WEBVTT - Tech Firms Unleash AI Spending Spree; Fed Holds Rates Steady

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>Good morning.

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<v Speaker 3>I'm Nathan Hager and I'm Karen Moscow. Here are the

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<v Speaker 3>stories we're following today.

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<v Speaker 4>Karin, the market continues to react to big tech earnings

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<v Speaker 4>we got after the closing bell. This morning's shares of

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<v Speaker 4>Meta platforms are surging seven and a half percent. The

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<v Speaker 4>Facebook owner top projections for holiday quarter revenue and gave

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<v Speaker 4>a strong forecast for the current period. That's offsetting concerns

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<v Speaker 4>about plans for unprecedented spending on artificial intelligence this year.

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<v Speaker 4>Here's met A CEO, Mark Zuckerberg on the earnings conference call.

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<v Speaker 5>I think that twenty twenty six is going to be

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<v Speaker 5>the year that AI starts to dramatically change the way

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<v Speaker 5>that we work. As we navigate this, our north star

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<v Speaker 5>is building the best place for individuals to make a

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<v Speaker 5>massive impact. So to do this, we're investing in AI

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<v Speaker 5>native tooling so individuals at Meta can get more done.

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<v Speaker 5>We're elevating individual contributors and flattening teams. We're starting to

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<v Speaker 5>see projects that used to require big teams now be

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<v Speaker 5>accomplished by a single, very talented person.

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<v Speaker 4>Mark Zuckerberg says Meta plans to spend as much as

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<v Speaker 4>one hundred and thirty five billion dollars this year on AI.

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<v Speaker 3>Meanwhile, Nathan at Microsoft, spending surge to a record high

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<v Speaker 3>while cloud sales growth slowed. That has shares a Microsoft

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<v Speaker 3>down more than six percent this morning. Capital expenditures for

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<v Speaker 3>the fiscal second quarter hit thirty seven and a half

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<v Speaker 3>billion dollars. That's up sixty six percent from a year ago.

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<v Speaker 3>And your CEO Satya Nadella on the company conference call.

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<v Speaker 6>We are in the beginning phases of AI diffusion and

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<v Speaker 6>its broad GDP impact. Our TAM will grow substantially across

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<v Speaker 6>every layer of the tech stack as this diffusion accelerates

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<v Speaker 6>and spreads. In fact, even in those early innings, we're

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<v Speaker 6>built an AI business that is larger than some of

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<v Speaker 6>our biggest franchises that took decades to build.

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<v Speaker 3>CEO Satya Nadella says total sales increase seventeen percent and

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<v Speaker 3>more than eighty one billion dollars in the quarter.

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<v Speaker 4>Man Karen, we're watching shares of Tesla this morning. They're

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<v Speaker 4>up more than two and a half percent in early trading.

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<v Speaker 4>The ev maker reported earnings above analyst estimates, and in

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<v Speaker 4>Tesla's call with analysts CEO Elon Musk said the company

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<v Speaker 4>is discontinuing the Model S and X.

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<v Speaker 7>It's time to basically bring the Model S and X

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<v Speaker 7>programs to an end with an honorable discharge because we're

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<v Speaker 7>really moving into a future that is based on autonomy.

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<v Speaker 4>Elon Musk says Tesla plans to spend twenty billion dollars

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<v Speaker 4>this year to streamline its electric vehicle lineup and shift

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<v Speaker 4>resources toward robotics and AI.

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<v Speaker 3>Nathan more news this morning on the AI front. The

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<v Speaker 3>information is reporting in video Microsoft and Amazon are in

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<v Speaker 3>discussions to invest as much as sixty billion dollars in

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<v Speaker 3>open ai as part of a major new funding round.

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<v Speaker 3>This could help alleviate investor can concerns about Open AI's

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<v Speaker 3>cash burn and.

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<v Speaker 4>Karen and Vidia CEO Jensen Wang says his company has

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<v Speaker 4>not yet received any orders from Chinese customers for H

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<v Speaker 4>two hundred AI chips. Jensen Wang spoke with reporters earlier

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<v Speaker 4>today in Taipei.

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<v Speaker 8>I'm hoping that also the Chinese government would allow Nvidia

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<v Speaker 8>to sell in H two hundred.

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<v Speaker 2>So they have to decide, and I'm.

