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With plenty of puts and takes, it's not surprising to see the stock oscillating between modest gains and losses in after-hours trading. View More

Microsoft on Wednesday reported better-than-expected quarterly results and issued a strong forecast for its all-important Azure cloud unit. But key debates hanging over the stock weren't put to bed, resulting in a muted reaction in extended trading. Here's a look at some of the key metrics in Microsoft's fiscal 2026 third quarter versus the Wall Street consensus: Revenue in the three months ended in March rose 18% year over year to $82.89 billion, beating the LSEG consensus estimate of $81.39 billion. Earnings per share (EPS) totaled $4.27, up 23.4% from a year earlier, topping the $4.06 consensus, according to LSEG. Azure cloud revenue growth on a constant currency basis came in at 39%, versus the FactSet consensus of 38%. On a reported basis, Azure cloud revenue was up 40%, ahead of the FactSet consensus of 39%. MSFT 1Y mountain Microsoft's stock performance over the past 12 months. Bottom line Let's call it a step in the right direction. There were some positives, led by the Azure growth guidance for the current quarter. But there were also some reminders about why Microsoft had become such a battleground stock in the first place — in particular, concerns about the viability of highly profitable seat-based software business models. With all these puts and takes, it's not surprising to see the stock oscillating between modest gains and losses in after-hours trading on Wednesday night. Microsoft was beloved in the early days of the generative AI boom, thanks to its close ties to ChatGPT creator OpenAI. But the shine has faded, rendering Microsoft the worst-performing stock in the "Magnificent Seven" over the past six months. It's tested our patience and that of plenty of other longtime shareholders, too. Among the reasons for the stock's poor performance: Microsoft's reliance on OpenAI for Azure growth came to be viewed as a weakness rather than a weapon. At the same time, the market wondered whether Microsoft was leaving Azure growth on the table as it ran into capacity constraints. Skepticism also mounted about the quality of Microsoft's Copilot AI assistant as rivals like startup Anthropic were showered with praise for their tools. Additionally, concerns about "AI eating software" have been a major overhang on Microsoft and its industry peers. These debates were not solved on Wednesday night, even if some clarity was gained. The positives: Microsoft expects Azure growth for the three months ended in June to be between 39% and 40%, compared to the FactSet consensus of roughly 37%. Microsoft also signaled that it's ramping up its capital expenditures to bring more AI computing capacity online. That should help the company meet demand from external customers while also allocating resources to internal AI model research to lessen its reliance on OpenAI's intellectual property over time. Microsoft and OpenAI's relationship continues to evolve , with a growing distance between them. On the earnings call, Microsoft CFO Amy Hood said the company expects to spend about $190 billion in capex in calendar 2026, implying almost $120 billion in the April-to-December timeframe. That compares with roughly $118 billion for all of calendar 2025, representing roughly 61% year-over-year growth. Another modest positive is that paid Copilot seats now exceed 20 million, up from 15 million disclosed in January, and Hood said the company expects a sequential increase again in the current quarter, driving continued average revenue per user growth. This isn't to say Microsoft doesn't still have work to do to make Copilot better, but adoption is at least trending upward. So, what about the bad? Well, Microsoft cannot escape the fact that it's still a software company that has thrived on selling seat-based licenses to customers. And in the age of AI, where companies may be lowering their headcount and the remaining employees are using gobs of expensive AI compute, the old way of charging customers may need to evolve. Indeed, a considerable amount of time on Wednesday night's conference call Q & A was spent discussing the seat-based versus consumption models. CEO Satya Nadella essentially made the case for a hybrid solution — and while time will tell whether he's right, the very nature of the conversation reinforced some of the existential concerns investors have about software providers right now. For now, we're reiterating our hold-equivalent 2 rating and price target of $500. Guidance Here's the guidance that Microsoft offered for its fiscal 2026 fourth quarter: Azure revenue growth (constant currency) between 39% and 40%, comfortably ahead of the FactSet consensus of 36.9%. Total revenue in the range of $86.7 billion to $87.8 billion, implying growth between 13% and 15%. The midpoint of the guidance is slightly below the FactSet consensus of $87.56 billion. Operating expenses of $19.3 billion to $19.4 billion, implying 7% year over year growth. The implied FactSet consensus was $19.78 billion. Capital expenditures over $40 billion as more compute capacity comes online. Here's the Q4 revenue expectations by reporting segment: Productivity and Business Processes: $37 billion to $37.3 billion. That is above the FactSet consensus of $36.64 billion. Intelligent Cloud: $37.95 to $38.25 billion. That compares with the FactSet consensus of $37.65 billion. More Personal Computing: $11.75 billion to $12.25 billion, below the FactSet consensus of $13.31 billion. (Jim Cramer's Charitable Trust is long MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Microsoft's forecast on revenue and operating margin was light, but the company sees $190 billion in 2026 capital spending, well above Wall Street's estimate. View More

