Bloomberg Audio, Studios, podcasts, radio news. This is Bloomberg Intelligence with Scarletfoo and Paul Sweeney.
How do you think the FED is looking at tariffs? The uncertainty of terriffs.
Let's take a look at the sectors and how they performed.
A lot of investors getting whipsaled every day by news events.
Breaking market headlines and corporate news from across the globe.
Could we see a market disruption of market events?
So people just too exuberant out there?
You see some so called low quality stocks driving this short term rally.
Bloomberg Intelligence with Scarletfoo and Paul Sweeney on Bloomberg Radio, YouTube, and Bloomberg Originals.
On today's Bloomberg Intelligence Show, we dig inside the big business stories impacting Wall Street and the global markets.
Each and every week, we provide in depth research and data on some of the two thousand companies and one hundred and thirty industries that are analysts cover worldwide.
Today, we'll look at why Wall Street's Vegas Banks report quarterly earnings that surpassed almost all analyst expectations.
Plus look at how the tech company Oracle will commit to the widespread use of AMD chips.
But first, We begin with some big news in the tech sector because.
This week the AI research and development company OpenAI signed a multi year agreement with Broadcom. It is to collaborate on custom chips and networking equipment.
The plan is to add ten gigawats worth of AI data center capacity, with the companies beginning to deploy racks of service containing the gear in twenty twenty six.
OpenAI will design the hardware and work with Broadcom to develop.
It for more. We were joined by mandeep Seeing Bloomberg Intelligence, senior tech industry analyst. You first asked man Deep, first take on the latest deal.
Look, OpenAI is going after heading as much compute capacity as they can, and they did. First ten gigawatts with Nvidia, six gigawatts with AMD, and now ten gigawats with Broadcom. And the difference here is with Broadcom they get to use their own chips. Nvidia and AMD are what we call merchant silicon. I mean that's basically generalized chips where you can deploy the workload you want, whether it's from
OpenAI or Microsoft or any other vendor. In the case of custom silicon, which is what Broadcom does, a company like open AI or Google. Google makes up almost you know, fifty percent plus of Broadcom's AI revenue. So Google has their chip called TPUs. They use it for everything run on Google's platform, whether it's YouTube, whether it's AI, whether
it's cloud. Everything inside Google's run on their TPU. So OpenAI's strategy here is to use an approach which is similar to Google TPUs because it saves you a lot of money. I mean, imagine, an Nvidia AI chip costs you thirty grand. A custom silicon that Broadcom is making for Google costs you six grand. That's the cost differential we are talking about. And it's not because has to spend thirty grand to make that chip. They have a seventy five percent gross margin on the chip that they're
selling to the customer. So Nvidia's cost is also low, but they mark up the price of their silicon. Same thing with AMD. In the case of Google, they are going directly to Broadcom to make that chip at a far lower price, and it's for their own use, which is why they don't have to pay the markup to Nvideo or AMD. And that's why having your custom silicon strategy is so good because it really saves you so one gigaw with Nvidia silicon would cost you about forty
to fifty billion. One gigawat with a Broadcom open Ai silicon would cost you twenty five to thirty billion. So if you're talking about you know, thirty to forty percent cost differential, and it's huge, I mean in the context of what these guys are trying to do, you know, scaled infrastructure.
In addition to that distinction, there's also no investment or stock component to this open Ai Broadcom deal, which makes it different from the deal that it struck with Nvidia and AMD. So I guess my question is how would open Ai finance the purchase or the chips in general?
That's a great question because right now they have to do a lot of financing. It's one thing that's a common thread in the Invidia transaction where even though Invidia is putting ten billion dollars in open Ai, they still
have to find the remainder of the money. So if you imagine, you know, forty to fifty billion dollars per gigawatt, ten gigawatts costume around five hundred billion, Nvidia is only investing up two hundred billions, so they still have to figure out the remainder of four hundred billion in the case of AMD, I mean, yes, they are getting some stock, but you still have to figure out the financing for that, you know, three hundred billion or so. Here, it's the
same thing. You need the money. And open eyes bet is if we keep ramping up our revenue, that is obviously a big source of the funding. We'll do a lot of private deals because we already have the buy in from these big player whether it's Nvidia or Microsoft and other sovereign providers. And I think it's a lot of scale game right now, because once we keep hitting our milestones, we'll keep raising more money. And that's the hope when it comes to open air.
