With plans to spend even more aggressively on a. I. Also, that Second Quarter guidance, perhaps, not that exciting on top of that, we got a massive earnings day comcast, five dow components also reporting, merck, honeywell, caterpillar, dow and ibm, one of the biggest laggards on the s p, by the way lets begin with the Market Reaction to the weaker than expected gdp, jim. 1. 6 looking for prior actually, it was about 2. 5 . Goldman was at 3. 1 . This is one where people were obviously the wrong way on both. Wrong on how slow it is and wrong on inflation so, the fed needs some help. These were numbers where you could say, you know what, they can cut. But david, you dont cut when you have this kind of inflation. So, the core price index, up 3. 7 when you were looking for 3. 4. What are you smirking about . These are awful numbers. Im not smirking. I was looking at you happily, happy to see you my gosh. What am i, your kid you bring me to work today listen to me gdp no. The worry now is stagflation, right . I was leading to that all right, well, i beat you to it. Yeah, you did look, stagflation, to people who arent familiar with things, means theres nothing you can do the fed cant get inflation under control. So, therefore, it cant cut rates, which therefore makes it so you get today you get a weakening economy or is this just some sort of weird oneoff, or is it reflective of these things youve been talking about, ive been talking about a little as well march is a crummy month when you hear restaurant receipts and think various things like that diesel prices. I dont know you got a frugal consumer thank you, goldman, for upgrade, tjx. We have industrials just doing okay we have caterpillar. We dont have that revenue raise im looking for. We have tech, where you have servicenow theyre going to be coming on soon this stock is down very badly, and one reason is because people say, wait a second, they didnt raise as much as they usually raise. Thats a kind of false positive. In other words, theyre still raising. What it amounts to, david, is youre struggling on a day like today to say, what do i do i got this tenyear at 4. 7 . I was told if it didnt hold 4. 6 , i should sell. Not to mention, we havent seen 5 in a little while in that twoyear. Hello. I bought that twoyear early this week. Im already taking a beating can you imagine taking a beating on a twoyear . Carl, im not giving up on it, because today is a tough day, but we left here last night, and you could say we left here on ford, and ford is great, and were talking about how we have a part of ford that is worth the price of ford. You want to go through the names that raised guidance mark, ford, Royal Caribbean, Waste Management, chipotle, sp global yes, yes and all that and a fiveplus percent twoyear will get you a down market. Carls right. Were sitting here, and we can bemoan everything. A lot of the 1. 6 number is net exports and inventories. You still got consumption running 2. 5. And i mean, well see. But its not stagflation is a little extreme i agree im just look, i wanted to give the conventional wisdom, because people are going to say, wait a second, why is the market down 4. 6 versus 4. 7 is not that big a deal, but whats happening is lets say earnings beat but sales werent that good today. Were only looking at the sales. So, Waste Management, which i have on tonight, the sales slipped. Well, this stock has been a horse. I mean, lets address the elephant in the room what has meta done this year metas done nothing but go up, 135 year over year. And were going to complain about it today i think Waste Management is a Terrific Company i have them on tonight i hate to say this and jim fish, please dont take it theyre run of the mill good company and a good indicator of industrial activity. Exactly we have ways to look at the economy other than the 4. 6, 4. 7 conundrum. We also know when you get a company like meta lowering the boom, and you get a company like servicenow not raising enough, then people start saying, okay, bonds going the wrong way, the gdp going the wrong way, maybe i have to trim i dont think thats wrong thats what i said yesterday i was apologizing to club members, saying, i hate being this negative, but i dont have the horses when you dont have the horses, you cant foment the horses. To jims point, raising guidance, take a listen. Significantly more over the coming years to build even more advanced models and the Largest Scale a. I. Services in the world. As were scaling capex and Energy Expenses for a. I. , well continue focusing on operating the rest of our company efficiently, but realistically, even with shifting many of our existing resources to focus on a. I. , well still grow our investment envelope meaningfully before we make much revenue from some of these new products are you worried about the opposite of the year discipline . It was a year of efficiency it wasnt necessarily years. All right, so, when someone has something to invest in, and it can give you a good return, then someone who is rational is going to give it now, what he does say, and there are some great lines in the call historically, investing to build these new scaled experience which is what he is doing, has been a very good longterm investment for us and for investors who have stuck with us yep why doesnthe deserve the benefit of the doubt he does im giving it to him. He does deserve the benefit of the doubt, but you have to also take in mind that the next quarter, where the guide was not not as high as had been anticipated by the way, theyre going to start to lap those big concepts that they saw as a result of shein and temu, spending enormously on the platform and so, that