Tech Earnings Roundup with Deirdre Bosa  |  Okay, Computer No. 83 - video Dailymotion

Bullish Studio

Deirdre Bosa joins Dan Nathan to discuss her video Ambition to Me is the American Dream (2:00), tech earnings (5:30), Uber (11:00) and the state of San Francisco (16:00).  About: Each week our tricked-out team of tech investors and former operators breakdown the biggest headlines and themes in both public and private markets, with a specific focus on the intersection of web2 and web3. We will be joined by some of the most influential voices in tech, media, and crypto leaving listeners with fresh perspectives on increasingly complicated topics impacting their lives and investment portfolios. Okay, Computer. Podcast is hosted by Dan Nathan and Deirdre Bosa. Follow OkayComputerPod on Twitter.  ---  View our show notes at RiskReversal.com  Learn more about Ro body: ro.co/okay  ---  Email us at contact@riskreversal.com with any feedback, suggestions, or questions for us to answer on the pod and follow us @OkayComputerPod  We’re on social:  Follow Dan Nathan @RiskReversal on Twitter  Follow @GuyAdami on Twitter  Subscribe to our YouTube Channel: https://www.youtube.com/channel/UCRAOycPjsSgcEyQcuJD_ENA

Transcript

00:00 All right, welcome to OK Computer. I'm Dan Nathan. I'm joined, as always, by Deirdre

00:05 Bosa. She is this host of CNBC's Tech Check. Debo, welcome.

00:09 It's been a busy news week, so I'm excited to be here.

00:12 I mean, the fact that you made time for me and our audience on a week where I've seen

00:17 you all day long on CNBC reporting on all the tech earnings and we're not even gotten

00:23 to the big kahuna, that would be Apple and, of course, Amazon, which you track very closely.

00:27 That's going to happen Thursday after the close. And we're going to hit all those. And

00:32 also, I have a great discussion with Deepwater Asset Management's Gene Munster, where we

00:36 do a little preview of those. So stick around for that.

00:40 But, Dee, first things first, let's do a little housekeeping here. OK, as we were kind of

00:46 looking around and seeing what Dee was kind of reporting on this week and some things

00:49 we wanted to hit, we saw a video on CNBC.com, which has also been running on the air. Deirdre

00:55 Bosa, "Ambition to Me is the American Dream." This was really great. And talk to me a little

01:01 bit about this, because I know your background. But let's let our listeners hear a little

01:05 bit about how you started, because you did not start in the media, but you've actually

01:11 been a reporter, obviously, since a pivot earlier in your career. You've been in Shanghai,

01:16 you've been in Singapore, you've reported from Canada, and obviously now you're in San

01:20 Francisco. Give us a little bit about the origins of this video and what this means

01:25 to you. What about the American dream is so important here?

01:28 I would love to. And I love that you saw that, Dan. And I will also say that this is one

01:32 of my favorite parts of the week, is getting to sit down and talk about you and take sort

01:36 of a broader perspective. I love doing this podcast. So CNBC is running these sort of

01:41 promo videos on ambition. That's sort of, if you watch CNBC, whether you're a CEO, a

01:47 CFO, a retail day trader, a student who's looking to learn more about financial markets

01:52 and companies and the economy, it's all about ambition, right? Wanting to do more. And so

01:57 they've asked a number of us on air people and even guests, what does it mean to you

02:01 to be ambitious? And I sort of went back to why I even entered this industry in the first

02:06 place. And as you said, Dan, I became a journalist after I was already in the corporate world.

02:11 I was working for Rio Tinto, believe it or not. I was in the mining industry in Shanghai,

02:15 China, where they were paying me basically pennies, no expat package by any means. But

02:21 we called ourselves RMB millionaires because you would feel like a millionaire if you were

02:25 living in China with a much lower cost of living, even if you were earning nothing by

02:29 US or Western standards. So I was in Shanghai and a few of my colleagues were actually arrested

02:35 for espionage charges. And I saw journalists from the Wall Street Journal, from the Financial

02:40 Times, et cetera, camping out in our lobby. And I looked at them and I thought, you know,

02:44 I think it looks a lot more exciting to be on that side of the door than on this side

02:48 of the door, punching numbers into a spreadsheet day after day. And that's really where it

02:53 began. I was always interested in financial news. I always wanted to work for CNBC. And

02:57 I don't know if you know this, Dan, but I interviewed a few times. I did not get the

03:00 job right away. I had to be ambitious. I had to go back and say, you know, I can do this.

