Amazon Spends Big, DraftKings Sees Major Super Bowl Bets
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Live from New York, I'm Caroline Hyde.

And I'm Jackie Davalos in San Francisco. This is Bloomberg Technology. Coming up, Amazon plans to spend at least $100 billion this year to keep up with AI demand. We break down the earnings. Plus, U.S. Treasury Secretary Scott Besson says Elon Musk's Doge effort isn't altering treasury systems. More on our exclusive interview. And with the Super Bowl this Sunday, we dig into the sports betting industry with DraftKings CEO Jason Robbins. But first, we

We dig in to these markets, but the number one name that is dragging down the Nasdaq, it's Amazon. We're off by 3.6%. The worst day for the stocks is December the 18th. This is all about the earnings that we get. The fact that they managed to be in line for their fiscal fourth quarter, 10% growth in revenue. We see earnings overall showing 60% more than growth in operating profit, but it's the forward-looking guidance that once again,

has us a little bit anxious, and it's all about AWS. Let's get to it with Bloomberg Intelligence Analyst Poonam Goyal. And first off with AWS, they're committing to yet more spend, $100 billion. That's going to be the run rate that's necessary to capture the extent of demand for cloud right now.

Yeah, you said it absolutely right. So we're not so surprised by that because we heard that from Microsoft and Google earlier too. But $105 billion in 2025 and likely thereafter means they're spending more on AI. But that's a good thing, right? We want to see them spend more because there is going to be higher demand for AWS services and Amazon needs to make sure that they're investing and not behind the curve.

What did the company say about its e-commerce business? We forget this now in all the talk about artificial intelligence. How is it fending off competition there?

Yeah, e-commerce actually had a very nice quarter on the heels of a very strong holiday season. They did well, surprisingly, in their physical store business, which is also a small piece of the business. But the fact that it grew nearly high single digits was surprising and promising on the efforts there. For the online side, very good growth there. And we are looking to see what happens in 2025 with the added tariffs. Let's just talk about whether or not

Commerce can be supporting ultimately the amount of capital expenditure that's going on here, Poonam. It feels as though this is a company that is cash rich. Most analysts have upgraded their price targets on the company today, even though we see those weaknesses in the shares. People are willing to wait, right?

Yeah, people are definitely willing to wait. I mean, there's a lot of profitability that will come out of Amazon over the coming years from the AWS business, but also from advertising, which is a key driver here to profitability with even higher margins than AWS. And retail is the driving force behind that higher advertising momentum.

That's Bloomberg Intelligence Analyst Poonam Goyal. Thanks so much. Let's go to China, where tech stocks have helped power a bull run for their market. Xiaomi among shares surging to a fresh record on the back of new product launches. Let's bring in Bloomberg's Peter Elstrom for more. Peter, what did Xiaomi unveil that got investors so excited?

Yeah. Hi, Jackie. Yeah, Xiaomi is best known for its smartphones, of course, and they've competed with Apple and Huawei in the market quite effectively. But they also have this whole ecosystem of other devices that they're able to tap into. That includes cars now. They went ahead with a car venture while Apple pulled away from that. They also have a lot of wearable devices. So there are a couple of bullish sentiments there. One, there's this overall sentiment that the China market is quite strong right now. On top of that, Xiaomi seems to be growing quite a bit. And the

And the Chinese government is offering subsidies in a number of different areas, including wearables that could benefit Xiaomi in the long run. So they have this whole ecosystem that is probably going to be able to benefit from some of these growth opportunities. Looking at Xiaomi autos, another auto that's been on a tear. BYD, we're all looking at autonomous. We're looking at a key competitive threat here for Tesla that saw Chinese sales fall like they have done around the world.

Right. BYD, of course, surpassed Tesla in terms of the number of electric vehicles sold. They've been a breakout success from China, really, and they've had success beyond the country in a number of different areas. So they didn't even announce anything that gave the shares this big bump. There's a report that they're going to have an announcement next week, and the anticipation is they're going to talk about their autonomous driving capabilities. They think they're going to take a step forward there, and that really benefited the shares on top of this overall bullish sentiment in China.

