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Let's go back to the tech sector. We can't stray too far from it ever, when we talk about the market and take a look at some of the mag seven names. Alphabet this week has moved ahead of Apple in terms of market cap, and Met us signing this big, big power generation deal with this company called Vistra, which has had a really futile week. Let's bring in Man
Deep sing right now. Man Deep is our global tech research head at Bloomberg Intelligence, and Man Deep just put into context for us this multi gigawatt nuclear deal that Meta has signed for its AI data centers. How should we think about this?
Yeah, I mean, the best way to frame it is how how these companies are spending their capex? And we know roughly, you know, one gigawa of AI data center capacity costs about fifty billion dollars. Again depends on the region, the source of energy and land et cetera. But that's the rough ballpark. So when you think about six point six gigawat, and we already know open Ai has committed to you know, about twenty six gigawatts, So clearly these
companies have big ambitions. And what it suggests is a company like Meta, which will very well spend over one hundred billion dollars in capex this year in twenty twenty six, may stay on that path for at least the next three to four years because they believe, you know, they have a lot of applications when it comes to their own consumption of AI data centers, and they seem to be confident about their own model, which has so far trailed the likes of open Ai and Tropic and Gemini
in terms of abilities. But it sounds like they want to make sure they have the capacity to deploy AI. And that's where nuclear is an interesting choice because a lot of the other hyperscalers have gone for more natural gas turbines, but we know there is a big backlog with someone like ge Vernola for their natural gas turbines, So from that perspective, nuclear is an interesting choice, you know, as an alternate.
What are the big tech companies, these big AI companies saying about their confidence in the reliability of power in the next five, ten, twenty years, because a lot of folks are saying that really could be the gating issue for the development and evolution of AI.
Yeah, I mean, look, I was at CEES where Jensen highlighted, you know, the reason why companies would upgrade quickly to the latest Rubin architecture is because they give I mean, Ruben will give them more tokens per unit of power, which is really a way to emphasize the efficiency of
how you utilize your available power. And so from that perspective, everyone sees very long lead times when it comes to adding new power, and they want to maximize, you know, the usage and utilization of whatever they have right now. And look, you could argue, you know, there are some other sources which may have shorter lead times, like solar
or battery packs. But in this case, given the size of power that these companies need for running we're talking about one gigawatt data center, it's very hard to think about too many sources of energy that will give you that sort of power, and you know that's where the lead times are so long.
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Let's get to the restaurant business here.
You know, the flu season which is upon us, and it's you know, a little bit more harsh than average.
It's impacting a lot of folks.
Obviously, it's also impacting some businesses, like the restaurant business.
I didn't think of that.
Michael Halen, He thinks of it. Senior restaurant and food service analysts for Bloomberg Intelligence Mike talk to us about recent trends in the restaurant bizz.
Yeah, it was a tough fourth quarter, you know, especially December. December was hurt by cold weather, snow, and an earlier flu season. It's the worst flu season so far in twenty five years. This mad some issues with you know, the vaccines not covering the current trains that.
Are out there, and so was pretty rough.
You know. Quick service and fast casual did better. Quick service sales were down slightly. You know, fast food chains like McDonald's and were as fast casual like Chipotle, Shakeshack, they were up slightly in December. It was the full service chain, so casual diners like Chili's and family dining like ihop that struggled the most, Which makes sense. If it's really cold or if it's snowing, you're less likely
to go out to a restaurant and dine in. You're more likely to order dominoes, and so it all kinds of makes sense. But you know, these trends are gonna flip pretty pretty nicely into January. We've seen a huge squeeze in restaurant stocks to open up this year, and we think it's going to continue.
So what do these casual dining chains do to change the trajectory of what seems like a pretty stet trend at this point.
Well, the casual dining chains had a really nice year in twenty twenty five.
We you know, they have.
But because of that, they have tougher comparisons to LAP right, and so for that reason, we think, you know, and we think USR stands to benefit more from from tax reform as well as like a ten percent ish decline in.
Oil prices, So we don't expect a.
Bad year at a casual dining. We think they'll continue to do pretty well. They're gonna you know, they're not gonna receive as much of a boost.
From Chili's, which had a, you.
Know, an unbelievable year in twenty twenty five. But we think casual dining can have a solid year here in twenty six. But it's the casual dining names and some of the fast casual names we cover, like Cava and Winkstop, that we think can have a really nice bounce here, especially in the first half of twenty twenty six.
Mike, we got some labor data, takes some jobs data, unemployment rate ticks down a little bit here.
I got to think that's that's important for US companies.
Yeah, you know, labor has been tough for restaurants. You know, we've seen a four percent ish wage rate inflation in our in this industry, you know, going back to before the pandemic, you know, so labor continues to be kind of an issue. There's still some talk about restaurants being understaffed right now, so that obviously impacts service levels negatively and hurts the customer experience. So obviously something we look at pretty closely.
