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In today’s edition,
- Apple’s tariff crossroads
- Alphabet’s AI bet
- YouTube’s TikTok play
- Spotify’s profit
- Bitcoin as treasury play
Market Snapshot
Markets ended the week higher despite early volatility. The Nasdaq gained 1.60% to 19,523.40, the S&P 500 rose 0.94% to 6,025.99, and the Dow Jones edged up 0.08% to 44,303.40.
Earnings drove sentiment, with 77% of S&P 500 companies beating Q4 estimates, posting 16.4% earnings growth vs. 11.9% expected. Additionally, 63% topped sales forecasts, reinforcing corporate resilience.
The ISM Manufacturing PMI expanded for the first time in 27 months, but tariff risks remain. The ISM Services PMI dipped but stayed in expansion at 52.8. Meanwhile, labor market data signaled gradual cooling—January jobs rose 143,000 vs. 307,000 in December, unemployment fell to 4.0%, and job openings hit a three-month low of 7.6 million.
Despite trade concerns and softer labor data, strong earnings and easing tariff fears helped markets post weekly gains. Investors now focus on inflation data, trade talks, and Fed policy signals in the coming weeks.
Stock market closing data for the week of Feb 3rd to Feb 7th, 2025
News Summaries
Apple is under pressure as new 10% U.S. tariffs on Chinese goods threaten its margins. iPhone sales are slowing, down 1% in Q4, and revenue from China fell 11%. Unlike Samsung, which mainly manufactures outside China, Apple relies heavily on China and Taiwan for device assembly and chip production. This makes it vulnerable. The company is slowly increasing production in India, Vietnam, and Arizona, but moving high-end iPhone and Mac manufacturing will take years. Meanwhile, China’s antitrust probe into the App Store adds more uncertainty. CEO Tim Cook’s past talks with Trump raise hopes for exemptions, but a trade deal with China is still unclear. Apple might offset costs by raising prices or adjusting its $100 billion annual services revenue. However, U.S. consumers, already paying over $1,000 for iPhones, may resist further hikes. Looking ahead, Apple’s slow rollout of AI may hurt its competitiveness. Samsung is already integrating Google’s Gemini AI. The main challenge for Apple is balancing supply chain risks, pricing power, and AI competitiveness in a rapidly changing global market.
Alphabet’s Q4 revenue was $81.6 billion, below estimates of $82.8 billion. Google Cloud’s sales of $12 billion fell short, raising investor concerns about its AI growth. Even though search ad revenue reached $54 billion and YouTube generated $10.5 billion, Alphabet’s stock fell nearly 9%. This drop reflects worries about its $75 billion capital spending plan for 2025, which is much higher than expected. CEO Sundar Pichai defended the spending, saying it’s necessary to scale cloud infrastructure for AI demand. However, investors are uncertain about the pace of returns. Meanwhile, Waymo achieved 150,000 trips per week, but Alphabet’s Other Bets only brought in $400 million, missing expectations. As AI competition increases, especially from open-source players like DeepSeek, Google’s search dominance and AI pricing power face pressure. The main challenge is proving that its AI investments can lead to sustainable revenue instead of just being infrastructure costs. This is crucial before competitors chip away at its advantage.
YouTube is targeting TikTok creators with ads on TikTok. They urge these creators to join YouTube amid worries about TikTok’s future in the U.S. A potential ban could happen in April. If TikTok is forced out, YouTube Shorts and Google could benefit. Google already blocked TikTok from its Play Store on January 19 under the divest-or-ban law. Other rivals like Instagram (Meta) and X are also launching new video tools to attract creators. Meanwhile, MrBeast is talking to investor groups interested in TikTok’s U.S. operations, but ByteDance says it won’t sell. TikTok’s acceptance of YouTube’s ad dollars shows a practical approach. It also highlights a critical time for TikTok’s creator ecosystem. Even if TikTok survives, changes in monetization, content reach, and regulatory risks could alter where creators and their audiences end up.
