AMD's AI Chip Sales Boost and Microsoft Azure's Slowing Growth | Bloomberg Technology

Bloomberg Technology
31 Jul 202446:31

TLDRBloomberg Technology discusses the impact of AMD's AI chip sales boost and Microsoft Azure's growth concerns. The show covers T-Mobile's success with monthly subscribers, the importance of fiber investments, and partnerships like SpaceX's satellite connectivity. AMD's data center business growth, supply chain updates, and the competitive landscape in AI accelerators are highlighted. The conversation also touches on the PC and gaming market, emphasizing the potential of AI PCs and the enterprise refresh cycle's positive indicators.

Takeaways

  • 📈 AMD's AI chip sales are experiencing a significant boost, with the data center business more than doubling year on year in the second quarter, indicating strong demand for data center infrastructure.
  • 🛠️ Microsoft Azure's growth is slowing, with an 8% contribution from AI, but concerns about spending to achieve this growth are raised, suggesting a longer time horizon for monetization.
  • 🚀 T-Mobile reported its biggest quarter ever, with the industry as a whole seeing organic growth and a focus on maintaining the value position in the market.
  • 🌐 There is a significant focus on fiber technology, with T-Mobile collaborating to purchase Metronet, highlighting the importance of fiber in broadband services.
  • 🔒 Supply chain constraints are affecting the semiconductor industry, but companies like AMD are working to expand capacity to meet the high demand for their products.
  • 💡 The PC market is expected to see a stronger second half of the year, with new generations of chips being launched for notebooks and desktops, which are well-received by the market.
  • 🎮 The gaming segment is valued for its strong partnerships, but there is a noted decline in revenue in the second half of the console cycle, with expectations for a refresh cycle to invigorate the market.
  • 🤖 Uber is partnering to bring electric vehicles to its ride-hailing app, starting in Latin America and Europe, showing a strategic move towards sustainability and new market opportunities.
  • 📊 Pinterest reported record user growth but fell short of revenue estimates, emphasizing the platform's focus on a positive user experience and investment in AI for better engagement and recommendations.
  • 🏆 Alibaba is leveraging the Paris Olympics with an initiative to help athletes become entrepreneurs, reflecting the company's commitment to supporting the athlete community beyond sports.
  • 🛍️ Alibaba.com introduces an AI-enhanced e-commerce search to make the search experience proactive, helping users to filter product selections and suppliers more effectively.

Q & A

  • What is AMD's recent performance in the AI chip market?

    -AMD has seen significant growth in its AI chip sales, with its data center business more than doubling year on year in the second quarter. The company is experiencing an environment where there is a high demand for data center infrastructure, indicating a strong market for AI accelerators.

  • How is T-Mobile performing in terms of monthly subscribers and industry competition?

    -T-Mobile is performing strongly, with the stock bouncing around in the morning of the reported day. The company is seeing organic growth in the industry and has taken the prize for the biggest quarter in its history, indicating a successful share-taking strategy.

  • What is the significance of T-Mobile's collaboration with Metronet in the context of fiber technology?

    -T-Mobile's collaboration with Metronet, the fastest-growing fiber company in America, is significant as it positions T-Mobile to capitalize on the growing demand for high-speed internet services. This collaboration is part of T-Mobile's strategy to expand its investment in fiber technology.

  • What is the impact of the partnership between T-Mobile and SpaceX on the company's strategy?

    -The partnership with SpaceX is aimed at eliminating dead zones by utilizing satellite connectivity. This strategic alliance is part of T-Mobile's broader initiative to enhance its network coverage and service quality, potentially giving it a competitive edge in the market.

  • What factors contributed to the strong second quarter for AMD?

    -AMD's strong second quarter was driven by several factors, including the doubling of its data center business year on year, passing significant milestones in its supply chain, and customers moving products into production. These factors contributed to the company updating its full-year guidance and expressing optimism about its hardware and software milestones.

  • How does AMD differentiate its AI accelerators from competitors like Microsoft Azure?

    -AMD differentiates its AI accelerators by offering the highest memory, which is beneficial for faster response times and handling complex training and inference tasks. The company emphasizes that its technology is optimized for different workloads and that it provides a diverse set of solutions to meet various market needs.

  • What is the projected market size for AI accelerators, and how does AMD plan to address the supply constraints?

    -The overall market for AI accelerators is projected to be over 400 billion dollars. AMD plans to address supply constraints by increasing the industry's overall capacity, working on expanding partnerships, and ramping up its supply chain to meet the high demand.

