Trump Directs to Cease Use of Anthropic Technology
Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly.CEASE ALL USE:In a post on Truth Social, President Donald Trump said that "leftwing nut jobs" at AI company Anthtropic have made a mistake trying to "strong-arm" the Department of War and "force them to obey their Terms of Service instead of our Constitution." The Fly notes that Anthropic said Thursday that the company "cannot in good conscience" allow the Pentagon to use its models in lawful cases without limitation. "Therefore, I am directing EVERY Federal Agency in the United States Government to IMMEDIATELY CEASE all use of Anthropic's technology," Trump posted. "We don't need it, we don't want it, and will not do business with them again! There will be a Six Month phase out period for Agencies like the Department of War who are using Anthropic's products, at various levels. Anthropic better get their act together, and be helpful during this phase out period, or I will use the Full Power of the Presidency to make them comply, with major civil and criminal consequences to follow."Meanwhile, Anthropic said in a statement, "Secretary of War Pete Hegseth shared on X that he is directing the Department of War to designate Anthropic a supply chain risk. This action follows months of negotiations that reached an impasse over two exceptions we requested to the lawful use of our AI model, Claude: the mass domestic surveillance of Americans and fully autonomous weapons. We have not yet received direct communication from the Department of War or the White House on the status of our negotiations. We have tried in good faith to reach an agreement with the Department of War, making clear that we support all lawful uses of AI for national security aside from the two narrow exceptions above. To the best of our knowledge, these exceptions have not affected a single government mission to date. We held to our exceptions for two reasons. First, we do not believe that today's frontier AI models are reliable enough to be used in fully autonomous weapons. Allowing current models to be used in this way would endanger America's warfighters and civilians. Second, we believe that mass domestic surveillance of Americans constitutes a violation of fundamental rights. Designating Anthropic as a supply chain risk would be an unprecedented action-one historically reserved for US adversaries, never before publicly applied to an American company. We are deeply saddened by these developments. As the first frontier AI company to deploy models in the US government's classified networks, Anthropic has supported American warfighters since June 2024 and has every intention of continuing to do so. We believe this designation would both be legally unsound and set a dangerous precedent for any American company that negotiates with the government. No amount of intimidation or punishment from the Department of War will change our position on mass domestic surveillance or fully autonomous weapons. We will challenge any supply chain risk designation in court."AI-LOADED SOFTWARE BUNDLE FOR 365:Microsoftis weighing releasing its long-rumored E7 enterprise productive software bundle, a more expensive AI-loaded version of Microsoft 365, Business Insider's Ashley Stewart, citing two people familiar with the plans. The bundle, which could cost up to $99 per user per month, could include Microsoft Copilot and its new AI agent hub, known as Agent 365, the author notes.PARTNERSHIPS:Nvidiaannounced multiyear strategic agreements with Lumentumto accelerate innovation in advanced optics technologies, including research and development, to enable next-generation AI infrastructure and systems designs. The nonexclusive agreement includes a Nvidia multibillion purchase commitment and future capacity access rights for advanced laser components. In addition, Nvidia is investing $2B in Lumentum to support R&D, future capacity and operations as the company builds out its U.S.-based manufacturing capabilities in a new fab.Nvidia and Coherentannounced a multi-year strategic agreement to advance the frontier of advanced optics technologies, including manufacturing capacity and research and development, to enable next-generation AI infrastructure. The nonexclusive agreement includes an Nvidia multibillion-dollar purchase commitment and future access and capacity rights for advanced laser and optical networking products. In addition, Nvidia is investing $2B in Coherent to support research and development, future capacity and operations as Coherent builds out its U.S.-based manufacturing capabilities.INFERENCE COMPUTING:Nvidia intends to reveal a new processor meant to help OpenAI and other customers build more efficient tools, Berber Jin, Robbie Whelan, and Keta Clark of The Wall Street Journal. The new system will be for "inference" computing, processing that allows AI models to respond to queries, the Journal adds, citing people familiar with the plans. The new platform will incorporate a chip designed by Groq, the sources added.