In terms of names that you like, and I know we don't do buy hold cell recommendations at Bloomberg Intelligence, but the kinds of companies that are best positioned in twenty twenty six. What are you looking for?
Oh yeah, so you know, for us, we're looking at chains that we think can outperform you know, same store sales estimates on the street with some chains that we think, you know, other analysts are just not bullish enough on. You know, McDonald's is coming up against some really easy comparisons due to e Coli once they report the four Q and the one Q, Winstock, Brinker. These are some of the names that we've written about.
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By this, transition to electric vehicles is proving very costly for automakers around the world. We had the big twenty plus billion dollar right off from four to a couple of weeks ago. Now General Motors will take another six billion dollars in charges tied to production cutbacks.
In its electric vehicle and battery operations.
Let's break it down with Craig Trudell, gloom Global Autos editor for Bloomberg News. He joins us from our London office. Craig, what's GM telling us here about kind of their transition to evs.
Yeah.
I think, you know, this is like a sort of ongoing toll that they're reporting, and I don't know that they're necessarily done. We heard them report actually some months back that you know, sort of rethinking their production capacity and pairing that back in response to the way electric vehicle demand and you know, battery supply was shaking out, that that was going to set them back more than
a billion dollars. So this is you know, an incremental amount of money on top of that, and there was some warning in the AK last night that actually, you know, there may be more to come. So you know, I think this is part of a broader sort of rationalization taking place in the US, where you know, an industry was trying to to respond to an administration that was you know, banging the drum in a much different way than the Trump administration is now.
You know, I look at this trailing twelve month performance of General Motors. It's up sixty one percent, and that kind of tells me you can take as many charges as you want here, I want you to pair back your transitions to ev Is that kind of what you're hearing.
You know, it's it's fascinating because on one hand, you're seeing you know, electric car leader or at least former electric car leader Tesla taking off and doing so in spite of the fact that their sales are slowing down. The outlook for EVS and their home market is pretty bleak. And yet you also in Unison, have you know, sort
of the contrarian play taking off in GM. I think, you know, it's maybe not quite that simple, and that you know, GM does have I think David Welch's story on last night the News does have, you know, sort of the context that they have quite quite a lot of electric vehicles available. They're going to continue to have a pretty broad range of cars, and Mary Barrow has talked about how EVS is their quote north star and
that that's not going to change. So I think there's going to be a little bit more stick toitiveness on GM's part than Ford, and yet I think this is also an indication that the market is saying, you know what, the way this company makes money is it's full sized pickups and SUVs. The more of those that they can make in this new paradigm, the merrier.
So I guess give us a sense of In the US, I think we have an idea that this transition to EV's is going to take longer than maybe we we initially thought that's not the case, it seems like in Europe.
Tell us how the adoption is going in Europe.
Yeah, I think actually last year it may be surprising to people because we ended the year with these headlines about the EUS sort of backing off of its combustion engine PAN for twenty thirty five. That being said, we actually had a nice pickup in momentum for electric vehicles last year. A lot of that was driven by the Chinese manufacturers. I think that is part of where the concern is here that you know, the the you know, local manufacturers in Europe. Some of them are doing better
than they were, but it's it is patchy. I think it's also patchy, you know, sort of country by country, but we did see, you know, a roughly thirty percent increase in battery electric vehicles sales last year in spite of the fact that a big player in Tesla had a really tough twenty twenty five.
That's interesting, you know, talk to those about hybrids here.
I just caved at least a hybrid form my number four offspring because he goes to school in California where the gas prices are just ridiculously high.
A the technology seemed really cool to me.
The car drove great, and it seems like a nice mix between or a nice compromise between going full EV and full ice.
How do you think about it?
Yeah, I mean this was the supposed bridge technology, and the bridge is going for a lot longer than I think. A lot of people reckoned, you know, I remember, uh, you know, uh covering Toyota being based in Japan for a few years. Uh, you know, Toyota taking a lot
of heat for sort of clinging to uh. You know, this technology that it's sort of pioneered with the Prius and you know, not sort of jumping with both feet in fully electric vehicles that has very much turned out to be to be the play and I think we're seeing, uh, you know, a lot of the excess battery capacity that got built in response to Biden administration's push for uh, you know, more of a battery uh you know sector
to be built in the US. A lot of that is going to get soaked up by these hybrids, whether they're whether they're plug in vehicles or not. If you can make you know, the the bigger pickups and SUVs that are already popular in the US more efficient, you get sort of the both the best of both worlds. Even if there's a little bit of incremental costs on the front end, these vehicles are going to be much cheaper to to refuel and and you know, better to run.
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