A penny saved is a penny earned, goes the old saying. But perhaps not if you plow all of those savings into shiny new technology. That’s the issue faced by Meta Platforms and other companies cutting jobs in order to spend on artificial intelligence. 

Meta is planning to lay off 10% of its staff, or around 8,000 people, according to an internal memo Thursday. The social-media company joins Amazon.com, Oracle, Snap, and Block among tech companies deciding they need fewer workers and more AI. Microsoft is also introducing voluntary buyouts for the first time to longstanding employees. 

Mass layoffs, while painful for employees, have previously been greeted by investors as sensible cuts to a bloated workforce. Meta CEO Mark Zuckerberg announced 21,000 job cuts across late 2022 and early 2023 in a move rewarded with big stock gains. However, the latest reductions might not be so warmly welcomed by the market. Firstly, much of the savings are likely to be swallowed up by Meta’s plan to spend up to $135 billion on AI infrastructure this year—a figure that could even be raised at the company’s coming earnings. 

Secondly, this is more than just reallocation of resources. While many layoff announcements are accompanied by reassurance the company is still recruiting in other areas, Meta is canceling plans to hire for 6,000 open roles. At the same time it is grading employees on their AI use and implementing a software tool tracking workers’ keystrokes and mouse movement to teach AI models. Put it together and it looks like Meta is making a huge bet on AI effectively replacing workers. But such autonomous “agents” still require expensive computing resources and the quality of their work isn’t proven yet. 

Huge job cuts may not allay recurring concerns about Meta’s spending. Those fears have a nasty habit of turning up like a bad penny.

—Adam Clark

Get more of the journalism you love. Choose Barron’s as a preferred source in Google.

Intel’s better-than-expected earnings and optimistic outlook will help the chip maker put the dot-com bust in the past, boosted by artificial intelligence and a string of investment deals after a period of struggle. CEO Lip-Bu Tan said the type of chip Intel specializes in is reasserting itself.

• That chip—the central processing unit or CPU—is in demand, the CEO said. “We have seen clear signs that the CPU is reasserting itself as the indispensable foundation of the AI era.” Data center and AI revenue rose 22%. Foundry revenue rose 16%, to $5.4 billion.

• Overall, adjusted first-quarter earnings were 29 cents a share and revenue rose 7% to $13.6 billion. The quarter included a $4.1 billion charge for goodwill impairment at its Mobileye subsidiary. Second-quarter revenue is expected to rise 11% at the midpoint of its range.

• The CEO arrived at Intel last year and immediately made some bold moves, selling a 9% stake to the federal government and forming ties with Nvidia, which took a 4.5% stake. Then, the question was whether Intel could survive, he said Thursday. Now, it’s how quickly it can meet demand.

• More recently, Intel repurchased a portion of a factory it had previously sold to Apollo Global Management and struck a new deal with Elon Musk’s companies to build a massive factory complex in Texas. Intel’s major issue continues to be that its manufacturing technology lags Taiwan Semi.

What’s Next: Tesla CEO Musk expects to use Intel’s 14A manufacturing technology at his TeraFab manufacturing facility, designed to serve Tesla and SpaceX. The 14A technology isn’t expected to launch until 2028.

—Adam Levine and Adam Clark

Reports that the San Diego Padres are near a sale to an investor group for $3.9 billion look bullish for Atlanta Braves Holdings, the only publicly traded Major League Baseball team, controlled by billionaire media mogul John Malone with a 7% economic stake and 50% voting interest.

• The Braves’ nonvoting shares are up 17% in the past month to around $48, valuing the company at around $3.2 billion based on roughly 64 million shares outstanding through various classes. The nonvoting stock is a better deal than the class A voting stock, now around $53.

• Jon Boyar, president of the Boyar Value Group, says using the reported sale price for the Padres, plus conservative assumptions for owned real estate, gets to a price in the mid-$60s a share. “We think the Braves could be worth at least that much, and potentially more,” he said.