In this articleMSFTFollow your favorite stocksCREATE FREE ACCOUNT Microsoft CEO Satya Nadella speaks during the Microsoft AI Tour event in Munich, Germany, on Feb. 25, 2026.Sven Hoppe | Picture Alliance | Getty Images Microsoft reported better-than-expected quarterly results on Wednesday and told investors that capital expenditures for the year will reach $190 billion due to soaring memory costs. Here's how the company did in comparison with LSEG consensus:Earnings per share: $4.27 adjusted vs. $4.06 expectedRevenue: $82.89 billion vs. $81.39 billion expectedMicrosoft's revenue grew 18% year over year in the quarter, which ended on March 31, according to a statement.Net income of $31.78 billion, or $4.27 per share, was up from $25.82 billion, or $3.46 per share, in the same quarter a year earlier. Adjusted earnings exclude a $14 million decrease in net income from Microsoft's OpenAI investments. With respect to guidance, Microsoft's finance chief, Amy Hood, called for $86.7 billion to $87.8 billion in fiscal fourth-quarter revenue. The middle of the range, at $87.25 billion, was below LSEG's $87.53 billion consensus. Microsoft foresees Azure cloud growth between 39% and 40% at constant currency, above StreetAccount's 37% consensus.Hood's forecast implies that Microsoft's operating margin for the fiscal fourth quarter will tick down to 44% from 46.3%, and will be narrower than StreetAccount's 44.6% consensus.Microsoft reported $31.9 billion in fiscal third-quarter capital expenditures and finance leases, up 49% and less than the $34.9 billion consensus among analysts polled by Visible Alpha. Gross margin, at 67.6%, was the narrowest since 2022, as depreciation costs mounted in connection with the company's data center infrastructure build-out.In forecasting $190 billion in capex for 2026, which would be up 61% from 2025, Hood said on a conference call that she anticipates a $25 billion impact from higher component prices. The Visible Alpha consensus was for capex of $154.6 billion. Across the tech industry, infrastructure providers are being forced to pay up for memory, which is in midst of a global crunch due to AI demand. watch nowVIDEO3:0203:02Memory stocks surge as earnings season gets underwayMoney Movers Microsoft's headcount will go down year over year in the 2027 calendar year, which will end in June 2027."We continue to evolve how we operate, to increase our pace and agility," Hood said.Revenue from Microsoft's Azure and other cloud services surged 40%. Analysts polled by StreetAccount and CNBC had expected 39.3% and 38.8%, respectively.The full Intelligent Cloud segment containing Azure, server products and GitHub and Nuance cloud services posted $34.68 billion in revenue. The sum came in higher than the $34.27 billion consensus among analysts surveyed by StreetAccount.Microsoft's Productivity and Business Processes segment, which includes Office productivity software, LinkedIn and Dynamics business software, totaled $35.01 billion in revenue. The figure was up about 17% and above StreetAccount's $34.43 billion consensus. window.addEventListener("message",function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}); The company now has over 20 million seats for the 365 Copilot artificial intelligence add-on for commercial Office subscriptions, up from 15 million in January. The count will be go up again in the September quarter, Hood said."Weekly engagement is now at the same level as Outlook as more and more users make Copilot a habit," CEO Satya Nadella said on the earnings call.Microsoft's More Personal Computing unit, which includes the Windows operating system, Xbox, Surface devices and Bing search advertising, contributed $13.19 billion in revenue, down 1%. StreetAccount's consensus was $12.73 billion.Sales of Windows licenses to device makers and Microsoft's own devices were down 2%. Technology industry researcher Gartner estimated that PC shipments increased by 4% during the quarter. Microsoft now has 1.6 billion monthly active Windows devices, Nadella said.Annualized revenue from AI altogether now stands at $37 billion, up 123%. The number includes business from clients running AI services on Azure, including all revenue from model builders, as well as revenue from Microsoft's own AI tools. AI systems that use standard central processing units, storage and other services, excluding model builders, are left out.Microsoft now has $627 billion in commercial remaining performance obligations, encompassing unearned revenue and amounts that will be recognized as revenue. The number was up by $2 billion from the prior quarter.During the quarter, the most senior Office software leader, Rajesh Jha, announced plans to retire, as did gaming chief Phil Spencer.As of Wednesday's close, Microsoft stock was down 12% so far in 2026, following its worst quarterly performance since 2008. That's due in part to broader market concern that AI will eat software, and fears specific to the company that its hefty AI investments won't produce the desired results.Tech stocks are poised to wrap up their best month since April 2020, the early days of the Covid pandemic, with the Nasdaq up 14% for the month as of Wednesday's close. Wall Street has been piling into the sector despite concerns that surging oil prices and supply chain disruptions from the war in Iran will lead to rising costs for AI infrastructure. The four hyperscalers — Alphabet, Amazon, Meta and Microsoft — all reported results on Wednesday, updating investors for the first time since the U.S. began combat operations in Iran in late February.On Monday Microsoft announced a revision to its longstanding relationship with OpenAI, ending its revenue share payments to the AI company. Any cloud provider can now serve OpenAI models under the new terms, following years of exclusivity for Azure. Microsoft still has a license on OpenAI's intellectual property for six more years, although it's no longer exclusive."We have a frontier model, royalty-free, with all the IP rights that we will have access to all the way to '32, and we fully plan to exploit it," Nadella said.WATCH: Microsoft tops revenue and earnings estimates, Azure revenue grows 40% watch nowVIDEO0:5300:53Microsoft tops revenue and earnings estimates, Azure revenue grows 40%Closing Bell: Overtime Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

Revenue in Amazon's cloud computing segment expanded 28% year over year, topping analysts' estimates. View More

In this articleAMZNFollow your favorite stocksCREATE FREE ACCOUNT watch nowVIDEO0:5700:57Amazon posts quarterly beat on earnings and revenueClosing Bell: Overtime Amazon on Wednesday posted better-than-expected earnings and revenue for the first quarter, and reported cloud sales that topped analysts' expectations. The stock was up more than 4%, after bouncing around in extended trading.Here's how the company did, compared with estimates from analysts polled by LSEG:Earnings per share: $2.78 vs. $1.64Revenue: $181.52 vs. $177.30 billionWall Street was also looking at other key revenue numbers: Amazon Web Services: $37.59 billion vs. $36.64 billion, according to StreetAccountAdvertising: $17.24 billion vs. $16.87 billion, according to StreetAccountRevenue in Amazon's cloud segment increased 28% year over year to $37.59 billion, marking its fastest growth in more than three years. Wall Street had expected AWS sales to grow 26%. Amazon and other big tech companies have been trying to justify their hefty artificial intelligence spending, which could approach $700 billion in 2026. Amazon in February projected its capital expenditures will reach $200 billion in 2026, a sharp increase from last year. The company recently announced a host of AI-related deals with OpenAI, Anthropic and Meta, which could help ease investor concerns about when its spending will deliver returns, but also suggest Amazon will need to build out even more data centers and infrastructure to meet surging demand. Amazon CEO Andy Jassy has also looked to highlight the company's homegrown chips business as a beneficiary of the AI boom, and it called out the segment near the top of its earnings release. "We're in the middle of some of the biggest inflections of our lifetime, we're well positioned to lead, and I'm very optimistic about what's ahead for our customers and Amazon," Jassy said in a statement. Read more CNBC tech newsMeta told it's violating EU law by not doing enough to keep children off Facebook and InstagramPentagon AI chief confirms DOD's expanded use of Google, says reliance on one model 'never a good thing'OpenAI's revenue, growth estimates fall short as company races toward IPO: ReportOpenAI brings its models to Amazon's cloud after ending exclusivity with Microsoft Amazon said property and equipment expenses in the first quarter reached $44.2 billion, which was above Wall Street's projected $43.6 billion, according to FactSet. Meanwhile, its free cash flow for the past twelve months fell to $1.2 billion, a 95% decrease year over year, primarily because of its AI investments, the company said. The company's capex spending is also being pushed higher because of its investments in its nascent internet-from-space service, called Leo. Amazon is aiming to begin commercial service in the third quarter of this year, CFO Brian Olsavsky said on a call with investors.Amazon needs to make enough satellites and book more rocket launches to build out its constellation, which will eventually total roughly 7,700 satellites. About 270 satellites are in service currently. Earlier this month, Amazon announced it plans to purchase Globalstar in a deal valued at roughly $11.57 billion, the second-largest acquisition in its history. "They have unusual and scarce global spectrum that's required to provide direct to device," Jassy said on the conference call, referring to Globalstar. "We also really like the satellite knowhow that we'll get as part of that merger." The deal also "afforded us the opportunity to build a deep relationship with Apple," Jassy said. As part of the deal, Apple, which owns a 20% stake in Globalstar, will use Amazon's satellite connectivity for some products.For the current quarter, Amazon said it expects sales to come in between $194 billion and $199 billion. Analysts polled by LSEG were expecting $188.9 billion. The company said second-quarter operating income is expected to be between $20 billion and $24 billion. Analysts were projecting $22.65 billion, according to StreetAccount.Revenue in its online stores segment, which still accounts for the largest share of Amazon's total sales, grew 12% in the first quarter to $64.3 billion, higher than analysts' estimated $62.7 billion. Alongside its earnings release, the company announced this year's Prime Day discount bonanza will be held in June, a month earlier than its typical timeframe. Advertising revenue jumped 24% year over year to $17.24 billion, above Wall Street's expectations for growth of 21.2%. The unit is one of the company's fastest growing and more profitable businesses, with the lion's share of revenue coming from sponsored products listings on its e-commerce site. Amazon's headcount fell by 1,000 employees since the fourth quarter. It finished the first quarter with 1.57 million employees globally, which was roughly flat from last year. The company announced at the beginning of the first quarter that it would lay off 16,000 corporate employees, after cutting 14,000 staffers in October.WATCH: Amazon needs to spend more to keep AWS as premier AI play watch nowVIDEO3:3503:35Amazon needs to spend more to keep AWS as the premiere AI play: Intelligent Alpha's Doug ClintonClosing Bell Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

