Stock Markets Are Suffering Amid Bubble Fears. Why Ford’s EV Pivot Offers Hope.

(Scott Olson/Getty Images)

Many predicted a market bubble was about to burst—just not this one. While fears over artificial intelligence spending persist, the focus shifted to the electric-vehicle boom as Ford booked a huge loss. The lesson for investors is that even a bubble popping isn’t necessarily that destructive if the technology can be put to good use.

The price for failing to forecast what American customers want and the shifting regulatory landscape is $19.5 billion in charges for Ford. But the car maker’s pivot to hybrid and so-called extended-range EVs is a reminder that a failure to predict the exact shape of the future doesn’t mean you can’t capitalize on it.

That could be a soothing thought for sliding AI-exposed stocks such as Oracle and Broadcom. The market has turned decisively against heavy technology spending—just ask software company ServiceNow, which shed $21 billion in market value Monday on a report that it was planning a $7 billion cybersecurity acquisition. That looks like an overreaction rather than prudence.

Even if spending proves to be excessive, it won’t all be wasted as companies pivot. Meta Platforms CEO Mark Zuckerberg has noted that if his social-media company builds too many AI data centers it can put them to alternative uses or rent them out. Ford agrees—it is now aiming to turn EV battery factories into sites manufacturing batteries for data centers.

As Oaktree Capital Management LP co-founder Howard Marks put it in an insightful investment memo last week, “No one should go all-in without acknowledging that they face the risk of ruin if things go badly. But by the same token, no one should stay all-out and risk missing out on one of the great technological steps forward.”

Ford decided it couldn’t miss out on the EV future and is now paying the price for its partial U-turn, but it has avoided ruin. A collapsing AI bubble could work out the same way.

—Adam Clark

*** Get more of the journalism you love. Choose Barron’s as a preferred source in Google.

***

Ford Motor to Take Big EV Charge. Here’s the Good News.

Ford Motor is the latest auto maker to do a major pivot on all-electric vehicles, mostly because they haven’t produced the returns once imagined. Ford instead is turning to hybrids, a move it says is following the customer. It also means Ford takes a $19.5 billion one-time charge, nearly half for EV asset write-downs.

• Andrew Frick, president of Ford Blue (the gas-powered vehicle maker) and Ford Model e (the EV maker), said consumers want the benefits of electrification, but also affordability and confidence in operational range. Looking ahead, Ford expects electrified vehicles to account for 50% of sales by 2050.
• That goal includes “extended range electric vehicles,” which are battery-powered cars that have an onboard generator, running on gas, that recharges batteries on the fly. There will be an EREV F-150 truck in the future, but Ford isn’t planning to make a battery-only version of its best-selling vehicle.
• Ford typically spends about $9 billion a year on new plants and equipment, and another $8 billion on engineering, research, and development. The hefty one-time charges include $6 billion in charges related to an EV battery joint venture and $5 billion in other expenses.
• The charges are necessary, Frick says, because large EVs won’t be profitable and it’s focused on making “affordable” all-electric cars. Ford still plans to launch a midsize electric truck in 2027. Ford’s Model e division is expected to be profitable by 2029. It lost $1.2 billion in the third quarter.

What’s Next: Ford expects 2025 operating profit of $7 billion, up from earlier guidance of $6 billion to $6.5 billion. That implies a fourth-quarter profit of about $1.3 billion, which is above expectations, according to FactSet. Ford is starting a stationary energy-storage business, like Tesla’s.

— Al Root

***

Bitcoin Dips Below $86,000 as Risk Sentiment Grows

The price of Bitcoin, the largest cryptocurrency, sank below $86,000, a signal that the risk-off sentiment continues to grip the markets. Though the price did recover to $87,000 early Tuesday, investors have been bidding up the price of less risky assets such as gold and selling crypto and tech.

• Bitcoin was down 31% from its record high of more than $126,000 in early October. It was down seven of the past eight days as of Monday, according to Dow Jones Market Data. That’s its longest losing streak since August, when it fell for six straight days.
• Stocks tied to the crypto market also fell Monday. The exchanges Coinbase Global and Robinhood Markets closed down 6.4% and 3.6%, respectively. Strategy, the largest corporate holder of Bitcoin, dropped 8.1%.
• The downward trajectory is contrary to Bitcoin’s December pattern. It has risen an average of 9.2% for the month since 2014, according to Dow Jones Market Data. Now about halfway through the month, Bitcoin is down around 6%.
• Crypto weakness isn’t stopping some from diving in. JPMorgan Chase’s asset-management arm is rolling out its first tokenized money-market fund to institutional investors with at least $25 million in investments and individuals with at least $5 million. The minimum investment is $1 million.

