Latest / Bloomberg Intelligence / Venezuela Regime Change Sets Stage for OFS Return

Transcript

Venezuela Regime Change Sets Stage for OFS Return · Bloomberg Intelligence

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
• 0:10
  Speaker 1: Bloomberg Intelligence podcast. Catch us live weekdays at ten am
• 0:14
  Speaker 1: Eastern on Apple, Cocklay and Android Auto with the Bloomberg
• 0:17
  Speaker 1: Business App. Listen on demand wherever you get your podcasts,
• 0:21
  Speaker 1: or watch us live on YouTube.
• 0:24
  Speaker 2: It is now day two of the market, kind of
• 0:27
  Speaker 2: digesting what has happened over the weekend with the raid
• 0:30
  Speaker 2: in Caracas and the capture of Nicholas Manduro. And of
• 0:33
  Speaker 2: course we've seen energy companies move up and down. Today
• 0:36
  Speaker 2: they are down. There are the worst performers in the
• 0:38
  Speaker 2: S and P five hundred. If you look at eleven
• 0:40
  Speaker 2: groups and I'm just looking at some of the worst performers.
• 0:42
  Speaker 2: They include Halliburton, they include Marathon Petroleum. But it's the
• 0:46
  Speaker 2: oil services company that I want to really dig into
• 0:49
  Speaker 2: here because many people say that they will be beneficiaries
• 0:53
  Speaker 2: of the rebuilding of Venezuela's oil industry. Let's bring in
• 0:58
  Speaker 2: Scott Levine. He's our senior Energy was his analyst here
• 1:00
  Speaker 2: at Bloomberg Intelligence. Scott make the case for why Halliburton,
• 1:05
  Speaker 2: Schlumberget and Baker Hughes are well positioned.
• 1:08
  Speaker 3: So in order to have you know, oil producers like Chevron,
• 1:14
  Speaker 3: Exxon and Shell.
• 1:17
  Speaker 4: Uh you know.
• 1:18
  Speaker 3: Participate in the turnaround of the Venezuela and oil industry.
• 1:23
  Speaker 5: Uh.
• 1:24
  Speaker 3: We need to get the machinery going basically, and uh
• 1:28
  Speaker 3: and the machinery is in very poor shape after you know,
• 1:31
  Speaker 3: decades of of poor governance and management and lack of investment.
• 1:38
  Speaker 3: Uh really since uh you know, really the Chavez administration
• 1:42
  Speaker 3: expropriated assets. And so you know who's who are the
• 1:46
  Speaker 3: experts in doing so and getting that machinery going again.
• 1:49
  Speaker 3: It's it's the oil field service companies and energy infrastructure
• 1:53
  Speaker 3: companies that need to uh make investments. Are the ones
• 1:56
  Speaker 3: that own the drill rigs, the ones that are experts
• 1:59
  Speaker 3: in fracking. They're also experts in developing pipelines and storage
• 2:04
  Speaker 3: capacity and doing all the things that are necessary in
• 2:08
  Speaker 3: order to make the the oil and gas engine hum
• 2:11
  Speaker 3: so to speak.
• 2:12
  Speaker 6: I do watch landman, so I consider myself an expert
• 2:14
  Speaker 6: on all this stuff.
• 2:15
  Speaker 7: Now, okay, before this weekend, what did those big oil
• 2:19
  Speaker 7: field services companies how did they view Venezuela kind of
• 2:23
  Speaker 7: like a no go zone kind of thing.
• 2:25
  Speaker 3: Yeah, pretty much. You know, they weren't o billions of dollars.
• 2:30
  Speaker 3: They didn't have assets expropriated the same way that companies
• 2:34
  Speaker 3: like Chevron and Dexon that own reserves do. However, they're
• 2:40
  Speaker 3: owed hundreds of millions of dollars for work that they've
• 2:44
  Speaker 3: already done. And really, you know, once the Obama administration
• 2:49
  Speaker 3: started putting sanctions on Venezuela, they started, you know, pulling
• 2:55
  Speaker 3: out of the country, and and that only intense and
• 3:00
  Speaker 3: the Trump administration when they started sanctioning the energy industry directly,
• 3:07
  Speaker 3: and they haven't been back since. Some of them are
• 3:09
  Speaker 3: carrying receivables on the book still and reserves for losses
• 3:12
  Speaker 3: and what have you. But they've been out of the
• 3:14
  Speaker 3: country really since then and are waiting for a more
• 3:18
  Speaker 3: hospitable environment to get back in the game.
