PC Sales, SoftBank and Holiday Box Office Trends | Bloomberg Technology

PC Market Slowdown and Tech Selloff

• PC sales are stalling, causing Dell's stock to fall 12%, as the recovery in PC demand is not happening at the anticipated pace (1m49s).
• The stalling PC sales are attributed to consumers and businesses being happy with the laptops they purchased during the early days of the pandemic, with many still using hardware from a couple of years ago (2m53s).
• The market is experiencing a selloff, with big tech selling off the most, and NVIDIA down more than 3%, as the Federal Reserve may be entering a rate-cutting cycle (1m28s).
• Crowdstrike's shares dropped 4.5% despite beating earnings expectations, due to lower-than-expected earnings per share estimates, indicating the company may not be out of the woods yet (3m56s).
• Crowdstrike experienced a global tech outage on July 19 after pushing out a software update, but sales do not appear to have been impacted (3m40s).

OpenAI Investment and Box Office Optimism

• SoftBank is looking to boost its stake in OpenAI by buying $1.5 billion in shares from the startup's employees (47s).
• The holiday box office season is expected to be strong, with movies like Wicked and Gladiator II kicking off the season (53s).

Economic Data and AI Impact

• The economy has a strong set of data, with PCE growth coming in at 2.8%, which may lead to a more cautious Fed and a rate-cutting cycle (1m11s).
• The impact of generative AI on demand for PCs and cybersecurity is still being understood, with companies like Crowdstrike focusing on AI updates and products (5m13s).
• There is a huge expectation on generative AI, with a significant build-up creating demand for various new technologies, including PCs and smartphones, despite lackluster numbers today (5m20s).
• The integration of AI on the edge, such as in the iPhone 17, which is expected to increase memory by 50%, is driving demand for advanced technologies like high-bandwidth memory and equipment from makers like HP (5m51s).
• The demand for advanced packaging and equipment is also benefiting actual equipment makers, who see increased demand for their products (6m18s).
• The infrastructure buildout is crucial, with an S-curve up, and interesting investments are being made in software, particularly in generative AI, with companies like Crowdstrike developing products that utilize AI (6m28s).
• Crowdstrike's product helps find problems or data-driven information and can be used within generative AI, making it an interesting opportunity (6m47s).

Investment Opportunities Beyond Tech

• Valuations are affecting optimism about AI adoption, but there are opportunities beyond tech stocks and information technology stocks, with interesting valuations in areas not necessarily related to IT (7m21s).
• Examples of these opportunities include equipment makers that play a big role in the US re-shoring, such as Intel and TSMC, which are receiving huge subsidies and investments for building out semiconductors (8m22s).
• Industrial robotics within these factories is also an area of interest, with companies like Micron, TSMC, Intel, and Samsung investing heavily in building out factories and utilizing robotic arms to carry heavy chips (9m2s).
• Robotics is an area where reimagining is expected to happen, with opportunities in industrial robotics, factory arms, and automation through software, with a growth rate expected in the semiconductor industry from 2021 to 2030 (9m45s).
• The automotive and industrial sectors are driving a lot of M&A, with even Synopsys involved in the space, and the hardware is being supplemented more and more with software and data-driven decisions, making the field of robotics interesting moving forward (10m13s).

Infrastructure Software Company's Performance and Outlook

• An infrastructure software company reported fiscal first-quarter results and gave an outlook seen as positive by analysts, but shares are trading lower (11m13s).
• The company's CEO stated that they had a good quarter, exceeding all guided metrics, and raised their free cash flow guide, but had a weak federal business that is usually the peak business for the federal government (11m38s).
• The CEO expects federal spending to return to normal levels in Q2, but is cautious about the federal business for the rest of the year due to the new administration coming in January (12m2s).
• The company is being cautious about the federal business overall for the rest of the year, which is one of the reasons they kept their full-year revenue outlook the same (12m17s).
• The CEO believes that technology spending will be more immune to belt-tightening with the new administration, and that software spending will be better because companies have to invest in key initiatives (12m54s).
• The company's software allows customers to run it on any server, providing flexibility and freedom of choice, which helps them diversify from any supply chain shortages (14m16s).
• The company's focus on generative AI is still in the early stages, and most of their customers are still in the early stages of deploying and adopting generative AI (15m16s).
• The CEO believes that most customers will be consuming generative AI models and using them for fine-tuning and inferencing to get real productivity gains, such as improving customer support and getting better means to do fraud detection (15m25s).
• Companies around the world are trying to build generative AI inferring applications, and a simple platform is being provided to help them build and deploy these applications, with the market still in its early stages and most companies incubating these applications, although some have gone to production, with 2025 and 2026 expected to be key years (15m57s).