  • What is the current state of the PC gaming market, and how does AMD view its future?

    -The PC gaming market is currently in the second half of the console cycle, experiencing a decline in revenue as expected. AMD believes that the market has great long-term potential and is excited about the positive indicators for the PC market going forward, especially with the launch of new generations of chips.

  • How does AMD's enterprise server business contribute to the company's growth?

    -AMD's enterprise server business is making substantial progress, with one third of its new designs coming from customers that have never used AMD before. The company's focus on providing the best performance by dollar and general-purpose computing capabilities is driving growth in this segment.

  • What is the significance of AI in Pinterest's strategy, and how does the company plan to leverage it?

    -AI is a core competency for Pinterest, used to increase the relevancy of recommendations and user engagement. The company has seen a significant lift in relevancy through the use of large language models, which has contributed to record user growth and deeper engagement per user.

Outlines

00:00

📈 T-Mobile's Growth and Fiber Expansion

The first paragraph discusses a variety of technology and business topics. It highlights T-Mobile's strong performance with a significant increase in monthly subscribers, indicating the success of the industry as a whole. The conversation emphasizes T-Mobile's organic growth, its value proposition, and its strategy to maintain a competitive edge in the market. Additionally, there's mention of a strategic collaboration with Metronet, a leading fiber company, showcasing T-Mobile's commitment to expanding its fiber infrastructure.

05:01

🚀 SpaceX Partnership and Data Center Growth

The second paragraph focuses on a technology company's robust second quarter, with its data center business experiencing over 100% growth year-on-year. The company credits the increased demand for data center infrastructure and computing capabilities as the foundation for current technological advancements. The discussion also touches on a partnership with SpaceX, aiming to eliminate dead zones through satellite connectivity, and the company's approach to leveraging AI accelerators for training and inference, highlighting the importance of memory capacity in their technology.

10:04

💡 Market Analysis of AI Accelerators and Semiconductor Supply Chain

This paragraph delves into the rapid growth of the AI accelerator market, with projections of it becoming a $400 billion industry. It discusses the balance between training and inference demands and the necessity for a diverse set of models to meet various needs. The conversation also addresses supply chain constraints, particularly the shortage of semiconductors, and the industry's response to increase capacity to meet the surging demand. Lastly, it mentions the company's product development roadmap, including upcoming new chip generations and the importance of staying on an annual product cycle.

15:07

🎮 PC Gaming Market and Enterprise Server Business

The fourth paragraph covers the PC gaming market, noting its strength in the second half of the year and the potential of AI PCs as a significant development for daily life. It also discusses the launch of a new generation of chips for notebooks and desktops, contributing positively to the market. The conversation shifts to the enterprise server business, highlighting the progress made with new designs and the company's focus on general-purpose computing for enterprise data centers, with an emphasis on performance and value.

20:09

🤝 Uber's Electric Vehicle Partnership and Market Analysis

In this paragraph, Uber's new partnership to introduce electric vehicles to its ride-hailing app is discussed, starting in Latin America and Europe. The move is seen as a strategic expansion to establish a presence in the electric vehicle market, given Tesla's lack of interest in such collaborations. The paragraph also includes commentary on Microsoft's slower growth and the long-term monetization strategy for its AI investments, as well as a brief mention of NVIDIA's chip shipments and the impact on consumer services.

25:20

📊 Pinterest's Earnings Report and AI Investment

The sixth paragraph provides an overview of Pinterest's earnings report, which, despite being below street estimates, shows record user growth and a strong second quarter. The CEO of Pinterest discusses the company's focus on making the platform a positive space for users, particularly Gen Z, and the decision to avoid political advertisements. The conversation highlights Pinterest's investment in AI to improve user engagement and recommendation relevancy, emphasizing the company's commitment to long-term health over short-term gains.

30:21

🛠️ Microsoft's Cloud Revenue and Future Projections

This paragraph examines Microsoft's cloud revenue and the company's cautious approach to monetizing its investment in data center infrastructure. The discussion includes an analyst's perspective on Microsoft's strategy, emphasizing the company's careful spending and focus on long-term demand signals. The paragraph also addresses NVIDIA's stock performance and the potential implications of increased memory chip production by Samsung.

35:25

🏭 Intel's Job Cuts and Business Realignment

The eighth paragraph discusses Intel's plan to eliminate thousands of jobs as part of a cost-reduction measure to fund its ambitious business turnaround. The company aims to invest in new technology to regain market share while also expanding its business. However, the need to save money to finance these efforts has led to the decision to reduce staff, highlighting the challenges faced by Intel in realigning its business strategy.