There's another boost here that's helping lift Chinese tech stocks. Deep Seek, which is completely the opposite reaction that U.S. tech markets had. Kind of explain that for us, Peter.

Right. DeepSeek, of course, is this AI model that has come out over the past few months, but really a couple of weeks ago captured the world's attention because it's an AI model that is competitive with OpenAI's alternative offering, but they did it at just a fraction of the cost. It's unclear exactly whether the costs that they announced are exactly in line, but nevertheless, it was certainly much, much cheaper than what the companies in Silicon Valley are doing. So

DeepSeek itself is, of course, not publicly traded, but that's given the sense of optimism for the rest of the Chinese market. And you've seen an uplift in a number of different stocks, in particular, Alibaba, best known for its e-commerce business, announced an AI model that's supposed to be quite good. They said theirs is actually better than DeepSeek's.

It's not clear whether that's the case, but their stock has been rising quite a bit. Now, this comes against the backdrop that Alibaba got beat up for years by the Chinese government, so they're still far, far off their highs from 2020 and 2021, but they're recovering a fair bit here.

The sentiment, of course, can whipsaw. And a lot of that's to do with just the economy over in China. There's tariffs and concerns about US-China relationship going forward. But for now, does this sort of bullish sentiment feel resilient? Is it all just pegged on the latest AI development, Peter?

It's so hard to tell, really, especially in China, because there's a lot of things that you can't see that are going on beyond the numbers, beyond the specifics that we see. There certainly are analysts who believe that this is going to be sustainable from here. One analyst put out a report called China will eat the world. Very bullish sentiment for some of these China stocks, including Alibaba and Tencent, which had been leaders in the past. But again, the Chinese government had really beat up those companies in the past, so they're just gaining back some of that ground. Peter?

Let's talk about trade tensions because amid all this optimism, what does all of this mean in the long term or even really in the short term as some of these tensions escalate with President Trump in Beijing?

Right. Jackie, you're hitting on another one of the very key factors in the unpredictability of the whole sentiment here. You have a number of Chinese companies that will get caught in the crossfire between the U.S. government and the Chinese government if, in fact, they escalate from here. We've already seen the U.S. put these 10 percent tariffs on China.

on Chinese goods. Also, they eliminated this rule, the de minimis rule that really helped PDD Holdings, the parent company of Timu, the e-commerce player that has been on such a tear and also Shein. Those companies are certainly going to get hit by some of these changes. It's a matter of whether they're going to continue with those. The Trump administration, of course, has gone back and forth on some of these tariffs. We saw them

announce them for Mexico and Canada and then back off of them. So far, the Chinese tariffs are in place. It's probably not going to go away. But you can imagine the Trump administration negotiating a bit here. So unpredictability is really going to be the key. Doesn't it just? William Bergs, Peter Elstrom, thanks so much. Coming up, we're going to hear from U.S. Treasury Secretary Scott Besson on Elon Musk's Doge efforts.

That exclusive in a minute. But first, we're watching shares of Pinterest to earnings abound. Pinterest surging almost 18 percent revenue for the current period expected to be about 837 to 852 million dollars. That exceeded estimates. They also really managed to push across expectations in the holiday quarter for revenue and profitability. From New York, San Francisco, this is Bloomberg Technology.

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U.S. Treasury Secretary Scott Besson says a lot of misinformation is floating around Doge and that he personally vetted the Treasury employees on Elon Musk's government efficiency team with read-only access to federal payment data. He sat down with Bloomberg's Aleha Mohsen yesterday for an exclusive interview. Just take a listen.

These are Treasury employees, two Treasury employees, one of whom I personally interviewed in his final round. There is no tinkering with the system. They are on read-only. They are looking. They can make no changes. It is an operational program to suggest improvement. So we make $1.3 billion payments a year.

And this is two employees who are working with a group of longstanding employees. The letter that the Treasury Department sent earlier this week talked about how the team currently does not have access to change the system. Have they at any point this year had the ability to make changes? Absolutely not. This is no different than you would have at a private company. And by the way, the ability to change the system sits over at the Federal Reserve.

