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Investors punish Big Tech AI expenditure that results in slower growth
Investors responded this week to Big Tech's earnings with a harsh warning: They will forgive companies that spend record amounts if they bring solid growth but punish them if they don't. This shows how the stakes have changed in three years since ChatGPT was launched. Meta Platforms, which owns Facebook, saw its revenue surge by 24% during the quarter ending December. This was due to online advertising targeting that was boosted?by artificial Intelligence. AI was also responsible for a first quarter revenue forecast that surpassed estimates. Meta's increasing sales were able to?fund? data-center spending expected to rise by as much as 87% to $135 billion this year. John Belton said, "Meta’s headline figures are an interesting reflection of market sentiment toward AI spending," said John Belton. The market is usually concerned about the first quarter, but the company has a large revenue forecast. Microsoft's Azure cloud computing business grew only marginally above expectations and also fell far behind record quarterly spending. OpenAI, a prized holding that accounts for 45% in the backlog of AI projects, is a concern. It could put $280 billion at risk if the startup fails to gain momentum. Zavier Wong is a market analyst for eToro. He said that Microsoft's close ties with OpenAI are what underpins its leadership in enterprise AI. But they also?introduce a concentration risk. ChatGPT's creator issued a "code-red", or internal warning, in December when Google's Gemini 3 was launched and received positive reviews. He is now playing catch-up with Anthropic's Claude Code in AI coding. Microsoft shares dropped 6.5% after-hours on Wednesday while Meta's soared 10%. Microsoft, which has benefited from its early-mover advantage in the OpenAI space to become the most valuable company on the planet by 2024, is now facing increasing investor pressure to justify the high capital expenditure. The company predicted that Azure's growth would?stay steady? in the period between January and?March 2025 after a slowdown in the final three months of the year, which was partly attributed to AI chip capacity limitations. Amy Hood, Microsoft's finance chief, said that if she had allocated all the graphics processing units (GPUs) that were just brought online in the second and first quarters to Azure, then the KPI would have increased by over 40%. She also added that using chips for internal development had limited growth. META BET ON AI'S COMPOSING EFFECT Meta's aggressive push in the AI race, which included a talent battle and a pledge to invest hundreds billions of dollars into massive new datacenters for "superintelligence", paid off during the first quarter. Meta predicts that growth will accelerate to as much as 33 percent in the current quarter. It is also racking up large bills with cloud providers like Alphabet's Google. This bodes well for Alphabet's search giant's next-week results. Mark Zuckerberg, Chief Executive Officer of Facebook, said that AI would "improve the quality of both the organic experience as well as advertising." Zuckerberg promised that superintelligence - a theoretical milestone achieved when machines surpass humans - will allow it to offer highly personalized artificial intelligence for a large user base of social media users. Meta, who predicted that total expenditures would increase by 43% this year to $169 Billion, said: "I believe that it will have a compounding effect." TESLA SET TO DOUBLE OUTLAY ?THIS YEAR Elon Musk’s Tesla also focuses on increasing spending, as the company doubles its expenditure this year, to $20 billion, and pivots towards AI, humanoid robotics, and autonomous vehicles. Tesla's shares retreated after a 3.5% rise in quarterly revenue and profit, which were higher than expected. Analysts noted that the results revealed a mismatch between the corporate AI goals of investors and their demand for payouts. Jesse Cohen is a senior analyst with Investing.com. He said that the market seems to be wondering if these massive capital spending hikes will produce sufficient returns. This reflects the growing gap between Wall Street's tolerance for long-term investment cycles and tech companies' AI aspirations.
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China expects record 9.5 billion passenger trips during Lunar New Year
A state planning official announced on Thursday that China expects a record number of passenger trips during the 40-day Spring Festival holiday travel period. This is higher than the 9.02 trillion domestic trips made last year. China has for the first extended its official Lunar new year?holiday to nine days, in an effort to increase domestic consumption. The holiday will take place from February 15 through February 23. China has a new push for'services-led consumption' to boost the domestic market. Travel rushes during China's largest holiday are often viewed as a barometer for the economy and a test of its transportation system. State officials have said that the number of rail passenger trips is expected to exceed 540 million and that aviation trips will likely surpass 95 million. Both are expected to be higher than previous peaks. They said that transportation capacity would be increased on popular routes, and in "favoured" areas to meet the travel demand. Colleen howe reported from Beijing, Farah master wrote the article and Jacqueline Wong edited it.
