Amazon Rushes Out Latest AI Chip to Take on Nvidia, Google

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break.

0:37So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point. And it fits into your morning. You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris. On Apple, Spotify, YouTube or wherever you get your podcasts.

1:02Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. A lot of news in the tech space. I guess it's just every day we have a lot of news in the tech space. One that jumped out at me is Amazon rushes out latest AI chip to take on NVIDIA and Google. And that gets my attention. Let me check in with somebody who might know a thing or two about this stuff. Mandeep Singh, senior tech industry analyst, Bloomberg Intelligence.

1:42He's out there in San Diego. I don't know what's going on in San Diego. I didn't get the invite, but Mandeep's out there doing the Zoom thing. Mandeep, Amazon chips, where do they stack up relative to, say, an NVIDIA or Google? I mean, look, Amazon, we know, is the largest cloud provider with almost 50 % share. And when it comes to the GPUs, everyone so far except for Google has relied on NVIDIA, you know, for training. And what Amazon is doing is really copying that Google Playbook where they want to use their own chips. It's just that they haven't had that kind of success that Google has had with TPUs.

2:27And they're trying to speed things up because in the end, all these hyperscalers don't want to spend, you know, 20 to 25 percent of their CapEx on procuring NVIDIA's chips. And that is what the end game is. I think Google so far is ahead in that. But clearly, Amazon is trying to catch up when it comes to their own chips efforts. Mandeep, it feels like Amazon, Google are becoming more formidable competitors to NVIDIA in this space, NVIDIA, the AI darling. When you think about 2026, who are some of the winners in this AI arms race? I mean, look, when you're running a cloud business, you know, you're trying to optimize things across the stack.

3:14And that's where, you know, a meta is very different from Google or an Amazon, which have a big public cloud business. I think what you are going to see is focus more on CapEx efficiency. If Google can deliver, you know, a lot more with their$90 billion in CapEx in terms of training and printing and having a cloud business, everyone will be measured the same way, whether it's Amazon or meta. And that's where CapEx efficiency will be a much bigger focus in 2026 than it was in the past two years where, you know, there was a gold rush going on in terms of getting these GPUs, making sure you have chips for training your models.

3:55I think we are moving into a phase where CapEx efficiency will be front and center going forward. Mandip, I see a Bloomberg News story. Apple AI head to leave. This doesn't feel right to me. What's going on with Apple and AI? And am I reading too much into this? Seems like there's a lot of turnover there. I mean, look, for a good reason, because Apple, when you think about the back seven players, has trailed in terms of having an AI strategy, making those investments. And right now we are seeing even, you know, just yesterday, DeepSeek released their latest model. ByteDance is talking about a model that can be run on your operating system.

4:36So there is so much going on at the hardware and at the operating system layer that you feel like Apple is missing out, one, because they don't have any AI models of their own. And also in terms of their partnerships, they haven't been that upfront about, you know, whether it's OpenAI or Google in terms of making changes to their operating system. So even though the hardware sales haven't really suffered because of that, I mean, when you look two years out, if Apple doesn't have a good AI strategy, a good model that works natively on the operating system, I think you will start to see an impact on the hardware sales.

5:16Stay with us. More from Bloomberg Intelligence coming up after this. I'm Carol Masser. And I'm Tim Stenevec, inviting you to join us for the Bloomberg Business Week Daily Podcast. Now, every day we are bringing you reporting from the magazine that helps global leaders stay ahead. We've got insight on the people, the companies and trends that are shaping today's complex economy. That's right, Tim. We're all over global business, finance, tech news, all as it is happening in real time. And we've got complete coverage of the U.S. market close. Gotta say, basically, if it impacts financial markets, if it impacts companies, if it's impacting trends and narratives that are out there, we are on it.

5:51We also have a lot of fun doing it. Bloomberg Business Week also brings you the analysis behind the headlines through conversations with our expert guests. And we are doing this all live each weekday. And then we bring you the best analysis in our daily podcast. Search for Bloomberg Business Week on YouTube, Apple, Spotify, or anywhere else you listen. Check it out on your way home from work to catch up on the conversations that you miss during the business day. And on the weekend, check it out for a complete wrap-up of your business week. That's the Bloomberg Business Week daily podcast. I'm Carol Masser.

6:20And I'm Tim Stenevek. Subscribe today wherever you get your podcasts.

6:28you're listening to the bloomberg intelligence podcast catch us live weekdays at 10 a.m eastern on apple carplay and android auto with the bloomberg business app listen on demand wherever you get your podcasts or watch us live on youtube cyber monday it's a thing a lot of people spending a lot of money at the click of a button let's get some of the data here punam goyal senior u.s e-commerce and retail analyst for Bloomberg Intelligence, joins us here. Hey, Poonam, talk to us about Cyber Monday. What were some of the trends you guys saw there as more and more people continue to shop online? Yes, so people definitely came online to shop.

