Artificial Intelligence Valuations and Previewing Black Friday

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This is Daniel Ives of Webb Bush. First of all, rocket It out of Las Vegas with Aston Martin. For those of you in radio, he's got the real jacket on, like the kind net Lance Alonzo. We're in all that. What in Formula one with all the excitement Apple taking over the broadcast, Cadillac coming in next year. When you're in the pit like you were, What's what's the thing that you don't know when you watch on TV?

I think, I mean my experience at that point.

I think the thing that people realizes not just how loud it is, but especially when you're in and you actually have like the headphones on and you hear them talking to the drivers. Just a complexity. I mean, that's the thing. It's like, it's it's really amazing.

Did you change a tire?

I did, but I will tell you at at indy five hundred I came close to almost change the entire.

Okay, to secure liberty media, you can own Formula one fw O. NK is the ticker for Liberty Media. You can own it as a publican.

Why is Apple doing that? Explaining just go to Jesse Paul's dying to get to Nvidia and you know the Google thing and all that. Why is Apple doing Apple TV? It's called dad TV because no one watches it. They got some product out, they've had some successes, but why waste their time on that?

Yeah?

I mean to me, it's really it's all about where they're ultimately going to take this. I mean in the future. And we'll see as Apple ultimately goes down the past with Gemini, and in terms of the AI future, they need to have as wide of a con ten lenses possible. And I think when you look at Apple TV, it's all part of Look, the quality speaks for itself. Quantity has been the issue, but for them, it's just they're going to continue to.

Have irons in the fire. That's what they're going to do.

The TV show Pluribus, it's a sci fi thing. She's home all alone. Everybody around her is like a droid. She's watching surveillance. It was great, why don't you get to a video right example?

So Dan, the AI story here took a little bit of return over the last a couple of days. Here Meta placing a big chip order with Google, further calling to question the position or the dominance position of Nvidiot. Give us your thoughts about that on I mean, look.

Google TPU if especially with with Broadcomm and TSMC is the is the builder that's been around for over a decade, right, So it's not that it's new per se. I think the issue comes down to demand the spy from video chips to twelve to one.

So the reality is the supply of Nvidio chips twelve to one watch.

So look, when you look at Meta like they're not going to be able to get everything they need from in video, so they got to look outside. When you look with googleized, I'd say it's really it's probut three to four years behind where Nvidio is. But again on some certain instances it could be good enough. And look that's where we're going. I mean, the reality is when it comes to AMD, when it comes to big tech, eventually you need to see Apple, you know, to see Meta,

So that's kind of how I thought about yesday. I was kind of surprised to see the cell off in video because my thought was all I hear from guys like you and technology folks coming in here is that the demand for AI is just I'm not saying satial, but boy, it's outstripping supply for sure, and you got to get what you can get when you can get it.

Look, just spending three weeks in Asia, I mean, we've seen demand accelerate thirty percent in the last six months for AI. So it comes down to like it's easy to call say AIS bubble in the spreadsheet and twenty fifty four of New York City office building, but when

When it comes tack.

Your piniata on Wall Street, people love to go after you on Twitter. It's the close. It's the act and all that underneath it. We know, folks, not only Dan Eyes, but webbush, there's some prodigious tech chips, like going to Asia, like actually walking in a factory, find out what's going on. Here's the reality for our listeners, our viewers worldwide. April three,

Look, and we've talked about so much on the show.

Over the years, right, I mean, the reality is is that there's no bigger consumer install based in the world than Apple two point four billion iOS devices, one point five billion iPhones. And it comes down besides just the

Added to Apple for AI And.

That's my view, Dave David and also look at this iPhone seventeen. It's been a surprise upgrade cycle that no one expected with Gemini.

Is Apple under less pressure to do something this whole do something, do something?

I'd say more pressure, but they couldn't do it till Google ultimately won the dojsuit. Once they won the dojsuit, that's where the candle ideenter between sun Dar and the cook start. And I think that's that ultimately is now where that's tracking to what can be a deal that couldn't have been until they won that deal. And I think that's where they're going to go. They're not buying purplexity, They're going with Google. They're going to go down bet heavily on them.