• The imminent deal for the Padres, recently reported in The Wall Street Journal, would be a new high for an MLB team. The Braves had baseball revenue of $600 million last year. Forbes values the team at $3.35 billion, slightly more than the Padres at $3.1 billion.

• Assuming a value of $4 billion in line with the reported Padres sale price plus $1.25 billion for real estate known as the Battery (cited in an investor presentation) totals $5.25 billion. Subtracting net debt of $650 million gets to a share price near $70, Barron’s estimates.

What’s Next: Malone separated the Braves from his Liberty Media in 2023 and hasn’t been in a hurry to sell, but he’s 85 now and has been cleaning up his empire. Starting in 2027, the Braves face a sizable boost in their tax bill because of new rules about player salaries.

—Andrew Bary

The Trump administration, acting on an earlier order by President Donald Trump, has reclassified FDA-approved medical marijuana and state-licensed marijuana products to a less-strict category that could ultimately expand their access. They are studying whether to reclassify marijuana more broadly.

• The Justice Department and Drug Enforcement Administration changed it to Schedule III of the Controlled Substances Act, from the stricter Schedule I, which includes LSD and heroin. The reclassification doesn’t apply to recreational marijuana. Cannabis company stocks like Tilray and Canopy sold off on the news Thursday, reversing a rally earlier this week.

• Raymond James analysts called it the most concrete federal cannabis policy action in over a decade, but noted that the phased reform timeline and the new expedited hearing process to consider the road rescheduling of marijuana from Schedule I to Schedule III “clouds the road ahead.”

• The order creates a narrowly defined dual-track framework where only FDA-approved products and state-licensed medical marijuana businesses get the Schedule III designation, while adult-use and unlicensed products remain firmly in Schedule I, the analysts noted. 

• President Joe Biden proposed downgrading marijuana to a lesser category in 2024, which drew 43,000 public comments, The Wall Street Journal reported. The order comes after a directive hastening the review of certain psychedelic drugs. 

What’s Next: The Schedule I designation makes it more difficult for cannabis companies to access banking services, secure ordinary stock listings, and do business across state lines. The hearing process starts on June 29.

—Janet H. Cho

Nuclear start-up Oklo is working with Nvidia to use AI infrastructure in modeling and simulations, including to support nuclear fuel research and development at Los Alamos National Laboratory. CEO Jacob DeWitte said the agreement would “significantly accelerate” plutonium-bearing fuel work on Oklo’s Pluto reactor.

• Oklo has worked to verify the Los Alamos reactor’s design, which recycles nuclear waste into energy using surplus Cold War-era plutonium. DeWitte said the latest agreement merges reactor deployment, high-performance computing power, and “world-class fuel and materials science expertise.” 

• The deal also supports the Genesis Mission, a government initiative at 17 national labs to fast-track new energy solutions using advanced computing tools, including AI and quantum. Oklo won’t build a commercial facility at Los Alamos, but has conducted ongoing research with the lab.

• Oklo is trying to accelerate the approval of its first nuclear powerhouse by working behind the scenes with regulators. It confirmed in March that the Energy Department had approved its safety design agreement for its Aurora powerhouse, laying the foundation for its first commercial nuclear facility.

• Oklo’s target of commercial power by the end of 2027 and its lofty valuation have been sticking points in the absence of meaningful revenue. Skeptics like Sen. Ed Markey have criticized its connections to Energy Secretary Chris Wright, a former Oklo board member.

What’s Next: Citi Research analyst Vikram Bagri, who rates Oklo stock at Hold, has been incrementally positive about Oklo’s recent updates. Oklo’s appointment of four independent directors this month signals that it is “strengthening its governance as it shifts from the concept stage toward reactor development.”

—Mackenzie Tatananni and Janet H. Cho

—Newsletter edited by Liz Moyer, Patrick O’Donnell, and Rupert Steiner