Bloomberg Businessweek Weekend: May 1, 2026

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1:45This is Bloomberg Business Week Daily. Reporting from the magazine that helps global leaders stay ahead. with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. Bloomberg Business Week Daily with Carol Masser and Tim Stenevek on Bloomberg Radio. Hi, everyone. Welcome to the weekend edition of Bloomberg Business Week. It was another whirlwind of news this past week from what's likely to be Jerome Powell's final Federal Reserve rate decision as Fed chair, although he's not leaving the Federal Reserve quite yet.

2:22We also got a visit from the King of England, spending time at the White House, also in New York City, to a massive IPO from Bill Ackman's Pershing Square, which maybe was a little bit disappointing if you check out how it traded on its first day. Yeah, Pershing Square USA fell 18 % in its debut this week. That's below that book value of$50 a share. Plus, we also got a slew of earnings. This week, we got quarterly updates from five of the Mag7. Microsoft, Meta, Alphabet, Amazon, and Apple. What did we call it, Tim? Something like 80 seconds or less than that? Well, it was 80 seconds last quarter.

3:01And then this week, it was 71 seconds when all these companies reported. It was... On Wednesday afternoon. It was crazy. It was crazy. These companies, these four big Mag7 companies all dropping within less than two minutes' time. It was crazy. There were lots of other earnings this week. We also got results from Wayfair. The company's CFO, Kate Gulliver, joined us to talk about the consumer, the trends, the buying trends that are out there, and building out the company's retail exposure. And we'll wrap the hour and the crazy week with Chris Wirth, Director of Sustainability at OPC Wines and Spirits.

3:34We talked farming, climate change, consumer tastes, and more. Oh, yeah, we sampled a little bit of wine as well. Yeah, there are three different choices. Tried them all. Anyway, we'll get to that later on this hour. All that to come. I think you took some of the bottles, too, if I recall. It wasn't that you just tried them. No comment. Tried and enjoyed them all. All for journalistic endeavors. I wasn't the only one. All of that to come on the weekend edition of Bloomberg Business Week. We start, though, with those big tech earnings so important to investor sentiment and market momentum. For a roundup on how the big hyperscalers stacked up when it came to CapEx and how investors reacted in the incredible 71 seconds of that earnings drop, We leaned on Bloomberg Intelligence Global Head of Technology Research, Mandeep Singh.

4:18That was just one day. That was the drop on Wednesday. Mandeep, good to have you here. There were some big, broad things that we were looking for as we headed into this big drop of tech earnings this week. Yeah, look, ROI on this CapEx was a big theme. And what we heard from these companies is not only are their cloud infrastructure business accelerating, which is what we saw with Google, Microsoft, and Amazon. I mean, think of it this way. Public cloud infrastructure was growing 20%. The combined market was$400 billion. Now we know that growth rate has gone from 20 % to 40 % for that aggregate$400 billion.

5:04And that's what I think should convince investors about the ROI on the infrastructure side. On the application side, you are starting to see Google Gemini really show up in terms of driving subscription revenue, which is why Google had such a solid print. Meta, on the other hand, wasn't very convincing in terms of showing that agentic AI contribution to the top line, even though they It grew, you know, 33 % in the quarter and had very strong guidance. But it's just the delineation between how much is AI versus how much is core business, which is phenomenal, doing really well. I think that was the missing link in the case of Meta.

5:46Mandeep, one thing I want to ask you. I mean, each of these companies, massive in their own right, well-known, obviously, but they're not all the same kind of companies. What's the secret sauce that Alphabet Google has right now? Google has that vertical integration. Think of what Apple has done so well over the past 10 years on the consumer device side. Google is showing that on the data center side, they have the chips to train their LLMs. They have the chips for inference for their LLMs. They're deploying it on their Google Cloud. And really that vertical integration gives them that CapEx efficiency, which is missing from the likes of Meta or even for that matter, Microsoft, who have to pay NVIDIA for all the chips.

6:36So there is that premium when it comes to procuring the chips. And just the data center costs are much higher, 15 to 20 percent higher for Meta and Microsoft than it is for Google. So that speaks to the efficiency part of what we learned. When it comes to Alphabet, when it comes to Google, how much of the capacity for their cloud business is used by themselves versus other customers? And who are those other customers? I mean, this quarter we learned Google Cloud, the external business, which is almost an$80 billion run rate, grew 63%. Now think of, you know, So if they are able to sustain that kind of growth rate, they will take share from Amazon and Microsoft when it comes to the overall cloud pie.

