The girls are fighting! From Microsoft’s reorganization signaling the potential end of SaaS, the (un)surprising public feud between Elon Musk and Donald Trump, and Broadcom’s impressive AI chip performance, Pat and Dan cover it all! The handpicked topics for this week are:
- Breaking News and Market Trends: Discussion of Microsoft’s reorganization and its implications for SaaS. Analysis of the Trump-Elon Musk public feud. Broadcom’s new chip and its impact on AI infrastructure.
- Market Analysis and Earnings Reports: Overview of current market trends, including S&P 500 reaching 6,000. Examination of Tesla stock fluctuations. Analysis of Broadcom and HPE earnings reports.
- AI and Technology Developments: Global Foundries’ $16 billion investment in US chip production Broadcom’s Tomahawk 6 chip and its significance for AI infrastructure.HPE’s AI revenue growth and enterprise market share.
- Navigating Industry Challenges: Discussion on the impact of political relationships on tech companies. Analysis of supply chain issues and their effect on earnings. Speculation on the future of physical devices and AI integration. Discussion on the potential impact of AI on job markets.
- The Six Five Summit Preview: Teaser of high-profile speakers and AI-focused content, 100% virtual and free to attend, streaming June 16-19 at sixfivemedia.com/summit
For a deeper dive into each topic, please click on the links above. Be sure to subscribe to The Six Five Pod so you never miss an episode.
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Transcript:
Daniel Newman: It’s like Liberation day. It was two months ago and this was going to be the end of the world. And if you invested on Liberation Day, you could be up 50 or 100%. Which just reminds me all you scaredy cats that don’t want to put your money to work when, when it looks dark. Remember, memories are short and people do not remember the down for long because we’re a bunch of degenerate gamblers that want to see our money go to work. And by the way, leaving your money in the bank right now with even lower inflation and lower rates is not going to get you where you need to go. But we’re not giving stock advice.
Patrick Moorhead: Dan, you’re definitely getting the super cut with that rant.
Daniel Newman: You always sit closer to our guests because you need that kind of attention. You always go first.
Of course, when they designed that intro video, Pat, you probably said I have to be first. I think this is the breakup edition. I think this show is going to be you and me talking, breaking up. It’s. It’s the end. It’s over. I’m tired of this crap. I always have to sit further away so you can be closer to get more relationship building. And thenI’m trying to get the photo. And then, by the way, here’s the world’s photos of Pat. It’s Pat CEO Dan sitting here. But what gets published online, it’s like I don’t even exist anymore Moorhead.
Patrick Moorhead: Dan. There’s no appreciation. We met 11 years ago and you were doing it, had a different job and I helped you. We partnered together. We’ve had success. If you want to throw that in my face here on the pod, you just. Just keep pushing it and you’ll see.
Daniel Newman: It’s over. First of all, I can’t believe you visited that island. I mean, I kept it a secret for the longest time, but I mean, I mean, I have that picture of you. I mean, you know, I said I’d never come out with it, but, you know.
Patrick Moorhead: The only pictures that you have of me doing something I might not want somebody to see is me injecting BPC157 into my midsection.
Daniel Newman: Maybe that’s not really BPC. Maybe I should tell everybody that it’s actually baby’s blood and you’re part of the Davos cult. And you’re a bug eater. All right, all right. Maybe we don’t have to break up yet, but I think we need a good practice, and I think that’s a pretty good run into what’s possible. I mean, if Elon and Trump can break up. Anything can happen. We are in an interesting era.
Daniel Newman: But hey, everyone, welcome back. It’s 264 episode. We couldn’t be more excited to be here this week. We’ve got a great docket. We will cover off on that and we will talk about breaking up. But unfortunately for all of you that want to see Pat and I fail, we’re not there yet. Don’t worry. Give it time, anything’s possible. We tend to keep our fights private, though I do think it’s pretty weird when people do that divorcing on Twitter, Come on, on X or whatever.
Patrick Moorhead: C’mon folks.
Daniel Newman: Wouldn’t it be funny if he banned Trump again? He platformed him just because it’s funny. All right, before we jump into the show, Pat, we do have to tell everybody we are now just one, a little over one week, actually. If you’re listening to this now, it is one week from today. If you’re listening to this on the drop.
Patrick Moorhead: Or 10 days.
Daniel Newman: Till our Six Five Summit. June 16th through the 19th, AI Unleashed. Couldn’t be more excited to have Michael Dell, Arm CEO Rene Haas, Box CEO Aaron Levie and so many other big leaders from across the tech industry. If you haven’t registered yet, I don’t know what is wrong with you. We can have a talk about that publicly. We can break up on X because you’re not my friend if you haven’t registered. It’s www.sixfivemedia.com/summit. You know where to be. All the sessions will be available during the week, but they will also be available on demand because we know people are busy and they don’t have time to just sit around and watch stuff all day unless it’s our stuff. And then you find the time, you make the time because hopefully we make you a little bit smarter. Pat, let’s talk a little bit about what we’re going to talk about. We’re going to start off with The Decode. This is the part we kind of break down the week’s biggest news. We’re going to talk about some news from Microsoft. We’re gonna introduce the Trump Elon feud, talk a little bit about what this means. And we’re going to talk about Broadcom, their newest chip. We’ll also hit their earnings, but that’ll be in our. What do we decide? Is it market madness or is it bulls and bears? Did we decide on the Bulls and Bears?
