Following a series of developments in the artificial intelligence sector over recent days, the market's tempo is set to shift this week. U.S. President Donald Trump has launched a fresh tariff offensive against Europe, driven by his interest in Greenland's sovereignty, a move that, as seen on Monday, has already triggered market volatility. Perhaps some form of agreement on this matter could be reached at the World Economic Forum's annual meeting in Davos, which commences today. We can expect to see repeated images on television screens of news anchors and various heavyweight figures, clad in heavy winter coats, standing amidst the pristine snow. Shifting focus back to the United States, the tech earnings season is underway, with Netflix scheduled to report on Tuesday and Intel set to disclose its results on Thursday. Both reports will be closely watched by the market, albeit for markedly different reasons. Netflix's recent performance has been steadily progressing—the streaming giant has averaged a 15% revenue growth rate over the past five quarters and anticipates a 16.7% increase for the fourth quarter. (It is noteworthy that Netflix has ceased reporting subscriber numbers, a signal suggesting growth in that metric has slowed substantially.) However, the key point of interest in this earnings report will be whether management comments on its participation in the bidding for Warner Bros. Discovery. Netflix currently holds a favorable position in this bidding contest: it has reached an agreement with the board of Warner Bros. Discovery, while Paramount's Skydance Media, backed by the Ellison family, is attempting to disrupt the process. Reports last week suggested Netflix might revise its acquisition proposal, eliminating the stock component in favor of an all-cash offer. Such a move would necessitate increasing its planned borrowing beyond the initial $50 billion. Investors are eager to hear Netflix executives explain the feasibility of this approach. Turning to Intel, the company once synonymous with the U.S. semiconductor industry has experienced a period of stagnation in recent years. However, the arrival of a new Chief Executive Officer, coupled with investments from the U.S. government, Nvidia, and SoftBank Group, has injected a dose of confidence for investors reconsidering Intel. Since last August, Intel's stock price has more than doubled, currently hovering around $47. This surge has also heightened investor scrutiny of the earnings report due on Thursday. It is widely known that Intel's fourth-quarter revenue is expected to decline, with the company's own guidance projecting a decrease between 3.5% and 10% year-over-year. Investors hope to hear from CEO Pat Gelsinger about the latest operational status. The desktop and laptop computer market, a core business segment for Intel, is facing pressure from rising memory costs due to soaring demand for memory chips from AI data centers. Concurrently, Intel's data center server business has recently stalled. Investors are also keenly interested in updates on its new 18A manufacturing process—a technology Intel is banking on to increase its market share in high-end chips. Of course, the company's revenue guidance for the first quarter will also be critically important information. Here are the detailed analyst expectations for the two companies' earnings, provided by S&P Global Market Intelligence: Netflix (Reporting Tuesday)
Q4 Revenue: $11.966 billion, up 16.8% year-over-year Earnings Per Share: $0.55 (adjusted for stock split), compared to $0.42 in the prior-year period
Intel (Reporting Thursday)
Q4 Revenue: $13.375 billion, down 6.2% year-over-year Earnings Per Share: Loss of $0.09, compared to a loss of $0.03 in the prior-year period
Hoping for Less AI Hype at Davos The scene is almost like a real-life version of the billboards lining Highway 101 in the San Francisco Bay Area. The shops along this quiet promenade have been completely "occupied" by various corporations, the vast majority of which are tech companies. Needless to say, they are eagerly promoting their products here. The career coaching platform BetterUp has erected a large billboard proclaiming, "AI can't lead change. You can." The platform specializes in a service model combining AI with human coaching. Furthermore, Salesforce has set up a "Davos AI Agent Innovation Center"—not to be confused with the "Salesforce Chalet" and "Salesforce Cabin" across the street. One must admit, the marketers in Davos are certainly creative! Companies like Meta, Google, Uber, Microsoft, Palantir, and Cloudflare have secured prominent, well-lit spots. Typically, the larger the company, the less text appears on the exterior signage. Inside the various venues, all conversations inevitably revolve around artificial intelligence. However, some long-time attendees mentioned to me that they sense a different atmosphere this year. "Last year, walking along the Promenade, you saw many logos with 'AI' on them," said Kate Smaje, Global Lead for Technology and Digital at McKinsey & Company, during my sixth coffee meeting of the day. "But this year, the hype seems to have subsided somewhat, replaced by a more pragmatic attitude." She added, however, that it was only Monday, and market sentiment could still become more fervent as the week progresses. I also spoke with Scale AI CEO Alexandr Wang. It's worth noting that, although the company's founder has moved on to Meta, Scale AI remains an independently operated business. Scale AI has two main business segments: one provides human annotation services for AI model developers to optimize their models' performance, and the other is a more traditional enterprise services business. Wang stated that in the enterprise segment, their clients are often companies that have hit roadblocks in deploying large AI projects and urgently need solutions. "Ultimately, it's about focusing on the right AI use cases, integrating data with human judgment effectively, and building systems that can continuously iterate and improve," Wang said. I will be in Davos for most of the week, grabbing every person I encounter to relentlessly ask questions about AI.— Jessica E. Lessin OpenAI Releases Landmark Compute vs. Revenue Chart Over the weekend, OpenAI provided a highly practical resource—publishing a correlation chart comparing compute scale (measured in gigawatts) with revenue growth. Finally, we have a benchmark to evaluate the value of various compute partnership agreements, which have previously been announced in gigawatt terms but can now be linked to actual revenue! Credit is due to OpenAI CFO Sarah Friar! In a blog post, Sarah disclosed that between 2023 and 2025, OpenAI's compute scale grew 9.5 times, from 0.2 gigawatts in 2023 to approximately 1.9 gigawatts in 2025; during the same period, the company's annualized recurring revenue grew 10-fold, surpassing $20 billion by last year. For context: Last September, OpenAI announced a partnership with Nvidia to build an "AI data center with a compute scale of at least 10 gigawatts"; meanwhile, The Information reported that OpenAI CEO Sam Altman aims to increase the company's compute scale to 250 gigawatts by 2033. Separately, Meta CEO Mark Zuckerberg announced a week ago that "the company plans to build tens of gigawatts of compute capacity within this decade, and in the long term, the scale will reach hundreds of gigawatts or more." Other News Briefs
Legal teams stated in court filings on Friday that if Elon Musk prevails in his lawsuit alleging OpenAI breached its charitable trust obligations, OpenAI could be required to pay Musk between $65.5 billion and $109.43 billion in damages. Musk's side also contends that Microsoft, accused of assisting OpenAI in breaching its fiduciary duties, should be liable for damages between $13.3 billion and $25.06 billion. Court documents show that humanoid robotics startup Figure AI filed a countersuit on Friday against its former head of product safety, Rob Grondel, in response to his earlier lawsuit. Database management startup ClickHouse announced on Friday that it secured $400 million in funding led by Coatue Management. A company spokesperson stated that post-funding, its valuation reached $15 billion, more than double its valuation during the previous funding round in May. ClickHouse's main competitors include Snowflake and Databricks. According to the Financial Times, Sequoia Capital will participate for the first time in a large funding round for AI startup Anthropic, which is expected to exceed $25 billion. U.S. news outlet Axios reported that OpenAI's Global Affairs President, Chris Lehane, stated in Davos on Monday that the company plans to launch its first hardware product in the second half of this year.
Comments