Alliance Resource Partners Q4 Profit Down on Weaker Coal Sales

Stay Ahead, Stay ONMINE

Alliance Resource Partners Q4 Profit Down on Weaker Coal Sales

Coal producer Alliance Resource Partners LP (ARLP) has reported $16.3 million in net income for the fourth quarter of 2024, down 86 percent compared to the same three-month period a year ago as volumes and prices fell. Net profit also dropped 81 percent sequentially. The Tulsa, Oklahoma-based company, which also owns coal, oil and gas […]

The Tulsa, Oklahoma-based company, which also owns coal, oil and gas royalty stakes, sold 8.42 million tons of coal at $59.97 per ton in the October-December 2024 period, according to results it published online.

In the same quarter in 2023, ARLP sold 8.61 million tons of coal at $60.6 per ton. In the third quarter of 2024, ARLP sold 8.38 million tons at $63.57 per ton.

Fourth-quarter revenue dropped 5.6 percent year-on-year and 3.8 percent sequentially to $590.1 million. ARLP attributed the year-on-year decrease to lower coal sales volumes, which declined 2.3 percent. It blamed the quarter-on-quarter decrease on weaker coal sales prices, which slid 5.7 percent partly due to lower export price realizations.

Besides lower revenue, ARLP said the year-on-year decline in quarterly net earnings was due to “higher per-ton operating expenses, which include $13.1 million of non-cash accruals for certain long-term liabilities, and $31.1 million of non-cash impairment charges in the 2024 quarter due to market uncertainty at our MC Mining operation, partially offset by a $14.0 million increase in the fair value of our digital assets”.

Meanwhile the sequential fall in quarterly net profit was due to “lower revenues and higher non-cash accruals relating to certain long-term liabilities and impairment charges in the 2024 Quarter, partially offset by an increase in the fair value of our digital assets”.

Quarterly adjusted earnings before interests, taxes, depreciation and amortization (EBITDA) came at $124 million, compared to $185.4 million for the fourth quarter of 2023.

“Adjusted EBITDA for the 2024 quarter decreased 27.2 percent compared to the sequential quarter [third quarter of 2024], as a result of higher non-cash accruals for certain long-term liabilities in the Illinois Basin, higher expenses related to the continuation of challenging geological conditions at our Tunnel Ridge and MC Mining operations in Appalachia, and lower revenue per ton for spot coal sold and per BOE [barrel of oil equivalent] in the royalties segment”, ARLP said.

In its royalties segment, ARLP logged coal sales of 5.49 million tons with $3.23 of revenue per ton sold. In oil and gas, it recorded 823,000 barrels of oil equivalent (boe) in volume, sold at $36.94 per boe.

Full-year revenue fell 4.6 percent to $2.45 billion mainly due to lower coal sales volumes.

Full-year net profit totaled $360.9 million, down from $630.1 million for 2023 due to “lower revenues, increased operating expenses and non-cash impairment charges, partially offset by a $22.4 million increase in the fair value of our digital assets”.

Full-year adjusted EBITDA fell from $933.1 million for 2023 to $714.2 million.

“Due to the continued strength of our coal contracts, our average coal sales price per ton for the 2024 full year of $63.38 came close to the record level achieved in the 2023 full year of $64.17”, said chair, president and chief executive Joseph W. Craft III. “However, lower sales volumes, higher operating costs and several non-cash accruals caused 2024 full-year financial results to fall short of last year’s record revenues and net income.

“The cold winter weather at the start of this year has driven higher natural gas prices and increased coal consumption in the eastern United States, helping reduce inventories. We are seeing customer solicitations for both near-term and long-term supply contracts, and if the colder weather continues to be above normal, we are hopeful we can reach our goal to ship 30 million tons to the domestic market in 2025.

“Having substantially completed major infrastructure projects at Tunnel Ridge, Hamilton, Warrior, and River View in 2024, we expect to see improved costs and productivity along with reduced capital spending this year.

