Cover:
-As cloud computing surged in 2011, venture capitalist Marc Andreessen asserted that "software is eating the world," predicting significant transformations in the tech landscape. Microsoft benefited immensely from this trend, transitioning from stagnation to substantial growth. However, with the rise of artificial intelligence (AI), there has been a notable shift in the tech sector’s focus, resulting in a decline in software stock values, including a 28% drop in Microsoft’s stock since July, losing $1 trillion in market value. Despite this, analysts believe Microsoft is well-positioned, with RBC's Rishi Jaluria suggesting the company is undervalued and likely to see substantial revenue and earnings growth. Microsoft’s broad suite of products remains central to its business, with its Productivity & Business Processes segment generating significant revenue, though AI poses a threat to this area. The ongoing narrative suggests that the impact of AI on software markets could signal a major disruption for companies like Microsoft.
Interview:
-Hilda Applbaum, co-manager of the $144B American Funds Income Fund of America, likens her investment strategy to nurturing her blueberry bushes. She focuses on undervalued companies with at least a 2.5% yield, investing for the long term until they can rebound. Her tenure has led to significant success, with the fund outperforming 98% of peers over 15 years, averaging 8.6% returns, as noted by Morningstar. Applbaum, recognized as one of Barron’s 100 Most Influential Women in US Finance, has a solid background in economics and investment analysis. In a recent conversation, she addressed concerns about the geopolitical situation in Iran and its potential impact on energy prices and technology firms, affirming her long-term investment approach and highlighting past successes with firms like Taiwan Semiconductor Manufacturing and Broadcom.
Tech Trader:
-As the war in Iran persists, the tech sector faces significant challenges due to disrupted raw material supplies, increased interest rates, and potential cyber conflicts. The ongoing conflict has already affected the global petroleum supply, crucial for energy sources used in chip manufacturing across East Asia, particularly in Taiwan and South Korea. Major semiconductor companies like Taiwan Semiconductor Manufacturing have seen their stocks drop by 10%, with South Korean giants SK Hynix and Samsung facing declines of 14% and 15%, respectively. The reliance on Middle Eastern resources, including helium and bromine, exacerbates the situation, leading to rising prices and potential shortages that may restrict chip production at a time when demand is surging due to AI advancements. An extended war could severely impact the AI infrastructure buildout by further complicating resource availability.
The Trader:
-Real estate investment trusts (REITs) are gaining popularity amid market instability due to concerns over Iran, rising oil prices, and declining AI trade, attracting investors for their tangible assets and reliable dividends. The State Street Real Estate Select Sector SPDR ETF has risen nearly 4.5% this year, contrasting with a more than 2% drop in the S&P 500. Senior portfolio manager Iman Brivanlou highlights that REITs are benefiting from inflation and potential interest rate cuts by the Federal Reserve, making their average yield of 3.3% appealing. He recommends infrastructure REITs like American Tower and SBA Communications, and suggests that REITs focused on senior living, such as Welltower, are promising due to demographic trends. The Westwood Enhanced Income Opportunity ETF also includes Prologis and Essex Property Trust, which are expected to perform well given the current housing market challenges.
-Alibaba Group Holding stock is preparing for its fiscal third-quarter earnings report, facing challenges primarily related to fears that advancements in artificial intelligence (AI) may impact its profitability. The tech giant's shares have declined over 7% this year amidst concerns regarding Chinese consumer spending and inflation. Currently, Alibaba's stock trades at 16X earnings estimates for the coming year, which is below its 10-year average of 19 and significantly less than Amazon's 26.5X. The company is expected to report earnings of $1.67/share, a 43% decrease from the previous year, with projected revenues of $42.1B, reflecting a 9% increase. Analysts, including Citigroup's Alicia Yap, point to ongoing management changes and executive turnover in Alibaba's Qwen chatbot unit as indicative of potential strategic disagreements regarding AI. However, demand for Qwen AI services has reportedly surged during the recent Chinese Lunar New Year, suggesting resilience.
