Google Surges on Cloud Growth, BYD Tops Tesla on Revenue | Bloomberg Technology

Google, BYD, and Supermicro News

• Google's shares have surged due to significant growth in its cloud business, attributed to the success of its AI initiatives. (36s)
• BYD has surpassed Tesla in quarterly revenue for the first time, marking a significant development in the competition between the two electric vehicle giants. (39s)
• Supermicro's shares have plummeted by over 30% following the resignation of its auditor, EY, which cited concerns about the company's integrity and management. This marks the largest drop in Supermicro's stock since 2018. (1m16s)
• EY's resignation was based on information that led them to believe they could not continue their audit, and they expressed concerns about not receiving all necessary information from Supermicro's management. (1m46s)
• Supermicro has a history of accounting issues, having settled claims with the FCC in 2020 and facing accusations from a former employee in April of exaggerating or misstating revenue. (3m28s)
• The company is significant in the AI infrastructure sector, as it provides powerful servers needed for advanced AI workflows, alongside HP and Dell. This has led to a substantial increase in Supermicro's revenue, despite ongoing debates about profit margins. (4m4s)
• Supermicro does not expect recent issues to lead to revisions in previously issued financials. (4m46s)

AMD and Alphabet's Performance

• AMD has disappointed the market with its revenue growth pace, particularly in data centers and AI, despite meeting fiscal quarter expectations. The company had projected $2 billion from its AI focus by the end of 2023, later increasing this to $5 billion, but this was still not enough to satisfy market expectations, leading to a nearly 10% drop in stock value. (5m28s)
• Alphabet's stock rose by 5% due to the positive impact of AI on its business, with a 35% growth in cloud revenue, generating $11.4 billion in Q2 revenues. The company is increasing its capital expenditure, particularly in cloud offerings. (6m10s)
• Alphabet is using AI to enhance productivity and reduce expenses, which is already showing results. The company has maintained its competitive edge in search offerings, with AI helping to answer more complex customer queries. (6m47s)
• The discussion anticipates similar trends in AI-driven productivity and efficiency impacting revenue growth for other tech giants like Microsoft and Amazon. (7m32s)

Market Expectations and AMD's Opportunities

• AMD is expected to achieve about $12 billion in data center sales this year, but there is a need for the company to catch up with market expectations. Analysts highlight opportunities in the Middle East and potential significant purchases by Meta. (7m55s)
• The market's expectations may be too high, with significant developments anticipated by 2025. Managing market narratives is crucial, as the market often demands more than what is currently delivered. (8m11s)

Market Trends and Investor Focus

• Google has indicated that the election period was beneficial for its search business and other areas. (9m5s)
• Investors are focusing on long-term growth in the technology sector and risk assets, with positive economic indicators such as a 2.8% GDP increase and rising housing sales, despite potential political risks. (9m8s)
• NVIDIA is considered a crucial investment due to its future potential, with its stock trading at 49 times future earnings, indicating a positive outlook for the technology sector. (10m23s)
• Reddit's stock has seen significant growth, with a 41% increase in its fourth-quarter outlook and a strong ad business, despite having a small user base. (11m4s)

BYD vs. Tesla and EU Tariffs

• BYD has surpassed Tesla in quarterly revenue for the first time, although the comparison includes hybrid vehicles, highlighting BYD's dominance in the Chinese market. (11m39s)
• The European Union has imposed tariffs of up to 45% on Chinese electric vehicles, increasing trade tensions between major export powers. (12m8s)
• Despite BYD's revenue milestone, Tesla remains more efficient on a per-employee basis, earning six times more per employee than BYD. (13m24s)
• BYD is leveraging its vertical integration and efficiency to scale up car production globally, which poses a challenge to U.S. and European automakers struggling with the electric vehicle (EV) transition. Tesla and BYD are leading in valuations due to their profitable paths in the EV market. (13m52s)
• Tesla's gross margin is just under 20%, and it is often seen as an AI and robotics company, whereas BYD focuses more on the car itself and is enhancing its distribution skills, particularly in China. (14m44s)

