On this episode of The Six Five Pod, hosts Patrick Moorhead and Daniel Newman discuss the latest tech news stories that made headlines. This week’s handpicked topics include:
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- New Show Format! 🎉 Pat & Dan unveil a new podcast format with weekly recurring segments: the decode, the flip, and market analysis.
- ServiceNow’s acquisition of Moveworks and its implications for the enterprise platform landscape.
- The appointment of Lip-Bu Tan as Intel’s new CEO and potential strategic directions for the company.
- A discussion on TSMC’s U.S. manufacturing plans and the importance of domestic chip production.
- Pat & Dan debate on the impact of tariffs on the U.S. economy, exploring both supportive and opposing viewpoints for “the flip.”
- An analysis of Oracle and Adobe’s earnings reports, focusing on market reactions and AI monetization challenges.
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Transcript:
Patrick Moorhead: So, Daniel, we told our audience about a new format that we’re going to be introducing and here it is, episode 253. Daniel, how are you doing, buddy?
Daniel Newman: Yeah, we are so back. We promised for like two months. And, let’s be clear. The team has done a tremendous job putting this together. I hope everybody liked that intro. Other than you going first, I got no issues with how that intro went. But it’s kind of like, how are you gonna put me second?
Patrick Moorhead: I mean, you know, maybe we’ll rotate. You know, I don’t know.
Daniel Newman: Best for last.
Patrick Moorhead: Age before beauty. Dan, is it best for last?
Daniel Newman: I don’t know. You know, there’s always some sort of. It’s just like hair can’t grow on, on a busy highway.
Patrick Moorhead: Yeah, exactly. So, hey, I want to tell you a little bit about the show. So we’re gonna have three, three segments here. And oh, by the way, this is going to be fully produced, not live. It’s the trade off that we’ll be making. But we will, we will continue to make the same mistakes we make live. Probably won’t get cut. But let me tell you a little bit about the show. So first off, we’re gonna have a segment called decode.
Daniel Newman: Okay.
Patrick Moorhead: And this is where we essentially break down the news of the week. Try to separate the noise from the signal of the signal through the noise, which, which I think you’ve, you’ve come to appreciate. And then we’re gonna, we’re gonna have a segment called the flip, which one of us will take on a certain view right this week. Uh, it’s on tariffs. It’s going to be for this or against this caveat. Dan and I might both be for something or we might both be against something, but we’re going to play both sides of the coin here. We might even have to flip a coin to see who goes first. And then we’re going to end the show talking about markets. You know, we haven’t figured out what we’re going to call this thing yet. Is it market madness? Is it bulls and bears? But Dan, you and I spent a lot of time on broadcast shows talking to CEOs and CFOs about earnings and, and it’s an ancillary part of what we do about industry analysts. And that’s where we’re going to chat about that. So, Dan, how’s the week? You know, I know you’re probably going on a big vacation coming up. All I know is I’m, I’m staring at four straight weeks of travel.
Daniel Newman: Me too. I’m just one of them. Happens to be a vacation. I’m very excited to head out and I’m going to virtually attend GTC. You know, kind of thought about it, like at CES, I virtually attended the keynote, had a better experience, got more out of it, definitely had better social, and still got to do all the broadcasts. So last year and again, I knew GTC, the ultimate pinnacle moment of all things. AI. What is it? The AI Jesus. The Godfather of AI. Some other silly metaphors about Jensen, but remember lining up around the building and then standing in the hallway because by the time we actually got to the seating opportunity, we didn’t get seated. I’m not super sad about it, but I am gonna miss being there with you. It does break my heart to know that I’m gonna come back tan and bronze and happy and relaxed and you’re gonna be all stressed out, but I’ll enjoy the next three weeks of travel with you for sure.
Patrick Moorhead: Yeah, exactly. I’m a great person to be around with stress. So, hey, let’s dive into the decode. All right. Dan, A lot of stuff happened. So hard to choose these topics, but ServiceNow made a major acquisition. I know they described this as a tuck in, but it’s the largest acquisition they’ve ever done before. What is going on here?
