BlackRock’s GIP Buys Aligned Data Centers in $40 Billion Bet | Bloomberg Intelligence
Summary
Investment Theme: BlackRock's GIP has made a significant $40 billion investment in Aligned Data Centers, highlighting the growing demand and investment in AI infrastructure.
Market Insights: The podcast discusses the potential bubble in the AI and data center market, with concerns about overvaluation and circular investments among major players like Nvidia and Microsoft.
Company Discussion: ASML, a key player in semiconductor equipment, is navigating geopolitical tensions with China, impacting its revenue streams and growth outlook.
Luxury Market: LVMH's recent sales growth suggests a potential recovery in the luxury sector, driven by strong performance in China and robust demand in the US and Europe.
Digital Advertising: Grinder is highlighted for its unique position in the dating app market, with growth in paying users and advertising revenue, despite broader industry challenges.
Apple's Strategy: Apple is notably absent from major AI investments, possibly waiting for market leaders to emerge before committing to partnerships or acquisitions in the AI space.
Tech Earnings Outlook: Upcoming tech earnings are expected to show a bifurcation, with companies like Microsoft benefiting from AI investments, while traditional software and consulting may face challenges.
Future Analysis: Bloomberg Intelligence is focusing on the impact of AI investments on hardware, chip providers, and data center operators, assessing which companies will benefit most from the ongoing AI infrastructure build-out.
Transcript
[Music] Bloomberg Audio Studios podcasts radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. It's yet another day of data center deals. I feel like this is a neverending story here and it continues to propel the stock market higher and that's kind of what's happening here. The NASDAQ up 1.3%, the S&P 500 up 1.1%. So, we needed to bring Caroline Hyde, our BTE co-anchor in to our New York studios uh here to kind of walk us through some of the big stories. And I guess let's start on the one that became official, which is Black Rockck's GIP buying um Align Data Centers. This is a $40 billion AI bet. And to be fair, it's a lot more than Black Rockck. You've got Black Rockck, but you've got MGX, which is Madala's AI investment company, part of that sovereign wealth fund focus on AI. But you've got Microsoft in the mix. You've got Nvidia in the mix. You've got XAI in the mix. Basically, anyone who likes financing data centers or needs access to data centers or has some GPUs to put inside data centers seemingly wanted in on what was a hundred billion dollar get together pool of capital. And this is their first chunk of change, 40 billion being committed to align data centers. It's over in Texas. And this was actually owned by Mcquaryy, a big Australian infrastructure player. And they are now managing to sell off. It's a huge campus. You're thinking about operating in US and indeed in South America aligned. They've got 50 campuses. They've got 78 data centers. But all of this is as we seem to have insatiable demand for compute and therefore values go skyrocketing. So your tech beat Carolina is always front and center for this market. It's even more so certainly last two years with AI. It's even more so in the last two weeks >> with a lot of these circular deals that being referred to circular deals. Um >> where people are investing in each other's companies and things like that and the dollar amounts are so huge. I know. >> Are your sources are they saying this feels a little frothy? What are your sources telling? >> I think a lot of people are starting to put the word bubble in the context of AI and infrastructure right now. Look, you you even had the CFO of Croup yesterday talking about his anxiety when it comes to potential frothiness in the AI market. You've had the global managers survey coming from Bank of America yesterday, more the most we've ever seen in terms of majority thinking that these AI players are too highly valued. So certainly the circularity gives people pause. We had a great fun manager on just yesterday really saying look even though they think Nvidia is a bet even though today HSBC has raised the price target on Nvidia to maybe putting this at an 8 trillion company in the next 12 months but people do have pause when they're putting a hundred billion in equity investment into OpenAI basically so that OpenAI can keep buying its own GPUs. You see that happening over in Europe. Another key player that we got to keep an eye on is NScale. There's currently an private AI data center builder router. I might add, they've never built one single AI data center, but they were a crypto miner that's pivoted, and now they're committing to doing four data center projects with Microsoft. But NScale, of course, got the tap, the anointment from Jensen when he went over to London saying, "I want to back you in my equity because guess what? 2,000 GPUs are going to be offered in those four projects to Microsoft." So, it just keeps on being this idea that ultimately where are we getting the money from at the moment? Build it and they will come is the mentality. We need the infrastructure before you can really get the productivity gains. So Nvidia is putting its cash to work. >> Okay. So circular funding and yet another example of that. So what I'm confused about is how some companies that had indicated things would be kind of rough just a few months ago have now turned around and are seeing a completely different tune. ASML, which is a Dutch uh semiconductor equipment maker, had warned that the ter the trade war, the tariffs on China was going to be hurtful to its business. Now it's completely like turned around and said, you know what, demand is great. Maybe they'll be able to ek out growth in 2026. I think it's also our expectations for ASML came down some. If you're looking at a quarter-on quarter basis, the sales and the bookings fell. It's because China is so outsized in their revenue stream and China's going to start dialing back in 2026 because of the geopolitical issues and the fact that the US is asking its neighbors and allies to stop allowing such semiconductor equipment into the nation. And you just had the House China Committee saying once again we're worried about ASML but also KLA and some of the other US players. So I think that we are seeing yes ASML managing to calm anxiety that they will still see growth from other pockets. So these EUV, this is extreme ultraviolet lithography. They're the only people that make this particular sophisticated equipment that is making your leading edge chips that are going to be fueling our AI consumption. So if they're the only player, well, they've got really a sort of an a built-in demand pool, but China is going to be dialing back and the market wanted to hear that others were going to step in and it seems as though they are going to. >> Stay with us. More from Bloomberg Intelligence coming up after this. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. >> Listen on demand wherever you get your podcasts or watch us live on YouTube. LBMA shares are higher right now after a surprise return to sales growth. So maybe that is leading to folks saying perhaps the downturn we saw in luxury is over. Uh let's get some perspective from Deborah Aken. She is Bloomberg Intelligence luxury goods analyst. Deb, good to speak with you. What are you thinking when it comes to uh LVMH's results and what it signals about whether luxury is back? >> Hi. Um yeah, so uh really a very big sentiment indicator. Uh the comments from the company late last night out of Paris were more positive than the market anticipated. Um when we look at the numbers in terms of the organic sales growth the market expected around minus one we came in at plus one but it's about the sequential improvement from Q2 to Q3 uh and the fact that all five of the business units are improved versus Q2 and more than that China is mid to high singledigit growth versus a year ago. The US is robust. Europe is doing uh the same as it did uh across the board doing okay but missing out on tourism and Asia X Japan is positive. We know for Q uh US will face a bit more of a difficult comp after the spending last year uh beyond the uh election and the Trump win but into the first half of 2026 the market is looking more positive and it's certainly rallied the whole of the sector this morning and this afternoon. Hey Deb, what's the correlation between luxury spending and just kind of the broader stock market around the world because markets are really performing well. How does that correlate to just luxury spending? >> You know the big thing the big thing on luxury spend has been um that the very high-end has done well. Um so airmes branella cushionelli where they work with a restricted volume operating model uh they've done well in terms of their topline growth but when I think about an LVMH um you know that given how big they are they needed big volume there even with some pricing to manage growth in this category and instead what we saw last year and the beginning of this year was maybe a little bit of trading down so brands like Tapestries Coach Ralph Lauren, they became really so popular not only in the US but more on a globalized basis too. Um and so the view has been that the sentiment around the share prices has very much been opposed and opposite to to what's been happening on the stock market but with the exception of the mid-range. and the mid-range have done better because the view in the investor uh mindset has been that the uh the luxury uh buyer will trade down. They've done that in some brands but not all brands. In some categories, not all categories and generally we expect the biggest and the best to come back first. >> What about LVMH's wines and spirits division? We've been hearing from constellation brands and other uh spirits companies that you know there's been this massive shift in consumer tastes away from alcohol certainly the younger generation. Does that affect a company like LVMH? >> So uh a different kind of thing with LVMH. I think at the very high end we had some US weakness. So um they operate in wines fine wines high-end champagnes cognacs and others. Um, champagne is doing well and is back to growth in the US. Uh, rosé wine is doing very very well, but some of the um, spirit side is still struggling a little bit. Um, and I think that's because we've seen some trading down. So, we had China very heavily stocked. Um, and the US not so solid through the first half of the year, but there are signs of that coming back. If I look at the numbers on the Q3 for wines and spirits, they're at plus one and they were at minus4 for Q2 and minus 9 for Q1. So, it seems as though inventory is leveled out and we're starting to see some selling. >> Deb, I learned from you long ago when looking at luxury, you have to also pay attention to what's happening in China and the Chinese consumer. Are the Chinese spending either in China or are they traveling to the London, Paris, New York, Milan type thing? What what are you seeing? Yeah, we're still seeing a lot of the spend. Um, we're getting mid-igh singledigit growth in that Q3 from LVMH on your is on localized spending. Uh, we are seeing pockets of growth on the tourism side. So, there is a more positive um view and mix linked into the commentary from these results. But overall we are still absolutely missing uh Asian tourists, Chinese tourists from Europe and also in Europe we're missing uh the strength of the dollar having swung over last year with US purchases here. Um and you're you are seeing some but not as many uh in terms of full recovery versus 2019. There's growth year on year but not versus 2019 into the US either when it comes to the Chinese tourist. We used to say um a third of luxury goods just over were on the ch were were from the Chinese cohort and that would include on land and traveling, right? And we still think there's a way for that to go. Um but certainly on land and locally they're doing better than they were. >> Stay with us. More from Bloomberg Intelligence coming up after this. >> You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10 a.m. Eastern >> on Apple CarPlay and Android Auto with the Bloomberg Business App. >> Listen on demand wherever you get your podcasts or watch us live on YouTube. Paul, it's it feels very 2007ish with the deal making taking place with the banks reporting these incredible numbers. Um, a lot of companies