Patrick Moorhead: It’s Bulls and Bears.
Daniel Newman: I think we’re gonna say market madness again.
Patrick Moorhead: Sorry.
Daniel Newman: Okay. Nothing mad about the market. We’re gonna talk bulls and bears. Later, we’ll talk a little bit about global foundries expanding there, its fat footprint in the United States, some big investments being made, and then we’re gonna go to The Flip and I’m gonna tell you all. Well, I don’t know what I’m gonna tell you yet because I gotta wait for The Flip. But we’ll see. But I think what I’m gonna do is win another debate. Last week, I crushed it. I had something up my sleeve. And I might have something up my sleeve again this week, Pat. I’m not gonna lie. I might have something up my sleeve again. And then we’ll get in the Bold and Bears. We’ll talk about the market for the week. We’ll talk about what went on. It was a bit of a quiet week. Are we even talking about tariffs anymore? Does anybody care about tariffs at all anymore?
Patrick Moorhead: I don’t know. I mean, Trump had a conversation with Xi yesterday. Apparently nobody talked about it.
Daniel Newman: I don’t even know. I don’t know what they’re talking about. We’ll talk about Tesla’s big stock drop, but basically we, from the time we planned that segment and now it might be up, the market is ripping this morning. And by the way, on Monday, when you’re listening to this, it may already be back down again. That’s the beauty of our Bulls and Bears. We talk about Broadcom and then we’ll hit on HPE earnings and then we may, if time allows, hit on a couple of other things. All right, Pat, we’ve done the rundown, We’ve gotten started. We had a fake fight after the debate today, we’ll have a real fight because you’re going to feel a little sore. How’s the shoulder, by the way? Everybody wants to know about your updates. Are you getting back? Getting better?
Patrick Moorhead: I had PRP on it, which is spinning my own blood, getting the plasma rich platelets and injecting it in my shoulder. And I’m back to bench press, flat bench, albeit light. So I am on my way back.
Daniel Newman: Well, ladies and gentlemen, Brian Johnson has joined the podcast. He’s spinning his own blood. Next, he’s going to be fully replacing all the blood in his body on a monthly basis. Is that how often he does that? He does that? Like.
Patrick Moorhead: Yeah, yeah, yeah, that’s blood boy. That costs about 20 grand, I think, by the way.
Daniel Newman: God. I mean, I want to know how much longer he lives. The great irony of, like, you know, if he gets final destination, something weird happens, like with all the work he’s doing. But anyways, yeah, I’m. I’m still not interesting in any of my fitness journeys. I. I’ve done a lot of work this year, but nobody cares. I’ve been out with Pat enough to know that people see him and they Google and they ogle and they see me and I still look puffy. But I’m gonna. I’m gonna work on that.
Patrick Moorhead: I mean, Dan, when you go from like 315 to 350. Nobody cares because you’re already bench pressing more than 99.9% of people your age.
Daniel Newman: Lawn people. Anyway, you know, I decided I’m going to be a complete pig by the end of the year. I’m going to try to put on, like, 250lbs. Then I’m going to publicly share my journey of getting fit again because I think people find that more interesting.
Patrick Moorhead: I’d sign up for that. I’ll become a subscriber to see that train wreck.
Daniel Newman: You’d sign up for the up track, right? You’d want to watch me actually balloon. That would be fun.
Patrick Moorhead: I don’t know. I kind of want to see you just get fat. That’d be funny.
Daniel Newman: I’m on it. I am on it. That’s my new goal. I’m going to see how quickly I can gain weight. What if you did, like, the weight gain journey, like, and not, like, a healthy one, like, getting fit? Like, I’m just gonna like the guy that did the McDonald’s movie where he.
Patrick Moorhead: Like, get the health journey. This is the unhealthy journey, the unhealthy journey.
Daniel Newman: But I’m, I’m having fun. That’s sort of what matters. All right, so let’s jump in. Sorry, total tangent. But sometimes I think our best parts of our show are the ones that aren’t actually on topic at all.
Patrick Moorhead: I think for us, they certainly are.
Daniel Newman: I’m having fun. I mean, we have to talk about all this other stuff. I mean, are you just gonna shoot peptides all day and maybe drink coffee? I’m still waiting for the moment our bots can do this pod. So you and I can just be out having coffee.
Patrick Moorhead: I mean, as usual, you know, you take, you take a, something that I just, I did first, and you take it to the, take it to 11. You’re shooting, like, seven peptides now.
Daniel Newman: I’m a super fan. This stuff is great. I mean. I will confess, All the supplements, all crap. These things, though, are like magic.
Patrick Moorhead: Yeah, you know, if I could replace this bag. Bag of pills. I am a pill popper. I’m sorry, Mom. Yeah, with a shot, then I would do that.
Daniel Newman: But now you’re just doing both.
Patrick Moorhead: You know, I pretty much am. Yeah. But I’m not doing seven peptides. I’m only doing three. Three.
Daniel Newman: Let’s, let’s inject a little tech into this conversation while we’re, while we’re at it. So Microsoft made a big announcement. You know, eight months ago, I wrote a Forbes piece that basically said SAS is dead. Dead. I actually think I beat Satya. But they’re making moves and it’s looking like they’re doubling down on, on the demise of something that they have a benefit of selling. I mean, what’s going on with this reorg?
Patrick Moorhead: Yeah, I mean, I know you like to get this victory lap in, but a year and a half ago at Google Cloud Next, I called this out.
