TheChek News Flow

Booming AI budgets seemed at risk last week when DeepSeek crashed Nvidia’s stock based on speculation that its cheaper AI models would lower demand for AI chips and data centers.

Alphabet CEO Sundar Pichai has certainly noticed the Chinese AI company, praising its work as “tremendous” in Alphabet’s latest earnings call (while adding that some of Gemini’s models are just as efficient).

But just like Meta, Alphabet isn’t throwing down the towel in Big Tech’s AI spending wars. In its latest earnings report, Alphabet announced it would boost capital expenditures to $75 billion this year — a whopping 42% increase — to accelerate its AI progress.

Alphabet is betting that cheaper AI will massively boost demand for its services, rather than making it basically free and threatening its business models. The company noted it stands to benefit from this rise in usage — known as inference — thanks to its billions of existing users.

“Part of the reason we are so excited about the AI opportunity is we know we can drive extraordinary use cases because the cost of actually using it is going to keep coming down, which will make more use cases feasible,” Pichai said during the earnings call. “And that’s the opportunity space. It’s as big as it comes, and that’s why you’re seeing us invest to meet that moment.”

Meta CEO Mark Zuckerberg made similar comments in Meta’s earnings call last week, pledging to spend “hundreds of billions” on AI in the long term despite all the DeepSeek buzz.

Whether this all pans out is unclear, but for now, tech giants can afford the AI bills, and when (or if) they’ll slow down is anyone’s guess.

Shares in Nissan fall while Honda stock jumps

TOKYO—Nissan’s 7201 -4.87%decrease; red down pointing triangle board is planning to reject Honda’s terms for a combination of the two automakers, putting in danger a merger plan announced less than two months ago, people familiar with the matter said Wednesday.

Nissan’s board was scheduled to meet later Wednesday, and the people cautioned that no final decision to kill the deal has been made.

The two Japanese automakers said on Dec. 23 that they planned to combine under a structure in which Honda and Nissan would both be subsidiaries of a single holding company.

A combination of Honda and Nissan would create the world’s third-largest automaker by vehicle sales when including Mitsubishi Motors, whose biggest shareholder is Nissan.

In recent days, Honda presented a new proposal that would have made Nissan a subsidiary of Honda instead of the more equal structure originally planned, according to a person familiar with the negotiations. The person said Nissan found the new proposal unacceptable and planned to reject it.

The person said Nissan and Honda would continue other cooperation that predates the merger talks, including collaboration on software and electric vehicles.

Honda said it was continuing to discuss the potential combination with Nissan and aimed to decide on a general plan by mid-February.

Nissan shares initially held up in Wednesday’s trading following reports of a rejection but fell later in the Tokyo session. Its shares were down 4.9% in the afternoon when the Tokyo Stock Exchange called a halt to trading. Honda shares closed up 8.2%. The price moves reflected investor views that Nissan was more likely to benefit if the merger went through.

If the automakers’ plan to combine falls apart, it would raise pressure on Nissan to reassure lenders, employees and customers that it can survive amid stiff competition in the U.S. and China. Nissan has lost ground in both markets.

Nissan said in November that it would lay off 9,000 workers and slash its factory capacity by one-fifth to cut costs.

The initial merger plan had drawn some skepticism, in part because of the differing corporate cultures at Honda and Nissan. Honda’s leaders have usually been engineers. Nissan historically favored graduates of the prestigious University of Tokyo, and its top jobs often went to sales leaders.

Honda’s chief executive stumbled at the December news conference announcing the potential deal when he was asked what he found attractive about Nissan as a partner. He couldn’t give specifics beyond Nissan’s long history as a carmaker and concluded by saying he wasn’t sure his answer was satisfactory.

Nissan’s troubles have left it with a market capitalization that is less than one-fifth of Honda’s.

For Nissan, “it was naive to imagine they could go into this as equals,” said Fumio Matsumoto, chief strategist at Okasan Securities. “If you’re going to do it, it’s best to make clear who’s on top.”

Matsumoto said Nissan’s effort to overhaul its business and look for partners was likely to continue, given the high cost of developing artificial-intelligence-powered autonomous vehicles and other new technologies. He said Nissan might seek foreign partners because apart from Honda, there were no obvious candidates in Japan.

Netflix bets on live sport in the next big battle for subscribers

Streaming group hopes boxing, wrestling and other events can also boost nascent advertising business

Netflix has spent nearly 20 years disrupting the television business, but its most recent programming innovation — live events such as the boxing clash between Mike Tyson and Jake Paul — has been standard fare for traditional networks since the 1950s.

Now the streaming group is adding another old-school format to its line-up: the chat show. At a star-studded presentation in Hollywood last week, it announced that comedian John Mulaney would launch a live weekly variety show called Everybody’s Live with John Mulaney in March.

“If we can be one-tenth as popular as any show from South Korea, then we will be the biggest talk show ever,” Mulaney joked, referring to the huge audiences drawn by Netflix’s Squid Game. 

