Alibaba unveiled its latest AI reasoning model with fewer parameters. (0:15) Trade deficit soars as tariffs worries juice imports. (1:09) No Jack Daniel's worse than a tariff. (4:45)Show NotesLayoffs soar as DOGE bitesMarvell shares tumbleEpisode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Chapter 1: What are Alibaba's latest advancements in AI reasoning models?
Chinese companies are continuing to make big strides in artificial intelligence, as Alibaba unveiled its latest reasoning model with fewer parameters, which rivals DeepSeek's R1 and OpenAI's O1 Mini. The new model, called QWQ32B, was developed with 32 billion parameters, referring to the training data that enables the model to generate desired outputs.
Chapter 2: How does the new QWQ32B model compare to its competitors?
Alibaba claims QWQ32B can achieve performance comparable to DCEC's R1 model, which uses 671 billion parameters. Alibaba's Quen team evaluated the new model across a range of benchmarks to assess its mathematical reasoning, coding, and general problem solving. It more or less matched the performance of R1 and OpenAI's cost-efficient O1 mini model.
The release comes as Alibaba committed to invest over $52 billion in its cloud computing and AI infrastructure over the next three years. On the economic front, the U.S. trade deficit surged 34% to a record $131.4 billion in January, higher than the $123 billion shortfall expected and up from $98.1 billion in December as fear of tariffs caused a spike in imports.
Chapter 3: What economic factors are affecting the U.S. trade deficit?
January imports rose 10% to $401.2 billion. Wells Fargo economists say, We ultimately expect tariffs to impart a modest stagflationary impulse of slower growth and higher inflation on the U.S. economy. The degree of the shock depends on many factors, such as exclusions and how long tariffs are in place. Today's release highlights that the sheer threat of tariffs has already influenced behavior.
To the extent the surge in imports was a pull forward in demand in preparation for tariffs, we may see some payback in the coming months. Looking to the labor market ahead of Friday's jobs report, Challenger Gray and Christmas said employers announced 173,017 job cuts in February, the highest monthly total since July 2020 and the highest total for February since 2019.
Chapter 4: Why are job cuts increasing in the U.S.?
The jump reflects the beginning of federal workforce and spending cuts that the Trump administration is pursuing. The February tally is more than triple the 49,795 cuts announced in January and more than double the 84,638 job eliminations announced the same month last year. But weekly initial jobless claims fell more than expected to 221,000.
Pantheon macroeconomist Samuel Toombs says, Data for claims made by former federal workers are reported separately and with a one-week lag. Unadjusted claims by former federal workers increased to 1,600 in the week ended February 22, up from 600 in the previous week. They likely rose further last week, given the faster pace of Doge job-cutting in recent weeks.
Chapter 5: What are the market reactions to Marvell Technologies' latest results?
Among active stocks, Marvell Technologies plunging as traders deemed its results, which looked okay at first blush, not good enough. KeyBank Capital Markets analyst John Vinn said the results and guidance were solid, but the company's data center revenue was only in line with estimates.
Additionally, there may be some concern from investors related to its Amazon businesses, as Amazon's Tranium 3 chip is likely to be developed by Amazon's own Annapurna Labs. Marvell won Amazon's next-gen Tranium 2.5 Ultra.
Going a step further, Summit Insights Group analyst King Chai Chan downgraded Marvell to Hold, noting that investor expectations are too high and the company lacks the financial leverage as its application-specific integrated circuit AI business could pressure the company further.
Hims and Hers is down after a court denied a motion filed by two compounding trade groups over the FDA's decision to declare that Eli Lilly's weight loss drug Zepbound is no longer in shortage. Hims and Hers markets compounded versions of rival Novo Nordisk's weight loss therapy Semaglutide at a sharp discount to the branded versions.
And MongoDB is sinking after the database solutions company provided a much weaker-than-expected outlook for fiscal year 2026. The reason for the lower outlook centers around slower growth from MongoDB's non-Atlas revenue. Atlas, which is a fully managed cloud database, accounted for 71% of revenue for the company during the fourth quarter of fiscal 2025.
Piper Sandler analyst Brent Braceland said, The initial growth outlook of 12.6% year-on-year versus our prior estimate of 17% shakes our confidence in the durability of share gains and upside levers in the near term. In other news of note, no booze is worse than expensive booze, at least according to Brown Foreman, CEO Lawson Whiting.
Brown Foreman, owner of Jack Daniels, Woodford Reserve, and Herradura, among other brands, held its earnings call and Whiting criticized Ontario's removal of U.S. alcohol products, calling it a disproportionate response to President Donald Trump's tariffs on Canada and Mexico.
He said, "...I mean, that's worse than a tariff because it's literally taking your sales away and completely removing our products from the shelves." But he added that Canada is not a massive market for brown foreman, and it's around 1% of sales, so we can withstand.
We're going to continue to try and fight for getting reciprocal zero-for-zero tariffs, which is the best thing for our industry as a whole, he said. And in the Wall Street Research Corner, BTIG technical strategist Jonathan Krinsky says the S&P 500 is facing more W-shaped recoveries rather than a V-shaped bounce-back.
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