One name I hadn't heard during all this dance between all these tech companies is Apple. Yeah, what's going on there?
Glaring absence exactly.
I think that's the right way to frame it. And look, at some point, I think they are going to go the broadcom route. Out of the three partnerships that Openei has had, a company like Apple will never go for merchant silicon. I mean, look at what they have done in their own devices. It's all custom silicon. And that's where if I had to pick a strategy for Apple, it will likely be custom Silicon using Broadcom or Marvel
or one of these asay providers. But the hard thing for them is because they have missed out all the action in the past last three years, it's so hard
to catch up. Even if you throw money and you know your capex dollars, the time is off the essence, and the longer they delay this, I feel either is Broadcom or a partnership with Google now that antitrust is behind, so they may very well adopt Google's LM across their huge That will be huge, But I think you know, with the regulatory overhand going away, that could be a very likely strategy.
Apple has a ton of cash. It can't buy its way to a solution.
Here, what do you buy?
I mean these are all scale players, a broad coom. Maybe you could say Marvel is a smaller player, but you need the best and chips. That's why everyone is buying Nvidia because they have the highest performance per what. So you can't really get a second or a third player because then you compromise on the performance per what. When the biggest constraint out there is power, so you know you need the leading later and it comes to the chip side of the equation.
Our thanks to Man Deep Saying, Bloomberg Intelligence senior tech industry analysts.
We moved next to corporate earnings from the pizza chain Dominoes.
Dominoes reported better than expected third quarter earnings this week. They were fueled by demand for promotions and the stuffed crust pizza.
From where we were joined by Michael Haylen, Bloomberg Intelligence Senior restaurant and food service analyst.
We began by asking Michael to break down the latest results.
It was a great quarter.
I mean five point two percent same star sales in the US, and everyone knows quick service restaurants, you know, have been struggling due to low income consumer weakness.
They did it with stuffed crust pizza.
They were the only major national pizza chain that did not have stuff crust pizza. So they added that to the repertoire and this year and that that's boosted sales value.
This quarter was the best deal ever nine ninety nine for any pizza and no matter how many toppings you want on it, right, So giving people a discount that they really want on an item they really want, and then you know DoorDash, George is the first quarter they were fully rolled out on door Dash and that has really helped them take a chunk of that third party delivery aggregator business, boosting same source sales.
Okay, that all makes sense, but is that sustainable, especially the promotions like nine ninety nine, which definitely sound appealing in this day and age. I mean, these campaigns might drive volume, but at some point don't they erode profitability?
Well?
I think you know what we saw was margins were flat, you know, so to your point, you know, but what Madgeman said and what they're right about is that you know, you don't take margin to the bank, you take dollars to the bank.
Right.
And so they did this nine ninety nine deal and they actually ran it longer than expected because franchises were making so much money off of it, right, And so yeah, they're willing to sacrifice a little bit of margin expansion here for that track because it's making franchisees happy and that's the key when running, when being a franchise or so, yeah, I think this is sustainable, right.
They are.
They have only a fraction of the third party delivery business, right, but they have a third of the pizza market in the US. So that's a huge slug of business that we think is a great opportunity that's going to continue to build over time. You know, Uber Eats, it took them quite some time to build some momentum there. This was just the first quarter of being fully rolled out on door dash, So we think it's going to have
a big impact over the next three quarters. But it sounds like it can continue to build stuff Cruss Pizza, right, this is something that's a permanent menu item. This is not something that is you know, just a limited time offer that's going to be run for a few weeks, right. And then value, they have a bunch of different value things they do these boost weeks, and they have a tip promotion and so they run different value at different times.
But what they've done has been able to like, you know, create a name for themselves and are owning certain type of discounts that they run throughout the year. And so I think that is important for national pizza players. It's it's a business that's heavily weighted towards low income consumers, and you know, to my point earlier, they're struggling right now.
So Mike, explain the economics or explain the strategy of using these third party delivery of folks like Uber Eats or door dash. What changed for Dominoes, for example? Why would they not use them but then make the decision to use them.
Yeah, great question. So you know, at first it was really about the cost, right, And you know years ago third party delivery companies were charging thirty percent plus Dominos number one, they waited till the prices came down. Also, their business is really just using the marketplace. They're still using their own delivery drivers, right, and so they're able to use door dash on for their marketplace and play a much much lower vig to the company for the listing, right.
