Microsoft, Meta Post Big Gains; President Trump Announces Tariff Deals

0:00Bloomberg Daybreak U.S. edition is brought to you by OTC Markets Group. OTC Markets' overnight platform for exchange-listed securities, Moon ATS, provides access to global securities in U.S. dollars from 8 p.m. to 4 a.m. Eastern, Sunday through Thursday. Learn more at otcmarkets.com slash moon. Moon ATS is operated by OTC Link LLC, a FINRA-registered broker-dealer, and is available only through participating broker-dealers. Today's episode is brought to you by ChatGPT for Business. As a listener of this podcast, you're looking for ways to help teams move faster, make sharper decisions, and turn scattered context into work they can use.

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1:59Learn more at thehartford.com slash risk mitigation. Bloomberg Audio Studios. Podcasts. Radio. News. Good morning. I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Well, Karen, let's begin with blowout earnings from a pair of tech heavyweights, Microsoft and Meta platforms. Let's begin with Microsoft. Those shares are trading at an all-time high, and if that holds, the tech giant would become the second company in the world to reach a$4 trillion valuation. Microsoft's latest results confirm it is leading in artificial intelligence with a 39 % rise in sales for its cloud business.

2:41Dan Ives is global head of tech research at Wedbush Securities. Massive beat on cloud. you see more and more of these use cases, these hyperscalers, those are the best indicators that just shows where the next spending in AI is going. And that's why right now, if you're a tech bear, you're in hibernation mode in that cave and you can't find AI in the spreadsheet. Dan Ives at Wedbush has raised his 12-month price target on Microsoft to$625. Right now, the shares are up more than 8 % in the pre-market, trading around$556 a share. Well, Nathan, shares are meta. They're also surging. They're up almost 12 % in early trading.

3:19The Facebook parent reported results that beat estimates. Meta is also taking advantage of strong advertising and stepping up spending next year. Executives say now is the time to seize on investment opportunities in AI. Mandeep Singh is senior tech analyst for Bloomberg Intelligence. There is a sequential acceleration in ad impressions as well as ad pricing growth. And to my mind, that is a sign of them applying AI to boost engagement. Obviously, the user growth has been almost the same every quarter, you know, 4 to 5 percent. So the fact that impressions grew 11 percent is a sign that people are spending more time on their family of apps.

3:59Mandeep Singh at Bloomberg Intelligence says Meta is also forecasting third quarter revenue that beat Wall Street estimates. Well, Karen, one big tech stock is not participating in the rally this morning. shares of Qualcomm are down more than 5 % in the pre-market. The biggest maker of chips that run smartphones reported lackluster growth. That's fueling concerns that tariffs will take a toll on Qualcomm and the broader chip industry. Well, up next, Nathan, we get more earnings from big tech. After the bell, results come in from Apple and Amazon. Bloomberg's Tom Busby tells us what to expect from the iPhone maker.

4:33Despite this period traditionally being one of the slowest of the year, before it releases new products for the holidays, the iPhone maker is projected to report modest sales growth after adjusting some of its manufacturing to offset the impact of the Trump tariffs. But Wall Street is expecting continued sluggish demand for gadgets like its TV set-top boxes and the Vision Pro mixed reality headset. And investors will want to hear more about its AI strategy after more of its AI talent was recently poached by Meta. Bloomberg consensus calls for revenue of$89.3 billion on earnings per share of$1.43.

5:06Tom Busby, Bloomberg Radio. OK, Tom, thank you. Now, when it comes to auto earnings, shares of Ford are down more than one percent in early trading. The automakers warning profit will see a sharp drop on the fallout from President Trump's tariffs. We spoke with Ford Motor CEO Jim Farley. Well, we're working with the administration is to take that layered tariff because the autos have their own tariff, plus they're subject to all these other tariffs. We're working with Commerce and the Trump administration to minimize our tariff expense so that we can get more competitive. Ford CEO Jim Farley says adjusted earnings could fall as much as 36 percent.

