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Meta Signs Multi-Gigawatt Nuclear Deals for AI Data Centers · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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  Speaker 2: Let's go back to the tech sector. We can't stray
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  Speaker 2: too far from it ever, when we talk about the
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  Speaker 2: market and take a look at some of the mag
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  Speaker 2: seven names. Alphabet this week has moved ahead of Apple
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  Speaker 2: in terms of market cap, and Met us signing this big,
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  Speaker 2: big power generation deal with this company called Vistra, which
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  Speaker 2: has had a really futile week. Let's bring in Man
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  Speaker 2: Deep sing right now. Man Deep is our global tech
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  Speaker 2: research head at Bloomberg Intelligence, and Man Deep just put
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  Speaker 2: into context for us this multi gigawatt nuclear deal that
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  Speaker 2: Meta has signed for its AI data centers. How should
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  Speaker 2: we think about this?
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  Speaker 3: Yeah, I mean, the best way to frame it is
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  Speaker 3: how how these companies are spending their capex? And we
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  Speaker 3: know roughly, you know, one gigawa of AI data center
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  Speaker 3: capacity costs about fifty billion dollars. Again depends on the region,
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  Speaker 3: the source of energy and land et cetera. But that's
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  Speaker 3: the rough ballpark. So when you think about six point
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  Speaker 3: six gigawat, and we already know open Ai has committed
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  Speaker 3: to you know, about twenty six gigawatts, So clearly these
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  Speaker 3: companies have big ambitions. And what it suggests is a
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  Speaker 3: company like Meta, which will very well spend over one
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  Speaker 3: hundred billion dollars in capex this year in twenty twenty six,
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  Speaker 3: may stay on that path for at least the next
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  Speaker 3: three to four years because they believe, you know, they
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  Speaker 3: have a lot of applications when it comes to their
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  Speaker 3: own consumption of AI data centers, and they seem to
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  Speaker 3: be confident about their own model, which has so far
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  Speaker 3: trailed the likes of open Ai and Tropic and Gemini
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  Speaker 3: in terms of abilities. But it sounds like they want
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  Speaker 3: to make sure they have the capacity to deploy AI.
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  Speaker 3: And that's where nuclear is an interesting choice because a
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  Speaker 3: lot of the other hyperscalers have gone for more natural
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  Speaker 3: gas turbines, but we know there is a big backlog
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  Speaker 3: with someone like ge Vernola for their natural gas turbines,
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  Speaker 3: So from that perspective, nuclear is an interesting choice, you know,
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  Speaker 3: as an alternate.
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  Speaker 4: What are the big tech companies, these big AI companies
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  Speaker 4: saying about their confidence in the reliability of power in
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  Speaker 4: the next five, ten, twenty years, because a lot of
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  Speaker 4: folks are saying that really could be the gating issue
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  Speaker 4: for the development and evolution of AI.
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  Speaker 3: Yeah, I mean, look, I was at CEES where Jensen highlighted,
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  Speaker 3: you know, the reason why companies would upgrade quickly to
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  Speaker 3: the latest Rubin architecture is because they give I mean,
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  Speaker 3: Ruben will give them more tokens per unit of power,
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  Speaker 3: which is really a way to emphasize the efficiency of
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  Speaker 3: how you utilize your available power. And so from that perspective,
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  Speaker 3: everyone sees very long lead times when it comes to
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  Speaker 3: adding new power, and they want to maximize, you know,
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  Speaker 3: the usage and utilization of whatever they have right now.
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  Speaker 3: And look, you could argue, you know, there are some
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  Speaker 3: other sources which may have shorter lead times, like solar
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  Speaker 3: or battery packs. But in this case, given the size
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  Speaker 3: of power that these companies need for running we're talking
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  Speaker 3: about one gigawatt data center, it's very hard to think
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  Speaker 3: about too many sources of energy that will give you
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  Speaker 3: that sort of power, and you know that's where the
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  Speaker 3: lead times are so long.
