Podcast Summary: Bloomberg Intelligence

Episode: Microsoft Slips on Report of Lower Demand for Some AI Tools
Date: December 3, 2025
Hosts: Scarlet Fu and Paul Sweeney

Overview

This episode of Bloomberg Intelligence explores critical earnings news, company developments, and sector trends—centered first on a breaking report about Microsoft’s AI product demand and extending to Salesforce, Oracle, and a retail sector roundup featuring Macy’s, Dollar Tree, and luxury goods analysis. Leading Bloomberg Intelligence analysts and reporters unpack the nuances behind stock movements, corporate strategies, and consumer trends through candid, data-driven conversations.

Microsoft and the AI Narrative

[02:29 – 08:18]

The Story

• Reports emerged that Microsoft had lowered sales targets for certain AI tools after missing sales goals (The Information), but Microsoft disputed this, as CNBC cited an internal email denying quota changes.
• Microsoft stock dipped slightly, causing market watchers to question if there was a real slowdown in demand for AI across Microsoft's products.

Analyst Insights (Anurag Rana, Bloomberg Intelligence)

• AI Infrastructure vs. AI Applications:
  • "There is no slowdown in Microsoft at that point. In fact, Microsoft is capacity constrained right now... that just comes in because you're hosting somebody's model or you're trying to get your hosting ChatGPT." (Anurag Rana, 03:22)
  • The distinction: infrastructure (cloud, hosting) demand is strong, but sales quotas relate to commercial AI tools like Microsoft Copilot (Office, GitHub).
• AI Product Take-up is Uneven
  • "GitHub Copilot... sells better than the others because of the use case of it. Microsoft Office Copilot... very expensive... $30 per user per month... not an apples to apples comparison throughout the board." (03:56)
• Enterprise Hesitation & Integration Lag
  • Broad tech spending is soft without AI.
  • Implementation complexity and costs slow adoption of certain AI products.
  • "Enterprise are not comfortable spending that level of money right now on those individual software pieces." (04:24)

Microsoft vs. Competitors

• Microsoft Leads in AI-Driven Revenue
  • "It is doing much better than everybody else... when you're running [ChatGPT], it runs on their cloud... a large portion of that revenue flows into Microsoft cloud." (Anurag Rana, 04:53–05:27)
  • Other vendors will benefit later as AI use broadens.

Salesforce and Oracle Context

• Salesforce:
  • Weak enterprise hiring and per-head billing limits near-term growth.
  • "It's going to be very much in line with what they had last time, somewhere around 9, 10%, which is not bad, but it's not very exciting..." (Anurag Rana, 05:37)
  • Excitement around new AI features (AgentForce) hasn't translated into meaningful revenue/data.
• Oracle:
  • Concerns about the sustainability of large AI/cloud contracts, especially with OpenAI.
  • "The big question is where is OpenAI going to get money from?... there is genuine reason to figure out... how is OpenAI going to raise that money and how are they going to spend?" (Anurag Rana, 07:14)

Retail Sector Deep Dive

Macy’s, Dollar Tree, and Consumer Trends
[10:41 – 24:07]

Macy’s Performance and Strategy

• Recent Results:
  • Stock dipped after issuing conservative Q4 guidance—seen as typical “underpromise and beat” strategy.
  • Sales momentum building: Comp sales up 2.7% at key stores.
  • "The changes that CEO Tony Spring is making... it's resonating, it's working." (Mary Ross Gilbert, 11:25)
• In-Store Experience:
  • More relevant brands, better store ambiance, improved associate engagement.
  • Observed more in-store traffic, notably on Black Friday.
• Collaborations & Celebrity Campaigns:
  • "For the holiday they have Jennifer Hudson... they're also engaging with social influencers." (Mary Ross Gilbert, 13:40)
  • Anticipated increase in collabs for Macy’s in 2026, mirroring peers like Dillard’s.
• Omnichannel Strength:
  • Macy’s generates a third of sales digitally, but stores remain vital; flexible shopping options emphasized.
  • "The ability to buy online, take back in store or buy online, pick up in store." (14:54)
• Consumer Segments:
  • "The lower end consumer is really feeling pinched... higher income consumer is resilient." (Mary Ross Gilbert, 15:47)

