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Quest Means Business
Inside Tehran as Tensions with U.S. Soar; Apple Reports Quarterly Earnings; Anthropic CEO Warns About "Powerful A.I." in Lengthy Essay; Manufacturers Using A.I. to Make Weapons More Accurate and Lethal; Documentary about Melania Trump to Premiere in D.C. Tesla Shares Fall as Musk Makes Big Bet on Robots; Reuters Source: SpaceX in Merger Talks with xAI; Border Czar: The Immigration Crackdown will Continue. Aired 4:00p-5p ET
Aired January 29, 2026 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:20]
PAULA NEWTON, CNN INTERNATIONAL HOST: Another sideways day for the markets, especially given all the currency gyrations, kind of surprising, Microsoft
shares at this hour down almost 12 percent, they missed for trading sideways.
Those are the markets and these are the main events: Tesla's A.I. pivot. The company abandoned some car models in favor of robots.
Brazil's digital bank, PicPay debuts on the NASDAQ. The CEO joins us live.
And Apple earnings are due out any moment. We will bring them to you. Live from New York. It is Thursday, January 29th. I am Paula Newton in for
Richard Quest and this is QUEST MEANS BUSINESS.
And good evening.
Tonight Tesla stock suffers as the company makes a massive bet on a future based on robots. Its shares fell more than two percent. Tesla says it will
discontinue the model S and model X vehicles.
CEO, Elon Musk says in their place, the company will produce more of its Optimus robots. He says they will be on sale by the end of 2027, and that
they can do everything from clean your home to perform surgery.
Musk said on Wednesday's earnings call that it is part of his long-term vision for the company.
(BEGIN AUDIO CLIP)
ELON MUSK, CEO, TESLA: That is slightly sad that it is time to bring S and X program to an end, and it is part of our overall shift to an autonomous
future.
(END AUDIO CLIP)
NEWTON: Hadas Gold has been following all of this and joins us live.
Hadas, everyone thought, right, that Tesla was a car company. I guess it is not anymore.
HADAS GOLD, CNN A.I. CORRESPONDENT: Well, I mean, Elon Musk for a long time has actually been saying that you shouldn't think of tesla as just a car
company, that it is an A.I. and robotics company, and especially as we are looking at sort of what has happened to Tesla over the next year, you might
get a sense of why they might want to shift things.
They announced a steep decline in annual profits for 2025, sales of the cars over the last year are estimated to have fallen around nine percent,
as they faced increased competition from China, the expiration of those E.V. sales credits, tax credits in the United States over the last year.
And then obviously, you've had the political headwinds as Elon Musk got more involved in politics, there were some people who didn't want to buy
his cars as a result of that.
And now, Elon Musk is making a reality, the shift from cars to this autonomous future that he has talked about literally replacing a factory
that made two of the Tesla models, the X and the S, saying that they are discontinuing those models entirely, and now that factory will be turned
into an Optimus factory that he says will eventually make one million of these humanoid robots a year.
I should note that we don't know exactly how many Optimus robots Tesla right now is producing because as we see, they do exist, but it is more
likely to be in the hundreds or thousands than anywhere close to a million a year. So, that would be a huge ramp up.
But, you know, he has really grand futuristic visions for Optimus. When he is talking about what he sees the future will be with these robots, it
sounds like a utopia. As you noted, he says it will do everything from, you know, clean your house to work in a factory, to take care of your kids, to
even perform surgery one day.
It is a key aspect of his mission to get to Mars. He has even said that these robots will eliminate poverty and make work completely optional.
Now, not everyone agrees with this utopian vision. The humanoid robotics industry has been going on for a while. There is a lot of competition.
Think about Hyundai's Boston Dynamics. There is Figure A.I. -- all of these companies have humanoid robots that are competing with Optimus and humanoid
robot is so incredibly complicated.
One expert described to me that he said, you know, it is harder to get a robot to tie a pair of shoes than it is to get a rocket to space. So, this
will be a very difficult endeavor for him. But Elon Musk says that he thinks Optimus will at some point make up 80 percent of Tesla's eventual
value. He has called it an infinite money glitch, and he has noted that there is kind of a very difficult S-curve in getting there.
There is going to be a lot of development, a lot of investment needed to make this a reality. There is also a big element of xAI because he wants
A.I. to be powering his robot, but they have got a long way to go before they can get there.
Also important to note, this is an important aspect of Elon Musk's pay package. If you remember last year, Tesla shareholders approved that $1
trillion pay package, massive pay package. One of those requirements that he has to hit before he can get and realize this pay package is to produce
something like a million of these Optimus robots within the next 10 years.
NEWTON: Yes, as you said, a tall order and yet we had more news out of Tesla today. Reuters was reporting, and it is their reporting, we've not
been able to been able to independently confirm it, that he has some mergers in store for a lot of his very successful companies, at least two
of them, including SpaceX.
