Microsoft poised for $4 trillion valuation after solid results
The software company forecast a record $30 billion in capital spending for the current fiscal first quarter and reported booming sales in its Azure cloud computing business on Wednesday.
Shares of Microsoft were up 8.6 per cent at $557.34 in early premarket trading, valuing it at $4.14 trillion.
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CNA
an hour ago
- CNA
US trade advisor says Trump tariff rates unlikely to change
WASHINGTON: New US tariff rates are "pretty much set" with little immediate room for negotiation, US President Donald Trump's trade advisor said in remarks aired Sunday (Aug 3), also defending the president's politically driven levies against Brazil. Trump, who has wielded tariffs as a tool of American economic might, has set tariff rates for dozens of economies, including the European Union, at between 10 and 41 per cent, come August 7, his new hard deadline for the duties. In a pre-taped interview broadcast Sunday on CBS's "Face the Nation," US Trade Representative Jamieson Greer said "the coming days" are not likely to see changes in the tariff rates. "A lot of these are set rates pursuant to deals. Some of these deals are announced, some are not, others depend on the level of the trade deficit or surplus we may have with the country," Greer said. "These tariff rates are pretty much set." Undoubtedly, some trade ministers "want to talk more and see how they can work in a different way with the United States," he added. But "we're seeing truly the contours of the president's tariff plan right now with these rates." The US had announced hiked tariff rates on dozens of trade partners, which will kick in on August 7 instead of August 1, which had previously been touted as a hard deadline. Among the countries facing steep new levies is Brazil. South America's largest economy is being hit with 50 per cent tariffs on exports to the United States -- albeit with significant exemptions for key products such as aircraft and orange juice. Trump has openly admitted he is punishing Brazil for prosecuting his political ally Jair Bolsonaro, the ex-president accused of plotting a coup in a bid to cling to power. The US president has described the case as a "witch hunt." Greer said it was not unusual for Trump to use tariff tools for geopolitical purposes. "The president has seen in Brazil, like he's seen in other countries, a misuse of law, a misuse of democracy," Greer told CBS. "It is normal to use these tools for geopolitical issues." Trump was "elected to assess the foreign affairs situation... and take appropriate action," he added. Meanwhile, White House economic advisor Kevin Hassett said that while talks are expected to continue over the next week with some US trade partners, he concurred with Greer's tariffs assessment in that the bulk of the rates "are more or less locked in." Asked by the host of NBC's Sunday talk show "Meet the Press with Kristen Welker" if Trump could change tariff rates, should financial markets react negatively, Hassett said: "I would rule it out, because these are the final deals." Legal challenges have been filed against some of Trump's tariffs, arguing he overstepped his authority. An appeals court panel on Thursday appeared sceptical of the government's arguments, though the case may be ultimately decided at the Supreme Court.
Business Times
6 hours ago
- Business Times
The AI race has big tech spending US$344 billion this year
[LONDON] If there's any lesson to take from the spending plans issued by the world's largest technology companies over the past two weeks, it's to never underestimate the fear of missing out. Microsoft, which set a US$24.2 billion capital spending record last quarter, plans to drop upwards of US$30 billion in the current period. similarly spent US$31.4 billion last quarter, almost double what it dropped a year ago, and is maintaining that level of investment. Google owner Alphabet raised its capital expenditures guidance this year to US$85 billion. Then there's Meta Platforms: The social networking giant lifted the low end of its forecast for 2025 capital expenditures and projected that costs will continue to grow at an even faster pace next year. Altogether, the four companies are expected to spend more than US$344 billion for the year, with much of it going to the data centres necessary to run artificial intelligence (AI) models. 'We have basically tripled capex investment in cloud due to AI,' Bloomberg Intelligence analyst Mandeep Singh said. The emphasis from virtually every company executive during this earnings season was on investing as quickly as possible to get ahead. 'We need the teams to execute at their very best to get the capacity in place as quickly and effectively as they can,' Microsoft chief financial officer Amy Hood told analysts in a call on Wednesday. Susan Li, Meta's CFO, said the goal of its own spend is to secure the advantage 'in developing the best AI models'. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Wall Street's response has been mixed. Meta was rewarded – in large part because the company posted a strong second-quarter sales beat and issued a rosy revenue forecast, signalling that the billions it's spending on AI are paying off. 