US Mulls Iran Military Options; Big Tech AI Spending Bonanza

0:00Being a small business owner isn't just a career, it's a calling. Chase for business knows how much heart and effort go into building something of your own. Manage all your business finances, from banking to payments to credit cards, all in one place with Chase's digital tools. Plus, access online resources designed to help your business thrive. Learn more at chase.com slash business. Chase for business. Make more of what's yours. The Chase mobile app is available for select mobile devices. Message and data rates may apply. JPMorgan Chase Bank N.A. Member FDIC. Copyright 2026. JPMorgan Chase and Company.

0:35When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, risk can affect multiple parts of the organization at once, from property and liability to cyber and regulatory challenges. At that level, managing risk becomes an ongoing discipline. At the Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive. And when losses do happen, that work is paired with insurance coverage shaped by years of underwriting, risk engineering, and claims experience. Learn more at thehartford.com slash risk mitigation.

1:10Policies provided by Hartford Fire Insurance Company and its property and casualty affiliates, Hartford, Connecticut. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions. slash repetitive tasks and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business, IBM. Bloomberg Audio Studios. Podcasts, radio, news.

1:55Good morning, I'm Nathan Hager. And I'm Karen Moscow. Here are the stories we're following today. Karen, those levels are at four-year highs for oil as President Trump keeps his naval blockade on Iran's ports and reportedly considers new strikes. The president says a deal has to include Iran giving up its nuclear program. They've come a long way. The question is whether or not they're going to go far enough. So at this moment, there will never be a deal unless they agree that there will be no nuclear weapons. President Trump spoke at the White House yesterday. This morning, Axios is reporting that the president will meet later today with the head of U.S.

2:35Central Command to discuss potential new military options. We get more from Bloomberg's Jumana Bersechi in Dubon. Those include targeted and limited operations. Could be limited attacks on infrastructure, once again. It could be a special forces operation to go and extract highly enriched uranium. There's also talk about a specific operation that they would conduct to reopen a small part of the street to allow for commercial vessels to pass through. Bloomberg's Jumana Berset, she reports those options had crude oil on the Brent trading as high as one hundred twenty six dollars a barrel overnight.

3:10Right now, Brent is up two and a half percent at just about one hundred twenty one dollars. West Texas Intermediate's just shy of one hundred eight. And the war is really adding to pain at the pump in California. AAA says that state's average gas price topped$6 a gallon for the first time since October of 2023. Well, Nathan, Defense Secretary Pete Hegseth faced questions about the war as he appeared before the House Armed Services Committee to defend the Pentagon's proposed$1.5 trillion budget. Bloomberg's Amy Morris reports from Washington. The budget request is on top of a trillion dollar appropriations from congressional lawmakers for this fiscal year.

3:48Lawmakers questioned Hegseth over the war's economic impact, noting that it's cost$25 billion so far, ranking member Adam Smith of Washington. We had to start this war, you just said, 60 days ago, because the nuclear weapon was an imminent threat. Now you're saying that it was completely obliterated? They had not given up their nuclear ambitions. Hegseth dismissed the criticism as political and rebuked lawmakers, both Republicans and Democrats, who pushed him for answers. In Washington, Amy Morris, Bloomberg Radio. Amy, thanks. The latest war developments and surging oil prices may be overshadowing the latest earnings from big tech.

4:27Let's start with Alphabet. Shares of the Google parent are up more than 6 % in early trading. We get the details from Bloomberg's John Tucker. Google's cloud business, which only became profitable three years ago, continues to grow quickly. accelerated by demand for AI software and infrastructure. The Gemini chatbot app and enterprise tools are gaining in popularity. The company expects to spend up to$190 billion this year on capital expenditures. That's up from a previous estimate of$185 billion, which was already double what it spent in 2025. John Tucker, Bloomberg Radio. All right, John, thank you.

5:05Amazon shares, they are up almost 2 % this morning. the company reported sales and profit that beat analyst estimates. Shares got a boost in part by a Bloomberg report that Anthropic, one of Amazon's biggest AI investments, is weighing a funding round that may more than double its valuation to$900 billion. CEO Andy Jassy says Amazon is spending at a rapid rate to expand data center capacity to meet the intense demand for artificial intelligence computing power. I think it's no secret that you've got, you know, the AI labs are spending an incredible amount of money on compute at this point. And you can compute both on the AI side as well as on the core side.