7:26Because Amazon AWS, yes, it's bigger,$150 billion, but it's growing 28%. So Google's growth rate is more than two times Amazon right now. But to your point about capacity, they are using almost 50 % of that capacity still for search and, you know, Gemini and their internal use case. But that's, again, the advantage they have with TPUs is they control the supply. I mean, yes, they have to get it fabbed at TSMC. But beyond that, they can do a lot more with the$180 billion in capex spend in terms of number of chips versus what others are able to do because they have to upgrade to NVIDIA's latest chips and they have to pay up for NVIDIA's latest architecture.

8:12So they're getting a lot bigger cluster and a lot bigger capacity than other hyperscalers. Are they also at this point selling their TPUs? Yes. So that's the latest deal with Entropic, which is a multi-year deal for 3.5 gigawatt capacity. That kicks off starting 2027. But clearly they have demand for TPUs beyond Google Cloud and their own usage. And that's where that Enthropic deal is very important in terms of the long term ramp for TPUs. All right. So, Mandeep, yay for Alphabet and Google. Who's the contrast? Who is it doing so well that we got this past week in terms of earnings? And I don't know whether do you contrast that with Meta?

8:57Do you contrast that? Which is that stock was under pressure. It's under pressure this year, year to date. We saw cutting jobs also this week. So I'm just, who's the flip side of the coin to all the great that we're seeing with Alphabet and Google? I mean, right now it has to be meta simply because they don't have that separate cloud business line on the infrastructure side, like you see with the other hyperscalers. But look, even an Oracle could come under pressure with all the shifts around OpenAI. So OpenAI previously was exclusive to Microsoft. Now they have this big deal with Amazon, where Amazon is investing$50 billion.

9:41OpenAI is deploying their models on Amazon. So that could cause few shifts, especially in terms of OpenAI's relationship with Oracle, for example. And, you know, there could be an impact in terms of whose infrastructure gets utilized more compared to what we saw in the past 12 months. But from the big tech earnings this week, the big hyperscalers, the real contrast between Alphabet is we saw it in Meta. Meta? I mean, Meta doesn't even have their own LLM that they are deploying on their family of apps. So think of where Alphabet was doing. But they do. They do within Instagram, within WhatsApp.

10:17Those are LLMs, right? The usage. I mean, think of how Alphabet is doing with search. Like AI Overviews has all Gemini content. In the case of Instagram and WhatsApp or Facebook, you don't, like meta AI is an option, but people don't use it. I will tell you, I do not use it. I've never used it. It's never been something that I've even had an interest in. And the meta AI standalone app has got a handful of users compared to their 3 billion users across a family of apps. So is it simply put, when you see CapEx from meta platforms, that's for their own use. And that's why investors are not that happy about it.

10:54And they have a vision which definitely resonates with investors that they want to deploy more personalized agents that can book travel for you, that can do things for you, even order food, for example. That's fine, but this is an advertising company. This is a company that makes money when we click on ads that show up on our Instagram views. So was Google, but look at how much Google has ramped up on the subscription side. Google subscription line is almost 70 to 75 billion dollars now if you add YouTube subscriptions and Gemini subscriptions. So they have diversified beyond ads to consumer subscriptions.

11:31Obviously, cloud is a big part of that diversification. You don't have that in Meta. So you think that's a real opportunity for Meta? You say investors are buying that story right now? I mean, everyone believes Meta has that surface to deploy agents. It's just a matter of having a good product that they believe in and they do it at scale. Should we talk about Apple? Oh, well, it's such a little company. I think we should talk about Apple. Yes, massive company. That was the earnings that we got this past week, Thursday after the closing bell. I know everybody was like, yeah, yeah, it's going to be about the new incoming CEO.

12:05But the numbers still mattered. People cared. Investors cared. Yeah, it was that revenue forecast for the third quarter that really got the stock moving that they mentioned on the call. It's amazing how Apple refresh cycle continues to do so well. You know, after every two years, you see a big refresh upgrade cycle that drives double digit growth in iPhone category. And that just goes to show the retention they have. So what is it? Is it the 17E, that lower end phone? Or is it the higher end phone? The higher end phone. It's always about the higher end phone with Apple that and they have a lot of stickiness.