40:26

🏅 Alibaba's Olympic Partnership and AI in E-commerce

The final paragraph covers Alibaba's partnership with the International Olympic Committee to support athletes in starting their own businesses through an initiative called 'Same Player, New Game.' It also introduces a new AI-enhanced e-commerce search feature on Alibaba.com, which aims to make the search process more proactive by leveraging human expertise and technology to help users find the right products and suppliers more efficiently.

45:26

📊 Market Insights and NVIDIA's Stock Performance

The last paragraph provides insights into the market's reaction to NVIDIA's stock, which has risen significantly after Morgan Stanley's positive outlook. It also mentions AMD's sales forecast upgrade and the potential benefits for NVIDIA in the AI market. Additionally, there's a brief mention of Meta's upcoming earnings report and the market's anticipation of its performance.

Mindmap

Keywords

💡AI Chip Sales

AI Chip Sales refer to the revenue generated from selling microprocessors specifically designed to handle artificial intelligence tasks. In the context of the video, AMD's growth in this area is highlighted, indicating a positive trend for the company. The script mentions, 'OUR DATA CENTER BUSINESS MORE THAN DOUBLED YEAR ON YEAR IN THE SECOND QUARTER,' showcasing the significant impact of AI chip sales on their financial performance.

💡Microsoft Azure

Microsoft Azure is a cloud computing service and part of Microsoft's suite of cloud services, offering a range of cloud computing solutions. The script discusses Azure's slowing growth, which is a concern for investors as it indicates a potential deceleration in the expansion of this segment of Microsoft's business. The transcript states, 'MICROSOFT AZURE'S SLOWING GROWTH,' emphasizing this point.

💡CAPEX

CAPEX stands for Capital Expenditure, which are funds used by a company to acquire, upgrade, and maintain physical assets. In the script, investors are looking at CAPEX to gauge future growth, as it represents the money being invested in infrastructure and technology to support expansion. The term is mentioned in the context of evaluating growth prospects: 'INVESTORS LOOKING AT THE CAPEX AND SAYING THEY KNOW SEE THE, GROWTH OR MONEY COMING OUT OF THE EQUATION.'

💡T-Mobile

T-Mobile is a major telecommunications company. The script discusses T-Mobile's strong performance, particularly in terms of gaining new subscribers and its strategy for value positioning in the market. The transcript highlights, 'T-MOBILE TOOK THE PRIZE. THIS WAS THE BIGGEST QUARTER TO, EVER IN OUR HISTORY,' indicating their success in attracting customers.

💡Fiber

In the context of telecommunications, Fiber refers to fiber-optic communication, which is a method of transmitting information as light pulses along a glass or plastic fiber. The script mentions the importance of fiber for T-Mobile, as they collaborate with Metronet, a fiber company, to expand their network infrastructure: 'LAST WEEK WE ANNOUNCE THAT WE ARE COLLABORATING TO, PURCHASE METRONET.'

💡Broadband

Broadband is a high-speed internet access technology that offers faster data transfer rates than traditional dial-up connections. The script discusses T-Mobile's success in the broadband market, stating, 'WE TOOK THE HIGHEST PERCENTAGE SHARE OF BROADBAND EVER IN OUR, HISTORY. 75 PERCENT.' This indicates their significant market share and the trust consumers place in their broadband services.

💡Satellite Connectivity

Satellite Connectivity refers to the use of artificial satellites in space to transmit data and voice signals. In the script, it is mentioned in the context of T-Mobile's technology alliance with SpaceX to improve network coverage: 'WE HAVE A TECHNOLOGY ALLIANCE WITH SPACEX. WE WANT TO ELIMINATE DEAD ZONES.'

💡Data Center

A data center is a facility that houses a large number of servers, storage systems, and network devices. The script discusses the growth in AMD's data center business, which is a key area for their AI chip sales: 'OUR DATA CENTER BUSINESS MORE THAN DOUBLED YEAR ON YEAR IN THE SECOND QUARTER.'

💡AI Accelerators

AI Accelerators are hardware or software components that speed up the processing of artificial intelligence applications. The script mentions the design and performance differences in AI accelerators and their importance for training and inference in AI systems: 'WE HAVE THE HIGHEST MEMORY. THAT IS REALLY HELPFUL WHEN YOU ARE ASKING QUESTIONS. AND YOU WANT YOUR ANSWERS TO RETURN FASTER.'