• 3:22
  Speaker 8: There.
• 3:23
  Speaker 2: I mentioned the share prices earlier about how energy stocks
• 3:26
  Speaker 2: are the worst performers today. Of course, yesterday they were soaring.
• 3:28
  Speaker 2: Haliburton up seven point eight percent, today off by three
• 3:31
  Speaker 2: and a half percent. Schlumberja gained almost nine percent yesterday,
• 3:34
  Speaker 2: giving some of that back, and Baker Hughes rallied four percent.
• 3:38
  Speaker 2: It's going to take a while for all of this
• 3:39
  Speaker 2: to play out. Of course, what kind of timeline are
• 3:42
  Speaker 2: we thinking about here and what are the other business
• 3:45
  Speaker 2: prospects for the Baker Hughes, the Schlumberjas and the halburn
• 3:48
  Speaker 2: as we wait for Venezuela to stabilize.
• 3:52
  Speaker 3: Yeah, So, I mean this has really been a tough
• 3:54
  Speaker 3: group over the last several years in general, and a
• 3:57
  Speaker 3: lot of us do with the oversupplied oil market. I
• 4:00
  Speaker 3: would view the majors that you mentioned as early to
• 4:04
  Speaker 3: middle inning beneficiaries of this cycle. And the reason I
• 4:08
  Speaker 3: say that is because the machinery needs to be fixed
• 4:10
  Speaker 3: before anything can really happen. Right, So the first thing
• 4:13
  Speaker 3: that needs to happen really is we need confidence that
• 4:19
  Speaker 3: access won't be ex appropriate, that the US is in
• 4:22
  Speaker 3: there and is going to oversee this transition or at
• 4:26
  Speaker 3: least have a heavy hand in it, and these companies
• 4:29
  Speaker 3: will will actually get paid for their efforts, and that
• 4:31
  Speaker 3: they can have confidence in that against the backdrop which
• 4:34
  Speaker 3: we just went through, right, And so you know, we'll
• 4:38
  Speaker 3: get more visibility on the specifics and maybe we'll get
• 4:41
  Speaker 3: some commitments from some of the major oil and gas
• 4:44
  Speaker 3: producers and visibility regarding the government maybe backstopping some of
• 4:48
  Speaker 3: these payments. Confidence that this is going to be an
• 4:52
  Speaker 3: environment where these companies can invest for the long haul
• 4:56
  Speaker 3: and participate for the long haul. They're not going to
• 4:58
  Speaker 3: have to spend as much as the Exons and the
• 5:00
  Speaker 3: Chevrons of the world. They're more beneficiaries from a business perspective,
• 5:05
  Speaker 3: but they have been burned obviously in the past, and
• 5:08
  Speaker 3: they're gonna want to be pretty confident that won't be
• 5:11
  Speaker 3: the case here again.
• 5:13
  Speaker 9: You think the industry can get quote unquote confident by
• 5:16
  Speaker 9: I don't know a guarantee from President Trump.
• 5:19
  Speaker 3: I do, and I think that's what you saw I saw.
• 5:21
  Speaker 3: I think you saw confidence in that yesterday in the
• 5:25
  Speaker 3: gut response to these stocks, and I think frankly they
• 5:27
  Speaker 3: outperformed most of the super majors for that reason. I
• 5:32
  Speaker 3: think there is confidence here given what we've seen. We
• 5:36
  Speaker 3: don't have a lot of details yet, right, But we
• 5:38
  Speaker 3: don't the market doesn't generally need those details in order
• 5:42
  Speaker 3: to draw a conclusion one way or another. Will get
• 5:46
  Speaker 3: a sense this upcoming earning season, which starts in a
• 5:48
  Speaker 3: couple of weeks, what these companies make of this whole situation.