03:06 I can get up to speed. I had to go away and study for a long time because, as you know

03:10 well, Dan, there's no teleprompter at CNBC. You're very minimal. You got to think on your

03:14 feet. You got to be quick. You got to digest the news and react to it. Speaking of which,

03:18 there's been a lot to react to this week.

03:21 No doubt about it. We're going to put that video in the show notes. It's a great video.

03:24 And you are so articulate and your story is pretty fascinating. And hopefully over the

03:28 next, let's call it a few months or whatever, you know, our listeners get to hear more about

03:33 your background because it's pretty fascinating. I will tell you this, that I am in absolute

03:36 awe of the work that people like you do, Melissa Lee, who I obviously have worked, you know,

03:42 really closely with on Fast Money for so many years.

03:44 One of the best.

03:45 And the ability for you guys to kind of think on your feet, ask critical questions, ask

03:49 the right questions and get to the main point for the viewer or the listener is just so

03:55 important. And for me, it's just a very different. I'm a market participant, right? So I'm just

03:59 like a hot take machine. You guys have to be very thoughtful about a lot of this and

04:04 how it's kind of relayed, I think, to the viewer, which is expected to kind of not be

04:11 staring at a fact set machine all day long the way I do.

04:14 Well, OK, not to make this too much of a love fest, but I think that about you because you

04:19 have to actually make calls. We don't do that at all. And we're not invested. We're not

04:24 allowed to. But you actually have money in the market. So it all works together, right?

04:28 You need someone with some skin in the game. You need someone to step back from it, too.

04:32 But let's just say that appreciation is mutual.

04:34 All right. Fair enough. Let's talk about the markets here today, because I think it is

04:38 a pretty fascinating day. We're getting towards the end of Q2 earnings season. And I think

04:42 that obviously we said, you know, Apple and Amazon are going to be really important tomorrow

04:47 night. And they're two very obviously different companies with very different exposures. But

04:51 to combine, they're about four and a half trillion dollars in market cap. So what they

04:56 have to say about consumer, about enterprise, about China, these are going to be really,

05:01 really important. And I'm just curious, like, you know, you've been looking at the kind

05:05 of progression of earnings season. It started out with the banks on July 14th. They were

05:09 better than expected. But it was also a group that had been fairly depressed. And I think,

05:14 you know, feeling the after effects of the rate hikes and the regional banking crisis

05:18 and that sort of thing. But tech earnings, for the most part, have really been better

05:22 than expected. And it's kept the market kind of buoyed over the last few weeks. But today

05:27 we have a Nasdaq that's down two and a half percent right now. We're just before one o'clock

05:31 taping here. And, you know, to me, you know, in front of tomorrow's earnings, I think,

05:37 you know, this is a really important moment for the markets because it's been really hard

05:41 to find reasons why this that why we might have a sell off here. So I'm just curious

05:46 how you're thinking about it. What's the sentiment? At least you've talked to a lot of CEOs. You've

05:50 talked to a lot of investors. You've talked a lot of private market investors over the

05:54 last few weeks. What do you think the feel is for the markets right here?