Trump Administration's Trade Policies and Impact on Companies

• President-elect Donald Trump's pick for the top trade position, Jamison Greer, sees China as a generational challenge and has advocated for a strategic decoupling from the country, having played a key role in imposing tariffs on China during Trump's first term (16m51s).
• The selection of Greer signals the direction of travel for the upcoming administration, which may be harder for companies to avoid, and could mean Trump may not temper his desire to impose tariffs of up to 60% on Chinese goods (17m22s).
• Greer has floated the idea of revoking China's permanent normal trade relations status, which would put China on the same footing as Russia and Cuba and subject Chinese goods to a range of tariffs (18m0s).
• This move would have huge ramifications for companies like Apple and Intel, and even venture investors, and could lead to expanded export controls on tech products (18m32s).
• CEOs like Tim Cook may need to intervene personally with President Trump to seek exemptions, given Trump's willingness to engage with CEOs and businesses (19m9s).
• Top executives are expected to try to get Trump's ear, as well as that of Jamison Greer and other top economic officials, to discuss the implications of the new trade policies (19m23s).

Elon Musk's Role in Government Efficiency

• Elon Musk is set to take on a new role as the head of the Department of Government Efficiency, with an unofficial Trump group test aiming to identify $2 trillion in spending cuts, and Musk's approach is expected to be similar to his strategy at Twitter (20m0s).
• Musk has already announced plans to eliminate work from home, and his approach is expected to be similar to his strategy at Twitter, where he has implemented significant changes (20m35s).
• Elon Musk is known for making dramatic cost cuts and headcount reductions, but this approach may not be suitable for the US government, as seen in his previous experience with Twitter, where he succeeded in reducing the budget but broke many things in the process (20m43s).
• The US government is a much larger and more complex entity than Twitter, and slashing costs quickly may not be the best approach, as it may lead to unintended consequences that cannot be easily fixed (21m42s).

SoftBank's Investment in OpenAI

• SoftBank is looking to boost its stake in OpenAI, which will be discussed further (22m7s).

Crypto Regulation and Investment Under the Trump Administration

• The relatively underfunded regulator, the Commodity Futures Trading Commission (CFTC), may see its jurisdiction expand dramatically under the incoming Trump administration, including oversight of major tokens such as Bitcoin (23m24s).
• Bill Harris, CEO of Evergreen Wealth and former CEO of PayPal and Intuit, believes that the regulatory burden for crypto investments may be reduced under the new administration (24m0s).
• PayPal has been making inroads into the crypto space, offering it as an option for users, but Harris does not think it has become a ubiquitous asset class yet (24m21s).
• Harris advises trying to anticipate where the regulatory environment is going and making changes accordingly, rather than waiting for the administration change (24m0s).
• In terms of talking to people in government, Harris emphasizes the importance of making contacts with decision-makers, while for employees, he focuses on investment taxes and expects more of the same rather than big changes (25m11s).
• Crypto is a mess from a tax point of view, as it is not treated like currency but as property, resulting in capital gains tax when sold at a gain (26m18s).
• Capital gains tax can range from 20% to 35% if not timed correctly, but there are ways to reduce, offset, or eliminate it by being smart about it (26m51s).
• Charitable giving and family gifting are ways to eliminate capital gains tax, and using a donor-advised fund is the best way to do charitable giving with crypto (27m30s).
• Donor-advised funds allow users to put crypto into the fund, take a tax deduction, and then decide when and to whom to donate, without having to pay unrealized capital gains tax (28m21s).

Business Concerns and Market Developments

• Business leaders are concerned about confidence building in the U.S. economy, with tariffs being a major challenge that could accelerate inflation rates and drive interest rates (28m52s).
• The U.S. economy is believed to be strong, but tariffs and inflation rates are major concerns for investors and businesses (29m2s).
• Black Forest Labs, a German AI startup, is in talks to raise up to $1 billion from investors, less than four months after its launch (29m44s).
• Delivery Hero boosted the public listing size of its Middle Eastern unit by up to $2 billion, which could be the United Arab Emirates' biggest listing of the year (29m52s).
• Apple is missing out on the 2024 smartphone market rebound, with barely managed growth despite smartphone sales declining, but remains the profit leader over its rivals (30m7s).
• The NASDAQ is under pressure, with NVIDIA being the biggest point dragging it lower due to concerns about the Fed cutting, and another company is having issues with auditing and reporting (30m25s).
• A company that went public via SPAC is currently unable to file its 10K on time, resulting in a 40% decline in stock value over the last two trading days, and a lowered revenue forecast of $480 to $500 million (30m57s).

