BI Weekend: OpenAI, AMD Deal, New Verizon CEO

Summary

Bloomberg Intelligence: OpenAI, AMD Deal, New Verizon CEO

Date: October 10, 2025
Hosts: Scarlet Fu, Paul Sweeney

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Episode Overview

This episode of Bloomberg Intelligence dives deep into several major business and market stories impacting Wall Street and beyond. Key topics include Fifth Third’s acquisition of Comerica (the largest US bank deal of the year), Verizon’s surprise CEO transition to Dan Schulman, AMD’s flagship deal with OpenAI, IBM’s strategic integration of Anthropic AI, Dell’s bullish outlook in AI hardware, Constellation Brands’ consumer adaptation amid challenging beer markets, and ICE’s unprecedented move into crypto-based prediction markets.

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Key Discussion Points and Insights

1. Banking Sector: Fifth Third–Comerica Mega Merger

[02:24]

• Deal Details:
  • Fifth Third Bancorp is acquiring Comerica for $10.9B in stock, creating the 9th largest US bank with ~$288B in assets.
• Motivation & Impacts:
  • Comerica, pressured by weak performance and activist investors post-SVB crisis, finds a stable exit.
  • Fifth Third expands into high-growth markets, particularly Texas and California.
  • Industry faces pressure for further consolidation among peers like Regions, KeyCorp, M&T, and Citizens.
• Regulatory Environment:
  • Bank deals are being expedited under the Trump administration compared to prior delays (98 days vs. 400–600 under Biden).
• Industry Themes:
  • The US remains “overbanked” with ~4,500 FDIC-insured banks.
  • Regional banks are consolidating to survive against big banks and fintech disruption.

Notable Quotes:

• "It moves them into growth growth year markets in Texas and California, supplements their Michigan presence and really builds out their branching presence across the Southeast and Southwest."
  — Herman Chan, [02:00]

• "Does there need to be that many banks within the United States? Probably not... so it's a really tough operating environment and we expect more consolidation over the next several years."
  — Herman Chan, [05:27]

Branch Strategy & Fintech:

• Branches now serve more as “expensive billboards” for marketing than actual customer necessity.
• Fintech competitors skip branches entirely, using their cost savings and agile apps to compete.

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2. Telecom: Verizon’s CEO Surprise

[08:27]

• Leadership Change:

  • Dan Schulman (former PayPal CEO) replaces Hans Vestberg.
  • Schulman brings financial, operational, and consumer finance expertise.
  • Prior expectations pointed to consumer business head Sowmya Sampath, surprising markets.

• Strategic Direction:

  • Wireless subscriber growth is slowing, with pressure to monetize Verizon’s 150 million consumer relationships.
  • Potential shift deeper into consumer finance (credit cards, device financing, possibly loans).
  • Comparison to T-Mobile’s push into outdoor advertising leveraging location data.

• Balance Sheet & Dividends:

  • $170B in total debt, but strong cash flows sustain future ventures and a 6.6% dividend yield.
  • Dividend safety is a priority; cutting it is “the third rail” for telecom investors.

Notable Quotes:

• "When the news broke that Dan is taking over as CEO, it really surprised a lot of people, including me."
  — John Butler, [08:54]

• "I call it the third rail of telecom. I mean you do not want to cut the dividend."
  — John Butler, [13:36]

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3. Tech: AMD–OpenAI Landmark Deal

[16:36]

• Deal Highlights:

  • AMD to supply GPUs for OpenAI’s large-scale inference workloads (not training), providing 6 gigawatts of capacity.
  • This capacity equals the electricity demand of a major US city—indicative of astronomical AI growth.
  • OpenAI gains rights to acquire up to 160 million shares of AMD, in tranches aligned to data center development milestones.

• Industry Comparison:

  • Nvidia’s similar (but opaque) arrangement with OpenAI differed in structure; AMD’s deal is milestone- and capital-driven.
  • The transaction is framed as "tens of billions of dollars," but specifics remain closely guarded.

Notable Quotes:

• "You guys are using words like top and bubble and I think that's completely fair...But AMD has done something interesting here."
  — Ed Ludlow, [17:03]

• "For each gigawatt of capacity that comes online, AMD would then say, here is this tranche of stock."
  — Ed Ludlow, [18:28]

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4. Tech: IBM + Anthropic AI Integration

[19:31]

• Partnership Purpose:

  • IBM will offer Anthropic’s Claude family of large language models to its software and enterprise clients.
  • Extends IBM’s open, partner-driven software turnaround (partly attributable to Red Hat acquisition).

• Anthropic vs. OpenAI:

  • Anthropic leans ‘enterprise,’ embedding AI into IT and legacy infrastructure, while OpenAI still dominates the consumer-facing app space (ChatGPT).
  • Partnerships like IBM–Anthropic help enterprises adopt best-in-class AI across regulated and legacy environments.

• Mutual Benefits:

  • IBM gets cutting-edge AI for its vast client and consulting network.
  • Anthropic gains critical enterprise access and real-world deployment.

Notable Quotes:

• "IBM has a very large services business called IBM Consulting. These consultants will go out and sell anthropic software into the enterprises and say, hey bank, let me help you to automate this particular process."
  — Anurag Rana, [21:58]

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5. IT Hardware: Dell’s AI-Driven Growth Ambitions

[23:26]

• Investor Day Revelations:

  • Dell doubles projections for sales and profit growth due to surging demand for AI servers—20–25% CAGR through 2030.
  • EPS growth targets at 15% (fueled by operational leverage and buybacks).
  • Valuation is expanding as Dell is seen as a go-to AI hardware play.