So it doesn't even lie in this building. So they could make suggestions on how to change the system, but we don't even run the system.

And if they ask for, if they request the ability to change the system, would you grant that? No, again, they have no ability to change the system. I have no ability to grant that change. That they can make suggestions, then it would go to the Federal Reserve, and just like any large ERP system, there would be tests, there would be this, there would be that, and then the Fed will determine whether these changes are robust or not.

As the Secretary of Treasury, you also oversee the IRS. Do you know what kind of access the team has to IRS data or individual taxpayer data? Well, I'm glad you asked that, too, because, look, the IRS, the privacy issue is one of the biggest issues. And under over the past four years, we've seen a

a lot of leaks out of there. The IRS systems are quite poor. When I started in college in 1980, I learned the program in COBOL

I think there are 12 different systems at the IRS that still run on COBOL. But as of now, there is no engagement at the IRS. And if they request that access, would you sign off on that request? They haven't. So we'll take that when it comes to it. I think there is a lot to do there. But the president was elected with a big agenda. And to the extent that

Getting the IRS in better shape is part of that, sure. Because look, with the IRS, what am I concerned about? I am concerned about collections. I'm concerned about privacy. And I'm concerned that the system is robust.

That was U.S. Treasury Secretary Scott Besson along with Bloomberg's Celaya Mosen. Let's bring in Bloomberg's Mike Shepard now. Mike, before we get into Doge, I want to address a story that just crossed the wire from Reuters. Trump plans to issue reciprocal tariffs as early as Friday, he told Republicans yesterday of his plans. Can you kind of break down what we know so far?

Well, we're still trying to confirm this report, Jackie, but it is significant in the sense that one of the biggest concerns that investors have had and companies have had about the incoming administration will be what happens on trade and on tariffs, just owing to the widespread potential economic impact. The Reuters report does not specify which countries would be targeted. It's unclear how

how detailed Trump got in the conversation with Republican lawmakers. But we are going to hear from the president later today. He is holding a news conference with the visiting prime minister of Japan at the White House in the one o'clock hour. And this is certain to be one of the top questions at the agenda. And he may even use the moment to make the announcement himself right there. And look,

Tariffs feed into inflation anxiety. That feeds into the lower consumer confidence data we got today as well. So there is a wider economic impact here. I wonder if with Japanese leadership, we hear more about AI as well. And we know that Mark Zuckerberg, riding high on his share price at the moment, has gone to the White House to discuss AI leadership too.

Well, Carol, AI has been one of the early themes of the Trump administration. And the president, in his very first day in office, rescinded the Biden executive order that sought to put more guardrails on the industry. And he since signed his own order looking to launch further development of the industry here. And then, of course, we saw the announcement with SoftBank's Masayoshi Son, OpenAI's Sam Altman and Oracle's Larry Ellison in Japan.

the Oval Office at the White House to talk about potential investment here in the U.S. of up to $500 billion. And we'll be looking to see if Masayoshi Son even shows up again at the White House today. He has been a frequent companion to Trump lately at Mar-a-Lago and more recently at the White House to talk further about this, what the Japanese investment firms

plans are here in the U.S., but also what Japan's plans are for developing AI there as well.

Mike, there's another companion that Trump has, and that's Elon Musk and his group Doge has been storming across Washington looking for savings. But in that video, you saw Besson trying to allay concerns that he did not have access to non-read-only information. But what did he say about having access in the first place? Does he agree with what Doge is doing in Washington?

Well, he endorsed it and he indicated that he was completely aligned with Elon Musk when it came to this effort to find savings, to reduce the size of the federal government and to also make the systems more efficient. And of course, during the conversation with our colleague, Salaya Mohsen, we heard the Treasury secretary point to the IRS and its antiquated systems.

You know, those networks and that hardware is decades old, and it has been repeatedly cited by the Government Accountability Office as something that federal agencies and administrations need to address, that Congress needs to fund the agency more, to replace the systems, to find money to do that. And yet, decades later, here we are. And one of the reasons it is difficult to simply march in and do this is that these older systems

can be sensitive. And that, you know, you heard the Treasury Secretary talk about tinkering. Even small changes carry the risk of perhaps a disruption of some sort. And that is probably the last thing this administration wants to see. Mike Shepard, breaking it all down. Thank you.

