😮‍💨 Is It Safe to Breathe Again, Investors?

Good afternoon! OpenAI’s leadership seems to be playing a game of musical chairs, and the music just paused again. Greg Brockman, the company’s president and co-founder, has decided to take a well-deserved breather, marking his first actual break since helping birth the AI giant nine years ago. Meanwhile, John Schulman, another co-founder, has packed his bags and headed over to rival Anthropic, insisting his move wasn’t sparked by any behind-the-scenes drama—though it’s hard not to wonder.

And if that wasn’t enough, product guru Peter Deng has also exited stage left. While all these departures seem to be coincidental, they follow a string of internal shakeups at OpenAI, including CEO Sam Altman’s brief stint as ex-CEO last year. Critics are starting to wonder if OpenAI is moving a little too fast and loose in its race to dominate AI, potentially leaving safety in the dust. But hey, who’s counting when the future of humanity is at stake, right?

MARKETS

• Stocks are staging a solid recovery. The Dow climbed nearly 300 points, with the S&P 500 and Nasdaq getting a lift from impressive gains in the tech sector.

• As investors shifted toward riskier assets, 10-year Treasury yields bounced back after touching their lowest level in over a year.

• Bitcoin, hovering near $50,000, managed a rebound but remains well below its recent highs.

STOCKS
Winners & Losers

What’s up 📈

• Lumen Technologies ($LUMN) skyrocketed 93.05% after management reported a massive surge in new business driven by increased AI adoption.

• Kenvue ($KVUE) leaped 14.68% after exceeding analyst earnings expectations in the second quarter, fueled by strong sales of its well-known products like Band-Aids and Tylenol.

• Uber ($UBER) climbed 10.93% following a strong Q2 performance that outpaced analyst predictions for both earnings and revenue.

• Palantir Technologies ($PLTR) rallied 10.33% on the back of an earnings beat driven by robust AI demand.

• CrowdStrike ($CRWD) rebounded 4.34% after Piper Sandler analysts upgraded the stock, signaling 2it had bottomed out.

• Lucid Group ($LCID) advanced 3% after receiving a significant $1.5 billion funding boost from Saudi Arabia's Public Investment Fund.

What’s down 📉

• Chegg ($CHGG) plunged 22.18% despite surpassing revenue expectations in Q2, as investors reacted negatively to slower growth and a declining user base.

• ZoomInfo Technologies ($ZI) nosedived 18.27% after missing on both earnings and revenue targets in the second quarter.

• Vulcan Materials ($VMC) slipped 4.36% due to disappointing earnings, marred by weaker demand for construction materials.

MARKETS
Is It Safe to Breathe Again, Investors?

If your inbox was flooded yesterday with anxious messages from friends fretting over their stock portfolios or colleagues worried about their 401(k)s, you weren’t the only one.

Is the Storm Over?

Monday's market madness had investors around the globe in a frenzy, thanks to a perfect storm of economic jitters. The chaos started with unsettling employment data hinting that the Fed’s efforts to cool the economy might be working too well. Add to that a massive unwind of a popular carry trade in Japan and some AI-related profit-taking, and you had a recipe for a sea of red in the markets.

But just as quickly as the losses came, they started to fade. Tech giants like Nvidia and Microsoft, which were among the biggest losers yesterday, have already bounced back into positive territory.

Staying Steady in Unsteady Times

So, is the storm over? Not so fast. While yesterday's selloff seemed more about fear than fundamentals, the broader economic landscape remains shaky. The Fed hasn’t budged on interest rates yet, despite growing speculation that they’ll roll out a hefty rate cut in September to calm things down.

Wall Street pros are warning that we’re likely in for more turbulence before any rate cuts materialize. And though a half-point cut seems to be the consensus, these are the same folks who predicted six rate cuts at the start of the year—so take their forecasts with a grain of salt.

The Takeaway?

Don’t let market swings scare you into cashing out. Analysts stress that volatility is no reason to hit the eject button, especially after the strong gains we've seen this year. A little bumpiness is par for the course.

And if we’re not at the market’s bottom yet, this might just be the chance to buy into sectors like AI, which have been sky-high in recent months.

In short, hang tight and keep your cool.There are plenty of other things to lose sleep over, like whether your favorite streaming service is about to hike prices again or why that meme stock you bought for fun is suddenly your biggest holding.

