Good morning from the Financial Times.
Today is Friday, February 6th, and this is your FT News Briefing.
Amazon's capital expenditure plans are giving investors the jitters, and then the rest of the show is all that and a bag of chips.
We'll take a look at America's snacking industry and why semiconductor chip makers had such a bad week.
I'm Mark Filippino, and here's the news you need to start your day.
Investors were not happy with Amazon.
The company shares fell as much as double digits in after hours trading yesterday.
The sell-off happened after Amazon announced plans to spend 200 billion on capital expenditure this year.
That's roughly a third more than what Wall Street was expecting, and it comes as the tech giant increases its bet on artificial intelligence.
Amazon CEO Andy Jassy told investors the spending was justified for two reasons.
One, there's strong demand for existing services.
And two, the company has plans to expand products like its Leo satellite internet network.
But just to put it into context, Amazon's funding commitment is way more than what its rivals like Google and Microsoft are spending.
U.S. tech stocks have fallen for three days in a row now.
The NASDAQ composite is on track for its worst week since November.
Software stocks and chip makers have been hit particularly hard over the past few days, so today we're going to hone in on how chip makers are faring.
Just a quick recap.
In addition to getting caught up in the wider sell-off ARM, AMD and Qualcomm put out some disappointing earnings results.
And the FT reported that sales of NVIDIA's H200 AI chips to China are still awaiting final approval from Washington.
Here to tell us more is the FT's Michael Acton in San Francisco.
Hi, Michael.
Hi, Mark.
Okay, so I just threw a lot out there.
Let's start with NVIDIA and these H200 chips.
So in December, there was this huge breakthrough.
The NVIDIA CEO, Jensen Huang, had intensively lobbied the White House to turn around its stance on export controls on these chips.
This deal basically opened the door to Nvidia selling these chips to China.
But the problem is that the implementation of that deal has really been caught up in the details of Washington bureaucracy and national security apparatus.
So we know that Chinese customers are yet to place orders with Nvidia because they're waiting for the licenses from the US side.
And the US side has very strict requirements, primarily through the State Department, which are really holding up this key market from being opened for NVIDIA.
And just to cover our bases, NVIDIA, AMD, and the State Department declined to comment.
Now moving on to how NVIDIA in particular is doing.
Its stock has dropped 15 since the end of October.
It's had a really rough week.
Are we seeing a change in the fortunes for NVIDIA?
So I think it's important to have some perspective on this.
I mean, it was almost exactly a year ago that we saw DeepSeek wipe about 600 billion off of NVIDIA's market cap.
The Chinese AI company had a breakthrough with these reasoning models and everyone thought that that meant some sort of drop in demand for NVIDIA's most powerful chips.
But then later in the year NVIDIA, at least briefly, surpassed the 5 trillion market capitalization.
There's also the fact that NVIDIA seems to have a clear run at about half a trillion dollars in revenue for 2026.
So the fundamentals aren't super worrying.
What is interesting is how relatively small pieces of news at this point can cascade into these really bad news from video shares.
So in this case it was how the week started from video with jensen huang defending against reports that he was falling out with open ai, with whom they had this huge hundred billion dollar uh infrastructure deal that was announced in september.
But really anything that suggests to investors that this critical partnership at the heart of the AI boom could be in trouble is enough to wipe some serious value off these companies.
Let's talk about some of these other chip companies now, ARM, AMD, and Qualcomm.
How did investors react to their earnings reports this week?
So what's interesting is none of them completely flubbed their results.
But in normal times you probably wouldn't see the reaction that we got.
But we're not in normal times.
So NASDAQ is down this week on Anthropic releasing new tools, which led to this kind of wave of speculation about whether AI is really posing an existential risk to IT and software companies.
Most profoundly, I think, is this memory shortage we're seeing across the chip market.
Because all of these memory chip suppliers have pivoted to try and produce the most advanced HBM memory for the AI data centers that we're seeing this huge multi-billion dollar build-out for.
And as a result, it's having a knock-on effect on the consumer electronics.
So there's a lot of anxiety about how long that shortage is going to go on for.
The Intel CEO said it could go on until 2028.
And as long as there's a constraint on traditional consumer electronics, then companies like AMD and Qualcomm and Arm are going to see hits to their shares.
Michael Acton covers the semiconductor space for the FT in San Francisco.
Thanks, Michael.
Thanks, Mark.
Yesterday, UK Prime Minister Keir Starmer apologized to the victims of Jeffrey Epstein.
I am sorry.
Sorry for what was done to you.
Sorry that so many people with power failed you.
Sorry for having believed Mandelson's lies and appointed him.
Peter Mandelson was Starmer's pick as Britain's ambassador to the U.S.
Mandelson quit the House of Lords earlier this week.
It came after emails released by the U.S.
Department of Justice showed he passed along confidential government information to Epstein.
Starmer admitted that he knew about Mandelson's relationship with Epstein when he appointed him, but Starmer said Mandelson lied about the extent of that relationship.
Now the prime minister is facing calls to resign.
Both the pound and gilt came under pressure yesterday.
Investors are worried about the potential for a more left-wing government to increase public borrowing.
For what it's worth, though, Starmer insists that he will stay at his post.
Get your game face on.
This Sunday, Super Bowl 60 kicks off with a matchup between the Seattle Seahawks and the New England Patriots.
