Tech and Finance Worlds See Mixed Signals as 2026 Begins
The economic landscape presented a mixed bag of news this week, with the US Federal Reserve holding steady on interest rates, Microsoft reporting strong cloud earnings alongside a decline in gaming, Tesla facing a significant profit drop, and Meta gearing up for a major AI push.
The US Federal Reserve announced Wednesday it would hold interest rates unchanged at around 3.6 percent, after lowering them three times last year, according to Euronews. The central bank cited a stabilized job market and "solid" economic growth, an upgrade from the previous month's characterization of "modest" growth. Lowering the key rate tends to decrease borrowing costs for mortgages, car loans, and business borrowing, though these rates are also influenced by market forces.
Microsoft reported strong second-quarter earnings, driven by its cloud business, The Verge reported. The software maker posted $81.3 billion in revenue and a net income of $30.9 billion. Revenue was up 17 percent, and net income increased by 23 percent. However, the company's More Personal Computing division experienced a revenue decline this quarter. The holiday quarter saw PC shipments grow unexpectedly.
Tesla, on the other hand, faced significant challenges, with profits tanking 46 percent in 2025 compared to the previous year, according to Ars Technica and TechCrunch. This decline was attributed to falling car sales, impacted by CEO Elon Musk's new role in the Trump administration and the elimination of federal electric vehicle subsidies by Congress. Tesla reported a profit of $3.8 billion for 2025, its lowest in years. Automotive revenues fell by 11 percent to $17.7 billion. Despite the overall downturn, Tesla saw double-digit growth in its energy storage business (up 25 percent to $3.8 billion) and services (up 18 percent to $3.4 billion), Ars Technica reported. Tesla already revealed that it shipped 1.63 million cars globally across 2025. That marks the second year in a row that its sales have declined, after Musk spent years promising average annual growth of 50, according to TechCrunch.
Despite Tesla's struggles, investors had largely expected the decline in sales in Tesla's fourth quarter and full-year results for 2025, and the company beat Wall Street's estimates for earnings and revenue, sending shares up, according to TechCrunch.
Meanwhile, Meta reported strong fourth-quarter earnings and announced plans for a major investment in artificial intelligence, Fortune reported. CEO Mark Zuckerberg predicted a "major AI acceleration" for the company in 2026 as it aims to catch up with Google, OpenAI, and Anthropic in leading AI models after falling behind in 2025. Meta's Q4 revenue reached $59.89 billion, exceeding analyst estimates of $58.41 billion, with earnings per share at $8.88 versus expectations of $8.19. Meta forecast its capital expenditures could rise to as much as $135 billion this year, nearly double the $72 billion it reported in 2025, as it unveiled its most radical AI spending plans to date, largely driven by increased investment in AI infrastructure, according to Fortune.
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