05:57 I think when we went into this earnings season and actually for the last couple of earnings

06:01 seasons, there were such high expectations and the mega cap tech companies have basically

06:06 had to just do enough to keep the rally going. It's been so hard, as you said, to knock off

06:12 tech, even though there's perhaps been reasons for it. We thought maybe this earnings season

06:16 that the generative AI hype cycle would need to have more muster behind it. Right. Like

06:22 Nvidia showed investors that they're actually monetizing the shift right now. We thought

06:26 that maybe Microsoft and Google and Facebook or Meta would have to do the same. They didn't

06:31 really. And investors said, OK, that's fine, because the promise is still there. And we're

06:35 willing to give you a little bit more time. So I think the same goes for Amazon and Apple

06:39 tonight. I mean, you look at a company like Apple, which has been seeing declining revenue

06:44 growth over the last few quarters, and investors have said, OK, because the balance sheets

06:49 are such fortresses, because they have these wide moats, because they're seen as the most

06:53 exciting companies, that just feels like it's good enough for tech to continue to carry

06:58 these markets. Although the rally has broadened out over the last month or so, which is probably

07:02 encouraging if you're along and you're looking and you want to invest, you want to see strength

07:07 from more than just the mega caps. Yeah. And, you know, I think it's important to note that

07:11 broadening out, you've seen a rotation. Right. So like these were really crowded trades.

07:16 Right. The Microsoft and the Nvidia and Tesla and some of these things that have benefited

07:19 over these narratives over the last few months or so. And it's interesting to note that,

07:25 you know, the Nasdaq is down, let's call it three, three and a half percent from those

07:28 recent 52 week highs. But stocks like Microsoft, you know, this is a two and a half trillion

07:32 dollar market cap company is down 10 percent. Tesla, which was nearing a trillion dollars,

07:36 is down 15 percent. Netflix is down more than 15 percent, much smaller company, but again,

07:42 had a huge run into its earnings. Right. And then sold off after that. So I think it's

07:47 interesting that, you know, what's clear is that investors are heading for the door, at

07:50 least today, in a lot of the most crowded, much loved trades. And I'm just going to mention,

07:56 you know, Nvidia down six percent. I mean, this is a trillion dollar market cap company

08:00 that has doubled since it reported earnings last quarter. They don't report again until

08:05 August 23rd. And might the impetus and again, you know, last night AMD reported. Right.

08:10 And this is exactly the point that you just made here, is that investors want to see how

08:15 much of the excitement was in AMD and they weren't able to do it. Now, the stock was

08:19 up a few percent. It actually opened up on the day and now it's down eight percent. All

08:23 that saying is that a lot of investors are heading for the door at the same time.

08:29 Something that I've been tracking this earnings season, I mean, it's easy to look at how many

08:32 mentions of AI there are, but at the, you know, on the earnings call. But what I find

08:37 is more interesting or have found to be more interesting to look at is mentions of CapEx

08:42 between between Google or Alphabet, Meta and Microsoft, 39 mentions. So not only is AI

08:52 making not making them not being monetized at the moment, it's actually costing them

08:57 a lot of money because in all three of those cases, the companies warned that their capital

09:03 investment costs are going to go higher as they invest in this opportunity. That means

09:08 different cloud infrastructure essentially means more chips from Nvidia. It is interesting

09:12 that it's down 6 percent today. That is a huge move for such a big company. But my takeaway

09:17 from at least last week was that Nvidia is going to be the big beneficiary. Is that already

09:22 baked in, though, like you kind of pointed to? It has run up so much this year. So do

09:27 we get a bit of cold water? Yeah, that that that is going to be the absolute

09:32 main event. And I also think it's interesting to note that like this week, you know, Intel,

09:37 which was obviously not really involved in this and we know where their exposures are

09:42 and PC and data center and some of that has been weak and they've been kind of late to

09:46 the game. They did talk up a little bit about the opportunities that they see, let's say,

09:51 in the back half of the year into next year. But that's not capped up 6 percent Friday

09:55 after its earnings and it's given it all back. It's filled in that gap. And so I think, you

10:00 know, I know this sounds kind of, you know, kitschy here, but, you know, mind these gaps.

10:05 And so far, it was another one. I want to talk a little bit about some of the fintech

10:08 names. You know, that stock was up 20 percent the day after it reported earnings on a perceived

10:14 better than expected quarter and raise. And now in the next last two trading days, it's

10:18 given all of that back. So this week we're going to have block. We're going to have PayPal.

