Good morning. Tech stocks are down again over worries about the ROI of AI.
(I was so surprised! Were you surprised? I was surprised.)
Concerns about overinvestment in the Great AI Data Center Buildout™ led shares of neocloud CoreWeave to fall more than 15%, shares of AI server seller Dell to drop by 11%, shares of neocloud Nebius to sink 10%, and cloud infrastructure giant Oracle shares to slump by more than 8%. A common link: All have substantial and growing amounts of debt.
The entire Nasdaq composite closed down almost 2%, though most of the so-called Magnificent Seven big tech stocks escaped largely unscathed. (The worst hit, Meta and Nvidia, closed down a touch over 3%.) It’s worth remembering that AI-driven capital expenditures this year for the Mag 7 are projected to exceed $725 billion, a figure roughly equivalent to the nominal GDP of Ireland.
Whether investors’ perpetual jitters about AI infra spending are warranted is a matter of perspective. “When you are building a new type of technology company,” CoreWeave CEO Michael Intrator wrote in a Wednesday memo reacting to the market, “there will be periods of time when the market misunderstands and acts irrationally.”
More tech news follows. —Andrew Nusca
P.S. Colleague Alexei Oreskovic recently popped down to the Silicon Valley headquarters of Applied Materials to see what’s cooking at the chip equipment supplier. Give it a read.
P.P.S. Colleagues Jeremy Kahn and Bea Nolan sat down with Nvidia CEO Jensen Huang in London. “I don’t know why anybody would want to support the advancement of a technology that’s going to result, you know, in the end of human civilization as we know it,” he said of AI. “And so, if they believe that, they really ought to stop working on it.”
Thoughts? Suggestions? Hot tip? Drop me a line.
THE BIG STORY
Netflix issues its biggest layoff in four years
Netflix is cutting again. The company is eliminating roughly 1,000 jobs, about 6% of its workforce, in a restructuring announced Wednesday. The cuts fall largely on its product, technology, legal, and human resources teams.
Netflix has plenty of money, but a growth problem. The company is still expanding, just not as fast as its leaders or its shareholders want. Its stock is down 22% this year and 42% over the past 12 months. In February, Netflix lost a bidding war for Warner Bros. Discovery.
The last time Netflix cut staff in a meaningful way, it was losing customers. In April 2022, the company reported its first subscriber loss in more than a decade, and it lost subscribers again the next quarter.
“Our revenue growth has slowed considerably,” Netflix told shareholders at the time, blaming high household penetration, including the many households sharing accounts, and a wave of new streaming rivals. By June, the stock was down nearly 70% for the year.
Netflix cut about 150 jobs that May and roughly 300 more in June, out of about 11,000 employees. The company said the May cuts were “primarily driven by business needs rather than individual performance.”
Then it rebuilt. Netflix launched a cheaper ad-supported tier late that year and moved to charge for shared accounts. By August of this year, its market value topped $315 billion.
Co-CEOs Ted Sarandos and Greg Peters framed these latest cuts as a question of priorities. “Our mission—to entertain the world—is ambitious, and delivering on it requires us to be disciplined about where we prioritize our people and resources,” they wrote in an employee memo. “Our business is strong and growing, and we remain on track to deliver our full-year forecast.”
The numbers back the second part of that. Netflix had about 16,000 full-time employees at the end of 2025, and revenue reached almost $25 billion in the first half of 2026, up 15% from a year earlier.
The rest of the picture is harder. Sarandos acknowledged the slowdown last month at an industry conference. “Overall, we’re not growing as fast as I want us to, and we’re working on making that move faster,” he said. In February, when Paramount Skydance topped Netflix’s offer for Warner Bros. Discovery, Netflix walked away, saying, “We’ve always been disciplined.” —Nick Lichtenberg
THE BLIND BOX
“We don’t have ‘heads of,’ or VPs, or all of that structure. Everyone just reports to me.”
THE RUNDOWN
—SpaceX restricted military-grade Starlink service, disruption missions, Ukraine says.
—An OpenAI staffer who joined Apple gave its leadership a presentation about an unreleased OpenAI product, the AI company said in court.
—ASML: We are unable to meet AI-driven demand for our chipmaking tools through 2028.
—Anduril reportedly opened a tender offer for staff of $1.3 billion, valuing the defense tech firm at $90 billion.
—Geoffrey Hinton, Yoshua Bengio, and 400+ scientists sign an open letter calling for an international body to oversee AI containment standards and incident reporting.
—GlobalFoundries will build two chip plants in upstate New York; the U.S. will receive a 4% stake in the contract chipmaker.
—Berkshire Hathaway invests $330 million in Bending Spoons, raising its stake to 4%.
—OpenAI taps Uday Ruddarraju, a former xAI executive, to lead its infrastructure and compute businesses.
THE PARTING SHOT
Why RAM is expensive, reason no. 724.