5:43That's due in part to a net tariff impact of$2 billion. That's about$500 million more than the company previously expected. Well, Nathan, let's turn to the economy now, the Federal Reserve to be specific. Despite pressure from the White House, the Fed kept its key interest rate unchanged yesterday. The central bank said growth moderated early this year and that uncertainty remains elevated. Here's how Fed Chair Jay Powell put it. Changes to government policies continue to evolve and their effects on the economy remain uncertain. Higher tariffs have begun to show through more clearly to prices of some goods, but their overall effects on economic activity and inflation remain to be seen.

6:21Fed Chair Jay Powell also answered questions about two members of the Monetary Policy Committee dissenting. It's the first time that's happened in over 30 years. Governors Michelle Bowman and Christopher Waller both voted for a quarter point rate cut. Well, now, Karen, details on a hot and cold relationship between Wall Street and the White House. JPMorgan Chase CEO Jamie Dimon and President Trump are talking again. Bloomberg's John Tucker joins us in New York with the details. It's been a while, John. Good morning. Yeah, it's kind of warming up once again. We're now learning that Dimon met with President Trump at the Oval Office last week to talk about the economy, trade and financial regulation.

6:58Mr. Trump picked Diamond's brain on the prospect of lowering interest rates, and they also touched on the administration's push to impose tariffs. The renewed dialogue actually began in June after years of tension. You'll recall back in 2023, Trump called Diamond highly overrated after Diamond urged business leaders to back Nikki Haley in the Republican primary. He also accused J.P. Morgan of discriminating against conservatives. When the president's April tariff announcements sent markets plunging, Diamond said a trade war was plunging the economy into recession. Well, the president did take notice.

7:32He reportedly cited Diamond's comments as reason for pausing the tariffs. In New York, I'm John Tucker, Bloomberg Radio. All right, John, thank you. Now to the latest on trade. With one day to go until his tariff deadline, President Trump has made a flurry of deals and demands. Last night, he announced a 15 % tariff on South Korean imports, including cars. That matches the rate Japan agreed to last week. And we get more with Bloomberg's Denny Thomas in Seoul. Seoul has been lagging behind in all these trade talks because of the political chaos we had here. And as we were hitting up to this August 12th deadline, it was pretty uncertain whether we would reach a deal or not.

8:10And Bloomberg's Denny Thomas reports the agreement also includes a$350 billion fund for South Korea to invest in the U.S. And the South Korea deal, Karen, comes after news on India. President Trump says he'll impose 25 percent tariffs on that country's exports, even though that country was one of the first to engage in trade talks with the U.S. Nisha Biswal is a partner at the Asia Group. For the president to come in with a very hardball tactic of announcing 25 % tariffs as well as penalties for Russian oil and gas imports, etc., I think is a little bit surprising. And certainly to our Indian friends, they're kind of shocked because they thought that they were working in good faith and were close to having a deal.

8:56Nisha Biswal with the Asia Group. President Trump says India's tariffs are among the highest in the world, but his team is still conducting talks, so there could be more to come on that front. Meantime, Nathan, Commerce Secretary Howard Lutnick says the U.S. has made deals with Thailand and Cambodia. Those details came in an interview with Fox News. He didn't elaborate on those agreements. President Trump had used trade talks to urge both countries to agree to a ceasefire in recent days. The U.S. has also signed a trade deal with Pakistan, and here's Pakistan's finance minister. I think we have come a long way from where we were and where we are today in terms of our overall strategic partnership between Pakistan and the United States.

9:35And Pakistan's finance minister says its trade deal with the U.S. will boost Pakistan's oil reserves. Still, Karen, a deal with Mexico and Canada remains elusive. Today, President Trump plans to speak with Mexico's president, Claudia Scheinbaum, as she looks to avoid a 30 percent tariff. Sheinbaum met yesterday with Republican Congressman Don Bacon and Democrat Ro Khanna. They came away optimistic about the two countries expanding trade and security cooperation. At the same time, President Trump is warning it's getting harder to make a deal with Canada. He posted as much on social media after Canadian Prime Minister Mark Carney announced that he'll recognize a Palestinian state at the U.N.