Daniel Newman: Three years.
Patrick Moorhead: I didn’t say, I didn’t say SaaS was dead. But it was pretty clear to me that agents sitting on top of the right data, we’re gonna, we’re gonna do something. But hey, let’s shift to the topic at hand here. So the first thing that I noticed here is that the headlines completely missed it, right? If you would have just read the headlines, it’s, oh, Microsoft’s LinkedIn chief to run Office Group and AI shakeup. And I don’t know, you know, I guess this is where analysts like us come in, and try to make stuff happen. But what wasn’t said was the most important thing. And this was essentially a Microsoft program that expresses the belief that SaaS is dead. And the conversation that we kick this off with and what they’ve done essentially is they have combined their productivity software and SaaS with their business apps and SaaS with LinkedIn with all of the agents. Okay? And this, to me, without them saying this, says we’re deprioritizing our own SaaS and prioritizing agents. Because now Rajesh has this big pile of resources that he can much more easily move around without going to Satya. And I think this is really, really interesting. A couple things here. I think the companies that are going to do the best in this East West agent connectivity.
So for instance, connecting ERP to CRM to HCM to plm, legal documents, office productivity and connecting that all together. I think there’s a couple things that will set it apart. I think somebody that has a SaaS app. I think that is one factor that I think will come into play. Okay, and that’s obviously Microsoft here. But, you know, I hearken back to, I don’t know, maybe nine months ago. I think even on this pod, I’m like, who else in AI, Daniel has covered AI? You know, at the starting point, which is, okay, I’m in research mode all the way to scale and everything in between my sophistication, I’m novice to expert. Hey, how do I want to consume this? IaaS, PAAS and SaaS personal, right? Like who it is, you know, executive to technology to developer to user, and then even the desired point of access, what could be a PC all the way to the public cloud and everything in between. And. And Microsoft is really the only company who can do this right. So they’ve burned the boats and they pretty much put the entire industry on notice that by sacrificing their own enterprise SaaS and productivity SaaS, they’re going all in on agents. So I think this is a big move not only for Microsoft and Microsoft’s competitors, but also for the industry at whole. Should lead to an acceleration. I want to, though, leave the door open and just say putting a boatload of resources in one place doesn’t necessarily always speed up things. In fact, more resources can slow it down. So Rajesh and his direct reports are going to have to think very carefully about the speed of execution on how they do this.
Daniel Newman: Yeah, I think another thing that’s interesting too is the experience in devices being put together. We saw OpenAI. Jony Ive move. We’re sort of hearing about this pervasive physical device that’s going to move with us. There’s some questions out there about what is the profile of a physical device in the future. What is there, Pat? About 300 million PCs a year ship something like that. Billion phones or something like that. Something like in that range, you got these huge numbers and, you know, questions of what will this even look like in the next few years? And then how does AI work with us pervasively? How does it keep us connected? And the idea that Microsoft is sort of putting this all in this kind of flywheel, that these things are all going to work together and they’re all going to. Because, like, this is new. This is super new. The idea of taking a group like Surface and putting it over on the physical devices and putting it over with your business applications and then tying in your productivity apps. But this to me is very much how I envision the future. That all of this stuff just needs to be accessible pervasively all the time. And whether we’re floating between a physical device, an application, wearable, this stuff is all going to happen. And so I think Microsoft is on the right track. It’s interesting because, you know, all these companies have their kind of Kodak moment. The moment that Kodak. The reason Kodak failed was because it didn’t want to acknowledge the fact that Print photography was going to become obsolete. Microsoft’s hitting it early because it’s, you know, it’s not entirely to their benefit. Like they have a very large SaaS business. So this is an interesting inflection. It’s sort of an interesting experiment in public to see if this is where it’s going to go. But I think you and I would all agree this is directionally where it’s heading and this is why they’re doing it and they’re getting in front of it. You know, go ahead.
Patrick Moorhead: No, I was going to say, you know, we got a front row seat when we were at Dell Tech World. You and I were both talking to Jeff Clarke and you know, he outlined, didn’t give all the details on how they did it, but talking about what they did and the ROI and the strategic areas that they did this, this is essentially that in the cloud. One thing I hope they do look at Daniel, is Google is ahead of Microsoft as it relates to the hybrid cloud. There are certain vertex features you can run on prem with Gemini 2.5 and I would expect them to extend that. And enterprises want to have a choice between a public cloud, private and a sovereign cloud.
Daniel Newman: Yeah, those are good adders. I will just say before we head over to the next topic, I do think we are at this really difficult moment to figure out where orchestration of agents will begin in it and I think that’s what everyone’s fighting about. You know, I don’t know if you saw this, but Slack actually sort of deprecated some of its services to its API that allows like applications, third party applications to utilize that data for various enterprise search for instance because they’re trying to be protective of sort of data moats. And so you know, because they, some Salesforce wants to be the agent of record and you kind of see this like everybody’s kind of playing for protectionism versus innovation versus where does an agent start? Because I don’t see enterprises wanting to launch agents from every one of their business applications. It’s just not possible to scale man.
Patrick Moorhead: Protectionism never works. You know, I mean.
Daniel Newman: We should have a debate about that.
Patrick Moorhead: Yeah, maybe we’ll do that for the next.
Daniel Newman: I mean, I mean the most popular marketplace in the world uses pretty aggressive protectionism to keep its vote. Pretty profitable, I would say.
Patrick Moorhead: Apple, right?
