On this episode of The Six Five Webcast, hosts Patrick Moorhead and Daniel Newman discuss the tech news stories that made headlines this week. The handpicked topics for this week are:
- AMD Q1/24 Earnings
- Amazon Q1/24 Earnings & Q Goes GA
- Qualcomm Q2/FY24 Earnings
- Apple Q2/FY24 Earnings
- Lattice Q1/24 Earnings
- Commvault Q4/FY24 Earnings
For a deeper dive into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.
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Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we ask that you do not treat us as such.
Transcript:
Daniel Newman: Hey everybody, it’s Friday and we are back with another episode of The Six Five podcast. It’s great to be here on this Friday, Patrick. It’s May the 3rd. It’s episode 215. I’m back from my travels. You’re traveling to your great aunt’s house where there are more pillows than people. How are you doing today, buddy?
Patrick Moorhead: Buddy, you’re not too far off. I mean, the amount of fine china, wallpaper and furniture is just amazing. No, I am broadcasting from an undisclosed location visiting a family member. But Dan, of course, I’m not going to miss the pod regardless of what’s going on in my life or my travels most of the time.
Daniel Newman: Yeah, we both had a pretty chaotic week with some crazy health things that went on in and around our family. So I’ll ask everybody out there, put in a little prayer. I can promise you, we both got some craziness going on. We are dealing with it. And I know people are going to say, “Well, you should deal with it. Maybe not do a podcast.” But it’s not because we’re workaholics. It’s because there’s only so much we can do. And in between the moments of stress, one of our favorite things to do is to talk about what’s going on in the tech world and to join our wonderful and amazing community here on The Six Five.
It’s May already, Pat. We’re a month out from The Six Five Summit. Can you believe it? Just over a month out.
Patrick Moorhead: It’s amazing.
Daniel Newman: This thing is exploding. There’s going to be so many updates now. We’ve got, oh, got well over 50, maybe over 60 sessions now. We’ve got some amazing speakers, tons and tons of CEOs. Keynote Bill McDermott’s going to join, but he’s going to be surrounded by a cast of stars and that stuff’s going to start getting unveiled over the next week.
And Pat, that means you and I are going to be going crazy because we’re going to be on the road, we’re going to be traveling. You and I are heading off to California this week. We’re going to be heading down to Las Vegas this week, and then on the road we go. But this week Pat was week two of earnings-palooza. It’s the second wave. And by the way, earnings season used to be like a week or two. Now it’s like eight weeks. So it feels like we’re always covering some earnings. But this particular week was a biggie.
We have four really big earnings. We’ve got a couple of what we call our smaller but very exciting growing tech companies and semi companies that we’ll be covering today on earnings, Pat, but so much ground to cover. So exciting. What a great week. You and I were, gosh, I don’t know. We’ve been on the tube. We’ve been on the radio. We’ve been on the press, giving our quotes, being famous. Pat, did you make any great calls this week? Because I just want to give you a chance to brag before I do.
Patrick Moorhead: I got up and, I don’t know, I predicted Qualcomm, which I was pretty happy about. I jumped on Yahoo Finance. I wasn’t in New York doing 12 shows like you, but I was supposed to do Apple earnings with John Fort, but life got in the way and I was on an airplane instead.
Daniel Newman: Yeah, understood. Understood. You did a great job on that Qualcomm segment. By the way, saw John and I probably would’ve actually been, he was getting his makeup on right as you would’ve been going on. And of course it didn’t probably hit the same way without having your commentary and it was a lot of fun.
Patrick Moorhead: Yeah, I’m going to be in New York in a few weeks doing the circuit there.
Daniel Newman: Yeah, well, it’s a lot of fun. I will tell you everybody out there, there is something different. I’ve been doing CNBC probably four or five years now, and this was the first time in studio. I’ve done in studio at Fox Business, done in studio at Bloomberg. But it was really cool to sit in the studio yesterday and have the conversation, did three different segments, went back and forth, did the Google antitrust suit with Eamon Javers, and then I had Tyler, Leslie Picker there. But then I also did the Apple kind of preamble, which by the way, I got right and I got wrong. Like Apple’s, we’ll talk about that later, but anyways-
Patrick Moorhead: Yeah, we’ll talk about that.
Daniel Newman: What I want to do though, the victory lap. Okay, so everybody was giving me crap because I was kind of making the rounds and I kept saying, “The economy is flimsy. Job data is flimsy. It’s not as good out there.” This is not me talking about it as a guy that is reading the markets. This is me as a guy that’s running a company. This is me as a guy that’s looking at how smaller businesses are doing. This is me as a person that’s talking to these companies, not just talking to the CEOs, but talking to people in the day to day, fray, looking at budgets and what companies are up against with budgets and how they’ve made their numbers.
They’re not making their numbers all through growth right now. This is not a euphoric moment. This is a chop and save your way. This is a layoffs have been going on in the tech space for it feels like months if not a year now. And I said, it just isn’t real. You keep seeing these weird adjustments, you keep … So anyways, I got in there and I basically said, while I was talking about Apple, I was talking about markets, I was talking about what was making investors happy and about how they have to almost be perfect with their numbers right now. We saw it happen to companies like AMD and Meta after their earnings. It got walloped even though they had good numbers, and that’s because the market’s hard out there. So I said, “Jobs are flimsy.” Some people yelled at me on Twitter and then sent me links to gov., blah, blah.
Patrick Moorhead: Gov., gov., I’ve been wrong for six straight quarters-
Daniel Newman: Jobs.gov. And all I’m saying is that just 24 hours after I went on air and people want to yell at me and tell me I don’t know what I’m talking about. And that’s okay. Sometimes I don’t. This time I did. And the jobs are crappy. And by the way, what’s down is up because nothing makes sense anymore. So we get crappy job numbers and the market grows. And we actually do understand why this is. It’s because we want to cut rates, because high rates mean people can’t go crazy and assets can’t keep inflating and all the things that we have and our Bitcoins can’t be $14 million like Cathie Wood says. And we can’t all live in $22 million mansions and make $100 million a year. We’re going to be living in pesos. At least Argentina got it right. Did they get it right, Pat? I don’t know. We’re having-
Patrick Moorhead: It is amazing how Argentina has gotten.
