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Big tech dominates the news this morning. Tesla emphatically denies a report. It is looking to oust Elon Musk. A judge rules that Apple violated an antitrust injunction and that an executive lied under oath. And Meta and Microsoft, they're both taken off after earnings.
All this in a case of he said, she said. And the trade talks standoff between the U.S. and China. It's helping to lift futures this morning. They're higher across the board, as you can see. It's Thursday, May the 1st, 2025. And you're watching Worldwide Exchange on CNBC and streaming on CNBC+.
Good morning. Thanks so much for watching us. I'm Frank Collin. We need you ready for this trading day ahead. We begin with the U.S. markets. The S&P and the Dow on a seven session win streak. It's the Dow's longest win streak since May of last year. Take a look this morning and see futures are higher across the board. The Dow looks like it would open up about 250 points higher. The S&P and the Nasdaq, they're both more than one percent higher. Of course, earnings from Microsoft and Meta really is driving the futures this morning. Take a look at the stock moves on these two names.
Meta platform is up about 6 percent. Microsoft up over 8 percent. We're going to dig into this with Dan Ives coming up in just a short time. We're going to be talking about this throughout the show, of course. We're also watching the major China ETFs and reports from Chinese state media. The White House has reached out to Beijing to begin tariff talks, taking a look at the ETFs.
that track chinese equities right now uh... the m_c_h_ i that we track very often actually pulling back about one percent of the k_ web the tracks chinese internet stocks up about a third of a percent the f_x_i_ up just fractionally right now we'll continue to watch these throughout the show we also look at currency specifically the dollar and the u one taking a look at those right now so
The dollar index moving up about a third of 1 percent. The yuan to the dollar. You can see the dollar's up just fractionally against it. We're going to talk a lot about the moves when it comes to the macro picture, when a trade deal could possibly create later in the show as well. Other thing we got to look at this morning, of course, that's bond yields. We can't forget there was a very disappointing GDP report yesterday. Take a look right here. Yields are pulling back on that and some concerns about economic growth. Right now you're seeing the benchmark at 4.15.
Okay, that is your setup now to this morning's breaking news outside of earnings. Rocking big tech today and a very rare public statement. Tesla chair Robin Denholm pushing back against a Wall Street Journal report. The board, as recent as last month, was looking to replace CEO Elon Musk.
Now, according to reports, the board even contacting executive search firms to look for a new CEO. Denholm posting on X calling that report erroneous and absolutely false, adding the board is highly confident in Elon Musk executing on the exciting growth plan ahead.
We're also watching shares of Apple this morning after a ruling from a U.S. district court judge saying the company's in violation of her 2021 court order. That order requires Apple to open up its app store. The third party payments also forces the iPhone maker to stop charging commissions on purchases outside of its app store. U.S. District Judge Yvonne Gonzalez-Rogers also referring the case to federal prosecutors to investigate whether Apple is in criminal contempt of her ruling.
She added the company made the proactive choice to conceal its decision-making process from her ruling, quote, and stark contrast to its initial in-court testimony. Contemporaneous business documents reveal that Apple knew exactly what it was doing and at every turn chose the most
anti-competitive option to hide the truth. Vice President of Finance Alex Roman outright lied under oath. Again, those are the words of the judge. Joining me now on this and much more is Dan Ives, Global Head of Technology Research at Wedbush Securities. Dan, good morning. Always good to see you.
Great to be here. Dan, why don't we start off with the Tesla news, if you don't mind. What does this mean? What does this mean that the board did, in fact, reach out to executive search firms if they were looking to possibly replace Elon Musk as CEO? And the fact that they had to compel him and he chose Tesla. What does that mean for investor confidence? Well, obviously, you know, Tesla's denied it in terms of the book. Are you going into earnings? I mean, it was the most important earnings called Musk probably career.
Because the Doge issues, that brand damage, he needed to choose. And I think the board, I kind of view that as a warning shot in terms of he needed to choose CEO of Tesla. And that's what he did. And that was a much different Musk on the conference call. I believe he will be CEO of Tesla at least for the next five years.
But look, I mean, this was I think this was definitely a very tense moment between the board and Musk. And we've talked in terms of shareholder frustration going into it. Dan, we've got to get to Apple. I want to ask you one other quick question. If Elon Musk officially leaves Doge and continues to just be focused on Tesla and his other ventures, in all fairness, he won't just focus on Tesla.
What does that mean for the branding going forward? There's a lot of animosity when it comes to the Tesla brand nowadays. I was actually driving yesterday and I saw somebody with a bumper sticker that said, I bought this before Elon went crazy. Just kind of spelling out how people seem to feel about the company right now. Yeah, look, I mean, we've said $100 per share, you know, overhang ultimate that this is at. And now from Musk, and I believe that his days, the White House are done. I mean, that's our view regardless of what he says in terms of one, two days a week.
