Nvidia-Google AI Chip Rivalry Escalates on Report of Meta Talks

Summary

Bloomberg Intelligence Podcast: Nvidia-Google AI Chip Rivalry Escalates

Date: November 25, 2025
Hosts: Scarlet Fu, Paul Sweeney
Featured Analysts: Mandeep Singh, Lindsey Dutch, Mary Ross Gilbert, Diana Rositopena

Episode Overview

This episode dives into two key segments:
1. The escalating competition between Nvidia and Google in the AI chip market — particularly as Meta considers diversifying its suppliers.
2. Retail and consumer staples coverage, analyzing earnings and strategies of major retailers like Dick’s, Best Buy, Kohl’s, Abercrombie & Fitch, and food giant J.M. Smucker.

Throughout, the Bloomberg Intelligence team breaks down the implications for investors, market share shifts, and the technological and macroeconomic forces shaping these industries.

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1. Nvidia vs. Google: The Battle for AI Chip Supremacy

Main Discussion: Meta's Reported Talks to Buy Google AI Chips
[02:01–07:42]

Key Points

• Meta’s Enormous Capex Plans:

  • Mark Zuckerberg has announced Meta plans to spend up to $600 billion in capital expenditures (capex) through 2028 ([02:33]).
  • Such massive spending makes relying solely on one supplier (Nvidia) untenable; diversification is critical for hyperscalers.

• Changing AI Tech Landscape:

  • Nvidia’s GPUs dominate AI training workloads and hold a near-monopoly for this use.
  • On the inferencing side, hyperscalers without proprietary chip designs are seeking alternatives.
  • Meta considering Google as a supplier is “a reflection of the changing tech stack and how these companies are evolving with AI” (Mandeep Singh, [02:33]).

• Google’s Secret Progress — Tensor Processing Units (TPUs):

  • Google is on the seventh generation of its TPU ([03:58]).
  • Recent performance advances mean Google’s chips can compete directly with Nvidia, especially for inferencing and operational efficiency.
  • “The Gemini model... has been able to match up to OpenAI, whether it's in terms of chatbot functionality, image generation, video generation, they are a state-of-the-art model.” — Mandeep Singh ([03:58]).
  • Gemini is not yet the best at everything (e.g., coding agents), but it provides “state-of-the-art at the lowest cost in terms of tokens.”

• Cost and Efficiency Arguments:

  • Nvidia chips for 1 gigawatt of capacity: $30–35 billion ([05:23]).
  • Meta plans to add about 10 gigawatts over five years; paying exclusively for Nvidia chips would mean $300 billion on hardware alone.
  • Google’s infrastructure is run much more efficiently, and with much lower costs per gigawatt (Google spent $90 billion in capex in a year, supporting a gigantic cloud business and model training).
  • “They’re not spending $30–35 billion per gigawatt, and that’s what everyone is seeing now in terms of efficiency.” — Mandeep Singh ([05:23])

Competitive and Investment Implications

• Investor Takeaways:
  • Nvidia is still growing, with forecasts up to $330 billion in revenue next year ([07:08]).
  • But given its massive valuation, further multiple expansion is unlikely — investors are cautious, recalling “scars from the dot-com bubble.”
  • “It’s very hard to see multiple expansion in a company like Nvidia which was close to...$4 trillion plus. And I think they are growing very nicely into earnings. But... people really being conservative in terms of what sort of multiple they pay for a stock like Nvidia.” — Mandeep Singh ([07:08])

Memorable Quotes

• “When you are spending such big sums, you don’t want to be dependent on one supplier... Nvidia still has the best chips. They probably have a virtual monopoly when it comes to the training.” — Mandeep Singh ([02:33])
• “Meta is looking to buy something from Google given they compete... so fiercely on the digital ad side... that’s really a reflection of the changing tech stack.” — Mandeep Singh ([02:33])
• “The Gemini model... as a standalone model has been able to match up to, you know, OpenAI” — Mandeep Singh ([03:58])
• “If a 1 gigawatt [data center] costs $50 billion, any company spending $30–$35 billion and all these companies, like OpenAI, has talked about adding up to 26 gigawatts in capacity, that really translates into huge revenue for Nvidia.” — Mandeep Singh ([05:23])

