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Kara Swisher · 50:51
Scott, we're back with more news. The S and P 500 crossed the 7,000 mark for the first time ever on Wednesday ahead of major tech earnings. Tech, of course, fueled it. Let's walk quickly through the results. Meta posted a strong quarter, with fourth quarter sales up 24% year over year. That's really impressive. His AI spending spree continues with a projected CapEx of up to 135,000,000,000 in 2020 Probably a lot of that will be dedicated, hopefully, to advertising for them because that's where they'll get the most bang for their buck. Microsoft also shows no sign of pulling back on AI spending $37,500,000,000 on CapEx in the latest quarter, a 66% increase from last year. The picture was less rosy for Tesla, which reported a 61 drop in net income for the quarter, down 46% for the year. The stock is still soaring inexplicably. Tesla is also scrapping the Model s and x cars using the factory space to build robots. He's coming all in on robots. I... One thing I say about him is when he goes for it, he goes for it. And I've heard some of his robotic stuff is very impressive, but nonetheless, he's betting the farm on it again. It's investing about $2,000,000,000 in x AI. The combination of robotics and AI to me is really important. I've talked about this before. Also, there's layoffs at Amazon and, related to AI and Pinterest, very large layoffs. They're all sort of using AI to to to cut labor costs. What jumps out at you the most?
Scott Galloway · 52:11
Well, I think AI is gonna add a lot of shareholder value, but not where we think it's gonna add the most value. I think the AI native companies are overvalued right now. I think the NVIDIA's OpenAI, the Anthropics of the world are probably overvalued. Where I do think you'll see an increase in shareholder value is the application of it, specifically autonomous. I think Waymo is gonna be a trillion dollar company on its own. Targeting of ads and and making the consumer experience better and creating a better advertising stack. I gotta be on... I think I think, I think Instagram and threads get better every day. I think they're fantastic. I think the consumer experience and also
Kara Swisher · 52:52
So does Gemini on Google, by the way.
Scott Galloway · 52:54
I've done a little poking around around how an advert... I just don't see why. I I I can't imagine what it's like to be selling ads for MSNBC right now when the person the person from Meta or Google show up and and show you what they can do. Oh, you're targeting kids who just got their driver's licenses in Montclair, New Jersey? No problem. We can reach them one at a time.
Kara Swisher · 53:16
And with perfect ads that are health AI.
Scott Galloway · 53:18
Yeah. At the right moment, it ends up people want to buy life insurance in... You know, at 7PM right after... I mean, anyways. So Meta's earnings, incredible. Revenue up 24% year on year.
Kara Swisher · 53:34
It's a big company.
Scott Galloway · 53:35
And not only that, their employee base wasn't up 24%. I don't have the number, but I think it was barely up. And then the one that was down six or 7%, they were up 7%. The one that was down was Microsoft because Azure didn't let up. Its cloud company didn't. It had growth of 39%, which still topped analyst expectations. But unfortunately, the new expectations is that you blow away expectations. But still Azure cloud computing, the demand is so great that Microsoft's backlog of commercial bookings were up a 110% to 625,000,000,000. There's some concerns about overreliance on OpenAI where as a whopping 45% of this backlog is attributed to their 0.25 of a trillion dollar agreement they made in October. And also, gross margins because of the increase in CapEx is the lowest it's been in three years, coming around 68%, which spook some people. Tesla, I can't even I can't even begin to understand what the fuck is going on there. I think this this stock should be down 90%. It's become a meme stock. It is.
Kara Swisher · 54:41
That's all. I have heard... I suspect he's just decided cars aren't the way to do it, and then he has some advantages in robotics. And several people who have called me recently and said, actually, he's doing a lot of really innovative stuff around robotics. It's just he's betting the farm on that everyone wants to have an Optimus robot in their house, I guess. But, you know, he's he's done it before. Like, that's the only thing I would say, but he hasn't shown. The other thing he's done before is say, we're gonna land on Mars. We're gonna... He makes promises he never... His mouth makes promises he can't keep in in reality. So the question is, like, getting rid... The the Model s and X cars were made by Rivian and Lucid and and and the Chinese. Right? He's gotten out of this business. He's not in the car business anymore, it seems like. And so the question is, can this robotics business meet the challenge? We'll see.
Scott Galloway · 55:33
Well, to be fair, they did beat expectations, but let's talk about what those expectations were. The revenues are down. Of all the companies we talk about, no one no one is down. My... You know, what? Met is up 23%. And then overall, a horrific quarter. Their operating margins, and that is the amount of money you get to hold onto, was 7.2% in last year, in the same quarter this year was down to 46%. That's a meltdown. Their free cash flow decreased 30%. Their GAAP net income decreased 61%. They realized they got a $500,000,000 in automotive regulatory credits that are gonna be running out, thanks to the big beautiful bill.
Kara Swisher · 56:15
People still believe in him. They're giving him money for XAI. I think he's gonna merge it into XAI, like I keep saying.