Look, this is important now. Contain the brand damage. Focus on autonomous in terms of FSD in Austin. Focus on robotics in terms of, you know, Optimus and actually, you know, deliveries, especially what we see in China. That's leaders lead. That's what Musk is going to do now. Brand damage will be there. We've said some of it could be permanent. But I think contained for now. He made that choice. It was a fork in the road moment. All right. Let's talk about Apple right now. The judge said,
More or less, at least in the short term until Apple appeals. We don't know how that's going to work out. And it's important note that Apple does plan to appeal this ruling basically blew up Apple's ability to generate billions of dollars in fees when it comes to this case. Also, the tariff overhang, even though we know the U.S. and China are talking right now, there's a tariff overhang on the hardware business. This is a hit to the services business. How do you maintain the same price target after this, Dan? Doesn't this change some of the thesis when it comes to Apple, at least when it comes to the ability to generate top line revenue?
Yeah, Frank, I mean, when it comes to the Epic-Apple battle, which has obviously gone on for years, I mean, our view continues to be that, like, look, they'll appeal, there'll be tweaks, and ultimately consumers will be able to even go outside Apple in terms of App Store, but they're
That is where consumers go. In other words, very few are going to go outside the actual app store. This is something that I don't really view as denting the business model. It is continued to be this regulatory sort of walls caving in, but it does not change your thesis, does not change your view of services. And obviously going into tonight, I mean, look, this is key because with tariffs right now, they're essentially playing a game of blindfolded darts.
Dan Ives, please stick around. We're going to come back to you in just a second. But right now, we want to turn to some of the earnings. And big tech giving a real big boost to futures in the early going, at least. Take a look right now. You can see futures higher across the board. The S&P and the Nasdaq both up more than 1% in the pre-market. Let's start off with meta. Shares are surging in the pre-market on a Q1 top and bottom line B. Current quarter outlook coming in in line with street expectations. Q1 sales rising 16% year over year. Net income popping 35%.
CEO Mark Zuckerberg saying the company is well positioned to navigate the macroeconomic uncertainty.
Some blockbuster results from Microsoft as well, reporting stronger than expected numbers in its latest quarter, showing demand for AI and cloud services remain strong. The company says fiscal Q3 revenue popped 13% of the year, with sales from its Azure cloud unit rising 33%. That was well above estimates. Joining me now is Storm Uru, head of the global innovation team at Liontrust Asset Management and co-lead fund manager of the Liontrust Global Innovation, Liontrust Global Dividend, and Liontrust Global Technology Funds. Of course, Dan Ives still with us.
Storm, good morning. Thank you for joining us. Good morning, Frank. Good to be here. All right. Why don't we start off with Microsoft? The beat on cloud was significant. We saw, you know, Google actually missed very slightly when it came to cloud. Microsoft was a blowout. What does that say when it comes to this race, when it comes to AI and to get AI focused companies and applications on Azure? Yeah, the Microsoft results were simply extraordinary, particularly the re-exceleration and Azure growth.
33%, as you highlighted just beforehand. But 50% of that growth came from AO revenue. And that's an important marker for us going forward because after DeepSeek about four months ago now, the debate really was around as digital intelligence gets smarter and it gets cheaper, what is going to be the impact on demand? And what we found out last night was that demand is accelerating.
In all fairness, Alphabet said they were actually capacity constrained. The demand was out there. Post-Deep-Seek, does this kind of settle any fears that there isn't that same need when it comes to scaling capacity, when it comes to AI infrastructure? Or are those concerns, they still kind of live on after this quarter? Yes, all we heard from both Alphabet and from Microsoft last night, it's they are supply constrained and the demand is there. So obviously the results from AWS tonight with Amazon is also going to be important for that view tonight.
But, you know, meta increasing as CapEx guidance for this year and signaling that maybe next year it's also going to increase as well. I think at this point it's very clear that we're compute constrained. And as AI continues to get smarter and cheaper, we expect this to continue to play out over the next few years. All right. Speaking of CapEx, I'm looking at the meta numbers, 64 to 72 billion dollars, way above what the street was expecting. What is that signaling to you? We're obviously way past that, quote unquote, year of efficiency.
Yeah, I mean at the end of the day, NVIDIA has really struggled with the stock price over the last 12 months. We think this could be an inflection point for NVIDIA going forward. This is really underwriting the demand for NVIDIA chips going forward and we haven't had visibility yet on Stargate orders coming through with maybe Oracle in the next couple of months. So we think, you know, at this point, infrastructure, compute infrastructure stocks like Arista, like Broadcom, like NVIDIA and so forth have really had a very tough time in the markets over the last three months.