• 5:55
  Speaker 3: But a good analogy might be Mexico. Mexico not to
• 5:59
  Speaker 3: get off the top end has also is they these
• 6:02
  Speaker 3: companies have hundreds of millions of unpaid bills or late
• 6:05
  Speaker 3: paid bills from Mexico. Mexico is not Venezuela, so to speak.
• 6:09
  Speaker 3: But you also have PMX, which is like PETAVESA, a
• 6:13
  Speaker 3: very financially challenged, operationally challenged QUANSI governmental entity, and these
• 6:19
  Speaker 3: companies are still doing business there, So it might be
• 6:22
  Speaker 3: good to use that maybe as a little bit of
• 6:24
  Speaker 3: an indicator of what to expect in Venezuela.
• 6:28
  Speaker 2: Just very quickly, you mentioned that we might get some
• 6:30
  Speaker 2: more insight during earning season when the executives are talking
• 6:33
  Speaker 2: to investors, who among these companies is most likely to
• 6:37
  Speaker 2: be a voice that you'd be listening to that might
• 6:39
  Speaker 2: save something helpful or useful.
• 6:41
  Speaker 3: Yeah, I mean, I think Halliburton really is kind of
• 6:44
  Speaker 3: the one that is most levered in North America. They
• 6:50
  Speaker 3: and Slumberge really are the two biggest players from any
• 6:54
  Speaker 3: services perspective. I think Halliburton's loss reserves are a little
• 7:00
  Speaker 3: bit higher than Schlumbergets or SLB's as they call themselves now,
• 7:04
  Speaker 3: but those would probably be the two that I'd keep
• 7:06
  Speaker 3: the closest eye on in terms of their involvement. They
• 7:10
  Speaker 3: have been the biggest players there historically.
• 7:13
  Speaker 6: Stay with us. More from Bloomberg Intelligence coming up after this.
• 7:20
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 7:24
  Speaker 1: weekdays at ten am Eastern on Applecarplay and Android Auto
• 7:27
  Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
• 7:30
  Speaker 1: get your podcasts, or watch us live on YouTube.
• 7:34
  Speaker 9: Just take a look at Nike here the tickers NKE
• 7:38
  Speaker 9: trailing twelve month basis down about twelve percent. It's got
• 7:40
  Speaker 9: a ninety four billion dollar market tap the definitely got
• 7:44
  Speaker 9: some inventory issues like a lot of retailers had coming
• 7:47
  Speaker 9: out of the pandemic, and some issues with China as well.
• 7:50
  Speaker 6: A lot of retailers are dealing with that in the
• 7:52
  Speaker 6: ath leisure space.
• 7:53
  Speaker 9: But let's go to the expert here at Punam Goyle,
• 7:55
  Speaker 9: senior US e commerce and retail analysts put them. I know,
• 7:58
  Speaker 9: Nike's a name that you been highlighting for clients.
• 8:02
  Speaker 6: Give us a little update here. What's going on with Nike.
• 8:05
  Speaker 8: Yeah, so where basically we think the Nike turnaround is possible,
• 8:09
  Speaker 8: we see finally some light at the end of the tunnel.
• 8:13
  Speaker 8: Their North America business has improved and is going to
• 8:17
  Speaker 8: improve as they rationalized inventories. The issue still is China
• 8:22
  Speaker 8: and the struggle in China. We don't think will end
• 8:25
  Speaker 8: anytime soon. In my mind, it's a one to two
• 8:29
  Speaker 8: year turnaround. But that said, if they can get everything
• 8:32
  Speaker 8: else right, which I think they are doing, and we'll
• 8:36
  Speaker 8: get to I do think that Nike's turnaround as well
• 8:39
  Speaker 8: under way and investors will begin to appreciate it.
• 8:42
  Speaker 2: So let's dig into the struggles in China. I mean,
• 8:44
  Speaker 2: you're talking about a long time a long time frame
• 8:48
  Speaker 2: here for things to turn around. Is it just that
• 8:51
  Speaker 2: Nike has lost its appeal to the Chinese consumer? Is
• 8:56
  Speaker 2: it competition that's really stepped up in the last couple
• 8:59
  Speaker 2: of years.