5:50CEO Andy Jassy says sales at Amazon Web Services were $37.6 billion during the quarter. That's up 28 percent from a year ago. Well, on the flip side, Karen, shares of Meta platforms are down about eight and a quarter percent in early trading. The Facebook parent is raising its spending outlook for the year, now projecting full-year capital expenditures of$125 to$145 billion, driven by Meta's AI strategy and higher component pricing. Now, that exceeds analyst estimates and marks a roughly 7.4 percent increase from Meta's previous projections back in January. Nathan, shares of Microsoft, they're down more than 1.5 percent, The world's largest software company expects sales in its Azure cloud unit to increase about 40 % in the current quarter and anticipates modest acceleration in the second half of the calendar year.

6:40It did say capital expenditures largely for data centers will total about$190 billion through the end of December, and that's more than Wall Street had expected. Karen, shares of Qualcomm are surging 10.5%. The biggest maker of smartphone processors says it's making headway in the lucrative data center market and predicts the China phone industry will bounce back. Big tech earnings continue today. We hear from Apple this afternoon. Well, Nathan, shares of Bell Ackman's Pershing Square USA plunged 18 % in its Wall Street debut. The drop came after the combined initial public offering for the closed-end fund, and his alternative asset manager raised$5 billion.

7:22Pershing was hoping to bring in$25 billion. Ackman spoke with Bloomberg yesterday about his goal to build a long-term, diversified holdings company like Warren Buffett. Look at Berkshire over the last 60 years. It's built most of its value running, becoming effectively an insurance holding company. That's what Buffett has built over time. And it was his successful management of the assets. When you heard Buffett buying Apple, it wasn't Buffett buying Apple. It wasn't even Berkshire buying Apple. It was the Berkshire insurance subsidiaries buying Apple. And we're going to do the same thing. We're going to manage this.

7:50The goal of Howard Hughes is to build a long-term, diversified holding company akin to what Buffett has done. And Pershing Square founder Bill Ackman spoke with our Danny Berger on Bloomberg Deals. Well, first, Karen, let's turn to the economy now. The Federal Reserve is leaving interest rates unchanged, but that decision may have been overshadowed by a big announcement from current Fed Chair Jay Powell. He's staying. After my term as chair ends on May 15, I will continue to serve as a governor for a period of time to be determined. I plan to keep a low profile as a governor. There's only ever one chair of the Federal Reserve Board.

8:27When Kevin Warsh is confirmed and sworn in, he will be that chair. Jay Powell's term as Fed chair ends two weeks from tomorrow, but his seat on the Board of Governors doesn't expire until 2028. The announcement drew harsh criticism from Treasury Secretary Scott Besant. I think it's highly unusual for someone who says he's an institutionalist and cares about norms at the Fed. This is a violation of all Federal Reserve norms. And I've got to tell you, also, Larry, I think it is an insult to Kevin Warsh, Mickey Bowman and Chris Waller to think that these other Republican nominees do not care about the institution of the Fed and that he alone can maintain the integrity of the Fed.

9:15Treasury Secretary Scott Besson spoke with Larry Kudlow on Fox Business. Now, Powell says he's concerned about a series of legal attacks on the Fed and that he will leave once a probe into the Fed's building renovation project is, in his words, truly over. Well, back in Washington, Karen, the longest partial government shutdown in history is a step closer to ending. The House has approved the first part of a two-part plan to reopen the Department of Homeland Security. On this vote, the ayes are 215. The nays are 211 with one member voting present. The concurrent resolution is adopted. That resolution would funnel$70 billion into immigration enforcement for the next three and a half years.

9:54Today, House Speaker Mike Johnson hopes to pass the second part of the plan to fund the rest of DHS outside ICE and Border Patrol through September 30th. All this comes after the White House told Congress it will not be able to pay most DHS workers after today because the fund it tapped for April payments has run out. Well, Nathan, former FBI Director James Comey has made his first court appearance on a second criminal indictment under the Trump administration. He's facing two federal charges related to threatening President Trump's life. The case centers on a now-deleted Instagram post where the numbers 86 and 47 were arranged with seashells.

10:29Critics say it could have been a reference to killing the president, but Comey says that was not his intent. Comey did not enter a plea and the government did not ask that he be detained. A plea hearing date has not been set. Well, finally, Karen, Live Golf may be coming to an end. Bloomberg News has learned Saudi Arabia's public investment fund plans to stop financial support for the league after this season. The move would bring a jarring end to the breakaway league that fractured pro golf and fundamentally altered the sports economics by luring stars away from the PGA Tour with giant contracts.

11:02Liv cost the Saudi Public Investment Fund an estimated$5 billion over just four years.

11:11Time 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. King Charles and Queen Camilla were in New York City as part of their historic state visit. The royal couple started the New York leg of their trip yesterday with a visit to the 9-11 memorial. Later, Charles attended the Greater Together reception at Rockefeller Plaza to mark the 50th anniversary of the King's Trust. That's the charity that King Charles started to help people aged 11 to 30 to develop life skills, get ready for work and access job opportunities.

