Tesla’s Sales Fall Most in a Decade, Alphabet Boosts Guidance for 2025 Spending

24:25Carol Massar:And to my mind, you know, given all the competitive threat that we talk about, they're still able to execute. And unless the search business really starts to decelerate sharply, I don't see anything in the fundamentals that has changed for Google. Is meta threat to Alphabet? No, because they're struggling with their own large language model. That's why they're making all the aqua hires. So they don't have the talent. It's really Google and open AI that are going neck and neck when it comes to the consumer side. And then you have got Enthropic on the enterprise side. But these three dominate the large language model race right now.

25:05Let me add that the advertisers are not saying that. Our advertisers are saying they're shifting dollars from two meta away from Google. So I think when you look at actually advertising dollars, they are shifting, and that's coming from our checks. So I think that there is a shift that's been happening. I don't think Google goes to zero, but I do think there's a shift in advertisers.

25:26Carol Massar:Why did Google search then grow double digits this quarter? It's starting to fade, and we think that ultimately Meta's results are much stronger. Okay. I mean, that's where we have to wait for Meta. maybe it grows high teens or over 20 % and then probably the stock's up 22 % year to date for a reason because the advertiser checks that we all do are saying that secondarily the framework of what they can do with AI is so much more powerful from what we're seeing in the experiences. So I'm not, again, I'm not a Google hater. I just think that we're starting to see a sudden, but they are behind when it comes to LLM.

26:02Carol Massar:So it's not because of their LLM lead that their ad revenue is shifting. So it's just better at surface and how meta is monetizing. It's not because of LLMs, right? I don't believe it's, I don't believe it's because of LLMs though. Yeah. So Brent, if, if indeed there is this shift happening, and I certainly see it in, in my behavior and I do end up going back to Google, but there is, there are other options out there now, whether, whereas there used to not be other options. If that happens, how does Google end up leveraging its AI product for actual ad revenue? What does that look like? Well, I think the challenge is when you go back to Gemini, that if you've gone into perplexity into the app or ChatGPT, where we all started and Gemini was late, how do you transition out of those apps when they're already front and center.

26:59And so they've got to get people to kind of get out of that. And then secondarily, I go back to like, I planned a family vacation in Europe on ChetGBT. And to your point, I had to go back to Google to find the boat rental, the restaurants, all the things we want to do as a family. So I do think that you ultimately end up back. I think the challenge right now is it's unclear exactly how they're going to navigate through this and are they going to end up in a better or worse position. And right now, Wall Street's betting a worse position, right? Stock's down on this print, which wasn't that bad.

27:35Why is it down? Why is the sentiment so bad? There's just better alternatives that people see. And you hear these advertisers, these big advertisers are spending billions of dollars a year on behalf of their clients. And they're saying, well, this is what I'm doing with my ad budget. So I think they need to do a better job of, you know, you've got to get AI overview on the market and get usage. You have to effectively show a better ROI. You have to get Gemini usage up. I think, you know, from Wall Street, a lot of this is just actually management, too, which is giving conviction. We covered Microsoft when Balmer was there, and stock did nothing, and people just didn't have a conviction.

28:12They had conviction when Nandela came in, the stock went from 30 to now it's 500. And so a lot of this, too, is optical. You've got to optically hold hands and help people because investors get the help from a lot of the other companies. They don't get the help from Google. So if you can drive a car, you're probably more likely to buy it. But if you can't drive it, then, you know, like, maybe I'll just go buy another car I know I can drive. So they need to do a better job on that side.

28:39Carol Massar:And to Brent's point about Gemini usage, I think on the call, if they share the token count, so last quarter they mentioned 480 trillion was the token count and it grew almost 5x month over month. Microsoft shared a similar metric. And to my mind, in the case of Alphabet, you'd not only have the cloud lift, so cloud consumption is driving token count, but also the surface area they have with their family of apps. So they have six apps with over 2 billion monthly active users. All the Gemini AI that they are deploying on those apps, including search, that will show up in the token count. And that's why Google is almost 10 times that of Microsoft.

29:26Carol Massar:So Microsoft processed 50 trillion tokens. Google processed 480 trillion tokens. That's because of the surface area they have to show Gemini and deploy that. And that, for me, is a key metric on the earnings call. So that's what you're going to be looking for. All right. We're going to let you go because you, I know, have lots to do. Mandeep Singh, you are such a gem. Bloomberg Intelligence. Hey, Brent, before you go, just a quick thought on IBM because they also report and they're down almost 5 % in the aftermarket. What do we need to know just quickly? Yeah, software that did better consulting is kind of like blah.