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  Speaker 5: Stay with us. 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 1: weekdays at ten am Eastern on Apple, Cocklay and Android
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  Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
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  Speaker 1: you get your podcasts, or watch us live on YouTube.
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  Speaker 5: Let's get to the restaurant business here.
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  Speaker 4: You know, the flu season which is upon us, and
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  Speaker 4: it's you know, a little bit more harsh than average.
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  Speaker 5: It's impacting a lot of folks.
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  Speaker 4: Obviously, it's also impacting some businesses, like the restaurant business.
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  Speaker 5: I didn't think of that.
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  Speaker 4: Michael Halen, He thinks of it. Senior restaurant and food
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  Speaker 4: service analysts for Bloomberg Intelligence Mike talk to us about
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  Speaker 4: recent trends in the restaurant bizz.
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  Speaker 6: Yeah, it was a tough fourth quarter, you know, especially December.
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  Speaker 6: December was hurt by cold weather, snow, and an earlier
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  Speaker 6: flu season. It's the worst flu season so far in
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  Speaker 6: twenty five years. This mad some issues with you know,
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  Speaker 6: the vaccines not covering the current trains that.
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  Speaker 5: Are out there, and so was pretty rough.
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  Speaker 6: You know. Quick service and fast casual did better. Quick
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  Speaker 6: service sales were down slightly. You know, fast food chains
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  Speaker 6: like McDonald's and were as fast casual like Chipotle, Shakeshack,
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  Speaker 6: they were up slightly in December. It was the full
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  Speaker 6: service chain, so casual diners like Chili's and family dining
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  Speaker 6: like ihop that struggled the most, Which makes sense. If
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  Speaker 6: it's really cold or if it's snowing, you're less likely
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  Speaker 6: to go out to a restaurant and dine in. You're
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  Speaker 6: more likely to order dominoes, and so it all kinds
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  Speaker 6: of makes sense. But you know, these trends are gonna
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  Speaker 6: flip pretty pretty nicely into January. We've seen a huge
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  Speaker 6: squeeze in restaurant stocks to open up this year, and
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  Speaker 6: we think it's going to continue.
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  Speaker 2: So what do these casual dining chains do to change
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  Speaker 2: the trajectory of what seems like a pretty stet trend
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  Speaker 2: at this point.
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  Speaker 6: Well, the casual dining chains had a really nice year
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  Speaker 6: in twenty twenty five.
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  Speaker 5: We you know, they have.
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  Speaker 6: But because of that, they have tougher comparisons to LAP right,
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  Speaker 6: and so for that reason, we think, you know, and
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  Speaker 6: we think USR stands to benefit more from from tax
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  Speaker 6: reform as well as like a ten percent ish decline in.
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  Speaker 5: Oil prices, So we don't expect a.
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  Speaker 6: Bad year at a casual dining. We think they'll continue
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  Speaker 6: to do pretty well. They're gonna you know, they're not
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  Speaker 6: gonna receive as much of a boost.
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  Speaker 5: From Chili's, which had a, you.
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  Speaker 6: Know, an unbelievable year in twenty twenty five. But we
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  Speaker 6: think casual dining can have a solid year here in
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  Speaker 6: twenty six. But it's the casual dining names and some
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  Speaker 6: of the fast casual names we cover, like Cava and Winkstop,
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  Speaker 6: that we think can have a really nice bounce here,
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  Speaker 6: especially in the first half of twenty twenty six.
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  Speaker 4: Mike, we got some labor data, takes some jobs data,
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  Speaker 4: unemployment rate ticks down a little bit here.
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  Speaker 5: I got to think that's that's important for US companies.
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  Speaker 6: Yeah, you know, labor has been tough for restaurants. You know,
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  Speaker 6: we've seen a four percent ish wage rate inflation in
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  Speaker 6: our in this industry, you know, going back to before
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  Speaker 6: the pandemic, you know, so labor continues to be kind
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  Speaker 6: of an issue. There's still some talk about restaurants being
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  Speaker 6: understaffed right now, so that obviously impacts service levels negatively
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  Speaker 6: and hurts the customer experience. So obviously something we look
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  Speaker 6: at pretty closely.
