Good morning from the Financial Times.
Today is Wednesday, February 4th.
This is your FT News Briefing.
U.S. tech stocks took a tumble, and Elon Musk's cadre of companies is gearing up for an AI future.
Plus, domestic energy companies in Argentina still have the upper hand, for now.
I'm Mark Filippino, and here's the news you need to start your day.
The tech-heavy Nasdaq composite ended the day down a little shy of 15 on Tuesday and the broader SP 500 was nearly 1 lower.
And at one point yesterday, Bitcoin hit its lowest point since US President Donald Trump's election in 2024.
Investors are worried about the impact of AI on software businesses.
A bunch of analytics groups saw their shares tank after the AI group Anthropic launched productivity tools that can help automate legal work.
The sell-off hit a bunch of companies on both sides of the Atlantic analytics groups like SP Global and Relix.
The latter is known for owning the legal information platform LexisNexis.
Private equity groups that have piled into the software space also got hit, and even European advertising companies.
Now, here's a quote that really sums up the fears driving the wider sell-off.
It's from Michael Rourke at Jones Trading.
He told the FT, if legal can be disrupted by Anthropic's new tool, then so can consulting and financial services.
Elon Musk is, once again, getting ready to burn through a mountain of cash to pursue a big dream.
Tech's best known visionary is gathering his resources and he's going after what he sees as the next big prize robotics, AI and space.
Here to discuss is FT Tech writer at large, Richard Waters.
Hi, Richard.
Hello, Mark.
Great to talk to you.
Good to have you back.
So what exactly is Musk's next big project?
So Musk is combining two of his biggest companies.
The Muskverse, as people like to call it, is this collection of loosely allied companies.
He's putting together SpaceX and XAI into a single unit XAI, which competes with OpenAI, Anthropic.
You know, building these large language models.
And he's ramming that together with SpaceX.
And he's saying, you know, the reason I'm doing this is I've got to put data centers into space.
That's the only way we're going to get the energy we need from all that solar energy up there to power.
The next move in AI.
So it is really a monumental thing.
And this is on the back of a larger announcement from Tesla from last week that it's going to be moving away from cars and more toward AI and robotics.
Yeah, so Tesla is really doubling down now on what it believes is its own future, which is robotics either robo-taxis or humanoid robots.
But at the same time, while it's doing that, XAI is building the AI, wants to get into space.
So you can start to pull all these pieces together as people are and say, well, hang on a minute.
If we've got huge data centers in space generating AI, and Tesla is the hardware arm, if you like, of the Muskverse creating all these robots.
Well, it all ties together, doesn't it, in some way?
It's a really gutsy kind of Elon classic move.
And will it sustain enough investor interest?
We'll see.
Why now, Richard?
So I think you have to start with the financial logic here.
Musk has a track record of folding companies that don't really have a future into other companies that do.
He did it 10 years ago with SolarCity, which was a struggling solar panel maker that he was a big shareholder in.
He folded it into Tesla.
He did it last year with X, the former Twitter, and he folded that into XAI.
And now XAI itself, which is, on one level, horrendously successful to have a valuation so high after only three years in business.
Yet it's not clear what its future is, because it's competing with much better funded, much more advanced companies like OpenAI, Google.
And so folding that now into SpaceX is a real challenge exit, if you like, and an obvious next step.
What are some of the concerns about what Musk is doing?
The new SpaceX, if indeed it is worth the 125 trillion he's now saying.
If you add that together with Tesla, he's playing around with 25 trillion of market cap.
What he doesn't have is cash flow.
But with that market cap, he has the chance to raise money.
So SpaceX is lining up a $50 billion IPO later on this summer.
By far the biggest IPO of all time.
You know, we can almost now see that as a down payment on what's going to come next, because Tesla needs to raise a ton of money.
Tesla has said it's going to more than double its capital expenditure this year.
So the entire Muskverse is going to need recapitalizing in some way.
And I think that's really what Elon has his sights on here.
So Richard, what are you looking out for next when it comes to this story?
Yeah, I think combining XR and SpaceX is obviously a very significant move.
Taking SpaceX public is the next big step.
And then and this is where it gets really interesting Musk will then be in control of two very large public companies, and his room for maneuver will start to narrow, as we saw when he bought out SolarCity a decade ago.
And that was only a a 2 billion transaction.
He was tied up in lawsuits for the best part of a decade over that one with unhappy shareholders.
And I think that's why there might be some caution on the part of Tesla investors, because what is the future for their company in this emerging vision that Elon has?
That's FT tech writer at large, Richard Waters.
