Tech Stocks Surge on Microsoft & Meta Earnings; US & Ukraine Sign Deal
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Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, the jump in futures, particularly on the NASDAQ, follows blowout quarters from a pair of tech heavyweights. Let's begin with Microsoft. Those shares are up more than 8% in early trading.

The software giant reported stronger than expected quarterly sales and profit growth. Customer demand for cloud services held steady despite economic turbulence. Azure's cloud unit at Microsoft posted a 33% revenue gain. 16 percentage points of that growth was attributed to AI. Microsoft CEO Satya Nadella spoke on the company conference call.

We just want to make sure we're building, accounting for the latest and greatest sort of information we have on all of that. And that's what you see reflected. And I feel very, very good about the pace.

Microsoft CEO Satya Nadella expects the cloud unit to grow as much as 35% in the current quarter. Well, shares of Meta are also rallying this morning, Nathan. They're up 6%. The Facebook and Instagram owner reported fiscal quarter revenue that beat expectations. The company also said current quarter revenue will be in line with analyst estimates. Here's CEO Mark Zuckerberg on the company's earnings call.

We've had a strong start to the year. Our community keeps growing with more than 3.4 billion people now using at least one of our apps each day. Our business is also performing very well, and I think we're well positioned to navigate the macroeconomic uncertainty.

And Meta CEO Mark Zuckerberg said the company expects to spend $64 billion to $72 billion this year, attributing some of the increase to tariffs imposed by the Trump administration. And Karen, the tech earnings keep rolling today. We will hear from two more of the so-called Magnificent Seven this afternoon, Apple and Amazon. Let's get an Apple preview now from Bloomberg's Tom Busby.

Key for investors will be any insights into the future impact of the Trump tariffs and the company's ongoing efforts to catch up with rivals on artificial intelligence, something that could risk its reputation and future sales. Now, Apple's heavy reliance on China for iPhone production has made it particularly vulnerable to tariffs and whether that exposure could lead to price hikes or more production shifting to India or elsewhere.

Bloomberg Consensus calls for revenue of $94.62 billion on earnings per share of $1.62. Tom Busby, Bloomberg Radio. All right, Tom, thank you. While staying in the tech world, the chair of Tesla is denying a report the board had looked to replace chief executive Elon Musk.

The Wall Street Journal reported that Tesla board members had contacted executive search firms to seek a successor to Musk earlier this year. According to the paper, the director's approaches took place about a month ago as investors were concerned about the amount of time Musk was devoting to his cost-cutting role with the government.

On a post on Tesla's X account, Chair Robin Denholm said, quote, this is absolutely false and directors are highly confident in Musk's ability. Karen, there are new developments this morning to end the war in Ukraine. The U.S. has reached a deal over Ukraine's natural resources. It'll get access to new investment projects to develop things like aluminum, graphite, oil and natural gas. Bloomberg's Dan Flatley is in Washington on why this deal is so important for Ukraine.

Essentially what this is, is a guarantee, as far as the Trump administration is concerned, that the U.S. will continue to remain involved in Ukraine, will help Ukraine achieve some sort of equitable peace deal with Russia, if that's even possible at this point. But this deal is key. Bloomberg's Dan Flatley says the deal will create a fund to attract global investment into Ukraine. The U.S. would get first claim on profits transferred into the fund, which would be jointly managed by both nations.

Meanwhile, Nathan, the Senate is looking to put new pressure on Russia as ceasefire talks drag on. Republican Lindsey Graham says he has broad support for what he calls bone-crushing sanctions if Russian President Vladimir Putin does not get serious with the discussions.

Graham's bill includes 500% tariffs on countries that purchase Russian energy and a ban on U.S. citizens buying Russia's sovereign debt. The South Carolina Republican says Putin will have to choose between sitting down with President Trump or watching his economy be crushed. All right, Karen, now let's get to the latest on the trade war. President Trump says he is determined to move ahead with his sweeping tariff plans, though he admits it comes with a political risk.

It is true. And I just think that I'll be able to convince people how good this is. This is what other countries have done to us. We've been the laughingstock and the whipping post. We've been ripped off by every country practically in the world. President Trump phoned into a NewsNation town hall last night after government figures showed the economy contracted in the first quarter for the first time since 2022. The president says much of the blame for that goes to former President Joe Biden.

In that News Nation town hall, Nathan, the president said there's a very good chance he'll strike a trade deal with China, but it has to be on his terms. Host Bill O'Reilly asked when he would announce deals with other trading partners like South Korea, Japan and India. Well, we have potential deals with them. Yeah, but I mean, OK, I'll tell you this. I'm in less of a hurry than you are. We are sitting on the catbird seat. They want us. We don't need them. Me.

