Amazon's Big Spending Plans and Bitcoin's Rebound

Summary

Bloomberg Tech — "Amazon's Big Spending Plans and Bitcoin's Rebound"

Date: February 6, 2026
Host(s): Caroline Hyde (NY), Ed Ludlow (SF)
Guests: Emily Nicole (Bloomberg), Rohit Kochani (ROF Capital Partners), Hey She (Alliance Bernstein), Dave Bazooki (Roblox CEO), Max Levchin (Affirm CEO), Robert Kinsel (Warner Music Group CEO), Kurt Wagner (Bloomberg), Karl Porter (Bloomberg)

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Episode Overview

This episode dives into two of the most significant current tech stories: Amazon's eye-popping $200 billion capital expenditure plan for 2026—including data centers, chips, and AI equipment—and Bitcoin's volatile rebound after a major sell-off. The hosts also break down key earnings and industry shifts with interviews from the CEOs of Roblox, Affirm, and Warner Music Group, plus insights from market analysts on the far-reaching consequences of hyperscaler spending, the future of AI infrastructure, and the resilience of digital assets.

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Key Segments and Insights

Amazon's $200 Billion CapEx Shock: The AI Arms Race

Starts at 01:52

• Headline: Amazon plans to spend $200B in capital expenditures for 2026, focusing on data centers, chips, and AI hardware.
• The stock tumbles over 8% (“on track for its biggest drop since of last year”) despite strong U.S. growth (24% YoY—the fastest in almost 3 years).
• Positive impacts ripple to suppliers: Nvidia shares jump over 6% as infrastructure and memory providers rally on expectation of hyperscaler investment.
• The Nasdaq 100 is otherwise bouncing after a rough week, but Amazon bucks the trend.

Analyst Perspective: Rohit Kochani, ROF Capital Partners

Interview at 06:20

• Sticker shock: The market expected high CapEx, but not the caution signs around operating margins and prolonged investment curves.
  • “People expected spotless earnings. I think Capex sticker shock was expected…but what was not expected was slight yellow flags in operating margins.” – Rohit Kochani [06:53]
• Kochani maintains a buy on Amazon (target $285), citing efficiency gains, diversified bets (cloud, retail, ads), and vertical chip integration.
  • “They are vertically integrating in a way that absolutely no other company on earth is trying to replicate at this scale.” – Kochani [09:13]
• Biggest concern: How long and how steep will the investment period last before ROI becomes apparent?
• On risk of negative free cash flow: Kochani is unfazed, citing Amazon’s past cycles of heavy spending followed by high long-term ROI.
  • “This company has gone through negative free cash flow cycles in the past and delivered ROI unlike many other companies…” – Kochani [11:22]

Deeper Analysis: Hey She, Alliance Bernstein

Panel at 27:13

• Total projected hyperscaler CapEx (Amazon, Microsoft, Meta, Google): $650B for the year.
• “It’s as defensive as it is offensive — it’s for growth, but it’s also to defend your competitive moat.” – Hey She [28:04]
• This is a “third year into the build.” Now, model adoption and disruption are accelerating (“rapid model drops and launches”).
• The AI infrastructure arms race is reshaping productivity even outside tech (retail, manufacturing), reminiscent of historic infrastructure revolutions (e.g., the electric grid).
• Concern is not just short-term ROI, but “the probability of holding on to that revenue and the profit is probably changing really fast”—explaining valuation volatility across AI and SaaS names.

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Bitcoin’s Wild Week: Volatility and 'FUD'

Crypto segment at 02:02, Emily Nicole joins at 04:03

• Bitcoin dipped 13% in a day, then rebounded 10%, hovering around $68k—erasing all gains since the Trump election rally.
• Drivers: Crypto is decoupling from traditional stores of value and equity indices, with no clear narrative; traders are “buying the dip.”
  • “It’s really just been a roller coaster week…bitcoin’s really struggled to patch onto any narrative.” – Emily Nicole [04:03]
• Companies like MicroStrategy (Saylor's earnings) experienced similar whiplash: stock down 17% before earnings, then up 16% after “losses were in line.”
• Regulatory headwinds from China aren't stopping renewed crypto interest—for now.

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Roblox Growth: Platforms, Safety, and AI

Roblox CEO Dave Bazooki segment starts at 14:02

• Roblox posts a blowout quarter: daily active users jump 69% to 144 million, bookings up 55% YoY.
  • “We are on a mission to get 10% of all global gaming content running on Roblox and we're well on our way.” – Dave Bazooki [14:26]
• Introduction of “gold standard for safety”: age estimation, filtering, safety features are being implemented with minimal user friction.
  • “We gave our teams an ambitious goal to have no friction for this…our matchmaking has gotten better, we continue to refine the way we filter text and make trusted connections.” – Bazooki [15:43]
• 18+ user segment is now growing at 50%+ year over year.
• Globally, countries like Japan see user growth at 160% YoY.
• Advert revenue is not yet a significant factor but is accelerating (rewarded video, developer-sponsored ads).
• AI on Roblox: Introduction of Cube foundation model; seeing greater experience variety, envisioning “novel games” and long-term multiplayer ‘holodeck’ ambitions.
  • “We're a multiplayer platform where…we're building the holodeck where people go together.” – Bazooki [19:51]

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Affirm: Steady Growth, International Expansion, and Financial Transparency

Affirm CEO Max Levchin interview starts at 21:57

• Affirm’s “Buy Now, Pay Later” card (Affirm Card) is experiencing rocket-ship growth, quadrupling faster than the rest of the business.
  • “The end game is to get you to put away your credit card forever and use a debit card powered by Affirm.” – Max Levchin [22:18]
• International operations, now live with Shopify in the UK, showing real revenue and setting up a continental Europe push.
  • “It's now a business…We're in London, we're hiring, we're building. It’s making real revenue.” – Levchin [23:10]
• Emphasizes conservative guidance as strategy, but reassures on historical outperformance.
• Credit quality is strong, with healthy customers and better-than-expected holiday growth.
• On U.S. capping of credit card rates: transparency remains Affirm’s biggest edge.
  • “The reason Affirm has been successful is because of upfront pricing. If you know what you'll pay, you'll be just fine.” – Levchin [25:37]

