Microsoft and Alphabet face an investor test on artificial intelligence

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Nasdaq futures rose on Tuesday morning, ahead of the big tech earnings boom that kicks off when Microsoft and Alphabet Inc report second-quarter results after the closing bell. There is a question on many investors’ minds: Is the hype around artificial intelligence, which has sent the stock prices of tech giants soaring in recent months, justified, or is it another bubble in the making?

Wall Street is deeply divided on the rise of artificial intelligence. Mike Wilson, Senior US Equity Analyst at Morgan Stanley, I apologize to customers On Monday, he wrote that his bearish calls for the stock market failed to cap the rally in AI-related stocks. (For example, chip maker Nvidia has seen its share value triple since January.) Citigroup analysts They stick to their bullish hypothesis for such companies.

On the other hand, Marko Kolanovic, chief market strategist at JPMorgan Chase, Unconvinced This technological fervor will help the markets avoid a sharp decline this year.

All eyes will be on Microsoft and Alphabet, Which is at the forefront of commercializing generative AI, and it’s the technology behind chatbots like ChatGPT that has captured the public’s imagination. Both are integrating AI into a wide range of their products, with Microsoft — which has invested billions in OpenAI — hoping the technology will help. Gaining ground on Google In major companies such as search.

Mita’s turn is Wed. The parent company of Facebook and Instagram is also betting big on technology, including by making the code of the most advanced artificial intelligence project free for public use. (Analysts also want to know more about how Meta plans to make money from Thread, its new competitor to Twitter, which has been rebranded as X.)

Macroeconomic factors continue to weigh on these companies. Inflation and an uncertain outlook hit them hard last year, as customers slashed software purchases and ad spending, prompting thousands of layoffs.

Recent data shows that inflation is beginning to moderate, which has sent these stocks higher in recent weeks, but investors will want to see evidence that the sector is going through the worst of it. The Federal Reserve is widely expected to raise interest rates by a quarter of a percentage point at its rate-setting meeting on Wednesday, but Wall Street is not sure whether the central bank will stop there or continue to raise borrowing costs and risk a recession.

And it will not be limited to just technology stocks. This is the busiest week of the current earnings season, as 39 percent of S&P 500 companies reported their results. The next few days will provide important insight into the overall health of corporate America. Consumer experts such as Coca-Cola and McDonald’s and industry giants such as Boeing will report.

Unilever says inflation has peaked. Shares in the consumer goods giant rose Tuesday morning after that For strong sales forecasts in the second half, with the company expecting slowing price increases to increase consumer purchases. But she warned that the war in Ukraine could drive up prices of agricultural commodities, driving up costs.

UBS agrees to fines of $387 million for Credit Suisse’s mistakes. UBS reached an agreement with US and UK regulators to resolve inquiries into the oversight failures that led to Credit Suisse losing $5.5 billion in the collapse of investment firm Archegos in 2021. UBS bought its struggling rival this year, inheriting a host of legal woes.

Senators cast fresh scrutiny over Leon Black’s ties to Jeffrey Epstein. The Senate Finance Committee is investigating whether Mr. Black’s $158 million payment to the disgraced financier for tax and estate planning services was part of a tax avoidance scheme, The Times reports. Separately, the US Virgin Islands charged JPMorgan Chase Former executive compensationJess Staley, for trips to meet Epstein.

The IRS ends unannounced visits to homes and businesses. The agency said it would stop the practice, which has been a mainstay of efforts to collect unpaid taxes. The move comes as the IRS rethinks its operations, facing increased political scrutiny from Republicans and threats to its employees.

The United States is said to be examining Abu Dhabi’s bid to take over Fortress Investment Group. The Committee on Foreign Investment in the United States is examining whether the $3 billion deal by Mubadala, the UAE’s sovereign wealth fund, Raise national security concerns, according to the Financial Times. At issue is the UAE’s relations with China.