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  Speaker 2: In terms of names that you like, and I know
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  Speaker 2: we don't do buy hold cell recommendations at Bloomberg Intelligence,
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  Speaker 2: but the kinds of companies that are best positioned in
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  Speaker 2: twenty twenty six. What are you looking for?
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  Speaker 6: Oh yeah, so you know, for us, we're looking at
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  Speaker 6: chains that we think can outperform you know, same store
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  Speaker 6: sales estimates on the street with some chains that we think,
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  Speaker 6: you know, other analysts are just not bullish enough on.
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  Speaker 6: You know, McDonald's is coming up against some really easy
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  Speaker 6: comparisons due to e Coli once they report the four
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  Speaker 6: Q and the one Q, Winstock, Brinker. These are some
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  Speaker 6: of the names that we've written about.
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  Speaker 5: Stay with us. 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 1: weekdays at ten am Eastern on Apple, Cocklay and Android
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  Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
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  Speaker 1: you get your podcasts, or watch us live on YouTube.
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  Speaker 4: By this, transition to electric vehicles is proving very costly
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  Speaker 4: for automakers around the world. We had the big twenty
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  Speaker 4: plus billion dollar right off from four to a couple
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  Speaker 4: of weeks ago. Now General Motors will take another six
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  Speaker 4: billion dollars in charges tied to production cutbacks.
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  Speaker 5: In its electric vehicle and battery operations.
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  Speaker 4: Let's break it down with Craig Trudell, gloom Global Autos
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  Speaker 4: editor for Bloomberg News. He joins us from our London office. Craig,
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  Speaker 4: what's GM telling us here about kind of their transition
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  Speaker 4: to evs.
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  Speaker 1: Yeah.
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  Speaker 7: I think, you know, this is like a sort of
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  Speaker 7: ongoing toll that they're reporting, and I don't know that
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  Speaker 7: they're necessarily done. We heard them report actually some months
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  Speaker 7: back that you know, sort of rethinking their production capacity
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  Speaker 7: and pairing that back in response to the way electric
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  Speaker 7: vehicle demand and you know, battery supply was shaking out,
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  Speaker 7: that that was going to set them back more than
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  Speaker 7: a billion dollars. So this is you know, an incremental
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  Speaker 7: amount of money on top of that, and there was
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  Speaker 7: some warning in the AK last night that actually, you know,
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  Speaker 7: there may be more to come. So you know, I
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  Speaker 7: think this is part of a broader sort of rationalization
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  Speaker 7: taking place in the US, where you know, an industry
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  Speaker 7: was trying to to respond to an administration that was
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  Speaker 7: you know, banging the drum in a much different way
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  Speaker 7: than the Trump administration is now.
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  Speaker 4: You know, I look at this trailing twelve month performance
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  Speaker 4: of General Motors. It's up sixty one percent, and that
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  Speaker 4: kind of tells me you can take as many charges
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  Speaker 4: as you want here, I want you to pair back
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  Speaker 4: your transitions to ev Is that kind of what you're hearing.
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  Speaker 7: You know, it's it's fascinating because on one hand, you're
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  Speaker 7: seeing you know, electric car leader or at least former
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  Speaker 7: electric car leader Tesla taking off and doing so in
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  Speaker 7: spite of the fact that their sales are slowing down.
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  Speaker 7: The outlook for EVS and their home market is pretty bleak.