---

2. Retail Earnings Roundup: Dick’s Sporting Goods, Best Buy, Kohl’s, Abercrombie & Fitch, J.M. Smucker

[10:35–34:32]

Dick’s Sporting Goods & Foot Locker

Guest Analyst: Lindsey Dutch ([11:03])

• Q3 Performance:

  • Strong back-to-school period for Dick’s; raised outlook for the legacy business.
  • Foot Locker (recent acquisition) faces inventory issues and steep markdowns; Q4 forecast is for mid- to high-single-digit same-store sales decline.
  • Integration requires further investment and brand assortment strategy, especially in relation to Nike and updating store layouts ([12:08]).

• Vendor & Brand Strategy:

  • Dick’s is diversifying its assortment, including up-and-coming brands (Hoka, On).
  • Foot Locker remains a Nike hub, especially within basketball, but Dick’s wants to manage exposure and ensure access to “the newest stuff, the hottest lines” ([12:08]).

• Tariffs and Costs:

  • Higher costs expected for Dick’s in the back half of the year and into next year.
  • Dick’s can pass some price increases onto higher-income consumers; Foot Locker, lacking premium product assortment, will suffer more from steeper inventory discounts ([12:57]).

Best Buy

Guest Analyst: Lindsey Dutch ([13:57])

• Q3 Surprise Beat:

  • Strong Q3 in computing, phones, gaming, and signs of a rebound in home theater.
  • Investors remain conservative due to a cautious Q4 guide ([14:13]).

• Promotional Strategy:

  • Best Buy leans into promotions and membership programs; started Black Friday deals early, targeting wallet share across more product categories ([16:13]).
  • “The Playbook looks very, very similar. But the demand picture looks better. So hopefully those promo events can really draw that shopper in.” — Lindsey Dutch ([16:13])

Kohl’s

Guest Analyst: Mary Ross Gilbert ([20:03])

• Business Simplification & Recovery:

  • “They’ve kind of gone back to the basics” — restoring private brands, bringing back petite sizing.
  • Slowly recovering after years of market share loss, especially to off-price/value players.
  • Beauty initiatives (with Sephora) important for repeat business; seeing early signs of turnaround ([20:03–22:16]).

• Competitive Rank:

  • Positioned below Macy’s, but benefits from off-mall locations.

Abercrombie & Fitch

Guest Analyst: Mary Ross Gilbert ([23:42])

• Rebound After a Difficult Year:

  • After a 50% stock decline during 2025 (on tariffs/weakness in main brand), latest quarter comp sales were better than expected.
  • Hollister (targets Gen Z) is outperforming; Abercrombie owns the millennial/young women niche.
  • “Abercrombie could turn positive in the fourth quarter with a number of the initiatives that they have in place going into the holiday quarter.” — Mary Ross Gilbert ([23:42])

• Tariffs Offset by Lower Freight:

  • Expect $60M tariff hit in Q4, but improving margins via less discounting and lower shipping costs.
  • Kohl’s also cites tariffs as a concern for 2026; private label mix helps margins ([25:18]).

J.M. Smucker (SJM) & Packaged Foods

Guest Analyst: Diana Rositopena ([30:07])

• Mixed Results and Tariff Impacts:

  • Lowered guidance after scrapping a planned coffee price increase, due to tariff relief.
  • Facing $75M in tariff costs for fiscal 2026 despite relief ([31:00]).
  • Coffee as a category allows price pass-throughs, but rising prices are pushing consumers toward private label alternatives ([32:40]).