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Warner Music Group: Earnings, AI, and the Future of Music IP

Interview with CEO Robert Kinsel starts at 37:23

• Q1 revenue up 10%; focus on both artist development (big names and new talent) and broad-based regional growth.
  • “Artist development is at the core of what we do and finding artists like the ones you mentioned is how we succeed. But it is not just that…” – Kinsel [37:23]
• AI deployed to automate marketing for over a million songs, boosting efficiency and potentially cutting costs.
  • “With AI we can do that and we're well underway to delivering on that…It's a major, major accomplishment for a large IP owner such as ourselves.” – Kinsel [38:30]
• Striking data licensing deals with companies like Suno; pushing for music value increases via both consumption and creation.
• Industry still at an early stage: “not yet” seeing full results from new partnerships but significant deal-making underway.
• Positive artist response to proactive AI strategy, learning from past tech disruptions (file-sharing).
  • “It’s been fantastic…Artists have learned, they studied the past, and they want to be part of experimentation with us.” – Kinsel [41:52]
• Partnership with Bain signals confidence in music IP’s growing long-term value.

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Reddit: Earnings, Ads, and AI Play

Reddit coverage at 44:29 with Kurt Wagner

• Reddit beat sales projections, but share price fluctuated.
  • “They have an AI story to tell too…Reddit Answers is an AI search engine built into Reddit.” – Wagner [45:23]
• New ad products and licensing user-generated data to AI players.
• International user growth aided by better translation and localization.
• Monetizing both logged-in and logged-out users remains a key challenge.

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The Boring Company: Nashville Tunnel Ambitions

Big Take at 47:12 with Karl Porter

• Boring Co.’s planned 10-mile Nashville tunnel is its most ambitious yet, but faces serious engineering risks tunneling through limestone (risk of sinkholes, technical complexity).
  • “Getting through limestone is very tricky and you have the risk of things like sinkholes. It's also, it's a very heavy wet rock. Like, actually transporting it throughout is going to be incredibly difficult.” – Porter [47:45]
• Local government cut out of some processes; safety and emergency egress points are key unknowns.
• Boring seeks international growth, signing Dubai as its first overseas contract.
  • “Again, it's a very aggressive timeline…Either they've dramatically improved the machine and their processors or it's not going to go as quickly as they're saying.” – Porter [49:16]

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Notable Quotes & Memorable Moments

• "The analysts are calling it sticker shock. Amazon pledging to spend $200 billion..." – Ed Ludlow [02:52]
• "This company has gone through negative free cash flow cycles in the past and delivered ROI unlike many other companies..." – Rohit Kochani [11:22]
• "It’s really just been a roller coaster week…bitcoin’s really struggled to patch onto any narrative." – Emily Nicole [04:03]
• “We are on a mission to get 10% of all global gaming content running on Roblox and we're well on our way.” – Dave Bazooki [14:26]
• "With AI we can do that and we're well underway to delivering on that…It's a major, major accomplishment for a large IP owner such as ourselves." – Robert Kinsel [38:30]
• "The end game is to get you to put away your credit card forever and use a debit card powered by Affirm." – Max Levchin [22:18]
• “It's as defensive as it is offensive — it's for growth, but it's also to defend your competitive moat.” – Hey She [28:04]

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Timestamps for Key Segments

• 01:52 – Amazon CapEx announcement and market reaction
• 04:03 – Bitcoin and broader crypto volatility, with Emily Nicole
• 06:20 – Analyst Rohit Kochani on Amazon’s investment logic
• 14:02 – Roblox CEO Dave Bazooki on explosive growth, safety, and AI
• 21:57 – Affirm CEO Max Levchin on company trajectory and financials
• 27:13 – Hey She (Alliance Bernstein) on the $650B capex era and AI disruption
• 37:23 – Warner Music Group CEO Robert Kinsel on music, AI, and catalog value
• 44:29 – Reddit’s earnings, advertising, and AI/data licensing
• 47:12 – Boring Company’s Nashville expansion and international ambitions

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Overall Tone & Takeaway

The episode exudes urgency and curiosity around the unprecedented scale of tech investment and disruption. From Amazon’s “mic drop” year of spending to the chaos and opportunity surrounding AI and digital assets, the show maintains a fast-paced, newsy tone, peppered with frank concerns (“Are we building a road to nowhere?”) and optimism about technological innovation. Interviews remain upbeat yet critical, with CEOs emphasizing transparency, user safety, and long-term growth even amidst market volatility and structural transformation.

Transcript

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[Ed Ludlow]

This is Bloomberg Tech. Coming up, Amazon shares drop after announcing plans to spend $200 billion this year on datacenters, chips and other equipment.

[Caroline Hyde]

Meanwhile, bitcoin rebounds, having plummeted on Thursday when it neared the $60,000 level.

[Ed Ludlow]

And we break down more tech earnings with the CEOs of roadblocks affirm and the Warner Music Group.

[Caroline Hyde]

But first we check in on what is a tentative bounce back after what has been a punishing week. Remember, the Nasdaq is on track for its worst week ad in three months, since the beginning of November. But now we see a little bit of a reprieve, a little bit of dip buying. We're up a percentage point if you're looking at the big indexes, and I know you're going to drib into the individual movers that push and pull. But Crypto up almost 9%, but only about eradicating half of yesterday's losses. We're still only at 68,000. What a remarkable beginning to the year for this asset class that in many ways people feel is not a store of value. But what are you looking at?