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Microsoft's Long-Term Potential in Quantum Computing
- Significant Cloud Growth: In Q2 of fiscal 2026, Microsoft reported a 16.7% year-over-year revenue increase to $81.3 billion, with cloud services contributing $51.5 billion, up 26%, indicating strong market demand and sustained growth potential.
- Increased Quantum Investment: Microsoft is heavily investing in its quantum computing ecosystem, introducing the Majorana 1 quantum processor aimed at enhancing computational stability and reducing errors, laying the groundwork for future commercialization.
- Data Center Expansion: The company added nearly 1 gigawatt of data center capacity in Q2 to address the challenge of Azure service demand exceeding supply, demonstrating its ongoing investment and strategic positioning in cloud infrastructure.
- Rapid AI Application Adoption: Microsoft’s Copilot user base surged over 160% year-over-year to 15 million paid users, showcasing its ability to successfully leverage AI in enterprise workflows, further driving revenue growth.
OpenAI CEO Admits Rushed Deal with Defense Department
- Contract Revision Commitment: OpenAI CEO Sam Altman stated that the company would revise its agreement with the U.S. Department of Defense, particularly to include clauses preventing domestic surveillance, aiming to alleviate public concerns over potential misuse of technology and enhance the company's credibility in government contracts.
- Focus on Technical Safety: Altman emphasized that many technologies are not yet ready to handle complex safety trade-offs, and OpenAI will collaborate with the Pentagon to ensure the safe use of its technologies, demonstrating the company's commitment to responsible technology deployment.
- Market Reaction and Competitive Pressure: Following the deal with the Defense Department, public reactions to OpenAI were mixed, with many users reportedly switching to competitor Anthropic's Claude, reflecting a heightened market concern for transparency in AI technology usage, which could impact OpenAI's market share.
- Support for Competitors: Altman urged on social media for the Defense Department not to designate Anthropic as a supply chain risk, indicating his emphasis on industry collaboration and aiming to maintain stability and growth within the broader AI ecosystem.
Microsoft's 18% Stock Decline: Analyzing the Causes
- Stock Performance: Microsoft's stock has risen approximately 660% over the past decade, with a compounded annual growth rate exceeding 22%, significantly outpacing the S&P 500's long-term average of 10%, yet it has fallen 18% this year, indicating a loss of market confidence.
- AI Investment Impact: While the overall market has been bearish on tech stocks, Microsoft's decline is more pronounced than other tech giants, as evidenced by the Roundhill Magnificent Seven ETF's modest 7% drop, suggesting that Microsoft's challenges are more complex.
- Valuation and Growth: At the start of 2023, Microsoft's price-to-earnings ratio was around 34, now reduced to 25; although AI has provided some growth, its December quarter growth rate was only 17%, dropping to 15% when excluding foreign exchange, indicating insufficient growth momentum.
- Long-term Investment Potential: Despite the current stock decline, Microsoft boasts a diversified business portfolio, including gaming, office software, and devices, and has amassed over $119 billion in profit over the past 12 months, indicating strong long-term investment value.
Microsoft Stock Declines 18% Amid AI Concerns
- Stock Decline Reasons: Microsoft's stock has fallen 18% since the beginning of the year, primarily due to high valuations and concerns over AI spending growth, despite its strong financial health with a 660% increase over the past decade.
- Market Performance Comparison: Compared to other tech giants, Microsoft's decline is significant, as the Roundhill Magnificent Seven ETF has only dropped 7%, indicating a broader bearish sentiment in the tech sector.
- AI Product Performance: Microsoft's Copilot AI has underperformed in the market, failing to impress compared to other popular chatbots, leading investors to question its future growth potential, which has negatively impacted the stock price.
- Investment Opportunity Assessment: Although the stock was previously overvalued, Microsoft's current P/E ratio has dropped to 25, and with $119 billion in profits, it may present a favorable opportunity for investors to reassess and potentially increase their holdings.
