Good morning.
I'm Nathan Hager and I'm Garen Moscow. Here are the stories we're following today.
The drop in Nasdaq futures comes after a couple of key tech earnings reports after the bell a huge run up in a trio of stocks on optimism over artificial intelligence. It's turning into investor disappointment this morning. Let's start with Google parent Alphabet. Those shares are down more than five and a half percent in early trading. Softness in the company's core search advertising business is a focus, and we get more on that from Bloomberg Technology host ed Ludlow in San Francisco.
One thesis or idea is that maybe the streets concern about weakness in the search business is they don't yet see tangible evidence that all of the R and D and work in generative AI and all of the product release is actually doing anything supportive to Google's core business. Compare and contrast that with Microsoft, where you see the contribution of AI across its kind of legacy and newer offerings and software suites. Aed Lovelife for bloombergis in San Francisco.
All right, ed, thanks, So we're also seeing weakness in shares of Microsoft this morning that stock is down about one point six percent despite easily beating profit and revenue forecasts, and we get the latest from Bloomberg's John Tucker, John and Karen.
Microsoft posted its strongest revenue growth since twenty twenty two, sixty two billion dollars. The profit easily beat estimates, coming in at two dollars ninety three cents a share. Artificial intelligence products are driving spending on cloud computing. Microsoft's as Your Cloud Services sales gain thirty percent, But as one analyst puts it, the company delivered a healthy set of results, but not as strong enough dose to appease the market.
A loptimism for Microsoft's AI prospects last week cent to its market cap above three trillion dollars. John Tucker, Bloomberg Radio.
All right, John, thanks for also seeing shares of chip maker Advanced micro Devices fall nearly seven percent. AMDs stock had been one of the favorite picks of investors looking for ways to bet on AI computing. The second biggest maker of computer processors, gave a week revenue forecast for the current period.
Well, Nathan, while investors diggest earnings, they'll have another huge event on the calendar of this afternoon the FED decision and more importantly J Powell's news conference, we get more from Bloomberg's Michael McKee.
Will the Fed offer any surprises today? Certainly not on interest rates. Fed funds stay in the five and a quarter to five and a half percent range, and it is likely they will change their tightening bias to something more neutral, dropping language about additional policy firming. That will put the burden of making news on Chairman J.
Powell.
The biggest news he could make would be guidance on rake cut timing, which is very unlikely. Finally, with tug in cheek, we ask, will Powell say the words soft landing? Michael McKee, Bloomberg Radio.
All right, Mike, thanks and catch our special edition at Bloomberg Survey Lence, the Fed decides starting at one thirty pm Wall Street time on Bloomberg Radio and television.
Let's turn to politics. Now, this just crossed the Bloomberg terminal. Karen a Brand Bloomberg News Morning Consult poll. It finds President Biden continues to trail former President Donald Trump in seven swing states. Six in ten voters in those states say the president bears responsibility for a surge in migrants at the US Mexico border.
Bloomberg's Amy Morris has the numbers. The monthly survey serves as a warning for Biden, who lags Trump forty two to forty eight percent across all seven swing states in a head to head matchup, But when a third party candidate is added, Trump's lead grows by another nine percentage points and voter's main concern is the economy by far, but now more respondents also call immigration their most important issue.
The gap between those two issues is narrowing, which suggests the Republican efforts to put immigration at the center of the campaign are working, and the trust gap is growing by a twenty two point margin. Swing state voters say they trust Trump over Biden to handle immigration. In Washington, Amy Morris Bloomberg Radio, All right, Amy.
Thank you well. From the White House to Congress, the House Homeland Security Committee has voted along party lines to move toward in peaching Homelands and Security Secretary Alejandro Majorcis over problems at the border. Republican Marjorie Taylor Green has been pushing this since last year. The facts and the data and the statistics do not lie.
Secretary Mayorcis is willfully breaking federal immigration laws.
Congressoman Marjorie Taylor Green spoke from the House floor, and Democrats here, Republicans are not providing the resources to enforce the law.
All right, let's turn back to the markets and company news. Karen Walmart has announced a three for one stock split, and we get the story from Bloomberg's Charlie Pellett.
The company says a lower price will help more of its employees buy shares. CEO Doug McMillan said, quote, Sam Walton believed it was important to keep our share price in a range where purchasing whole shares rather than fractions, was accessible to all of our associates. The world's largest retailer has an existing stock purchase program for employees, through which they buy stock directly and the company matches fifteen percent of the purchase up to eighteen hundred dollars a year.
