Yesterday, Elon Musk announced, “You can now ride-hail a Tesla in the SF Bay Area, in addition to Austin.” But that Tesla will have a person in the driver’s seat touching the steering wheel. In other words, you can pay for a person to drive you around in a Tesla… so basically, an Uber? Also, you need to be a Tesla employee, an employee’s friend or family member, or an invited member of the public. See a video of a human-controlled “robo” taxi. The S&P 500 opened 1% higher after Wednesday’s blockbuster earnings from Microsoft and Meta lit a fire under the entire AI complex. Unfortunately, the day only got worse from there. US stocks slid throughout the session, ending near their lows. The S&P 500 gave back 0.4%, the Nasdaq 100 fell 0.5%, and the Russell 2000 underperformed with a 0.9% decline. This ended July as the S&P 500’s first month without a daily gain or loss of at least 1% since July 2023.
🧠 Trivia time: Test your knowledge on recent business news with our Snacks Seven Quiz: |
- Which company has plans to open a “Manufacturing Academy” in downtown Detroit later this month?
Check your answer.
|
|
|
- Microsoft’s guidance of $30 billion in capex for the current quarter implies a run rate of $120 billion for fiscal 2026. Meta, meanwhile, hinted that business investment next year could approach the $100 billion mark.
- Zuckerberg? We know he’ll spend billions on just about anything. Nadella? Well, that’s a different story. Beyond the DeepSeek freak-out, perhaps the top source of worries about an AI capex slowdown this year centered on the cloud giant maybe having too many data centers.
|
The tree of AI spending is growing to the sky — and this tree’s branches are poised to grow even closer to the sun soon, as it doesn’t yet incorporate the recent guidance from these two hyperscalers. All that capex is the earnings of other major companies. And we’re seeing the effects of this continued commitment to spending billions upon billions rippling through the AI supply chain. |
|
|
The entire AI ecosystem stands to benefit from titans plowing this kind of money into this kind of business. Want extra access to Nvidia’s GPUs? You go to CoreWeave. Want more of your own chips? Hello, Nvidia and AMD. You want to house them? Super Micro Computer and Dell are ready to take your money. You want the physical infrastructure to support that data center? Enter GE Vernova, Arista Networks, and Vertiv Holdings. You need power to turn it all on? Constellation Energy and Vistra got you. Again, it needs to be said: all that capex is other companies’ earnings. This week wasn’t the last time we’re going to see these dollars on a quarterly report. Next time, they’ll just be in the revenue column. Go Deeper: Two revealing charts on the AI spending boom |
|
|
Apple and Amazon report A+ results |
Speaking of capex, Amazon continued the trend after the bell on Thursday, revealing in its earnings report that the company’s capital expenditures in the second quarter totaled $32.18 billion, up a whopping 83% from a year earlier and way above analysts’ estimates. The company posted $167.7 billion in sales for Q2, growing 13% from the same quarter a year earlier and topping analysts’ expectations of $162.19 billion. A huge portion of the profits came from Amazon’s AWS cloud business, which saw revenue grow 17.5% year on year to surpass $30 billion for the first time, powered by huge demand for AI. The bulk of its business still came from North America, but that cloud power is growing and could overtake its international division, as this chart shows. Meanwhile, Apple reported after the bell and its initial release had little to say about AI or capex, as it continues to play a game of AI catch-up with its Big Tech peers. But the iPhone maker had plenty of good news to share: | - 💵 Revenue of $94.04 billion, compared to expectations of $89.35 billion.
- 📱 iPhone revenue came in at $44.6 billion, versus the FactSet consensus of $40.1 billion.
- ☁️ Services brought in $27.4 billion, compared with expectations of $26.8 billion.
|
Regionally, China was a beat but America was a miss. You can’t win them all! Later on the earnings call, CEO Tim Cook did address the AI elephant in the room, saying, “We see AI as one of the most profound technologies of our lifetime… we are also significantly growing our investment.” |
|
|
Even though both companies hit it out of the park on results this quarter, only one of them rose in after-hours trading, and it’s probably not the one you think! Off the cuff, we’d say it’s because the other one lowered guidance and markets tend to be forward-looking beasts. Read more about Amazon and Apple. |
|
|
Yesterday’s Big Daily Movers |
- eBay hit an all-time high as Wall Street cheers Q2 beat and tariff resilience
- Norwegian Cruise Line sailed higher after record revenue calmed investors’ fears of choppy demand
- Roblox jumped after second-quarter bookings — the amount of money users spent on the platform — beat Wall Street estimates
- Cigna shares dropped 10% despite the healthcare insurer beating Q2 estimates and showing solid cost control during the quarter
|
|
|
- July jobs report
- Earnings expected from Exxon Mobil and Chevron
|
|
|
Was this email forwarded to you? Don’t miss out on future stories — subscribe to Snacks and get your daily dose of financial news straight to your inbox. Craving more insights in your inbox? Subscribe to Chartr and The Wrap for quality reads. |
|
|
Sherwood Media, LLC produces fresh and unique perspectives on topical financial news and is a fully owned subsidiary of Robinhood Markets, Inc., and any views expressed here do not necessarily reflect the views of any other Robinhood affiliate... See more |
|
|
|