What’s Next: A flurry of macroeconomic data this week could usher in a crypto comeback, particularly if today’s November jobs report and Thursday’s November inflation data strengthen the case for another Federal Reserve rate cut in January. Risky assets like crypto tend to respond favorably to lower rates.

— Callum Keown, Nate Wolf, and Janet H. Cho

***

Comcast’s Spinoff Versant Could Figure in Paramount, Netflix Fight

Comcast’s spinoff, Versant Media Group, could figure in the current takeover battle between Paramount Skydance and Netflix for Warner Bros Discovery. That’s because the higher the valuation of Versant, the better for Netflix since it would imply a higher valuation for Warner’s cable business, including CNN and TBS.

• The deal that Netflix struck with Warner Bros. would leave out the Warner’s cable network business, Discovery Global, to be spun off to Warner Bros. shareholders. The business is similar to Versant’s portfolio, which includes CNBC, MS NOW (formerly MSNBC), and Golf Channel.
• Versant debuted Monday trading at a price that values the company’s equity at about $6.5 billion in when-issued trading, which is a technical term prior to a spinoff being finally separated. With light trading, it’s difficult to immediately draw a conclusion about Versant’s ultimate trading level. The final separation is after the close on Jan. 2, with regular trading starting Jan. 5.
• At $45, Versant would be valued at about 4.5 times projected 2026 earnings before interest, taxes, depreciation, and amortization, or Ebitda, of $1.925 billion, based on its forecast. Barron’s valuation of 4.5 times reflects Versant’s enterprise value (equity value plus net debt).
• Paramount has offered $30 a share in cash for all of Warner Bros. while Netflix is only after its streaming business, HBO, and movie studio among other assets. The superiority of the Netflix deal hinges in part on the cable valuation, which Barron’s has estimated around $4 a share.

What’s Next: Versant is what Wall Street calls a “melting ice cube” with declining revenue and cash flow. But it generates significant free cash flow—a projected $1.1 billion next year—has a good balance sheet, and could become a takeover target. It has been seeking to diversify away from traditional cable revenue.

— Andrew Bary

***

After Purging Federal Workforce, Trump Forms Tech Force

The Trump administration will create a “Tech Force” to address the federal government’s shortage of specialized technical expertise, especially for a push to adopt artificial intelligence. The move comes after the administration’s federal workforce purge this spring made it short of the technology expertise it needs.

• The program will hire 1,000 fellows for one- or two-year stints, led by experienced technical managers hired from the private sector. Participants will receive technical training and work closely with senior engineers on projects across numerous federal departments and agencies.
• The engineers, data scientists, and technology leaders are hoping to solve some of the government’s most complex and large-scale challenges in AI, cybersecurity, data science, and software engineering. They would work to modernize government, “fast-track AI adoption,” and “unleash” innovation at tech companies.
• University of Michigan public policy professor Donald Moynihan noted that the administration fired some of the government’s top technologists during the purge by Elon Musk’s Department of Government Efficiency, including the U.S. Digital Service and 18F business office.
• Private sector companies participating in the Tech Force program include top tech and AI companies such as Magnificent Seven members Amazon, Apple, Google’s public sector group, Microsoft, Meta, and Nvidia. Other software, AI, finance, and app-based companies are also participating.

What’s Next: The tech companies involved in the program have pledged to recruit workers for the Tech Force and could potentially hire workers leaving at the end of their government stints. The program also wants to offer 200 students public-service experience and the opportunity to earn college credits.

— Janet H. Cho

***

Why Rocket Lab Stock Plunged After Another Successful Launch

Investors are still trying to make sense of the new space race, featuring mainly privately held companies including SpaceX and Blue Origin. One publicly listed company, Rocket Lab pulled off a successful launch of its own on Monday—but shares dropped anyway.

• Rocket Lab, sometimes described as a mini-SpaceX, said Sunday that it had completed its first mission for the Japan Aerospace Exploration Agency. The “RAISE And Shine” mission lifted off from Rocket Lab’s Launch Complex 1 in New Zealand.
• The launch marked Rocket Lab’s 19th of the year, extending its annual record. But investors weren’t impressed. The stock dropped 9.9% to $55.41 on Monday, while the S&P 500 and Dow Jones Industrial Average fell 0.2% and 0.1%, respectively.
• Why shares drop on seemingly good news is often explained by the adage “buy the rumor, sell the news.” The stock market is forward-looking, so successful space launches are reflected in Rocket Lab stock already.
• Starting points matter for stocks, too. Coming into Monday trading, Rocket Lab stock was up 141% for the year, trading at roughly 35 times estimated 2026 sales.

What’s Next: That’s an impressive run and a rich valuation, reflecting high expectations. It will take more than a few successful launches for shares to continue rising—investors hope that increasing space spending by militaries and commercial companies will lead to years of sales and earnings growth.

— Al Root and George Glover

***

—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner