Chapter 1: What recent actions are FBI agents taking regarding the 2020 election?
FBI agents search a Georgia election office, part of a push to re-examine Trump's 2020 loss. Plus the backstory on the medals rally that just won't quit. And investors reward Meta for growing its digital ad revenue as big tech's AI costs pile up.
The market is getting increasingly worried that this massive spending is needing to deliver results now. And advertising is one of the easiest and quickest ways to monetize that with the promise of more to come.
It's Thursday, January 29th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. Gold has hit another record high, topping the $5,500 mark for the first time as the rush to precious metals continues.
After recording its strongest annual performance since 1979 last year, the World Gold Council said that global demand for the safe haven asset is expected to remain strong this year, driven by lower interest rates and persistent geopolitical risks. Deputy Finance Editor Quinton Webb says the run-up in prices means a lot of different investors are trying to get in on the trade.
Chapter 2: How is the metals market performing and what factors are influencing it?
We've had this long spate of elevated buying by global central banks because in many cases they would like to reduce their dollar dependence and put more of their reserves into another alternative assets. So these things are all together combining to help support gold and to create this upward push in gold prices.
In the last few years, we've seen the emergence of gold ETFs, which now manage many billions of dollars. And you can effectively buy those at the click of a button in your brokerage apps.
Chapter 3: What impact did Meta's AI spending have on their digital ad revenue?
So certainly people are not just buying gold bars and stashing them in vaults. People are increasingly buying gold ETFs or alternatives such as buying shares in gold miners, of course, but that's a less pure exposure to the gold price. And Quinton says that an unlikely crossover with crypto is adding to gold's luster, too.
Tether has emerged as a significant buyer of gold, partly for a recently launched gold-backed stablecoin that it has. But also, you know, don't forget that Tether commands a huge sum of assets because of its major stablecoin, which is tied to the dollar. So that extra buying in the past month is probably another reason that's helping sustain the gold price.
Chapter 4: Why are investors concerned about AI spending in big tech companies?
And gold isn't the only metal hitting new records this morning, with silver, copper, and palladium all rallying too. Tech giants Meta and Microsoft reported earnings yesterday. Both results topped analyst expectations, with Meta posting record Q4 sales growth and Microsoft blowing past net income forecasts.
But what ensued was a tale of two very different investor responses, as Meta shares popped in off-hours trading while Microsoft's fell. Joining us to dissect the themes cropping up across this earnings season so far is State Street Investment Management's Altaf Qasim.
Altaf, Meta and Microsoft are both spending big on data centers, building out their respective AI capabilities, and both also signaled yesterday that trend is not going to end. It's really going to play out through 2026. Why then the mixed reaction on Wall Street?
The big difference was that one company was able to show that it was monetizing its the huge spend in CapEx on data centers and other sorts of AI infrastructure. And the other one was actually showing slowing growth in cloud computing, which is one of its core capabilities.
It's a story of the spending was always expected to be increasing, but the monetization was what the market was looking for, and it happened in one company and not the other.
I mean, is the difference here digital ad spending targeting consumers versus AI spending for the purposes of enterprise products?
Yeah, I mean, there's a very clear differentiation between consumer and enterprise here. The market is getting increasingly worried that this massive spending, which has all been front-loaded, is needing to deliver results now. And they've rewarded the companies that have shown that the money is coming through right now. And advertising is one of the easiest and quickest ways to monetize that.
Whereas with enterprise applications, it feels like it's still tomorrow, tomorrow, tomorrow. And the market is becoming impatient. And I think that's why the stock was punished.
Altaf, I'm just thinking about Meta and its digital ad business, a real cornerstone for the company. How relevant is it that consumers seemingly have been as receptive as they've been to AI images and marketing materials? Obviously, we know creators have chafed at this, but it's a tailwind for businesses that have gone big on AI image creation if they can normalize this within the ad space.
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