Meta to Spend Tens of Billions of Dollars on AMD Gear, Buy Stock

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1:46Geetha Ranganathan:story coming out of the technology space meta will buy amd chips and computers designed to run artificial intelligence models over a five-year stretch beginning in the second half of 2026. And this is a kicker for me. And I receive warrants to buy 160 million AMD shares. Pretty cool. Let's get the latest reporting there. Ed Ludlow, a BTEC co-host. He's out there in San Francisco. Ed, another big deal, another two mega companies here doing some big business together. What do you make of it?

2:15Paul Sweeney:Yeah, I mean, it's very large scale. Six gigawatts of capacity is equivalent to the output of six nuclear reactors. It's enough power for several million homes. The average size of a data center is about 300 to 500 megawatts. So it is a sort of multi-year massive commitment. And the market has faded a little bit in terms of AMD share reaction. But it's quite a big bet by Meta that AMD's technology, in particular its AI accelerators, the chips that will be used to run models and what we call inference are effective. But the warrants bit, I agree, very interesting. Like, is it or is it not circular financing?

2:55Paul Sweeney:I'm always up to debate it.

2:57Scarlet Fu:And of course, we know that Meta announced a tie-up with NVIDIA just last week. So this is about Meta also diversifying its partners in this build-out. How much do we know or can we guess that Meta is spending on this partnership, on this transaction?

3:16Paul Sweeney:Well, on this AMD one, the way that Lisa Su and AMD put it is that it's double digit billions per gigawatt. So it's tens of billions of dollars over the five years. Remember, AMD is a distant number two player with respect. You know, it's all of its revenues are about 10 billion dollars a quarter, which includes the data center part. NVIDIA's just data center part is more than 50 billion dollars. So, you know, they've got some ways to catch up. But yeah, it's very significant scale. And on the Meta side, Mark Zuckerberg said it next to the president. He's committing to spending about$600 billion over the next five years or more.

3:56Paul Sweeney:And he's always said that if they misspend, quote,$200 billion here or there, the risk of not spending that money is greater for them. So the stock's down half a percentage point right now. But yeah, most people, this is consistent with what we'd expect from Meta.

4:13Geetha Ranganathan:Ed, what I'm seeing as I'm coming up to speed in all things AI and the lingo that's used in that industry, when Meta agrees to buy AMD chips, computers, okay, I get that. Where does the whole concept of measuring this in terms of gigawatts and power, how does that work into the story?

4:30Paul Sweeney:Oh, that's a really smart question. Basically, like data is transferred via electrons. There's work in more nascent fields of transferring data via photons, light in other words. But inside the server, that's how data passes through electrons. There is a heavy electricity draw to power the whole system, not just to run the GPUs and run the computations, but also everything involved in cooling and heat dissipation. We're talking about electricity, and that's why it's measured such. And to go back to Scarlett's earlier question, this is six gigawatts just between META and AMD. But Meta has plans to install like tens of gigawatts by the end of this decade.

5:11Paul Sweeney:And then beyond that, like hundreds of gigawatts, you know, completely different scale to what we've we've been talking about. That's why we track so closely in parallel what is happening with grid and energy infrastructure, because the burden is, you know, it's not you can't even compute it with the human brain. That's kind of what we're talking about. Stay with us. More from Bloomberg Intelligence coming up after this. Today's show is brought to you by Vanguard. To all the financial advisors listening, let's talk bonds for a minute. Capturing value and fixed income is not easy. Bond markets are massive, murky, and let's be real.

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7:32Scarlet 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 one of the things we're keeping an eye on is this

7:49Geetha Ranganathan:big m &a trade in the media space warner brothers discovery all right what do we know we know that it's for sale. We know that Netflix has an offer that's been accepted by Warner Brothers Discovery. That's a good thing. But we also know that Paramount Skydance is very interested and has made repeated bids for this company. And it's been reported most recently that Paramount's actually raised its bid a little bit. But I don't know where we are. That's kind of it's been hanging on for such a long time here. Somebody is following this stuff very closely. And that's Geeta Ranganathan. She is the media analyst for Bloomberg Intelligence.

8:21Geetha Ranganathan:She follows all of the media companies out there. Geetha, I guess Paramount's coming up with a higher offer. Do we have any details of what this new offer for Warner Brothers Discovery is?