Daniel Newman: Yeah, when you evaluate in the hundreds of billions, I guess a 3 billion dollar plus or minus acquisition becomes a tuck in. Yeah, it was one of those that kind of started blowing up my phone over the weekend. The scoops came out of Bloomberg and others. The secret was no longer being hidden. And I got a, I got a note on Sunday that I was going to talk to CEO Bill McDermott in the morning, read the press release and I said, holy smokes. Move Works is not necessarily like a, you know, a name that just rolls off everyone’s tongue in the tech space. But when I started to listen to this company, ServiceNow, let’s start. ServiceNow has been in a major transition from an IT services management company with a really great rule of 50 plus growth. You know, Bill is one of the best cheerleaders in sales. I mean, you know, in leadership. You know, he comes in and really knows how to rah rah the team. But he’s been talking a long time about this big, meaningful, meaty disruption that’s going to take place inside of the application space. What I like to call the software industrial complex. Right now, any company that’s buying software has this terrible lock in with tons and tons of seats. Whether it’s SaaS or not. It’s often seat based, meaning you’re paying every single user. It’s really expensive. The future is not that, okay? The future is agentic. The future is going to be real time abstractions of a software layer. It’s going to be a single point of truth that you’re going to be able to talk to. It’s going to look like chat GPT, but it’s going to have all your enterprise data. It’s going to have, you know, the database, the integration, the language models. They’re going to be specialized models, and are going to be large models. So this is where ServiceNow is going. So where does Move Works fit? Well, this is a company that really has had all the backend stuff with ServiceNow has all the backend stuff for workflow automation, you know, just workflow it. Right Pat?
But the bottom line is the front end has still been one of its build out. Yeah, yep, I saw that smile. So what’s happening in ServiceNow is connecting the back end to the front end in this HR space. And it’s not really just hr, but it’s hr, it’s enterprise search and it’s basically employee, employee experience workflow. So an employee wants to know something, do something, see something, learn something, they can basically punch it in and Move Works is going to accelerate that sort of digital work experience and HR platform that ServiceNow has been pushing. Bottom line here, ServiceNow has said we are going to compete in CRM. ServiceNow has competed but it’s been ancillary. So the salesforces, the oracles of the world, the work days all should be on notice at this point that ServiceNow is coming for your lunch money. Okay. And I think that had been a little bit of a line. And yes, every ecosystem is going to continue to have this sort of competition and there’s going to be integrations and APIs and you know, data integration platforms. But ServiceNow is going for it. They see a future that’s agentic. This gave them millions of workers on the platform. It’s going to integrate with what they’re already doing, their database. And I really think that this is a potentially game changing move for ServiceNow and by the way, positive for the economy to see multi billion dollar acquisitions being made. I also think this will go through quickly. I don’t see this one having any issues with regulation.
Patrick Moorhead: Yeah. So you know, when it comes to acquisitions and innovation, right, there’s, there’s always three options, right. Build, buy and partner. And Moveworks has been a partner of salesforce. In fact, as you alluded to, they had racked up a ton of business. Right. They have 5 million employee users that they brought on in 18 months and 90% of its customers are deploying the technology to all of their employees. So this isn’t some nascent startup that is, you know, fixing to have revenue. I think the number was $100 million. I could be, I could be wrong on that one, but. So they decided to buy. I fully believe that ServiceNow could have built this. This is a time to market play and when you have major transitions, time to market matters. It’s not everything but it’s, it’s something. And if you look at services, ServiceNow’s back end capabilities like you alluded to with AI and you connect those with Moveworks. I have to put a smile on my face. Daniel by the way, inside joke between Daniel and I, between the, connecting the front end and the back end, it’s kind of like all, I think I talk about a theme that I talk about there. But anyways, connecting the back end of the front end, you have some serious magic. And when you think about it, let’s think about employee search, right? What are all of the reasons you would do employee search in an HRM system on top, top of workday or, or even a sales force with CRM finance systems with ERP and, and, and, and, and sales. So it makes a lot of sense. I think the markets are spending way too much time on the size of the deal and not thinking about the downstream potential value of this. But hey, those are the markets I, I do want to thank. I didn’t get the chance to talk to Bill but I did get a chance to talk to the President and CPO and COO at ServiceNow. Amit Xaviery. We had a very good conversation post deal kind of breaking it down, getting into the, to some of the nuts and bolts of this. So good, good stuff there. Let’s get into our next topic. Dan and this is a smoking one and that is a new CEO at, at Intel Lip-Bu Tan which interestingly enough both you and I met when we were at the SIA dinner and who knew that he, he had just stepped down off the board of, of intel and we may, you know I had a, I had A very provocative tweet, uh, out there with a picture of him saying, hey, we may or may not have talked about intel, and I’m still not going to say anything because that’s in the lockbox, right? Wait, wait.
Daniel Newman: You talk to him and you’re not going to share everything? Come on.
Patrick Moorhead: I know. Can you imagine that? Like that trust with executives.
Daniel Newman: Yeah, yeah. By the way, I think your picture was great, but you, you kind of tweeted a cryptic message at some point, kind of suggesting, this won’t be the last we’re going to hear from this. That was a, you know, and then you retweeted it because, you know, we’re doing this extra. We do more victory laps than ever before now we’re extra. Sure.
Patrick Moorhead: Yeah. Sometimes you have to do a victory lap.
Daniel Newman: Yeah. I’m not always right, but this time I, I, you totally nailed it.
Patrick Moorhead: So people like, it’s not always about me.
Daniel Newman: But people dug up that tweet, though. Like, there were, there were people waiting like, that had that thing, like in their bookmarks waiting to call you out. So right or wrong, you were right on this one. That was a great call. I, I didn’t say it wasn’t possible, but I certainly never had the gall to call it out.
Patrick Moorhead: Yeah. And by the way, even if he wasn’t, you know, people forget about that. But I did hit it. Had had a really good idea he would find his way back in here. But hey, you and I both, I mean, it’s crazy. I was supposed to go on Yahoo. Finance, talk about another topic. This breaks, and I’ve got five minutes to prepare for this. And then immediately after Yahoo. Finance, that interview, I go on cnbc. And I noticed, you know, you were on broadcast a ton, but this is just crazy. So let me give you my thoughts here. So, and this is very consistent with what I said, you know, right as it hit. So first of all, he’s the right pedigree at the run up to finding the new CEO. I said, you have to find somebody who really understands products and understands Foundry, and that doesn’t mean you have to be in both of those for years. But you know, enough that you can’t get smoked by your customers or internally. Right. You’re smart enough technologically on the product side to know when your team says, I need 10,000 people to pull this off, you have enough experience, say, no, that’s completely B.S. you know, this, this takes 5,000 people in half the time that you’ve told me that you can do that. He was CEO of Cadence for years which by the way all the tools that for an EDA provider have to connect to a foundry and if it is an important thing. The first question I got from all these shows was was he the right pick? And my answer was hey, I need to bet. I don’t know his strategy. Right. I don’t know what his objectives are and what his strategies are to pull that off. Only then will I have it again. It’s not a personal thing. I rather weigh in on his strategy and how he’s going to go at it. The first thing that Lip-Bu has to do is determine. I think if there’s going to be a split, not split, are we going to remain in the Foundry? How big is Foundry going to be? And by the way even as a fab and yes I have read the employee note he sent out but, but recognize I mean if he wants to sell the foundry what is he going to say? We don’t want to be a world class foundry. That would not. That’s not very good in negotiations. Second thing is can he pull in a data center AI gpu?
Daniel Newman: Right.
Patrick Moorhead: That’s bringing intel down in many areas and quite frankly they missed the mark. They had the ability. There were a bunch of products that were canceled in this but AMD found a way to go in and get 5 to 10% market share with a lot less resources and a lot quicker. What happened to intel there? Gaudi and Gaudi it was the right idea and it is very high performance, very high efficiency. But the hyperscalers are building all of their own Asics there Final commentary. There will likely be cost cuts and here’s my warning to intel on cost cuts. If you go in and take a hacksaw to MDF you will seed a tremendous amount of market share to both AMD and Qualcomm. Okay. Trust me, if you do not have the best product you will lose in areas where you don’t have the best product which is in the hyperscalers which intel is losing a lot of market share on Xeon and even when it comes to DIY when it comes to enterprise, enterprise PCs, enterprise servers and networking, it’s not about best product. It’s about a good product with really good sales and really good marketing programs and messaging.
