Qualcomm Earnings, Musk $1 Trillion Pay Vote

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1:02Bloomberg Audio Studios. Podcasts. Radio. News.

1:11Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.

1:23This is Bloomberg Tech coming up. Qualcomm gives an upbeat forecast, but it fell short of investor expectations. We'll discuss why with the CEO. Plus the earnings don't stop there. Executives from Figma, Robinhood, Chime and Lyft, they join us after reporting results. And all eyes on Tesla as we await the outcome of a shareholder vote on a$1 trillion pay package for Elon Musk. And Tesla, it weighs on the broader market, said. Let's get to those broader markets on the day because, well, overall we've got a lot of macro data to be digesting and that feeds in the angst that we've been seeing in tech stocks more broadly.

1:58We're off by 1.7 % on the Nasdaq 100. We're still questioning valuations. It's interesting that the AI play moves into the macro in terms of jobs data, not coming from the federal departments, but it is coming from Challenger Gray and Christmas. And they're saying we've never seen an October as bad as this in 20 years in terms of 153 ,000 jobs losses. AI automation being blamed. Bitcoin up by 1.7%. We've got some risk aversion, Ed. Yeah, in the chip sector, we have two very similar stories with two very different reactions. Arm has given us a bullish outlook for the current period, which basically suggests they're making traction in AI.

2:32The shares had opened a lot higher. We're now down 2%. Qualcomm, again, giving a pretty bullish outlook for the current period. Traction in traditional markets, diversifying revenue. But that stock is down 4%. At the high end of estimates, they didn't quite get there. Then there's in the media and entertainment space. Warner Brothers Discovery actually missed estimates on revenue in the quarter. But amid plans for a sale or some kind of transaction, that's really all the street really cared about. It is. And let's dig into that street reaction, the stock reaction. Hannah Miller's here to covering all things media.

3:06And really almost these numbers vindicated the decision by David Zaslav to be separating out the businesses. Talk us through it. Yeah, so this morning we heard David Zaslav really play up the strength of the studio segment. They had some big blockbuster hits this summer with Superman and weapons. He wants buyers to look at the movie business, not the TV networks business. Of course, Mr. Sarsdorf was asked about what happens next, and his response was pretty straightforward. We have an active process underway. Are you able to tell us any more, Hannah, about what an active process underway means?

3:40Yeah, they want to move quick on this, and we're expecting to get more news in December about this deal. You know, the bids have to come in. They have to consider all the interest they're getting from players like Netflix, Comcast, and Paramount. It's going to be really interesting to see how it plays out. But Hannah, are they the names that we're limited to? Or could we see big tech throw its hat in the ring? Who else might be interested in a CNN on one side or more the studios on the other side? Yeah, we're also hearing whispers about Amazon. They could come in as they try to continue building out their prime video streaming service.

4:18There are these valuable assets. There is the focus on the movie business, HBO, but we have to remember that there's CNN, there's a valuable sports portfolio. There are some really nice assets up for grabs here. Bloomberg's Hannah Miller, thank you very much. Let's get back to the chip sector. Arm gave a bullish revenue forecast helped by rising interest in designing chips to run AI data centers. Kunjan Sabani, senior analyst at Bloomberg Intelligence, writing, operating expenses remained elevated on AI investments and full chip initiatives, but long-term share gains and rising royalty content continue to support its outlook.

4:56Kunjan Sabani joins us now. Arm makes money in two ways. It licenses the blueprints, the underlying technology for a chip, and then it gets royalty in each unit of that chip that's sold. The story here is about what Arm is offering in the AI accelerator space or in the data center context. Explain what you saw in the numbers that they gave. Yeah, the data center strength was really the highlight, as you mentioned, Ed. When you look at the royalty revenues from the data center last fiscal year, it was about 10 percent of royalties. We expect this now to get to almost 18 to 20 percent. So a 2x increase in one year by the end of fiscal 26.

5:36What's really driving here in the quarter, they signed a lot of CSS license deals. Basically, they're licensing their IP to a lot of data center customers, whether it's been the merchant customers, the ASIC designers, SoftBank, and even Chinese customers. A lot of these licenses will eventually get converted into royalty revenues, hence creating a tailwind for layering more and more royalty revenues. Their share is significantly increasing quarter over quarter. and is, as we know, NVIDIA is going to launch their servers with the Blackwell servers. The CPU in that servers are going to be based on the ARM IP.