China's Technological Advancements and US Response

• Despite U.S. tariffs, export controls, and financial sanctions, China is advancing in key future industries, achieving a global lead in five areas, including drones, high-speed rail, EVs, solar panels, and some materials, while catching up in others like semiconductors and AI. (15m43s)
• China's industrial policy, which includes subsidies and state-backed investments, supports industries like the EV sector, benefiting companies like BYD, which has become globally competitive. (17m24s)
• The U.S. is attempting to limit China's technological advancements, particularly in AI chips, through trade restrictions, but there are concerns about China's progress despite these measures. (18m1s)
• The US has concerns about China's industrial policy, particularly in the semiconductor industry, and has implemented export controls to limit China's access to certain technologies (18m55s).
• China has responded to these controls by championing specific companies, such as SMIC, which receives heavy subsidies, and Huawei, which is also state-supported (19m10s).
• Research suggests that US export controls have done less damage to China's semiconductor industry than expected, and China is making strides in the sector, although the quality of these strides is debatable (19m31s).
• There is still leakage in the export controls, with reports suggesting that some Chinese companies are finding ways to obtain restricted chips through carve-outs (19m46s).

EU Investigation, AI Chip Development, and Tech Company Updates

• The European Union is investigating PDD, the parent company of Temu, over concerns about counterfeit goods and lower-priced goods in the EU jurisdiction (20m10s).
• X AI is seeking funding, with a valuation of $24 billion, and is working with Broadcom to develop a custom chip focused on running AI models (20m48s).
• OpenAI is also working on a custom chip, which will run software that responds to user requests and is expected to be in high demand (21m8s).
• Apple has unveiled an updated MacBook Pro lineup with speedier processing and AI capabilities, as part of a flurry of upgrades this week (21m19s).
• The company also released Apple Intelligence earlier in the week (21m29s).
• AMD's shares are down 10% after the company's earnings report failed to persuade investors that it is bridging the gap to NVIDIA (21m46s).
• Alphabet's shares are up 42% due to strong growth in cloud, driven by AI, which is the biggest jump since March 21 (21m54s).
• Snap's shares are up 14%, with the company's subscription growth and user base expansion being key factors (22m8s).
• Reddit's shares are also up, with the company's strong outlook for the holiday quarter and data licensing side with AI being key factors (23m29s).
• Supermicro, a server maker, is down significantly after its auditor resigned, with the company's shares experiencing their biggest drop since 2018 (22m42s).

Snap, Reddit, and Meta's Growth and Strategies

• Snap is experiencing growth outside the U.S. and is seeing an increase in subscription revenue, which is estimated to be between $100 million and $123 million. The company has invested heavily in artificial intelligence, which is enhancing ad performance and video content recommendations. (24m2s)
• Reddit is expanding its advertising reach by targeting ads through artificial intelligence and machine learning, and by offering ads in multiple languages. The platform's unique approach involves targeting based on topics rather than social media profiles. Reddit's partnerships with OpenAI and Google for data licensing are contributing to its revenue growth. (24m51s)
• Despite having fewer users and lower revenue compared to Snap, Reddit's market capitalization is similar, largely due to its data licensing business, which investors see as having significant potential. Some investors project this could generate as much as $6 million annually. (26m12s)
• Meta is expected to exceed revenue expectations, continuing its trend of double-digit revenue growth in recent quarters. The company is focusing on AI advancements, including a new AI video generator and tools for creators and advertisers. Meta's AI assistant, which has 500 million users, is also a key part of its strategy. (26m57s)
• Investors are concerned about the amount of money being spent on infrastructure by technology companies, particularly in the context of AI investments. (27m58s)
• Analysts note that while revenue from AI is not yet significant, hyperscalers like Microsoft are seeing accelerated booking numbers relative to their capital expenditure, indicating potential future returns. (28m31s)
• Microsoft has increased the cost of its Office software, which has resulted in significant revenue, and despite some headwinds, the company is not losing money. (29m6s)
• There is excitement about Microsoft's ability to generate revenue from AI, as evidenced by improvements in margins and incremental revenue. (29m44s)
• Meta is exploring AI applications and is expected to gradually ramp up its business model, which is primarily ad-driven, to enhance user experience and attract more users. (30m10s)
• Meta is reportedly working on developing its own real-time search capabilities to reduce dependency on Microsoft's Bing, highlighting the competitive dynamics between the two companies. (31m52s)
• The search experience on certain platforms is currently suboptimal, and there is potential for improvement, although it is not expected to surpass Google Maps in functionality. (32m27s)
• Alphabet is benefiting from its AI investments, with increased query volumes and usage across various platforms, indicating that major tech companies like Amazon and Microsoft continue to grow due to their capital, user base, and data. (33m23s)
• There is a discussion about the potential impact of regulators on the growth of large tech companies, with a suggestion to invest broadly across major tech names. (34m39s)

