Amazon Cutting 16,000 Jobs, ASML Reports Record Bookings

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1:11Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech coming up. Amazon cut 16 ,000 corporate jobs to remove layers of bureaucracy and, quote, increase ownership. Plus, ASML also announcing job cuts to boost efficiency and posting strong fourth quarter orders. And sources tell Bloomberg that SoftBank is in talks to invest as much as$30 billion more into OpenAI. Let's check in on these markets, though, because there's been some interesting whipsawing ASML among them, but we go more macro right now. At one point, we saw the S &P 500 above that$7 ,000 level.

1:55We have never seen that before. And that is as we see the momentum in AI continuing. But we have a crucial Fed meeting. What is going to be put to Jay Powell later today about independence of the Federal Reserve? We're not thinking that there will be any move in terms of rates. But still, there's nervousness. Nervousness around Iran as well, Ed. There's a lot to be focusing in on. But for now, NASDAQ 100 holds on to its gains of 0.4%. What are you looking at? The breaking news story of the morning. Amazon is cutting 16 ,000 more corporate roles, eliminate middle management, streamline. It confirms a lot of what Bloomberg had already reported.

2:28The stock kind of bouncing around in the session, now softer by seven tenths of one percent. We're going to get to that later in the program and go deep on what's happening in Amazon and tech more broadly. Then there's ASML at one point in the session, up more than seven percent and pushing to a fresh record high. Great blockbuster bookings, bookending the 13th consecutive year of growth and also doing its own job cuts. I guess, you know, fix the roof while the sun is shining kind of analogy, Caro. but now the stock is down softer, 2.5%. Something might have been happening on the call. Yeah, we've got to dig into it because, as you mentioned, 1 ,700 jobs are to go, and the Dutch maker of the semiconductor equipment that is sort of world-used says it plans to cut 1 ,700 roles, around 4 % of the workforce.

3:13It's an effort to streamline the organization, the CEO has said. This is as the company reported earnings that you mentioned showing record fourth-quarter bookings, fueled, of course, by AI demand. But SML CEO Christophe Fouquet did speak with Bloomberg on the phone earlier. Take a listen to what he had to say. The last three months have brought a lot of clarity. And I think what you see basically is that the semi-industry, our customers, start to believe that this AI demand is sustainable. And therefore, they have moved into building capacity and they are moving very aggressively. And I think this has been very nicely translated indeed into a record booking number.

3:53So that's, of course, very good news for the midterm. Why are the shares down then? Let's talk about the results. When Pierre Ferregu is head of global tech infrastructure and New Street Research. Why did we sell the rally, the record high in the shares earlier today? Hey, Caroline. Yes, that's a great question. So I think ASML basically confirmed what everybody suspected that 2026 is going to be a great year. Now you have to take a step back and think, what does that mean a great year? The guided revenue growth between 4 % and 19%, which in absolute terms is very strong growth. As you mentioned, the bookings were never seen, we've never seen that level of orders at ASML, like exceeding 13 billion in a single quarter.

4:46Now, when you take a step back, think about what is the downstream of ASML, who are the clients. It's a Micron, it's a Hynix, it's a Samsung, it's a TSMC. And these players are actually growing much, much faster than that. They are growing, like if you take, for instance, TSMC is probably going to grow like between 30 and 35 % this year. So we already see that semi-cap equipment start slagging a bit their clients in terms of growth. And that's a very natural thing because they sell equipment to add capacity. And when you look at the trajectory of growth of AI, we are actually just passing the inflection point.

5:23Going forward, growth is going to continue to be very strong, but it is going to slow. And so it's going to translate into slower growth at semi-cap equipment manufacturers. And I really think this is the way the street is digesting the news today and overnight. Initially, the stock was up. And now the street is realizing, OK, but if 2026 is a peak spending year, maybe it's time to actually take profits on ASML as a stock. So you think this is peak? I mean, that's not what one would hear from Jensen Wang, who thinks we've still got trillions to go. We are still in this mode of trying to question whether we're in an AI bubble or not.

6:04Do you think that we got any clarity on that from ASML after we, of course, got TSMC, after SK Hynix showed such strength in memory? Yeah, so we're definitely not at peak on AI. And you look at the TSMC guide to 2029, growth between 55 % and 60%. So we are still in a very high growth environment in AI. The peak I refer to, Caroline, is a peak in actually capacity increase. Because if in 2027 you still grow very fast, but a bit slower than 2026, you will not need more equipment than you needed in 2026. So this is this idea that semi-cap players are driven by incremental capacity, not by growth directly.

