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Gene Monster. There seems to be a reaffirmation of free cash flow and profit belief among MAG seven this morning over at Looke Capital. You know them well, Genio invented it. Young Kim goes out to a five point fifty price target on Microsoft. Is it real now? Where there's a new persistency of belief in MAG seven free cash flow.
That's a good way to put it, And maybe another way to put it is that we knew that these businesses had great free cash flow, typically generate between eighty and one hundred billion per year. But what we saw last night from Microsoft to Meta is that their businesses are resilient. Resilience in the face of these tariffs. Is that Meta raised their revenue by three percent. That was in the midst of this is for the June quarter,
a headwind that's coming from China e commerce. They probably would have raised it by three three or or four
or five percent if not for that headwind. And so to that resiliency of cash flow, Yes, as part of the story, there was this period of doubt that started with deep Seek at the end of January that I think there's this kind of realignment now we're seeing today with investors understanding that these companies are just this incredible cash machine and most likely that benefit is going to continue in the future.
Gene, you know, before I guess the last three or four months, when we've all just been focused on tariffs, we actually were talking about growth stories such as the cloud, such as AI. Given what you saw from Microsoft, given what you saw from Meta talk to us about where tech spend is today, is that still a growth story that investors should be focused on.
Definitely.
There are two kind of forces in play last night. One was in terms of what the tech spend is, and what we heard from Microsoft was that their numbers were actually down sequentially on that CAPEX number. Some of that this is for the March quarter. Someone was related to timing to some of these data centers, but they did also say that they expect next year that apecks to grow kind of in line with revenue. And then of course Meta cranked it up by nine percent. That
was a big That was a big surprise. But there's a story here kind of below the fold that I think is really important, especially when it comes to Meta, and last week we had our AI some we had a representative from open Ai as one of the fireside chats and asked the question about, like, what is the substance behind AI from a return on investment perspective, and his answer was that they have seen it in the coding side and also customers service. And that's, from my perspective,
a pretty disappointing answer relative to all this anticipation. But when I saw the Meta results last night, saw this increase in revenue and also what's happening with their daily active users. It grew six percent year every year. This is three point four billion people, sixty plus percent of the world's Internet population on a daily basis. Part of the reason why this is happening is AI is actually
impacting their business. In other words, I think Meta is the best example of how AI can have a real impact on an investment at scale.
Gene Monster with US Leland Miller to come on China, but right now gene Monster with deep Water thrilled to have him on this morning. Migrate in the Cloud, Hey, you U stay in the cloud? Gen Monster talk about Amazon today and after seeing Microsoft, you're not counting cardboard boxes at Amazon, You're looking at their cloud.
Business right Definitely I mean, we've seen good cloud numbers from Google and as you're last night, and it better be good at this point for Amazon, and it probably will be good. And part of the reason why it probably will be good is we're seeing this surge in demand from Generator AI. It's increasing usage at a bigger rate. So I think that AWS number is going to be a great number tonight for Amazon.
Gene Munsters spending time by mister Bezos Yatchett. Yesterday, Joe Matthew Balance of Power in conversation with the Senator from the Commonwealth of Massachusetts. Here is Elizabeth Laurn with mister Matthew.
What Donald Trump is saying is if the American people can see clearly what his tariffs are costing them, that creates a real problem for Donald Trump and for the Republicans in Congress. So his solution is not to do something more sensible on tariffs. His solution is to try to end access to the information and to persuade Jeff Bezos that he needs to erase that information. And yes, I want to hear about that conversation. In fact, I want to hear about all of the conversations.
Senator Warren, the Commonwealth of Massachusetts. Gen Monster, I know you're going up in the rocket the next time the Bezos term rocket. Let me just cut to the chase, Geem Monster, is Jeffrey Bezos? Is he running Amazon?
Still? Simple answer is yes, as as chairman and as founder. I think he has an outside has influenced much more than Jasse and so I think the answer is that the buck does stop with him, Jamie.
That's short answer there. He really doesn't want to talk about it, that's right.
Yeah, Hey, g we're going to hear from our good friends in Cooper Tino and their results. What do you expect? What do you need to hear from Apple and Tim Cook? As a again, try to navigate what is a suddenly a very you know, I guess uncertain global economic outlook.
So the numbers, I've been watching this company for twenty plus years, and these numbers are less important tonight as
far as the actual reported numbers. It's more about the structure that they're going to lay for how they're going to navigate what's happening with tariffs and production, and how they're building out their AI and so very unique setup where if the iPhone number is good, that would be a positive impact on the stock if it's bad, a slight negative, But for the most part, investors are looking much further down the road, and this is a pivotal
moment around the company. I would say this related to what's going on on the globalization side, how that impacts Apple, and separately in terms of what's going on tariffs. Those are forces that are hard for Apple to control. There is one piece that and they will likely sort themselves out. My sense is this year. But there's one piece that I think investors have been penalizing Apple for that will
come up. This will be an a topic tonight that I think there is generally a misunderstanding from investors, and that piece is Apple behind an AI. The answers yes, and how much are they being damaged by that? And I think that the answer is currently almost not at all. And part of the reason is that they really have three years to sort this out. When it comes to Apple Intelligence, when I say sort of out, I mean provide the features that give it punch and so their
customers aren't going anywhere. And so when I think, Paul, when I think about these results tonight, I'm more cute into how they're going to fix Apple intelligence over the next two three years versus the next two or three quarters.
Okay, Gene, what I want to do here is I got a seguity and the Leland Miller on the Beige Book and all the brilliance of China in that. So we're going to do this with Gene Monster right now. Gene Monster. I don't think this is in the zeitgeist. Tim Cook, based on my amateur take, is the number one supply chain expert in American business out of Douke All that this is the guy is more knowledgeable about
Pacific rim get the stuff from there to here? Is there a lack of confidence in Tim Cook's ability to stick to survive these supply chain disruptions.
There is one hundred percent confidence in Tim Cook's ability to make the best out of an extremely difficult situation. But even his magical ability to increase gross margins by using better manufacturing over the last decade, even that power is small relative to the forces of what these tariffs could mean. And I'll just kind of put some briefly
into context. Is my sense is that these tariffs, when it comes to Apple, there's still mixed messages coming out of the White House in terms of how Apple's going to be impacted by that, My sense is that they're probably going to shake out somewhere between a ten and twenty percent tariff. And if that in fact ends up being the case, even with Cook's masterful use of the supply chain, They're probably going to see some diminishing of gross margins and it probably goes from call it forty
percent forty one percent. They're probably going to lose a couple percent on that, call it thirty nine, and so that is a step back. But I just want to put some context when we hear about all this, the versus the Tim Cook, the levers that he can pull, there are some limitations to it, and that's why I think that I just like applaud dan Ives and him standing up and saying like, we got to get this thing figured out. And what figured it out means is
just some clarity. And ultimately I think that that clarity is going to be twenty percent, and it's going to be a little bit of an impact. Again, doesn't change the long term trajectory of the business, but it's something that investors are focused
She monster, thank you so much, Managing partner Seatporter Asset management,