DeepSeek STRIKES Earnings | Tesla, Microsoft, Meta YIKES

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meetkevin.com but for now we got to talk

deep SE well what did we just hear from

Microsoft meta and and Tesla and why the

heck is Microsoft down

5.4% in the after hours whereas Tesla is

up 4% in after hours and Nvidia down

about 1 and a quarter and all these

numbers obviously could shift and flip

and flop all over the place but a lot of

people were wondering what what's the

news what's going on so let's get

through it so first of all uh Microsoft

missed slightly on cloud now they're

blaming not having enough data servers

available for them to satiate the Azure

demand that there is but some people are

scratching their head going wait a

minute H how do you'all miss on

intelligent Cloud now they only missed

by about

1.35% so it's not that big of a deal in

terms of the Miss but I think the

markets were a little bit more spooked

because remember we went into this

expecting Microsoft and meta to say

something like hey uh we we have no

plans to spend or change our Capital

expenditures but we will see what we can

learn from Deep seek and incorporated

into our efficiency models at the

company right and guess what Facebook

which is up 2% right now and after hours

said literally exactly this it's it's

almost like they listen to my video

before earnings here's what meta is

likely to say and they copied it

Microsoft didn't listen to the video

meta said hey right now we still

anticipate our cap backs to be be

between 50 and 65 billion that's up from

the 51 they previously projected uh and

they quote hope to implement DC advances

at meta they see a business

opportunities from Artificial

Intelligence coming next year in terms

of being able to actually monetize

artificial intelligence but it's too

soon for us to make any kind of changes

to our capital expenditure guidance you

know just two days after the release of

deep seek essentially So Meta sort of

looked at this and was like oh yeah like

we can't make any changes yet on our

capex but oh absolutely we're going to

end up spend like we're going to be more

efficient we're going to learn what we

can and open source is the future yeah

Okay cool so that was meta's take to

deep seek well what did Microsoft say

Microsoft instead of saying this came in

and said well so we missed on cloud uh

and Kathy Wood by the way is complaining

that Microsoft is seeing uh you know

growth Decline and so we can kind of

explore that more deeply separately but

uh when it came to nadela speaking

satian Nadella speaking about deep seek

he says deep seek has some real

Innovations and we actually see capex

growth being lower this year than it was

last year and there are definitely

significant efficiency gains to be had

from artificial intelligence now this is

really interesting because you kind of

have this like Duality here

and my take is markets are looking at

Microsoft going okay like y'all are high

margin y'all obviously would be a

beneficiary of more efficient AI but

only to the extent that you can actually

grow on share and I think they're

getting beat up here a little bit

unfairly but I think they're getting

beat up on missing that cloud growth I

think markets might be looking at

Microsoft going okay well if y'all are

going to be more efficient we want you

to sell more but you're not selling and

more so we'll go somewhere else but

honestly it's not just Microsoft getting

beaten up after these earnings its

Salesforce is down 3% after that

Microsoft misses well possibly in

sympathy and they've been running quite

a bit over the last few days meta is

still holding on to its

2.2% but that's probably because meta

makes most of their money from

advertising and frankly they're crushing

it with advertising I mean look at M

meta numbers for example the average

price paid for for an advertisement at

meta is up 14% year-over-year that is

phenomenal growth uh over at meta uh

you've also got to remember that even

though they missed on their guidance by

2.5% their their numbers across the

entire world are frankly great you look

at ad Revenue growth at 28% at the rest

rest of the world 48% operating margin

they costs only up about 15% well

they're really exploding with not only

advertising but also the potential side

of innovation Mark Zuckerberg for

example started by talking about the

rayb band metag glasses and how hey the

market will tell them if this is

something that billions of people are

going to want to use or if it's going to

be a slow schlog or grind so it seems

like for some reason markets were really

resonating with meta here a little bit

more uh service now was another one of

those software businesses that just

disappointed with the subscription

Outlook not great and the stock down

about 8 % in after hours after they had

a Miss on their guidance so it seems

like markets today are saying look

that's cool y'all can be more efficient

because of deep seek you all are

reiterating the innovations that are

happening with the Deep seek technology

but we need to see big dollars com into

the bottom line and growth and if you're

not going to grow like Kathy Wood said

regarding Microsoft then maybe this

isn't the place to be and so I think

that's kind of why you started seeing

Microsoft trade down a bit uh not only

that Miss but also that mention that

we're going to focus more on short-lived

assets so basically focusing on more

near-term spending that could be like a

marketing campaign right like oh we'll

Market our business and we'll use that

marketing expense this year and that's

it as opposed to like a longer term

asset which would be like another data

center so they're kind of in this

Duality where they're like on one hand

we're data and compute constrained but

on the other hand things are getting

more efficient and we don't want to keep

building data centers because maybe

we'll just sort of converge into that

efficiency now that's kind of a

complicated idea right there so I want

to draw that one out and and I'm not

saying that you can't understand it I

just I think the way that I'm conveying

it is a little bit complicated but I

think it's actually really important for

us to think about so let's grab a page

