UPS and Amazon On Track to Split—and UPS Stock is Paying the Price

Report

United Parcel Service (UPS) recently announced a significant reduction in its deliveries for Amazon, its largest customer. This decision has led to a sharp decline in UPS shares, which plunged by over 15% following the announcement. The company also issued weak revenue guidance for the year, projecting 2025 revenue of $89 billion, which is below analysts’ expectations of $94.88 billion.

UPS CEO Carol Tome stated that while Amazon is their largest customer, it is not their most profitable one. The company plans to cut Amazon deliveries by more than 50% by the second half of 2026. This move is part of UPS’s strategy to reconfigure its U.S. network and launch multiyear efficiency initiatives aimed at saving approximately $1 billion.

Amazon responded to the announcement by stating that they respect UPS’s decision and will continue to partner with them and other carriers to serve their customers. Despite the reduction in volume, Amazon has been expanding its own logistics operations, which now rival or exceed the size of major carriers.

Additional Insights

This bold move by UPS underscores a pivotal shift in its strategic direction. By reducing its dependency on Amazon, UPS is aiming to diversify its customer base and focus on more profitable segments. The company’s efficiency initiatives and network reconfiguration could help bolster its margins and enhance service quality for other clients.

However, this transition may not be without challenges. The reduction in volume from Amazon, which has been a major contributor to UPS’s revenue, might initially impact the company’s financial performance. UPS will need to effectively manage this transition and demonstrate its ability to generate growth from other customers.

Moreover, as Amazon continues to expand its logistics network, other shipping companies may also feel the pressure to reevaluate their relationships with the e-commerce giant. This trend could lead to a more competitive landscape in the logistics industry, where companies strive to balance volume and profitability.

While the immediate reaction to the announcement has been negative, with a significant drop in UPS shares, the long-term impact will depend on how well UPS executes its strategy and adapts to the evolving market dynamics. Investors and stakeholders will be keenly observing the company’s progress in achieving its efficiency goals and securing new business opportunities.

Potential Effects of Deportation on The Economy

    President Trump's campaign promise to follow through with mass deportations of

undocumented immigrants as of 2025 has officially started. Columbia recently

accepted the president's flights of undocumented immigrants after Trump

threatened Tariffs. According to Michael Gapen (Morgan Stanley’s

chief US Economist), the impact of this could slow down the economy's

future growth. 

  

 Previous studies found that anti-immigration laws set in place in Arizona between

2008 and 2015 showed that each year of deportations GDP decreased by 2%

per year. Predicted results of the future economy from Morgan Stanley GDP will

grow at a rate of 1.9% which is low compared to the 2.5% growth observed in

2023. Deportations could also potentially cause a slowing of employment rates,

as well as a decrease in productivity rates according to JPMorgan’s Michael

Feroli. 

Megan Leonhardt (2025), Trump’s Immigration Crackdown Could Play Havoc with the Economy, Barron’s. https://www.barrons.com/articles/trumps-immigration-crackdown-could-play-havoc-with-the-economy-f4c41411

DeepSeek, What is it and what are it's effects?

 DeepSeek is a revolutionary AI-powered application powered by a Chinese start-up that will shift the axis in data analysis and decision-making. It provides much quicker access to information with immediate adaptation. Thus, DeepSeek might be poised to disrupt the AI space.

Key Capabilities of DeepSeek

• Fast Data Analysis: DeepSeek offers unprecedented accuracy and speed of results in industries such as finance and healthcare.

• Real-Time Learning: Continuous improvement of its output through users' interactions.

• Customized Applications: For several industries, combining relevance with efficiency.

Economic and Market Impacts

DeepSeek's announcement affected the US markets, among technology stocks. Shares in Nvidia, which supplies AI chips, fell by 13%, causing a record $465 billion hit in market capitalization. Shares of Microsoft and Alphabet extended significant losses and showed investor anxieties about emerging global competition.

Implications for the U.S. Economy

• Competitiveness: U.S. firms must innovate rapidly to maintain their market lead.

• Market Volatility: Stock market fluctuations reflect the challenges posed by global AI advancements.

• Focus on R&D: Increased investment in AI innovation is essential to stay ahead.

The rise of DeepSeek underlines how AI is a transformative force with the power to remake markets anew. 

Link to Source

Stargate: Transforming the U.S. Economy with AI Investments

President Trump’s Stargate initiative, a $500 billion investment in artificial intelligence (AI) infrastructure, is set to redefine the U.S. economy. Backed by tech giants like Oracle and OpenAI, the plan includes constructing state-of-the-art data centers starting in Texas, creating over 100,000 jobs by 2029. This ambitious project directly impacts national income and business cycles, addressing economic growth and stability.

AI investments drive productivity, a key determinant of national income. For instance, Oracle emphasizes AI’s potential in healthcare, such as designing vaccines in 48 hours, reducing costs, and boosting efficiency. Job creation in construction, tech, and R&D injects income into local economies, further stimulating aggregate demand.

Stargate also counters tech sector slowdowns, acting as a stabilizing force during business cycle fluctuations. By driving investments and creating jobs, the initiative supports recovery in the wake of widespread 2024 layoffs. Long-term, AI’s efficiency gains can buffer future recessions, reducing costs in logistics, manufacturing, and other industries.

This investment also positions the U.S. to compete with China’s low-cost AI innovations, ensuring technological leadership and safeguarding national security. However, challenges like workforce displacement require attention, with reskilling programs essential for equitable benefits.

A $500bn investment plan says a lot about Trump’s AI priorities. (January 22, 2025). The Economist.