Amazon's Big Spending Plans and Bitcoin's Rebound

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1:30Bloomberg 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 shares drop after announcing plans to spend$200 billion this year on data centers, chips and other equipment. Meanwhile, Bitcoin rebounds, having plummeted on Thursday when it neared the$60 ,000 level. And we break down more tech earnings with the CEOs of Roblox, Affirm and the Warner Music Group. But first, we check in on what is a tentative bounce back after what has been a punishing week. Remember, the Nasdaq is on track for its worst week, Ed, in three months since the beginning of November.

2:14But now we see a little bit of a reprieve, a little bit of dip buying. We're up a percentage point if you're looking at the big indexes. And I know you're going to drill into the individual movers that push and pull. But crypto up almost 9%, but only about eradicating half of yesterday's losses. We're still only at 68 ,000. What a remarkable beginning to the year for this asset class that in many ways people feel is not a store of value. But what are you looking at? The analysts are calling it sticker shock. Amazon pledging to spend$200 billion capital expenditures on AI infrastructure. The stock down more than 8 % right now on track for its biggest drop since April of last year.

2:55Operating income in the current period,$21 billion at the high end below consensus. So the concern is, is the trade-off worth it here? There is a big backlog for AWS and AI business. By the way, it's one of the few names on the NASDAQ 100 that's down. Because in reaction to that capital expenditures pledge, you see everyone from the GPU providers. Nvidia is now up more than 6 % in response. Memory names, infrastructure names, energy names all higher because the capital expenditures for all of the hyperscalers and aggregate plus meta is growing. We're going to get to that with an analyst in just a few minutes' time.

3:29In the world of cryptocurrencies, traders are buying the dip. Caro outlined it. Bitcoin's rebounding after plummeting on Thursday, erasing all the gains since Donald Trump's 2024 election, falling close to$60 ,000 popping back up again. Blueberg Digital Finance reporter Emily Nicole joins us with the latest difficult. Emily, what's going on? Your guess is as good as mine, to be honest. We've been watching Bitcoin over the last 24 hours and it's really been a roller coaster. As you said, it dipped about 13 percent yesterday. Now I think we're up about 10 percent. So we're recovering some of that.

4:04But it's really just been a roller coaster week. It's been hard to kind of guess at why that's been happening. There's been a lot of instability over the last few months with geopolitical tensions. And Bitcoin's really struggled to patch onto any narrative within that, whether or not it's a safe haven, a store of value. If it can latch onto stocks as it used to trade pretty in line with tech stocks back in the day. None of that seems to be sticking. And it's just kind of doing its own thing right now. FUD, some would call it in the market, fear, uncertainty, doubt, just consumed the asset class as a whole.

4:34And it's consumed companies that have ridden so high on the back of the climb in crypto. I think of strategy and some of these other digital asset treasury companies. How have you seen, particularly on the back of Michael Saylor's earnings yesterday, have you seen people still questioning how long they can ride this? Well, if we look at strategy, for example, that has also had a similarly up-down two days. So yesterday it was down about 17 % at the close before the earnings. Investors were really bracing for some bad news coming from that, particularly with Bitcoin having such a bad day. and then today we're seeing it up more than 16 % because of that kind of whipsawing effect.

5:11The earnings weren't as bad as people expected. Losses were in line with what we thought was happening. No new debt was being created and so people are trying to stretch for, you know, where can we see some staying power within this rally? Where is there a bottom? Where is there stability? And that might be where we're now starting to see a sort of bottom. Maybe that 60 ,000 mark was it and for strategy as well, maybe it's kind of starting to see a way out of that. Yeah, it's interesting, even with the headlines coming from China as they tighten curbs on crypto and unstable coin issuance, still managing to catch some buying of the dip today.

5:46BlueMegs, Emily, Nicole, what a busy week. Thanks for joining us. Meanwhile, let's talk Waymo now, using DeepMind's Genie 3.0 AI model to create realistic worlds for a new Waymo world model. It's according to the company in a blog post today. The self-driving tech developer argues this collaboration with another segment of Google's tech ecosystem is going to help the expansion of way most self-driving services across many more markets. Ed. Let's get back to Amazon. Big mover, big story. The stock lower as the company announced it's set to spend$200 billion this year on data centers, chips and equipment, supercharging its bets on AI.