• Broader Packaged Foods Trend:

  • Companies are weighing how much price increase to pass on, given consumer sensitivities after years of inflation.
  • “We’re seeing private label get some market share in the past six to eight months and that has been a headwind.” — Diana Rositopena ([32:40])

---

Timestamps for Key Segments

• AI Hardware Rivalry & Meta’s Diversification: [02:01] – [07:42]
• Dick’s & Foot Locker Earnings Analysis: [10:35] – [13:57]
• Best Buy’s Q3 Beat & Strategies: [13:57] – [16:45]
• Kohl’s Recovery & Positioning: [19:37] – [22:56]
• Abercrombie, Hollister & Tariff Strategies: [22:56] – [26:33]
• J.M. Smucker, Packaged Foods & Pricing Dynamics: [29:26] – [34:32]

---

Notable Quotes

• On the AI hardware arms race:

  “I’m very surprised that Meta is looking to buy something from Google given they compete, you know, so fiercely on the digital ad side. But that’s really a reflection of the changing tech stack and how these companies are evolving with AI.”
  — Mandeep Singh ([02:33])

• On Nvidia’s future growth:

  “It’s very hard to see multiple expansion in a company like Nvidia which was close to...$4 trillion+...everyone has that scars from the dot-com bubble in terms of paying too much in terms of multiple.”
  — Mandeep Singh ([07:08])

• On Kohl’s turnaround:

  “Their private brands... they brought those brands back because they actually sacrificed some... under the prior leadership... Now that they’ve brought the private brands back, they brought back petite sizing which was really important to their customer base. Now they’re really starting to see, you know, a recovery.”
  — Mary Ross Gilbert ([20:03])

• On food inflation & private label:

  “We’re seeing private label get some market share in the past six to eight months and that obviously has been a headwind for packaged food companies. They’re becoming more competitive.”
  — Diana Rositopena ([32:40])

---

Overall Takeaways

• Tech: The AI chip landscape is shifting, with Google’s hardware (TPUs) now competitive enough to attract major spend from Meta and potentially diversify hyperscaler supply chains away from Nvidia. Increased focus on efficiency and operating costs will shape future AI infrastructure investments. For investors, Nvidia’s explosive growth is likely already priced in, with caution dominating sentiment.
• Retail: Dick’s, Best Buy, Kohl’s, and Abercrombie navigate varying turnaround dynamics: from inventory struggles (Foot Locker) and changing consumer trends (Abercrombie, Best Buy) to tariff and cost pressures.
• Packaged Foods: Smucker and competitors are facing a tough, price-sensitive consumer and the renewed challenge of private-label competition, as cost pass-through reaches its limits and margin management becomes key.

---

This summary captures the core insights and lively exchanges of the episode, providing the essential context, segment flow, and actionable takeaways for listeners or investors interested in the evolving tech and retail landscape.

Transcript

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[Bloomberg Intelligence Analyst / Host]

Many platforms in talks to spend billions on Google's AI chips, suggesting that the search giant Google has made the case that it can rival Nvidia as a leader in artificial intelligence technology. Let's check in with an expert who's got an opinion there. Mandeep Singh, Senior Tech Analyst for Bloomberg Intelligence. Mandeep, what do you make of this news with Meta investing and spending money on Google's chips? What does that mean for the space? And you know, Nvidia in particular because we're seeing some big moves in the stock market today.

[Mandeep Singh]

Look, I mean we know capex numbers are going up not just next year, probably through 2028 because Metta has given some sort of a three year forecast. In fact, Mark Zuckerberg has mentioned that, you know, they plan to spend up to $600 billion in capex through 2028. So when you are spending such big sums, you don't want to be dependent on one supplier. And in this case, Nvidia still has the best chips. They probably have a virtual monopoly when it comes to the training. But on the inferencing side, I think everyone, especially among the hyperscalers who don't have their own chips, are looking to diversify. And I think I'm very surprised that Meta is looking to buy something from Google given they compete, you know, so fiercely on the digital ad side. But that's really a reflection of the changing tech stack and how these companies are evolving with AI.