[16:05:07]
GOLD: Yes, this was, you know, kind of a blockbuster report from Reuters.
SpaceX has been considering and this has been reported by "The Financial Times," a huge IPO, potentially sometime within this next year. But ahead
of that, now, Reuters is reporting that there is a possibility of SpaceX and xAI merging together.
Now, there had been talk in the past of SpaceX merging with Tesla, that kind of, I guess you could makes a lot more sense, but this talk of SpaceX
and xAI merging, I guess, should not come as an entire surprise, because Elon Musk has been talking about things like getting A.I. data centers up
in space.
He has been talking about this for about a year or so, and how would you get those data centers up in space? Well, useful to have a SpaceX company
as well to help get those data centers up and running.
And also, there has been other crossover. Last year, SpaceX agreed to invest $2 billion in xAI. That's according to "The Wall Street Journal."
Tesla also just announced that it is investing $2 billion into xAI. So, there has always been a lot of crossover between Elon Musk's companies
beyond just him being the CEO.
So, in a way this is huge news, but also the way that Elon Musk has been talking, I don't know if it is necessarily a huge shock that there might be
some consideration of merging these two companies.
NEWTON: Yes, and we will see what kind of advantage it gives them if this news doesn't turn out to be true, Hadas Gold for us, thanks for getting us
to where Tesla is now, which has been hard to figure out.
Ross Gerber is the Ceo of Gerber-Kawasaki Wealth and Investment Management, he joins me now. You are the Tesla guru. I am not sure you want that title
anymore because I want to start with the conversation.
I want to start this conversation with what you posted, right? And we can see it here: "I woke up last night super sad about this. The Tesla Model S
means a lot to me. This E.V. changed the world. I remember the first day I saw one 13 years ago. Now, it is gone. This isn't right."
I want to point out that the image that we posted there -- that you posted there is A.I. generated, of course, but hey --
ROSS GERBER, CEO, GERBER-KAWASAKI WEALTH AND INVESTMENT MANAGEMENT: Let's get to this personal move first, right? Why? Like, why do you think this is
a sad day?
GERBER: Well, as I said in my tweet, when I originally invested in Tesla, it was a climate change solution, and that's why we were so bullish on
electric vehicles was because of Tesla and that Model S discovery, because we work in Santa Monica and that's where the Tesla store was.
It was really the beginning of an incredible time when there was not one E.V. on the road when we started this journey that today when I drive
around Los Angeles, there are E.V.s everywhere and not just Tesla.
It is just wonderful what electric vehicles have done for transportation and for the environment. So, to like be ending this chapter for Tesla when
climate is still such an important issue that needs to be solved, and taking one of the best cars ever made off the road simply because his
reputation is so bad that people won't buy it, it makes me sad.
NEWTON: What about the counterpoint to that, though? And this really brings in his new businesses, right? The fact that he is over E.V.s, he has
revolutionized the market. He was the disruptor. He is now going to disrupt other things and his big thing, if it is not the robots, then it is the
driverless cars.
GERBER: Well, first of all, he is not disrupting driverless cars because that's already been done and it is by Waymo. So you know, right now Tesla
is behind in driverless cars. And you know, I am still having issues with full self-driving, even today, I just got all my cameras cleaned on my
Cybertruck because everybody is like, oh, your cameras must be dirty dah- dah-dah.
And then within two minutes of driving in the sun, I had the same issue again. And I was like, no, you know, like how is this going to work if the
cameras can't drive in the sun? So, there is a lot of work to be done at Tesla before they solve any of the issues they are trying to solve, whether
it be robotics or autonomy and there are a lot of competitors in both of those businesses.
On the other hand, they dominate the E.V. business and why does it have to be one or the other? My whole argument is they could sell E.V.s and still
do all of this, but the issue is people don't want to buy tesla E.V.s because of Elon.
And so there needs to be some responsibility taken for shutting all of this down. I mean, the S business, the S and X business alone was worth $15
billion and they are just shutting it down. It was like -- it is crazy.
NEWTON: Given the context that you just gave us, what do you then make of Reuters reporting that there might be this merger between SpaceX and xAI?
GERBER: Yes, xAI needs money bad, and they're spending as much money as possible to try to get ahead of the competition in A.I. and they want to
be the dominant, you know, intelligence behind Tesla and all of the robotics, as well as whatever SpaceX ends up doing.
The bottom line is, you know, Tesla and SpaceX have put money into xAI, and he is going to need somebody to support xAI. So Tesla, being a public
company probably would not get, you know, the approval to pay an outrageous amount of money for xAI.
[16:10:14]
But SpaceX isn't a public company, so there is much higher likelihood that they could get that approved because they don't really have a public board.
So that said, with the valuation of $1.5 trillion of what people are talking about for SpaceX, it is almost like free for them to buy xAI if
people are willing to pay that price for SpaceX stocks.