And so they were the last of all the major pizza players and QSR names. They were the final holdout. A big part of it was they were just so big in delivery and they didn't want to cannibalize the margin on that business. But what we're seeing is it really dry transactions. This quarter, we saw positive same store sales growth with carry out as well as delivery. They saw same store sales growth with every income cohort. It was a very strong quarter across the board.
You can count on people to not want to get off their couch and always order in, and that's guaranteed money made.
The only offspring that's still on my dole is my last guy. He's in college, and he knows he has to call me, text me. Does he to get pre approval to use any third party deliveries because I hate that cost?
Yeah, I mean, well as Gen xers and older, you know, the thought of paying out extra for someone to deliver food too is just so.
I haven't heard from him in like six months.
That's good progress. So, Michael, is Domino's attracting higher income consumers who are perhaps trading down and looking for those deals like the nine ninety nine pizza, and I wonder how much more market share they can pick up that way.
Well, same store sales, to your point, did grow with higher income consumers. They didn't talk about whether that's a trade down naturally, though. You will see that from increasing your third party delivery sales, right because those customers tend to skew younger and skew more affluent.
So we do know that's kind of card.
Yeah, yeah, exactly.
Thanks to Michael Halen Bloomerg Intelligence Senior restaurant and food service analysts.
Coming up look at how the luxury goods maker LVMH unexpectedly returned to sales growth last quarter.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies and one hundred and thirty industries.
You can access Bloomberg Intelligence via bi go on the terminal. I'm Scarlet Foom.
And I'm Paul Sweeney.
This is Bloomberg.
This is Bloomberg Intelligence with Scarlett Foo and Paul Sweeney on Bloomberg Radio.
Return next to US bank earnings.
This week, Wall Street's biggest banks reported third quarter earnings that surpassed almost all analyst estimates.
They included Goldman Sachs, Bank of America, Morgan Stanley, JP, Morgan Chase, and Wills Fargo. The results were driven by deals, investment, banking, and market volatility.
For a closer look at Bank of America and Morgan Stanley, we were joined by Alison Williams, Bloomberg Intelligence, senior analysts for global banks and asset managers.
First asked Alison what she made of Morgan Stanley's quarterly results.
Obviously, it's a strong environment for equities, especially the third quarter was a very strong environment. We hit records multiple times, including in the end of September. We had new records earlier this quarter. But you know, as we know, when you manage a team, when you have that strong environment, you want people that are going to take advantage of it. And I mean equities trading really jumping. We saw we saw strong growth actually at JP Morgan and Morgan Stanley.
Goldman trailing a bit so, raising maybe some questions about what happened there, but also equity fees Morgan Stanley doing well.
And then the wealth.
Business, I mean that's really the focus for investors. Those flows really strong.
Yeah, wealth management net revenue of eight point two to three billion, it was estimated to increase seven percent to seven point seven to eight billion, So that was a big, big beat. And this is the part of the business that Morgan Stanley has really been focused on to kind of separate it from Goldman Sex because this is the steady eddy business where it's fee generated, it's recurring, you're not dictated by the whims of the market and volatility and anything that could happen in any quarter.
Right.
So, yeah, So to your point, that wealth and asset management tends to be more favored by investors because it does tend to be more of a recurring revenue model. You know, obviously if the market goes down twenty percent or up twenty percent, that has an impact on fees, but it's not parable to something like the underwriting or the pure transactional business. Recall the pandemic when things completely
shut down. I mean, granted they recovered, but the fact of the matter is like it's less volatility, more recurring revenue. Investors like that fee income and they like sort of the relative stability of that business.
So one thing that really jumped out at me, Allison, when I was looking at the earnings is the fact that all the bank's provision for credit losses Japan, Morgan set aside more than what analysts thought it would set aside. Golden Sacks set aside less. Morgan Stanley was estimated to have set aside ninety seven million. It ended up setting aside zero zero for bad losses bad loan losses. What does that say they did?