[Podcast Host / Interviewer]

What is it about Alphabet and Google that we did not realize that they're making so much progress on their own chips? These TPU is Tensor processing units. It does feel like it's kind of come from out of nowhere. I know folks in the tech industry know that Google has been working on this for a while, but if you are just, you know, following along, it feels like Nvidia had this locked up and then all of a sudden it's a little bit more open.

[Mandeep Singh]

Yeah, I mean Google is in the seventh generation of their tpu, so clearly they have been working at this for a while. Which is the reason why the TPU has been able to catch up to Nvidia's GPU in terms of performance. But to your point, look, the Gemini model was not comparable to OpenAI and Anthropic's leading models up until the last six months. So that is what has changed that Gemini as a standalone model has been able to match up to, you know, OpenAI. Whether it's in terms of chatbot functionality, image generation, video generation, they are a state of the art model. Maybe in terms of coding agent, they still trail Anthropic. Anthropic released a new version yesterday and they still claim that their models are better than Gemini. But if you are looking for a state of the art model at the lowest cost in terms of tokens, Gemini is your best bet. And which is what matter is realizing that yes, they could use, you know, the low cost that Google has in terms of running their infrastructure and use it to their advantage in terms of how they are looking to deploy gen on their family of apps.

[Bloomberg Intelligence Analyst / Host]

So Mandeep, can you give us a sense of the competitive landscape today for Nvidia? We know, I guess now we have a better appreciation for Google as a competitor just laid out for us and how you think it might play out?

[Mandeep Singh]

I mean the one metric that Nvidia shared on their Latest earnings call was their content per gigawatt is going to grow over the next few years. And the reason they said is because they generate the most tokens per watt. Now for 1 gigawatt, Jensen said they'll have up to 30 to $35 billion of Nvidia chips being purchased. Think about it, you know, if a 1 gigawatt costs 50 billion, any company spending 30 to 35 billion and all these companies like OpenAI has talked about adding up to 26 gigawatts in capacity, that really translates into huge revenue for Nvidia just from one hyperscaler. And that's what I think. Meta, if they plan to add 10 gigawatts over the next five years, they don't want to be giving Nvidia, you know, $300 billion just for the chips. They want to diversify and really make sure they're running their infrastructure at the lowest cost, which is what Google is doing. Google spent $90 billion in capex this year and guess what, they have a cloud business. They have trained their new model. They are doing inferencing at scale. They're serving search and all their family of apps functionality. So they are really running it very efficiently. They don't, they're not spending 30 to 35 billion dollars per gigawatt and that's what everyone is seeing now in terms of efficiency.

[Podcast Host / Interviewer]

So you do a great job of explaining this from a technical point of view, from the technology's point of view. But for investors who really just understand Nvidia as, you know, AI personified or embodied, is this just an opportunity to diversify and not rely so much on Nvidia and maybe Chase, another company whose shares have not rallied as much?

[Mandeep Singh]

I think so. I mean it's very hard to see multiple expansion in a company like Nvidia which was close to, you know, 4 trillion plus. And I think they are growing very nicely into earnings. They have given a forecast of up to $330 billion in revenue next year. So there is embedded growth in there, but everyone has that scars from the dot com bubble in terms of paying too much in terms of multiple. And that's where you're seeing people really being conservative in terms of what sort of multiple they pay for a stock like Nvidia.

[Bloomberg Intelligence Analyst / Host]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Mary Ross Gilbert]

You'Re.

[Bloomberg Intelligence Podcast Announcer]

Listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10am Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube.

[Bloomberg Intelligence Analyst / Host]

Let's talk some retailers. We got some retailers bringing up the rear of earnings season as they like to do. We had Dick's Sporting Goods and we had Best Buy and let's break it all down with Lindsey Dutch, Consumer Hardline, Senior Analyst of Bloomberg Intelligence joining us from Princeton via that zoom thing. Let's start with Dick's Sporting Goods. They raised their outlook again, but I guess investors are focused on, I guess some of the cost, trying to turn around Footlocker. Talk to us about Dick's Sporting Goods, Lindsey.