Daniel Newman: Yeah, I mean it’s, it’s work. Nothing like I think both of you and I agree that it’s probably the most monopolistic and, and manipulative.
Patrick Moorhead: See you can pull that crap on consumers and consumer ISVs. You can’t pull that with enterprises.
That is not going to work. I don’t know of any company out there who does that. It never works. And a lot of these enterprise companies are talking about, hey, one of the key parts, what we believe in our dogma for AI is your data. Is your data.
Daniel Newman: Yeah, I think that’s probably right. But then it goes back to all the things you just said about where the data resides, about sovereignty, about these companies having a certain stewardship, to the protection of that data, to how it gets utilized and how third parties can connect APIs to it and then potentially use it the wrong way. So taking data from one system, opening an API, then letting another company use it in a way that wasn’t intended. So there is all these sort of back and forths and potential risks, but I think we’re going to see, I do think to your point, the enterprise needs to move a lot faster. And it’s not moving that fast right now. It’s just, it’s not moving even anywhere close to the speed of the consumer. We’ll come back to this one, Pat. I have a feeling this topic is going to be maybe not this exact one, but this is going to be thematic over the next year. So Trump and Elon, this is like, gosh, you know, it all started with the big beautiful bill. I think Musk tweeted something along the lines of the bill can be big or the bill can be beautiful, but it can’t be both. Yeah. And it sort of started with a bit of this. You know, it was, it was not super confrontational, but you could sort of sense and I mean, really everything going into the last sort of months of, of Elon Musk being there, you could sort of sense this tension building up. There were some shared values.
And you know, Musk has been on this bit of a rampage of showing tweets from Donald Trump going back to 2012, where he talked about people can’t be reelected if the budget isn’t balanced. Talking about the deficit, talking about, you know, Republican hawkishness and the lack of, and I can’t believe, you know, embarrassed by the Republican spending. And now all of a sudden here we are with potentially one of the largest spending bills cutting taxes and by the way, a really wildly challenging juxtaposition with a marginal lead in the House and only a marginal lead in the Senate for the Republican Party to get something passed. We’ve got these large Trump era tax cuts at stake. And if we don’t get the big beautiful bill passed, we would potentially see one of the largest hikes in tax for a long time. Musk is saying don’t care, cut spending, blow it up, go back, do better. Looking at it very much through that kind of corporate lens, like, you know, in an enterprise, we get this done in a weekend, I can get this done. But we basically have politicians, Republicans, we have Democrats. And so this feud started with that, but then it got super personal. Yesterday, you know, Trump started criticizing Musk. He had some comments about his various billions of dollars of federal grants. Maybe he pulled them. And then Musk talked about decommissioning SpaceX support for NASA. And, but the worst one, Pat, and I’m going to pass this your way here, was when he basically dropped the, probably the most poorly kept secret ever, but that he was basically confirming what everybody already knew, that Donald Trump was a, was a close ally or friend or had a relationship with Jeffrey Epstein. But then there’s pictures of Musk with Giselle Maxine or whatever. So it’s like I, this is stranger than fiction.
Patrick Moorhead: No, it really is. And we’re trying to Decode this. I know we’re going to do this for The Flip. But you know, essentially you had two besties, right? And the weird part is even when Musk knew that he was on his way out and Trump, you know, did a, did a huge press conference in the Oval Office, it seemed like everything was, you know, they disagreed but they weren’t going to take this, they weren’t going to take this thing publicly. You know, there’s one side, I mean, that says that this is, this is contrived. But once it started to get personal with, you know, Jeffrey Epstein and the Island, I knew that this wasn’t a made for TV movie, which, you know, Trump is exceptional at doing. And I saw some engineers, ex engineers, talking about how literally their systems are melting. They cannot believe all of the traffic that this has, riven. But you know, I, I with two very caustic and you know, two people who want to be the leader at the microphone who, you know, quite frankly both kind of go off the deep end and, and get super emotional super quick. I mean, Trump is actually tamed down where he was in his first administration. But I, you know, you look at the stuff that, that he had sent out on there and has sent out and then you look at, at the way that, you know, Musk responds here, it’s just very, there’s a lot of emotion going on, and I think they’re just acting like two babies.
Daniel Newman: Yeah, it is, it is a bit of, you know, know, the big problem is the debt, the debt ceiling, the amount of burden that we are putting on our future generations, including ourselves. We’re around for a little bit longer, Pat, is, is absolutely, it’s undeniable, it’s insurmountable, it’s scary. And I think Elon Musk has a very good point. I think the problem is he wants to do it like a corporate enterprise. And we’ve just found that there’s absolutely no way to get that done. We can’t even get the 160 billion in savings codified. We’re having a hard time getting $9 billion in savings codified because this isn’t a partisan thing. It’s not.
Patrick Moorhead: I mean, let me just throw out one cost. I mean, you know, Medicare in 2020 was $800 billion, and now it’s, it’s honing in on twice that. Okay, think of that. A trillion and a half dollars for Medicare. And essentially what happened is the pandemic kicked in, we added a bunch of costs, and then we just kept spending. It’s deplorable.
Patrick Moorhead: And the amount of debt and the ability to pay it off, I mean, we’re honing in. That 25% of the debt paid down is just interest.
