boost economic growth tax rises boost economic growth will put the brakes on expansion? welcome. this is business today and we will start with news from the tech sector because tech stocks are weighing on wall street today. let me show you what is happening on the nasdaq, heading for its worst day in months after results from mehta and also for microsoft on tuesday. investors are worried about big ai investment and that the firms are putting a lot of money into it without any clear sight of a return. you see the nasdaq is off by more than 2.3% and the concern is whether the money they are investing will be repaid. let's talk to our north american business correspondent who is following this. this is the problem, all of the big tech firms piling into ai problem, all of the big tech firms piling into aland as yet we do not know whether they can monetise it. we do not know whether they can monetise it— monetise it. you are quite ri . ht monetise it. you are quite right and _ monetise it. you are quite right and we've _ monetise it. you are quite right and we've seen - monetise it. you are quite right and we've seen the l monetise it. you are quite - right and we've seen the shares in microsoft and meta falling

and they are dragging the nasdaq with it. even though we saw a different share price reaction when it came to the results for alphabet there is a common theme and that is that al spending, investors are ai spending, investors are nervous about whether they are going to see the returns from the ai spending and how they will sustain profit growth when they are spending so much in this new technology. and there's a difference between there's a difference between the haves and have—nots, those that can monetise it and those that can monetise it and those that can't and this was especially the case for microsoft which has really ramped up its spending on al but the results are strong and they did beat expectations, it's the cloud imputing division climbed 33% but it was about forecast for the cloud computing division as well as the excessive ai spending and it was a similar story for meta with shares down and this is when the bar is so high, particularly at these very

expensive levels.- particularly at these very expensive levels. the question as well about _ expensive levels. the question as well about the _ expensive levels. the question as well about the investments | as well about the investments they are making is whilst it's costing them millions, they cannot afford to not invest because there's one direction of travel when it comes to ai and it is about it being the future of tech so there will be firms worried that if they don't get on this race, they will lose further down the line so they can't afford to invest right now. so they can't afford to invest right "ow-— right now. it's a difficult conflict _ right now. it's a difficult conflict to _ right now. it's a difficult conflict to describe - right now. it's a difficult - conflict to describe because we have seen ai has driven this market rally on a year to date basis but now investors are concerned about getting the returns from aland we see in these big companies pour money into it, particularly the magnificent seven and for microsoft we see their shares are struggling now because they are struggling now because they are the second to worst perform in the cohort and investors are concerned about al and how they navigate that and we will see

it in the earnings because they are looking for any signs of underperforming to punish the stocks, so we might see some divide between the have and have—nots. divide between the have and have-nots-— divide between the have and have-nots. apple results, we had of the — have-nots. apple results, we had of the tech _ have-nots. apple results, we had of the tech stocks - have-nots. apple results, we had of the tech stocks but. have-nots. apple results, we| had of the tech stocks but not apple yet. explain what we might yet hear. it apple yet. explain what we might yet hear.— might yet hear. it will be interesting _ might yet hear. it will be interesting to _ might yet hear. it will be interesting to see - might yet hear. it will be interesting to see which | interesting to see which direction the shares go for apple and amazon. we'll tech reign supreme or investors punish the stocks. businesses will look to apple to provide an update on demand for its iphone with the ai features and thatis iphone with the ai features and that is something that analysts have been hoping could propel apple from a period of low growth and investors that will be keenly watching that as well but apple could be vulnerable. the stock has had two downgrades in the past month alone with the analysts saying that optimism is a bit excessive here and also i will

briefly touch on amazon as well because they will be looking for the health of the consumer with its e—commerce business, and this focus on cloud computing and ai spending. yes the ai thread _ computing and ai spending. yes the ai thread running through all of the results. we will talk more about apple when we get the figures. elsewhere, investors not happy about results from uber. the app said eight grew at the slowest pace in over a year and said it was down to cash strapped riders taking public transport. bookings for the third quarter rose by 16%, coming bookings for the third quarter rose by16%, coming in bookings for the third quarter rose by 16%, coming in at $41 billion, still a big amount of money but less than forecast. let's talk to our business reporter who is following this for us and this is the weird thing, a huge number but still manages to disappoint. why? if you look at isolation, kaden crapp —— uber made profit of over $1 billion ——