saying they may go private. Um, we're hearing a lot of speculation about that. The latest is Grinder and in this case uh the dating app has confirmed that it received a letter from its largest shareholders interested in exploring a take private transaction. So let's bring in our Bloomberg intelligence uh internet analyst software and internet analyst uh with us Nicole Duza to give us a little bit more here. So Nicole um Grinder this dating app that's focused on the LGBT community does not actually have a proposal to evaluate. is just telling everyone, hey, this is happening and there's percolations of this happening. >> Correct. Uh, so as of right now, what we know, what's been reported is there are two investors, Raymond's age and James Louu, who together control about 60% of Grinder. They are in talks with Fortress Investment Group to secure debt financing to take the company private. Um, there has been no direct proposal at this time, but discussions seem to be around a $15 share price, which would value Grinder at around $3 billion. >> Talk to us about this company. How has it performed as a publicly traded company? >> So, uh, year to date, the shares are down around 29%. Uh, that being said, Grinder is one of the few dating apps that is still growing paying users. So, we've seen >> So, they're growing, they're still growing users. >> Yes. Okay. Uh, and that at this point right now is a little bit rare for dating apps, right? We've seen Tinder uh, lose users. We've seen Bumble lose a lot of users. Grinder, because of their niche user base, has been able to hang on to to a good amount of their users and grow users every year. >> And what is their strategy going forward? Because I did read something about how they have this three-year plan where they're targeting some pretty aggressive growth. And the the fact that they're growing users is a good sign, but the dating app business doesn't seem to be that great right now. >> Yes. So they have a couple of different levers that they can pull. Uh the first one is raising prices. They've talked for the first time about raising prices. They haven't raised prices since 2018. Uh so they're looking now at potentially raising prices. Um introducing a new premium tier. Right now they get around $24 per paying user. So there is a little bit of room for growth. They only have about 8% of their total user base of 15 million users uh who actually pay for the app. Uh so there is room there. They're also growing advertising revenue. Uh Grinder is one of the few dating apps that does have a pretty solid ad platform. Uh they grew ad revenue around 40% last quarter. Uh which was a big step up. Uh we expect that to continue. They're looking at new ad units. They're looking at better targeting. Uh so we do think there are there's room for ad revenue to really grow from here. >> I mean so you step back to the digital ad story. It's still a very bullish story for digital advertising. I mean, there's still that big macro call of digital advertising, whether it's the big ones like Facebook or the smaller ones like Grinder taking dollars away from traditional analog media. Is that story still in play? And if so, how long do you think it goes for? >> Uh, I think it is still in play. I mean, we do still see some ad dollars going to more traditional sources. So, you know, obviously digital advertising is much better targeting. Um, you can do things like direct response advertising where users um are taken directly to a website to make a purchase. Um it's a good use of ad dollars uh for for companies. Grinder has a really unique user base. Um their user base is um more affluent. They have higher discretionary income. They tend to be higher educated. So it could be a really great platform for a lot of advertisers uh who are looking to to advertise uh to that base. >> And they're also Gen Z heavy as well. So talk a little bit about how that is uh very appealing to advertisers. >> Yes. So, actually, it's funny because Grinder is one of the only dating apps really who isn't necessarily seeing an issue attracting Gen Z users. Uh, they've talked a lot about how the issues that other dating apps are facing, they don't really face because it's such a unique user base and because people come to Grinder not just for for romantic connection, but also just to meet people, to make friends, to have a community. Um, so Grinder has done a great job of attracting these users of holding on to them and again it could be a great place for advertisers to to reach Gen Z. >> Uh, 30 seconds left. Then why was the stock down or is down 40 some odd percentage this year? >> Uh, so they have they have missed on a few revenue metrics. Uh, they were a little bit light on revenue last quarter, a little bit light on IBIDA. Uh, but again we think, you know, the long-term growth perspective for this company is really strong. Uh, they have been growing users uh, which is unique for dating apps. So, we're very comfortable with the 20 to 25% revenue growth through 2027. >> Stay with us. More from Bloomberg Intelligence coming up after this. >> You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. You know, for all the talk of all these companies involved in AI deals, circular deals, where they're teaming up with someone and they're buying something or investing in something, partnering with something to buy their own chips back. One company is noticeably absent from all these announcements and that is a big one. It's Apple. Yes. >> Where is it? >> I I don't know. >> They have a lot of cash. >> They do. I don't I don't know. I don't I don't know their AI play. That's what I don't know. >> Well, their AI doesn't work very well on their phone right now. I can tell you that. Honor Rana is a tech analyst at Bloomberg Intelligence and he joins us now from Chicago. So Honor, um there are some headlines here that Apple is looking to uh beef up its smart home offerings uh lessen its dependence on China. This is something that uh the president of the United States has been pushing Apple to do to bring some of its manufacturing back to the US. But Apple is not doing that. It is beefing up its manufacturing operations in Vietnam. What's going on with Apple? See when you look at it whether it's accessories or you know