I think that if you're trying to find the common denominator, particularly if it's like the hyperscalers matter, etc., for me, it's that the calculus is the same as last quarter, right? CapEx money going in, how much money is coming out, particularly in AI? Have you seen some good evidence that that's the case so far? Well, we're early in the curve, so you know that the revenue's not coming in because remember, you know, for Microsoft, we're on a recurring subscription model. So even if they ploughed $10 in today, I mean, you're paying them a monthly fee. So, no, we haven't. But I think we're seeing proof that if you add up all the hyperscalers and their total bookings relative to their CapEx spend, their actual booking numbers accelerate. That's not all I but we are seeing that return also seen in pricing. I mean, Microsoft's doubled the cost of office.

So you've paid $30 or C for office, you just doubled your I like it doesn't cost double that to serve. They're making a lot of money. Look at last year. Amy gave you 100 basis points of margin improvement in the in the beginning of the I and this year. They're going to about 100 basis points a headwind. But like this isn't this isn't like they're losing money, right? They made money. And you're right, they're like so grand. I mean, these are incredible numbers. So like, this isn't a wasteland. And this is the number one question we're getting. Where is all this capital going? Well, you can see in the booking number, you can see in the margins, you can see it now on the incremental revenue. You can see it in the pricing and then you can start to see them in the customer case studies. Brent, you're excited about Microsoft? I can tell we're all excited.

Never mind science. I mean, the thing about Microsoft, they've always been good at selling software that you can otherwise get for free somewhere else. Matter is a different beast, right? You have this buy on matter. And in the story, it's like interesting, the business model. Like I've been using the Ray-Ban Metters for about a month now. That's how I use AI. What are you expecting in the earnings print, in the sort of belief that they can demonstrate this future business model? Well, I think, again, we're super early across the entire industry. We think about A.I. in applications. Right. We're not early in A.I. and infrastructure. We see it in all data, all the numbers. Right. You see it. It's going to be a delayed reaction. So I want to be careful like you're not going to solve this isn't going to pop out a pop pop out of the cake and

surprise everyone like this is going to be slow, steady, gradual ramp. Like we've said, like this is is going to be game changing. So I'm a believer in that. I think ultimately over time, we as users will get a better experience because of AI, the advertisers which pay the bill. Again, none of us pay the bill that to matter, right? It's all out ad driven. If you if you can create an easier ad campaign and do it quickly and do it more cost efficiently, like advertisers are going to stampede because all the users are going to stay there and more people are going to be there because the experience is so good. So again, I think it's a phased approach. I don't think it's going to be overnight success. But I think what Zuck has been doing, like he's very confident, right. You can see it in in hip in in his style, his T-shirt, his necklace, his hair.

You can just see it. He's not, he's not, he's got a stylist, man. He's got himself a good style. And we all love to see it. I'm a big approver and appreciate it. But Brent, what's also interesting is there was some news as to whether or not Metro Guy is ultimately trying to build its own search, real-time search within its meta offering, becoming less dependent on the likes of Bing, which is Microsoft's, or Google Search, which of course is Alphabet's. How much do you think these frenemies will continue to use each other? Of course, Metro, in some ways, when it depends on access to compute or just building its own and going to NVIDIA and the others, the ecosystem to have its own search is a no-brainer. I mean, think about it. Like if you buy a golf shirt or you buy something for your house and you want to find something else on the platform, why can't you just go on their

platform, search for it? It's not a good search experience that it should be a better search experience. So is it an area that they can improve upon? Does that mean I'm not going to Google Maps because I'm going from San Francisco down to the valley to visit a company and I'm going to jump on there. You know, I'm not going to search there for traffic and all the other things that. So but I think the experience is going to get better. Yeah, because it's not great right now. And there's no question all the data that's trapped in that platform mean it's really, really hard to find something that you've seen and go back and try to find it. I'm not the experience is going to get better, but it's not going to box up Google. It's not going to box up perplexity. It's not going to change. I think the opportunity for the others and we saw that in Google's number right mean Yeah let's go that

digit. Talk to us about alphabet. Talk to us about how they're managing to find the dividends, the rewards of an AI investment. Well, I think you go back to it's not all AI-driven, which is you get in your car, use ways to get to work. You use actively looking for a restaurant where the hours you don't. You don't go to other, you don't go to other engines like perplexity of other places. For that information, you may want to say, How do I stop my washer dryer from blinking? I'll go to perplexity, do that, only go to Google anymore. But I'm not like I think the thing is we're having a higher query volume and then all of us are becoming more comfortable that they're different tools. And so we're just increasing our usage across all these platforms. And so it's like everyone wants a, Hey, this vendor is going to die,

this vendor is going to win. Like I think everyone seems to be that in the end, in a good spot are winning. And that is, again, these bigger platforms, right? A.I. needs three things: capital, users, and data. And when you think about all the big platforms, Amazon, Google, Microsoft, they all have that matter, are incredible usage, obviously. So our view is the big keep getting bigger, and it's a really boring storyline. Like I wish I had a better storyline, but like it, I'm sorry, but like they're just going to keep getting bigger and better.

Jefferies' Thill: AI Will Be Gradual But Game-Changing

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Jefferies' Thill: AI Will Be Gradual But Game-Changing

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