Daniel Newman: That’s it. What about analyst relations budgets? Anything to say about that?
Patrick Moorhead: Yeah, I definitely don’t. That’s the last thing I would cut.
Daniel Newman: I mean I can think of a few analysts that could cut but I mean I also think of a few. They should probably invest anyway. Yeah, I mean I. Yeah, so. Yes, exactly. I was actually in a two hour long sales meeting when that was going on. You ever seen the movie Jerry Maguire where he just gets fired and he runs to his office and starts calling his Rolodex and everybody’s lighting his phones up. And then he gets Cuba Gooding on the call and Cuba Gooding is, you know, like bugging him. Show me them. You know, and he’s like, won’t let him off the call and you start to see the phones ringing down. That was me. Like I had, I could not get off this call. I had, you know, broadcast. I had journalists and everybody looking for my comment. You know, not, not saying I’m awesome, but kind of saying I’m awesome. I didn’t really get as involved in the immediate reaction as I wanted to. But sometimes you do have to run a business and you can’t just drop everything all the time. You totally crushed it. You crushed this one before, you crushed this one during. I have a, you know, pretty similar viewpoint here. I guess I’d name a couple of different things. I kind of look at Lip-Bu a little bit in the vein of Haktan. He’s not exactly the same but I see a lot of sort of similarities and sort of the run the business to efficiency, very EBITDA and, and growth of margin and income focus, willing to sort of cut off the fringes of things that seem to be sort of excess programming that doesn’t need to be done. I can definitely see him coming in. I think your point about the hack size, I don’t think that’s really where the hacksaw needs to be brought in. I do think there are probably a lot of extra resources inside of Intel. It just got overstaffed and takes a.
Patrick Moorhead: A lot more engineers do the products at Intel than it does to AMD or Nvidia for sure.
Daniel Newman: And so that’s, it’s going to be a real careful predicament. I’m not necessarily talking about engineering by the way. There’s a lot of other sort of, you know, just kind of in the middle roles that are somewhere in between a deep research query on OpenAI and someone that genuinely like building products.
Patrick Moorhead: I got you. I got you. Yeah, the sea of cubes apart.
Daniel Newman: Yeah, you know, marketing, you so prolifically said you told your son to go into engineering or sales that you either got the, you know what, you know, what’s to go into sales, Barbie brains to go into engineering. But then you know, you don’t want to end up in the middle area. You know, remember you said that even though you acknowledge that you sort of ended up in that middle area. My point is, it’s like that middle area is where I see Hawk really looking at the business and you know, the, this, the employee count, head count, size, efficiency. I mean look, you’ve got to return the company to cash flow, profitability. Now having said that, Lip-Bu is going to be really focused on kind of, I think the, the, the foundry split thing is going to come back up. He sort of gave this illusion coming out of the gate. And we’ll talk about this as our next topic a bit more that you know that he is going to keep things running, kind of one big integrated Intel. But you know that part of the reason he walked off the board was because he wanted to see the split.
So it’s kind of like I don’t know if he’s appeasing, kind of creating a calmness. You know, my whole TV spiel here was all about stability. The markets hate instability. People hate companies that are unstable. Having co-intermediate CEOs did not make the market feel comfortable with Intel’s longer term trajectory. Despite the fact that I think both of us would agree that MJ did a pretty good job. You know, I wasn’t as privy to what David worked on during the time but like it felt like it was going okay. But look, the market wanted stability, Litboo gave stability. I think the stock will rise. I don’t think they’re going to see a meteoric rise until there’s some certainty around what happens to the foundry and products part of the company. I think that is still super uncertain. So I think that you know, while there’s kind of words being used, I don’t think he was going to come out in his first email to the entire company and be like I’m going to split the company up. Like I just don’t think that’s how this type of thing works. And I also think there’s a lot of external forces at play with policymakers, with the Trump administration, with what optionality does he even have to do this? Because I stand by my opinion. Intel is the US chip champion for manufacturing at the leading edge. It’s the only chance, it’s the great American hope for actually being able to make chips below 4 nanometer at scale in the United States. And if anything ever happens between China and Taiwan, it is the only hope that we have of not going back 20 years in history and being stuck at whatever the newest note is because I’ll queue you up for the next topic because TSMC is not our hero in the United States.
