👨‍⚖️Google Break Up?

Good afternoon! It's CEO-poaching season, and investors are buying it. Victoria’s Secret has a new plan to combat increased competition from brands like Rihanna’s Savage X Fenty: steal their CEO. The struggling retailer announced that it hired a new chief exec, Savage X Fenty boss Hillary Super.

The corporate poaching comes just a day after Starbucks announced its new CEO: Chipotle’s CEO. The coffee giant nabbed Brian Niccol (who Chipotle had poached from Taco Bell in 2018), sending its shares soaring.

Two things appear to be pretty clear: investors love boardroom drama, and executives don’t seem to be burdened by non-compete clauses.

MARKETS

• Stocks surged on Thursday, with all three major indexes closing in the green, driven by strong consumer and labor market data that eased recession fears.

• The Dow gained around 550 points, the Nasdaq jumped over 2.3%, and the S&P 500 extended its rally to 6.6% across six days, marking its best performance since November 2022. As confidence in the economy grew, investors celebrated Walmart’s positive outlook, further fueling market optimism.

STOCKS
Winners & Losers

What’s up 📈

• AST SpaceMobile ($ASTS) skyrocketed 50.70% after the company confirmed an early September window for its first-ever commercial satellite launch.

• Ulta Beauty ($ULTA) jumped 11.17% after Berkshire Hathaway announced a new stake in the company.

• Dell Technologies ($DELL) surged 7.05% after JPMorgan analysts named it a new top pick. The firm reaffirmed its Overweight rating and set a new price target of $160 by December 2025.

• Walmart ($WMT) jumped 6.58% after the retail giant delivered a strong earnings report, beating estimates on both the top and bottom lines, and raised its full-year guidance.

• Tesla ($TSLA) climbed 6.34% on the back of strong retail sales, signaling higher consumer demand and potential growth in vehicle sales.

• Robinhood ($HOOD) rose 5.11% after Deutsche Bank upgraded the stock to "buy" from "hold" and increased its price target from $21 to $24.

What’s down 📉

• Dillard's ($DDS) dropped 10.76% after missing second-quarter earnings and revenue estimates, as sales slowed and costs rose, driven by higher payroll expenses.

• Grab Holdings ($GRAB) dropped 7.42% as weaker-than-expected growth in its earnings report led to the stock's decline, despite no alarming details in the results.

• Fair Isaac Corp. ($FICO) declined 4.20% after disclosures revealed insider selling, with two executives offloading over $8 million worth of shares in the past week.

• Pilgrim's Pride ($PPC) fell 3.28% after Bank of America downgraded the stock from a "buy" rating to a "neutral" rating and set a $47.00 target price.

• AT&T ($T) dipped 2.75% after AHL Investment Management Inc. reduced its stake in the company by 28.3% during the second quarter, as reported in its most recent SEC filing.

BIG TECH
Breaking Up Google? DOJ Considers a Historic Move

Google ($GOOGL) has long reigned supreme with its trifecta of Search, Android, and YouTube, but its days of unchecked dominance might be numbered. After a federal court ruled that Google’s been playing monopoly with the internet search market, the Department of Justice (DOJ) is considering some drastic measures that could permanently alter Google’s empire—and send shockwaves through Big Tech.

Google’s Breakup Drama

For the first time in over 20 years, the DOJ is mulling over the breakup of a major tech company, and Google’s in the crosshairs. This isn’t just a slap on the wrist; the DOJ is reportedly considering forcing Google to shed some of its most profitable assets. Imagine Google Ads—responsible for a staggering $238 billion in 2023—being spun off into a separate entity. That’s just one option on the table. Another scenario could see Google being forced to sell off its Android operating system or Chrome browser, two products that are practically synonymous with the internet itself. The potential breakup could not only reshape Google but could also set a new precedent for regulating other tech giants.

Flashback to Microsoft’s 2000 Antitrust Battle

If this all sounds familiar, it’s because we’ve seen something like this before. Back in 2000, the DOJ went after Microsoft for its near-total control over the PC market. While the attempt to break up Microsoft was eventually overturned on appeal, the case did lead to restrictions that slowed down the tech giant’s dominance just enough to allow new players—like Google—to rise. Now, Google might find itself in a similar position. The DOJ could impose rules that force Google to share its valuable data and technology with competitors or ban it from entering exclusive contracts that keep rivals at bay. Case in point: Google’s $26 billion splurge to secure default search engine status on iPhones and Firefox. These kinds of practices could soon be a thing of the past.

