Bloomberg Intelligence Podcast Summary

Episode: Deere’s Disappointing Outlook Shows Farm Recovery Is Elusive
Date: November 26, 2025
Host(s): Scarlet Fu and Paul Sweeney
Guests: Chris Giolino (Machinery Analyst, Bloomberg Intelligence), Woo Jin Ho (Senior Technology Analyst, Bloomberg Intelligence), Diana Rosetta Pena (Consumer Staples Analyst, Bloomberg Intelligence), Matt Britton (CEO, Suzy and Author)

Overview

This episode examines the latest quarterly earnings and outlook from Deere & Company, which signal deeper challenges for North American agriculture and farm equipment markets. The discussion broadens to cover Dell and HP earnings, Petco's margin strategies, and emerging AI-driven consumer shopping trends, reflecting the current market landscape and the technological shifts impacting both businesses and consumers.

Section 1: Deere’s Prolonged Downturn – Why Farm Recovery Remains Elusive

Main Discussion Points

• Deere's Earnings & Disappointing Outlook

  • [02:05] Paul opens by noting Deere’s iconic status and its foundational role for American farmers, then sets the context for the surprisingly poor earnings and guidance.
    • “It's the tool for the American farmer who feeds the world…they came out with some numbers. Disappointing. It's a little tough out there in farm country.” – Paul (02:13)
  • [02:48] Chris Giolino explains guidance was worse than expected, signaling a “lower for longer” agricultural cycle in North America.
    • Net income guidance for 2026 points to another 10% decline, with projected earnings per share (EPS) of roughly $16.50 — 18% below consensus.

• Severity and Uniqueness of This Downturn

  • [03:55] Chris calls it cyclical, not structural, but the cycle is “more severe than initially expected.”

  • Large ag retail sales in North America expected down 30% this year, with another 15–20% drop anticipated in 2026—volumes at a 40-year low.

    “I don't think I have a model that goes back far enough that shows that trough level of volume…from a cycle and volume perspective, this is as bad as it gets.” – Chris Giolino (04:28)

• Key Drivers of Weakness

  • [04:57] Oversupply leading to soft crop prices, persistently high input costs (interest, rent, labor, fertilizer).
  • Lingering trade uncertainty, especially with China—formerly the largest ag customer for Deere-linked US farmers.
    • “A lot of the input costs for farmers are still very elevated, even on the interest, rent, labor, fertilizer costs are still too high.” – Chris Giolino (05:19)
    • “China had essentially stopped buying our soybeans. That's our largest ag customer…So the combination of those three has really kind of, you know, extended the duration of this downturn.” – Chris (05:44)

• Signs to Watch for Recovery

  • [06:09] Recovery tied to improvement in crop prices and stability/predictability of Chinese purchase commitments.
  • Need to see China consistently return to the US market before confidence returns and farmers invest in new equipment.

• Lingering Skepticism Over China

  • [07:03] Chris doubts that lasting change in Chinese buying can be assumed ("show me" story); without dependable demand, farm spending will not recover.

    “Until China delivers on some of their commitments and delivers consistently, farmers aren't going to go out and spend.…we need to see it to believe it first.” – Chris (07:13)

Section 2: Tech Earnings Spotlight – Dell and HP Grapple with AI and Cost Pressures

Dell’s AI Server Story

• [10:00] Dell increases annual projections for AI server sales, now eyeing $25 billion driven by large “clustered Blackwell” deals.

  • “We’re starting to see some of these clustered Blackwell deals…billions of dollars for each.” – Woo Jin Ho (10:33)

• Margin pressure persists as server margins, while improving, lag expectations; higher input/commodity (DRAM) costs impact both server and PC businesses.

  • [11:28] “The server margins have improved…But the bigger story…is that the DRAM pricing has gone up and these higher commodity costs is bringing a drag…” – Woo Jin Ho (11:37)

HP’s Cost Cutting and Outlook

• [12:31] Facing similar pressures, HP cuts EPS guidance by $0.30 for fiscal 2026 due to high commodity (memory) prices; announces further workforce reductions (4,000–6,000 jobs by FY28), emphasizing the impact of AI automation.

  • “They've been in cost cutting mode for the past five, six years…and they continue to be in cost cutting mode. So you know profits are going to be terrible and they're going to try to preserve their cash flow.” – Woo Jin Ho (13:19)

• Investors remain wary—cost cuts aren't translating into near-term profit gains; the next years are a “wait and see” period.

Dell’s Funding and Operating Leverage

• [16:20] Dell’s strong balance sheet, cash flow, and business diversification are advantages as it invests in high-upside server infrastructure for AI demand.
  • “They have a fairly sizable traditional IT service business, traditional servers as well as storage…that helps cushion the lower margin profiles of the AI servers for them.” – Woo Jin Ho (17:07)

Section 3: Petco’s Path to Growth – Margin Expansion, Service Diversification

Petco’s Earnings Recap

• [20:32] Petco’s recent earnings matched consensus, but EBITDA margins expanded by over 100 basis points.

