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Meta to Spend Tens of Billions of Dollars on AMD Gear, Buy Stock · Bloomberg Intelligence

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  Speaker 2: Another big, big noise, I would say, news story coming
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  Speaker 2: out of the technology space. Meta will buy AMD chips
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  Speaker 2: and computers designed to run artificial intelligence models over a
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  Speaker 2: five year stretch beginning the second half of twenty twenty six.
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  Speaker 2: And this is a kicker for me and I received
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  Speaker 2: warrants to buy one hundred and sixty million AMD shares.
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  Speaker 3: Pretty cool.
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  Speaker 2: Let's get the latest reporting there at ludlow b tech
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  Speaker 2: co host he's out there in San Francisco. Add another
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  Speaker 2: big deal, another two mega companies here doing some big
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  Speaker 2: business together.
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  Speaker 4: What do you make of it?
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  Speaker 5: Yeah, I mean it's very large scale. Six gigle lots
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  Speaker 5: of capacity is equivalent to the output of six nuclear reactors.
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  Speaker 5: It's the enough power for several million homes. The average
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  Speaker 5: size of a data center is about three hundred to
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  Speaker 5: five hundred megawatts, So it is a sort of multi
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  Speaker 5: year massive commitment and you know the market has faded
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  Speaker 5: a little bit in terms of AMD share reaction, but
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  Speaker 5: it's quite a big bet by Meta. The AMD's technology,
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  Speaker 5: in particular its AI accelerators, the chips that will be
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  Speaker 5: used to run models and what we call inference are effective.
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  Speaker 5: But the warrants bit, I agree, very interesting, Like is
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  Speaker 5: it or is it not circular financing? I'm always up
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  Speaker 5: to debate it.
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  Speaker 3: And of course we.
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  Speaker 6: Know that Meta announced a tie up with Nvidia just
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  Speaker 6: last week, so this is about Meta also diversifying its
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  Speaker 6: partners in this build out. How much do we know
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  Speaker 6: or can we guess that Meta is spending on this partnership,
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  Speaker 6: on this transaction.
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  Speaker 5: Well, on this AMD one. The way that Lisa Sue
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  Speaker 5: and AMD put it is that it's double digit billions
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  Speaker 5: per gigawat, So it's tens of billions of dollars over
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  Speaker 5: the five years. Remember, AMD is a distant number two
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  Speaker 5: player with respect. You know, it's all of its revenues
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  Speaker 5: are about ten billion dollars a quarter, which includes the
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  Speaker 5: data center part in Video's just data center part is
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  Speaker 5: more than fifty billion dollars, So you know they've got
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  Speaker 5: some ways to catch up. But yeah, it's very significant scale.
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  Speaker 5: And on the Meta side, right, you know, Mark zucker
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  Speaker 5: both said it next to the President. He's committing to
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  Speaker 5: spending about six hundred billion dollars over the next five
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  Speaker 5: years or more. And you know he's always said that
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  Speaker 5: like if they misspend quote two hundred billion dollars here
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  Speaker 5: or there, the risk of not spending that money is
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  Speaker 5: greater for them. So the stocks like down half a
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  Speaker 5: percentage point right now. But yeah, you know, most people,
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  Speaker 5: this is consistent with what we'd expect from Meta ed.
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  Speaker 2: What I'm seeing as I'm coming up to speed and
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  Speaker 2: all things AI and the lingo, that's you the net industry.
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  Speaker 2: When Meta agrees to buy AMD chips computers, Okay, I
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  Speaker 2: get that. Where does the whole concept of measuring this
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  Speaker 2: in terms of gigawatts and power?
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  Speaker 4: How does that work into the story?
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  Speaker 5: Oh that's a really no, that's a really smart question. Basically,
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  Speaker 5: like data is transferred via electrons, there's work in more
• 3:20
  Speaker 5: nascent fields of transferring data via photons light in other words,
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  Speaker 5: but inside the server, that's how data passes through electrons.
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  Speaker 5: There is a heavy electricity draw to power the whole system,
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  Speaker 5: not just to run the GPUs and run the computations,
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  Speaker 5: but also like everything involved in cooling and heat dissipation.
