While we were all panicking about AI advancing to superhuman intelligence levels and becoming our evil overlords, it turns out the real problem is AI chatbots are too nice! OpenAI is rolling back a recent update that made responses from its GPT-4o model "overly supportive but disingenuous," which goes against one of its 50 Laws of Robotics: don't be sycophantic. I don't know about you, but I prefer a little insincere flattery to AI models breaking most of the other 50 rules! US stocks staged a Herculean comeback to finish positive yesterday. After starting the session battered by a double whammy of negative economic news and concerns about AI demand, the S&P 500 and Nasdaq 100 were each down more than 2% at their lows. But stocks managed to hurdle those challenges over the course of the day and accelerated into the close, perhaps buoyed by month-end rebalancing activity. When the dust settled, the S&P 500 and Nasdaq 100 ended in positive territory, while the Russell 2000 had a 0.6% decline. It's the biggest intraday loss the benchmark US stock index has erased to finish positive since October 13, 2022. That's the day the bull market began. |
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Meta and Microsoft each reported earnings yesterday, and both crushed it. It turns out that the businesses of selling advertisements and licensing software remain incredibly lucrative and powerfully profitable businesses. |
- Microsoft made $70.1 billion in revenue, with most of that coming from its two meat-and-potatoes businesses: the Azure cloud business ($26.8 billion) and its Microsoft 365, LinkedIn, and Dynamics segment ($29.9 billion).
- Meanwhile, all the way down the Pacific coast in Menlo Park, Meta delivered $42.3 billion in revenue in the first quarter and earnings per share of $6.43, well above the FactSet consensus estimate of $41.3 billion in revenue and EPS of $5.23.
- Back to Redmond, Washington, for a moment: while the cloud business had the biggest growth (up 21% year over year), the bucket of the business that includes Windows, Xbox, and Bing was still bringing in $13.4 billion.
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All in all, these were two extremely successful money machines continuing to do exactly what it says they do on the box — turning advertising and software subscriptions into big, chunky earnings per share. If that were the end of the story, it'd be a pretty boring evening, but it wasn't and the reverberation was felt across tech all night. So, what's there to worry about? More on that after the jump… |
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Energy Investors, Here Comes The Sun |
Over the next three years, the IEA estimates that roughly 600 TWh of additional electricity will be generated from solar every year.1 To put that into perspective, Korea's entire population runs on about 600 TWh every year. Nations and corporations alike are attempting to find the balance between net-zero targets and expanding energy demands — with Big Tech companies already installing solar panels in their back gardens. Investing in solar is a stake in tomorrow's power. SolarBank investors are getting ahead of the shift. As an established operator already powering 10,000+ homes (plus corporate energy transitions), an investment in SolarBank (Nasdaq: SUUN) could be your portfolio's segue into renewable energy. 📢 Investors: Read more about SolarBank's plan.2 |
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But of course, both Meta and Microsoft have ambitions beyond hawking loud, autoplaying brand videos on Reels and Microsoft Office license keys. They want to be technologists, and to that effect are both spending oodles of money and throwing armies of engineers at generative-AI efforts under each company's corporate umbrella. |
- Meta had full-year capex estimates cranked up from an already robust $60 billion to $65 billion all the way to a frankly eye-watering $64 billion to $72 billion.
- That's based on, in the words of the company, "additional data center investments to support our artificial intelligence efforts as well as an increase in the expected cost of infrastructure hardware."
- Up in Washington, capital expenditures for the quarter were $16.7 billion, up 52% year on year. Those chatbots are pricey!
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Turns out the cutting edge is considered to be one of the more painful parts of the blade, and the frontier of computing is some of the most expensive real estate on the market. |
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Despite a postpandemic price surge, the costs of _____________ have leveled out to what they were 15 years ago. |
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Get More than a Seat at the Bar with This Opportunity |
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Yesterday's Big Daily Movers |
- It was a dark day for First Solar after its CEO sounded the alarm on tariffs
- Beauty tech company Oddity, parent company of Il Makiage, is sitting pretty after crushing Q1 estimates, dodging tariff fallout
- Etsy shares sank after the online marketplace topped revenue estimates but swung to a loss
- Snap dropped partly because of how de minimis changes may hurt ad spending, though one analyst sees green shoots
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- Ford says it'll extend its employee pricing deal one more month… and then probably hike prices
- Meanwhile, Stellantis and Mercedes-Benz both yanked their full-year guidance because nobody knows what'll happen with tariffs
- CEO Brian Niccol's "Back to Starbucks" plans aren't brewing a bold turnaround, but instead are grinding down profits
- Super Micro's massive sales miss is the latest headache for the volatile AI trade
- Is it really just the earnings, stupid?* (*Markets Editor Luke Kawa admits his predictions may have been wrong)
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- April ISM Manufacturing Index
- Earnings expected from Apple, Amazon, Eli Lilly, CVS Health, Estée Lauder, Hershey, Live Nation, Mastercard, McDonald's, U.S. Steel, Roku, Amgen, Riot, Airbnb, Reddit, Roblox, Sirius XM, and Strategy
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Advertiser's disclosures:
1 See Electricity 2025 report for further details. 2 Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal. Before investing, carefully assess whether a particular stock aligns with your investment objectives, risk tolerance, and financial situation. 3 The minimum investment is $1,003.94. Gin & Luck is the parent hospitality group of the cocktail brand Death & Company. This is a paid advertisement for Gin & Luck Inc's Regulation A Offering. Please read the offering circular and related risks at https://invest.deathandcompany.com/. Note: In the Offering Circular, the terms "Gin & Luck Inc" or "Death & Co," refers to Gin & Luck Inc., a Delaware corporation and its consolidated subsidiaries. DealMaker Securities LLC, a registered broker-dealer, and member of FINRA | SIPC, located at 105 Maxess Road, Suite 124, Melville, NY 11747, is the Intermediary for this offering and is not an affiliate of or connected with the Issuer. Please check our background on FINRA's BrokerCheck. |
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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 |
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