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Abu Dhabi's Lunate names an ex-ADQ leader to spearhead global expansion
Lunate, based in Abu Dhabi, has appointed Mohammed Hassan Alsuwaidi as its executive chairman and managing director. He will be leading the firm's global expansion strategy. Lunate manages $115 Billion in assets, and describes itself in a press release as an independent commercial partner-led alternative investing company. Alsuwaidi will help to expand its international presence, and deepen institutional capital relationships. Over the next five years, the firm plans to double its assets under management. Alsuwaidi is the founder CEO of ADQ. The fund is owned by Abu Dhabi and is the third largest sovereign wealth fund in the emirate. Since its establishment in 2018, the fund's assets have increased to $263 billion, spread across sectors such as energy, infrastructure and healthcare. ADQ's portfolio - which includes Etihad Airways and Abu Dhabi Ports Company - is seen as crucial to diversifying the economy of the emirate and boosting non oil growth. The statement did not specify who would succeed him. He is still the investment minister. Lunate, a subsidiary company of Chimera Investments, is part of the conglomerate headed by Sheikh Tahnoun bin Zayed Al Nahyan. He is Sheikh Mohamed bin Zayed's brother and national security adviser. Sheikh Tahnoun is the head of a huge business empire in Abu Dhabi. He chairs the Abu Dhabi Investment Authority and ADQ, which are the largest sovereign wealth funds in the UAE. The co-managing partners of Lunate also own stakes. The managing partners of Lunate, Khalifa al Suwaidi and Murtaza Hussain, said that Alsuwaidi’s ability to build to scale, attract global capital and drive sustainable growth would be crucial as Lunate continued to accelerate its development into a global investment company. Lunate and BlackRock's HPS Investment Partners announced in October that they would launch a platform for investing in large North American?and European corporations, with Lunate committing at least $1 billion. Abu Dhabi is the home of several sovereign wealth funds, which collectively manage estimated assets worth more than $1.5 trillion. Reporting by Rachna uppal and Yousef saba. Alison Williams, Mark Potter and Alison Williams edited the report.
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Western Balkans ask EU for concessions to truckers after fourth-day border closure
The Western Balkans continued to blockade cargo terminals at the borders of the European Union on Thursday, as regional governments asked for the EU's help in adjusting 'rules that they claim add hundreds of millions of Euros?to costs. On Monday, truckers from Bosnia, Montenegro and Serbia protested against the EU’s stricter entry-exit policy, which threatens them with detention or deportation if they exceed Schengen's visit limits. On the same day, EU spokesperson Markus Lamert stated that the bloc was working on new visa strategies for highly mobile occupations such as truck drivers, athletes, or artists. However, the drivers kept up their pressure. A mile-long truck column blocked the approach to the cargo terminal at the Batrovci border crossing between Serbia and Croatia. "I personally would like this to end tomorrow ...,, but we will see what 'the European Commission' will... bring us as a resolution," said Dusan andjelic of the MS Transporter company. Blockades stopped the flow of freight along the main corridor connecting the EU with Turkey and the Middle East. Marko Cadez, the head of Serbia's Chamber of Commerce, said that 93% of exports were blocked from four countries. This caused daily damages of approximately 92 million euro ($109.95 millions). EU-based companies operating in the region or exporting there?are affected as well. Cadez, a Belgrade-based Cadez representative, said that "for every company... there are between 10,000 and 50,000 Euro per day in 'penalties'... because they don't service customers." Jakov Milatovic, the President of Montenegro, wrote to Marta Kos on Wednesday urging her to consider the daily needs of Montenegrin truckers. Montenegrin truckers lifted their blockade on Thursday of the Adriatic Port of?Bar, which had caused fuel shortage fears. Cadez stated that Serbia is seeking a meeting to discuss possible solutions, such as special permits or visas. $1 = 0.8368 Euros (Reporting from Aleksandar Vaovic in Belgrade, and Branko Filipovic in Batrovci. Editing by PhilippaFletcher).