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  Speaker 5: Like we're talking about electricity and that's why it's measured
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  Speaker 5: such and like to go back to Scarlett's earlier question,
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  Speaker 5: like this is six gigawatts just between Meta and AMD,
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  Speaker 5: but Meta has plans to install like tens of gigawatts
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  Speaker 5: by the end of this decade, and then beyond that,
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  Speaker 5: like hundreds of gigawatts, you know, completely different scale to
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  Speaker 5: what we've we've been talking about. That that's why we
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  Speaker 5: track so closely in parallel what is happening with grid
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  Speaker 5: and energy infrastructure, because the burden is is you know,
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  Speaker 5: it's not you can't even compute it with the human brain.
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  Speaker 3: That's kind of what we're talking about. Stay with us.
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  Speaker 3: More from Bloomberg Intelligence coming up after this.
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  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 2: One of the things we're keeping an eye on is
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  Speaker 2: this big M and a trade in the media space
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  Speaker 2: Warner Brothers Discovery. What do we know we know that
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  Speaker 2: it's for sale. We know that Netflix has an offer
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  Speaker 2: that's been accepted.
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  Speaker 4: By Warner Brothers Discovery. That's a good thing.
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  Speaker 2: But we also know that Paramount's guidance is very interested.
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  Speaker 2: It's made repeated bids for this company, and it's been
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  Speaker 2: reported most recently that Paramount's actually raised its bid a
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  Speaker 2: little bit. But I don't know where we are. That's
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  Speaker 2: kind of it's been hang and on for such a
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  Speaker 2: long time here. Somebody is following this stuff very closely,
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  Speaker 2: and that's Keitha Ranganathan. She is the media analyst for
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  Speaker 2: Bloomberg Intelligence. She follows all of the media companies out there. Githa,
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  Speaker 2: I guess Paramount's coming up with a higher offer. Do
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  Speaker 2: we have any details of what this new offer for
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  Speaker 2: Warner Brothers Discovery is?
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  Speaker 7: Yeah, thanks Paul. So we don't have the dollar amount.
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  Speaker 7: We know that it's above thirty dollars a share. That's
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  Speaker 7: the that's the tender offer that they launched a few
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  Speaker 7: months ago for all of Warner Brothers Discovery. They had
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  Speaker 7: informally agreed to take the number up to thirty one
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  Speaker 7: dollars or above thirty one dollars. But we still do
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  Speaker 7: not have clarity on the number that they have revised
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  Speaker 7: it too. And you know, we're still kind of I
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  Speaker 7: think at least the Warner Brothers shareholders oneer brother Discovery
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  Speaker 7: shareholders are still kind of waiting for that best and
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  Speaker 7: final offer. So still, you know, a lot of details
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  Speaker 7: not really disclosed. We have to wait to hear back
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  Speaker 7: and see what the Warner Brothers Discovery board de sides.
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  Speaker 2: You know, I'm looking at Netflix's stock. It's down seventeen
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  Speaker 2: percent this year, It's down twenty two percent on the
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  Speaker 2: trailing twelve months. This is a stock that did nothing
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  Speaker 2: but go up for years and years. Do Netflix shareholders
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  Speaker 2: how are they viewing this potential deal for Warner Brothers.
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  Speaker 7: Yeah, so, you know, at this point, I think majority
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  Speaker 7: of the investors really view it as a distraction, at
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  Speaker 7: least in the near term. I mean, we've seen this
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  Speaker 7: happen time and time again. When you know, winning an Emina,
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  Speaker 7: there's always this this kind of cloud with M and A.
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  Speaker 7: You know, you just don't know whether the deal is
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  Speaker 7: actually actually going to work. Execution risk is there, Integration
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  Speaker 7: risk is there? For Netflix? There is the added complexity
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  Speaker 7: of you know, a long regulatory road one doesn't really
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  Speaker 7: know how any of that scrutiny is going to play
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  Speaker 7: out on the regulatory side, on the anti trust side.
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  Speaker 7: So there's just a lot of uncertainty at this time, Paul,
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  Speaker 7: And you know, we do know that the underlying story,
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  Speaker 7: the underlying business economics for Netflix is working. I mean,
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  Speaker 7: they have subscriber growth, they have pricing power, they have
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  Speaker 7: a new lever in the form of advertising, which is
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  Speaker 7: expected to take off in a big way this year.