💡Semiconductor Supply Chain

The semiconductor supply chain refers to the network of companies and processes involved in the production of semiconductor devices, from the sourcing of raw materials to the manufacturing and distribution of the final product. The script discusses the tightness of the supply chain and its impact on AMD's ability to meet demand: 'THE SUPPLY CHAIN WILL CONTINUE, TO BE TIGHT.'

💡PC Market

The PC Market refers to the industry involving the production and sale of personal computers. The script mentions the PC market's health and AMD's positive outlook, especially with the launch of new chips: 'THE PC MARKET IS A GOOD MARKET. THE SECOND HALF OF THE YEAR IS STRONGER THAN THE FIRST HALF.'

💡Gaming Business

The gaming business encompasses the development, marketing, and sale of video games and related products. The script discusses the gaming segment, particularly AMD's partnerships with market leaders like Microsoft and Sony, and the expected decline in revenue during the second half of the console cycle: 'GAMING. THAT IS A GREAT SEGMENT. WE TRULY VALUE THOSE STRONG PARTNERSHIPS WE HAVE WITH, MARKET LEADERS LIKE MICROSOFT AND SONY.'

💡Enterprise Server Business

Enterprise Server Business refers to the sector of the market that deals with the sale and support of server systems to large organizations. The script mentions AMD's progress in this area, highlighting new customer acquisitions: 'I AM PLEASED TO SEE THE, PROGRESS WE ARE MAKING THERE. WHEN YOU THINK ABOUT THIS MARKET , THERE IS A SET OF, WORKLOADS THAT NEED THE BEST GENERAL PURPOSE COMPUTING.'

💡Uber

Uber is a ride-hailing company that is expanding its services. The script discusses Uber's new partnership to bring electric vehicles to its app, starting in Latin America and Europe: 'UBER IS TEAMING UP TO BRING ELECTRIC VEHICLES TO THE, RIDE-HAILING APP, STARTING IN LATIN AMERICA AND EUROPE BEFORE, EXPANDING ELSEWHERE.'

💡Artificial Intelligence

Artificial Intelligence, or AI, is the simulation of human intelligence in machines to perform tasks. The script mentions AI's role in various contexts, such as in Pinterest's platform for user engagement and recommendation improvements: 'AI IS A CORE COMPETENCY FOR US... WE ARE NOT ONLY GROWING USERS, AT RECORD LEVELS, WE ARE DEEPENING ENGAGEMENT PER USER, AND A BIG SPOT IS INCREASING THE RELEVANCY OF, RECOMMENDATIONS.'

💡Advertising Pricing

Advertising Pricing refers to the cost structure for placing advertisements, which can be influenced by various factors, including technology investments. The script discusses how investment in AI infrastructure may translate to advertising pricing for companies like Meta: 'HOW DOES ALL THE INVESTMENT IN, AI INFRASTRUCTURE TRANSLATE YOU ADVERTISING PRICING?'

Highlights

AMD's AI chip sales are boosting the company's performance, showing significant growth in the data center business.

Microsoft Azure's growth is slowing, with concerns about CAPEX and the return on investment in AI infrastructure.

T-Mobile reports its biggest quarter ever, with a focus on organic growth and maintaining a value position in the industry.

Fiber investment is a key area of growth, with T-Mobile collaborating with Metronet, America's fastest-growing fiber company.

SpaceX partnership aims to eliminate dead zones through satellite connectivity, enhancing network coverage.

AMD's roadmap includes new chip series launches, emphasizing the importance of CPUs, networking, and systems capabilities.

PC market shows signs of recovery, with AI PCs expected to be an inflection point for daily use in various environments.

Gaming business insights reveal a decline in revenue during the second half of the console cycle, awaiting the next refresh cycle.

Uber's new partnership aims to bring electric vehicles to its ride-hailing app, starting in Latin America and Europe.

Pinterest's user base is growing, with 40% being Gen Z, indicating a strong presence of the younger demographic.

Intel plans to eliminate thousands of jobs as part of a cost-cutting measure to fund its ambitious turnaround strategy.

Alibaba's initiative with the IOC aims to help athletes become entrepreneurs, leveraging the Paris Olympics for business.

AI-enhanced e-commerce search by Alibaba.com uses AI to proactively filter product and supplier selections, improving the user experience.

NVIDIA's stock rises as Morgan Stanley rates it as a top pick, influenced by AMD's positive sales forecast in the AI market.

Meta's earnings report is anticipated, with a potential impact on the market, especially considering its valuation compared to other tech giants.

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