• Broader Theme:

  • Legacy tech players—Oracle, Dell, Cisco—find revival by aligning with the AI hardware and networking boom.

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6. Networking: Cisco vs. Broadcom in AI Data Center Chips

[25:37]

• Product Launch:

  • Cisco introduces a new chip and networking system for long-range data center interconnects.
  • This competes with Broadcom but currently constitutes only 2–3% of Cisco’s business.

• Analyst Picks:

  • Arista Networks (ANET) is highlighted as a top “AI networking” stock alongside Dell and HP.

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7. Consumer Products: Constellation Brands’ Challenges

[31:04]

• Quarterly Results:

  • Alcoholic beverages broadly struggle amid shifting tastes; Constellation’s premium brands dragged by market, even as Q2 beats expectations.

• Macro & Structural Headwinds:

  • Beer faces headwinds: high inflation, tariff uncertainty, changing socialization patterns, cannabis substitution, and the rise of weight loss drugs (GLP-1 use).
  • Gen Z and women scale back drinking; ready-to-drink cocktails and non-alcoholic beer see increased demand.

• Company Strategy:

  • Rolling out low/no-alcohol products and “taste-forward” innovations, focusing on premiumization in wine/spirits.
  • Despite weakness, strong margins and cash flows enable continued share buybacks and dividend payouts.

Notable Quotes:

• "Their beer business ... commands high price points, about twice the level of a popular beer. So, in times where consumers are pulling back, a little cautious about expenditures... pressures are still on and they're very real for this company."
  — Ken Shea, [31:36]

• "Of consumers that do partake in cannabis now more than half have substituted for alcohol at least once a week and that's up from 46% last year. So that's a trend that just keeps moving."
  — Ken Shea, [35:37]

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8. Fintech/Crypto: ICE Invests in Polymarket

[37:26]

• Deal Dynamics:

  • ICE (owner of NYSE) to invest $2B in Polymarket, valuing the crypto-based prediction marketplace at $8B.
  • ICE will globally distribute Polymarket's event-driven data to its institutional clients, leveraging both sides’ strengths.

• Industry Implications:

  • Traditional exchanges seek growth by embracing new asset classes: crypto and prediction markets.
  • Data is a key business driver: combining retail and institutional access increases value for both ICE and Polymarket.

• Regulatory Landscape:

  • Polymarket recently re-entered the US after regulatory hurdles, leveraging a friendlier regime and the acquisition of a regulated derivatives platform.

Notable Quotes:

• "You have this, these big institutions that are paying millions of dollars for access to this data...This combination is giving ICE access to retail clients that they otherwise wouldn't necessarily have access to and vice versa."
  — Catherine Dougherty, [40:08]

• "This acquisition implies 50 times revenue is the purchase price there...That's not cheap and it's an all cash deal. They're just saying we're in."
  — Catherine Dougherty, [43:03]

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Notable Quotes & Memorable Moments

• On Bank Branches:
  "It's a big billboard, big expensive billboard in markets where you have a lot of foot traffic and higher growth markets."
  — Herman Chan, [06:35]

• On Strategic Shifts in Telecom:
  "The naming of Shulman in my mind tells me they're looking to tap the consumer finance market... maybe that they can take that perhaps a step deeper."
  — John Butler, [09:48]

• On AI Infrastructure Power:
  "It is 6 gigawatts of capacity. The reason that that figure is critical is that it equates to the peak electricity demand of most major US cities."
  — Ed Ludlow, [17:03]

• On Cannabis Substitution & Alcohol:
  "Now that some of these federally legal hemp-based THC products beverages are sold in liquor stores right next to the beer aisle in about half the states of the country, that's really chipping away also at beer consumption."
  — Ken Shea, [36:33]

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Timestamps for Major Segments

• Banking M&A: Fifth Third & Comerica – [02:24] to [08:20]
• Verizon CEO Change – [08:27] to [14:06]
• AMD–OpenAI AI Infrastructure Deal – [16:34] to [19:29]
• IBM+Anthropic AI Integration – [19:31] to [23:20]
• Dell & Cisco AI Hardware Outlook – [23:23] to [27:58]
• Constellation Brands & Alcohol Market Trends – [31:04] to [37:18]
• ICE Investment in Polymarket – [37:22] to [43:07]

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Episode Flow & Tone

The episode maintains an analytical, market-focused tone, peppered with candid, sometimes humorous remarks. The experts provide deep dives into each company and market development, always linking specific news to broader industry themes—be it consolidation in banking, technological rivalry in AI and chips, or consumer behavior shifts in beverage consumption. Host banter with expert guests keeps the discussions accessible and grounded.

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Summary Takeaway

A tightly-packed episode spotlighting key inflection points in banking, telecom, AI chips, and consumer tastes. The detailed research and analyst opinions provide listeners with actionable insights into how iconic firms are navigating disruption—from fifth-generation bank mergers and AI arms races to legacy brands adapting to new consumer realities. The episode’s well-rounded analysis makes it essential for investors, sector insiders, and trendwatchers alike.