Thanks, Richard.
Great to talk to you.
The U.S. military said that it shot down an Iranian drone yesterday.
The drone quote aggressively approached an American aircraft carrier 500 miles off the southern coast of Iran.
Hours later, Iranian gunboats threatened to board and seize a US-flagged tanker in the street of Hormuz.
Now the timing of this isn't great.
U.S.
President Donald Trump has been threatening military action against Iran over the past couple of weeks.
And officials from the two countries are planning to meet on Friday.
They're expected to talk about Iran's nuclear program and other issues.
Argentina's economy is volatile.
So over the past couple of years, multinational oil and gas companies like Exxon and Total have scaled back investments in the country.
That pullback by the majors hasn't been all bad.
It's allowed domestic energy players to flourish.
Kira Nugent is based in Buenos Aires for the FT.
Hi, Kira.
Hi, Mark.
So do me a favor.
Just walk us through how some of these Argentine companies have capitalized on this economic uncertainty.
The domestic oil and gas groups are much better at dealing with the volatility that you mentioned, the really severe triple digit inflation that Argentina has faced.
Capital and currency controls, which are obviously less of an issue for domestic companies than for multinationals.
They're able to respond to really abrupt policy changes that the government here tends to make much quicker than international companies.
And the last couple of years, this kind of window of opportunity has opened up where multinationals have been selling up or at least looking at selling up, because
Prices of their assets have risen and they're able to get out at a good time.
That has happened right as the local groups really want to expand because Argentina is entering a shale energy boom.
And a key to this boom is one of the world's largest shale developments?
Yeah, absolutely.
So Vaca Muerta, this massive shale oil and gas field, was discovered in Patagonia in 2011.
It's the second largest shale gas field in the world and the fourth largest for shale oil.
And it's been, you know, developing quite rapidly over the last 15 years.
Shell and Chevron made really big early investments.
But we're now at this kind of watershed moment where production is accelerating very quickly because transport bottlenecks have been resolved and the exports from shale oil and gas are becoming a really important part of Argentina's economy.
So to be clear, while Argentine companies have seized on this opportunity, the big international companies still have a foothold.
Is that what I'm hearing?
Yeah, absolutely.
So Chevron and Shell and Total still have presence in Argentina.
It hasn't been like a full-on exodus, but the story of the last few years has definitely been this kind of foreign groups shrinking their market share and local groups expanding.
So how long do you think this advantage for domestic companies is going to last?
So we might already be seeing the tide turn a bit.
Continental Resources, the company founded by US shale magnate Harold Hamm, bought into several fields in Vaca Muerta in the last few months.
And the government is hoping, if the economy remains stable and it continues its free market reforms and lowers some costs for the industry, that will start a trend and other multinationals or kind of independent US oil companies will start to pile in.
That effort by President Milley to open up the economy isn't just affecting the country's oil industry.
You've done some interesting reporting about how it's affecting consumers, too.
Yeah, it's a pan-economy approach that Millais is taking.
And his moves to cut tariffs and other restrictions on imports have triggered a boom in the use of these international e-commerce platforms like Amazon and Timu, which are obviously very common, very widely used in other parts of the world.
So in 2025, the amount of goods that Argentines ordered from overseas via those kinds of platforms tripled.
And I spoke to one e-commerce site that told me that their most popular projects were Lego sets, Apple computers and Stanley thermoses.
These are all things that in Argentina have been very expensive in recent years.
And there's now much more supply as the economy opens up.
The consequence of that is that the local manufacturing industry has complained of having to cut tens of thousands of jobs.
And there's this kind of quite painful transition for the economy that is benefiting consumers and hurting some industries.
And we can expect to see a lot more of that if Millet continues his reforms in the next few years.
That's the FT's Keira Nugent.
Thanks so much, Keira.
Thanks, Mark.
Before we go effective today, Peter Mandelson is no longer a member of the UK Parliament's upper chamber, the House of Lords.
He was once one of Britain's most high-profile politicians.
But yesterday Mandelson gave notice that he would quit the chamber after claims he passed confidential UK government information to the late convicted sex offender, Jeffrey Epstein.
Mandelson declined to comment.
Meanwhile, here in the States, former President Bill Clinton and his wife, former Secretary of State Hillary Clinton, agreed to testify later this month before Congress in an investigation into Epstein.
Tomorrow, we'll have more coverage of the Epstein fallout.
You can read more on all these stories for free when you click the links in our show notes.
This has been your daily FT News briefing.
Check back tomorrow for the latest business news.
