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ONE BIG THINGAI is costing Big Tech more money than it earns\u2014and Wall Street hates it<\/p>\n
Alphabet made history on Wednesday, booking its most profitable quarter in corporate history\u2014$112 billion in profit, the first 12-figure quarterly profit in history. Revenues in Google\u2019s cloud computing business, the core of the company, soared 82%.\u00a0<\/p>\n
So why did investors punish Alphabet, sending its shares down nearly 7%, the worst day since tariffs?<\/p>\n
Because for the first time in the company\u2019s history, Alphabet became cash flow negative, Fortune\u2019s Eva Roytburg reports. On page 12 of its earnings presentation, Alphabet revealed that it was spending more on property and equipment than it was taking in from its operating activities, leaving it with $5.9 billion in negative free cash flow.<\/p>\n
At least six firms cut their price targets for Alphabet in response, including Piper Sandler (to $395), UBS (to $379) and D.A. Davidson, whose $350 target was one of the most bearish on the Street.<\/p>\n
THE MARKETSAfter a bloodbath on Wall Street, traders are buying the dip<\/p>\n
U.S. stocks took a sharp step down yesterday with the S&P 500 falling 1.21%. Asia followed suit and all the major indexes there saw losses this morning. But as the sun rose over Europe so did the mood of investors, who bid up stocks in the U.K. and the Stoxx 600 index in early trading. Likewise, U.S. futures ticked up a little this morning, suggesting that some investors think yesterday\u2019s cull was overdone.\u00a0<\/p>\n
S&P 500 futures were up 0.28% this morning. The index fell 1.21% yesterday.\u00a0
\nIn Europe, the Stoxx 600 was up 0.51% in early trading and the U.K.\u2019s FTSE 100 was up 0.36% before lunch.
\nAsia: South Korea\u2019s KOSPI was down 5.72%. Japan\u2019s Nikkei 225 was down 2.73%. India\u2019s Nifty 50 was down 0.39%. China\u2019s CSI 300 was down 1.67%.\u00a0
\nBrent crude was $97 per barrel this morning, down from a high of $102 yesterday.
\nBitcoin was at $65K.<\/p>\n
BUBBLICIOUSIt\u2019s a record year for IPOs. Is it a bubble?<\/p>\n
It\u2019s likely going to be a record year for IPOs as measured by market cap, and the number of IPOs has only grown since 2020. But, Goldman Sachs asks, is the upturn in IPOs a sign that the stock market is heading into a bubble? (Look at the numbers for 1999 and 2000 in the left-hand chart below if you want to understand why older investors remain traumatized by the dotcom bubble and its IPO insanity.) The bank asked Prof. Jay Ritter, the University of Florida\u2019s \u201cMr IPO,\u201d and Owen Lamont, a senior vice president at Acadian Asset Management for their thoughts:<\/p>\n
Ritter: \u201cHigh new issue volume is a predictor of low future market returns. But, like most indicators, this signal works only slightly better than chance\u2026 So, I wouldn\u2019t view an IPO boom on its own as a sign that a market downturn is imminent.\u201d
\nLamont: \u201cIf the recent increase in activity turns into a wave of issuance, I would view that as a symptom that the market is overvalued and in a bubble.\u201d<\/p>\n
MORE FROM FORTUNE<\/p>\n
Meet SLB: The $70 billion oil services giant poised to cash in on AI data centers and the post-Strait of Hormuz oil exploration boom – Jordan Blum<\/p>\n
\u2018You just hired a million bad employees\u2019: How the brief tokenmaxxing era delivered the opposite of what it promised – Nick Lichtenberg<\/p>\n
\u2018The demographic dividend of the last 40 years is ending\u2019: J.P. Morgan says the world is running out of the two things that kept interest rates down – Eleanor Pringle<\/p>\n
Hopes for key crypto bill fade amid delays, Trump ethics controversy – Jeff John Roberts<\/p>\n
Turns out Dead Internet Theory was right: AI agents are eating the Web, growing by nearly 8,000% and rewiring the Internet\u2019s business model – Mia Osmonbekov<\/p>\n
European travel platform Omio raises $10 million and buys Rail Europe as it chases Asia\u2019s tourism market – Nicholas Gordon<\/p>\n
HERE WE GO AGAINWhite House imposes yet another set of trade tariffs on its allies<\/p>\n
The Trump Administration hit 60 countries with a new set of trade tariffs at 10-12.5% yesterday, citing Section 301 of the Trade Act of 1974, which allows the U.S. to penalize countries it believes practice slavery. The countries targeted include the U.K., Mexico, the E.U., Japan, Taiwan, and South Korea.<\/p>\n
Context: It is an amazing coincidence that the U.S. investigated 60 countries for forced labor practices and discovered forced labor in all 60 of them. Expect these tariffs to be challenged in the federal courts.<\/p>\n
IRAN\u00a0White House set to launch \u2018massive attack\u2019 on Iran<\/p>\n
The U.S. conducted a 13th night of attacks on Iran in the last 24 hours, targeting \u201cIranian military command centers, drone storage facilities, communication networks, coastal surveillance sites, and maritime capabilities,\u201d according to Centcom.<\/p>\n
It may be just a curtain-raiser for something bigger, President Trump told Axios: \u201cI am considering a massive attack. Bigger than ever before. I am close to making a decision. We are all set for it,\u201d he said.<\/p>\n
The president also made further threats to Iran and its Houthi proxy group on social media.\u00a0<\/p>\n