We think this may underwrite those positions going forward and the demand is still there. One other question for you, Storm. We're talking about digital ads, a lot of concerns about that. Of course, that's Meta's core business. Does this settle some of the concerns about digital ads? I think they may have ramped up yesterday after that much weaker than expected GDP report. Yeah, without a doubt.
Meta is showing us once again, if you adopt and embed AI into your business model today, from a business transformation point of view, you can really deliver better products to customers. And what we're seeing is really the pricing power that Meta has by embedding AI into their recommendation systems. And that's all we saw last night and that's what we expect to go through over the next 12 months. Dan, I'm going to give you the last word. Whether it's Microsoft or Meta, did anything especially stick out when it came to these earnings and the reports?
phenomenal summary by storm look these are shake on barclay like quarters from microsoft from meta if you're a bull right now you're feeling good intact cloud ad and then you look at catbacks doubled down there's nothing here not to like all right dan i was with the last word dan you you're kind of playing to the home crowd you know i'm a big eagles fan dan i have storm uru great to see you both appreciate the insight you both have a great day
All right, we've got a lot more to come here on Worldwide Exchange, including what my next guest says, the old adage, sell in May and go away. It may be more apt this year than it ever has been before. Plus, tax hikes on the table as Republicans look to cover more than $5 trillion for their tax cut package. And then later, opportunities in telecom, an inside look at some underappreciated areas of the market that could make you a whole lot of money. A very busy hour still ahead when Worldwide Exchange returns.
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All right, welcome back to Worldwide Exchange. We're following some breaking news literally just crossing the wires a short time ago. According to Bloomberg, Elon Musk is considering sending his government efficiency team, of course known as Doge, to the Federal Reserve. Now, according to this report, he's citing the costly renovation of the central bank's D.C. headquarters as an example of potential government waste, looking to cut potentially $2.5 billion, I believe. Again,
Just crossing right now, we're just following this. I know we just reported that the board of Tesla said that they or the board of Tesla refuted reports that they compelled Elon Musk to come back to Tesla. And we're looking for a new CEO. But again, a new report from Bloomberg. Elon Musk considering sending his Doge team to the Federal Reserve, setting a costly renovation of the bank's D.C. headquarters as a potential example of government waste. We're going to continue to follow that story and look for any more info on that coming up.
All right. Right now, we want to turn to the regional banks, Community Financial, reporting first quarter results earlier this week with earnings topping expectations and revenue rising nearly 11 percent. The company, which is based in upstate New York, is the parent of Community Bank, which has more than 16 billion dollars in assets and 200 locations across New York, Pennsylvania, Vermont and Massachusetts. Joining me now is Dimitar Karanaev, president and CEO of Community Financial System. Good morning. Thank you for joining us.
Good morning. First off, I want to start off with after that GDP report yesterday, I think there was a lot of concerns about not just the economy slowing down, but contracting. Obviously, you have exposures to the Northeast. What are you seeing when it comes to loans and business activity in your region?
Yeah, we're definitely not seeing contraction. In our markets, what we're seeing is solid activity. It's not as strong as it was a year ago, but it's still pretty solid. A little bit more tentative, I would say. So we don't know exactly when some of the loan demand is going to pull through, given some of the uncertainties.
But we're certainly not seeing contraction. Not seeing contraction. Part of your business is wealth management services. We've heard from a lot of the big banks that they've seen trading activity kind of tick up due to the volatility in the market. What are you seeing in your region? Again, that covers New York, Pennsylvania, Vermont, some very different economic situations across that landscape.
Yeah, it has been pretty stable. Certainly asset values are something that impacts that business and impacts a little bit of the confidence of the people to actually participate in the market. So there's a little bit of that. But again, we're coming off of pretty high levels. So it is still fairly, fairly good.
What about tariffs? What are you hearing from some of your customers, whether it's deposit customers or business customers looking for loans, about the impact of tariffs? Tariffs have certainly injected a lot of uncertainty into just about every local economy and, of course, the broader U.S. economy. Yeah, really interesting on the tariff side. We probably haven't seen all of the impact yet. What we're seeing right now is for our business customers, the ones that have tariffs,
uh import goods they don't exactly know what those goods are going to cost a few months out so that's leading to a little bit of a challenge when you price on the other end in terms of selling your own products into the market so we're seeing a little bit of tentativeness a little bit of delayed capex on that front on the building side you know some projects are getting a little bit delayed we're probably going to start seeing some cost overruns here and there so we got to be careful and plan ahead
It's just a little bit of uncertainty. I will say on the consumer side, we've seen a little bit of tentativeness as well. Purchase applications for mortgages are down compared to last year. We do have some demand, but kind of short supply issues as well.