11:49At this reception, we can celebrate both my King's Trust and the enduring cultural bond between the people of the United Kingdom and the United States, which, of course, is a relationship rooted in shared creativity, enterprise and values. King Charles also gathered with leaders of some of the world's biggest companies to encourage U.S.-U.K. investment and visited a Harlem urban farm program. The Trump administration is hailing the Supreme Court decision on the Voting Rights Act as a, quote, complete and total victory for American voters. The White House said in a statement, the color of one's skin should not dictate which congressional district you belong in.

12:31Congressman Rich McCormick was asked about fellow Republicans in Georgia calling for a special session to draw new maps in his state. We already started early voting, so I don't think we can do it in Georgia. It wouldn't be appropriate at this point. Justice Elena Kagan called the ruling the latest chapter in the conservative majority's now-completed demolition of the Voting Rights Act. Police are calling a stabbing on a London street, an act of terrorism. Two Jewish men were injured. The suspect was arrested after trying to attack the responding officers. Global news, 24 hours a day and whenever you want it with Bloomberg News Now.

13:05I'm Michael Barr, and this is Bloomberg, Karen. Thanks, Michael. Time now for our Bloomberg Sports Update. And for that, we bring in John Stashauer. Thanks, Karen. A couple of teams stayed alive in the NBA playoffs. Detroit beat Orlando. The Magic still lead three games to two. Houston beat the Lakers, who's still up 3-2. Also, Cleveland beat Toronto. And the Cavs lead 3-2. Overtime in the Stanley Cup playoffs. Philadelphia, a 1-0 win over Pittsburgh. The Flyers win the series four games to two. Vegas in double overtime over Utah. Also, Montreal won 3-2 at Tampa Bay. The Canadians and Golden Knights have 3-2 series leads.

13:41That's your Bloomberg Sports Update. Stay with us. More from Bloomberg Daybreak coming up after this. Support for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds, and crypto. And they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R &D spend, small cap stocks with improving operating margins, or the S &P 500 minus high debt companies.

14:19Chances are there isn't an ETF that fits your exact criteria. But on Public, you just type in a prompt and their AI screens thousands of stocks and build a one-of-a-kind index. You can even backtest it against the S &P 500. Then you can invest in a few clicks. Go to public.com slash market and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash market.

14:53Sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures at public.com slash disclosures. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. not noise proof of how we can help companies get smarter by putting ai where it actually pays off deep in the work that moves the business let's create smarter business ibm for many men mental health challenges aren't recognized until they've already taken a toll work pressure financial stress changing relationships and traditional expectations around masculinity can quietly wear men down often without clear warning signs in season three of the visibility gap dr guy winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support.

15:54Listen to the new season of The Visibility Gap, a podcast presented by Cigna Healthcare.

16:05Coast 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, The high-sea standoff continues between the U.S. and Iran with no let-up to the naval blockade of Iran's ports. But now more than two months into the war, President Trump says a further military response is still an option. We've got an amazing military. Now they have to cry uncle. That's all they have to do, just say, we give up. That was President Trump at the White House yesterday. Joining us this morning from our European headquarters in London is Bloomberg Opinion columnist Mark Champion covering the Middle East and international affairs.

16:46Great to have you with us, Mark, as we watch this pretty sharp reaction in the commodities markets to reports that President Trump may be getting a briefing, at least, on new military options. What are we hearing this morning? What could the possibilities be? Good morning. Yes, good morning. I mean, essentially, what we know is that we have a continuing blockade. and then you know what we don't know is whether president trump will also now you know restart the war that would in a sense be an acknowledgement that he doesn't think that the blockade is going to work fast enough for him so you know we'll see how that goes it's you know that there's been so much said at various different times you know by the white house that turned out not to be you know, quite how things, you know, quite accurate.

17:41So, but, you know, on the other side in Iran, you see, you know, this is really a sort of test of wills, test of how much economic pain each side can take. So, you see, you know, oil prices going up. On the other side, you see the rial, the Iranian currency weakening very sharply as a result of the blockade. Both sides, you know, are feeling the pain, the one thing you can be sure of is that the Iranians won't say we give up, but, you know, they may want to come back to the table and to preempt, you know, either try and end the blockade, either do it by force, you know, by attacking the Gulf states again.

18:26Certainly, they will do that if the Americans restart the war, or the Iranians, you know, may come back to the table and try and negotiate again. We've had our own reporting that U.S. Central Command has asked for permission to use a hypersonic missile in the conflict. What potential impact could that have? It depends on what they want to use it for. I mean, in the round, I would say not much. That sounds, you know, you say these things much as, you know, President Putin has in Ukraine. We're going to use a hypersonic missile. It does kind of focus attention and it's useful in terms of psychological warfare.

