i've emily chang in san francisco. this is "bloomberg technology." has a up, alphabet huge win in this quarter. would break it down. plus, all the other faang stocks are up on the google earnings beat as well. how it plays into the broader tech momentum. one tech titan had a rough start of the week and that is amazon.

why? once againrump taking aim at jeff bezos and his ownership of "the washington post." the first, to our top story. shares of alphabet dumped as much as 6.1% in late hours trading -- jumped as much as six point 1% in late hours trading. i'll bet report --alphabet reported second-quarter sales above $20 billion. grew 24%.usiness joining us to break it down, our bostick.nd romaine let's start with the expectation. google released two different net income numbers, one including the judgment from the european commission they are appealing and one not.

investors do not seem to care looking at the revenue growth, which was strong. >> the revenue growth was strong. the eps was strong, even if you put back in the $5 billion fine. the company has shown it is still fighting its own story. you saw that in the revenue the cloudhe ads, business. this is what investors were looking for. i think they came in a hotter than some folks expected and he saw that reflected in the stock after hours here. in, i just got off the phone with ruth porat, the ceo of alphabet. we talked about what was driving the earnings strength. she said they will concentrate on mobile. she says we focus on innovation in mobile. we will look for improvements that can enhance growth across platforms and we will support

opportunities we see, which is interesting given that we are significantly again. as for how long that could keep going on, she said, investment is supporting growth across the business. it is search and ads, it is the importance of new machine learning. we are looking for additional compute capacity given the outlook for growth. google isnvestment making across its platforms concern you, this rise in capex? no, it does not concern me at all. i think from an advertising perspective, it is a great thing. you want even more innovation at this point and i think you have seen it, a little bit, and taking some of the advertising products, advertising technology and putting it together so it is more easy as an advertiser to buy across youtube, across google search, across google's properties. more investment there i think is

a good thing. i do not think it is something to be too concerned about. emily: it is ironic, romain, given the last week or so for alphabet and the possibility that with this european commission ruling, google could be forced to pay handset makers a lot of money to support their apps going on to these phones preinstalled and could force google to fundamentally change its business model. that's not something ruth porat would get into on our call. -- theut cloud as well ceo of google who is talking about earnings as we speak -- let's talk about the cloud, in particular the cloud. google is in third place behind microsoft, behind amazon, but it is growing territory. how much do you think the cloud in particular could supercharge alphabet going forward? season,e this earnings

i spoke to a couple of analysts. one thing we are looking for is not just expansion of the cloud revenue, but really to see more diversity alphabet out of revenue and they weren't --diversity out of alphabet revenue and they were not on the ad reliant space. there are a couple charts on the terminal that will show over the quarters the reliance on ad spending is dropping mildly. they are finding other ways to bring in revenue and that is giving investors more to hang their hat on. a lot of people shrug that out because the dollar amount was not that impacts over a company with their balance sheet, but the fundamental changes are still esoteric and down the road. are investors coming into this earnings season fairly confident we will get an earnings beat.

we saw that not only in the shares. we have a little run-up in the shares. even when you look at the short interesting google over the last couple of months, it has really dropped. it has been the lowest it has been since 2016. you have seen a lot more optimism on alphabet then you have seen in a while. they also spent five minutes talking about artificial intelligence. they have gone to great lengths to position google as a leader in ai collin, what do you make of that? collin: they are. if you look at the companies they have bought up over the last few years, they are one of the leaders when it comes to artificial intelligence. it is interesting to see on the ad side how they continue to evolve the artificial intelligence and bring it into the ad experience to make better, more relevant ads.

paid search on google is probably one of the more engaging, relevant forms of advertising that there is, but even more artificial intelligence to tune the advertising better, to a more personalized kind of ad, i think, is the future state of where they are trying to bring it. emily: also the other line item, which over time has been shrinking, although they did loosen about $100 million more this quarter -- but ruth porat told me it is historically lumpy. we're not talking so much about google's moonshot, aside from waymo. is one in particular that she and they are most excited about. collin, how optimistic are you about waymo as a true contributor at some point to alphabet's overall business? collin: oh, man. a true contributor.

