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Earlier this week, Meta's Mark Zuckerberg faced a barbecue on Capitol Hill and publicly apologized to family members of victims of online abuse. Just over a day later, he had a lot to worry about as his company delivered some of its best quarterly results in years.

Meta's results illustrate how the latest earnings season for Big Tech has gone: a largely positive period in which companies that could claim the benefits of artificial intelligence and cost savings were the most praised on Wall Street.

Meta shot out the lights. After years of questions about its advertising business and its ability to deal with scandals, the parent company of Facebook and Instagram reported that its fourth-quarter profit tripled from a year ago. Some of that was attributed to AI, with the technology making core advertising activities more effective. So did cost cuts, including tens of thousands of layoffs as part of the company's self-described “year of efficiency.”

Meta's profit was so good that the company will soon pay out stock dividends for the first time (which could amount to as much as 1.50 euros). $700 million per year for Zuckerberg alone) and announced a $50 billion buyback. It is a sign that the tech giant “come of age,” said an analyst, who, together with Microsoft and Apple, regularly makes payouts to investors.

Zuckerberg promised more investment in AI — “Expect us to continue to invest aggressively in this area,” he said on an earnings call — and the company said it had largely completed its cost cuts. But some analysts said Meta will eventually have to show a return on those expenses.

Amazon also touted its AI initiatives. Much of the earnings call was spent talking about Rufus, a new smart assistant aimed at helping shoppers find what they're looking for. (It could also allow Amazon to reduce ad spend on Google and social media platforms.)

It's part of an effort by the e-commerce giant to show that it's not just AI catching up to Microsoft and Google. Amazon reported steady growth in cloud computing, a benchmark for sales of AI services to enterprise customers, with the division growing 13 percent this quarter. That met analyst expectations, but that growth is less than half that of competing divisions at Microsoft and Google.

Apple resumed sales growth, although China weighed on the results. Revenue rose 2 percent in the quarter, the first quarterly increase in a year, driven by sales of iPhones and services like Apple Music. But shares in Apple fell in after-hours trading as investors worried about slowing sales growth in China, the company's second-largest market, where it faces resurgent competition from Huawei and a struggling economy.

Even though Apple's product du jour is the new Vision Reality Pro, it teased the rollout of new AI initiatives this year, in the midst of worries that it's late for the game. “I think there's a huge opportunity for Apple with generative AI and with AI, without going into much more detail,” CEO Tim Cook told analysts.

Senators accuse consulting firms of withholding information about their Saudi work. The CEOs of four consulting firms – Boston Consulting Group, McKinsey, M. Klein & Company and Teneo – are expected to witnesses on Capitol Hill next week, after the Permanent Subcommittee on Investigations said so has not complied with subpoenas from Congress. The subcommittee is investigating Saudi Arabia's efforts to exert influence through its investments in the US

Problems with commercial real estate weigh on banks worldwide. Shares of lenders – New York Community Bancorp, Japan's Aozora Bank and Switzerland's Julius Baer – fell Thursday after each detailed their exposure to soured loans to real estate companies. It's the latest sign of a reckoning among lenders with the decline in the commercial real estate market, as office vacancy rates remain well below pre-pandemic levels.

A missing Chinese dealmaker resigns. Fan Bao, who was detained by authorities in Beijing last year, has resigned as chairman and CEO of China Renaissance, the investment bank announced today. The disappearance of Bao, one of China's most well-connected top dealmakers, shocked the country's business community and raised questions about how far Beijing would go to shore up the private sector.

Volvo is cutting back on funding for its electric car joint venture. The Swedish automaker essentially plans to do just that sever ties with Polestar, a start-up it co-founded with China's Geely, amid continued losses at the company. The move further raises questions about how major car companies are dealing with a slowdown in electric vehicle sales, which is weighing on their revenues.

Amer, the Chinese-owned parent group of sportswear brands Wilson and Arc'teryx, made a muted debut on the New York Stock Exchange this week, raising less money than hoped.

But the battle raises questions about the prospects of a larger company with ties to China: Shein, the fast-fashion giant that also plans to go public in the US.

Amer has priced its IPO at $13 per share, well below the target range of $16 to $18, raising about $1.4 billion. Although the Americas and Europe account for a larger share of sales, unidentified IPO investors told Reuters they were concerned about the The company's dependence on China: The country accounted for almost 20 percent of Amer's turnover last year, up from 8 percent in 2022.

She in filed for an initial public offering late last year. It was recently valued by private investors at $60 billion. At that level, it would be the largest company to go public in the US since Uber in 2019.

Although Shein is now headquartered in Singapore, the company was founded in China – and, perhaps more importantly, makes many of its garments there.

The companies are vastly different. Shein works almost like a social media app, while Amer is closer to a luxury company. But Shein also faces a series of challenges related to China, being accused of allowing this copied designs to spread on its platform for the use of forced labor in its supply chains.

All that bad news is weighing on supporters, some of whom are reportedly trying to sell their shares with a 30 percent discount.

There are some parallels between Shein and Amersaid Matt Kennedy, senior strategist at research firm Renaissance Capital. “Both are clothing companies with a Chinese angle, he told DealBook.

Yet there are major differences between the two companies, including price points between the items they sell. A Wilson tennis racket can cost $200, while a Shein dress can cost as little as $10, meaning the fast-fashion retailer could better survive consumer belt-tightening.

— Johannes Coffee, a professor at Columbia University Law School, on why a Delaware judge's ruling to nullify Elon Musk's pay package worth more than $50 billion won't lead to an exodus of companies from the state. After the ruling, Musk said companies should not incorporate in Delaware.

McKinsey partners have done just that re-elected Bob Sternfels as the global managing partner of the consulting giant – but only just after making it into a runoff after two rounds of voting.

His hard-fought victory on Thursday highlights internal discontent at McKinsey and raises questions about the way the company is run.

Sternfels defeated Rodney Zemmel, the head of the firm's fast-growing digital practice. First elected in 2021, Sternfels had replaced Kevin Sneader, who was ousted after just one term amid controversy over McKinsey's work with opioid makers and other divisive clients.

McKinsey has had to make cuts in the past year, cutting 1,400 back-office jobs, reducing the number of new partners it has appointed, curtailing some of its bankruptcy operations amid scrutiny of its work and delaying the start of new MBA recruits.

Some McKinsey partners are unhappy with how Sternfels has handled these challenges, which they accuse him of the incorrect handling of restructuring and dismissals and over-reliance on a small team rather than the wider partnership.

There may be a bigger problem for McKinsey: the partnership. The firm's senior ranks now number about 750 partners, making it more difficult to reach consensus on important issues – especially in turbulent times.

Offers

  • In activist investment news: Elliott Management gained a board seat Etsy, reportedly after amassing a 13 percent stake. And Barington Capital is calling for changes Mattel, including sales of the Fisher-Price and American Girl brands. (Bloomberg, WSJ)

  • The rising stock market in India is causing a increase in the number of IPO applications there, but some investors are concerned about how this offering will perform. (FT)

Policy

  • Allen Weisselberg, the former CFO of the Trump family business, is in talks to plead guilty to committing perjury in the recent civil fraud trial of the former president. (NYT)

  • “Inside of the Israel lobby is new $90 million war chest” (The lever)

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