Then I was with Wedbush with us here on Wednesday before Thanksgiving, is you get ready to travel, the Horde comes over to the house. We say good morning all the different ways you listen to us. Thank you for discovering Bloomberg's surveillance in two thousand and twenty. Will be your Friday, Paul Sweeney, your people. It was a big arguments. People went back and forth. Yes, yeah, it will be your Friday after Thanksgiving, Paul, and talk.

To us about Meta a little bit. I think that's one of the ones the market is unsure of as it relates to the AI play there. Stocks down about twenty percent from its recent high, so some concerns there. How do you position that?

I think, I mean it's a table pounder by because the reason that stocks off is because Zuk right now wartime CEO, focus on increasing cap backs over the next year in his arms race, and you're and you're seeing obviously pressure in terms of earnings and cashle but that's

The reality is.

That there's two more years and weise left in this tech ball market. You're in year three of an eight to ten year build and it is truly a fourth in dustrial revolution. I think Meta is going to be proven that this is the right move what they're doing in.

The ZEITGEISTI this weekend is the partition that yes, we appear to be using AI for search stuff In Paul Sweeney the other day goes, should I go with the ocean space cranberry or something homemade, you know that kind of stuff, or like task driven AI? When do you perceive America makes the shift to a more sophisticated use of AI.

Yeah, it's a great qub. But today it's enterprise.

I mean, the reality is the consumer AI revolution hasn't started. Chat GPTAM, we see that, but it's all enterprise. I mean, this spending we're talking about called next two to three trillion, it's just the enterprise. When it talks about consumer, it's our autonomous humanoid robotics.

It's the future, the consum.

Goddamn robot to make my cranberry Sauce Switten, you're what's happening again? And I continue to meet the call. Keen will be in a rubotaxi in your the other day that I thought Ludlow and again you never know, it could be Ludlow.

So all right, let's go to that robotics and all that kind of stuff, because that's kind of the story behind teslaly these days it's not about bending steel and making cars and things like that. So the stocks up four percent year today, so it's really lagging the market. It's come back from I guess the biggest concerns where we were several months ago. But when you talk to your institutions, our clients, what are they telling you.

I mean, it's it's all about the future. I believe autonomous and ultimately optimists about will be the most important chapter ever in Tesla's growth story. And I think now must being wartime CEO have in the compackage, you know, potentially trillion dollar men. This will now define Tesla. And I also think you're gonn see a regulatory road map that's going to ease when it comes to autonomous, specifically

Let's go to our three radio stations. Good Morning ninety two nine FM, Boston ninety nine one FM, Nathan Hager Radio in Washington, here Bloomberg eleven three zero. How is a robotaxi get across the Charles River right by MI T How does a robot get turn left there and support? How does a robotaxi get around DuPont Circle? How does a robotaxi get down Fifth Avenue right outside the Trump Tower? I don't get it.

Look, I mean, do you look at it? It's data driven. I mean the reality is is that is.

Your proof of concept that they can handle normal urban traffic.

What everything I've seen, and obviously we've been there in Austin, You're going to continue to see to expand you know, across you know, many cities over the next few months.

I believe we're there now.

I'm not saying that there's you're gonna see the GEO offense area continued expand, but it's my view next few years, twenty percent of cars on the road when you're whether it's New York City, whether it's Boston, whether scot you're gonna look around and you're gonna and you're not gonna see a driver.

Enough check what's your single best buy right now? Is it matter or is something different?

I mean to me single best buy writ or is Microsoft the relative to what we see in terms of the stock.

I sit down because the view that.

Now Google, now Amazon and others on the hyperscale are going to sort of eat their lunch. Gook, what's happening Oracle as well? It just look New York City cab driver was bearish on Alphabet Google start the year. Today they're barish on Microsoft. And I think that's why that has one hundred hour upside.

Okay on Microsoft just is one example. Are they open Ai? Sam what's his name, Sam Altman?