12:41But look, once we are past that upgrade cycle, I still think they will fall back to that, you know, mid to high single digit growth rate, which you compare to the other hyperscalers like Google growing 22 percent at a$400 billion run rate. It's a lot. And ability to sustain that kind of growth rate with the investments they're making. That's what's missing from Apple. That's sustainability of growth. Hey, Mandeep, you mentioned the new CEO, John Ternus. He says, quote, we have an incredible roadmap ahead. This is the most exciting time in my 25 year career at Apple to be building products and services.

13:17Is that true? Well, I think, again, from a hardware perspective, there is no better company when it comes to consumer hardware. So I will concede like I haven't seen an alternative built around, you know, these LLMs when it comes to challenging Apple's hardware position. But I better hope that as part of the roadmap, they have an AI strategy because right now it feels like they're leaving too much on third party LLMs to help out when it comes to AI specifically. Mandeep, you just rock. Nobody knows this stuff like you do and you just tie it all together. Mandeep Singh, of course, oversees our global tech at Bloomberg Intelligence joining us here.

14:05Up next, we stay with earnings and we catch up with a great read on the consumer, the housing market. We do that with the CFO of Wayfair, Kate Gulliver. We feel great about the quarter that we printed. I think we're very focused on the fundamentals. And are we doing two things? Are we expanding our share gains in a category that, you know, as your team covered, is complex right now and challenging? and are we expanding our profitability? And we're doing both. You're listening to Bloomberg Businessweek. This is Bloomberg.

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17:25Spotify, or wherever you listen. This is Bloomberg Business Week Daily with Carol Nasser and Tim Stenevec on Bloomberg Radio. This week, Wayfair shares fell after the home goods retailer reported adjusted earnings per share for the first quarter that missed the average analyst estimate. It issued second quarter guidance on the conference call expecting mid-single digits percentage growth year over year and gross margins between 29.5 % and 30.5%. Wafer stock down about 30 % so far this year. For more, Kate Gulliver, chief financial officer at the company, stop by to talk about the quarter and the outlook.

18:05We feel great about the quarter that we printed. I think we're very focused on the fundamentals. And are we doing two things? Are we expanding our share gains in a category that, you know, as your team covered is complex right now and challenging? And are we expanding our profitability? And we're doing both. So in that, you know, print on Q1, we showed that 7.4 % net revenue growth. We think that's on a category that was down sort of low singles. So a really nice share spread to the category. And then you saw a really strong flow through to EBITDA. That was our highest Q1 adjusted EBITDA margin since 2021.

18:41And so I think you're really seeing the strength of the model there. So we feel great about the quarter. Kate, I just want to say, first of all, thank you for getting the memo so that we kind of match here. I'm really happy. I love it. Blue is blue is the theme. Cerulean, you know, I love it. I love it. Hey, listen, one of the things I wanted to think, ask you about, you've been at Wayfair for more than a decade, your interim CFO, CFO since May of 2022. After those heady and exuberant days of the pandemic, tough time we know for the global economy, the US economy, but everyone was buying so much for their homes.

19:15And then we had that reset. And I think we've all now can look back at that time and say that was the anomaly. That was the unusual time. We've seen the reset. You've seen your share of cycles, though, I guess is what I want to point out to. Tell us about the consumers right now. We've been talking about they're in a pinch. Gas prices are higher. Other things are higher. They're holding back. Tell us about what you saw with the consumer. Yeah, we do think that in our category, the category is challenged and the consumer is challenged. So if we look at Q1, we felt that Q1, the category was down sort of low single digits again.

19:50This is on a category that has been down consistently since 2021. And actually, if you look at the trend line, so typically this category in a normalized period grows 3 % to 4 % a year. If you were to CAGR the 2019 period to now and look at what that trend line should have been, we're still far below that trend line. So even when adjusting for that pull forward, as you spoke to in 2020 and 2021, the category is off. And I think that speaks to a consumer who is challenged right now and not spending as much on discretionary. I think what's important, though, is that for us at Wayfair, our focus is less on, you know, when is the consumer going to recover and when are we going to see those category tailwinds?

20:32We want those. Those will be fantastic. It's a cyclical category. We know it'll come back. But our own growth is really driven by our share spread to the category and the initiatives that we have going internally around rewards, Wayfair verified, our physical stores. And those are growing in a really good direction. And that's what's driving that, you know, mid single digits revenue guide for Q2. So you're less concerned about potential weakness from the consumer in the current quarter than you are about that being offset by the tech investments that you're making? Yeah, so our guide for the current quarter does not contemplate any improvement in the category dynamics.