makes the revenue guide a little less than perhaps had been anticipated and then, theres 40 billion number, just to sort of stop for a moment and think about that. If, in fact, they were to hit it thats the very high end of that envelope but 40 billion in capex the number itself is staggering. As i quote him, smart investors see the product as scaling. Theres a clear monetizable opportunity there, even before the revenue materializes in other words, you dont have to wait until the numbers explode. You got to get in the ahead of it witness how much the stock was up last year and this year still up almost 20 for the year im defending it. I think you can buy the stock. Wait a couple days, because theres guys who want to get out. He didnt tell you to buy ahead of this quarter. There are still plenty of people who have a 24 a share earnings number for 2025, and believe that it should trade at a 20 multiple, which would mean right back to 480 if you believe that 18 gets you around where we are right now. So, you know, that said, its going to be a little while until we see these products. Right and you say he gets the benefit of the doubt he very well probably deserves that yes but it also does raise some concerns, even though they have 30,000 fewer employees than they did in november of 22 thats you know, a situation where hardware costs more what are the takeaways evercore, really good piece today. Winners, nvidia. Nvidia stock is going to be down today because its part of a cohort called tech meanwhile, all they did was tell you how much money theyre spending on these chips. I got a great one for you whos the second on the evercore list i dont know. Who . Broadcom. Who joined the board in february right hock tan. Thats an interesting he said Something Interesting on the clip. Energy costs speaking to ge vernova, the amount of cost of energy for the first time in years is really going much, much higher. Theyre going to have to all these companies are going to have to compromise and start using natural gas. They cant just rely on wind and solar. Its one thing when alphabet or microsoft or amazon, even, their capex, particularly when it comes to the spending theyre doing as hyperscalers in the datacenter, because thats just money theyre putting in that they immediately charge customers who are using it this is different. This is new products that conceivably are going to be based, by the way, on the incredible amount of data that this company has that is makes it unique in terms of the personal data it has to but everybody can come up with their own guess. Is it going to be an a. I. Agent that helps you create content . Its going to be search dynamite search. What is it going to be that ultimately they have its going to be exciting somehow, its going to be merged with reality labs where theyve already spent, what have they spent overall, 40 million . Questionable so far listen, they got the raybans. They do someone this morning said i saw that. A new fashion style raybans is crushing it new fashion styles are coming dont laugh everybody do you know how Many Companies would kill for some invention like raybans carl, he comes up with this thing called reels its a competitor to tiktok. The president signs a ban on tiktok, and hes got reels, and we think hes not worth trusting and for all the the guys a visionary for all the protestations yesterday by tiktok, information this morning saying theyre beginning to game out some sale scenarios. I saw that. They have to. Reels is going to potentially selling at least some portion of tiktok by the way, on the reality labs spending, i did note another part of the call was he was talking about how we report our financials as a family of apps, and they also report reality labs with an operating loss of 3. 8 billion in the quarter. Maybe they spent as much as 40 billion on the thing remember, they changed the name of the company to meta he goes on to say, i think fundamentally, the same thing with the vision of reality labs to build the next generation of computing platforms in large part so we can build the best apps and experiences, so over time, were going to need to find ways to articulate the value thats generated across both segments, meaning maybe they start breaking reality labs numbers out. I think they have to. They bought 300,000 of just the humdrum nvidia chips h100s . Yeah. Whats he going to do when he gets the blackwell although, of course, amazon wants the blackwell. Of course, we say that all these companies are making their own chips. Well, theyre making the lowend chips. Youre still relying on nvidia, and i know that its fashionable to sell nvidia these days, but when the smoke clears, and it hasnt yet, nvidia is the winner when we come back, were going to see how many earnings we can get to in one block or two on this busy thursday. Plus the ceos of servicenow and southwest, shares under pressure well look at merck, bristol, ho honey well, harley, and a bunch of others when we return they respond to emails with phone calls. And they dont circle back, theyre already there. They wear business sneakers and pad their keyboards with something that makes their clicketyclacking. Clicketyclackier. But no one loves logistics as much as they do. You need tamra, izzy, and emma. They need a retirement plan. Work with principal so we can help you with a retirement and benefits plan thats right for your team. Let our expertise round out yours. 