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Verizon Shares Take a Hit After Q1 Sales Warning
March 13, 2025
Say “ceramic mugs” three times, and you might just summon StarbucksSBUX $110.12 (2.25%) CEO Brian Niccol. The coffee chief couldn’t stop repeating the phrase during the company’s latest earnings call, emphasizing the brand’s renewed push for reusable cups to bring back that warm, old-school “mug hug” vibe.
Meanwhile, markets dipped yesterday as the Fed hit pause on its rate-cut streak, keeping interest rates unchanged as expected. After hours, TeslaTSLA $388.49 (2.27%) jumped despite lackluster earnings, while MicrosoftMSFT $410.33 (0.34%) slipped even after beating estimates. Up next: AppleAAPL $226.70 (2.10%) and IntelINTC $19.22 (-0.41%) step into the earnings spotlight today.
The AI arms race continues, but investors are starting to wonder if the sky-high spending is worth it. Microsoft reported solid earnings, beating expectations on both revenue and profit, yet its stock slipped as Azure’s cloud growth underwhelmed. Meanwhile, Meta delivered a blockbuster quarter, with revenue surging 21% to a record $48 billion and profits soaring 50%, sending its stock up 5% in after-hours trading.
AI’s Price Tag Keeps Climbing
Microsoft CEO Satya Nadella revealed the company’s AI business now pulls in around $13 billion annually, but scaling it comes at a hefty cost—$80 billion is earmarked this year for AI infrastructure alone. Meta is going even bigger, planning to spend at least $114 billion, mostly on AI-driven infrastructure, including a proposed city-sized data center. The bet? AI-powered recommendations are driving record ad revenue and keeping its 3.3 billion users locked into its platforms.
A New AI Challenger Emerges
The AI gold rush has seen tech giants funnel over $125 billion into AI data centers in the past year, and that number is set to rise. However, the recent emergence of China’s DeepSeek—a model said to rival OpenAI’s most advanced systems while using far fewer resources—has raised eyebrows. The development has investors questioning whether Big Tech’s extravagant AI spending is truly necessary or if a leaner, more cost-effective approach is the future.
Shifting Strategies on the Horizon
DeepSeek’s efficiency-first model isn’t the only disruption. Alibaba just announced an AI system it claims outperforms both DeepSeek and Meta’s Llama. With pressure mounting, Silicon Valley may need to rethink its AI investment strategy. Even chipmaker AMD is pivoting, recently publishing a guide on how to optimize DeepSeek on its processors, signaling a shift toward cost-conscious AI development.
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If at first you don’t succeed… wait a few years and offer $800 million less. Ultra-low-cost carrier Frontier (ULCC $8.00, -0.49%) is making another run at acquiring budget rival Spirit (SAVEQ $0.60, +2.31%), putting forward a $2.1 billion buyout offer. This would mark the second time Frontier has attempted to merge with Spirit, a deal that would create the fifth-largest airline in the U.S. Spirit initially accepted Frontier’s $2.9 billion bid in 2022 but ultimately opted for JetBlue’s higher offer. That deal was torpedoed by the DOJ, which sued to block it, leading the two airlines to walk away early last year.
Will Spirit Take the Deal?
Not just yet. Spirit rejected the latest offer as too low but left the door open for more talks. Investors were optimistic, sending shares of both airlines higher yesterday. Spirit, which filed for bankruptcy in November, has been bleeding cash—losing over $2.5 billion since 2020. However, the airline says it expects to emerge from bankruptcy this quarter, thanks to deep cost cuts.
Budget Airlines Are Struggling to Stay Afloat
The ultra-low-cost model isn’t soaring like it used to. Spirit is bankrupt, Frontier hasn’t posted an annual profit since before the pandemic, and JetBlue’s grim outlook sent its stock diving this week. With budget airlines in turbulence, even no-frills carriers are pivoting toward premium offerings. Frontier is introducing first-class seating, Spirit rolled out a new perk-heavy tier, and Southwest (LUV $30.74, +1.00%) is considering assigned seating and extra legroom. Even legacy carriers like Delta (DAL $68.70, +3.90%) are doubling down on premium—85% of its new seats this year will be in higher-tier cabins.
Mergers May Be Making a Comeback
The M&A climate could be shifting. Wall Street giant Goldman Sachs (GS $630.25, +0.31%) predicts a 20% surge in mergers this year, as antitrust regulators ease up and corporate tax rates stay low. The Biden administration had been tough on mergers, with the FTC under Lina Khan setting records for blocking deals. But as regulatory attitudes shift, companies—including airlines—may feel emboldened to revive deals that once seemed impossible.
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Advertiser's disclosures:
¹ The minimum investment is $1,000. This is a paid advertisement for the Boxabl Inc. Regulation A offering. Please read the offering circular and related risks at StartEngine’s Boxabl Website.
Investing in private company securities is not suitable for all investors because it is highly speculative and involves a high degree of risk. It should only be considered a long-term investment. You must be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid, and there is no guarantee that a market will develop for such securities.