  • Profitable growth is on track (phase two of strategy); next phase is to restore comparable sales growth, likely in the second half of 2026.

• Increased margin achieved with smarter inventory, emphasis on high-margin services (grooming, vet), and store closures.

  • “They're relying more on services.…grooming…vet side. That generates a lot of income and a lot of profitability for them.” – Diana Rosetta Pena (21:31)

Market Environment

• Competition and consumer spending on pets are stabilizing after years of volatility.

  • Pet adoption rates expected to grow at their historical pace by 2026.

• Petco’s customer surveys reveal increasing willingness to spend on discretionary pet items.

Capital Allocation

• No dividend or buyback plans imminent; focus remains on deleveraging and executing turnaround strategy.
  • “They're focusing on…the right inventory on the shelf as well as getting profit profitability up there and, and getting leverage down to like less than three times ebitda.” – Diana Rosetta Pena (25:18)

Section 4: The AI Shopping Revolution – Generational Change and Industry Implications

AI as the New Shopping 'Front Door'

• [29:24] Matt Britton highlights the paradigm shift from traditional search (Google) to conversational AI interfaces (ChatGPT, Gemini, Perplexity) as consumers’ entry points for product discovery and purchase.

  “The Internet looks like it's about to have a new front door. For the last two decades…Google has become a verb…That is starting to shift.” – Matt Britton (29:24) “Google reported a 9% year over year decline in their classic Link search in Q3 of 2025. At the same time, ChatGPT saw 1.8 billion weekly queries.” – Matt Britton (29:45)

• For Generation Alpha (born after 2010), using AI as an interface is intuitive and standard; they may never use traditional web search at all.

  “Gen Alpha…never will live with the through a world where you went to Google, right?…They're going to go to a ChatGPT to do research.” – Matt Britton (31:16)

AI Optimization and Brand Strategy

• Brands are racing to master “GEO”—optimization to ensure their products are surfaced by AI recommendations.
• The process is a “black box”; whoever figures it out first will gain significant competitive advantage.

  “Every brand wants to be the first brand that ChatGPT recommends. And right now, frankly, it's kind of a black box…” – Matt Britton (32:36)

Live Shopping and the Influence Economy

• [33:30] Live shopping, led by social influencers, replaces “traditional” online browsing, especially with Gen Z and Gen Alpha as heads of household.
  • TikTok, “whatnot,” and other platforms enable creators to move from awareness to direct sales and equity, accelerating commerce shifts.

  “They are engaging in what you…talked about is live shopping…they can actually use their audience, use their credibility…to actually sell products.” – Matt Britton (34:00)

Funnel Disruption – “Alpha Buyer”

• “Alpha buyers” (Gen Alpha consumers) expect instant checkout, creator trust, and minimal friction—changing how products are marketed, researched, and sold.

  • Raises the risk of increasing dominance by a small set of digital platforms and further transformation of the retail business model.

  “You can do your research and…purchase on maybe just one platform. Right. And that's going to change the entire funnel…” – Matt Britton (35:13)

Notable Quotes & Timestamps

• “From a cycle and volume perspective, this is as bad as it gets.” – Chris Giolino (04:28)
• “China had essentially stopped buying our soybeans. That's our largest ag customer.” – Chris Giolino (05:22)
• “Until China, you know, delivers on some of their commitments and delivers consistently, farmers aren't going to go out and spend.” – Chris Giolino (07:13)
• “Dell…raised their server guidance from $20 billion to $25 billion. A lot of that coming into the fiscal fourth quarter.” – Woo Jin Ho (10:28)
• “No one likes cost cuts…you're not getting the profit gains…it's more a wait and see what those impacts are going to be.” – Woo Jin Ho on HP (14:20)
• “The Internet looks like it's about to have a new front door…ChatGPT saw 1.8 billion weekly queries as of October 2025.” – Matt Britton (29:24, 29:45)
• “Gen Alpha…are never going to know a world without AI…One day they may look at traditional search engines the way you and I look at rotary landlines.” – Matt Britton (31:09)

Segment Timestamps for Reference

• Deere Results & Ag Cycle: 02:05 – 07:38
• Dell & HP Earnings Analysis: 10:00 – 17:27
• Petco Earnings & Retail Landscape: 20:18 – 25:52
• The Future of AI Shopping: 28:43 – 36:12

Conclusion

This episode delivers a candid look at industry inflection points: Deere’s outlook underscores a bleak moment for North American agriculture, Dell and HP face the dual pressures of AI investment and cost inflation, Petco shows resilience through service-led strategies, and the AI-driven transformation of shopping is creating both uncertainty and unprecedented opportunity across sectors. The thread tying these narratives: major sectoral change—whether cyclical, technological, or generational—is redefining what it takes to thrive in 2025 and beyond.