Paramount Wins Warner Bidding War; Block Surges — Market Highlights

Investing.com - Futures linked to major U.S. stock indexes edged lower, as the performance of well-known tech companies affected market sentiment toward AI trading. After Netflix withdrew from a bidding war, Paramount Skydance is expected to become the winner of the long-standing corporate battle for Warner Bros. Discovery, while Anthropic clashed with the Pentagon. Jack Dorsey’s Block announced plans to cut about half of its staff, and oil prices rose slightly.

1. Futures Decline

On Friday, U.S. stock index futures dipped slightly, indicating a weak finish to the week as investors digest the impact of earnings reports from key tech sectors.

As of 02:59 a.m. Eastern Time (15:59 Beijing Time), Dow futures fell 205 points, down 0.4%; S&P 500 futures declined 13 points, down 0.2%; Nasdaq 100 futures were roughly unchanged.

On Thursday, major Wall Street indexes closed mixed, with focus on earnings from AI darling Nvidia and cloud software giant Salesforce.

Despite Nvidia reporting quarterly results better than expected, concerns remain about increased competition, the sustainability of surging customer demand, and uncertainty over when investors will see significant returns. Nvidia’s stock — which has a substantial weight in the overall market — dropped over 5%.

Meanwhile, despite disappointing annual revenue guidance, Salesforce’s stock rose. However, Vital Knowledge analysts noted that the company’s earnings “are not worse than expected.”

Thursday also saw intense rotation within tech stocks, with investors shifting from “physical” stocks like chips and data center infrastructure to virtual stocks like software and data, analysts added.

They believe Nvidia’s “small warning signals” and the reassurance from Salesforce and other enterprise software companies’ earnings, along with comments from AI startup Anthropic earlier this week about wanting to “supplement and enhance, not kill” software companies, drove this trend.

2. Paramount Wins Warner Bros. Bid War

Following Netflix’s surprising decision to withdraw its competing bid, Paramount Skydance is poised to become the winner of the long-running corporate battle for Hollywood veteran Warner Bros. Discovery.

Netflix’s executives saw their stock soar in after-hours trading after announcing that, while the deal “has always been a ‘cherry on top’ at the right price,” it is “not an ‘all-in’ necessity.” The streaming service has the financial capacity to acquire, but some shareholders question the rationale of acquiring traditional media assets.

The reason Netflix abandoned its previous agreement with Warner Bros. was that HBO Max’s parent company’s board deemed Paramount’s offer of $31 per share for the entire company to be superior. Netflix was given four days to respond but ultimately decided to forgo its $27.75 per share bid for Warner Bros. studio and HBO Max.

This paves the way for Paramount — owned by tech billionaire Larry Ellison’s son, David Ellison — to build a media giant, potentially bringing popular franchises like “Harry Potter” and “Game of Thrones” under its umbrella. If approved and cleared by regulators, Paramount would also oversee cable networks like CNN and TBS.

Warner Bros. CEO David Zaslav said the deal with Paramount would “create tremendous value for our shareholders.” Paramount’s stock rose in after-hours trading, while Warner Bros. declined.

3. Anthropic Clashes with U.S. Government

Anthropic announced it would not agree to the Pentagon’s demand to remove safety measures from its AI systems, sparking a dispute with the U.S. government.

The controversy centers on the Pentagon’s request for Anthropic to eliminate features that prevent its technology from being used for surveillance of Americans or autonomous weapons.

The Pentagon threatened to end its partnership with Anthropic and list it as a “supply chain risk” if the company refused. Defense Secretary Pete Hegseth set a Friday afternoon deadline for Anthropic to agree that the Pentagon could use the technology in all legal circumstances.

However, Anthropic CEO Dario Amodei stated in a release that he “cannot do this in good conscience,” adding that the military’s demands would actually undermine these safety measures.

4. Block Surges

Block’s stock soared over 23% after the payments company announced plans to cut nearly half its workforce as part of its effort to embed AI more deeply into its operations.

The layoffs are expected to eliminate over 4,000 jobs, reflecting a broader trend of companies adjusting staffing levels amid the rise of AI. This has raised concerns among employees and economists that, despite AI boosting productivity, it could lead to higher unemployment.

Block CEO Jack Dorsey said, “Smart tools have changed the meaning of building and running a company,” adding, “We’ve seen this internally,” and “smaller teams using these tools can do more and do it better.”

Despite plans for up to $500 million in restructuring costs, analysts cited by Reuters said the stock’s surge reflects optimism that profit margins will improve with fewer employees.

5. Oil Prices Slightly Rise After U.S.-Iran Talks

Oil prices edged higher but may end the week lower after the U.S. and Iran extended negotiations on Tehran’s nuclear program, easing concerns over potential hostilities that could disrupt supply.

Brent crude futures rose 0.7% to $71.29 per barrel, while U.S. WTI crude futures increased 0.8% to $65.74 per barrel.

This week, Brent was roughly flat, but WTI declined about 1%, reversing some of last week’s gains.

Talks on Iran’s nuclear ambitions concluded on Thursday without a clear agreement, but plans to resume negotiations are in place, with technical discussions scheduled for next week in Vienna, according to Omani Foreign Minister Sayyid Badr Albusaidi’s post on X after the Geneva meeting.

Tensions over Iran have been a major driver of oil prices since February, as the U.S. amassed a large military presence in the Middle East and threatened action if Tehran refused to accept an agreement.

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