“Additionally, the combination of cold winter weather and new LNG export terminal capacity should support strong domestic natural gas prices in 2025, benefiting both our Coal and Royalties segments.

“The increase in forecasted electricity demand, particularly from data centers and growth in AI, is highlighting the inadequacy of current resource plans without extended use of fossil fuel plants. “These market realities, coupled with what we expect to be a more favorable regulatory environment, are laying the foundation for Alliance to continue serving as a cornerstone of the country’s reliable electricity infrastructure for years to come”.

ARLP declared a quarterly cash distribution of $0.7 per unit, or $2.8 per unit annualized.

To contact the author, email [email protected]

Stay Ahead

Explore More Insights

Stay ahead with more perspectives on cutting-edge power, infrastructure, energy, bitcoin and AI solutions. Explore these articles to uncover strategies and insights shaping the future of industries.

Digging into voice AI platform Deepgram

Deepgram is the leading voice AI platform used by over 200,000 developers to build speech-to-text, text-to-speech, and full speech-to-speech (which enables individuals with speech disabilities to be clearly understood) tools. It’s aimed at businesses and developers who need accurate and scalable transcriptions for applications like call centers, video captioning, voice

BKV Names New CFO

BKV Corp. has named a new chief financial officer (CFO) as John T. Jimenez is set to retire on May 15. David Tameron will succeed Jimenez, BKV said in a media release. “John’s vision and stewardship have helped transform BKV into the strong public company that we are today, building

Spy vs spy: Security agencies help secure the network edge

“By following the minimum levels of observability and digital forensics baselines outlined in this guidance, device manufacturers and their customers will be better equipped to detect and identify malicious activity against their solutions,” it said. “Device manufacturers should also use it to establish a baseline of standard features to include

Nvidia claims near 50% boost in AI storage speed

Storage is an overlooked element of AI that has been overshadowed by all the emphasis on processors, namely GPUs. Large language models (LLMs) measure in the terabytes of size and all that needs to be moved around to be processed. So the faster you can move data, the better, so

Harbour Energy questions international safety after Wintershall Dea takeover

Following its acquisition of Wintershall Dea, Harbour Energy (LON: HBR) found that its new regions do not have the same safety standards as their North Sea assets. Late last year the takeover of the German energy firm was approved in a move that expanded the UK operator’s global footprint. At the Offshore Energies UK (OEUK) HSE conference in Aberdeen on Thursday, Harbour Energy’s managing director of its UK business unit Scott Barr, said that the firm’s expansion highlighted “complacency” in the global industry. “Recently, our company has come from operating in two or three countries to seven or eight and as we get to know each other then we get to share knowledge, and we get to get together, it’s a complacency thing,” Barr told delegates. “We work in an industry where we think everybody has a safety case, our safety critical elements, has our aims, has maintenance management systems, has all of the above that are obviously a part of the story of keeping us safe and part of those barriers. They don’t.” In September, the UK’s largest producer of oil and gas completed a £8.53 billion takeover of its German rival as the firm aimed to diversify its portfolio in the wake of the UK’s windfall tax. At the time, chief executive Linda Cook commented: “It marks our fourth and most transformational acquisition since we were founded in 2014, and is another big step forward as we continue to build a large, global independent oil and gas company focused on the safe and responsible production of the oil and gas the world still needs.” Following the deal, Harbour set out plans to pursue offshore opportunities in Mexico and Indonesia as well as continuing the work Wintershall Dea had been doing in Argentina and North Africa. “We’ve got such

