US Mulls Iran Military Options; Big Tech AI Spending Bonanza

Bloomberg Audio Studios, Podcasts, Radio News.
Good morning, I'm Nathan Hager and I'm Karen Moscow. Here
are the stories we're following today.
Karen, those levels are at four year highs for oil
as President Trump keeps his naval blockade on Iran's ports
and reportedly considers new strikes. The President says a deal
has to include Iron giving up its nuclear program.
They've come a long way.
The question is whether or not they're going to go
far enough.
So at this moment, there will never be a deal
unless they agree that.
There will be no no clear workers.
President Trump spoke at the White House yesterday. This morning,
Axios is reporting that the President will meet later today
with the head of US Central Command to discuss potential
new military options. We get more from Bloomberg's Jumana Bursecci
in Duban.
Those include targeted and limited operations. Could be limited attacks
on infrastructure once again, it could be a Special Forces
operation to go and extract highly enriched uranium that there's
also talk about a specific operation that they would conduct
to reopen a small part of the street to allow
for commercial vessels to pass through.
Bloomberg's Jumana BURSETCI reports those options had crude oil on
the Brent trading as high as one hundred and twenty
six dollars a barrel overnight. Right now, Brent is up
two and a half percent at just about one hundred
and twenty one dollars West Texas Intermediate. It's just shy
of one hundred and eight, and the war is really
adding to painted the pump. In California, Triple A says
that state's average gas price topped six dollars a gallon
for the first time since October of twenty twenty three.
On Nithan, Defense Secretary Pete Haiks had faced questions about
the war as he appeared before the House Armed Services
Committee to defend the Pentagons proposed one point five trillion
dollar budget. Bloomberg's Amy Morris supports from Washington.
The budget request is on top of a trillion dollar
appropriations from congressional lawmakers for this fiscal year. Lawmakers questioned
hag Seth over the war's economic impact, noting that it's
cost twenty five billion dollars so far. Ranking Member Adam
Smith of Washington.
We had to start this war, you just said, sixty
days ago because the nuclear weapon was an imminent threat.
Now you're saying that it was completely obliterate.
Had not given up their nuclear ambitions.
Hag Seth dismissed the criticism as political and rebuked lawmakers
both Republicans and Democrats, who pushed him for answers in Washington.
Amy Morris Bloomberg Radio.
Amy, thanks, the latest war developments and surging oil prices
maybe overshadowing the latest earnings from big tech. Let's start
with Alphabet. Shares of the Google parent are up more
than six percent in early trading. I get the details
from Bloomberg's John Tucker.
Google's cloud business, which only became profitable three years ago,
continues to grow quickly, accelerated by demand for AI software
and infrastructure. The Gemini chatbot app and enterprise tools are
gaining in popularity. The company expects to spend up to
one hundred ninety billion dollars this year on capital expenditures.
That's up from a previous estimate of one hundred eighty
five billion dollars, which was already double what it's spent
in twenty twenty five. John Tucker, Bloomberg.
Radio, All right, John, thank you. Amazon shares they are
up almost two percent. This morning, the company reported sales
and profit that beat analyst estimates. Shar's got a boost
in part by a Bloomberg report that Anthropic, one of
Amazon's biggest AI investments, is weighing a funding round that
may more than double its valuation to nine hundred billion dollars.
CEO Andy jase He says Amazon is spending at a
rapid rate to expand data center capacity to meet the
intense demand for artificial intelligence computing power.
I think it's no secret that you've got you know,
the AI labs are spending an incredible amount of money
on compute at this point, and you can compute both
on the AI side as well as on the core side.
CEO Andy Jassey says, sales at Amazon Web Services we're
thirty seven point six billion dollars during the quarter. That's
of twenty eight percent from a year ago.
Well, on the flip side, care and shares of meta
platforms are down about eight and a quarter percent in
early trading. The Facebook parent is raising its spending out
look for the year, now projecting full year capital expenditures
of one hundred and twenty five to one hundred and
forty five billion dollars driven by Meta's AI strategy and
higher component pricing. Now that exceeds analyst estimates and marks
the roughly seven point four percent increase from Meta's previous
projections back in January.
Hey then charees a Microsoft. They're down more than one
and a half percent. The world's largest software company expects
sales in its Azure cloud unit to increase about forty
percent in the current quarter and anticipates modest acceleration in
the second half of the calendar year. It did say
capital expenditures, largely for data centers, will total about one
hundred and ninety billion dollar to the end of December,
and that's more than Wall Street had expected.
Karen Shares of Qualcomm are surging ten and a half percent.