• 9:00
  Speaker 8: So it's a few things. Number One, Nike in the
• 9:04
  Speaker 8: US and other parts of the world is perceived as
• 9:07
  Speaker 8: a more affluent, at leisure brand. In China, it is not.
• 9:11
  Speaker 8: What's been happening in China is that Nike has been
• 9:14
  Speaker 8: selling at a discount to clear inventory as the vicious
• 9:18
  Speaker 8: cycle of weaker sales has led to more discounting. So
• 9:22
  Speaker 8: it's more seen as an off price brand that needs
• 9:25
  Speaker 8: to change. They know that needs to change. I think
• 9:28
  Speaker 8: that's the first step in solving the problem. And I
• 9:31
  Speaker 8: think what they will do now and what they've said
• 9:33
  Speaker 8: that they do, and I do believe they will because
• 9:35
  Speaker 8: they did it in the US, is they will clean
• 9:37
  Speaker 8: out that aged inventory. But as we know, that will
• 9:41
  Speaker 8: take time. In the US alone, in the last year,
• 9:43
  Speaker 8: we've seen that it takes anywhere from twelve to eighteen months.
• 9:46
  Speaker 8: The US is finally in a place where in the
• 9:49
  Speaker 8: next three to six months they should be clean, so
• 9:52
  Speaker 8: which is why we think you'll take eighteen months. Once
• 9:55
  Speaker 8: they can do that, the new pipeline of products that
• 9:57
  Speaker 8: they're building, I do think will resonate with shoppers and
• 10:01
  Speaker 8: it will sell at full price. But once again, it's
• 10:04
  Speaker 8: an eighteen to twenty four month turnaround in China in my.
• 10:07
  Speaker 9: View, talk to us about you know, new product development
• 10:11
  Speaker 9: and new product introduction. Are there certain verticals that they're targeting,
• 10:14
  Speaker 9: whether it's running or lifestyle or what you know, other
• 10:18
  Speaker 9: types of activities.
• 10:19
  Speaker 8: So running is a core category that they're focused on.
• 10:22
  Speaker 8: They have launched a new innovation in running. Running actually
• 10:26
  Speaker 8: with their new pipeline, has done very well. In the US.
• 10:30
  Speaker 8: We saw that running was up nicely, whereas the rest
• 10:33
  Speaker 8: of the business was down slightly to up slightly depending
• 10:36
  Speaker 8: on the quarter that you look at over the last
• 10:38
  Speaker 8: twelve months. We also think that they're focused on sport.
• 10:42
  Speaker 8: So when you think about Nike and if you compare
• 10:44
  Speaker 8: it to Adidas, you know, I think there's a big
• 10:46
  Speaker 8: difference in the way that they're approaching their businesses, which
• 10:49
  Speaker 8: allows both of them to succeed. Nike is focused solely
• 10:53
  Speaker 8: and most importantly on sports and performance, whereas Adidas has
• 10:57
  Speaker 8: owned for the last few years is the lifestyle category.
• 11:02
  Speaker 8: And I do think that Nike's focus on sports is
• 11:05
  Speaker 8: the right one and that is where they should be
• 11:07
  Speaker 8: to drive this turnaround.
• 11:09
  Speaker 2: What about tariffs terrorists is certainly something that affects Nike.
• 11:14
  Speaker 2: I know that Vietnam and the US is reacharch trade deal.
• 11:17
  Speaker 2: Most of the footwear in this country is manufactured in Vietnam.
• 11:20
  Speaker 2: But how is Nike managing through this headwind?
• 11:24
  Speaker 8: So the headwind is here and it's here to stay.
• 11:26
  Speaker 8: Nike has to selectively increased prices to combat the tariff impact.