Quebec Says It’s Open to LNG, Oil Projects After Trump Threats

Quebec has long resisted proposals to build new oil and gas pipelines through its territory. US President Donald Trump’s threats against Canada might change that. Quebec Environment Minister Benoit Charette said the government of the Canadian province is open to reconsidering two major energy infrastructure projects that it previously rejected. TC Energy Corp.’s Energy East pipeline, which would have carried western Canadian crude to refineries in eastern Canada, was mothballed in 2017 over regulatory hurdles and intense political opposition in Quebec. A separate proposal known as GNL Quebec to build a liquefied natural gas pipeline and export terminal in the Saguenay region was rejected by both federal and provincial authorities on environmental grounds. Both would still be turned down if presented under the same terms today, but if they were improved, it’s open for debate, Charette told reporters Wednesday. “If we address these concerns today, these are projects that could be accepted,” he said. The comments underscore how Trump’s threats to impose broad tariffs on US imports of Canadian goods have changed the political landscape in Canada. Trump has also made repeated statements that he believes Canada should become a US state — an idea that is rejected by a large majority of Canadians, according to polls. One survey by Ipsos, published shortly before Trump’s inauguration, found that 80% of respondents would “never” vote for Canada to become part of the US. Foreign Minister Melanie Joly, who’s from Quebec, told a Montreal business audience Tuesday that Trump’s threats might reshape how Quebeckers think about fossil fuel projects. “It’s a question people have to ask themselves here,” Joly said. “At the same time, we have environmental objectives. We have to reduce our C02 emissions. I’m very, very interested to know: Does what’s happened in the last few days change the game?” South Bow Corp., the oil pipeline company spun

Starmer signals he will not block Rosebank oil field going ahead

UK Prime Minister Sir Keir Starmer has indicated he will not block the Rosebank oil field from going ahead after a court ruled its approval “unlawful”. Last week, a Scottish court overturned regulatory approvals for the Rosebank project because they did not take the climate impact of downstream emissions into account. The court ruling also overturned environmental approvals for the Jackdaw gas field, in a case brought by campaign groups Greenpeace and Uplift. Norwegian operator Equinor (OL:EQNR) holds an 80% stake in Rosebank with Ithaca Energy (LON:ITH) holding 20%. The Rosebank field is the largest untapped oil reserve in the UK North Sea, containing an estimated 350 million barrels of oil equivalent. © Supplied by Roddie Reid/ DCTRosebank infographic. Meanwhile, oil supermajor Shell (LON:SHEL) is advancing the Jackdaw natural gas project, which could eventually account for 6% of UK gas production. While the court ruled the original approvals unlawful, Equinor and Shell are able to resubmit their applications taking downstream emissions into account. Prior to the UK general election last year, Starmer’s Labour party said it would not issue new licences to explore new fields in the North Sea. But speaking to Sky News, Starmer signalled he would not intervene to block Rosebank going ahead. “I can’t pre-empt the decision, but you know, we did say that where a licence had already been granted, we wouldn’t interfere with them,” Starmer said. “I’ll be open with you, oil and gas is part of the future mix for decades to come.” Equinor chief calls for Rosebank approval Earlier this week, Equinor chief executive Anders Opedal called on UK energy secretary Ed Miliband to issue new permits for Rosebank. Opedal said allowing Rosebank and Jackdaw to go ahead will ensure the UK is a “predictable country for investors”. “Reading the Labour manifesto, Rosebank

DNV’s UK ETO 2025 shows progress, trends to build on to achieve net zero

The UK is making great strides in decarbonising its energy system. But to achieve net zero, a leading risk and assurance business believes the country needs to build on three structural trends. DNV, an independent expert in assurance and risk management, warns for the third year that the UK will not meet its 2050 net zero target, based on the country’s current approach to decarbonisation. In its 2025 Energy Transition Outlook (ETO) report, DNV expects the UK’s annual emissions to amount to 145 metric tons of carbon dioxide equivalent (MtCO2e). While that’s a significant 82% reduction compared to 1990 levels, it will not meet the UK’s legally binding net zero target by 2050. The transport and building sectors are seen to be the major contributors to the total energy system emissions in 2050. This is linked to the slow adaptation of heat pumps to reduce reliance on gas boilers in homes. Based on current costs and subsidies, DNV forecasts that by 2035, only 4 million heat pumps will have been installed. Meanwhile 24 million or 75% of homes will still be using gas heating. DNV also predicts that in a decade’s time, nearly 60% of passenger cars will still be powered by fossil fuels. It will take significant time to replace the vehicle stock, even with the current incentives to promote electric vehicles (EVs) and the expected cost reductions for them. Looking on the bright side But Hari Vamadevan, regional manager of the UK & Ireland’s energy system team, chooses to look on the bright side. He says: “There is more detail of progress than just failing to meet targets. “I think the ETO has consistently shown the UK is one of the better countries in the world in terms of decarbonising its energy system. Its targets are more ambitious