Features:
-Concerns regarding the Iran war have affected financial markets, particularly raising fears that increased oil prices could trigger a global economic slowdown. This downturn has caused a decline in copper prices, which has also affected Freeport-McMoRan, the largest US copper miner, as its stock has fallen more than 10% from its peak over the past year. Despite this, Freeport's stock is still up approximately 20% for the year and more than 75% in the last 12 months, primarily driven by expected demand from data centers requiring copper wiring. Even though copper prices have dipped, they remain approximately 4.5% higher this year and over 25% since March 2025. Wall Street has set a consensus price target of $68.62 for Freeport shares, projecting a 10% increase from current levels, although this estimate may be conservative. Kevin Smith, Chief Investment Officer of Crescat Capital, believes that the current pullback is a temporary overreaction to the Iran situation and that there is significant potential for a long-lasting bull market in copper. He views the current dip as a buying opportunity for Freeport and other copper miners, suggesting that copper prices could rise an additional 20% to 25% from their present levels.
-Iran’s heavy artillery and navy have been quickly neutralized by the US and Israel, but regaining control over the Strait of Hormuz is proving to be a prolonged challenge. The strait, a critical passage for 20% of global oil and LNG, may remain blocked for weeks, impacting energy markets and potentially leading to global recession if oil prices reach $150. Iran's Supreme Leader has expressed intentions to keep the strait closed to exert pressure, further complicating efforts as attacks on tankers and mining activity increase. The US faces a complex task in reopening the strait, with reports suggesting a varying number of mines deployed by Iran. A straightforward military solution appears elusive, given the layered defense capabilities Iran possesses.
Europe:
-The US and Israel claim that Iran’s heavy artillery and navy have been quickly neutralized, but regaining control over the Strait of Hormuz is proving to be a prolonged challenge. The strait, a critical passage for 20% of global oil and LNG, may remain blocked for weeks, impacting energy markets and potentially leading to global recession if oil prices reach $150. Iran's Supreme Leader has expressed intentions to keep the strait closed to exert pressure, further complicating efforts as attacks on tankers and mining activity increase. The US faces a complex task in reopening the strait, with reports suggesting a varying number of mines deployed by Iran. A straightforward military solution appears elusive, given the layered defense capabilities Iran possesses.
Emerging Markets:
-Venezuela has made unexpected progress since U.S. forces captured President Nicolas Maduro on January 3. Vice President Delcy Rodriguez reformed the Hydrocarbons Law, transitioning to production-sharing arrangements, and an amnesty law released over 3,000 political prisoners. Public sentiment has shifted dramatically, with 80% of Venezuelans now optimistic about the future. Oil production is expected to increase from one million to 1.5M barrels per day, primarily driven by multinationals like Chevron, Eni, and Repsol. However, reaching the historical production levels of 3.5 million barrels will require significant structural changes and improvements in the rule of law. Maria Corina Machado, the opposition leader, plans to return to Venezuela to support a transition to democracy, but internal challenges remain, especially with Diosdado Cabello’s influence. The US holds Venezuelan oil revenues pending the establishment of a representative government, while the country grapples with over $130B in sovereign debt, making large-scale investments contingent on resolving these financial issues.
Commodities:
-Since the outbreak of war in Iran, the State Street SPDR S&P Metals & Mining ETF (XME) has fallen nearly 6% from February 27 to Friday, as reported by FactSet. This ETF provides exposure to both precious and industrial metals, as well as mining companies like Alcoa, Freeport-McMoRan, and Newmont, which have seen declines of 3.35% to 4.78%. BullionVault researcher Adrian Ash indicates that the rising energy costs due to oil prices nearing $100 per barrel significantly impact mining operations, as energy constitutes a large portion of mining costs. Additionally, he notes that industrial metal prices are declining amid fears of an economic slowdown, as reduced consumer buying diminishes input demand. Continuous copper contracts (HG00) have dropped 0.5% in the past five trading days while gold prices have also decreased since early March, after reaching a peak of $5,626.80 per ounce on January 29. Ash cites that gold often declines when equities fall as investors liquidate positions to cover losses, further complicating the outlook for mining stocks amid heightened market volatility driven by geopolitical tensions.
Streetwise:
-Nvidia's stock, despite a staggering 22,000% increase over the last decade, is currently facing skepticism on Wall Street due to a recent temporary trading dip. Investors are uncertain whether Nvidia can sustain its exceptional growth trajectory. The upcoming Nvidia GTC 2026, which centers around artificial intelligence developments, represents a crucial opportunity for the company to bolster investor confidence. Currently, Nvidia's stock saw an 8% decline earlier this year but has recently stabilized to a decrease of only 1%. Analysts predict a significant increase in free cash flow, projecting an 85% rise to over $178B in the fiscal year ending January 2027 - a marked acceleration compared to the previous year. However, there remains a substantial $98B variance in analysts' estimates, reflecting a high level of uncertainty. Nonetheless, recent consensus forecasts have improved following Nvidia's quarterly earnings report in late February. Notably, if Nvidia meets these predictions, it has the potential to become the most prosperous company in history, surpassing notable benchmarks like Saudi Aramco's record free cash flow, influenced by geopolitical developments affecting oil markets.