So, I think this is going to happen at some point because xAI needs money and ultimately, these things, you know, are complementary to each other.
But I see xAI being much more complementary to Tesla than it is to SpaceX.
NEWTON: If we take like a 35,000 feet view, although we need to go higher than that because of SpaceX, of Elon Musk and his companies, where are you
on this? Because I think if you look at Tesla's stock, some people are still incredibly keen on it and others cannot wait until something like
SpaceX goes public.
GERBER: Right. I mean, people are excited. We are getting calls all the time about people wanting to invest in SpaceX even at ridiculous
valuations. And I get it, you know, it is one of the issues I have with Apple is that Tim Cook hasn't taken a risk his whole career, and you have
the exact opposite with Elon Musk, where he will like bet a trillion-dollar company on an idea that may or may not work, you know?
And so people like risk taking, and you know, Elon says it like in the conference call, he likes difficult things. He is willing to, you know, die
on the production line if that's what it takes to make something successful, and he has been successful so far building companies.
So I get why people, including myself, are continuing to invest in these companies. But it is also, you know, it is very possible that he makes
mistakes and is wrong about things, too and that could be extremely costly and that's risk taking.
So, you know, if you're a risk taker, Elon really fits in your wheelhouse and if you're not a risk taker, Apple fits in your wheelhouse.
At Gerber-Kawasaki we own both, you know, so that's the way we look at it, but I don't think Tesla at this price makes a lot of sense for most people
because I think the valuation is about two times what the business is really worth.
NEWTON: Yes, it is interesting how devoted some of those retail investors, though, remain with Tesla.
Ross, look, thanks so much for --
GERBER: I get it!
NEWTON: I know, I know, I know, you get it. And you know what? Everybody says don't bet against Elon. At least everyone who owns tesla says don't
bet against Elon. We will see. The timeline though, the horizon is definitely out there now. We are not talking about one or two quarters.
Ross Gerber for us, thanks so much. Really appreciate you joining us.
GERBER: Thank you.
NEWTON: Now, The White House Border Czar Tom Homan says his goal is to reduce the number of federal agents in Minnesota. Homan warned that the
reduction depends on the cooperation of local and state officials, and he offered no details about how many ICE agents would leave Minneapolis or
when. Take a listen.
(BEGIN VIDEO CLIP)
THOMAS HOMAN, U.S. BORDER CZAR: When the violence decreases, we can draw down those resources, but based on the discussions I've had with the
Governor and the A.G., we can start drawing down those resources.
As far as those looking for public safety threats being released and doing it in the jail with much less people, so the draw down is going to happen
based on these agreements.
But the draw down can happen even more if the hateful rhetoric in the impeachment interference will stop.
(END VIDEO CLIP)
NEWTON: Shimon Prokupecz was at that news conference, and he joins us now from Minneapolis.
Shimon, I am wondering your thoughts on this, given what Mr. Homan said. Is this a real de-escalation that community members can look to and say,
great, things are going to change.
SHIMON PROKUPECZ, CNN SENIOR CRIME AND JUSTICE CORRESPONDENT: I think there is hope that it is certainly and I think we are already seeing some de-
escalation. We are not seeing those federal law enforcement convoys that have been here now for, what? About two months or so that have been riding
around and in many cases escalating the situation, especially when the man who was running this operation, Greg Bovino, who was essentially ousted by
the President and told to go back home to California, is no longer here and he would drive around in this convoy. Everyone knew who he was, and for no
reason would just make stops and it would draw attention.
So, in the last couple of days, we've not seen anything like that and in the chat rooms where many of the observers who have become, you know, the
center of this, of who have been observing the ICE activity and federal agents, it has been quieter.
And, you know, you could also feel it is a difference here too, people, I think are starting to feel like maybe they're at the end of this. There is
some hope. But I also think, there is just so much pain in this community.
Many are mourning. Many are really just dealing with the fear that they have now had for weeks over what was happening here, and they are just
hoping they can get back to living their normal lives.
So, we will see. There is hope.
[16:15:10]
I think there is still a lot to work on. I don't think we are going to see what we saw in the months before today, and even the weeks before today.
NEWTON: Yes, which would be a relief for the community members. I mean, you've had, you know, two people are dead, and then you have people in
these communities, as you've explained, that are just terrorized, really, a lot of people not going to grocery stores, schools and work.
I want to ask you, though, Shimon, in terms of this give and take, right? Mr. Homan was very clear, saying he does have some guarantees from state
and local officials about what they will do to help ICE. Does that seem to be coming to fruition in any way?
PROKUPECZ: So, that is kind of its politics, right? You know, in listening to Homan speak, I almost felt that he was looking for some kind of a reason
for why he was doing this, so that it doesn't appear that this was some kind of a loss for them or that they were surrendering in some way.