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  Speaker 7: So all of the underlying drivers are in place. Does
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  Speaker 7: the Warner Brothers deal help? Absolutely? It is a nice
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  Speaker 7: to have, but it is not a must have. And
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  Speaker 7: I think what the Netflix shareholders have been really afraid
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  Speaker 7: of is Netflix over paying for this asset. We know
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  Speaker 7: that at the current offer they're already paying twenty five
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  Speaker 7: times EBITDA. Is Warner Brothers worth that? One can argue that,
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  Speaker 7: yes it is. It does have some global great franchises,
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  Speaker 7: But going above and trying to match paramount's offer that
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  Speaker 7: could be a risky move and I don't think shareholders would.
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  Speaker 3: Like that, KEITHA.
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  Speaker 2: You know, in my view, Lisa and I've read across
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  Speaker 2: some Wall Street research, this is deal for Netflix. It's
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  Speaker 2: a nice to have obviously great, great assets, but for Paramount,
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  Speaker 2: it's kind of a must have. What happens to paramount
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  Speaker 2: S guidance.
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  Speaker 4: If they don't get this Warner Brothers deal.
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  Speaker 7: Yeah, yeah, that's the big head scratcher, Paul. I mean,
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  Speaker 7: there is effectively no plan B for Paramount skuidance.
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  Speaker 8: You know.
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  Speaker 7: One of the things that has been kind of debated
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  Speaker 7: a lot is you know, who can they combine with? Obviously, organically,
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  Speaker 7: the growth prospects look extremely bleak. You know, they have
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  Speaker 7: about sixty percent exposure to a declining linear TV ecosystem
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  Speaker 7: the studio business while it's up and down. The streaming business. Yeah,
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  Speaker 7: they've done okay, but again it's still subscale with only
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  Speaker 7: about eighty million subscribers. So they absolutely need to have
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  Speaker 7: a dance partner. The question is who do they combine
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  Speaker 7: with if they don't have Warner Brothers Discovery. Obviously one
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  Speaker 7: of the choices out there is Comcasts NBC. We'll have
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  Speaker 7: to wait and watch because again, there could be potentially
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  Speaker 7: a lot of regulatory issues because you do have two
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  Speaker 7: broadcast networks with CBS as well as NBC, So I'm
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  Speaker 7: not sure how that works, but that is potentially an
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  Speaker 7: option that they can explore if the Warner Brothers deal
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  Speaker 7: doesn't work out.
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  Speaker 3: Stay with us. More from Blue Intelligence coming up after this.
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  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 9:20
  Speaker 2: Novo Nordisk plans to slash US list prices for its
• 9:24
  Speaker 2: medicines Wigovy and Ozempic next year.
• 9:27
  Speaker 4: We are Wigov households, so this is good news there.
• 9:30
  Speaker 2: Michael Shaw, senior at Pharma Biotech analyst for Bloomberg Intelligence,
• 9:34
  Speaker 2: joins us from London. Mikey, what's Novo doing here? They're
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  Speaker 2: going for market share? What's the plan here?
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  Speaker 8: Yeah?
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  Speaker 9: I think that, I mean the slashing of the list
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  Speaker 9: price would I mean, would essentially improve access. I think
• 9:49
  Speaker 9: in terms of the price cut, so fifty percent on
• 9:52
  Speaker 9: the list, so it's bringing down the monthly cost down
• 9:54
  Speaker 9: of thirteen fifty to about six five dollars per month.
• 9:58
  Speaker 9: I mean, you won't see that sort of discount translate
• 10:02
  Speaker 9: to the net price, so I think it's important to
• 10:05
  Speaker 9: kind of make that distinction between the list and the net.
• 10:08
  Speaker 9: I mean what it does mean is, you know, Nova
• 10:11
  Speaker 9: will be essentially negotiating with insurers off a lower base
• 10:14
  Speaker 9: and then you'll probably see some adjustment in in the
• 10:19
  Speaker 9: discount or rebate offered. But I don't think that fifty
• 10:22
  Speaker 9: percent is going to translate down to the net net price.