[Ed Ludlow]

The analysts are calling it sticker shock. Amazon pledging to spend $200 billion. Capital expenditures on infrastructure. The stock down more than 8% right now, on track for its biggest drop since of last year. Operating income in the current period, $21 billion at the high end, below consensus. So the concern is, is the trade off worth it here? There is a big backlog for us and AI business. By the way, it's one of the few names on the NASDAQ 100 that's down because in reaction to that capital expenditures pledge, you see everyone from the GPU providers, Nvidia is now up more than 6% in response. Memory names, infrastructure names, energy names, all higher because the capital expenditures for all of the hyperscaler aggregate plus meta is growing. We're going to get to that with an analyst just a few minutes time. In the world of crypto currencies, traders are buying the dip carrot outlined it Bitcoin's rebounding after plummeting on Thursday, erasing all the gains since Donald Trump's 2024 election, falling close to 60,000 USD popping back up again. Bloomberg Digital Finance reporter Emily Nicole joins us with the latest difficult Emily, what's going on?

[Emily Nicole]

Your guess is as good as mine, to be honest. We've been watching bitcoin over the last 24 hours and it's really been a roller coaster. As you said, it dipped about 13% yesterday. Now I think we're up about 10%. So we're recovering some of that. But it's really just been a roller coaster week. It's been hard to kind of guess at why that's been happening. There's been a lot of instability over the last few months with geopolitical tensions and bitcoin's really struggled to patch onto any narrative within that, whether or not it's a, a safe haven, a store of value if it can latch on to stocks as it used to trade pretty in line with tech stocks back in the day. None of that seems to be sticking and it's just kind of doing its own thing right now.

[Caroline Hyde]

FUD some would call it in the market. Fear, uncertainty, doubt just consumed the asset class as a whole. And it's consumed companies that have ridden so high on the back of the climb in crypto, I think of strategy and some of these other digital asset treasury companies. Dax, how have you seen particularly on the back of Michael Saylor's earnings yesterday, have you seen people still questioning how long they can ride this?

[Emily Nicole]

Well, if we look at strategy, for example, that has also had a similarly up down two days. So yesterday it was down about 17% at the close before the earnings. Investors were really bracing for some bad news coming from that, particularly with bitcoin having such a bad day. And then today we're seeing it up more than 16% because of that kind of whipsawing effect. The earnings weren't as bad as people expected. Losses were in line with what we thought was happening. No new debt was being created. And so people are trying to stretch for, you know, where can we see some, some, some like staying power within this rally. Where is there a bottom? Where is the stability? And that might be where we're now starting to see a sort of bottom. Maybe that 60,000 mark was it. And for strategy as well, maybe it's kind of starting to see a way out of that.

[Caroline Hyde]

Yes, interesting. Even with the headlines coming from China as they tighten curbs on crypto and unstable coin issuance, still managing to catch some buying of the dip today. Bloomberg's Emily Nicole, what a busy week. Thanks for joining us. Meanwhile, let's talk way More now using DeepMind's Genie 3AI model to create realistic worlds for a new way more world model, according to the company. In a blog post today, the self driving tech developer argues this collaboration with another segment of Google's tech ecosystem is going to help the expansion of way more self driving services across many more markets.

[Ed Ludlow]

Ed, let's get back to Amazon. Big move, a big story. The stock lower as the company announced it's set to spend $200 billion this year on datacenters, chips and equipment, supercharging its bets on AI. Rohit Kochan is Managing Director, Senior Analyst for Internet and Capital Markets Research at ROF Capital Partners. They call it sticker shock, right? The reaction to the big capital expenditures number. But there was a time where a big capital expenditures number was what you wanted to see. Why the negative reaction?

[Rohit Kochani]

I think the negative reaction is just because outside of the Capex, people expected spotless earnings. I think Capex sticker shock was expected given what Google met Microsoft did last 10 days. But what was not expected was slight yellow flags in operating margins and certainly people realizing that Amazon has to spend a lot more given they are launching satellites to space.

[Ed Ludlow]

Right.

[Rohit Kochani]

They are building new Whole Foods and so on and so forth.

[Ed Ludlow]

You, you have a buy on Core on the stock and I believe let Me just check here on my Bloomberg terminal. Yeah. $285 price target. Right. There are lots of pieces of data in there. Some people looked at the operating income forecast for the current period and thought that's a little worrying. Bearing in mind US is the majority of operating income. Some look to the backlog, some looked at the US growth 24% fastest pace of growth in almost three years. Where would you look?

[Rohit Kochani]

All of the above. There are, there are many positives in the, in the report and in the Outlook and the other various moving parts in Amazon accelerating US improving retail margins, better advertising growth as well as better efficiency efficiency in, in retail overall. I think what is spooking the market here is there are more investments beyond AI that this company is doing unlike many other peers that are just doubling down on simple simply one thing. So the worry here is next to three years, how high of an investment curve are we looking at for Amazon and how what level of ROI do they get beyond the core investments? I think that's the worry here. But I think all in we think this is a Jenny winner, very underappreciated and time will tell.

[Caroline Hyde]

Let's dig into why it's a gen winner. Is it training and graviton just seeing the triple digit percentage growth, the fact that they've got that vertical integration, making their own chips, using that for the compute that they offer and the efficiency does it games then is it more that their own models like we don't talk much about the own models that they're producing. We talk so much about Google's for example, but not so much Amazon.

[Rohit Kochani]

I know. I think Amazon is with all of the above again they are vertically integrating in a way that absolutely no other company on earth is is trying to replicate at the scale at which Amazon is trying to do vertically integrating cloud, vertically integrating retail and having the diversity of advertising. So I feel when all three pillars of Amazon start to crank up higher operating margins which we will, we will see over the next call it six to nine months, that's when the real potential of profitability of this company will, will manifest in the numbers. And that's been, that's why I believe the surface area of investments as well as surface area of ROI on those investments is so much wider at Amazon that is being underappreciated and that's, that's where we feel this is a Jenny winner across the board.