But the fact of the matter is that this operation may have continued in the way it was violating peoples' Civil Rights. This is not something -- these
are not my words, these are the words of law enforcement officials, other officials here in this city and this state may have continued, sadly, you
know, a man lost his life. And as a result of that, we are seeing all these changes.
Now, what Homan is talking about, some agreements with the jails and getting some of the inmates who are here illegally to get ahold of them,
and then they'll be able to deport them, there are a lot of rules and restrictions here as to how they can go about that because of just there is
an ordinance in this city that prevents law enforcement officials, the city, from working with ICE on immigration. So, we will see how that goes.
But on the state level, on the state level, the jail is already -- the prison system is already providing that information to the government so
that the government is aware of those individuals.
Previously, Greg Bovino, the man who was previously in charge of this was trying to say that that was not happening. But that has been happening and
Homan actually admitted that today.
So, we will see. Theres still a lot of politics here, but the point in all of this, the point right now is just that for these people in this
community to get back to living their normal lives and not having to be afraid, as you said, to leave their homes and to go eat and to go shopping
and the kids so the kids could go back to school.
So, we will see. Hopefully that will start happening here.
NEWTON: Yes, it has been especially -- the schools talking about how terrified the children have been and can't just freely attend school. That
has been really so shocking for so many in the community.
Shimon, really appreciate you being on the ground there. Thanks so much.
PROKUPECZ: Sure.
NEWTON: Now, PicPay has broken the IPO drought for Brazilian companies. We will speak to the CEO about the digital bank's market debut. That's next.
(COMMERCIAL BREAK)
[16:20:46]
NEWTON: PicPay ringing the opening bell at the Nasdaq today. The Brazilian digital bank was celebrating its U.S. IPO. The pay shares closed flat on
its first day of trading at $19.00. That was the IPO price.
PicPay offers a digital wallet, allowing instant transactions similar to Venmo and Revolut. Its IPO is the first by a Brazilian company in four
years.
PicPay CEO, Eduardo Chedid joins me now, and he is at the NASDAQ.
Congratulations on the IPO, and I am wondering how you believe this will allow your company to grow and what you expect your business will look like
in the next few quarters?
EDUARDO CHEDID, CEO, PICPAY: All right, so thank you for having us here, a special day and well, really excited. It opens up a new chapter for us, one
that reinforces our mission to basically create meaningful impact for our customers and simplify their financial lives.
So the company is doing pretty well. We reached 66 million clients in the third quarter of 2025. Revenue is $1.4 billion growing 92 percent, and net
income also growing 82 percent.
Well, I think that our listing here, it will definitely provide more conditions to foster even additional growth. We believe that well, having
access to a larger and qualified base of investors will definitely help us on bringing the company and to an even better level in the coming years.
NEWTON: Certainly, the customer base is impressive in terms of tens of millions. But I have to ask you, as a consumer, for me personally, Fintech
has always overpromised and under-delivered. So, please tell me what is different about PicPay.
CHEDID: Well, first of all, if you think of Brazil now, the number one payment method used by Brazilians is instant payments. PicPay actually
created that eight years before it was launched by the Central Bank. So, we have a disproportionately large participation on the number one payment
method in the country, 11 percent of all Pic's transactions actually end or begin at a PicPay account.
On top of that, we do offer credit products just like credit cards, loans, payroll loans, salary advances. So, I think that in a matter of five years,
we actually turned an unprofitable digital wallet into a complete digital bank, which is profitable and with an accelerated growth.
For consumers, we are basically the only ones that currently offer, for example, the possibility to manage not only the PicPay account, but all of
your other bank accounts through our account aggregator, so only one app to manage many different accounts.
NEWTON: In terms of growing that, though, do you also assume that you might get into the commercial credit market as well? I know when, especially when
it comes to small and medium-sized businesses, they are looking for that, even if it is just micro loans.
And you know, we did point out, Brazil has had quite a drought on those IPOs. How important is that kind of expansion to you, if at all.
CHEDID: Well, yes. From the beginning, we were always a two-sided ecosystem because we had buyers and sellers on the other side, so we always cater for
small and medium businesses. Definitely, this is one of our key opportunities and areas of investment. The same product velocity that we
use to build a very good and competent, competitive product suite. On the consumer side, we are applying now to SMBs, just to give you one number.
We've reached almost 900,000 small and medium business accounts, and we are actually growing that by around 60,000 new accounts per month.
[16:25:18]
So, it seems that we have really good and early signs that the small and medium businesses are also looking at PicPay as someone who can actually
deliver the same as we are already delivering to all of our consumers.
NEWTON: And before I let you go, the Brazilian economy itself, I mean, clearly, you're going to say you're optimistic about it, but what kind of
challenges do you see going forward?
CHEDID: Well, I think that, not very different from the U.S. I think that the fiscal part could be better.
On the other hand, we still have the lowest unemployment rates, GDP is growing, and so we have a positive outlook. If I could say something. Yes,
the fiscal could do better.