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<v Speaker 8>Looking forward to to a favorable decision. I think that

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<v Speaker 8>H two hundred is very good for America. Technology leadership

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<v Speaker 8>is also very good for the Chinese market.

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<v Speaker 4>I wasn't Video CEO Jensen Wang. Chinese officials recently told

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<v Speaker 4>the country's largest tech firms, including Ali Baba, they can

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<v Speaker 4>prepare orders for h two hundred chips. Suggests Beijing is

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<v Speaker 4>close to formally approving imports of components essential to powering

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<v Speaker 4>artificial intelligence.

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<v Speaker 3>Nathan Big tech earnings continued this afternoon, and that's when

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<v Speaker 3>Apple reports its latest quarterly results. We get a preview

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<v Speaker 3>with the Bloomberg's Tom Busby.

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<v Speaker 9>Apple is boys to deliver its big sales quarter ever,

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<v Speaker 9>thanks in large part to expected blowout sales of its

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<v Speaker 9>iPhone seventeen lineup, especially for the higher end models, but

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<v Speaker 9>investors are still concerned about rising costs for components, especially

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<v Speaker 9>memory chips, and what sales look like in China, which

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<v Speaker 9>declined just three months ago. Bloomberg consensus calls for revenue

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<v Speaker 9>to jump eleven percent higher to one hundred and thirty

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<v Speaker 9>eight point four billion dollars, the biggest quarterly growth in

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<v Speaker 9>four years, on earnings per share of two dollars sixty

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<v Speaker 9>eight cents. Tom Busby Bloomberg Radio.

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<v Speaker 4>Okay, Tom, thank you now let's turn from the markets

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<v Speaker 4>to get you to the latest from Minneapolis. The new

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<v Speaker 4>man in charge of immigration enforcement in the city, Tom Holman,

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<v Speaker 4>is set to hold a news conference later this morning.

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<v Speaker 4>President Trump sent his Borders are to replace Border Patrol

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<v Speaker 4>Commander Greg Bevino in a bid to cool the uproar

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<v Speaker 4>over the shooting deaths of two US citizens by federal agents.

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<v Speaker 4>The two officers involved in Alex Pretti's killing have been

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<v Speaker 4>placed on administrative leave. Meanwhile, President Trump is warning Minneapolis

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<v Speaker 4>Mayor Jacob Frye he is quote playing with fire for

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<v Speaker 4>saying he won change his city's immigration policies. In Minnesota,

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<v Speaker 4>Democrat Ilhan Omar held another town hall last night after

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<v Speaker 4>a man charged at her with a liquid during an

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<v Speaker 4>event earlier this week.

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<v Speaker 10>I wouldn't be where I am at today, having to

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<v Speaker 10>pay for security, having the government to think about providing

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<v Speaker 10>me security if Donald Trump wasn't in office, and if

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<v Speaker 10>he wasn't so obsessed with.

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<v Speaker 4>Me, Democratic Congresswoman il Han Omar. Again, we expect to

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<v Speaker 4>hear from White House Borders our Tom Holman in a

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<v Speaker 4>news conference from Minneapolis. It's set for eight thirty Wall

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<v Speaker 4>Street time, and we will bring it to you live

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<v Speaker 4>on Bloomberg Radio and on the Bloomberg podcast page on YouTube.

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<v Speaker 3>Well, Nathan, we're hearing signs of progress and avoiding a

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<v Speaker 3>government shutdown over the Minneapolis crackdown. A source style's Bloomberg

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<v Speaker 3>News that talks between the White House and Senate Democrats

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<v Speaker 3>are moving closer to Democrats demands. To Minnesota, Democrat Amy

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<v Speaker 3>klobaschar laid out her demands for federal agents on the

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<v Speaker 3>Senate floor.

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<v Speaker 11>The mass should come up, and the body camera should

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<v Speaker 11>go on, and there must be throw a objective and

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<v Speaker 11>independent investigations into these killings.

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<v Speaker 3>Along with Minnesota is Amy Klobuchar, Senate Minority Leader Chuck

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<v Speaker 3>Schumer has insisted that homeland security funds be stripped from

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<v Speaker 3>the massive spending package that'll keep the government open after

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<v Speaker 3>tomorrow night. Senators from both parties say they're open to

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<v Speaker 3>a stopgap measure for homeland security to allow more time

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<v Speaker 3>for negotiations on immigration enforcement.