6:13When you look at Amazon ramping its Gravedon chip, that's based on the ARM IP. Google's Axiom chip based on the ARM IP. So they're seeing significant share gains here, which eventually sets them up to have strong royalty growth in the future from the data center segment. Kunjin, you mentioned SoftBank, and of course SoftBank is the main owner of ARM. Some of it trades on the public markets. SoftBank, big player in just the broader AI space, Stargate, for example. Did you get enough detail from Rene Haas, the CEO of Arm, about their role in Stargate and the big build-out? We did. So if you look at the numbers, this quarter software brought in somewhere about $180 million in royalty revenues, a$50 million jump from just last quarter.

6:56Also, when we look at revenues by Gio, So Japan is becoming now almost 15 to 20 percent of revenue, which until a few quarters ago, Japan was merged into small category other. So that tells you that the amount of revenue, both from royalty side and licensing that SoftBan is bringing into this company and going to become a significantly big, concentrated customer going forward. Software has a lot of portfolio companies. They acquired Graphcore, Ampere. So you can imagine it's a leading indicator of where they would be using ARM IP. Also, there's news about software and working with Arm to sort of develop their own chips.

7:34Qualcomm, strong outlook for the current period suggests strength in Android and efforts to diversify revenue sources doing well. We're showing your research on the screen, Kunjan. Very quick, give us your react. Yeah, it was a good quarter, but the concern here is that the fear that they would go back to 75 % of share at Samsung comes to becoming true. So that's, I think, what investors didn't like. We think that Apple share is higher than what we feared 70. It's close to 80 to 85 percent. But that goodness got offset by the Samsung share drop. Kunjun Sabani, always great research from you and the team.

8:09We appreciate it at Bloomberg Intelligence.

8:17Shares of Qualcomm. We check in on them because they reported last night. They're trading a little bit lower today. But the chipmaker actually really delivered an upbeat forecast. They had sales and profits handily topping Wall Street expectations. But maybe the market had got ahead of itself. Let's talk about it all and the real fundamentals with Cristiano Amon, he's Qualcomm CEO. And I'm sure it's really frustrating to start on the stock market reaction. But what do you think investors had done ahead of this? Had they got overexcited? We're seeing this play out with a few of the chip sector.

8:45Look, it's really hard to predict the market right now. But we're incredibly happy about the company. I think we're executing very well. Our strategy is playing out perfectly. Everything we said we're going to do, we're actually doing better. And, like, I could not be more excited about so many things that are going well at Qualcomm right now and the new opportunities we have in the future. I think the company is very different. We had expanded beyond handsets into a number of different markets. The results are showing. And there are very few companies like Qualcomm that can go from 5-watt chips for earbuds all the way to now 500 watts chips for a data center.

9:26And I think that's how we think about the opportunity. We can't wait to get into more on the detail of how you're jumping into the AI accelerator offering. But just going to the smartphone business, which is the bread and butter, what are you seeing at the moment? And particularly, what inroads are you making in Android? Yes. So, you know, I think this is a very interesting, and it's, you know, every quarter we see this. I know there's a lot of conversation about it, But it's a trend that has happened to Qualcomm over the past several years. I want everybody to step back and look at what's happening with the handset market in general.

10:00The handset smartphone is the most important consumer electronic purchase in the world. It's our inseparable device. And people want always to get a better device when they buy a new device. What we see right now is the expansion of the premium tier. So the market, Caroline, the units of handset market is still smaller on the annual basis than used to be before COVID. But what has happened and is driving a lot of growth from Qualcomm and Android over the past several years is the premium tier is expanding in size. So if you look at the United States market, most of the devices are premium tier.

10:38Most people will buy like an iPhone or a Galaxy. That's now happening everywhere in the world. It's happening in China. It's happening in India. So we see premium tier expanding. That makes a much richer market for us. And then we see phones becoming more capable, more compute, more AI that is driving silicon content. That's why Android continues to grow with Snapdragon 8. And I think the upside that we have seen above expectations is really Android expansion for Qualcomm. Cristiano, good morning. It's Ed. What you've tried to do is diversify away from mobile and away from Apple, right? But there are so many categories.

11:20Now data center, but auto, mixed reality. Which of those is the fastest moving for you right now? Look, right now you probably see in terms of the speed, it's automotive. I think we have been growing significantly on a year-over-year basis. And most of our growth, again, like the conversation with handset, has nothing to do about the market size. It's just us gaining share. Those cars becoming really computer on wheels. And we build a digital platform for the car industry, which is the Snapdragon digital chassis. So when you talk about diversification away from handset and Apple, a couple of things that actually came out in those results that are incredible.