It's prime time for sports fans, but the big game is also synonymous with snacks.
I'm partial to some chips and dip.
This year though, the state of the economy might be curbing America's appetite and slimming down the snacks table.
Here to talk about that is Greg Meyer.
He's the FT's U.S.
Consumer Editor.
Hi, Greg.
Hey, Mark.
So we got a little preview of how some of America's biggest consumer brands are gearing up for the Super Bowl when they reported earnings this week.
Let's start with Pepsi.
Talk me through what they said.
Pepsi is obviously one of the biggest soft drinks and snacks companies on earth.
They reported their quarterly results on Tuesday.
Their sales grew overall year on year, but they noted volumes in their so-called convenient foods category.
Snacks declined by 2.
This has been a persistent problem for their snacks business, which sells...
Doritos, Cheetos, Tostitos.
Anything that crunches.
But yes, things that crunch.
Consumers are putting their foot down and buying less, which is why you're seeing these lower volumes.
In response, Pepsi said very explicitly they're going to cut prices in the US for an assortment of snack foods, including Doritos and Cheetos, by up to 15 percent, starting this week, before the Super Bowl kicks off.
I'm sure coincidental timing.
Now, you said that consumers are putting their foot down because prices are getting too high.
But the way that I understand it is that it's not all consumers.
People who can't afford snacks as much are buying less, while people who can afford are still buying at the same level or more.
That's right.
Some of the trends you're seeing in other sectors of the economy, you're clearly seeing in food.
For wealthier households.
They're generally cheaper still spending and certainly not going to be cutting back on things like a bag of chips.
But as Ramon LaGuardia, Pepsi's chief executive, said on their earnings call this week, low- and middle-income households have become stretched and have concerns over affordability.
A Mondelez International which sells Oreo cookies and Ritz crackers and chocolates.
They also reported earnings, and their CEO, Dirk van der Putt, made some similar comments.
The consumer confidence is near a historic low.
They're worried about overall affordability.
They are fed up with the price increases.
So what we are seeing is that the average shopping basket, whether you're in the higher or in the lower social economic classes, has not increased for the last two, three years.
And while the concerns about affordability are one big factor here, there is a possible other one, and that's the growing use of GLP-1 weight loss drugs.
How big of a piece of this demand puzzle is that for some of these brands?
It's hard to put a number on it, but everyone in the industry acknowledges GLP-1s are having an effect.
If you take them, generally people are eating smaller portion sizes.
They're often cutting back on sugars, maybe upping their protein.
And so, yeah, on net, it's not great for selling higher volumes of snack foods.
LaGuardia of PepsiCo.
Again he acknowledged we should assume there will be a broader adoption of GLP-1 medicines.
And he said they're trying to adjust in a variety of ways building their markets for drinks like Gatorade, one of their fortified water brands.
Adding foods with fiber content.
He said more than 70% of Pepsi's U.S. foods business was actually sold in single-serve pack sizes.
And he suggested that that might be more amenable to people who are cutting back their intake.
Well, I will be cutting back, Greg, but maybe starting after Super Bowl Sunday.
That's the FT's U.S.
Consumer Editor, Greg Meyer.
Thanks, Greg.
Thank you, Mark.
Before we go I want to bring in the Briefing's Monday host, Victoria Craig, for our weekly look ahead into the news crystal ball.
Hi, Victoria.
Hey, Mark.
So you've got your eyes on another election in Japan this weekend.
What's going on?
Yeah, so Sane Takeichi, she is the country's first woman prime minister.
She wants a mandate for, quote, major policy change, which includes more spending.
To give you a little bit of the backstory on this.
She won an internal party vote to become president of her liberal Democratic Party last year.
And now she wants a general election to get voter buy-in.
So this has been Japan's shortest ever ever post-war general election campaign.
She only called this snap election about two weeks ago and it was only three months ago that she became the prime minister.
So this is a move that almost no one saw coming.
Okay, so do we have an idea of the outcome of Sunday's election?
Well, Takeuchi has become a bit of a phenomenon, especially among women in Japan, and so she could win a comfortable victory when voters head to the polls on Sunday.
Critics though, say that, despite her popularity, her policies are light on detail and real solutions.
Markets also haven't been convinced about Takeuchi's approach, which at one point helped spark a sell-off in long-dated government bonds.
I also want to mention Mark, that The US president is not waiting for results of this election.
In an unusual intervention on Thursday.
Donald Trump said on social media that he gives Takeuchi his, quote, complete and total endorsement.
And he's invited her to the White House on March 19th.
Certainly one to look out for.
And we're also going to be keeping an eye on a major election in Thailand.
That one is also happening on Sunday.
Victoria, thanks as always for joining me.
You bet.
Thanks, Mark.
Check back next week for the latest business news.
The FT News Briefing was produced this week by Henry Larson, Julia Webster, Sonia Hudson, Fiona Simon and Victoria Craig.
I'm your host and editor, Mark Filippino.
Our show is mixed by Alex Higgins, Kent Millitzer, and Kelly Gary.
We had help this week from Peter Barber, Michael Lello, David DaSilva, and Gavin Kalman.
Our executive producer is Topher Forges.
The FT's global head of audio is Cheryl Brumley.
And our theme song is by Metaphor Music.