Unions fear up to 2,000 North Sea redundancies at Repsol

A trade union has raised concerns that North Sea operator Repsol (BME:REP) could cut up to 2,000 jobs amid a review of its ageing offshore production assets. The Spanish firm has received numerous warnings and fines from UK regulator over the past year, and the Unite union says it understands the firm is now undertaking a review of its operations. Unite negotiated a collective bargaining agreement covering 350 offshore workers employed by the firm’s British subsidiary Repsol Resources UK in 2023. Speaking to Upstream, Unite regional officer John Boland said the union understands Repsol Resources is looking to reset as an “end-of-life field operator”. As a result, Boland said Repsol could make up to 2,000 contractor and employee roles redundant in the process of shifting its focus to decommissioning. Based in Aberdeen, Repsol operates 38 fields across the UK continental shelf including 11 offshore installations and two onshore terminals. Its operational assets include the Arbroath, Montrose, Auk and Clyde platforms and the Bleo Holm FPSO. The operator is also in the process of decommissioning multiple assets, including the Fulmar and Buchan platforms. Last year, Reuters reported that Repsol was in talks to merge its UK assets with private equity-backed NEO Energy. The firm previously operated its UK assets in a joint venture with Chinese operator Sinopec, which ended in 2023. Since then, Repsol has faced persistent rumours of job cuts at its Aberdeen base. In response to the redundancy fears, a Repsol UK spokesperson told Energy Voice: “Repsol UK do not comment on speculation.” Repsol regulator woes Repsol has drawn the ire of both the North Sea Transition Authority (NSTA) offshore regulator and the Health and Safety Executive (HSE) in recent months. In November last year, the NSTA handed Repsol a £350,000 fine for “unreasonable practice” which led to a

Senate Confirms Wright as New USA Energy Sec

This week, Chris Wright was confirmed by the Senate to be the new Secretary of Energy for the United States, the Congress.gov website showed. Wright was confirmed by the Senate in a Yea-Nay vote of 59 – 38, the site revealed. In a statement posted on the White House website on January 20, U.S. President Donald Trump announced that he nominated Wright for the role. In a statement posted on the American Petroleum Institute (API) website commenting on the Senate’s confirmation, API President and CEO Mike Sommers said, “Secretary Chris Wright’s experience in the American energy sector gives him an important perspective that will inform his leadership of the Department of Energy”. “We look forward to working with him to bolster American geopolitical strength by swiftly approving new LNG export permits and ensuring the open access of American energy for our allies around the world,” he added. In a release sent to Rigzone this week by Tom Pyle, President of the American Energy Alliance (AEA), the AEA said Wright “secured broad bipartisan support, including seven Democrats and one Independent who caucuses with them”. “As energy secretary, Wright will lead the charge to ensure the United States remains a global energy leader and continues to expand its energy production capabilities,” the AEA added in the release. In a statement posted on the U.S. Department of Energy website, Wright said, “thank you to President Trump and the United States Senate for entrusting me with the great responsibility of leading the United States Department of Energy”. “I am honored and humbled by the responsibility and immense opportunity to help meet the American people’s growing energy needs,” he added. “Our next chapter will strengthen our nation’s energy leadership by developing our enviable resources, bolstering global partnerships, and advancing new technologies,” Wright continued. A bio

Linux containers in 2025 and beyond

The upcoming years will also bring about an increase in the use of standard container practices, such as the Open Container Initiative (OCI) standard, container registries, signing, testing, and GitOps workflows used for application development to build Linux systems. We’re also likely see a significant rise in the use of bootable containers, which are self-contained images that can boot directly into an operating system or application environment. Cloud platforms are often the primary platform for AI experimentation and container development because of their scalability and flexibility along the integration of both AI and ML services. They’re giving birth to many significant changes in the way we process data. With data centers worldwide, cloud platforms also ensure low-latency access and regional compliance for AI applications. As we move ahead, development teams will be able to collaborate more easily through shared development environments and efficient data storage.