Netflix’s expansion into live programming is aimed at driving revenues to its nascent advertising business — another foundation of the classic TV model. The company broke its long-standing opposition to advertising with the launch of cheaper ad-supported options in 2022, a time when investors were concerned about slowing subscriber growth.

The push appears to be working, despite some minor but well-publicised technical glitches.

The Tyson-Paul fight in November was the most-streamed sporting event ever, leading to a surge in new Netflix subscribers, while two NFL games at Christmas — one featuring a halftime performance by Beyoncé — generated up to $180mn in US advertising, according to Bernstein.

Together, they helped drive Netflix to a record 19mn new subscribers in the most recent quarter, bringing its total to more than 300mn.

The momentum has continued into the new year. Netflix last month debuted its weekly livestream of World Wrestling Entertainment’s Raw, the product of a $5bn deal struck between two companies last year. WWE said its audiences on Netflix were twice the size of its old deal on traditional TV.

The 10-year WWE deal is the perfect example of the kind of live programming that Netflix looked for, said Bela Bajaria, its chief content officer. “We love to do something that’s noisy, that’s surprising, that can really create a tonne of conversation,” she told the Financial Times. “Live [streaming] is a great tool to expand into different kinds of programming.”

She said wrestling was attractive to Netflix because it had a loyal, all-age fan base and generated new weekly programming all year round. These qualities are also attractive to advertisers, according to analysts.

“The goal of Netflix is to keep you coming back constantly, and the beauty of content like WWE is that it’s new every Monday,” said Rich Greenfield, an analyst at research firm LightShed Partners. “For advertisers, the [attraction] is that it’s live and you get programming that works all around the world.”

The live programming push coincided with a strong run for the company. Its share price surged 83 per cent in 2024, and has increased a further 10 per cent to $981 so far this year. Yet some Wall Street analysts say it has space to rise further.

“I absolutely believe they’re going to continue this growth,” said Laurent Yoon, an analyst at Bernstein. He expected strong subscriber growth to continue — particularly in markets outside the US, where penetration was far below US levels. “Netflix has recently proven to be a credible destination for live events” which could lead to higher advertising revenue, he added.

The financial recovery from the 2022 “Great Netflix Correction” appears to have helped the company regain its swagger.

Presenting Netflix’s 2025 line-up last week, Bajaria took a swipe at rival Hollywood studios for relying on sequels, saying Netflix deserved more credit for its original “prestige” programmes.

“We aren’t afraid to take big, bold swings,” she said, pointing to Emilia Pérez, which received 13 Academy Award nominations, including for Best Picture. “We just received more Oscar nominations than any other studio.”

The company will also stream more live sport this year, including a return of NFL games at Christmas. Netflix has also secured US rights for the Fifa Women’s World Cup in 2027 and 2031.

Now that Netflix has shown it can capture large global audiences for live sport, the question is how quickly it plans to expand — and how much it is willing to spend. The success of the boxing match, NFL games and its popular sports documentaries have fuelled talk that Netflix would sign a streaming deal with a major league.

The company has damped down such speculation, citing the high cost of sporting rights. Bernstein’s Yoon said he could see Netflix doing smaller “niche sports” deals that engaged audiences, even if it forgoes expensive rights deals for football, basketball, the NFL or baseball.

Other streaming companies have paid up for sports rights, including Amazon, which in 2021 agreed to pay about $1bn a year for the exclusive rights to Thursday night NFL games. Apple has rights to streaming some Major League Baseball games and Major League Soccer.

Netflix co-chief executive Ted Sarandos has repeatedly ruled out buying expensive, multiyear sport rights packages, while saying in January that he was “thrilled with everything about” the deal to stream two NFL games in December.

“But it doesn’t really change the underlying economics of full-season big league sports being extremely challenging,” he said. “If there was a path where we could actually make the economics work for both us and the league, we certainly would explore.”

Prices have climbed more than 8% this year on fears of a global trade war

The cost of short-term gold borrowing in London has shot up as the shortage in the bullion world’s trading capital has starved the market of the precious metal.

A gold rush into the US — where inventories on the New York Comex have risen 88 per cent since November’s election — has drained the market in London, as traders try to get ahead of potential tariffs threatened by President Donald Trump. Users report bottlenecks of several weeks to withdraw gold from the vaults at the Bank of England.

The rate to lend gold for a week has risen to about 10 per cent on an annualised basis this year, compared with 2-3 per cent previously, according to the World Gold Council, an industry body.

“There is more gold in the US than there should be under normal circumstances, and there is less gold in London than there should be,” said John Reade, chief market strategist at the WGC. “That is causing disruption to the gold market, and has increased the cost of borrowing gold.”

Borrowers of gold are typically other commercial banks and consumers such as refineries, jewellers or industrial manufacturers, who require the precious metal but find it cheaper to temporarily borrow it rather than buy and store it.

