Chapter 1: What impact does AI have on energy consumption in data centers?
AI is transforming industries, but the data centers powering it require more energy and water than ever. At the break, join Christoph Beck, Chairman and CEO of Ecolab, for insights on using water effectively while safeguarding this critical resource for future generations.
Welcome to Tech News Briefing. It's Friday, January 30th. I'm Katie Dayton for The Wall Street Journal. Meta and Microsoft have both spent billions on artificial intelligence in recent months. And now that investment is finally reflected in a rising share price for one of them. We're taking a look at why the stock market fortunes of these two tech powerhouses are diverging so sharply.
Then, a small group of companies are betting that your old e-bikes and hard drives could help combat China's chokehold on the rare earth metal industry. Stay with us to find out how it could work. But first, Microsoft and Meta have been in the doghouse with investors recently.
They're the two biggest spenders when it comes to AI, at a time when the market is starting to question just when all that investment will pay off. But this week, something shifted. Meta reported record quarterly sales and saw its stock price climb. But it was a different story for Microsoft. Here to break it down for us is WSJ Heard on the Street columnist Dan Gallagher.
So Dan, earlier this week, we had earnings reports from Meta and Microsoft that both slightly exceeded Wall Street's expectations for their December-ended quarter. But the markets reacted very differently to each company. What happened?
In this case, I boil it down to simplicity versus complexity. Meta, 98% of their business is advertising. They've been able to use AI in ways to improve that, drive more engagement, better targeting, and so forth. And that's showing up in their growth.
And they projected a really strong, essentially, growth acceleration for the first quarter, which kind of sold the message that AI is actually helping them. And it gave them essentially a pass on what's been this spending. All of the big companies have been spending a ton on AI.
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Chapter 2: How are Meta and Microsoft investing in AI differently?
Meta is spending the most relative to its revenue, and it's going to spend even more. Like this year is probably going to spend more than half of its revenue on CapEx, which is an obscene amount. for these companies. But the stock is up because investors think AI is actually paying off for them.
And what about Microsoft?
Microsoft has this like more complex business model where they do software for large corporate customers, for consumers. There's these mix of like cloud contracts. They even sell things like Xbox that's in that mix too. So it's a pretty complicated setup and they're trying to use AI in a number of ways. One, they're trying to develop it internally to make their own processes better.
They're powering AI computing for companies like OpenAI, which is a very big customer for them. And they're also trying to drive people like us to use things like Copilot at work. Copilot is their AI software that we can use to run spreadsheets, to make PowerPoints, all these sorts of things. So they have this kind of more complex task.
And one thing the recent report showed is that all these companies don't have as much AI computing capacity as they'd like to have. They talk about being capacity constrained.
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Chapter 3: Why are the stock market fortunes of Meta and Microsoft diverging?
And Microsoft has had to make that different parts of that capacity available for different parts of its business. And they intentionally decided that not to put as much capacity towards its cloud business that's the most closely watched by investors. So the cloud revenue growth wasn't quite what investors wanted to see. And that's why you're seeing the stock sell down a lot on that report.
Driving AI adoption is just trickier for them because ultimately it's going to depend on how many businesses adopt AI, use it in a way that drives business to Microsoft. And that's just a longer thing to do.
I'd love to hold these two stocks up against Alphabet, which has seen a huge boost to its share price in the last six months.
Chapter 4: What role does recycling play in the rare earth metals market?
Why is the Google firm outperforming Meta and Microsoft to such an extent?
Google's had a lot of things go its way, especially during 2025. A big thing that helped the stock was the company essentially beat the government's efforts to break it up. The stock was really underwater before that. So once the company kind of won those cases and won some very favorable rulings, the stock really started to take off.
And then their latest Gemini model ended up testing really, really well, scored really high on all these benchmarks, got a lot of strong buzz for like surpassing OpenAI and Chad GPT. And the fact that they were able to train that model on ships that Google itself designed also was a big help for them because it kind of showed just the technical prowess this company has.
So Google had a lot of things helping its narrative over the last six months that really helped its stock.
That was WSJ columnist Dan Gallagher. Which company's results are surprising you this earnings season? If you're a listener on Spotify, leave us a comment with your thoughts. Coming up, your obsolete tech may be worth more to the US than you'd expect. We're breaking down why. That's after the break.
How can enabling smarter water management help AI scale responsibly? Here's Christophe Beck, chairman and CEO of Ecolab.
All water of the Earth that we can drink is 35 miles wide. That's all we've got for the whole planet. So we'd better find ways to reuse water. That's especially true for AI. But here's the good news. We have technology that can reuse water in that process of the chips manufacturing. And the technology that we bring is ultimately at every step of the process in the chip manufacturing to reuse it.
Rare earth metals, elements that power a ton of the modern gadgets we use every day, usually come from China. The country mines three-fifths of the world's metals and has more than 90% of the world's capacity for refining them. That's not usually a problem. But as geopolitical tensions ramp up between China and the U.S., unfettered access to rare earth metals is no longer guaranteed.
Beijing last year used rare earth export restrictions as a weapon in the trade war with the U.S., Some believe the U.S. can gain greater control of its own destiny, not by mining, but by recycling the kinds of technology most of us would consider to be junk. Our WSJ colleague Ed Ballard is here to explain more. Ed, talk us through this recycling option that has been presented. How does that work?
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