AMD Soars as AI Demand Fuels Better-Than-Expected Sales Outlook

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1:53Scarlet Fu:Bloomberg 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.

2:14Geetha Ranganathan:Let's get back to tech because why not? We always go back to tech and there's always a lot happening there. AMD put out some numbers that really were really impressive to Wall Street. The stocks are just ripping here. We also want to talk about NVIDIA and their deal with Corning. We can do that with Kunjan Sabani, Bloomberg Intelligence Senior Semiconductor Analyst. Kunjan, AMD, the street likes what it heard. what did you hear and see with their most recent earnings? Yeah, you know, the start of the show was really the CPU story. I know for the past whole year, everyone, including media, has just been focused on the GPU.

2:50Geetha Ranganathan:This is where they'll compete with NVIDIA. But over the last two quarters, we have been calling out that this is going to be the year of CPU for them. And it did pan out. What really stood apart was they almost doubled or actually exactly doubled the TAM for CPU in less than a year than what they had given the numbers just like nine months ago. They also doubled the growth rate expectations that comes with this larger TAM, again, in less than a year ago, what they provided. So that is going to what is going to be really driving the growth for them this year. The GPU story, again, is just a 4Q26 or a 27-weighted phenomenon.

3:30Geetha Ranganathan:So this is what is really driving past all the expectations that people had on the street in terms of revenue growth for their overall data center business. of the stock up 17 % today, up 95 % year to date, and up 325 % on a trailing 12 month basis, just a rip market cap$680 billion.

3:50Scarlet Fu:I'm so glad you bring that up because it has handily outperformed Nvidia, which of course has become kind of the benchmark for chip and AI. So when it comes down to that um so what khanjan is it fair to compare amd to nvidia or are investors kind of doing themselves a disservice um by always using nvidia as the benchmark for amd it is fair i mean look

4:15Geetha Ranganathan:in the that is the only number two gpu provider out there right so you by default you are going to compare to that but what i think people were missing for the last two three quarters where the only focus was towards the GPUs and not towards the CPU, which is really AMD's bread and butter. This is where they have really made their name and competed against the past competitor of Intel or the incumbent in that space. So we think we need to focus on both those areas, especially right now when CPUs are having sort of resurgence in the AI server market.

4:45Scarlet Fu:Yeah, but also because of this recent surge in AMD, this outperformance over NVIDIA, the stock is really expensive. You look at the price earnings on a trailing basis, So it's 144 times and then on a forward earnings of 59 multiple versus NVIDIA's 24 multiple, which, wow, Paul, that looks really, really cheap. Yeah. So, Kunjan, in terms of valuations, you know, what needs to change for AMD or can it continue trading at these lofty valuations?

5:15Geetha Ranganathan:Also, remember, they are just starting with their, well, they will be just starting with their server level AI GPU solution shipping in second half, right? So when we compare the same stage when NVIDIA was in, NVIDIA was also enjoying a very rich premium multiple. So I think as they start ramping these products, as we get into 27, 28, there would be some normalization expected. Hey, Kunjan, also in your space today, NVIDIA has bought$500 million worth of rights for shares in Corning as part of a partnership to expand artificial intelligence infrastructure. What do you make of this deal? Yeah, so this is not surprising.

5:54Geetha Ranganathan:NVIDIA has actually been investing in the optical and the networking component and supply chain stack. They also made investments in Lumentum and Cohort a few months ago. And what is this is when we think about the scale up networking, this is what you connect all the GPUs together. And this is where the pathway is. The more and more GPUs you can connect together so that they work as a single entity, the better ROI you get, especially when you think about low latency for inference, where most of the spending is going. So what NVIDIA has been doing is really investing in the supply chain stack, in the component provider stack to make sure they have enough supply.