• 11:30
  Speaker 8: It's also negotiated supply relationships and found efficiencies internal. Just
• 11:34
  Speaker 8: like the rest of the space, Nike isn't alone in
• 11:38
  Speaker 8: the tariff situation. We do think that you know, tariffs
• 11:41
  Speaker 8: will continue to impact margin in twenty twenty six, as
• 11:45
  Speaker 8: well as the shift from DTC to wholesale. The wholesale
• 11:49
  Speaker 8: business is doing better and Nike is more focused on
• 11:52
  Speaker 8: it today because it had lost focus years ago, so
• 11:56
  Speaker 8: that mixshift is negative. That said, as more full price
• 11:59
  Speaker 8: selling takes hold, as we see signs of China improving
• 12:03
  Speaker 8: over the next twelve to eighteen months, those are both
• 12:06
  Speaker 8: areas where they can help to recover loss margin. Twenty
• 12:11
  Speaker 8: twenty six calendar is not a margin story for Nike.
• 12:14
  Speaker 8: It's a top line story. I think twenty twenty seven
• 12:16
  Speaker 8: is where we can start to talk about margin expansion.
• 12:20
  Speaker 9: Put them in your discussions with Nike and other consumer
• 12:23
  Speaker 9: products makers and peril makers. What's the consensus today about
• 12:28
  Speaker 9: the consumer?
• 12:29
  Speaker 8: The consumer is mixed. The luxury or the affluent consumer
• 12:33
  Speaker 8: is clearly doing better than the low income consumer, and
• 12:36
  Speaker 8: we do think the consumer will continue to make choices
• 12:39
  Speaker 8: and where they shop. But we think the consumer is
• 12:42
  Speaker 8: looking for fashion, it's looking for newness, it's looking for
• 12:45
  Speaker 8: what's hot in the market, and as long as brands
• 12:48
  Speaker 8: and retailers can be on trend, they will drive sales
• 12:52
  Speaker 8: of those products because that is where the consumer is
• 12:55
  Speaker 8: shopping on trend product.
• 12:58
  Speaker 2: How much rope our investor is willing to get Elliot Hill.
• 13:03
  Speaker 8: I mean, I think, like you do, need to give
• 13:05
  Speaker 8: him another year. We need to give him six to
• 13:07
  Speaker 8: twelve months to start to see China inventory moderating and
• 13:12
  Speaker 8: the situation beginning to unfold for the rest of the world.
• 13:16
  Speaker 8: I think he's proven that things are becoming stable and
• 13:20
  Speaker 8: that they are on the uptick in twenty twenty six,
• 13:23
  Speaker 8: especially later in twenty twenty six.
• 13:25
  Speaker 6: Stay with us more from Bloomberg Intelligence coming up after this.
• 13:32
  Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
• 13:36
  Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
• 13:39
  Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
• 13:43
  Speaker 1: you get your podcasts, or watch us live on YouTube.
• 13:47
  Speaker 9: Let's talk a little bit about Amazon, particularly the web
• 13:50
  Speaker 9: business here. It's obviously been a tremendous growth driver for
• 13:54
  Speaker 9: this company over the years, and certainly been the vast
• 13:58
  Speaker 9: majority of its operating income comes from the web services.
• 14:02
  Speaker 9: Here in the question is how fast can this business
• 14:04
  Speaker 9: grow as it continues to scale. Our next guest has
• 14:07
  Speaker 9: a thought er too, anaerog run a Technology Channels for
• 14:09
  Speaker 9: Bloomberg in intelligence. So on step back, you take a
• 14:13
  Speaker 9: look at the AWS business Amazon Web Services, where are
• 14:17
  Speaker 9: we kind of in the growth trajectory of that business.
• 14:22
  Speaker 5: Yeah, thanks Paul, so happy to you. With everybody.