Cryptocurrency and climate change have been linked as issues before in terms of how carbon-intensive it is to produce new digital tokens. But the cryptocurrency industry is also hoping to get rid of a legal dogma at the heart of the Supreme Court’s decision on the Environmental Protection Agency last year.

Coinbase is exploiting the EPA’s loss as a legal defense. Last summer, the Supreme Court struck down the Environment Agency’s emissions rule, citing the so-called Key Question Doctrine, a doctrine that holds that Congress has not given regulators the power to decide important political or economic issues themselves.

Now, Coinbase is arguing that the SEC cannot sue it because it lacks the ability to regulate cryptocurrencies. Moreover, says the exchange, Congress is actively working on legislation to oversee its industry. “Never has it been so clear that the Supreme Court has focused specifically on key questions and the role of regulators in our economy,” Paul Grewal, Coinbase’s chief legal officer, told DealBook.

The SEC counters that Coinbase is missing the point. The agency’s attorneys finally wrote in a court filing that the EPA case was about to happen Rule making, not the authority of the regulator to sue. Critics add that it is not clear whether cryptocurrency regulation is a major issue, given that the industry’s overall market capitalization is lower than that of Apple, Microsoft, or Alphabet.

Business advocates seem undeterred by these arguments. “It seems like the key question doctrine is designed for cryptocurrency at this moment.” Katie Hauna crypto investor and former federal prosecutor, recently tweeted:

Separately, the US Chamber of Commerce, which represents corporations more broadly, has expressed its eagerness to use key question arguments in court to limit the power of the FTC’s proposed ban on incomplete clauses.

Led by “Barbie” and “Oppenheimer,” the North American box office had its biggest opening weekend since 2019 and its fourth-best showing ever. Here’s how the phenomenon stacks up against other weekend offerings, each dominated by one movie.

Although Elon Musk’s rebranding of Twitter to X was a surprise over the weekend, the abrupt name change plays out as expected these days. Users and advertisers were divided on the wisdom of the move, which eliminated the company’s old bird logo, even if pulling out the old banners had some hiccups.

The change was immediately reflected in Twitter headquarters. Inside the San Francisco office, X logos were displayed in the cafeteria, while conference rooms were rebranded with words like “eXposure” and “s3Xy,” according to The Times.

But efforts to remove Twitter’s name from the building ran into difficulties, when workers were suspended by the San Francisco Police Department for performing “unauthorized work.” As of this morning, the letters “A” are still visible from the street.

People cannot agree on whether the move will cost the company dearly. Abandoning the Twitter name and the iconic bird logo — which Twitter once identified as among — skeptics said Its most distinctive assets – It can cost up $20 billion in value. (among them: Esther Crawforda former Twitter executive who was briefly among Mr. Musk’s top aides.) Some users bemoaned the switch to the more generic X.

Others said a rebranding could help the company shed years of baggage associated with the Twitter name, a line of thought shared only by Twitter. Jack Dorsey, the founding partner of the company. Some advertising executives said the change wouldn’t meaningfully alienate potential advertisers, while others said Musk had at least succeeded in drumming up publicity for his platform after the Meta Thread debut.

Speaking of meta… Facebook’s parent company has trademark X in relation to the social network, although it relates to a specific blue and white logo. Mr. Musk’s company now uses a black and white mark, although trademark attorneys said the reliance on lettering is simple Legal challenges are almost certainly called.

deals

  • A Saudi soccer team majority owned by the kingdom’s sovereign wealth fund has offered a record $332 million to sign French star Kylian Mbappe. (The New York Times)

  • Blackstone’s leading real estate fund agreed Sell ​​simply self storage For $ 2.2 billion, while continuing to limit investor withdrawals. (bloomberg)

  • Johnson & Johnson said it plans to Reduce its stake in Kenvue, the consumer health company it spun off this year, has lost at least 80 percent through the exchange offer. (CNBC)

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