6:23Rohit Kokani is managing director, senior analyst for internet and capital markets research at Roth Capital Partners. They call it sticker shock, right? The reaction to the big capital expenditures number. But there was a time where a big capital expenditures number was what you wanted to see. Why the negative reaction? I think the negative reaction is just because outside of the CapEx, people expected spotless earnings. I think CapEx sticker shock was expected given what Google, Meta, Microsoft did last 10 days. But what was not expected was slight yellow flags in operating margins. And certainly people realizing that Amazon has to spend a lot more given they are launching satellites to space.

7:11Right. They are building new Whole Foods and so on and so forth. You have a buy on core on the stock. And I believe let me just check here on my Bloomberg terminal. Yeah. $285 price target. Right. There are lots of pieces of data in there. Some people looked at the operating income forecast for the current period and thought that's a little worrying. bearing in mind AWS is the majority of operating income. Some looked at the backlog. Some looked at the AWS growth, 24%, fastest pace of growth in almost three years. Where would you look? All of the above. There were many positives in the report and in the outlook and the various moving parts in Amazon.

7:54Accelerating AWS, improving retail margins, better advertising growth, uh as well as better efficiency in in retail overall i think uh what is spooking the market here is uh there are more investments beyond ai that this company is doing unlike many other peers that are just doubling down on simple simply one thing so the worry here is next two three years how high of an investment curve are we looking at for amazon and how what level of roi do they get beyond the core AI investments. I think that's the worry here. But all in, we think this is a Gen AI winner, very underappreciated, and over time return.

8:38Let's dig into why it's a Gen AI winner. Is it Tranium, Graviton, just seeing the triple-digit percentage growth, the fact that they've got that vertical integration, making their own chips, using that for the compute that they offer and the efficiency that it gains them? Is it more that their own models, like we don't talk much about the own models that they're producing. We talk so much about Google's, for example, but not so much Amazon's. I know. I think Amazon is, with all of the above, again, they are vertically integrating in a way that absolutely no other company on earth is trying to replicate at the scale at which Amazon is trying to do.

9:16Vertically integrating cloud, vertically integrating retail, and having the diversity of advertising. So I feel when all three pillars of Amazon start to crank up higher operating margins, which we will see over the next six to nine months, that's when the real potential of profitability of this company will manifest in the numbers. And that's why I believe the surface area of investments as well as surface area of ROI on those investments is so much wider at Amazon. that is being underappreciated. And that's where we feel this is a JNI winner across the board. It's interesting. We have such short-term memory loss sometimes.

10:04This was always a company that focused more on investing in itself rather than producing profitability. But push us forward as to how Adi Jassy continues to manage the cost basis because that was the headline that stole the show previous to earnings season was the amount of job cuts they're making. Is that still what you need to be seeing from Andy Jassy? I think there is room. Probably the company needs to make after the overhiring of almost two and a half years after the COVID. I think there is still a digestion period, which probably one would argue that has been a little bit more prolonged than what one would have preferred to see.

10:44So they're finally getting there. And I think a little bit of extra cost cuts would be much more appreciated to make room for more CapEx. CapEx across the hyperscalers plus Meta is now at$650 billion for the year. For Microsoft, that's based on consensus. The difference with Amazon is that they might tip into negative free cash flow. We have 30 seconds. How worried are you about that? I'm not worried at all. This company has gone through negative free cash flow cycles in the past and delivered ROI, unlike many other companies that are for the first time going through this cycle. If you look at 15 years, Amazon has delivered ROI, ROIC, probably in a best in class manner.

11:28Rohit Karkhani of Roth Capital Partners. Thank you very much indeed for joining us today. And coming up, we talk more earnings. We're speaking with the Roblox CEO, Dave Buzuki, as the company sees 144 million daily active users. You don't even want to hear how many hours people are spending on this platform. We'll break it down. This is Bloomberg Tech.

11:51Today'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, Lots of firms throw a couple flashy funds your way and call it a day. But not Vanguard. At Vanguard, institutional quality isn't a tagline. It's a commitment to your clients. We're talking top-grade products across the board of over 80 bond funds, actively managed by a 200-person global squad of sector specialists, analysts, and traders. These folks live and breathe fixed income. So if you're looking to give your clients consistent results year in and year out, Go see the record for yourself at vanguard.com slash audio.

12:32That's vanguard.com slash audio. All investing is subject to risk, Vanguard Marketing Corporation Distributor.