Daniel Newman: Even in like, what, a year, within a year, he got … I mean, again, there were some hard decisions made, but when you’re running a business, when you’re running a country, sometimes hard decisions have to be made. Our particular policymakers seem to just love to kick the can down the road, just keep raising debt, a trillion dollars every 90 days of debt for our children to have to deal with. Aren’t those boomers … Hey Boomer.
Patrick Moorhead: For the record, I’m not a boomer everybody. I’m a Gen X.
Daniel Newman: But I am a millennial.
Patrick Moorhead: Slightly less successful than Elon Musk and David Sacks. But yeah.
Daniel Newman: You’re pretty darn good at what you do. You’re in a very small percentage of the population, my friend.
Patrick Moorhead: Listen, I think I’ll stick to what I do.
Daniel Newman: It’s a great show today. Let’s hit it. We’re going to talk about AMD. We’re talk Amazon, Qualcomm, Apple, Lattice and Commvault. And yes, I’ve said we are talking about publicly traded companies. Remember, this show is for information entertainment purposes only. Don’t make any investment decisions based upon what you hear here. Do your own research, do your own homework, make decisions, listen to other industry analysts when they set their price targets and buy ratings, fools. No, but seriously, do your homework. Get your advice from the right places. Make your own decisions.
Pat, let’s kick this one off. AMD, I mean some great numbers, but what did the market have to say about that?
Patrick Moorhead: Yeah. So amazing numbers on what I consider their core businesses, right? Data center up 80%, PC up 85%, but big drop-offs in gaming and embedded. The market is looking for a beat-beat raise or you get blown out. And AMD saw what a 9% decline based on what was a really good quarter because the street wanted a revision up. So let’s peel back the onion here. And the outlook was slightly lower than expected. So data center, like I said, up 80%, and that’s a combination of the MI300 data center AI GPU and of course EPYC. Lisa had talked about, she believed that while they don’t split out their numbers between MI and EPYC, Lisa said that they gained revenue share citing what has been a soft spot in the market and for AMD, and that was enterprise.
So next generation of EPYC it’s called Turin. Lisa said the silicon is looking great. That means on schedule for those who are counting up there. But the most important thing was that they upgraded the MI300 number from 4 billion to 3.5. And Dan, you and I have been chronicling this for-
Daniel Newman: Other way around, dude, 3.5 to 4.
Patrick Moorhead: Oh, sorry, 3.5 to 4, thank you. We’ve been chronicling this since I think the initial number was a billion or something super, super low. I do believe, and I’m sticking to my guns and watch a show we did in September, sorry, December that I think at the end it’ll be about $6 billion for the year.
And on PC, I mean it was in the doldrums, it was post the C-word, which I won’t use. Up big time. It’s the Ryzen 8000 that’s carrying the water here. That’s the brand new design from the company. And gaming, I mean down 48%, Radeon console. And I got to tell you, I just don’t know what turns around this business and I know it’s very heavily weighted to console. And if the company doesn’t bring out, if Microsoft and Sony don’t bring out new consoles, then how do you do that? But it’s the PC gaming that is disappointing and we’re going to have to see for the Nvidia comp when it comes down.
The Xilinx business, AMD calls it embedded, down 46%, very much very similar to Altera, which was off 58%. Xilinx was off 46%. Listen, the market’s trash and their numbers were in the toilet and there’s really nothing that the company can do out there. We’ll talk about how Lattice outperformed all the FPGA folks a little bit later. So listen, tough environment, AMD crushed it on their core businesses and they’re rewarded with a 9, 10% decline.
Daniel Newman: Isn’t it funny? Isn’t it funny, Pat? I mean look, this is where I was talking about earlier when I went on yesterday on the show and I talked about having to be perfect. And perfect, by the way, seems to be very … There was only one number that anyone cared about. I’m just being candid. With AMD there was one number that anybody cared about. It was the MI300 number. The three and a half billion revision to four just simply was not enough growth. You have heard about this $400 billion TAM over the next few years for infrastructure or for silicon for AI.
And people want to see, I think they wanted to see five, you heard numbers like five and six whisper. And I think Lisa’s being conservative. I think the fact is, you said this, I’m going to agree with you. I think she knows there’s a great possibility of more. I did hear a number, I believe in one of the calls we were on. I heard a number of a hundred customers though. Obviously there’s a high density to a couple of hyperscalers. And of course we know that Nvidia is kind of feasting and famineing on a handful of hyperscalers itself. And then it has a few of these new AI.
I did a Fortune interview this week about not Coherent, CoreWeave. And CoreWeave got this huge valuation growth. And these small group, the small cohort of companies is buying up tons and tons of these GPUs. And I was talking to … God, I’m trying to remember who I was talking to. The question was effectively, is this the biggest front load of all time? Meaning is this market this incredible front load and then we’re going to have to wait, right? I mean at some point they’re going to have a lot of this infrastructure is going to be built out and the killer apps, I mean they’re coming. Of course, we’re seeing things being built in real time. I saw some cool app that I think can replace me entirely this week. It was awesome.
Patrick Moorhead: Man, I hope I get replaced someday. It would be …
Daniel Newman: Hurry up. Hurry.
Patrick Moorhead: I know.
Daniel Newman: Hurry up. But, oh yeah, it was Will Koulouris. I was talking on Street Signs the other night and he asked me, “Is this the biggest front load of all time? Is this … ” I mean it was a good question because can this buying rate, and that’s what I’m also saying, is this growth-over-growth period, I mean when people are looking at markets, it’s like yeah, 357% or whatever number and video was last quarter. Now they got to grow the last year at the same time. Now they got to grow over the 350%, the 50% they grew a year ago. So what if they only grow 50% over 350? Are people going to be frustrated?