it is broad language, but i think it is far off. you look at the breakdown today. the advertising business -- it is google's entire business for the most part. it will take time. waymo is in later stages compared to competitors in that space. it will still take time for to be a substantial part or a big driver of google of --alphabet's overall business. thank you.right, we will talk about the tech momentum and what is going on with alphabet. meantime, a vote of confidence in paypal. the hedge fund has taken an interest in the payment processor. they beat more than 40% from where the stock is trading now. is just forhabet

starters. facebook, amazon, and twitter all report this week. of the faang stocks in focus, next. if you would like to check us out on the radio, listen to us in the u.s. on sirius xm. this is bloomberg. ♪

out withphabet earnings and just to recap, this was a home run quarter for google. investors had been looking for alphabet to jumpstart momentum in faang stocks. remember, s&p tech heavyweights facebook, amazon, and twitter all post as well and netflix,

which had a conservative forecast for the rest of the year, disappointing the market. with us to discuss the broader outlook for faang stocks, we have our guest and in our office in new york, we have our market reporter -- on markets reporter romaine bostick still here with us. get any credit for driving the broader tech momentum, in spite of netflix's with last week? >> thanks that, emily. i think people are looking at alphabet as a bellwether, and rightfully so. the fact that the company delivered 26% organic revenue growth -- were company of the size, i think says a lot about google, but also probably something about the broader environment from a spending perspective. that'sng as out for

results were, the stock is only after-hoursnt in trading and what is interesting about that, if you look at the faang names, both alphabet and apple have been outperforming the s&p technology sector. emily: do you concur? apple andou look at amazon, all of the faang stocks, they have underperformed the s&p 500, even the broader nasdaq. going into this earnings season, one thing you did not see was the type of run-up in shares we often get in these names. we did get a bit of a run-up in facebook. that was probably the most notable run, 2% over the last week, and there was about a 1% jump in google, but other names have really been treading water. i think people are dropping to the side whether this is a story.rm

i think a lot of that was settled today with alphabet. we will see with facebook and amazon. when you have stocks trading at or near all-time highs, when you have 30% earnings growth on some of these names, you have to a peakif we have reached and whether investors want to stick around to find out if we are going to go down the other side. emily: i do have a chart that shows that alphabet's revenue growth still trails facebook, amazon, and netflix and facebook, despite all of the controversy over the last several months -- scott, what do you read into this? >> i want to clarify i was referring to year to date performance. we have seen netflix up 88%, facebook up 19%, i think the broader tech sector was up 15%.

those a disparity in performance among the faang names. last year we saw the tech sector up and all of the faang names were up as well. to thing that people need keep in mind, the performance has been more diverse this year compared to last year. emily, one thing you pointed out, the revenue growth. i think people were taken back and astounded that last week, microsoft put up 17% revenue growth and one of the things i pointed out, which is important to keep in mind for earnings season, particularly this week, will this be a peak for revenue growth for some of these names, whether it is for cyclical or secular reasons? that is important to keep in mind. how much better can it get for 26%e companies --alphabet revenue growth. how sustainable is that? i do not know that will be sustainable for the next couple

of years, perhaps the next couple of quarters. emily: what about facebook? you downgraded facebook from buy to hold. the scandals, we know about that. the market has shrugged that off. are you concerned about facebook? >> you are right. we downgraded the stock after the tremendous snap back on the cambridge analytical revelations. that being said, we do have concerns about facebook. they include not just what is going to happen as a result of cambridge analytic and further scrutiny related to data and personal privacy, but also the notion that the facebook flap facebook platform is not a place progrowth anymore. you think about messenger and there.ation your member oculus vr? there are questions facebook

needs to answer now. that may not happen now because instagram has been so successful, but even video on facebook. we have good about that being a major growth driver per monetization for couple years and i do not know we have really seen that, which is a plus in terms of future opportunity, but a negative perhaps in terms of near-term execution. romaine, we of, amazon coming up. we will talk momentarily about the president's ire toward jeff bezos and "the washington post." putting that aside, what do you expect when it comes to amazon -- we saw a fairly strong prime day -- and amazon expanding its tentacles and to all of these new categories? romaine: amazon is one of the stocks were they are basically fighting their own story and most investors view it not only as a company with a great deal of dominance, but it really can change things out will. i think -- at will.

when you take the political issues out there, it's a company that a lot of folks see as able to grow at will. as long as it spends at well. for now, investors are fine with that. other and a lot of these names, they have become haven assets for investors who are worried about the political issues out there. they are turning to facebook, they are turning to amazon because at a minimum, these are companies that can weather the storm of geopolitics and trade issues, as long as they continue to spend and grow. emily: all right, romaine bostick, bloomberg markets, thank you. thank you.er, we will continue to cover all of these companies reporting throughout the week. speaking of amazon, coming up, president trump has resumed his public campaign against jeff bezos by calling his paper, "the

washington post," and expensive lobbyist for amazon. you are watching "bloomberg technology." be sure to wallow our global news network on tictoc on twitter. this is bloomberg. ♪