21:10So we're, you know, quite confident in hitting that mid-single digits revenue, you know, absent any category recovery. We said on the call, actually, we thought April was down sort of low to mid-single digits in the category. So the category, you know, maybe further challenge in April. Even with that, you know, we still are confident in this mid-single digits number for Q2. Hey, talk to us a bit more, Kate, about Paragol. That's really your luxury online marketplace. What are you seeing the dynamics and metrics of that marketplace in particular? Yeah, I think there's been a lot of discussion around the K-shaped economy.

21:45And certainly where we see that play out is with Paragold, which is, as you pointed out, Carol, our luxury brand. We also have our specialty retail brands. So Joss & Main, Birch Lane, All Modern. And those play a bit above mass, not quite at the luxury level, but above mass. and all of those brands are doing quite well. They're growing very nicely. Now, those are small brands. So Wayfair.com has to be growing nicely too to get that 7.4 % comp. But we are seeing strength in the higher end for sure. What about when it comes to the pro business? Yeah, that's a great question. I appreciate you asking about that.

22:20The B2B business is actually held in quite nicely. Last time we gave a stat on that, I think we said it was around 2 billion. That's an important category for us. One, we can continue to grow. So that's a place where I'd say our ability to continue to improve the site has sort of nicely added to how the consumer engages in that category. So the pro consumer, for example, wants, you know, consolidated delivery, all of the products arriving together versus piecemeal. They want to be able to plan projects on the site. And these are things that we've rolled out over the last year or so to really help that shopper in that category who tends to be a designer or a contractor.

22:57So, you know, when we, you know, you're talking about the different aspects of the business, Kate, and I want to go back to, all right, so some weakness now, you know, in terms of what we just saw for the last quarter, but that you guys seem to have confidence about momentum for the second quarter. Is that fair? Yeah, I think what you're hearing from us is, you know, we know the category is under pressure. We've been, you know, as you point out, we've been operating in a challenging category for a few years now. And what we're seeing is the benefits of several different initiatives that we've launched over the last year plus, really hitting and combining together.

23:30And that is what is sort of driving this share acceleration. And, you know, one of the things too, Kate, I wanted to dig into, we've talked with you about this. I mean, and everybody talks about, you know, housing, it's not been great, right? People aren't buying homes. But the last time we caught up with you, or I think we've talked about it in the past, about the refresh cycle. Is that where you're really seeing a lot of activity? I know we have been in a house for a long time and we are doing some refresh work overall. But I'm just curious, give us some context and color around that. Well, I hope you're shopping the sites, Carol, as you're doing the refresh.

24:07You know, it is, I will say, with the category down so much, eventually we do think we'll start to see some of that refresh. I think people stay in their home long enough, you know, to your point. and there's a desire to sort of simplify or improve. I think we've talked before about categories that have done well during this period are categories that are more, you know, decorative accents, seasonal decor, the types of things that you might use in a refresh, whereas the bigger ticket items, the bigger furniture items, that category has been even more compressed. You know, within all of that, though, our focus continues to be on the share gains in each of those sort of subcategories that we play in.

24:48Can you talk a little bit about the calculus or the equation that goes into when someone returns something or wants something returned? You have this calculation that says, OK, we can give you a partial refund and you can keep the items or we'll take a full refund, but you have to pay for shipping and back. Because we're talking about stuff that isn't as easy as just returning to a store, sometimes not as easy from a shipping perspective. Just curious how that equation works and sort of how that hits your bottom line. Yeah, so you've actually introduced a number of the pieces in the way that you frame the question.

25:26You're right. We think about, one, what is the customer experience here, right? Some of these items are very difficult for that customer to return. So how do we make that easy for her? We actually have opened up a number of outlet stores across the country where the customer could return the product. We have two large format Wayfair stores open in Chicago. Atlanta, the customer can bring the product into those stores. Or if it's smaller parcel, she can certainly ship that back. But would she perhaps prefer to keep the product and not return? That's always an option. But the focus is really, how do we simplify this for the customer?

25:59It's really important for the customer to have a great experience with us, even if she needs to return, because that's what keeps her coming back and shopping consistently with us over time. And I do think it's that trust in the brand and the trust that you're going to have a high quality experience that has really been one of our strengths over the last two decades that we've operated. In terms of how that impacts the P &L, our returns rate has remained very steady over many, many, many years. And what we try to do is actually prevent returns from the start, right? So how do we make the product detail page as rich as possible?