10:23 We're going to have Coinbase, you know. So, like, I think it's really important to kind

10:27 of watch the behavior after expectations high. Stocks have had big runs. They put up the

10:33 quarter in the guidance and maybe you have that one day move. But like with AMD here,

10:38 it doesn't take too many folks at the same time saying, is this as good as it gets right

10:44 to head for the door and have the opposite reaction?

10:47 One more name for you to contemplate that saw a big reversal in just a matter of, I

10:51 think, an hour or so was Uber yesterday. Pre-market, better profitability than expected. They were

10:56 up and then lost all of those gains and throughout the day. So that's another one that I was

11:02 all day. I was trying to figure out why maybe it was some profit taking. But what does that

11:05 say about the market as well? It's a stock that has run up 100 percent year to date.

11:09 All right. So I saw you on CNBC yesterday talking about this. And, you know, it's interesting.

11:14 It's a company I know that, you know, really well. And I want to talk a little bit about

11:19 the advertising business there, because it's something that, you know, I use Uber an awful

11:23 lot, you know, and I've tried to use Lyft here and there. And just in New York City,

11:27 it's just one of those things that I think availability of drivers and speed of, you

11:31 know, to you and all that sort of stuff. I mean, they just got it down. And I'm also

11:34 kind of it's becoming a little bit Josh Brown, you know, the halftime report, the reform

11:38 broker, he had a great post on his blog yesterday talking about Uber. And we'll put that in

11:44 the show notes. And he was actually talking about it in the context of Elon Musk wants

11:47 to build a super app. But Uber is way far ahead of their ambition. I just thought it

11:53 was really interesting. I'm not saying it's going to look like the super app that that

11:57 Elon Musk envisions, like a WeChat. But when you think about how many users and you think

12:01 about the trust that you already have with them for your safety, for your financial,

12:05 you know, all that sort of stuff, I thought it was an interesting thought exercise. But

12:10 the one point I wanted to make about this advertising business is that this could be

12:13 really powerful. You've tracked it with Amazon as it's become, you know, a 30 plus billion

12:18 dollar high margin business. I opened Uber the other day, and I saw a reminder that the

12:23 show that I love now on Apple TV Plus hijack. I don't know if you've seen this with Idra

12:27 Elba. It was like, hey, new new episode this, you know, tonight or something like that.

12:33 That is a powerful relationship that you have in your phone like that if you're using it

12:37 multiple times a day the way I am. So talk to me a little bit about that business.

12:42 That is an interesting idea. And I think that, you know, Dark House, which he had ambitions

12:46 to be a super app years ago, and he tried to have a fintech offering, which didn't really

12:50 work. They do have food and delivery. So I guess I can understand that point as far as

12:55 any American tech company is able to achieve super app status. I'm skeptical that anyone

13:01 is even close to it in the way that it really exists in Asia. Uber and advertising is interesting.

13:06 You're right. It kind of took everyone's surprise at Amazon that it became this massive business

13:10 with high margin. It's high growth if you're getting into it. You have a compelling platform.

13:15 I worried at the beginning that it would be a little bit too intrusive. Right. You hear

13:18 about advertising being pushed to you to your phone when you didn't even open up the app.

13:23 So it's interesting to hear that you think it's compelling and that it's useful. However,

13:29 I think we'll see. Did you see as well yesterday just the pure price of ride sharing and food

13:37 delivery? Did you see that in a Wired interview, Dark House, Rashahi was asked to guess how

13:41 much an Uber cost to get there. He said 20 bucks. It ended up being more than twice that.