Transcript

[Scarlet Fu]

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[Paul Sweeney]

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[John Butler]

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[Ed Ludlow]

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[John Butler]

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[Ed Ludlow]

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[Paul Sweeney]

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[Scarlet Fu]

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[Paul Sweeney]

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[Scarlet Fu]

Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Intelligence with Scarlet Fu and Paul Sweeney.

[Paul Sweeney]

How do you think the Fed is looking at tariffs? The uncertainty of tariffs?

[Scarlet Fu]

Let's take a look at the sectors and how they performed.

[Paul Sweeney]

A lot of investors getting whipsawed every.

[Scarlet Fu]

Day by news events, breaking market headlines and corporate news from across the globe. Could we see a market disruption? A market event?

[Paul Sweeney]

People just too exuberant out there.

[Scarlet Fu]

You see some so called low quality stocks driving this short term rally. Bloomberg Intelligence with Scarlet Fu and Paul Sweeney on Bloomberg Radio, YouTube and Bloomberg.

[Paul Sweeney]

Originals on today's Bloomberg Intelligence show, we dig inside the big business stories impacting Wall street and global markets.

[Scarlet Fu]

Each and every week. We provide in depth research and data on some of the 2000 and 130 industries our analysts cover worldwide.

[Paul Sweeney]

Today we'll look at how AMD landed a deal with Open Air to build.

[Scarlet Fu]

AI infrastructure, plus why Dell Technologies is roughly doubling its growth estimates for sales and profit for the next two years.

[Paul Sweeney]

But first we begin with a big deal in the banking sector.

[Scarlet Fu]

This week 5th 3rd agreed to buy Comerica for about $10.9 billion in stock. It is the largest US bank deal this year.

[Paul Sweeney]

The deal will create the 9th largest bank in the country with about $288 billion in assets according to the two companies.

[Scarlet Fu]

So we called in Herman Chan, Bloo Intelligence senior analyst for U.S. regional banks and we began by asking Herman for his take on the deal.

[Herman Chan]

Yeah, I think it's a win win for both. Comerca has been sort of in the doldrums over the past couple of years after the SBB debacle. It's taken some long time to get it under its own footing and they've gotten a lot of agitated investors and activists pushing for a sale and this was a great outcome. On the other hand, for Fifth Third, it's a great deal. It moves them into growth growth year markets in Texas and California, supplements their Michigan presence and really builds out their branching presence across the Southeast and Southwest.

[Scarlet Fu]

So within the regional banking space, what does this deal put pressure on? Who does this deal put pressure on to make a move of their own?

[Herman Chan]

Yeah, so that's a question, the follow on question like who's next? So there are other banks that are operating within the size of of a Fifth third that have also done deals like a PNC and and the others that are still on the sidelines are banks like Regions in the Southeast, Key Corp in Ohio as well, and M and T and Citizens in the Northeast. So those are the ones that probably are going to get asked a lot of Questions on the 3:2 earnings call about M and A.

[Paul Sweeney]

So what do we know about the Trump administration and its view towards bank consolidation? Are they opined on this at all?

[Herman Chan]

Yeah. So we can see that these bank deals are getting approved at much faster clip. So I mentioned Huntington earlier. They're buying a bank in Texas named Veritex and it's going to take them about 98 days from deal close, from merger announcements and that trusts with under the Biden administration it's taken 400 to 600 days for a large deal. So these deals under Trump are being fast tracked and it's really encouraging the management teams to really go out there and search for deals.

[Scarlet Fu]

So for so long a lot of people had commented that the US is overbanked. By one count there's almost 4,500 FDIC insured banking institutions here. Yeah. Are we still overbanked, Herman?

[Herman Chan]

I would say so. There's a lot of Competition and that's the reason why Comerica is looking to sell because they, they were lacking in a retail branch presence. They mostly bank middle market commercial customers that are great but it doesn't create the diversity that they needed during times of stress like the SVB environment. And so that was a lesson learned for, for a lot of the banking industry that you need to diversify your deposit base. And, and one way to diversify is the sell to a larger organization.

[Scarlet Fu]

Which segment of the banking industry is bloated, needs to streamline the most?

[Herman Chan]

Yes. So there you mentioned 4,500 banks like is. Does there need to be that many banks within the United States? Probably not. They don't have the scale to operate a retail branch presence. They don't have the, the capabilities on the fee side and the advisory side to really help their customers on the commercial side. And you much competition from not only larger banks but also the fintechs that are just, you know, biting at the heels on the consumer side. So it's a really tough operating environment and we expect more consolidation over the next several years.

[Paul Sweeney]

All right, riddle me this year, why do banks even have branches? I hear banks. I'm not adding branches. I've been into a branch in years.

[Scarlet Fu]

Across the street from Bloomberg headquarters, Citigroup.

[Herman Chan]

City branch right across the. A lot of it is marketing and a lot of it is scale. So for a bank like Fifth third, they're growing organically in the Southeast and that's been a major growth driver for them.

[Paul Sweeney]

But I need a branch.

[Herman Chan]

You don't need a branch, but you need the branch for a marketing aspect. So you need to.

[Paul Sweeney]

It's like a big billboard, right?

[Herman Chan]

It's a big billboard, big expensive billboard in markets where you have a lot of foot traffic and higher growth markets. So it's a big billboard and it's been a proven growth driver for banks. But on the other hand, branches are declining. So if you have critical mass and scale in your existing markets, you can trim your branch presence and not affect your depositors. But if you're entering new markets, then opening new branches is the way to think.