Meanwhile, state-run media in China are reporting the U.S. has reached out to Beijing to try to kickstart trade talks through various channels. President Trump has repeatedly said Chinese President Xi Jinping needs to make the first move. And Karen, the global trade war is impacting monetary policy overseas. The Bank of Japan is pushing back the timing for when it expects to reach its 2% inflation target.

BOJ is also slashing its growth forecasts as the global trade war darkens the economic outlook. And checking the Japanese yen right now, it is weaker against the dollar, down about three quarters of one percent at 144.16.

It's time now for a look at some of the other stories making news in New York and around the world. And for that, we're joined by Bloomberg's Michael Barr. Michael, good morning. Good morning, Karen. Former Vice President Kamala Harris used a high-profile speech in San Francisco to deliver a sharp-edge critique of President Donald Trump, accusing him of wholesale abandonment of American ideals. Last night's speech was Harris' most extensive public remarks since leaving office in January. We are living...

In a moment, when the checks and balances upon which we have historically relied have begun to buckle. The speech comes as Harris has not ruled out a run for California governor or another White House try.

The U.S. urged India and Pakistan to work together to de-escalate tensions and avoid a clash after militants killed dozens of people in Indian-controlled Kashmir last week. Relations between India and Pakistan have rapidly deteriorated, with India accusing Pakistan of involvement in the attack, Pakistan denying any links.

A Columbia University student arrested during his citizenship interview was released yesterday by a federal judge in Vermont. Outside the courthouse, Moshe Medawi said that he is not afraid of President Trump.

He had made a very brave decision to let me out, and this is what justice is. And for anybody who's doubting justice, this is a light of hope. The judge said Madawi has not been charged with a crime. Linda Druby, one of Madawi's attorneys, said her client is feeling shocked and proud to see justice. The court.

told the government that they cannot detain individuals solely because they're engaged in lawful speech. And that's exactly what Mr. Madawi was engaged in. Madawi is allowed to occasionally go to New York City to finish up his studies at Columbia.

In upstate New York, the Onondaga County District Attorney says 11 teenagers, a part of the West Hill High School men's lacrosse team, have turned themselves in for a hazing incident. That means they'll be spared from facing more serious charges. The DA says they hazed younger team members, ambushing them with an apparent gun and knife pointed at one of them before he was thrown into the back of a car.

Global news 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg. Karen. All right, Michael Barr, thank you.

When you have bars in the sky, onboard showers and award-winning in-flight entertainment, it's no surprise that Emirates was recently named the best airline in the world. We fly you to over 140 destinations and with partners across the globe, we connect you to another 1,700 cities across six continents. So when we say we're also the largest international airline, what we really mean is...

If you're going there, so are we. Book now on Emirates.com. Fly Emirates. Fly better. Switch to Verizon Business and get more from your internet without paying more for your internet. Get LTE Business Internet starting at $39 a month when paired with select business mobile plans. That's unlimited data and with it, unlimited possibilities. Start saving today with Verizon Business. Ranked number one in small business internet customer satisfaction by J.D. Power.

Starting price for 25 megabits per second LTE internet plan with smartphone plan savings, plus taxes, fees, and economic adjustment charge. Terms apply. For J.D. Power 2024 award information, visit jdpower.com slash awards. Time now for the Bloomberg Sports Update. Here's John Stashour. John, good morning. Good morning, Karen. The Yankees finished the series in Baltimore the night after hitting six home runs, four in the first inning, another first inning home where it was hit for the Yankee captain. High drive, center field. Mullins back. Track. Whoa!

See ya! Oh, what a shot! A two-run home run for Judge in his personal playpen.

2-0 Yanks.

Nationals lost 7-2 in Philadelphia. Win for Colorado, 2-1 over Atlanta. Rockies finished April 5-25. Most losses on May 1st in MLB history. In the seventh inning of the Cubs game in Pittsburgh, a fan fell from the stands, landed on the warning track in right field. He's in the hospital in critical condition.

Season over for the Lakers. They go out scoring only 16 points in the fourth quarter in a 103-96 home loss to Minnesota, who won the series four games to one for the Timberwolves. Rudy Gobert, 27 points, 24 rebounds. Both are career playoff highs. Houston beat Golden State 131-116. The Warriors are still up 3-2. The Knicks are up 3-2. Going to game six tonight in Detroit. The Knicks hoping to

Followed the path of last year's first round when they also failed to win the series at home in game five, but won it game six. That was in Philadelphia. Washington and Florida moving on. Stanley Cup playoffs. Capitals beat Montreal 4-1. Panthers won 6-3 at Tampa Bay. Both won their series in five. Winnipeg beat St. Louis 5-3. John Staschauer, Bloomberg Sports, County, Nathan.

