Big Tech Earnings, Reid Hoffman and the Election | Bloomberg Technology

Market Downturn and Earnings Reports

• The market is experiencing a downturn, with the NASDAQ off by more than 2%, as earnings reports come in, including those from Microsoft and Meta, which are driving the market lower (37s).
• Uber's stock is down the most in two years due to gross bookings not meeting market expectations, with a reported $41 billion for the quarter, and the company also facing an FX headwind (1m14s).
• Meta narrowly beat quarterly expectations on its advertising business, but warned of greater losses on Reality Labs as it invests in AI and X, with growth expected to finish in 2025 (1m55s).
• Microsoft is on track to be dropped by the most since October 2022, with growth of the next three-month period expected to be 31-32%, a decline sequentially, due to supply constraint capacity on the data center side (2m9s).
• The themes of high-capacity AI spending are consistent across most of the market, with companies like Microsoft and Meta ramping up spending, but also facing challenges in meeting demand (2m36s).
• Nvidia's stock is down 4%, despite being a key player in AI spending, with concerns over product delays and long-term growth prospects, as well as the growth outlooks of its biggest customers, such as Microsoft (3m54s).
• The market is watching the key clients of AI spending, including Alphabet, Microsoft, Meta, and Amazon, which are ramping up spending, but also facing challenges in sustaining growth (3m33s).

Impact of Election on Silicon Valley

• Reid Hoffman, LinkedIn co-founder, will discuss the impact of the election on Silicon Valley (54s).

DoorDash's Operating Profit and Growth

• DoorDash posted its first operating profit since the pandemic, with a gross outside restaurant deliveries, and the company's CFO will be speaking about the results (42s).

Meta's Earnings and AI Strategy

• Meta's recent earnings report showed a mix of positive and negative results, with the company beating quarterly expectations for its advertising-supported business, but also expecting greater losses in Reality Labs and increased capital expenditures (4m54s).
• Despite the concerns, Meta is leveraging its AI technology, particularly Llama, to drive engagement and monetization, with notable successes in video recommendations and Meta AI, which already has 500 million monthly active users (5m57s).
• The company's revenue growth is expected to be sustained at a mid-teen growth rate, driven by its ability to deploy AI for its own advantage (6m29s).
• Mark Zuckerberg emphasized the importance of investing in AI infrastructure and new opportunities, including using AI advances to accelerate the core business and drive strong ROI (6m51s).
• New revenue avenues for Meta include leveraging A models for engagement and monetization, unified video on its platforms, and using AI to make recommendations more targeted (7m22s).
• In the mid to long term, Meta may explore other revenue sources, such as business-to-business messaging on WhatsApp, adding advertising to search feeds, and subscription-based services (8m21s).
• Meta's early success with Ray-Ban Metas, smart glasses, is also a notable development (8m44s).

Cloud Computing Market Share

• In the context of cloud computing, Alphabet's Google Cloud and Microsoft's Azure appear to be gaining market share from Amazon's AWS, driven by the expansion of AI services and products (9m2s).
• Amazon's earnings report is expected to provide further insight into the cloud market dynamics, with a focus on the company's ability to maintain its market share (9m7s).
• Amazon's AWS cloud revenue is expected to grow 22% in the fourth quarter, with an outperform rating on Amazon (10m0s).

Legal and CEO Changes

• The EU is investigating an e-commerce platform for potentially violating the Digital Services Act by not doing enough to combat sales of illegal products on its site (10m48s).
• Elon Musk was sued by the Philadelphia District Attorney for his political action committee's sweepstakes targeting swing state voters, with the DA asking a court to stop Musk from engaging in what it calls an unlawful lottery (11m3s).
• Peloton has tapped Afford executive as its new CEO, who was hired last year to run a new technology-focused division of the automaker (11m15s).

DoorDash's Expansion and Growth Strategy

• DoorDash topped Wall Street expectations in nearly every key metric this earnings season, seeing its first quarterly operating profit since the start of the pandemic, generating $107 million in operating income (11m36s).
• DoorDash is shifting from restaurant deliveries to a broader platform, with more consumers ordering from various categories such as grocery, retail, and Halloween costumes (11m41s).
• DoorDash's goal is to be the local neighborhood superstore, partnering with every single store in the neighborhood (12m21s).
• The most profitable business lines for DoorDash are its restaurant business, which has been profitable for a few years, and its new categories business and international business (12m44s).
• DoorDash is seeing strong growth internationally, gaining share in every country it operates in, driven by underlying product innovation and the launch of its subscription program (13m6s).
• DoorDash's partnership with Lyft is integral to growing its user base, making Dash Pass more viable and helping consumers save even more (13m40s).
• DoorDash's core focus continues to be improving the platform, where it sees the majority of the growth (13m58s).
• DoorDash's success in combining ride-hailing with delivery of food and groceries is attributed to its focus on improving the platform and making Dash Pass more viable (14m1s).
• DoorDash aims to be the local commerce to-do list, providing deliveries from local stores, which is the most frequent use case, with the company being the leader in that space (14m49s).
• DoorDash operates in over 30 countries but not in all cities, focusing on building the best product for consumers, merchants, and dashers, with a commerce platform for merchants doing well (15m15s).
• The company is the fastest-growing from a grocery perspective, gaining share compared to peers, with the goal of expanding to all things within local commerce (15m33s).
• DoorDash's success is driven by a combination of selection, quality, and affordability, which consumers are asking for and driving same-store sales growth for merchants (16m1s).
• Over 7 million dashers have dashed with DoorDash in the last year, with the company being the fastest-growing from the consumer's perspective as well (16m20s).