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Norfolk Southern reports a rise in its quarterly profit due to cost control
Norfolk Southern announced a higher profit for the fourth quarter on Thursday due to cost control. This was despite uneven freight demand, and a persistent macroeconomic stress. The results come after the U.S. Surface?Transportation?Board earlier this month returned Union Pacific's $85 billion merger proposal with the company to be revised. Surface Transportation Board has deemed Union Pacific's December merger application incomplete. However, Jim Vena, the CEO of Union Pacific, said that the request was routine and the deal is still on schedule to close in the first half of 2027. Norfolk stated in October that it anticipated future top-line fluctuations due to "competitor reaction"?to the merger proposal, which had already caused a 2% drop in third-quarter intermodal volume. Intermodal shipping is the combination of two or more modes of transport for goods. Mark George, the CEO of Norfolk, said that the company saved over $215 million in the fourth quarter. This was primarily due to productivity gains. He added that "as we approach 2026, demand remains uncertain." Revenues from railway?operations? for the fourth quarter dropped 2%, to $3 billion?, compared with a year ago. Volumes on the railways fell 4% compared to a year earlier. Norfolk, an Atlanta-based company, reported a profit adjusted of $3.22 per share, compared to $3.04 a year ago. The company's operating rate, which is a key measure for efficiency, was 65.3% on a?adjusted basis. This represents a 40-basis point decline from the same period a year ago. Apratim Sarkar, Maju Samuel and Apratim Sakar contributed to this report.
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Southwest expects to exceed its 2026 profit estimates as the overhaul gains momentum
Southwest Airlines on Wednesday forecast a stronger-than-expected profit in ?2026 and signaled a solid start to the year despite U.S. winter storm disruptions, saying ?an ?overhaul of its business model was beginning to gain traction. The airline has shifted away from its old practices, such as unassigned seats and free checked baggage, and said that it is benefiting from more customer-focused offers, reliable operations, and early positive results of the changes it implemented last year. Southwest is expecting a profit adjusted of at least $4.00 per share. Analysts' expectations average $3.19. Analysts had predicted a profit of 33 cents per share for the first quarter. In after-hours trading, the company's stock gained over 5%. Southwest Airlines said that the new assigned seat and extra legroom options on flights, which began this week, could boost earnings if customers are willing to pay for these upgrades. The carrier stated that it would have a clearer idea of the strength of this demand within the next few months and planned to provide more detailed profit forecasts for 2026 in its "next quarterly report" due out in April or even sooner. Southwest Airlines said that it expects unit revenue, which is a key measure of how much money it makes for each flight it performs, to increase by at least 9.5% in the current quarter. Analysts had expected a 6.53 percent rise. TRANSFORMATION PIVOT Dallas-based carrier, United Airlines, Delta Air Lines and American Airlines, were unable to compete with the Dallas-based carrier for many years because it sold a simpler product. This left them with fewer levers when costs increased and demand changed. It has shifted away from its old model as investors and pressure on profits have forced it to change. The switch from open seating to assigned seating is a departure from the long-standing system. It makes 'the onboard experience? more similar to what travelers see at big legacy airlines. It began charging customers for checked baggage last year. It also introduced a more restrictive "Basic" entry-level fare, and tightened the rules on travel credits. These are the types of add-ons that Southwest has avoided for many years, but that rivals use to increase revenue. It also aims to reduce?costs, and improve the day-today operations. Southwest CEO Bob Jordan said the change was "the most ambitious transformation in Southwest's History" and that early execution from cost reductions to improved reliability has created "a foundation for significant earnings growth this year." Southwest Airlines' stock outperformed both the market as a whole and the entire airline industry over the last year. Investors bet that the new look will work. The adjusted profit for the fourth quarter was 58 cents per share, which is in line with expectations. The company will hold a conference call on Thursday morning with analysts and investors to discuss its financial performance. (Reporting and editing by Chris Reese, Jamie Freed, and Rajesh Kumar Singh)