Let’s Go Build Some Data Centers: PowerHouse Drives Hyperscale and AI Infrastructure Across North America

PowerHouse Data Centers, a leading developer and builder of next-generation hyperscale data centers and a division of American Real Estate Partners (AREP), is making significant strides in expanding its footprint across North America, initiating several key projects and partnerships as 2025 begins. The new developments underscore the company’s commitment to advancing digital infrastructure to meet the growing demands of hyperscale and AI-driven applications. Let’s take a closer look at some of PowerHouse Data Centers’ most recent announcements. Quantum Connect: Bridging the AI Infrastructure Gap in Ashburn On January 17, PowerHouse Data Centers announced a collaboration with Quantum Connect to develop Ashburn’s first fiber hub specifically designed for AI and high-density workloads. This facility is set to provide 20 MW of critical power, with initial availability slated for late 2026. Strategically located in Northern Virginia’s Data Center Alley, Quantum Connect aims to offer scalable, high-density colocation solutions, featuring rack densities of up to 30kW to support modern workloads such as AI inference, edge caching, and regional compute integration. Quantum Connect said it currently has 1-3 MW private suites available for businesses seeking high-performance infrastructure that bridges the gap between retail colocation and hyperscale facilities. “Quantum Connect redefines what Ashburn’s data center market can deliver for businesses caught in the middle—those too large for retail colocation yet underserved by hyperscale environments,” said Matt Monaco, Senior Vice President at PowerHouse Data Centers. “We’re providing high-performance solutions for tenants with demanding needs but without hyperscale budgets.” Anchored by 130 miles of private conduit and 2,500 fiber pathways, Quantum Connect’s infrastructure offers tenants direct, short-hop connections to adjacent facilities and carrier networks. With 14 campus entrances and secure, concrete-encased duct banks, the partners said the new facility minimizes downtime risks and reduces operational costs by eliminating the need for new optics or extended fiber runs.

Blue Owl Swoops In As Major Backer of New, High-Profile, Sustainable U.S. Data Center Construction

With the global demand for data centers continuing to surge ahead, fueled by the proliferation of artificial intelligence (AI), cloud computing, and digital services, it is unsurprising that we are seeing aggressive investment strategies, beyond those of the existing hyperscalers. One of the dynamic players in this market is Blue Owl Capital, a leading asset management firm that has made significant strides in the data center sector. Back in October 2024 we reported on its acquisition of IPI Partners, a digital infrastructure fund manager, for approximately $1 billion. This acquisition added over $11 billion to the assets Blue Owl manages and focused specifically on digital infrastructure initiatives. This acquisition was completed as of January 5, 2025 and IPI’s Managing Partner, Matt A’Hearn has been appointed Head of Blue Owl’s digital infrastructure strategy. A Key Player In Digital Infrastructure and Data Centers With multi-billion-dollar joint ventures and financing initiatives, Blue Owl is positioning itself as a key player in the digital infrastructure space. The company investments in data centers, the implications of its strategic moves, and the broader impact on the AI and digital economy highlights the importance of investment in the data center to the economy overall. With the rapid growth of the data center industry, it is unsurprising that aggressive investment fund management is seeing it as an opportunity. Analysts continue to emphasize that the global data center market is expected to grow at a compound annual growth rate (CAGR) of 10.2% from 2023 to 2030, reaching $517.17 billion by the end of the decade. In this rapidly evolving landscape, Blue Owl Capital has emerged as a significant contributor. The firm’s investments in data centers are not just about capitalizing on current trends but also about shaping the future of digital infrastructure. Spreading the Wealth In August 2024, Blue Owl