Microsoft's Quantum Computing Strategy and AI Growth
- Quantum Computing Investment: Microsoft is heavily investing in its quantum computing ecosystem, with the introduction of the Majorana 1 processor in 2025 utilizing topological qubits aimed at enhancing computational stability and reducing errors, thereby advancing the commercialization of quantum computing.
- Strong Financial Performance: In Q2 of fiscal 2026, Microsoft reported a 16.7% year-over-year revenue increase to $81.3 billion, with cloud services revenue reaching $51.5 billion, up 26%, reflecting robust demand for AI-related workloads.
- Data Center Expansion: Microsoft added nearly 1 gigawatt of data center capacity in Q2 and invested $37.5 billion, two-thirds of which was allocated to short-lived AI assets, indicating proactive measures to address data center capacity constraints.
- AI Application Growth: The number of paid Microsoft 365 Copilot users reached 15 million, up over 160% year-over-year, demonstrating the rapid adoption of AI applications in enterprise workflows, further driving revenue growth for the company.
Concerns Over AI Stock Bubble Intensify
- Investor Concerns Rise: A Bank of America survey reveals that 23% of investment-grade credit investors cite the 'threat of an AI bubble' as their top concern, a significant increase from 9% in December 2025, indicating declining confidence in AI stocks.
- Rising Borrowing Risks: The survey highlights worries among credit investors about AI companies borrowing excessively, which could lead to increased debt risk if companies exceed their repayment capabilities, potentially impacting credit ratings and borrowing costs.
- Massive Investments by Giants: The four largest AI hyperscalers—Alphabet, Microsoft, Meta, and Amazon—are projected to spend around $700 billion on AI-related capital expenditures by 2026, and if these investments do not yield substantial returns, it could negatively affect shareholders and bondholders.
- Adjusting Investment Strategies: To mitigate risks associated with an AI bubble, investors might consider reallocating portions of their portfolios towards value stocks or small-cap ETFs, which tend to perform more steadily in volatile markets and reduce reliance on AI stocks.
Microsoft's Long-Term Potential in Quantum Computing
- Significant Cloud Growth: In Q2 of fiscal 2026, Microsoft reported a 16.7% year-over-year revenue increase to $81.3 billion, with cloud services contributing $51.5 billion, up 26%, indicating strong market demand and sustained growth potential.
- Increased Quantum Investment: Microsoft is heavily investing in its quantum computing ecosystem, introducing the Majorana 1 quantum processor aimed at enhancing computational stability and reducing errors, laying the groundwork for future commercialization.
- Data Center Expansion: The company added nearly 1 gigawatt of data center capacity in Q2 to address the challenge of Azure service demand exceeding supply, demonstrating its ongoing investment and strategic positioning in cloud infrastructure.
- Rapid AI Application Adoption: Microsoft’s Copilot user base surged over 160% year-over-year to 15 million paid users, showcasing its ability to successfully leverage AI in enterprise workflows, further driving revenue growth.
OpenAI CEO Admits Rushed Deal with Defense Department
- Contract Revision Commitment: OpenAI CEO Sam Altman stated that the company would revise its agreement with the U.S. Department of Defense, particularly to include clauses preventing domestic surveillance, aiming to alleviate public concerns over potential misuse of technology and enhance the company's credibility in government contracts.
- Focus on Technical Safety: Altman emphasized that many technologies are not yet ready to handle complex safety trade-offs, and OpenAI will collaborate with the Pentagon to ensure the safe use of its technologies, demonstrating the company's commitment to responsible technology deployment.
- Market Reaction and Competitive Pressure: Following the deal with the Defense Department, public reactions to OpenAI were mixed, with many users reportedly switching to competitor Anthropic's Claude, reflecting a heightened market concern for transparency in AI technology usage, which could impact OpenAI's market share.
- Support for Competitors: Altman urged on social media for the Defense Department not to designate Anthropic as a supply chain risk, indicating his emphasis on industry collaboration and aiming to maintain stability and growth within the broader AI ecosystem.
