Daybreak Weekend: Tech Earnings, Middle East and Africa Summit, Labubu Craze

0:01Bloomberg Audio Studios Podcast Radio News. this is bloomberg daybreak weekend our global look at the top stories in the coming week from our daybreak anchors all around the world straight ahead on the program we'll get you set for more corporate earnings in the tech sector i'm nathan hager in washington i'm caroline hepker in london where we're asking how middle east and african countries are focused on business in a changing world order i'm doug krisner looking at whether the labubu craze is due for a beanie baby style bust. That's all straight ahead on Bloomberg Daybreak Weekend on Bloomberg 1130 New York, Bloomberg 99.1 Washington, D.C., Bloomberg 92.9 Boston, DAB Digital Radio London, Sirius XM 121, and around the world on BloombergRadio.com and the Bloomberg Business App.

1:02Good day to you. I'm Nathan Hager. We begin today's program with more corporate earnings in tech. Cybersecurity provider CrowdStrike reports on Tuesday. Then we hear from software names Snowflake and Salesforce on Wednesday. For more, we're joined by the analysts who cover these companies most closely. Bloomberg Intelligence, global head of tech research Mandeep Singh, and Anurag Rana, tech analyst for Bloomberg Intelligence. It's great to have the both of you with us on this weekend program. Of course, we've heard from a lot of big tech names already. A lot of the hyperscalers have reported as well.

1:35Mandy, I'll start with you. Do the results that we've heard so far tell us anything about what we could hear from these software players this week? Yes, I think when you look at the hyperscale cloud numbers, especially Microsoft and Google, it's pretty clear that we are seeing that lift from AI workloads for both Microsoft and Google. And that's why Microsoft is growing close to 40%. Google was mid 30%. And they're ramping up CapEx in anticipation of those numbers going even higher. So I expect that to trickle down to some of the software players. like Snowflake, for example, is in the business of using enterprise data for deploying some of these agents that everyone is looking to add in terms of their enterprise functionality.

2:30And Snowflake data is, to my mind, critical. So they should see a similar lift to their top line from AI workloads. And CrowdStrike being a cybersecurity provider, I think they are finding the attack surface when it comes to generative AI is far bigger than anything these security companies have dealt with. And you could have prompt injection attacks and some other types of new attacks that no one even conceived of before. So they should similarly benefit from enterprises looking to secure their firewalls and their infrastructure, given everyone is deploying AI. So I expect CrowdStrike print should be strong as well in terms of AI demand.

3:22Let's bring you into the conversation, Anurag, as well. I know you cover Salesforce pretty closely as well. What do the hyperscale numbers tell you about what we could get from Salesforce? So Salesforce is on the other side of the equation. They really are in a completely different business than some of the other vendors that Mandeep talked about. In their case, The only product that has an overlap is some of the data cloud that they started to sell in the last couple of years as part of their Gen AI offering. Now, that product is a small portion of the overall portfolio. So even if it doubles, really, it's not going to really move the needle for them.

4:00For them, they're on the receiving side of the lower end of IT spending, which is as people are spending more and more money on AI-related workloads and AI-related infrastructure, you know, it's taking out from some of the stuff that Salesforce is selling. And in fact, one of the things that they are grappling with is the lack of seat count growth in their enterprises that they sell into. So it's, I mean, you know, in our view, it's not going to be that exciting for them. They're running at about 10 % bookings growth rate number. That's probably where we'll see for them. The big question for them would be, you know, how much of the guidance they're going to go out and improve because of the closure of the Informatica deal, which just happened.

4:46Let's dig into all these companies much more closely, Mandeep. I know you cover CrowdStrike in particular. And I got to admit, whenever I think of CrowdStrike, I think of outage from last year, just because, you know, full disclosure, it affected me personally. I think a lot of listeners can relate to that as well. Is that still an overhang or is it fair to still think about the outage when it comes to CrowdStrike? Well, so when I look at the new customers that CrowdStrike has added since then, clearly their pace of new customer ads have slowed because of what happened. And I feel they've come out of it relatively okay, even though there was a slowdown, but they managed to hold on to their existing customer base.