• 10:26
  Speaker 9: I think what's also important to note is, I mean
• 10:28
  Speaker 9: it's going to benefit you know, patients here with high
• 10:31
  Speaker 9: deductibles insurance plans or patients that have co insurance plans
• 10:36
  Speaker 9: that where you know they're they're paying a percentage of
• 10:39
  Speaker 9: the list price. But it doesn't affect kind of pricing
• 10:42
  Speaker 9: in the in the in the director, the patient channel,
• 10:46
  Speaker 9: or the set or the self pay prices, which are
• 10:49
  Speaker 9: obviously you know, a key driver of sales and volume
• 10:52
  Speaker 9: at the moment. So the flaw here is effectively sent
• 10:55
  Speaker 9: by by by trump bar x. Where the drugs are
• 10:58
  Speaker 9: available at about three hundred and fifty dollars per month, how.
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  Speaker 6: Do patients decide whether they want the Eli Lily pill
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  Speaker 6: versus the Novo pill? Is it just whatever their doctor prescribes.
• 11:11
  Speaker 6: The more are people going out in and actively saying
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  Speaker 6: I want this one over that one.
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  Speaker 9: Well, the Lily pill hasn't been.
• 11:19
  Speaker 6: Injection at this point.
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  Speaker 9: Yeah, but I mean in terms of the injects also
• 11:23
  Speaker 9: zet bound versus we GOOVI. I think in general, you know,
• 11:27
  Speaker 9: based on our the prescribers that we've spoken to, and
• 11:30
  Speaker 9: also based on the clinical data that's out there, Lily's
• 11:34
  Speaker 9: got the superior product. I think that was, you know,
• 11:37
  Speaker 9: clear in head to head studies as a redefined foretrial
• 11:41
  Speaker 9: that read out you know, a couple of days ago,
• 11:43
  Speaker 9: and you know, the base case there was for Novo's
• 11:46
  Speaker 9: we're goby to show non inferiority versus zet bound didn't
• 11:50
  Speaker 9: meet its primary endpoint. The weight loss actually looked you inferior.
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  Speaker 9: There are a few caveats there. So in general, I think,
• 11:59
  Speaker 9: you know, doctor is well, the ones we've spoken to,
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  Speaker 9: you know, prefers that in reality, it comes down to
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  Speaker 9: essentially cost and whatever the patient can access either through
• 12:10
  Speaker 9: you know, what they can afford or their insurance pan.
• 12:12
  Speaker 9: Mike yah. I know.
• 12:13
  Speaker 2: You guys, since the beginning of all this have kind
• 12:15
  Speaker 2: of scoped out the size of the market here, and
• 12:18
  Speaker 2: the numbers are just huge. What does the introduction of
• 12:22
  Speaker 2: an oral dosage mean for maybe growing a number of
• 12:28
  Speaker 2: patients that may be attracted here.
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  Speaker 9: Yeah, so I mean we still see you know, a
• 12:33
  Speaker 9: place for orals and injectibles. Orals obviously helps improve access,
• 12:39
  Speaker 9: they're cheaper, they don't face the same film finished constraints
• 12:44
  Speaker 9: of an injectable treatment. And then in terms of kind
• 12:48
  Speaker 9: of positioning, whether they're going to use for you know,
• 12:50
  Speaker 9: weight loss induction or weight loss maintenance. I think that
• 12:55
  Speaker 9: you know, the jury is still out on that. You know,
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  Speaker 9: different people we've spoken to, in different companies that we've
• 13:00
  Speaker 9: spoken to, you know, have different views on the positioning
• 13:03
  Speaker 9: of an oral versus an injectable. But I mean I
• 13:06
  Speaker 9: think there's going to be room for both, and you know,
• 13:09
  Speaker 9: both formulations are going to be utilized.
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  Speaker 2: What's the next real I guess big move here in
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  Speaker 2: this part of the market. I mean, I think getting
• 13:21
  Speaker 2: the oral dosage is big. What's the next big thing?
• 13:24
  Speaker 2: Is it just improving it? Maybe lowering the side effects?
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  Speaker 2: What are you looking for next?