How will the Fed respond to the Iran war’s fallout?
Market Questions is the FT’s guide to the week ahead
Investors will be laser focused next week on commentary from Federal Reserve chair Jay Powell about how the Fed views the risks to inflation and growth, as central bankers try to gauge the economic fallout from conflict in the Middle East
Higher oil prices are expected by some analysts to contribute to a stagflationary environment in the US economy — a combination of inflation and stagnant economic growth that is difficult to combat under the Fed’s dual mandate to keep prices low and employment high.
“It’s yet another stagflation shock,” said Stephen Douglass, chief economist at NISA Investment Advisors. “You have to pick a side and which side of the mandate Powell emphasises will be the first signal.”
Still, uncertainty over how long the conflict will go on means the Fed is likely to deviate little from its current policy.
“They’re firmly on hold. That will allow them to get clarity on what’s happening in the war and in the oil market,” Douglass said.
Traders in futures markets have turned more hawkish since the war began and anticipate only a single quarter-point cut from the Fed by the middle of 2027. It marks a dramatic shift from two weeks ago, when they expected two quarter-point cuts this year. Jill R Shah
Is the ECB still ‘in a good place’?
The European Central Bank’s monetary policy meeting on Thursday has become much more interesting than policymakers would have wished a couple of weeks ago. A longstanding consensus that borrowing costs would hold steady for the foreseeable future has been trashed.
Economists at Goldman Sachs predict that headline inflation in the Euro area will rise to almost 3 per cent in the second quarter, from 1.9 per cent in February. Traders in swaps markets have priced in at least one quarter-point increase in interest rates by the end of this year. Before the war, they were pricing a roughly 50 per cent chance that the ECB would resume the cutting cycle it began in 2024.
Many observers reckon the trauma of runaway inflation after Russia’s full-scale invasion of Ukraine in 2022 could trigger a more hawkish ECB response to the present crisis. But few if any expect it to act on Thursday. Traders in swaps markets are pricing a 90 per cent chance that it will leave borrowing costs unchanged at 2 per cent for the sixth meeting in a row.
Before they make any move, policymakers will want a better understanding of how long the conflict and its disruption to energy markets will last, given their tendency to “look through” short-term supply shocks. Moreover, while high energy prices will fuel inflation, they will also slow economic growth, and at least to some extent keep price pressures in check.
ECB president Christine Lagarde would adopt “a decidedly wait-and-see approach for now”, BNP Paribas economists wrote in a note to clients. However, they added, Lagarde was likely to ditch her mantra that monetary policy is “in a good place” and instead stress that the ECB “won’t hesitate to act to ensure price stability if required”. Olaf Storbeck
Will inflation expectations force the BoE’s hand?
Like the Fed and the ECB, the Bank of England is widely expected to leave its policy interest rate unchanged at its meeting on Thursday as it grapples with the price pressures and uncertainty unleashed by the war in the Middle East.
Traders in swaps markets are pricing an 80 per cent chance that the BoE will deliver one quarter-point rate rise by the end of this year — a sharp turnaround from the two quarter-point rate cuts that were fully priced in before the US and Israel began their bombardment.
UK inflation was previously on track to return to the BoE’s 2 per cent target by the middle of 2026. The sharp rise in global energy prices and the risk of second-round effects have put this in jeopardy.
David Miles, senior economist at the Office for Budget Responsibility, said UK inflation could be on track to end the year at about 3 per cent if oil and natural gas prices remained at their current elevated levels, rather than declining to 2 per cent as previously forecast.
Edward Allenby of Oxford Economics said the BoE’s Monetary Policy Committee “will be wary about the risks of making a policy error and is likely to err on the side of caution for now”.
If the energy shock proves shortlived, some economists say the BoE should be able to resume its cutting cycle before the end of this year. However, policymakers may be cautious about the risk of higher price growth as household inflation expectations are still above the 2010-2019 average, with consumers still feeling the strain of elevated inflation.
“The MPC will want to lean against the risk that less well-anchored inflation expectations move higher in response to a new supply shock, as this would help to lessen the likelihood of strong second-round effects forming that could keep inflation elevated for longer,” said Allenby.
