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$4,675
That’s the cost per migrant for a military deportation flight from Texas to Guatemala. That is more than 5 times the price of a first-class ticket.
TL;DR
Starbucks Sales Fall, Stock Rises on Turnaround Plan
Starbucks reported a 4% drop in same-store sales and a 6% decline in store traffic. Despite the sluggish numbers, the coffee seller beat profit and revenue expectations, and investors cheered CEO Brian Niccol’s turnaround plan, sending Starbucks shares up 8%. Niccol’s plan includes:
The National Coalition for the Homeless criticized Starbucks for reversing its open-door policy. This is uncomfortable, but you cannot have a premium, specialty coffee brand that is highly associated with America’s homelessness crisis.
Over time, it’s difficult to maintain discipline and avoid adding more menu items. Starbucks has something like 380 billion beverage combinations. Out of every three menu items, one is going away. That’s a baller move. In the short run, that’ll likely hurt. But over the long term, it sends a stronger signal about what Starbucks does and doesn’t do.
Microsoft Beats Forecasts, But Cloud Slowdown Sends Shares Lower
Microsoft topped expectations on both revenue and earnings, but a weaker-than-expected cloud forecast sent the stock down 6% in after-hours trading. Executives blamed cloud softness on limited data center capacity.
Microsoft is spending to relieve the bottleneck, with capital expenditures soaring 96% YoY to $22.6 billion. Still, CEO Satya Nadella signaled a disciplined approach: “You don’t want to buy too much of anything at one time,” balancing infrastructure investment with demand-driven monetization.
The company’s AI-related revenue run rate hit $13 billion — roughly 5% of its last twelve months revenue — showing solid traction.
Wall Street keeps moving the goalposts. Microsoft expects 31% growth in Azure in the current quarter — an insane number for a company this size — but because it missed the 33% estimate, the market threw a fit.
Capex, short for capital expenditure, is the money a business spends on acquiring or maintaining fixed assets like land, buildings, and equipment. Unlike day-to-day operating expenses (opex), capex is about long-term investments that drive growth, expand capacity, or improve efficiency.
Meta’s Growth Streak: Record Revenue and AI-Powered Expansion
Meta delivered a knockout quarter, with revenue up 21% to a record $48 billion and net income up nearly 50%.
AI-driven personalization is fueling growth by enhancing content recommendations and ad targeting. Its AI advertising improvements have already boosted ad quality by 8%, and more than 4 million advertisers now use Meta’s AI ad creative tools, up from 1 million six months ago. For Meta, AI isn’t just hype; it’s strengthening pricing power.
Average revenue per user increased 16%, and quarterly operating margins hit a three-year record of 48%.
With TikTok under regulatory pressure, Meta is luring creators with deals of $2,500–$50,000 per month for exclusive Instagram reel content.
Threads is gaining momentum, now at 320 million monthly active users and adding 1 million users per day, putting it on pace to overtake X by year-end.
Meanwhile, Ray-Ban smart glasses have sold more than 1 million units, becoming the No. 1 product in 60% of Ray-Ban stores throughout Europe, the Middle East, and Africa.
If U.S. tech giants are the luxury brands of AI, DeepSeek is the dupe. Last week proved that capital alone isn’t a moat — winners will be defined by cost efficiency, access to users, and talent. Meta’s latest update reaffirms the foresight of its AI strategy:
Cost efficiency: Llama’s open-source format shifts optimization costs to developers.
User access: Meta owns the rails: Outside China, 90% of internet users are on a Meta app. This feeds a powerful flywheel: User data makes AI better → better AI personalizes content and ad targeting → more users engage → ad revenue grows.
Talent: Nearly 90% of Meta’s Q4 head count growth was in R&D, and its $65 billion capex spend is fueling both AI infrastructure and top-tier hiring.
Sidenote: Europe is so back: Deutsche Bank just explained AI with 25 memes. Check it out here.
Tesla’s Earnings: Fundamentals? What Fundamentals?
Revenue rose just 2% year over year, missing expectations, while net income plunged 71% to $2.3 billion. But that didn’t stop the stock from jumping 4% after hours.
Tesla’s metrics look even worse under the hood: Bitcoin gains and regulatory credits accounted for more than half of Tesla’s Q4 net profit, and the company’s full-year operating margin sank to 7.2%, its lowest since 2020.
Competition isn’t helping. Tesla’s U.S. market share dropped to 49% (down from 55% last year), and BYD overtook Tesla in global EV production.
Tesla jumped 63% in 2024, even as the auto business — which generates over 80% of its revenue — had its worst year on record. The company is now worth $1.3 trillion — more than the next 20 largest automakers combined. If that valuation feels unmoored from reality, consider that Tesla trades at 117 times forward earnings, more than three times Nvidia’s multiple.
Falling revenue, plunging profits, shrinking market share — none of it seems to matter.
“A self-driving wolf”: On Tesla’s earnings call, Musk referenced wolves, Superman, bananas, and trains. Actual analysis confirms he speaks to investors at the level of a 12-year-old.
As AI costs drop, companies that budgeted heavily for AI — like pharma firms in drug discovery — will see their AI expenses fall 50–80%, boosting their earnings over the next two to three years.
