AI

Several Big Tech companies have reported earnings in recent weeks and provided estimates for their spending in 2026, along with leading analysts’ projections.

The data point that seems to have caught Wall Street’s attention the most is the estimated capital expenditure (CapEx) for this year, which collectively represents an investment of over $700bn (€590bn) in AI infrastructure.

That is more than the entire nominal GDP of Sweden for 2025, one of Europe’s largest economies, as per IMF estimates.

Global chip sales are also projected to reach $1tn (€842bn) for the first time this year, according to the US Semiconductor Industry Association.

In addition, major banks and consulting firms, such as JPMorgan Chase and McKinsey, project that total AI CapEx will surpass $5tn (€4.2tn) by 2030, driven by “astronomical demand” for compute.

CapEx refers to funds a company spends to build, improve or maintain long-term assets like property, equipment and technology. These investments are meant to boost the firm’s capacity and efficiency over several years.

The expenditure is also not fully deducted in the same year. CapEx costs are capitalised on the balance sheet and gradually expensed through depreciation, representing a key indicator of how a company is investing in its future growth and operational strength.

The leap this year confirms a definitive pivot that began in 2025, when Big Tech is estimated to have spent around $400bn (€337bn) on AI CapEx.

As Nvidia founder and CEO Jensen Huang has repeatedly stated, including at the World Economic Forum in Davos last month, we are witnessing “the largest infrastructure build-out in human history”.

Hyperscalers bet the house

At the top of the spending hierarchy for 2026 sits Amazon, which alone is guiding to invest a mammoth $200bn (€170bn).

To put the number into perspective, the company’s individual AI CapEx guidance for this year surpasses the combined nominal GDP of the three Baltic countries in 2025, according to IMF projections.

Alphabet, Google’s parent company, follows with $185bn (€155bn), while Microsoft and Meta are set to deploy $145bn (€122bn) and $135bn (€113bn) respectively.

Oracle also raised its 2026 CapEx to $50bn (€42.1bn), nearly $15bn (€12.6bn) above earlier estimates.

Additionally, Tesla projects double the spending with almost $20bn (€16.8bn), primarily to scale its robotaxi fleet and advance the development of the Optimus humanoid robot.

Another of Elon Musk’s companies, xAI, will also spend at least $30bn (€25.2bn) in 2026.

A new $20bn (€16.8bn) data centre named MACROHARDRR will be built in Mississippi, which Governor Tate Reeves stated is “the largest private sector investment in the state’s history”.

xAI will also expand the so-called Colossus, a cluster of data centres in Tennessee that has been described by Musk as the world’s largest AI supercomputer.

Furthermore, the company was acquired by SpaceX in an all-stock transaction at the start of this month.

The merger valued SpaceX at $1tn (€842bn) and xAI at $250bn (€210bn), creating an entity worth $1.25tn (€1.05tn), reputedly the largest private company by valuation in history.

There are also reports that SpaceX intends to IPO sometime this year, with Morgan Stanley allegedly in talks to manage the offering that now includes exposure to xAI.

Elon Musk stated that the goal is to build an “integrated innovation engine” combining AI, rockets and satellite internet, with long-term plans that include space-based data centres powered by solar energy.

Conversely, Apple continues to lag in spending with “only” a projected $13bn (€10.9bn).

However, the company announced a multi-year partnership with Google last month to integrate Gemini AI models into the next generation of Apple Intelligence.

Specifically, the collaboration will focus on overhauling Siri and enhancing on-device AI features. Therefore, one could say that Apple is outsourcing a lot of the investment it needs to be competitive on AI development.

As for Nvidia, it will report earnings and release projections on 25 February.

The company is primarily in the business of selling AI chips, and is expected to get the lion’s share of the Big Tech’s spending. Particularly, for the build-out of data centres.

In last August’s earnings call, CEO Jensen Huang estimated a cost per gigawatt of data centre capacity between $50bn (€42.1bn) and $60bn (€50.5bn), with about $35bn (€29.5bn) of each investment going towards Nvidia hardware.

The great capital rotation

Wall Street has had mixed feelings about the enormous spending Big Tech companies have planned for 2026.

On the one hand, investors understand the necessity and urgency of developing a competitive edge in the artificial intelligence age.

On the other, the sheer scale of the spending has also spooked some shareholders. The market’s tolerance hinges on demonstrable ROI from this year onwards, as the investments are also increasingly financed with massive debt raises.