And I mean for Morgan Stanley, lending is such a small part of their business. It's the least out of all the banks, So if you're going to see zero, you would see it there. But the one question we do have, which I think will become clear as we see many of the other bank report is you know, we're seeing a very strong consumer at these big banks, but is there differentiation in terms of the high end
consumer or lower income consumer? A lot of these banks, you know, the focus really is on the higher end consumer. JP Morgan. They're despite a lot of the headline figure or headlines that came out from Jamie's comments. We look at the credit card business and the credit trends in that business super strong. Their charge off rate, they actually guided it down because they had to because the delinquencies
are coming in, you know, so much lower. We know that JP Morgan really focuses on that Sapphire card, that high end card. So they are seeing a strong consumer. But will we see something different when we see some of the other card companies report.
You know, when you think about it, the drivers of the investment banking business are pretty darn simple. Listen to chief executive chief financial Officer Alistair Borthwick. Here's what he told analyst on Wednesday. Quote, we've seen more certainty now around trade and tear and around taxes as well. It's a louder client base to make longer term decisions. That's reflected in our investment banking activity. Yeah, it's as simple as that, but again it's hard to predict kind of
what those macro trends are going to be. Switching gears to the Bank of America, their bankers did really well, not that that's a surprise, but they put us a big growth.
Rate, they did, and you know, to your point, Paul, I mean, you've been in this business, right, so the having clarity is generally helpful for the investment banking business. That's why we did see sort of a fall off midyear. But what we've heard from the banks and their bankers is that, look, clients are beginning to accept that there is some level of uncertainty they'll have to deal with.
It's not going away necessarily anytime soon. So if you need to come to market now, it's probably a good time. And by the way, record equity prices fed cutting rates, you know, those are also helpful and bringing some of those deals to market. Bank of America, by the way, talking about their backlog up very strongly for the fourth quarter. So this momentum into this next quarter is likely to show up again in the in the fourth quarter results.
So for Bank of America, it feels like investors were singularly focused on the net interest income number because it had not done so well just a year ago, and Bank of America was really focused on improving that. This was a big beat on the NII number here and they actually guided higher for the fourth quarter. The bank is going to hold its first investor day I think since twenty eleven next month. How does this set up Bank of America for this investor day?
So I think they are set up well for the investor day. And keep in mind investor Day will be focused I think on the long term trends. We have gotten some management changes, some announcements related to succession planning, and I think, you know, Brian moynihan has done a great job with the bank. I think the investor day is really going to be focused on, you know, what
is the look forward? And AI is something that we've heard a little bit about Bank of America talking about that this quarter, Goldman Sachs bringing out their three point zero program. Morgan Stanley actually had been talking about that with their cuts last year. How is AI going to contribute to the structural profitability of Bank of America? You know, so cyclical, some very strong trends' quarter structural they've done a good job, but what is next for the bank?
I mean, I just forgot how big Bank of America is, and they meet They grew through so many acquisitions, two hundred and thirteen thousand employees. It's got a market cap of almost four hundred billion dollars. They seem like they've got the right mix of assets at this point.
Yeah, So to your point, they did grow a lot through acquisitions under prior managements. And I think you know what Brian oinnihan has come in and said was they're really going to focus on organic growth. They focused on this strategy responsible lending. There's some noise around that when times are good, right because everyone said, well, are you being too conservative? But then when times are bad, that
is really helpful to managing the downside. And that's one of the things that I think can give investors come for as we worry about recession risks in the coming quarters.
Our thanks to Alison Williams, Bloomberg Intelligence, Senior Analyst for Global Banks and Asset managers.
We move next to earnings from the luxury goods maker LBMH.
This week, LVMH reported third quarter earnings that beat analyst estimates in all five business units after two quarters of declines. The rise of revenue and China sales also suggest that the slump and luxury demand might be easy.
For more on this, we were joined by Deb Aik and Bloomberg Intelligence luxury goods analyst.
We began by asking Deb for her take on LVMH's results and whether it signals that luxury is back.
Really a very big sentiment indicator. The comments from the company were more positive than the market anticipated. When we look at the numbers in terms of the organic sales growth, the market expected around minus one minute plus one. But it's about the sequential improvement from Q two to Q three and the fact that all five of the business units are improved versus Q two, and more than that, China is mid to high single digit growth versus a
year ago. The US is robust, Europe is doing the same as it did across the board, doing okay but missing out on tourism and Asia. Extra Pan is positive. We know four q US will face a bit more of a difficult comp after the spent in last year beyond the election and the Trump win. But into the first half of twenty twenty six, the market is looking more positive and it's certainly rallied the whole of the sector. This morning and this afternoon.