Time now for Talking Tech. First up, Apple's latest budget iPhone is set to be unveiled as soon as next week. The long-awaited lower-cost iPhone SE is expected to feature a new design and Apple intelligence. The updated SE is part of Apple's efforts to boost its iPhone business, which saw 1% decline in sales during the holiday quarter.

Plus, OpenAI is close to selecting additional data center campuses in Texas. The sites are part of Stargate, the joint venture aiming to invest $500 billion in US AI infrastructure over the next four years. And speaking in Berlin earlier, OpenAI CEO Sam Altman said he'd also, quote, love to help build a similar project in Europe. But out of the continent's regulations would determine how quickly the technology advances.

And cryptocurrency firm Gemini is said to be considering an IPO as soon as this year. According to the sources, the Winklevoss-backed firm is in talks with potential advisors, but no final decision has been made yet. Jackie. And we stay on crypto. Elise Killeen, Stillmark Managing Partner, joins us now. Elise, can this Gemini IPO spark a wider wave of IPOs across the crypto space, or is Gemini just an outlier?

Well, I hope so. So the companies in the field have been maturing and hopefully at the same time as the IPO market is opening. You, of course, are someone who has been in the Bitcoin space for years, not to age anyone here, but at least a decade you've been playing in this field. Time and time again, we're seeing a broader adoption here. But is it all talk from a White House perspective? Is reality being struck from adoption and an institutional level?

We are seeing incredible adoption and in 2025 there's great tailwinds to that. At the end of January, for example, Tether announced that it would launch on Bitcoin and on Bitcoin's payment network Lightning, which means that trillions of dollars in activity and over 400 million Tether users could now be hosted on Bitcoin and Lightning network.

Those users in turn and Tether will get the value of Lightning's instant settlement and cheaper transaction capabilities.

So finally, you know, with speed, with ease, maybe comes this broader adoption, but stable coin regulation, is that necessary first really for us to see the wave of us doing payments through crypto finally? Regulatory clarity is certainly overdue and will be helpful. It's helpful both in terms of the startup ecosystem and because the startup ecosystem is relevant to Bitcoin's adoption, it's helpful to Bitcoin itself as well.

Let's stick on this topic of regulation as boring as it may be sometimes. But crypto at this point in its life cycle is still somewhat vulnerable to the whims of Washington. We've seen that really wax and wane. What can the administration do in the short term to really cement crypto's momentum?

Sure. So as I said, regulatory clarity will be helpful, but Bitcoin and startups don't exist in a silo. What happens in the economy is also incredibly important and both to startups and to Bitcoin. And we've seen that in Bitcoin's recent volatility. Now, what we're hoping is that as regulatory clarity is available, that startups can continue along the path that they have pursued, but more efficiently because we

Their capital doesn't need to be spent in creating sort of redundancies and alternative paths that hedge against future regulation.

There's some common ground between crypto and artificial intelligence when it comes to data centers. This has been a huge topic in earnings for Microsoft and Amazon trying to build out the capacity to run their models. And not so dissimilar from Bitcoin, it takes a lot of energy consumption. And there's concerns that the power grid might not be able to handle this demand.

Are you worried at all that perhaps these infrastructure constraints might impact Bitcoin's future growth? That's a great question. So there is an important convergence between Bitcoin technologies and what's happening in generative AI and the proliferation of LLMs and apps built on top. Now, from an energy perspective, of course, Bitcoin has been very productive in providing

anchor tenancy and mining off of renewable energy sources. Bitcoin can do that because it can scale up or down its mining demands based on the price of energy at the time, which makes it responsive to demand

cycles. Bitcoin mining can be applied to A.I.'s energy needs as well in the way that I just explained. But Bitcoin technologies can do more than that because of Bitcoin. Bitcoin's payment network lightning networks ability to scale payments as generative A.I. matures.