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  Speaker 7: And yet you also in Unison, have you know, sort
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  Speaker 7: of the contrarian play taking off in GM. I think,
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  Speaker 7: you know, it's maybe not quite that simple, and that
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  Speaker 7: you know, GM does have I think David Welch's story
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  Speaker 7: on last night the News does have, you know, sort
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  Speaker 7: of the context that they have quite quite a lot
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  Speaker 7: of electric vehicles available. They're going to continue to have
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  Speaker 7: a pretty broad range of cars, and Mary Barrow has
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  Speaker 7: talked about how EVS is their quote north star and
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  Speaker 7: that that's not going to change. So I think there's
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  Speaker 7: going to be a little bit more stick toitiveness on
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  Speaker 7: GM's part than Ford, and yet I think this is
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  Speaker 7: also an indication that the market is saying, you know what,
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  Speaker 7: the way this company makes money is it's full sized
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  Speaker 7: pickups and SUVs. The more of those that they can
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  Speaker 7: make in this new paradigm, the merrier.
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  Speaker 4: So I guess give us a sense of In the US,
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  Speaker 4: I think we have an idea that this transition to
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  Speaker 4: EV's is going to take longer than maybe we we
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  Speaker 4: initially thought that's not the case, it seems like in Europe.
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  Speaker 5: Tell us how the adoption is going in Europe.
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  Speaker 7: Yeah, I think actually last year it may be surprising
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  Speaker 7: to people because we ended the year with these headlines
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  Speaker 7: about the EUS sort of backing off of its combustion
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  Speaker 7: engine PAN for twenty thirty five. That being said, we
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  Speaker 7: actually had a nice pickup in momentum for electric vehicles
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  Speaker 7: last year. A lot of that was driven by the
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  Speaker 7: Chinese manufacturers. I think that is part of where the
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  Speaker 7: concern is here that you know, the the you know,
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  Speaker 7: local manufacturers in Europe. Some of them are doing better
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  Speaker 7: than they were, but it's it is patchy. I think
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  Speaker 7: it's also patchy, you know, sort of country by country,
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  Speaker 7: but we did see, you know, a roughly thirty percent
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  Speaker 7: increase in battery electric vehicles sales last year in spite
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  Speaker 7: of the fact that a big player in Tesla had
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  Speaker 7: a really tough twenty twenty five.
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  Speaker 5: That's interesting, you know, talk to those about hybrids here.
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  Speaker 4: I just caved at least a hybrid form my number
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  Speaker 4: four offspring because he goes to school in California where
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  Speaker 4: the gas prices are just ridiculously high.
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  Speaker 5: A the technology seemed really cool to me.
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  Speaker 4: The car drove great, and it seems like a nice
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  Speaker 4: mix between or a nice compromise between going full EV
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  Speaker 4: and full ice.
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  Speaker 5: How do you think about it?
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  Speaker 7: Yeah, I mean this was the supposed bridge technology, and
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  Speaker 7: the bridge is going for a lot longer than I think.
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  Speaker 7: A lot of people reckoned, you know, I remember, uh,
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  Speaker 7: you know, uh covering Toyota being based in Japan for
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  Speaker 7: a few years. Uh, you know, Toyota taking a lot
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  Speaker 7: of heat for sort of clinging to uh. You know,
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  Speaker 7: this technology that it's sort of pioneered with the Prius
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  Speaker 7: and you know, not sort of jumping with both feet
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  Speaker 7: in fully electric vehicles that has very much turned out
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  Speaker 7: to be to be the play and I think we're seeing, uh,
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  Speaker 7: you know, a lot of the excess battery capacity that
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  Speaker 7: got built in response to Biden administration's push for uh,
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  Speaker 7: you know, more of a battery uh you know sector
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  Speaker 7: to be built in the US. A lot of that
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  Speaker 7: is going to get soaked up by these hybrids, whether
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  Speaker 7: they're whether they're plug in vehicles or not. If you
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  Speaker 7: can make you know, the the bigger pickups and SUVs
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  Speaker 7: that are already popular in the US more efficient, you
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  Speaker 7: get sort of the both the best of both worlds.
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  Speaker 7: Even if there's a little bit of incremental costs on
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  Speaker 7: the front end, these vehicles are going to be much
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  Speaker 7: cheaper to to refuel and and you know, better to run.
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