13:46 And that, I guess, is you can say that it's inflation, but there are studies out there

13:50 that have looked at the price of ride sharing and it has, you know, gone up so much faster

13:56 than really anything else. Yeah, I think so. So, you know, I use the subway as much as

14:02 I can in New York City. It is easily the best way to get around in a fast place. But, you

14:05 know, a lot of folks are just not happy about what they perceive to be the safety, you know,

14:10 underground and that sort of thing. And so you've also seen with the rise of ride share

14:14 that the amount of taxis or the availability has gotten kind of poor. So as we get to a

14:20 point where we're looking to be, you know, predictable tech solutions, I mean, Uber has

14:24 definitely gained that trust. And when you think about that delivery business that they

14:29 had, I mean, they gained a lot of trust of a lot of Americans, you know, during the pandemic

14:33 or so. So, you know, I think that, you know, Dara, you know, who came in and, you know,

14:39 was meant to fix something that looked kind of like kind of very wide reaching as far

14:44 as their ambitions in a way has really focused on a couple of things that they want to do

14:49 really well. And I know that you've been really critical. A lot of these, and I don't mean

14:53 critical. You've actually highlighted the fact that a lot of these companies were doing

14:57 it right at the shareholders behest, right? They like, um, as far as profitability was

15:02 concerned, he guided towards gap profitability. They they're, they're getting there. Right.

15:07 And, and, and, and, you know, so like he's, he's kind of done the things that he said

15:11 he's going to do from an investor standpoint. I think that's good. And from a consumer standpoint,

15:15 I feel like, yes, the costs have gone up for a lot of these deliveries and the fees that

15:19 are embedded in that sort of thing, but the service has not suffered.

15:23 Yeah. And I think that Dara Kraso-Shahi has done a really fantastic job communicating

15:27 with wall street. I think that he was early to realize that you can't just rely on adjusted

15:31 EBITDA, which was one of my big complaints is that I think that maybe the average investor,

15:36 when you say you're profitable and you don't specify whether that's adjusted EBITDA or

15:40 gap profitability, I think that that can sometimes be misleading, um, to some, to some of the

15:45 average investors, but to his credit, a billion dollars in free cash flow. That's pretty amazing

15:50 for a company that, you know, even not long ago was losing billions and billions of dollars.

15:56 And I mean, the, the thing that I take issue with is I wonder the business model, I don't

16:00 know that it's still disruptive, um, and it's going to change everything or it's going to

16:05 be the Amazon of transportation as it was claimed during its IPO, or whether it's just

16:09 this kind of interesting utility, right. That has replaced the taxi industry, even when

16:15 we talk about its profitability and you know, the headline from yesterday was first quarter

16:19 of operating profit. It's a little cloudy because they have so many other investments

16:23 and other companies. So they're not totally in control of that profitability fate. They're

16:28 subject to Aurora and grab and DD and lime, a scooter company that is still private. So

16:35 those, those are all marked to market or marked in some way each quarter. So if you are a

16:39 bull and you're looking for Uber to enter the S and P 500 next year, not so fast, they

16:44 got to show four quarters of this. And that's not necessarily in Dara's hands, even though

16:50 he's a great operator has to do with some of these other companies and its investment.

16:53 Yeah. You know, and that's a really great point. Um, you know, Tesla, when it was added

16:58 to the S and P 500 in late 2020, I mean that stock, you know, was a rocket ship. Um, from

17:04 the moment it was announced, I think it was like November of 2020, the stock was, um,

17:08 you know, like kind of floundering, um, a little bit, or it was basing and they put

17:13 up those four consecutive quarters of a gap profitability and that was it. And, and, you

17:18 know, once you get into one of those indexes, I mean, you know, like it's, it's, it's, it's

17:23 a good place to be. And for a company that was just nearing a hundred billion dollar

17:26 market cap, I'm sure that's going to be on a lot of investors kind of, um, you know,

17:31 radars here. But again, that's not the reason to buy a stock. I do think though that it

17:36 adds to, you know, it immediately will go into, you know, dozens and dozens of funds

17:40 that track the S and P um, 500 D I caught you, um, last week. Um, you know, I was kind

17:46 of taking a look into, uh, you know, a story that I had heard and that you've been working

17:51 on, um, about the demand for office space in San Francisco. We know that, you know,

17:56 a lot of the narrative over the last kind of couple of years, um, has been that, you

18:00 know, this is one city center that has not come back the way like a city like New York

18:04 has. And you were on the NBC nightly news, you were doing a report on just what this