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<v Speaker 4>Guardrails's turn of the weather Now, Karen, we have more

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<v Speaker 4>frigid temperatures and the possibility of another winter storm this weekend.

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<v Speaker 4>Let's get the latest now from Bloomberg meteorologist Craig Allen.

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<v Speaker 12>Craig, Good morning, Good morning Nathan, and good morning Karen.

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<v Speaker 12>New York City right now is at thirteen Boston fourteen,

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<v Speaker 12>Washington fifteen degrees. So yes, the first thing that we've

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<v Speaker 12>mentioned here is the coal. The suburbs of all these

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<v Speaker 12>cities have readings that are in the single digits and

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<v Speaker 12>the wind chills are also in the single digits to

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<v Speaker 12>near zero. So you're absolutely right. We are starting off

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<v Speaker 12>with bitter, bitter coal temperatures again, and this isn't going away.

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<v Speaker 12>That's lasting through the weekend for sure. Now, let's break

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<v Speaker 12>this down by region for the upcoming possibility of a snowstorm.

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<v Speaker 12>There's definitely going to be a snowstorm across the South Carolina,

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<v Speaker 12>North Carolina, southern Virginia. How close is this going to

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<v Speaker 12>get to Washington, d C. Well, there are winter storm

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<v Speaker 12>watches in effect as far north as the southern parts

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<v Speaker 12>of Virginia. I think DC could get grazed by this.

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<v Speaker 12>I think New York City, especially east of the city

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<v Speaker 12>across Long Island and the eastern sections of New England

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<v Speaker 12>will get grazed by it as well. And definitely Boston

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<v Speaker 12>will be in the works, especially out towards Cape cod

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<v Speaker 12>so heavier amounts east and south based on last night's

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<v Speaker 12>weather maps, and lighter amounts off to the west and north.

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<v Speaker 12>It's still wobbling, guys, so there is still the chance

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<v Speaker 12>of going back and forth on this forecast. We'll have

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<v Speaker 12>more on that as we go through the morning, Nathan,

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<v Speaker 12>Karen own's good.

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<v Speaker 3>All right, Craig Allen, thank you, and of course we

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<v Speaker 3>will be checking back in with you throughout the morning.

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<v Speaker 3>As you said, we want to turn to the economy now.

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<v Speaker 3>Where as I expected, the FED held rates steady, and

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<v Speaker 3>Bloomberg's John Tucker joins us with the very latest John,

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<v Speaker 3>good morning.

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<v Speaker 13>Good morning Karen. This marks the first rate pause since July,

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<v Speaker 13>and at his news conference after the decision, heard here

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<v Speaker 13>live on Bloomberg Radio, Fed shared jer impalaces they're still

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<v Speaker 13>waiting to see the impact of tariffs before committing to

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<v Speaker 13>rate cuts.

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<v Speaker 14>The expectation is that we will see the effects of

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<v Speaker 14>tariffs flowing through goods prices peaking, and then starting to

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<v Speaker 14>come down.

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<v Speaker 13>With a decision to hold state rates steady yesterday was

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<v Speaker 13>approved on a ten to two vote, with the governors

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<v Speaker 13>Christopher Waller as Stephen Myron dissenting in favor of a cut.

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<v Speaker 13>Waller's descent in favor of a rate cut seen as

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<v Speaker 13>keeping him in the race to replace pal As Cheer

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<v Speaker 13>of the Federal Reserve in New York. I'm John Tucker,

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<v Speaker 13>Bloomberg Radio.

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<v Speaker 4>All right, John, thank you for seeing commodities rally this morning.

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<v Speaker 4>In fact, gold is up for ninth straight day, surging

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<v Speaker 4>above fifty five hundred dollars and outs. The rally's been

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<v Speaker 4>fueled by a week or dollar and investor flight from

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<v Speaker 4>sovereign bonds and currencies. Spot gold has risen by nearly

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<v Speaker 4>thirty percent this year.

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<v Speaker 3>Time now for a look at some of the their

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<v Speaker 3>stories making news in New York and around the world.

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<v Speaker 3>And for that we're joined by Bloomberg's Michael Barr.