Investors are starting to draw conclusions on what Powell's tenure has meant for Wall Street. View More

In this article.SPX.DJIFollow your favorite stocksCREATE FREE ACCOUNT A trader works, as a screen broadcasts a news conference by U.S. Federal Reserve Chair Jerome Powell following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., April 29, 2026. Brendan McDermid | Reuters As Federal Reserve Chair took the podium for what was probably his last press conference leading the central bank, investors began drawing conclusions on what his tenure has meant for Wall Street.Powell has served as chair of the board of governors since 2018. Kevin Warsh — Powell's nominated successor who's expected to take over next month — was cleared by the Senate Banking committee on Wednesday in preparation for a final Senate confirmation vote.Powell's exit as chair comes with the stock market near record highs and the economy posting moderate growth after dodging a post-Covid recession. But the Ivy League grad has faced criticism for his handling of inflation and interest rates in the latter years of his tenure, which led to huge losses in the bond market in 2022 and headwinds since. "Most investors would say that they felt that they were getting honest information from him," said Sam Stovall, chief investment strategist at CFRA Research. "It was an apolitical tenure focused on doing the right thing for the economy."StocksThe Dow Jones Industrial Average has climbed nearly 9% annually under Powell, according to CFRA Research. While a slower rate of growth than under his predecessor Janet Yellen, that exceeds the average of around 6% for chairs going back more than a century. By contrast, the S&P 500 rallied 14.7% annually under Powell, the third best performance for Fed chairs going back to 1970, Bespoke Investment Group found.Investors benefited from Powell's decision to hold press conferences after every Fed decision, said Art Hogan, chief market strategist at B. Riley Wealth. Powell's answers helped traders separate "the noise from the news," Hogan said."There's been an evolution of Fed transparency that I think has only been positive," Hogan said. "That helps markets in trying to ascertain the path of monetary policy and the path of interest rates."Powell's background as an investment banker at Dillon, Read and partner at private equity firm Carlyle Group (1997–2005) often favored investors counting on stock market gains. But it didn't always play out as well for everyday Americans trying to budget in the face of high prices, said One Point BFG Wealth Partners investing chief Peter Boockvar."He believed in easy money. He voted for all the QEs. He voted for zero interest rates," Boockvar said. "It's only when inflation mugged him by reality that he became more hawkish in."But the problem with accommodative monetary policy is, "Easy money gets investors drunk on things, and puts beer goggles on them," Boockvar said. 'Sometimes it ends up OK, but other times it ends up in rampant inflation."BondsBonds haven't fared as well as stocks under Powell. The Bloomberg US Aggregate Bond Index that aims to track all U.S. investment-grade debt returned just under 2% annually during Powell's tenure, far below the average of 6.5% since the 1970s, according to Bespoke.The culprit: high inflation after Covid, which led the Fed to drive up benchmark lending rates as high as 5.5%, and stubbornly, sticky prices since. Prices surged in the aftermath of massive fiscal stimulus aimed at offsetting the Covid-induced economic slowdown, with the consumer price index hitting a 40-year high in 2022. "Powell has had a big challenge with inflation and interest rates," Stovall said. "It has not been as easy as it had been, let's say, for Janet Yellen."But CFRA data shows inflation ran at an annual rate of 1.8% throughout all of Powell's time as head of the Fed — below the average of more than 3% for all central bank chiefs going back more than a century. The Fed aims for no more than a 2% annual increase in inflation to meet its statutory goal of achieving "stable prices." But Hogan said investors also benefited from a flexible view of inflation under Powell, when the Fed chair understood that if inflation ran below 2% some years, it allowed for hotter readings other years."That was very good for markets, knowing that we're not going to see an overreaction by the Fed," Hogan said. "The Fed did a pretty good job of not oversteering or overreacting." Get Morning Squawk directly to your inboxThe Morning Squawk newsletter by Alex Harring is your rundown of five things to know before the stock market opens.Subscribe here to get access today. Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

The outgoing leader may be staying on in a lesser capacity, but he won't be a spoiler in Kevin Warsh's Fed. View More