5:33And now we are at a point where, because of generative AI deployments, I mean, there are three or four companies that probably are best positioned to benefit from the Gen AI deployment. So I would put CrowdStrike amongst one of them. And clearly, there is M &A going on with Palo Alto buying Chronosphere and CyberArk and Google buying with. So there are other dynamics at play, but on an organic basis, I think CrowdStrike has done well and they have themselves made some tuck-in. So I feel they have been able to at least stabilize, you know, the impact and second half for them would be faster growth compared to the first half of 2025.

6:26And so from that perspective, I mean, given there are around 20 % growth, I expect growth to improve going forward. It's interesting to think about the opportunities presented by artificial intelligence for the cybersecurity space. When it comes to CrowdStrike, are there challenges? So CrowdStrike to me, you know, is still a company that is a category leader in the endpoint security space. And so the challenge is if everyone starts deploying security in a different way. So imagine, you know, we have a lot more agent tech functionality out there. You don't need to secure as many human users. And so that could have an impact on CrowdStrike going forward.

7:13And they clearly have to adapt their business model in terms of the agent tech functionality. But as I said, you know, I don't see any pure play AI security provider really challenging their position right now. And when it comes to artificial intelligence opportunities on ARAG, looking at Salesforce's upcoming earnings, we just heard from the CEO ahead of the report saying he's not going back to chat GPT after seeing what Google's Gemini offers now. There's been a lot of attention on this new large language model coming from the Alphabet unit. Where does that position Salesforce heading into earnings?

7:55Yeah, I think the Google CEO must thank him for a few billion in market cap addition over there because that was a very big statement. Google works very closely with Salesforce. They provide cloud services to Salesforce. So it is a very good relationship between the two firms. And also remember that OpenAI is starting to get into the wheelhouse of a lot of these software providers by saying that you can run some of the software-like functionalities through ChatGPT. So there could be a little bit of that. But frankly speaking, when it comes to Salesforce, the fundamentals are that non-AI-related IT spending is weak.

8:33And it has been weak for some time in the last couple of years. As corporations are spending more on expanding their AI footprint or either in infrastructure or models, they are pulling back in areas such as traditional software spending where Salesforce lies or in consulting, which is impacting some of the consulting names. So that's the theme that we are seeing right now. Let's see if that reverses in 2026. But as of now, things, you know, I would say from a macro point of view are not that rosy for Salesforce. Interesting. Why is that? Is it just because there's too much of a reliance on artificial intelligence right now?

9:13No, it's not that. If you are a JP Morgan or a Citibank, I mean, you have to make sure that you invest aggressively in AI-related aspects of it. Now, and these companies also don't have unlimited budget. So if your overall budget is only going to grow up by 7%, 8 % or 9%, you know, and you are allocating a large portion of that into AI, you know, you have to find money from somewhere else. And that somewhere else is usually tapering down in some of the other areas, whether it's buying new hardware or, you know, cutting your consulting spends, et cetera. And that's what's, you know, impacting Salesforce.

9:47And Mandeep, looking at Snowflake's earnings the same day as Salesforce on Wednesday, it looks like there's a lot of focus on how they're navigating artificial intelligence as well. Yeah, I mean, look, when I compare Snowflake to a company like Palantir, Palantir has seen remarkable acceleration on the commercial side by integrating their ontology product with these LLMs. And to me, the closest competitor for Snowflake is Palantir and Databricks. So from that perspective, Snowflake hasn't seen that kind of bump that Palantir has seen. That's partly to do with they didn't have as many LLMs on their platform to integrate with for agentic functionality.

10:37They've been trying to add more LLMs, and that, for me, is a catalyst for that top-line acceleration. But there is no doubt that they are behind when it comes to some of the agentic functionality compared to Databricks and Palantir. And when it comes to bringing in more of those large language models, does that add to some of its costs, and could that have an effect on its margins? It certainly could. And that's our view as well, that Snowflake may see some pressure on margins. And look, they use all these hyperscalers, Microsoft, Google and Amazon for deploying their products. So if Microsoft or Google have to raise prices, then they're going to pass it on to Snowflake.