12:07And it shows what we've been saying we're doing it. We just closed our fiscal year. The non-Apple-related growth in the company of about 18%. And when you look at segments like automotive, we're actually doing significantly higher than that. And that's also the other segment as well. The other part of the question is what's moving faster? And we are incredibly optimistic about those new category of mobile devices, which we call personal AI devices. As AI models and agent applications started to appear for consumers, that's materializing with devices that people wear. Like glasses, for example, are really becoming agentic glasses.

12:51And we said$2 billion of revenue by fiscal 29. We're way ahead of that. Just looking of how is it performing right now, especially with Meta. this is the first opportunity we've had to speak to you since the big data center news ai200 to start and the question that i've had most often for you from the audience is what is qual different about qualcomm's approach particularly to inference you have the this ai accelerator family or mpu how is it different from an nvidia or amd gpu a broadcom marvel xpu or this large body of startups that are basically chasing rack-scale solutions for AI? Yes. So I'll start answering the question by saying the following.

13:40There's a lot of people that will love Qualcomm. There are people that are not going to like Qualcomm. But one thing everybody's probably going to say, don't bet against Qualcomm being a technology-competent company. I think, look, just last year we're the number one company in America in terms of patent applications. And every market that we actually enter, we actually develop something very unique from a technology leadership. So now to answer your question, what are we doing? We're actually very focused on the next phase of data center. The next phase of data center, if you expect all of those projections to materialize and all of those companies investing in data center and AI to deliver the profitability the market expects, they are going to have to do inference.

14:24Inference is directly when you put AI into production at scale. And if you see just some of the conversations you see in the market right now about concerns of growth rates, power is one of the concerns. You need a lot of energy. So we're coming from our DNA of building devices. They're very efficient in power. And we think about what are the architecture that is dedicated for inference, especially for the post-GPU, I think, architecture. And I think that's what we're doing. I think we're developing an architecture that is optimized to the highest possible compute density you can put on a data center for a very efficient power.

15:04And people are interested and we're just busy executing. I think the other part of the answer, Ed, is why you not think that Qualcomm will have an opportunity to participate? The market is so big. We don't have to get a lot. Everything we get is multiple billions of dollars. Christiana, you brought up a really interesting if. If some of the big numbers that are being bounded about by the big players come to light. $3 trillion by 2028 is what Morgan Stanley thinks is going to be needed in data centers. What if it doesn't? Is there a risk that we actually innovate because we have to innovate because there isn't enough power and suddenly that data center demand just isn't going to live up to that expectation?

15:47No, for Qualcomm, for us, it's all upside. So, but do you think, can I just get a take on whether you think that$3 trillion figure even is reasonable? Do you have any negative worries, any concerns? Look, I don't. I believe that the need for compute is very clear. That's not only also, not only on the data centers everywhere. I think we see that on phones, we see that on cars, we see that on PCs. AI needs a lot more computing power. And I think, I believe what that will actually do is create opportunity for innovation. And there will be competition. Right now, everybody's playing to win. Everybody's building data centers to win.

16:25And then there's going to be competition. And I think that's what our focus is. But I don't believe the trend and the need for a computer. You can have an argument about the timing, but the trend is very clear. Here's one way I'll describe it to you. And I'll be very careful with my words. The Internet, when we thought about what the Internet will be back in 1999, is bigger today. The internet's much bigger today than people thought. So I think on the long run, AI is probably underestimated. It's going to be bigger. The question is always going to be about timing, and we're preparing for when there's going to be competition.

17:03Cristiano Amon of Qualcomm, great to have you back on the show. Thank you very much. Figma delivered an upbeat outlook projecting stronger-than-expected quarterly revenue and profit, citing strong demand and growing adoption of its new products. I sat down with CEO Dylan Field, who began by explaining the impact to growth from acquiring Weavey, a startup focused on generating imagery with AI within a web browser. Weavey is this amazing product where you can bring in all sorts of models. You can compose them in a node-based system, which basically means drag-and-drop visual programming. And from there, you can really start to explore what's possible with various models.