18:08 AI bubble might mean for demand for commercial real estate and San Francisco. So my question

18:15 to you is what did you learn about this? And, you know, I mean, I think, you know, my view

18:20 is that, you know, I think what's gone on in the stock market as it relates to AI probably

18:25 doesn't map exactly to like how we're going to see this kind of play out. So I'm just

18:29 curious as like, what did you, what did, what did, what did you learn, um, from that reporting

18:33 here and is it really something that, that a lot of these folks are really focused on

18:37 the Bay area here, or is it going to be, um, a bit more dispersed than some of these other

18:42 secular shifts that we've seen, um, that have been perceived to be out of Silicon Valley

18:46 over the last call of 10 to 15 years. So the reason I started looking into this story is

18:51 I went to a wedding in Vancouver, Canada, and I had so many people in the property business

18:57 as well, come up to me and say, Oh, are you okay? What is happening in San Francisco?

19:03 You know, what a mess that city is. And I thought it's interesting. I know I've heard

19:06 this narrative. I've seen it a lot, but living in the city, it really does not feel that

19:11 way, which is to say both things can be true. You're going to walk through the tenderloin,

19:16 even union square. It's not going to be great. These are, you know, the center of the city

19:19 where you see open air drug market homelessness problem. I said, my kids know that when we

19:24 get out of the car to go to hockey practice in downtown, they got to hide the Nintendo

19:30 switch in the trunk underneath. Otherwise our windows, our car, our windows will be

19:35 smashed. Our window, our car will be broken into. This is just something that they have

19:39 grown up knowing. So the question is, is it all that much worse right now than it ever

19:43 has been? I would say it's always not great in San Francisco and we've gotten a really

19:47 bad rap. Yes, some of that is, is, um, is fair, but I went to look about the, look at

19:55 the AI excitement and who's building here. And it turns out that a lot of companies and

20:01 really interesting people in artificial intelligence, especially generative AI, they're building

20:06 in San Francisco. They want to be here. I went to one company scale AI. Um, it was last

20:11 valued at $8 billion. So it's a big company. And this guy's been around forever. Went there

20:16 on a Thursday afternoon to film the story and the office was full and they had, you

20:19 know, I want to say it was like more than 10,000 square feet right in the middle of

20:23 the city. And you go to a place like Hayes Valley, which is just across town, still considered

20:28 sort of downtown San Francisco. And it is buzzing. The cafes are full of people working

20:32 on things. There's, there's these kind of like AI communal living places where people

20:37 are networking. So I think both things are true. I also talked to a lot of people in

20:40 the business community with established businesses, particularly in FinTech that are unhappy with

20:46 the city's policies and they want to see more from Mayor London Breed. And I sat down with

20:50 her as well to try and question her on what she's doing. And it's, it's tough. So the

20:55 city has a lot to come back, but there's also this glimmer of hope in AI. And I will say

20:59 that a lot of it's happening here and the numbers back that up as well. You've got,

21:03 I think 20 of the best funded AI companies. They're all here in the Bay area and a lot

21:08 of them are in San Francisco proper.

21:10 Yeah, no, I, I think that, you know, that could be a silver lining of just the demand

21:16 in the near term, you know, for these kinds of products, services or innovation in around

21:21 it. We know that it's just this kind of, you know, the network effects that have always

21:24 existed in Silicon Valley as it relates to access to talent and capital and all of it

21:29 being in one place there. Hopefully that is something that kind of can benefit and really

21:34 speed up. All right, well, listen, Deirdre, this is a big week. We have some big FinTechs.

21:38 We have Apple, we have Amazon. Those are Thursday after the close. You and I will definitely

21:42 check back next week. You can find Deirdre on CNBC on her tech check. And she will be

21:49 reporting on all of this. So I really appreciate you being with me this afternoon.

21:53 Thank you, Dan.

21:54 Thank you.

21:55 [Music]

21:58 [BLANK_AUDIO]

Tech Earnings Roundup with Deirdre Bosa | Okay, Computer No. 83

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