11:26So from that perspective, we do think with more AI workloads, Snowflake, a company like Snowflake may see pressure on the margins. And of course, all these earnings are coming at a time where investors broadly are questioning artificial intelligence valuations. Anurag, how does that play into what we could get this week? Yeah, I mean, you look at valuations, you know, Salesforce, as I said, is the completely opposite realm of all the AI infrastructure play that's out there. Their valuation is a lot less with what has been historically. In fact, SaaS vendors have seen a decline in the last 12 to 24 months because of the seat count pressure that we talked about.

12:05And even for them, you know, when you look at margins, you're not going to get the same lift in margins that we have seen in the last two to three years. Salesforce, under the attack of some activist investor, really went out and gave margin back to the investors. But I think right now, with their agent-forced product, they really are investing heavily into sales and marketing. And I think a lot of that will, you know, show up in this quarter's earnings. Again, we hear from CrowdStrike on Tuesday and then Snowflake and Salesforce on Wednesday. Thanks to both of you for being with us. That's Mandeep Singh and Anurag Rana of Bloomberg Intelligence.

12:44And coming up on Bloomberg Daybreak Weekend, we'll look at how Middle Eastern and African countries are focused on business in a changing world order. I'm Nathan Hager, and this is Bloomberg.

13:04As markets move and headlines break, what matters most is context. A Bloomberg subscription gives you unmatched reporting, sharp analysis, and powerful tools that help you connect the dots. Visit Bloomberg.com slash podcast offer to learn more. This is Bloomberg Daybreak Weekend, our global look ahead at the top stories for investors in the coming week. I'm Nathan Hager in Washington. Up later in the program, Graham will look ahead to the holiday shopping season as those trendy LeBouBou dolls are expected to be a hot item in Asia. But first, in the coming days, industry leaders, investors and government officials descend on the UAE for the 7th Milken Institute Middle East and Africa Summit.

13:48This year's edition is taking place at a time when shifting geopolitical landscapes and technological advances are dramatically altering the world order. Attendees will seek to understand where the Middle East and Africa fit in the new hierarchy. For more, let's go to London and bring in Bloomberg Daybreak Europe anchor Caroline Hepker. Nathan, the Middle East and Africa have the advantage of young demographics and strategic location. They could well be poised to take advantage of the next frontier in global development. This year already, Middle Eastern states, including Qatar, have played a pivotal role in the signing of the Gaza Peace Plan, with President Donald Trump thanking Arab and Muslim nations in advance for pledging money to rebuild the devastated Palestinian territory.

14:34Questions do remain of the extent to which these nations in the region, including Saudi Arabia and the UAE, will help fund the reconstruction. While several deep-pocketed and energy-rich countries in the area worked on and enthusiastically endorsed the peace plan, almost all have specific reservations. Meanwhile, countries in Africa are grappling with a complex relationship with the US president. Bloomberg opinion columnist Andreas Kluth has written about how Donald Trump's claims that South Africa is facing government-sponsored race-based discrimination and that in Nigeria, quote, their killing Christians are evidence of the current administration's use of African policy to promote an America first agenda.

15:22The position of African countries, therefore, in a world increasingly dominated by US rhetoric does face challenges. And it's something that was discussed widely at the recent Bloomberg Africa Business Summit. During the event, South Africa's Minister of Finance Enoch Godongwana told Bloomberg's Jennifer Zabasadja that talks between the United States and South Africa are ongoing. The negotiations taking place between ourself and the USA, except that we can't be through the media through what details of this argument when we're not negotiating with them in the media. What would you say the current state of relations are between South Africa and the US?

16:07Absolutely no problem, except that now and again we hear what the USA says about genocide and all of those things. Do you think it is putting a dent on potential investment into the country? Yes, the USA is powerful and to that extent it influences the attitude of investor community to South Africa. That was South Africa's Enoch Godongwana speaking there to Bloomberg's Jennifer Zabasadja on the sidelines of the Bloomberg Africa Business Summit. This ahead of the Milken Institute Middle East and Africa Summit in the coming days. So I've been getting some information about what is to come from Bloomberg's UK and Middle East finance editor Jenny Serain and our chief Africa correspondent Jennifer Zabasadja.

17:02Welcome to both of you. Thank you for speaking to me. In terms of the Milken Institute, this particular event, Jenny, give us a sense of how big a deal the gathering is, who the main players are going to be attending, because there is increasingly a focus on the Middle East and its connections around the world. What we've seen increasingly is, especially as the U.S. maybe has pulled back in a lot of ways from some of these big global summit type things, you've seen a real big emphasis on some of these Mideast players that can kind of step in and fill the void. So this is a region that just has vast amounts of capital.