Patrick Moorhead: I mean, everybody’s got their spreadsheet and you’re a smart guy, you’ve got the degree. I’ve got the degree. I mean it’s basically net cash flows to infinity is the value of the company, so.
Daniel Newman: Yeah. I mean look, there is no satisfactory number. There seems to be a couple of things people are focused on. With AMD it was that number. With other companies, it’s the CapEx spend. I mean, why did Meta get crushed, and Google and Microsoft got a big backing? And the difference was pretty much just Zuck’s perspective on how much investment was going to be required to keep growing.
I’m pretty sure from a standpoint of cash flow created in profitability and growth, Meta is off the charts in terms of how profitable they are. But people don’t want them spending on virtual, on Reality Labs because everybody’s going to be buying, apparently according to Tim Cook this week, everybody’s going to be buying one of those 27 pound headsets because they’re doing awesome. God, what a crock of shit. Anyways, that whole call, that whole … Anyway, we’ll come to that later. I don’t have much else to say. You hit the AMD thing. I mean look, the only other thing I’d say is the ramp on Ryzen looks great. I mean Intel had a great 31% growth in client. You and I were kind of cheering them because there wasn’t much else to cheer in that number. And then …
Patrick Moorhead: AMD shows up, does the mic drop to 85?
Daniel Newman: Jeez, I mean. And obviously it wasn’t max, so it’s not … They’re winning share. I mean they’re growing share. They’re doing very, very well right now. So AI PC is really coming later. It’s not even here yet and they’re still getting these great numbers. So just wait for that. So that’s all I got to say about that.
Patrick Moorhead: Yeah. Hey, one little adder, I think AMD’s data center business is honing in on the size of Intel’s.
Daniel Newman: Yeah, we did talk about that. Isn’t that crazy?
Patrick Moorhead: Oh, sorry. Yeah.
Daniel Newman: No, I didn’t talk about it here. You and I talked about it. You and I.
Patrick Moorhead: I thought I was just busy looking at myself like I do.
Daniel Newman: You do do that sometimes.
Patrick Moorhead: I can’t help it, man.
Daniel Newman: You do do that sometimes, but I don’t think-
Patrick Moorhead: I’m attracted to awesomeness.
Daniel Newman: You are. You are pretty awesome. But yeah, so let’s keep moving here buddy. Oh, I’m the host. Anyways. All right, so let’s go to … You’re so good sometimes, I just want you to take control, buddy. So let’s go on to Google, man. Listen, Google’s number was three or four different things, but Google … Gosh, what time is it? Amazon.
Patrick Moorhead: Come on, man.
Daniel Newman: Amazon. So I’m going to talk about Amazon’s earnings. Amazon came out Q1 2024. This was the next kind of hold your breath moment, hold your nose, go under the water, and what happens because this is what has to happen. The market’s actually setting up extremely well. You got Microsoft doing all, Google doing well, you got Amazon doing well and Apple artificially doing well. And so Amazon though hit its number on the top. Its ecommmerce number was good. It hit its number on the bottom. It delivered this quarter. But most importantly I think was one number that you and I were waiting to see what happened is AWS. There’s a lot of people out there that are given a lot of love on the Google/Microsoft side. Is Microsoft taking share? Is Google taking share?
And here’s what I’m thinking finding out, we’re finding out here, is the answer is Google and Microsoft are getting bigger and taking a bigger share of the cloud pie, but it’s not really at AWS’ expense. This is what’s really interesting. And I looked at some data this week in particular of how this is happening. And AWS grew 17%. And again, this is not just 17%. They grew 17% towards $100 billion. Okay? So they are now at a run rate of $100 billion at a $25 billion quarter this quarter, Pat.
So the market overall is they’re sitting at about 31% of share. This is Synergy data. It’s not Futurum data. I’ll get this data soon enough, but I got to give credit where credit’s due. But while over the last couple of quarters, Microsoft’s gained a couple of points of market and Google’s gained a couple of points of market, AWS has only lost one point of market. Okay, so what does that mean? Well, basically what it means is that the market is being taken from other smaller cloud providers. That’s what’s happening on a global basis.
Patrick Moorhead: It’s funny, I saw data from another firm that …
Daniel Newman: You there?
Patrick Moorhead: Oh my … Yeah, my-
Daniel Newman: I lost you for a second-
Patrick Moorhead: … Wi-Fi was getting wonky.
Daniel Newman: Yeah, you’re back. You’re back. You’re back.
Patrick Moorhead: Kind of odd. I’m-
Daniel Newman: Can you hear me?
Patrick Moorhead: Yeah, I’m on Starlink. Yeah, I can hear you.
Daniel Newman: You were saying something. Jump in.
Patrick Moorhead: No, no, no. What was I saying? I don’t even know what I was saying.
Daniel Newman: You said you saw different data, you saw some different data.
Patrick Moorhead: Oh, sorry. Saw different data on market share showing that I think it was just simple based on revenue, but where it showed AWS going up and Azure going down. But again, I don’t do the bean counting. So I’m interested to see some accurate numbers of what happened.
Daniel Newman: Yeah. So that was a really interesting one to watch, but Amazon’s got a lot going on. It doesn’t get the same kind of credit right now for all the things it’s doing in AI. Bedrock, its ability to handle a distributed set of models, the investments it’s making in Anthropic. I’ll let you talk about Q if you want a little bit here in a moment because I want to save some oxygen for you, but a lot going on in AI and it deserves some definite credit there.
But Pat, there’s a coming grip.
With huge size, huge scale, it’s hitting its numbers. AWS growing more than expected, significantly more. It was a billion above what was expected in revenue. I mean, you realize how crazy it is. Sometimes we laugh off like a billion. Ah, it was just a billion above expectation. I think their AWS number was expected around 24. It shows up around 25. It’s like it just a billion more. That was kind of yesterday when you said something about how much could be bought with 110 billion, what companies could be bought with that. Anyways.