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13:44Check out shares of Roblox. Company on fire up 10 % after they reported fourth quarter users and bookings that topped expectations. Daily active users jumped 69 % to 144 million. It beat analyst forecasts. I'm pleased to say we're now joined on the results by Dave Buzuki, CEO of Roblox. Your engagement levels were jumping to a similar degree. I think it was like 68%. Is this the games that are driving this, Dave? It's really the games, the platform, and the creator. We are on a mission to get 10 % of all global gaming content running on Roblox, and we're well on our way. We had a banner year, as you mentioned, in 2025.

14:24We had 55 % year-on-year bookings growth. And in addition, as we started rolling out what we call the gold standard for safety, we're age-checking our users, and we now have accurate data on the 18 and up segment, which is growing at over 50 % year-on-year. In addition, around the world, countries like Japan are growing 160 % year-on-year. Really, people are creating new genres and types of games, whether it was Dress to Impress a year ago or Grow a Garden. So we're powered by both platform and an amazing creator community. Yeah, you've got Bruno Mars singing live on Brain Rot. I mean, 12 million people all using and coming to watch that at the same time.

15:13The records are interesting given, as you say, these safety measures have been put in place. How has that impacted? Has that created any friction? or indeed it seems as though you're leaning into the opportunity of these safety measures? I think leaning in is a good way to mention it. I believe the last time we chatted, we mentioned our vision for the gold standard for safety. In addition to filtering and monitoring all chat for critical harms and not allowing image or video sharing, we have now our full end to our rollout of age estimation, which is understanding the age of everyone on our platform and using that to allow people to communicate with people of similar age.

15:56We gave our teams an ambitious goal to have no friction for this. And when you lean into something like this, a lot of innovations pop up on the side. Our matchmaking has gotten better. We continue to refine the way we filter text and make trusted connections. So we're optimistic. mystic we're going to go through this and ultimately come out with minimal friction from this dave i fired up my new gaming pc last night asa nitro v15 intel i5 nvidia geforce rdx 4050 and i thought to myself what am i going to play and for you guys and everyone else it's about pipeline right you rely on these third parties to to keep the pipeline going but you also have like the ambition on these higher fidelity games.

16:46How do you guarantee the pipeline and how are you going to manage the pipeline going forward? So I have some more things to play. The pipeline on Roblox is very, very healthy. We watch the distribution, the variety, the diversity of the experiences that our creators are growing. And over the last year, we've made amazing really advances, not just in our technology platform, but in search and discovery so that the pipeline is robust right now. We have a unique vision with our platform, especially for 18 and up expansion, that when a creator makes an experience on Roblox, it works at good performance on a low-end 2GB Android phone, for example, but also can scale up and look beautiful on your brand new gaming PC.

17:36This is unique technology. It requires a vertical stack going from cloud to game engine to discovery to the apps on everyone's desktop. It's why we're optimistic that that 50 % growth in 18 and up can get more and more of that part of the global gaming market. I'll highlight in the US, our ambitions are more than 10%. And in the US, a big majority of that 50 billion approximate gaming market is 18 and up. So we see really good trajectory in that direction. Dave, advertising. We check with you regularly on it and you're consistent that it's not yet a meaningful contributor, right? When will it be?

18:19Will it be? Or do investors now start to change how they factor in ads for you going forward? I want to highlight the big picture. In 2025, I believe we gave guidance in the low 20s and we ended up with 55 percent bookings growth. So I want to highlight the big picture is we continue to exceed guidance and expectation on how we grow. We're seeing great progress, both on rewarded video advertising and also developer sponsored tile advertising, which is creators on Roblox who are monetizing really well, accelerating their own growth by purchasing advertising. We do believe it'll be a big segment.

19:03It will ultimately, as we roll out Roblox Moments, which is really used for discovery of video capture of Roblox, that'll be a part of it. So we're continuously bullish, but not ready to really split it out yet. Dave, briefly, how bullish are you on the AI platform? and indeed the model that you have. We've got Cube Foundation model that you've just unveiled, but Google's also got Project Genie. How are you seeing that changing the development of games and how do you stick to your sort of more blocky aesthetic that people love? Well, what we believe we will see over time as we advance AI, our avatar system and our technology platform, a much bigger diversity of the types of experiences you see on the platform.