U.S. Federal Reserve Chair Jerome Powell departs following his final press conference following a two-day meeting of the Federal Open Market Committee (FOMC), at the U.S. Federal Reserve in Washington, D.C., U.S., April 29, 2026. Kevin Lamarque | Reuters How do you change regimes when the head of the old one isn't leaving?That will be the question facing Federal Reserve chair nominee Kevin Warsh next month once confirmed by the Senate, now that outgoing Chair Jerome Powell has confirmed he will stick around indefinitely as a voting member of the Fed's Board of Governors.Powell's decision to stay has little precedent in Fed history, but it may be less disruptive to Warsh's plans than it might otherwise seem. Powell said at a Wednesday press conference that he has no desire to be a "shadow chair" and that his plans for an extended tenure at the Fed are aimed squarely outside the infamously crumbling walls of the Marriner S. Eccles headquarters building.Powell's rejection of the shadow chair idea is fitting given that it was an idea floated specifically to undermine him. Treasury Scott Bessent proposed the plan for a shadow Fed chair in October 2024 when he was still a private citizen. Now-President Donald Trump was fed up with Powell before he'd even won election that year, so Bessent proposed designating a replacement far in advance. "Based on the concept of forward guidance, no one is really going to care what Jerome Powell has to say anymore," Bessent said.  Read more CNBC politics coverageTrump’s lack of focus on economy is spooking Republicans as 2026 election loomsTrump orders Navy to ‘shoot and kill any boat’ laying mines in Hormuz StraitU.S. Navy Secretary John Phelan leaving Trump administration: Pentagon Trump still cares about Powell, but Powell went out of his way Wednesday to suggest that Warsh needn't be overly worried about having an ex-chair hanging around. "There's only ever one chair," Powell said. Like Warsh, Powell was appointed by Trump before the president soured on him."I'm not looking to be, you know, a high-profile dissident or anything like that," he added.He is looking instead to ward off the threats he sees to the Fed's independence from the Trump administration's legal attacks on the independent central bank. Congress gave the Fed the power to set interest rates without thinking about politics, and Powell plans to keep it that way. Otherwise politicians of all stripes will be tempted to juice the economy through lower rates and risk surging inflation.  watch nowVIDEO4:2504:25How Kevin Warsh plans to change the Federal ReserveThe Fed Powell wants to see a definitive resolution to the criminal investigation brought and then dropped by U.S. Attorney for the District of Columbia Jeanine Pirro. She has said she plans to appeal judge's decision to quash her subpoenas. Sen. Thom Tillis, R-N.C., who was key in brokering an understanding between Pirro and Powell, said Sunday he believed Powell would likely stay on until the appeal was resolved. That could take months.Powell's decision to stay at the Fed essentially brackets those Trump-related fights for Warsh. Powell effectively becomes the board's designee for Trump fights, while Warsh goes about the business of putting his stamp on the Fed. That could mean even nixing the kind of press conference Powell was speaking at. Warsh in his nomination hearing declined to commit to holding press conferences on the same schedule as Powell. The outgoing chair acknowledged it would essentially be up to Warsh. "I think our communications are fine, but looking at doing it in a different, better way is the most natural thing in the world," Powell said. Changing communications could extend to perhaps the most notable policy development out of Wednesday's meeting. Three Fed officials dissented from the Fed's decision saying they objected to an "easing bias" in the policy statement the Fed issued. Those officials agreed with the overall decision to keep interest rates flat but didn't want to signal that the Fed was still seriously considering cutting interest rates in light of the risk of inflation from the Iran war. (Warsh has pledged to quickly cut interest rates.) Fed forward guidance on the rocks Those comments are "a form of forward guidance," Powell said — a way to let markets know what's coming down the road. Warsh opposes that practice."I do not generally believe the Federal Reserve should offer forward guidance as currently practiced," he wrote in response to questions to Senate Democrats, which they released Tuesday. Warsh in those written comments also said he wants to "reform" the Fed's 12 regional reserve banks. He said he was open, for instance, to residency requirements that would ensure the bank presidents come from the districts they represent. Powell said he is open to changes at the reserve banks, too. "There's a back and forth on that," he said. The only area Powell would draw the line on would be wholesale firing the regional Fed presidents. Allies of the president have floated that idea, which would be within the board's power but would be unprecedented. A rotating group of those presidents vote on monetary policy, so replacing them with loyalists could be a backdoor way of handing power to the administration. "That would be the beginning of the end of the Fed's ability to make monetary policy independently," Powell said. But Warsh has shown no sign he is considering the plan. He told Sen. Lisa Blunt Rochester, D.-Del., at his confirmation hearing last week that overthrowing the Fed presidents wasn't in his plans for regime change. He means "policy regime change," he said. Interest rate clashes could come That means the only major challenge for Warsh, as far as Powell is concerned, will be driving consensus within the Fed for where to set interest rates. Wednesday's dissents suggest that won't be easy. But Powell, whom Warsh has described as a failed chair who chose inflation, went out of his way to say Warsh is up to the task.The chair's job is to "create consensus" among the Fed's voters and to "be inside their thinking," Powell said.Warsh "has the capabilities, skills to be very good at that," Powell said. Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

While David Ellison has set a lofty goal for Paramount to release 30 films a year, there's no recent precedent for such a haul. View More