Scott Galloway · 56:20
He's now using Tesla as kind of nutrition for XAI. They disclosed that Tesla invested 2,000,000,000 in So Musk's company this is... You know, and he needs a new vision, a new distraction. And as you said, he's gone all in on Optimus, which I think is going to compete with the Cybertruck and the Segway and the Palm as the biggest flops in history or maybe the mixed reality headset. The other thing that struck me was the layoffs in Amazon. Yeah. Is And they laid off 16... Yeah. But it's for different reasons. Pinterest is doing it because Pinterest is fucked and subscale. I like Pinterest. I like the people there. It's subscale. It's going to have a very difficult time. Amazon laid off 16,000 people in their corporate workforce, which doesn't sound like a lot because I employ 1,600,000 people, but the majority of those people are in their factories. This is probably close to 10% of their corporate staff. And this really is, I've said for a long time that AI is corporate Ozempic. All these guys are going, you know. I mean Amazon has said they're going to double their top line retail revenue in the next five to seven years without a single increase in the number of headcount. That's AI. And then also I think the place in Amazon's my big tech stock pick for '26. The collision and you've referenced this of AI industrialized robots of which Amazon has a million industrialized robots. And the total number of industrial robots in America outside of Amazon is 400,000. So they have gone just as Musk is going all in on robots, no fucking sense. Amazon... Jaffee and Bezos are going all in on AI driven industrialized robots, which is champagne and coattin.
Kara Swisher · 58:02
But they were they were there before. They bought a company called Kiva many years Yeah. But just so you know, recent Amazon layoffs plus October layoffs 10% of the company. It's it's a pre... They had one.
Scott Galloway · 58:12
Oh, is it? Thank you. Yeah. Yeah. But UPS cut 30,000 jobs. Mhmm. I mean, these guys
Kara Swisher · 58:17
are Industrial Robotics. That's AI.
Scott Galloway · 58:20
I interviewed David Solomon from Goldman Sachs on ProfG, and he said, I mean, they're planning to grow their revenue substantially the next two or three years. Goldman's in a great spot right now, great leadership, they're doing well. But he admitted employment will begin to flatten. You know, no CEO is gonna come out and say, gonna reduce 10 or 20% of my workforce. Right? No. They can't say that because then everyone, the best people start leaving. But what he did say is it's gonna flatten. What we're looking at here
Kara Swisher · 58:50
Flat is is new up.
Scott Galloway · 58:51
Right. But what... This takes their earnings and absolutely makes them go crazy. And then when these companies do well, everyone, you know, the S and P does well because the S and P is now kind of the s m... You know, the s... It's not the S and P five hundred. It's the S and P ten. Anyways, these companies on the whole continue to just be extraordinary, and that is until this movement called Resist and Unsubscribe came along.
Kara Swisher · 59:15
Anyway, one more quick break. This is absolutely true. It was corporate Ozempic. Take it away. We'll be back for predictions.
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— Predictions segment begins —
Kara Swisher · 1:00:47
Okay, Scott. I'm gonna make one quick prediction. Okay? If you don't mind. The Super Bowl is just a few weeks away, and go Seahawks. But I've already have a prediction for the best ad, Lady Gaga. Did you see that singing mister Rogers beautiful day in your neighborhood in an ad for Redfin and Rocket Mortgage? I don't really care about the ad, but they they released a teaser clip, and she sounds amazing singing.
Scott Galloway · 1:01:11
She's got incredible voice.
Kara Swisher · 1:01:12
Oh, it's gonna be the best ad. I'm gonna... We'll we'll talk about the ads later because that's
Scott Galloway · 1:01:15
always not the prediction I was expecting.
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Scott Galloway · 1:01:17
It's very similar to mine, and that is we're about to engage in military strikes against Iran. So very similar predictions.
Kara Swisher · 1:01:23
Yeah. Okay. Lady Gaga. Yeah.
Scott Galloway · 1:01:25
Okay. It's just so strange that the Epstein files are now a distraction for me. It's like the behavior keeps getting more and more depraved that we have
Kara Swisher · 1:01:31
to believe safest thing in America is... Are the Epstein files, but go ahead.
Scott Galloway · 1:01:36
No. I I... I've made this prediction before, and I'm just making it again. It feels like I follow this. I love this guy, Dejio Hussar, on TikTok. And I'm sold. I'm just fascinated with military equipment. And it appears that all our assets are being coordinated in The Gulf for a pretty obvious reason. And I don't know if Trump is doing it for the right or the wrong reasons. Maybe it's a distraction. But I think he absolutely loves the Tarzan flex of leveraging the best organization in history and that's the military. It appears to me that they are absolutely... Even the planes that are deploying to the area are like giant gas stations in the sky. I think Israel's on board because I think they think it would be good for their brand. So I think you're gonna see a coordinated... Some sort of coordinated strike in Iran in the
Kara Swisher · 1:02:19
next Alright. Okay.
Scott Galloway · 1:02:20
Seven to fourteen days.
Kara Swisher · 1:02:21
I said that see a coordinated strike against Ohio or wherever they're gonna attack the Haitians who are not eating the cats and dogs. That's where I think you're gonna see the next strike.
Scott Galloway · 1:02:30
Do you think... So you you don't think they're gonna pull back at all? No. Yeah. You're probably right.
— Predictions segment ends —
Kara Swisher · 1:02:35
Not these people. Anyway, we wanna hear from you. Send us your questions about business tech or whatever's on your mind. Go to nymag.com/pivot to submit a question for the show or call 85551 Okay. That's the show. Thanks for listening to pivot. Be sure to like and subscribe to our YouTube channel. We'll be back next week. Scott, read us out.
Scott Galloway · 1:02:53
Today's show is produced by Lara Nayman, Zoe Marcus, and Taylor Griffin. Ernie and Richarda engineered this episode. Manolo Moreno edited the video. Thanks also to Drew Burrows, Mia Savario, and Dan Shalon. Nishat Kuros, Vox Media's executive producer podcast, make sure to follow Pivot on your favorite podcast platform. Thank you for listening to Pivot from New York Magazine and Vox Media. You can subscribe to the magazine at nymag.com/pod. We'll be back next week for another breakdown of all things tech and business care. Have a great weekend.
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