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  Speaker 9: Yes, I mean when we look at we've done an
• 13:34
  Speaker 9: analysis into the pipeline for a b C. So I
• 13:38
  Speaker 9: mean there's you know, more than one hundred and ninety
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  Speaker 9: assets in clinic. It's heavily dominated by it by GLP one,
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  Speaker 9: So there's going to be a need for new mechanisms
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  Speaker 9: outside of GLP one. One of the key ones coming
• 13:50
  Speaker 9: through the pipeline at the moment and is going to
• 13:51
  Speaker 9: be in focus this year is going to be amelin.
• 13:55
  Speaker 9: So the idea here is to have I mean it's
• 13:58
  Speaker 9: a different it's a non incredit mechanism. It's an injection,
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  Speaker 9: a weekly injection. But the idea here is to basically
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  Speaker 9: have GLP one like weight loss, but with better tolerability.
• 14:11
  Speaker 9: So as you know, you know, one of the main
• 14:13
  Speaker 9: drawbacks at the moment of GLP one therapy is the
• 14:15
  Speaker 9: gi side effects of the gasher intestinal side effects, which
• 14:20
  Speaker 9: leads to disc discontinuations. So amline aims to solve that problem.
• 14:26
  Speaker 9: You know, we don't need to see kind of more
• 14:28
  Speaker 9: than twenty percent weight loss, so amline drugs are generally
• 14:30
  Speaker 9: targeting fifteen to twenty percent weight loss over over a year,
• 14:34
  Speaker 9: but we do want to see that improvement in tolerability
• 14:37
  Speaker 9: if it can show improvements in body composition. So that's
• 14:41
  Speaker 9: fat mass loss versus muscle mass loss. You know, that's
• 14:44
  Speaker 9: going to be considered a bonus. So that's really going
• 14:46
  Speaker 9: to be you know the next the next focus, or
• 14:49
  Speaker 9: the next wave of innovation in in obuc.
• 14:54
  Speaker 3: Stay with us more from Bloomberg Intelligence coming up for this.
• 15:00
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 15:04
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• 15:07
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• 15:11
  Speaker 1: get your podcasts, or watch us live on YouTube.
• 15:15
  Speaker 2: Earnings still kind of have trickling in here. We at
• 15:17
  Speaker 2: Home Depot reported some numbers today's so pretty good numbers,
• 15:20
  Speaker 2: pretty good outook stocks up about two point nine percent today,
• 15:23
  Speaker 2: It's up about thirteen percent year to date.
• 15:25
  Speaker 3: It's got a.
• 15:26
  Speaker 4: Market cap at three hundred and eighty six billion dollars.
• 15:29
  Speaker 3: Let's check in with Drew Reading.
• 15:31
  Speaker 2: He covers all the homebuilders and all the related stocks there,
• 15:34
  Speaker 2: including the home depots of the world. Drew, what'd you
• 15:37
  Speaker 2: make from the earnings coming out of Home Depot.
• 15:41
  Speaker 8: Yeah, it was a solid print for Home Depot, be
• 15:43
  Speaker 8: on same store sales with a little bit of weather impact.
• 15:47
  Speaker 8: I think importantly, they maintained their four year guidance that
• 15:50
  Speaker 8: they issued at their December Analyst stay calling for comp
• 15:53
  Speaker 8: sales of zero to two percent. You know, quite Frankly,
• 15:57
  Speaker 8: when you think about Home Depot, it's really been steady
• 16:00
  Speaker 8: as she goes for several quarters. If you strip out
• 16:03
  Speaker 8: all the weather impacts that we've seen over the last
• 16:05
  Speaker 8: couple of years, they're really growing demand at about a
• 16:07
  Speaker 8: one percent comp range. So their customer has been resilient.
• 16:12
  Speaker 8: As you heard on the call, though, the problem is
• 16:14
  Speaker 8: there's just not really a catalyst for a significant next
• 16:17
  Speaker 8: leg of growth, and a lot of that has to
• 16:19
  Speaker 8: do with what we're seeing in the housing market.
• 16:22
  Speaker 6: Right Affordability still remains a big issue. All the mortgage
• 16:25
  Speaker 6: rates have come down, so that should be a positive
• 16:27
  Speaker 6: for Home Depot.