In this articlePSKYWBDFollow your favorite stocksCREATE FREE ACCOUNT Paramount Skydance CEO David Ellison speaks on stage during the Paramount Pictures presentation at CinemaCon at The Colosseum at Caesars Palace in Las Vegas, April 16, 2026.Valerie Macon | AFP | Getty Images Paramount CEO David Ellison is trying to do something that no other studio has done in the modern age of cinema — release 30 films annually.Ellison once again promised this theatrical feat in front of thousands of exhibitors at CinemaCon on April 16. Applause erupted from the crowd after he made the pronouncement. But privately, movie theater operators have expressed concerns and skepticism about the proposed future slate of films. While a massive string of releases would help cinemas, companies doubt Ellison will be able to follow through on the promise. His 30-film plan would hinge on Paramount receiving regulatory approval for its proposed merger with Warner Bros. Discovery, which the latter company's shareholders approved on April 23. Ellison noted that each studio would produce 15 films a year.However, Ellison has not provided many details about those 30 releases, and it's not clear how he would hit the ambitious goal. Representatives for Paramount did not reply to CNBC's request for comment.It's unclear if all of the films would have wide releases — meaning they eventually play in at least 1,500 theaters, though the typical benchmark is 2,000. It's also not certain whether the company will count films it distributes but doesn't produce as part of this figure, or how many of those proposed titles will be considered tentpole blockbusters.Movie theater operators and industry experts are skeptical that Paramount would be able to sustain a 30-film slate after the initial merger. After all, part of the consolidation process is eliminating redundancies, which inevitably leads to layoffs as well as cost-cutting measures that often result in fewer productions."When it comes to traditional brand-new wide release films, 30 movies a year is a lofty plan given that most distributors are releasing on average anywhere from 10 to 15 wide releases each year," said Paul Dergarabedian, head of market trends at Comscore.In the past 25 years, no studio has released 30 films in a single year. The combination of 20th Century Fox and Searchlight came close in 2006 when the studios had 25 wide releases, according to data from Comscore. window.addEventListener("message",function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}); The data also shows that when studios have merged in the past, the result has been fewer theatrical releases, not more.Prior to acquiring 21st Century Fox and its studio assets, Disney was averaging 12 films a year dating back to 2000. Meanwhile, the combined efforts of 20th Century Fox and Searchlight averaged 16 films during that same time. Not including 2020, in which theatrical releases were impacted by pandemic-related cinema closures, Disney has averaged around 13 films a year following the 2019 acquisition. The line chart shows the annual film releases by Disney and 20th Century between 2000 and 2019 ahead of the two companies' eventual merger. "I don't remember any instance with consolidation where one plus one equals two," Eric Handler, managing director and senior research analyst at Roth Capital Partners, told CNBC.Additionally, a combined Paramount and Warner Bros. slate would face some logistical issues in placing 30 films on a 52-week calendar, as well as competition for coveted premium large format theaters.The wider Hollywood cohort has also balked at the merger, citing similar concerns about job losses and reduced productions. More than 4,000 A-listers, including Robert De Niro, David Fincher, Pedro Pascal and Florence Pugh have signed an open letter opposing the combination of the two companies.At least one theater operator, however, is supportive of the merger. AMC CEO Adam Aron came out in favor of Paramount's acquisition of Warner Bros. during CinemaCon earlier this month. "Of particular importance are David's public commitments to expand film distribution by Paramount and Warner to at least 30 movies per year, and his vocal embrace of a 45-day exclusive theatrical window," he wrote in a statement. "I am confident that David Ellison is sincere as to his intentions, and truly believe that he in fact will wind up delivering on these commitments," he added. 'Empty seats and vacant screens' However, Ellison's target would not only be higher than any recent precedent — it would be significantly more."Historically, the max you're seeing out of the studio is sort of 20 a year," said Doug Creutz, senior research analyst at TD Cowen.He noted that studios like Disney, Universal and Warner Bros. have the funds to make 30 films annually, but they don't, not only because is it not profitable to do so, but also because few studios have enough quality intellectual property or original stories to put out in a year. window.addEventListener("message",function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}); "If you had 30 good ideas, then I'd say do it, but you won't," he said. "Most studios don't have 20 good ideas.""I think that the reality of it is that they'll realize that, they probably realize it already, but they're saying 30 because you're trying to get the deal approved," Creutz added. "I would say my guess is that there isn't a year where Warner plus Paramount release 30 films unless the slates are already set pre-merger."This sentiment was repeated by industry analysts, movie theater owners and even rival studios during private conversations CNBC had at CinemaCon earlier this month. More so, there was an overwhelming sense of tension between studios and cinema operators, particularly when it came to the number of theatrical titles being offered up.Theater companies would welcome more quality releases, but there has been a shortage of them following the Covid pandemic."I tell people that the only thing that exhibition has are empty seats and vacant screens until the studios step up and give us something to play," one veteran movie theater executive, who requested anonymity to speak candidly, told CNBC. "We have no other alternative."The executive noted that re-released films, live sports and concert screenings "don't pay the bills," and even concession sales aren't driving the same kind of revenue that they used to."We can't survive without movies," the executive said.Movie theaters have struggled in the wake of the pandemic because of a lack of titles. Production was slowed due to Covid-related shutdowns and was exacerbated when both the writers and actors guilds went on strike just a few years later. At the same time, streaming has become more prominent and studios are producing fewer titles for theatrical release.Fewer films has led to lower domestic box office hauls. Prior to the pandemic, annual ticket sales routinely topped $11 billion in the U.S. and Canada, but in the years after, the combined efforts of the studios have yet to surpass $10 billion. This year could break that trend, as the slate of films is significantly larger. However, if a merger does take place, the expectation is that the release schedule will once again shrink. window.addEventListener("message",function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}); "We know what's going to happen," the veteran theater executive said. "We know that when Paramount eats Warner, it's going to be exactly like Disney-Fox. There is no difference."Other theater operators echoed these sentiments when speaking anonymously to CNBC. They, too, questioned how the gaps in the slate would be filled if Paramount can't deliver on its 30-film plan.Amazon MGM has already stepped up to the plate in recent years and has promised at least 15 theatrical releases per year starting in 2027. The studio is on pace to have 13 releases in 2026. One of its recent films, "Project Hail Mary," which arrived in theaters in March, has set box office records for the studio and delivered audiences to theaters.However, Amazon's 15-film annual addition to the overall slate was already replacing the films lost from the Disney-Fox merger. It wouldn't be enough to also account for any losses in titles from a merger between Paramount and Warner Bros. "It's not great for exhibition," the cinema veteran said. "It's a lose-lose proposition." Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

The listing gives public investors their first direct stake in Ackman's investment platform, which runs a concentrated portfolio of 10 large-cap names. View More