17:41So for us it's a bet that the starting prompt is just the starting prompt, it's not the end. What you need to do is shape these outputs almost like a medium, like clay, rather than try to go for the one shot. And then the final destination should be what you get through throughout this process. The team itself is incredible. I mean, they've managed to really balance simplicity with power so that they're able to achieve an incredible environment for creative exploration and process and workflow building. And really excited to work with them and build this out further. It brings me back to the customer behavior question.

18:20So revenue for the full year will be$1.044 billion to$1.046 billion. But I guess it's, is this existing customers using more products? Or is it a customer count growing higher because you're offering a wider range of products? Yeah, I mean, definitely both and also new customers adopting. We are seeing acceleration and all that, and our NDR, for example, went from 129 to 131 % this quarter, and that's on over 10K ARR customers. The way that we look at just what's going on overall is people really like the platform aspect of Figma, and that is something that drives adoption. but also the interoperability between the different products we have is really important.

19:13It's something that we're trying to make all the better all the time. In the quarter gone, net losses were driven by stock-based compensation. Yeah, the one-time event related to the IPO in particular. Related to the IPO in particular. But, you know, stock-based comp is part of this business in the world of technology but it's also part of the fabric and culture of the technology industry particularly now where we have this fixation on AI talent. What is your strategy going to be from this point, Dylan? Just less stock comp or you'll just have to manage it differently? Well, I think that, first of all, it starts with making sure that you see and everyone sees stock-based compensation as an actual expense.

19:56And I think that as we build out, we will see that number normalize. On a non-gap basis, this is a profitable quarter for us. And we continue to invest heavily in the short term in order to drive long-term platform growth and capabilities for our customers. I think that every customer wants that and our investors want that as well. Dylan Field, Figma CEO, with you, Ed. Meanwhile, Robinhood also reported earnings yesterday. Shares actually falling this morning, though. The company's crypto earnings, they were lower than expected. Meanwhile, operating costs, they were higher. Now, Robinhood CEO Vlad Tenev sat down with us yesterday and discussed the trading platform's plan to expand its offering.

20:42The interesting thing about prediction markets is it rounds out the offering and sort of like completes the time at which Robinhood customers can continue to engage with the platform. For a while, we were offering predominantly U.S. equities, which is very much a U.S. East Coast working hours type of event. Markets are open, you know, nine to four East Coast hours. And then we've expanded that over time with us introducing 24-hour market. We've added crypto. And now prediction markets, a lot of the events, particularly in sports, are happening nights and weekends. So Robinhood is becoming increasingly a 24-7 platform where you can trade and invest in global markets at all times of the day.

21:37And I think our customers do tend to be digitally native and quite savvy. That tends to lean younger. But we also have customers that are in their 70s and 80s. And as long as you're comfortable doing your finances on a mobile device and you want to be at the frontier of technology, I think it's something that transcends just young people. Of course, we always want to be relevant to the next generation. But Robinhood, I feel like you should be at a disadvantage if you're using any other platform. That was Robinhood CEO Vlad Tenev speaking after the company's earnings call yesterday. Now, coming up, AI seems to be taking a toll on U.S.

22:20jobs. We'll talk about the October labor cuts next. This is Bloomberg Tech.

22:30Hi, now. For Talking Tech and first up, Apple is turning to Google for help overhauling its Siri voice assistant. Now, the iPhone maker is planning to pay about a billion dollars a year for an ultra-powerful 1.2 trillion parameter AI model, according to sources. And the hope is to use the technology as an interim solution until Apple's own models are powerful enough. Plus, AI looks to be making its mark on the US labour market. Last month saw the most job cuts by US firms for October in two decades. It's all according to data from Challenger Grey and Christmas. Look, the firm pointed to AI reshaping industries.

23:03We're also acknowledging the impact of cost-cutting and right-sizing post-pandemic. Ned. Okay, coming up. Tesla shareholders have voted on the proposed$1 trillion pay deal for Elon Musk and his future at the company. After the market today, we'll find out the results of that vote. Stay with us. This is Bloomberg Tech.

24:19We'll be right back. Fiber Network across Texas. New Air Energy and Digital, symbol NUAI. Hi, Julie. It's Pam. Listen, I just saw the storm warning and they're saying it could be bad. I know the store is going to be a madhouse, but we need to stock up on food. We also need gas for our generator or we're going to be stuck without power. Please make sure you have everything you need before it's too late. I don't want you getting caught unprepared. For Patriots. Everything you need for total peace of mind. Oh, why does my back hurt every morning? I stretch. I cold plunge. I even invested in a $5 ,000 mattress.