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<v Speaker 15>Michael, good morning, Good morning Karen. Former New York Mayor

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<v Speaker 15>Eric Adams is responding to criticism about the budget from

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<v Speaker 15>current mayor zoron mcdone. The newly sworn in Democratic Socialist

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<v Speaker 15>mayor argues additional money from the state is necessary because

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<v Speaker 15>the city faces a fiscal crisis created by Adams and

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<v Speaker 15>by a push from former Governor Andrew Cuomo to shift

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<v Speaker 15>costs from the state onto the city.

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<v Speaker 16>We did not arrive at this place by accident. This

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<v Speaker 16>crisis has a name and a chief architect. In the

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<v Speaker 16>words of the Jackson five, it's as easy as ABC.

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<v Speaker 16>This is the Adams budget crisis.

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<v Speaker 15>And Donnie says over two years, New York is steering

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<v Speaker 15>at a twelve point six billion dollar budget gap. Adams

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<v Speaker 15>refuted the claim, saying the city was upgraded by bond

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<v Speaker 15>rating companies and had ample reserves Under his leadership. President

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<v Speaker 15>Trump warned Iron to make a nuclear deal with the

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<v Speaker 15>US or faced military strikes far worse than the attack

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<v Speaker 15>he ordered last June. Ron said it stands ready for

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<v Speaker 15>dialogue based on mutual respect and interests, but warned that

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<v Speaker 15>it will defend itself and respond if pushed. Police a

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<v Speaker 15>man repeatedly crashed his car into the Habbad Lubovich World

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<v Speaker 15>headquarters in New York City. The incident happened last night

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<v Speaker 15>while people were gathered for prayer of the acidic Jewish site.

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<v Speaker 15>No one was injured, Police Commissioner Jessica Tish.

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<v Speaker 11>This incident is.

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<v Speaker 10>Currently investigated as a game crime by the Nypolice Gate

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<v Speaker 10>Crimes Task Force.

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<v Speaker 15>The driver was arrested. Global News four hours a day

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<v Speaker 15>and whenever you want it with Bloomberg News Now. I'm

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<v Speaker 15>Michael Barr, and this is Bloomberg Karen.

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<v Speaker 9>Thanks Michael.

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<v Speaker 3>Time now for our Bloomberg Sports update, and for that

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<v Speaker 3>we bring in John Stashauer.

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<v Speaker 12>Thanks Darren.

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<v Speaker 17>Fifty nine year old Todd Monkin named the new coach

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<v Speaker 17>of the Cleveland Browns. He was an assistant once with

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<v Speaker 17>the Browns, then went to Georgia. Last three years he's

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<v Speaker 17>coached the offense in Baltimore. The NBA trade deadline next

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<v Speaker 17>Thursday in the Milwaukee Bucks was eighteen and twenty seven.

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<v Speaker 17>Their star Giannis So to the compo, currently out with

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<v Speaker 17>a calf injury. The Bucks are said to be open

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<v Speaker 17>to listen to trade offers involving Giannis Lebron James back

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<v Speaker 17>at Cleveland, maybe for the last time, and the Cavs

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<v Speaker 17>blew out the Lakers by thirty at your Bloomberg Sports Update.

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<v Speaker 3>Stay with us more from Bloomberg day Break coming up after.

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<v Speaker 1>This Coast to coast on Bloomberg Radio, nationwide on Sirius

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<v Speaker 1>Exam and around the world on Bloomberg dot Com and

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<v Speaker 1>the Bloomberg Business Appum. This is Bloomberg Daybreak.

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<v Speaker 4>Good morning on Nathan Hager, the AI spending boom is

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<v Speaker 4>in full swing and the biggest names in big tech

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<v Speaker 4>are being rewarded for it if they can show it's

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<v Speaker 4>paying off. This morning, investors seem to think that's the

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<v Speaker 4>case for Meta platforms. For Microsoft not so much. Joining

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<v Speaker 4>us this morning is Man Deep Saying, Global head of

0:12:15.240 --> 0:12:17.480
<v Speaker 4>technology research for Bloomberg Intelligence.

0:12:17.720 --> 0:12:18.120
<v Speaker 15>Man Deep.

0:12:18.120 --> 0:12:19.800
<v Speaker 4>We heard Meta says it's going to spend up to

0:12:19.840 --> 0:12:22.800
<v Speaker 4>one hundred and thirty five billion on capex this year.