19:07But the munitions that the US has used until now have been extremely effective. What it is that they would want to do with a hypersonic missile that they couldn't do with other kinds, not quite sure. They are very good at evading air defences, sophisticated air defences. Iran's air defenses are pretty much destroyed. So, you know, not quite clear. Of course, all this is coming as Defense Secretary Pete Hegseth has faced some pretty tough questioning on Capitol Hill about how the war has been going. The idea, particularly from Democrats, that the U.S. may be heading into a quagmire in Iran. Does this look like a quagmire at this point to you, Mark?

19:51Not necessarily a quagmire. I would very much doubt that this turns into an extended war along the lines of Vietnam or Afghanistan, even Iraq. You know, I think there will, both sides actually do want to need an exit, but they also think that the other side's going to blink first. And that's the real problem here. I really don't see it. You know, first of all, you know, in order for there to be that kind of quagmire, you really need for boots to be on the ground, Americans to put troops in. And that's what really gets you sucked in, makes it difficult to get out. You know, I don't think we're going to see that, certainly not at scale.

20:33But nevertheless, you know, even months, you know, weeks or months is going to be very, very painful for the global economy and possibly a lot more painful for Europe and Asia than it is for the United States. Appreciate your perspective this morning, Mark. Thanks so much for joining us on Daybreak. That is Bloomberg opinion columnist Mark Champion covering the Middle East and international affairs from our European headquarters in London. You can read much more of Mark's thoughts on the conflict at OPIN Go on the Bloomberg Terminal. Karen. Nathan, another major story we're following involves earnings from big tech.

21:11We heard from four big ones after the bell. And we want to break it all down with Bloomberg intelligence analyst Matt Bloxham. Matt, good morning. So Alphabet, Meta Platforms, Amazon and Microsoft, we're seeing investor reaction mixed. What was your big takeaway from the earnings? Yeah, so a few things. Obviously, there's another step up in capital spending by these big companies. So, we're already absorbing a 70 % year-on-year increase, 26 versus 25, which would take this combined spending to$650 billion. Based on the overnight reporting, that 650 has now increased to$723 billion. A big chunk of that coming from Microsoft and also from Meta.

21:56And I think some mixed reactions to kind of whether that increased investment makes sense. And certainly investors still trying to kind of understand when the payback is going to come from these investments and how big it's going to be. And we saw with Alphabet, the parent of Google, that Google's businesses are firing on all cylinders. Great growth in the kind of core ads business, but also really strong growth from their cloud business, which increases revenue 63 % year on year. And a similar story at Amazon, where all of its different businesses, including cloud, are growing pretty well. But at the other end, you had Meta, where they're not exposed to as many of the kind of levers that AI is creating, much more still focused on an ads-based business.

22:44Their large language models are lagging behind rivals like Anthropic and OpenAI. But they were stepping up CapEx. And I don't think investors were convinced that the management team there have the clarity of what the kind of revenue generating opportunity and the return profile looks like. Yeah. And when it comes to Meta, it seemed like CEO Mark Zuckerberg was maybe a bit vague when it came to the analyst call. Do analysts really need to hear more from him then? I think maybe not so much, hear more from him, but see more in the business and the numbers. And you'll actually see them kind of move forward with their large language models so that people feel they've got more opposed to their kind of opportunity.

23:30And also just kind of see them solidify the kind of active user base. They've got a huge active user base across their different products, but it did dip a little bit in the quarter. And I think, you know, there's these kind of lingering concerns that as the AI proposition evolves, that maybe some of these, you know, big established social network businesses and meshing platforms could become more vulnerable. And maybe the ad dollars will kind of shift elsewhere. And we did talk about Amazon just a bit. It's cloud division, another bright spot here. But we also get that report on Anthropic. Can you walk us through that too?

24:10How did that help Amazon? There's been so many Anthropic reports. Which one is bringing you up? That Anthropic is weighing a funding round and Anthropic is one of Amazon's biggest AI investments. Yeah, you know, I think obviously there's a lot of focus on how much these businesses are worth. And I think that that particular funding round could put an even bigger valuation on Anthropic. So that's kind of definitely a big positive carry for Amazon. I think obviously, you know, they're potentially kind of very complementary partners with Anthropics, Claude models being super popular with the enterprise community.

24:49And obviously tying that together with Amazon's market leading Amazon Web Services cloud business, you've potentially got a really winning combination. So in some ways, they kind of win more than one way. They get revenue coming in through Amazon Web Services. that also helps Anthropic and the Anthropic valuation goes up and that helps Amazon. So it's kind of a nice reinforcing circle they've got there. 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.

25:24You 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.