Tesla Scraps High-End Car Models & Starbucks is Heating Up

What It Covers

Tesla discontinues Model S and X to manufacture Optimus robots while profits crater 46%. Meta increases AI spending to $135 billion but advertising revenue surges 24%. Microsoft cloud growth slows despite record spending. Amazon cuts 16,000 corporate roles targeting management layers. Starbucks reports first turnaround success under CEO Brian Niccol with 4% same-store sales growth.

Key Questions Answered

• •Tesla's Profit Collapse: Tesla's pretax profit margin dropped to 6% in 2024, less than half of Toyota's margin, while total profits fell from $7.1 billion in 2023 to $3.8 billion. The company discontinued Model S and X, which represented only 3% of deliveries, to repurpose its Fremont factory for Optimus robot manufacturing instead of traditional vehicle production.
• •Meta's AI Investment Strategy: Meta plans capital expenditures between $115-135 billion for 2026, nearly double the $72 billion spent in 2024, while maintaining 97% revenue from advertising at $60 billion quarterly. Unlike previous quarters where increased spending caused 14% stock drops, shares rose 10% as investors now trust the advertising business generates sufficient cash flow to fund AI experiments.
• •Microsoft's Concentration Risk: OpenAI represents 45% of Microsoft's $625 billion cloud contract backlog, creating customer concentration concerns among investors. Cloud unit growth decelerated to 39% from the previous quarter despite capital expenditures hitting a record $37.5 billion, with two-thirds allocated to short-lived hardware, causing the stock to drop 6% despite beating revenue targets by 1%.
• •Amazon's Management Purge: Amazon eliminated 30,000 corporate positions across two rounds, reducing white-collar workforce by 10% to remove bureaucratic layers and increase decision-making speed. CEO Andy Jassy established a dedicated email alias for identifying red tape and stated long-term headcount will shrink as AI assumes human tasks, though the company avoided explicitly linking layoffs to AI replacement.
• •Starbucks Turnaround Metrics: New CEO Brian Niccol achieved 4% US same-store sales growth through operational changes including four-minute service targets now met at company-operated stores, 200 store remodels, and protein cold foam products. The green apron service model requiring baristas to greet customers and personalize cups, combined with viral barista cup launches, drove measurable foot traffic increases.