So we'll see how all of that plays through, I would say a little bit, just the uncertainty level is elevated, which is not great for business. All right. Dimitar Karyvanov, thank you very much for joining us. We really appreciate your time and your insight. Hope to have you back. Thank you. All right.
All right, still on deck here at Worldwide Exchange, a light outlook has shares of this smartphone supplier sinking ahead of the open. We're going to reveal our mystery chart coming up. On a programming note, don't miss Fast Money Live on Thursday, June the 5th. Join Melissa Lee and the Fast Money Traders at the NASDAQ for a behind-the-scenes look at the show and some one-on-one time with the traders during a Q&A session and there's even a cocktail hour. Guests will also walk away with an exclusive Fast Money Live gift.
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Welcome back to World Wide Exchange. Republican lawmakers are racking their brains on ways to pay for their more than $5 trillion tax package. And before their ideas even head for a vote, business groups, they are already pushing back. Our Emily Wilkins joins us now from Washington with much more on this story. Emily, good morning.
Good morning, Frank. Well, yeah, Republicans, they've talked a lot about the tax cuts that they plan to pass this year. But in order to get everything that Trump wants or even some of what he wants, lawmakers are likely going to have to find places where they can actually raise taxes. Now, several proposals have been discussed among lawmakers. Nothing's final. But what we're hearing are things like increasing the excise tax on stock buybacks,
capping the amount businesses and corporations can deduct for state and local taxes, limiting how much companies can deduct from executive pay, and increasing taxes on university endowments. Now, those four provisions alone could raise more than $600 billion for the federal government, according to estimates from the Tax Foundation.
But there's also already some strong opposition, as you mentioned, both in the business community, the Chamber of Commerce, and among business-friendly lawmakers who are concerned that some of these provisions could hurt companies. I spoke yesterday with Congressman Andy Barr, who said that ending deductions for businesses could be just as harmful as raising the corporate rate.
The whole goal of extending the Trump tax cuts is to produce growth, is to unleash this economy. And I know that the president and House Republicans are committed to a pro-growth tax reform. And that means no increases on business taxes. We shouldn't be raising taxes on business in any way.
So you can hear some opposition there, but Republicans are likely going to need to find some way to pay for things to cover other things that businesses want, like tax credits for research and development. Trump has also asked for no tax on tips. That's another item there. Lawmakers say that all ideas are on the table right now, and that even includes a new top tax bracket for the highest earners.
Yet that particular proposal is losing some momentum, especially after Republican leaders in the House have come out against it. A House panel that's overseeing taxes are expected to detail their specific plans for tax increases and tax cuts soon, likely in the coming week. And Frank, we'll be ready with the details when we see that. Yeah, seems like a contentious fight is kind of shaping up here. Emily, give us the timeline. How does this all play out?
So we are expecting again to get those details perhaps sometime next week and then the committee will actually meet, go through everything, do a vote where they approve it. From there, that tax package is going to be combined with that much larger one big beautiful bill. The hope is that we're going to be able to get that tax package
for Speaker Mike Johnson is that the House can vote on that entire package before Memorial Day. And at that point, they'll begin talking with the Senate about what can or can't pass in that chamber. Of course, Treasury Secretary Scott Besson says he wants everything done by July 4th.
But we're keeping an eye out for that debt limit X state. Remember, the debt limit raising the debt ceiling, that's going to be a part of this package as well. So whenever the U.S. is not going to be able to pay on its debts anymore, that is the absolute drop dead deadline for when Congress is going to need to pass this package. Emily Wilkins, live in D.C. Emily, thank you very much.
All right, coming up here on Worldwide Exchange, fueling a possible market turnaround. Details on the Chinese state media report. The U.S. and Beijing are gearing up for possible trade talks. We're going to dig into that, and we're live in Beijing. And if you haven't already, you should follow our podcast. If you miss Worldwide Exchange, check us out on Apple, Spotify, or other podcast apps. We'll be right back after this quick break.
It is a major morning for mega cap tech. We're following two breaking stories, including Tesla shooting down a new report of an apparent search for a possible successor to Elon Musk. Meanwhile, Apple being dealt a major legal blow ahead of its latest earnings. We're also looking at shares of Meta and Microsoft. They are taking off on the back of their latest results.
And those two stocks helping to lift futures. You can see futures higher across the board, the S&P and the NASDAQ both up more than 1%. Welcome back to Worldwide Exchange. I'm Frank Holland. Coming up this half an hour, we're going to have the latest in what's shaping up to be a very big morning
for these Mag 7 members. But first, we're going to get you ready for the trading day ahead. We begin with the U.S. markets, the S&P and the Dow on a seven-session win streak. It's the Dow's longest win streak since May of last year. Take a look at this right here. A lot of green on this board. The Dow looks like it would open up about 250 points higher. The S&P more than 1% higher. The NASDAQ more than 1.5% higher. Of course, earnings from Meta and Microsoft, big part of that picture.