eBay and Twilio Earnings

• eBay's stock is down over 8% due to lackluster holiday period results, which may indicate concerns about consumer behavior (16m44s).
• Twilio's third-quarter earnings beat estimates, with the company raising its full-year revenue outlook, driven by steady progress, financial discipline, operating rigor, and innovation focus (17m31s).
• Twilio is starting to see accelerated growth, becoming a beneficiary of the AI wave, with a focus on delivering personalization at scale through the combination of communications, contextual data, and AI (18m3s).
• The company is making focused bets on innovation, with a return to innovation leading to improved margins and exciting opportunities for investors and customers (18m21s).
• Twilio's CEO, Khozema Shipchandler, expresses optimism about the company's long-term ambitions and its ability to balance growth with ongoing profitability and free cash flow, citing the potential benefits of the age of AI (19m24s).
• The company plans to monetize its AI capabilities by combining contextual data with communications capabilities to create personalized consumer outcomes, leveraging its acquisition of Data Acid (19m48s).
• Twilio is standing by its decision to keep its Segment business, which was previously criticized by activist investors, and is on track to get the business to breakeven, with improvements in market capacity and ongoing performance (20m48s).
• The Segment business accounts for less than 7% of Twilio's overall revenues, and the company's overall business growth, margins, and free cash flows are strong, making it an activation engine for AI using data and communications (21m15s).
• Twilio's stock is up 15%, on track for its biggest jump since 2022, but the company is focused on the long-term game and delivering personalized experiences for customers using communications, contextual data, and AI (21m47s).

Roadblock Earnings and Microsoft's Performance

• Roadblock has reported strong earnings, beating analyst expectations and boosting its guidance, with a 34% increase in bookings and a surge in user base (22m23s).
• Microsoft's earnings underwhelmed due to a weaker forecast, despite Azure growth returning to 34%, and the company's core business growing north of 20% without A.I. elements (23m51s)
• The forecast was affected by capacity limitations, with Microsoft citing supply shortages and a 50% increase in capital expenditures (24m32s)
• Google Cloud's growth accelerated to 35%, powered by A.I., while Microsoft's A.I. contribution was 12 percentage points, although this number is not very clear due to resegmenting (24m49s)
• The company's focus on enterprise opportunities may limit consumer adoption of A.I.-improved Office 365 and similar products (25m59s)
• Microsoft is creating separate products, such as Co-Pilot and Studio, which are expected to gain traction in the enterprise market (26m23s)
• The transparency of A.I. contributions is a key focus for investors, as capital expenditures continue to increase and companies call out scaling issues (26m48s)