'On advertising, the strong performance this quarter is largely thanks to AI unlocking greater efficiency and gains across our ad system,' chief executive officer Mark Zuckerberg said on an analyst call. Zuckerberg has plans to build several massive data centres and has been luring top AI researchers with compensation packages valued at hundreds of millions of US dollars. The company recently restructured its internal AI division, now referred to as Meta Superintelligence Labs, in an effort to build human-level AI capabilities and apply that technology across its products. Shares of the company have gained more than 8 per cent since it reported earnings on Wednesday. Amazon, on the other hand, failed to convince investors that its lavish spending has been worth it. The stock was down as much as 8.1 per cent on Friday after the company reported tepid sales from its cloud division. The results were 'especially disappointing' given the strong performance from Google's and Microsoft's own cloud services, according to Bloomberg Intelligence (BI). And the ongoing capital costs will not help. The operating margin for Amazon's cloud unit will continue to face pressure 'through 2026 as capital spending ramps up', BI analysts Poonam Goyal and Anurag Rana said. Alphabet's shares are essentially unchanged from last week when it reported earnings and issued guidance. The company raised its capital expenditures outlook by US$10 billion and expects to ramp up spending even more in 2026. chief executive officer Sundar Pichai explained that the investments are necessary to keep up with customer demand. 'Obviously, we are seeing strong momentum across our portfolio, and especially in cloud,' Pichai told analysts in a call on Jul 23. 'It's a tight supply environment, and we are investing more to expand.' Nikhil Lai, an analyst at Forrester, put it another way: If Google wants to keep up with rivals, he said, it has little choice but to follow suit: 'Google's hand is forced by OpenAI to spend tremendously on AI's infrastructure and applications.' Microsoft tied its AI investments directly to a 39 per cent jump in sales for its Azure cloud-computing division, which came in ahead of analysts' estimates. 'We continue to lead the AI infrastructure wave and took share every quarter this year,' chief executive officer Satya Nadella said in a call with analysts on Jul 30. 'In Microsoft's case, the returns are good,' Gil Luria, an analyst with DA Davidson, said. The only question now is whether Microsoft's customers are in turn seeing a decent return on investment, he said. 'That's where the test will be,' he said. 'If they don't, they are not going to increase that spend next year.' Apple's capital plans pale in comparison to its big tech peers. But the iPhone maker did raise its spending estimates, tying much of the increase to AI efforts. Apple's property, plant and equipment investments totalled US$9.47 billion in the nine months ended Jun 28, up nearly 45 per cent from a year ago. 'You are going to continue to see our capex grow,' chief financial officer Kevan Parekh told analysts on Thursday. 'It's not going to be exponential growth, but it is going to grow, substantially. And a lot of that's a function of the investments we are making in AI.' BLOOMBERG
Straits Times
11 hours ago
- Straits Times
China can buy Nvidia H20 chips again. But it's not all good news
Sign up now: Get ST's newsletters delivered to your inbox The Cyberspace Administration of China on July 31 flagged concerns about possible 'backdoor' security risks associated with the H20 chips, which American chipmaker Nvidia has denied. – Two weeks after Nvidia's chief executive Jensen Huang mounted a charm offensive to court the Chinese market, the American chip giant found itself once again the centre of attention in Beijing – and not in a good way. 'Nvidia, how can I trust you?' So read the headline of a commentary published by the People's Daily, the communist party's mouthpiece, a day after Chinese regulators summoned on July 31 the company's representatives over what they deemed 'serious security issues' related to its chips. The processor in question, known as the H20, was until recently the most advanced chip that Nvidia could sell to China under US restrictions. Washington effectively banned their exports in April amid an escalating trade war, but said in July that it would allow sales to resume. Some US officials touted the easing of export controls as a negotiating chip in ongoing trade talks with Beijing. But this apparent concession, analysts say, is not necessarily all good news for China. 'The reversal of the H20 ban offers short-term relief for China's artificial intelligence (AI) industry,' said Mr Charlie Dai, a vice president and principal analyst at advisory firm Forrester Research. 