putting together the phones you really cannot do that in the US we don't have the size factories or automation to to do that so you you will have to do that somewhere in Asia and as they're diversifying away from China because of the the obvious threat between US and and China trade wars Vietnam is a proper location where they can assemble let's say some accessories or smaller products where you know they may cost you $100 or $50 but they have the low cost area to produce them or or I would say assemble them. >> So, so Honor, we've spent the last two three four weeks speaking with you, speaking with Mandep, uh speaking with other tech experts about all these deals around the AI ecosystem that we've seen $10 billion here, hundred billion there. Companies ranging from Microsoft to AMD to Nvidia to OpenAI. We have not talked about Apple. What is And I'm not sure if that's a good or bad thing. I don't know if these deals are good or bad. I just know there a lot of them. They're coming out of the woodwork. There's big numbers and Apple's just conspicuous by its absence, it feels like. How do you think about it? >> Yeah, the, you know, you could look at it both ways. One way is you criticize that they're not really at the forefront of the next generation model out there. But the other way you can say is, you know, let everybody else fight it out. In the end, it'll go to the one that has the best model and include that in there its own uh distribution channel which is basically iOS. We have heard from Mark Gman has done some really good work on this particular aspect of it is the next series the next version of Siri may have um technology from some of the third party providers you know whether that's open AAI anthropic or even Gemini you know our bet is that you know we hope that they go with Gemini because they already get a lot of money from Google for the search business maybe there is some revenue sharing on on that part as well so we think eventually we don't know when they will get it right when it comes to AI infusing in their product, but it's going to come with some third party rather than in-house AI. >> So, in other words, they're kind of waiting for the dust to settle, waiting for winners to emerge before picking their horse and and and riding it. Is that something other device makers, handset makers are doing as well? I mean, Alphabet doesn't have to do that because it has its own AI business and it makes handsets. >> Yeah. And it's very well integrated because it's the Google Gemini. it's part of Android and then you know Samsung is going to license that so so they are all set on that particular aspect of it but it's possible that Apple may choose to work with uh Gemini Google itself again get their technology infuse it in their products and you and I get the same experience we would get you know on um on on like for example using chat GPD or anthropic I think from what we have heard from Mark is the research right now is they are running parallel chat bots internally try to see which has a better output and eventually we know with Apple it's going to go with the one the highest quality of searches or uh queries or answers and and you know let's let's hope that they get it around in the March time frame that it's rumored to come out >> um earnings uh for the tech companies are going to be in a couple of weeks here uh what should we be focusing on this quarter honor >> so we we we're bifocating the entire tech space into two buckets one is area where we going see some weakness. That's going to be more on the consulting side, more on your traditional software side. And on the second half of the equation is companies that will see an uplift in their revenue because of AI related investment. So Coree and Microsoft fall in that bucket. But on the other side, you know, you're going to see some struggle with let's say IBM consulting although IBM software should do well. Um and and that is the bifocation that we have. What is going to be most important for Microsoft for example is all the headline news that we are hearing about um lower capacity or some constraints in data center work whether that's going to have an impact on Azure guidance or their cloud revenue guidance for next quarter um that is going to be the biggest question going into the quarter for Microsoft >> which of the names have the potential to surprise most to the upside given what you've seen so far uh in terms of estimates >> I think core has one potent potential, but at the same time, you know, this stock moves so much on a daily basis with any new announcement that comes out. So, it's tough to say whether a lot of that optimism is probably baked into the numbers at this point. >> So, what's the big thing that you guys are working on? I've referred so many people to the Bloomberg intelligence technology team's uh AI report here, which really is definitive, I think, in kind of laying out for people what AI is. and you know what are the all the facets of it here what's the next level of analysis for you guys in Bloomberg intelligence technology >> so the biggest thing we are trying to hone in and bifocate this investment cycle that you mentioned you know during the initial remarks there are two aspects of it one is everything that openai is leading it's signing contracts with Nvidia Oracle AMD and so forth now at this time openai doesn't have the money to fund a lot of that stuff they have enough financial backers to take care of it. So you know let's so that's one area to focus on. The second part is companies like Meta, Amazon, Microsoft they are going out and uh building capacity or signing up deals for data centers and new uh chips. Now they have the cash to do it. So we are trying to figure out in in these cases to see both of these scenarios to see which ones of them will have a greater impact on the downstream ecosystem. you know, whether it's hardware providers or chip providers or for that matter data center providers as well. >> This is the Bloomberg Intelligence Podcast available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 10:00 a.m. to noon Eastern on Bloomberg.com, the iHeart Radio app, TuneIn, and the Bloomberg Business App. You can also watch us live every weekday on YouTube, and always on the Bloomberg terminal.