uber made billion dollars in isolation, and growth in bookings are up 16%, and that also looks good, but you have to take into account the fact this is a fast—growing company and investors are gambling on growth. this is a company that despite only having recently started to turn a profit is worth $150 billion so if it's not growing quickly enough, those investors are not going to make the profit they are expecting and it is forecast for the fourth quarter were disappointing so still growing relatively quickly but not growing as quickly as investors would like and therefore the share price which is very high has been dropping rather quickly. has been dropping rather cuickl . , ., quickly. interesting that even a firm like — quickly. interesting that even a firm like uber _ quickly. interesting that even a firm like uber is _ quickly. interesting that even a firm like uber is not - quickly. interesting that even l a firm like uber is not immune to the squeeze on spending and a lot of people thinking, i won't spend on a uber even if it's a few quid more and take public transport instead. everybody does have an option, so there are alternatives that people can choose and the other

problem that uber is facing is there are concerns growing it has saturated the market. if you go out in a city there is uber and there's not enough room for growth because the people who want to take them are already taking them so the company is trying to move the operation into the suburbs of major cities and looking for new markets and students for example but they are very price sensitive so people will not be flocking in if they have alternatives like taking a bus and they might do that and that is the worry for investors. theo, good to talk to you it is one whole pound, quid, in the uk. household businesses are weighing up the impact of yesterday's tax and spending plans delivered by the chancellor. rachel reeves announced tax rises worth £40 billion to fund the nhs and other public services. as promised there will be no direct rise to income tax or vat or employee national

insurance but employers will pay national insurance at a higher rate and at a lower threshold meaning it will pull more —— more of the workforce into the national insurance bracket and that amounts to a tax bill of £25 billion for business. earlier i spoke to the chief economist at pwc and explained that the budget is very much a case of short—term pain for hopefully long—term gain. i pain for hopefully long-term aain. ., pain for hopefully long-term i ain, ., ,., , pain for hopefully long-term rain, ., , �* gain. i would say i'm quite sympathetic _ gain. i would say i'm quite sympathetic to _ gain. i would say i'm quite sympathetic to the - gain. i would say i'm quite i sympathetic to the chancellor who had to navigate a difficult situation with high public debt, no net growth and deal with the political constraints on the manifesto but i think the budget was big in terms of scale and policy direction and i think there were three main tests for businesses. one with respect to the cost of labour and we saw three main changes, the employment rights bill, the increase in employers national insurance contributions and the changes to minimum wages. in isolation is are good policies but put together that is a big

change for businesses they will have to adapt to. the second one was with respect to the state of public services and the government plan envisages a very fast ramping up of day—to—day spending in the next couple of years, so the resources will be therefore public services to take on but i think the devil will lie in the detail because delivery will be the main challenge for the chancellor and on the third point it's the reaction of the financial markets who have been cautious. i think a good comparison would be the mini budget of 2022 because that budget envisaged about 40 billion of unfunded of a loosening of fiscal policy and yesterday's loosening is about 35 billion but the reaction of financial markets is quite different. ten year yields are up different. ten year yields are up by different. ten year yields are up by 20 basis points whereas in the 2022 budget they were significantly higher, significantly higher, significant higher than that.

the question is whether people see the benefit and they are prepared to offer a bit more if they see an improvement in some public services which is promised by the chancellor this morning saying she is very aware that the plans will affect workers and businesses absorbing the costs, paying more national insurance meaning they might get smaller pay rises, so therefore it's a big gamble that growth will result from these changes because you are putting a burden on business and business could say hang on, we will go elsewhere. that is a fair point and i would say on the growth outlook, if you