Lululemon’s High-wire CEO Search Continues With Q4 in the Offing
The next person in the corner office is going to have plenty of work on both the brand and corporate fronts.
Bringing in a new chief executive officer always requires a little balance — but Lululemon Athletica Inc. is performing the corner office switch on a high wire.
On top of all the usual troubles that come with changing the guard at a top-tier brand, the process is unusually complicated.
- Calvin McDonald made a quick C-suite exit following a seven-year run as CEO, which was characterized by the kind of dramatic growth that seemed unstoppable, until it stopped.
- Lululemon’s stock price has fallen back down to Earth from the stratosphere — with the market capitalization dropping from about $60 billion two years ago to under $20 billion.
- Activist investor Elliott Investment Management is pushing for change and advocating for Jane Nielsen, the Ralph Lauren Corp.-veteran, as the next CEO.
- And founder Chip Wilson has turned out to be not just the company’s biggest shareholder, but its biggest critic and is now waging a proxy battle to remake the board, which will pick the next CEO.
While sources said Lululemon has been interviewing candidates, and has spent time with Nielsen and others, the process is ongoing and the big reveal is not seen as imminent.
That means the company’s fourth-quarter earnings report and conference call with analysts on Tuesday will be something of a platform for some potential internal contenders. They include Meghan Frank, who’s been Lululemon’s chief financial officer since 2020 and is now interim co-CEO along with chief commercial officer André Maestrini.
It is Frank who’s been getting the interest — at least among the betting crowd. And Wall Street will be listening closely on the call to see if there’s the voice of a big-time CEO there.
But this is a decision that will be made not by the masses, but, as Wilson has pointed out repeatedly, the board.
In an open letter last month, the billionaire founder described his campaign as an effort to “catalyze a quantum of change that is sorely needed” at Lululemon.
“The heart of the issue is a disconnect between the company’s creative engine and the board’s strategic oversight of how nonquantifiable power of brand and product translates to brand strength, margin durability, and long-term shareholder value.”
But that’s not the only take.
Simon Siegel, an analyst at Guggenheim Partners, said there were two “primary schools of thought on how to fix Lululemon.”
The first, which aligns with Wilson’s thinking, posits that the brand’s product and messaging are off.
“Therefore the fix, while easy to say and hard to do, goes back to retail 101: return the focus to the product, have merchandising and storytelling and quality as the be all, end all,” Siegel said. “If you build it, they will come.”
Siegel is not in that camp.
Instead, he thinks the brand has overstretched itself and drove unhealthy sales with less than ideal product.
“You need someone who understands and is willing to take leadership of a company, not announcing growth, but announcing strength, announcing a path to improvement,” Siegel said. “And a lot of public company CEOs believe that growth is the air they breathe. And so in scenario two, the business is best equipped to find someone with the will, with the stomach to announce a pullback in sales, a purposeful pullback in sales, to ultimately see the growth.”
While Wilson has been making a lot of the noise, the process has stirred up the question of just what are the skills needed to be CEO and where can they be found.
There is a belief among some that it’s an uneasy step from CFO to CEO, that whoever is in the big job needs to be first a product person.
Both Nielsen and Frank have done turns as CFOs, for sure, but it’s also a role now that has much more strategic impact than when they were just crushing numbers all day.
A source friendly with Nielson said she is “the whole package,” is “asking the right questions” and “gets the brand piece.”
And Joanne Crevoiserat, CEO and former CFO of Coach-parent Tapestry Inc., has proven that knowing one’s way around a spreadsheet is not necessarily a bad thing at the tippy-top.
Laurent Vasilescu, an analyst at BNP Paribas, said: “These CEOs are not designers. They are leaders. They’re running [the company], thinking about the design team, marketing team, the finance team, real estate team. That’s what they are.
“Anyone who comes in as CEO, she or he will not be designing the product,” he said. “What she or he will need to do is figure out if they have the right design team, right design directive.”
Vasilescu said Lululemon has to boost marketing and also cut back on back office costs.
“That is totally in Jane Nielsen’s wheelhouse,” he said. “That’s what she did at Ralph. She did that. So they need that as well.”
So the company’s fourth-quarter results, when they come out after the market closes on Tuesday, will be the side show.
Instead, everyone will be watching for which way the wind is blowing as Lululemon takes to the high wire.
The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000.
American Marquee Brands Eyeing Roberto Cavalli
The New York and Redondo Beach, Calif.-based brand management company is in pole position to take control of the Italian fashion brand.