[Paul Sweeney]

I could find my checkbook.

[Scarlet Fu]

That raises the question, does a fintech that wants to be a bank need to therefore have a retail presence? Do they need to open up a branch also across the street from our office?

[Herman Chan]

So that's, that's the beauty of the fintech models that they're issuing the branches. It's not a requirement, it's a lower cost to serve because you don't have the physical retail presence. And it's one way to really compete effectively with these, with these legacy banks where you have a really easy to use app and you aren't burdened by this cost basis of owning the physical presence.

[Paul Sweeney]

All right, so when we had a couple little blowups in your world a couple years ago, I found this KRE the SPDR S&P Regional Banking ETF.

[Herman Chan]

That's right.

[Paul Sweeney]

How are you? How are the regional banks trading these days?

[Herman Chan]

Yeah, so they're really doing all right. We're talking about price the tangibles around 1.5 to 1 point times ish. During the height of the weakest point during the SBB debacle, it was less than one time. So they've rebounded really nicely despite some of the uncertainty on the economy and with tariffs and, and so we've seen some growth from them, especially on the commercial lend side that's really helped grow their top line.

[Paul Sweeney]

Our thanks to Herman Chan, Bloomberg Intelligence senior analyst for U.S. regional banks.

[Scarlet Fu]

We move next to some news in the telecom space.

[Paul Sweeney]

This week, Verizon Communications named Dan Schulman as Chief Executive Officer, replacing Hans Vestberg. The goal is to boost mobile subscriber growth and shares.

[Scarlet Fu]

Shulman is the previous CEO of PayPal and brings financial and operational leadership experience as well as expertise in telecoms, technology and finance. Vestberg will stay on for a year to help ensure a smooth transition.

[Paul Sweeney]

For more, I was joined by John Butler, Bloomberg Intelligence Senior Telecom Analyst. I first asked John if this change was expected at Verizon.

[John Butler]

Not at all, Paul. I mean, you know, when you think merger Monday. I've had a lot of busy Mondays lately. But the last piece of news I expected was this change in leadership at Verizon. The company had really been sort of, I guess prepping the head of the consumer business or grooming is a better word. Some Orion Sampath who is just a phenomenal talent in my opinion. And he's been sort of pushed out there doing a lot of investor conferences and giving the investment community the impression that he was the next in line. So when the news broke that Dan is taking over as CEO, it really surprised a lot of people, including me.

[Paul Sweeney]

So what's the company saying here? Why do you think they chose this outsider versus somebody that again, an insider that maybe the street thought was going to be the next in line?

[John Butler]

You know, I think for telecoms, all three of the majors, the wireless business is slowing very rapidly on them. We're seeing subscriber growth down a lot this year. There's a lot of pressure on pricing. And I think the thought is Dan Shulman used to be CEO of PayPal. He's got experience at Amex in the consumer finance business. So they're thinking in terms of how to monetize the 150 million consumer relationships they have to move into adjacencies. The naming of Shulman in my mind tells me they're looking to tap the consumer finance market. You know, they've already got a credit card business. I think it's probably doing pretty well, but they're not actually in the loan business there. But they're doing a lot of device financing. And so I think the hope, maybe this is my speculation, maybe that they can take that perhaps a step deeper into the consumer finance market and maybe other adjacencies to be able to monetize that base a little bit more and diversify away from the slowdown in wireless.

[Paul Sweeney]

Yeah, no, Verizon, they've kind of dabbled over the years in other businesses purchasing AOL and Yahoo. So what's the focus going forward here? Is it to try to just manage the wireless business as you know, the decline in the wireless business as best they can?

[John Butler]

So again, the strategy here, Paul, I think is to sort of build off that base that they have. The wireless business is stable. It's not going anywhere. It's typically a GDP plus business. Again, we're seeing a slowdown now, so it could move down to a GDP like growth rate. But again, it's all about extensions. So all three of the majors here are pushing hard into consumer broadband. They're doing very well. They're both in the fiber and the fixed wireless access business. But even that business is starting to mature a bit as it saturates here in the US So the question becomes what's next? And maybe the what's next could be consumer finance. If you look at T Mobile, they've tapped the outdoor advertising market, which actually is growing double digit. I never would have guessed. But there the thought is, hey, as people carry around these phones, we know where they are, perhaps we can leverage that and come up with very innovative ways of increasing eyeballs on our outdoor advertising. So I think they're looking for that type of creative thinking to come up with new ways of generating growth. And again, you're trying to leverage that huge core base of wireless subs that you have.

[Paul Sweeney]

Just looking at their balance sheet, John, this is a, this is company Verizon. It's got $170 billion of total debt there. How's the, how does the market feel about their balance sheet.

[John Butler]

So I think of the big three, Verizon is probably at a point where they want to be in terms of financing the business. Can they load on a bunch more debt? It's, it's hard to say. I'm going to defer to our credit analyst for that, Steve Flynn, but I don't view their ability to finance new ventures as an issue here at all. It's a very cash rich business. Wireless that is. And you know, I think that will allow Verizon to bankroll any of the new ventures they plan to push into.

[Paul Sweeney]

From here, certainly Pro shareholders. A 6.6% dividend yield, is that safe?

[John Butler]

I think it is safe. That's a good question. I think Verizon of the big three really sort of gets it when it comes to the importance of the dividend to the investment community. There's a lot of telecoms out there at and T included that have cut the dividend in the past and learned the hard way that that really, I call it the third rail of telecom. I mean you do not want to cut the dividend.