Morgan Stanley estimates that hyperscalers will borrow around $400bn (€337bn) in 2026, more than double the $165bn (€139bn) that was loaned out in 2025.

This surge could push the total issuance of high-grade US corporate bonds to a record $2.25tn (€1.9tn) this year.

Currently, projected AI revenue for 2026 is nowhere near matching the spending, and there are valid concerns. For instance, the possibility of hardware rapidly depreciating due to innovation, and other high operational costs such as energy usage.

It can be confidently stated that the numbers have a heavy reliance on future success.

As Google CEO Sundar Pichai acknowledged this month, there are “elements of irrationality in the current spending pace”.

Back in November, Alex Haissl, an analyst at Rothschild & Co, became a dissenting voice as he downgraded ratings for Amazon and Microsoft.

In a note to clients, the analyst wrote “investors are valuing Amazon and Microsoft’s CapEx plans as if cloud-1.0 economics still applied”, referring to the low-cost structure of cloud-based services that allowed Big Tech firms to scale in the last two decades.

However, the analyst added “there are a few problems that suggest the AI boom likely won’t play out in the same way, and it is probably far more costly than investors realise”.

This view is also shared by Michael Burry, who is best known for being among the first investors to predict and profit from the subprime mortgage crisis in 2008. Burry has argued that the current AI boom is a potential bubble pointing to unsustainable CapEx.

Big Tech’s AI race is funded by a tremendous amount of leverage. Whether this strategy will pay off, and which companies will be the winners and the losers, only time will tell.

At the moment, Nvidia certainly seems to be a great beneficiary. Moreover, Apple has a distinct approach by increasing third party reliance, through a partnership with Google, instead of massively scaling their spending. It is a different trade-off.

Europe’s industrial deficit

Amid all this spending, urgent questions have also been raised about Europe’s ability to compete in a race that has become a battle of balance sheets.

For the European Union, the transatlantic contrast is sobering. While American firms are mobilising nearly €600bn in a single year, the EU’s coordinated efforts do not even match the financial firepower of the lowest spender among the US tech titans.

Brussels has attempted to rally with the AI Factories initiative, and the AI Continent Action Plan launched last April, which aim to mobilise public-private investments.

However, the numbers tell a stark story. Total European spending on sovereign cloud data infrastructure is forecast to reach just €10.6bn in 2026.

While this is a respectable 83% increase year-on-year, it remains a rounding error compared to the US AI build-out.

Last year, at the time when the initiatives mentioned were being discussed, the CEO of the French unicorn Mistral AI, Arthur Mensch, stated that “US companies are building the equivalent of a new Apollo program every year”.

Mensch also added that “Europe is building excellent regulation with the AI Act, but you cannot regulate your way to computing supremacy”.

Mistral represents one of the only flickers of European resistance in the AI race. The French company is employing the same strategy as most of Big Tech and aggressively expanding its physical footprint.

In September 2025, Mistral AI raised a €1.7bn Series C at a valuation of almost €12bn, with the Dutch semiconductor giant ASML leading the round by singly investing €1.3bn.

During the World Economic Forum in Davos last month, Mistral’s CEO confirmed a €1bn CapEx plan for 2026.

Just last week, the company also announced a major €1.2bn investment to build a data centre in Borlänge, Sweden.

In a partnership with the Swedish operator, EcoDataCenter, the facility will be designed to offer “sovereign compute” compliant with the EU’s strict data standards, and leveraging Sweden’s abundant green energy.

Set to open in 2027, this data centre will provide the high-performance computing required to train and deploy Mistral’s next-generation AI models.

This is an important move for the company, as it is the first infrastructure project outside France, and it is also a core venture for European data sovereignty.

Meanwhile, US tech titans are attempting to placate European regulators by offering “sovereign-light” solutions. Several Big Tech projects have been rolled out for “localised cloud zones”, for example in Germany and Portugal, promising data residency.

However, critics argue these remain technically dependent on US parent companies, leaving the European industry vulnerable to the whims of the American economy and foreign policy.

As 2026 unfolds, the stakes are clear. The US is betting the house, and its credit rating, on AI dominance.

Europe, cautious and capital-constrained, is hoping that targeted investments and regulation will be enough to carve out a sovereign niche in a world increasingly run on American technology.

A viral AI-generated video of actors Brad Pitt and Tom Cruise fighting atop a building is causing a stir online.