6:51It's a first order derivative of the growth of their clients. And that's the reason why the market is right to be a bit nervous, specifically on some meetings. Now, when it comes to their clients, like the growth outlook for 26 is amazing. It's already very strong for 2027. And it looks really, really good for 2028 and 2029. So we are still in a very, very, very strong growth environment in AI. Yeah, if the stock's down and 2026 is the peak, the market doesn't believe Mr. Fouquet. He thinks it's about sustainability. Listen to this real quick. I think we have all been surprised by the magnitude of AI.

7:29And we all saw it coming a bit. But at the same time, you know, we see those investments coming out. And it's pretty big. And I think that all of us are continuing to watch, basically, for the sustainability of those investments. I think sustainability is a key word. I think the question is always, is this going to last? I think that more and more of our customers are responding positively to that question. Is this going to last? And he's saying that the signals from his customers are that it is going to last. And you're saying the market isn't showing us that. Well, the market is being careful about it.

8:08Because this is going to last for the CEO of ASML might mean we still have very good level of spending in 2027. But if 2027 is as good as 2026, how is the stock going to work on that? It's probably not going to work well. I have a question for you. What is the leading indicator in the world of tech, right? I can give you a chart right now. It shows you expected capital expenditures for the hyperscalers and other associated names like Meta and Oracle, right? Is that the leading indicator? or Bloomberg's Ian King is going to come on next and tell us that Texas Instruments is a leading indicator for the health of the economy or ASML and EUV demand is a leading indicator.

8:51Which data set is most critically important to you right now, Pierre? So what's most critically important, Ed, is to connect these data sets rightfully. I love the chart you just showed. This is like CapEx. And you see that we expect CapEx to grow a lot this year, a growth next year. And as we are not too sure, we don't model much beyond that. This is a leading indicator. Now, what is going to drive the business of ASML is how much incremental capex you add every year. And what you see very clearly is that this incremental capex is now plateauing and coming down. And that's the reason why in semi-cap equipment, you have to be careful and expect a significant slowdown in revenue growth.

9:37For the rest of the industry, capex growth is a very, very good indicator. And then Texas Instruments is actually a very interesting indicator. That is the most important indicator today outside of AI. Because it's quite important to understand what is the global economy doing outside of AI. And we've been into a very, very painful, lengthy down cycle in automatives, in industrials. and what TSMC said, it's confirmed signals that we've had already for a few weeks that we are at the bottom and things are improving. I'm just trying to answer the question, is this going to last? Pierre Ferrague from New Street Research, thank you very much.

10:18I alluded to it just then, shares of Texas Instruments soaring after the company gave a surprisingly robust forecast for the first quarter, signaling that customers have worked through inventory and are returning for chips, analog chips. Multiple analysts are raising price targets, calling the outlook, encouraging. Bloomberg's Ian King is here. Analog chips, simple translation of a touch of a button into a signal. But we always write in our story, in our summary of earnings, this is like the bellwether, the crystal ball for the economy. What do we learn through their earnings? Yeah, I mean, they've got tens of thousands of products, tens of thousands of customers.

10:53So they are literally everywhere. Everything that's got an on and off switch, that's where they are. what they said was, again, you were very careful and they're incrementally better. They had been talking about a recovery being kind of off pace, not as kind of robust as we would normally get. Now they're saying actually orders are improving and are continuing to improve. The signs are now better. How much are they able to harness any of the AI vibes rather than autos, industrials, the bellwether part? Yeah, that's a very good question. The answer is they confirmed the AI Their vibe is good for them.

11:28It's now a significant business. But really, it's not the main business. The main business for them remains industrial and automotive. The things that are a broader... I mean, we know that data centers are big, right? And they confirmed that. What they told us was that industrial is getting better as well, which is what we want to hear. We're really focused right now on how global these companies are, like currency impacts, like China, what's going on with China. Is there anything kind of extra that Texas Instruments can tell us about different geographies, other industries, like industrial good?

12:01Is there anything that's pretty bad? Yeah, I mean, they talked about consumer electronics not being fantastic. And that's because consumer electronics actually recovered earlier than other markets. And now it's kind of slowing down a little bit. Some of the consumer electronics devices, home theater, maybe PCs a little bit, memory dependent. We talked about memory. The price of memory is going up. That's no secret. And that has a knock-on impact. Ian King, as always, breaking it down. And you mentioned memory. We're going to go there. Check out SK Hynix shares. They have really rocketed on the back of their earnings.