MILAN — Marquee Brands is eyeing Roberto Cavalli and is in pole position to take control of the fashion brand, according to market sources.
WWD reported last year that Cavalli’s owner Hussain Sajwani was shifting his attention from fashion to a project that is aiming to support the growing demand for data storage and processing related to AI and other technologies. He is spearheading a new major venture to develop data centers around the world, with investments of more than $20 billion through his company Edgnex.
A representative for Marquee could not immediately be reached for comment on Friday.
Last June, the Cavalli company issued a statement that said it was “working to find the best path to growth, which includes exploring strategic partnerships. This process will be carried out with the participation of all relevant stakeholders.”
Cavalli is controlled by Sajwani’s Auriel Investment SA, a subsidiary of the Dubai-based Damac Properties. For this reason, sources believe that the deal has not been signed yet, slowed down by the war in the Middle East.
The global property development company, which Sajwani established in 2002, is one of the largest in the region, with real estate projects in Dubai; Abu Dhabi, UAE; Doha; Amman, Jordan; Beirut; Jeddah and Riyadh, Saudi Arabia; Miami; Toronto, and London. Sajwani built the Trump-branded golf course in Dubai that opened in February 2017.
Sajwani, who is the chairman of Damac, bought Cavalli in 2019, after the fashion company had filed a restructuring plan with the Court of Milan. He was especially interested in Cavalli at the time because its strategic investment arm Dico International was working on a five-star hotel tower in Dubai and other hotels and residential projects have been in the pipeline, as well as Cavalli Cafés ventures. The latter plan, however, has fizzled over the years.
In 2022, Sajwani also acquired the jeweler De Grisogono.
Prior to Auriel Investment, Italian private equity fund Clessidra Sgr took control of Cavalli in 2015 through its Varenne vehicle, which at the time included L-GAM and Chow Tai Fook Enterprises Ltd.
Brand management firm Marquee has made its mark by focusing on owning just the brands and working with broad networks of partners for everything else. It was established by Neuberger Berman in 2014, works with something like 300 licensees and has experience converting brands to a licensing model. Heath Golden is CEO of Marquee, which owns Martha Stewart, Laura Ashley, Stance, America’s Test Kitchen and Isotoner, among others.
Designer Roberto Cavalli launched his namesake brand in 1970 and developed an innovative printing process on leather and denim, building a global fashion and lifestyle business with his bold animalier prints, bejeweled distressed jeans and sexy dresses. He died in Florence in April 2024 aged 83.
Cavalli’s CEO Sergio Azzolari quietly left the company last year. The brand is designed by Fausto Puglisi, who joined the house in the fall of 2020 and has been successfully embracing the vision of the late founder and increasing the brand’s visibility through the slew of celebrities who have worn it, from Taylor Swift, Beyoncé Knowles-Carter, Miley Cyrus and Jennifer Lopez to Dua Lipa, Lady Gaga and Gwen Stefani. A swim collaboration with Kim Kardashian’s Skims was revealed last year.
Mariah Carey performed at the opening ceremony of the 2026 Milano Cortina Winter Olympics in February wearing an ornate Cavalli gown featuring an Art Deco-inspired design of shimmering beads and crystal embellishments on the bodice, waist and skirt of the dress, with a dramatic train and a feathery wrap.
Humanoid robots get to work at German BMW factory
After successfully piloting humanoid robots at its Spartanburg, SC plant last year, BMW is putting AI-powered machines to work building EVs at its Leipzig iFACTORY.
While other companies trade on promises and plans, BMW has been quietly testing humanoid robots at its Spartanburg, SC plant – and the results have been overwhelmingly positive. The Figure 02 humanoid robots in that project have contributed to the production of over 30,000 BMW X3s, primarily by handling the precise positioning of sheet metal for welding. This second project hopes to build on that success using new machines develped by Zurich-based Hexagon Robotics.
Unveiled last June, the new Hexagon AEON robots are equipped with AI-based motion control and sensors that can evaluate their environment and make independent decisions based on what’s around, determining more or less on their own what they need to do to carry out their instructions while avoiding people and things that might otherwise be “in the way.”
Hexagon calls that kind of decision-making, self-determining software, “Physical AI,” and the company believes it will make all the difference when it comes to integrating AEON into existing factories.
“Our aim is to be a technology leader and to integrate new technologies into production at an early stage,” explains Michael Nikolaides, Senior Vice President Production Network, Supply Chain Management at BMW Group. “Pilot projects ([ike the one at Spartanburg and this one at iFACTORY] help us to test and further develop the use of Physical AI – that is, AI‑enabled robots capable of learning, under real-world industrial conditions.”