Silicon Valley on High Alert

While Google is currently the star of this antitrust drama, every other tech behemoth—from Amazon to Apple to Meta—is watching with bated breath. The outcome of Google’s case could have far-reaching consequences, especially as these companies face their own antitrust challenges. A decision to break up Google could embolden regulators to take a tougher stance across the board, fundamentally altering the landscape of the tech industry. The DOJ is set to reveal its proposed remedies in September, and until then, all of Silicon Valley is on edge, knowing that the stakes have never been higher.

NEWS
Market Movements

• AstraZeneca ($AZN) hit a record high after its cancer drug Imfinzi was granted FDA priority review for testing in limited-stage small cell lung cancer.

• Warren Buffett acquired stakes worth $266.3M in Ulta Beauty ($ULTA), while selling $1B of Snowflake ($SNOW) shares and exiting from Paramount ($PARA).

• Boeing ($BA) secured orders for 72 planes in July, outpacing Airbus’s 59.

• Lockheed Martin ($LMT) has agreed to acquire Terran Orbital for approximately $450M, taking the struggling spacecraft manufacturer private.

• China’s Huawei reportedly developed an advanced AI chip to rival Nvidia ($NVDA).

• SoftBank scrapped plans to produce AI chips with Intel ($INTC), citing Intel’s inability to meet volume and speed requirements.

• Meta ($META) shuttered CrowdTangle, a tool that tracked the spread of disinformation and violence on Facebook and Instagram, despite protests from regulators and the public.

• Amazon ($AMZN) will participate in a U.K. trial to test drones in local airspace, utilizing its Prime Air delivery drones for the tests.

• Starbucks ($SBUX) new CEO, Brian Niccol, may make $113M working remotely in California, away from HQ, while workers must be at the office.

EARNINGS
Walmart Q2 Surge: Higher Sales, Raised Outlook

By the Numbers:

• Revenue: $169.34 billion (vs. $168.46 billion expected)

• Adjusted EPS: $0.67 (vs. $0.65 expected)

• US Same-Store Sales Growth: 4.2%

• E-Commerce Growth: 22% in the U.S.

• Full-Year Sales Guidance: 3.75% to 4.75%

Walmart’s Winning Streak

Walmart ($WMT) just dropped some numbers, and it looks like they're riding high on the wave of deal-seeking shoppers. The retail giant raised its full-year sales outlook, now predicting a rise of up to 4.75%, a bump from its previous cap of 4%. Thanks to a growing number of customers—especially those from higher-income brackets—scouring for bargains, Walmart's stock surged today, marking its biggest intraday gain since late 2022.

The real juice? E-commerce sales in the U.S. shot up by 22%, largely driven by pickups and Walmart’s third-party marketplace. This growth wasn’t just in the grocery aisles either; after 11 quarters of decline, general merchandise sales finally showed some life. Seasonal items like pool noodles were particularly popular—so much so that you could stretch all the noodles sold across 30,000 football fields. That’s a lot of backyard fun.

Cautious Optimism Amid Economic Uncertainty

Walmart’s success contrasts sharply with other retailers like Home Depot ($HD) and Whirlpool ($WHR), which have been struggling as consumers put off big-ticket purchases. Meanwhile, Walmart continues to rake in customers across all income levels, including a significant chunk from wealthier households hunting for deals.

With the back-to-school season off to a strong start and inflationary pressures easing a bit, Walmart’s cautious optimism about the rest of the year seems well-placed. The retailer is focusing on keeping prices down, pushing suppliers to do the same, and expanding its high-margin businesses like advertising and membership programs. And with more shoppers tightening their belts and opting for at-home dining over takeout, Walmart’s grocery dominance is likely to continue driving growth.

Calendar
On The Horizon

Tomorrow

Tomorrow’s spotlight shines on some key real estate data, with building permits and housing starts on deck. These reports will show us if the construction of new homes is gaining momentum or hitting the brakes.

We'll also get a read on the consumer vibe with the University of Michigan’s consumer sentiment survey. While recent numbers suggest the economy is on the mend, this survey will reveal if the average American is actually feeling the love.

Before Market Open:

• Berkshire Hathaway ($BRK.A, $BRK.B) is the one to watch. Warren Buffett, the Oracle of Omaha, is still sitting on a mountain of cash, but that hasn’t stopped him from making moves. He’s recently added Ulta Beauty to his cart, piled on some Japanese stocks, and shifted his bets by selling Apple and buying more Occidental Petroleum. Shareholders are eager to hear how he’s planning to navigate the latest market rollercoaster.