Tech Firms Unleash AI Spending Spree; Fed Holds Rates Steady

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.
Karin, the market continues to react to big tech earnings
we got after the closing bell. This morning's shares of
Meta platforms are surging seven and a half percent. The
Facebook owner top projections for holiday quarter revenue and gave
a strong forecast for the current period. That's offsetting concerns
about plans for unprecedented spending on artificial intelligence this year.
Here's met A CEO, Mark Zuckerberg on the earnings conference call.
I think that twenty twenty six is going to be
the year that AI starts to dramatically change the way
that we work. As we navigate this, our north star
is building the best place for individuals to make a
massive impact. So to do this, we're investing in AI
native tooling so individuals at Meta can get more done.
We're elevating individual contributors and flattening teams. We're starting to
see projects that used to require big teams now be
accomplished by a single, very talented person.
Mark Zuckerberg says Meta plans to spend as much as
one hundred and thirty five billion dollars this year on AI.
Meanwhile, Nathan at Microsoft, spending surge to a record high
while cloud sales growth slowed. That has shares a Microsoft
down more than six percent this morning. Capital expenditures for
the fiscal second quarter hit thirty seven and a half
billion dollars. That's up sixty six percent from a year ago.
And your CEO Satya Nadella on the company conference call.
We are in the beginning phases of AI diffusion and
its broad GDP impact. Our TAM will grow substantially across
every layer of the tech stack as this diffusion accelerates
and spreads. In fact, even in those early innings, we're
built an AI business that is larger than some of
our biggest franchises that took decades to build.
CEO Satya Nadella says total sales increase seventeen percent and
more than eighty one billion dollars in the quarter.
Man Karen, we're watching shares of Tesla this morning. They're
up more than two and a half percent in early trading.
The ev maker reported earnings above analyst estimates, and in
Tesla's call with analysts CEO Elon Musk said the company
is discontinuing the Model S and X.
It's time to basically bring the Model S and X
programs to an end with an honorable discharge because we're
really moving into a future that is based on autonomy.
Elon Musk says Tesla plans to spend twenty billion dollars
this year to streamline its electric vehicle lineup and shift
resources toward robotics and AI.
Nathan more news this morning on the AI front. The
information is reporting in video Microsoft and Amazon are in
discussions to invest as much as sixty billion dollars in
open ai as part of a major new funding round.
This could help alleviate investor can concerns about Open AI's
cash burn and.
Karen and Vidia CEO Jensen Wang says his company has
not yet received any orders from Chinese customers for H
two hundred AI chips. Jensen Wang spoke with reporters earlier
today in Taipei.
I'm hoping that also the Chinese government would allow Nvidia
to sell in H two hundred.
So they have to decide, and I'm.
Looking forward to to a favorable decision. I think that
H two hundred is very good for America. Technology leadership
is also very good for the Chinese market.
I wasn't Video CEO Jensen Wang. Chinese officials recently told
the country's largest tech firms, including Ali Baba, they can
prepare orders for h two hundred chips. Suggests Beijing is
close to formally approving imports of components essential to powering
artificial intelligence.
Nathan Big tech earnings continued this afternoon, and that's when
Apple reports its latest quarterly results. We get a preview
with the Bloomberg's Tom Busby.
Apple is boys to deliver its big sales quarter ever,
thanks in large part to expected blowout sales of its
iPhone seventeen lineup, especially for the higher end models, but
investors are still concerned about rising costs for components, especially
memory chips, and what sales look like in China, which
declined just three months ago. Bloomberg consensus calls for revenue
to jump eleven percent higher to one hundred and thirty
eight point four billion dollars, the biggest quarterly growth in
four years, on earnings per share of two dollars sixty
eight cents. Tom Busby Bloomberg Radio.
Okay, Tom, thank you now let's turn from the markets
to get you to the latest from Minneapolis. The new
man in charge of immigration enforcement in the city, Tom Holman,
is set to hold a news conference later this morning.
President Trump sent his Borders are to replace Border Patrol
Commander Greg Bevino in a bid to cool the uproar
over the shooting deaths of two US citizens by federal agents.