Sam Almon?

Are they down because they're affiliated with Sam Altman?

I think, just like just like Oracle, there's that too big to fail concept right where anyone that touches open AI that's ultimately been an overhang. But it comes down to like that would be like me being like, okay, if I could have more Peter luger Steak, would I have it?

Or would I rather own white Castle.

Actually at Bush you gotta be going pay.

Yeah again, you gotta go Lugers. But the reality is that open AI. It's the Peter Lugers of technology.

You want to be associated with it, not not associated those are you on YouTube?

The interns are in her ears. We got these holiday interns and Sweeney's intern It's from Penn State.

I'm shocked we are. Nobody cares we are.

Paul Damn Penn State. Go Paul.

Who's going to be the coach?

Do you think? I mean?

Look, I think we'll see it probably Monday. Oh okay, that was actual.

I continue to think it's you know, it's either Chesney from JMU did that you know? Or there could be a mystery candidate that will see how that emerged over the coming days.

So I think a mystery candle.

Not no, not no, please, and we better days are ahead for Pensate after a dark year.

Okay, all I asked, you're such a hitter and you're so f one. Next time you go to F one, take young John Farroll with you, like playing.

The reason I got into F one it was Netflix and Farah.

Yeah yeah, yeah, I mean he he's like head to Toad Ferrari.

Sure, I mean you know, I mean, you know that's how you roll.

The whole Thing's where's your next f one you're going to?

I mean I have a few, but uh a few on the docket, you know, Mid Middle.

East and and some other ones.

Dan, I thank you to extended a conversation, a lot of good information there with his single best by the gentleman from Microsoft. Stay with us. More from Bloomberg Surveillance coming up after this.

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We got people out there, really in the trenches about thinking of the future of retail. Tiffany joins us right now out of pen out of Northwestern their fabulous NBA program. She's a Boston consulting group and most she's like not every day, but every third day at Highland Park in Dallas. Yeah, I mean that's the way she will. Tiffany, thank you for joining Surveillance this morning. Let's start. There is Luxury fixed, I mean, there's this China. OMG, China is terrible, but

Sure, luxury is one of those categories where based on our recent survey, we are planning on seeing some recovery during the Black Friday season. It was one of the categories that when we surveyed across we saw increase and spend.

Black Friday used to be one hour in front of Walmart exact thousand people and Tiffany says, it's a season helpul.

Yeah, And here's something that surprised me, Tom. In store shopping is making a big comeback as fewer only shop online. Tiffy talk us about that if I had never gone to a store again, I'll be happy.

Well, what we're actually seeing is that most shoppers are planning on shopping both in store and online this holiday season, and the reason that they want to go back and store is they want to touch and feel the products right, they want to be a part of experiential retail. They want personalized help as they shop. And it's really in line with what we've been seeing all year long with mall traffic continuing to come back and store per just is coming back as well as the hybrid shopping channel,

All right, so talk to us about AI. Can AI like kind of make my shopping list for me and kind of go and buy the stuff for me.

AI can definitely do both.

Now that being said, I would say most consumers are still using AI more in their initial shopping research and inspiration, and we actually found that about fifty percent of consumers plan on using AI in this holiday season.

I'm addicted to it. I did have to do a search gyst today. You ready dark chocolate?

Okay?

I know nothing about dark chocolate. I grew up with Bosco. Yes, okay, dark chocolate. I go to Perplexity, Tiffany, dark chocolate, Boom. There's like three types to buy, just like that, Okay, Tiffany. The basic BCG question and Paul brought this up yesterday. What inning are we in for the growth of online, for the growth of Amazon in Walmart. If it's a baseball game Della's, does Dallas have a baseball day in

I think it.

Depends a little bit on what angle you're looking at it from. But if you think about where we are, I would say we're still in the middle of the game.

Now, how are the how are the retailers dealing with UH tariffs here and passing along whatever cost increases they might be bearing. Are they taking it in their margin? Are they trying to pass along customers? How's that playing out here? Because we don't hear as much about teriffs as we did, you know, maybe the beginning of the year.