10:10summit in September. Well, Nathan, back here in the U.S., dangerous weather is in focus again today. The Northeast heat wave is receding, but a new weather threat is on the way. Heavy rain and flash flooding, and Bloomberg meteorologist Craig Allen has the details. There is a Category 3 out of 4 threat for excessive rainfall running right up from Washington, D.C., up 95 through Baltimore, Philadelphia, to about the New York City area. And the worst of the rain will be falling during the late Thursday afternoon into Thursday evening commute, and possibly even into Friday morning. This threat, if it materializes, will impact 18 ,000 square miles and the possibility of over 22 million people impacted by this rainfall for the late afternoon and next 24 hours.

10:57And that's Bloomberg meteorologist Craig Allen, who says thunderstorms could accompany the rain, resulting in as much as two inches of rainfall per hour. And a political story to end this one, Karen. Former Vice President Kamala Harris says she will not run for California governor next year. There had been speculation she would. Analysts say it leaves open the possibility Harris mounts a third run for the White House in 2028.

11:24Time 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. Authorities say the man who killed four people at a Manhattan office building bought the rifle he used in the attack and the car he drove across the country from his supervisor at a Las Vegas casino. Police say Shane Tamura fatally shot four people on Monday before killing himself. New York Governor Kathy Hochul. There's nothing that can justify the intentionality behind someone who travels across many states, loads up his vehicle with a weapon of mass destruction, intent on slaughtering people.

12:03So he knew exactly what he was doing. And the first of victims was laid to rest yesterday. Julia Hyman, who worked for Rudin Management, was 27 years old. Today, funeral services will take place for the NYPD officer killed in the attack, Diderot Islam. About two dozen people were taken to the hospital after a Delta Airlines flight encountered severe turbulence that forced it to make an emergency landing in Minneapolis. The airline says Delta Flight 56 was heading from Salt Lake City to Amsterdam. Russia attacked Kiev with a barrage of drones and missiles overnight. In defiance of President Donald Trump's calls for the Kremlin to reach a truce with Ukraine, The bombardment killed at least six people, including a child, and injured more than 50.

12:52Pressure is increasing globally to end the war in Gaza. More than 20 Arab and Muslim countries have issued a joint call condemning Hamas for the October 7th terror attacks on Israel and calling for the group to disarm. Meanwhile, UN officials say the worst-case scenario of starvation in Gaza is taking place. Scott Paul is the director of Peace and Security at Oxfam America. The Israeli authorities need to unlock this in every step of the way if they want to prevent this famine from being formally declared and this crisis from deepening to unfathomable levels. Scott Paul with the Global Confederation Oxfam that works to end poverty and injustice.

13:31Global 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. Bloomberg Daybreak U.S. Edition is brought to you by OTC Markets Group. Thinking about joining the exploding overnight market space, but unsure where to start? Designed to meet the needs of a growing international investor base, OTC Markets' overnight platform for exchange-listed securities, Moon ATS, provides access to global securities in U.S. dollars from 8 p.m. to 4 a.m. Eastern, Sunday through Thursday. Extend your trading day and trade global securities in U.S.

14:07dollars through a FINRA-licensed broker-dealer. In the first half of 2026, over$28.1 billion U.S. dollars traded on Moon ATS. Learn more about Moon ATS. Visit otcmarkets.com slash moon. Moon ATS is operated by OTC Link LLC, a FINRA-registered broker-dealer. Quick one before you jump back in. You're listening for ways to help teams move faster, make sharper decisions, and turn scattered context into work they can use. ChatGPT for Business can help. ChatGPT for Business gives teams a shared workspace with admin controls, permissions, and access to work and codecs in ChatGPT. This means your business can move from question to answer and code to rollout quicker.