watch nowVIDEO5:0105:01Pershing Square CEO Bill Ackman: We look nothing like other closed-end fundsSquawk on the Street Bill Ackman's long-awaited push into public markets debuted Wednesday, marking a scaled-back but still ambitious step toward building a Berkshire Hathaway-like investment platform.The Pershing Square Capital Management founder's combined initial public offering raised $5 billion, pricing at the low end of expectations after marketing a deal that initially targeted between $5 billion and $10 billion. The haul is a far cry from earlier ambitions floated two years ago to raise as much as $25 billion.The transaction created two separately traded entities on the New York Stock Exchange: closed-end fund Pershing Square USA Ltd., which began trading under the ticker PSUS, and asset manager Pershing Square Inc., listed as PS. The dual structure allows investors to gain exposure either to the underlying portfolio or to the management business itself.PSUS closed at $40.90, down 18% and well below its IPO price of $50. PS, meanwhile, ended the day at $24.20. Zoom In IconArrows pointing outwards "Hedge funds are sort of known for managing money for rich people. And now we have the opportunity for someone with $50, could be a long-term shareholder," Ackman said on CNBC's "Squawk on the Street" on Wednesday. "Usually, the retail gets cut massively back, the institutions are favored. We did the opposite."The offering was structured to appeal to both institutional and retail investors and notably omitting performance fees. Investors in PSUS received bonus shares in Pershing Square Inc., tying the two vehicles together while maintaining separate trading.The listing gives public investors their first direct stake in Ackman's investment platform, which runs a concentrated portfolio of 10 large-cap names including Amazon, Uber and Brookfield as of the end of 2025.Track record and macro hedgingCentral to Ackman's pitch is Pershing Square's long-term return profile. Since inception in 2004, the firm has generated cumulative net returns of more than 2,600%, far outpacing the roughly 836% gain in the S&P 500 over the same period, according to roadshow materials.Another key selling point is the firm's history of macro hedging — a strategy Pershing Square credits with generating outsized gains during periods of dislocation. In early 2020, the firm made one of its most high-profile trades, spending about $27 million on credit protection tied to investment-grade and high-yield indexes as the Covid pandemic roiled markets. The hedge returned approximately $2.6 billion within weeks, a roughly 93-fold gain that helped offset losses elsewhere in the portfolio.Buffett inspirationAckman took a concrete step toward a long-held ambition of building a publicly traded vehicle modeled on Berkshire, the conglomerate run by Warren Buffett for decades. The activist investor has repeatedly pointed to Buffett's evolution — from running partnerships to overseeing a permanent capital vehicle — as the blueprint for Pershing Square's future.The firm has emphasized the advantages of permanent capital — a structure that reduces the risk of forced selling during market stress and allows for longer-term positioning. Ackman has contended that such flexibility is critical to compounding returns over time, echoing the model that helped transform Berkshire from a struggling textile business into one of the world's largest investment vehicles.Ackman said he plans to adopt elements of Berkshire's shareholder culture, including hosting annual meetings where investors can engage directly with management."We're going to have investor days. We're going to have an annual meeting, Berkshire Hathaway style, where people come, and they ask questions," Ackman said. Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

While OpenAI and Microsoft remain partners, the AI company has been rapidly pushing into Amazon's world. View More

In this articleMSFTAMZNFollow your favorite stocksCREATE FREE ACCOUNT Avishek Das | Lightrocket | Getty Images OpenAI revenue chief Denise Dresser said the AI company's agreement on Tuesday to make its models available on Amazon had nothing to do with an announcement a day earlier that the startup had restructured its relationship with Microsoft for a second time in six months."The two are not related in any way," Dresser told CNBC in an interview following OpenAI's announcement with Amazon. Analysts aren't so sure.A lot has happened since late October, when OpenAI completed its recapitalization, giving Microsoft a 27% stake in the for-profit side of the artificial intelligence company. As part of that arrangement, OpenAI agreed to purchase an incremental $250 billion of Azure services. And a revenue share agreement would remain until OpenAI was verified by an independent panel to have reached artificial general intelligence, or AGI. One major development since then is that OpenAI has been cozying up to Amazon, Microsoft's biggest rival in cloud infrastructure. In November, OpenAI disclosed a $38 billion commitment with Amazon Web Services. And in late February, Amazon said it would invest $50 billion in OpenAI, which would, in turn, use 2 gigawatts worth of AWS' custom Trainium chips for training AI models.Amazon and OpenAI also agreed at the time to jointly develop "customized models" for Amazon's engineering teams to power its consumer products, and OpenAI's spending commitment on AWS expanded by $100 billion. "That was the big thing that was happening," said RBC Capital Markets analyst Rishi Jaluria, who recommends buying Microsoft shares, in an interview. This week's one-two punch is the starkest sign yet that a dramatic shift is underway in the decade-long relationship between Microsoft and OpenAI.It started in 2016, when OpenAI began running its big experiments on Azure. Three years later, Microsoft invested its first $1 billion in OpenAI, a number that would grow to $13 billion over several follow-on rounds. Read more CNBC tech newsMeta told it's violating EU law by not doing enough to keep children off Facebook and InstagramPentagon AI chief confirms DOD's expanded use of Google, says reliance on one model 'never a good thing'OpenAI's revenue, growth estimates fall short as company races toward IPO: ReportOpenAI brings its models to Amazon's cloud after ending exclusivity with Microsoft But in 2024, Microsoft started calling OpenAI a competitor in its financial disclosures, and early last year the software giant lost its designation as OpenAI's exclusive cloud provider. In an internal memo earlier this month, Dresser wrote that OpenAI's partnership with Microsoft has been "foundational to our success," but "has also limited our ability to meet enterprises where they are." With that backdrop, the latest agreement between the two companies, "is looking to be quite fluid and for all we know could change again in six months," UBS analysts wrote in a note Monday.Additional elements of the deal include an end to Microsoft's exclusive license to OpenAI's intellectual property and to Microsoft's revenue share payments to OpenAI. Microsoft will also no longer be the sole cloud provider for API products built with third parties. "While some changes seem inevitable, Microsoft appears to have made more concessions than gains," wrote the UBS analysts, who have a buy rating on Microsoft. Amazon CEO Andy Jassy called Monday's announcement "very interesting" in a post on X, adding that more details would be shared Tuesday.Hours later, his company jumped in to announce a service for building AI agents with OpenAI models. 'Original partner' Microsoft CEO Satya Nadella, right, greets OpenAI CEO Sam Altman during the OpenAI DevDay event in San Francisco on Nov. 6, 2023.Justin Sullivan | Getty Images News | Getty Images For years, developers interested in those models needed to go through Microsoft's Azure cloud or work with OpenAI directly. Now companies with large AWS investments will be able to more easily adopt the models, while taking advantage of volume spending plans.Dresser, speaking from an Amazon event, said the reworking of OpenAI's arrangement with Microsoft was not inspired by the growing collaboration with Amazon."Microsoft is our original partner," she said. "They're an incredible partner to us. They will be a premier partner as we move forward. What we are focused on is making sure, as we meet our customers where they are, that they have access to environments that they're working in. And we want to make sure that we deliver the best models in the best environments for customers to be successful."The Financial Times reported that Microsoft considered legal action regarding OpenAI's plans with Amazon, and Microsoft told the newspaper that it was "confident that OpenAI understands and respects the importance of living up to [its] legal obligation." Microsoft didn't provide a comment beyond Monday's announcement. Microsoft is similarly making moves to diversify away from OpenAI.In September, Microsoft said it was starting to draw on an AI model from Anthropic to answer some queries in the 365 Copilot assistant for commercial clients. Two months later, Microsoft agreed to invest up to $5 billion into Anthropic, which committed to purchasing $30 billion of Azure compute capacity.Taking advantage of the surging popularity of Anthropic's Claude Code, Microsoft announced in March an offering called Copilot Cowork in cooperation with Anthropic.One downside of soaring demand for Claude is that reliability has suffered. The company reported partial or major outages during 37 of the past 90 days. Amazon, an early Anthropic partner and investor, has taken notice. Anthony Liguori, a vice president at AWS, said his team, which works on the Bedrock service, switched to OpenAI's Codex as its primary development platform after relying on Claude Code and Amazon's own Kiro tool. The reality for all the major parties involved is that they need each other. Capacity is so constrained that OpenAI and Anthropic need to work with all of the major cloud vendors to secure as much compute as possible. And Microsoft and Amazon need simple access to all the major models to serve their massive customer bases.So while Microsoft and OpenAI may be drifting apart, Jaluria was quick to note, "Microsoft still needs OpenAI, and OpenAI still needs Microsoft."Correction: A prior version of this story misspelled Dresser's first name in the key points.WATCH: Private investors don't believe OpenAI is worth what it pretends to be, says CFR's Sebastian Mallaby watch nowVIDEO3:5903:59Private investors don't believe OpenAI is worth what it pretends to be, says CFR's Sebastian MallabyThe Exchange Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