Hey, dev, what's the correlation between luxury spending and just kind of the broader stock market around the world, Because markets are really performing well, how does that correlate to just luxury spending.
The big thing on luxury spend has been that the very high end has done well, so Airmyre's Brunellokucinelli, where they work with a restricted volume operating model, They've done well in terms of their top line growth. But when I think about an LVMH, you know they're given how big they are, they need a big volume there, even with some price in to manage growth in this category. And instead, what we saw last year and the beginning of this year was maybe a little bit of trading down.
So brands like Tapestry's Coach Ralph Lauren they became really so popular, not only in the US, but more on a globalized basis too. And so the view has been that the sentiment around the share prices has very much been opposed and opposite to what's been happening on the stock market, but with the exception of the mid range, and the mid range have done better because the view in the investor mindset has been the luxury buyer will
trade down. They've done that in some brands, but not all brands, in some categories, not all categories, and generally we expect the biggest and the best to come back first.
What about LVMH's wines and spirits division. We've been hearing from Constellation brands and other spirits companies that you know, there's been this massive shift in consumer tastes away from alcohol, certainly the younger generation. Does that affect a company like LVMH.
So a different kind of thing with LVMH. I think at the very high end we had some US weakness, so they operate in wines, fine wines, high end champagnes, cognacs, and others. Champagne is doing well and is back to growth in the US. Rose Wine is doing very very well, but some of the spirit side is still struggling a little bit, and I think that's because we've seen some trading down. So we had China very heavily and the US not so solid through the first half the year,
but there are signs of that coming back. If I look at the numbers on the Q three for wines and spirits, they're at plus one and they were at minus four for Q two and minus nine for Q one, So it seems as though inventory is leveled out and we're starting to see some selling.
Deba I learned from you long ago, and looking at luxury, you have to also pay attention to what's happening in China and the Chinese consumer. Are the Chinese spending either in China or are they traveling to the London Parish, New York Milan type thing? What are you seeing?
Yeah, we're still seeing a lot of the spend. We're getting mid high single digit growth in that Q three from alviw Majia onny is on localized spending. We are
seeing pockets of growth on the tourism side. So there is a more positive view and mixed linked into the commentary from these results, but overall we are still absolutely the missing Asian tourist, Chinese tourists from Europe, and also in Europe, we're missing the strength of the dollar having swung over last year with US purchases here and you're you are seeing in some but not as many in
terms of full recovery versus twenty nineteen. There's growth year on year, but not versus twenty nineteen into the USI. But when it comes to the Chinese tourist, we used to say a third of luxury goods just over we're on the we're from the Chinese cohort, and that would include on land and traveling right, and we still think there's a way for that to go, but certainly on land and locally they're doing better than they were.
Oh thanks to deb Aik and Bloomberg Intelligence, Luxury Goods analyst.
Coming up, look at why the global snacking company Kelenova is adding a jolt of protein to its big as snack.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in research and data on two thousand companies and one hundred and thirty industries.
You can access Bloomberg Intelligence Big on the terminal. I'm Scarlet Foo.
And I'm Paul Sweeney. This is Bloomberg.
This is Bloomberg Intelligence with Scarlet Foo and Paul Sweeney on Bloomberg Radio.
We move now to news from the consumer good sector, because.
This week the global snacking company Kelenova announced it'll offer a version of pop tarts with higher protein content. This will begin in November.
The news comes this company start to add protein to food with hopes of louring shoppers who've moved away from highly processed products.
In other news, the retail giant Walmart announced a partnership with AI research company open Ai. This deal would allow shoppers to browse and purchase his products on the AI chotbot chat GPT. For more on all of.
This, we were joined by Jen bartashis Bloomberg Intelligence Senior retail analyst.
We began by asking Jen for her take on Kelenova's protein boost.
Really, what we're seeing is a lot of these package fry companies are tapping into this protein trend. It's something that consumers are really looking for. And at the end of the day, when it comes to PepsiCo or it comes to Kelenova, this is really about making people feel marginally better about eating food that is bad for them. Right, Let's let's just be honest about it, right, So you know, when you put protein on the package, people feel like even if they're making a bad choice. It's not as
bad as it could have been. And that's really what's behind this.
It's like the equivalent of vanity sizing at retailers. Right, you know, you're actually a size six, but we're going to tell you you're a size two so you feel better and buy more clothes. Is this as simple jen as just adding protein powder on top of the Kellogg's pop tarts excuse me, Kelenova pop darts.