• 14:24
  Speaker 4: When you look at AWS, you know, one of the
• 14:27
  Speaker 4: narratives over the last two years has been that they
• 14:29
  Speaker 4: have been a laggered in AI, and large portion of
• 14:32
  Speaker 4: that is because CHACKGPT, before the contract change with Microsoft
• 14:36
  Speaker 4: was only hosted on Microsoft Azure. As the capacity constraints started,
• 14:42
  Speaker 4: you know, Microsoft farmed outside some of that business to
• 14:45
  Speaker 4: Coviv and then Auticle and so forth. But in the
• 14:48
  Speaker 4: most recent agreement, you know, you can see that CHACKGPD
• 14:51
  Speaker 4: can be hosted in other cloud providers. So that's one
• 14:54
  Speaker 4: area to focus on. But the big thing for AWS
• 14:58
  Speaker 4: is it's an enterprise business. It's not so much a
• 15:01
  Speaker 4: consumer chat operate. So this is the year where where
• 15:04
  Speaker 4: we think that thing kicks off. And what we are
• 15:07
  Speaker 4: thinking is the growth rate for a WS improves successively
• 15:11
  Speaker 4: every quarter going into the at the end of the year.
• 15:15
  Speaker 9: So just remind me and probably everybody's listening and watching,
• 15:19
  Speaker 9: has Amazon invested in open ai or any of that
• 15:22
  Speaker 9: type of thing. Is that are they part of those
• 15:24
  Speaker 9: what people refer to as circular deals.
• 15:29
  Speaker 4: So Amazon is not directly invested in open Ai. They
• 15:32
  Speaker 4: have a new crop contract with them right now, but
• 15:34
  Speaker 4: there is this numer earlie you know in the in
• 15:37
  Speaker 4: the day what we heard a few a month ago
• 15:39
  Speaker 4: or so.
• 15:40
  Speaker 5: But they have invested in Anthropic.
• 15:41
  Speaker 4: So that's an area where you know, when you are
• 15:44
  Speaker 4: partnering with the second largest ll M provider. I mean,
• 15:47
  Speaker 4: I'm not counting Google because that's it's part of a
• 15:49
  Speaker 4: big conglomerate, but a pure play you know, vendor which
• 15:52
  Speaker 4: is Nthropic. So they have invested in that, they partnered
• 15:55
  Speaker 4: with them, and we think that actually workloads also go up.
• 15:59
  Speaker 4: We recently an AI survey and part of what we've
• 16:02
  Speaker 4: found out was software companies are using Anthropic more and more,
• 16:06
  Speaker 4: mostly for the coding reasons. And I think if that
• 16:08
  Speaker 4: accel rates, that actually helps out Amazon as well because
• 16:11
  Speaker 4: some of those workloads do get up to AWS. The
• 16:15
  Speaker 4: big part of the AWS story is it is the
• 16:17
  Speaker 4: largest cloud provider, so the successive growth rate or to
• 16:20
  Speaker 4: see a big number jump over there, unlike a Google
• 16:24
  Speaker 4: you know that has it is the delta is huge
• 16:27
  Speaker 4: or the growth rates are not the same. So, but
• 16:29
  Speaker 4: what we think this year some of those enterprise workloads
• 16:32
  Speaker 4: start to flow in as more their capacity comes online.
• 16:36
  Speaker 4: They have invested heavily in data centers and some of
• 16:39
  Speaker 4: that actually shows up this year and that we think
• 16:42
  Speaker 4: is going to help us help them improve their growth rates.
• 16:45
  Speaker 9: So from competitive landscape position, how do you how do
• 16:48
  Speaker 9: you think of Amazon AWS in the AI space?
• 16:52
  Speaker 4: Yeah, so when you look at the traditional space, there
• 16:54
  Speaker 4: to clear leader, but when you look at the AI
• 16:56
  Speaker 4: infrastructure space, that lead is starting with micro Soft because
• 17:00
  Speaker 4: they got chart GPT to begin with, so that's one.
• 17:03
  Speaker 4: Then you have Google doing very well with their TPU stuff.
• 17:06
  Speaker 4: You know, Oracle and core v also getting into that.
• 17:08
  Speaker 4: But Amazon still has a very large portfolio over there.