emily: bloomberg has learned the trump administration try to tooke california's authority regulate emissions, including those affecting new-car sales. the proposed revamp would put the rakes on federal rules to boost appeal efficiency in the next decade and would cap the fuel economy at the 2020 level. we will look more into this industry later this hour. speaking of president trump, he is taking aim at familiar targets, amazon and "the washington post." both are

controlled by the richest person in the world, jeff bezos. the president says that "the more than aning expensive lobbyist for amazon. with more from washington, whomberg's been brodie covers tech lobbying for us. can president really have a negative impact on amazon here? reporter: that's a really good question. amazonre a lot of way has nexus is with the government. it is pursuing government contracts. it obviously could have antitrust investigations, all kinds of things, the health care space. while trump can pressure the department of justice or the federal trade commission, they are probably guarding their independence in any -- and anything they would want to do would take months, if not years, of investigation to pull off and what we saw today, it's not even clear he can end their stock price for more than a morning. their stock price

for the morning. emily: is this about amazon or "the washington post"? about jeffhis is bezos. this is about "the washington post." this is about a feud between two billionaires. he tweeted -- in my opinion, the post is nothing more than an expensive -- is amazon used as protection against antitrust claims that many feel should be brought? should and i trust that should antitrust claims be brought? reporter: there are a group of activists -- there are critics. they have trained a lot of fire on amazon. they have said it is using different parts of his business idize predatory

pricing. majorbasically raising antitrust concerns. on the other side, you have a company that is broadly popular with consumers. clear that a lot of consumers are harmed. it is not clear that there is another company and has the market share to be dominant in a way that the ftc in the doj would be looking into it. emily: how does it compare to other tech companies? it's focus is on congress and the agencies. the lobbying has grown fastest over the last five or six years and in many ways, it is probably broadest in terms of the number of government agencies they are going out and talking to. we found up on friday the company set a record for lobbying, so it is a very big force here in the district.

settingsee facebook records. it was facing cambridge analytic a andcambridge analytic google, spending more than a hero those companies, almost the two of them combined. there are a lot of companies literally spending millions of dollars to lobby every quarter. emily: the was the weekend supreme court ruling that does upset amazon and e-commerce copies. what is the real impact of that? reporter: that's a great question. that was one of the things cap saying, amazon lost the case, "the washington post -- that was one of the things were saying, amazon lost the case, "the washington post" lost to the case. neither of them was really party to the case. amazon had been collecting tax ports of merchandise. the question is, what happens merchantshird party

of use amazon as a retail platform and now face new tax burdens? are they going to go to amazon for compliance or will it be something else? the company survived when it started collecting its own sales tax, but what happens to those merchants? it's unclear. bloomberg'sight, been brodie. think you very much. we will be watching the president's tweets. up, google will be investing more in hiring people in emerging markets like indonesia and india. take a look. >> user growth there is extraordinary to see and we are seeing this across all of our products. there's over a billion users each. that is where much of their growth is going to come from.

emily: this is "bloomberg technology." r.i.m emily chang and san francisco. back to our top story. --i am emily chang in san francisco. back to our top story. alphabet pretty much beating and all metrics. shares are popping in after hours. google ceo sundar pichai speaking on the earnings call talk about emerging markets, ai, the cloud. he says there is an inflection point, talking about the cloud. from bloombergst intelligence.

we always want more information about the cloud. what you think he means that there is an inflection point? >> there are two things he mentioned. he talked about diversification. so, a lot of companies are looking to not just talk about one cloud company, but also to spread those, so there's enough room if you look at the end market, there's enough room for apple and google and amazon. so, if you put those things together, you're talking about an end market that has grown more than 35% over the next five or six years. the end market is really that big. if we look at our sizing by 2025, we expect that to be upwards of $20 billion.

for threelot of room players. because of that and the diversification angle, we think that there is room for the three of them to post robust growth. emily: star are headwinds -- there are headwinds in europe. they happy $5 million fine. romaine:, on the phone call with the phonerat, with call with me, did not going to detail. google maythat actually be benefiting from gdp because other companies have had trouble dpr compliant. ruth porat talked a lot about that. she said with a long history with this. we care a lot about it. we are taking sure that we get it right and she talked about measures that they are working on. what you make of the fact that some of these rules were share the wealth, if

you will, but in fact, it has only concentrated the wealth? more advertisers trust google. they have been doing this for a long time. the size of the company is so big. they know how to handle it. so, i think you are right. it is the opposite of what people thought. that privacy regulations would help advertisers put their business and keep it there because they know the privacy regulations will be followed properly. regarding the ruling, sundar pichai did address it. take a listen. we're looking forward to finding a solution that the anonymous benefits to android users and so on.