Gold prices have climbed more than 8 per cent this year on fears of a global trade war, setting multiple record highs. On Tuesday they rose another 1 per cent to touch a new record of $2,845 per troy ounce.

Overnight leasing rates for gold recently jumped as high as 12 per cent, according to Philip Newman, managing director at Metals Focus, a London-based precious metals consultancy.

“Leasing rates are well above normal levels — and they are likely to remain volatile for some time,” he said.

Concerns over US tariffs has caused a surge of gold to flow into New York, as traders take advantage of a premium for bullion in the country.

Ruth Crowell, chief executive of the London Bullion Market Association, an industry body whose members include some of the world’s biggest banks, said that “liquidity and gold stocks remain solid” in London.

“There are challenges when the US is operating at this kind of premium, but it is something that the market is managing well,” she added.

Gold demand reached a record high last year, and was likely to set another record this year due to strong demand from central banks and investors, according to the World Gold Council’s annual trends report published on Wednesday.

Total demand rose to 4,974 tonnes last year, up 1 per cent from the previous year. Investment demand rose 25 per cent last year, fuelled by demand for gold bars and a revival of investor demand for gold exchange traded funds, which invest directly in the precious metal.

Reade, of the World Gold Council, said the “unprecedented” level of political and economic risk created by the Trump administration’s policies were likely to burnish the metal’s allure as a haven.

“This uncertainty, will keep gold well-bid at times this year,” said Reade. He added that while he expected gold prices to hit more record highs this year, it would be unlikely to repeat its performance of last year, when the metal rose 26 per cent.

Last year central banks purchased 1,045 tonnes of gold — roughly level with the previous year, and the third consecutive year with central bank purchases of more than 1,000 tonnes.

Europe’s largest asset manager is ‘looking at everything that would improve our growth’, says Valérie Baudson

Amundi is “in the market” for more acquisitions, according to its chief executive, as Europe’s largest asset manager reported record net inflows last year that helped lift assets under management to a new high of €2.24tn.

“Amundi is in the market and is a consolidator,” Valérie Baudson told the Financial Times. “We’re looking at so many files . . .[but] you need to wait for the planets to be aligned.”  

Amundi was created in 2010 through the merger of the asset management arms of French banks Crédit Agricole and Société Générale. Since then it has grown into Europe’s largest asset manager and one of the industry’s most profitable players, through a strong run of organic growth, a series of savvy acquisitions and discipline on costs. 

Last year Amundi struck three small deals to diversify its business and bulk up in fast-growing areas. It signed a strategic partnership with Victory Capital to increase its investment and distribution presence in the US; it bought Zurich-based Alpha Associates, which offers funds of funds in private markets; and it snapped up aixigo, a German technology company. 

But two larger targets proved elusive. Amundi held talks last year to buy Axa Investment Managers from its parent insurer but was not able to agree terms, and in August Axa announced a €5bn deal to offload the business to banking group BNP Paribas. 

Amundi and its majority shareholder Crédit Agricole had also been in on-off discussions for more than a year with German insurer Allianz over plans to combine its €560bn investment management arm with its larger French rival. But talks were paused in December after the two sides struggled to agree on the structure and governance of a tie-up — although some in the industry expect that talks may resume at a later date.

Through Amundi’s 2016 acquisition of Pioneer Investments from Italy’s UniCredit, it has a 10-year distribution agreement with the Italian bank to continue selling Pioneer’s investment products through UniCredit branches.

This is due to expire in 2027, although a new distribution deal may be negotiated. Analysts at JPMorgan have warned that Amundi may need to offer higher rebates to UniCredit as part of any renegotiation and said that Amundi could experience outflows from the roughly €110bn it estimates is distributed by the Italian bank today.

Baudson declined to comment on specific negotiations. She said that Amundi was “looking at everything that would improve our growth” as long as the acquisition targets met three criteria: it must make strategic sense for clients, be financially positive for shareholders, and the two sides must be aligned on deal execution. 

Pointing to Amundi’s strong performance last year — net income grew 13 per cent to €1.4bn, and net inflows doubled from the previous year to €55bn — she said that Amundi was under no pressure to do a deal. “If it’s today, it’s today, if it’s tomorrow, no problem.” 

Whether or not Amundi strikes another deal, “it doesn’t matter. We go on growing very significantly.” 

In the latest example of consolidation sweeping across the European asset management industry, last month France’s BPCE combined its investment arm Natixis with Italian insurer Generali. 

Baudson said that the dealmaking wave was “completely natural and long-expected”, with the roughly 15-year-old barbell effect continuing to play out.

“Managing a profitable growing asset manager can be very well done in a specialised way under $100mn and can be very well done when you’re at least $1tn because you have scale,” said Baudson. “When you’re in the middle, it’s complicated.” 

Amundi’s shares were up just under 1 per cent on Tuesday morning.

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