In New York, Charlie Bloomberg Radio, All right.
Charlie, thanks Lelon Muss fifty five billion dollar Tesla pay package has been struck down by a Delaware judge following a shareholder challenge. If the decision survives appeal, it could threaten the entrepreneur's fortune and throw the fate of his companies into question. Mus twenty eighteen award was the largest compensation package in history. Tesla's board will now need to agree on new payment terms for their CEO.
And Karin and other wealthy executives. In the news, Bloomberg News has learned media mogul Byron Allens made a fourteen point three billion dollar offer for all outstanding shares of Paramount Global. Paramount is one of the crown jewels in a global media empire controlled by the Redstone family. Shares of Paramount are up nearly twenty one percent in early training.
And Bloomberg News has learned Carlisle Group co founder David Rubinstein and a consortium of investors have agreed to buy the Baltimore Orioles baseball team from the Angelos family for one point seventy three billion dollars. Time now for a look at some of the other stories making news around the world, and for that were joined by Bloomberg's Amy Morris Samy.
Good morning, Good morning, Karen.
Some are calling Israel's secret counter terrorism operation at a hospital in the West Bank a potential war crime. Members of the Israeli special forces disguised themselves as hospital staff to sneak into a hospital room and then shoot three Palestinian fighters who Israel says we're planning more attacks. Tofts University professor of international law Tom Danenbaum says these kinds of tactics are generally out of bounds.
Even if they were clear targets clearly misusing the hospital, it would still be a war crime to present as a civilian or a medic to get proximate to them.
The Palestinian Foreign Ministry posted on social media calling the killings heinous and a crime against humanity. Tunnels under Gaza are about to be flooded with water by the Israeli military to keep the Palestinian militant group of MAAS from using the estimated three hundred fifty miles of tunnels that they built. The plan has drawn criticism over potential dangers to nearly one hundred and thirty hostages still being held,
and over damage to drinking water and sewage systems. President Biden says he has decided how to respond to the killing of three US service members and a drone attack in Jordan this week, but he also says he doesn't want to expand the war in the Middle East. Deputy depending on Press Secretary Sabrina Singh, we.
Don't want to see escalation in the region. We don't seek a wider regional war, and that's exactly what the President said. However, we're not going to sit back and let these attacks go unanswered. We are going to respond. That's not escalation, that's proportionate. We believe we have the right to respond.
Iran has now signals it's prepared to hit back against any US strike on its soil or assets abroad. The largest social media companies are going to face some questions today about protecting children online. Bloomberg's Ed Baxter with that story.
The heads of Meta, Snapchat, discoord X, and TikTok in front of the Senate Judiciary Committee. The name of the herring is big Tech, the online child sexual exploitation crisis. But Senator Richard Bloomenthal says it will get into other areas as well.
We're really interfering with a cash cow that they are very reluctant to modify.
And says it will be uncomfortable.
They need to be put on the spot.
And Bloomenthal says a change of the company's priorities at Baxter, Bloomberg.
Radio well more news coming up, global news twenty four hours a day and whenever you want it. With Bloomberg News Now, I'm Amy Morris and this is Bloomberg Karen gret Amy.
Thank you. We do bring you news throughout the day right here on Bloomberg Radio. But now you can get the latest news on demand, and that means whenever you want it. Just subscribe to Bloomberg News Now and you can get the latest headlines right at the click of a button. You can get informed right on your schedule. You can listen and subscribe to Bloomberg News Now on the Bloomberg Business app, Bloomberg dot com plus Apple, Spotify, and anywhere else you get your podcasts. Time now for
the Bloomberg Sports Update. Here's John Stashauer, John Karen.
A couple of the big upsets in college basketball. The biggest one was in Atlanta. Georgia Tech came in two and seven and acc played North Carolina was nine and oho, but naighth and George, a freshman for the All Jackets, scored with seven seconds left and Georgia Tech stormed the court after upsetting North Carolina seventy four to seventy three. The Triels are ranked third. Tennessee is ranked fifth. Lost
at home to South Carolina sixty three fifty nine. Fifth straight win for Marquette atop the Big East, winning at Villanova eighty five to eighty. Michigan State beat Michigan eighty one sixty two. For longtime Spartans coach Tom Izzo, that's career winning number seven hundred. He gets it on his sixty ninth birthday. Southeast go to twenty two and two at home, got thirty points from Jason Tatum, beat Indiana
one twenty nine, one twenty four. The Warriors top the Sixers one nineteen, one oh seven, and Steph Curry went for thirty seven made eight three pointers. Joel Embi, who had missed a the game's, returned for the Sixers.