[Caroline Hyde]

It's interesting we have such short term memory loss sometimes. This was always a company that focused more on investing in itself rather than producing profitability but push us forward is as to how Andy Jassy continues to manage the cost basis because that was the headline that stole the show previous to earnings season was the amount of job cuts they're making. Is that still what you need to be seeing from Andy Jassy?

[Rohit Kochani]

I think there are there is room probably the company needs to make after the over hiring of almost two and a half years after the COVID I think there is still digestion period but which probably one would argue that has been a little bit more prolonged than what would have one would have preferred to see. So I think they're finally getting there and I think a little bit of extra cost cuts would be much more appreciated to make room for more CapEx.

[Ed Ludlow]

CapEx across the hyperscalers plus matter is now at $650 billion for the year for Microsoft. That's based on consensus. The difference with Amazon is that they might tip into negative free cash flow. We have 30 seconds. How worried are you about that?

[Rohit Kochani]

Not worried at all. This company has gone through negative free cash flow cycles in the past and delivered ROI unlike many other companies that are for the first time going through this cycle. If you look at 15 years Amazon has delivered ROI Auto I see probably in a best in class manner.

[Caroline Hyde]

Kochani of Rose Capital Partners, thank you very much indeed for joining us today. And coming up we talk more earnings. We're speaking with the Roadblock CEO Dave Bazooki as a company sees 144 million daily active users, you don't even want to hear how many hours people are spending on this platform. Well, break it down. This is Bloomberg Tech.

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[Caroline Hyde]

Check out Shares of Roadblocks Company on Fire up 10% after they reported fourth quarter users and bookings that topped expectations daily. Active users jumped 69% to 144 million. It beat analyst forecasts, I'm pleased to say. We're now joined on the results by Dave Bouzouki, CEO of Roadblocks. Your engagement levels was jumping to a similar degree. It was like 68%. What is is this the games that are driving this?

[Dave Bazooki]

Dave it's really the games, the platform and the creator. You know we are on a mission to get 10% of all global gaming content running on Roblox and we're well on our way. We had a banner year as you mentioned in 2025 we had 55% year on year bookings, growth and in addition, as we started rolling out what we call the gold standard for safety, we're age checking our users and we now have accurate data on the 18 and up segment which is growing at over 50% year on year. In addition, around the world countries like Japan are growing 160% year on year. Really people are creating new genres and types of games, whether it was dress to impress a year ago or grow a garden. So we're powered by both platform and an amazing creator community.

[Caroline Hyde]

Yeah, you've got Bruno Mars singing live on brainrot. I mean 12 million people all using and coming to watch that at the same time. The records are interesting given, as you say, these safety measures have been put in place. How has that impacted, has that created any friction or Indeed it seems as though you're leaning into the opportunity of these safety measures.

[Dave Bazooki]

I think leaning in is a good way to mention it. I believe the last time we chatted we mentioned our vision for the gold standard for safety in Addition to filtering and monitoring all chat for critical harms and not allowing image or video sharing, we have now are full into our rollout of age estimation, which is understanding the age of everyone on our platform and using that to allow people to communicate with people of similar age. We gave our teams an ambitious goal to have no friction for this. And when you lean into something like this, a lot of innovations pop up on the side. Our matchmaking has gotten better. We continue to refine the way we filter text and make trusted connections. So we're, we're optimistic we're going to go through this and ultimately come out with minimal friction from this.

[Ed Ludlow]

Dave I fired up my new gaming PC last night. Acer Nitro V15, intel i5, Nvidia, GeForce RDX4050 and I thought to myself what am I going to play? And for you guys and everyone else, it's about pipeline, right? You rely on these third parties to keep the pipeline going, but you also have like the, you know, the ambition on these higher fidelity games. How do you guarantee the pipeline and how are you going to manage the pipeline going forward? So I have some more things to play.

[Dave Bazooki]

The pipeline on Roblox is very, very healthy. We watch the distribution, the variety, the diversity of the experiences that our creators are growing. And over the last year we've made amazing really advances not just in our technology platform but in search and discovery that the pipeline is, is robust. Right now we have a unique vision with our platform, especially for 18 and up expansion that when a creator makes an experience on Roblox, it works at good performance on a low end 2 gigabyte Android phone for example, but also can scale up and look beautiful on your brand new gaming PC. This is a unique technology. It requires a vertical stack going from cloud to game engine to discovery to the apps on everyone's desktop. It's why we're optimistic that that 50% growth in 18 and up can get more and more of that part of the global gaming market. I'll highlight in the US our ambitions are more than 10% and in the US a big majority of that 50 billion approximate gaming market is 18 and up. So we see really good trajectory in that direction.

[Ed Ludlow]

Dave Advertising we check with you regularly on it and you're consistent that it's not yet a meaningful contributor, right? When will it be? Will it be? Or do investors now start to change how they factor in ads for you going forward?

[Dave Bazooki]

I want to highlight the big picture. You know, in 2025 I believe we gave guidance in the low 20s and we ended up with 55% bookings growth. So I want to highlight the big picture is we continue to exceed guidance and expectation on how we grow. We're seeing great progress both on rewarded video advertising and also developer sponsored tile advertising which is creators on Roblox who are monetizing really well accelerating their own growth by purchasing advertising. We do believe it'll be a big segment. It will ultimately as we roll out Roblox moments, which is really used for discovery of video capture of Roblox that'll be a part of it. So we're continuously bullish but not ready to really split it out yet.

