Valuations and Long-Term Viability in Tech

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President Donald Trump said his administration was talking with China on trade, after Beijing denied the existence of negotiations on a deal and demanded the US revoke all unilateral tariffs.

“They had a meeting this morning,” Trump said Thursday during a meeting with Norway’s prime minister when a reporter asked about the Chinese statement.

Pressed on which administration officials were involved in discussions, the US president said, “it doesn’t matter who ‘they’ is. We may reveal it later, but they had meetings this morning, and we’ve been meeting with China.”

The exchange exposed the ongoing disconnect between Washington and Beijing, as President Xi Jinping’s government maintains a defiant stance despite Trump’s recent suggestion he could lower tariffs on China.

Separately, the US will demand that Russia accept Ukraine’s right to develop its own, adequately equipped, army and defense industry as part of a peace agreement, according to people familiar with the matter, pushing back on Russia’s insistence that the country largely demilitarize as a condition to end the war.

Meanwhile Google parent Alphabet and Intel reported quarterly earnings after the close of US trading Thursday.

Alphabet reported first-quarter revenue and profit that exceeded analysts’ expectations, buoyed by continued strength in its search advertising business.

First-quarter sales, excluding partner payouts, were $76.5 billion, the company said Thursday in a statement. Analysts had expected $75.4 billion on average, according to data compiled by Bloomberg. Net income was $2.81 per share, compared with Wall Street’s estimate of $2.01.

Alphabet needs to ensure momentum in its internet search advertising and cloud businesses in order to justify its heightened investment in the artificial intelligence race. Competition is prompting the company and its rivals to spend heavily on infrastructure, research and talent. While Google benefits from AI startups spending on its cloud and business tools, it’s also racing to present an answer to popular conversational AI chatbots, which consumers are beginning to think of as an alternative to using Google Search.

Intel Corp., the chipmaker attempting a comeback under new Chief Executive Officer Lip-Bu Tan, gave a weak forecast for the current period and said it’s cutting workers to bring costs in line with the business’s smaller size.

Second-quarter revenue will be between $11.2 billion and $12.4 billion, the company said in a statement Thursday. That was well short of the $12.9 billion average analyst estimate.

The cost-cutting plan will involve “eliminating management layers” to enable it to make faster decisions, Intel said. The company doesn’t yet have an estimate for the one-time expenses associated with the cuts, but expects operating costs to be reduced to about $17 billion this year and $16 billion in 2026. Bloomberg News reported this week that Intel is planning to slash its employee ranks by more than 20%.

• Today's show features: 
  Ed Price, Senior Fellow (non-resident) at New York University and Former British Trade Official
• Sheila Kahyaoglu, Jefferies Managing Director in Equity Research
• Mark Douglas, MNTN President and CEO and Mandeep Singh, Bloomberg Intelligence Senior Tech Industry Analyst, on Alphabet earnings
• Ed Ludlow, Bloomberg Technology Co-Host, on Intel earnings

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