Global Data Center Operator Telehouse Launches Liquid Cooling Lab in the UK to Meet Ongoing AI and HPC Demand

@import url(‘/fonts/fira_sans.css’); a { color: #0074c7; } .ebm-page__main h1, .ebm-page__main h2, .ebm-page__main h3, .ebm-page__main h4, .ebm-page__main h5, .ebm-page__main h6 { font-family: “Fira Sans”, Arial, sans-serif; } body { letter-spacing: 0.025em; font-family: “Fira Sans”, Arial, sans-serif; } button, .ebm-button-wrapper { font-family: “Fira Sans”, Arial, sans-serif; } .label-style { text-transform: uppercase; color: var(–color-grey); font-weight: 600; font-size: 0.75rem; } .caption-style { font-size: 0.75rem; opacity: .6; } #onetrust-pc-sdk [id*=btn-handler], #onetrust-pc-sdk [class*=btn-handler] { background-color: #005ea0 !important; border-color: #005ea0 !important; } #onetrust-policy a, #onetrust-pc-sdk a, #ot-pc-content a { color: #005ea0 !important; } #onetrust-consent-sdk #onetrust-pc-sdk .ot-active-menu { border-color: #005ea0 !important; } #onetrust-consent-sdk #onetrust-accept-btn-handler, #onetrust-banner-sdk #onetrust-reject-all-handler, #onetrust-consent-sdk #onetrust-pc-btn-handler.cookie-setting-link { background-color: #005ea0 !important; border-color: #005ea0 !important; } #onetrust-consent-sdk .onetrust-pc-btn-handler { color: #005ea0 !important; border-color: #005ea0 !important; background-color: undefined !important; } Starting in early 2025, Telehouse International Corporation of Europe will offer an advanced liquid cooling lab at their newest data center, Telehouse South at the London Docklands campus in Blackwall Yard. Telehouse has partnered with four leading liquid-cooling technology vendors — Accelsius, JetCool, Legrand, and EkkoSense — to allow customers to explore different cooling technologies and management tools while evaluating suitability for their use in the customer applications. Dr. Stu Redshaw, Chief Technology and Innovation Officer at EkkoSense, said about the project: Given that it’s not possible to run completely liquid-cooled data centers, the reality for most data center operators is that liquid cooling and air cooling will have an important role to play in the cooling mix – most likely as part of an evolving hybrid cooling approach. However, key engineering questions need answering before simply deploying liquid cooling – including establishing the exact blend of air and liquid cooling technologies you’ll need. And also recognizing the complexity of managing the operation of a hybrid air cooling and liquid cooling approach within the same room. This increases the

Flexential Partners with Lonestar to Support First Lunar Data Center

Flexential, a leading provider of secure and flexible data center solutions, this month announced that it has joined forces with Lonestar Data Holdings Inc. to support the upcoming launch of Freedom, Lonestar’s second lunar data center. Scheduled to launch aboard a SpaceX Falcon 9 rocket via Intuitive Machines, this mission is a critical step toward establishing a permanent data center on the Moon. Ground-Based Support for Lunar Data Storage Flexential’s Tampa data center will serve as the mission control platform for Lonestar’s lunar operations, providing colocation, interconnection, and professional services. The facility was chosen for its proximity to Florida’s Space Coast launch operations and its ability to deliver low-latency connectivity for critical functions. Flexential operates two data centers in Tampa and four in Florida as part of its FlexAnywhere® Platform, comprising more than 40 facilities across the U.S. “Flexential’s partnership with Lonestar represents our commitment to advancing data center capabilities beyond conventional boundaries,” said Jason Carolan, Chief Innovation Officer at Flexential. “By supporting Lonestar’s space-based data center initiative, we are helping to create new possibilities for data storage and disaster recovery. This project demonstrates how innovative data center expertise can help organizations prepare for a resilient future with off-world storage solutions.” A New Era of Space-Based Resiliency The growing demand for data center capacity, with U.S. power consumption expected to double from 17 GW in 2022 to 35 GW by 2030 (according to McKinsey & Company), is driving interest in space-based solutions. Storing data off-planet reduces reliance on terrestrial resources while enhancing security against natural disasters, warfare, and cyber threats. The Freedom data center will provide resiliency, disaster recovery, and edge processing services for government and enterprise customers requiring the highest levels of data protection. The solar-powered data center leverages Solid-State Drives (SSDs) and a Field Programmable Gate Array (FPGA) edge

