Big Tech

Wall Street experienced a volatile Friday, with the S&P 500 recovering from early losses amid tech sector concerns. Jim Cramer advised focusing on profitable companies like Nvidia, Microsoft, and Alphabet. The CNBC Investing Club is considering exiting Disney due to linear TV challenges and is reducing its BMY position after trial pause and management concerns. This week, the Club is monitoring earnings from Home Depot, TJX, Nvidia, and Palo Alto Networks, focusing on specific growth drivers and management strategies.

The CNBC Investing Club’s “Morning Meeting” discussed market pressures on Big Tech due to CoreWeave’s weak outlook, raising concerns about AI investment sustainability and debt levels. Soft labor market data also contributed to downward pressure. Linde shares rose after a UBS upgrade citing future earnings growth. Nvidia declined following SoftBank’s stake sale to fund OpenAI, reinforcing debt concerns around AI data centers despite the Club’s long-term view. The rapid-fire segment covered CoreWeave, Paramount Skydance, Amgen, Dutch Bros, and Coterra Energy.

Subsea cables, carrying over 95% of global data, are experiencing explosive growth driven by AI and data center expansion. Big Tech companies like Meta, Amazon, and Google are heavily investing in new cables, with investments projected to double between 2025-2027. Security concerns are rising due to potential sabotage, prompting increased surveillance efforts. Geopolitical tensions, particularly between the U.S., China, and Russia, are influencing regulations and supply chain decisions in this critical infrastructure sector.

The Federal Reserve implemented a 25 basis point rate cut, but tempered expectations for further cuts. Alphabet, Meta, and Microsoft reported earnings surpassing estimates, with Alphabet’s revenue exceeding $100 billion for the first time. Notably, all three companies are significantly increasing capital expenditure (capex) for AI and data center infrastructure. Alphabet revised its 2025 capex forecast to $91-93 billion. Finally, a high-stakes meeting between President Trump and President Xi Jinping is anticipated, focusing on trade relations.

California enacted legislation aimed at protecting children online, addressing concerns about AI chatbots, social media, and digitally altered content. SB 243 requires AI chatbots to disclose their AI nature and prompt minor users to take breaks. AB 56 mandates social media platforms to display mental health risk warnings, while AB 621 increases penalties for deepfake pornography. AB 1043 requires age verification tools in app stores. The laws necessitate changes in tech business models and align with a global trend toward greater AI regulation.