[Caroline Hyde]

Dave, briefly, how bullish are you on the AI platform and indeed the model that you have? We've got Cube foundation model that you've just unveiled, but Google's also got Project Genie. How are you seeing that changing the development of games and how do you stick to your sort of more blocky esthetic that people love?

[Dave Bazooki]

Well, I what we believe we will see over time as we advance AI, our avatar system and our technology platform, a much bigger diversity of the types of experiences you see on the platform. We've shared our notion of novel games, which is games you'd never expected to see on Roblox and genres like RPG or in sports. And really with AI, we see that as an acceleration technology for both creation for the way games look. We shared some videos on X this week around 3D in the Cloud up sampling and also how models will be used for driving creation. I'll highlight one key thing about Roblox. We are a connection and a communication platform. We're a multiplayer platform where you know, in sci fi terms we're building the holodeck where people go together. Some of the technologies out there that we're building as well, like world models are currently video single player technologies. We think the big long term opportunity for us is synchronizing thousands of players in the cloud, which is much different technology and stuff where, you know, is actively part of how we build roadblocks.

[Ed Ludlow]

Dave Bazooki of Roadblocks, thank you very much. Now coming up on Bloomberg Tech, a firm CEO Max Levchin joins us talk about his company's results. Stick around this next this is Bloomberg Tech. Shares of a firm down about 6%. The buy now, pay later company reported results that beat analysts estimates, though some on the street say that the outlook part is a little bit conservative. Fortunately we can talk through it with a firm CEO Max left in. Actually there's been a lot this morning about the Outlook, the financials strong quarter gone. I actually just want to talk about what you're doing and I'd like to start, if I may, with the affirm card. How's that coming along? And Max, with you, if, if I may, what's the end game with the firm card?

[Michael McDermott]

You know, there is no end game for. There's so much to do. I have a hard time saying we'll be done when this feature ships from card rocketed once again for a long time I think it looked like a gently super linear growth curve. And in our latest letter we finally showed that it's.

[Ed Ludlow]

That's kind of what I mean. You know, the trajectory has changed.

[Michael McDermott]

It's, you know, we didn't do anything very specific to make it go obviously exponential but it is accelerating and it's just the great work of our product teams that have been putting in new features, integrating all of our 0% deals into the car. The card grew, you know, something like four times. The rest of the business, you know, it's just a rocket ship that we built a few years ago and it just keeps going. The end game is to get you to put away your credit card forever and use a debit card powered by, by a firm.

[Ed Ludlow]

The other growth part of the story, because it is a growth story and whatever you feel about the analysts saying of being conservative is international expansion a bit. So in my, my home country and Caroline's home country, the uk it's a really interesting case study. How is that going? But then what, what comes next after that?

[Michael McDermott]

Well, we just announced some exciting brands. We're live with Shopify, our great partner in the US now in the uk it's a real business now. So for, for a couple of quarters we've said look where we've crossed the pond. We're in London, we're hiring where we're building. It's now a business, it's making real revenue. It's generating some very significant sales lifts for our merchant partners. We have a whole slew of new partnerships to, to, to go live with soon. So feeling great about it and eyeing continental Europe next, of course. And so we're definitely not going to be a North American phenomenon only, but we're still very, very committed and very focused on our North American stronghold.

[Caroline Hyde]

So is TD Securities. Its truest is Bloomberg Intelligence Analysis. Right. That you do guide conservatively and you just feel that that's the right thing to do in this consumer context.

[Michael McDermott]

I think the guide is the guide, as our CFO always reminds me to say, you Know, I encourage folks that hold our stock or eyeing our stock to see how we've done in the past quarter after quarter. We made a quite promises and we deliver on them. So we take our guidance very seriously. We intend to always do well relative to what we said we'll do and better and that that's what it is. I mean, ultimately the results speak for themselves and we are in it for a very long term. So at some point people will figure out exactly just how much more growth there is in this business.

[Caroline Hyde]

Credit quality holding up clearly. And that's the litmus test in many ways for success within, within delinquencies. Are they on the rise? How are you seeing a consumer right now, Max?

[Michael McDermott]

You know, we have underwritten tens of millions of American households on the order of 70 million, 26 million actives just last 12 months alone, we reported. We see a pretty big swath of America. Our consumer is healthy, they are paying us back. They're shopping. They had a great, great holiday season. A lot of outside observers underestimated our growth over the holidays. We proved them wrong yesterday. Once again, American consumer as we see her is doing just fine.

[Ed Ludlow]

Max, I think this is the first opportunity we've had to speak since the President's initiative to cap credit card interest rates. You know, we start this conversation by you saying, well, we want people to put their credit card away. You obviously have some, some a bias in that, that narrative. But just your viewpoint on it, please. And what's happened in the weeks that followed? We just have 30 seconds, sorry.

[Michael McDermott]

I think the most important thing in this conversation about affordability is transparency. Like rate caps are a conversation for the legislators. But the most important thing is people understand what they're getting into. The reason a firm has been successful is because of upfront pricing. If you know what you'll pay, you'll be just fine.

[Caroline Hyde]

Max Leisure, Always great to have your transparency on the show. CEO of a firm. Thank you. Coming up, we dive on this week's market moves. The issue of Alliance Bernstein. That's next. This is Bloomberg Tech.

[Ed Ludlow]

Welcome back to Bloomberg Tech. We're looking at the NASDAQ 100, right? It's kind of the go to index. It has the Mag 7, the kind of broadest and diversified list of tech companies. And on the week, we're headed for our biggest weekly drop since November. Carrie pointed that out earlier, actually a percentage point more. And the NASDAQ 100 would be on track for its biggest weekly drop since April. In the moment, we're actually a little bit higher in the session. And that's the reaction of the supply chain to Amazon and Amazon's projection of spending $200 billion capital expenditures in 2026. Of course, the big beneficiary when you're spending hundreds of billions of dollars on AI infrastructure and datacenter is in video. And that is one of the best performers right now in this session. If we move super fast, we might be able to change the chart and show you what that looks like.