The two officers involved in Alex Pretti's killing have been
placed on administrative leave. Meanwhile, President Trump is warning Minneapolis
Mayor Jacob Frye he is quote playing with fire for
saying he won change his city's immigration policies. In Minnesota,
Democrat Ilhan Omar held another town hall last night after
a man charged at her with a liquid during an
event earlier this week.
I wouldn't be where I am at today, having to
pay for security, having the government to think about providing
me security if Donald Trump wasn't in office, and if
he wasn't so obsessed with.
Me, Democratic Congresswoman il Han Omar. Again, we expect to
hear from White House Borders our Tom Holman in a
news conference from Minneapolis. It's set for eight thirty Wall
Street time, and we will bring it to you live
on Bloomberg Radio and on the Bloomberg podcast page on YouTube.
Well, Nathan, we're hearing signs of progress and avoiding a
government shutdown over the Minneapolis crackdown. A source style's Bloomberg
News that talks between the White House and Senate Democrats
are moving closer to Democrats demands. To Minnesota, Democrat Amy
klobaschar laid out her demands for federal agents on the
Senate floor.
The mass should come up, and the body camera should
go on, and there must be throw a objective and
independent investigations into these killings.
Along with Minnesota is Amy Klobuchar, Senate Minority Leader Chuck
Schumer has insisted that homeland security funds be stripped from
the massive spending package that'll keep the government open after
tomorrow night. Senators from both parties say they're open to
a stopgap measure for homeland security to allow more time
for negotiations on immigration enforcement.
Guardrails's turn of the weather Now, Karen, we have more
frigid temperatures and the possibility of another winter storm this weekend.
Let's get the latest now from Bloomberg meteorologist Craig Allen.
Craig, Good morning, Good morning Nathan, and good morning Karen.
New York City right now is at thirteen Boston fourteen,
Washington fifteen degrees. So yes, the first thing that we've
mentioned here is the coal. The suburbs of all these
cities have readings that are in the single digits and
the wind chills are also in the single digits to
near zero. So you're absolutely right. We are starting off
with bitter, bitter coal temperatures again, and this isn't going away.
That's lasting through the weekend for sure. Now, let's break
this down by region for the upcoming possibility of a snowstorm.
There's definitely going to be a snowstorm across the South Carolina,
North Carolina, southern Virginia. How close is this going to
get to Washington, d C. Well, there are winter storm
watches in effect as far north as the southern parts
of Virginia. I think DC could get grazed by this.
I think New York City, especially east of the city
across Long Island and the eastern sections of New England
will get grazed by it as well. And definitely Boston
will be in the works, especially out towards Cape cod
so heavier amounts east and south based on last night's
weather maps, and lighter amounts off to the west and north.
It's still wobbling, guys, so there is still the chance
of going back and forth on this forecast. We'll have
more on that as we go through the morning, Nathan,
Karen own's good.
All right, Craig Allen, thank you, and of course we
will be checking back in with you throughout the morning.
As you said, we want to turn to the economy now.
Where as I expected, the FED held rates steady, and
Bloomberg's John Tucker joins us with the very latest John,
good morning.
Good morning Karen. This marks the first rate pause since July,
and at his news conference after the decision, heard here
live on Bloomberg Radio, Fed shared jer impalaces they're still
waiting to see the impact of tariffs before committing to
rate cuts.
The expectation is that we will see the effects of
tariffs flowing through goods prices peaking, and then starting to
come down.
With a decision to hold state rates steady yesterday was
approved on a ten to two vote, with the governors
Christopher Waller as Stephen Myron dissenting in favor of a cut.
Waller's descent in favor of a rate cut seen as
keeping him in the race to replace pal As Cheer
of the Federal Reserve in New York. I'm John Tucker,
Bloomberg Radio.
All right, John, thank you for seeing commodities rally this morning.
In fact, gold is up for ninth straight day, surging
above fifty five hundred dollars and outs. The rally's been
fueled by a week or dollar and investor flight from
sovereign bonds and currencies. Spot gold has risen by nearly
thirty percent this year.
Time now for a look at some of the their
stories making news in New York and around the world.
And for that we're joined by Bloomberg's Michael Barr.
Michael, good morning, Good morning Karen. Former New York Mayor
Eric Adams is responding to criticism about the budget from
current mayor zoron mcdone. The newly sworn in Democratic Socialist
mayor argues additional money from the state is necessary because
the city faces a fiscal crisis created by Adams and
by a push from former Governor Andrew Cuomo to shift
costs from the state onto the city.