there is more work to be done. confident that we can find a way to make sure that entry is available at scale. that: so, do you think google could be forced to change its business model? how much could that hit the bottom line? jitendra: that is not a change in the business model. they do that today with apple aggressively. emily: they could potentially charge google. jitendra: where the surprises on the call was the acquisition of cost growth was moderating. and in the context of what he just said about how we could think about solutions to make , ifoid available globally

if there increases, growth is so strong, it more than offset it. increase in a 58% paid clicks. so, that is telling you. they have the demand in advertising, but a lot of acquisition costs seem to be moderating. it was interesting they did not give a sterner warning. i think we still have to wait and see if any of the changes could surprise, but it looks like it will be long. andrew: can google's competitors in search take advantage of this? there's a lot of doubt whether they can now. i think it is a long-term issue more than a short time -- short-term concern for the

bottom line. asia, what else are you seeing outside the u.s.? jitendra: we see a lot of these new product launches like taser in italy -- in india. that is a long-term tale for revenue growth. they are seeing strong growth this quarter. they are making a foundation for the long-term revenue growth for the economies of scale. emily: going into the break we were talking about all sundar was doing into ai and whether they were backing it up. andy, do you think they are? andrew: it's a very difficult thing to measure. how does ai help their search?

does it make it more targeted? i think it's very difficult to measure though they touted all the time -- tout it all the time. jitendra: the competition cannot see how they are increasing the roi for advertisers. every time they mentioned, they talked about it in conjunction with that product category. so, basically what you will end development of these searches, the return on investment, advertisers are getting the investment with the ongoing investments in every product category. that means long-term results. have earnings coming up. we have seen the broader market. andrew: you have spoken earlier about facebook and the issues they have had. everybody is looking at amazon to see if the money make -- if

the moneymaking continues. -- theynot see that in are a great prime day. we will not see that in this report. will investors continue to push that price up and up and up? a recordwill have tomorrow again. amazon is setting records. that's another thing to watch for. this has set the stage for facebook, amazon's advertising business to trend popular results. we look at the paid click number, which is a sign of demand and demand is very strong. you see this in mobile advertising. expected to grow. share of these companies growing, and limited impact so far seen from regulatory risk and things like that. you combine all of these, and you are set up for a baseline be. of emily: thank you both. lots to talk about this week.

disappointing news for iphone users. trailtest apple iphones samsung when it comes to download speeds. that's according to a survey. the survey indicated the iphone x operated fastest on verizon's network. lus, which is p plus,t to the iphone x was faster. we will talk- siliconlken beaches -- beach's growing texting. and the call for help. should investors be worried? this is bloomberg. ♪

emily: tender, the honest the honest tindr, -- one of these businesses have in common you go they successfully launched their businesses in southern california. here to discuss this, the managing director of a leading l.a.-based investment bank. also the founder of the montgomery summit, which is often described as like sxsw. what trends are you seeing in l.a. and silicon the, if you will, that we may not be sing in silicon valley echo >> that

is good. we think about this every day. it's great to be back on bloomberg. the los angeles echo system we consider to be southern california. there is a large engineering based there. we have leadership coming down from the bay area, sales and marketing, executive leadership. very large companies, media companies that are usually attention because the media loves to write about the media. that might be a little bit of a surprise. is there an advantage to head cornering in l.a. as opposed to san francisco? jamie: i think you need the best of both, to be honest. there is so much down here. definitely to have a successful company you need to have a foot in each camp.

you can build engineering teams down there and retain the engineers most likely. emily: let in doing this for a long time. i know ai is something you are interested in. talking about google and its ai capabilities. water trends we should look out for? jamie: the damages that cloud strike has -- the massive data sets. 2.3 decisions per second. we look at companies that can algorithms that run over that. you have three or four companies with massive data sets. really, you can argue whether microsoft or google had the better algorithms, but google had the better data sets. emily: a lot of us are wondering what data do they have on me and do i know about it and who are they giving into it -- who are

they giving it to? jamie: they have everything. emily: could that be a flaw, been that trust has undermined or do people ultimately not really care? don't know if there is a price point put on it yet. people care at some price. if it is free -- you saw the hearings. it was a clown show. facebook is a great company and so is google. there is no price point on privacy. we will figure out what it is worth two people. emily: what other trends are you excited about? we are interest-rate in industry 4.0 -- emily: industry 4.0? the manufacturing sector is anywhere between 20% and 40% of a country's gdp. that is an area technology has not really hit yet. information technology is starting to hit the