[Lindsey Dutch]

Yes, that's right. The legacy business remained very strong in the third quarter. Strong back to school, clear demand, momentum heading into the fourth quarter. That's where the raised outlook came. It was really for the legacy business. But when we look at Foot Locker, the deal closed early September. The outlook for the fourth quarter is mid to high, single digit, same store, sales decline. Dick's is also looking to expedite the turnaround there, which means offloading old inventory, steep markdowns in that fourth quarter, which is going to really hurt the margin as well. So Foot Locker needs a lot of work. Fourth quarter is going to be weak and investors are really looking to see how quickly they can turn that business around.

[Podcast Host / Interviewer]

Yeah, and probably they'll need to put some money into it as well to reorganize stores, stores and freshen up the display. How much of this deal Dick's buying Footlocker was predicated on Nike and what it was doing with this shift back to its wholesale channels and away from solely relying on its direct to consumer offerings and its own stores.

[Lindsey Dutch]

So Footlocker was, I would argue overexposed to Nike. Several years ago they had been working that exposure down. I think Dick's will remain focused on being diversified just given that their own assortment where they're leaning into lots of other brands, new upcoming brands like Hoka and on. They did discuss though that Footlocker will sort of remain sort of a hub for basketball and Nike does have a strong hold in the basketball market. So I expect Nike to be, you know, a strong vendor with Foot Locker. But Dick's is looking to make sure that they have that right assortment, the newest stuff, the hottest lines coming from Nike and others.

[Bloomberg Intelligence Analyst / Host]

What is Dick saying about tariffs in their business?

[Lindsey Dutch]

So you know, Tara, they are going to feel higher costs in this back half of the year and even into next year. Dick's has since the pandemic, since they've been able to see sort of an increase in demand for their premium assortment. They're not really a huge discounter for the holiday. They like to sell their product fully through. So I don't expect them to sort of discount and they have taken prices up selectively but certainly not across the board and their higher income consumer is sort of accepting those increases. I think Foot Locker is a little bit of a different story. And you might see that impact a little bit bigger on that business just because they don't have those premium products and they're already going to need to offload older inventory with steep discounts. So you sort of have that turnaround compounded with these rising costs heading into the next year. Something for them to work on.

[Podcast Host / Interviewer]

Lindsey, I also want to ask you about Best Buy. The shares are up about four and a half percent right now. And of course this consumer electronics retailer had a beat in raise quarter. It looks pretty good and it looks like it's on the usual strains, sales of mobile phones and sales of computer equipment.

[Lindsey Dutch]

Yeah. So Best Buy had a strong third quarter. Better as better than expected as you mentioned. I think, you know, the stock isn't getting a full bump because there is definitely some conservatism and a low guide for the fourth quarter. And investors are trying to figure out, you know, is it just conservatism? Are they just worried about the consumer or is there something really there that there's going to be a slowdown in that fourth quarter? But the business looks good, demand looks strong. As you mentioned, computing, phones, gaming, all looking solid. And they're also seeing an improvement in home theater, which is really big because that has been a weaker category for the last couple of years. So if that comes to fruition, I definitely think there will be strength in the fourth quarter.

[Bloomberg Intelligence Analyst / Host]

So you think about a Best Buy, I mean some of those are big ticket items here and that would suggest that they're confident they go to a part of the K shaped economy, maybe that that is doing better. Is that a typical Best Buy customer?

[Lindsey Dutch]

So Best Buy definitely promotions are going to be a big piece of the fourth quarter. They're sort of leaning into those promotional events. That's what worked last year. And I think they're trying to lean into the things that worked last year for this year. And I do think the consumer backd is quite similar when we do that compare. They also recently launched a marketplace and they seem to have a stronger focus on marketing and advertising. And so they're really trying to meet the consumer where they are and make sure that Best Buy is top of mind when you're shopping for a wide array of things, not just those big ticket items like TVs or appliances. So they're trying to have a bigger wallet share with consumers across the board and they're leaning on that marketplace and advertising to do it and then hopefully get you into the store. And that's where they can bring their customer service and experience as well.