BlackRock’s GIP Buys Aligned Data Centers in $40 Billion Bet | Bloomberg Intelligence
Summary
Transcript
[Music] Bloomberg Audio Studios podcasts radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. It's yet another day of data center deals. I feel like this is a neverending story here and it continues to propel the stock market higher and that's kind of what's happening here. The NASDAQ up 1.3%, the S&P 500 up 1.1%. So, we needed to bring Caroline Hyde, our BTE co-anchor in to our New York studios uh here to kind of walk us through some of the big stories. And I guess let's start on the one that became official, which is Black Rockck's GIP buying um Align Data Centers. This is a $40 billion AI bet. And to be fair, it's a lot more than Black Rockck. You've got Black Rockck, but you've got MGX, which is Madala's AI investment company, part of that sovereign wealth fund focus on AI. But you've got Microsoft in the mix. You've got Nvidia in the mix. You've got XAI in the mix. Basically, anyone who likes financing data centers or needs access to data centers or has some GPUs to put inside data centers seemingly wanted in on what was a hundred billion dollar get together pool of capital. And this is their first chunk of change, 40 billion being committed to align data centers. It's over in Texas. And this was actually owned by Mcquaryy, a big Australian infrastructure player. And they are now managing to sell off. It's a huge campus. You're thinking about operating in US and indeed in South America aligned. They've got 50 campuses. They've got 78 data centers. But all of this is as we seem to have insatiable demand for compute and therefore values go skyrocketing. So your tech beat Carolina is always front and center for this market. It's even more so certainly last two years with AI. It's even more so in the last two weeks >> with a lot of these circular deals that being referred to circular deals. Um >> where people are investing in each other's companies and things like that and the dollar amounts are so huge. I know. >> Are your sources are they saying this feels a little frothy? What are your sources telling? >> I think a lot of people are starting to put the word bubble in the context of AI and infrastructure right now. Look, you you even had the CFO of Croup yesterday talking about his anxiety when it comes to potential frothiness in the AI market. You've had the global managers survey coming from Bank of America yesterday, more the most we've ever seen in terms of majority thinking that these AI players are too highly valued. So certainly the circularity gives people pause. We had a great fun manager on just yesterday really saying look even though they think Nvidia is a bet even though today HSBC has raised the price target on Nvidia to maybe putting this at an 8 trillion company in the next 12 months but people do have pause when they're putting a hundred billion in equity investment into OpenAI basically so that OpenAI can keep buying its own GPUs. You see that happening over in Europe. Another key player that we got to keep an eye on is NScale. There's currently an private AI data center builder router. I might add, they've never built one single AI data center, but they were a crypto miner that's pivoted, and now they're committing to doing four data center projects with Microsoft. But NScale, of course, got the tap, the anointment from Jensen when he went over to London saying, "I want to back you in my equity because guess what? 2,000 GPUs are going to be offered in those four projects to Microsoft." So, it just keeps on being this idea that ultimately where are we getting the money from at the moment? Build it and they will come is the mentality. We need the infrastructure before you can really get the productivity gains. So Nvidia is putting its cash to work. >> Okay. So circular funding and yet another example of that. So what I'm confused about is how some companies that had indicated things would be kind of rough just a few months ago have now turned around and are seeing a completely different tune. ASML, which is a Dutch uh semiconductor equipment maker, had warned that the ter the trade war, the tariffs on China was going to be hurtful to its business. Now it's completely like turned around and said, you know what, demand is great. Maybe they'll be able to ek out growth in 2026. I think it's also our expectations for ASML came down some. If you're looking at a quarter-on quarter basis, the sales and the bookings fell. It's because China is so outsized in their revenue stream and China's going to start dialing back in 2026 because of the geopolitical issues and the fact that the US is asking its neighbors and allies to stop allowing such semiconductor equipment into the nation. And you just had the House China Committee saying once again we're worried about ASML but also KLA and some of the other US players. So I think that we are seeing yes ASML managing to calm anxiety that they will still see growth from other pockets. So these EUV, this is extreme ultraviolet lithography. They're the only people that make this particular sophisticated equipment that is making your leading edge chips that are going to be fueling our AI consumption. So if they're the only player, well, they've got really a sort of an a built-in demand pool, but China is going to be dialing back and the market wanted to hear that others were going to step in and it seems as though they are going to. >> Stay with us. More from Bloomberg Intelligence coming up after this. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. >> Listen on demand wherever you get your podcasts or watch us live on YouTube. LBMA shares are higher right now after a surprise return to sales growth. So maybe that is leading to folks saying perhaps the downturn we saw in luxury is over. Uh let's get some perspective from Deborah Aken. She is Bloomberg Intelligence luxury goods analyst. Deb, good to speak with you. What are you thinking when it comes to uh LVMH's results and what it signals about whether luxury is back? >> Hi. Um yeah, so uh really a very big sentiment indicator. Uh the comments from the company late last night out of Paris were more positive than the market anticipated. Um when we look at the numbers in terms of the organic sales growth the market expected around minus one we came in at plus one but it's about the sequential improvement from Q2 to Q3 uh and the fact that all five of the business units are improved versus Q2 and more than that China is mid to high singledigit growth versus a year ago. The US is robust. Europe is doing uh the same as it did uh across the board doing okay but missing out on tourism and Asia X Japan is positive. We know for Q uh US will face a bit more of a difficult comp after the spending last year uh beyond the uh election and the Trump win but into the first half of 2026 the market is looking more positive and it's certainly rallied the whole of the sector this morning and this afternoon. Hey Deb, what's the correlation between luxury spending and just kind of the broader stock market around the world because markets are really performing well. How does that correlate to just luxury spending? >> You know the big thing the big thing on luxury spend has been um that the very high-end has done well. Um so airmes branella cushionelli where they work with a restricted volume operating model uh they've done well in terms of their topline growth but when I think about an LVMH um you know that given how big they are they needed big volume there even with some pricing to manage growth in this category and instead what we saw last year and the beginning of this year was maybe a little bit of trading down so brands like Tapestries Coach Ralph Lauren, they became really so popular not only in the US but more on a globalized basis too. Um and so the view has been that the sentiment around the share prices has very much been opposed and opposite to to what's been happening on the stock market but with the exception of the mid-range. and the mid-range have done better because the view in the investor uh mindset has been that the uh the luxury uh buyer will trade down. They've done that in some brands but not all brands. In some categories, not all categories and generally we expect the biggest and the best to come back first. >> What about LVMH's wines and spirits division? We've been hearing from constellation brands and other uh spirits companies that you know there's been this massive shift in consumer tastes away from alcohol certainly the younger generation. Does that affect a company like LVMH? >> So uh a different kind of thing with LVMH. I think at the very high end we had some US weakness. So um they operate in wines fine wines high-end champagnes cognacs and others. Um, champagne is doing well and is back to growth in the US. Uh, rosé wine is doing very very well, but some of the um, spirit side is still struggling a little bit. Um, and I think that's because we've seen some trading down. So, we had China very heavily stocked. Um, and the US not so solid through the first half of the year, but there are signs of that coming back. If I look at the numbers on the Q3 for wines and spirits, they're at plus one and they were at minus4 for Q2 and minus 9 for Q1. So, it seems as though inventory is leveled out and we're starting to see some selling. >> Deb, I learned from you long ago when looking at luxury, you have to also pay attention to what's happening in China and the Chinese consumer. Are the Chinese spending either in China or are they traveling to the London, Paris, New York, Milan type thing? What what are you seeing? Yeah, we're still seeing a lot of the spend. Um, we're getting mid-igh singledigit growth in that Q3 from LVMH on your is on localized spending. Uh, we are seeing pockets of growth on the tourism side. So, there is a more positive um view and mix linked into the commentary from these results. But overall we are still absolutely missing uh Asian tourists, Chinese tourists from Europe and also in Europe we're missing uh the strength of the dollar having swung over last year with US purchases here. Um and you're you are seeing some but not as many uh in terms of full recovery versus 2019. There's growth year on year but not versus 2019 into the US either when it comes to the Chinese tourist. We used to say um a third of luxury goods just over were on the ch were were from the Chinese cohort and that would include on land and traveling, right? And we still think there's a way for that to go. Um but certainly on land and locally they're doing better than they were. >> Stay with us. More from Bloomberg Intelligence coming up after this. >> You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10 a.m. Eastern >> on Apple CarPlay and Android Auto with the Bloomberg Business App. >> Listen on demand wherever you get your podcasts or watch us live on YouTube. Paul, it's it feels very 2007ish with the deal making taking place with the banks reporting these incredible numbers. Um, a lot of companies saying they may go private. Um, we're hearing a lot of speculation about that. The latest is Grinder and in this case uh the dating app has confirmed that it received a letter from its largest shareholders interested in exploring a take private transaction. So let's bring in our Bloomberg intelligence uh internet analyst software and internet analyst uh with us Nicole Duza to give us a little bit more here. So Nicole um Grinder this dating app that's focused on the LGBT community does not actually have a proposal to evaluate. is just telling everyone, hey, this is happening and there's percolations of this happening. >> Correct. Uh, so as of right now, what we know, what's been reported is there are two investors, Raymond's age and James Louu, who