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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The lesson from tech company earnings so far this year is that selling the infrastructure needed to build artificial intelligence services remains far more lucrative than selling the AI services themselves. Cloud computing divisions at Alphabet and Microsoft surpassed results in other parts of the business. Amazon makes it a hat-trick. 

Amazon Web Services, the world’s largest cloud computing business, now has a $100bn annual run rate. In the past quarter it accounted for 17 per cent of total revenue but more than 61 per cent of total operating income. This performance drove overall profit at the company. 

During the pandemic, Amazon’s huge expansion of warehouses, delivery infrastructure and headcount lifted operating expenses sharply just as revenue growth dimmed. Free cash flow was negative in 2021 and 2022. In response, it increased its debt and tightened up costs. Those moves are now paying off. In the quarter, the Seattle-based ecommerce and cloud company’s operating income and net income tripled. Trailing 12-month free cash flow topped $50bn. 

The unanswered question is whether Amazon is on the cusp of another vast spending plan. It says that it plans to pay down debt and increase capital investment this year. But in a call with analysts, chief executive Andy Jassy was careful not to be drawn on questions of capital investment intensity and the long-term impact on profits. He may have been wary of reproducing the sort of downbeat share price reaction that Meta’s spending plans received last week.

Capital expenditure will rise this year. Amazon is pouring more money into data centres. But it is not clear how much it wants to spend on its own AI tools. It has positioned itself as a platform for multiple AI models but is also offering its own generative AI services to enterprise customers. It has expanded access to Q, a chatbot designed to act as an AWS assistant. At $20 per user a month this is cheaper than Microsoft’s Copilot or Google’s Duet AI. But Amazon offered little guidance about future revenue streams.

The second lingering question is how long it will be before Amazon joins Meta, Alphabet, Microsoft, Nvidia and Apple is paying a dividend. Those companies use the payments to prove they have the near-term interests of shareholders at heart even as they accelerate long-term spending plans. At Amazon, however, the resurgence of free cash flow is still fresh. Dividend payments may not be on the cards for 2024.

elaine.moore@ft.com

That still did not deter Kennedy from running in the special election or for a full term in November.

“The dysfunction has become an embarrassment across this country and across the global community,” Kennedy said in a phone interview on Monday. “And we have to restore honor and civility and functionality back into the halls of the House of Representatives.”

Kennedy’s victory on Monday was no surprise — President Joe Biden won the district by 23 percentage points in 2020, according to calculations from Daily Kos Elections, and the district has twice as many registered Democrats than Republicans.

That means Democrats are favored to hold onto the seat in November. Kennedy will first have to win the June primary to run for a full term, but he could have that race to himself.

Former Grand Island Town Supervisor Nate McMurray, who ran unsuccessfully in a neighboring congressional district, is also looking to run. But Kathleen McGrath, a spokesperson for the state Board of Elections, wrote in an email there are multiple objections to McMurray’s petition signatures, and that ballot access will be determined at a Wednesday meeting. Kennedy had also filed a lawsuit challenging McMurray’s signatures.

“I’m looking forward to working with my colleagues to deliver for the people of this country and making sure that the House of Representatives is more reflective of the people,” Kennedy said of his campaign for a full term. “And I believe going into November, we have the moral high ground here to take back the House as Democrats. I believe the people of this country are sick and tired of seeing the dysfunction in the chaos that’s reigning under MAGA Republican control in the House.”

Kennedy will likely be a reliable Democratic vote in the House, focusing his campaign on core party issues including protecting Social Security and Medicare, defending democracy, and codifying the right to an abortion into federal law.

A practicing Catholic, Kennedy said back in 2014 that his views on abortion had “evolved,” and now is calling for federal law to reflect the abortion protections in New York State law.

Kennedy was among the state legislators who voted in 2019 to protect the right to an abortion in New York up to 24 weeks of pregnancy, with exceptions for a non-viable fetus and when a patient’s health is at risk.

“I believe that a woman’s right to make health care decisions about her own body ought to be made between a woman, her family and her doctor,” Kennedy said. “And if we do not allow for that scenario to play out, and if we restrict and ban abortion across this country, women will die.”

Kennedy had the endorsement of the American Israel Public Affairs Committee’s political arm in the race. He reiterated his support for Israel, while also calling for civilians to be protected in the country’s war against Hamas.

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Elon Musk has shut down the division that runs Tesla’s Supercharger business, dismissed two senior executives and fired hundreds more staff as the electric-car maker continues its restructuring amid a sharp downturn in the EV market.

Musk announced internally on Monday that the head of the superchargers group, Rebecca Tinucci, and Daniel Ho, head of new products, would be leaving along with their entire teams. About 500 people were in the supercharger group, the memo said.

Tesla’s supercharger system is among the largest charging networks in the world, and was one the reasons the company enjoyed such a commanding lead over rival carmakers for so long. While the supercharger operations will continue, the move raises questions over the future of the charging business.

The entire public policy unit will also be disbanded following the departure of its leader, Rohan Patel, in the middle of April.

“Hopefully these actions are making it clear that we need to be absolutely hard core about headcount and cost reduction,’ Musk wrote in the memo, which was first reported by The Information. “While some execstaff are taking this seriously, most are not yet doing so.”

Any manager “who retains more than three people who don’t obviously pass the excellent, necessary and trustworthy test” should resign, he added.

Tesla did not respond to a request for comment.

The latest dismissals at the company come after Musk announced last month that the carmaker would cut “more than 10 per cent” of its total workforce, more than 14,000 jobs, in order to be “lean, innovative and hungry”.

The urgency of the shift was underlined by Tesla reporting a decline of almost 10 per cent in revenues in the first quarter of this year, its first year-on-year quarterly drop since the start of 2020. The share price has more than halved from its November 2021 peak of just under $410 a share.

The decision took staff by surprise. Will Jameson, who worked in the Tesla supercharger team, wrote on X that Musk “has let our entire charging org go”. Another employee of that division, George Bahadue, posted on LinkedIn confirming he had been let go.

He added: “What this means for the charging network, [North American Charging Standard] NACS, and all the exciting work we were doing across the industry, I don’t yet know. What a wild ride it has been.”

When Jameson was asked by a reader on X why the entire division had been let go, he replied “your guess is as good as mine”.

Musk said in the memo that superchargers sites currently under construction would be finished and “some” new locations would be constructed.

The surprise move comes despite Tesla having built the dominant EV charging network with 50,000 sites globally and 15,000 in North America. Recently it has signed contracts with several key rivals including Ford, General Motors and Rivian to use its NACS charging standard.

Models from other carmakers will be able to use its branded charging stations, potentially bringing Tesla significant revenue stream, as well as establishing it as the de facto industry standard.

Tinucci, Ho and Patel are not the only long-standing Musk lieutenants to leave this year. Drew Baglino, senior vice-president leading Tesla’s engineering and technology development for batteries, motors and energy products, resigned in April and Martin Viecha, its head of investor relations, said he would step down on the company’s first-quarter earnings call last week.