The biggest maker of smartphone processor says it's making headway
in the lucrative data center market and predicts the China
phone industry will bounce back. Big tech earnings continue today.
We hear from Apple this afternoon.
Well. Nathan Shares at Belle Ackman's Pershing Square USA plunged
eighteen percent in its small Street debut. The drop came
after they combined initial public offering for the closed end
fond and his alternative asset manager raised five billion dollars.
Pershing was hoping to bring in twenty five billion. Ackman
spoke with Bloomberg yesterday about his goal to build a
long term diversified holdings company like Warren Buffett.
Look at Berkshire for the last sixty years, it's built
most of its value running becoming effectively an insurance holding company.
That's what Buffett is built over time, and it was
his successful management of the assets. When you hear Buffet
buying Apple, it wasn't Buffet buying Apple. It wasn't even
Berkshire buying Apple. The Berkshire insurance subsidiaries buying Apple. And
we're going to do the same thing. We're going to
manage A goal of how to use is to build
a long term, diverse fight holding company akin to what
Buffett has done.
And Pershing Square founder Bill Lackman spoke with our Danny
Berger on Bloomberg Deals.
Well, first, Karen, let's turn to the economy. Now, the
Federal Reserve is leaving interest rates unchanged, but that decision
may have been overshadowed by a big announcement from current
Fed chair Jay Powell.
He's staying after my term as chair ends on May fifteen,
I will continue to serve as a governor for a
period of time to be determined. I plan to keep
a low profile as a governor. There's only ever one
chair of the Federal Reserve Board. When Kevin Worsh is
confirmed and sworn.
In, he will be that chair.
Jay Powell's term as FED Chair ends two weeks from tomorrow,
but his seat on the Board of Governors doesn't expire
until twenty twenty eight. The announcement drew harsh criticism from
Treasury Secretary Scott Bessant.
I think it's highly unusual for someone who says he's
an institutionalist and cares about norms at the FED. This
is a violation of all Federal Reserved norms.
And I've got to.
Tell you also, Larry, I think it is an insult
to Kevin Warsh, Mickey Bowman, and Chris Waller to think
that these other Republican nominees do not care about the
institution of the FED and that he alone can maintain
the integrity of the FED.
Treasury Secretary Scott bess And spoke with Larry Kudlow on
Fox Business Now. Palell says he's concerned about a series
of legal attacks on the FED and that he will
leave once a probe into the fed's building renovation project is,
in his words, truly over. Well back in Washington, Careen,
the longest partial government shut down in history is a
step closer to ending. The House has approved the first
part of a two part plan to reopen the Department
of Homeland Security.
On this vote, the eyes of two hundred and fifteen.
The nays are two.
Hundred and level of one member voting.
Press listen the concurrent resolution is adopted.
That resolution would funnel seventy billion dollars into immigration enforcement
for the next three and a half years. Today, House
Speaker Mike Johnson hopes to pass the second part of
the plan to fund the rest of DHS outside ice
and border patrol through September thirtieth. All this comes after
the White House told Congress it will not be able
to pay most DHS workers after today because the fund
it tapped for April payments has run out.
Well Nathan, former FBI Director James Comy, has made his
first court appearance on a second criminal indictment under the
Trump administration.
He's facing two.
Federal charges related to threatening President Trump's life. The case
centers on a now deleted Instagram post or the numbers
eighty six and forty seven were arranged with seashells.
Critics say it could.
Have been a reference to killing the president, but Komy
says that was not his intent. Comy did not enter
a plea and the government did not ask that he
be detained. A plea hearing date has not been set.
Well.
Finally, Karen, Live Golf maybe coming to an end. Bloomberg
News has learned Saudi A. Ray Baba's Public Investment Fund
plans to stop financial support for the league after this season.
The move would bring a jarring into the breakaway league
that fractured pro golf and fundamentally altered the sports economics
by luring stars away from the PGA Tour with giant contracts.
Live cost the Saudi Public Investment Fund and estimated five
billion dollars over just four years.
Time now for look at some of the other stories
making news in New York and around the world. For that,
we're joined by Bloomers Michael Barr, Michael, good Morning.
Good morning. Karen King, Charles and Queen Camilla were in
New York City as part of their historic state visit.
The royal couple started the New York leg of their
trip yesterday with a visit to the Nine to Eleven Memorial. Later,
Charles attended the Greater Together Reception at Rockefeller Plaza to
mark the fiftieth anniversary of the King's Trust. That's the
charity that King Jeralds started to help people aged eleven
to thirty to develop life skill, get ready for work,
and access job opportunities.