'On the other hand, it could slow domestic chipset adoption and impact the pace of technology self-reliance (amid) ongoing geopolitical frictions.' A taste for Nvidia China has been advocating the use of homegrown chips by its companies as part of a broader push for self-reliance, including in key technologies such as AI. Top stories Swipe. Select. Stay informed. Singapore LTA, Singapore bus operators reviewing Malaysia's request to start services from JB at 4am Singapore Despite bag checks and warnings, young partygoers continue to vape in clubs in Singapore Singapore President Tharman meets migrant workers who saved driver of car that fell into sinkhole Singapore Now flying solo, Acres CEO Kalaivanan Balakrishnan presses ahead with wildlife rescue efforts Opinion The charm – and drawbacks – of living in a time warp in Singapore Business UMS Integration becomes first SGX company with secondary listing in Malaysia Singapore Ong Beng Seng to plead guilty on Aug 4, more than 2 years after trip to Qatar with Iswaran Business Decoupling to save on tax? You may lose right to property if ties go awry Despite this, many Chinese AI firms – in particular private tech giants – are said to still prefer using Nvidia's H20s to train and run their models, even though the chips are not Nvidia's most powerful. After the US announced a lifting of its export ban, news agency Reuters reported that Chinese companies were scrambling to buy the H20s, citing sources. It also said that Nvidia had placed fresh orders for 300,000 chipsets from its contract manufacturer amid strong Chinese demand. 'The general sense is that Chinese customers, especially Bytedance, Baidu, Tencent and Alibaba, still prefer Nvidia's solutions, whether it's H20 or whatever comes next,' said Mr Ray Wang, research director for semiconductors, supply chain and emerging tech at advisory firm The Futurum Group. Nvidia's edge over its Chinese rivals – which 'continue to improve' – is manifold for now, he explained. Its hardware has larger memory bandwidth, making it better for inference tasks, or the application of trained AI models that makes them useful in the real world. The company also has a stronger software platform with which to program the chips, as well as more capable networking technology to harness the combined performance of hundreds and thousands of processors, Mr Wang said. Importantly, he added, Chinese firms' rivalry with Huawei – seen as the biggest domestic rival to Nvidia on the chip front – also fuels their preference for the American chipmaker. Huawei has a sprawling business empire that boasts not just chipsets, but also extends to cloud computing and AI model development. This puts them in direct competition with the other tech giants. Mr Wang said: 'So if you're Alibaba or Tencent, do you want to source your most important computing resources from Huawei?' The push for self-reliance Nvidia's current advantages notwithstanding, analysts say that China will simultaneously double down on growing its domestic chip ecosystem – a goal that could be helped by regulators' recent scrutiny of the American firm. The Cyberspace Administration of China had on July 31 flagged concerns about possible 'backdoor' security risks associated with the H20 chips, which Nvidia has denied . A People's Daily commentary released on social media the next day sketched out possible 'nightmare' scenarios associated with such risks, such as electric cars suddenly losing power on the highway. It asked the company to provide proof of the chips' security to alleviate users' worries. The regulators' move 'will likely cause Chinese tech firms to temporarily curb adoption (of the H20) due to fears of potential vulnerabilities and regulatory uncertainty, despite strong underlying demand,' said Mr Dai of Forrester Research. He added that even as companies' continued reliance on Nvidia's superior AI capabilities may sustain some purchases of its chips, he expected firms to simultaneously also accelerate shifts towards domestic alternatives. Mr Su Lian Jye, chief analyst at technology research firm Omdia, said that Chinese firms in recent years had already been buying more homegrown chipsets or developing their own amid sharpening geopolitical tensions. These include China's three major telcos, banks, cloud service providers, and various other state-linked companies, he said. Tech giants including Baidu and Alibaba are also developing their own chips. In recent weeks, following news that Nvidia would once again be allowed to ship H20s to China, local firms have spoken up about strengthening support for homegrown chipmakers. On July 25, AI start-up StepFun, a model developer, announced an 'ecosystem innovation alliance' with several domestic chip companies including Huawei, Cambricon, Moore Threads and MetaX, news outlet Caixin reported. The same day, StepFun released a large language model that was developed with the properties of domestic chips in mind, the report also said. Separately, co-founder of cyber-security company Qihoo 360 Zhou Hongyi said on July 23 that his company had turned to procuring domestic chips, and that its recent purchases had all been of Huawei products, news outlet Yicai reported. The company, which has also branched into AI, is on the US' entity list, which restricts access to American technology. Mr Zhou acknowledged that there was a 'gap' between Chinese chips and Nvidia's, but stressed the need to use domestic processors anyway, in comments that were videoed and uploaded to social media. 'If you don't use them, the gap will always be there,' he said. 'The more (you) use them, the more they will improve.'
