The Big Tech earnings dilemma
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What is the main topic discussed in this episode?
Hey guys, it's Mark checking in from my time off. I wanted to let you know about the FT Weekend Festival happening on Saturday, September 5th at Kenwood House Gardens in London or online wherever you are. Spend the day with FT journalists, leading voices, and forward thinkers across business, politics, economics, culture, and the arts. As a podcast listener, you're going to save 10% on tickets with the code FT podcast. Just visit ft.com slash festival to find out more. We'll have that link in the show notes.
Good morning from the Financial Times. Today is Wednesday, July 29th, and this is your FT News Briefing. Ukraine has a new tactic in its war with Russia, and big tech companies are facing a dilemma as they report earnings this week.
Can one of these companies get the mix right of strong AI growth without the overwhelming and terrifying AI spending?
What new tactic is Ukraine using to target Russia's energy infrastructure?
Plus, AI has been hallucinating all over reports from big four consultants. I'm Sonia Hudson, InfoMark Filipino, and here's the news you need to start your day.
Ukraine has a new strategy for attacking Russia's energy industry. It's previously conducted broad drone attacks on refineries. Now Ukraine is focusing on striking critical components that are hard to replace. The goal is to keep plants offline for longer and make each attack more costly for Moscow. This is all according to Ukrainian military planners, drone operators, and energy specialists.
Why are Ukraine's strikes now focusing on hard-to-replace refinery components?
Russia and Ukraine inherited similar Soviet-designed energy systems. And that gives Ukrainian engineers a detailed understanding of Russian facilities. But it also means Russia has been able to use that same knowledge to hit Ukrainian energy infrastructure.
Some of the biggest U.S. tech companies report quarterly earnings this week. Meta and Microsoft are releasing their results later today. And this all comes as global chip stocks are taking a beating. Investors are worried about how long the AI boom times can last. Here to tell us what these jitters mean for big tech is the FT's U.S. financial commentator, Rob Armstrong. Hey, Rob. Hey. So what did we see yesterday across global chip stocks?
Which Big Tech earnings highlight the AI spending versus growth dilemma?
So what we saw is a pretty sharp sell-off in chip stocks that started in America, moved overnight to Asia, to Korea and Japan, where there's other large chip companies, and then came back around the world and hit chip stocks in America again yesterday. This is part of a larger story we've seen unfolding in the last two or three months, where first, the big... So-called magnificent seven U.S. tech stocks surrendered their market leadership. After that, the semiconductors picked up at the baton and ran with it for a while. But now they've started to falter. So it's like, who's going to lead the market now?
When everyone's wobbling.
Yes.
So, you know, all this turbulence is happening right in the middle of earnings season. What have we heard from big tech companies so far, the ones that have reported? And what are you expecting this week from Microsoft, Meta, Apple and Amazon?
Well, the one we have heard from is Google, and their results very neatly encapsulate the dilemma that markets are facing right now. And Google, or Alphabet, as the parent company is known, came out and said, well, we had great over 80% growth in our cloud computing business, which is basically their AI business. But we spent even more billions of dollars than you thought we were going to building data centers and investing in this technology. And the market looked at that balance and said, we don't like it. And the share sold off. So what I think we're likely to see in the case of Microsoft, Meta, and Amazon is that dilemma playing out again. Can one of these companies get the mix right of saying,
strong AI growth without the overwhelming and terrifying AI spending.
Rob, I'm also curious about the competition that we're seeing out of China. You know, we had the Chinese startup Moonshot release a really competitive AI model last week. There was also this blockbuster listing of a Chinese chipmaker in Shanghai on Monday this week.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–0:58
2
What new tactic is Ukraine using to target Russia's energy infrastructure?
0:58–1:46
3
Why are Ukraine's strikes now focusing on hard-to-replace refinery components?
1:46–2:40
4
Which Big Tech earnings highlight the AI spending versus growth dilemma?
2:40–12:47