While designing robots to look like humans likely causes more problems than it solves, it does make planning their workflows more intuitive for the humans behind the controls who are translating their own actions into robotic commands. That kind of digitization is, at least, arguably beneficial.
“Digitalization improves the competitiveness of our production, here in Europe and worldwide,” says Milan Nedeljković, Member of the Board of Management of BMW AG, Production. “The symbiosis of engineering expertise and artificial intelligence opens up entirely new possibilities in production.”
You can watch BMW’s newest mechanical Turk employee at work in the company’s official release video, below, then let us know what you think of AEON in the comments.
Back in January, I wrote an article about a fresh order for more than forty new Freightliner eCascadia electric semi trucks being deployed in Texas. In the comments, Harry Tuttle wrote, “Hmmm. Not Teslas. How about that.”
I wonder what you guys are going to write on this one.
Video :
BYD — THE GLOBAL CONSOLIDATOR
M&A Strategy, Target Identification & Valuation | March 15, 2026
Stella Li (BYD EVP) confirmed in São Paulo the group is open to acquiring legacy OEMs. We have been through the targets, the numbers, and the politics. Here is what matters.
▎THE OPPORTUNITY
• NSANY — Primary target. 0.26x P/BV, mkt cap ~$8.3bn, TTM rev $76.5bn. No white knight post-Honda collapse. Even ex-M&A, this is the most compelling distressed-industrial setup in global auto right now.
• Opel / Vauxhall (Stellantis) — EU brownfield play. Bypasses the 45% EU tariff wall on Chinese-built EVs. Stellantis at 0.28x P/BV. Bloomberg confirmed Xiaomi/Xpeng talks 12-Mar — BYD is the logical next call.
• Maserati — Brand optionality at ~€1-2bn. Geely/Lotus playbook. <7 cars/day at Modena.
▎THE CONSTRAINT — AND WHY MOST NOTES GET THIS WRONG
Political risk is the central variable, not valuation. Three factors that kill outright acquisition:
1. Employment — 5.5M jobs in Japanese auto alone (8% of workforce). Every politician in Yokohama, Sunderland and Smyrna (TN) is a veto point.
2. Regulatory — METI Economic Security Act (JP), EU Foreign Subsidies Regulation, UK NSI Act 2022, US connected vehicle ban 2027. All operational, all apply to BYD.
3. Dealer networks — 6,000+ Nissan outlets across 160 markets. Organised opposition, direct legislative access. Geely spent 18 months fighting Swedish dealers on Volvo.
Our call: outright acquisition probability <15% in 3 years. Asset-level deals (plants, minority stakes, IP licensing) are the realistic path — but deliver a fraction of the strategic value.
▎NOT IN PLAY — REGARDLESS OF VALUATION
• Renault — French state 15% stake, €7.4bn auto net cash, not a distressed seller. Tech partnership candidate, not M&A target.
• Toyota, VW, Hyundai — Political blockers are structural, not cyclical.
▎THE TRADE
Long NSANY on distressed value (0.26x P/BV is the floor thesis — M&A optionality is a free option on top). Watch STLA European asset separation announcements for the Opel catalyst.
Full PDF note attached — includes political opposition deep dive and original Electrek source article.
Laurent Chekroun
For professional investors only. Not investment advice.
US Army announces contract with Anduril worth up to $20B
The U.S. Army said late Friday that it has signed a 10-year contract with defense tech startup Anduril. The deal could be worth up to $20 billion.
According to the announcement, the contract starts with a five-year “base period,” with the option to extend the deal for an additional five years, and it includes Anduril hardware, software, infrastructure, and services.
The Army describes the agreement as a single enterprise contract consolidating what had been “more than 120 separate procurement actions for Anduril’s commercial solutions.”
“The modern battlefield is increasingly defined by software,” said Gabe Chiulli, the chief technology officer at the Department of Defense’s Office of the Chief Information Officer, in a statement. “To maintain our advantage, we must be able to acquire and deploy software capabilities with speed and efficiency,”
Anduril was co-founded by Palmer Luckey, who was previously known for selling VR startup Oculus to Facebook (now Meta). Facebook fired Luckey after controversy erupted following a news report that he’d donated to a pro-Trump political group.