It will need to it will need to access micro payments at scale on a reliable network. And lightning architected as a payment channel network can uniquely do that in the crypto sphere. We've only got a minute left. Lightning labs is, of course, in your portfolio. Interestingly, Satoshi Energy is as well. And that's about renewable energy feeding Bitcoin miners. Where else is about to sort of take off when it comes to portfolios? How where other startups are you looking at?

Yes. So what's really taking off in 2025 is companies that are advancing the financialization of Bitcoin itself. So those are companies like, for example, a portfolio company, Kaza, that provides enterprise tools so that BTC can be added to the balance sheet.

We've seen that happen in public companies. Bitwise recently reported that over 70 public companies hold Bitcoin. We're seeing the same sort of activity in the private market that's facilitated by enterprise tools that allow for auditability and internal controls.

that are otherwise standard. We are also seeing products develop like Bitcoin denominated life insurance. That's happening with our portfolio company, Meanwhile, which allows for Bitcoin holders to mature their own portfolios so that they're represented with the Bitcoin ETF, holding Bitcoin directly and with products to mature. Elise Killeen, Stillmark Managing Partner. Always great to have you here in New York. Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York.

And I'm Jackie Davalos in San Francisco.

straight day. This is all about AI commitment. This is all about generative AI giving you a return on AI already because we're seeing that investment pay off from large language model development to indeed the advertising model that underpins Meta's performance. We're up 15%

in the last month alone. So keep an eye on that particular stock, Jackie. But we're also looking at what's happening with the buzz around Sunday and the Super Bowl. DraftKings currently off by one and a quarter percent. We want to see how much money is placed in terms of sports betting ahead of this integral game to those that like a little bit of a flutter. Jackie, we're talking all things Super Bowl. It's the big Super Bowl weekend and it's

$15 billion in sports betting is about to get even bigger. For more on the sports betting business and how the Super Bowl plays a role, we're joined by Jason Robbins from DraftKings. Jason, you're the chief executive of one of the largest sports books out there, but you're also facing some tough competition, especially from those that are actually using contracts linked to sports games, but aren't

the traditional sports books. I'm talking crypto.com, Kalshi. What kind of competition are you seeing?

Well, I think a lot of different forms of gaming right now, and those aren't exactly gaming. They're classified as, I think, financial contracts, but a lot of different forms of gaming are appearing. Those are in the regulated market. There's actually a much larger illegal market that's competitive with us, and they're much more difficult to compete with because they don't have to follow any rules or regulations. So definitely a lot of competition out there right now, but we feel like we have the best product and the best customer experience, and in the end, we think that'll win the day.

And regulator after regulator, you convinced Jason. What are the winnings for you this weekend, do you think? How many bets will be placed? What are your takeaways?

I can't really say what I think the numbers will be, but each year the Super Bowl gets bigger and bigger, so I expect this to be our biggest day ever. Sunday, I should say, to be our biggest day ever. Hard to know exactly what the numbers will be, and right now it's a pretty balanced line, so in some ways that's good because that means it won't be as volatile tomorrow.

Although right now, because we have so much money on player props, it's a much bigger deal whether you see Saquon Barkley, Jalen Hurts and Travis Kelsey get in the end zone and who actually wins the game. Don't get our producers started on parlaying as well, but I'm really interested, Jason, more broadly on what this means for your marketing efforts. Ultimately, this must be a massive draw for people to then come back time and time again.

Well, Super Bowl is not only the biggest betting day of the year, it's our biggest day of the year for customer acquisition and activation. So it's a huge day for us marketing-wise. We have a ton of stuff going on all week leading up to the game and obviously throughout the game. So big time for our marketing team and they've done a great job each year. We've won the customer acquisition battle the last two Super Bowls, I think the last three Super Bowls. So we're very confident in them and feel like we're going to have a great showing this year too.

There's another thing that's taking more people to their televisions to watch the NFL. That's Taylor Swift. She's driven major viewership since she's dating one of the Chiefs players. And I'm curious if DraftKings is capitalizing on this increased viewership in any way.

Well, more viewership always is better for us. And I think it's sort of this positive cycle where people bet more and they tend to watch the games more and they watch longer. And then more people watching means more opportunities for them to place wagers with us. So that's a really good thing for our business, obviously for the ratings of the NFL. And I don't know how much Taylor's contributing to it, but if she is, then thank you.