We did not arrive at this place by accident. This
crisis has a name and a chief architect. In the
words of the Jackson five, it's as easy as ABC.
This is the Adams budget crisis.
And Donnie says over two years, New York is steering
at a twelve point six billion dollar budget gap. Adams
refuted the claim, saying the city was upgraded by bond
rating companies and had ample reserves Under his leadership. President
Trump warned Iron to make a nuclear deal with the
US or faced military strikes far worse than the attack
he ordered last June. Ron said it stands ready for
dialogue based on mutual respect and interests, but warned that
it will defend itself and respond if pushed. Police a
man repeatedly crashed his car into the Habbad Lubovich World
headquarters in New York City. The incident happened last night
while people were gathered for prayer of the acidic Jewish site.
No one was injured, Police Commissioner Jessica Tish.
This incident is.
Currently investigated as a game crime by the Nypolice Gate
Crimes Task Force.
The driver was arrested. Global News four hours a day
and whenever you want it with Bloomberg News Now. I'm
Michael Barr, and this is Bloomberg Karen.
Thanks Michael.
Time now for our Bloomberg Sports update, and for that
we bring in John Stashauer.
Thanks Darren.
Fifty nine year old Todd Monkin named the new coach
of the Cleveland Browns. He was an assistant once with
the Browns, then went to Georgia. Last three years he's
coached the offense in Baltimore. The NBA trade deadline next
Thursday in the Milwaukee Bucks was eighteen and twenty seven.
Their star Giannis So to the compo, currently out with
a calf injury. The Bucks are said to be open
to listen to trade offers involving Giannis Lebron James back
at Cleveland, maybe for the last time, and the Cavs
blew out the Lakers by thirty at your Bloomberg Sports Update.
Stay with us more from Bloomberg day Break coming up after.
This Coast to coast on Bloomberg Radio, nationwide on Sirius
Exam and around the world on Bloomberg dot Com and
the Bloomberg Business Appum. This is Bloomberg Daybreak.
Good morning on Nathan Hager, the AI spending boom is
in full swing and the biggest names in big tech
are being rewarded for it if they can show it's
paying off. This morning, investors seem to think that's the
case for Meta platforms. For Microsoft not so much. Joining
us this morning is Man Deep Saying, Global head of
technology research for Bloomberg Intelligence.
Man Deep.
We heard Meta says it's going to spend up to
one hundred and thirty five billion on capex this year.
Microsoft just this quarter thirty seven and a half billion
Meta shares up, Microsoft shares down. What gives.
Well, So in the case of Meta, I mean, the
core business seems to be accelerating, and what they highlighted
last night was, look, I mean, we are spending all
this money, but we already see some return in terms
of our ad conversions, better recommendation systems, and eventually we
will be launching separate products in terms of, you know,
having an AI assistant that will work within the apps
content generation tools. So the investors seem to have given
them a green light in terms of, you know, investing
upfront with the hope that they will launch new products
that can that they can monetize you know later in
the year, So clearly that core business acceleration was key
in the case of Microsoft. I mean, it was a
fine quarter. The Azure growth was thirty eight percent instead
of thirty nine percent, and what they said is, look,
we are using a lot of the GPUs internally to
develop our new applications instead of renting them out, you know,
on Azure. And from that perspective, they are supply constraint
like all the other companies are. And you know, I
kind of feel like everyone is, you know, compute constraint
right now. So that's where memory prices are having an impact,
and all the things that are going on in terms
of the price this is are having an impact around
you know, what these companies are able to do around
creating that infrastructure. So overall, it was a very good
quarter for Microsoft. It's just expectations were slightly higher, and
that's where probably the investors stand. Like that Azure print.
So in just thirty seconds, man, deep, how does that
set us up for when we're going to hear from
Apple later on today?
I mean memory prices. So Microsoft called out how memory
prices are having an impact on their Windows sales. So
I do expect Apple to acknowledge memory prices impacting their
gross margins, and we'll find out if it's if it
had an impact on their hardware sales during the quarter.
This is Bloomberg Daybreak, your morning podcast on the stories
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