What's up: China--not tariffs--at top of agenda at D.C. confab of Silicon Valley leaders and policy makers; Nvidia CEO says all companies will need ‘AI factories; Google CEO takes the stand

Good morning, CIOs. The latest earnings from Microsoft and Meta Platforms add a footnote to a recent U.S. Commerce Department report pointing to a shrinking U.S. economy.

Both tech giants projected revenue growth at or above expectations for the current quarter, noteworthy given today's tariff-related turmoil.

The Commerce Department on Monday reported Monday that U.S. gross domestic product fell at a seasonally and inflation adjusted 0.3% annual rate in the first quarter, the first contraction since the first quarter of 2022.

The findings did not seem to apply to Microsoft, which reported that total revenue jumped 13% from a year earlier for the January-to-March period to just over $70 billion. Meta said its sales grew by 16% to $42 billion, ahead of analyst expectations. Meta also boosted the high end of its capital expenditure forecast for this year by 11% to $72 billion.

Microsoft Chief Satya Nadella Wednesday credited the results to ongoing demand for AI and cloud computing.

Indeed the returns raise the question that if AI and cloud demand can rise during today’s environment, imagine how it would look without today's drama.

Of course, it could be today's uncertainties that’s partly fueling AI and cloud spend, according to IBM CFO James Kavanaugh.

“When you think about a very dynamic and uncertain environment, clients are focused on cost efficiency, cash preservation and liquidity,” Kavanaugh said last week, adding that their automation portfolio "plays extremely well to that.”

• Microsoft Flexes Muscle in Cloud, Office and Windows as Earnings Jump
• Meta Posts $42 Billion in Sales, Points to Strong Growth

Nvidia CEO says all companies will need ‘AI factories,’ touts creation of American jobs. Nvidia CEO Jensen Huang said all American companies will eventually need or become artificial-intelligence factories—or entities that produce both goods and AI—and will create skilled U.S. jobs in the process.

“Just as we make physical cars today, or anything physical in the future, there’ll be a digital version of it,” Huang told The Wall Street Journal on Wednesday. “So you need an AI factory to create the AI model that runs in the car.”

An AI factory—which can also be described as a sort of one-stop shop of chips, software, design and networking infrastructure designed for AI—is a concept that Nvidia has promoted at past events as a facility that takes in data and churns out intelligence.

👉 The Nvidia chief’s comments came during the Hill and Valley Forum, a gathering of Silicon Valley elites and policymakers. The WSJ's Belle Lin was there. Read on for highlights from the event. 

Google CEO takes the stand. Sundar Pichai on Wednesday urged a judge to reject the “extraordinary” measures proposed by the Justice Department to curtail its dominance in online search.

The testimony came during a trial before U.S. District Judge Amit Mehta in Washington, who ruled last year that Google has an illegal monopoly over online search. The judge is now hearing arguments and testimony over what remedy he should impose to restore competition.

Federal judge hammers Apple for violating antitrust ruling. In the latest twist in the legal dispute between Apple and "Fortnite" developer Epic Games, Judge Yvonne Gonzalez Rogers ordered the iPhone maker to allow developers to steer users to alternative methods of paying for services or subscriptions offered in the App Store.

"Apple willfully chose not to comply with this court’s injunction,” she said in the ruling. The case has been referred to federal prosecutors to determine whether a criminal contempt investigation is appropriate.

AI helps job seekers pivot to new careers. The Journal's Lindsay Ellis reports how AI tools created by companies including Salesforce and LinkedIn are helping workers sell their skills, tailor their résumés to new areas and identify under-the-radar roles. 

• Looking for a job in tech is more confusing than ever
• The hottest AI job of 2023 is already obsolete

Qualcomm logs higher revenue, profit on higher chip sales. Chief Executive Cristiano Amon said the software chip maker is navigating the current macroeconomic and trade environment and remains “focused on the critical factors we can control.” 

Tesla board opened search for a CEO to succeed Elon Musk. Board members reached out to several executive search firms to work on a formal process for finding Tesla’s next chief executive, people familiar with the discussions tell the WSJ. The current status of the succession planning couldn’t be determined

Amazon plans to invest $4 billion by 2026 to speed up deliveries in rural America. The investment will grow its rural network footprint to over 200 delivery stations and create 100,000 new jobs, Amazon said on Wednesday.

Silicon Valley leaders and policy makers gathered in Washington, D.C. on Wednesday for the Hill and Valley Forum—a conference of China hawks and AI "accelerationists" focused on maintaining U.S. dominance in a world where China poses a looming threat.

“Every year since the beginning, the theme has been anchored around America’s technology competition [with] China and the threat of China surpassing us. This year is different. President Trump’s return to the White House has unlocked a new sense of possibility for the future,” event co-founder Jacob Helberg said in a statement.

Helberg is Trump’s pick for under secretary of state for growth, energy and the environment, and an adviser to Palantir chief executive Alex Karp, whose on-stage remarks created a flash of tension: Two protestors yelled as Karp spoke, angered over Palantir’s role in the Middle East with its technology.

The densely packed event, which took place in an auditorium of the Capitol Visitors’ Center, also attracted the likes of top AI companies including OpenAI and Anthropic, as well as policymakers including House Speaker Mike Johnson and Interior Secretary Doug Burgum.

While talk of AI and securing U.S. leadership abounded, there was little discussion of tariffs or export controls that are threatening to upend the economy—a glaring omission while top tech and policy leaders met in the nation’s capital.

A decade ago, there weren’t as many companies excited to work with the federal government, Weil told me, but there’s now “renewed energy and enthusiasm” about it.

Anthropic, meanwhile, has taken a strong stance on the diffusion rule, which co-founder Jack Clark told me the AI company supports. “Our reason for advocacy is America’s leadership in AI runs on compute, and the diffusion rule is a way that you secure that leadership for decades for the U.S. and its allies,” Clark said.

Nvidia chief executive Jensen Huang, who was a headliner for the event, declined to answer my question about his company’s stance on chip export curbs, instead pivoting to say that policymakers “need to recognize that we should be accelerating, supporting, and promoting the American AI industry around the world.” Huang also touted the creation of skilled trade jobs that would be created as American companies start setting up “AI factories.”

Not all were at the Hill and Valley Forum for talk of AI policy or tariffs, though. Deepika Bodapati, COO of AI healthcare company Commure, attended for the first time to learn more about how regulated sectors—from the government to health systems—are thinking about AI. 

“When you’re operating large bureaucracies, much like the government, you think about AI differently,” Bodapati told me. “It’s important for us to approach it from that perspective, and see directly what they’re doing.”

—Belle Lin

The Trump administration reached a deal Wednesday with Ukraine giving the U.S. access to its mineral wealth. (WSJ)

The rush to get goods to the U.S. ahead of President Trump’s tariffs has already led to huge distortions in global trade patterns and economic data. It isn’t over yet. (WSJ)

Better-than-expected earnings from both Microsoft and Meta Platforms boosted markets Thursday, reassuring investors of the relative resilience of the "Magnificent Seven" tech giants amid tariff uncertainty. (WSJ)

A federal judge in Vermont ordered the government to release Columbia University student Mohsen Mahdawi while his case proceeds, saying the Trump administration was threatening to deport legal residents for stating their political views. (WSJ)

The WSJ CIO Journal Team is Steven Rosenbush, Isabelle Bousquette and Belle Lin.

The editor, Tom Loftus, can be reached at thomas.loftus@wsj.com.