SoftBank's Investment Strategy and OpenAI's Future

• SoftBank's Vision Fund had flipped this company and is now aiming to increase its stake in OpenAI by acquiring up to $1.5 billion, according to sources (31m13s).
• SoftBank has been relatively quiet after a big surge from 2017 to 2021 but is now actively investing, particularly in artificial intelligence (31m38s).
• SoftBank has an arrangement for a secondary share sale from OpenAI that will free up $1.5 billion, allowing them to invest in the transformational company (32m4s).
• OpenAI's CEO, Sam Altman, has talked about doing secondary share sales regularly, which can help with employee retention, and it's unlikely that OpenAI will IPO next year (32m36s).
• Companies like Striped have stayed private for an extended amount of time, and this secondary share sale is probably the best path for OpenAI as far as employee retention is concerned (32m46s).

Venture Capital and Space Mining

• , a venture capital firm, has made investments in space companies, including those focused on mining resources in space, and is looking to build a new ecosystem (33m35s).
• The firm's co-founder, Katelin Holloway, believes that understanding what it takes to be a great founder is crucial, whether building a chocolate bar or a reusable rocket (34m19s).
• The business opportunity and valuation in space mining are fantastic, but it comes with bigger scale risks, and the economy and times we are living in today make it more feasible for early-stage firms to invest in these companies (34m34s).
• SpaceX and Blue Origin have been charting the path from the private sector, allowing for better understanding of the technology, and it's likely that investors will see returns within the next 10 years (35m10s).
• The Trump administration may have provided help from a regulatory perspective, and the beautiful thing is that the technology is finally coming to the forefront (35m52s).
• Startups are more agile and their founders are not afraid to take big swings, which is a luxury that larger companies like SpaceX no longer have, and it is the youngest companies that will take advantage of new technologies and build new things (36m5s).
• Venture capital firms are looking to invest in deep tech and are sitting side-by-side with larger firms, and there is a lot of committed capital to areas like AI and climate tech (36m51s).
• The evaluation of AI companies is competitive, and many venture capital firms are looking for obvious reasons to invest, but they are also looking to deep tech in a way they have not before (36m59s).
• The power of selection is important in early-stage investing, and understanding where the people component meets the product is crucial, and the expectation is that companies will move on to later rounds and take it all the way (37m44s).

Black Friday Streaming Deals and Legacy Media Shift

• Black Friday deals are not just for clothing or electronics, but also for streaming services, and many of these deals are for ad-supported versions of the services (38m21s).
• Streaming companies are promoting ad-supported versions of their services to get more subscribers, and legacy media companies are zeroing in on streaming and pulling away from traditional cable (39m18s).
• Hulu is a pioneer in Black Friday deals for streaming services, and other streamers have jumped on the bandwagon, but many of these deals are short-term and only last for a year at most (39m48s).
• It is not difficult to exit these deals, and streaming companies will often offer a sweetener to keep customers on board if they try to cancel (40m7s).

Holiday Box Office Success and Movie Industry Trends

• The domestic box office could reach up to $370 million over the five-day holiday period coming up, based on Bloomberg Intelligence and industry forecasts, thanks to recent blockbusters like Wicket and Gladiator II (40m48s).
• The current holiday box office trends are a result of a combination of consumer sentiment and well-received movies, creating a perfect storm that has cinemas and studios happy, with some estimates suggesting a total of over $300-350 million in revenue (41m13s).
• The movies in question, including Wicked, Gladiator II, and Moana, are not cheap to produce, with significant marketing campaigns, such as the one for Wicked, contributing to their high costs (41m35s).
• The success of these movies can kick off the content value flywheel, accelerating the theatrical runway and benefiting the studios (41m51s).
• Moana 2 is expected to be a big deal for Disney and Disney streaming, complementing the Wicked audience and targeting a different demographic, with a great preview and a potential bounce back for the studio after a few misfires in 2023 (42m18s).
• Disney is only releasing a handful of blockbuster films, but they have had a wonderful bounce back this year, with momentum hopefully continuing next year (42m33s).
• Studios are leading with established IP, whether it's a brand or a sequel, trying to balance it out with originals, with Amazon's original film Red One being a recent example (43m5s).
• Disney is expected to lead into some of their established franchises, with a focus on balancing original content with sequels and established IP (43m25s).
• Red One, an original film, went to theaters unexpectedly, and its performance is being closely watched (43m31s).

Tech Sector Performance and Earnings Reports

• The tech sector is experiencing a mixed day, with the Nasdaq lower due to NVIDIA and other key tech names, while Bitcoin is back at $95,000 (43m44s).
• Dell and CrowdStrike earnings are coming out, putting a damper on optimism around a PC recovery for Dell and HP (43m55s).