— AI May Replace 8,000 IBM Employees; Morgan Stanley to Cut 3,000 Jobs; Uber Breaks Records on Strong Ride Demand; Pfizer Revenue Crushes Expectations; Carl Icahn Accused of Ponzi Scheme; May Day Travel Boom Overwhelms China; LA Multifamily Property Values Plunge
1. AI May Replace 8,000 IBM Employees
IBM CEO Arvind Krishna revealed in an interview that the company plans to halt hiring for positions that could be replaced by AI in the coming years.
Currently, the company has 26,000 non-customer-facing roles, 30% of which may be automated by AI within the next five years — potentially displacing 7,800 workers.
With the rapid rise of AI in recent years, many fear a disruptive revolution in the job market. IBM’s move highlights both the practicality of AI and its profound impact on employment.
Krishna stated that tasks such as sending employment offers and facilitating internal transfers — typical HR functions — could be fully managed by AI.
IBM will continue hiring for software development and customer-facing roles.
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2. Morgan Stanley to Cut 3,000 Jobs
Sources revealed that Morgan Stanley plans to cut 3,000 employees globally by the end of this quarter, representing about 5% of its workforce.
The investment banking and trading divisions are expected to be the most affected. Just a few months ago, Morgan Stanley conducted a 2% workforce reduction.
CEO James Gorman said that securities issuance and M&A activity are unlikely to recover before 2024.
In Q1, the firm’s profits declined year-over-year, with M&A advisory and equity issuance revenues down 32% and 22%, respectively.
During the pandemic, banks postponed layoffs to support employees, but downsizing has now become the most practical cost-cutting tool.
The current round of layoffs will not affect employees in the wealth management division.
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3. Uber Breaks Records on Strong Ride Demand
Uber’s latest quarterly earnings report showed EBITDA of $761 million, exceeding analysts’ expectations of $679 million, suggesting that the sluggish economy has not significantly impacted consumer demand for rides and food delivery.
CFO Nelson Chai stated that the company achieved record profit margins and free cash flow in Q1, and is confident about further improvement in Q2.
Total Q1 revenue reached $31.4 billion. Although monthly active users declined, the $15 billion in ride revenue indicates more frequent usage per user.
In March, Uber captured 76% of the U.S. ride-hailing market, up from 66% in early 2020. Having already cut jobs during the early pandemic, the company has not announced new layoffs or cost-cutting measures.
Uber’s revenue from ride-hailing and food delivery is nearly evenly split, with delivery accounting for a smaller portion.
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4. Pfizer Revenue Crushes Expectations
Pharmaceutical giant Pfizer reported Q1 revenue of $18.3 billion, far exceeding analyst forecasts, with adjusted earnings per share of $1.23 compared to the expected $0.97.
Due to declining demand for Covid-related products, Pfizer’s stock has underperformed peers over the past year. The company has pledged to launch new products to fill the gap and announced a $43 billion acquisition of cancer drug maker Seagen earlier this year to create new growth drivers.
Last year, Pfizer’s Covid vaccine Comirnaty and antiviral Paxlovid accounted for half of its $100 billion in revenue. However, Q1 sales from these products plummeted 77% to $3.1 billion. The good news is Paxlovid sales still exceeded analyst expectations.
Wells Fargo analysts noted strong vaccine demand in China, and the U.S. government has ordered $2 billion worth of vaccines.
Pfizer plans to soon launch an RSV vaccine, which is already in production and could hit the market as early as Q3.
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5. Carl Icahn Accused of Ponzi Scheme
Recently, activist investor Carl Icahn’s firm, Icahn Enterprises, became the latest short target of Hindenburg Research, which alleges the company has significantly overstated its asset valuations and found supporting evidence.
Hindenburg’s report claims that the legendary Wall Street figure’s firm is excessively leveraged and has sustained large losses — a combination that typically ends badly.
The report alleges that Icahn Enterprises has overvalued its assets by at least 75% and that its market cap is 200% above its net asset value (NAV), while peer companies are trading below NAV.
Icahn has allegedly used new investor capital to pay dividends to existing investors — a structure Hindenburg compares to a Ponzi scheme.
Following the report’s release, Icahn Enterprises’ share price plunged as much as 24%.
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6. May Day Travel Boom Overwhelms China
During the May Day holiday, millions of Chinese tourists flocked to major cities and top attractions.
In the first three days of the holiday, there were 159 million bookings via car, train, air, and boat — a 162% increase compared to the same period last year.
Nationwide, daily tourist volumes during the Golden Week nearly returned to 2019 pre-pandemic levels. Over 53 million train passengers were recorded.
Photos showing overcrowded attractions have flooded social media. Some travelers even opted to visit war veteran cemeteries to avoid crowds.
After three years of strict Covid restrictions, many students finally got the chance to travel.
China’s tourism boom highlights the resilience of both consumer demand and the broader economy.
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7. LA Multifamily Property Values Plunge
According to a new market report from NAI Capital, sales of multifamily homes in the Los Angeles area fell 11% quarter-over-quarter and 37.5% year-over-year in Q1, while average sale prices dropped 18.4%.
Following the April 1 implementation of Measure ULA, all commercial property sales over $5 million are now subject to a 4% transfer tax, and sales above $10 million face a 5.5% surcharge — policies that could further depress LA’s commercial real estate market.
After California and LA ended pandemic-era eviction bans, the apartment vacancy rate rose 20 basis points to 4.2%, up 70 basis points from a year ago. Average monthly rent hit a record high of $2,156, up 1.9% year-over-year, driven primarily by newly built units.
In East LA County, vacant apartment numbers surged 32.2%, and the average sale price of apartments fell 20.3%.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.