The Federal Reserve on Wednesday released its latest decision on interest rates. View More

watch nowVIDEO2:1002:10Fed leaves funds rate unchanged, FOMC sees four dissensionsPower Lunch An unusually divided Federal Reserve on Wednesday held its key interest rate steady as policymakers grappled with the policy impact of persistent inflation and awaited a looming leadership transition at the central bank.In what may have been Chair Jerome Powell's final meeting at the helm, the rate-setting Federal Open Market Committee voted to hold the benchmark funds rate in a range between 3.5%-3.75%. Markets had been pricing in a 100% chance of no change.However, the meeting saw a dramatic turn amid a groundswell of officials who opposed messaging that further rate cuts could be ahead. Amid expectations for a routine vote to hold the benchmark funds rate steady, the FOMC instead was split along 8-4 lines, with officials expressing different reasons for their vote.The last time four FOMC members dissented was in October 1992.Separately, during a news conference following the central bank's decision, Powell signaled that he would remain on the Board of Governors for an indefinite period. He said he is waiting until an investigation into Federal Reserve's renovations "is well and truly over with transparency and finality." "In a term generally marked by consensus building and few dissents, Chair Powell concludes his term with 4 dissents," Brent Schutte, chief investment officer at Northwestern Mutual, wrote in an email. "This not only highlights the potential for more of the same in the coming months as a new Chair focused on changing the Fed takes over, but also the reality that the nearer term economic outlook remains highly uncertain given conflicting labor market and economic growth signals against a backdrop of inflation that has been stuck at 3% plus since the end of 2023." A divided Fed Governor Stephen Miran, as he has done since joining the central bank in September 2025, dissented in favor of a quarter percentage point cut. window.addEventListener("message",function(a){if(void 0!==a.data["datawrapper-height"]){var e=document.querySelectorAll("iframe");for(var t in a.data["datawrapper-height"])for(var r,i=0;r=e[i];i++)if(r.contentWindow===a.source){var d=a.data["datawrapper-height"][t]+"px";r.style.height=d}}}); The other three "no" votes came from regional presidents Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas. They said they agreed with the hold but "did not support the inclusion of an easing bias in the statement at this time."At issue for the trio was this sentence: "In considering the extent and timing of additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks."The phrasing indicates the likelihood that the next move would be lower, implied by using the word "additional," which reflects that the most recent rate actions have been to cut. Hammack, Kashkari and Logan, along with several other Fed officials, have warned about the dangers of persistent inflation. Higher prices augur higher rates for the Fed, which has been on an easing bias since the latter part of 2025. 'Inflation is elevated' In the post-meeting statement, the committee noted that, "Inflation is elevated, in part reflecting the recent increase in global energy prices."Markets had been widely expecting the hold and in fact are pricing in no changes the rest of this year and well into 2027. Fed officials at the March meeting indicated they foresee one cut this year then another in 2027, putting the funds rate down to its expected "neutral" level around 3.1%.Stocks were lower on Wednesday, as oil prices shot higher and investors waited high-profile earnings from four of the "Magnificent Seven." The Fed's decision marked the third consecutive meeting where the committee chose to stand pat – following three consecutive cuts last year.For most of his eight years as chair, Powell has been able to maintain strong consensus among the committee even as the Fed has struggled to contain inflation and resist aggressive White House political pressure.Policymakers, though, face an economic climate where inflation indeed has held well above the Fed's 2% target, as President Donald Trump's tariffs and soaring energy prices are complicating policy. Normally, Fed officials would look through the temporary price shocks from both factors, but the duration of the surges has raised concern about the longer-lasting consumer impact.On the other side of the Fed's so-called dual mandate, concerns have abated over the low-hire, low-fire labor market.Nonfarm payrolls in March grew by a better-than-expected 178,000, while the unemployment rate slipped to 4.3%. For April, payrolls processing firm ADP has reported average weekly private payroll growth around 40,000, further indicating that the jobs picture is healthy if less than robust.Earlier in the day, the Senate Banking Committee in a party-line vote advanced Trump's nomination of Kevin Warsh as the next Fed chair. The full Senate is widely expected to follow suit, setting up the Fed's first leadership change since Powell took over in 2018.During the Powell's news conference, he congratulated Warsh on the progress of his appointment. Powell's choice Typically, a Fed chair would depart once a successor is installed, but Powell signaled his intention to serve until the renovations investigation has been completed. His term expires in January 2028. "I'm encouraged by recent developments, and I'm watching the remaining steps in this process carefully," Powell said, commenting on his decision. U.S. Attorney Jeanine Pirro recently handed over a Justice Department probe into renovations at the Federal Reserve's headquarters to the central bank's inspector general. If the matter isn't resolved and Powell's stays on it would mark the first time a sitting chair didn't leave the Board of Governors since Marriner Eccles in 1948.Powell and Eccles faced similar challenges in the form of White House pressure on monetary policy. In Eccles' case, President Harry S. Truman pushed the Fed to keep rates low to help reduce government borrowing costs. Trump has pressured the Fed to help the housing and labor markets, and to help reduce the financing burden of the nation's nearly $39 trillion national debt.In the Eccles era, the clash led to the 1951 Treasury-Fed Accord, which helped formalize the Fed's independence by creating a clear barrier between the two institutions.Warsh has spoken of reopening the accord and modernizing it for the current era where the central bank's fixed income holdings total some $6.7 trillion. The chair-elect has advocated strengthening the relationship with better coordination on debt issuance while furthering Warsh's goal of lessening the Fed's imprint in the bond market.Powell has spoken strongly about Fed independence. By remaining as a governor, he can continue to influence the board as a member. He also denies Trump an opening to appoint another member to the board. Counting Warsh, the president would have three appointees on the seven-member board, including Governors Christopher Waller and Michelle Bowman from his first term."This means that the addition of Kevin Warsh to the FOMC will not swing the balance between doves and hawks, as Warsh will take Stephen Miran's seat given Powell's seat will not be open for the time being," said Josh Jamner, senior investment strategy analyst at ClearBridge Investments.— CNBC's Christina Cheddar Berk contributed to this report. Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.