[Podcast Host / Interviewer]

Did they say anything or give any indication on how they're preparing for Black Friday and for the holiday shopping season?

[Lindsey Dutch]

It sounds like very similar to last year, so they started their deals about a week ago. They roll out new deals each week. They are leaning into their paid membership program so paid members get access to certain deals over the regular shop. But the Playbook looks very, very similar. But the demand picture looks better. So hopefully those promo events can really draw that shopper in, especially since everyone's already looking for those items.

[Bloomberg Intelligence Analyst / Host]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Podcast Host / Interviewer]

Let's dig into some of the individual companies a little bit more here with Mary Ross Gilbert. She's a senior equity analyst covering the sector for Bloomberg Intelligence. And Mary, let me start off with Kohl's because we talk about companies that are gaining market share. Kohl's lost a lot of market share over the past five, six years and it's coming back a bit here. What is its strategy? Is it just that it's kind of simplified its business model?

[Mary Ross Gilbert]

Garlic. What's happening here is that they've kind of gone back to the basics. What something, something that Kohl's has always been known for. So one is their private brands. So if you think about some of the brands like SO and Juniors, Lauren Conrad for women and they brought those brands back because they actually sacrificed some of those brands under the prior leadership and replaced them with some more name brands like Madden Girl, trying to really attract the junior shopper there. And now that they've brought the private brands back, they brought back petite sizing which was really important to their customer base. Now they're really starting to see, you know, a recovery. But they're not out of the woods yet, Scarlett, as you pointed out. I mean they're really cycling three years of declines. But we are seeing encouraging results. And given that they actually turned positive in the latest month, it looks like they could actually reach break even in the fourth quarter even though they're guiding to a 1.7 comp sales decline. So it's very encouraging to see with Kohl's again not out of the woods. And when you look at what's going on with so far, it's now a two billion dollar business. And as you were sort of highlighting, that means they really lost, you know, over the last four years something like 4 to 5 billion in other categories. So they have lost market share. We think they're losing it to off off price and some of the value players in the specialty space, such as Old Navy. You know, a Gap brand Stock is.

[Bloomberg Intelligence Analyst / Host]

Up 33% today alone. Just a huge move, up 49% year to date. So it seems like the market likes what it heard here. So from a competitive landscape, where does Kohl's kind of fit in out there? MARY.

[Mary Ross Gilbert]

So Paul Kohl's is really a value player in the department store space. So they're really a notch below Macy's and, and they're also located off the mall, which can be an advantage and because they brought in so as a beauty authority and beauty is a very big and important and higher margin category for department stores.

[Bloomberg Intelligence Analyst / Host]

So that's sorry, you have to invest in your face. Somebody once told me, yes, you got.

[Mary Ross Gilbert]

To invest in your face. That's exactly right. Well, the idea there is that you're getting a repeat customer, they have to come back and they have to replenish products. But we did see a comp sales decline because as that business has matured, it's kind of tracking somewhat close to what the the the company is tracking in terms of comp sales. So we did see a decline in the latest quarter. So that's they do have a number of initiatives to try to bolster that because of course we're seeing gains with some of their competitors and we think we'll see that when Macy's goes to report next week.

[Podcast Host / Interviewer]

Right. And of course that's a big one, right, in terms of department store chains, we'll be looking for that one. And of course you'll help us break it down when those cross. MARY I also want to ask you about Abercrombie and Fitch. It was the darling two years ago because the new CEO found a way to make the brand relevant to a new audience. It was no longer targeting teenage boys, for instance, and really targeting young working women. But it's had a brutal 2025. The shares have fallen, I believe more than 50% through Monday's close. A lot of concerns about tariffs perhaps, and maybe even a lack of fresh ideas in terms of its offerings. When you look at the stock today, it is soaring up 30% on the latest earnings. What's the narrative with Abercrombie and Fitch right now?