[Robert Kinsel]

Boom.

[Ed Ludlow]

Nvidia up 7%. Amazon down 8% percent. Actually way, way more widespread than that across memory chip equipment makers, nuclear names, the whole lot.

[Caroline Hyde]

Car power names bloom. Its numbers extraordinary. Let's dissect this a bit more Ed, because you've just been talking us through the sheer scale of the hyperscalers plans. If you add in matter, it's $650 billion. It really underscores just how quickly the race is accelerating. Let's talk more on what this wave of investment means for markets, for disruption across industries, the actual use of the models that this compute brings. Hey, she is with us. Alliance Bernstein CIO of Thematic Innovation Equities. You own the whole array, you own the hyperscalers plus the infrastructure layer. What from this week did you. Do you agree that 650 billion is what we should be seeing from these sorts of names?

[Hey, she]

I think what we're seeing, and we've been saying this is this the third year into, if you think about fundamentals of startup and where we are today, this is a third year into the build. And I would say this is a year that we should start to see adoptions. And in fact, I think that's what's causing a lot of disruption in the marketplace. We're seeing rapid model drops and launches of new models, new versions of it, and the speed of that is accelerating. And that is something that we should be expecting to see at this point. But what's also interesting is that what it also means and we see said this, this is an interesting time the large cap themselves, they're spending a lot of money because it's as defensive as it is offensive. It's for growth, but it's also to defend your competitive moat. It has the ability to disrupt many models. And this time it's interesting is AI has holds the potential to disrupt tech. How we think about the way that the infrastructure layer is and how we think about enterprise software, how the traditional business model with high competitive mode, how that could be changing going forward. And that's exactly what we're seeing. So it's kind of hard for us to judge. Is 650 the right number or is it a number? Yes.

[Ed Ludlow]

Can I jump in and ask where do you look for the evidence then? So for example, Amazon talked up its back backlog, which is very different from rpo, right. In the world of software because it's not invoiced. They talked about, you know, the operating income. A backlog would suggest, oh my goodness, they've got hundreds of billions of dollars of revenues waiting in the wings from that, from their offering. But the market doesn't seem to believe that. Do you believe that metric?

[Hey, she]

I think it's less about whether or not that is indeed just that one metric that we focus on, but rather if you think about all these, this is basically a rebuild of the digital infrastructure layer. And that's why I said what is 650 billion? Is that precisely the right number we should be anchoring on? But just the fact how it could unlock the future of workload and when we think about it is not just the hyperscalers per se, but also what does it mean for the rest of the economy? What could it unlock in terms of potential in productivity? And you're actually seeing the early evidence of that. You can see in the traditional retail industry, what does the future hold for shopping and what does agent mean for future of shopping? Or if you think about the traditional manufacturing industry, we are in fact seeing real productivity gain from using AI. And that's only the beginning. And time and time again, I think if we look at, look back in history when you have some such disruptive technology changes, what happens in the near term, some of the way, the way that we do things gets disrupted. But then new business model productivity gain actually do emerge and that is the power innovation. It requires little imagination. So if you look at this point in time, yes, it's a huge number that we're spending, but you probably could look back and back then when electricity was first invented it that probably was a tremendous amount of money to be spent on the grid. Right?

[Caroline Hyde]

What if this is the future of the grid? Well, let's talk about therefore the innovation that we're seeing at the moment. And I just want to bring to our viewers, of course, the latest that happened about midday yesterday when Anthropic released a new version of its AI model Claude Opus 4.6. It's designed, we know, to carry out financial research, other work related functions. The company says it can scrutinize company data, regulatory filings, market information to come up with really detailed financial analysis that would Normally take a person days to complete. This is after the market kind of fell out of bed following their legal plug in to co work. So how are you seeing these models becoming an entry point into software? What did you think about just the gargantuan sell off across data services and software names?

[Hey, she]

You know, in the time of such data disruption it's very, it's too early to call what's cheap who is going to be the future winner because this is only the beginning. And ultimately it comes back to what is the real long term competitive moat. And that's what the question really is at this point because you know, it's if you talk to the private companies, you probably are seeing some of the private companies. This is the fastest way for a company to get to $100 million revenue. Yeah, but my question was would be what is the real way to look at it? Who can hold on to that $100 million of revenue for a long period? Stickiness and what we are seeing right now, what's interesting is it's not in the near term numbers that's going down, but the question that we are asking, and I think all the investors are asking is, well it brings in the probability of what is the terminal revenue we should be paying, what's the terminal multiple we should be paying for the revenue because the probability of holding on to that revenue and the profit is probably changing really fast. And that's why we're seeing the terminal multiple actually is coming down pretty fast. And that's the disruption that we're seeing in the market today. But is it with disruption and chaos there's always opportunities because on the other side of it is while we are really concerned about, I feel like six months ago everyone's concerned about the ROI and now we're seeing models being dropped. And then in the meantime there's a massive sell off in the market. So I would say, I think there's also opportunity as well because now we're probably a little more comfortable with the ROI. And then the $650 billion question for everybody is are we building a road to nowhere? And I would say, well maybe there's hope that we're building a road to somewhere. So it actually creates huge opportunities, opportunities if you have long term horizon. And because there's dislocation in the market.

[Ed Ludlow]

Later, Reliance Bernstein, deeply pensive on what's happening in the markets long term and short term. Thank you so much. Coming up we're joined by Warner Music Group CEO Robert Kinsel to break down the company's earnings. That conversation next. Don't miss it. This is Bloomberg Tech.

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[Caroline Hyde]

Ticket lady Jennifer of Coolidge. Well, many thanks good sir. Here is my Discover card. They accept Discover at Renaissance Fairs? Yeah, they do.