• 17:12
  Speaker 4: And what we think is going to happen this year
• 17:14
  Speaker 4: is they're going to they have been spending a lot
• 17:15
  Speaker 4: of money to expand that data centers. They're going to
• 17:17
  Speaker 4: get more and more AI infrastructure orders because you know,
• 17:20
  Speaker 4: at the end of the day, they have the capital,
• 17:22
  Speaker 4: they also get the same chips from Nvidia, they have
• 17:25
  Speaker 4: the luxury or they know how to build those data
• 17:27
  Speaker 4: centers and plug these things together. So I think this
• 17:30
  Speaker 4: is the air where they kind of break through from
• 17:32
  Speaker 4: a lot of this narrative of being an AI laggard.
• 17:35
  Speaker 9: And that that's kind of reflected in the stockown rock.
• 17:37
  Speaker 9: I'm just looking at over the trailing twelve months, you know,
• 17:39
  Speaker 9: only up about five percent here, so tracking lagging the market.
• 17:42
  Speaker 9: So what's the is the reason because they just haven't
• 17:46
  Speaker 9: necessarily got the full AI you know, kind of win
• 17:49
  Speaker 9: in their sale.
• 17:51
  Speaker 4: No, because they the kind of work that doing is
• 17:53
  Speaker 4: very different. The first phase of AI boom that we
• 17:57
  Speaker 4: have seen is in the consumer app It's in the
• 17:59
  Speaker 4: chart GPT and the Gemini.
• 18:00
  Speaker 5: What we have seen. They're not enterprises.
• 18:03
  Speaker 4: They're not large banks that are you know, adding more
• 18:06
  Speaker 4: AI capabilities, but we are in that phase of enterprising
• 18:10
  Speaker 4: adding more AI capabilities. And when that happens, you know
• 18:12
  Speaker 4: they have the large infrastructure, plus they have a lot
• 18:15
  Speaker 4: of the data that these big companies reside in the
• 18:18
  Speaker 4: Amazon ecosystem. I think that's where they benefit the most.
• 18:22
  Speaker 9: I mean it's not very often in the last i
• 18:23
  Speaker 9: don't know, fifteen years where we could say Amazon is
• 18:27
  Speaker 9: cheap or Amazon looks like a good buy relative to
• 18:30
  Speaker 9: its peer set. But I mean, if you have a
• 18:33
  Speaker 9: certain time horizon. Is that what the bulls are saying here?
• 18:36
  Speaker 5: Yeah, I think that's where it is that.
• 18:38
  Speaker 4: You know, so far the narrative has only been about
• 18:40
  Speaker 4: open EI and chargpt and Microsoft. I think that narrative
• 18:43
  Speaker 4: starts to change this year with more and more enterprise adoption.
• 18:47
  Speaker 4: And you know, you and I talked about it just
• 18:49
  Speaker 4: a few weeks ago that we did in AI survey
• 18:51
  Speaker 4: where enterprises are really looking forward to deploy some of
• 18:54
  Speaker 4: these AI tools internally and that's not going to happen
• 18:57
  Speaker 4: in isolation. They have to build that on some data framework,
• 19:01
  Speaker 4: some kind of AI framework, and that's where AWS comes in.
• 19:04
  Speaker 9: You think, just broadly speaking, we're going to hear anything
• 19:06
  Speaker 9: out of CEES as a relates to AI, anything big,
• 19:09
  Speaker 9: do you think?
• 19:10
  Speaker 5: Not?
• 19:10
  Speaker 4: On the enterprise side, I think a lot more of
• 19:12
  Speaker 4: the toys that people think about, whether you know you
• 19:15
  Speaker 4: have a threefold phone or more AI assistance. But that
• 19:18
  Speaker 4: really doesn't move the needle for some of these cloud vendors,
• 19:22
  Speaker 4: largely because they are predominantly, you know, exposed to companies
• 19:26
  Speaker 4: spending more on enterprise or AI rather than consumers.
• 19:31
  Speaker 1: This is the Bloomberg Intelligence podcast, available on Apple, Spotify
• 19:36
  Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,
• 19:40
  Speaker 1: ten am to noon Eastern on Bloomberg dot Com, the
• 19:44
  Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You
• 19:48
  Speaker 1: can also watch us live every weekday on YouTube and
• 19:51
  Speaker 1: always on the Bloomberg Terminal