on the iPad here and uh let's draw this

out this this thesis and then I want you

to tell me what you think about this

thesis let's see if we're on the same

page on this puppy all right so and then

of course we'll do our test learnings so

I think there's a chance with what

Microsoft is doing is they saying look

we have spent uh a lot of money on

artificial intelligence right so

spending on AI infrastructure let's call

it this right that's spending on AI

infrastructure and then let's go ahead

and draw a uh AI

needs curve so we'll do uh uh we'll kind

of draw this logarithmically

AI needs curve actually it's kind of

like logarithmically and then it turns

more what is that parabolic upside down

Parabola so uh let me label this uh and

then I'll I'll sort of put

like where we are now I I'll call

this the

now it feels like uh and I could be

wrong about this but it it feels feels

like this is what they're talking about

so spending on AI infrastructure is this

that's the now and this right here is AI

Demand right so they're at a place where

right now there's a shortage this

section right here is the

shortage but the problem is because AI

is getting more efficient they actually

see in the future a collapse in the need

for data centers that they have and so

if they stop building let's say they

stop building right here eventually what

this section right here is going to be

is uh excess uh

compute uh and I think when we get into

the Tesla earnings you're going to see

some of that as well though Tesla didn't

get punished as much because Tesla has

the argument of well Optimus robots are

going to need way more compute so just

stay tuned and I'll talk about Tesla in

just a moment

but to me I think like I I personally

would would consider taking a screenshot

of this right here I'm not saying that's

because this is like beautiful art it's

because I I really think if you're an

investor you want to look at this

critically and you want to make an

opinion about this you want to say do I

agree with this so so again the dotted

line is where we are now the orange

vertical line is spending on AI

infrastructure and the reason it's not

exponential is because there's a limit

to how quickly you can get chips and

Machinery Machinery just sort of grows

linearly it doesn't really grow

exponentially uh whereas demand can

right demand can grow overnight like we

saw during the pandemic but actually

manufacturing stuff uh doesn't usually

grow exponentially it usually does this

stair stepping thing

where it probably practically looks like

this uh and and then the linear line is

really just the average of it right but

the point is if AI demand is so

explosive to where yes we're compute

constrained but then you have Microsoft

saying we actually don't need this much

like we're not going to invest that much

anymore into capex like we're going to

slow our capex growth I think that's

because they actually see those

efficiencies at some point putting them

in a place where they're going to have a

substantial excess of supply of compute

uh like think about this like take this

out I don't know 3 years when it's all

built okay so you really need new demand

sources for this stuff uh look go go out

into this direction over here and what

you end up with is this entire section

right here all of this widening this all

becomes excess compute what you need are

more purposes more purposes to fulfill

this excess compute and so what's an

example of excess compute that can

actually push that red line up or that

that sort of demand curve up what can do

that well honestly Optimus is something

uh that can push this curve up and so I

think that's why Tesla is uh reacting a

lot more positively in the after hours

at least right now uh you know Stock's

up over 3% it was down as much as 5%

when it first missed on its numbers

we're going to talk um uh Tesla here in

just a moment but uh really when you

listen closely to what Elon said what

was different this time was that they

talked in their shareholder deck about

how they have this uh

50,000 unit server cluster uh in fact I

have a picture of it right here where is

it right here right here it's the cortex

50,000 GPU training cluster that was

different you know something else that

was different was them recognizing $600

million of revenue from Bitcoin uh as a

mark to Market which also means if

bitcoin's going to go down in the future

they'll have to take the hit but the

fact that they took a

600,000 uh sorry $600 million bonus like

to their income and they still missed

earnings per share on an adjusted basis

by 2 cents they missed Revenue uh by

like $1.5 billion dollar uh and uh their

gross margin came in at

16.3% versus the estimate of 18.9% with

margin excluding regulatory credits at

just 13.6% these numbers were not good

but the thing that actually kept them

going was that they have more compute

but not only do they have more compute

they have the purpose and so that is the

opposite of what Microsoft is feeling

because again compare this Microsoft

equals uh more compute uh uh uh but uh

Miss On Demand right uh and then at

Tesla what you actually have is uh more

compute more demand coming via Optimus

so this is a a very different artificial

intelligence story they're not really

relyant on an outside source for keeping

their servers busy and I think that's

one of the reasons why Tesla got

rewarded here even in the face of crap

margin but then again remember when I

did my earnings preview we talked about

this with course members in the alpha

report we talked about this in videos on

the channel like I talked about this

everywhere okay this was I think I was

as clear as I could possibly be here

that the Tesla earnings today were never

going to matter about the vehicle

margins or vehicle deliveries we already

knew all this stuff was going to be crap

it was all going to be about the future

Optimus when are we going to get it oh

okay you guys are going to try to build

a few thousand by the end of the year to

have them functional in factories and

then you want to get to ideally 10,000

uh a month at some point in the future

your first line will be th000 a month

then the next line will be 10,000 a

month then you'll be at 100,000 a month