6:30Geetha Ranganathan:because as we know, that's the biggest bottleneck right now. A few months ago, it was power. Right now, it's memory. So it could definitely come down to optical components being supply constraints. So NVIDIA is just making investments in the right suppliers that they think they are going to work with so that they have enough supply as they transition to CPO or optical or silicon photonics starting in 2728.

6:53Scarlet Fu:I mean, NVIDIA has a lot of cash to throw around. Yes. So$500 million would be a lot for a normal company, but not for an NVIDIA. How long can it continue doing this, you know, kind of throwing out half a billion there, two billion there, you know, to companies within its ecosystem? Is there a natural limit to this?

7:12Geetha Ranganathan:There is a theoretical limit, but I don't think they're anywhere close to that. Look, they're generating so much cash, which, you know, they are doing significant amount of buyback. But for a$4 trillion company, I mean, how much of a buyback can you keep doing to really move the needle, right? So this is, we think, a better use of cash, investing sort of in their customers, investing in the ecosystems and broadening their reach across the ecosystem.

7:36Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. If your finance team spends more time finding data than using it, if there's one entity here and one here and one here and one here, If scaling your business feels like starting over, you need the Intuit ERP. Intuit Enterprise Suite is the AI-native ERP solution that's powerful, painless, and proven. Learn more at intuit.com slash ERP.

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10:19Scarlet Fu: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. All right. Disney had a blowout quarter. The results were certainly impressive because the stock is up right now about 7 percent. It's given back some of its advance because it was up quite a bit more before. Geetha Ranganathan is our Bloomberg Intelligence Analyst on U.S. Media. And Geetha, was there anything here that didn't deliver? Not really, Scarlett.

10:57I think people were really coming into this quarter. Everybody was really fearing whether they would lower guidance. They did the exact opposite, raised guidance for EPS growth, 16 percent. Consensus was expecting about 11%. And really, I mean, the biggest source of fear for this stock has been the theme parks business, just kind of given, you know, the backdrop of rising oil prices, as well as macroeconomic factors, geopolitical tensions. But again, management basically saying that theme park demand remains extremely strong, and you have the added benefits of a lot of new cruise ships coming on.

11:30So we're going to see an acceleration in that segment through the second half of fiscal 2026.

11:36Geetha Ranganathan:Geetha, another key driver for this company and this stock has been their streaming business. Talk to us about the profitability. It's finally turned profitable. And talk to us about the profitability now and maybe what are some targets? So the profitability, they actually, for the quarter that they just reported, Paul, a fiscal second quarter, they reported an 88 % increase in profit. So definitely a fantastic turnaround from just a few years ago when they were reporting something like$4 billion in losses. So this year, we're going to look at about$2.6 billion in profit. that translates to a 10 % operating margin.

12:08And really what investors are focused on for the next few years, at least, is that while theme parks is definitely the majority of earnings for Disney, 60 % of earnings this year, the biggest earnings growth story is really going to come from the streaming business. So we're kind of looking for ways that how management can basically improve that margin right now, you know, from 10 percent this year to 20, 25, 30 percent. And they have different levers in place. The most important one really being price increases as well as bundling, because we've seen them really, you know, achieve a lot when it comes to reducing churn with their bundle and they plan to do more.

12:53Scarlet Fu:Keita, I want to also get your take on the big headline that we got in the past hour. Ted Turner, who, of course, founded CNN, passing away at the age of 87. Paul has talked a lot about how he is kind of the, you know, walking and no longer walking, but the embodiment of the 21st century, 20th century media mogul. Tell us a little bit about how you see him influencing and affecting the media industry that you now cover in 2026. Yeah, huge news. I mean, obviously a legend and the pioneer for cable net, the whole cable network business itself. And of course, 24-hour news with CNN. We've kind of come full circle, Scarlett, if you just kind of look at it from a business perspective.