Daniel Newman: Yeah, we’re going. I heard something like could be a trillion a year of interest payments. And then obviously, Trump’s a bit at war with Fed Chair Jerome Powell because he wants him to cut rates. And there’s a lot of evidence, I would argue that he’s right about inflation. I mean, inflation is way down. I think there’s some questions in the job market. Musk, of course, is saying the tariffs are, are inflationary and will cause the recession. So, they were not in alignment there. And then we probably didn’t say. The one thing that’s worth mentioning before we move on is, you know, there’s a lot of, of sort of speculation that this is all about the EV mandate, that, you know, he wanted the EV mandate and Trump doesn’t think people should be forced to buy EVs, so, you know, we always knew he was not a purist from climate and sustainability stuff. But it’s, it’s interesting, Pat. I mean, this is a, this, like I said, are we even talking about tariffs anymore? Is that even a thing? Like, it’s amazing.
Patrick Moorhead: This will happen next week. I’m sure we’ll be, we’ll be on to something. Our hysteresis is short here. Our attention span is even shorter and we’ll be on to something next week.
Daniel Newman: Yeah, let’s find, you know, there’ll be something to set on fire. Keep the news cycle going. All right, so Pat Broadcom is scaling up bigly and looks like they’re building quite the full stack story for AI.
Patrick Moorhead: Yeah. So Broadcom has had its Tomahawk line for years. It really is the industry standard or scale out networking. And if you look at some of the challenges today, primarily for those with large scale AI and HPC clusters, there are challenges. There’s network bottlenecks where you have tens of thousands of clusters. They get hit with performance bottlenecks and you have the complexity, which is you can only address a certain amount of XPUs or GPUs at the same time. Otherwise you need to be, you know, keep adding switches. And the cool part is when you get this high performance, low latency, you can enable a single memory plane, which means you can do more in the same connected cluster. The other problem that’s out there is underutilized accelerators. Right. You’ve heard, you know, 30 to 40% of all GPUs are not being used and that’s primarily because of latency and bandwidth. And the GPU is just sitting there. It’s sitting there waiting for the data or waiting to send the data to the next compute unit and power and cost. Daniel, we’ve talked a lot about the power and how much data centers, and primarily GPU data centers are sucking as a percentage of, of all of the power inside of first world companies cost. Think of CapEx, right? Look at all of the hundreds of billions of dollars in CapEx that just the Mag 7 for, for that. So Tomahawk 6 comes in and essentially increases bandwidth.
So we used to, I mean, 102 terabits per chip. That is absolutely ridiculous. Well, what does that mean? That means you can support over 500 XPUs or GPUs with a single hop and then scale out 100,000 XPUs, which is pretty, is pretty amazing. So just to turn up the contrast ratio a little, Tomahawk 5 was scaled out. Tomahawk 6 is scale up and scale out. So think of it taking on Infiniband and in some cases Envy Link. And that’s pretty cool. And it’s using Ethernet, not something proprietary or something that hasn’t been invented yet. And it does support the latest Ethernet standard, I always want to call it EUC Ultra Ethernet out there. So you know, just to, just to net this out, scale up and scale out. Lower cost and lower power in aggregate. And a much simpler network, right. You can convert a three tier network which is today where you have certain switches pulled together in a topological fashion and take that down to two, two tiers and that means simplicity, that means lower cost and that means lower power. So it’s on, man. I mean the biggest competitors to this are basically Nvidia, Estera Labs and Marvell.
Daniel Newman: Yep. I absolutely love what Broadcom is doing. I am not intentional as an analyst. We’re not supposed to be fans, but I’m very optimistic about how they’re executing. And between the XPU business that they’ve outperformed and out executed all the other companies right now they’ve got more pedigree, more tenure. They really are going full stack and you know they’re going to be an enabler of meaningful competition. When people say who’s the real competition to an Nvidia, it’s Broadcom that’s the real competition right now with any sort of volume. I mean their AI chip numbers over 10 billion which makes them the largest producer of AI chips that isn’t Nvidia right now by volume. And again they all. They have the full Rack network in and out of the Rack. And that’s pretty impressive because that’s also a big business. It’s also super high margin. And if the bet is that all the hyperscalers and other companies are going to want to have an alternative, they are the logical alternative. It’s not to say that the Marvells and all chips and others don’t have a market and won’t get business. It’s just to say right now if you had to order them, it’s, it’s a very clear one A.
Patrick Moorhead: Yeah, I’m really interested to see what Cisco comes up with next week because they have a silicon one that says they’re 51 to 100 terabytes per second. It’s Ethernet. So that you and I are both going to be out there. Actually it’s airing today, so yeah.
Daniel Newman: We look forward to hearing from the team about what they’re doing there. They’ve been a little quiet on the, on this, on the Silicon front. Maybe it’s time for them to make some noise. All right, one more for you, Pat. You know, global foundries haven’t heard much from them. Not, not sub 5 nanometer. So people don’t talk about it a lot but we say we need more US chip production, more on shoring. It looks like Global Foundries is stepping up to the plate.