Yes, So what they've done is they've they've added protein into the pastry part of the pop tart and that changes the texture and the taste just a little bit. But what's really interesting is the consumer trend behind it.
You know, we ran a proprietary protein study back in the middle of the summer, and what we saw was that almost forty percent of consumers eat something with protein enhanced whether it's a snack or a beverage, on a weekly basis, and you know, at at least thirty eight percent so that they're eating more protein enhanced products in the last three months. So clearly there's a consumer uptake, there's interest in this, and that's what these companies are really tapping into.
Do I want more protein do I need more protein?
I'm eating more egg whites, but that's because it's available at work.
What are you doing, I don't know, use the same thing.
Your goldfish do not have extra protein on them.
Have extra protein.
Neither of you are on GLP one drugs, right, But protein is a big solution for people who are on those drugs because you tend to lose muscle mass as a side effect of those drugs, and so as the uptake of GLP one goes up, there's more and more demand for these protein and Harry products.
That's what I needed. Okay, Now I'm at a cocktail party and I need to sound smart on proteins. Now I got mine.
But apparently fiber is the new protein and jen Is didn't the PepsiCo CEO say something about.
This, yeah, you know, whether it's yeah, anything that helps kind of enhance the product. So when you talk about Dorito's that they have additional milk protein being added, you know, higher fiber products. All of these things are things that people, the average consumer perceives as having a health or wellness benefit, and people are trying, in small steps to be a little bit better about their health.
All right, let's get to another story I thought was really interesting Walmart partners with open Ai to offer shopping on chat GPT. This sounds like a natural what's going on here?
Jen?
Yeah, this is an interesting move, but I think it really illustrates sort of that trend of what's happening across retail in general. Walmart's really been very good about doing experimentation and kind of checking out what the opportunities are when it comes to social media and social commerce particularly, and this lead us to partnership with with Open Eye.
This really does tap into that as well. Now, social spending is still very small in terms of the overall percentage of what retailers are achieving, but it's important to be present and I think that's what's most notable about this announcement.
What is social spending and how do the numbers differ from from normal shopping through Walmart's website or going into Walmart's actual stores.
Yeah. So social commerce is when you're on a platform, whether it's on chat, gptin now or whether it's on TikTok, or whether it's on Facebook or any of the social media platforms, and you have the ability to add to cart and buy now. That's that's social commerce, but it's still a tiny, tiny fraction of the overall e commerce that happens for these companies.
So while it's.
Important in terms of their showing that they're present and that they're aware of new technologies, it's not going to move the needle with regards to their overall e commerce sales or their overall business mix.
At this point, Jen, we've got a little bit more data, a little bit more time and has it relates to tariffs? What's your best guest says to what your package food companies, your retailers, how are they kind of segmenting the terrors before maybe passing along something to the consumer.
Yeah, it's a complicated situation, Paul, And really what's happening is where they can find alternative sourcing. A lot of companies have been trying to do that. There are some
companies in package food where that's not as easy. So I would take McCormick as an example, where a lot of spices you can't produce domestically or you can't source domestically, and then it becomes a question of how do you negotiate with partners, do you find alternative countries of origin that maybe have slightly lower tariff levels, and it's also a lot of effort right now is going into finding efficiencies that can help offset those costs so that they
can absorb some of that cost and not have to pass it on to consumers. Ultimately, most of the companies we're talking to are saying that where needed, they will very strategically pass price through, but they're trying to avoid a uniform, unilateral price increase just due to tariffs.
How much of this work has been done what you just described, and I guess I wonder how much of it will be covered in the earnings calls this quarter.
I think it will be definitely a topic of the earnings calls this quarter. But when we had tariffs back in twenty eighteen, a lot of companies started the process of identifying other options for sourcing. So there's probably been more progress made than people would recognize because it didn't just start this year, and so it's been sort of
a gradual shift. And once they have those plans in place, they can sort of accelerate that and then the focus really is on efficiencies, and that's where the technology comes back into play, where it helps them be better with regards to their sourcing, their negotiations, and really in terms of understanding what products they actually need to carry and which products they could perhaps suspend or discontinue.
Our thanks to Jen Bartashi's Bloomberg Intelligence Senior retail analyst.
We move next to news in the tech sector.