8:32Paul Sweeney:Yeah, thanks, Paul. So we don't have the dollar amount. We know that it's above$30 a share. That's the tender offer that they launched a few months ago for all of Warner Brothers Discovery. They had informally agreed to take the number up to$31 or above$31. But we still do not have clarity on the number that they have revised it to. And, you know, we're still kind of, I think, at least the Warner Brothers shareholders, Warner Brothers Discovery shareholders are still kind of waiting for that best and final offer. So still, you know, a lot of details not really disclosed. We have to wait to hear back and see what the Warner Brothers Discovery Board decides.

9:15Geetha Ranganathan:You know, I'm looking at Netflix's stock. It's down 17 percent this year. It's down 22 percent on the trail in 12 months. This is a stock that did nothing but go up for years and years. Do Netflix shareholders, how are they viewing this potential deal for Warner Brothers? Yeah.

9:31Paul Sweeney:So, you know, at this point, I think majority of the investors really view it as a distraction, at least in the near term. I mean, we've seen this happen time and time again when, you know, winning an M &A, there's always this this kind of cloud with M &A. You know, You just don't know whether the deal is actually going to work. Execution risk is there. Integration risk is there. For Netflix, there is the added complexity of a long regulatory road. One doesn't really know how any of that scrutiny is going to play out on the regulatory side, on the antitrust side. So there's just a lot of uncertainty at this time, Paul.

10:07Paul Sweeney:And we do know that the underlying story, the underlying business economics for Netflix is working. I mean, they have subscriber growth. They have pricing power. They have a new lever in the form of advertising, which is expected to take off in a big way this year. So all of the underlying drivers are in place. Does the Warner Brothers deal help? Absolutely. It is a nice to have, but it is not a must have. And I think what the Netflix shareholders have been really afraid of is Netflix overpaying for this asset. We know that at the current offer, they're already paying 25 times EBITDA. Is Warner Brothers worth that?

10:46Paul Sweeney:One can argue that, yes, it is. It does have some global, great franchises. But going above and trying to match Paramount's offer, that could be a risky move. And I don't think shareholders would like that.

10:58Geetha Ranganathan:Keitha, you know, in my view, at least, and I've read across some Wall Street research, this deal for Netflix, it's nice to have. Obviously, it's great, great assets. But for Paramount, it's kind of a must-have. What happens to Paramount Skydance if they don't get this Warner Brothers deal?

11:14Paul Sweeney:Yeah, that's the big head scratcher, Paul. I mean, there is effectively no plan B for Paramount Skydance. One of the things that has been kind of debated a lot is who can they combine with? Obviously, organically, the growth prospects look extremely bleak. They have about 60 % exposure to a declining linear TV ecosystem. The studio business, well, it's up and down. The streaming business, yeah, they've done okay. But again, it's still subscale with only about 80 million subscribers. So they absolutely need to have a dance partner. The question is, who do they combine with? If they don't have Warner Brothers Discovery, obviously, one of the choices out there is Comcast and BC.

11:55Paul Sweeney:We'll have to wait and watch because, again, there could be potentially a lot of regulatory issues because you do have two broadcast networks with CBS as well as NBC. So I'm not sure how that works, but that is potentially an option that they can explore if the Warner Brothers deal doesn't work out.

12:12Geetha Ranganathan:Stay with us. More from Bloomberg Intelligence coming up after this.

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13:34Geetha Ranganathan:Novo Nordisk plans to slash U.S. list prices for its medicines, Wegovi and Ozempic next year. We are a Wegovi household, so this is good news there. Michael Shaw, senior pharma biotech analyst for Bloomberg Intelligence, joins us from London. Mikey, what's Novo doing here? Are they going for market share? What's the plan here?

13:56Ed Ludlow:Yeah, I think that, I mean, the slashing of the list price would, I mean, would essentially improve access. I think in terms of the price cut, say 50 % on the list, so it's bringing down the monthly cost down from$13.50 to about$6.75 per month. I mean, you won't see that sort of discount translate to the net price. So I think it's important to kind of make that distinction between the list and the net. I mean, what it does mean is, you know, NOVA will be essentially negotiating with insurers off a lower base. And then you'll probably see some adjustment in the discount or rebate offered. But I don't think that 50 percent is going to translate down to the net price.

14:40Ed Ludlow:I think what's also important to note is, I mean, it's going to benefit, you know, patients here with high deductibles, insurance plans. or patients that have coinsurance plans where they're paying a percentage of the list price. But it doesn't affect kind of pricing in the direct patient channel or the self-pay prices, which are obviously a key driver of sales and volume at the moment. So the floor here is effectively sent by Trump Rx, where the drugs are available at about$350 per month.