NEWTON: Yes, from your lips to the government's ears, because it isn't just Brazil dealing with that these days, that is for sure.
Eduardo, we have to leave it there, but I really want to thank you. And again, congratulations on the IPO.
CHEDID: Well, thank you.
NEWTON: Thanks.
Now, oil prices surge on new fears of a potential conflict with Iran. More on that after the break.
(COMMERCIAL BREAK)
NEWTON: Hello, I am Paula Newton, and there is more QUEST MEANS BUSINESS in a moment when Apple is moments away from reporting its quarterly earnings
and we will get you to those numbers when we have them.
And a new documentary about Melania Trump is hours away from its public premiere. We will be live from the red carpet at The Kennedy Center.
Before that, though, these are the headlines this hour.
The man U.S. President Donald Trump has put in charge of the immigration crackdown in Minnesota says he wants to ease tensions there. U.S. Border
Czar Tom Homan says he wants to eventually draw down the number of federal agents in Minneapolis, and he urged protesters to let agents do their jobs.
A man accused of spraying apple cider vinegar at U.S. Congresswoman Ilhan Omar has been charged with assault. The incident happened Tuesday at a Town
Hall in Minneapolis, just after Omar called for Homeland Security Secretary Kristi Noem to resign. Omar was not injured in the attack.
Prime Minister -- British Prime Minister Keir Starmer says it's time to build a more sophisticated relationship with China. He told Chinese leader
Xi Jinping that the new countries need to build a long term, consistent partnership. Starmer is on a four-day trip to China, along with business
leaders. He's the first British prime minister to visit Beijing in eight years.
Now the price of oil rose to its highest level in five months amid growing concerns supplies from Iran could be disrupted by a U.S. attack. Global
benchmark Brent topped $70 earlier before paring those gains. U.S. benchmark WTI has also been climbing.
Sources tell CNN that President Trump is considering a major new strike on Iran after talks on its nuclear program failed to make any progress.
CNN's Fred Pleitgen is reporting from inside Tehran this week, operating with the permission of the government. He visited the site where the
protests began and eventually spread nationwide. He, in fact, spoke with some Iranians about their grievances and the government's crackdown on
protesters that has killed thousands of people and arrested many thousands more.
To protect identities, we have blurred faces in this report.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: We're in the area around Tehran's Grand Bazaar. This is where the protests started
several weeks ago that then, of course, spread throughout the entire country. Then ultimately leading to that crackdown, where even the
government acknowledges that thousands of people were killed.
We spoke to some folks around here and at least some of them said the despair continues and they said they have very little trust that the
government will be able to resolve the issues.
UNIDENTIFIED FEMALE (through translator): In general, the situation is volatile in a way that the prices are crazy high and, for instance, just
yesterday, there was a 20 percent to 30 percent hike in prices.
PLEITGEN: Are you confident that the government can solve the economic issues?
UNIDENTIFIED FEMALE (through translator): Definitely not. We are certainly sure the government cannot solve it. This is something that I can say for
sure. Maybe it is dangerous. I feel this is the end of everything.
PLEITGEN: How deep is the trauma after the crackdown on the protests?
UNIDENTIFIED FEMALE (through translator): In this situation, no one is able to do anything because you either have to go to the streets and be killed
by weapons or stay at home and die of hunger.
PLEITGEN: When the protests first started here at the bazaar in late December, it was especially the carpet sellers and jewelers who first
walked out.
Now we did speak to some people here, who claimed that the situation is now under control.
UNIDENTIFIED MALE (through translator): Of course, the Islamic Republic can solve the problem. Actually it's done so. 99 percent of it is resolved.
PLEITGEN: All this comes as President Trump continues to weigh his military options here in this region. Iran's leadership has said that any attack on
Iran will be met with very strong resistance. But they've also said they're willing to negotiate, however not under duress.
Fred Pleitgen, CNN, Tehran.
(END VIDEOTAPE)
NEWTON: Coming up, tech giants are making huge investments in A.I. The CEO of Anthropic says they're underestimating the technology's risks. We'll
have more on that.
(COMMERCIAL BREAK)
[16:36:21]
NEWTON: Now in the last few minutes, Apple announced its quarterly results. The tech giant beat expectations on overall earnings and revenue, powered
by apparently iPhone sales. That would be the iPhone 17 and a rebound in China, which is also very important for this company. Shares gained more
than 3 percent after hours. They have been losing some ground, though. We are waiting for the conference call.
Lisa Eadicicco is in New York for us and brings us through the result.
I mean, look, they are obviously happy with those iPhone sales.
LISA EADICICCO, CNN BUSINESS TECH EDITOR: Yes. So we're seeing a really strong December quarter for Apple, as you mentioned, soared past
expectations on revenue and iPhone revenue as well. And this is really important. Apple reported about $85 billion in iPhone revenue for the
quarter and overall revenue was around $143 billion just over that. And this is a big deal because this is the first full quarter of availability
for the iPhone 17 lineup.