0:12:23.200 --> 0:12:26.679
<v Speaker 4>Microsoft just this quarter thirty seven and a half billion

0:12:27.000 --> 0:12:30.720
<v Speaker 4>Meta shares up, Microsoft shares down. What gives.

0:12:31.800 --> 0:12:34.640
<v Speaker 2>Well, So in the case of Meta, I mean, the

0:12:34.760 --> 0:12:38.400
<v Speaker 2>core business seems to be accelerating, and what they highlighted

0:12:38.480 --> 0:12:41.679
<v Speaker 2>last night was, look, I mean, we are spending all

0:12:41.720 --> 0:12:45.280
<v Speaker 2>this money, but we already see some return in terms

0:12:45.320 --> 0:12:50.520
<v Speaker 2>of our ad conversions, better recommendation systems, and eventually we

0:12:50.559 --> 0:12:53.720
<v Speaker 2>will be launching separate products in terms of, you know,

0:12:54.200 --> 0:13:00.000
<v Speaker 2>having an AI assistant that will work within the apps

0:13:00.120 --> 0:13:04.080
<v Speaker 2>content generation tools. So the investors seem to have given

0:13:04.120 --> 0:13:06.880
<v Speaker 2>them a green light in terms of, you know, investing

0:13:07.000 --> 0:13:10.559
<v Speaker 2>upfront with the hope that they will launch new products

0:13:10.600 --> 0:13:13.960
<v Speaker 2>that can that they can monetize you know later in

0:13:14.000 --> 0:13:17.760
<v Speaker 2>the year, So clearly that core business acceleration was key

0:13:17.800 --> 0:13:20.400
<v Speaker 2>in the case of Microsoft. I mean, it was a

0:13:20.480 --> 0:13:24.960
<v Speaker 2>fine quarter. The Azure growth was thirty eight percent instead

0:13:25.000 --> 0:13:28.800
<v Speaker 2>of thirty nine percent, and what they said is, look,

0:13:28.840 --> 0:13:31.920
<v Speaker 2>we are using a lot of the GPUs internally to

0:13:32.040 --> 0:13:36.520
<v Speaker 2>develop our new applications instead of renting them out, you know,

0:13:37.160 --> 0:13:41.160
<v Speaker 2>on Azure. And from that perspective, they are supply constraint

0:13:41.400 --> 0:13:46.160
<v Speaker 2>like all the other companies are. And you know, I

0:13:46.280 --> 0:13:51.160
<v Speaker 2>kind of feel like everyone is, you know, compute constraint

0:13:51.240 --> 0:13:55.199
<v Speaker 2>right now. So that's where memory prices are having an impact,

0:13:55.280 --> 0:13:57.800
<v Speaker 2>and all the things that are going on in terms

0:13:57.800 --> 0:14:02.679
<v Speaker 2>of the price this is are having an impact around

0:14:02.720 --> 0:14:05.160
<v Speaker 2>you know, what these companies are able to do around

0:14:05.559 --> 0:14:09.440
<v Speaker 2>creating that infrastructure. So overall, it was a very good

0:14:09.520 --> 0:14:13.280
<v Speaker 2>quarter for Microsoft. It's just expectations were slightly higher, and

0:14:13.320 --> 0:14:17.199
<v Speaker 2>that's where probably the investors stand. Like that Azure print.

0:14:17.480 --> 0:14:19.480
<v Speaker 4>So in just thirty seconds, man, deep, how does that

0:14:19.520 --> 0:14:21.040
<v Speaker 4>set us up for when we're going to hear from

0:14:21.080 --> 0:14:22.560
<v Speaker 4>Apple later on today?

0:14:23.600 --> 0:14:27.400
<v Speaker 2>I mean memory prices. So Microsoft called out how memory

0:14:27.440 --> 0:14:30.320
<v Speaker 2>prices are having an impact on their Windows sales. So

0:14:30.640 --> 0:14:35.160
<v Speaker 2>I do expect Apple to acknowledge memory prices impacting their

0:14:35.240 --> 0:14:38.760
<v Speaker 2>gross margins, and we'll find out if it's if it

0:14:38.920 --> 0:14:41.320
<v Speaker 2>had an impact on their hardware sales during the quarter.

0:14:43.120 --> 0:14:46.560
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