Why DeepSeek Is Great for AI and HPC and Maybe No Big Deal for Data Centers

In the rapid and ever-evolving landscape of artificial intelligence (AI) and high-performance computing (HPC), the emergence of DeepSeek’s R1 model has sent ripples across industries. DeepSeek has been the data center industry’s topic of the week, for sure. The Chinese AI app surged to the top of US app store leaderboards last weekend, sparking a global selloff in technology shares Monday morning. But while some analysts predict a transformative impact within the industry, a closer examination suggests that, for data centers at large, the furor over DeepSeek might ultimately be much ado about nothing. DeepSeek’s Breakthrough in AI and HPC DeepSeek, a Chinese AI startup, this month unveiled its R1 model, claiming performance on par with, or even surpassing, leading models like OpenAI’s ChatGPT-4 and Anthropic’s Claude-3.5-Sonnet. Remarkably, DeepSeek developed this model at a fraction of the cost typically associated with such advancements, utilizing a cluster of 256 server nodes equipped with 2,048 GPUs. This efficiency has been attributed to innovative techniques and optimized resource utilization. AI researchers have been abuzz about the performance of the DeepSeek chatbot that produces results similar to ChatGPT, but is based on open-source models and reportedly trained on older GPU chips. Some researchers are skeptical of claims about DeepSeek’s development costs and means, but its performance appears to challenge common assumptions about the computing cost of developing AI applications. This efficiency has been attributed to innovative techniques and optimized resource utilization. Market Reactions and Data Center Implications The announcement of DeepSeek’s R1 model led to significant market reactions, with notable declines in tech stocks, including a substantial drop in Nvidia’s valuation. This downturn was driven by concerns that more efficient AI models could reduce the demand for high-end hardware and, by extension, the expansive data centers that house them. For now, investors are re-assessing the

Microsoft will invest $80B in AI data centers in fiscal 2025

And Microsoft isn’t the only one that is ramping up its investments into AI-enabled data centers. Rival cloud service providers are all investing in either upgrading or opening new data centers to capture a larger chunk of business from developers and users of large language models (LLMs). In a report published in October 2024, Bloomberg Intelligence estimated that demand for generative AI would push Microsoft, AWS, Google, Oracle, Meta, and Apple would between them devote $200 billion to capex in 2025, up from $110 billion in 2023. Microsoft is one of the biggest spenders, followed closely by Google and AWS, Bloomberg Intelligence said. Its estimate of Microsoft’s capital spending on AI, at $62.4 billion for calendar 2025, is lower than Smith’s claim that the company will invest $80 billion in the fiscal year to June 30, 2025. Both figures, though, are way higher than Microsoft’s 2020 capital expenditure of “just” $17.6 billion. The majority of the increased spending is tied to cloud services and the expansion of AI infrastructure needed to provide compute capacity for OpenAI workloads. Separately, last October Amazon CEO Andy Jassy said his company planned total capex spend of $75 billion in 2024 and even more in 2025, with much of it going to AWS, its cloud computing division.