Patrick Moorhead: Yeah yeah. When Tom was CEO they seem to have more of an external profile and he’s now executive chairman, new CEO, new president. The president lives here in Austin. But there was a $16 billion investment and what’s interesting is it was kind of like you know the announcements that happen in in in Middle East where okay it’s Trump backed here and they had all these companies that, that said that they were going to Support this Apple, SpaceX, AMD, Qualcomm, NXP and even General Motors essentially are the will are are going to be the customers of this new, this new foundry. And there are a couple areas that Global Foundries is really good at and things that are important right. Silicon photonics, Gallium nitride. Things that by the way this isn’t new. They’ve always been important for AI automotives and comms markets. RF. A lot of RF chips have always been manufactured. They have you know they use a special material called uh, silicon on insulator. By the way that was a carryover from AMD when he was, I was there and Global Foundries is not an offshoot of AMD. But yeah yeah in the macro perspective I think it is interesting. One of the most interesting things is I don’t think I’ve ever seen a press release with Cristiano Amon and Tim Cook in it. That was probably the most interesting optic for me. Those two companies are at war with each other and I thought that was super interesting.
Daniel Newman: Yeah, I don’t have much to add here. I would say it’s a. Something we need to keep hearing about is this steady drip of companies that are going to to reshore onshore and do more chip development here. The essential processes is what Global founders likes to call it are not not as dependent and other in Asia as we’ve been come with leading but I think it’s also the example and the commitments and the investments because right now the trade war as I still see it is more about IP, it’s more about resiliency and it’s more about the capability to build the things we need here. So that’s good news. All right. We’re going to tie off this decode Pat. We’re going to get after it a little bit. You know we did, we did a bit on the Trump Elon feud but are they going to become Besties again? I guess. Let’s see. Did I win?
Patrick Moorhead: You won. Yeah. You’re talking about how they’re going to be besties again.
Daniel Newman: Yeah. Well, I tweeted this. Or X did or X post tweeted this yesterday. As I said, we may be watching the best movie of all time play out in the real world. You know, there are some reasons to believe that the types of accusations that have been passed back and forth are indicative of, you know, a real fight that’s going on. But let’s face it, these two sociopaths that are our president and that are the multibillionaire, that is Elon Musk, he lost $36 billion yesterday, but he only had $350 billion left after that tough day.. Would they possibly play this out in the public eye in order to wag the dog and move attention elsewhere? It is entirely possible. But when you’re playing for stakes this big and you are coming in with one onus, they have reputations to protect. So the problem is right now, with so much going on in Washington is Elon Musk came to Washington to cut costs. And in the end, it doesn’t look like the cost cuts are going to get done. Donald Trump ran on the idea that he could lower the deficit, that he could use tariffs to cut all kinds of costs, that he could lower taxes. And right now, all those things are at stake.
So what do we know works better than anything else? You wag the dog just a little bit where you need to. You move your eyes and attention elsewhere. The bill gets pushed through. The cost cuts didn’t happen. They claim it’s all a big disruption in a fight. They didn’t get along, they. And then in the end, suddenly, slowly, they become friends again. Is there some real tension that’s developed between the two of them? Absolutely. Anyone that’s playing for stakes this big, losing his EV mandate, potentially seeing all the work of Doge go to waste, seeing Donald Trump move from being a hard nose drain the swamp to a blithering bureaucrat that’s willing to accept terrible policy that’s going to raise our deficit. So these two have a reputation to protect. But in the end, I don’t think this fight is real. I think they both had encounters with Epstein and Maxwell. By the way, having an encounter does not mean that any of them actually did anything that was illegal. And I think we need to be very clear about that because in this world, the guilty until proven innocent and, and the canceling and the doxxing has gone way too far. But you’ve got two people that really don’t care about calling out names, having fights in public, telling people they’re going to get fired, including the Fed chair and different secretaries, different world leaders. So having a little fight to train, to take attention away from failing policies, from a mounting debt that is going to absolutely bury our children and be passed generations into the future in order to hopefully jam this thing through. Because in my opinion, Musk knows it has to get done. The tax cuts have to remain, but if it gets done and costs aren’t cut, he’s going to look like an absolute clown. He had dedicated three months to go, three plus almost six months to go to Washington D.C. to get effectively nothing done. That’s embarrassing when you’re someone like Elon Musk. And by the way, in the process of doing all that, you alienated half of the US population, you ended up losing value in your, in your company’s stock and you ended up creating, you know, a situation where you lost most of the base of people who bought Teslas in the first place.
So by the way, another play and another conspiracy here is why not win back half the population here by going toe to toe with the President of the United States and saying, I’m almost back on the liberal side. I am anti Trump. I now have Trump derangement syndrome. My name is Elon Musk. I am all about climate, I am about space, I am about education, I am about innovation. Everything that the right is considered not to be for. So Elon Musk, Donald Trump, playing it out, protecting their reputations. Elon can sell more cars to Democrats. They can stop firebombing his dealerships and threatening his life. Donald Trump can get away and he can pass the big beautiful bill. They all walk away and when we turn the cameras off, those two are belly bumping and they are having all kinds of fun together. My take, no real fight going on. This is a movie. We are watching it, popcorn in our hands and we are all being played for fools.
Patrick Moorhead: Wow, Daniel, you seem to be a very forgiving person. This is good. But listen, I think these two are done and it could get even worse. And I just, I’m going to ask the audience right now if your best friend that you literally publicly declared as best friends said you were a pedophile, said that the success that you had was not because of you, but because of them. If they were going to economically block you, take something away from you that they shouldn’t. Would you really get back with them? And it’s not just doing this in private, maybe filing a lawsuit. It’s doing it in front of all of your friends, all of your family and your kids. How would your family respond if the person that used to be your bestie said that you were a pedophile? Think about that for a second. I don’t need five minutes to figure this out. I’m gonna drop the mic. I’ve won. Let’s move on.
Daniel Newman: Are you done? That’s it.