Both of those stocks really driving the futures this morning. You can see Metashare is up over 6 percent, hitting their highs of this morning. Microsoft shares up just over 8 percent right now. We're also watching those major Chinese ETFs and reports from Chinese state media that the White House has, in fact, reached out to Beijing to begin tariff talks. We're going to have a lot more on this from our Unishoon coming up later this hour. But right now, taking a look at those ETFs, we're going to see the MCHI, which we usually track, pulling back.
about 1%, but the K-Web up just about a half a percent, the FXI up fractionally as well. We're also looking at the currency market, the dollar and the yuan, taking a look at those. So seeing the dollar move higher right now, up about a third of a percent. Also, the U.S. dollar gaining very fractionally against the yuan this morning. We're going to continue to watch this throughout the show.
and talk to Eunice about some of these currency moves as well. We also want to look at bond yields. Remember, we did have that very disappointing GDP report yesterday showing the U.S. not just slowing down, but actually contracting. Taking a look at bond yields this morning, the benchmark pulling back a few basis points from the levels we saw yesterday. Right now at 4.14%.
All right, we're going to get back to our big story this morning. Of course, that's big tech. We're going to start off with Tesla, the company's chair, pushing back on a Wall Street Journal report that the board, as recently as last month, was looking to replace CEO Elon Musk. Posting on X, she called the report erroneous and absolutely false, adding the board is highly confident in Musk's ability to continue executing on the exciting growth plan ahead.
We're also watching shares of Apple this morning. A U.S. district court judge saying the company's in violation of her 2021 court order requiring the tech giant to open up its app store to third party payments. And that forces the iPhone maker to stop charging commissions on purchases outside of its app store.
The judge also referring the case to federal prosecutors to investigate whether Apple's in criminal contempt of her ruling, saying the company and one executive went so far as to lie under oath, withholding key documents on how it would comply to her ruling. Apple, of course, reports its earnings later today after the bell.
And speaking of earnings, Meta and Microsoft shares taken off on the back of their results. Meta reporting strong ad sales and boosting AI spending as it shakes off tariff fears. Microsoft reporting better than expected results driven by its cloud business, also issuing some strong guidance. For much more on all this, let's bring in Sarah Koons, Managing Director at Clio Capital. Sarah, good morning. Good to see you.
Good to see you. Let's start off with Apple because Apple shares are pulling back more than 1%. What's your take on this ruling? We were talking to Dan Ives earlier. He said no change to his price target. He didn't seem to be very worried, but I would think just this potentially changes the thesis of Apple's being more of a service company and potentially billions of dollars being taken away from the top line.
Dan is a permable about everything. I don't know if he ever worries. But, you know, I think the reality is that Apple has long been a walled garden that has long been very contentious. The interesting thing is Android's not really and it doesn't seem to make a huge difference for them. So, you know, even if Apple agreed to this ruling and made some changes, I don't know how quickly we would see sort of a shift there.
I think that's a big question. And I think that the more important point, though, is it seems like between Apple and Alphabet, it's clear that these judges are losing patience with big tech and want to be listened to, even if the administration isn't coming down as hard on them. And so, you know, I think that this is almost more of a test case of what does big tech do in this Trump administration with these topics than it is, you know,
you know, will we have a non-wild garden app store and will that change very much about our behaviors because we're all on the same five apps anyway?
Sarah, I want to ask you again. Dan Ives, no change in this price target. He says he believes the narrative for Apple stays the same at least long term. There may be some short term disruptions, but there still are those tariff concerns. We know the White House and China are having conversations, according to Chinese state media. But with the tariff concerns, the reduction in potential revenue here, even though it's important to note Apple will appeal. Does this significantly change your view on Apple and the investability of this company?
So I think that the tariff thing is a totally different monster, right? That will be a real problem for them. Even if they could manufacture and assemble in the U.S., they certainly need to get their raw materials for the batteries, for everything else from all over the world, largely China. And that's not going to go away. And so they will need to figure something out if the tariffs stay sort of where the president initially indicated. And so
That, I think, is a headwind. But the reality is that's a headwind for everybody in hardware, for everybody who has batteries. And so because of that, I think if that entire market sort of falls a bit, you're just going to see Apple fall in line with them, not be disproportionately impacted. So, no, I don't think that even the tariffs make a huge foundational change because at the end of the day, you drop your phone into a pool, into your sink. You need a new phone. You're probably going to buy an Apple if you already had Apple.
