Richard, I'm trying to understand whether all of this is a net positive or
a net negative just in terms of how that sets us up for the remainder of the
year. Well, I think what it's indicative of
straight away is, is that at the moment it's a stock pickers market, i.e.
certain parts of technology and industry are going to do a lot better than
others. I think you can see that already.
If you look at Microsoft's numbers, good set of numbers.
The enterprise was strong, but consumer was incredibly weak.
If you look at IBM, predominantly an enterprise company, good set of numbers.
If you look at Tesla. Very special case because don't forget,
Tesla only plays in the electrical vehicle market, which will show growth
this year compared to the rest of the auto market, which may actually be
considerably weaker. So you have to pick and choose exactly
where you want to look. And I think that's going to be the theme
for this year. How problematic is it that a lot of big
tech has bet on the rise of cloud software and now cloud is arguably going
to run into some trouble. That's going to that's going to come
back to bite in the results later on the year, isn't it?
Yeah. The problem is now I think cloud running
into trouble is not quite how I'd put it.
I mean, what they've basically said is cloud was growing at 40 percent.
Now it's going to grow at 30 percent. You know, in this environment, growing
at 30 percent, I would argue, is probably the best growth in the
technology industry at the moment. However, the problem is, is that
companies, particularly Amazon, have been using the profits generated by
cloud to subsidize investments in growth in other parts of the business.
Now cloud starts to slow down its growth.
That means there's less money for this subsidization.
And this is why I suspect Amazon is cutting so hard.
You saw a similar thing at Microsoft. You know, Microsoft's consumer business
is its most profitable by a very long margin.
That has been incredibly weak. And now it's having to cut because
margins are under pressure due to the way that the mix is coming through.
Richard, do you think that the worst is behind us in terms of the job cuts or
are we just getting started here for big tech?
Again, I think it depends on a case by case basis.
Now, when I look at social media or if I look at Snapchat, if I look at metro
platforms, I would argue they're still massively overstaffed.
If I look at other companies such as Apple, if I look at Microsoft,
for example, the degree to which they've both up I think is is much less of a
green. I think even some of these companies are
making sort of cosmetic cuts, if you like, in order
just to be seen to be making cuts, because that's what the shareholders
want to see in this more austere environment.
So in terms of the worst is over, I think with the place to look is going to
be social media for a lot more cuts to come.
What about the other earnings that are still to come into late in the day?
I know you're looking at some other large industry players.
I mean, what what in particular is something investors need to need to.
I hear. I think the other thing to look out for
in the sector is going to be relative performance compared to value.
So, you know, Tesla put out a good performance, but I would argue that the
shares have not been in touch with reality for some considerable amount of
time. Flipside of that is a company like
Qualcomm. Qualcomm is doing particularly well.
If you think about its long term prospects in the short term, it's
suffering because of an inventory correction.
But again, this is a company where the valuation is very much in touch with
reality. Intel's kind of in the middle.
Intel is going to be an interesting one because Intel is in the midst of this
transition. It's a make or break transition.
And there is significant. There are significant doubters out there
who think that is not going to be able to turn this company around.
And it could be the end of Intel. So that's going to be a very interesting
one to watch.