And then Pat, the other star of the show is advertising. I mean quietly Amazon’s become the third-largest advertiser. They’re running it like a $60 billion run right now for their advertising business. And that’s been really, really impressive, robust. And of course they can eat their own proverbial dog food with the technology that they’re using with the everything from AI to shopping.
And I think Amazon’s set to be a real beneficiary in the next era of search. And no one’s really talking about that either. But as you look at search and advertising and e-commerce and buying Amazon’s kind of quietly setting up really well and kind of staying under the radar of any antitrust or any BS because, well, they’re not really search as far as we know search, but in many ways they’re becoming search. So good quarter overall, I mean really, really strong. Pat, I’ll kick that back to you.
Patrick Moorhead: Yeah, I mean listen, Amazon’s quarter was almost flawless, kind of like Google and Microsoft. They didn’t have a great guide, but AWS was up so much, so much profit, in fact, record profit, upping of 37%. And even though you and I have talked about this $100 billion annual run rate, they finally hit it. And by the way, it was the biggest percentage growth since the fourth quarter of 2022 also, which we don’t normally see. Every one of the divisions made money. So North America, International and AWS.
And I’m with you there on the advertising, just $12 billion. And by the way, just as a comparison of scale, that’s 50% bigger than YouTube. And yes, I know Google is more than just YouTube, but it just gives you the amazing scale that AWS is advertising. I mean they have advertising anywhere including the AWS console, which not everybody is happy with. I wanted hit on Q. So very similarly, we’ve seen the giant companies, most of the Mag Seven come out with some sort of agent, Copilot, choose your name, essentially a helper. And there was a lot of discussion about industry punditry that hey, AWS, Amazon, they’re behind. They were the clear leaders in machine learning and that’s just the numbers of the amount of enterprises that use things like SageMaker and their core IaaS services.
But Q, right, finally … Not finally. Q went GA. And what they did is an interesting piece and very similar to what we’ve seen. It crosses multiple different things. First of all, they have a portion of Q that essentially sits on a giant data lake, okay? And I’m sorry, I’m looking for my notes here. And that is called … Hang on a second. That’s called Amazon Q in QuickSight. So think of this as a massive BI tool that sits on your managed data lake. They have Amazon Q for business, which is they’ve hit a couple areas like content creation, knowledge search, summary, and interestingly enough, even supply chain, which I thought was interesting and of course you would expect this from on Amazon to be able to hit that really hard.
So I think it’s good to see them go GA with this. Technically speaking, they were behind the GA of Google agents, sorry, Google agents as well as Azure Copilot. But I do like the service that sits on Bedrock, which is very much a managed service and making it simple. And that’s one of the biggest issues out there from keeping enterprises from signing up to do all this general AI is just so difficult. With things like Bedrock, you don’t even have to target a specific accelerator or a GPU or a CPU. It just picks it for you. So a lot of the stuff, I’m looking forward to what they’re doing.
And final comment is Q Connect, which is essentially the ability to think of the amount of call centers out there. And if you’ve got your own software out there, for instance, you’re not working with a five-nine or something like that, Q Connect is there for customer inquiries, sales process, expedite issue resolution. And that’s it.
Daniel Newman: And there you go. There you have it. There we are. All right buddy, let’s go into another one. This one, you were all over, made some good calls there, had some great tweets and thanks for those. I might’ve used some of those for some prep for some other things I did, but Qualcomm.
Patrick Moorhead: Very good quarter for the company and like we discussed with AMD, people are looking for beat, beat and arrays. That’s exactly what Qualcomm did. On one hand it’s unexpected in that while smartphones have recovered, as we saw with Apple, and we’re going to talk about them, didn’t recover as much as everybody thought. But that’s okay because auto absolutely kicked butt. And not only did they kick butt for the quarter, but they increased their backlog by 15 billion going from 30 billion to 45 billion.
I was on a call with Nakul Duggal and I was joking with him. I had written an article and I referenced him as the $10 billion man. Do I need to go in and re-up that and call him the $45 billion man? I have no idea.
Daniel Newman: It’s time.
Patrick Moorhead: So a big surprise in those numbers, Dan, was that ADAS is a third of that backlog and it’s just crazy. Four months ago I was in a car in Las Vegas where Qualcomm had a couple engineers that had done some software together and they wanted to give me a ride on it. And this is when Qualcomm wasn’t even talking about this. So pretty awesome that within four years they have this much business across ADAS and connectivity and of course the dashboard. Handsets, market’s up and they’re kicking absolute butt in China. It was kind of like puts and takes here. They have content in Apple. Apple’s down. It was down 10% as we’re going to talk, but they have more content when you add the AP PoP plus the modem and the RF. I think the highlight was Snapdragon 8 gen 3 up 40% first half ’24 year-over-year. And that is fantastic growth.
Final comment, we still haven’t seen the super cycle yet kick in for AI smartphones and AI PCs. I believe that it will start in the second half and I do think that Qualcomm will be a beneficiary.
Daniel Newman: I’m interested here. Old, former Qualcommer, Samir Khazaka, we’ve known Samir for a long time. He’s hitting us up on the Twitter. He is asking us a question. Let’s play the game a little bit. He said Qualcomm said 40% revenue growth in China for the first half of its year. Growth should have contributed better revenue growth for the quarter, which came in at, he said, a tepid 1%.
Patrick Moorhead: Yeah, I felt like I peeled the onion on that, on the puts and the takes, right? You had Huawei grow, which doesn’t have any Qualcomm content, but you had Apple come down and you had OPPO go up. And by the way, a lot of this depends on year-on-year or sequentially, but those to me were the puts and the takes. MediaTek’s doing really well too. So I think that’s a factor.