Luckey has repeatedly insisted that the media misrepresented his political views, but according to a recent feature in The New York Times, Luckey and Anduril have been embraced by the second Trump administration, thanks to his vision for remaking the U.S. military with autonomous fighter jets, drones, submarines, and more. The company (named, like Palantir, for a magical object in “The Lord of the Rings”) brought in around $2 billion in revenue last year, the NYT says.
Separate reports suggest that Anduril is in talks to raise a new funding round at a $60 billion valuation.
This announcement also comes as the Department of Defense is locked in a dispute with Anthropic, with the AI company suing the DoD over its designation as a supply chain threat following a failed contract negotiation, while OpenAI has faced consumer backlash and at least one executive departure after signing a Pentagon deal of its own.
Honda is killing its EVs — and any chance of competing in the future
I get it; it’s not an easy time for a legacy automaker to be selling electric vehicles, what with incentives being gutted and Chinese automakers knocking at the door. But Honda is taking it to another level.
This week, Honda killed its paltry — and frankly unpromising — EV programs. What little motivation Honda had to compete in the EV arena is apparently gone, and along with it, any chance of surviving the current wave of disruption that’s sweeping the industry.
The company casts blame on U.S. tariffs and Chinese competition, two easy targets. But it never really had a viable EV strategy to begin with.
Honda kicked things off on Thursday by halting development of the electric Acura RDX and the Honda 0 sedan and SUV, three models that were the company’s first ground-up EVs — but about which very little was shared with outsiders. It continued on Friday, with Automotive News reporting that Honda was going to stop production of the Prologue, a vehicle that was essentially designed and entirely built by GM.
The decision could backfire in a number of different ways, but there are two that I’d argue are most important. By shelving EVs, Honda will fall farther behind in two of the biggest shifts sweeping the automotive industry: electric drivetrains and software-defined vehicles.
Missed EV opportunities
To Honda — and to many legacy automakers still early in the transition— an EV is just a car with a different drivetrain. I can imagine Honda executives thinking that they can wait out the awkward transition period and, when motors and batteries are fully sorted, simply swap out the fossil fuel bits. How hard could it be?
That’s a mistake, of course. Many automakers have found that dropping batteries into a car originally designed for an internal combustion engine doesn’t work out so well. It might shortcut the development cycle, but the resulting product ends up heavy, inefficient, and more costly to produce.
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When developed as an original product, EVs offer automakers a chance to rethink the automobile, and in the process, make it cheaper.
Take Ford, for example. The Mustang Mach E has been a sales success, but not a financial one for Ford. The Mach E is based on a heavily modified version of the platform that also underpins the Escape, a fossil fuel crossover. Part of the problem, Ford CEO Chris Farley said in a recent interview, was that legacy engineering decisions held the product back: The Mach E’s wiring harness is 70 pounds heavier than Tesla’s, for example. Small errors like that compound themselves in a product as complex as an automobile.
Honda will also miss out on several learning opportunities. There’s learning by doing, both in development and manufacturing. There’s also learning to cultivate new suppliers and supply chains. It will also miss out on receiving critical customer feedback — what do people really value in their EVs?
Sayonara, software-defined vehicles
Here, Honda is setting itself up for failure on the second disruption sweeping the automotive industry: the software-defined vehicle (SDV), which has core capabilities that can be upgraded and improved over time.
Consumers, mostly those who buy EVs from the likes of Tesla, Rivian, and BYD, have grown accustomed to the frequent updates, slick infotainment software, and advanced driver assistance systems of Tesla, Rivians, Nio or Xiaomi. Honda has yet to make significant progress in any of those domains.
SDVs don’t have to be EVs, but they tend to go hand-in-hand. The large battery in an EV makes it easier to feed powerful computers, and it allows things like over-the-air updates to happen when the car is parked and “off.” Could Honda make a fossil fuel SDV? Sure, but it’s unlikely to for the same reason it’s backing away from EVs: the old way of doing things is easier and more profitable, for now.
What does Honda stand for?
Honda is facing an identity crisis. At its core, it’s an internal combustion engine company. It makes really good engines, and that’s starting to matter less and less.
Other traits of its cars are also under assault. For years, the company has prided itself on making driver’s cars. They’re lightweight, efficient, and handle well. But when the car drives itself, what does a “driver’s car” even mean?
Putting autonomy aside, I’d argue that the market for a driver’s car is limited anyway. People are drawn to Honda because they’re reliable and reasonably priced. The fact that they handle well is icing on the cake, maybe helping consumers break a tie if they’re torn between two brands.
