OpenAI plans a fund raising round. Big tech earnings flood Wall Street. Samsung reports mixed quarterly numbers. All this and more on the January 31 edition of World Street.
Mixed Bag
Samsung Electronics posted stronger-than-expected Q4 revenue, but a steep rise in R&D costs for its chip business took a toll on profitability. While revenue climbed 12% year-on-year and operating profit surged 130%, the quarter-on-quarter picture was less rosy—operating profit slumped nearly 30%, and revenue dipped over 4%. Investors weren’t impressed, sending Samsung shares down 2.2% on Friday morning in South Korea.
Cautious Optimism
Apple reported a 4% revenue bump in its first fiscal quarter but fell short of Wall Street’s iPhone sales projections and faced an 11.1% revenue drop in China. Despite this, shares rose about 3% in extended trading after the company’s forecast hinted at revenue growth in the March quarter. Apple expects “low to mid-single-digit” growth annually and “low double-digit” growth in its Services segment. The strong dollar remains a headwind, expected to shave 2.5% off total sales, but adjusted growth would align with December’s 6% rise.
Mood Turns Sour
Microsoft shares tumbled 6.2%—their worst drop since October 2022—after issuing weak guidance for the current quarter. The company delivered a strong fiscal Q2, beating expectations with $3.23 EPS on $69.63 billion in revenue. However, CFO Amy Hood’s revenue projection of $67.7 billion to $68.7 billion for the next quarter fell short of the $69.78 billion analysts had expected, cooling investor sentiment. Revenue grew 12.3% YoY, marking its slowest pace since mid-2023.
Shipping Struggles
United Parcel Service (UPS) took a 14% hit on Thursday after slashing its 2024 revenue guidance and announcing plans to cut Amazon deliveries—its largest customer—by more than half by 2026. In its Q4 earnings report, UPS revealed it had reached a deal to reduce Amazon’s shipping volume by over 50%. The company is restructuring its U.S. network and launching multiyear efficiency initiatives aimed at saving around $1 billion.
Raising the Stakes
OpenAI is in talks to secure up to $40 billion in fresh funding, a deal that could catapult its valuation to as high as $340 billion, CNBC reported. SoftBank, led by Masayoshi Son, is expected to lead the round with an investment between $15 billion and $25 billion, potentially overtaking Microsoft as OpenAI’s biggest backer. The Wall Street Journal first broke the news.
AI-Powered Surge
IBM skyrocketed 13% on Thursday—its best day since July 2000—after a stellar Q4 report underscored AI-driven momentum in its software business. The company posted adjusted earnings of $3.92 per share on $17.55 billion in revenue, narrowly beating estimates of $3.75 EPS and $17.54 billion revenue. Overall revenue edged up 1%, while its software unit jumped 10% YoY, fueled by growing demand for AI and its Red Hat Linux operating system. CEO Arvind Krishna revealed that IBM secured $5 billion in bookings for its generative AI division, further boosting investor confidence.
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