John Deere unveils more autonomous farm machines to address skill labor shortage

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More Self-driving tractors might be the path to self-driving cars. John Deere has revealed a new line of autonomous machines and tech across agriculture, construction and commercial landscaping. The Moline, Illinois-based John Deere has been in business for 187 years, yet it’s been a regular as a non-tech company showing off technology at the big tech trade show in Las Vegas and is back at CES 2025 with more autonomous tractors and other vehicles. This is not something we usually cover, but John Deere has a lot of data that is interesting in the big picture of tech. The message from the company is that there aren’t enough skilled farm laborers to do the work that its customers need. It’s been a challenge for most of the last two decades, said Jahmy Hindman, CTO at John Deere, in a briefing. Much of the tech will come this fall and after that. He noted that the average farmer in the U.S. is over 58 and works 12 to 18 hours a day to grow food for us. And he said the American Farm Bureau Federation estimates there are roughly 2.4 million farm jobs that need to be filled annually; and the agricultural work force continues to shrink. (This is my hint to the anti-immigration crowd). John Deere’s autonomous 9RX Tractor. Farmers can oversee it using an app. While each of these industries experiences their own set of challenges, a commonality across all is skilled labor availability. In construction, about 80% percent of contractors struggle to find skilled labor. And in commercial landscaping, 86% of landscaping business owners can’t find labor to fill open positions, he said. “They have to figure out how to do

2025 playbook for enterprise AI success, from agents to evals

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More 2025 is poised to be a pivotal year for enterprise AI. The past year has seen rapid innovation, and this year will see the same. This has made it more critical than ever to revisit your AI strategy to stay competitive and create value for your customers. From scaling AI agents to optimizing costs, here are the five critical areas enterprises should prioritize for their AI strategy this year. 1. Agents: the next generation of automation AI agents are no longer theoretical. In 2025, they’re indispensable tools for enterprises looking to streamline operations and enhance customer interactions. Unlike traditional software, agents powered by large language models (LLMs) can make nuanced decisions, navigate complex multi-step tasks, and integrate seamlessly with tools and APIs. At the start of 2024, agents were not ready for prime time, making frustrating mistakes like hallucinating URLs. They started getting better as frontier large language models themselves improved. “Let me put it this way,” said Sam Witteveen, cofounder of Red Dragon, a company that develops agents for companies, and that recently reviewed the 48 agents it built last year. “Interestingly, the ones that we built at the start of the year, a lot of those worked way better at the end of the year just because the models got better.” Witteveen shared this in the video podcast we filmed to discuss these five big trends in detail. Models are getting better and hallucinating less, and they’re also being trained to do agentic tasks. Another feature that the model providers are researching is a way to use the LLM as a judge, and as models get cheaper (something we’ll cover below), companies can use three or more models to

OpenAI’s red teaming innovations define new essentials for security leaders in the AI era

Join our daily and weekly newsletters for the latest updates and exclusive content on industry-leading AI coverage. Learn More OpenAI has taken a more aggressive approach to red teaming than its AI competitors, demonstrating its security teams’ advanced capabilities in two areas: multi-step reinforcement and external red teaming. OpenAI recently released two papers that set a new competitive standard for improving the quality, reliability and safety of AI models in these two techniques and more. The first paper, “OpenAI’s Approach to External Red Teaming for AI Models and Systems,” reports that specialized teams outside the company have proven effective in uncovering vulnerabilities that might otherwise have made it into a released model because in-house testing techniques may have missed them. In the second paper, “Diverse and Effective Red Teaming with Auto-Generated Rewards and Multi-Step Reinforcement Learning,” OpenAI introduces an automated framework that relies on iterative reinforcement learning to generate a broad spectrum of novel, wide-ranging attacks. Going all-in on red teaming pays practical, competitive dividends It’s encouraging to see competitive intensity in red teaming growing among AI companies. When Anthropic released its AI red team guidelines in June of last year, it joined AI providers including Google, Microsoft, Nvidia, OpenAI, and even the U.S.’s National Institute of Standards and Technology (NIST), which all had released red teaming frameworks. Investing heavily in red teaming yields tangible benefits for security leaders in any organization. OpenAI’s paper on external red teaming provides a detailed analysis of how the company strives to create specialized external teams that include cybersecurity and subject matter experts. The goal is to see if knowledgeable external teams can defeat models’ security perimeters and find gaps in their security, biases and controls that prompt-based testing couldn’t find. What makes OpenAI’s recent papers noteworthy is how well they define using human-in-the-middle

Stay Ahead, Stay ONMINE