This week, we heard that the chip maker Advanced micro Devices received a major order from Oracle for its new AI chips. This announcement is part of a frenzy of deals by big tech and AI companies.
And in other news, the cloud based software companies Salesforce expanded its partnership with open Ai. This will allow companies to access Salesforce's agent Force app and chat GPT, enabling instant checkout in its commerce platform.
For more, we would joined by anaag Rana, Bloomberg Intelligence technology analyst. We first asked Anarak if the recent deal between AMD and Oracle is unusual.
The slight and usual part is that the AMD chip seems to be doing at parity at what Nvidio chips are for this particular case. Now, I do not know what kind of workloads Oracle will put on it, so you really can't do an apples to apples comparison. But The story at this point is Oracle has a massive backlock of orders and it needs to invest money to get them converted into revenue. They need to open more
data centers or rent out more data centers. They need to buy more chips, buy more hardware, and combine all that together and eventually then they're going to get paid for all that stuff. So they're going anywhere they can find chips right now, and you know, it seems that AMD is their next stop.
So there are a couple of threads to pull on there. It feels like AMD is increasingly the number one alternative to invidios chips. We can talk about that a little bit. But what struck me is that there's no dollar amount disclosed in this deal or partnership or promise. The previous deal that AMD struck with open Ai just said tens of billions of dollars in new revenue. Why are firms keeping it so vague.
Well, because they do not know how many chips they would need at what point, at what capacity. This is a you know, it's not you know, it's more so signaling that we are not just truly dependent on in video, we have other options as well. It helps them with navigating in terms of pricing from in video. Also, you know, we know in video chips are getting expensive over the last few years, so there could be one reason. The other thing we don't know is what the workloads there are.
Because we know, for the absolute best of the best, you you have to use in video chips. That's what we know. Whether all of that changes in twelve to eighteen months, we don't know. But there are other workloads that may not require that amount of you know, firepower or horse power you could say. For that you may use you know, AMD chips or something even more inferior.
And even yet another announcement in your space an rock Salesforce, a company you've been talking to us about for many, many years, Salesforce and open Ai announced an expanded strategic partnership. What's going on there?
Yeah, So for me, this is actually a far bigger news and has more ramifications in the long run. If you see what's been happening in the software landscape over the past two years, the threat is that Opening I will come and it will take away you know, basically the businesses of all the application software vendors. You know,
whether that's Adobe, Workday Salesforce, HubSpot, you name it. Because open ai has shown capabilities that their model can help out in functions such as finance, human resources, sales automations, et cetera. This integration between the world's biggest CRM software vendor, which is Salesforce, and open Ai shows that both of them will be working together and you know, it'll be easier for enterprises to go inside open ai chart GPT ask for what they want that gets connected to the
data that resuldes in Salesforce. Makes it very easy for the enterprise customers to do their work as well, rather than just going into you know, Salesforce. So I think this is a bigger news in the long run. But you know we are all talking about Oracle as well.
Yeah, open Ai announces a new deal with someone every day, Paul. This is kind of what you're getting back to. And this really both of these announcements are the latest in the string of big tech building more computing infrastructure and meeting this demand, this and satual demand. I've really lost track of the permutations, an what were you about? These back and forth announcements and partnerships, and you know, the billions of dollars that may or may not change hands.
Do do we think that these are just announcements that may not come to fruition if circumstances change, for instance, in the next six months.
See from a salesforce point of view, and which is which I was? You know, you would say most of us are worried about as the legacy software names. It's a good thing because opening I is a new channel of communication with you know, the rest of the world. If you can integrate your product with them, it kind
of saves you from getting disrupted. The question is and the long run, and then we'll find out what happens is will Opening I have that much level of funding to keep up with all the promises that they have. They have given very high revenue estimates for the next few years. But at the same time, I mean, the rest of the bigger you know, tech vendors are not
you know, just sleeping. At that point, I would say, we'll find out whether open I will be able to gain market share from the likes of you know, Microsoft, Topple, Google and Meta or Amazon, or this is going to be just an expansion of the overall market.
Our thanks to Honor Agrana Bloomberg Intelligence Technology analyst.
It's this week's edition of Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies and one hundred and thirty industries.
And remember you can access Bloomberg Intelligence via b I go on the terminal. I'm Scarlett Foo and I'm Paul Sweeney.
Stay with us. Today's top stories and global business headlines are coming up right now