Behind the scenes, Iran rejected a ceasefire offer from the U.S., delivered to it via the president of Iraq, according to the NYT.<\/p>\n
Trump is becoming increasingly frustrated with the war, according to the WSJ: \u201cThe war has taken a personal toll on the president and some of his senior advisers. Some top aides have been advised by intelligence agencies that the Iranians are seeking to kill them and have been told to stop taking car services, according to people familiar with the matter,\u201d the paper says.\u00a0<\/p>\n
Iran now has a chokehold on 38% of the world\u2019s maritime oil supplies\u00a0\u00a0<\/p>\n
These charts from Apollo Global Management\u2019s Torsten Slok, Rajvi Shah, and Shruti Galwankar show just how important the straits of Hormuz and Bab al Mandeb are to the global oil trade\u2014and how little of it is making it out of the Gulf. Of the 78.4 million barrels per day that usually transits one of Earth\u2019s eight major maritime chokepoints, the Hormuz and Bab al Mandeb comprise 29.5 million, or 38% of seaborne supply.\u00a0<\/p>\n
In some months of the war, exports from Iraq and Kuwait were reduced to zero, according to Wood Mackenzie, the energy consultancy. Although Saudi Arabia had diverted some oil from the Strait of Hormuz through its 746-mile Aramco pipeline, that pipe exits into the Red Sea\u2014which has now been blocked by the Houthis at the Strait of Bab al-Mandab.<\/p>\n
\u201cFor months, the market treated Yanbu as the answer to Hormuz risk,\u201d WM\u2019s Ian Solis said in an email this morning. \u201cThe problem is that Yanbu has its own chokepoint. If Bab al-Mandeb comes under sustained disruption from a declared Houthi naval blockade, Asia stands to lose a major crude supply artery. What looked like diversification was in reality a shift from one strategic bottleneck to another.\u201d<\/p>\n
The closure of the Bab al-Mandeb would force ships to sail via the Cape of Good Hope\u2014adding nine days to journeys between Europe and Asia:<\/p>\n<\/p>\n
CHART OF THE DAYYounger people are comfortable letting AI execute investments on their behalf<\/p>\n
The fact that an OpenAI model escaped a secure environment and hacked a rival company even though OpenAI believed it had walled it off from the internet is the stuff of sci-fi nightmares. It may yet be the tipping point at which humanity becomes seriously uncomfortable with allowing AI to be autonomous.\u00a0<\/p>\n
Some of us, however, are apparently pretty relaxed about letting AI do its thing. Specifically, the young.<\/p>\n
This chart from Deutsche Bank shows which demographics are comfortable letting AI trade stocks for them. \u201cAmericans up to 34 years old are happy giving AI responsibility for automatically executing trades on their account by a ratio of 10:1. In the UK, the same age group is happy with AI by a ratio of 3:1. The ratio falls as people age,\u201d according to analysts Luke Templeman and Galina Pozdnyakova.<\/p>\n
NUMBER OF THE DAY: DAYLIGHT SAVING TIME6%<\/p>\n
The increase in fatal car crashes in the dark morning hours that occur after the \u201cspring forward\u201d change of the clocks\u2014a night in which people lose on average 40 minutes of sleep, according to the epidemiologists Katie Sharkey and Katrine Wallace.<\/p>\n
THE FRONT PAGES TODAY<\/p>\n
Trump\u2019s new global tariff draws rebukes from trade partners over forced-labor justification – CNBC<\/p>\n
South Korean tech billionaire ordered to pay $640mn in \u2018divorce of the century\u2019 – FT<\/p>\n
Investors Zero In on Runaway Tech Spending, Putting Dent in AI Trade – WSJ<\/p>\n
Spain Is Starting to Annoy the Rest of Europe – Bloomberg<\/p>\n
The Tate Brothers, in Federal Custody, Watch Their Political Backers Go Quiet – NYT<\/p>\n
Doomsday warning for Hollywood as LA shoot days plummet in latest figures – NY Post<\/p>\n
ONE MORE THINGJapan\u2019s prime minister says she sleeps only \u2018zero-to-three hours\u2019 per night\u00a0<\/p>\n
Japanese Prime Minister Sanae Takaichi set off a firestorm on social media when she said, \u201cToday\u2019s holiday felt like such a true blessing\u2014finally getting a full five hours of sleep for the first time in ages,\u201d Takaichi wrote on X in a post that\u2019s garnered over 35 million views. \u201cEver since taking office as prime minister, zero-to-three hours has been the norm.\u201d\u00a0\u00a0\u00a0<\/p>\n
For Takaichi, 65, the lack of sleep and working \u201cfrom early morning until late at night\u201d is something she believes is a point of pride rather than a cause for concern, reports Fortune\u2019s Preston Fore.\u00a0<\/p>\n
Opposition lawmaker Toru Kunishige warned that chronic sleep deprivation, \u201cimpairs judgment\u2014 much like a state of intoxication\u2014and could pose a risk to national crisis management.\u201d Indeed, she once summoned staff to a meeting at 3 a.m. because her fax machine had broken\u2014which doesn\u2019t sound like the act of a leader functioning on all cylinders.<\/p>\n
There\u2019s another possibility. The late British prime minister Margaret Thatcher infamously slept only four hours per night, and some have speculated she was able to maintain that punishing level of wakefulness because she had an unusual gene mutation.<\/p>\n
\u00a0<\/p>\n
#Trump #weighs #massive #attack #Iran #Tehrans #chokehold #oil #tighter<\/p>\n","protected":false},"excerpt":{"rendered":"
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