The 15-second video comes from the latest AI video-generation platform, Seedance 2.0. The platform was launched this week by its owner, ByteDance, the same Chinese parent that oversees TikTok. As the video circulates online, the Motion Picture Assn. and other industry stakeholders have called out the video for its unauthorized use of copyrighted works.

Charles Rivkin, chief executive of the Motion Picture Assn., wrote in a statement that the company “should immediately cease its infringing activity.”

“In a single day, the Chinese AI service Seedance 2.0 has engaged in unauthorized use of U.S. copyrighted works on a massive scale,” wrote Rivkin. “By launching a service that operates without meaningful safeguards against infringement, ByteDance is disregarding well-established copyright law that protects the rights of creators and underpins millions of American jobs.”

The video was posted on X by Irish filmmaker Ruairi Robinson. His post said the 15-second video came from a two-line prompt he put into Seedance 2.0.

Rhett Reese, writer-producer of movies such as the “Deadpool” trilogy and “Zombieland,” responded to Robinson’s post, writing, “I hate to say it. It’s likely over for us.”

He goes on to say that soon people will be able to sit at a computer and create a movie “indistinguishable from what Hollywood now releases.” Reese says he’s fearful of losing his job as increasingly powerful AI tools advance into creative fields.

“I was blown away by the Pitt v Cruise video because it is so professional. That’s exactly why I’m scared,” wrote Reese on X. “My glass half empty view is that Hollywood is about to be revolutionized/decimated.”

Reese isn’t alone in thinking AI could potentially “decimate” Hollywood and take away jobs. Creating protections against AI was one of the main reasons both SAG-AFTRA and the Writers Guild went on strike in 2023. But some members argue that those measures — now nearly three years old — did not go far enough.

As SAG-AFTRA reentered contract negotiations with the studios earlier this week, AI is still one of the union’s highest priorities. It’s expected that the actors union could propose what has been called the Tilly tax, a fee that studios would have to pay to the union in exchange for using an AI-generated actor — a response to the introduction of Hollywood’s first AI actor, Tilly Norwood.

In a statement to The Times, SAG-AFTRA confirmed that the union stands with the studios in “condemning the blatant infringement” from Seedance 2.0, as video includes “unauthorized use of our members’ voices and likenesses.”

“This is unacceptable and undercuts the ability of human talent to earn a livelihood. Seedance 2.0 disregards law, ethics, industry standards and basic principles of consent,” wrote a spokesperson from SAG-AFTRA. “Responsible A.I. development demands responsibility, and that is nonexistent here.”

Some of the biggest names behind the artificial intelligence boom are looking to stack Congress with allies who support lighter regulation of the emerging technology by drawing on the crypto industry’s 2024 election success.

Marc Andreessen, Ben Horowitz and OpenAI co-founder Greg Brockman are among tech leaders who’ve poured $50 million into a new super political action committee to help AI-friendly candidates prevail in November’s congressional races. Known as Leading the Future, the super PAC has taken center stage as voters grow increasingly concerned that AI risks driving up energy costs and taking away jobs.

As it launches operations, Leading the Future is deploying a strategy that worked two years ago for crypto advocates: talk about what’s likely to resonate with voters, not the industry or its interests and controversies. For AI, that means its ads won’t tout the technology but instead discuss core issues including economic opportunity and immigration — even if that means not mentioning AI at all.

“They’re trying to be helpful in a campaign rather than talking about their own issue all the time,” said Craig Murphy, a Republican political consultant in Texas, where Leading the Future has backed Chris Gober, an ally of President Trump, in the state’s hotly contested 10th congressional district.

This year, the group plans to spend up to $125 million on candidates who favor a single, national approach to AI regulation, regardless of party affiliation. The election comes at a crucial moment for the industry as it invests hundreds of billions of dollars in AI infrastructure that will put fresh strains on resources, with new data centers already blamed for driving up utility bills.

Leading the Future faces a growing challenge from AI safety advocates, who’ve started their own super PAC called Public First with a goal of raising $50 million for candidates who favor stricter oversight. On Thursday, Public First landed a $20-million pledge from Anthropic PBC, a rival to OpenAI that has set itself apart from other AI companies by supporting tougher rules.

Polls show deepening public concern over AI’s impact on everything from jobs to education to the environment. Sixty-two percent of US adults say they interact with AI at least several times a week, and 58% are concerned the government will not go far enough in regulating it, according to the Pew Research Center.