[Mary Ross Gilbert]

Yeah, so Scarlett, with Abercrombie and Fitch, their numbers came in better than expected. So the namesake brand, as you pointed out, I mean that had been double digit increases over the last three years. So they're cycling those increases and that's why their sales are coming in less than expected generally for the whole year and why the stock is down. But this quarter, the comp sales decline there was about 3.3%. So that was better than expected. And when you look at Hollister though, Hollister has been coming in ahead of expectations and they've been posting double digit increases. So as you were talking about sort of the millennial women who really love and also the men, but it does tend to favor more of the women on the Abercrombie side, on the Hollister side, which really caters to Gen Z that has been on fire. And so that's what's helping to kind of overcome the weakness that they're seeing at Abercrombie. But also it's looking like Abercrombie could turn positive in the fourth quarter with a number of the initiatives that they have in place going into the holiday quarter, even though they're cycling some pretty strong gains in the prior year and the year before that. So there's some encouragement there. And I think. And then of course you have some short interest both in that stock and also in Kohl's. And that's part of the big bounce back that you're seeing this morning is some of that short covering.

[Bloomberg Intelligence Analyst / Host]

What we're not really talking about, Mary, is tariffs and the impact on these retailers. What's the story these days?

[Mary Ross Gilbert]

Yeah, so in the case of Paul, in the case of tariffs with Abercrombie, they expect to have a $60 million hit in the, in the fourth quarter. So they are being hit by tariffs, but they're discounting less. Plus they have lower freight expenses. And this is something we've been hearing from most of the retailers is that lower freight costs are also helping to bolster margin. So they are going to be impacted, but probably not as badly as before given that they've got an improvement in average price points, less discounting and lower freight. That's helping to offset some of the tariffs. And remember that 60 million dollar hit on tariffs for Abercrombie, that's after mitigation efforts. So there is still going to be an impact. Kohl's even brought it up, which they hadn't really brought up tariffs in their prior two calls, but they did say that going into early 2026 there will be some impact there for them. And the reason why their margins have been holding up and coming in better than expected and their margins are low, but it's because of the fact that their mix of business being more private label, which is higher margin, is helping to bolster those margins.

[Bloomberg Intelligence Analyst / Host]

Stay with us. More from Bloomberg Intelligence coming up after this.

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[Bloomberg Intelligence Analyst / Host]

J.M. smucker Company SJM is the ticker symbol. They are in Orville, Ohio. Stock is trading rate at 100 a share. It's down 3% today, down 8% year to date. It's got a market cap of about $11 billion. I didn't, don't look at that company too often here. But they reported numbers, they lowered the top end of their four year guidance after the company opted to forego a planned price increase on coffee in the wake of tariff relief from the Trump administration. Let's get the latest on this name and on some of the other food companies. Diana rositopena, Consumer staples Analyst for Bloomberg Intelligence joining us live here in our Bloomberg Interactive studio. All the way from the 10th floor.

[Diana Rositopena]

From the 10th floor.

[Bloomberg Intelligence Analyst / Host]

Boy, that's a long walk now because you guys used to be just one floor away. We could just stomp on the floor and you guys come running up to help us out. Okay, talk to us about Jim Smuckers. This is Jelly, this is coffee maker Smuckers.

[Diana Rositopena]

What's going on there as well, you know, pet snacks and cat food. So basically, I mean it was, it was all right. There were some pull, some puts and takes for the quarter. There's some signs of stabilization, but it doesn't seem that it's there yet. It's, it's similar to other packaged food companies that we are seeing in the space. It's always a second half or the next six month story when it's going to get, you know, growth is going to happen and it really doesn't happen. So you know, people are starting to lose patience on that.

[Bloomberg Intelligence Analyst / Host]

So specifically as it relates to the tariffs, they like a lot of your companies, they're just telling you what the number is.

[Podcast Host / Interviewer]

Yes.

[Bloomberg Intelligence Analyst / Host]

So what's their tariff cost? I guess for the period?