[Herman Chan]

Yeah.

[John Butler]

So my call here is that I think the dividend is safe. Yes.

[Scarlet Fu]

Our thanks to John Butler, Bloomberg Intelligence Senior telecom analyst. Coming up, a look at how IBM is planning to integrate a tech.

[Paul Sweeney]

You're listening to Bloomberg Intelligence on Bloomberg Radio providing in depth research and data on 2,000 companies and 130 industries.

[Scarlet Fu]

You can access Bloomberg Intelligence via big on the terminal. I'm Scarlet Fu.

[Paul Sweeney]

And I'm Paul Sweeney. This is Bloomberg.

[Scarlet Fu]

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[Scarlet Fu]

This is Bloomberg Intelligence with Scarlet Fu and Paul Sweeney on Bloomberg Radio.

[Paul Sweeney]

We move to some news in the tech space.

[Scarlet Fu]

This week Advanced Micro Devices landed a deal with Open Air to build AI infrastructure and this gives the chip maker AMD a chance to challenge Nvidia in the AI computing industry.

[Paul Sweeney]

OpenAI will deploy AMD graphics processing units over multiple years. The deal also sets the stage for Open Air to acquire a large stake in the chipmaker with the ability to buy as many as 160 million shares at AMD.

[Scarlet Fu]

So we asked for contacts from Ed Ludlow, Btech co anchor. We first asked Ed what he makes of this week's deal.

[Ed Ludlow]

The specifics of the deal are really important. What is OpenAI going to use AMD's technology for? It's going to use it for inference. In other words, running the models that already exist exist, not training them. It is 6 gigawatts of capacity. The reason that that figure is critical is that it equates to the peak electricity demand of most major US cities. Like these are huge numbers as you say. But it just speaks to what's happening to the mind of the participants in the industry, which is they will need this capacity. You guys are using words like top and bubble and I think that's completely fair. Maybe you saw my column on the debt role in what's happening. But I would say that AMD has done something interesting here which is different to what Nvidia did, which is they will issue stock to OpenAI. AMD shares going to OpenAI but only once OpenAI has spent some money and actually built some stuff.

[Anurag Rana]

Stuff.

[Ed Ludlow]

So where's Open Air going to get the money?

[Scarlet Fu]

Well, that's why Sam Altman has been traveling the world, meeting with all kinds of investors, trying to get some funding. You said the specifics matter, Ed, but we don't know how much this partnership, this deal is worth beyond the very generic tens of billions of dollars. Right? That could be $10 billion. That could be $99 billion.

[Ed Ludlow]

Yes, that's correct. I mean, AMD CFO framed it as being tens of billion dollars of revenue opportunity. But that's why I think the specifics of the terms I've made a careful examination of them are really important to understand versus what Nvidia did with OpenAI. So Nvidia said it was going to invest $100 billion into OpenAI. We don't even know if that was cash or chips in lieu of cash. But basically Nvidia would get some equity in Open Air in return. In this instance, AMD and OpenAI, Open Air is getting AMD shares, but they are deliverable in tranches against milestones which relate to literally building the data centers. So for each gigawatt of capacity that comes online, AMD would then say, here is this tranche of stock. And that's why I'm saying focus on the Open Air obligation here. They need actual money to dig up the dirt, put the foundations in, get the data center up and put the servers in right before any of the this stock comes into play.

[Paul Sweeney]

Our thanks to Ed Ludlow, Btech Co.

[Scarlet Fu]

Anchor Staying with Tech this week the tech company IBM announced a plan to integrate anthropic AI technologies into its software solutions.

[Paul Sweeney]

IBM said it will make the startup's clawed family of large language models accessible for its clients. Shares of IBM jumped after the news.

[Scarlet Fu]

So for more we're joined by Anurag Rana, Bloomberg Intelligence technology analyst. We began by asking Anurag how he evaluates this latest partnership.

[Anurag Rana]

See, when you come to a company like IBM, I think they have done a very good job of being open and partnering with other vendors. I think the acquisition of Red Hat was the first such example a few years ago and frankly speaking, the company has turned around quite a bit. Now it's more of a software company than it is a service or a hardware company. IBM still has a lot of footprint in legacy companies and their internal infrastructure, whether that's a regulated entity, whether that's an on premise software. What they're basically saying is for these companies who want to add more AI capabilities into their infrastructure, we're going to use one of the best models that's out there and that's Anthropic. They're not just solely dependent on IBM's own internal models, but we see more and more of that happening that companies like IBM and other services companies will go out and partner with anthropic, with OpenAI, with Gemini, and give more enterprise capabilities to vendors, to companies. Basically.

[Paul Sweeney]

How does anthropic differ from OpenAI, if at all?

[Anurag Rana]

That's a very good question, Paul. And right now what we are seeing is Anthropic is pushing more and more stuff on the corporate side or the enterprise side. On OpenAI side, you know, their core businesses still ChatGPT, which is the app and that's more of a consumer app right now. And the question is, you know, which one of the models will somebody use? Whether if you are, let's say a J.P. morgan or a Citicorp, you know, would you be going to be using one of their models or an open source model? I think they're going to be using all of the models. What anthropic relationship with IBM does, it actually helps them to spread the word out across their entire customer base. So if you are trying to get more coding done, for example, in an IT department and you have all the legacy products that there now you can use an AI model from Anthropic rather than using whatever tools you had before.