7:05The results came out this morning. According to Adobe, sales were$14.25 billion. That's just slightly ahead of the$14.2 billion estimated, so a 7.1 % gain. So I'd say, you know, overall, things were largely to me as expected, maybe slightly better. We saw deals over Cyber Monday, which drew customers. But in all honesty, Paul, you know, we looked at 81 brands online yesterday. And what we found was that the majority of them, the deals were in line to last year. So we did see retailers pull back on discounting because there's just more costs that are built into this year from tariffs. consumers buying, what were they buying up Cyber Monday?

7:52And what is that telling you about the health of the consumer? Was it big ticket items? Were they trading down to private labels? Yeah, but we saw, so we saw electronics still being very powerful this holiday season. The Apple AirPods were cited to be among one of the top sellers. We also saw the PlayStation in high demand. People were shopping for fashion apparel. They were buying for the home. Across the news that we've read, what we've seen. Sneakers, athletic wear was probably a little lower than expected. But once again, that's not really an item that you often put under the tree as much as you buy for yourself.

8:27So we think that could pick up. Talk to us about the, I'm thinking about some of the folks that really do a good job online. Walmart, Target, how are those guys, how are they performing? Yeah, so Walmart and Target, we think both actually had a good holiday season, but in terms of promotional activity, we think they were largely in line with last year. That said, we were in the stores on Black Friday. We monitored their deals online over the weekend to yesterday. And we think their deals were good, but they weren't aggressive or more aggressive, I should say, than last year, which is in a way a good thing because they'll help their margins.

9:04We think margins this holiday quarter won't suffer because retailers had to discount more aggressively than they did last year. How are you thinking about the retail sector going into next year? Do you expect that the strength will continue? I think it'll be tough. You know, we've seen shoppers come out to shop for event-driven buying, whether that's back to school or holiday or birthdays or events. They're coming out and they're spending. But once we exit holiday, there is really no catalyst in January to shop. So we do think that you will kind of see the normal lull that you see after the holidays also creep into 2026.

9:45But next year, it's really going to be more about what happens with pricing. We've seen retailers be able to hold prices steady or raise them just slightly into the back half from tariffs. But next year, will they have to implement bigger price increases because all the inventory will likely be impacted by some sort of tariff into next year. That's kind of where I want to go, Poonam, just lastly here. I mean, I don't know how to think about the tariff impact because it seems like we haven't really seen it too much at the consumer level. And maybe that means that, you know, the retailers, the distributors, that they've kind of taken it in their margin.

10:22And the tariff is what it is. That doesn't look like there's going to be a second round of tariffs next year. So the the tariffs are what they are in the economy, but you're saying that maybe there still could be some impact next year? Well, if you think about when the tariffs were implemented, it really affected the back half of this year, right? So when you go into the first half of next year, you're up against comparisons where there really wasn't a tariff impact. So that's one thing that you have to deal with. The second thing is, is that prices are going up. I'm not, you know, we did see select price increases.

10:51In fact, you know, Nike came out and said that they're directly raising prices, but on select goods. And I think that's the approach that most retailers have been taking is we'll raise prices where we can and where we know we can't, we'll absorb it, or we'll offset it otherwise through efficiencies and supplier kickbacks. So that's what we'll continue to see happen next year. But there is still some pressure. Now we'll see what happens next week, right, where the court ruling could be that the tariffs are just unwarranted and are unlawful. And if that happens, then I think we have some positive of surprises in for us next year.

11:25Stay with us. More from Bloomberg Intelligence coming up after this. I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast. Every week, we bring you fascinating conversations with the people who shape markets, investing, and business. CEOs, fund managers, billionaires, Nobel laureates, traders, analysts, economists, everybody that affects what's going on in the market, whether you own stocks, bonds, real estate, commodities, crypto, you really need to hear these conversations. Sometimes it's behaviorists like Dick Thaler or Bob Schiller. Sometimes it's fund managers like Peter Lynch, Bill Miller, Ray Dalio.

12:11Sometimes it's authors, Michael Lewis, author of The Big Short and Moneyball. Regardless of the conversation, these are the folks that move markets each week. That's the Masters in Business podcast with me, Barry Ritholtz. Listen on Apple, Spotify, or wherever you get your podcasts.

12:33You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. We are waiting for a huge M &A trade to be announced. Warner Brothers Discovery with an enterprise value of about$90 billion. It's up for sale. Second round bids for the company were due yesterday. We understand that it's Netflix, it's Comcast, and of course it's Paramount, Skydance, and all that kind of stuff there. So Geetha Ranganathan, she is the senior media analyst for Bloomberg Intelligence.