Jesse Hunt, a Leading the Future spokesman, said the group is “committed to supporting policymakers who want a smart national regulatory framework for AI,” one that boosts US employment while winning the race against China. Hunt said the super PAC backs ways to protect consumers “without ceding America’s technological future to extreme ideological gatekeepers.”

The political and economic stakes are enormous for OpenAI and others behind Leading the Future, including venture capitalists Andreessen and Horowitz. Their firm, a16z, is the richest in Silicon Valley with billions of dollars invested in AI upstarts including coding startup Cursor and AI leaderboard platform LM Arena.

For now, their super PAC is doing most of the talking for the AI industry in the midterm races. Meta Platforms Inc. has announced plans for AI-related political spending on state-level contests, with $20 million for its California-based super PAC and $45 million for its American Technology Excellence Project, according to Politico.

Other companies with massive AI investment plans — Amazon.com Inc., Alphabet Inc. and Microsoft Corp. — have their own corporate PACs to dole out bipartisan federal campaign donations. Nvidia Corp., the chip giant driving AI policy in Washington, doesn’t have its own PAC.

Bipartisan push

To ensure consistent messaging across party lines, Leading the Future has created two affiliated super PACs — one spending on Republicans and another on Democrats. The aim is to build a bipartisan coalition that can be effective in Washington regardless of which party is in power.

Texas, home of OpenAI’s massive Stargate project, is one of the states where Leading the Future has already jumped in. Its Republican arm, American Mission, has spent nearly $750,000 on ads touting Gober, a political lawyer who’s previously worked for Elon Musk’s super PAC and is in a crowded GOP primary field for an open House seat.

The ads hail Gober as a “MAGA warrior” who “will fight for Texas families, lowering everyday costs.” Gober’s campaign website lists “ensuring America’s AI dominance” as one of his top campaign priorities. Gober’s campaign didn’t respond to requests for comment.

In New York, Leading the Future’s Democratic arm, Think Big, has spent $1.1 million on television ads and messages attacking Alex Bores, a New York state assemblyman who has called for tougher AI safety protocols and is now running for an open congressional seat encompassing much of central Manhattan.

The ads seize on Democrats’ revulsion over Trump’s immigration crackdown and target Bores for his work at Palantir Technologies Inc., which contracts with Immigration and Customs Enforcement. Think Big has circulated mailings and text messages citing Bores’ work with Palantir, urging voters to “Reject Bores’ hypocrisy on ICE.”

In an interview, Bores called the claims in the ads false, explaining that he left Palantir because of its work with ICE. He pointed out the irony that Joe Lonsdale, a Palantir co-founder who’s backed the administration’s border crackdown, is a donor to Leading the Future.

“They’re not being ideologically consistent,” Bores said. “The fact that they have been so transparent and said, ‘Hey, we’re the AI industry and Alex Bores will regulate AI and that scares us,’ has been nothing but a benefit so far.”

Leading the Future’s Democratic arm also plans to spend seven figures to support Democrats in two Illinois congressional races: former Illinois Representatives Jesse Jackson Jr. and Melissa Bean.

Following crypto’s path

Leading the Future is following the path carved by Fairshake, a pro-cryptocurrency super PAC that joined affiliates in putting $133 million into congressional races in 2024. Fairshake made an early mark by spending $10 million to attack progressive Katie Porter in the California Democratic Senate primary, helping knock her out of the race in favor of Adam Schiff, the eventual winner who’s seen as more friendly to digital currency.

The group also backed successful primary challengers against House incumbents, including Democrats Cori Bush in Missouri and Jamaal Bowman in New York. Both were rated among the harshest critics of digital assets by the Stand With Crypto Alliance, an industry group.

In its highest-profile 2024 win, Fairshake spent $40 million to help Republican Bernie Moreno defeat incumbent Democratic Senator Sherrod Brown, a crypto skeptic who led the Senate Banking Committee. Overall, it backed winners in 52 of the 61 races where it spent at least $100,000, including victories in three Senate and nine House battlegrounds.

Fairshake and Leading the Future share more than a strategy. Josh Vlasto, one of Leading the Future’s political strategists, does communications work for Fairshake. Andreessen and Horowitz are also among Fairshake’s biggest donors, combining to give $23.8 million last year.

But Leading the Future occasionally conflicts with Fairshake’s past spending. The AI group said Wednesday it plans to spend half a million dollars on an ad campaign for Laurie Buckhout, a former Pentagon official who’s seeking a congressional seat in North Carolina with calls to slash rules “strangling American innovation.” In 2024, during Buckhout’s unsuccessful run for the post, Fairshake spent $2.3 million supporting her opponent and eventual winner, Democratic Rep. Donald Davis.

