Good morning, and welcome to November. On this day five years ago, Google announced that it would buy Fitbit for $2.1 billion.
It surely feels like ages ago that Fitbit was the king of wearable tech. The underwhelming launch of the Apple Watch failed to break Fitbit’s grip…but then it did. Today, watches are in, bands are out, and Google is an also-ran in the category…even if its products are slick.
As for me? I exchanged my fitness band for a mechanical watch that very same year. One fewer thing to remember to plug in. —Andrew Nusca
P.S. My editor wants you to know that Josh Kushner, founder of the venture firm Thrive Capital (Airtable, Anduril, OpenAI, Plaid, Stripe), will speak at the upcoming Fortune Global Forum, Nov. 11-12 in NYC. Request an invitation here.
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Amazon’s $110 billion cloud business is minting profits
Michael Buckner/Variety/Getty Images
Amazon’s quarterly financial results on Thursday surpassed analyst expectations, powered by strong revenue growth and record operating income. But it was Amazon Web Services, the company’s $110 billion cloud computing business, that really stood out.
AWS operating income grew 50% year-over-year to $10.4 billion. Meanwhile revenue in the unit rose 19% from the same period a year earlier to $27.5 billion, in line with expectations. The division’s operating profit margin was 38%, accelerating from 30% in the same period last year.
The robust profits came even as Amazon, like its Big Tech peers, invests heavily on its own AI consumer products while also expanding its offerings of AI services and building blocks to corporate customers.
One unknown is how those profits will look as AWS’ multibillion-dollar generative AI business—in which sales are growing more than 100% year over year—develops into a larger piece of the overall Amazon Web Services business. “There are going to be very healthy margins here” over time, Amazon CEO Andy Jassy said during a conference call.
In the meantime Amazon continues to ramp up capital spending, with a particular focus on expanding its datacenter footprint. Increased automation and robotics investments also play a role. Said Jassy of the company’s continued drive to automate warehouses: “We really do believe that AI is going to be a big piece of what we do in the robotics network.” —Jason Del Rey
OpenAI debuts ChatGPT Search
The rise of gen AI made it clear that the days of conventional online search were numbered. OpenAI’s latest announcement is perhaps the greatest salvo to date.
The San Francisco AI company said Thursday that it would add a new set of search features to its flagship ChatGPT product. Dubbed—naturally—ChatGPT Search, the capabilities allow users to search for timely information and receive it with attribution to news publishers and other sources.
The new capabilities use OpenAI’s 4o model and are available to paid ChatGPT Plus and Team users for mobile and web. The company says its enterprise and educational customers, then free users, are expected to follow in the coming weeks and months, respectively. About 250 million people use ChatGPT each week.
How are existing search giants Google and Microsoft (a leading OpenAI investor) confronting the existential threat? By incorporating conversational AI into their search products, of course. Game very much on. —AN
Apple sales grow 6% with rebound in iPhone demand
Apple on Thursday reported a 6% revenue bump in its fiscal fourth quarter as sales of iPhones rebounded.
The company posted growth in all of its business units save for the category that includes wearable devices. Total sales in the three months ended Sept. 28 increased year over year to $94.9 billion, coming in slightly above Wall Street estimates of $94.6 billon.
And the iPhone? Sales of Apple’s all-important product grew by 5.4% to $46.2 billion, reversing two consecutive quarters of decline. (Apple released its new iPhone 16 in September, so only about one week’s worth of sales were included in these results.) Apple CEO Tim Cook said on a conference call that iPhone sales set a September revenue record, with growth in every geographic segment.
The only Apple business category that declined in the quarter was the wearables, home, and accessory group, which includes the Apple Watch, AirPods, and the costly Apple VisionPro headset. Net sales for the unit fell 3% year over year to $9 billion. —Kali Hays
China sanctions largest U.S. drone maker
China has announced sanctions on Skydio, the company said Wednesday, for selling drones to Taiwan. Its only customer in the republic is the National Fire Agency.
“We’re proud to support critical infrastructure operators, first responders, and allied militaries around the world,” CEO Adam Bry wrote in a blog post. “We’re proud to support Taiwan, and we are undeterred.” Based in the San Francisco Bay Area, Skydio is the largest drone maker in the U.S. and a supplier to the militaries of both the U.S. and Ukraine.
The sanctions put Skydio in a supply chain bind. Though its drones are manufactured stateside, the batteries that power them “are one of the few components we have not yet moved out of China,” Bry wrote. Beijing hit ‘em where it hurts: Skydio is working off a “substantial stock” of batteries and is on the hunt for alternative suppliers, but still must ration batteries to one per drone.
A Financial Times report says Skydio sought help from the Biden administration; as trade tensions continue between the U.S. and China, American officials have been concerned about the disruption of supply chains as leverage. Congress is currently evaluating legislation that would ban drones from DJI, based in Shenzhen, from operating in the U.S. —AN
Intel soars after better-than-expected results
Intel shares jumped some 7% in after-hours trading on Thursday after the chipmaker reported earnings and guidance that exceeded Wall Street expectations.
Intel reported earnings of 17 cents on revenues of $13.28 billion—a decline of 6% from the same quarter a year prior. Unsurprisingly, given the Silicon Valley icon’s extensive overhaul under CEO Pat Gelsinger, the company recognized $2.8 billion in restructuring charges and $15.9 billion in impairment charges during the quarter.
Gelsinger said on a conference call that Intel expects to lower head count by 16,500 employees—cuts were announced in August—and reduce its real estate holdings. All of that should be a wrap by Q4 2025.
Intel still finds itself with a target on its back. A possible takeover by Qualcomm or another peer—or disruption by circling activist investors—is hardly off the table as the company works to keep its head above water and its share price up.
But managing expenses will only get it so far. Intel announced its Xeon 6 server processors and Gaudi AI accelerators during the quarter; Gelsinger said on the call that Gaudi uptake has been slower than expected. —AN
More data
—Microsoft hires Facebook’s former engineering chief. Jay Parikh will report to CEO Satya Nadella.
—Google’s Android 16 is coming months earlier than expected: 2Q25. The better to align with device launches, my dear.
—Nvidia’s Run:ai acquisition will see EU review after Italian regulators pump the brakes.
—Uber shares drop after earnings reveal that higher prices have slowed growth.
—Anthropic calls for “targeted regulation” of AI. The window for policy action is closing fast, it says.
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