17:42You've got entities and specific investors that are looking to put that capital to work in new and interesting ways. And so that's why you see so many Wall Street names and sovereign names from around the world kind of flocking to these events and looking to get in touch with these investors. How do you think those Middle Eastern countries, the GCC are balancing the desire for investment and also their domestic issues? Yeah, it's interesting. I do think we're starting to see more of a divergence between the different countries themselves. So over the years, Abu Dhabi's reliance on oil, it has lessened to some degree.

18:19And a large part of that is because they've been able to go and invest so heavily in these new and different areas. Saudi, on the other hand, is still heavily reliant on oil. And so you kind of see that in how their different budget dynamics play out. But you see, I think, across the board, a desire to move beyond oil. That's why you see them rushing to invest in all these new economy, up and coming area. Jennifer, you've just come through a very busy time in the past few days in Africa, talking to a lot of African leaders. We heard a little snippet of one finance minister who you spoke to. just tell us first of some of the complexities that are facing African nations of which there are so many right now as this sort of new world order is establishing itself.

19:06You know it was the first group of 20 summit of course that was on the African continent that was held on the African continent which was significant for many countries outside of just South Africa which is really the only sovereign nation that's a part of the G20, but also the African Union was also a part of the Group of 20. And so we saw a number of leaders that used this opportunity, and even South African President Cyril Ramaphosa, who has held the G20 presidency for the past year, used this opportunity to amplify a lot of the challenges that these countries are facing, that even predate a lot of the shifting alliances, if it were, that we've seen in the past few months.

19:54And so, of course, one of the major, you know, and probably one of the top concerns that many of them have told us is this issue of debt sustainability. This is, of course, you know, really came to light even more so after the pandemic, when we saw a number of African countries actually, you know, fall into debt. and they were not able to pay back some of the debt that they had borrowed. We saw that from Zambia. We've also seen that from Ethiopia. And so the concern really was how do these African countries develop and industrialize when most of the revenues and the payments and their cash flow that they have domestically is going to servicing debt, more so than, you know, many of our reports indicate more so than sectors like education and health.

20:52And so we heard from a number of ministers wanting to at least find some ways in which they are able to maybe look at various ways of financing. And so it's not just, you know, getting services from the IMF or the World Bank, but it's also from new investors. Jen, where do you think the focus is then? What do you think that African nations are thinking about in terms of their ties to the Middle East? As you say, you know, there's a lot of focus on the Trump administration and the US relationship with these countries. What are those ties between African countries and the Middle East? What's been interesting is that, you know, The Trump administration and the U.S.

21:37sort of scaling back in their aid, you know, going from aid to trade or transactions to a certain extent, has sort of come at the same time in which a number of African countries have been able to stabilize many of their economies, so much so that they're some of the fastest growing economies in the world. And so while, of course, the shock of USAID was very relevant and focused for a number of countries, it's also come when there's a lot of new investors that are looking for capital to deploy. And, you know, we were actually speaking to the Barclays head of South Africa, and he's also head of the private banking across the continent.

22:21And he was just saying just how much capital there is in some of these Gulf nations and how, you know, the extent of the money and where it's coming from and the opportunities are more so than he's seen in the past few years. OK, so that's an interesting point. Jenny, I'm also thinking, I mean, maybe some of this turns on the military, but also a lot of it turns on soft power as well. How does soft power, not just hard power, play into the mindset of the Middle East now? Huge investment in lots of other things to project, you know, whatever image it is that those leaders want to, maybe in sports or in other ventures.

23:07How do you think about soft power now in the Middle East? I think it's definitely still top of mind for these governments. And so that's why you see a lot of the different entities, whether it's sovereign wealth funds or other alternative asset managers that they've set up going after these kind of more unique assets that are on the market. I mean, I think you saw it with the PIFS decision to, you know, go and take electronic arts private and kind of the big take private deal of the year. That was a huge display of the kind of wealth and then the kind of ambitions that they have. and that was all tied to their desire to be the leader of the gaming industry and have this huge footprint in a space that's obviously fast growing but also kind of captures the minds and imaginations of a lot of consumers around the world.