But then had to lead with a knee injury.
He's headed for an MRI. Ben Johnson, a hot assistant in the NFL, spoke with both Seattle and Washington. He was considered the favorite to get the commander's job, but then he removed himself from consideration. He's only thirty seven fields he'll get a job at some point and he's decided to stay in Detroit, whereas where he's the offensive coordinator. Arthur Smith fired as the coach in Atlanta after three years, now taking over the offense in Pittsburgh.
He used to coach the offense in Tennessee.
John Stashenewer Bloomberg Sports.
From coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on siriusxam, the Bloomberg Business app in Bloomberg dot com. This is Bloomberg Daybreak. Good morning, I'm Nathan Hager.
The kickoff of big tech earnings is looking like a bit of a disappointment so far for investors. Both Microsoft and Google parent Alphabet delivered quarterly results that beat Wall Street expectations as a whole, but expectations around artificial intelligence might not have hit the bar for both these tech giants. Let's bring in Alex Web for more on the tech story. Alex covers all things tech for us at Bloomberg. Alex,
thanks for being here. Is that the story was ai price to perfection for these companies.
Yes, expectations are exceptionally high. Microsoft's trading at thirty six times it's forward earnings. That means that in order to meet expectations, you really have to beat them, and beat them by a generous margin. The irony is that AI did provide a six percentage point tailwind to Microsoft. Don't forget AI right now is very much a cloud product. It's about getting companies to build their AI functionality on
Microsoft Azure in the case of Microsoft. But some investors were saying, actually that six percentage point growth concealed other or offset other weakness in that cloud business and was one reason weren't too happy about it, and you saw a bit of a set off in the shares. There's also a little bit of profit taking in these moments when you don't see blockbuster numbers coming out. Google enjoyed
again some boost from AI with its cloud business. It's cloud business just posted its first full fiscal year of profits. But actually for them it's really about the ads where the ads business was a little bit weaker than anticipated. That still generates the lion's share of its revenue, and of course is providing the cash flow to expand into things like AI and of course the cloud.
So then I guess that would raise the question about whether the Google's parent company Alphabet will have the resources to kind of play catch up with Microsoft and some of the other players in the AI space. Is that the concern here.
Well, it's yeah. I mean, it's just more that there's less less money to go around. Really, Google was actually in a pretty good place when it comes to AI if you think about it, not just in terms of Microsoft, but in terms of Amazon. Right Amazon's really the leading player in the cloud. If anything, people a little bit investors are a little bit worried about what Amazon has to offer in the space, and it might be one reason why Google is gaining a little bit of ground.
But it still has, you know, very deep pockets, with cash flow of sixty nine billion dollars in the in the most recent fiscal year. Of course, investors are always going to be concerned about how much of that cash flow is going to be reinvested. It looks like there's going to be still quite a lot because fundamentally the big spending, corporate spending on AI isn't coming through yet.
They've done a lot of the preparation. The likes of Google, Microsoft, and Amazon, they've invested, they're invested in, and they have invested in and are investing in data centers with the sort of chip sets from Nvidia that will help fuel this technology. But the big spending from Fortune five hundred companies hasn't really started with Gusta yet.
Yeah, we've talked about the softness and the core ad business for Google. There's softness in Microsoft's stock this morning, despite the company delivering its best revenue growth since twenty twenty two. What's the issue for Microsoft investors?
I mean, you do if you see a lot with Apple as well, that when they have a quarter that's you know, fine and maybe slightly beats expectations, even you then see your sell off in the shares because you know they've been on such a tear recently and they've been you know, tipped it into that that crown or now has that crown of being the world's most valuable company.
So the any sign of a little bit of weakness, which is kind of really all you're seeing with Microsoft, a little bit of weakness is a reason to do that, not the sort. And they've also maybe held back a little bit on the bullishness for the forecast for this year when it comes to the growth of AI. That's from an investor relations perspective, probably quite canny given how
high investor how high expectations already are. If you can temper that a little bit, it gives you more room to play with heading into the next fiscal year.
Well, we got John Alex, I've got to get your reaction to this judgment from the Delaware Chancery Court avoiding Elon Musk's fifty five billion dollar compensation package. What's your take on it.