Election Monitoring and Immigration Debate

• Conspiracy theorists who believe Donald Trump won the 2020 election are organizing on Telegram to monitor polling places in swing states, which some argue could lead to voter suppression. (35m16s)
• Telegram, a cloud-based messaging app with nearly one billion users, is gaining attention in the U.S. as it lacks the moderation found on platforms like Facebook and Twitter, allowing for the spread of extreme and radical content. (36m16s)
• Some groups are circulating petitions and calls for volunteers to stand outside ballot boxes in key election areas. Telegram's press team did not respond to requests for comment. (36m57s)
• Immigration is a hotly contested topic in the election, but a recent poll shows that the majority of both Harris and Trump voters support allowing high-skilled immigrants, such as doctors, engineers, and computer scientists, into the country. (37m27s)
• There is a common understanding among voters from both parties that high-skilled immigration is beneficial for the United States, as evidenced by foreign-born CEOs at major companies like Google. (38m11s)
• The upcoming election is expected to be consequential for immigration policy, affecting both asylum and high-skilled immigration, with candidates likely to implement very different policies impacting companies' talent pipelines. (38m38s)
• If President Trump is re-elected, there could be travel bans similar to those in 2016, potentially affecting the ability to bring new AI talent into the United States, especially from certain nationalities or visa categories. (39m6s)
• Approximately two-thirds of graduate students in AI fields are foreign-born, and there may be restrictions on hiring foreign-born talent from U.S. universities, exacerbating the current challenges in the immigration system. (39m50s)
• Top technology companies, such as Amazon and Apple, are beneficiaries of H-1B visas and are actively preparing for different immigration policy scenarios in the upcoming election. (40m13s)
• Companies are operating under a dysfunctional immigration system and are preparing for both potential outcomes of the election, with plans in place to react to changes in immigration policy. (40m36s)
• During the lame-duck period, there may be a small window for the Biden administration to implement policies that could benefit certain companies, although the outcome of the upcoming election remains uncertain. Companies are preparing for various eventualities, including challenges related to foreign workers traveling during holidays. (41m12s)

Alphabet's Earnings and Cloud Industry Dynamics

• Alphabet's recent earnings report showed a significant beat, with $2 billion added to the top line, driven by the integration across its family of apps. This positive performance is not expected to be mirrored by Microsoft or Meta. (42m26s)
• The market share split in the cloud industry could change due to Google's progress, as they are utilizing their TPUs for training, potentially allowing them to generate more revenue compared to other cloud providers. The performance of Azure, particularly if it achieves more than 41% growth, will be closely watched. (43m6s)
• The focus remains on the major tech companies reporting earnings this week, with anticipation building for NVIDIA's upcoming report. (43m36s)