Patrick Moorhead: Yeah, that’s exactly right, Dan. And you know, let’s just breeze right on this topic, it’s somewhat related to the new CEO, but it’s kind of not. Dan, I know this was a topic. I know you’re been talking a lot here, but I think you’re going to lead on this one. But I’ll try to go quicker. Yeah, there. Yeah, yeah, we gotta, I think we gotta blow through this buddy.
Daniel Newman: Continuation.
Patrick Moorhead: Yeah, yeah, exactly. And you know, there’s just yet, I think it’s the 50th rumor about some JV between TSMC and this time it was TSMC plus a bunch of potential customers at about 50. Dan, what do you think?
Daniel Newman: No, there we go. No, I, I’ll take two more sec. Two, one minute and I’ll give it over to you. If I don’t think it would exceed 20 in any circumstance, I just don’t see it getting bigger than that. I do see that some of the posturing from the Trump administration about the canceled CHIPS Act, I don’t think it was as much about supporting intel or Micron. I think it was more about all the money we were sending to SK and TSMC and Samsung and other companies. And what Trump basically said is look, they want our volume, they want our fabless providers. If we basically make that really expensive for them, they’re going to bring the manufacturing here. And whether they do or don’t, whether it’s done before the Trump administration is over, they got the commitment that they wanted was that TSMC would bring at least their newest the N2 node here. They bring some R and D here, but that doesn’t solve the long term problem. We need Intel. We need intel to have a strong IP. We need Intel to be able to manufacture without dependence on Taiwan, their leading edge chips for data center, for edge, for mobile. And if we can’t do that here, we’re failing. So the CHIPS act itself hasn’t solved any of those problems. So when Trump says cancel the CHIPS act, that’s why he’s saying it. I don’t think it’s about the money. We need to do what Taiwan did to prop up TSMC with Intel. We need to support importing it, we need to force some manufacturing to it. I know that people won’t love me saying that, but we either need to make them strong or we risk suffering the long term consequences.
Patrick Moorhead: Yeah, good stuff, Daniel. I totally agree. So let’s go into our next segment which we are calling the Flip.
Daniel Newman: Fun, Fun, fun.
Patrick Moorhead: Let’s go to our next segment and this is called the Flip, where one of us takes a certain point of view. We might agree with both, we might disagree with both, but this week we are talking about are tariffs helping or hurting the US Economy? So, Dan, let’s flip the coin here on who’s going to take the pro stance on tariffs. You know, I think that was you. So go for it, Mr. Tariff Boy.
Daniel Newman: I am all for the tariffs. Some people that have paid attention to my content may or may not know that this may or may not be my actual stance. That’s the funnest part about the Flip. But look, Pat, the United States has the world’s largest trade deficit. It’s over a trillion dollars heading into this year. The Trump administration genuinely believes that we’re being taken advantage of by countries around the world. We have exported almost all of our major industries in manufacturing. We’ve been kind of devastated on both sides by lower cost manufacturing offshore and then of course, high cost of unions here in the United States. Tariffs are a vehicle to potentially create more balance in the trade. Having said that, I’m not only for the idea of tariffs to help the U.S. economy. I think that’s about evenness and balance. So if we charge tariffs, whether that’s China, who charges US Tariffs? The UK charges US Tariffs, Germany charges US Tariffs, France charges of tariffs. So these trading partners that we kind of act like we are making some obscene and inappropriate gesture to charge them something for our goods and our services being exported to them don’t actually, it doesn’t stand any, doesn’t stand on its own merit. The merit of it is this: if you want to make trade fair, then that’s fair, then let’s not charge any tariffs.