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If youve ever grilled, you know you can count on propane to make everything great. But did you know propane also Powers School buses that produce lower emissions that lead to higher test scores . Or that propane can cut your energy costs at home . It powers big jobs and small ones too. From hospitals to hospitality, people rely on propanean Energy Source thats affordable, plentiful, and environmentally friendly for everyone. Get the facts at propane. Com now. Shares of servicenow, symbol n. O. W. , are moving lower, despite a First Quarter earnings beat, although its a little more complicated than that joining us now is servicenow chairman and ceo Bill Mcdermott. Always great to see you. Subscription revenue guidance, not as strong as i thought, despite the fact that you had a great First Quarter. Im trying to figure out whether the First Quarter may be an aberration and that the next quarter is more important or whether things are just fine things are just fine, jim you know, we had a triple play we beat on the top line. We beat on the bottom line, and we raised our fullyear guidance and we can all debate, did i increase the guide enough, but that seems to be a pretty highclass problem because servicenow has become the a. I. Platform for business transformation, and were proving that the number one gen a. I. Use case in the world today is process optimization, so jim, in terms of things being fine, think about every business work flow and every enterprise around the world is going to be engineered with gen a. I. At its core, and we are that single pane of glass thats going to drive that transformation lets talk about that after listening to Mark Zuckerberg last night, he says that gen a. I. Costs a fortune, and theres absolutely no return within a couple of years why is the return instantly for gen a. I. For servicenow, and Mark Zuckerberg says, forget it . Were may thiking a lot of m on it already because we have small language models that are domain specific. They dont take a lot of compute power. Theyre lightning fast, and theyre highly secure because its the customers own data and we also remain open to the ecosystem and all the models because they fully integrate with servicenow, should the customer wish to go that way, and you know, thats the best of both worlds for the customer totally open, but at the same time, today, were taking Great Companies like microsoft and ibm. Theyre transforming their Employee Experience with digitalfirst support models, freeing up resources and fueling innovation with service nows gen a. I. Or novartis, great ceo, delivering new drugs while increasing operating efficiencies, and hes streamlining clinical trials, research, and Financial Management with gen a. I. From servicenow and were billing for that right now. So, the game is on at servicenow right, again, and i totally agree with that. You know, im looking at the stock being done im looking at people feeling a little jaded about gen a. I. , and im wondering, if i worked at novartis, how am i impacted by servicenow what makes my life better . How am i more productive i need to know this because this is a day where your stock is down and people are feeling very foolish about buying stocks that are making money off of socalled gen a. I. , and i put the socalled in after listening to Mark Zuckerberg, who is a darn smart guy. He sure is. We admire him greatly, and hes got a great company. We just have a different approach to this the proof is in the pudding. I mean, our Free Cash Flow is up 47 year over year total gross profit, up 83 year over year. So, weve proven that we cannot only grow the top line but also the bottom line. So, heres whats happening, jim. Lets take employees and customers. Think about gen a. I. Deflection rates. Theyve doubled in all of our installs, and theyre improving every month. So, the soulcrushing work that people dont want to do, they dont have to do anymore with servicenow think about Software Engineers 48 increase in the speed to innovation with natural language text turning to code think about security and risk. Gen a. I. Remediating vulnerabilities and improving the Security Posture for companies. And i can go on and on these are use cases that were doing right now. So, the ceos that are out there, they want a flag in the ground on gen a. I microsoft has done a great job with their solution, and theyre giving a copilot, and were teaming up with microsoft with our now assist a. I. Copilot, so just think about a ceo listening to the show right now. You want to team up with microsoft, you want to team up with servicenow . Total engineering integration, total teamwork, lets go all right, so, you said Software Engineers doing better. When i listen to jensen huang, hes saying we dont need Software Engineers like we used to are you able to eliminate Software Engineers because youre talking natural language . Why do i need code writers its a great question we still need our engineers, jim, because were going to be the defining Software Enterprise company of the 21st century. Weve improved productivity by 50 , so you can say, do i need half the engineers no at servicenow, we say we need all the engineers and were going to keep hiring them, because we intend to define the Enterprise Software market in this century and give customers an entirely new experience, and we want our people fired up, innovating at clock speed. Okay. I totally understand that. And what im trying to do, again, is deal with the research which talks about how they did expect a bigger guide, and what youre saying, which would indicate that you could have blown the doors off, and im wondering whether maybe when we go to your big meeting that is upcoming, your financial day, maybe well hear what disappointed these skeptics, these analyst skeptics they may regret that they were skeptical about the billings when they hear what you do at your conference. L