Regulation proponents

“The fact that they tried to replay the crypto battle means that we have to engage,” said Brad Carson, a former Democratic congressman from Texas who helped launch Public First. “I’d say Leading the Future was the forcing function.”

Unlike crypto, proponents of stricter AI regulations have backers within the industry. Even before its contribution to Public First, Anthropic had pressed for “responsible AI” with sturdier regulations for the fast-moving technology and opposed efforts to preempt state laws.

Anthropic employees have also contributed to candidates targeted by Leading the Future, including a total of $168,500 for Bores, Federal Election Commission records show. A super PAC Dream NYC, whose only donor in 2025 was an Anthropic machine learning researcher who gave $50,000, is backing Bores as well.

Carson, who’s co-leading the super PAC with former Republican Rep. Chris Stewart of Utah, cites public polling that more than 80% of US adults believe the government should maintain rules for AI safety and data security, and says voter sentiment is on Public First’s side.

Public First didn’t disclose receiving any donations last year, according to FEC filings. But one of the group’s affiliated super PACs, Defend our Values PAC, reported receiving $50,000 from Public First Action Inc., the group’s advocacy arm. The PAC hasn’t yet spent any of that money on candidates.

Crypto’s clout looms large in lawmakers’ memory, casting a shadow over any effort to regulate the big tech companies, said Doug Calidas, head of government affairs for AI safety group Americans for Responsible Innovation.

“Fairshake was just so effective,” said Calidas, whose group has called for tougher AI regulations. “Democrats and Republicans are scared they’re going to replicate that model.”

Allison and Birnbaum write for Bloomberg.

Published on
11/02/2026 – 17:52 GMT+1

Spotify stocks spiked 6% higher at market opening this Wednesday, later paring down some of its gains, after the company released its earnings report on Tuesday.

The popular music platform closed 2025 with a little over €2.2bn in net profits which represents a 94% increase, almost double what was achieved the year prior.

The positive result reinforced the historic turnaround the firm accomplished since 2024, when it became profitable on the year for the first time. Before then, Spotify operated at a loss for almost two decades after being founded in 2006.

Last year, the music streaming platform grew in users by 11% and in paying subscribers by 10%. Additionally, Spotify also cut costs and increased prices in several markets achieving a 33.1% profit margin, the highest in its history.

A substantial part of the success in 2025 occurred towards the end of the year, when the company hit a total of 751 million monthly active users (MAUs), after its biggest quarterly increase in activity.

For the first quarter of 2026, Spotify is projecting a continuation of this trajectory. The report points to around €4,5bn in revenue and 759 million MAUs.

The Swedish executive chairman and founder, Daniel Ek, who resigned from the CEO position last month, stated in the earnings call that Spotify has “built a platform for audio but increasingly to all other ways in which creators connect to the public”.

The new CEO, Alex Norström, also declared that “after a year of execution, 2026 will be the year of elevating ambition”.

Music industry and AI

The impact of Spotify’s growth in 2025 was also felt outside the company, in the music industry as a whole.

The firm paid out more than €11bn to artists last year which the earnings report states is “the largest annual payment to music creators by any platform in history”.

Moreover, the Swedish company stated that “we also helped artists generate over one billion dollars in ticket sales, connecting fans to live events”.

Going forward, one of Spotify’s biggest bets is on AI integration, as is the case for most tech companies.

The firm has accelerated the launch of tools such as a playlist generator based on prompts, and a personalised agentic DJ, which have already been used by millions of paying subscribers.

However, artificial intelligence is also presenting new problems for Spotify such as AI-generated music. In the earnings call, the co-CEO, Gustav Söderström, stated that “the issue isn’t new but it has scaled”.

Söderström added that the company is working closely with the music industry to allow artists and record labels to include disclaimers specifying the production methods.

John Mayer calls it “adult day care”: the historic recording studio behind the arched gates on La Brea Avenue where famous musicians have been keeping themselves — and one another — creatively occupied since the mid-1960s. Known for decades as Henson Studios — and as A&M Studios before that — the 3-acre complex in the heart of Hollywood has played host to the creation of some of music’s most celebrated records, among them Carole King’s “Tapestry,” Joni Mitchell’s “Blue,” Guns N’ Roses’ “Use Your Illusion” and D’Angelo’s “Black Messiah.” Charlie Chaplin, who was born in London, began building the lot in 1917 in a white-and-brown English Tudor style; he went on to direct some of his best-known films, including “Modern Times” and “The Great Dictator,” on the property. In 1966, Herb Alpert and Jerry Moss bought the place and made it the base for their A&M Records; they converted two of the lot’s soundstages into high-end recording studios that drew the likes of Sergio Mendes, the Carpenters, Stevie Nicks, U2 and John Lennon.