So this is really the first full picture that we have of how the iPhone 17 is selling. And that's important because Apple over the past year, there
have been a lot of questions about where it stands in the A.I. race as companies like Google and OpenAI are kind of soaring ahead with new
products and new models. So the big question looming over Apple is what is Apple doing in this space? What is its A.I. strategy?
That's something that is likely to come up on that earnings call in just a little bit. But the other thing that we're also expecting to hear about are
any questions around the memory shortage that's been kind of crunching the consumer tech industry as a lot of memory makers kind of shift their
resources towards producing memory for A.I. data centers instead of consumer tech products.
NEWTON: Yes. As you said, a lot of issues there. And then we're even, you know, post tariff issues at this point in time. A lot of questions there.
Before I let you go, eye-watering slide for Microsoft. I actually couldn't believe it when I saw it because it was well over 10 percent.
EADICICCO: Yes. So I think what we're seeing here with Microsoft is there's a ton of pressure to show that the investments that it's making in its
infrastructure are paying off. And I think Wall Street was looking for a little bit more growth in its Azure Cloud computing platform when it
reported earnings yesterday. It said that there was 39 percent growth in this past quarter. And that's significant.
But in the previous quarter, there was 40 percent growth. So I think as Microsoft is ramping up spending, ramping up its capital expenditures, I
think the street was likely looking for just a little bit more signal of growth in that Cloud unit to show that those investments are paying off and
that the demand is there the way, you know, Microsoft has been saying it is. There's been this narrative in the industry that there's a need for
more compute, and that's why a lot of these companies, not just Microsoft, but a lot of the big tech hyperscalers, are investing more in
infrastructure and resources to power these A.I. services.
NEWTON: Yes, the bar is high. And if you don't clear it, Microsoft knocked more than $300 billion off its value today.
Lisa, grateful to you for going through those results as we said await that conference call.
Now, as Lisa was just saying, companies like Apple are investing heavily in A.I. The CEO of Anthropic is warning of its growing dangers. Dario Amodei
wrote a new essay this week where he described how powerful A.I. could wreak havoc on society. Job losses are just the beginning. He said people
should imagine A.I. as a literal country of geniuses, smarter than any Nobel Laureate or statesmen. And even if it still obeys people's orders, it
could be misused by terrorists or would-be dictators.
Marietje Schaake is a fellow at Stanford University's Institute on Human Centered A.I. She was previously a member of the European parliament, and
she joins us now.
[16:40:07]
Grateful to have you here as we continue to try and parse all these developments on A.I. and I do want to talk about the threat that he
outlines. Just to quote him, he says, "Taking time to carefully build A.I. systems so they do not autonomously threaten humanity," emphasis on that
word, "is in genuine tension with the need for democratic nations to stay ahead of authoritarian nations and not be subjugated by them."
My goodness, talk about dystopian. Is this framing credible that democracies must win the A.I. race because if not, autocracies will take
over?
MARIETJE SCHAAKE, FELLOW, STANFORD UNIVERSITY'S INSTITUTE ON HUMAN CENTERED A.I.: Well, it's a very popular race frame that we hear a lot in the United
States. I mean, lots of companies, the Trump administration are really pushing this narrative that the U.S. needs to not only win the race, but
dominate the world with its A.I. And unfortunately, a lot of us, including myself in Europe, are wondering how democratic the United States is.
In general we see a lot of very concerning developments, but specifically around A.I. While Dario Amodei points out dangers and calls for regulation
essentially, redistribution through taxing, safety measures, mechanisms to make sure that society is not overwhelmed by the impact of A.I. that he
foresees, of course the Trump administration has a deregulatory approach. So really says let companies race between themselves, help us race others
in the world. And I think that's actually a race to the bottom that's very, very dangerous.
NEWTON: And I do want to get to that because as you rightfully point out, Amodei allows that yes, we need regulation, we need the guardrails. But
this is key for him. It's thus very important for regulations to be judicious, he says. They should seek to avoid collateral damage, be as
simple as possible and impose the least burden necessary to get the job done.
I mean, to me, that really seems contradictory here because I don't know how you get to that point. What -- how do you get to that point, do you
believe?
SCHAAKE: Well, I think it's important that we have much more transparency into the companies and the capabilities in the public interest. I mean, we
hear from him now as a CEO. And, you know, I think it's helpful that he states his position, that he is explicit about what he expects, what he's
building and what he wants to see in terms of public policy. But, you know, we have to, I guess, trust CEOs to reflect how they believe the technology
will work while we need much more academic, independent research about A.I., much more transparency of the companies to facilitate that and then
to have a political discussion because what one CEO may call light touch agile regulation might be, you know, endangering the vulnerable, might
facilitate harms elsewhere.