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C.H. Robinson's profits beat quarterly estimates due to cost control and weak freight demand
C.H. Robinson's fourth-quarter profit was above Wall Street expectations on Wednesday as cost control helped the global freight forwarder to mitigate the impact of a weak demand in a challenging international trade environment. In aftermarket trading, shares of?the company? rose 6.3%. The largest U.S. Freight Broker reported a 5% drop in operating costs for the quarter. Personnel expenses, other selling, administrative and general costs all fell by about?5%. The average number of employees fell by 12.9% during the fourth quarter. C.H. Robinson has increasingly used artificial intelligence to streamline operations and reduce manual processes. This shift is occurring as the U.S. freight market struggles with muted shipments and excess capacity. These factors are pushing up rates and forcing logistics companies to reduce costs. The fourth quarter was a difficult macro-environment, as weak global freight demand, increasing spot costs for trucking, and declining ocean rates were all headwinds. CEO Dave Bozeman stated. Global Forwarding, the company's freight forwarding division, reported a 17.3% drop in revenue for the quarter to $730.98 millions. The company's total revenue dropped 6.5%, to $3.9 billion. This was further affected by the sale of its Europe Surface Transportation division, as well as lower prices and volumes for ocean and truckload service. LSEG data shows that cost control helped the company achieve a profit adjusted for the quarter at $1.23, which was higher than analysts' estimates of $1.12, according to LSEG. Reporting by Abhinav Paramar and Apratim Sakar in Bengaluru, Editing by Shreya Biwas and Leroy Leo
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Plane crash in Colombia kills 15, including politician
Satena, the state-run airline, said that a plane crash occurred in northeastern Colombia on Wednesday, killing all 15 people aboard, including a local politician. Satena said that the Beechcraft 1900 turboprop twin-engined plane took off from Cucuta before noon, near the Venezuelan border, for a short trip to Ocana. The carrier said that 12 minutes into the flight the air traffic control lost contact. Satena said that the emergency beacon on the plane 'had not been activated. According to the airline's?passenger listing, the flight carried Diogenes Quintero, members of his team, and Carlos Salcedo - a Congress candidate ahead of the March elections. Local media released images of the plane's crash, which included what appeared to be significant fuselage damage. The area where the plane crash occurred is a mountainous area where coca leaves are grown. This raw material for cocaine is also where illegal armed group such as the National Liberation Army, and a dissident faction of Revolutionary Armed Forces of Colombia, operate. Reporting by Nelson Bocanegra and Luis Jaime Acosta; Editing by Daina, Beth, Kylie, and Deepa Babington
Turkey demands that Greece coordinate its research in the disputed Aegean waters
Turkey's Defence Ministry said that Ankara had issued a maritime notification urging Greece to coordinate with Ankara all research activities in parts of the Aegean sea that Turkey considers its continental shelf.
The relationship between NATO allies and historic rivals has improved over the past few years, but there is still disagreement about where the continental shelf begins and ends in the Aegean Sea - an area that holds significant energy potential, and which could have implications for airspace and overflights.
Turkey issued a Navtex – a legal advice message for?mariners – outlining its objections to Greece’s activities in Aegean sea that Ankara claims violate international?law, and demanding coordination.
Ankara issued the first notice in history without an expiration date. Both sides had issued temporary advisories in response to the respective activities they were undertaking in the region.
This move could fuel tensions among allies who are seeking energy resources in eastern Mediterranean and affect the operations of vessels operated by companies in the region.
The Greek foreign minister stated earlier this month that the government had plans to expand its territorial waters, potentially into the Aegean. The Turkish parliament declared in 1995 that Greece's unilateral extension of its waters beyond six nautical miles would be a cause for war. Athens argued this was a violation of international maritime law.
Greece has said that the only thing it will discuss with Turkey, is their maritime zones. This includes continental shelves and exclusive economies zones. (Reporting and writing by Tuvan Gümrukcu; Editing by Alexandra Hudson).
(source: Reuters)