[Scarlet Fu]

Okay, so it makes sense why Anthropic is a good fit for IBM or how it's going to incorporate Anthropic into its software. But what does IBM specifically offer Anthropic? What access does IBM have that Anthropic wants and needs?

[Anurag Rana]

Yeah, that's another excellent question. In this case you're looking at IBM's entire customer base. IBM has a very large services business called IBM Consulting. These consultants will go out and sell anthropic software into the enterprises and say, hey bank, let me help you to automate this particular process. And you can use it with this software. It drives their consulting business and it also helps out their software business, which is fairly popular right now.

[Paul Sweeney]

Now, IBM hitting all time high on a rug, this stock has found a new life, hasn't it?

[Anurag Rana]

Absolutely. And this is something that we've been saying it for almost five years now. The acquisition of Red Hat completely changed it. If you go back and look at some of the comments we've made on TV about IBM, prior to Red Hat it was a very closed company. It only wanted to sell their own products to people and was not very keen on embracing what I would say is Open source. With the acquisition of Red Hat and the company saying, you know what, Red Hat can work with any cloud provider. I think that was the biggest difference to me was it allowed Red Hat to work with companies but based on Amazon Web Services or Microsoft, so they were not just pushing their own cloud products. And I think that really made a difference. Their software business has been doing so well comparatively to the rest of the world and I think that's where you see the market validation that this is the right strategy for the them.

[Paul Sweeney]

Our thanks to Anuragrana, Bloomberg Intelligence Technology Analyst.

[Scarlet Fu]

We move to some more news in the IT hardware space.

[Paul Sweeney]

This week at its investor day, Dell Technologies roughly doubled its growth estimates for sales and profit for the next two years.

[Scarlet Fu]

Dell also said demand for artificial intelligence products will extend those higher projections at least through 2030.

[Paul Sweeney]

Separately, Cisco Systems says it is releasing a new chip networking system to connect data centers across hundreds of miles.

[Scarlet Fu]

So for more on both of these companies, we were joined by Woo Jin Ho, Bloomberg Intelligence Senior Technology Analyst. We began by asking Woo should break down what we heard from Dell.

[Woo Jin Ho]

This is a very seasoned management team. They have a tendency to give out three to four year guidance plans. I think the surprise here is what's driving that 79% growth outlook for from 2026 to 2020 for 2030. And it's going to be AI servers, right. And one of the things that they said at the analyst day, that servers are going to grow at a 20 to 25% compounded rate. I think there was some skepticism there heading into the, into the print in terms of is there an AI bubble? And by laying out a 20 to 25% AI server growth going through 2030 off of already high numbers shows that there is some durability. The air server demand.

[Paul Sweeney]

So which when you get an analyst meeting together, it's a big day for a company. They put a lot of time and effort in putting, getting their senior management together, putting together presentations, presenting a vision here. What were some of the two or three takeaways from you from this investor day?

[Woo Jin Ho]

Yeah, so, so the one highlight here is the server demand, the durability of server demand. But more importantly, and we talk about this all the time, you know Paul, it's about earnings and cash flow, right. And the other day we're talking about eps growth about 15% and how do we get to that 15%? We're talking about 8% of the sales growth dropping down to the bottom line. But given all that cash generation, there's going to be a fair amount of capital returns through buybacks. So you're going to get a lift on EPS there. So shareholders aren't going to be happy from an EPS standpoint. We're already seeing that from a valuation standpoint because it is lifting from an 8 to 10 times PE to about 15 times growth, which makes it into a 1 times peg.

[Scarlet Fu]

Take another story that we're tracking here and that I've been fascinated by is this idea of legacy tech companies finding their feet in this wave, whether it's Oracle, whether it's Dell and now Cisco as well. Cisco is releasing a new chip and networking system to connect data centers. And this is a move that pretty much puts it in more direct competition with Broadcom. How big of an opportunity is this for Cisco and Shop? Should Broadcom be worried?

[Woo Jin Ho]

Yeah, so, so we publish a react and essentially I don't think Broadcom should be fully worried. There's a couple of things that I'll say right. Cisco is actually one of the biggest chip networking chip manufacturers globally, but more for their legacy enterprise IT chips, right? They produce their own chips that powers their own networking gear. They're fairly newer to the game in the the networking chip side. From a revenue standpoint, it's really not a big driver, but it may be able to push more boxes. A couple of things that I'll say they did about $1 billion in AI back end revenue. But to put that into context, you know, they're doing about 55 to 56 billion dollars in total sales. So you know, from an Overall percentage of AIO as an overall percentage of sales, about 2 to 3% of total sales. Are they going to challenge Broadcom? I doubt it. But I do think there'll be a second source to the cloud providers versus.

[Paul Sweeney]

Broadcom which in your coverage area, what's your best AI play? Because I'm sure you get that call from clients all the time.

[Woo Jin Ho]

You know, I mean I have a handful. Dell was one, you know, HP is another one to take a look out for. They have an analyst day next week. But from a networking standpoint, Arista has actually been one of the high flyers from a networking standpoint. So I would look at Arista and people have been taking the AI networking angle and using Arista as one of the tools.

[Ken Shea]

I like that.

[Scarlet Fu]

Arista. I haven't heard that one come up yet. You know, okay, HP or hpq, just to clarify.