In 1985, A&M’s parquet-floored Studio A was where Quincy Jones gathered the all-star congregation that recorded “We Are the World” in a marathon overnight session; in 2014, Daft Punk evoked the studios’ wood-paneled splendor in a performance of “Get Lucky” with Stevie Wonder at the 56th Grammy Awards.

Now, with an eye on preserving the spot at a moment of widespread upheaval in the entertainment industry, Mayer and his business partner, the filmmaker McG, have finalized a purchase of the lot, which they bought for $44 million from the family of the late Muppets creator Jim Henson and which they’ve renamed Chaplin Studios in honor of the silent-film giant who broke ground on it more than a century ago.

Tariff turmoil. Threats against Iran. An anti-immigration surge that has taken two innocent lives.

And there’s a sizable slump hitting the stock, bond, precious metals and cryptocurrency markets.

What’s the connection?

The answer is: Not much.

When it comes to Trump policies, investors have come to realize that Trump is often all talk, little action—that’s the underpinning of the “TACO” trade, for “Trump Always Chickens Out,” which I described in May.

As recently as Jan. 20, for example, the Standard & Poor’s 500 index fell by more than 2% in a possible reaction to Trump’s saber-rattling over Greenland and threat to hike tariffs on European countries he felt were thwarting his imperial ambitions.

The next day, the index began a comeback, rising nearly 1.2%. By three sessions later, it had recovered all that first day’s loss. The index went on to set an all-time record on Jan. 27, one week after the Greenland sell-off.

The latest sell-off in the investment markets doesn’t appear to be connected to Trump’s policymaking. The current narrative blames artificial intelligence. There’s an inchoate expectation that AI will have a great economic impact, though little of that has emerged thus far, and no one is very clear on what form it will take or even whether it will happen at all.

Investors and investment analysts don’t really know what to make of AI. From reading the most recent market commentaries, one might conclude that investors are unnerved by the potential of AI to upend industries across the spectrum.

“For two years, we have been talking about how AI is going to change the world,” Michael O’Rourke, chief investment strategist at Jonestrading, told Bloomberg. “In the past two weeks, we have seen signs of it in practice.”

The evidence that most Wall Street pundits cite is the downdraft in technology stocks, including software companies that (according to the narrative) may lose their franchise to AI bots. The tech-heavy Nasdaq composite index has lost a cumulative 5.6% since notching a high on Jan. 28 and has lost 6.2% since its all-time intraday high, reached on Oct. 29.

Yet companies that are seen as winners in the AI derby, such as Google parent Alphabet (down 5.4% this week) and chipmakers AMD (down about 26% since its recent peak in late January) and Nvidia (down 7.5% in the last week), also have been caught in the downdraft.

Leaving the hard numbers aside, conjectures about the effects of AI on individual companies are exactly that — conjectures. The specific trigger of the current downdraft, it’s said, was the release by AI company Anthropic of a tool with which law firms can use the company’s Claude AI bot for tasks including document reviews and research.

Anthropic’s announcement this week sent shares of legal publishing and legal technology companies plummeting. Thomson Reuters, the publisher of Westlaw, was among those most severely hit — down nearly 20% since the announcement.

Yet Anthropic’s real impact on the legal publishing and tech businesses is, at this moment, the subject of sheer speculation. No one can say whether the AI firm will actually dislodge the incumbent providers, several of which already claim to be powering their services with AI.

The sell-off was driven by “a lot of unsophisticated investors just really thinking that AI is going to immediately overnight take away the business of these legacy players,” Ryan O’Leary, a research director at International Data Corp., told Law.com. “A lot of this stuff has been offered for years from the legacy legal technology providers.”

Much of the recent commentary is produced by investment mavens searching for explanations for market moves in recent news nuggets. That’s always a mug’s game. Investors are looking in the wrong place when they try to tie market swings to current events.

(I know whereof I speak, for I used to have the job of conjuring up just such explanations for a market story on a daily basis.)