29:59And I think the CEO had mentioned they'd like to do better in consulting. But that seems to be the biggest concern across consulting overall. So, you know, tale of two cities, software business growing, high single digit consulting, not massive grower and flat on a constant currency basis. And so, you know, they're shifting to become a software company. Arvind has done a great job. The CEO, the stock's up almost 30 percent year to date. The multiple's almost at Microsoft. Like, I'd much rather own Microsoft. I'd much rather own Google. There's other names I'd rather personally own. I can't own any of these names, but we're advising our clients to own over IBM.

30:37We just see, you know, the stock pretty full at the multiple it's at.

30:41Carol Massar:All right. Just real quickly, what would be your top number one question on Alphabet on the call here? And the stock's down still 1.6 % lower. Just quickly. You know, the continued adoption of AI overview and what's happening with Gemini. All right. Going to leave it there. This was fun. Brent, thank you so much. Brent Dale, he's Senior Technology Research Analyst over at Jeffries, joining us on Zoom on this Wednesday. This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at 2 p.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station.

31:20Just say, Alexa, play Bloomberg 1130.

31:24Carol Massar:So we've seen initial public offerings definitely picking up some momentum this year. As a group, IPOs are up about 5 % year to date as measured by the Renaissance IPO Index, but up 41 % from a low back on April 8th. We've got a couple of IPOs today. Both are trading lower in their first day of trading. We've got NIQ Global Intelligence shares slumping after the company raised more than a billion in its IPO, giving it, Tim, just about a market cap of just under$6 billion. Another, a small cap, Carl's Med. It's a med tech company slipping in its first day of trading after it raised$100.5 million in its IPO, the company with an approximately$387 million market cap.

32:05Carlsmed uses AI to personalize spine surgery. It sold 6.7 million shares after offering them for$14 to$16 each. Here with more on the company in the first day of trading as a public company, Mike Cordagnier, co-founder and CEO and president of Carlsmed. From the NASDAQ, also joining us, Bloomberg News Accuities reporter Natalia Konejavich. She's here in the studio with us. Mike, the stock is down on the first day. How are you feeling on a day such as today? Stock not necessarily moving in the direction you want to see? Well, we're feeling really good about, you know, how we're doing today. You know, continue to focus on our mission and building awareness about, you know, really what we do that ultimately we know has transformed spine surgery.

32:52And so, you know, continue to focus on the fundamentals and, you know, it's ultimately going to be a really strong day for us.

33:03Carol Massar:For those who might not be familiar, Mike, just fill us in on exactly what you do. From what we understand, you guys do personalized surgery, which got one of our producers, Cece a little worried because we thought all surgery was personalized. At least we hope that's the case when we go under the knife, so they say. So what exactly do you guys do? Yeah, you know, we've really taken a very different approach to what really a medical device company is. And so we are a medical technology company and we work with surgeons and patients and we take digital imaging of the patients as well as surgical inputs from the surgeon create a virtual plan of that patient's surgery.

33:50And then we 3D print personalized devices for their spine surgery, build those on demand, deliver directly to the operating room. And And ultimately what this does is this gives the surgeon really power to be able to perform very precisely what can be a really complex spinal surgery.

34:13Carol Massar:Mike, hi, congratulations on trading debut. I'm curious about your path to profitability because companies like yours typically require a lot of capex. Do you guys have any timeline in mind on when you become profitable? Yeah, well, we haven't provided direct guidance to that. However, we have built our company very differently than a traditional medical technology company because we don't carry any inventory. Everything that we create is 3D printed directly on demand. And so as we think about this public offering, the use of capital to reinvest towards really our growth in being able to provide this technology to a lot more patients.

35:00Carol Massar:What's proprietary? Yeah, ultimately, you know, we have a broad technology platform that we built. And so as we think about rolling this out much more broadly, we've been able to create an end-to-end technology platform that is proprietary to us that we've called our digital production system. And this is an all-in-one system that allows us to take digital data about the patient, about the surgeon, create personalized plans and the devices to achieve those plans. And ultimately, when we started down this journey just a few years ago, this whole end-to-end process took us a little bit longer than eight weeks.

35:51And now we've really reinvested in our proprietary system that allows us to do this in two weeks or less, which really allows these scheduled surgeries to be able to be done in the time that the surgeon and patient needs them. Mike, why was an IPO the right move here? If the broad adoption by doctors around the U.S. and around the world is your goal here, why not look to be acquired by, let's say, a Medtronic or a Johnson & Johnson or a Striker that already has these relationships with doctors and can roll this out more broadly? Yeah, we really think about this much more than a product line and really much more as a new way to run a business because very different than what the large players in this space do, which tends to be a very capital intensive business model.