I'm not much of a gambler, but what can you tell us about your current user base? Have you seen any major shifts in who is putting wagers online?

You know, it's definitely been growing in terms of female audience. Obviously, you know, for us, that's an important vector because right now our audience is largely male. So we think there's a lot of room to grow on that front. In general, though, the demographics haven't changed a whole lot. Typically tends to be, you know, average age in the mid 30s to late 30s. Lots of people we think, you know, coming from technology and educated backgrounds.

typically a higher income consumer. So those tend to be the demographics we see. And that really hasn't changed since we launched. But definitely seeing more women bettors coming in, which is a great thing. I'm interested in sort of the fundamentals of the business, in large part, not dictated by you, but how what the outcome of the games are. I mean, customer friendly wins was something that hit the numbers on the last time that you came on and discussed them. So how do you manage to navigate that and control your own destiny?

Well, there is always that. And, you know, this is a business where we are taking a side of the action. So there's going to be volatility in the results. Over time, that normalizes. So the things that we can control or what we focus on, which are making sure that we provide a great product for our customers and trying to create more ways for them to bet and more ways for them to engage. And, you know, making sure we have a really great back-end operation to our trading risk management is A+.

using our marketing to help drive parlays and other forms of betting that we think are good for margins and good for the customer. So those are the things we focus on and the outcomes will be the outcomes. There's been some years that we've had good years. In 2022, we had a good year. Last year, you know, 2024 wasn't, but it definitely can vary year to year and that's part of the business. But overall, it doesn't really change fundamentals nor the trajectory of our business.

Well, growth drivers going forward. We've heard generative AI, of course, is being kind of the key driver for a lot of companies out there. How is DraftKings starting to incorporate this across the business? Any chance we could see any tasks taken over by AI versus a human in the short term?

We think generative AI is a huge opportunity, and it's really more about getting better outcomes for our customers. Efficiency internally is simply a means to an end for that. So everything from how do we make sure we have great customer service and using chatbot and AI to do that, to making sure that our products are as interactive as possible and easy to use as possible.

Lots of areas for us to play AI, really across the entire business, a good chunk of our code. I think I read a memo recently about 15%, something like that, of our code right now is being written by generative AI. So we really feel like we have a long way to go, but also are seeing some great traction with internal adoption.

Jason Robbins, it's been great having you on. 31 buys on the stock, zero sales. And I'm sure you might be having a great time this weekend. Jason Robbins, DraftKings CEO. Thanks for stopping by. We want to stick with, of course, the Super Bowl and how people are making bets on the outcome. Bloomberg's Ira Budoway is with us for more. And Ira, just how much money is going to be placed and how are they placing these bets?

So the best estimates are somewhere from $1.4 to $1.5 billion in legal wagers. So that's in the 38 states and Washington, D.C. that now allow it with regulated sportsbooks. But that is a fraction of some unknown number that's probably at least...

as much or more than the legal wagers still being placed with offshore books, illegal bookies, casual bets. So we don't know kind of the full size of that dark pool of money, but that is kind of part of the job of DraftKings and FanDuel is to keep pulling people into the regulated environment and adding to the number of states that allow it.

There's new entrants coming into this space. And, you know, not so long ago, Robin Hood was offering the opportunity to be able to participate in Super Bowl bets. What are you seeing in the competitive landscape? Yeah, I mean, that is the latest wrinkle in this. We're seeing derivatives exchanges, futures markets get into this crypto dot com and cal sheet both come forward with swaps that function a lot like sports bets.

And they have used the Super Bowl, which is the biggest betting day on the U.S. calendar, as a way to introduce this idea. It's interesting, almost around the election as well, you certainly saw the predictions market and crypto come in as a way of placing bets and bypassing...

regulations ultimately here in the U.S. What is it, apart from this being a customer acquisition tool for the likes of DraftKings and FanDuel, what else can they use from this day? How else can they drive, like the cannabis industry also has biggest competition is basically illegal. How do you turn attention to that for the White House and the administration?