At this reception, we can celebrate both my King's Trust
and the enduring cultural bond between the people in the
United Kingdom and the United States, which causes a relationship
route in shared creativity, enterprise, and values.
King Charles also gathered with leaders of some of the
world's biggest companies to encourage US UK investment and visited
a Harlem urban farm program. The Trump administration is hailing
the Supreme Court decision on the Voting Rights Act as
a quote complete and total victory for American voters. The
White House said in a statement, the color of one's
skin should not dictate which congressional district you belong in.
Congressman Rich McCormick was asked about fellow Republicans in Georgia
calling for a special session to draw new maps in
his state before.
We started early voting. So I don't think we can
do it in Georgia. I wouldn't be appropriate.
At this point.
Justice Selena Kagan called the ruling the LA chapter in
the Conservative majorities now completed demolition of the Voting Rights Act.
Police are calling a stabbing on a London street and
act of terrorism. Two Jewish men were injured. The suspect
was arrested after trying to attack the responding officers. Global
News twenty four hours a day and whenever you want
it with Bloomberg News. Now. I'm Michael Barr, and this
is Bloomberg Heron.
Thanks Michael all the time.
Now for our Bloomberg Sports Update, and for that we
bring in John Stashauer.
Thanks Darren.
A couple of teams stayed alive in the NBA playoffs.
Detroit beat Orlando. The Magic Steel lead three games to two.
Houston beat the Lakers, who still have three two. Also,
Cleveland beat Toronto and the Calves lead three to two overtime.
In the Stanley Cup playoffs, Philadelphia a one nothing went
over Pittsburgh. The Flyers win the series four games to
two Vegas and double overtime over Utah. Also, Montreal won
three to two at Tampa Bay. The Canadians and Golden
Knights have three two series leads. That's a Bloomberg Sports Uptea.
Cool. Stay with us more from Bloomberg day Break coming
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Coast to coast on Bloomberg Radio, nationwide on Sirius XM,
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Bloomberg Business app.
This is Bloomberg Daybreak. Good morning, I'm Nathan Hager.
The high seas standoff continues between the US and Iran
with no led up to the naval blockade of Iran Sports,
but now more than two months into the war, President
Trump says a further military response is still an option.
We've got an amazing military.
Now.
Now they have to cry uncle.
That's all they have to do is just say we
give up.
I was President Trump at the White House yesterday.
Joining us this morning from our European headquarters in London
is Bloomberg Opinion columnist Mark Champion, covering the Middle East
and international affairs. Great to have you with us, Mark,
as we watched this pretty sharp reaction in the commodities
markets to reports that President Trump may be getting a
briefing at least on new military options. What are we
hearing this morning? Could the possibilities be good morning.
Yes, good morning.
I mean essentially, what we know is that we have
a continuing blockade, and then you know, what we don't
know is whether President Trump will also now you know,
restart the war. That would in a sense be an
acknowledgment that he doesn't think that the blockade is going
to work fast enough for him.
So, you know, we'll see how that goes.
It's you know that there's been so much said at
various different times, you know, by the White House that
turned out not to be you know, quite how things
are quite accurate. So but you know, on the other
side in Iran, you see, you know, this is really
a sort of test of wills, tests of how much
economic pain each side can take.
So you see, you know, oil prices going up.
On the other side, you see the real the anion
currency weakening very sharply as a result of the blockade.
Both sides that you know, are feeling the pain.
The one thing you can be sure of is that
the Iranians won't say we give up. But you know,
they may want to come back to the table and
to preempt either you know, either try and end the blockade,
either do it by force, you know, by attacking the
Gulf States again. Certainly they will do that if the
Americans start restart the war or the Iranians, you know,
may come back to the table and try and negotiate.
Again. We've had our own reporting.
The US Central Command has asked for permission to use
a hypersonic missile in the in the conflict.
What potential impact could that have?
What depends on what they want to use it for,
I mean, in in you know, in the round. I
would say not much that sounds you know, you say
these things much as you know President Putin has in Ukraine,
we're going to is a hypersonic missile. It does, you know,
kind of focus attention and it's useful in terms of
psychological warfare. But you know, the munitions that the US
has used until now have been extremely effective. What it
is that they would want to do with a hypersonic
missile that they couldn't do with, you know, with other kinds,
not quite sure. You know, they are very good at
evading air defenses. Sophisticated air defenses. Iran's air defenses are
pretty much destroyed, so you know, not quite clear.
