Meta and Tesla Earnings Unpacked | Pivot

1. KSKara Swisher0:00

   There's a lot of earnings news out there this week. Let's start with Meta's Q1. The company saw revenue increase 27%, uh, from $28.65, uh, billion in the same period last year. Net income more than doubled to $12.37 billion. This c- this company is making some money. But Meta's forecast of rising costs related to AI, they've replaced a, uh, you know, their, um, virtual reality stuff with AI (laughs) sent... which is very expensive, sent its share price down 15% in extended trading. It's gonna cost some money for them to get into this business. Mark Zuckerberg said on the earnings call that his immediate goal is getting millions or billions of people using Meta AI, with revenue coming down the line. They do not have revenue plans. M- m- that's one thing we need to stress. A lot of this AI doesn't have a business plan yet. Um, and, or there's a, there's a, it's a small business plan, um, and there's anticipation of huge profits in the future. So, he's doubling down on doing this, um, and i- i- at the same time, his current business is killing it, right? I mean, thoughts?

2. SGScott Galloway1:03

   I think it's arguably... Unfortunately for our children, this is one of the best run companies in the world. It's just, uh, the amount of money here they're printing and he's... the m- what, what was... d- I thought the most interesting thing about their earnings call relative to Tesla, was Tesla's massive, uh, investment in AI. You know, uh, Musk was bragging about how many GPUs they'd order, ordered-

3. KSKara Swisher1:28

   Yeah.

4. SGScott Galloway1:28

   ... because he's trying to create a distraction from the fact (laughs) his core business is in decline.

5. KSKara Swisher1:31

   Well, let me get... let me put those earnings. You can... let, let's talk about the Met- let's talk about Meta first, though.

6. SGScott Galloway1:36

   Sure.

7. KSKara Swisher1:36

   Should lotta p- should he be focusing on the other parts of the business? No, 'cause that's... he's gonna have... this is something... we were both making fun of his, uh, investments in virtual reality and, uh, Oculus. You know, all the Metaverse stuff.

8. SGScott Galloway1:48

   Yeah.

9. KSKara Swisher1:48

   You know, and changing the name. We thought that was ridiculous and a waste of money.

10. SGScott Galloway1:51

    Yeah.

11. KSKara Swisher1:51

    And throwing money down a sh- down a toilet essentially.

12. SGScott Galloway1:55

    Mm-hmm.

13. KSKara Swisher1:55

    In this case, do you think this spending, which is gonna be massive, is... he's gotta be in here, right? This is not a-

14. SGScott Galloway2:01

    I, I-

15. KSKara Swisher2:02

    ... choice.

16. SGScott Galloway2:02

    So, I can't... I, I can't predict if these investments are gonna pay off, but I think-

17. KSKara Swisher2:07

    Yeah.

18. SGScott Galloway2:08

    ... they have to make them. I, I just-

19. KSKara Swisher2:09

    Yeah.

20. SGScott Galloway2:10

    When you have... when you have the premier technology eating the world and the market, the market seems to offer you a return on investment on that, the perception that you're investing here. I mean, to a certain extent, even des- st- despite the fact... let me back up. Microsoft has spent more money on AI than every other company and venture capitalist, I believe, combined. If you look at Microsoft and its affiliates and its proxies, it is inv-... Satya Nadella is now considered, in my opinion, the, probably the brightest mind in business. And, I mean, there's a lot of them, but his forward lean, his forward-leaning investments in AI have increased the market cap of that company probably one or... one to $1.4 trillion off of a huge investment, but relative to $1.4 trillion. It's the best corporate investment... it's probably arguably the best venture investment in history. And so everyone says, "We can't beat the company they got behind." I mean, quite frankly, Mark... uh, the, supposedly the brightest man in technology, Musk? He's way behind in AI. He talks about it a lot. He doesn't have a single real victory in AI. It's not... his, his known in AI for walking away from the most successful AI company ever-

21. KSKara Swisher3:30

    Yeah.

22. SGScott Galloway3:30

    ... without a single share-

23. KSKara Swisher3:31

    That is correct.

24. SGScott Galloway3:31

    ... or anything.

25. KSKara Swisher3:32

    Right.

26. SGScott Galloway3:33

    So, he's trying to play catch-up and everyone... so I, I think Mark Zuckerberg taking his forward-leaning investments, which he can afford, out of virtual reality into AI, that just feels right as rain to me.

27. KSKara Swisher3:45

    Yeah. Yeah, I agree. There... I mean, uh, look, his main business right now is gonna carry him through. Look at these increases. He owns the current business environment, right? It looks (laughs) like... uh, you know, th- these numbers are really impressive. Um, and it's sort of like Microsoft's owning Windows and leaning into the future, right? Like, where they wanted to lean and, uh, e- when they leaned into cloud, for example. The... it, it's a... but this is so much more expensive. It's just... they, uh, he has to do this. And I think people were thrilled when he was making cuts to employees, but this stuff is expensive. And it's also, we have to build new fabs, we... it's just, there's gonna be enormous investment here, um, for this, and, and as we get into quantum computing. And he just can't af- he cannot miss this turn or else another company will, will take over the, all... the next version of business. Even without a business plan that people can foresee at this moment. Um, but it's almost like shifting from horses to cars. That's what it... you know?

28. SGScott Galloway4:42

    The other-

29. KSKara Swisher4:42

    We're gonna have cars.

30. SGScott Galloway4:43

    The other big shift that just really blew me away. Meta is essentially a video company. Video now represents-

Episode duration: 14:21