[Woo Jin Ho]

Oh, hp. So think of it as a mini Dell and a mini Cisco in one.

[Paul Sweeney]

Our thanks to Woo Jinho, Bloomberg Intelligence Senior Technology Analyst coming up, we'll look.

[Scarlet Fu]

At why the owner of the Corona and Model, especially brands, reported positive quarterly results.

[Paul Sweeney]

You're listening to Bloomberg Intelligence on Bloomberg Radio providing in depth research and data on 2000 companies and 130 industries.

[Scarlet Fu]

You can access Bloomberg Intelligence through Bigo on the terminal.

[Paul Sweeney]

I'm Scarlet Fu and I'm Paul Sweeney. This is Bloomberg.

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[Scarlet Fu]

This is Bloomberg Intelligence with Scarlet Fu and Paul Sweeney on Bloomberg Radio.

[Paul Sweeney]

We move next to some news in the consumer product space.

[Scarlet Fu]

This week Constellation Brands, which owns Corona and Modelo Especial brands in the US reported better than expected results for its fiscal second quarter. The company cited robust beer and wine sales.

[Paul Sweeney]

This comes despite the company stock falling more than 30% this year. Beer and alcoholic beverages in general have broadly struggled as younger consumers and women drink less.

[Scarlet Fu]

So for more on this and other news in the consumer space, we were joined by Ken Shea, Bloomberg Intelligence Senior Consumer Products Analyst.

[Paul Sweeney]

We first asked Ken more about why Constellation Brands had been struggling this year.

[Ken Shea]

It's definitely a slow beer market. Tariffs are playing a role and also some of the crackdown, you know, the ISIS had in inner communities, hurting the Hispanic community and their socialization trends. All these things have been a factor for the last couple quarters. The company said that their beer volumes were not quite as poor as a lot of street analysts expected. But the pressures are still on and they're very real for this company. And that's because their suite of products, as you mentioned, Corona Modelo, these command high price points, about twice the level of a popular beer. So in times where consumers are pulling back, a little cautious about expenditures. Got to remember, you know you've had high inflationary pricing in this category for the last few years.

[Anurag Rana]

Years.

[Ken Shea]

These brands aren't doing so well right now. And then compounding that with some of the factors that I mentioned and some longer term issues like cannabis substitution things we talked about glp, one user not drinking as much moderation among Gen Z. All these things are weighing of a company right now.

[Scarlet Fu]

Yeah, I'm super interested in what you said about the last part like the structural changes in consumer taste, especially from Gen Z younger people. Overall beer is just not where people want to be spending their money necessarily.

[Ken Shea]

That seems to be the case. You know, it's, it's been around a long time. It's $115 billion market that is growing very slowly. It's essentially flat. In fact, volumes are expected to be down low, single digit this year. So clearly it's a very mature category. And what we've seen over the last few years is consumers just want different tastes. You know, you have a proliferation of the ready to drink cocktails, you know, like truly and white claws and more sophisticated, you know, margaritas in a can and so on. That's where a lot of the consumer who wants taste experimentation are going. And then you have other more mundane factors like just, you know, calorie, more conscientious calorie counts and all these things just weighing on this very, very mature industry.

[Paul Sweeney]

So somebody like Constellation Brands, do they go out and look to maybe buy some of these brands or verticals that within the spirits business may be growing?

[Ken Shea]

Well, they've had kind of a mixed history of M and A over the last few years. I'll put it, I'll be kind say that way. Not really. You know, they're downsizing their wine and spirits segment and try to shift it to more of a high end mix, which I think they're having success with. But what that does is it makes their beer business even that much more important. It's now about 85% of their sales. So as beer goes, I mean the company has really good brands and a lot of brand loyalty there. But again, it's not a lot of wiggle room. So.

[Scarlet Fu]

So with beer becoming less popular and you mentioned other big trends like Ozempic, weight loss, drugs and greater cannabis use, what is Constellation doing about non alcoholic beverages?

[Ken Shea]

So they've rolled out a non alcoholic a brand. They've come out. A couple years ago they came out with a low calorie brand called Modelo Oro Corona. No alcohol I mentioned. So those two brands, while they're relatively small, they see, you know, a lot of opportunity that's on trend with what you said. So, you know, they're doing that. They're also modifying some of their portfolio for more taste. There's consumers that want a lot of taste. They're coming out with, you know, a fruity cerveza. And so they're doing as much as they can to stay on trend with consumers.

[Scarlet Fu]

I love myself a grapefruit beer. Yeah, there's a German grapefruit beer that I really like. Yeah, tastes good.

[Paul Sweeney]

Talk to us about this legal cannabis and obesity drugs and the impact that's having on the beer business, the spirits business overall. Ken, is that something that a lot of your companies are calling out?

[Ken Shea]

BI came out with our fourth annual consumer survey on beverage preferences. And again we see that consumers are substituting cannabis for alcohol. Of the of consumers that do partake in cannabis now more than half have substituted for alcohol at least once a week and that's up from 46% last year. So that's a trend that just keeps moving. Now you're seeing a lot of these cannabis companies coming out with hemp THC products beverages that are sold in mainstream liquor stores. You know, traditional cannabis, legal cannabis sold in dispensaries was not really a big hit. But now that some of these federally legal hemp based THC products beverages are sold in liquor stores right next to the beer aisle in about half the states of the country tree that's really chipping away also at beer consumption.