It's interesting because you know, a lot of the critics of el Musk will say, well, this is the news Delaware regulators essentially, or the Delaware system doing its job properly and protecting investors. The upshot might actually be that investors end up with a little bit less protection if he decides to, you know, move the incorporation to somewhere like Texas or Nevada where the protections for shareholders are
perceived as not being quite as stringent. That's what he's already done with Twitter or x if you prefer so. It looks as though he won't get access to all that money. I think it's mostly in the form of equity that doesn't necessarily have big, meaningful implications for the operations of Tesla. Maybe a little bit around the edges for X given the capital requirements at that company and for some of the other portfolio companies, but ultimately it's really about Musk himself.
Lots to talk about in the tech space, certainly this morning. Thanks for the roundup as we kick off big tech earnings, and I'll look ahead toward the end of the week to Apple, Amazon and Meta Platform, so I'm sure we'll be checking back in with you as well. Alex, thanks again for being here. Alex Webb a covering tech for
us for Bloomberg News. Now let's pivot to politics, because we did get a brand new Bloomberg News Morning Consult poll of the seven key swing states that could be pivotabal to deciding this election, and it raises some interesting new issues for some of those voters. Let's bring in Bloomberg News national political reporter Gregory Cordy to break down what we've learned from this latest iteration of the Bloomberg News Morning Consult Swing state poll. What did we find, Gregory, Yeah.
Well, as we've talked about, this is a race that really we haven't had much movement in terms of the cannons, in terms of the issue environment, except that this month, we are starting to see a shift in what voters are concerned about. It's a small shift, but it's perceptible, and it's away from the economy and towards immigration as
an issue. Now, the economy is still far and away the number one issue among voters, but as some of these economic indicators that we're looking at, and especially inflation, starts to ease a little bit, that creates some room for voters to worry about some other things. And by and Marge, what they're worried about is the crisis at the US Mexico border. And of course that's an issue that former President Donald Trump does well in with voters.
By a twenty two point margin, voters say they trust Trump over Biden about that on that issue, and by about a two to one margin they say they blame Biden for what's going on there. So this is not this is a shift in the issue environment, but not one that necessarily benefits President Biden. And so overall, what we're seeing is the race remains with about a six point lead by Donald Trump across the seven swing states that we're pulling in.
So does that mean that the former president is widening his lead against the current president based on this issue that's emerging is more of a concern for voters immigration.
Months a month, we're seeing about a one point increase in Trump's lead, but we should say that that's within the margin of errors, so it's not necessarily a perceptible lead. But when we see this lead month over month happening, and this is also consistent with other public polling out there, I think we can pretty much say confidently that President Trump is leading in this race both nationally and in these swing states are most likely to decide the election.
What does this poll say about what vote perceive as driving the problems at the border.
Yeah, it's interesting because voters have a pretty sophisticated view of this. Actually, they while about sixty percent of them blame Joe Biden form, they also understand that there's a lot of other geopolitical factors at play here, and so corruption in other countries, and the economic environment in Central and Latin America, war famine. They understand that all those are driving this mass migration of people northward through the
gap through Mexico into our border. But when they look at the domestic political situation, Biden and Democrats get mostly blamey.
Now this is coming, of course, at a time when the Senate is negotiating a border security bill. President Biden is trying to move that forward, and House Republicans are now moving to impeach Homeland Security Secretary May orgis over at the border. How could that potentially shape voter perceptions of this issue.
Yeah, President Biden is very much trying to shift the conversation on this by putting forward a proposal to say, hey, look, give me the emergency authority, give me the spending uh, and I will close the border and we will we will address this crisis. Now, we should say that this Paul was in the field before some of these latest back and forth machinations and negotiations, and so we're we just started to see that in this Poul while I was in the field where especially Democrats were giving Biden
credit for making those overtures. Obviously Republicans aren't quite ready to give him credit for that yet. But as this issue goes.
On, and.
Yeah, Biden continues to try to flip the script on Republicans because look it's now former President Trump who's trying to quash any deal on the border. He says it's a no deal on the border is better than a bad deal, and it's put Democrats in the position of trying to go on the un offensive on the issue.
In our last thirty seconds here, Greg gree, I know this. Pole also asked about former President Donald Trump's legal issues as well. What did we find there.
Yeah, fifty three percent of Slang State voters said they would not vote for Trump if he is convicted in one of these four criminal cases he's been indicted in. Now, of course many of them wouldn't have voted for him in the first place, but that is a majority. And what that means is even some Republicans say that they would no longer support him if he's convicted, and of course if he's sent in the prison, even fewer would
continue to support him. So that's the area of vulnerability for President Trump as he goes and tries to navigate all of these criminal cases he's facing this year.
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