Bloomberg Intelligence: Caterpillar, European, and Big Tech Earnings
Hosts: Scarlet Fu & Paul Sweeney
Date: October 31, 2025
Overview
This episode examines the latest earnings season, focusing on major players across tech, heavy industry, telecoms, and logistics—unpacking what the financials reveal about AI-driven demand, supply chain dynamics, and shifting corporate strategies. Key discussions involve earnings updates and strategy shifts at Verizon, Boeing, Caterpillar, UPS, and major European firms, as well as broader implications for workforce transformations due to artificial intelligence.
Key Discussion Points and Insights
1. Verizon: Strategy Shift & Earnings Update
Guest: John Butler, Bloomberg Intelligence Senior Telecom Analyst
[02:44 – 07:57]
- Leadership Change: Dan Schulman (ex-PayPal) succeeds Hans Vestberg as CEO after subscriber loss and underperformance.
- Strategic Pivot:
- From network-centered to consumer-focused strategies, taking a page from T-Mobile, but with more discipline.
- Strong focus on broadband for growth:
- Acquisition of Frontier to boost fiber subscribers.
- Emphasis on fixed wireless access as another residential broadband avenue.
- Growth Drivers:
- Cross-selling wireless to new broadband customers.
- Modest organic growth from population and immigration.
- Technology & Spectrum:
- Currently amid the 5G cycle; next-gen (6G) expected around 2030.
- C-band spectrum activation to boost network speeds.
- Branding Challenge:
- Verizon aims to nurture a more customer-friendly image similar to T-Mobile’s, leveraging Schulman’s experience.
Notable Quote:
- “The real watchword of the day here for Verizon is to pivot from a very technology or network oriented company...to now, Shulman is going to turn them into a very consumer focused company.” — John Butler [02:51]
2. Boeing: Recovery Amid Setbacks
Guest: George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense, and Airlines Analyst
[08:31 – 13:56]
- Financials & Highlights:
- $4.9B charge on 777X program, $430M operating loss in commercial airplane segment (excluding charge), but better than consensus.
- Boeing achieved positive operating and free cash flow; $5B in inventory released as finished planes are delivered.
- 737 Program:
- FAA allows production ramp-up to 42/month; ambitions to reach 44–45/month. 737 remains core to turnaround strategy.
- Leadership Evaluation:
- CEO Kelly Ortberg (since August 2024) given high marks for morale and quality improvements.
- Labor issues persist (St. Louis machinists strike), but seen as manageable relative to commercial operations.
- 777X’s Role:
- Major widebody opportunity; strong backlog and competitive seat economics vs. Airbus A350-1000.
Notable Quotes:
- “What I saw from earnings is that the commercial airplane business had about a $430 million loss...I think it's another sign that commercial airplane is getting closer to break even.” — George Ferguson [08:31]
- “I’d give him a very high grade. The biggest thing he needed to do was improve morale, improve quality. And it appears to be the case.” — George Ferguson on CEO Ortberg [11:44]
3. Big Tech & AI Data Center Demand
Guest: Anurag Rana, Bloomberg Intelligence Technology Analyst
[16:28 – 19:29]
- AI Demand Outpaces Supply:
- Unprecedented capital expenditure (capex) increases at cloud giants (Microsoft, Meta, Google) to expand data centers and chip capacity.
- Nvidia surpasses $5T market cap, underscoring sector exuberance.
- Performance Divergence:
- Google:
- Clear revenue growth from AI-enabled cloud services.
- Successful partnerships (e.g., Anthropic using Google Cloud’s TPUs).
- Meta:
- Heavy AI spending (~$60–80B), but unclear path to monetization; investors remain unconvinced about long-term ROI.
- Contrast with prior cost-cutting narrative post-Metaverse.
- Google:
Notable Quotes:
- “Microsoft...basically came out and said, you know, we thought we'll be fine by now but they're still capacity constrained. The demand is coming through.” — Anurag Rana [16:49]
- “Google has I think done a phenomenal job of explaining to the market what their AI strategy is and why it's working so well.” — Anurag Rana [17:46]
4. Caterpillar: AI-Driven Equipment Demand
Guest: Chris Cialino, Bloomberg Intelligence Senior U.S. Machinery Analyst
[19:42 – 23:48]
- Strong Earnings & Order Backlog:
- Q3 revenue and earnings beat expectations; order acceleration and record $40B backlog.
- Power generation (generators, turbines)—key business segment for AI data center infrastructure—shows fastest growth.
- Cat plans significant capacity expansions, especially in large engines, over the next three years.
- Competitive Landscape: Cummins, Siemens Energy, and various global players.
- Tariff Impacts:
- $600M headwind in Q3; resilience in margins despite tariff and price/cost headwinds.
- Expectation of higher tariffs in Q4.
- Hesitancy to increase prices thus far, but 2026 seen as a chance to use pricing to offset costs and gain market share.