14:50Join over 10 million business and enterprise users worldwide already using ChatGPT for work. Download the ChatGPT desktop app or contact sales to learn more. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal, whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock.

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15:38Time now for the Bloomberg Sports Update, brought to you by Flushing Bank. And here's John Stashauer. John, good morning. Good morning, Karen. The baseball trade deadline, 6 o 'clock today. The Mets just traded for two relief pitchers, and the Yankees added a reserve outfielder, and the Yanks then hosted the Rays. There was one run scored in the first seven and a half innings, and then eight runs were scored in the next three and a half. Three times the Yankees tie the game with a Trent Grisham home run in the eighth, an Anthony Volpe homer with one out in the ninth, and a Cody Bellinger RBI triple in the tenth.

16:08The game went to the 11th inning. A Tampa Bay balk put the winning run at third, and the new Yankee Ryan McMahon was at the plate. Well, now they don't have the bunt, and that forces the Rays to bring the infield in. All one. This should do it. Fly ball. DeLuca. He'll let it go over his head. And the Yankees win. Jazz Chisholm will score. McMahon with the walk-off single. And the Yankees in a wild game. Wins this one in 11 innings by a score of 5-4. On the S-Network, Yankees four games behind Toronto, who won 9-8 in Baltimore. The Red Sox game behind the Yanks. A 13-1 route in Minnesota. The Mets in San Diego had just three hits.

16:50Lost 5-0, so the road trip saw the Mets sweep the Giants and then get swept by the Padres. The Mets stayed just ahead of the Phillies, who lost. Biggest trade of the day, Arizona sends slugging third baseman Eugenio Suarez to Seattle, where he played before. Suarez has 36 home runs. The Mets got submariner Tyler Rodgers from the Giants. His identical twin brother was also dealt by the Reds to the Pirates. And the Mets also acquired another reliever, Ryan Helsley, from Minnesota. Mets said he's still looking for a center fielder. The Yankees, with the pickup of Austin Slater from the White Sox, have now added three position players, but no pitchers.

17:27They could also use help in their bullpen. A WNBA rematch of last year's finals in Minnesota. The Lynx beat the Liberty 100-93. Minnesota, a league best 23-5. John Stashauer, Bloomberg Sports. Karen, take it. All right, John, thank you. And Bloomberg Daybreak is brought to you by Flushing Bank. Life's more rewarding with Flushing Bank's complete cash rewards program for personal and business accounts. With 29 in New York metro locations, there's nothing more rewarding. Visit FlushingBank.com, member FDIC. Coast to coast on Bloomberg Radio, nationwide on Sirius XM, and around the world on Bloomberg.com and the Bloomberg Business App.

18:07This is Bloomberg Daybreak. Good morning. I'm Nathan Hager on a really good morning for big tech. Following big results in the latest earnings reports, both Microsoft and Meta platforms are surging pre-market after results suggesting the arms race in artificial intelligence spending may be starting to pay off. Joining us now is someone who's been sounding the drumbeat on the promise of AI, Dan Ives, Global Head of Tech Research at Wedbush Securities. You must be feeling really good this morning, Dan. And I want to start right off with your latest note on Microsoft. You're raising your price target on the stock to$625.

18:43Microsoft's already poised to become another$4 trillion company this morning. What gets Microsoft to$5 trillion in your view? Good morning. Yeah, good morning. Look, me and you have talked about this for years. I think this was a watershed moment, not just for Microsoft, for Meta, and what it means for big tech when it comes to the AI revolution, hitting its next stage of growth. Look, Microsoft, I believe Microsoft and NVIDIA will be$5 trillion mark caps in 2026. We are just starting this next stage of the AI revolution. We saw a 39 % sales jump in particular for Azure Cloud, a big piece of this as well.