Microsoft's 18% Stock Decline: Analyzing the Causes
- Stock Performance: Microsoft's stock has risen approximately 660% over the past decade, with a compounded annual growth rate exceeding 22%, significantly outpacing the S&P 500's long-term average of 10%, yet it has fallen 18% this year, indicating a loss of market confidence.
- AI Investment Impact: While the overall market has been bearish on tech stocks, Microsoft's decline is more pronounced than other tech giants, as evidenced by the Roundhill Magnificent Seven ETF's modest 7% drop, suggesting that Microsoft's challenges are more complex.
- Valuation and Growth: At the start of 2023, Microsoft's price-to-earnings ratio was around 34, now reduced to 25; although AI has provided some growth, its December quarter growth rate was only 17%, dropping to 15% when excluding foreign exchange, indicating insufficient growth momentum.
- Long-term Investment Potential: Despite the current stock decline, Microsoft boasts a diversified business portfolio, including gaming, office software, and devices, and has amassed over $119 billion in profit over the past 12 months, indicating strong long-term investment value.
Microsoft Stock Declines 18% Amid AI Concerns
- Stock Decline Reasons: Microsoft's stock has fallen 18% since the beginning of the year, primarily due to high valuations and concerns over AI spending growth, despite its strong financial health with a 660% increase over the past decade.
- Market Performance Comparison: Compared to other tech giants, Microsoft's decline is significant, as the Roundhill Magnificent Seven ETF has only dropped 7%, indicating a broader bearish sentiment in the tech sector.
- AI Product Performance: Microsoft's Copilot AI has underperformed in the market, failing to impress compared to other popular chatbots, leading investors to question its future growth potential, which has negatively impacted the stock price.
- Investment Opportunity Assessment: Although the stock was previously overvalued, Microsoft's current P/E ratio has dropped to 25, and with $119 billion in profits, it may present a favorable opportunity for investors to reassess and potentially increase their holdings.
Microsoft's Quantum Computing Strategy and AI Growth
- Quantum Computing Investment: Microsoft is heavily investing in its quantum computing ecosystem, with the introduction of the Majorana 1 processor in 2025 utilizing topological qubits aimed at enhancing computational stability and reducing errors, thereby advancing the commercialization of quantum computing.
- Strong Financial Performance: In Q2 of fiscal 2026, Microsoft reported a 16.7% year-over-year revenue increase to $81.3 billion, with cloud services revenue reaching $51.5 billion, up 26%, reflecting robust demand for AI-related workloads.
- Data Center Expansion: Microsoft added nearly 1 gigawatt of data center capacity in Q2 and invested $37.5 billion, two-thirds of which was allocated to short-lived AI assets, indicating proactive measures to address data center capacity constraints.
- AI Application Growth: The number of paid Microsoft 365 Copilot users reached 15 million, up over 160% year-over-year, demonstrating the rapid adoption of AI applications in enterprise workflows, further driving revenue growth for the company.
Concerns Over AI Stock Bubble Intensify
- Investor Concerns Rise: A Bank of America survey reveals that 23% of investment-grade credit investors cite the 'threat of an AI bubble' as their top concern, a significant increase from 9% in December 2025, indicating declining confidence in AI stocks.
- Rising Borrowing Risks: The survey highlights worries among credit investors about AI companies borrowing excessively, which could lead to increased debt risk if companies exceed their repayment capabilities, potentially impacting credit ratings and borrowing costs.
- Massive Investments by Giants: The four largest AI hyperscalers—Alphabet, Microsoft, Meta, and Amazon—are projected to spend around $700 billion on AI-related capital expenditures by 2026, and if these investments do not yield substantial returns, it could negatively affect shareholders and bondholders.
- Adjusting Investment Strategies: To mitigate risks associated with an AI bubble, investors might consider reallocating portions of their portfolios towards value stocks or small-cap ETFs, which tend to perform more steadily in volatile markets and reduce reliance on AI stocks.