But EVs promise to be significantly more reliable than fossil fuel vehicles, and as Chinese automakers show, once battery prices come down, so do overall vehicle costs. If Honda can’t compete on reliability or price, consumers will balk.
That already appears to be happening in China. Honda said as much in its recent earnings report. “Honda was unable to deliver products that offer value for money better than that of newer EV manufacturers, resulting in a decline in competitiveness,” the company said. Headwinds in China contributed to the company’s nearly $16 billion losses last year. Without a plan for EVs, it’s only a matter of time before Honda suffers the same fate elsewhere.
The Week’s 10 Biggest Funding Rounds: AI, Robotics And E-Commerce Top The Ranks
Busy week, big checks, lots of AI and robotics. That, in ultra-brief synopsis form, characterized the general startup fundraising environment this week. Notably, the two largest global rounds were U.K.-based Nscale and Paris-based Advanced Machine Intelligence, which raised $2 billion and $1.03 billion, respectively.
In the U.S., meanwhile, e-commerce platform Quince, AI networking developer Nexthop AI and industrial automation startup Mind Robotics each picked up $500 million.
1. (tied) Quince, $500M, e-commerce: Quince, an online fashion and home goods retailer with an affordable luxury theme, said it secured $500 million in Series E financing led by Iconiq Capital. The round sets a $10.1 billion post-money valuation for the 8-year-old, San Francisco-based company.
1. (tied) Nexthop AI, $500M, AI infrastructure: AI networking startup Nexthop AI raised $500 million in Series B funding led by Lightspeed Venture Partners, with Andreessen Horowitz joining as a major investor alongside other backers. The Santa Clara, California-based company develops switching technology built on open-source operating systems for AI and cloud networking.
1. (tied) Mind Robotics, $500M, robotics: Rivian spin-out Mind Robotics closed on a $500 million Series A round, co-led by Accel and Andreessen Horowitz. The Palo Alto, California-based company is developing an AI-enabled industrial robotics platform, with a focus on automating industrial and manufacturing tasks at scale.
4. Rhoda AI, $450M, robotics: Palo Alto, California-based robotics startup Rhoda AI emerged from stealth with $450 million in Series A funding reportedly led by Premji Invest. The startup trains robots using hundreds of millions of videos to develop intelligent models for operating in complex and changing environments.
5. Replit, $400M, AI software creation: Replit, an agentic AI software creation platform, picked up $400 million in Series D funding at a $9 billion valuation, up from $3 billion just six months ago. Georgian led the financing for the Foster City, California-based company, joined by a long list of venture and celebrity investors.
6. (tied) Eridu, $200M, AI networking: AI startup Eridu emerged from stealth with over $200 million in a newly announced Series A round led by Socratic Partners, John Doerr, Hudson River Trading, Capricorn Investment Group and Matter Venture Partners. Saratoga, California-based Eridu develops a high-performance network switch for AI data centers.
6. (tied) Axiom Math AI, $200M, artificial intelligence: Palo Alto, California-based Axiom Math AI, a developer of AI systems that can perform automated verification of computer code, raised $200 million in Series A funding at a $1.6 billion valuation. Menlo Ventures led the round, joined by Madrona, Greycroft, B Capital and Toyota Ventures.
8. Sunday, $165M, robotics: Sunday, a startup planning a beta launch for a household robot called Memo later this year, raised $165 million in Series B funding. Coatue led the financing, which set a $1.15 billion valuation for the Mountain View, California-based company.
9. Kai, $125M, cybersecurity: San Jose, California-based Kai, developer of an agentic AI cybersecurity platform, announced that it secured $125 million in funding led by Evolution Equity Partners.
10. Oro Labs, $100M, procurement: Oro Labs, developer of a procurement platform for enterprise customers, raised $100 million in Series C funding. Brighton Park Capital and Goldman Sachs Growth Equity led the financing, which the company said follows a year of 300% revenue growth.
Global financings
The week’s largest rounds went to European startups.
Nscale, $2B, AI infrastructure: Nscale, an AI infrastructure hyperscaler, secured $2 billion in Series C funding. Aker and 8090 Industries led the financing, which set a $14.6 billion valuation for the London-based company.
Advanced Machine Intelligence, $1.03B, artificial intelligence: Advanced Machine Intelligence, a startup co-founded by computer science pioneer and former Meta AI chief Yann LeCun, said it has raised $1.03 billion to develop “world models,” or AI designed to learn from and interact with the physical world. The funding for the Paris-based company represents the largest seed round ever for a European startup.