Good morning. Andrew here. Maybe this should be a bet in prediction markets: How quickly after SpaceX goes public — a filing may come as soon as this week, according to The Information — will Elon Musk seek to merge it with Tesla? That isn’t a far-fetched question after Musk last weekend announced a joint venture between Tesla and SpaceX to build a giant factory to make A.I. chips, known as Terafab. It has received less attention than I would have expected, but the deal could ultimately provide a rationale for a giant merger in the future. If there’s any lesson to learn about Musk, it’s that he is always consolidating his businesses. Just look at SpaceX and xAI, or xAI and X, or SolarCity and Tesla. Watch this space. (Was this newsletter forwarded to you? Sign up here.)
Goodbye, SoraOpenAI wowed the public two years ago by releasing Sora, an artificial intelligence tool for creating Hollywood-quality short clips. Three months ago, the A.I. giant stunned Hollywood when it signed a deal to license Disney content for Sora in exchange for a $1 billion investment. All of that has gone up in smoke. OpenAI’s shuttering of Sora is among the most visible signs yet of the company’s shifting business strategy — and of its efforts to rethink spending as it competes with resurgent rivals in the A.I. race. “We’re saying goodbye to Sora,” OpenAI’s Sora team wrote on social media. “What you made with Sora mattered, and we know this news is disappointing,” it added. Perhaps in a sign of how quickly the decision was made, Sora’s closing was announced a day after OpenAI published a blog post about how to safely create content with the tool. And the news prompted Disney — which drew some criticism for agreeing to work with Sora — to say it would “continue to engage with A.I. platforms” so long as they respect intellectual property. Cost was most likely the reason. Processing billions of text-based A.I. queries is expensive. Creating A.I.-generated video content is exponentially more so. And while OpenAI executives like Sam Altman expect to triple the $13 billion in revenue it collected last year, it also plans to spend well over $100 billion over the next four years. OpenAI is also locked in a tightening race with Anthropic, whose revenue has been growing at a faster pace because of its greater adoption by high-paying corporate users. And it is working on an I.P.O. that may come as early as this year, though Anthropic may list first. All of that means that OpenAI’s priority now is preserving resources, a strategy that has already meant ending projects like letting users shop directly via ChatGPT. Other competitors aren’t standing still. Google still appears committed to its Sora rival, Nano Banana. And many industry watchers think its deep pockets and ability to rapidly advance its Gemini model make it a serious threat. Meta yesterday introduced an executive compensation plan that could make some of its top executives (excluding Mark Zuckerberg) vastly wealthier — if the company meets hugely ambitious goals like a $9 trillion market value, up from $1.5 trillion today. The company has said it believes that A.I. is perhaps the biggest part of its future. (It’s also unveiling an initiative to help small businesses adopt A.I. tools.) In other A.I. news:
Global markets rebound on hopes of an end to the war in Iran. U.S. stock futures are up again today, after markets jumped and oil prices slipped yesterday on the reports that the Trump administration had sent Iran a 15-point plan to end the fighting, and that Tehran said that “nonhostile” ships could pass through the Strait of Hormuz. But there are signs the war may continue, including the Pentagon saying it had ordered about 2,000 troops to the region. Wall Street still expects energy shocks to persist for months. Potential overlapping failures are being investigated in the crash at LaGuardia Airport. A preliminary inquiry suggested that factors in the fatal runway collision could have included the fire truck that collided with an Air Canada jet not having a transponder and the air traffic tower having only two controllers on duty, a reminder of staffing shortages the board has raised before. Meta is ordered to pay $375 million for violating consumer protection laws. A jury in New Mexico found that the social media giant had misled users about the safety of its platforms and enabled sexual exploitation of young users in a lawsuit brought by the state in 2023. The verdict underscores how states have shifted the focus of their suits to accusations of addictive or dangerous design of the apps from user content and behavior. New questions about the case against the FedPresident Trump’s pressure campaign on the Fed and its chair, Jay Powell, has alarmed and puzzled Wall Street, especially because it threatens to gum up succession at the central bank. But more clarity around the Fed’s future may have emerged in, of all places, a closed-door hearing in Washington. What that means for the near-term future of the central bank and its interest rate policy, however, remains unclear. The latest: G.A. Massucco-LaTaif, a top deputy to Jeanine Pirro, the U.S. attorney for the District of Columbia, told a judge this month that prosecutors “do not know at this time” what evidence there was to justify a criminal investigation into Powell over the Fed’s $2.5 billion renovation of its headquarters, The Washington Post reports. Trump has said, without citing evidence, that “there is criminality” in the project. And Massucco-LaTaif argued that “there are 1.2 billion reasons” to investigate the matter, an apparent reference to how many dollars the renovation is over budget. The presiding judge, James Boasberg of the Federal District Court for the District of Columbia, later quashed the department’s subpoenas of the Fed, leaving the investigation in limbo. The revelation raises more questions about the future of the case. In his order quashing the subpoenas, Boasberg said the government had “offered no evidence whatsoever that Powell committed any crime other than displeasing the president.” Pirro has asked Boasberg to reconsider his decision and vowed to appeal. Senator Thom Tillis, Republican of North Carolina, has vowed to block confirmation of any of Trump’s Fed picks — that would include Kevin Warsh, his choice to succeed Powell — until the investigation ends. And Powell last week said he had “no intention of leaving the board until the investigation is well and truly over.” But economic reality may not change the Fed’s stance on interest rates. Even if the investigation ends soon and Warsh is quickly confirmed, the central bank faces challenges in pursuing Trump’s desire for rate cuts. The war in the Middle East threatens to stoke inflation, and some economists are predicting a lengthy holding pattern, if not a hike in borrowing costs. The futures market this morning sees no rate cuts before September 2027. The grim job market for new graduatesCollege seniors getting their degrees this spring will enter the worst job market for 20-somethings since the coronavirus pandemic. Some 5.7 percent of college graduates ages 22 to 27 were unemployed at the end of last year, up from 4 percent in March 2023, according to the New York Fed. Fears that artificial intelligence will decimate white-collar work have been stoked by A.I. leaders like Dario Amodei, Anthropic’s C.E.O., who has warned that the technology could eliminate up to half of all entry-level white-collar jobs. But The Times’s Sydney Ember reports that, for now, “low hire, low fire” dynamics in the labor market are what’s making it particularly hard for young workers to get a foot in the door. Getting a diploma has long been an advantage for job seekers. But it’s at least possible the job market could flip, and skilled trade workers could end up better positioned than their degree-holding peers. Already, the unemployment gap between workers with and without degrees has been narrowing in recent years. And a recent report by the research group Randstad showed that global demand for skilled trade work was growing three times as fast as professional roles, driven in part by demand linked to data center construction. The results of a Gallup poll published yesterday showed that job-market sentiment was significantly lower among college-educated workers than among those without degrees: As of the end of 2025, just 19 percent of college-educated workers said it was a good time to find a job, compared with 35 percent of workers without a college degree.
DEALBOOK QUIZ A harsh reckoning for reality TVThis question comes from a recent Times article. Click an answer to see if you’re right. (The link will be free.) The reality-TV universe is shrinking. While major franchises like “Love Island” and “Below Deck” continue to draw big audiences, the volume of new reality shows entering production has declined sharply. Since 2022, the number of unscripted and reality series with season premieres in the U.S. has plummeted by a third, according to Luminate, a data and analytics company. It fell 15 percent last year alone. A decline in cable ratings and ad revenue has made networks more cautious. How many reality-TV series had season premieres in the United States last year? We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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