[Bloomberg Media Studios Host]

Here.

[Caroline Hyde]

Discover is accepted at the places I love to shop. Get it with the times. With the times.

[Hey, she]

You're playing the loot.

[Ed Ludlow]

Yeah, and it sounds pretty good, right?

[Bloomberg Media Studios Host]

Discover is accepted at 99% of places that take credit cards nationwide based on the February 2025 Nielsen report.

[Caroline Hyde]

Cue the upbeat music. After record quarterly revenue in fiscal fourth quarter, Warner Music Group rose another 10% in its first quarter quarter thanks to increases in digital in artist services and expanded rights in licensing revenue. And they're leaning into AI. The shares are up 5% on the day, as you can see. Let's talk through with the CEO Robert Kinsel. Thank you very much indeed for joining us today, Robert. And you talk about the creative wins here. So is it the force factors of Alex Warren of Cardi B of Ed Sheeran that drive these sorts of revenues or where else are you managing to pull the levers?

[Robert Kinsel]

First of all, thank you for having me. It's really great to be here to talk about the success that we're seeing with our strategy working. You're leading with the right way, which is artist development is at the core of what we do and finding artists like the ones you mentioned is how we succeed. But it is not just that. Our market share growth has been broad based across regions, across business units. So both our catalog division as well as our frontline divisions, North America, Latin America, Europe have been growing and gaining share and that is what underpin our consistent results over the past three quarters of driving sustained, sustained growth and acceleration while we're cutting costs.

[Caroline Hyde]

Cutting costs. How much are you able to cut costs with AI? Because Robert, herein lies your background, the fact that you've worked in always with a focus on digital, the intersection of music with technology and the fact that you have led the charge striking deals with Suno, for example, putting out blog posts as to why this can be a win for the artists you develop. How much is that actually helping cut costs at this moment?

[Robert Kinsel]

Yeah, so it's good to step back on because they're the way we approach it is that it has to deliver against our three core priorities. Priority number one is growing our share. We just spoke about that and there are activities that we do within that, using AI that help us automate our marketing across our entire catalog of over a million songs. It is humanly impossible to touch all of those songs and promote them. With AI we can do that and we're well underway to delivering on that. So it's a major, major accomplishment for a large IP owner such as ourselves to we have to increase, we have to increase the value of music and AI is helping us to do that by introducing new pricing tiers on existing DSPs digital service providers, but also by having new entrants such as Suno and Audio and that is where we focused initially. And we want to make sure that now we're not only getting paid from consumption from the Spotify and YouTube of the world, but also from creation, from the Sunos and videos of the world. And those two worlds over time will merge as well. And then third is growing our efficiency. And on the efficiency front, we're deploying across finance, across legal, across hr. These are three departments that we started with, obviously, in addition to market that I mentioned before. And all of that is helping us be more effective, handle more copyrights and more artists at the same or lower employee base and at the same time grow revenues and profit.

[Ed Ludlow]

Robert, we got some early insight into what your strategy is when you joined us at Bloomberg Screen time, right in October. And you know, my interpretation of your time on stage was that this was pretty early. Like Suno is a case study now that we're a few months on. Are there any examples of work you've deployed either internally or work you've done with Suno and the first four or five other companies that you've done deals with? That's new, you know, that's tangibly made an impact in the quarter? Gone.

[Robert Kinsel]

Yeah. So actually when I was with you guys, you know, at your conference in October, we were actually heads down on deals with those companies. So those were not even closed. So it was super early. We've, I've published principles that we as a company uphold to doing these deals, which is the partners have to commit to licensed models. They have to properly reflect the value of music, which means the right commercial terms that we're really happy with. And three, that artists have to have the right to opt in for the use of their name and likeness and you know, in derivative works. And we are in the process of transitioning these partners to licensed models. So the answer to your question is not yet, because we're extremely early in that. But they're well underway, they're signing more partners and they're working on their new models. And as soon as they transition to license model, which is our condition number one, then we will be able to start cooperating much more deeply.

[Ed Ludlow]

We just had the Grammys, right? Yeah, I mean, let me just, you know, we just had the Grammys. And that puts the focus back on the artists, the songwriters, other side of the table. How have they responded to your strategy and the work you want to do with the AI company companies?

[Robert Kinsel]

It's been, it's been fantastic. You know, we as a company take our role of guiding the development of AI and music Very seriously because we've learned from the past where the music industry waited for far too long during the file sharing era 25 years ago. So we believe in being early, taking, you know, taking the reins together with our partners and defining the future of music. Music. So it's, and there are a lot of artists who want to be part of that. They also have learned, they studied the past and they want to be part of it. So we are having conversations both with our artists, the lawyers, their managers, and there are many artists who are reaching out and they just want to be part of experimentation with us. So it's been a surprisingly positive response.

[Caroline Hyde]

I mean it was a positive day for you with the Grammys as well as some of your R and B wins. For example. I'm, and I'm interested about the joint approach briefly that you're doing with Bain because it feels as though you think the value of music is going up if you're wanting to be buying these back catalogs even more so.

[Robert Kinsel]

Yeah, so, so we, we firmly believe that music is undervalued. It's undervalued. It's roughly $0.50 of value of a video and it shouldn't be based on its consumption is just for historical reasons. So there's tremendous opportunity for value appreciation in the future. And we believe that the industry is finally moving from just volume based, subscriber based growth to volume based and price based growth. And that's really important. We started on the strategy over a year ago where we started to retool our partnerships with our distribution partners to have certainty around our wholesale rate increases rather than hope and wait and welcome price increases, which we always do welcome. But we're really focused on creating certainty around rate increases. So in the face of that and with the added step change of value caused by AI and additional tiers companies, you know, experienced investors like Bain see this as something that has potential to really unlock a lot of value in the industry and they're putting their money where the mouth is.