All right, let's get some of these other stories. Meta actually raising its CapEx guidance again, well above what the street was looking for. What do you make of that decision? I was saying earlier, we're obviously past the year of efficiency. Important to note, then we saw Alphabet. They said that they were capacity constrained. They weren't demand constrained. They were capacity constrained. What do you make of this move from Meta?
Yeah, I mean, we've been hearing capacity constraint from a lot of these big companies recently. Mark likes to spend money. Mark loves to spend money. The street loves it when he's more efficient and just sort of sticks to his knitting, sticks to what works well. But I think that when he feels like he has the leverage, he likes to chase new ideas, new opportunities. It seems like what he's chasing here is a little bit more AI and a little bit less metaverse.
So I bet that the street is going to like that more. And I think it also does make some sense here because, you know, we spend so much time, much like on Alphabet, we spend so much time on Meta's products, WhatsApp and Instagram and Facebook, telling it what we want, what we're looking for, what we're curious about. And so it makes sense that they say, hey, we think we can build AI products because we're not scraping data.
You are giving us your data in real time and we know exactly kind of how you're thinking, how you're feeling. Why wouldn't we build products around that? Because it does seem like the consumer has an appetite for smart AI in certain places in their lives. I want to get to Microsoft as well. What did you make of their results? I don't know if you watched this interview with Robert Smith from Vista Equity Partners on our air. Talked to Scott Wapner not too long ago, about a week or so ago. He said basically the companies that really...
lean into agentic AI, they're going to be the winners and the companies that don't, they're just going to cease to exist. When we're talking about agentic AI, of course, cloud infrastructure is very important. What do you make of this result from Microsoft when it comes to their Azure business and the competition when it comes to hyperscalers? I think that
I think that as there's more scale needed, the companies that are these big incumbents in Cloud will benefit and certainly Microsoft is one of them. The interesting thing for me when you look at the chart, is that when you pull out that big ramp up that happened wasn't really about Azure and AI Cloud usage, it was largely tied to OpenAI.
And so I think as the open AI kind of relationship, we're seeing reporting that maybe that Sam and Satya aren't as close anymore. There's some tension there. Open AI is not sort of the only chat bot in the room. Magentic AI, which moves away from that sort of chat interface more to sort of AI in the background is a big piece of it that they haven't quite, you know, wrapped their hands around yet. So I think the question is, as that sort of exposure increases,
a little bit less exciting. Is Microsoft and its Azure business strong enough in AI to sort of keep the stock price up? Or does it float down a little bit because some of it was kind of AI hype? And Microsoft's a company that will be around probably long after all the rest of us have left the earth. But the reality is that they have benefited massively from this AI hype. And it's not clear that Microsoft
Azure cloud usage hype is going to have the same bump. Well, we're going to get another read on the hyperscaler business with Amazon reporting. Sarah Koontz, great to see you as always. Thank you very much. All right, coming up here on Worldwide Exchange, the latest on the White House, reportedly trying to get the ball rolling on trade talks with China. We're live in Beijing with the very latest coming up next.
welcome back to worldwide exchange market flash on qualcomm shares moving lower q2 results they beat estimates on higher chip sales but as you can see right here shares are dropping as q through revenue guidance is just shy of estimates the cfo says this all reflects the impact of tariffs as they stand right now but the situation could change
if there are positive developments in the U.S.-China trade war. And speaking of potential positive developments, some new reports from Chinese state media that the White House has reached out to Beijing to begin some trade talks. Our Eunice Yun joins us now from Beijing on the CNBC Newsline with the very latest on this story. Eunice, good morning.
Thanks so much, Frank. Well, the social media account linked to State TV, which is followed for its Beijing messaging on U.S.-China trade issues, posted that the Trump team reached out to China for talks on tariffs and suggested that China would be open to engage. So the post under the name of Yu Yantanchen said that the U.S., quote, proactively reached out to China through various channels. It argues that the U.S. is clearly, they say, the more anxious party,
But says that China has nothing to lose by engaging and adds that this could be an opportunity for China to pressure the U.S. in talks since it argues that China is in a stronger position. So the combination of this and the tone is a shift and a possible way for China to signal an off-front to the trade war while saving space.
which is really important for China in this discussion, and messaging to the Chinese public that the leadership would be negotiating from a position of strength. So getting them to the negotiating table, you really have to show, allow the leadership here to continue to project strength.
By the way, we're looking at some of the Chinese markets right now, kind of mixed results. The Shanghai composite pulling back about a quarter of a percent. I want to ask you, you mentioned saving face and you talked to us about this quite a bit. We were talking to someone else, DeWard McNeil from Longview Global yesterday about who can kind of just hold hold this longer. Can the U.S. hold out longer? Can China hold out longer? How important is saving face compared to the Chinese economy? Remember, China or not? Remember, you know, China set out some very ambitious growth targets for this year.