Yeah, I think everyone's settled into sort of this new norm when it comes to tariffs, if you will, And it's a mixture both definitely, right, They've taken some in their margins, they have passed them along through and for.

This holiday season.

They know that consumers right still have expectations when it comes to discounting promotions, right, and so they're making sure that they can meet those expectations pretty quickly.

Or one final question. Okay, so all of us are buying off this affirm kind of thing where it's set out in payments. I don't know what you call it, like a firm and you know all the others folks. If I go into a given store, they want all my money now or a charge card. But if I buy online, I can spread out the payments. How is it? Where do you see that dynamic in two years?

In five years, sure, we've seen actually a stabilization in the buy now, pay later trend. So while there's still a consumer and still categories that that's going to play a meaningful role. I think we're seeing it balanced with those desires to go in the store that I was talking about and the benefits that you get when you go in store.

Is Highland Park. I've never been Tiffany in Dallas. Highland Park is like that's sort of like where they invented one stop luxury.

Right there, we do have a really lovely shopping center in Highland Park that has a lot of great luxury stores.

Give us one experience. Come on, come on, not using the BCG MX, I mean, what's your favorite store?

Well, I must admit my favorite store in Highland Park is actually a bakery. It's called Bakery, and I love the I love the bakers there.

They make an excellent scone.

Great you get to come back in the show, Michael Barr says, bring her back, Tiffany, thank you so much with BCG Dallas here to get a sense of where we are in this retail season.

It's a journey, she said, Stay with us. More Fromloomberg Surveillance coming up after this.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Applecarplay and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.

For the arguments in the kitchen, out in the back porch, at the Thanksgiving table, Sure where you're getting an evil lie from Grandma about the market. You just wish you were sitting at Thanksgiving with Andrew Slimman, Morgan Stanley investment manager. He writes one of the most intelligent notes on the street. Get it from Morgan Stanley and protect the copyright of all our guests. And he's basically saying, forget market timing.

Well, Tom, Before I begin, I got to say that was the most unique introduction I've ever sived.

So congratulates worst has given me the beverage of her choice before she's trying the mold whatever it is. I'm here continue, Andrew.

So I'll give you the answer if I go to my Bloomberg terminal and I look at what has worked from a style standpoint the last ten years, value growth, dividends. What's worked according to your bloom work, It is momentum number one and revisions number two. Long down the list is things like dividends, quality, value growth. It is momentum

So that's the end of day.

It's a long winded way of saying stocks move with the second derivative, which is earnings revisions, because stock prices in bed today expectations of the future. You don't buy a stock based on what's happened in the past. You buy it based in the future. And if the future looks better than what is expected, stock prices go up. And if it's worse, Tom you know, in other words, I've not since I've been in this business, or stocks.

Don't go up for long when.

Companies are telling you businesses is as.

Good as expected.

So what gives me faith is I see a positive for earnings.

Bottle it. That's the single best idea today.

Just wonderfully, Andrew, Andrew, I guess we're entering I guess what is the fourth year of this current bull market here? So I'm sure you get the questions, how much longer does this thing go? What do we what needs to work to continue this bull market? What do you tell folks these days.

Well, I certainly, certainly earnings have to keep going. The market's not cheap at you know, twenty two times earnings. But you know, I pushed back a little bit on that for two reasons. Number one is, you know, the dynamics of what comprised the S and P today is far more profitable. Companies are far more profitful than in the past, so versus average is a.

Little misleading, uh, you know.

And number two is again, valuations are only as powerful as the denominated which is the estimate, and that's turned out to be too low.

So I think.

There's a good backdrop for equities in the fourth year. You know what's fascinating is when if a bull market makes it to the fourth year. Now, a bull market ends when you have a twenty percent pullback, which we haven't had. Every time the S and P has made it to the fourth year, it's gone up in the fourth year.

It's never had it down year. So that's that's pretty powerful perspective. Four equities Andrew two years ago.

Nice quote from you here, quote Why should I buy equities when I can lock in a five percent risk fee yield? Discuss?