13:13Geetha, what's the latest there on Warner Brothers Discovery? Because it seems like this is a company that wants to be sold and be sold quickly. Yeah, absolutely, Paul. I mean, things seem to be definitely intensifying. So the second round bids were due yesterday. The reporting so far seems to suggest that Netflix has mostly a cash bid. That's a little bit of a surprise, given that, you know, when you compare Netflix with both Comcast and Paramount Skydance, obviously that stock has the most value. You know, they're trading at almost 30 times a forward EBITDA compared to a Comcast, which trades at about five times.

13:48So obviously, I mean, you know, it just goes to show that Netflix is very, very interested. There was obviously some, you know, speculation earlier whether they were a serious bidder or not. I think this kind of puts that to rest. The offers this time are binding, means if the board likes something that it sees, they can absolutely go ahead and bring this whole process to a conclusion pretty quickly. So right now, just waiting to hear on the actual numbers. We haven't heard any reporting on the actual bid numbers themselves. Warner Brothers, of course, looking for$30 a share. Geetha, Bank of America has a note that calls the bidding war for Warner Brothers, quote, industry realignment.

14:27Is that a fair characterization? And how do you see this bidding war transforming the industry? Absolutely agree with that. I mean, you know, You have Warner Brothers, which is one of the most iconic studios in Hollywood. You know, you have a great streaming service in HBO Max. You just look at the Warner Studio this week at the, I mean, sorry, this year at the box office, they've had an absolutely phenomenal run. So they're leading with about a 28, almost 30 percent share of domestic box office. So this is a huge studio that could obviously or a huge company even that could, you know, completely reshaped the media landscape.

15:06And it is transformative in many, many ways. So if you think about Paramount Skydance is streaming assets right now with Paramount +, they have about 70 million subscribers. You add HBO Max, you get over 200 million. Same is true for Comcast. This is kind of an existential deal, I would say, for both those companies and absolutely transformative. So you take Warner Brothers and Paramount Skydance, for instance, if those two companies combine, that basically then becomes the second largest media company after Disney. So again, huge, huge things at stake here for all of these three bidders. How about valuation here?

15:46The company has said in the past that they would like$30 a share. The stock is trading at just north of$24 a share. John Malone, the company's chair emeritus and, of course, one of the biggest dealmakers in media and telecom over the last 50 years. He says that number is, quote, possible. How do you think valuation is going to shake here? What's the price that's going to clear, do you think? I think it's definitely going to be above $28, Paul. So we know that, you know, when all of this had started, Warner Brothers was trading at about$12 a share. We're already up to$24. We know that in the last bidding round, Paramount Skydance offered close to about$24, which was rejected.

16:27Now, if you just think about the two parts of the business for Warner Brothers Discovery, you have the TV networks business, again, throwing out a lot of cash, but not necessarily big in terms of valuation. I mean, this is a melting ice cube. You know, the multiple that you would slap on this part of the business would be maximum about a four or five X. But then you think about the streaming and the studio assets. Now, that is where you have your scarcity asset. You have a lot of the IP sitting there. You have a streaming business that is turned profitable, that could become extremely profitable over the next few years.

16:58And so that's where most of the valuation is going to be. And, you know, we ran some numbers. We think that just the streaming and the studio portion of the business alone could be worth about$28. So when you think about that$30 per share that, you know, John Malone says is possible, we absolutely think yes. Itha, can you please talk to us a little bit about what some of the long-term strategic advantages will be for Warner Brothers when this deal closes, whoever the final winner is? I think for the final winner of the Warner Brothers asset, one thing is it obviously completely transforms the business in terms of increasing revenue, increasing scale, increasing EBITDA.

17:38But I think the big thing that everybody is looking for really is the synergy number. And if you think about Paramount Skydance, which is really looking to acquire all of Warner Brothers, so not just the studio and streaming, but also the linear networks, the synergies are going to be sizable. We think it could be anything upwards of five to six billion dollars. And that's really where, you know, a lot of this is going to kind of flow down to the bottom line. Of course, you know, there's always this question about how much of synergies can be extracted. But actually, Warner Brothers Discovery themselves have kind of provided us with an excellent template.

18:11They've done a fantastic job when it comes to extracting synergies, both with the Scripps transaction, as well as with the most recent Warner Brothers and Discovery merger. So we think if, you know, they lay out a good plan, it can definitely be done. And so Synergies really is the name of the game here, apart from, of course, monetizing all of the IP because they do have some of the best brands in the business. Comcast, how credible are they? I mean, we know the Roberts family, Brian Roberts, loves to do deals, rarely goes more than five or six years without doing a big deal here. How do you handicap them here?