manufacturing world through streamlined processes, improve safety, reduced cost. it's going to be a lost -- a long process. it will take five or 10 years to see really rollout in companies like honeywell and ge, rockwell, and their supplier base. but that's a massive, massive industry. about cars? we hear a lot about tesla, but of theere are the gm's world who have been making cars for many, many years. tesla has become the market leader. can the established automakers catch up? jamie: yes, i think so. when you are talking about google earnings on the news, you are buying a great company with google at this point. you probably get waymo for free and the cloud for free. emily: when i talked to ruth porat about that, she was very

optimistic about waymo's prospects, but they have no idea when it will be a contributor to revenue. idea. they have no and look at baidu in china. it is the same thing. you just put a couple thousand dollars per car, multiplied by ae number of cars -- it is map for the market. i think you are getting that for free on the google side. some of the key components of automated vehicles, you see that manifest in the research coming out. you were doing this kind of statistics before most people . now there's a lot of competition. jamie: we are a moving target.

we try to keep ahead of the competition. .i will be a big theme this is the fourth year we have had a large woman's conference. this past year -- we are excited about that -- emily: i like to hear that. competition is good. we learn, we listen, we watch, we pounce on it. we have a lot of fun in california. people love coming down for couple days. our guests stay. we were great with eric schmidt. he met with everybody he could. he saw evan spiegel at a local university. that's pretty typical. people staying gauged. they do not come into the green room and leave. they talk with the odds were north and coach them. emily: that was light years ago. good to see that you are still going. jamie: thank you, thank you.

very much.k you coming up, tesla is reportedly requesting cash back from suppliers? will this generate a profit? this is bloomberg. ♪

tesla alarms investors as a report surfaces that the companies trying to get refunds from suppliers. tech shares fell on the release of a memo.

the memo, according to a poll -- going to a report from "view called ont journal" suppliers to help them turn a profit. the pace of 5000 model three's in one week can be sustained. max, did they not think these emails would be linked to the press? you have to think they were expecting this. tesla confirmed to "the journal" something like this was going on and elon musk tweeted about it, basically clarifying the accounting issues around these refunds or rebates or whatever. yes my think this was kind of planned. it is part of their strategy to try to do everything they can to get their finances in order, get as many cars out the door and get the cash flow positive as soon as possible. but are investors

going to buy it knowing that this is how they got it done? super well not go today. it depends on your point of view, i guess. on one hand, if you are an investor and you are concerned about their cash position, you say, it's great. they are taking advantage of their leverage. if you're running out of cash, you have more leverage in the negotiation and they get a discount. it does not look totally sustainable. we see a lot of stuff out of tesla the last two months from workers describing very long hours, elon musk describing very whereours, to the tents they are making the car, now the supplier issue. this company feels kind of slapped together. that could be bad or it could be the sign of a company that is really doing everything it can to get it done. emily: we have a chart in my gtd library showing the tesla interests spiking and then

fading. is there an argument to be made this is a good thing? max: that which is a good thing? emily: that tesla sending the z's map -- these emails, trying to get their money back is a good thing? the argumenthink is, like i said, they are doing everything they can. from the point of view of tesla, they are growing the customer base very rapidly. they have a lot more market power today than they did, say, two years ago -- it's sensible to say you have to give us a better deal now. we are a bigger thing. retroactivelyis asking for money and it does not look like a company that is -- that has its feet under. emily: with all of the grand ambition that elon musk has been

his company? max: this is something i have been thinking about, especially with the layoffs where they laid off 90% of the staff. if you are doing anything you can to look really good, that makes the future a lot harder to figure out. tesla has done really well getting people focus on the futures saying, yes, this is what we are doing now. we have this great new car coming out and it is harder to see how they are going to get to y, this compact suv, or some of these other far out things. you start to wonder that investors stop looking at this as a company that is all about the future and more like a company that is managing itself quarter to quarter, which is not what elon musk wants or envisioned. we will watch to see how these suppliers respond. max chafkin from "humbert businessweek," -- "bloomberg

businessweek," thanks for weighing in. still firing on all quarters. shares rallied as much as 5% in late trading. take a listen to google ceo sundar pichai on this call talking about the cloud. sundar: i think all of the major anders are seeing traction typically, when you look at enterprise -- even when you deploy and you have an architecture, you try to stay on it as long as you can. change is hard. but we have a case where the benefits are super clear and over time there is a tremendous cost to your business of being in the wrong architecture. emily: google ceo sundar pichai there are weighing in.

we will have results from , all week longk here. that does it for the show. i am emily chang. this is bloomberg. ♪ this isn't just any moving day.

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enjoys a boost from the banks as investors weigh the effects of tariffs on growth. jumping afterbet the bell on the back of better-than-expected revenue and improving ad business. after talks, two sides remain far apart. >> president trump turns up the heat on