Notable Quotes:
- “Orders exceedingly accelerated here in the quarter and we also saw backlog improve sequentially to a record $40 billion...” — Chris Cialino [19:58]
- “Power gen is probably roughly 30% of the energy and transportation business...it continues to be the fastest growing part of the portfolio.” — Chris Cialino [20:48]
5. UPS: Labor Cuts, Network Optimization & Tariffs
Guest: Lee Klaskow, Bloomberg Intelligence Senior Transport Logistics and Shipping Analyst
[24:13 – 28:41]
- Job Cuts & Cost Savings:
- Plans to eliminate 34,000 jobs; shifting focus away from low-margin Amazon business.
- Strategic facility closures and increased automation (added to 35 more facilities, 66% packages now touch automated centers).
- Goal: Achieve $3.5B in total annual cost savings for 2025.
- Tariffs & Trade Policy:
- Removal of de minimis exemptions (duty-free limits) drives down China-U.S. package volumes by 20%.
- Customs and supply chain business outperforms, offsetting lower package flows.
Notable Quote:
- “They're increasing overall automation...and about 66% of their packages touch these automated facilities...That number is just going to continue.” — Lee Klaskow [25:51]
- “China to U.S. volumes were down around 20%. And that's having a negative impact.” — Lee Klaskow [27:29]
6. European Earnings: AI, Sector Challenges & Defense
Guest: Tim Craighead, Bloomberg Intelligence Global Chief Content Officer
[32:17 – 38:07]
- Beats vs. Misses: ~53% of European companies beat earnings, but with less drama than US Big Tech, as the region lacks equivalent tech giants.
- Sector Rotation:
- Tech, financials, and industrials driving recent earnings momentum, while traditional sectors (autos, energy, basic materials) have seen serious declines (down from 27% to 10% of total earnings contributions since 2022).
- AI Adoption:
- ASML (chip equipment) and SAP (enterprise tech) prominent, with AI mainly improving productivity, customer service, data efficiency.
- Defense Boom:
- European defense stocks surge on the back of new NATO spending targets (3.5% of GDP) and geopolitical urgency.
- Valuations now far higher than U.S. peers; Ryan Mattel noted as a major winner.
Notable Quotes:
- “Europe doesn't play the game like the U.S. where every company is trying to manage estimates...this is a good reporting period for Europe so far.” — Tim Craighead [32:36]
- “The European defense imperative is a critical theme. Everybody's talking about it...and valuations are far higher than the US comparables.” — Tim Craighead [37:17]
7. AI’s Impact on the Workforce
Guest: Peter Werner, Co-Chair of Cooley's Global Emerging Companies
[38:27 – 43:57]
- Professional Services Disruption:
- AI poised to automate junior-level repetitive tasks (e.g., legal document review, spreadsheet work), creating training gaps for future senior talent.
- Firms are exploring alternative training methods (e.g., simulation platforms) for associates.
- Company Receptiveness:
- Startups are “all in” on labor-light AI-first models, while established firms struggle to adapt and retrain.
- AI-Proof Jobs?
- Most resilient: senior, experienced roles with high emotional intelligence, strategy, creativity.
- Manual/labor jobs may be more insulated temporarily, but manufacturing automation (“dark factories”) shows no category is untouchable long term.
Notable Quotes:
- “Lots of short term, medium term optimism, right? Reduction of drudgery...But then you start to think longer term, what does that mean? What does that mean for us?” — Peter Werner [38:32]
- “My instinct is that the most senior, most experienced people with the highest EQ and the ability to read rooms, think laterally...in the white collar world, those are the last ones to go.” — Peter Werner [43:02]
Timeline of Key Segments
| Timestamp | Segment/Topic | Guest(s) | |-------------|---------------------------------------------------------|----------------------------------| | 01:27–07:57 | Verizon earnings & strategy | John Butler | | 08:13–13:56 | Boeing’s financials, turnaround, and labor issues | George Ferguson | | 16:28–19:29 | Big Tech earnings, AI data center demand | Anurag Rana | | 19:42–23:48 | Caterpillar: equipment demand and AI infrastructure | Chris Cialino | | 24:02–28:41 | UPS: layoffs, automation, and tariff impacts | Lee Klaskow | | 32:17–38:07 | European earnings, AI trends, and defense stocks | Tim Craighead | | 38:27–43:57 | AI and the future of the workforce | Peter Werner |
Memorable Moments & Quotes
- “The demand is coming through. They talked a lot about their OpenAI agreement...I still think they are probably in one of the better places than they have been in the past several years.” – Anurag Rana [16:49]
- “Backlogs extend several years. So we think we have pretty good visibility at least through, you know, the next three years.” – Chris Cialino [21:34]
- “What we need is...do we just need to have a virtual reality simulation of that? And we don’t build them out to clients, but we put them through their paces virtually so that they gain experientially still?” – Peter Werner [40:37]
Summary
This episode covers how AI investment is driving growth and strategic change from Big Tech and heavy industry to professional services. Verizon and Boeing are navigating pivotal leadership and operational transitions. Caterpillar's power generation business is booming as a foundational AI play, while UPS rapidly automates and cuts costs in response to changing global trade. European companies are catching AI’s productivity wave, with defense stocks shining amid geopolitical shifts. Throughout, guests weigh the opportunities and uncertainties of AI’s advance—especially its profound implications for the future shape of work.