19:28Is that kind of growth sustainable, those kinds of solid double-digit sales returns? These are jaw-dropping numbers. I mean, when you think about cloud and even some of the strength that we are expecting coming in, And it's one where enterprises are lining up with Microsoft, given what we're seeing in AI. Now, look, will that eventually moderate? Of course. What this essentially means is Microsoft is almost creating another company within Microsoft in terms of AI that I believe right now, you know, they're kind of leading the race when it comes to cloud ahead of Amazon, of course, you know, Google.

20:11In terms of what enterprise customers are getting out of that race, of course, we've seen the strides they've made with Microsoft Co-Pilot. What other use cases do you see Microsoft putting out there for a broader market? Look, I think it's across verticals. I mean, that's why you're seeing customers line up. And look at Microsoft. They're now, for CapEx, originally you were$80 billion. Now you're$120 billion. So as they're expanding, as you saw Alphabet do the same thing, this arms race is just starting. But I've said, look, this is a Scotty Scheffler-like quarter from Microsoft, but it's not the end.

20:50It's actually the beginning of the second, third, fourth derivatives playing out for AI, and that's bullish for tech. So do you see Microsoft sort of building a moat around what it's doing with AI, or could some of its competitors chip away at what they're doing? Yeah, we don't view it as a zero-sum game, and that's why we're bullish on Amazon and Google, and of course, when you look at Oracle as well. But on the enterprise, that's their backyard. That's where they dominate. And I think Nadella and Microsoft, they're playing almost another game now than everyone else, and that's what you're seeing in these numbers, execution flawless.

21:31They obviously will get led in the velvet ropes to the$4 trillion markup club with NVIDIA. But it's just the beginning in terms of this next stage of cloud and AI growth. In terms of what we're seeing out of meta platforms as well, Dan, I wonder what you make of this personal intelligence or personal super intelligence strategy that Mark Zuckerberg's putting out there with his AI vision. I mean, that's how you're going to get to a four-digit stock because I think Zuckerberg right now, wartime CEO, focused on really going to full sort of end-to-end when it comes to the consumer AI revolution. What's amazing about these numbers is just the advertising growth, even the lack of spend.

22:20I mean, this is a company that's transforming right in front of us. and they are going to be front and center as a monetization when it comes to the consumer piece of AI. I love that you call it a lack of spend. I mean, we've seen him putting out, you know, 100-plus million dollar pay packages for some of these people that he's poached from other companies to join his superintelligence team. He's talking about$66 to$72 billion in AI spend. Is that the kind of level that investors can stomach? Look, eventually it will moderate, okay? But if you look at even just from an investment perspective in advertising, you just forget about some of those pay packages.

23:00I mean, what you're seeing on the advertising growth is really unprecedented. And in terms of like what they're spending there and CapEx and the different we're seeing in big tech, look, this is an arms race. And no tech company wants to be on the outside looking in. And that's why it's so impressive about what Meta is doing, what Microsoft is doing, Solid Alphabet. and I think you'll see with Amazon as well. I mean, that, this is, but it's not just about Mag7. It will spread to the rest of tech. Well, in our last minute or so, let's get to the companies that we are going to be hearing from after the bell today.

23:39You mentioned Amazon. We're going to hear from Apple as well. It seems like Apple has been kind of falling behind in terms of where they're going with AI. Yeah, man, I think that's been the frustration, right? You have the biggest install base in the world. they need, you know, I continue to believe perplexity is the acquisition they need to make. It's not going to happen internally. But I think what it shows is look at Amazon. You can say Amazon a year ago is nowhere. Now, aggressively focus on the AWS and monetizing when it comes to what's happening on cloud. Because we're talking about what's going to be a tech bull market for the next few years.

24:14Biggest tech theme we've seen in the last 40, 50 years. It's a fourth Industrial Revolution, Apple can't be on the outside looking in. Just quickly, you've called for Apple to buy perplexity and take its AI out from in-house. Do you see Tim Cook leaning that way toward an acquisitive stance? Look, they've never done acquisitions really before outside beats, but times are changing. You can't be on a park bench drinking lemonade while the AI Revolution passes you by. 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.

24:52Eastern 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.