Daniel Newman: Yeah, I think the market is in a slow state of recovery. I think that the China number coming in above is really, really strong. I do think we’re still not in the point yet where handsets are really growing quickly, but I think we are going to see that. It’s going to be interesting. We’re going to have some fired up conversations over the next 24 to 48 hours across the world about Apple and their next generation of iPhone and we’ll just create the AI phone.
Our friend Dan Ives tweeting about this morning that there’s a super cycle coming. I know a guy that said something like that at an event just about PC. So I mean smart people say smart things, but look, it was a pretty spot. It was a very tidy earnings, Pat. It was very tidy across the board. The growth isn’t as fast as a whole 1%. It sounds like we have that. IBM is always like, “We got all this great stuff going on, but the overall revenue was up 1%.” What was the market super excited about?
I had an interesting back and forth with Ben Bajarin about this and he said, “It’s AI. Everybody got into AI.” I said it was automotive. I think it’s automotive. I think that there’s some AI at the edge enthusiasm for sure, but I actually think that’s kind of slow because people are still waiting to really see it and feel it a little bit. We talk about it a lot and you know a little bit of what’s going on, you know the secret sauce because you’re on the inside track, so you can’t talk about that stuff. But people, the average Joe out there is not experiencing AI at the edge in a way that they’re like, “Oh my gosh, I can’t wait the extra two milliseconds for something to go out to the cloud.” I’m kidding. It might be eight milliseconds, but we can’t feel that difference as humans. Or the privacy stuff that we’ve talked about or some of the ability to track every single sort of thing we do in data and being able to separate private from public and what goes to the cloud and what doesn’t go to the cloud.
And then again, what do we value as a society? Because people largely haven’t actually valued any of that stuff. We’re all like, “Yeah, sign me up. Term of service? I’m not reading that. Just hit Yes. Here we go.” But long and short, Pat, the automotive business is incredible. And where are they taking that from? I mean that’s another question. I don’t know. Did you answer it? I was looking at myself in the self view, but where’s that growth of pipeline coming from?
Patrick Moorhead: I mean it has to be coming from Nvidia, Texas Instruments, NXP. It just, it has to.
Daniel Newman: I mean, it’s like a Hoover effect. And that’s ADAS growth though, the ADAS expansion of-
Patrick Moorhead: Oh sorry, Mobileye, my gosh. Of course. Mobileye.
Daniel Newman: Yeah. I mean that is a Hoover effect to have that much pipeline grow that quickly. Because you know these cars. It’s three, four and usually like six, seven years out. So these design agreements take a long time. Maybe Qualcomm will hoover up Luminar.
Patrick Moorhead: Maybe. But Elon Musk says you don’t need ADAS. Did you say it was 12 cents a share?
Daniel Newman: I was joking, but I mean give it another few weeks.
Patrick Moorhead: Yeah, totally. Hey, did you catch …
Daniel Newman: Go ahead.
Patrick Moorhead: Did you catch Cristiano’s final comment on the call?
Daniel Newman: Which one? No.
Patrick Moorhead: Yeah. So he said, “I’m just going to leave you all the thought. One great thing about the execution company, every time we enter new market or set ourselves up into a new market, we end up building a very strong position. We went for mobile modems to RF front end, we became number one. Same thing, went to Wi-Fi. Automotive is something we had ambition to build as part of diversification. I think we’re quickly becoming the industry partner of choice. We believe there’s a long time opportunity with VR, AR and now we’ve absolute majority of the designs. And with PC, we clearly built the leading platform, and we have the product momentum that we hopefully will translate into financial in the coming years. This is a company that delivers, a company that … ” Yeah, anyways. So that was his mic drop that it was good.
Daniel Newman: Oh, it was a worthy mic drop. Now having said that, we haven’t heard much yet on, and you and I talked to Cristiano this week.
Patrick Moorhead: Yeah.
Daniel Newman: I may have answered a question and he may have responded something like, “No hablo Ingles.” But the point is that-
Patrick Moorhead: I asked him the same. Yeah, I asked him the same question.
Daniel Newman: We’re going to be looking to see the impact that creates. The only thing I think, Pat, that, and you and I, we get more right than we get wrong. And that’s the only thing you have to do, is get more rights. If you’re like 50.1/49.9. But the timing on AI PC is peculiar to me as how quick it ramps and how quickly it makes the market and how quickly it starts to drive revenue. It does seem you’ve got some very different kind of points of view. And I guess we also have some different points of view on really what defines a true next gen AI PC.
By the way, Apple’s going to have something to say about this in the next few weeks too. They leaked their M3. I know you want to say something, so I want to let you get it out because I want to move to Apple now, so I’m going to-
Patrick Moorhead: Well, I just want to be really clear. I talk about the cycle starting in the second half.
Daniel Newman: Yeah.
Patrick Moorhead: I mean the meat of this is going to be in ’25, ’26, but that’s to start somewhere. And in fact, some will debate that the AI PC started with Meteor Lake in January, and maybe it did. And some people might say that the AI smartphones are the Samsung with the S24. And it did. It kind of did, right? But I think the impact from it will hit in the second half. So just for all those keeping score out there who would like to attack me if we don’t see a doubling of business in the second half, it’s going to start, it’s going to probably crux at the second half of ’25. So there.
Daniel Newman: Yeah. Well, I just want to remind everybody that I said job numbers were flimsy this week all week long.
Patrick Moorhead: You already did that victory lap, Dan. You can’t have a two for victory lap, I mean.
Daniel Newman: No, I get to do it again because I’m so rarely so right.
All right. Let’s go to Apple now. So Apple, there was all these data numbers coming in from, what was it, Counterpoint and IDC-
Patrick Moorhead: And Alice.
Daniel Newman: And Alice.