36:46You know, we've built this new business model, which is really digital first, allows us in conjunction with the surgeon to do the procedure digitally first and then make on demand everything that's needed. And so because of this, because of ultimately our ability to do this on demand, we built a very nimble, agile company that we can deeply target those key institutions and the patient population to directly deliver exactly what's needed. And we see this really as a platform technology that has a lot more applications, much beyond our current indications that we have for spinal fusion.

37:34Carol Massar:So can I just ask you, so does that mean you ultimately see yourself maybe for every complicated surgery figuring out how to do this? Just quickly. Yeah, absolutely. You know, we see this as continued innovation partnership with, you know, surgeons as well as us on the technology side to be able to provide a very novel personalized solution to patients that ultimately drives better outcomes. because as we've looked at our early data for spine fusion surgery, we've been able to materially improve outcomes for patients because we can directly personalize the devices needed for their surgery. Mike, what is your tariff exposure?

38:22Yeah, so we are 100 % supply chain in the U.S. And so we're very well insulated from the news that's coming out around tariffs.

38:36Carol Massar:Hey, one thing I want to ask you, though, in terms of the growth of the business, I know you're not going to give us anything on profitability or when you get there. But what's the growth that you are seeing in usage, growth, and revenues? Can you give us some numbers? We are Bloomberg, and you are a public now, and ultimately you're going to be sharing this stuff. Just got about 40 seconds. Yeah, absolutely. You know, we've grown phenomenally since we started, and we can report that, you know, in the first quarter of this year, you know, we grew 100 % year over year. And so, you know, we see this adoption very rapid with new surgeons, new accounts coming on board, and, you know, we anticipate, you know, continued wide adoption of this new standard of care.

39:24All right.

39:25Carol Massar:I think we have to leave it there. Hey, listen, stay in touch. Love to know as you continue along and maybe on that first earnings, you can come join us after that. Mike Cordner, he is co-founder, Cordaña, excuse me, co-founder, CEO and president of Carl's Med, joining us from the NASDAQ on their first day of trading. And our own Natalia Kedijavich, she's here in studio. She's our Bloomberg News equities reporter. Some people treat ChatGPT like some kind of smart search engine, And some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work.

40:04Carol Massar:It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling.

40:40Carol Massar:The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients.

41:13Carol Massar:And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact. That's where 4imprint comes in. 4imprint have promotional products that work as hard as you do. Durable, useful, and designed to make a lasting impression. Think quality apparel your team will wear again and again, including popular and exclusive brands. Drinkware that's enjoyed again and again.

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42:28Catch us live weekday afternoons from 2 to 5 p.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube.

42:38Carol Massar:Those latest trade agreements still waiting to be done, including one with the EU and then another that's already been hammered out with Japan, Tim. Weighing in, both U.S. Treasury Secretary Scott Besson, followed by U.S. Commerce Secretary Howard Lutnick. 15 percent for Japan for reciprocal tariffs for autos. That is a different kind of deal because the Japanese proposed a very innovative solution. Has Brussels come up with anything innovative? Not yet. The EU has a collective action problem. 27 countries. That's up to them to negotiate, right? Are they willing to open their market? I don't think anybody—Europe's not going to go and give us a trillion dollars to invest in work.

43:21Carol Massar:Well, can they get below 15 percent, or is 15 percent now the floor? For autos, I would— No, for a reciprocal tariff, the European Union. I don't think big countries— At one point, they were willing to accept 10 percent. I don't think big countries can get low like that. All right. That, of course, is U.S. Commerce Secretary Howard Lutnick, preceded there by U.S. Treasury Secretary Scott Besson. They were earlier on Bloomberg Surveillance on TV and radio. Hey, check out those full interviews. You can find them on the Bloomberg and at Bloomberg.com. Hey, for the tell, though, on these trade agreements and what impact it may have on global trade and for investments in the U.S., we start in the nation's capital with a senior advisor in Japan, Chair at CSIS.

43:59Carol Massar:It's the Center for Strategic and International Studies. Christy Gavella joining Tim and myself from the nation's capital. Christy, it does seem like things are moving along on trade deals. According to what's kind of coming out, are these good trade deals for the United States? Are they good for the economy? Are they good for the global economy? And why or why not? Well, it certainly seems that the Trump administration is gaining momentum in its quest to negotiate trade deals before the August 1 deadline. If we look at the deal that was announced with Japan yesterday, it's clear that these are good deals for the U.S.

44:34Carol Massar:in the sense that the U.S. is raising tariffs by significant amounts and therefore administration also by getting increased investment that addresses the trade deficit. You know, some could argue that the concessions being offered are perhaps not as significant as they might have wanted, but they are getting, for example, Japan$550 billion in investments, as well as concessions on rice imports and also on auto safety standards. So these are meaningful deals in a sense. And the deal with Japan was the most substantial negotiated yet in terms of trade volume. In your view, does it seem like the deal with Japan is better for Japan or better for the United States?

