Markets Brace for Microsoft and Meta Earnings

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News. Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.

**Ed Ludlow** (0:22)
This is Bloomberg Tech. Coming up, SK Hynix reports a six-fold jump in profit and raised capital spending to a record $31 billion, but its Korean shares slumped. We'll tell you why. Plus, we're joined by SoFi CEO Anthony Noto following the company's earnings, topping Wall Street estimates, but showing high expenses and big tech, big earnings, big AI spending. Next up, Microsoft, Meta and a Fed decision will break it all down. There's an AI spending paradox. Korea's SK Hynix just reported a six-fold jump in profit and raised capital spending to a record $31 billion. Under normal circumstances, that would be a positive for the memory chip maker. Instead, investors sent Korean shares of the market leader in high bandwidth memory for AI down nearly 7%. Its US listed ADR is basically flat right now. The concerns over AI spending, whether it will ultimately pay off, overshadowed another blockbuster quarter. That skepticism, weighing on chip stocks more broadly, look at the NASDAQ 100 and the SOX. The NASDAQ 100 is down for a sixth straight session. Longest streak of decline since October 2022
The SOX down for a fifth day, matching the run of losses that it saw in December. Up next in earnings, Microsoft and Meta.
But for now, let's kick it off with memory. Bloomberg Intelligence analyst Jake Silverman here on SK Hynix. What was the takeaway for you? I mean, as I said, in any other quarter, this would have been a big blockbuster blowout for SK.

**Jake Silverman** (1:48)
Yeah, I think part of what investors are focusing on right now is just pricing, price increases quarter over quarter. And overall, SK Hynix kind of missed these lofty expectations. And that's been building just because AI demand has been so strong, it's really been crowding out demand for other products. So a lot of the capacity that SK Hynix has is allocated towards AI.
And so that's just created an environment of a lot of exuberance around that. And that's really ultimately the main takeaway. But another important couple of things just to keep in mind is, one is just there seems to have been some idiosyncratic issues in the quarter round timing of product mix. And then also the long-term contracts, which is really what investors are focusing on. They want a little bit more visibility in terms of demand long-term.

**Ed Ludlow** (2:42)
That's so interesting because, you know, SK would say there's been a change in customer behavior. You know, historically, memory is highly cyclical, boom and bust. But customers have said, we're willing to commit.
Just talk a little bit more about that, Jake, the change in how the market works, but also why it's not a big positive signal right now.

**Jake Silverman** (3:01)
Yeah, so typically in the past, what we've seen is customers signing monthly, but typically more like quarterly contracts. And a lot of that was because the demand was mostly coming from smartphones, PCs, consumer devices. And increasingly over the last several years, cloud and now more AI demand. And so, because AI demand is growing at a pace that's really unprecedented, and a lot of this is just because AI is far more memory intensive relative to other applications that we've seen in the past.
And so, because of this, as you're building out these massive data centers, and there's so many of them, the customers need assurances that they can get the supply, because there's been an underinvestment in the past in terms of memory capacity. So now, there's kind of a give and take in terms of supply and demand. The memory makers need to add more capacity, but they can't add it fast enough to meet the demand.

**Ed Ludlow** (4:00)
Jake Silverman of Bloomberg Intelligence, covering memory. Thank you very much. The AI sell-off is taking a toll on Kyosha. The Japanese memory maker has received its first analyst price target cut in nearly a year, with Philips Securities slashing its target by roughly 40%. The firm cited lower valuations across memory chip peers, but maintained its buy rating, saying Kyosha's long-term growth story remains intact as demand for AI storage and NAND flash memory continues to build.
The money keeps pouring into China's AI race. Moonshot AI has raised $3.5 billion at a $35 billion valuation, according to sources, far surpassing its original fundraising target after the breakout success of its Kimi K3 model. They're not stopping there, Bloomberg's Bailey Lipscholtz. On the IPO and capital markets beat. We've been reporting about this for some time now, but it's confusing because Moonshot is basically doing this round, seems like it's done, and then doing a quick follow on, give us all the details we need.