Happy Thursday, N2K reader!

Pick a winner in this week’s world-famous news haiku competition™ in today’s poll.

And now for something completely different.

Matt Davis — Need2Know Chedditor

News You Need2Know

What’s the stock market up to, eh?

$SPX ( ▼ 1.23% )   $DJI ( ▼ 1.2% )   $NDX ( ▼ 1.59% )

Companies mentioned in today’s newsletter

SpaceX, $UPS ( ▼ 0.16% ) , $AMZN ( ▼ 4.42% ) , $GOOGL ( ▼ 0.54% ) , $QCOM ( ▼ 8.46% ) , $AMZN ( ▼ 4.42% ) , $MSFT ( ▼ 4.95% ) , $ORCL ( ▼ 6.95% )  

Elon Musk is getting serious about orbital data centers

Elon Musk is once again setting his sights beyond Earth. This time it’s with one of his companies, not just his horse tranquilizer habit. He’s got a bold initiative to launch orbital AI data centers. Last week, Musk’s SpaceX filed plans with the FCC for a monumental one-million-satellite data center network, and he’s wasted no time championing the concept publicly. “You can mark my words, in 36 months but probably closer to 30 months, the most economically compelling place to put AI will be space,” Musk declared during Patrick Collison’s podcast Cheeky Pint.

The logic? Space provides optimal conditions for scaling AI infrastructure. According to Musk, “Any given solar panel is going to give you about five times more power in space than on the ground, so it’s actually much cheaper to do in space.” While critics, including podcast guest Dwarkesh Patel, pointed out flaws in Musk’s economic reasoning — like the challenges of servicing hardware in orbit — Musk remains undeterred. He boldly claimed, “Five years from now…we will launch and be operating every year more AI in space than the cumulative total on Earth.”

Supporting this vision is SpaceX’s recent merger with xAI, combining its space expertise with artificial intelligence capabilities. The project also received a boost from an unusual move by FCC Chairman Brendan Carr, who shared the filing on X (formerly Twitter), hinting at Musk’s favorable regulatory prospects.

Throughout his tenure as chairman, Carr has shown himself eager to help President' Trump’s friends and punish his enemies — so as long as Musk stays on Trump’s good side, the proposal is likely to sail through without issue. The last time Musk got on Trump’s bad side, of course, he wrote on Twitter X (the social media site he’s just merged with SpaceX) that Trump was “in the Epstein files.” So: You never know.

Job cuts surge to highest January total since ‘09

Job cuts in the U.S. soared to their highest level for a January since the financial crisis in 2009, signaling mounting pressures in the labor market. Employment services firm Challenger, Gray & Christmas reported a staggering 108,435 job cuts last month, more than double the 50,000 cuts reported in the same period a year earlier. “Generally, we see a high number of job cuts in the first quarter, but this is a high total for January. It means most of these plans were set at the end of 2025, signaling employers are less than optimistic about the outlook for 2026,” said Andy Challenger, the firm’s chief revenue officer, speaking to the Financial Times.

Separate data from the Bureau of Labor Statistics (BLS) showed job openings dipping to 6.5 million in December, the lowest in over five years. Cory Stahle, an economist at Indeed, warned the FT that the labor market is “perilously close to a definitive breaking point.”

Notably, seasonal distortions and industry-specific factors contributed to the grim statistics. UPS’s $UPS ( ▼ 0.16% ) decision to cut 30,000 jobs after splitting with Amazon $AMZN ( ▼ 4.42% ) significantly impacted the transportation sector. Technology layoffs also surged, with Amazon alone shedding 16,000 positions.

Though the unemployment rate remains low at 4.4%, Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, argued that the Federal Reserve “prematurely shifted its focus from the labor market back to inflation.”

The numbers have prompted renewed scrutiny of monetary policy, with Treasury yields falling as investors anticipate possible rate cuts later this year.

Quote of the Day

Tech shares slide for the third straight day

Tech stocks took another hit on Thursday as disappointing jobs data (see above!) added to a sell-off already rattling the software and AI sectors. The Nasdaq Composite fell 1%, marking its third consecutive session of losses and heading toward its worst week in months. The S&P 500 mirrored the drop, fueled by fears of an increasingly fragile labor market and uncertainty surrounding Silicon Valley's AI investments.

Major companies weren’t spared in Thursday’s downturn. Alphabet $GOOGL ( ▼ 0.54% ) slid 2.4% despite solid earnings, as plans to double capital expenditures to $185 billion raised questions about the profitability of AI projects. “The market is getting a natural correction and a test of the AI story,” said George Pearkes, macro strategist at Bespoke Investment Group, talking to the FT.

Adding to concerns, Qualcomm $QCOM ( ▼ 8.46% ) saw a 7.6% drop amid warnings of smartphone production challenges, while Amazon $AMZN ( ▼ 4.42% ) and Microsoft $MSFT ( ▼ 4.95% ) fell 4.1% and 3.2%, respectively, as fears over AI disruption deepened.

Song of the Day: Maluma, Kany Garcia, ‘1+1’