Democratic lawmakers grilled Hegseth about the Iran war in a hearing about the Pentagon's budget. View More

In this article@CL.1@LCO.1Follow your favorite stocksCREATE FREE ACCOUNT US Secretary of Defense Pete Hegseth, testifies for a US House Armed Services Committee hearing titled "Department of Defense FY2027 Budget Request," on Capitol Hill on April 29, 2026. Saul Loeb | Afp | Getty Images Defense Secretary Pete Hegseth, in his first appearance before Congress since the Iran war started, downplayed the length of the war and said the biggest "adversary" the U.S. faces at this point in the war is the "reckless, feckless and defeatist words of congressional Democrats and some Republicans." "Two months in, on an existential fight for the safety of the American people, Iran cannot have a nuclear bomb, we are proud of this undertaking," Hegseth said in his opening remarks before the House Armed Services Committee on Wednesday. President Donald Trump, at the outset of the war, said the conflict would be over within a matter of weeks. Hegseth and Chairman of the Joint Chiefs of Staff Dan Caine testified about the Pentagon's budget for the 2027 fiscal year as the war dragged beyond its second month. It's caused global economic turmoil as Iran has choked vessel traffic through the Strait of Hormuz since the beginning of the conflict. Read more CNBC politics coverageTrump’s lack of focus on economy is spooking Republicans as 2026 election loomsTrump orders Navy to ‘shoot and kill any boat’ laying mines in Hormuz StraitU.S. Navy Secretary John Phelan leaving Trump administration: Pentagon Armed Services Committee ranking member Adam Smith, D-Wash., questioned Pentagon comptroller Jules Hurst about the cost of the war, which has not been fully fleshed out publicly. The administration has yet to send Congress a supplemental spending request to finance the war. Hurst, who also testified, said the war's cost is estimated at $25 billion so far, mostly in munitions. Hurst said the Pentagon will send a supplemental request once it has a full assessment of the cost of the conflict. White House Office of Management and Budget Director Russell Vought in congressional testimony April 15 declined to estimate the cost of the war. Vought spoke to the House Budget Committee shortly after a Harvard University analyst found the war could cost taxpayers $1 trillion.The U.S. military has burned through munitions during the conflict, which Congress will need to provide funding to replenish. The Pentagon is also asking for a massive $1.5 trillion fiscal 2027 budget, which is expected to draw scrutiny from lawmakers. The hearing allowed Democrats, who have largely opposed the war, to publicly question Hegseth and the administration on their plans and on the cost of the war. The secretary took an adversarial tone towards Democrats' questions, frequently interrupting their lines of inquiry.Smith said in his opening statement that while the "proficiency of our military has been on display," the administration has not met its strategic goals and questioned whether the administration has a plan to win the conflict."As we sit here today, Iran's nuclear program is exactly what it was before this war started," he said. "They have not lost their capacity to inflict pain, they still have a ballistic missile program, they're still able to blockade the Strait of Hormuz and have the ships that are capable of doing that. What is the plan to get that to change?"Pressed by Smith on the strategy for reducing Iran's nuclear threat, Hegseth said Iran's nuclear facilities have been "obliterated," a line he's consistently used for weeks, and the U.S. action was necessary to destroy a "conventional shield" to safeguard Tehran's nuclear ambitions. Hegseth said the goal is to "get them to a point where they're at the table," giving up nuclear weapon ambitions. "They haven't broken yet," Smith said. Rep. Ro Khanna, D-Calif., questioned Hegseth on the economic costs borne by Americans from the war in Iran. Since the war began, oil prices have spiked globally. That has caused gasoline prices to soar in the U.S. Energy prices cascade into other parts of the economy, like food and transportation. U.S. crude on Wednesday hit $106 per barrel. The global benchmark Brent rose to $118 per barrel. Hegseth bristled at the question, responding that "I would simply ask you what the cost is of an Iranian nuclear bomb," and accusing Khanna of "playing gotcha questions about domestic things." Pressed further by Khanna, Hegseth said the Trump administration has "an incredible economic team that's managing this better than what the previous administration did to our economy." Khanna then lambasted Hegseth, arguing he doesn't know the cost of the war. "You didn't even do the analysis on how much it's costing the American people," Khanna said. "You don't even know what the average American is paying."Most Republicans lauded the job Hegseth has done as defense secretary and defended the administration's war effort. He did weather some intraparty criticism, however, over his firings of top military officials. Hegseth recently fired Gen. Randy George, the former Army chief of staff, and John Phelan, the former secretary of the Navy. Rep. Austin Scott, R-Ga., told Hegseth: "I disagree with the firing of Gen. George."Scott, during the particularly partisan hearing, also warned that bipartisanship will be necessary to get any defense budget across the finish line. Military defense packages in Congress are usually negotiated and passed by a bipartisan coalition, as both sides typically have defectors. "We're going to lose some Republican votes. We're going to have to have some [Democratic] votes to do the things that we have to do to fund the Department of Defense," Scott said. "I would encourage everybody to keep that in mind." Choose CNBC as your preferred source on Google and never miss a moment from the most trusted name in business news.