Microsoft is restructuring its Xbox gaming division, closing the studios Ninja Theory and Compulsion Games, and internally reviewing options such as a spin-off, joint venture, or tighter subsidiary structure. The restructuring aligns Xbox decisions with margin accountability, hardware cost trends, and a broader focus on AI partnerships and new Surface devices. The moves come as investors assess recent class-action lawsuits and evaluate how gaming fits alongside Microsoft's core business.
U.S. stocks closed mixed on Tuesday: the Dow rose ~0.66% for a second straight record, while the S&P 500 fell >0.5% and the Nasdaq dropped >1%. Shares of recently IPO’d SpaceX surged nearly 5%, briefly valuing the company above Microsoft and Amazon amid heavy retail buying. Amol Dhargalkar of Chatham Financial warned that high-growth AI-related stocks face risks from rising or sustained interest rates that pressure long-dated cash flows. In deal news, Olin agreed to acquire Huntsman in a $2.4 billion all-stock transaction, sending both stocks lower; Yum Brands announced a $2.7 billion sale of Pizza Hut, lifting its shares against a backdrop of softer consumer spending.
Anthropic is shutting down its Fable project. The move could benefit open-source AI development. However, many of the AI models currently gaining traction are Chinese.
Databricks' annualized revenue reached $6.9 billion, with sales growth exceeding 80%. The company's profit margins, however, are shrinking as costs from AI agents assisting with data analysis increase significantly. The surge in AI agent activity is raising operational expenses, offsetting revenue gains.
AI data centers and hardware suppliers are increasingly tapping debt markets to fund the large-scale build-out of artificial intelligence infrastructure. This trend reflects the capital-intensive nature of the AI industry as companies seek to scale computing capacity. Debt financing allows these firms to accelerate construction and equipment purchases without immediate equity dilution.
SpaceX's shares surged 20% on Monday, its third day of trading. This one-day increase in market valuation was the second-largest ever recorded for a U.S. company. The jump underscores strong investor appetite for the rocket and AI company following its recent public listing.