Yeah, well, China has set out very ambitious growth targets. But yesterday there were some very negative data that we saw. The factory activity shrank by the most in two years in April. And this was really the first time that we started to see President Trump's tariffs starting to take their toll on the export sector. This was a really big trend.
fall that a lot of people said shocked them. So because of that, we are seeing a huge impact on the economy. At the same time, though, the messaging is that Beijing would continue with its hardline stance. They've been pushing out all these videos to the Chinese public, vowing that they're never going to kneel down to what they describe as U.S. bullying. So the long-term, I think,
tactics here is that they are willing to embrace a protracted trade war, but they are seeing the reality that, yes, the U.S. is going to be hit, but that China is going to be hit, too. Yeah. You mentioned the factory order, something that we covered with you earlier this week. We got to also remember that GDP number yesterday, really a shock to the market, showing the U.S. economy in contraction, not just slowing down, but in contraction. So it seems like both sides have a lot of incentive to get to the table. Our Eunice Yoon, live from Beijing. Great to see you as always, Eunice. Thank you very much.
All right, coming up here on Worldwide Exchange, we've got the one word that every investor has to hear today and the stock pick that every investor needs to know. Plus, digging into one slice of the market that's actually showing some strength. Graham Management's CEO, he's here to lay out the case for telecoms. That's coming up next. Also, a programming note, CNBC is going to bring you the Berkshire Hathaway annual shareholder meeting this Saturday live on CNBC, CNBC.com, and on CNBC+.
Our Becky Quick and Mike Santoli will be live in Omaha starting at 8.30 a.m. Eastern and bring you full coverage, including Warren Buffett answering four hours of shareholder questions. That's always a good time. We'll be right back, but really quick, we're going to take a quick look at futures in the green across the board. You can see the S&P and the Nasdaq both up over 1%. Stay with us.
Welcome back to Worldwide Exchange. In a very volatile year of trading, one part of the market has outperformed. That's the telecom trade, broadband and communication services providers, names like AT&T and Verizon posting double-digit gains, even with concerns about an economic slowdown and a slowdown in consumer spending.
Graham Management is a leading private equity firm in the space with more than $9 billion in assets under management and a focus on infrastructure for the growing demand for broadband and data centers. Joining me now is the founder and CEO of Graham Management, David Grain. David, good morning. Thank you for joining us. Morning, Frank. How are you doing? I'm doing great. So we're just kind of highlighting some of the moves in the public markets. Why do you think, I know you're a PE guy, but why do you think investors have continued to have confidence in this part of the market when we've seen so much volatility in just about everything else?
Well, look, I think the general world sentiment is that broadband is highly essential, right? And the need for faster and more ubiquity around broadband, it just hasn't slowed at all.
In addition, I think there's a lot of regulatory support for the expansion of broadband, certainly in the United States and really all over the world. And I think the perception is that it's an economic driver like no other. So it touches all aspects of our life and society.
I think there's a lot of a lot of resilience there. So we got results from Microsoft to Meta. Meta especially really boosting its CapEx guidance. A lot of that money is going to be spent on data centers. Data centers are an important part of your business. We were getting some conflicting reports after DeepSeek that maybe companies were pulling back on data center spending. It seems like we've kind of settled that with these two reports today. But give us a sense when you're talking about data center investments with people, where do they want to put them?
What's the focus? How much money do they want to spend? Are they going to be smaller, more localized? Are they going to be giant ones in the middle of the country? What are you hearing and seeing?
Well, it's somewhat all of the above, Frank. I mean, the advent of AI has created this explosion of demand for data centers and compute power. But the drivers of where it makes sense to actually build these data centers has a lot to do with the availability of reliable and high quantity of electricity.
So I think there's definitely no slowdown in the demand side of the equation. The real question is, how do you execute on the build-out plans? And again, that's driven a lot by the cost of electricity and its availability and reliability.
Speaking of the availability of electricity and power, not only do you have your own PE firm, you're on the board of a number of very notable companies. I'm talking Dell, the Southern Company, obviously a utility that provides energy to people, also New Fortress. What's going on with these companies? How are they responding to tariffs and some of the uncertainty in the economy? I want to really lean on your experience because you touch so many other businesses in addition to your own.
Well, notwithstanding the fact that I'm a board member, I don't really speak for these companies. But what I can tell you is that in general, there's a lot of uncertainty around the tariffs. And the primary concerns are, what will the cost be? How resilient are the supply chains? And what sort of impact does that have on the ability to continue to roll out and advance your commercial enterprise?
I think all the companies that you've mentioned have to consider what the right path is for them. But I think there's enough focus and experience in this space for all these companies that they're going to make the right decisions and hopefully be able to weather through some of this choppy period.
