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In today’s big story, BI obtained a leaked recording of an Amazon all-hands showing how the tech giant plans to cut costs so it can make big bets.
What’s on deck
Markets: Investors are getting cocky about the stock market, and that could be a red flag.
Tech: Why Microsoft’s quantum ‘breakthrough’ is so important.
Business: This EV maker was once more valuable than Ford. Now it’s bankrupt.
But first, we’re robbing Peter to pay Paul.
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Amazon agreed to a $6 million settlement.Nathan Stirk/Getty Images
Big Tech is on a cost-cutting spree to fuel its endless appetite for big AI bets.
Amazon is the latest tech giant trying to find the sweet spot between saving money and not shying away from making big bets.
The company’s retail CEO, Doug Herrington, told employees to keep reducing costs so it can fund “big investments in big new businesses,” according to a recording of last month’s internal all-hands meeting that Business Insider’s Eugene Kim obtained.
In an ideal world, companies’ big bets can save them money in the long run. Amazon’s investments in AI and warehouses have helped it lower the costs of fulfilling customers’ orders. Amazon Robotics’ chief technologist, Tye Brady, spoke to Eugene about the progress made there.
Finding the balance between savings and innovation is key. Herrington told employees every team should simultaneously look to reduce costs and develop new ideas. Gail Carpenter, Amazon’s retail CFO, also described how cost-cutting is part of a wider formula, not a one-way street.
“As a reminder, this work isn’t just about cost reduction — it enables us to invest in a better customer experience,” she said in the meeting.
Meta announced on November 9 it would be cutting 11,000 workers, or 13% of its total workforce, as revenue continued to slump.Justin Sullivan/Getty Images
Companies’ big bets can take a while to pay off, though.
AI projects aren’t cheap, from hardware and data center needs to the talent to get it up and running. And while expectations are high for AI’s impact, those benefits haven’t fully materialized.
In the meantime, tech companies can’t afford to take their foot off the gas, lest they risk falling behind competitors. And if the big bets aren’t helping companies save money yet, they’ll need to look elsewhere.
Amazon has laid off at least 27,000 people since late 2022 and shrunk less profitable businesses like its fashion and fitness program.
Meta, which hasn’t backed down from its massive tech budget, has also taken steps to cut spending while remaining aggressive on the AI front.
The company recently cut thousands of underperformers, taking a page from Amazon’s playbook, while simultaneously ramping up hiring machine-learning engineers.
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Getty Images; Alyssa Powell/BI
1. Are we too confident in the stock market? Good news: Americans are actually feeling hopeful about the market. Bad news: We need a healthy dose of skepticism to watch out for risks. The confidence investors are feeling about stocks could quickly turn to arrogance, leaving them exposed.
2. Breaking up with Bumble. The dating app’s stock plummeted on Wednesday following its latest earnings report, which forecasted lower-than-expected sales. Since its 2021 IPO, Bumble has lost over 90% of its market value. Shifting habits and app fatigue are problems for dating platforms, perhaps lowering how much users are willing to pay for Bumble’s service.
3. Palantir’s stock slumps. Shares of the software company, which is a major US defense contractor, tanked 10% after reports that Defense Secretary Pete Hegseth ordered budget cuts. The slump ended a four-day winning streak for Palantir, whose stock had, until Wednesday, surged 65% this year.
Apple
1. Hey, Siri. Tell me about the new $599 iPhone with AI. Apple announced its budget-friendly iPhone 16e, available to preorder on Friday. The phone is complete with Apple Intelligence and an Action button for shortcuts. After a rocky period for iPhone sales, a cheaper version is Apple’s chance to attract new customers with its new AI features.
2. There are no guarantees in the world of startups, but these companies are good bets. Silicon Valley’s past few years have been filled with cost-cutting and layoffs, but AI has brought excitement back to the industry. BI compiled 43 startups — focused on everything from women’s health to security — worth betting your career on.
3. Microsoft’s quantum “breakthrough.” Microsoft on Wednesday unveiled Majorana 1, a quantum chip the company says is powered by a new state of matter. “Most of us grew up learning there are three main types of matter that matter: solid, liquid, and gas. Today, that changed,” CEO Satya Nadella said. The development is “just as revolutionary as the silicon transistor,” a quantum expert told BI.
Cunaplus_M.Faba/Getty, fatido/Getty, Hugo Kurk/Getty, Tyler Le/BI
1. Monopolies and murder. The manifesto found on Luigi Mangione before he was accused and charged in the killing of UnitedHealthcare CEO Brian Thompson doesn’t focus too much on the quality of healthcare in the US. Instead, the note largely discusses the size of its parent company, UnitedHealth Group. In other words, Mangione seemed to be angry about monopolization — and it points to a very real trend: American business is bigger than ever.
2. Big Tech’s data centers have a pollution problem. The solution could be to bury it. AI data centers are still largely powered by fossil fuels despite promises of leveraging renewable or low-carbon energy sources. Big Tech is now exploring carbon capture, which essentially means burying carbon emissions underground. It’s not a new technique, but it’s both costly and complex.
3. Another EV startup runs out of charge. Electric-truck startup Nikola filed for bankruptcy on Wednesday. The truck maker rode a wave of enthusiasm when it went public in 2020 and was once worth more than Ford. However, the startup was later engulfed in a high-profile fraud scandal and ultimately failed to commercialize its tech. It’s the latest once-promising EV startup to collapse.
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The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Grace Lett, editor, in Chicago. Ella Hopkins, associate editor, in London. Hallam Bullock, senior editor, in London. Amanda Yen, associate editor, in New York. Elizabeth Casolo, fellow, in Chicago.