So it's important that different stakeholders, not only CEOs but also civil society members, journalists, parliamentarians, labor unions, what have
you, reflect on what A.I. means for them and that public policy reflects these different interests that go beyond what companies need, you know,
what the billionaires would hope to gain in terms of revenue, but what all of us need in this rapidly evolving technological race that certainly does
not only have upsides, also has proven downsides already. Forget about what it might mean in the future.
NEWTON: Right.
SCHAAKE: And so, I hope that Dario Amodei and companies like Anthropic are going to actively push the Trump administration, the U.S. Congress, to
regulate in the public interest.
NEWTON: And I hear everything you're saying, but I don't think people are confident that they will have that agency anymore. And as you rightfully
pointed out, governments aren't sure that they have any agency when they're up against the Trump administration before. The Trump administration has
already worrying other countries and warning other countries that, look, you cannot have digital sovereignty. We will not allow it.
SCHAAKE: I know, and that's a real affront. It's actually sort of confrontation through modern means. But I think we should also look to the
American people and what they wish to see from the technologies that are rolled out in their communities, that are used by the police to profile
people, to target undocumented immigrants so that ICE can go after them. If you want to travel to the United States as a tourist or as a business
person, you're supposed to hand over your social media accounts that are then being vetted before access is being granted.
So we really see an instrumentalizing of technology, including A.I., in -- very political, very sensitive activities by the Trump administration that
are certainly controversial in the U.S. and around the world.
[16:45:04]
And so it's really high time that people raise their voices about what they believe the proper place of technology is in our society. And of course,
there are many ways in which we can use A.I. It doesn't have to be the big generative A.I. platforms. It can also be applied A.I. from smaller
companies that are not so resource intensive. With data centers upsetting people in communities through their resource use like water and
electricity.
You know, there will be a lot of friction, social unrest, concern about the role that these tech companies are claiming without democratic guardrails,
checks and balances. And to suggest that the United States is the democratic player in the global race is unfortunately not a correct
assessment.
NEWTON: You've given us a lot to think about there, and we will continue to have you back, as I said, those A.I. developments continue to come, and I
feel sometimes like we're just trying to outrun a tsunami. Running may make us feel better. It doesn't necessarily help, though. I really appreciate
your input. Thanks so much.
Now as Nic Robertson reports, weapons manufacturers are also working to put A.I. to use, using it to make their guns and drones more accurate and more
deadly than ever seemed possible. This is his report.
(BEGIN VIDEOTAPE)
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR (voice-over): At an Israeli gun range, a demo of how A.I. is changing up battlefields.
SEMION, HEAD OF EUROPE, ISRAEL WEAPON INDUSTRIES: It will analyze my movements, analyze when I'm stable enough on the target, and will release
the bullet when it calculates the maximum probability for me to hit the target.
ROBERTSON (voice-over): This tech called Arbel and others like it already in use by Israeli troops in Gaza. A.I. enhanced weapons aren't new, but
putting them in front line soldiers' regular guns is cutting edge.
SEMION: I think we're at the, let's say, the beginning of this revolution of putting A.I. on the soldiers.
ROBERTSON (voice-over): The manufacturers are counting on fears of cheap, increasingly lethal battlefield drones boosting sales.
SEMION: Europe has an ecosystem that feel very threatened by this kind of threat. We see very growing interest in this kind of solution.
ROBERTSON: The lessons of the world's cutting edge battlefields like Ukraine, if you don't have A.I. tech in your weapon, then you just increase
your chances of getting killed. Manufacturers are racing to keep up, governments hungry to protect their troops.
BOB TOLLAST, RESEARCH FELLOW, ROYAL UNITED SERVICES INSTITUTE: Guys are just being, you know, they're being chased into bunkers. They can't get
away and I think this is what's driving such a massive level of experimentation. And in Ukraine alone, I've actually heard there were 63
companies just in the drone interceptor market.
ROBERTSON (voice-over): These recent videos from Ukraine show how sophisticated front line drones have become. Smart operators increasingly
helped by A.I. able to hit targets impossible a few years ago. And it's not just Ukraine's front line losses ringing alarm bells around Europe's
capitals, airports from Denmark to the Netherlands, Germany, France, the U.K., are also getting buzzed by fast-moving, hard-to-target drones. The
Dutch recently tried unsuccessfully to shoot them down.
As the threat multiplies, so innovation is accelerating both attack and defense, enhanced by A.I. Near instantaneous software updates edging
closer.
TOLLAST: It's that iteration loop that's really changed how we're looking at warfare. That's really one of the big lessons from Ukraine actually.
We're in an age what some people call software defined warfare.
ROBERTSON (voice-over): Even so, experts like Tollast caution against the notion an infantry soldier's A.I. tech being a defining battlefield game
changer just yet.
Back on the Israeli gun range, they're convinced A.I. augmented infantry is the way forward.