• 16:28
  Speaker 8: No, Yeah, of course, lower mortgage rates rates we do
• 16:32
  Speaker 8: expect will stimulate demand throughout the year. You know, it
• 16:36
  Speaker 8: should also encourage more refinance and activity, which could support
• 16:40
  Speaker 8: bigger ticket spending this year. Is we just haven't seen
• 16:43
  Speaker 8: it yet.
• 16:43
  Speaker 9: If you look at existing.
• 16:44
  Speaker 8: Home sales in December, they were below a four million
• 16:46
  Speaker 8: annualized rate. That's about twenty five percent below kind of
• 16:51
  Speaker 8: what the normalized market would look like. You know, one
• 16:55
  Speaker 8: of the big issues that's out there. We heard it
• 16:57
  Speaker 8: from Home DEEPO, and we hear it from all of
• 16:58
  Speaker 8: the builders that we taught to is that there's just
• 17:01
  Speaker 8: a lack of confidence at the moment, whether it's the
• 17:04
  Speaker 8: direction of the economy or the outlook for employment, there's
• 17:08
  Speaker 8: just a lack of urgency among buyers. And if you
• 17:10
  Speaker 8: think about it, there's a lot of people sitting on
• 17:12
  Speaker 8: the fence looking at the headlines, saying to themselves, look,
• 17:15
  Speaker 8: maybe home prices are going to come down, maybe mortgage
• 17:18
  Speaker 8: rates are going to come down further. So they're taking
• 17:20
  Speaker 8: more of a wait and see approach. So I think
• 17:21
  Speaker 8: until you know, we could kind of rebuild that confidence.
• 17:25
  Speaker 8: You know, lower rates aren't having much of an impact.
• 17:28
  Speaker 3: Drew.
• 17:28
  Speaker 2: Just the last several days, the tariff's story and narrative
• 17:33
  Speaker 2: has kind of reared its ugly head again.
• 17:35
  Speaker 3: Just refresh our memory out of the.
• 17:37
  Speaker 2: Home you know, the home depots of the world, how
• 17:40
  Speaker 2: they dealt with tariffs over the last year or so.
• 17:44
  Speaker 8: Sure so, for for some context, home Depot sources about
• 17:49
  Speaker 8: fifty to sixty percent of the products they sell from
• 17:53
  Speaker 8: North America, so those aren't subject to tariffs. The remaining portion,
• 17:58
  Speaker 8: you know, comes from you know, a number of countries.
• 18:00
  Speaker 8: They've done well to diversify their supply chain. What they
• 18:03
  Speaker 8: told US today is that they've pretty much implemented all
• 18:07
  Speaker 8: of the pricing in terms of tariffs that they're going
• 18:09
  Speaker 8: to do. It's about a three percent increase. We've seen
• 18:12
  Speaker 8: it in average ticket this quarter, and they expect that
• 18:16
  Speaker 8: to drive average ticket in twenty twenty six. As it
• 18:19
  Speaker 8: relates to you know, the comments we heard Friday and
• 18:22
  Speaker 8: over the weekend, as you would expect given it's you know,
• 18:25
  Speaker 8: happening in real time and a fluid situation, they said
• 18:27
  Speaker 8: they're still analyzing the impact.
• 18:31
  Speaker 6: And very quickly drew before we let you go home
• 18:33
  Speaker 6: deeple small arrival. Lows will be reporting earnings tomorrow morning.
• 18:37
  Speaker 6: Are we expecting a similar story from Lows?
• 18:41
  Speaker 8: Yeah. I would expect to hear from Lows the strength
• 18:43
  Speaker 8: of their professional customer. They've done well to invest in
• 18:46
  Speaker 8: a space where they've kind of ignored for you know,
• 18:49
  Speaker 8: a couple of years. That's really driven out performance of
• 18:52
  Speaker 8: home depot. So we expect to hear relative strength there,
• 18:55
  Speaker 8: a little pick up from weather, but big picture, I
• 18:59
  Speaker 8: do expect a continue to hear that big ticket discretionary
• 19:02
  Speaker 8: spending remains challenged by these same things that we discussed,
• 19:05
  Speaker 8: whether it's related to housing or overall sentiment from the consumer.
• 19:10
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• 19:19
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• 19:29
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