45:14Carol Massar:It represents a compromise on both sides. Japan's initial position was that it wanted the removal of all U.S. tariffs, which, of course, it did not receive. But a key issue for Japan was the tariffs on automobiles, which were at 25 percent from earlier in the year. So Japan received a reduction to 15 percent on autos and also received an overall reduction from the proposed 25 percent reciprocal tariffs to 15 percent. So that is a substantial improvement over the initial conditions Japan was facing. It's also the lowest reciprocal tariff rate that's been negotiated to date with a country that's running a trade surplus with the U.S.

45:48Carol Massar:But make no mistake, 15 percent tariffs are still a significant blow for the Japanese economy. So, you know, things were given and things were gained on both sides. Hey, you know, there was a Bloomberg story, Christy, out this morning and included a quote from Trin Yuen, senior economist for Emerging Asia at Texas. And she said, we live in a new normal where 10 percent is the new zero. And so 15 percent and 20 percent doesn't seem so bad if everyone else got it. And she's talking, of course, about tariff levels. She went on to say that a 15 to 20 percent tariff level, it's still profitable for U.S.

46:20Carol Massar:companies to import from abroad rather than produce similar goods at home. So wait a minute. I thought these trade deals were about bringing back manufacturing and supply chains to the U.S. and investment back to the U.S. Is that going to really happen? Well, on your initial point, it is true that the Trump administration has managed to reset people's perspectives on what constitutes reasonable tariffs. So, you know, what we see with Japan, for example, would have been considered horrific. And the minimum 10 % that seems to be on the table is also shocking by previous standards. But it is true that in the longer term, it's still up in the air whether these tariffs will really achieve the goal of bringing investment and jobs back to the U.S.

47:04Carol Massar:in a substantial way. These tariffs are not necessarily the best tools to do that. And it also is very difficult to predict how companies and others will react to them. So we can only really see the short-term consequences in terms of rising prices for consumers and also the revenue that it will generate in the short term. But companies and others will adjust in unpredictable ways, and it won't necessarily mean that they will come back to the U.S. The president has talked about trade deals and economies opening up to the United States. In your view, was the Japanese economy closed to the United States?

47:39Certainly from an automaker perspective, it's been a few years since I've been in Japan, but I didn't see any American cars on the roads of Japan. They were all Japanese cars there. But has the market been closed to the U.S.?

47:54Carol Massar:In general, tariff barriers in Japan are not significant. Japan has had open trade with the U.S. for a long time. But you're correct that on sensitive products like agriculture, there have always been high tariffs that's not unique to Japan. So rice did become a significant issue in the negotiations. On autos, the main issue there is more complicated. So the concession that was given in the agreement related to auto safety standards, which have long been perceived to be a non-tariff barrier that have made it more difficult for U.S. automakers to sell in Japan because they have to meet different safety standards.

48:30Carol Massar:But there are a host of market factors that make U.S. cars less competitive in Japan that won't necessarily be addressed by these changes. So, you know, there are areas in short where Japan's market has been rather closed. But on the whole, you know, companies face relatively open conditions on a relatively free and fair playing field. We've seen some reports about the EU seem to be maybe working, getting closer to a deal with the United States. We've got China next week. Just to wrap up, just remind everyone why having trade deals with these big trading partners is important for the U.S. economy and the U.S.

49:08Carol Massar:overall. Well, from the perspective of the Trump administration, the issue is that these countries are running trade surpluses. So they are seen as a negotiating tool in that sense. Overall, these are our major trading partners in the U.S. And so the trade volumes that are going through are significant to the economy. It's important that these relationships are maintained. It's important that from the administration's perspective, they be rebalanced in various ways. So, you know, getting these deals ahead of the August 1 deadline minimizes disruptions to markets and to companies' activities. So it's important that they move forward.

49:43Carol Massar:Yep. We can cross a big, big uncertainty off our list here. No doubt about it. Thank you so much. Christy Gavella, Senior Advisor and Japan Chair at CSIS, the Center for Strategic and International Studies, joining us from the nation's capital. This is the Bloomberg Business Week Daily Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

50:27Carol Massar:Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com.

51:23T's and C's apply. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact. 4imprint's promotional products are designed to work as hard as you do and make a lasting impression. From quality apparel, including exclusive brands, to drinkware, tech, and totes, they've got thousands of options to fit your brand and budget. Plus, you get free samples, expert help, and their 360-degree guarantee. so you can be 4imprint certain everything shows up just right, right on time. Explore more at 4imprint.com. 4imprint. 4certain.