Nvidia Faces AI Upheaval
Nvidia, the leading manufacturer of AI chips, experienced a historic market cap loss of nearly $600 billion on Monday, January 27, 2025. This unprecedented drop was triggered by the emergence of DeepSeek, a Chinese AI startup that has taken the tech world by storm.
DeepSeek, founded in 2023 by Liang Wenfeng, has developed AI models that reportedly match the performance of leading US models like ChatGPT, but at a fraction of the cost. The company claims to have created its latest AI model for just $6 million, using fewer and less advanced Nvidia chips. This revelation has sent shockwaves through the AI industry, causing investors to reassess the value of established players like Nvidia.
The DeepSeek app quickly rose to the top of Apple's App Store charts in both the US and UK following its launch on January 10, 2025. Its rapid success has drawn praise from notable figures in the tech industry, including venture capitalist Marc Andreessen, who called it "one of the most remarkable and significant advancements" in the AI sector.
However, some analysts remain sceptical about DeepSeek's long-term impact on the industry. Wedbush's Ives argues that major US businesses are unlikely to adopt a Chinese startup's AI infrastructure for their use cases. Nevertheless, the market reaction has been severe, with Nvidia's stock plummeting 17% and other tech giants like Broadcom, Dell, and Oracle also experiencing significant losses.
As the dust settles, the tech world eagerly awaits Nvidia's response to this challenge. The company has scheduled a conference call on February 26, 2025, to discuss its fourth-quarter financial results, which may provide more insight into how it plans to address the changing landscape of AI chip demand.
Boeing's Turbulent Year
Boeing reported a staggering $11.8 billion annual loss for 2024, marking its second-largest deficit since 2020 and sixth consecutive year of losses. This financial turmoil was primarily driven by a series of challenges that plagued the company throughout the year.
The company's issues began in January 2024 when a door panel detached from a new 737 Max during flight, exposing critical quality control issues. This incident reignited safety concerns and led to production slowdowns as regulators demanded manufacturing process modifications.
A seven-week strike by 33,000 workers, primarily from Boeing's core operations in Seattle, further exacerbated the situation. The work stoppage, which began in September, halted production at two key factories and disrupted assembly lines for the 737 Max, 777, and 767 freighter models.
Boeing's fourth-quarter results were particularly bad, with a net loss of $3.8 billion and a 31% year-over-year revenue drop to $15.2 billion. The commercial aircraft unit saw a 55% revenue decline to $4.76 billion, while the defence unit's revenue fell 20% to $5.4 billion.
In response to these challenges, Boeing announced plans to reduce its workforce by 10% and raised over $20 billion through stock sales and loans to protect its credit standing. The company also postponed the introduction of the 777X, now projected to begin passenger operations in 2026.
Despite these setbacks, Boeing's total backlog remains substantial at $521 billion, including orders for over 5,500 commercial aircraft. CEO Kelly Ortberg emphasized the company's commitment to implementing fundamental changes to recover performance and rebuild trust with stakeholders.
Texas-Led Coalition Targets ESG Policies
In a significant escalation of the ongoing anti-ESG campaign, Texas Attorney General Ken Paxton has spearheaded a multi-state coalition threatening legal action against major Wall Street firms over their ESG and DEI policies. The coalition, comprising 10 state Attorneys General, has sent warning letters to BlackRock, Goldman Sachs, JPMorgan Chase, Bank of America, Citigroup, and Morgan Stanley.
The coalition's primary concerns revolve around the firms' climate-focused investment practices and diversity initiatives. Despite recent withdrawals from climate-focused coalitions like the Net-Zero Banking Association (NZBA) and Net Zero Asset Managers (NZAM) initiative, the AGs are demanding answers about decisions made during the firms' memberships. They've also raised issues with DEI policies, including "discriminatory employment quotas" and board diversity goals.
This action follows a pattern of intensifying pressure from Republican-led states on financial institutions over ESG practices. Earlier in January 2025, Texas, along with 10 other states, filed a lawsuit against BlackRock, Vanguard, and State Street, accusing them of manipulating the coal market and driving up energy costs.
The financial institutions now face a 45-day deadline to respond to a series of questions about their ESG and DEI policies. This ultimatum is presented as an opportunity to avoid potential "lengthy enforcement action".
Shell's Carbon Dominance
Shell dominated the global carbon credit market in 2024, retaining a massive 14.5 million credits, making it the largest buyer for the second consecutive year. This dominance comes as oil and gas companies, including Shell, have scaled back their spending on clean energy initiatives, with Shell's investments in renewable energy falling to just 8% of its total spending budget.
Shell's strategy focuses on affordability and scale, with a large portion of its credits coming from forestry and land-use projects, which are cost-effective but face scrutiny over integrity. The company also retired 2.4 million renewable energy credits at an average price of $4.15 per credit. However, Shell has announced plans to sell part of its nature-based carbon projects, signalling a strategic shift towards more profitable ventures like fossil fuels.
Critics argue that the company's continued reliance on fossil fuels undermines its long-term sustainability goals, in which they aim to achieve net-zero emissions by 2050. Despite these concerns, Shell claims to remain committed to reducing operational emissions by 50% by 2030 compared to 2016 levels.
Looking at our GaiaLens scores for our Energy Production & Consumption theme, Shell is already in the bottom 50% of the Oil, Gas and Consumable Fuels industry, with a score of 44/100 and their Environmental score currently sits at 33. It will be interesting to see whether Shell will reduce its operational emissions enough to improve its Environmental scores.
Google Employees Seek Stability Amid Layoff Uncertainty
Google employees have initiated a petition titled "Job Security" to express their concerns about ongoing layoffs and the lack of job stability within the company. The petition, which has garnered over 1,300 signatures from employees across the US and Canada, reflects a broader sense of unease among Google's workforce. This movement comes as the company prepares for anticipated budget reductions in 2025, following a series of layoffs that began in 2023.
The petition highlights the impact of continuous job cuts on employee morale and productivity. It emphasises that despite Google's strong financial position, the loss of many colleagues without clear explanations has been particularly disheartening. Employees are urging CEO Sundar Pichai to prioritise voluntary buyouts over layoffs, ensure fair severance packages for those laid off, and avoid using performance reviews as a pretext for terminations.
Google's new CFO, Anat Ashkenazi, has been a focal point of concern since her October remarks about driving further efficiencies, which many interpreted as a signal for more layoffs. The petition also addresses concerns about Google's performance review system, known as GRAD, which some employees believe is being used to justify terminations by forcing low-performance ratings.
The Alphabet Workers Union has been instrumental in organising this petition, reflecting a growing trend of employee activism within the tech industry. As Google continues to invest heavily in AI infrastructure, the tension between cost-cutting measures and employee job security is likely to escalate. The company's response to these demands will be crucial in addressing the ongoing instability and restoring confidence among its workforce.
In the broader context, Google's situation mirrors the challenges faced by many tech companies, where layoffs have become a common response to financial pressures and strategic shifts. The outcome of this petition will not only impact Google's internal dynamics but also influence how other tech giants approach workforce management and job security in the face of economic uncertainty.
Alphabet Inc. currently ranks third out of 57 peers in the Interactive Media and Services industry with a Social score of 84/100. However, their Workforce score of 75 lags slightly behind their Customer and Community scores. It will be interesting to see whether this event impacts their Workforce score further, particularly in terms of Employee Satisfaction Rating.
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