Patrick Moorhead: Blah, blah, blah-
Daniel Newman: Apple’s China numbers were down 197% from a year ago. And their overall iPhone market was shrinking. It was doomsday. This was set up to be the worst Apple earnings ever basically. So anything that was a beat was going to be good. But I just got to read back my tweet here because I basically said it’s like the arts and sciences but I have to be candid when I … It’s like I was expecting bad too, but I actually said, I just want to read this. I said something like well played, but I basically said … I want to read it back. “The Apple beat was against really low expectations.” So this is a puts and takes comment.
First, so well played by Apple. They basically, they completely bought into it, they ate it, they leaked their next thing. They made everybody think that they were in even worse shape than they were. They gamed the whole thing perfectly, all time low expectations. And then they beat again. They beat a crappy number. Nobody remembers that because people forget that it was a crappy guide. They give another single digit growth guide, by the way. I want to remind that, get that on the record now, they’re guiding the single digit growth. Apple is a single digit growth company, and by the way, their iPhone number was down 10%, but yet everybody was freaking celebrating this.
Talk about being able to get the market to completely not pay attention. Somebody sent me a tweet, this guy, future investor, it was very funny here. He tweeted me on it this morning. It was basically a comment of there was a picture of the Vision Pro at the bottom of the ocean rotting. There was a picture of the iPhone drowning. And there was a picture of an investor giving a hug to $110 billion buyback. And that’s all they could see, is the investor looking at the buyback. I mean, look, Pat, what did you tweet? Something along the lines of half a Qualcomm, four HPs. It was like something like what they could buy.
Patrick Moorhead: Intel, almost an entire Intel. Yeah.
Daniel Newman: Almost an entire Intel with the money they’re going to spend in buyback. But look, they beat on services, which it’s the high margin part. Their other products, revenue missed. Their iPad revenue missed. Their Mac revenue beat a pretty low expectation, but it beat their iPhone number missed, but their revenue beat. So it’s kind like you go across the business, nothing’s actually doing particularly well. He did give some kind of reinvigoration to the Vision Pro, said enterprises are buying it at a faster rate. With that particular thing, Pat, Apple’s always been a buzz company. The buzz of the Vision Pro lasted two weeks. It was two weeks of people getting out of their Cybertrucks, wearing their Vision Pros and going into Starbucks and eating while they were wearing their Vision Pros.
I still believe in the technology. I still think they iterated on what HoloLens and Google Glass and everyone did, and they’ve made something that I think is more immersive, more enjoyable, more usable. I mean, you watch movies on it. It’s pretty cool. But it still feels like a neck injury waiting to happen. It’s too big. It’s too bulky. It’s too much battery hog. It’s too much to carry around. It’s not very usable. It’s not very comfortable. And so will they get it right eventually? Yeah, they’re beta building a developer ecosystem in real time and people that are … the odd millions of people that are willing to buy anything Apple puts out are buying what Apple puts out. They should have built the car. There would’ve been a few million people to buy that too.
But having said that, I think they’re still more iterative than innovative and they’re still, the best innovation they have is financial, engineering innovation. They’re innovating by breaking all kinds of records, like spending more money on a stock buyback than any company in history by a long shot. And by the way, the market loves it. So now what is Apple? It’s a single digit percent growing value stock with a huge buyback program and a dividend. I mean, and by the way, their stuff’s fine. I like it. I use their phone. It’s good. It’s cool.
Patrick Moorhead: So kind of the IBM of consumer devices and services.
Daniel Newman: But there was a point Pat where IBM was IBM and they were the Apple that IBM is. And what do I mean by that? There was a window when IBM was the most innovative company on the planet. And then there was a window where IBM was still talked about as the most innovative company on the planet, but they were really losing that ground. And are we in that moment right now? What are they doing that is truly breakthrough? And by the way, I just got to say this. I know Tim Cook has done a good job of managing the ship, but don’t you think Steve Jobs is somewhere rolling over in his grave that the best use of $110 billion was that they were going to use it for a buyback? Can you imagine that that was what he envisioned the future of this company being?
And I will say one other thing, is Apple with its amazing war chest and wonderfully managed balance sheet, could and should go buy all kinds of different innovators and they can’t. Now, having said that, they should take a play from Satya Nadella and just do what he’s doing and go buy talent and have the talent leave the company, so those companies kind of capitulate, and then bring the innovation with them or use licensing agreements or different … There’s different ways to skin that particular cat. But I mean 110 billion, you could, like you said, buy a lot of innovation and a lot of revenue growth. I don’t know Pat, but like I said, it was an interesting quarter. Apple always gives us something to be entertained by.
Patrick Moorhead: Yeah. I look at this through three different lenses. One is the what are the investors thinking? Number two is what are the real numbers of how are products selling year-over-year? And then this overall where the company is headed? They 100% had a disaster quarter. I mean revenue is off 4%, iPhone off 10%, iPad off 17%, wearables off 10%, America’s off a point, Greater China eight points, Japan 13%, rest of Asia Pacific off 17%. To their credit, Mac was up 4%, service is up 14%. But let’s peel the onion on that. On the Mac side, they’re doing blowout discounting on M1 MacBook Airs. I totally get that. And there’s also probably some boost from M3s. So that made sense.
Services at 14% is basically selling back up Apple, plus fitness stuff. And don’t forget, Google search deal gets plopped in there as well. What does the future of the App Store look like with the deconstruction that’s starting in Europe and will likely make its way to everybody else? So from a number standpoint, it was a disaster. From an investor standpoint, you boost your dividend and you boost buybacks. You’re basically reducing the float when you do the buyback. That means there’s going to be less open shares. And on a per share basis, that means that it’s going to go up. So that’s just math.
Daniel Newman: It was precipitous.
Patrick Moorhead: Yeah. And then you look at the dividend increase and that also goes into the magic spreadsheet of net cash and the stock goes up. So that was, I mean Apple is very, I got to hand it to them, very creative. They are a super creative and innovative company on the spreadsheet in this quarter. Now Macro, here’s the deal. They’re behind in AI on the device. They’ve never had a cloud capability beyond backup and storage, but they never have to be first to do what they need to do. I think they’re going to lean in heavily on device with absolutely no timidity like I’ve seen, quite frankly, in the Windows world. The Windows world is all about, “Hey, look at this Copilot in the cloud, and yeah, we’re going to build a capability on the device itself. But come WDC, it’s going to be all on device all the time.”