[Scarlet Fu]

Final question to you, Ken. What about return of cash to shareholders? I'm looking at the dividend yield, about 2.9% if you're being generous. Is Constellation Brands still able to make good on its dividends, continue buying back its shares?

[Ken Shea]

That's an important point, Scarlett. Yes, they can. Despite the pressure on sales, believe it or not, the operating margins a Constellation generates are best in class. They're about twice that of other alcoholic beverage companies in general. So they have strong cash flows. As a matter of fact, they're winding down construction of a brewery right now. Over the next couple of years, you're going to see free cash flow likely rising. So it's high and rising and that's enabling them to continue to meet their commitments to share buybacks and dividends.

[Scarlet Fu]

Our thanks to Kenneth Shea, Bloomberg Intelligence Senior Consumer Products Analyst.

[Paul Sweeney]

We move next to some news on Intercontinental Exchange, or ice.

[Scarlet Fu]

This week we heard the company plans to invest as much as $2 billion in cash in polymarket, which is a crypto based betting platform.

[Paul Sweeney]

The transaction values Polymarket at roughly $8 billion. And ICE will become a global distributor of Polymarkets event driven data.

[Scarlet Fu]

We're joined by Catherine Dougherty, Bloomberg Finance reporter. We first asked Catherine for some more background on ice.

[Catherine Dougherty]

It runs on the blockchain. So you have this storied institution ice, that owns the New York Stock Exchange as you mentioned, and therefore putting their money where their mouth is. It really is an indication of where the the market is headed. So you have these institutional players that are teaming up with either crypto native firms or in this case it's also the prediction market based players. And we have seen this recently with also CME, the derivatives exchange based in Chicago. They're partnering with FanDuel and most people associate FanDuel with sports betting. But they are big in prediction markets as well and with CME and FanDuel they're doing a markets based prediction of yes or no will for example gold be above a certain benchmark. And this announcement also shows a storied institution kind of getting behind the newer incumbents and showing where they see the next phase of the market headed.

[Paul Sweeney]

What does polymarket really do? I see him quoted around in the press and things like.

[Catherine Dougherty]

So you've probably seen polymarket around the time of the election, they were one of the platforms that users were placing bets on who was going to win the presidential election. They at a time were also in the news around 2022 because they were prohibited from actually operating in the US and more recently in the last few months, in 2025, they've re entered the US market and they've done so through two avenues. One, it's a changing regulatory environment, it's a crypto friendly regulatory regime. And number two, they bought their own regulated derivatives platform that essentially allowed them, it was a pathway back into the United States market market.

[Scarlet Fu]

So with this deal, which values polymarket at about $8 billion, ICE. ICE becomes the global distributor of Polymarkets event driven data. What does that mean to have that data now in its hands? What can it do with that information? Because exchanges don't just, they're not just a platform for collecting commissions on trades, they're also huge sources of information data that they then sell.

[Catherine Dougherty]

That's right. It's a huge part of their business. And you have this, these big institutions that are paying millions of dollars for access to this data. And as the market becomes a mix of institutional client base and retail clients, that data, these companies, you have ice, you have polymarket. This combination is giving ICE access to retail clients that they otherwise wouldn't necessarily have access to and vice versa. Polymarket gets, gets now all of their data displayed through ICE channels. That institutional clients have been set up and working with ICE for years. So it's a fast entryway for both companies to increase their user base, increase their access and how they market themselves to an entirely new client.

[Paul Sweeney]

So, so it just feels like some of these traditional exchanges, if you will, I think that are they saying basically if we want to grow in the future, we have to embrace some of these new asset classes, whether it's crypto or whether it's predictive markets and things like. Is that kind of what they're telling us?

[Catherine Dougherty]

I think that it's very much where they see their clients headed. There's a blurring line between you have hedge funds and traditional institutional firms and then you have have retail investors that at a time there was so much news during the meme stock era around who these users were that were in their basements. But now these are really sophisticated investors that are playing in the options market, prediction markets. Many of the leaders of these exchanges are saying there is no difference between what we've been running and at least a binary yes or no. Is this index going to be above or below a certain threshold there? They're combining what was presumably two different worlds into one now.

[Scarlet Fu]

And competitors of polymarket include Kalshee and crypto.com are you anticipating Catherine, there is going to be similar tie ups for those companies as well.

[Catherine Dougherty]

There is a race to I believe that this is just the start or really the CME partnership with FanDuel was kind of the first indication. This is just another and I, I think that it's going to be off to the races in terms of who partners up next because you to build something from scratch is hard and when you partner with a existing client base too, it is an easy way in to an entirely new market.

[Paul Sweeney]

I tell you it wasn't cheap. I'm reading Bloomberg Intelligence Research react from Paul Goldberg. This acquisition implies 50 times revenue is the purchase price there.

[Catherine Dougherty]

That's not cheap and it's an all cash deal. They're just saying we're in.

[Scarlet Fu]

Our thanks to Catherine Doherty, Bloomberg News finance reporter.

[Paul Sweeney]

It's this week's edition of Bloomberg Intelligence on Bloomberg Radio providing in depth research and data on 2,000 companies and 130 industries.

[Scarlet Fu]

And remember, you can access Bloomberg Intelligence via bigo on the terminal. I'm Scarlet Fu.

[Paul Sweeney]

And I'm Paul Sweeney. Stay with us. Today's top stories and global business headlines are coming up right now.

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