[Ed Ludlow]

Robert Kinsel, CEO of Warner Music Group. Great to have you back with us on Bloomberg Tech. Really appreciate it. Thank you. Let's turn back to the earnings story elsewhere. Shares of Reddit actually now softer 410 of a percent, basically flat. One point in the session had been up 8%. So we kind of fizzed out a little bit. The company projected current quarter sales that did surpass Wall Street's expectations thanks to growing ads.

[Kurt Wagner]

Ads.

[Ed Ludlow]

Its advertising business. Get out to Bloomberg's Kurt Wagner. What's, what's going on with the Reddit story here, I just got an analyst, not my inbox saying that Reddit's on a roll, but the stock would suggest otherwise. Yeah, when it started up this morning that made sense to me because as you pointed out at the projections for the current quarter were good. There was a big beat in the holiday quarter. It feels like there's a lot of momentum for this, this advertising business. I think they have an AI story to tell too. They're obviously not building these massive data centers like we're seeing from these hyperscalers. They're not, I mean this massive capex, but they have this product called Reddit Answers which is basically an AI search engine built into Reddit and years and years and years of forums of people discussing things and they are also licensing that data, as you know, to some of these AI players. So they have a bit of an AI story that isn't quite as capital intensive as a lot of these other big tech players coming down.

[Caroline Hyde]

It's interesting, analysts said many had reiterated that overweight, some neutral. But Piper Sandler counter Fitzgerald we're also seeing bad cut their price targets. So maybe there's a little bit of a view on how much the what's already priced in. Kurt, what was really interesting I thought was the international growth here and is that so much to do with the AI and the translation capability now?

[Ed Ludlow]

Yeah, I think they've been working to make sure that it's accessible to people who don't just speak English. This is a lot of these consumer products as you both know. You know, as they grow, they have to build their products for all of these various markets and that does take time. I think that's part of it. One of the things that's interesting you'll see in some of these analysts notes of this debate around logged in versus logged out users. If you guys remember Twitter, back in the day this was the big debate. You know, could you show ads to someone showing up to Twitter who doesn't have an account? I think Reddit's in a better position because of the focus of these forums.

[Caroline Hyde]

And being topic based Wagner all over social media. As always, we thank you. Ed, what we got coming up?

[Ed Ludlow]

We've got the boring company going full speed on a tunneling project in Nashville, but there could be some headwinds along the way. Bloomberg big take coming up. This is Bloomberg Tech.

[Caroline Hyde]

Tesla's evaluating multiple sites across the US to manufacture solar cells as part of Elon Musk's 100 gigawatt Solar Ambition. So according to sources and the company is considering expanding production at its Buffalo, New York factory with Arizona and Idaho also under consideration. That longer term, another scenario would involve building a second facility in New York state. One source said China currently dominates output of solar cells. And on the back of your scoop, you've seen some big share price moves.

[Ed Ludlow]

Yeah, and his other companies are busy to. The Boring company is about to embark on its most ambitious tunneling project yet. Its first full fledged transit corridor underneath Nashville. But critics worry the company is winging it. Bloomberg's Carl Porter is here with the details in this week's Bloomberg Big Take. It is the most ambitious project that, that Boring has undertaken. But, but people are worried. So balance those two things. Why is it the most ambitious and what's the concern?

[Kurt Wagner]

Well, it's the most ambitious on several levels. They are Boring, that is all looking to build two 10 mile tunnels between the airport and downtown Nashville. And they're looking to do it through limestone, which is compared to other projects such as the Las Vegas one. They're running through sandstone predominantly at that point. Getting through limestone is very tricky and you have the risk of things like sinkholes, poles. It's also, it's a very heavy wet rock. Like actually transporting it throughout is going to be incredibly difficult.

[Caroline Hyde]

That's some of the technical difficulty. I mean your big take was so eye catching. Simply because of the headline Musk's boring tunnel in Nashville has mayor hoping no one dies. Just how realistic are they worried that that's some sort of opportunity cost it?

[Kurt Wagner]

You read the story of the city have largely been cut out of this entire process. Having been involved at the start they felt that it wasn't the right time depending on who you talk to. And people around Boring say they just weren't interested. So they went and it's the entire route now has been designed to go on state land. So until you get to things like fire safety and like really into the construction process and looking at things like egress points where you know, emergency services could get in if there's a problem in the tunnel, the city don't have much say. So you know, the mayor, depending on your point of view, is either being alarmist or is just expressing concern on behalf of his constituents.

[Ed Ludlow]

You've been reporting on Boring deeply for a little while now. And the timing of the big takes are interesting because also the company's looking to the Gulf. Right. What can you tell us about Dubai and their international expansion?

[Kurt Wagner]

Dubai is the first successful contract signed for an international expansion. They're looking at putting multiple exit points in to that network. Our understanding is that they may have already sent a test vehicle out there that we've not been able to confirm that yet. Again, it's a very aggressive timeline for getting these things done. If you look at the Las Vegas project, I believe they started tunneling their pre Covid and there were supposed to be, you know, 68 miles worth of tunnels dug by now. I think they got five miles operational. So either they've dramatically improved the machine and their processors or it's it's not going to go as quickly as they're saying.

[Caroline Hyde]

Remarks Car Porter Deeply researched story. We urge people to go and read it. Meanwhile, that does it for this edition of Bloomberg Tech. What week? Ed?

[Ed Ludlow]

Yeah, you know, it's like the mic drop week for capital expenditures. 185 billion Alphabet 200 billion Amazon the repercussions next week recap on the pod. You know where to find it. It's there on the screen. And this is Bloomberg Tech.

[Michael McDermott]

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[Ed Ludlow]

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[Caroline Hyde]

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