Dollar Tree Earnings and Position

• Earnings Beat and Raised Profit Outlook
  • "Dollar Tree did well this quarter... they really have hit a niche in being able to capture consumers, both lower end consumers who need cheaper goods and then high income consumers who are looking to trade down." (Lily Meyer, 19:34)
• Core Consumer & Trade-Down Strategy
  • 85% of items $2 and under, but moving upmarket with select pricier goods.
  • Traffic declined this quarter, attributed to tariffs, not demand drop.
• Tariff Impact & Shopping Shifts
  • "Tariffs are really drag this quarter. They said that's going to lessen..." (Lily Meyer, 21:10)
• Consumers Focused on Essentials
  • "This Black Friday... instead of buying... a Lake Crusade Dutch oven... instead was gonna buy like three bags of 40 pound dog food." (Lily Meyer, 22:57)

General Retail Trends

• No Massive Consumer Pullback
  • People are value-driven, seeking promotions and essentials.
• Omnichannel Remains Dominant
  • "While a lot of people have switched their holiday shopping to be online, we still saw a ton of people in stores, especially at stores with really good deals." (Lily Meyer, 23:48)

Luxury Sector Snapshot

[26:58 – 33:21]

2025 Review & 2026 Outlook (Deb Aitken, Bloomberg Intelligence)

• Growth Recovers Slowly:
  • "We seem to be ending at around 3 to 4% growth as we exit 2025... China which was the drag" (Deb Aitken, 27:32)
  • US and Middle East robust; China contributes some "green shoots" late in year.
  • High end beauty in China and US surging per L'Oréal executives (28:02)

Tariffs and Pricing

• Tariff Worries Overblown:
  • Brands with strong equity managed higher prices, offsetting new tariffs.
  • "They've managed to pass on price... 6, 7% pricing to the US consumer." (Deb Aitken, 28:37)
  • Effect expected to moderate in 2026.

Chinese Consumer and Travel

• Chinese Shoppers Venturing Abroad:
  • Increased travel to Europe anticipated post-tariffs, less to Japan due to politics.
  • "China consumer is looking to travel more into Europe... that would be the first time that we're looking for them to come back." (Deb Aitken, 29:47)

Luxury Supply Chain Notes

• High-end brands mostly manufacture in Europe, limiting US/China tariff disruptions.

The Handbag Phenomenon

• High-End Handbags as Investments
  • "If you bought at Hermes, you have a just as good or a better correlation than if you'd have held gold." (Deb Aitken, 32:23)
  • Entry-level luxury (“affordable jewelry”) hit harder by tariffs and shifting production.

Notable Quotes

• On Microsoft AI Demand:

  • “I don’t think there is any material slowdown in AI from what I’ve heard.”
    — Paul Sweeney [02:58]

• On AI Sales Adoption:

  • "So when you see that, you know, within a three year period you have what, 500, 600 million users out there. When we use ChatGPT, a large portion of that revenue flows into Microsoft cloud."
    — Anurag Rana [05:00]

• On Retail’s Consumer Split:

  • "The lower end consumer is really feeling pinched...but the higher middle income and the higher income consumer is resilient."
    — Mary Ross Gilbert [15:47]

• On Value Shopping Shift:

  • "We're still seeing consumer spend, but they're really value driven... they're trading down when they need to. They're stocking up on essentials."
    — Lily Meyer [21:57]

• On High-End Luxury Trends:

  • "If you bought at Hermes, you have a just as good or a better correlation than if you'd have held gold."
    — Deb Aitken [32:24]

Key Timestamps

• 02:29 — Microsoft AI sales targets controversy and analyst perspective
• 03:20 — AI infrastructure vs. AI applications demand
• 04:45 — Microsoft’s competitive AI status
• 05:32 — Salesforce growth outlook and analysis
• 07:00 — Oracle/OpenAI and cloud spending risks
• 10:41 — Macy’s results and in-store/customer engagement strategies
• 13:00 — Celebrity collaborations and digital/physical blend in retail
• 19:03 — Dollar Tree’s earnings, core consumer focus, and trade-down shoppers
• 21:57 — Value-driven consumer mindset and holiday essentials trend
• 26:58 — Luxury market review: 2025 recap, China’s impact, luxury travel
• 32:23 — High-end handbags as investment assets

Conclusion

This episode painted a nuanced picture of the technology, retail, and luxury sectors moving into 2026. While headline worries about Microsoft’s AI demand roiled markets briefly, segment analysis demonstrated resilience—particularly for infrastructure and specific use cases. Retail continues to be shaped by consumer belt-tightening, omnichannel strategies, and the lure of value across income levels, while the luxury market is weathering tariff shocks, with early signs of a Chinese consumer rebound and the enduring allure of investment-grade handbags.