I mean, I think the sportsbooks in the background are asking regulators for clarity around this. You know, they want to know, do we need to go through state regulators or can we go through the CFTC? You know, what is the state of play? Because I think ultimately, if it's possible to run a federally regulated sportsbook in some fashion or exchange market that includes sports events, then they might want to do that, right? So that is, I think right now, it's really about sort of letting regulators know

provide clarity, they hope, soon about what's allowed and what's not. Because you're right, this is a huge day for bringing in new customers. And I think they see this as potentially a competitive threat. It's been great talking to you. We all ahead to the Sunday big game, Bloomberg's Ira Boudway. We thank you. Jackie.

Coming up, shares of a firm jump after posting a second quarter earnings beat and a strong outlook. We speak with CEO Max Levchin next.

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Shares of fintech company Affirm are soaring in today's trade as the company posted second quarter results that beat estimates, along with a strong outlook. For more, I have Max Lefchkin, Affirm CEO with me here in San Francisco. Max, what are your results telling us about the consumer? Because as I think about it, does it mean that they're spending more or does it mean that their budgets are pinched and resorting to breaking up their payments?

I think our results are telling you that consumers prefer a firm. They chose us as their preferred shopping tool. Obviously, we outgrew the industry. We outgrew a lot of the retail numbers. So clearly, folks are recognizing that the tool we've built for them is safe and useful, and we are delighted to help them with their holiday shopping and beyond. What are they spending on? What sorts of new merchants as well have come on the platform?

We're available at almost 80% last I checked of old U.S. e-commerce. And so we're really very widely distributed at this point from general merchandise to everything in between. The standout categories over the holiday period were travel, which continues, by the way, to be really strong even now. Anticipation of Super Bowl, people need to get superpowers.

to Super Bowl and tickets are not cheap. And so we're there to help. But also electronics, general merchandise is always really strong. So across the board, there's been just a lot of really good results. Interesting that Expedia also did very well given its exposure to travel. Max, I mean, the analysts love the numbers. Mizuho just says you're crushing it. Where do you want to even more finesse? Where is your target right now?

you know we have a lot of work to do still you know i appreciate uh dan dolov and uh the picture perfect comment i think that that's just extremely kind of him uh and we're very proud of these results obviously we got another half a fiscal year to go we got a date with gap operating income positive it's coming up very excited about that we just launched in the uk so we're going to keep growing there keep signing new merchants we have

exceptionally strong growth with our card product that just order than doubled both on the active cards and the volume on these cards. So just continue investing in what's really going well for us there. And, you know, many things to do.

What's so interesting is, look, basically, credit rating company FICO recently did a big study with your help showing about the impact of buy now, pay later loans, opening, closing them, what it does for credit scores. It actually makes them higher or stays the same. Max, how can you really breathe this into the market to shake off some of the negativity around buy now, pay later and show that really the data proves out that this is strong and it doesn't impact you?

I think the most important metric I care about and we care about as a company is consumer adoption. And last quarter's strong growth and prior quarters show that folks understand the value that we bring, the certainty, the sense of control.

We uniquely perhaps in the industry don't charge late fees, don't compound interest, don't do deferred interest. So the product really is a healthy financial choice. It's a much better product than your credit card and just about anything else out there. And so I think the consumer has long understood the value we provide. This study is gratifying because it shows that when consumers use a firm, given that we already report majority of these loan results to the credit reporting agencies,

they're actually building their credit history and improving their credit scores so long as they are responsible borrowers. And so it's just another confirmation point that what we've built works. It helps consumers on a daily basis and for the long term. Okay. Speaking of other consumers across the pond, you mentioned the United Kingdom. You just expanded there. But it's also coming at a time when...

regulators are starting to scrutinize by now pay later practices. How does that affect your expansion plans? So in part because we are so focused on being honest and transparent, our mission literally states that we must build honest financial products to improve lives. We've always taken the position that we want to engage with the regulators, want to make sure thoughtful regulation takes place. And so my first meeting literally when I landed across the pond was to meet with several of

his majesty's treasury officials to make sure they understand who we are, what we stand for, and understand the regulatory goals. And we will continue to engage with regulators, certainly in the UK, but in the US as well, and Canada, where we also operate. So we're very pro-thoughtful regulation.

