Key Takeaways
- Microsoft (MSFT) has committed to $130 billion in data center leases, a massive two-thirds increase in commitments since March, to fuel its AI competition.
- Japan PM Sanae Takaichi is moving to slash the food sales tax from 8% to 1% for a two-year period, aiming to curb the impact of persistent inflation on households.
- Meta Platforms (META) faced multiple price target reductions from Scotiabank and Piper Sandler following a sharp 91% drop in quarterly free cash flow due to heavy AI spending.
- Toyota Tsusho (8015) and JOGMEC are advancing a strategic heavy rare earth project in Namibia with a new C$47.7 million investment to secure supply chains outside of China.
- Thai stocks hit their lowest levels since early July, with the SET index sliding 1.8% amid a broader regional sell-off in technology equities.
Big Tech’s AI Spending War Intensifies
Microsoft (MSFT) has signaled a massive escalation in the AI infrastructure race, signing $130 billion in data center leases. This surge represents a significant acceleration in the company's capital commitments as it seeks to provide the computing power required by partners like OpenAI. The move comes as Microsoft brought 31 new data centers online in the most recent quarter alone, bringing its total to 88 for the fiscal year.
In contrast, Meta Platforms (META) is seeing increased scrutiny over its "spending binge." Analysts at Scotiabank slashed their price target for the social media giant to $600 from $700, while Piper Sandler lowered its target to $785. Investors remain wary after Meta reported that free cash flow plummeted to $784 million from $8.5 billion a year prior, a direct result of aggressive investments in AI hardware and talent.
Japan Proposes Drastic Food Tax Cut
Japanese Prime Minister Sanae Takaichi has instructed Liberal Democratic Party (LDP) executives to proceed with a plan to lower the consumption tax on food to 1% from 8%. The temporary measure, expected to last two years, is designed as a "stopgap" until a more permanent benefit system for low-income households is established in 2029.
The proposal has sparked intense debate in Tokyo regarding fiscal sustainability. Critics point out that the cut could cost the government over 4 trillion yen ($31.6 billion) annually in lost revenue. However, Takaichi is pushing for the bill to be submitted promptly to the Diet, citing the urgent need to address the 71% disapproval rating regarding the government's handling of rising living costs.
Strategic Shifts in Critical Minerals and Regional Markets
Toyota Tsusho (8015) and the Japan Organization for Metals and Energy Security (JOGMEC) have established a special purpose company for the Lofdal heavy rare earth project in Namibia. JOGMEC will invest up to 47.668 million Canadian dollars in the venture. The project is strategically vital for Japan's automotive sector, as it focuses on dysprosium and terbium, critical components for EV motors currently dominated by Chinese supply chains.
Meanwhile, Asian markets faced significant headwinds on Thursday. The Thai SET index dropped 1.8% to 1,595.17 points, marking its lowest close since July 9. The decline was fueled by a regional retreat from technology stocks and uncertainty surrounding the Federal Reserve’s interest rate path, which has pushed long-dated U.S. Treasury yields to their highest levels since 2007.
Geopolitical Tensions Escalate in Ukraine
A massive Russian missile and drone barrage struck multiple Ukrainian cities overnight, resulting in significant civilian casualties. In Kryvyi Rih, an Iskander-M ballistic missile destroyed a residential home, killing six people, including children, and wounding eight others. Simultaneously, the western city of Lviv reported at least six injuries and fires in residential districts following air strikes, forcing the city to reroute public transport as rescue operations continue.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.