Of course, all this is coming is Defense Secretary Pete
Heggsat has faced some pretty tough questioning on Capitol Hill
about how the war has been going, the idea of,
particularly from Democrats, that the US may be heading into
a quagmire in Iran. Does this look like a quagmire
at this point to you? Mark not necessarily a quagmire.
I would very much doubt that this turns into an
extended war along the lines of Vietnamar again, Stan, even Iraq.
You know, I think they will.
Both sides actually do want to need an exit, but
they also think that the other side is going to
blink first.
And that's the real problem here. I really don't see it.
You know.
First of all, you know, in order for there to
be that kind of quagmire, you really need for boots
to be on the ground, Americans to put troops in.
And that's what really gets you sucked in, makes it
difficult to get out. You know, I don't think we're
going to see that, certainly, not at scale. But nevertheless,
you know, they even months, you know, weeks or months
is going to be very, very painful for the global economy,
and possibly a lot more painful for Europe and Asia
than it is for the United States.
Appreciate your perspective this morning. Mark, Thanks so much for
joining us on Daybreak That is Bloomberg opinion columnist Mark
Champion covering the Middle East and international affairs from our
European headquarters in London. You could read much more of
Mark's thoughts on the conflict at Olpin go on the Bloomberg.
Terminal Karen Nathan.
Another major story where following involves earnings from big tach
We heard from four big ones after the bell and
we want to break it all down with the Bloomberg
Intelligence analyst Matt Bloxam. Matt, good morning. So Alphabet, Meta platforms, Amazon,
and Microsoft. We're seeing investor reaction mixed. What was your
big takeaway from the earnings?
Yeah, so a few things. I'll see that there's another
step up in capital spending by these big companies.
So where we're already absorbing.
A seventy percent year, and you increase twenty six versus
twenty five, which would take this combined spending to six
hundred and fifty billion dollars based on the overnight reporting
that six point fifty has now increased to seven hundred
and twenty three billion dollars, a big chunk of that
coming from Microsoft and also for Meta, and I think
some mixed reactions to kind of whether that increased investment
makes sense, and certainly investors still trying to kind of
understand when the payback is going to come from these
investments and how big it's going to be.
And we saw with.
Alphabet the parent of Google, that you know, Google's businesses
are firing on all cylinders, great growth in the kind
of core ads business, but also really strong growth from
their cloud business, which increases revenue sixty three percent year
on year. And a similar story at Amazon where all
of its different businesses, including cloud, are growing pretty well.
But at the other end you had Meta, where you know,
they're not exposed to as many of the kind of
leavers that's AI's creating much more still focused on and
ads based business, their large language models lagging behind rivals
like Anthropic and Open Eye, but they were stepping up kapex,
and I don't think investors were convinced that the management
team they have the clarity of what the kind of
revenue generating opportunity and the return profile looks like.
Yeah, And when it comes to meta, it seemed like
CEO Mark Zuckerberg was maybe a bit vague when it
came to the analysts call, uh, do analysts.
Really need to hear more from him?
Then?
I think maybe not, maybe not so much. Hear more
from him, but see more in the in the in
the business and the numbers. And you actually see them
kind of move forward with their large language model so
that people feel they've got more bows to their they
got the kind of opportunity, and also just kind of
see them solidify the kind of active user basement. Also
got they've got a huge active user base across their
different products. But it did dip a little bit in
the quarter, and I think, you know, there's these kind
of lingering concerns that as the AI proposition evolves, that
maybe some of these you know, big established social network
business and mashing platforms could become more vulnerable and maybe
the ad dollars will kind of shift elsewhere.
And we did. We did talk about Amazon just a bit.
Is cloud division another bright spot here? But we also
get that report on anthropic can you walk us through
that too? Is how did that help Amazon?
There's been so many Anthropic reports.
Which that Anthropic is wearing a funding round in Anthropy
is one of Amazon's biggest AI investments.
Yeah, you know, I think obviously there's a lot of
focus on how much these businesses are worth, and I
think that that particular funding ground could put an even
bigger valuation on Anthropic. So that's kind of definitely a
big positive carry for Amazon. I think obviously, you know,
they're potentially kind of very complementary partners with your anthropics
claud models being super popular with the enterprise community, and
obviously tying that together with Amazon's market leading Amazon Web
Services cloud business, You've potentially got a really winning combination.
So in some ways they kind of win. One way,
they get revenue coming in through Amazon Web Services, that
also helps Anthropic, and the anthropic valuation goes up and
that helps Amazon. So it's kind of a nice reinforcement
circle they've got there.
This is Bloomberg Daybreak, your morning podcast on the stories
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