12:33And there's this relentless appetite for AI memory, which SK Hynix serves. They're also, in fact, going to be establishing an AI data center solutions firm here in the U.S., Ed. How much is that to do with South Korea-U.S. relationships going forward and the need to invest in the United States? It's going to be backed by$10 billion of capital to pursue partnerships and investments in the sector. So keep an eye on that stock. And that was its trading in South Korea today. OK, coming up, trade tensions rise between the U.S. and South Korea. More on the why next. This is Bloomberg Tech. This is Scarlett Fu.

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14:12Taking a look at shares of Amazon, softer 7 tenths of 1%. the company announcing the cut of 16 ,000 corporate jobs worldwide, saying it's an effort to remove layers of bureaucracy and to, quote, increase ownership. It also confirms quite a lot of what Bloomberg's been reporting of late. Bloomberg's Spencer Soper, who covers Amazon, joins us now. 16 ,000 corporate jobs is the latest wave of more than one wave. And the messaging and in line with your reporting, right, is that this is about efficiency and streamlining, not about AI. What are the details of this particular trim that we're seeing? Yeah, definitely a delayering.

14:56They're kind of targeting the middle. And this is something that goes back to last year when Jassy was talking about more people who are doing the direct work and fewer people managing the work in the middle. So there's that in there. It also hit a large, you know, different parts of the organization. So when they had initially laid off 14 ,000 back in October, departments were given a choice. They said they had to hit some numbers. They were given a choice. Do you want to cut people now or wait until after the holiday season? And so a lot of departments, particularly the retail division, waited until after Christmas to do their cuts.

15:37So now we're seeing a total of 30 ,000, which is the biggest in Amazon's history for the corporate side. And that's, you know, compared to, I think, 27 ,000, which was a few years ago back in 2021 and 22. Now, it feels, Spencer, that they've been at length to say this isn't some regular occurrence. I know Beth Galetti, who's really in charge of people, experience, technology, is this isn't going to be some rolling set of cuts that we see every few months. But 30 ,000 in the last three months is a huge amount. Yeah, 30 ,000 is a big amount. But also, if you read her statement very carefully, it's really corporate gobbledygook trying to strike that tone between reassuring employees but also not making any promises.

16:22You know what I mean? So she's saying some might ask if this is going to be a rolling theme, but she's not really saying, hey, we're not going to cut anymore over this period of time. So it's kind of just noncommittal gobbledygook if you really read it carefully. Yeah, saying, is this the beginning of a new rhythm? That's not our plan. But just as we always have, every team will continue to evaluate the ownership speed and capacity to invent for customers. Bloomberg, Spencer, Soper, thanks for breaking it down for us. Now, the Trump administration is demanding that South Korea implement its six-month-old trade deal with the U.S.

16:57to prevent tariffs from rising to 25%. Trade tensions between the two countries have been rising, made worse by the U.S.'s frustration with Korean digital services regulations. New York's senior tech editor, Mike Shepard, joins us now to unpack what is a tech-centric story in many ways because it involves key chip makers over in Korea, for example. Well, it really does. And we saw actually the flashes of this brewing as long as 10 days ago, Karen. And we saw Howard Lutnick threatening those memory makers with tariffs of up to 100 percent if they didn't step up their investments here in the U.S.

17:30And that is one of the issues that we have seen surge more recently with the president's threat of increasing tariffs to 25 percent from the current agreed upon 15 percent level. And a lot of that has to do with what is happening with those investments. Remember, under the deal, South Korea had promised to invest as much as$350 billion in the U.S. over the next several years. But that step has been stalled in the South Korean parliament. They are just beset by a lot of issues, including currency woes and capital outflows. And so lawmakers there have really not been able to codify how this investment would go forward.

18:10But we heard this morning from U.S. Trade Representative Jamison Greer that time is up and South Korea needs to start moving. Otherwise, the U.S. will move to the next step, perhaps, and that is implementing a potential tariff increase. Mike, the other news story at the intersection of tech and what's happening in Washington, D.C., is Intel pledging to match Trump account contributions for its employees. What do we need to know about that? Well, it's an interesting step, and it's one that other companies, including BlackRock, have already taken. And Dell, of course, Michael Dell, the founder of Dell Computing, is one of the pioneers behind this Trump accounts project.

18:54And it's made some big pledges that we've talked about on this program before. But Intel is getting in line with that. And, of course, the stakes for Intel are quite different. And when I say stakes, it's quite literal. The U.S. government owns currently 5.5 percent of the company and is on course to own as much as 10 percent of the chipmaker. And it's also interesting, Ed, that in December the company hired Robin Colwell from the White House to serve as its next government head of government affairs here in Washington. So Intel is, in a way, really aligning with this initiative, the Trump accounts, which are designed to encourage saving and investment by parents for young children over the next several years to try to get people not only invested in the stock market, but saving over the long haul.

