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📈 Amazon's $100B AI Offensive
Honeywell to break up, Qualcomm stock falls, Pinterest shares surge, Hitachi expands venture capital $1B, Big Tech's AI spending rattles markets
Evelio Silvera
February 07, 2025
In partnership with
Good morning.
⚡ The Fast Five → Honeywell to break up, Qualcomm stock falls, Pinterest shares surge, Hitachi expands venture capital $1B, Big Tech's AI spending rattles markets
🔎 Market Trends → Wall Street ends mixed in choppy trading; Amazon, jobs report in focus; US Futures Slip Ahead of Monthly Jobs Report
And now…
⏱️ Your 5-minute briefing for Friday, February 7, 2025:
MARKET BRIEF
Before the Open
As of market close 02/06/2025.
Pre-Market
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Fear & Greed
Markets in Review
Markets Waver as Investors Eye Jobs Data and Fed Policy
The Nasdaq gained 0.5% to 19,792, while the S&P 500 added 0.4% to 6,083.6. The Dow slipped 0.3% to 44,747.6 as traders assessed labor market trends ahead of Friday’s jobs report. Consumer staples and financials led the gainers, while energy stocks slumped.
The Big Picture:
The labor market continues to defy expectations. Jobless claims rose more than expected, but overall employment remains steady. January job cuts increased 28% from December but were down 40% year-over-year, according to Challenger, Gray & Christmas.
Friday’s nonfarm payrolls report is expected to show a 170,000-job increase, a cooling from December’s 256,000 gain. Strong employment could reinforce the Federal Reserve’s decision to pause rate cuts.
The 10-year Treasury yield ticked up 1.6 basis points to 4.44%, while the 2-year yield rose 2.9 basis points to 4.21%. Meanwhile, WTI crude fell 0.8% to $70.50 per barrel as the U.S. Treasury announced new sanctions on Iranian crude shipments to China.
Market Movers:
Tapestry (TPR) soared 12%, leading the S&P 500 after the luxury fashion house raised its full-year revenue outlook, citing strong holiday sales.
Philip Morris (PM) surged 11% as the tobacco giant posted a better-than-expected quarter driven by demand for smoke-free products and ZYN nicotine pouches.
Honeywell (HON) fell 5.6%, the worst performer on the Dow and Nasdaq. The industrial giant announced a split into three companies but issued cautious full-year guidance despite a solid Q4.
Ford (F) dropped 7.5% after forecasting weaker 2025 profitability, citing market headwinds—even as Q4 results topped estimates.
What They’re Saying:
"The Fed remains on the sidelines for now, but any uptick in hiring or inflation will only reinforce its steady hand," Stifel noted in a client report.
WHAT WE’RE WATCHING
Events
Today: Bureau of Labor Statistics - Average Hourly Earnings m/m - 8:30am
Why You Should Care: It's a leading indicator of consumer inflation - when businesses pay more for labor the higher costs are usually passed on to the consumer.
Today: Bureau of Labor Statistics - Non-Farm Payrolls - 8:30am
Why You Should Care: Job creation is an important leading indicator of consumer spending, which accounts for a majority of overall economic activity.
Today: Bureau of Labor Statistics - Jobless Rate - 8:30am
Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.
Earnings Reports
Today: Flowers Foods, Newell Brands, Frontier Airlines, Canopy Growth, Cboe Global Markets, Plains All American,
Monday: McDonald's, Vertex Pharmaceuticals, Rockwell Automation, Onsemi, Incyte, Lattice Semiconductor
MARKET BRIEF
Leading News
Amazon's $100B AI Offensive: The Next Chapter in Silicon Valley's Evolution
Why it matters:
In the biggest capital spending spree since the dawn of cloud computing, Big Tech is going all-in on AI infrastructure – and Amazon just raised the stakes with a $100 billion commitment that could reshape the competitive landscape.
Zoom Out:
The e-commerce giant turned cloud computing kingmaker is opening its wallet wider than ever, pumping $26.3B per quarter into AI capabilities. This isn't just keeping up with the Joneses – it's an arms race that makes the cloud computing buildout look like a warmup act.
While skeptics point to Chinese upstart DeepSeek's bargain-basement AI development ($6M for a GPT-4 competitor), the real game isn't just about building models – it's about building the digital railways they'll run on.
Key Insights:
Follow the money: The AI infrastructure land grab is hitting fever pitch, with $320B in combined 2025 capex announced by the Four Horsemen of Tech ($AMZN, $MSFT, $GOOGL, $META). Historical parallel: Think railroads in the 1860s – expensive to build, but transformative for decades.
Competitive moat metrics: Amazon's AWS commands 32% of cloud market share. This AI buildout could cement its lead through what Warren Buffett would call "deepening the moat" – making it prohibitively expensive for newcomers to catch up.
Risk radar: DeepSeek's efficient R1 model development ($6M vs. industry billions) suggests potential disruption from lean competitors. But infrastructure supremacy may matter more than model efficiency.
Market Pulse:
"This is a once-in-a-lifetime type of business opportunity," says CEO Andy Jassy. Translation: We're seeing the digital equivalent of the transcontinental railroad buildout.
Bull’s Take:
While the price tag may induce sticker shock, Amazon is essentially pre-booking its seat at the AI infrastructure table for the next decade. For long-term investors, this massive capital deployment could prove as prescient as AWS investments did in the 2010s.
Headlines
Nissan searches for new partner as $58bn Honda merger talks collapse (link)
Honeywell to Break Up in Bid to Recreate Some GE Magic (link)
Spotify, Warner Music Group sign new multi-year distribution deal (link)
Arm, Qualcomm stocks fall as investors wait for AI to drive new demand for smartphones, PCs (link)
Pinterest shares surge as much as 20% after company beats on fourth-quarter revenue, shows strong user growth (link)
Hitachi Expands Corporate Venture Capital With Fourth Fund, Reaching $1 Billion (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
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