[Diana Rositopena]

Yeah. So right now they're saying that for fiscal 2026 is going to be about $75 million. Even include, you know, excluding that tariff relief that they are experience. Experience and which is, you know, the reason why they're not going to increase prices for the third time this year.

[Bloomberg Intelligence Analyst / Host]

So they have been raising prices on coffee.

[Diana Rositopena]

They have been raising prices on coffee. This is a category that is very pass through category for Smucker. The problem with that is that competitiveness is, is a little bit, you know, declining compared to private label. So they're trying to, you know, forego some of the margin, you know, recoup to be able to be more competitive.

[Bloomberg Intelligence Analyst / Host]

Is that what most of the companies are doing, the packaged goods companies? Are they trying to take as much as they can in their margin and then pass the rest along to consumers?

[Diana Rositopena]

Well, it depends on the category. For coffee, this is definitely normal for them. They tend to be also a category leader. So it kind of, you know, they're, they're, you know, they tend to, to, to say what, you know, what the prices are going to be. But some of the other packaged food companies that we have seen, they take some margin head, they try to, are not putting that on the consumer because they have been increasing prices for the past couple of years. So they already think that elasticity is getting there.

[Bloomberg Intelligence Analyst / Host]

Right. So what, what's, what are these companies like Smuckers? What are they saying about the consumer out there? How's the consumer, are they switching down? Are they more price sensitive than usual and maybe switching to store products? Store brands?

[Diana Rositopena]

Yes. So we're seeing private label to get some market share in the past six to eight months and that obviously has been a headwind for packaged food companies. They're becoming more competitive. Not necessarily Smocker, but you know, we're seeing others such as Campbell's and the like saying that they're going to be more price competitive in 2026. So we should probably experience a little bit more of, you know, muted sales growth and margin contraction.

[Bloomberg Intelligence Analyst / Host]

So you also follow cw, the Post Company, right?

[Diana Rositopena]

Yes.

[Bloomberg Intelligence Analyst / Host]

Tell me, just remind me about their products. I mean that's, that's primarily cereal.

[Diana Rositopena]

That's primarily cereal. They also bought their pet, you know, category from Smucker that has not done so well. And they also have some of the, you know, like eggs, eggs product, side dishes and the like. And that has been a little bit on the, on the upswing because again that's another commodity that they can pass through price increases and they have experienced that and they have been able to offset some of the declines lines from cereal and even pet food.

[Bloomberg Intelligence Analyst / Host]

So if you're, if you're doing coffee or even cocoa, that's just a commodity. And those in commodity, those prices have been going up because there's been droughts in some of the coffee growing places and cocoa growing places around the world. So if you're Smuckers, you just pass it along, right? I mean it's just, you fear commodity costs are going up. You just got to pass that along.

[Diana Rositopena]

Yes. And that is obviously the, exactly what.

[Bloomberg Intelligence Analyst / Host]

They, when, when coffee comes down, do they cut the price of.

[Diana Rositopena]

Yes, they actually do. Which is, you know, they, they anticipate or they hope that, you know, price increases stop so they can actually become more competitive. But we'll see. It's again, it's a second quarter, second half of the Year Story now this.

[Bloomberg Intelligence Podcast Announcer]

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[Podcast Host / Interviewer]

Amazon five Star Theater presents real customer reviews performed by a real serious improv podcaster.

[Mary Ross Gilbert]

Tonight's review Furby I bought a Furby.

[Podcast Host / Interviewer]

As a nostalgic joke.

[Diana Rositopena]

Joke's on me.

[Podcast Host / Interviewer]

Day 1 Adorable giggles wiggles its ears.

[Mary Ross Gilbert]

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[Podcast Host / Interviewer]

Day 3 Woke me up at 3am whispering in Furbish. I think it summoned something. Day 5 I'm starting asking for life advice.

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Day 7 It blinked at me like it knew I blinked back.

[Podcast Host / Interviewer]

We've reached an understanding.

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[Podcast Host / Interviewer]

5 stars Aaron M. Find your perfect.

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Gift this holiday on Amazon.

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