Your commercial news round up: Microsoft, Meta, interest rates and electric cars

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Are you up to date with this week’s commercial news? An announcement from Microsoft about its AI spending has caused stocks to rise and Meta has reported increased profits due to a surge in advertising revenue. Meanwhile, the Bank of England (BoE) announced an interest rate cut for the first time in four years and Uber has partnered with Chinese company BYD to build a fleet of electric cars. Read on to find out more.

• Chip stocks (including Nvidia, Arm and AMD) rebounded on Wednesday 31 July after Microsoft announced continued investment in AI. This follows a drop in stocks on Tuesday 30 July due to concerns about the sustainability of the technology. However, Microsoft stated that its June spending increased by nearly 80% on the previous year and explained that “nearly all” of this was cloud and AI-related. This announcement spurred rising stock values as investors gained confidence in continued spending on AI infrastructure by big companies. For example, Nvidia stocks increased by 13%, adding $329 billion to its market value in a single day. Microsoft was the only one of the ‘magnificent seven’ tech stocks to close lower.
   
• The BoE has cut interest rates from 5.25% to 5%, with the bank's monetary policy committee members voting by a majority of five to four to reduce the rate. This is the first rate cut since the start of the pandemic. However, BoE governor Andrew Bailey cautioned that, while “inflationary pressures have eased” enough to cut rates, it’s unlikely that there’ll be more cuts over the next few months, noting that "we need to be careful not to cut rates too much or too quickly”. The BoE has forecasted that inflation will increase to 2.75% before returning to its 2% target next year.
   
• Meta, the parent company of Instagram and Facebook, reported a surge in profits due to increased sales of adverts in spring. Revenue rose to more than $39 billion in the three months to June 2024, a 22% increase on the previous year, while profits nearly reached  $13.5 billion. The introduction of ads on Reels “has led to a perfect storm of rising impressions and rising ad prices”, eMarketer principal analyst Max Willens explained.  Meta's profits exceeded expectations, despite significant investment in AI projects and a $1.4 billion settlement paid to the US state of Texas over allegations of improper data collection. Meta's CEO Mark Zuckerberg stated that the company had a strong quarter and predicted that its AI system is “on track to be the most used AI assistant in the world by the end of the year". Despite concerns about spending, analysts believe that the company's Q2 results will alleviate investor apprehensions.
   
• Uber has partnered with Chinese electric vehicle (EV) manufacturer BYD to bring 100,000 EVs to its global fleet of cars. The deal includes incentives for Uber drivers to switch to electric cars, such as discounts on maintenance, charging, financing and leasing. The agreement will initially be rolled out in Europe and Latin America, before expanding to the Middle East, Canada, Australia and New Zealand. In a statement released by the two companies, they revealed that the aim is to reduce the total cost of EV ownership for Uber drivers, “accelerating the uptake of EVs on the Uber platform globally, and introducing millions of riders to greener rides”. The partnership also involves integrating BYD's self-driving technologies into Uber's platform and comes at a time when EV sales have slowed globally and Chinese car makers face higher import charges in certain markets. BYD has been expanding its production facilities outside of China, with recent manufacturing plants established in Turkey, Thailand and Hungary. It’s also the world's second-largest EV company after Tesla.