And in my opinion, a lot of this comes down to we charge, we get balanced, we bring manufacturing back. Like I said with tsmc, TSMC realized that if they were going to pay some obscene amount of tariffs to be able to continue to provide Nvidia, Qualcomm, Apple, you know, AMD and others, chips that maybe it is better for them to build the manufacturing capacity here in the United States. So we are in a situation where that is the outcome, that is the goal. The Trump administration, the people that voted for it, wanted to bring stronger manufacturing middle class jobs back to America. And by the way fabs aren’t necessarily middle class. That’s upper, you know, doctoral level. But it could be cars, it could be making, you know, material goods, it could be, you know, health care supplies. It could be, of course, semiconductors for phones and PCs and everything else. We want to bring more manufacturing back. We want to have more fairness in our trade. The trade partners that are screaming and complaining, the loudness charges us, and they don’t want us to charge them. It simply is imbalanced. There’s an opportunity to correct this, I think, by putting and imposing these tariffs. We have one more opportunity that I’ll note before I turn it over to you, Pat, so you can wrongly try to defend the terrible social ideas of us not charging anyone tariffs. Having a little fun here with you, buddy. Relax. Is there an opportunity here to bring inflation down. Because in the end, if these countries are smart and if Trump is truly the negotiator he says he is, why wouldn’t everyone agree to bring their tariffs down to the lowest common denominator, considering how much they need our goods and services and how much we need theirs? We could bring costs down, take some of those charges out from moving goods around the world and actually deliver lower cost things to the people that need lower cost things the most.
Patrick Moorhead: That was pretty good, pretty good argument there, Daniel. And again, I’m going to argue that tariffs are “bad” standpoint, which may or may not be my real point of view. But listen, I’m glad you ended with bringing inflation down because essentially, tariffs are just a tax on consumers and businesses. So anybody importing goods, what they’re going to do is pass that price onto businesses and manufacturers. And there’s a lot of studies that talk about the tariffs in 2018 and 2019 that put those costs right to poor Americans, consumers and small businesses. And, you know, in the end, it really slows job growth and hurts GDP, real GDP, not inflationary GDP, because essentially anything that we produce here in America requires lumber. It requires, let’s say for homes, it requires metal, which goes into building our cars. And if those come in at an increased price, they raised, they raised the cogs, which means they raised the prices. And some people just can’t afford those goods, particularly with the durable goods. You know, and we saw this with nafta, with even washing machines and refrigerators. Hey, come on in. And, and, and, and, you know, terrific. It’s, it’s okay. So, and I think, I think the other thing is, you know, is retaliation, right? If a, if a, the way the current tit for tat is, hey, I put 500 billion in tariffs on you. We get 500 billion in tariffs back on us, like, literally. Where, where does, where does this end? And in the end, it just, you know, goes back to my previous arguments, which it raises prices and, and slows down GDP. I think the best example of this and what happened in the 1930s, was the smooth Tally Smoot Hawley Tariff act in 1930, which, by the way, you know, I’m a student of history. You’re awesome at economics. Pretty much everybody is in agreement. That said, it deepened the Great Depression. It really got us into this lose, lose type of situation. So in the end, tariffs are taxes on consumers and small businesses, weakens the job market, shrinks consumer buying power, impacting GDP and, you know, damages our export competitiveness. So there we go.
Daniel Newman: So, folks, hope couldn’t agree with you less.
Patrick Moorhead: No, I appreciate that.
Daniel Newman: We can stay friends after this blip, Dan.
Patrick Moorhead: I think we can. We have argued about better things.
Daniel Newman: I’m gonna. I’m gonna start taxing my insights. You want to hear my next opinion? It’s going to cost you 20% more, man.
Patrick Moorhead: I don’t know if I can afford that, though, bro. All right, let’s go into the next topic. Bulls and bears. We’re going to break down market inflections, maybe talk about some earnings from companies. When there’s a meltdown, we’re going to talk about that. When there’s madness in the market like there is right now, we’re going to chat about that. But hey, why don’t we start off with Oracle?
Daniel Newman: All right.
Patrick Moorhead: Oracle came out with a. I think it’s a triple. Triple miss. Correct me if I am wrong there. They missed on EPS by about a point. So maybe, you know, they missed on revenue.
Daniel Newman: Not.
Patrick Moorhead: Not by a ton.
Daniel Newman: Barely missed everywhere.
Patrick Moorhead: Sorry.