Spotify posted its first full-year profit in 2024. This came after years of heavy investment, as the company shifted to cost control and strategic price hikes. They reported €1.14 billion in net income, compared to a €532 million loss in 2023. This turnaround was driven by a 12% rise in monthly active users, reaching 675 million, and a 16% growth in revenue, totalling €4.24 billion. Premium subscribers increased by 11% to 263 million. Price hikes pushed the average revenue per user (ARPU) up by 5% to €4.85. Gross margin reached 32.2%, exceeding its long-term goal of 30%. Despite cutting 20% of its workforce in 2023, Spotify pursues new initiatives. CEO Daniel Ek hinted at a premium hi-fi tier and more personalised product versions. Ad-supported revenue grew by 7% to €537 million, but paid subscriptions remain the main driver. The big question now is whether Spotify can maintain profits while balancing new product investments and further price increases without losing users.
From the World of Crypto
More companies are following MicroStrategy’s lead in holding bitcoin as a corporate treasury asset, hoping to boost their stock prices.
According to Coinkite, 78 listed companies worldwide, including pharma and advertising firms, have adopted this strategy. MicroStrategy has linked its value directly to bitcoin. Since 2020, it has built up billions in bitcoin holdings. Its stock has soared in the last six months, and its $87 billion market cap is now nearly double the value of its bitcoin reserves.
Firms with struggling stock prices see bitcoin as a way to attract new investors. KULR Technology, a small-cap firm working with NASA and the U.S. Navy, adopted a bitcoin treasury strategy in December. It spent up to 90% of its surplus cash on bitcoin. Since then, its stock quadrupled before settling 50% higher than before.
Similarly, Semler Scientific, a healthcare company, issued a convertible bond in January to buy 871 bitcoin for $88.5 million. This pushed its stock up by 120%. Metaplanet, Japan’s self-proclaimed ‘Bitcoin Treasury Company,’ saw its share price surge 2,000% after shifting focus from hotels to crypto.
Some companies use bitcoin to defend against short sellers. OneMedNet, a microcap healthcare firm, began buying bitcoin last year to counter short-selling pressure. Founder Jeffrey Yu described bitcoin’s potential upside as “another tool” to protect against stock declines. Meanwhile, asset managers like Bitwise are advocating for exchange-traded funds (ETFs) that track companies with significant bitcoin reserves, further merging crypto with traditional markets.
Changes in U.S. accounting rules have made bitcoin holdings more appealing. The Financial Accounting Standards Board now allows firms to mark bitcoin at fair market value, which means gains appear on financial statements. For example, Tesla reported a $600 million boost in mark-to-market income in January.
Despite the momentum, risks remain. Bitcoin’s volatility could lead to sharp drops, destabilising companies that use it as a core asset. Critics argue that struggling firms might use bitcoin to hide weak business fundamentals, turning their companies into vehicles for crypto speculation.
As MicroStrategy founder Michael Saylor promotes bitcoin adoption through events like Bitcoin for Corporations, the big question is whether this trend will last or just be another cycle of market hype. If bitcoin prices remain stable, these companies could benefit. If not, they may end up being more crypto fund than operational business.
Community Speaks: Insights from Vested Investors
The Vested Community is buzzing with discussions on trending stocks, market movements, and investment strategies. Here’s a glimpse into what investors are watching:
📌 MicroStrategy (MSTR) as a Bitcoin Proxy?
Nidhi_Cipher_998 sees MicroStrategy as a leveraged bet on Bitcoin, adding it to their watchlist amid expectations of a crypto surge. With the stock jumping from $200 to $400, they are eyeing a potential dip near $300 as a buy opportunity.
📌 Spotify (SPOT) Rally—Time to Buy?
Investor k_grav is tracking Spotify’s strong rally and sees promising business adoption. With $400 as a reasonable entry price, they are waiting for the right moment to buy.
Want to join the conversation and get exclusive insights from fellow investors? Dive into the discussion here: Vested Community 🚀