19:47And in this way, Intel is trying to get on the right side of the story with the administration in another one of the president's priorities. Bloomberg's Mike Sheppard, thank you very much. Cara? It's time now for Talking Tech, Ed. First up, Elon Musk has suggested the timing of SpaceX's possible blockbuster IPO could come in mid-June. It's according to a report in the Financial Times. The owner of the rocket maker, of course, is reported to be targeting the IPO for when Jupiter and Venus will appear very close together in the sky. Musk's 55th birthday is also in June. Plus, Snap has created a subsidiary dedicated to augmented reality glasses.

20:24specs. Now the unit is intended to give the smart eyewear team more independence but allow it to raise some money. The spokesperson confirmed Snap will launch the AR glasses regardless of external investment. And Apple CEO Tim Cook has joined other tech leaders weighing in on the killing of Alex Preti by federal agents in Minnesota. In an internal memo, Cook called for de-escalation and he said he had spoken to President Trump about the situation.

20:57SoftBank is in talks to invest as much as$30 billion more into OpenAI. Now, that's according to sources. The Japanese firm is already one of OpenAI's biggest backers with a 11 % stake in the chat CPT maker. He with more is Bloomberg's AI and data center czar, Lin Dwan. And so,$30 billion really makes Masa all in. I mean, we know he takes big bets. Yeah, and I think we had one of the analysts out in Asia saying he is literally betting the house on OpenAI and other AI stakes. Now, that being said, it's probably worth pointing out that it's as much as$30 billion as opposed to$30 billion itself. So we'll see exactly where he lands there.

21:33But, I mean, let's face it, like, SoftBank has already invested tens of billions of dollars in OpenAI. So what's another$30 billion at this point, right? Lynn, there are lots of people in my world asking equally if OpenAI is good for it and all their capital commitments for infrastructure and whether SoftBank has up to$30 billion. But the main thrust of it is that this is part of a round that we know is happening, right? OpenAI wants to raise money. What do we know about its target raise overall and the valuation it wants to hit, irrespective of how much SoftBank contributes to that? That's exactly right.

22:09And we've been reporting on this funding round that OpenAI has been orchestrating over the past several months for a while now. Obviously, SoftBank isn't the only name that is intended to invest in this round. We very recently broke the news that OpenAI has been in conversations with very big name investors in the Middle East. And so it's possible that we see some sovereign wealth money wind up in this round. Now, in terms of like what they're targeting valuation wise, very difficult to say. It's even difficult to say exactly how much they may end up raising in the end. The ranges that you've seen out there from us, from others in the media, are kind of all over the place.

22:53It's like anywhere from$750 billion to$850 billion, depending on where investors in OpenAI decide to land in the end. So it's very much an active round, and we continue to try to keep tabs of exactly where it lands. What's interesting is how SoftBank has been very focused on the AI play, but also selling down in NVIDIA to be able to loosen up some cash. They made a purchase of Ampere, for example, in the chips area. Are they deemed a winner in the AI space right now? Well, I think it's probably two different questions that you're looking to unpack there. One is, what does SoftBank selling down at stake in NVIDIA really mean?

23:33And I think that for a moment, people were making the mistake of interpreting that as, ooh, SopBank sees that it's getting like way over its skis and it's not really, you know, all in on AI when in fact what it was really doing is trying to raise enough money to make even more bets on AI. Your other question though was like, is SopBank a winner in AI? I mean, is anybody a winner in AI? I think that the concerns over an AI bubble are still relevant. We saw ASML though report some strong bookings.

24:08Welcome back to Bloomberg Tech. Let's check in on these markets, which have been flip-flopping as we build anticipation of the Fed decision. And indeed, many feeling we're not going to get a rate change, but what will Jay Powell say at the press conference? We've also got building geopolitical anxiety, whether it's about Iran, whether we've got still tensions with South Korea in terms of trade. Nevertheless, one point the S &P 500 goes above 7 ,000 and the Nasdaq 100 holds on to its gains. Earnings are coming thick and fast. This is where we see the fundamental picture of this tech rally that we're so used to.

24:36Seagate, best performer in terms of actual percentage move when you're looking at the Nasdaq 100, 20%. This is again winning formula on memory. Alice calling the numbers that Kate put out last night terrific. Texas Instruments also came out with numbers. This is like the bellwether when you're thinking about industrials and thinking about autos. And we've hit a bottom and we're coming back out of it. We're up almost 8 % on that name. ASML actually turns red. It had blowout orders. But too many people questioning perhaps where they can keep on building momentum, selling chip equipment to those chip makers such as TSMC Intel here in the United States.