Even in normal times, finding a firm footing in the oil business is a slippery endeavor.

UK oil major Shell posted its weakest quarterly profit in nearly half a decade on Thursday, sending its New York-listed shares down 5.3%. The drop occurred less than a week after US major Chevron reported declining profit, though that company’s shares have risen 4.7% since, thanks partly to its unique upside in Venezuela, the South American nation the Trump administration plans to “run” after deposing its president.

Oil Things Considered

Crude prices remain in low-margin territory for many producers, and most oil supply estimates don’t suggest that will change any time soon. Brent and West Texas Intermediate benchmarks are down roughly 10% in the past year. The tumbling prices helped trim Shell’s adjusted earnings to $3.3 billion in the fourth quarter, the lowest since the early days of 2021. Like the quarterly numbers, Shell’s full-year adjusted earnings of $18.5 billion, down from $23.7 billion a year earlier, were weaker than Wall Street expected.

Chevron’s net income, also constrained by crude, fell 14% to $2.8 billion. However, the US major still beat analysts’ expectations, and CEO Mike Wirth played to Wall Street’s belief that his firm, the only US producer operating in Venezuela, is best positioned to capitalize on Trump’s plans. The company said last week that it could ramp up its Venezuelan oil output by 50% in the next two years without requiring new capital. Shell, for what it’s worth, said it’s considering multibillion-dollar investments in Venezuela that CEO Wael Sawan told CNBC “could be activated in months.” Nevertheless, both firms will still have to contend with the global geopolitical dance around the oil glut:

• Crude production from the Organization of the Petroleum Exporting Countries (OPEC) dipped considerably last month, mostly due to the US strike in Venezuela. A Bloomberg survey found OPEC pumped 28.8 million barrels per day, down 230,000 from December.
• But OPEC doesn’t control everything. The US Energy Information Administration forecasts that global liquid fuels production will rise by over 1.2 million barrels per day this year, with roughly 60% of that increase coming from the US, Canada, Guyana and Brazil (the latter of which is in OPEC+, which is not bound by OPEC production cuts).

The Shareholder Is Always Right: Even as profits slumped, Shell increased dividends by 4% and handed investors $3.5 billion in buybacks, marking its 17th consecutive quarter with at least $3 billion in repurchases. Chevron also boosted its dividend last week. Lower oil prices have raised concerns that shareholder payouts may suffer, with some fears realized Wednesday when Norway’s Equinor cut buybacks by 70% following a 22% dip in profit. In a note, Hargreaves Lansdown said it is “not too concerned” about Shell’s declining profitability and cash flow given its strong cash generation and “robust balance sheet,” but added that amid depressed energy prices, “no payouts can be guaranteed in future quarters.”

Strategy alchemist-in-chief Michael Saylor posted four letters to X yesterday as the bitcoin holding company’s stock plummeted alongside the digital asset it has stockpiled: “HODL,” meaning “Hold On for Dear Life.”

Shares in the company, formerly called MicroStrategy, suffered double-digit declines yesterday as bitcoin, which it owns more than 713,000 of, dipped below $64,000. After the bell, Strategy shared a net loss of more than $12 billion.

Now, the company’s core business is being tested.

In/Finite Money Glitch

Though Strategy sells a small amount of software ($123 million in revenue last quarter), it’s essentially a bitcoin holding company that investors buy stock in to gain indirect exposure to the digital asset. For Strategy, that has historically meant buying bitcoin, selling stock for more than the price of bitcoin, and pocketing the difference. Lather, rinse, repeat.

From 2020 to 2024, Strategy’s shares surged by more than 3,500% as its stock attracted investors who didn’t want to deal directly with the blockchain. But as the price of bitcoin falls, Strategy’s margins are looking tight:

• Strategy has regularly bought bitcoin through both its price peaks and valleys, scooping up the coins for an average of $76,000 each. It bought another 855 tokens last week for nearly $88,000 apiece. This week, bitcoin fell below the average price Strategy has paid for it.
• The company’s market-to-net asset value, or mNAV, fell to 1.09 late Thursday, meaning it barely trades at a premium to bitcoin. Investor Michael Burry (of “The Big Short” fame) wrote in a Substack post Monday that a 10% dip below $70,000 for bitcoin would put Strategy in the red. He pegged $60,000 as a threshold below which a “death spiral” could drag down the wider crypto sector.

Fading Value Prop: Strategy’s value prop as insulation between investors and crypto made more sense before spot bitcoin ETFs came on the scene last year. BlackRock and Fidelity have since launched funds, giving investors a way to gain indirect bitcoin exposure through familiar financial institutions and vehicles. These funds aren’t immune to the crypto downturn, with investors pulling $545 million from US bitcoin ETFs Wednesday. But that’s pennies compared with the total managed assets of businesses like BlackRock. For his part, Saylor isn’t focused on a short-term chill, framing Strategy and its pile of bitcoin as a long-term investment that’ll bounce back.

Like the protagonist in the sleeper hit movie Memento, the electronics industry is losing memory (chips) every day.

Shares of Qualcomm, one of the world’s largest smartphone chip suppliers, and semiconductor designer Arm Holdings struggled this week amid heightened worries that a memory chip shortage will diminish growth for consumer electronics businesses. Qualcomm predicted lower sales this quarter than Wall Street expected, thanks to the chip shortage, while Arm said the gap could trim as much as 2% from its royalty revenue over the next year.

“Unfortunately, I think that the whole sector is impacted by memory,” Qualcomm CEO Cristiano Amon said on the company’s post-earnings call.

AI Allocation

Where all these chips are going will come as no surprise: artificial intelligence innovation, which tech companies are pouring billions of dollars into. Manufacturers like Samsung and SK Hynix are prioritizing the development of higher-profit chips that power AI over the type of memory needed to power your smartphone and laptop.

It doesn’t look like the shortage will be a thing of the past anytime soon. Analysts at Morningstar say it probably won’t show signs of waning until at least the second half of 2027; Intel CEO Lip-Bu Tan says 2028.

What does that mean for your smartphone and other electronics?

• Higher prices, probably. Samsung president and head of global marketing Wonjin Lee, told Bloomberg last month he expects price hikes: “Prices are going up even as we speak. Obviously, we don’t want to convey that burden to the consumers, but we’re going to be at a point where we have to actually consider repricing our products.”
• Potentially less random-access memory (RAM), which is what lets you switch quickly between apps. A report from researcher TrendForce says DRAM — a type of RAM — capacities in high-end and mid-range models “are expected to hover near the minimum standards, slowing upgrade cycles.” The low-end smartphone market will be most affected, the report added.

Gaming Gripes: Mario and Luigi are taking a hit, too. Nintendo “appears to be looking at an absolute horror show on the cost of building a console, unless memory prices come down sharply,” equity analyst Pelham Smithers told Bloomberg.