that's awesome that's really exciting

okay what else can you tell us oh you're

going to start doing cyber cab tests in

uh uh Austin uh potentially in June and

you're probably going to release uh full

self-driving

unsupervised later this year in

California and Texas and then other

parts of the United States this year

that's great hey what about Hardware uh

like Hardware 4 oh crap cars with hard

Ware 3 you're going to have to upgrade

to Hardware 4 to probably get

unsupervised oh no and then to that

elon's like good thing a lot of people

didn't buy the FSD package because he's

basically implying that they're going to

provide that upgrade for free because

yeah you're going to need a hardware

upgrade you're going to need a new

computer upgrade to actually get to to

this level so it'll be interesting

because I've got two cars I think

actually one of them might still be on

hardw War 2 but anyway I've got two

older ones and then I've got the Cyber

truck which is on hard War 4 so we'll

see I guess but anyway um they also

still sort of tease this idea about the

launch of a new more affordable model

but nobody's asking questions about it

or they're purposefully dodging

questions on it and not even having them

ask those questions uh they keep teasing

it they mention it in their prepared

remarks they mention it in their

shareholder deck that uh uh you know a

more affordable model should come in

20125 but they never talk about is this

going to be a whole new car is this

going to be like a refresh version of

some existing product is this just going

to be a low battery variant of something

that we already have like a lower

smaller battery model 3 uh they also

have a an interesting slide where they

they kind of suggest they're not going

to use the stainless steel ever again in

future products so maybe they kind of

learned a poopy doopy lesson there see

right here they say use in future

vehicles and they check mark steer by

wire adaptive air suspension custom

laminated glass ether Lube 800 volt

battery system 48 volt architecture

that's how you don't get the 12vt

cigarette lighter anymore it's actually

kind of annoying if you have old

cigarette lighter products but uh look

what's not going to be included the

stainless steel

exoskeleton is not going to be used in

future Vehicles so I thought that was

kind of interesting because that sort of

implies that they're not really planning

on a future version of like a cyber

truck or a cyber van and instead it'll

be more like the Roven the robo van or

or whatever they talked about coming out

with Apple watch support through their

app I guess I need to get that app

update cuz I'd love to have the key on

my watch instead of on my phone that'd

be really cool uh talked about how

they're producing 2 and a half th000

cyber uh truck worth cyber trucks worth

of

4680 uh and uh Mega sha Mega Factory

Shanghai was completed in Q4 that's

that's all fantastic then we've got uh

they've got the roof going on the Reno

facility for the semi- trucks they

expect to manufacture semi- trucks next

year Elon Musk as usual and almost I

mean frankly I predicted it on the live

stream you should go watch it just cuz

it's a meme at this point I'm like well

elon's going to get off playing Diablo

or whatever he's playing and then he's

going to get on the radio or you know

his his phone be like oh what are we

doing guys oh earnings call Tesla is

going to be the most valuable company in

the world uh and then today he actually

surprised me because he got on he goes

Tesla is not only going to be the most

valuable company in the world but uh

it's going to sound like Donald Trump

and it's probably going to be worth five

times as much as the most valuable

company in the world today it's going to

be huge it's going to go ballistic he

had a lot of

excitement at the beginning uh let's

just say everybody's so used to hearing

at this point it didn't move the stock

at all but that's okay because the stock

really shouldn't move off that because

it was kind of just like a pump we

really want to hear updates uh and so

again very very optimistic but uh he

kind of goes through the usual how

useful and autonomous car is going to be

in the future and blah blah blah but

really they want to tow into doing FSD

trials in June in Austin as an initial

operated by uh Tesla and hopefully

they'll have a few thousand Optimus

robots at the end of the year operating

in their facility and then next year we

get into more volume production for

Optimus and cyber cabs uh probably where

then they can expand the robo taxi

service so to speak so uh internal only

for now they do think that they can get

the Optimus cost down to $20,000 and

cost a good sold which actually pretty

good given that they're cogs right now

on a car is about $34 $35,000 but their

average selling prices have gone down

their average selling prices are so low

right now that uh they uh they're at the

lowest margin per vehicle right now that

they have seen uh since

2018 and that's before the EV tax

credits go away so you know some

potential pain on the ACT ual EV and the

like manufacturing side but again the

market is rewarding the enthusiasm

because yes as AI becomes more efficient

it'll actually be a Big Boon to Tesla so

the Deep seek model would be a huge Boon

to Tesla because really you're you're

able to likely operate artificial

intelligence at frankly a much more cost

effective uh level of energy or spend

essentially to accomplish hopefully uh

that 10x requirement that Optimus robot

are going to need since they're going to

be doing as Elon says so many more

things than just what a car does so

anyway that gives you a little bit of a

deep- seek impact on the Tesla earnings

currently up about

4.4% Microsoft earnings currently down

about

5.28% uh

and meta earnings uh currently up about

1.8% there you have it check out

meetkevin.com thank you so much for

watching and we'll see you in the next

one can not advertise these things that

you told us here I feel like nobody else

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advertising in see go congratulations

man you have done so much people love

you people look up to you Kevin P there

financial analyst and YouTuber meet

Kevin always great to get your take