SEMION: It really dramatically increases your marksmanship, your lethality, your ability to engage, but this is the best tool to any light arm scenario
you can see at the battle.
ROBERTSON: Is there any way of going back from this now?
SEMION: No.
ROBERTSON (voice-over): What is clear, guns as we knew them are changing, becoming more deadly.
Nic Robertson, CNN, Israel.
(END VIDEOTAPE)
NEWTON: From first lady to co-producer, Melania Trump's $40 million documentary featuring herself premieres shortly. We're live on the red
carpet.
(COMMERCIAL BREAK)
[16:52:38]
NEWTON: A new documentary about Melania Trump premieres in just a few hours at the Kennedy Center in Washington, D.C.
(BEGIN VIDEO CLIP)
MELANIA TRUMP, FIRST LADY OF THE UNITED STATES: Everyone wants to know, so here it is.
Hi, Mr. President. Congratulations.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Did you watch it?
M. TRUMP: I did not, yes, I will see it on the news.
(END VIDEO CLIP)
NEWTON: Now, the behind-the-scenes documentary has attracted headlines for its huge marketing budget and the payday it represents for the first lady.
Betsy Klein joins us from the red carpet at the Kennedy Center in Washington, D.C.
There are two points to this, right? Firstly, this is a behind-the-scenes look that you would never normally get of a first lady. And this is the
first lady debuting her role, as you know a bit of a media mogul, especially the way she negotiated this.
BETSY KLEIN, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's right. And I do have to correct you, it is a black carpet behind me, though. I am standing
atop a red carpet. But Melania Trump, we've seen really approach the role of first lady very differently during this term. She's kept a very low
profile, splitting her time largely between Florida and New York. She has done rare public appearances and no interviews on camera. That changed this
week, as she appeared on FOX News three times to promote this documentary.
Now we are expecting essentially the second Cabinet meeting of the day here on this red carpet. Susie Wiles, Secretary Bessent, Secretary Hegseth,
Secretary Rubio, even Homeland Security Secretary Kristi Noem, plus some conservative influencers, celebrities like the rapper Waka Flocka Flame, as
well as the criminal -- financial criminal Wolf of Wall Street, Jordan Belfort.
But first ladies write books and hit the speaking circuit all the time after leaving office. What is unprecedented here is for a sitting first
lady to profit essentially off of inside access to her private life. She is proving that a peek behind the curtain of her life is a multimillion dollar
endeavor here. She signed this $40 million deal with Amazon-MGM Studios, along with a $35 million marketing budget.
So let's just set aside the question of whether this is a political calculation by Amazon to appeal to the Trump administration and assume that
they are making the bet that First Lady Melania Trump can draw an audience to the movie theater. Since Donald Trump entered the political arena, First
Lady Melania Trump has been somewhat of a Rorschach test for American political observers.
[16:55:074]
Is she a MAGA queen? Is she a secret underground operative for the resistance? There is this enormous public curiosity about her, this Melania
mystique that we have been watching. So one thing the media tour for this documentary has made absolutely clear is that she is her husband's wife.
She is incredibly politically aligned with her husband. She supports him wholeheartedly. So is that going to translate to selling tickets for this
documentary? We're going to have to wait and see.
But when we do think about what to expect, it's worth noting the first lady is an executive producer of this documentary. That means that it was made
with her full participation and editorial control. This is all her project and we are going to see her curated view of this first 20 days in the run
up to the inauguration, Paula.
NEWTON: So, Betsy, and apologies, I didn't ask you. Have you seen it?
KLEIN: I've not. And that's actually a really interesting and notable point. There has not been a screener provided to the press. That is pretty
unusual. And it means that we will not be able to review it ahead of time. There was a private screening in the East Room earlier this week, and now
this invitation only screening at the Kennedy Center, a very small group of politically aligned reporters, has been invited, included on the guest
list. That includes Maria Bartiromo of FOX Business, as well as Greta Van Susteren. But we are expecting to see it in a movie theater with everyone
else tomorrow.
NEWTON: OK, Betsy Klein, we'll wait to hear what the reviews are. Appreciate it.
Now, a mixed close on Wall Street following some major tech earnings. The Dow the only index that closed higher, just barely, gained 21 points after
spending most of the day in the red.
We want to have a look at some of those Dow components. As I said, Microsoft down 10 percent, which was better than the 12 percent it had been
down during the day. Investors worrying about the Cloud growth slowing. IBM up 5 percent. It beat estimates for earnings. And Caterpillar closed up 3
percent after releasing higher profit numbers than expected. Sales Force is one of the many software stocks closing in the red, as investors worry
about uncertainties. It was down 6 percent.
And that is QUEST MEANS BUSINESS. I'm Paula Newton. "THE LEAD WITH JAKE TAPPER" is next.
(COMMERCIAL BREAK)
END