My favorite investment guru, Barry Ritholtz, author of the 2025 primer “How Not to Invest,” points out that the markets typically give back some portion of their gains after steep run-ups.

“Markets,” Ritholtz wrote, “go up and down; it is easier to ride out a downturn when you realize the giveback is but a small percentage of the recent gains.”

That may be what’s happening now. The Standard & Poor’s 500 index has lost about 43 points this year. But that’s less than two-thirds of a percentage point, and it comes after the index turned in average annual gains of more than 23% from the start of 2023 through the end of last year. The Nasdaq composite has lost about 700 points this year, but that’s about 3% of its value, and it comes after gaining 43.4% in 2023, 28.6% in 2024 and 20.4% in 2025.

This record evokes the classic remark of physicist I.I. Rabi at the 1954 hearing convened to consider stripping J. Robert Oppenheimer of his security clearance because of his opposition to developing the hydrogen bomb. After listing Oppenheimer’s wartime accomplishments, including overseeing the invention of the plutonium bomb, Rabi asked the inquisitors, “What more do you want, mermaids?”

Stocks and bonds aren’t the only investment showing signs of exhaustion after a period of sizable gains. Bitcoin traded as high as $97,916 on Jan. 13; on Thursday it traded at about $63,426. That’s a loss of more than 35% — but then, bitcoin is notoriously volatile.

None of this means that the investment markets’ performance is always driven by animal spirits. Real-world events can have significant and sometimes lasting effects. But those events tend to be intrinsic to business rather than externalities such as White House maneuvers or geopolitics.

Consider what happened to the Dow Jones industrial average on Jan. 27. That day, shares of the giant healthcare company UnitedHealth lost nearly 20% of their value due to as a weak earnings report, along with the Trump administration’s plan to limit rate increases for Medicare Advantage plans, an important component of UnitedHealth’s business, next year. The company’s plunge brought down the Dow by more than 400 points, or 0.8%.

But the Dow comprises only 30 companies, weighted by share prices, so a sharp change in an expensive stock can exert strong pressure on the average. But the rest of the market took the news in stride, with the S&P 500 riding a gain of about 0.4% to an all-time high.

It’s also true that the markets aren’t entirely immune to Trump’s policies. The problem is that investors and market outsiders often take him at his word, when he’s merely throwing out options, and thus overreact. Investors tend to take Trump’s tariff threats as done deals, when in the final analysis he has chickened out.

Expectations that the tariffs would drive inflation much higher, for instance — an eventuality that might actually have a genuine effect on the economy and therefore on market values — haven’t been borne out. But the reason, notes Paul Krugman, is that “effective tariff rates have risen much less than headline rates.”

That’s because some countries and some businesses have negotiated carve-outs from the official rates. Despite Trump’s blustering, more than 87% of the value of exports from Canada and Mexico still enjoy tariff exemptions under the U.S.-Mexico-Canada Agreement of 2018, which Trump, after all, negotiated and signed.

And Trump does have the power to turn his whims into reality, in ways that could have real-world effects on society and the economy.

All that can be said right now is that hasn’t happened yet. But many of his policy pronouncements remain so nebulous and unrealized that if you’re looking for why the stock market has been in a slump, you would be well advised to look elsewhere.

SACRAMENTO — National union leaders, including the head of one of California’s largest labor organizations, on Wednesday urged Gov. Gavin Newsom to protect workers as artificial intelligence threatens to replace or surveil employees — and warned that a failure to do so could hurt his presidential ambitions.

“This is a priority for the entire nation,” Lorena Gonzalez, president of the California Federation of Labor Unions, said at a news conference near the state Capitol. “He cannot spend his time waiting to be done in California and think he’s not going to get questions about the true issues surrounding AI, Big Tech and the Big Tech billionaires that are trying to buy our government.”

Gonzalez, a former state lawmaker from San Diego, said the federation is sponsoring a package of new bills aimed at reining in the use of AI and protecting the rights of workers, including safeguards against spying in the workplace and restrictions on layoffs.

The package of bills supported by labor organizations includes:

• Senate Bill 947 by Sen. Jerry McNerney (D-Stockton), which would require human oversight if an algorithm is used to justify the discipline or termination of an employee.
• Senate Bill 951, introduced by Sen. Eloise Gomez Reyes (D-Colton), which would require employers to provide a 90-day advance notice to workers and local and state governments before AI-related layoffs. It would apply to cases affecting 25 or more workers or 25% of the workforce, whichever is less. Recent layoffs, including at Amazon, Expedia and Pinterest, have been tied to AI, although some economists argue it’s challenging to determine whether that was the primary factor.
• Assembly Bill 1331, dubbed “No bosses in the bathroom,” would grant workers the right to remove workplace surveillance tools when entering public bathrooms or certain employee-only areas. The bill, authored by Assemblymember Sade Elhawary (D-Los Angeles), would subject employers to a $500 civil penalty for violations.