19:47We've shared our notion of novel games, which is games you'd never expected to see on Roblox in genres like RPG or in sports. And really with AI, we see that as an acceleration technology for both creation, for the way games look. We shared some videos on X this week around 3D in the cloud, up sampling, and also how models will be used for driving creation. I'll highlight one key thing about Roblox. We are a connection and a communication platform. We're a multiplayer platform. We're, you know, in sci-fi terms, we're building the holodeck where people go together. Some of the technologies out there that we're building as well, like world models, are currently video single player technologies.

20:36We think the big long-term opportunity for us is synchronizing thousands of players in the cloud, which is much different technology and stuff where, you know, is actively part of how we build Roblox. Dave Buzuki of Roblox, thank you very much. Now, coming up on Bloomberg Tech, Affirm CEO Max Levchin joins us to talk about his company's results. Stick around. That's next. This is Bloomberg Tech.

21:06Shares of Affirm down about 6%. The Buy Now, Pay Later company reported results that beat analyst estimates, though some on the street say that the outlook part is a little bit conservative. Fortunately, we can talk through it with Affirm CEO, Max Lefkin. Actually, there's been a lot this morning about the outlook, the financial strong quarter gone. I actually just want to talk about what you're doing. And I'd like to start, if I may, with the Affirm card. How's that coming along? And Max, with you, if I may, what's the endgame with the Affirm card? You know, there is no endgame. There's so much to do.

21:43I have a hard time saying we'll be done when this feature ships. Affirm card rocketed once again. For a long time, I think it looked like a gently super linear growth curve. And in our latest letter, we finally showed that it's... That's kind of what I mean. You know, the trajectory's changed. It's, you know, we didn't do anything very specific to make it go obviously exponential, but it is accelerating. And it's just the great work of our product teams that have been putting in new features, integrating all of our 0 % deals into the card. The card grew, you know, something like four times the rest of the business.

22:21You know, it's just a rocket ship that we built a few years ago, and it just keeps going. um the end game is to get you to put away your credit card forever and use a debit card powered by a firm the other growth part of the story because it is a growth story and whatever you feel about the analyst saying you're being conservative is is international expansion a bit so in my my home country in caroline's home country the uk it's a really interesting case study how's that going but then what what comes next after that well we just announced some exciting brands. We're live with Shopify, our great partner in the U.S., now in the U.K.

22:59It's a real business now. So for a couple of quarters, we've said, look, we've crossed the pond. We're in London. We're hiring. We're building. It's now a business. It's making real revenue. It's generating some very significant sales lifts for our merchant partners. We have a whole slew of new partnerships to go live with soon. So feeling great about it. And I and Continental Europe next, of course. And so we're definitely not going to be a North American phenomenon only, but we're still very, very committed and very focused on our North American stronghold. So is TD Securities' truest, is Bloomberg Intelligence Analysis right that you do guide conservatively and you just feel that that's the right thing to do in this consumer context?

23:39I think the guide is the guide, as our CFO always reminds me to say. I encourage folks that hold our stock or eyeing our stock to see how we've done in the past, quarter after quarter, we make promises and we deliver on them. So we take our guidance very seriously. We intend to always do well relative to what we said we'll do and better. And that's what it is. I mean, ultimately, the results speak for themselves and we are in it for a very long term. So at some point, people will figure out exactly just how much more growth there is in this business. Credit quality holding up clearly. And that's the litmus test in many ways to success within delinquencies.

24:21Are they on the rise? How are you seeing a consumer right now, Max? You know, we have underwritten tens of millions of American households in the order of 70 million, 26 million actives just last 12 months alone, we reported. We see a pretty big swath of America. Our consumer is healthy. They are paying us back. They're shopping. They had a great holiday season. A lot of outside observers underestimated our growth over the holidays. We proved them wrong yesterday once again. American consumer, as we see her, is doing just fine. Max, I think this is the first opportunity we've had to speak since the president's initiative to cap credit card interest rates.

25:03You know, we start this conversation by you saying, well, we want people to put their credit card away. You obviously have some bias in that narrative. But just your viewpoint on it, please. and what's happened in the weeks that followed. We just have 30 seconds, sorry. I think the most important thing in this conversation about affordability is transparency. Like, rate caps are a conversation for the legislators, but the most important thing is people understand what they're getting into. The reason Affirm has been successful is because of upfront pricing. If you know what you'll pay, you'll be just fine.

25:36Max Leichterian, always great to have your transparency on the show. CEO of Affirm, thank you. Coming up, we dive on this week's market moves, the laissez-faire of Alliance Bernstein. That's next. This is Bloomberg Tech.