And I believe that Apple is 100% behind Microsoft on this because it’s not just them showing up with one mixture of experts model. You need to have like 20, 30, 40, 50 different tuned models to different stuff. And then you need to tie it all together between iPhone, Mac and whatever they’re doing in the cloud. Siri is laughable aside from weather and reminder and wake me up. So yeah, I don’t think they’re down and out or down for the count or anything like that. It’s just they’re in a really precarious position right now.
Daniel Newman: It ain’t over. A company with a balance sheet like that could do nothing and stick around for a really, really, really long time. So just like I said, we like to be hard on it because it’s Apple. It’s easy to be happy. But if you’re looking for innovation, everything they’re doing is mostly financial engineering. So that’s the question I was asked yesterday. Is this a growth company? I mean, I don’t know is a single, I guess Pat philosophically speaking, 1% is a growth company, but I don’t think it’s what people really think about when they think about growth. So that’s the big question mark.
By the way, how many rocking chairs do you have in that house? I see one, but I mean there must be five.
Patrick Moorhead: I mean, probably seven.
Daniel Newman: Okay. Because the sign’s you’re over 75 is kind of like you have one rocking chair per decade. All right, so let’s move on. We’ve got a couple more topics. We’re going slow because that’s what we do here on The Six Five. We like to do six topics for five to 25 minutes a piece. Let’s talk about Lattice Semi. We’ve now seen the FPGA numbers from everybody or mostly everybody.
Patrick Moorhead: That’s right. Yeah, let’s dive in here. So first off, Lattice is in a very difficult market. A lot of it is IoT. So some puts and takes going on right now. Oh, thank you. We’re live. You’re actually live on the podcast. Welcome. So yeah, there was some puts.
Daniel Newman: Breakfast.
Patrick Moorhead: No, I know. Can you believe that? Isn’t that awesome?
Daniel Newman: Awesome.
Patrick Moorhead: So yeah, we had puts and takes. By the way, that’s my stepmom, Marcia. So thank you Marcia for joining the show. So yeah, puts and takes. I mean you have automotive that’s doing well for Lattice, but the market’s down. The whole industrial IoT thing, as we’ve seen from pretty much everybody is down. Computing is way up, right? You’ve got Lattice on pretty much every modern day server, general purpose server, but also AI server out there. And they got a 50% attach rate on pretty much everything that they do with software. So that’s pretty awesome.
So they don’t have to cut prices because they don’t have to. And they’re still hovering at 69% gross margins, which is pretty, pretty incredible. We haven’t yet seen the shoe drop on Avant, which is their mid-range play that goes right at the heart of Altera and Xilinx business. And Jim did throw something out there that I thought was provocative on the call. He said, “We have accelerated the roadmap on Nexus.” And that was definitely a stay tuned moment. If you’re looking competitively, Altera was down 58%, Xilinx was down I think 43%, and the Lattice was down 24%. So I think that’s a win.
Daniel Newman: Yeah, so this is definitely an instance where Lattice outperformed the market in its particular space, but has kind of … So just to be clear, we saw different gullies in the semiconductor space over a different periods of time. Data center bottomed at a different point, and then the memory bottoms at a different point, and then PCs and devices have bottomed to different points, and FPGAs. And FPGAs held up a lot longer, stronger for longer. Remember, I mean there was like 10, 11 quarters. This was a beat in terms of what was expected, but it’s just after so many really remarkable quarters, it’s just a little bit of a slowdown. But when it comes to that low to mid market, Lattice seems to really have its arms wrapped around it. And Pat, they’re still delivering close to a 70% margin, still delivering really strong earnings.
It’s a very well-run company. They’ve got good innovation coming out. They’re winning the right partners. They’re seeing some softness in areas like communications that have slowed down its recovery. Industrial broke later than other parts of the market. That’s stuck around. Now you got automotive, that should be making a comeback, I believe, in the near future. And of course data center is going to be really strong. And that’s where I see the growth. As they’ve gone up the market, they’ve been in a really good position. And as Intel tries to find its … Sorry, what’s the new company? It just totally slipped my mind.
Patrick Moorhead: Altera.
Daniel Newman: Is that what they’re calling it, the new-
Patrick Moorhead: Yeah, the old name is the new name.
Daniel Newman: Thank God. Why did that just disappear from my brain? Okay, I wanted to say it and then I’m like, “No, that’s not right. That’s the old name.” The old name is the new name. Okay, what’s old is new again. So Altera was really off its numbers. Xilinx showed up off its numbers. So I guess when you’re looking in a certain class, you want to say who’s performing best in the class? And right now Lattice is performing best in the class.
I know recently you sat down with Jim Anderson. He’s going to be joining us at The Six Five Summit this year. And so that’s very exciting. We look forward to hearing from Jim more. And of course, sometimes part of managing a company is doing really well when things aren’t going really well and doing better than what’s in the market. So in this case, credit to the company. I think we’re starting to see the bottom. My belief is there’s probably one more tough quarter and then you very likely might start to see the turn. And that’s really how it was guided as well.
All right, Pat, we got one more topic to hit on today and that is Commvault.
So the last few weeks, this is a company that probably doesn’t get as much attention as maybe it should get, but with Rubrik’s recent IPO, Cohesity’s recent announcement of making a huge deal with Veritas. Data protection’s hot. Data protection and access to data, security, cybersecurity, cyber resilience as a lot of people are calling it is a hot topic. We saw a blow out IPO from Bipul Sinha and his team at Rubrik, and we’re starting to see a lot of interest. Commvault’s basically got their investment thesis they put into the market. But in case you’re not paying attention, while AI is the red hot attention grabber, cyber resilience spending, the estimate right now is growing by about 78% right now.