Gonzalez said labor organizations are often told to “work it out” with businesses but argued this was a dead end.

“We are not going to be able to achieve guardrails by working with bosses who want no guardrails,” she said. “It is time that the governor engages with workers in the workplace. Every AI convening he does, everybody he’s pulled together is [representing] AI and Big Tech lobbyists.”

Gonzalez was joined Wednesday by Liz Shuler, president of the AFL-CIO, and other labor leaders from Iowa, Georgia, North Carolina and Nevada.

“This is the most urgent issue that we [as workers] are facing,” Shuler said. “This is a crisis and no one is prepared.”

In a joint letter addressed to Newsom, they implored the governor to act quickly to establish meaningful safeguards around the technology.

“This fight extends beyond devastating job losses and new forms of union busting,” a copy of the letter states. “There is dignity in human work that is the foundation of a healthy, productive democracy. The future of our economy and our society cannot be left to the unchecked whims of profit driven technology corporations and billionaires.”

In an email to The Times, Newsom spokesperson Tara Gallegos said the governor had a strong record of fighting for workers’ rights, including raising the minimum wage and expanding sick leave and other worker protections.

“No Governor has done more than Governor Gavin Newsom to regulate AI in a way that protects workers without killing jobs or innovation,” she wrote. “Under his leadership, California has taken the most comprehensive, worker-centered approach to AI in the country.”

Adults in the United States are growing increasingly concerned about the ramifications of AI, according to a survey from the Pew Research Center. Fifty percent of those surveyed last year said they are “more concerned than excited” about the increased use of AI in daily life, up from 37% in 2021.

Last year, Spotify paid out more than $11 billion to the music industry, bringing the company’s total payouts since launch to nearly $70 billion.

The milestone year reflected the “largest annual payment to music from any retailer in history,” the company announced on Wednesday in a post. In 2025, Spotify’s payout amount grew by over 10%, making the Sweden-based streamer one of the industry’s main revenue drivers.

“Big, industry-wide numbers can feel abstract, but that growth is showing up in tangible ways,” wrote Charlie Hellman, the company’s new head of music. “Despite rampant misinformation about how streaming is working today, the reality is that this is an era full of more success stories and promise than at any point in history.”

When music streaming was first introduced, there was some controversy about how much artists earn from streams. According to Spotify, independent artists and labels accounted for half of all royalties. Additionally, the company said there are currently more artists earning over $100,000 a year from Spotify alone than were getting stocked on shelves at the height of the compact disc era.

Founded in 2006, the company, with a large presence in L.A.’s Arts District, has become the world’s most popular audio streaming subscription service. The platform offers access to over 100 million tracks, podcasts and audiobooks in over 180 markets.

At the top of the year, founder Daniel Ek moved from his CEO position to become executive chairman. Spotify named two co-CEOs, Gustav Söderström and Alex Norström, in his place.

This month, Spotify raised prices for its premium subscribers in the U.S., bringing the costto $12.99 per month. Hellman disclosed that as Spotify’s audience continues to grow, the higher prices are designed to help with the company’s ongoing expansion. According to the post, Spotify makes up roughly 30% of recorded music revenue and pays out two-thirds of all music revenue to the industry. The other third gets invested back into the company to maintain an “unrivaled listening experience.”

Recently, the streamer has been focused on growing its podcasting division by opening a new recording studio in Hollywood, premiering several shows in partnership with Netflix and expanding its creator monetization program.

Separately, Spotify said it is hoping to counter new developments in AI by reinforcing a human connection between artists and fans. This includes an emphasis on more artist-powered videos, continuing to promote artists’ live shows on the platform and expanding the role of the company’s music curators. The streamer also has plans to crack down on AI-driven artists on the platform.

“AI is being exploited by bad actors to flood streaming services with low-quality slop to game the system and attempt to divert royalties away from authentic artists,” said Hellman. “We’re going to introduce changes to the systems for artist verification, song credits, and protecting artist identity. It’s critical to ensuring listeners and rightsholders can trust who made the music they’re hearing.”