Patrick Moorhead: I already dropped the mic.
Daniel Newman: I’m declarative. You got a guy with, with like 11 kids from four moms and certain kids that he’s already alienated. This guy doesn’t care at all about what people think of him. Like I said, he’s got 350 billion left. He’s chilling.
Patrick Moorhead: He is possibly the most insecure person per billion that I’ve ever, I’ve ever seen.
Daniel Newman: Wow.
Patrick Moorhead: I mean, he doesn’t, you know what? If he didn’t worry about it, he would just stop tweeting. He would delete his things and he would walk away and maybe get revenge a different way.
Daniel Newman: It’s coming. We will see everybody. Are we watching a movie or is this a fight or is this a divorce in the public town square? I don’t know, Pat. I, actually, I personally tend to think that there’s probably some bits of truth, but there’s a lot of political theater here, that’s for sure. All right, well, that’s fun. The Flip is always a lot of fun. Go ahead and write to us. Tell us who won. Did Pat, in his very short and brief mic drop, take me out with my blithering rant of foolishness and name calling and stupidity and conspiracy theories? Who knows? I mean, look, I used to do Fox, but now I’m all about news. I’m heading down the rabbit hole.
Patrick Moorhead: You’re still doing Fox and you’re on your way to Owen. I know you.
Daniel Newman: Listen, all attention is good attention. You know that’s my insecurity coming out. So. All right, Pat, we are going to move on to bulls and bears. All right. What a week, Pat. We are ripping towards all time highs. And on the Friday as we record this thing on June 6th, apparently the market loves Donald Trump on Epstein Island. It is up people’s attention to what is going on in world trade. I mean, we had a jobs report that looked a little weak, but we’ve got inflation way down. The S&P is back at 6,000. It is possibly going to rip to some level of all time highs. Tech is back. Microsoft back over three and a half trillion dollars in market cap. Nvidia and Microsoft swapping blows this week to be the world’s biggest company. It’s like Liberation day. It was two months ago and this was going to be the end of the world. And if you invested on Liberation Day, you could be up 50 or 100%. Which just reminds me all you scaredy cats that don’t want to put your money to work when, when it looks dark. Remember, memories are short and people do not remember the down for long because we’re a bunch of degenerate gamblers that want to see our money go to work. And by the way, leaving your money in the bank right now with even lower inflation and lower rates is not going to get you where you need to go. But we’re not giving stock advice.
Patrick Moorhead: Dan, you’re definitely getting the super cut with that rant. If you don’t, I’m going to do something super cute. I may put some interstitials of me, you know, doing tricep workouts this morning, but. No, that was good.
Daniel Newman: I like it. That would be pretty funny. That would be pretty funny. I can’t help myself. You know, I get into these manic moves where I just, I just need to blither a fool. So. All right, let’s talk a little earnings though, Pat, you know, I kind of gave the overall. Oh, by the way, I do need to mention you kind of mentioned this, but you know, Trump and Xi Jinping besties, they’re talking again. Tweet out and he’s like, that guy’s really, really good. And that’s why it’s going to be hard to make a deal. So you got the deal man basically saying, I’m fighting with the deal man and I’m not sure I’m going to be able to get it done. But you know, just the idea of them talking caused the market to rip. People are just looking for a reason to be exuberant. I wouldn’t be short. Don’t be the asshole at the craps table playing the don’t pass line. It’s, it’s just, it doesn’t work. I mean, you got those Ray Dalio types that just literally are perpetually calling for the end of the world and they might get it right like once. And I mean, I guess being right once, the Victory lap can be big enough. But you see as a whole, the casino is. Wait, what, what did Trump say after Liberation Day? There’s no crying in the casino. He was talking about the markets. But Pat, look, Tesla, in this Trump Elon fight, the Poly Market said 35% that Elon wouldn’t be CEO by the end of the year. Okay. His stock dropped 14%. People were losing their damn minds. Now I’m just pulling up right now so we get this in real time. Tesla is up 16. It’s up 6% today. So on the last day it went from, it was at almost 350, dropped all the way to 275. Now it’s back over 300. What do you think about that?
Patrick Moorhead: Yeah, it’s, it’s down 12% though, in aggregate for the past five days. And we are recording on a Friday here, folks. But I did two press interviews on this, kind of breaking this down. So why would this possibly happen, right? There was a lot of discussion about, well, is it because Musk is coming back? Absolutely not. Right? In fact, Musk is the guy that does the impossible. He creates the rockets that land themselves for the first time. He had one shot to get that rocket up and he got it up. Otherwise he would have been bankrupt. He slept in his factory because quite frankly they couldn’t mass produce cars. Now they can. They do have some challenges moving forward. They do need to get in fact autopilot, sorry, full auto. Robo Taxis apparently starts here in Austin in six days, opening for business. They’re already running around the city apparently. I haven’t seen one yet, so that’s not it. Musk makes things better for business. What they’re afraid of is retribution. Retribution of an investigation, retribution of contracts being cancelled. That’s what they’re afraid of. And it’s really a fear of the unknown. I do think, and I did bring this up, Daniel, that, you know, now that they’re pissing off, you know, the far right, right, they pissed off the far left. You know, is that going to mean more business is going to be okay if you’re a Democrat too, to buy a Tesla? And you know, I talked a lot about brands, brand equity, having a half life. It’s going to take time to mend those wounds. But it’s kind of a ridiculous reason to sell. It makes no sense. It’s that we would say nonsense.
