No matter what’s happening with international trade and the stock market, and even if tariffs raise the price of new gadgets, we’ll still need cell phone and internet service.
In a rare patch of green amid a sea of red as the market reacts to President Trump’s new tariffs, the big mobile phone operators are up a bit today.
OpenAI is bringing in more revenue than ever, but with ambitions to spend north of $1 trillion on its AI infrastructure buildout — cash which it simply does not have to hand — it’s maybe no surprise that the company is almost constantly in fundraising mode.
And its latest discussions could see the company raise as much as $60 billion from three of its biggest suppliers, with The Information reporting that Nvidia, Microsoft, and Amazon may anchor a larger round which could see the ChatGPT-maker raise as much as $100 billion.
Per The Information’s sources, existing investor Nvidia is in discussions to invest up to $30 billion, new investor Amazon is considering $10 billion to more than $20 billion, while Microsoft, which is also already heavily invested with a 27% stake, is looking at less than $10 billion.
Separately, reporting from the Financial Times confirms some of the same broader details, like that the three tech companies are indeed close to participating in a larger ~$100 billion round. However, the sources cited by the FT put the combined total investment from the trio of tech titans closer to $40 billion.
While OpenAI is close to receiving term sheets, or an investment commitment, from these companies, according to The Information, their investments could depend on other deals that they are already negotiating with OpenAI separately, including its cloud server rental deal with Amazon.
Earlier this week, reports emerged that SoftBank might plow a further $30 billion into OpenAI as well — presumably as part of this larger round.
And its latest discussions could see the company raise as much as $60 billion from three of its biggest suppliers, with The Information reporting that Nvidia, Microsoft, and Amazon may anchor a larger round which could see the ChatGPT-maker raise as much as $100 billion.
Per The Information’s sources, existing investor Nvidia is in discussions to invest up to $30 billion, new investor Amazon is considering $10 billion to more than $20 billion, while Microsoft, which is also already heavily invested with a 27% stake, is looking at less than $10 billion.
Separately, reporting from the Financial Times confirms some of the same broader details, like that the three tech companies are indeed close to participating in a larger ~$100 billion round. However, the sources cited by the FT put the combined total investment from the trio of tech titans closer to $40 billion.
While OpenAI is close to receiving term sheets, or an investment commitment, from these companies, according to The Information, their investments could depend on other deals that they are already negotiating with OpenAI separately, including its cloud server rental deal with Amazon.
Earlier this week, reports emerged that SoftBank might plow a further $30 billion into OpenAI as well — presumably as part of this larger round.
Investors have taken billions in market cap away from ServiceNow and CEO Bill McDermott would very much like for it to be returned.
During the conference call that followed Q4 earnings on Wednesday, McDermott tried to reassure investors that the company’s recent M&A efforts weren’t made to latch onto lines going up in hopes of distracting from any looming deterioration in its core business:
I wanted to make it very clear to the investors, I hear you, and we did not and never have bought an asset like many others have — and I know that's probably why it's on your mind — because we needed the revenue. What we needed is the innovation and the expanded growth opportunity of a great TAM and a customer base that's waiting for us. And as it relates to future M&A, we do not have a large scale M&A on the roadmap...
So, probably it was a little bit what's going on over there at ServiceNow, and I noticed that we lost about $10 billion in market cap on that because of the worry. So now the worry is gone, you can give us back the market cap. And no, we're not going after anything large. We now have them in the family and we're going to grow them like we do everything else.
McDermott attributed the downdraft in ServiceNow to its recent acquisitiveness. And it’s true that the stock did tumble upon reports that the company was acquiring cybersecurity firm Armis (which came on the heels of its Veza acquisition), then dipped again when the deal was announced at an even higher price than previously rumored.
Interestingly, McDermott was actually understating the pain on the call, or at least has a very generous return policy: the stock shed nearly $21 billion in market cap on December 15, the session it got dumped amid reports around the potential Armis acquisition.
NOW has fallen more than twice as much as the iShares Expanded Tech Software ETF since December 12 through Wednesday’s close. More broadly, the software cohort has been branded with the equivalent of a scarlet letter by traders as of late, amid concerns that it’ll be disintermediated by AI tools and agents. In particular, Claude Code’s development of Cowork has been hailed as a “ChatGPT moment repeated” that threatens to disrupt large swaths of the industry.
Wedbush analyst Dan Ives removed ServiceNow from his list of top 30 AI stocks at the start of December, saying that its AI monetization has been slower than anticipated so far.
ServiceNow is lower in premarket trading despite reporting top and bottom line Q4 beats in results that were broadly applauded by the analyst community, along with better-than-expected Q1 guidance.
That’ll be even more market cap that McDermott will likely want back.
Cloud software giant ServiceNow delivered better-than-expected Q4 sales and earnings after the close of trading on Wednesday, though the shares slipped in after-hours trading.
The company reported:
Revenue of $3.57 billion, higher than the $3.53 billion analyst consensus estimate published by FactSet.
Adjusted earnings of $0.92 per share vs. the $0.88 analysts expected.
Subscription revenue of $3.47 billion vs. the $3.42 billion predicted.
Raised guidance for Q1 subscription revenues of between $3.65 billion and 3.655 billion, compared to the $3.58 billion FactSet consensus estimate.
Non-GAAP gross margins of 80.5%, a little light compared to the 81.1% FactSet consensus estimate.
Despite the better-than-expected results, the stock was down after-hours. ServiceNow also announced an expanded AI partnership with Anthropic, in which it will enmesh Anthropic’s Claude models more deeply into its products, alongside its financial results.
Such efforts to more closely associate itself with the AI boom have fizzled so far. ServiceNow shares have plunged 45% over the last year. And investors clearly remain skeptical after the Q4 numbers.
Southwest Airlines posted its fourth-quarter and full-year earnings after the bell on Wednesday. Its shares climbed more than 4% in after-hours trading.
The airline, one of the big four US carriers, guided for revenue per seat mile to climb “at least 9.5%” in the first quarter, and costs per seat mile to rise 3.5%. It forecast a 1% to 2% boost in capacity for Q1.
For the full year ahead, Southwest said it expects adjusted earnings of $4 per share, ahead of Wall Street estimates of $3.22.
The carrier, which flew its last open-seating flight on Tuesday, posted Q4 adjusted earnings of $0.58 per share, slightly above the $0.57 per share expected by Wall Street analysts polled by FactSet. Southwest’s passenger revenue rose 7.6% to $6.79 billion in the fourth quarter, beating estimates of $6.77 billion.
