Shares of several major technology companies declined in pre-market trading Thursday after the release of their quarterly earnings reports, with investor attention focused on corporate spending on artificial intelligence. Separately, global oil prices rose following reports of attacks on tankers off the coast of Saudi Arabia.
Alphabet, the parent company of Google, reported that its cloud revenue increased by 82%. However, the company’s stock fell 5% in pre-market trading after it announced plans to increase capital expenditures.
Tesla’s stock dropped more than 7% in extended trading after the company’s earnings per share for the second quarter did not meet Wall Street estimates. Shares of IBM also moved lower following the release of its quarterly results, which were below market expectations.
Energy Markets and Economic Indicators
In commodities, oil prices increased by nearly 5% Thursday morning. The price of U.S. West Texas Intermediate crude futures surpassed $90 per barrel, reaching its highest level in over a month. The price movement followed reports of attacks on oil tankers near the coast of Saudi Arabia.
The U.S. Energy Information Administration reported last week that its diesel benchmark experienced its largest weekly increase since early March.
Legislation on Congressional Stock Trading
On Wednesday, the U.S. House of Representatives passed a bill titled the Stop Insider Trading Act. The legislation, if enacted, would prohibit sitting members of Congress from purchasing individual stocks. The bill now proceeds to the Senate for consideration.
The bill passed with support from members of both parties, though some Democratic representatives stated the legislation did not go far enough.
In a separate legislative development, the Senate is reviewing a bill that would prevent the president and other federal officials from sponsoring cryptocurrencies. Sen. Bernie Moreno, R-Ohio, stated that President Donald Trump had approved the ethics portion of the bill.
Corporate Mergers and Media Sector News
European Union antitrust regulators on Wednesday approved the proposed merger between Paramount and Warner Bros. Discovery. The approval is conditional on Paramount divesting its share in a European film distribution joint venture with United International Pictures. Paramount also agreed not to enter a film distribution agreement with Universal in Europe for the next 10 years. In the United States, the merger is facing a legal challenge from a group of state attorneys general.
In other media industry news, Comcast reported quarterly earnings that exceeded analyst estimates. The company also announced that its streaming service, Peacock, achieved profitability for the first time.
Amazon Announces Layoffs in AI Division
Amazon confirmed it is reducing its workforce in its generative artificial intelligence unit. The company did not specify the number of employees who will be affected by the layoffs.
In a statement to CNBC, an Amazon spokesperson said, “we’re sharpening our focus on the initiatives that matter most for customers, so we can move faster on what counts.” The workforce reduction follows a period of increased hiring during the pandemic and significant company investment in AI infrastructure.