18:46You know, Paul, so, you know, industry sources seem to suggest that Warner Brothers Discovery actually wants Comcast to be the winner. And I think a lot of this has to do with the fact that, you know, David Zaslav obviously has this history with NBC. He used to work there. He obviously knows Brian Roberts extremely well. But I think they're all David Zaslav also kind of sees this as a path for him to ultimately run NBC. He doesn't necessarily want to exit Hollywood just yet, which is what would happen if he sold to either Paramount Skydance or to Netflix. So I think in many ways he does want to kind of sell to Comcast.

19:19Again, it's going to come down to whether Comcast can put up the money because they are right now in a very, very tricky, precarious situation. Their cable business is struggling. They are, you know, the stock is trading at historical lows, five times EBITDA. So really, really in a tough spot. And they have to come up with a majority cash bid. We're looking at something like about$60 billion. This has to be debt financed. And so you kind of think about all of that incremental interest expense for them, Paul. I mean, this is going to be diluted up to free cash flow. And I don't think investors are going to like it.

19:54Stay with us. More from Bloomberg Intelligence coming up after this. This is Caroline Hyde. And I'm Ed Ludlow, inviting you to join us for Bloomberg Tech, a daily podcast focusing exclusively on technology, innovation and the future of business. Every weekday, we bring you the top headlines from the world's biggest tech companies. From finance to defence, AI to entertainment and from startups to the magnificent seven. We highlight the latest stories of the people and companies pushing the tech sector to new frontiers and the politics that shape global tech markets. We do this all every weekday, then bring you the most important conversations and analysis in our podcast.

20:33Search for Bloomberg Tech on YouTube, Apple, Spotify, or anywhere else you listen. Join us every afternoon on your commute home and stay ahead of the tech news cycle. That's the Bloomberg Tech Podcast. I'm Caroline Hyde in New York. And I'm Ed Ludlow in San Francisco. Subscribe today, wherever you get your podcasts.

21:03On Demand, wherever you get your podcasts. Or watch us live on YouTube. We have some news this week. Big news for New York City. Getting three casino licenses for the city. One in the Bronx. Two in Queens. This is to build, like, real casinos. Not just the, you know, some of the gaming stuff. This is real-time stuff. And it's big for the greater New York City metro area here. So we want to break it down with Brian Egger, Senior Gaming and Lodging Analyst for Bloomberg Intelligence. So, let's step back, Brian. Talk to us about kind of what the licenses represent and kind of where do we go from here?

21:41Sure. So, this is a fairly protracted process involving ultimately the selection of three recipients. By the way, the only three left in the running after a few others were eliminated and dropped out. And really, it authorized resort casinos for the downstate New York area, mostly New York City. And as it turns out, as you mentioned, the three casino qualified casino applicants, if you will, really are in New York City, but outside the borough of Manhattan itself. Brian, just looking at your note on these license approvals, you write that they face a narrow path to decent returns on investment.

22:20Can you please talk to us a little bit more about that idea? Sure. So what we assume for these resorts is they will get what I would call a gaming revenue premium, a room rate premium of 10, 20 percent to other kind of high end urban area resorts, such as the Burgad in Atlantic City, Winds Encore in Boston. However, our concern in terms of the return prospects are that development costs are quite high and perhaps some of the targeted non-gaming contribution elements might be a bit ambitious. So for that reason, when we worked the numbers, we came up with something like a 10 % return on investment, which is certainly a bit less than most operators would expect to attain in these regional markets.

23:05So I'm thinking here, I mean, again, I'm just thinking about Steve Cohen's. I was looking at his plans yesterday for in conjunction with his city field. Obviously, he owns the Mets. City field is out there. The National Tennis Center is out there. The world, you know, we had the World's Fair situation. So there's a ton of opportunity out there. It seems like these are going to be more retail, hotel than casino. How do you think the mix of revenue is going to be there? So there certainly is. I think when we work the numbers, we assume that with respect to either food and beverage or retail entertainment revenue, those will be fairly sizable chunks of the overall revenue pie, probably cumulatively close to half, which is true of many gaming resorts in attractive environments where you get a lot of non-gaming revenue.

24:00I think the same will be true here. The question is, will it be enough and will the margins, which we take to be about 30 percent, be sufficient to get a good return? But certainly, you know, the logic of having it next to Citi Field makes a lot of sense. You know, the other locations, valleys at a golf course in the Bronx, you know, the resorts world in Queens, pretty much expanding an existing facility all have their merit. The question is, will it be enough to get a decent return? But certainly some of these locations have rational prospects. What does this victory for these three companies mean for their competitors like SANS, MGM, Wynn?