Bloomberg Audio Studios, podcasts, radio news joining us now to get out to the tech earnings in the tech space. Deep water asset managers Gene Munster can't say enough about Gene's commitment to Bloomberg surveillance in combination with Dan Eyves Eyes Monster Munster Eyes we saw on July fourth with Gene, thank you for that commitment to doing that.
You're on it, love it, Gene.
I brought up Microsoft, which I never look at, and they got they're modeling twelve thirteen percent revenue growth. Do you have a conviction on mags seven blended revenue growth? Does it sustain or is there a direction to it?
Well, I can tell you what the numbers are that basically, if you look at everything, with the exception of Nvidia, the street expectations for this year is thirteen percent growth and maybe as expected a similar growth rate for twenty twenty six. Now, typically when you see rising numbers, the comps get more difficult and the street anticipates a deceleration and growth, and what we're seeing is kind of the opposite.
This is kind of a rare chapter. My sense is that next year, counter twenty six is going to surprise to the upside, and I just want to caution is when the market set all time highs, I think that that kind of gets people a little bit more enthusiastic,
and I'm backing out what the market's doing. I just want to kind of zero in on what the fundamentals are, and the bottom line is that these companies are just fundamentally having more success and squeezing juice out of their existing business and just adding additional spice to their growth. And so Tom, I feel really good about how these companies are going to play out. The one I would
mention that I'm less optimistic. You mentioned Microsoft. That is one that I don't think has the dynamic upside that a lot of the other big tech companies do.
Using that as a model, yet a COVID recovery. Ye had a twenty twenty two pause and then up, up and away with the YARDNNI and compore October twenty twenty two bottom geene Monster. Do you, as a tech guy, do you extrapolate that trend from the autumn of twenty twenty two.
I do.
I think that when you uh, there's gonna be ebbs and flows in terms of kind of optimism and pest, sex, skepticism, skepticism, the Liberation day back in April, optimism we're at now. But if you if you step back and look at the broader trend over the next three years, Let's say I think that this is gonna continue to be a bull market. I think it's gonna go materially higher, and ultimately I think it's going to end in a in a bursting of a bubble.
Uh. And the reason why I mentioned that kind.
Of that that that that rough edge of kind of how this plays out is that if I'm right about what the next three years look like and we get just across the board optimism levels that I think are hard to kind of comprehend, I think that ultimately there probably is some sort of bubble bursting. But Tom, to answer question, I think that you know, we're very.
Optimistic deep water.
We are about seventy percent of our investments are AI related and I sleep well at night.
Jem, you said you were maybe a little bit cautious on Microsoft that looked at the A and R function for Microsoft sixty five buys seven holds zero cells. What's your current view of Microsoft here?
You just have better places to invest in they've study revenue. There is a lot of that predictability, which is attractive. I just maybe to give some context to why the stock is working.
That piece is attractive.
And second is Microsoft has probably been the most forward thinking company when it comes to using AI to save costs. They've talked about this five hundred million dollars in annual savings just in terms of coding moving that over to the machine. And so I think that investors are expecting some margin expansion. So I think that, you know, that's the reason why it's moving up. But the reason why I.
Just think there are better places to be is that.
Ultimately the upside to the numbers, if you look at across the rest of the mag seven, I think there's just more upside to you know, Microsoft, for example, is not going to grow at twenty percent, Micro at fourteen and a half percent, whereas you have a company like Apple, surprisingly the streets looking for mid single digit growth next year and you could see percent growth.
Geo's in a Klaim Bloomberg food court the other day looking at the Red Sox box scores. I don't know if you're word gene, but the Red Sox have won ten in a row and one of our fancy artificial intelligence people walked up to me and said, you know, Tom, you need a brief So I got briefed. Do you parse a difference between Chat, GBT, Google, Gemini? Help me here? Anthropic perplexity is something? Are these all equal things? Gene
Munster or for our listeners and viewers? Do we need to learn nuances of them?
Well, the answers, it's nuanced.
And this is something we're actually working on a bigger project right now. We're going through and testing these different models, and there are there's like broadly accepted testing benchmarking like chat Bottterina for example, which is widely recognized, but there's a lot of gamification in terms of how the companies go up against those those benchmarks. And then there's just the coding side, how well there's a code, And then there's just like the real world, like does give you
the answer you're looking for? And it turns out that each of these models, the exception of Lama Lama is pretty weak and so but if you look at the other four primary models, they all have kind of different strengths. And so ultimately is that I think of AI as more of like a personality is that the world isn't going to be centered on one personality.
We won't want that.
And so each of these models as a slightly different personality and slightly different strengths. And so that's what we are seeing is if you're going to say, what's like the BS model kind of putting everything all together, it's it's probably open AI GPT today, and then GROC and Gemini kind of close behind.
So Gene today.
The news is on the chip side. The US government says, I don't know in Vidia AMD they can start sending some of these advanced AI chips to China. What's the backstory there with stocks are trading up on this news.
Well, it's big news obviously from Vidia, and they talked three months ago about this impact being a negative fifteen percent.
To the overall growth.
So if you think about the street numbers, maybe just to Paul the kind of zero in on what's going on with Nvidia is company three months ago says we can't sell these age twenties to China and that's going to cost us fifteen percent of our revenue. The reason why that the street numbers are not going to go
up by fifteen percent today is twofold. Number one is the four analysts that cover in VideA, about eight of them had anticipated that these curbs be released in this current quarter, and so you saw some of the analysts already expecting this announcement. And then separately, is that this is good news. It's good news for Nvidia, but like the whole geopolitical conversation around how chips play into rare minerals and all.
That, that hasn't been solved.
And if one thing we've learned over the last three months is that you really can't take one development in a day and extrapolate over the next couple of years. So that's why this stock's up five percent a day, not fifteen percent.
Quickly, Let's do that with the Apple. Why not? Okay, chine monster on Apple? Are they going to surprise people with a plus plus here in the announcement?
You know?
As far as like the geopolitical side, like announcements there, I don't know if anything's going to happen there. I can say this is that if you look at the mag seven and look at where is the likely most upside in the September quarter, so pretty narrow near term focused.
Apple's at the top of the list.
The streets looking for flat revenue growth in the September quarter, They're continuing they're going to benefit from that huge thirty seven percent growth back in twenty twenty one. Of those upgrades are going to be coming in. It's not flashy, it's not AI. But in terms of going into this print and the commentary about the September quarter, I think Apple is gonna show well.
Jane, thanks for the brief. She Monster with us Steve Water on technologists