So the company basically says there’s a big opportunity in data protection and cyber resilience and they’re here to grab it. And where are they grabbing it? Well, they’re growing everywhere. I mean, that’s the amazing thing about it, Pat. This is a company that’s gone to it from a licensing to a subscription to a SaaS model. They’re growing ARR. They had a subscription revenue growth Pat on a year-over-year basis to 27%. They saw their total ARR grow by 18%, their subscriptions by 25%. And Pat, here’s the killer number. Their SaaS ARR number grew by 65%. People like companies with high durability, high predictable revenue. And that’s where Commvault has moved. And again, moving from a pure data protection to more of a cyber resilience play.
They also saw great customer growth. They grew in quarter to quarter, they added 500 new customers, 9,300 overall. And Pat, they’re getting nice net dollar retention. So they’re basically getting each customer to spend more. They’re up 123% in the quarter on that net dollar net revenue expansion. Pat, this is a company, this is a space that I think is going to continue to grow. As AI grows, risk grows, data protection becomes a bigger opportunity. We’re seeing what Cohesity is doing with RAG. We’re seeing different companies coming out with different plays about how they’re approaching AI and access to the data. There’s different layers of where data accessibility is going to be really important.
And then companies are going to be looking at the speed of recovery, the security levels, the intelligence that’s available, and of course which solution offers the best TCO. Commvault believes that it offers the best TCO. And of course the others would probably tell you the same thing. But strength of growth, strength of ARR, strength of customers, and net revenue expansion were all very, very positive here, Pat. And so I think Commvault is setting up to become much, much more interesting and a company I expect us to talk more about here on the show.
Patrick Moorhead: Yeah, Commvault was one of the original pure plays in backup. And then we saw them move from backup to data resiliency and security. And we’re obviously going to see them very much move into the AI space, which they’ve had a few very interesting announcements out there with Alloy. The most interesting thing is this is a very profitable company and the profits keep going up as opposed to, I think what we saw with Rubrik, which was it’s very much not a profitable company. Being one of the early folks has its benefits and challenges. The benefit is that you have a very large customer set. You have the trust of certain customers and then you can start layering on … Don’t yawn when I’m talking, Dan.
Daniel Newman: So boring.
Patrick Moorhead: It’s not that bad.
Daniel Newman: I’m kidding. I’m kidding. It’s just, anyway, go ahead.
Patrick Moorhead: Okay. But the challenge is that you have to kind of come out and recast yourself as a company. And that’s exactly what the team at Commvault has done with a lot of branding, with a lot of marketing. But it was that type of just marketing without delivering the goods, it would be very different. And like you so suitably said, if you look at the subscription revenue curve, if you look at total ARR on a dollar basis, it is pretty exceptional subscription ARR, SaaS ARR is exceptional. And it looks like the pipeline keeps going on the subs because customer growth has gone from literally 5,600 in the first quarter to 9,300 customers in the fourth quarter. And you don’t know how big those customers are, but when you have nearly every one of your key metrics going up into the right, is a big deal.
Overall the market’s super frothy. Two things going on. Ransomware and the sophistication of hackers and the risk that puts your data at. You’ve got the fractalization of data across on-prem, edge, private cloud, public cloud, and SaaS. So everything just keeps fractalizing. And whenever you fractalize anything, securing it is much more difficult. Next generation for all these companies is being able to put some sort of data analytics on top of it and query it like we’ve seen with the Cohesity. That I think is the holy grail and quite frankly, could move the company’s multiples to AI level multiples if they can make that turn. And here’s the thesis, right? The data is sitting there and the data is mixed, right? You have ERP. You have CX. You have Custard. It’s sitting right there. You have emails. Why not put that data to work with generative AI to be able to query that? So I look forward to researching Commvault more and doing more comparisons to their competitors.
Daniel Newman: Yeah, it’s going to be an interesting category, Pat, something to watch really, really closely is this whole space. Listen, we did it. I know you got some things to take care of, some business to take care of there on the personal front, and wishing you all the best in that. But Pat, it’s always good to get it in. We love this show. It’s my favorite part of the week. By the way, did I mention that I made some really good calls this week on … Anyway, I’m joking, but-
Patrick Moorhead: I didn’t, Dan.
Daniel Newman: Okay. I sort of forget.
Patrick Moorhead: The jobs at the jobs report.
Daniel Newman: I just want to say that anyone out there didn’t know that I said the jobs number was crap, and it was crap.
Patrick Moorhead: I mean, it was crap for like six straight quarters or widely off, but-
Daniel Newman: Well, you know-
Patrick Moorhead: That was a high risk, that was a high risk one, Dan?
Daniel Newman: Well, here’s the thing, is if you make the same call forever, eventually you’ll probably be right. I look at that sometimes. It’s like, “You were the one that made the call of the big gain?” It’s like, “Yeah, I called that every quarter. I was wrong for 28 quarters, but on the 29th, I was spot on.”
Patrick Moorhead: Love it.
Daniel Newman: But anyways, it’s going to be interesting going forward, Pat. I think rates are going to get cut. Market’s already pricing that in. That means more frothy growth, high inflation, high house prices, high car prices, high grocery prices, high gas prices. But who cares? We’re all happy. We’re all living in the clouds, dude now. Let’s just … I can’t go. I want to head down. I do so much doom scrolling at night. I got so many things I want to say, but I’m going to say I’ll probably just keep it to myself for now.
Great show. Great. Appreciate everybody tuning in. We love you here on The Six Five. We hope you’ll join us this year for The Six Five Summit. Check out thesixfivesummit.com. We’d love to have you participating or joining or watching or tuning in. But for this week, for this episode, for Patrick Moorhead and myself, it’s time to say goodbye. We’ll see you next week. Adios.
Patrick Moorhead: Out of here.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