Daniel Newman: All right, so we got a couple more to hit, Pat and I want to do these somewhat promptly because I actually have to go to work a little bit here in a few minutes.
Patrick Moorhead: Corporate meetings. I get it.
Daniel Newman: Corporate bull crap. And if you’re listening, I posted something yesterday that said nowhere for you to hide 80% of people AI is coming for your job. Just want to be clear, that could be anywhere. Including Futurum Group. All right, let’s talk about Avago, Avgo, Broadcom, PAT. AI revenue up 46%. 4.4 billion overall revenue 15 billion. They beat, they beat. They’ve got a big guide for the next quarter. Over 5 billion. They’ve got over 10 billion now in accelerator revenue. Pat, this is execution. This is having the right products, the right product market fit. You know, they’re holding everything together and doing what they said with the infrastructure side on Software, software side, VMware, mainframe, this company, man, I just, it just blows me away. And by the way, they don’t just make huge EBITDA, they make huge net profit, $5 billion of profit on the quarter. Unlike $15 billion of total revenue. They pull more than 50% to EBITDA and they pull more. Almost a third of their revenue goes to actually cash creation every quarter. Hock Tan is an absolute machine. I don’t even know what more to say. By the way, the upgrades came pouring in today. Never seen a stock with so much consensus. I think there’s more excitement, enthusiasm and valuation to this one than Nvidia, which is just wild. They sold a little bit on the news, but didn’t matter. This thing’s going to rip higher this quarter. That’s my bet.
Patrick Moorhead: Yeah, it’s crazy. Had a double beat and a raise, but that just isn’t what it used to be. The market did want to see, I mean I did see the notes that came out, but the market wanted to see something definitive. And if you look at the PE ratio, which I pointed out yesterday in my tweet, it makes sense to me that that didn’t go up. If you look at the PE ratio of Broadcom compared to Nvidia and even AMD Broadcom is, is priced at a, a much bigger multiple there. I know while everybody’s googly eyed on the chips and it is cool, I do think that’s great. They increase their revenue by 25% on the software side directly related to VMware and, and what is going on there? I know everybody said it would be a disaster. It’s not. Are there people that are pissed off? Yes, they are. Are some customers trying to get out of VMware? Yes, but they obviously aren’t currently and I, I think to me, is VCF. People using VCF are going to be the, the milestone and the metric to, to keep your eye on. Because if you get into VCF, you’re betting on VMware for your private cloud.
Daniel Newman: Absolutely. You hit that on the head. All right, we got a couple minutes left and then I want to tie off HPE. Pat, I think we both talked to CEO Antonio Neri. What was your read on their results?
Patrick Moorhead: Yeah, listen, better than I had expected. A fine showing, right. A double beat and a good forecast in their stock went up. Right. They tightened, they narrowed the, the guidance which is a, a vote of confidence and it’s on the back of, back of AI. I think the thing I liked the most was that every product group’s revenue is up. Hybrid cloud, edge, server. Right. Was up. I mean the margins, you know, I don’t like to see the execution issues on the server stuff that was directly attributed to the change off in Nvidia GPUs. But it’s good to see that everything is growing. I think that’s a good signal.
Daniel Newman: Yeah, I like the enterprise number. About a third of that AI revenue going to enterprise. They’re not hyper dependent. I mean I think a lot of people will look at the Super Micros and the Dells and wonder why HPE is not. But I think that’s pretty intentional and I think it’s also they’ve had to get their supply chain in order, which sounds like they did. They’re committed to margin coming back. They’ve got some upside on their revenue. You know the cash flow kind of always comes in the second half for them. So it looks a little soft in that quarter, you know, to see kind of I think about $800 million cash decline on a year over year basis. One other thing I like to mention, I mean they really crushed it on Greenlake. 47% I think growth. I mean they’re still growing high mid double digits, you know, multi billion pipeline, thousands of customers. That was a part of the business that really Antonio committed to early on. You’re seeing it work. Some strength at the edge, still having some strength in HPC, which has been a bit of their, bit of their pedigree over the, over the years. Juniper deal needs to get done. I think that’s a distraction and it’s kind of carried on a little bit too long. But it was, it was a kind of a tidy quarter, you know, it’s been it and the market seemed to like it. So congratulations to the team at HPE. And there you have it. So. So I’m gonna wrap up there, Pat, unless you have any other comments on. On the markets, let’s make sure that we go.
Patrick Moorhead: Let’s wrap.
Daniel Newman: Let’s make a quick call out for The Six Five Summit. Everybody make sure that you’ve signed up because it’s going to be outstanding. sixfivemedia.com/summit next week. We will see you there. If we don’t see you there. Pat is going to send you a DM and he’s going to break up with you. Pat, we’ll never break up, will we? There’s no way. Never.
Patrick Moorhead: Not a chance. At least not publicly.
Daniel Newman: Sorry, everybody. It ain’t happening. We’ll be miserable. But we’ll do it together. That’s what we’re gonna do. We’re gonna be two miserable and we will do it and privately have our fights. And you will never know because we’ll just come to the show and we’ll be all jovial and laughing and shooting up peptides.
Patrick Moorhead: Jovial and jacked.
Daniel Newman: Jovial and jacked.
Patrick Moorhead: All right.
Daniel Newman: Be part of our community. Subscribe, Watch our show every single week. We appreciate you all, but it’s time to go. Bye.
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.