Daniel Newman: They barely missed everything. Like, but they.
Patrick Moorhead: Yeah, they missed on revenue, adjusted EPS for the quarter and then a Q4, FY25. They missed on revenue, revenue, endpoint, and adjusted EPS. Yeah, they. They missed on everything. But that’s really kind of missing the point of some of the things that were brought out there. There were a lot like, like if you, if you end it there, it’s a very immature way to look at the potential of the company and the market. First of all, the database standoff between on prem and cloud people, it’s over, okay? Oracle has its database firmly entrenched in the top CSPs. This is huge. That was like a 15 year standoff and Larry won and you know, we’re going to see. There was a lot of growth there. Of course, I think it was 90%. It was huge. They have exascale appliances inside the cloud, folks. OCI is rocking and the talk of Stargate, OpenAI and XAI, I think we’re positively received by the markets and I think all of this was reflected in the 130 billion dollar backlog. 2027 revenue forecast reflects optimism with 20% growth overall. And I’m going to end Cloud ERP at 16%, much higher than the other enterprise SaaS plays that we have seen out there.
Daniel Newman: Yeah, the way I headline this one Pat, is I said if you’re going to post a double slash triple miss, why better to do it on the day of a market meltdown than, you know, so Oracle got to do it on a day that already was crap. So the market, you know, it’s hard to tell when you’ve got this kind of high pressure selling on tariffs and on geopolitics and on macros and on GDP and whether people were really this disenfranchised by Oracle or was it like. Well, of course it sold because everything sold. It was blood red. One of the worst days, by the way, in two years it looked like the beginning of the pandemic era. In terms of the actual selling that day, not quite, but it was pretty darn bad. Look, I’m going to focus on a few positives here because the negatives are with all the momentum that Oracle has, maybe it shouldn’t have missed. But at the same time I do think there’s a little bit of this great reset going on in the market. Like if I’m a CEO and I, you know, you and I have talked a number. I spent time with Bill and Arvin this week. I saw Renee Haas and you know, I think all of them are sort of okay with the idea. They’re all optimistic, but they’re all kind of okay with a bit of an, of a forward PE reset. I mean the stress of trying to hit these numbers, it’s not so bad when you have a bit of a sell off that, you know, the analysts start to say, you know, we’re looking at SP at 20 times instead of 22 times 4. That actually sets that, that adjustment sets them up for better opportunities in the future to start beating again, which is what people want beating against current, beating against the guide.
So I kind of look optimistically at that stuff. But for Oracle, look, the DB multi cloud revenue from their big three clouds 92 increased in three months, Pat. So clearly that strategy is working. GPU consumption for AI training 244 up in the last 12 months. Their AI GPU capacity in Oracle Cloud, they’re doubling capacity over the next year. They raised their dividend which clearly means on a cash basis they’re confident. They raise their dividend 25%. And then you mentioned this, but Stargate, they’ve somehow become one of the major cloud providers of record for Stargate. Like you realize when this thing’s done their club business could be really close to on par with the top three just by this investment. Now again there’s a lot of questions about Stargate. I love that the spend is coming here to Texas, but I’m just pretty optimistic about Oracle. You know we never like to see a miss, but I do think a bit of a reset during a market decline is never a bad thing for CEOs, for businesses and of course for investors to find an entry point that, you know, I keep thinking about that picture of people lining up around the building to buy Tesla at 500 bucks but then everybody’s gone at 200 bucks. It’s like nothing’s changed except you know, a couple of tweets from the, from, from the Trump administration.
Patrick Moorhead: Which means a lot today. Right? It’s the major avenue that the Trump administration uses for communications which listen, I spend all my time. So hey, let’s move into the, hey, let’s move to the final markets topic here and that is Adobe earnings, another enterprise SaaS play that people are looking for, for those downstream impacts of, of AI. Did they do it?