Well, of course, you know, the president marked his first 100 days in office of his second term this week. I just want to kind of get a sense of this administration when it comes to their support for infrastructure. Of course, the previous administration, that infrastructure bill, but they didn't seem to have the same focus on government and corporate partnership. What are you seeing under this administration, at least under these first 100 days?
Well, look, I think the expectation has been met about lighter regulation when it comes to the advancement of this space. So I think we have seen some of a some bit of a relax in terms of the ability to get deals done depending on what they are. It appears to be a pretty pro growth stance that they're taking. And the viewpoint is that, you know, to have
secure and competitive networks- is a real advantage. Again an economic driver like none other. I think what's really interesting is that. You know this is one area where both sides of the aisle are really in support. Because of the impact it can have on economic growth. Particularly down at the state level- so I think- you know so far so good we're going to see how. All things work out there handful things that really need to happen on the regulatory side.
particularly in one of the areas that we focus, which is radio frequency spectrum.
And that is returning auction authority to the Federal Communications Commission. And then, of course, managing the reallocation of spectrum that's currently under government use for commercial use. That may take some time, but but I do think there's a high degree of focus on it. So, David, we hit terrorists. But very quickly, I do have to ask you your reaction to the news that the U.S. and China, they're officially engaging in trade talks.
Listen, that's positive. I'll watch to see what happens the rest of the day and what happens tomorrow. So, you know, there's been quite a bit of change. So it's kind of hard to nail down exactly what we think is going to happen. But again, being prepared around managing the costs,
managing the supply chain. And therefore what impact it will have on capital expenditures is really the key focus. Yeah I also want to clarify reports from Chinese state media that they're engaged in talks. I think we'll have to wait and see and see what the administration says today. David Green really appreciate you and your time. Thank you very much. Thank you Frank. All right coming up here worldwide exchange the top stock idea our next guest says maybe a way to avoid tariff related inflation pressures we're going to reveal that name coming up. Stay with us.
Welcome back to Worldwide Exchange. The markets are looking to kick off the new month on a positive note on the back of those better than expected earnings from both Meta and Microsoft last night. You can see futures are higher across the board right now. Dow looks like it would open up more than 300 points higher. Let's bring in Patrick Frazetti, Managing Director and Partner at Rose Advisors at Hightower. Patrick, good morning. Always good to see you. Same, Frank. Good morning. All right, let's get rolling. What's your word of the day? How do you see today shaping up? And I think that view might change. I don't know. I'm not clear. But what do you think?
The word is resilience. It's not only that investors should remain resilient, but you should look for resilient businesses to invest in in a market like this. What do you make of some of these reports today? Again, it's reports that the U.S. and China are engaging in very early trade talks.
Well, it's interesting. I mean, we're going to see this type of news come in and out with various countries, you know, in the coming, you know, months. It's I'll wait and see. Right. I mean, if it's really happening, then great. I hope it's productive talk.
And if, you know, seeing is believing, you know, so once the truth comes out, we'll certainly be paying attention. All right, let's get to your pick for today because you're sticking with that resilience theme even after some earnings that we're going to get to in a second. But what's your pick and why?
My pick is Vulcan Materials because it's a very simple aggregates business. It's a basic materials business. They own the rock in the ground. It's a localized business, right? So they own several quarries around the country. And it really insulates them from inflation with rock being sort of their largest cost component. Now, they have maybe some indirect costs.
operating cost pressure from time to time. But overall, they reported earnings recently and it was very positive on that front. And they still see demand, as you mentioned in your last segment, from AI data center growth. So that's a positive, even though they see some residential slowdown. But overall, very stable business, high cash flow, high margin. And your take on big tech after these earnings from Meta and Microsoft yesterday, what's your view on that, speaking of earnings?
I clearly view it positively, but it's first quarter earnings, right? But I think guidance also is positive. So again, we'll take this stuff on a day-to-day basis. Things have never seen a new shift from one way to another on a daily basis, but I certainly view them positively. Microsoft's call last night, I think, was
was very forthcoming and I'm glad to see that growth continuing. And AI was obviously a big part of their Azure growth. Patrick Frizzetti, always good to see you. Your pick for us today, Vulcan Materials. Have a great day.
Thanks, Frank.
It looks like the Dow would open up more than 300 points higher than NASDAQ, up over 1.5% right now. One quick look at big tech as well before we let you go. Big tech moving higher across the board. Of course, Apple, the exception there. That does it for us here on Worldwide Exchange. Squawk Box starts right now. You've been listening to CNBC's Worldwide Exchange. You can always catch us live weekdays at 5 a.m. Eastern. If your small business has a problem...
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