together control about 60% of Grinder. They are in talks with Fortress Investment Group to secure debt financing to take the company private. Um, there has been no direct proposal at this time, but discussions seem to be around a $15 share price, which would value Grinder at around $3 billion. >> Talk to us about this company. How has it performed as a publicly traded company? >> So, uh, year to date, the shares are down around 29%. Uh, that being said, Grinder is one of the few dating apps that is still growing paying users. So, we've seen >> So, they're growing, they're still growing users. >> Yes. Okay. Uh, and that at this point right now is a little bit rare for dating apps, right? We've seen Tinder uh, lose users. We've seen Bumble lose a lot of users. Grinder, because of their niche user base, has been able to hang on to to a good amount of their users and grow users every year. >> And what is their strategy going forward? Because I did read something about how they have this three-year plan where they're targeting some pretty aggressive growth. And the the fact that they're growing users is a good sign, but the dating app business doesn't seem to be that great right now. >> Yes. So they have a couple of different levers that they can pull. Uh the first one is raising prices. They've talked for the first time about raising prices. They haven't raised prices since 2018. Uh so they're looking now at potentially raising prices. Um introducing a new premium tier. Right now they get around $24 per paying user. So there is a little bit of room for growth. They only have about 8% of their total user base of 15 million users uh who actually pay for the app. Uh so there is room there. They're also growing advertising revenue. Uh Grinder is one of the few dating apps that does have a pretty solid ad platform. Uh they grew ad revenue around 40% last quarter. Uh which was a big step up. Uh we expect that to continue. They're looking at new ad units. They're looking at better targeting. Uh so we do think there are there's room for ad revenue to really grow from here. >> I mean so you step back to the digital ad story. It's still a very bullish story for digital advertising. I mean, there's still that big macro call of digital advertising, whether it's the big ones like Facebook or the smaller ones like Grinder taking dollars away from traditional analog media. Is that story still in play? And if so, how long do you think it goes for? >> Uh, I think it is still in play. I mean, we do still see some ad dollars going to more traditional sources. So, you know, obviously digital advertising is much better targeting. Um, you can do things like direct response advertising where users um are taken directly to a website to make a purchase. Um it's a good use of ad dollars uh for for companies. Grinder has a really unique user base. Um their user base is um more affluent. They have higher discretionary income. They tend to be higher educated. So it could be a really great platform for a lot of advertisers uh who are looking to to advertise uh to that base. >> And they're also Gen Z heavy as well. So talk a little bit about how that is uh very appealing to advertisers. >> Yes. So, actually, it's funny because Grinder is one of the only dating apps really who isn't necessarily seeing an issue attracting Gen Z users. Uh, they've talked a lot about how the issues that other dating apps are facing, they don't really face because it's such a unique user base and because people come to Grinder not just for for romantic connection, but also just to meet people, to make friends, to have a community. Um, so Grinder has done a great job of attracting these users of holding on to them and again it could be a great place for advertisers to to reach Gen Z. >> Uh, 30 seconds left. Then why was the stock down or is down 40 some odd percentage this year? >> Uh, so they have they have missed on a few revenue metrics. Uh, they were a little bit light on revenue last quarter, a little bit light on IBIDA. Uh, but again we think, you know, the long-term growth perspective for this company is really strong. Uh, they have been growing users uh, which is unique for dating apps. So, we're very comfortable with the 20 to 25% revenue growth through 2027. >> Stay with us. More from Bloomberg Intelligence coming up after this. >> You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. You know, for all the talk of all these companies involved in AI deals, circular deals, where they're teaming up with someone and they're buying something or investing in something, partnering with something to buy their own chips back. One company is noticeably absent from all these announcements and that is a big one. It's Apple. Yes. >> Where is it? >> I I don't know. >> They have a lot of cash. >> They do. I don't I don't know. I don't I don't know their AI play. That's what I don't know. >> Well, their AI doesn't work very well on their phone right now. I can tell you that. Honor Rana is a tech analyst at Bloomberg Intelligence and he joins us now from Chicago. So Honor, um there are some headlines here that Apple is looking to uh beef up its smart home offerings uh lessen its dependence on China. This is something that uh the president of the United States has been pushing Apple to do to bring some of its manufacturing back to the US. But Apple is not doing that. It is beefing up its manufacturing operations in Vietnam. What's going on with Apple? See when you look at it whether it's accessories or you know putting together the phones you really cannot do that in the US we don't have the size factories or automation to to do that so you you will have to do that somewhere in Asia and as they're diversifying away from China because of the the obvious threat between US and and China trade wars Vietnam is a proper location where they can assemble let's say some accessories or smaller