Daniel Newman: Well, they did it, but they didn’t project it. Meaning this quarter was recorded for the company record revenue quarter. Look, I, I, I, I keep my assessment kind of short here because I feel like I keep saying the same thing about Adobe over and over again. Adobe has a little bit of that software industrial complex challenge that I mentioned with like the way that people spend and buy just trying to bolt on AI is proving to be a friction where they’re going to have to somehow see if they can get the customers to spend incrementally more and how they can do that in a, the least friction way so that they can grow the ACV on their customers. Right. They need their customers to spend more. Having said that, I mean their revenue is at record, they’ve got double digit growth, albeit low double digit, but that’s been pretty steady. That’s what our market forecast for enterprise software says it’s in the high single digits so they’re above the forecast overall for the market. But like I said, you know, right now we are in the era of guide driven market response. Guide was not where people wanted it to be. The thing sold really, really hard. Another great reset. And on top of that, if your guide is bad and then you don’t perform, you get double whack. But at least that wasn’t the case for Adobe. My thought is they have strong recurring stable revenues, they’re diversified across, you know, documents, application, CRM and creative. But there is a faster crowd. They want to see more AI revenue faster. This has been my continuous complaint about the AI trade. It’s not the infrastructure part of the AI trade, it’s the consumption dollars to apply to these companies that justify these great valuations. And so I think Adobe could be in good shape. I think a reset is not a bad thing. I think that AI strategy is important and I’ll turn it over to you.
Patrick Moorhead: Yeah, so let me, let me fill in your great analysis here. So you know, I like to look at the sentiment that comes back from the financial analysts and not that I agree with it all the time, I, I don’t, but it gives a picture filling in kind of exactly what you’re talking about here. Right. I think on the positive side, you know, people like the metrics that came in through Firefly.
Daniel Newman: Right.
Patrick Moorhead: Jeffries had a comment on that. I would say on the negative side, right. From Deutsche bank. Really they’re concerned about competitive pressures and underwhelming near term Geni monetization, which is what you talked about a little bit. So kind of a mixed bag here and I am looking forward to what they bring out at their next financial industry analyst. Here’s the way I look at this, Dan. Adobe is when you look at large businesses where they generate most of their, most of their revenue, I don’t think they’re at risk. Large companies that have very built out processes with Adobe, regardless if the AI feature of the day is better, Adobe just can’t be too far behind and part of the workflow. And then if you look at their full digital experience and how they’ve put that out, that’s another very sticky thing. I think where Adobe could be challenged is, you know, the one off content creator, right. Who is looking for a one off tool that can, you know, fundamentally change their workflow, save them some money, and be able to double their revenue flow. That’s where Adobe is at risk and I think I need to do a little bit more research to see are they gaining share, losing share in, in these areas because of it. I, I don’t know. A lot of VCs are getting out there talking about these magic tools but to be honest I haven’t even come across any of my business ones that you know we are using some non Adobe AI tools for what we do here on the Six Five.
Daniel Newman: Right.
Patrick Moorhead: We’ve shifted that for doing segments and super cuts and, and, and stuff like that and we, we are a small business so I think I just proved, you know with a one off that, that this is the case.
Daniel Newman: Yeah, there’s gonna be a lot of demand for it. It looks really good. I know we wanted to talk a little bit about the forecast projections for the US economy. We’re not going to hit it right now. I did, you and I both did do a lot of broadcasts this week. Maybe the producers can cut in a couple of our comments. I know I went on Fox Business and they asked me if now is the time to buy and so I know both you and I probably fundamentally believe the AI trade is not dead. That the actual recession risks create more demand for technology because it’s deflationary. Hey, maybe even our producers can cut in some of those wise words we said from our segments, Pat. But hey, dude, we did the first show, the first format. How much fun did we have? I, you know, I, I gotta say, I mean it went smoother than I thought. You know, I really expected you to suck but you really did.
Patrick Moorhead: I don’t know man. You’ll get your, you’ll get your chance. I mean I’m the world’s best Moderator next to JCal but so I’m the second world’s best moderator and we’ll, we’ll give you such.
Daniel Newman: So I’ll give you the top three.
Patrick Moorhead: I appreciate that. So I just want to thank everybody for tuning in. While Dan is sipping my ties on the beach in Turks, I’m going to be sweating it out, waiting in line to hear AI Jesus bring down the tablets from the hill out on the west coast. So with that hit that subscribe button. Thanks for tuning in and let us know what you think about this show and the new format. Take care.
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.