Reid Hoffman on Kamala Harris and Tech Industry

• Reid Hoffman will be speaking about tech billionaires' involvement in the U.S. election as the D-Day approaches (27m5s)
• Reid Hoffman, co-founder of LinkedIn, supports Kamala Harris for president, believing she can provide a stable environment for the tech industry to prosper, with good global relations and an ability to follow the rule of law, which is essential for the industry's success, especially since most large tech companies get the majority of their revenues overseas (28m31s).
• Hoffman thinks that Harris's presidency would be more beneficial to the tech industry than other factors such as corporate tax rates, making her the clear choice for many in the industry (29m28s).
• Hoffman has spoken publicly about his views on Lina Khan, chair of the Federal Trade Commission (FTC), and Gary Gensler, chair of the Securities and Exchange Commission (SEC), and their impact on the tech industry (29m53s).
• Hoffman has never discussed Lina Khan with Kamala Harris or the White House, and his views on her are based on her public actions, including her work on anti-competition and click-to-cancel subscriptions (30m23s).
• Hoffman believes that Lina Khan's approach to mergers and acquisitions (M&A) is unhelpful to the tech industry, as it can limit funding for companies that might compete with large tech companies (30m51s).
• Hoffman knows Gary Gensler from his time at MIT and thinks that Gensler's approach to cryptocurrency needs to shift to be less restrictive (31m27s).
• Vice President Kamala Harris is the only presidential candidate in U.S. history to have spoken about the importance of founders, and it is hoped that she would bring an innovation-forward point of view to the presidency (32m7s).
• Harris has always brought intellectual curiosity to the tech industry, asking questions about how it can help all Americans and the rest of American industry (32m43s).
• A key difference between a hypothetical Harris administration and the current Biden administration is Harris's engagement with the tech industry, which Biden has not been as involved with (33m23s).
• Harris has been engaged with the tech industry, including running the artificial intelligence regulation and executive order process, and bringing companies into the White House to discuss safety and regulation (33m41s).
• Harris's approach to the tech industry is expected to be innovation-forward, with a focus on ongoing monitoring and leaving room for innovation (34m8s).
• A hypothetical Trump administration with Elon Musk taking a bigger role could mean a grifter capitalism approach, with the government penalizing opponents and using the instruments of state to favor certain companies (35m0s).
• This approach could create an unstable environment for investing in the tech industry, with the government choosing who to favor and who to penalize (35m31s).
• Elon Musk's businesses have significant ties to the government, particularly in the space and automotive industries, which are heavily regulated and rely on government contracts, and his influence could be a concern if he were to take a prominent role in an administration (35m39s).
• X.com, a platform owned by Elon Musk, has been criticized for supporting conspiracy theories, which is a serious problem, and there have been reports and investigations into the issue, including a data-based piece by Bloomberg (36m7s).
• Reid Hoffman has invited Elon Musk to appear on his program multiple times, but Musk has not accepted, and Hoffman believes that something is different in this election, with more prominent figures in the tech industry speaking out about their political views (36m42s).
• Speaking out about one's political views can have negative consequences, such as loss of business opportunities or retaliation from those who support opposing candidates, and Hoffman has seen this happen in the past, including instances where limited partners withdrew their support from venture firms that spoke out against Trump (37m18s).
• Business relationships can sour due to political differences, and Hoffman has heard of Republican senators criticizing him internationally, which he finds unfortunate, but he believes it's more important to prioritize what's good for America, American industry, and American society (37m54s).
• The relationship between Elon Musk and Open AI, a company he co-founded, has soured, and Musk has expressed concerns about the company's direction, and if he were to take a prominent role in an administration, it could have significant implications for the AI industry (38m49s).
• Reid Hoffman worries that if Elon Musk were to take a more prominent role, he would prioritize his own interests and view the success of the AI industry as dependent on his own involvement, which could lead to conflicts and baseless lawsuits, such as those he has filed against Open AI (39m15s).

Elon Musk's Potential Role and Influence

• Elon Musk's potential role in the government is discussed, with hopes that he would prioritize the tech sector and American industry as a whole, rather than his own interests (39m55s).
• The litigation between Elon Musk and Open AI is mentioned, with Open AI accusing Musk of harassment in their legal fight, which is set to continue on October 8 (40m16s).

AI and Election Discussion

• The discussion of AI and its regulation in the election is considered insufficient, with the focus being on how to get the benefits of AI for American industry, society, and consumers (40m30s).
• The importance of regulation is acknowledged, but it is noted that it can slow down innovation and delay progress (40m53s).
• The goal of making AI tools, such as medical assistants and tutors, available on every smartphone is considered a priority (40m54s).
• If former President Trump were to get a second term in office, it is hoped that he would be more business-forward and technology-forward, rather than pursuing individual "grifter capitalism" (41m27s).
• However, if Trump's actions were to affect American industry and prosperity, it would be necessary to build in more resilience to chaos and uncertainty (42m11s).
• Reid Hoffman expresses his hope that Vice President Harris will win the election, and has not done extensive contingency planning for a Trump victory (42m22s).

Amazon's Alexa and AI Challenges

• Amazon's efforts to make its Alexa devices a force in artificial intelligence are discussed, with the company facing technical challenges despite having a significant presence in U.S. households (42m43s).
• The struggle Amazon is facing in bringing Alexa into the AI field is highlighted, with the company having a decade-long lead in the chatbot space but struggling to update its technology (43m12s).
• The rapid development of AI tools by other companies, such as Microsoft, Google, and Apple, is noted, with Amazon's lack of progress in this area being seen as surprising (43m22s).
• Amazon is struggling with its language model, facing internal challenges such as hallucinations and struggling with basic tasks like turning on and off lights, which has raised questions about whether the company will be able to catch up in the AI war (43m45s).
• Amazon's Alexa has been prodded with sports questions by Andy, the leader of Amazon, and has hallucinated, particularly about up-to-the-moment results (44m20s).
• The rollout of Amazon's new language model has been pushed back, with an early target in early 2024, then moved back month by month, and most recently scrapped in October, with sources indicating a possible target deadline in 2025 (44m37s).
• The delay is due to technical challenges, including making sure the LLM can do basic tasks like those asked around the home, which LLMs are not particularly good at (45m12s).
• The team is working on merging the old brain with the new brain, trying a hybrid approach that takes a lot of custom code to make sure it knows permissions and access to devices (45m55s).
• The irony is that all the stuff Amazon Alexa is really good at are very simple tasks, which is what LLMs are not particularly adept at (46m21s).
• Amazon's earnings will be released after the bell, and a conversation about the technology discussion for the upcoming election will continue tomorrow with a Republican perspective (46m37s).
• A surrogate or backer for Trump will be on the program to give his take on the technology discussion for the candidate (46m49s).