Meta’s market value fell by more than $100bn after it forecast “hundreds of billions of dollars” in AI spending. The sharper question is who can stop that spending. Mark Zuckerberg controls a majority of Meta’s votes through special share classes, so outside investors cannot veto the budget. Selling the stock is their only protest.

That protest works slowly. Data-centre leases, chip orders and power contracts are signed years ahead, so this year’s bill reflects bets placed before the doubt began. Zuckerberg decides, and he keeps control whether the bet pays or not. The shareholders who fund it have no such guarantee.

The suppliers’ safety is also conditional. Their revenue lasts only while customers can pay. Cisco, the networking-equipment maker that supplied the 1990s fibre build-out, booked a $2.25bn inventory write-down in April 2001, according to its own results statement.

The Gist AI Editor

Meta’s $100bn drop shows investors doubting AI spending

Meta’s market value fell by more than $100bn after it forecast “hundreds of billions of dollars” in spending, and that dragged US tech stocks lower (FT). Investors are now asking whether AI spending will earn its money back. Meta can’t easily cut spending, because a rival with more computing power could win customers. Shareholders carry the cost of that race. Nvidia and the chip and power suppliers collect the revenue regardless.

Treasury yields hit their lowest since September on French debt worries

Treasury yields fell to their lowest levels since September as worries about French government debt pushed investors toward safer assets (WSJ). A yield is the annual return a lender demands. When money flows into US bonds, that return falls, and so does the cost of borrowing for US companies and homebuyers. Blackstone shows the other side. Its private-equity unit’s asset-sale proceeds fell 49% on rising rates (WSJ). Funds that can’t sell holdings at acceptable prices can’t return cash to their investors.

Critical PHP flaws force global patching and some temporary shutdowns

The rush to patch a widely used web programming language entered its second day, and researchers say hackers tried to exploit the weaknesses (Bloomberg). Researchers say the attacks began before the flaws were publicly known. Many sites run PHP, so the fix depends on thousands of separate administrators, and those who patch slowly stay exposed.

Non-obvious angle: luxury demand is weakening while AI stocks absorb capital

Kering, owner of Gucci and Bottega Veneta, reported revenue down 1% as luxury demand stays weak (WSJ). Meanwhile, Anthropic’s possible IPO is drawing investor attention (FT). Capital is moving from discretionary consumer brands toward AI infrastructure. The bet is that AI will earn more than shoppers will spend.

Stay tuned for the next Gist—your edge in a shifting world. The Gist remains independent and reader-supported. If you value news free from corporate or state interests, consider supporting our mission with a donation.

Treasury Yields Fall as Investors Seek Safe Haven
— Wall Street Journal

Kering’s Sales Lose Steam in Struggling Luxury Market
— Wall Street Journal

Thursday assorted links
— Marginalrevolution

Blackstone’s Core Businesses Hit by Rising Rates
— Wall Street Journal

What Musk’s Millions Could Mean For The Midterms
— Bloomberg

Critical PHP Flaws Spur Global Patch Effort, Temporary Shutdowns
— Bloomberg

France reports the first human case of Shamonda virus

France has reported the first known human infection with Shamonda virus. The disease had previously affected only animals. According to Politico Europe and The Guardian, the patient died in early October and was severely immunocompromised. Authorities called it “an exceptional case” and said there is “no health risk for the general population.” Investigators are still working out whether the virus contributed to the death.

The virus is a bunyavirus spread by midge bites. It was first detected in European livestock this summer. In cattle, sheep and goats it causes lower milk yields, abortions and birth defects (The Guardian). The cost therefore falls first on farmers and on the public bodies that monitor animal disease. Watch for expanded midge and livestock surveillance budgets, and for pressure on vaccine makers to develop animal vaccines.

German firms pass energy costs into prices

The ifo institute’s price expectations index rose to 22.7 points in September, from 21.4 in August (ifo). The index measures how many firms plan price rises. Its chief economist, Timo Wollmershäuser, expects inflation to climb above 3% in the coming months. He cites the Bab al-Mandab blockade, which pushed crude prices up again. Gas and power prices reached their highest level since late 2022 in mid-September. Utilities are expected to raise household tariffs in winter.

Heat pumps are becoming a way to manage power demand

Il Sole 24 Ore reports double-digit market growth for heat pumps in Europe, driven mainly by homes. The sector’s pitch is shifting from efficiency to flexibility. Households and firms can shift when they draw power, which helps them cut bills while energy prices are high.

UK parliamentary committee turns to critical minerals

The UK’s Business, Innovation, Science and Trade Committee will launch its critical minerals report at Chatham House on 5 November. The event will examine how London can use its finance and markets expertise to build supply chains with allied countries. It is a bid to turn the City’s capital into influence over mineral supply.

Catch the next Gist for the continent’s moving pieces.

Ergebnisse der Ministerpräsidentenkonferenz
— ZDF

Höhere Energiepreise werden zunehmend weitergegeben
— IFO

Critical minerals: The UK’s role in securing resilient supply chains
— Chatham House

First known human case of Shamonda virus confirmed in France
— Politico Europe

Shamonda virus detected in human for first time in France
— The Guardian

Jürgen Klopp erwischte Einbrecher mit Süßigkeiten
— ZDF