23:58And so I think, yeah, we'll definitely continue to see these players look for ways that they can make that kind of mark in kind of these key industries and I think sports is a great one, as you mentioned. And you see them doing it in arts and culture increasingly. So it'll be really interesting to watch as they kind of pick their spots and pick their moments to deploy this trillions and trillions of dollars of sovereign wealth that they have. My thanks to Bloomberg's UK and Middle East finance editor, Jenny Serrain, and to our chief Africa correspondent, Jennifer Zabasadja. I'm Caroline Hepker here in London, and you can catch us every weekday morning for Bloomberg Daybreak Europe, beginning at 6 a.m.

24:36in London. That's 1 a.m. on Wall Street. Nathan. Thanks, Caroline. And coming up on Bloomberg Daybreak Weekend, we'll look at whether the labubu craze is due for a Beanie Baby-style bust. I'm Nathan Hager, and this is Bloomberg.

25:01This is Bloomberg Daybreak Weekend. Our global look ahead at the top stories for investors in the coming week. I'm Nathan Hager in Washington. As the holiday shopping season gets underway, those trendy LeBooBoo dolls are expected to be a hot item. The toys are produced and sold exclusively by the China-based retailer Popmart. But some are wondering if these toys have reached their peak and whether LeBooBoo is due for a Beanie Baby-style bust. For more, let's go to Daybreak Asia podcast host Doug Krisner. Nathan, these dolls have become a global phenomenon. They're fictional characters, and they appear to be an interesting mix of cute and creepy.

25:40If you haven't seen a Lububu doll, it might be helpful to think of it as a fuzzy elf-like figure with a row of jagged teeth. Images of these dolls reminded me of the characters from Where the Wild Things Are, created by Maurice Sendak. Lububu isn't a standalone character. I was surprised to make that discovery. She is part of a larger group called The Monsters, created by Hong Kong artist and author Ke Sing Lung. For a closer look at the popularity of Labubu and what it means for the company that controls this property, I'm joined by Bloomberg's Shirley Zhao. Shirley covers consumer companies in Asia, and she joins us from Hong Kong.

26:20Thank you for making time to chat with me. So we know now Labubu has gone global. Can you help me understand the beginning of this craze? How did things start? So things really started around late last year when it started to, you know, caught a lot of people's attention. And the global craze really started to rise after a series of K-pop stars and Hollywood stars started to feature La Boo Boo in their photos. And the most known perhaps is Blackpink's Lisa. And she is known as a huge fan of La Bubu. And she is seen in many photos, you know, showing her personalized La Bubu with really trendy clothing and really fancy handbags.

27:14And, you know, a lot of well-off people started to show La Bubu in their social media. That really triggered this global frenzy starting from earlier this year. Can we say that it began in China on the mainland? Is that accurate? Yes, it is accurate. I think a lot of this trend is to do with the economic slowdown in China. So previously, consumers in China were seen posting photos on social media, flaunting, you know, Hermes handbags or, you know, Louis Vuitton handbags and other really pricey luxury goods. But now with consumers' confidence starting to weaken, but still people want a taste of this luxury lifestyle of, you know, the lifestyle of really well-off people.

28:10but they don't they're being more cautious in buying luxury goods now so what else can they do and they see people like lisa and people like a lot of rich people all uh you know showing their la bubu dolls and then they want to buy the doll because that gives them a taste like what they call a small luxury, a taste of the upper class lifestyle in the background of an economic slowdown. Are these expensive? How are they priced? They are relatively pricey in terms of, you know, just a little fluffy doll. For small dolls like this, it's quite easy to fake it. So you can find a lot of different versions of fake labubus on China's e-commerce platforms going for much cheaper than the real ones.

29:07And sometimes you can't tell whether it's real or it's fake. The fake ones are known as la fufus. So a lot of people are joking that even though they spend a lot of money and effort to buy a La Bubu doll that they want, they don't know whether it's real La Bubu or La Fufu. So the doll is made by a company called Popmart. What do we know about Popmart? So Popmart is known as making the so-called blind box dolls. They actually have started quite a few years ago before the global popularity of La Bubu. A lot of other Popmart's products are also relatively well known, although none of them is as viral as La Bubu.