Coast to coast on Bloomberg Radio. Nationwide on Sirius XM. And around the world on Bloomberg.com and the Bloomberg Business App. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager on a very busy week for big tech earnings. It is getting off to a solid start. Strong earnings from Microsoft and Meta Platforms.

even with uncertainty around trade. Here to break it down for us this morning, Bloomberg Markets reporter Valerie Teitel. Val, great to have you with us. Let's start with Microsoft, since it's seeing the slightly bigger move in the pre-market. Investors there wanted to see whether demand is still holding up for AI in the cloud, and it looks like Microsoft delivered and then some. Good morning. Good morning, Nathan. Yes, Microsoft delivered and then some. Shares are jumping 8%.

in the pre-market beats across the board revenue cloud sales and also a bullish projection over its cloud business investors were also very welcome to see that it tapped the brakes on capex for the first time in 10 quarters investors really like that prudence with that stock soaring

up this morning. Let's focus in on the cloud business because sales there unexpectedly strong up 13%. The cloud business called Azure grew 33% in the quarter and they said that in the next quarter they are predicting 35% growth. That was well above estimates. Profits were also up 18%.

from the same period last year. And almost half of their growth in that cloud business came from AI services. So it seems like all that expenditure on artificial intelligence is paying off and then some for Microsoft. Those shares are up 8.2% pre-market. And interesting to see that they have this sort of bullish forecast around demand for further AI.

Could that hold up if these trade uncertainties continue? How is Microsoft saying it's going to navigate that? Look, Microsoft definitely in the

in the context of the fact that they are continuing to spend, continuing to invest, is showing that they are expected to get returns for this additional expenditure. You know, Meta also said the same thing. They forecasted additional spending on the back of this. So even though all of this uncertainty is overhanging, we're still seeing companies in big tech.

further. And I think that is a bullish thing for U.S. mega cap tech. Now, turning to Meta, as you say, the spending there is continuing as well. And it looks like the ad business is holding up to sort of support that spending as well. Yeah, Meta jumping 6.1% so far, pre-market trade. They really did calm investor nerves.

about the impact of Trump's trade war on advertising sales. Advertising is a very cyclical business. Some were worried that they might have seen advertisers pull back on ad spend given all the uncertainty, but they reported a first quarter revenue that beat expectations. 98% of their revenue comes from advertising, so they did not show an advertising pullback. They also forecasted additional spending, as I said, and they anticipated continued growth despite the tariffs.

They also showed that the investment in AI is paying off for them, too. They showed that AI is helping to improve ad targeting and personalization on the content people see on its social media network. So another bullish narrative coming out of Meta. Those shares are up six and a quarter percent. Yeah, I guess it has to be said, Valerie, that just the fact that both these companies are even giving guidance is a bullish sign as well, given so much of what we've heard from so many other companies. So in our last minute or so, what does that tell us about what we could expect?

later today when we hear from Amazon and Apple after the closing bell. I do think the risk is here, Nathan, we might get a different narrative because the narrative coming out of both Apple and Amazon is their heavy reliance on China. We know that Apple's iPhone supply chain is very intertwined in China. Amazon has a lot of retail logistics and advertisers that come from China as well. So we might get a different picture painted by these two other Mag7s that report later tonight. So watch out for those

Any comments about them shifting their supply chains, updating on pricing as well? We'll be watching out for those kind of warnings with Apple and Amazon later. It's interesting to think about in our last minute if there could be sort of a fracturing of the Magnificent Seven based just on where the supply chains are coming from. Yeah, exactly. And you have to have to account for the fact that Apple...

Apple and Amazon, you know, they're retailers of hard goods, which are struggling with these tariffs. So you're right. We might see a bifurcation happen between tech, those who are more focused on the shipments of goods versus the sale of software. They could see some bifurcation between those two corporates. That's a very good point.

This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed by 6 a.m. Eastern each morning on Apple, Spotify, or anywhere else you listen. You can also listen live each morning starting at 5 a.m. Wall Street time on Bloomberg 1130 in New York, Bloomberg 99.1 in Washington, Bloomberg 92.9 in Boston, and nationwide on Sirius XM Channel 121.

Plus, listen coast to coast on the Bloomberg Business app now with Apple CarPlay and Android Auto interfaces. And don't forget to subscribe to Bloomberg News Now. It's the latest news whenever you want it, in five minutes or less. Search Bloomberg News Now on your favorite podcast platform to stay informed all day long. I'm Karen Moscow. And I'm Nathan Hager. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak.

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