Talk to us about AI because you have a chatbot that handled 20,000 inquiries on Black Friday. Per day. Per day. I mean, at what point will you be able to kind of use that AI technology perhaps across your platform? Could we expect to see them taking over any human tasks, for example?

We see AI as a productivity enhancer. We're not replacing humans with robots here, and that's definitely not our plan, but there's incredible productivity gains to be had. So the chatbot is widely available. It handles two-thirds of consumer queries today without any human involvement, but any time you wish to speak to a human, you can. All you need to do is say, "Please put me through to a person," and that's what happened.

That's exactly what we intend to do, not just with customer service. We use AI to do all sorts of really, really interesting things. For example, we must, as part of our regulatory obligation, track that

that merchants advertise and promote a firm responsibly and don't promote things that we won't finance or misrepresent the terms. So we have an LLM based system that we've built internally to track it called the prohibited GPT, a funny name, but extraordinarily effective. Something that humans cannot do. There are millions and millions of points across the web where our name is mentioned and it

It is our responsibility to make sure the terms being advertised are accurate. And so it's a great tool that AI can do for us and humans will never be able to give up with. So that is a blueprint of how we use AI everywhere. Briefly, is that your main area of investment? Where else do you have to be spending to grow?

You know, we grow primarily with the help of our merchants. If you look at our numbers, we'll see that our advertising and marketing budgets are incredibly modest. And that is because we partner with extraordinary companies, extraordinary scale, extraordinary consumer-obsessed companies.

ethos such as Amazon and Walmart and Target and many, many brands that folks know and love, they promote our service to their shoppers. And that's how consumers first find out what we stand for, who we are and how we can help them. So our growth is predominantly driven by our partnerships.

investments in technology, that's where we invest in exciting things like generative AI and productivity. And we know exactly how to budget it. So we don't we don't overspend on those things either. Max Levchin, a firm CEO, numbers out best day for the stock since November the 11th. Thanks so much for joining.

Boy, it has been a week of earnings. Let's just dwell on what's come out after the bell yesterday and what drives the stock market today. Amazon on the downside, biggest points contribution dragging indices lower. We're off by 4%. AWS growth not accelerating because it can't meet demand. We're going to talk about the $100 billion invested in capacity. Pinterest having its best day since May of last year, up 16% as it beats expected.

Expectations, all about Gen AI investment. Expedia, best day since November 2023. All about holiday bookings beating expectations as well. But let's get to it. Amazon, the juggernaut. Manit Singh is here with us to go through so many stocks. Let's just start with Amazon because most analysts seem to be upgrading price targets. They lost their only sell rating. They are convinced that this investment is worth it.

Look, I mean, Amazon does have the largest cloud business, almost $115 billion run rate, growing at 19%. So it's quite impressive what they are able to do. The one, I would say, kind of negative I would cite here is that Microsoft is the only one that has

quantified their AI contribution. They said it was $13 billion run rate this quarter. Now, in the case of Google and now Amazon as well, we don't know exactly what the AI workload contribution is. And remember, Amazon only competes in the infrastructure layer, whereas Microsoft is selling you Office Copilot, GitHub Copilot, and Google is also selling you other types of software. So that's where

I think if we had kind of known what the AI contribution was, then it will be more clear in terms of how that makes the shifting between traditional cloud and AI workloads. Mandip, really quickly, about 30 seconds left here, but this crossed the wire not too long ago. Bill Ackman says Pershing Square owns about 30 million Uber shares. What does this mean? What do you make of it?

Well, I mean, when you look at Uber's valuation, yeah, I think clearly there was a case to be made that, you know, they trade at a cheaper valuation relative to other marketplaces. So it looks like that valuation argument is coming in compared to all the noise about autonomous driving that we've been hearing. Up 8.5% best day since February of this year. So only a few days ago, Mandeep Singh of Bloomberg Intelligence. Thank you. That does it for this edition of Bloomberg Technology.

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