13:34I mean, obviously, Ted Turner, you know, at the height of his career in the 1980s and 1990s, you know, established the whole Turner network business, sold that business to Time Warner. And then we've seen that property kind of change hands over the years so many times, you know, with a sale to AT &T and then a sale to Discovery. And finally, this year, potentially a sale to Paramount Sky Dance. So really kind of, you know, shaping the media ecosystem in so many different ways. And, you know, Paramount Sky Dance, as it kind of closes this year on this Warner Brothers Discovery transaction, along with, of course, those Turner networks, it will, I think, really reshaped the media ecosystem in so many ways that Ted Turner obviously set up.

14:22So I can't understate his role in definitely shaping the whole media narrative today.

14:30Geetha Ranganathan:Stay with us. More from Bloomberg Intelligence coming up after this. Support for the show comes from Public. Lately, it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth. On Public, you can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts, yep. High yield cash, yes again. They even have direct indexing.

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17:014certain.

17:03Scarlet Fu: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.

17:18Geetha Ranganathan:All right, let's get back to it here. Elon Musk's SpaceX is proposing to spend$55 billion to begin construction on a new semiconductor production facility in guess where? Texas, dubbed TerraFabs. Let's check in with George Ferguson, senior aerospace defense and airlines analyst for Bloomberg Intelligence. I think we need to also I think he's going to be the space analyst as well, because air defense. Your portfolio is expanding, George. Exactly. George, talk to us about SpaceX. What do you think they're doing here as they get ready to maybe go public? Yeah, so we do cover space first. Yes. There you go.

17:53Aerospace. Thank you. Sorry. And I mean, I think he's concerned about his supply chains, right? He sees a heavy need for semiconductors. I mean, you know, part of sort of putting SpaceX and XAI and Starlink together is all about putting data centers in space, which requires a lot of computing power, which requires chips. Covering him from afar before getting SpaceX as he's preparing to go through his IPO, one of the things I've sort of heard and seen is just that Elon Musk likes to control his supply chain. And I think he also likes clearly to drive down costs inside his supply chain. And he's done it with Tesla from some of the analysis I've seen.

18:43And I think this that same playbook, right? He wants to own a supply chain. He knows semiconductors is a big issue. He knows he's going to need a lot of them. And so he wants to get in it and build it himself. And I think it would be a great thing. I think I could see a lot of other industries in the U.S. that would like a more robust U.S. semiconductor supply chain, including defense. So he may also find other opportunities for these chips he's making. But supply chain control, I think, is a concern about getting enough.

19:18Scarlet Fu:OK, Elon Musk, he is known for thinking big, really big. Is it realistic of him, for him to be able to create a semiconductor plant that can really move the needle, take on stalwarts like TSMC? You know, look, there's a lot of people that have bet against him. And I think sort of the roadside is littered with them, right? And so I'd be very careful. I'm typically a doubter. It comes from, I think, my early days in credit. I'm still working through it in therapy. But the issue is here, right, we've watched them even in SpaceX. We have a company now that's launching 150, 60 rockets a year, reusing bottom portions of those rockets and driving down the cost to access space.

20:10And I think if we talked about this two decades ago, we'd say never going to happen. Right. And he is by far the leader in space launch now. Again, every other day he's launching something. Even New Glenn couldn't get it all right in the last launch. And they're trying to catch up with their billions of dollars. So I would say it's big. He always goes big. But I have a hard time betting against him anymore. He's done so many things big. I think he's got a real good opportunity.

20:41Geetha Ranganathan:George, what do we know about the timing of this potential IPO? It's been reported for a while, but I just haven't seen much. Yeah, neither of we. We keep hearing June-ish, you know, summer-ish. And so the noise, I think, has gotten a little fainter recently. As you know, Paul, to sort of watch markets and see how they're performing. But I think that, you know, to me, if the markets are performing, the timing looks right to put a lot more cash again inside this SpaceX venture. and go for this data centers in space and more investment in XAI. Again, with this New Glenn failure the other day, the FAA is looking at what happened in the New Glenn shot.