Oh?

I My argument, Tom is the stock market is following a classic behavioral path, which is unfortunately, you know that the only consistency of this business, and you know this bomb as well as I do, is people sell low and they buy high. It's the only only market I know where when prices go down people want to sell.

Well, it's just described by the investment strategy.

Well, it's a triple log cast whatever you have. But look, in twenty twenty three, we had just come off a twenty five percent declining. Was a wonderful opportunity by stocks.

But the reason why we had twenty five percent the climb was man was raising rates.

So suddenly now short term rates look attractive and we didn't want to buy equity and.

We gotta go. Are the Chicago Bears for real?

We're gonna find out tomorrow.

I know my whole family wants to watch for the first time a few years.

So that's that could because that's.

A good thing. And just slimon, thank you so much as Morgan stanleyder just fabulous. Note again, get that note from Morgan, Sandy Joe, stay with us. More from Bloomberg Surveillance coming up after this.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern well Cocklay and Android Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.

Stephanie Chen joins us right now. She's absolutely definitive on this at Trinity Investments, Los Angeles, and I want to really emphasize as folks, if you go to Michigan State in a hospitality Paul, I don't know what that's like. It's like, you know, religion at the Vaticates or something like. It is the program in America for the hospitality business. Stephanie in your racket, did everybody get the growth of luxury wrong? Did you see it coming? Or is it like OMG, now it's here.

Yeah, No, appreciate the time and thank you for having me. You know. I think from a luxury perspective, the trends were always very positive, right. I think pre COVID there was always a sense of you know, that type of demand being there. I think as you noticed, you know, from a post COVID environment, the need for experiences has

What does it mean? Like like Paul's the one I don't have a life, Stephanie Sweeney's hit every golf course like the jew Marriott Phoenix doesert Rich? Is that in your scout steal? Right? I mean these places have become ginormous destinations, right, yeah.

Yeah, no, correct, And I think there's you know, these destination what we like to call destination markets, are really where we focus our attention just because again, like you noted, they're just such a diverse, diversified demand base.

Right.

You have the leisure component, you have the group component, you have the corporate component, and so I think you know, from a leisure perspective, what's really driving customers and consumers to travel is the experiences and what you're offering, because I think right now what's differentiating the product is what you can offer from an experiential perspective.

Stephanie. So we're at Trinity Investments. Where are you guys allocating your capital in the hospitality space these days? Yeah?

So, like I noted earlier, what we like to call destination markets whereby you know, whether that be resort, urban, really places where you can focus a lot of the kind of group leisure in corporate demand. So a lot of the hotels that we focus on are let's call it three hundred or four hundred rooms and above. And the reason for that is because you know, there's an ability to yield, manage the properties and kind of you know, when the leisure component is potentially on the lower side,

In New York City, for exam, I'm wondering if it's another a lot of boutique hotels coming here with names like you know, the Delano for example, trying to rebrand properties here in New York and maybe brands that are working in other parts of the world trying to bring their brands to New York and other urban markets. How do you guys do you invest in that?

Yeah, I mean, look, the boutique segment is definitely one that has been quite profe and I think a lot of that it goes back to the whole experiences, right, and I think what the boutique segment has done really well is to provide this different experience relative to kind of the different niche that they're able to offer. Unfortunately, you know, because of the scale of what we like to focus on, and because we are value add investors, we tend to focus on these larger assets that aren't

Circle back to the airlines I mentioned ed Bastian and Delta airlines. I mean, in your world of luxury boom, does that filter right back into the airlines where there's fewer and fewer economy seats and more and more fancy seats.

Yeah, I mean, look, there is, and there isn't. I would say from a supply demand fundamental perspective in the luxury space space, it's still quite favorable, right, And what I mean by that is there's still not a lot of new supply relative to that kind of let's call it luxury sector, and so what that does is obviously deem really well from a fundamentals perspective for the existing

Stephanie, thank you so much. Stephanie Chen with is Trinity Investments, Los Angeles.

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