微软计划将数据中心算力扩至三倍，年资本开支近2000亿美元

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Let's get to some of those tech earnings. Oracle and Adobe. Uh we got an analyst who follows those companies. So that makes it very easy. Anoragana, he is a senior technology analyst for Bloomberg Intelligence. He's out there in Chicago. Anorog, let's start with Oracle here cuz man, I saw, you know, their cloud business had a great number and that's what I thought people were focusing on. The stock traded up 9% at the open, but it's kind of giving it back.

What's going on there?

Yeah, Ben, it's to be honest, it's a bit confusing because we really like the numbers. I mean I think the cloud business was improving even more than what uh the street was expecting and that's what had happened and I think the guidance for next quarter is also conservative. They should be able to beat that uh you know cloud numbers as well. I I think what's happening over here is there is a little bit of you know uncertaintity about data center expansion.

So you know it's probably that's more macro not related just to Oracle and I think that could be one factor. Um the one thing that I liked about the earnings was that they actually said they're not going to have to raise capex because that has been my biggest worry when it relates to Oracle is that do they have to keep on increasing capex. One of the things they're doing is they are asking customers to think about it bring your own chips or bring your own hardware this way they don't have to foot the bill ahead of time.

So it's it's really doing these arrangements are helping them out but you know I I think it's more the macro related about data center expansion in general. So our Bloomberg News uh story written by Brody Ford points out as well that gross margin shrank to 61%. Um and sequentially that's a big drop because it was 66.3% in the previous quarter. Does that worry you honor?

Well, we have been modeling that for a while. I mean it is normally a natural whenever you have a brand new you know business starting in the infancy it will have very low gross margins. But imagine this they missed out massively on gross margins. I mean compared to last year I shouldn't say miss but the gross margins dropped but their operating margins improved. They have been cutting cost so well that they are actually showing you know very decent operating margin.

So I I personally would not worry about it because you're adding a lot of gross profit dollars to the company which we would not get otherwise. All right we got to get the story of the day here. Microsoft here Bloomberg's got a green B which means they got exclusive reporting. Brody Ford, Matthew Day. Microsoft plans to more than triple its data center capacity going from 38 gawatt. I have no idea what a gigawatt is, but it sounds big.

Uh up to, you know, I mean, it's going to be up from like 12 gawatt now. What is going on there? Who's paying for that?

I mean, they have paying for that. I mean, they're spending over two close to $200 billion a year trying to do that. And in fact, you know, the gentleman they mentioned in the report, we just we had him on our podcast 6 months ago. And these guys really are changing the infrastructure of all of Microsoft data centers because the way you do GPU kind of computing or AI computing is very different than what you would do on a CPU based or the older cloud based.

So I mean they have some really impressive data centers that are going on live. Um there is one in Texas, there is one in uh um uh Wisconsin. And so I mean they've done a very good job of managing it and right now whatever they actually can't do it in-house they are outsourcing it to neo clouds at this point. So uh you know frankly speaking Microsoft is in the middle of this is one of the biggest beneficiaries of AI.

Um so you would you you know and and on top of that you know they will still be free cash flow positive this year.

Okay. I mean, those are ambitious plans, but will they actually be able to do that given there's a lot of public opposition uh to data centers uh in local communities? I mean, it's one thing to say that this is what they want to do. Can that get done in the time frame they they want?

I think that is the single biggest you could say obstacle right now or the overhang or not just Microsoft, but you can extend that to everybody whether it's AWS, Google, Oracle or the Neoclouds is do they get the permits to be able to do it? will they have the power and you know so far we have had not seen any major I would say there have been delays but not any massive delays but frankly speaking the opposition we are seeing it right now um I would say across the board not just with the Democrats but Republicans as well I think this is going to be a bigger issue that plays out over the next 6 to 12 months and that is one thing I could I think that is one thing that could you know soften the the growth rate of some of these AI labs as well as you know I I would say just the entire AI trade in general.

So, is this in the numbers? I'm looking at the I see a capex ramping up on the Bloomberg terminal for Microsoft, but is this kind of gigawatt expenditures? Is that in the numbers?

I mean, right now, I think you you have because you're looking at this year and next year, you know, almost everybody is increasing capex next year. You know, in our own BI's projected data center model, we have capex going over the next few years. we have not we are not tapering it down at this point because um you have more backlog revenue on the balance sheets than they have the capacity to to fulfill it and the math is you know 1 gawatt costs somewhere around depending on what kind of data center you're building 40 to$60 billion right now of an Nvidia data center

are you I don't know what these guys are doing

big numbers either way

big numbers oh by the way by by the way half of that goes to Nvidia just think about it this way

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Hey, when I first worked down in lower Manhattan in the mid 80s, it was a ghost town, man. At 5:00, everybody just kind of bailed. Maybe they had the South Street Seapport, but that was about it. If you want of downtown.

Exactly. Now, that was good. We We did some good stuff down there at South Streetport after work, but now it's just ripping down there. They did a phenomenal job renovating and rejuvenating the entire southern tip of Manhattan post 911. And we write about it on Bloomberg News today. Great, great story. Uh Amanda Gordon joins us here. She's a reporter for the wealth team at Bloomberg News joining us here in our studio.

Amanda, talk to us about what's going on in lower Manhattan because boy, post 911, it's not just the the World Trade Center site, it's just kind of lower Manhattan in general's kind of been rejuvenated. What's going on down there?

Exactly. Well, as [clears throat] this morning, as those names are being read, we we think of a void that was created and it really was one to your point that already existed. People already felt that the uses of this downtown area um were were not vital before 9/11. And so that void that was created that day sort of spurred so many New Yorkers to get on board to think about how to reinvent. And I just think [clears throat] it's so important reporting the story to note that those who played a part in conversions of tho