products where you know they may cost you $100 or $50 but they have the low cost area to produce them or or I would say assemble them. >> So, so Honor, we've spent the last two three four weeks speaking with you, speaking with Mandep, uh speaking with other tech experts about all these deals around the AI ecosystem that we've seen $10 billion here, hundred billion there. Companies ranging from Microsoft to AMD to Nvidia to OpenAI. We have not talked about Apple. What is And I'm not sure if that's a good or bad thing. I don't know if these deals are good or bad. I just know there a lot of them. They're coming out of the woodwork. There's big numbers and Apple's just conspicuous by its absence, it feels like. How do you think about it? >> Yeah, the, you know, you could look at it both ways. One way is you criticize that they're not really at the forefront of the next generation model out there. But the other way you can say is, you know, let everybody else fight it out. In the end, it'll go to the one that has the best model and include that in there its own uh distribution channel which is basically iOS. We have heard from Mark Gman has done some really good work on this particular aspect of it is the next series the next version of Siri may have um technology from some of the third party providers you know whether that's open AAI anthropic or even Gemini you know our bet is that you know we hope that they go with Gemini because they already get a lot of money from Google for the search business maybe there is some revenue sharing on on that part as well so we think eventually we don't know when they will get it right when it comes to AI infusing in their product, but it's going to come with some third party rather than in-house AI. >> So, in other words, they're kind of waiting for the dust to settle, waiting for winners to emerge before picking their horse and and and riding it. Is that something other device makers, handset makers are doing as well? I mean, Alphabet doesn't have to do that because it has its own AI business and it makes handsets. >> Yeah. And it's very well integrated because it's the Google Gemini. it's part of Android and then you know Samsung is going to license that so so they are all set on that particular aspect of it but it's possible that Apple may choose to work with uh Gemini Google itself again get their technology infuse it in their products and you and I get the same experience we would get you know on um on on like for example using chat GPD or anthropic I think from what we have heard from Mark is the research right now is they are running parallel chat bots internally try to see which has a better output and eventually we know with Apple it's going to go with the one the highest quality of searches or uh queries or answers and and you know let's let's hope that they get it around in the March time frame that it's rumored to come out >> um earnings uh for the tech companies are going to be in a couple of weeks here uh what should we be focusing on this quarter honor >> so we we we're bifocating the entire tech space into two buckets one is area where we going see some weakness. That's going to be more on the consulting side, more on your traditional software side. And on the second half of the equation is companies that will see an uplift in their revenue because of AI related investment. So Coree and Microsoft fall in that bucket. But on the other side, you know, you're going to see some struggle with let's say IBM consulting although IBM software should do well. Um and and that is the bifocation that we have. What is going to be most important for Microsoft for example is all the headline news that we are hearing about um lower capacity or some constraints in data center work whether that's going to have an impact on Azure guidance or their cloud revenue guidance for next quarter um that is going to be the biggest question going into the quarter for Microsoft >> which of the names have the potential to surprise most to the upside given what you've seen so far uh in terms of estimates >> I think core has one potent potential, but at the same time, you know, this stock moves so much on a daily basis with any new announcement that comes out. So, it's tough to say whether a lot of that optimism is probably baked into the numbers at this point. >> So, what's the big thing that you guys are working on? I've referred so many people to the Bloomberg intelligence technology team's uh AI report here, which really is definitive, I think, in kind of laying out for people what AI is. and you know what are the all the facets of it here what's the next level of analysis for you guys in Bloomberg intelligence technology >> so the biggest thing we are trying to hone in and bifocate this investment cycle that you mentioned you know during the initial remarks there are two aspects of it one is everything that openai is leading it's signing contracts with Nvidia Oracle AMD and so forth now at this time openai doesn't have the money to fund a lot of that stuff they have enough financial backers to take care of it. So you know let's so that's one area to focus on. The second part is companies like Meta, Amazon, Microsoft they are going out and uh building capacity or signing up deals for data centers and new uh chips. Now they have the cash to do it. So we are trying to figure out in in these cases to see both of these scenarios to see which ones of them will have a greater impact on the downstream ecosystem. you know, whether it's hardware providers or chip providers or for that matter data center providers as well. >> This is the Bloomberg Intelligence Podcast available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 10:00 a.m. to noon Eastern on Bloomberg.com, the iHeart Radio app, TuneIn, and the Bloomberg Business App. You can also watch us live every weekday on YouTube, and always on the Bloomberg terminal.