Breakfast News: Big Tech Delivers

Breakfast News: Big Tech Delivers

Source: Image Created by Jester AI.

1. Tech Earnings Show AI Demand

Microsoft (MSFT -0.82%) and Meta (META -1.39%) both jumped over 5% after the market closed, following strong earnings that showed their large-scale artificial intelligence (AI) investments are starting to pay off.

• "Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth." Microsoft's cloud services revenue jumped 33% versus last year. CEO Satya Nadella is forecasting 34%-35% growth for the cloud-computing division in the coming quarter, easing investor concerns about any potential slowdown in AI demand.
• "We're making good progress on AI glasses and Meta AI, which now has almost 1 billion monthly actives." Meta beat revenue and earnings-per-share expectations, with CEO Mark Zuckerberg pointing to higher capex spend this year on data centers to fuel further AI growth.

2. Apple Under Legal Scrutiny

A federal judge has ruled that Apple (AAPL -2.88%) violated a court order by not opening up the App Store to third-party payment options and by engaging in other anticompetitive practices, meaning the company could face criminal investigation.

• "That it thought this court would tolerate such insubordination was a gross miscalculation." Judge Yvonne Gonzalez Rogers sided with Fortnite developer Epic Games, arguing that Apple failed to comply with her original order back in 2021. She has also referred the case to federal prosecutors to investigate whether Apple committed criminal contempt of court in flouting the ruling.
• The App Store reportedly generates net revenue of around $20 billion a year: Not only is this negative press coverage, but the spotlight on the App Store is unwanted by Apple, which is keen to protect revenue from the product. The company will report quarterly earnings after the market closes.

3. Auto Manufacturers Take Action

Ford (F -0.67%) is cutting plans to develop next-generation electric vehicle (EV) architecture, a further sign of the pressure on the auto sector due to ballooning costs and tariff-related uncertainty.

• Designed to streamline vehicle-software systems: Despite having invested heavily in the project, which was supposed to help compete with EV leaders like Tesla (TSLA -0.33%), the initiative is being abandoned on account of higher costs and timing delays.
• Reassessing capital spending plans: The move comes less than a day after Stellantis (STLA -4.01%) withdrew full-year financial guidance due to the uncertain macro landscape, with European manufacturers, including Mercedes-Benz, following suit.

4. Next Up: Earnings Expected

Amazon (AMZN -0.87%) is slated to deliver earnings after the closing bell, with attention on how AI infrastructure investments are going, along with a spotlight on Amazon Web Services' (AWS) growth trajectory.

• Scrutiny on the health of the consumer: Airbnb (ABNB -0.64%) will report after the market closes. Investors will be focused on booking growth momentum, as well as signs that the experience feature and other diversifying revenue initiatives are picking up pace.
• Underperforming the S&P 500 by 56% over the past five years: Atlassian (TEAM -0.72%) releases earnings post-close, with shareholders hoping the company will continue to beat revenue estimates, as it has every time over the past two years.

5. Foolish Fun

Third-party sellers on Amazon who import goods from China and sell to U.S. customers have had to swiftly address issues in light of the trade war between the two countries.

This will likely be a topic of conversation on today's earnings call. Do you think the impact on the company's outlook will be a big deal in the long term, or just a short-term blip? Debate with friends and family, or become a member to hear what your fellow Fools are saying!