NEWS
Market Movements

• Tesla ($TSLA) is set to fix 1.7 million vehicles in China, according to the Market Regulator.

• Uber ($UBER) reported a 16% YoY revenue increase in Q2, surpassing analysts' estimates.

• Airbnb ($ABNB) warned of a potential slowdown in U.S. demand, even though it saw revenue growth in Q2.

• Elon Musk has sued OpenAI and Sam Altman, accusing them of straying from the organization’s mission to develop AI that benefits humanity. If this sounds familiar, it’s because Musk previously filed and then dropped a similar lawsuit.

• Groq, a startup producing chips to power AI models, raised $640M in a new funding round, bringing its total to over $1B with a $2.8B valuation.

• SunPower has filed for bankruptcy and plans to sell off its assets.

• Mars Inc. is in talks to acquire Kellogg spinoff Kellanova.

• China has launched its rival to Starlink internet satellites.

• CrowdStrike ($CRWD) has stated it isn’t responsible for Delta’s flight cancellations after the July outage.

• Apple ($AAPL) is testing a new Safari feature called Distraction Control, which allows users to remove distracting elements from websites they visit.

BIG TECH
Google Gets the Monopoly Hammer: What’s Next?

The Verdict Is In

In a ruling that could shake up the tech world, a federal judge has declared that Google ($GOOGL) is, indeed, an illegal monopoly. Judge Amit Mehta didn’t mince words, stating, “Google is a monopolist, and it has acted as one to maintain its monopoly.” This is a major win for the Department of Justice, which has been chasing Google for years, accusing the tech giant of smothering competition in search and advertising.

But hold your horses—this is just the beginning. The next phase will decide what happens to Google. Will it be slapped on the wrist with a fine, or could it face a breakup? While the latter sounds juicy, it’s probably not going to happen. Google’s appealing the ruling, so this could drag out longer than your latest Netflix binge.

Big Tech's Turn in the Hot Seat

Google isn’t the only tech giant sweating right now. Amazon ($AMZN), Apple ($AAPL), and Meta ($META) are all facing similar antitrust scrutiny. Regulators argue that these companies have been acting like playground bullies, pushing around smaller rivals and favoring their own products. The Google ruling could set the stage for how these cases unfold, but whether it’ll lead to actual change remains to be seen.

Investors Hit Snooze

While the ruling is big news, investors don’t seem too concerned. Alphabet’s stock dipped a bit with the rest of the market but quickly bounced back. Analysts like Wedbush’s Dan Ives aren’t expecting any major disruptions to Google’s operations in the near term, so it looks like business as usual—for now.

So, what’s next? We’re all just waiting to see if this ruling will actually make a dent in Google’s search dominance or if it’s just another chapter in the ongoing saga of Big Tech vs. The World.

EARNINGS
Uber’s Q2 Earnings Shift into High Gear

By the Numbers

• Earnings per share (EPS): 47 cents (vs. 31 cents expected)

• Revenue: $10.7 billion (vs. $10.57 billion expected)

• Mobility Gross Bookings: $20.6 billion (up 23% YoY)

• Delivery Gross Bookings: $18.1 billion (up 16% YoY)

• Net Income: $1.02 billion

• Monthly Active Platform Consumers (MAPCs): 156 million (up 14% YoY)

• Total Trips: 2.77 billion (up 21% YoY)

Zooming Past Expectations

Uber ($UBER) put the pedal to the metal in Q2, delivering earnings that sped past Wall Street’s forecasts. The company reported 47 cents per share, outpacing the expected 31 cents, while revenue came in at $10.7 billion, topping predictions. With its mobility unit seeing a 23% surge in gross bookings and delivery bookings rising 16%, Uber’s growth engine is firing on all cylinders.

CEO Dara Khosrowshahi was riding high, noting that Uber’s monthly active platform consumers reached 156 million, a 14% increase from last year, with 2.77 billion trips during the quarter. The market took notice, sending Uber’s stock up 10.9% following the report.

Looking Ahead

For the third quarter, Uber is forecasting gross bookings between $40.25 billion and $41.75 billion, with adjusted earnings expected to land between $1.58 billion and $1.68 billion. While the midpoint is just shy of analysts' estimates, it still signals that Uber expects to keep cruising along smoothly.

The Road to Autonomous

Khosrowshahi didn’t shy away from addressing Tesla’s ($TSLA) potential robotaxi threat. He assured investors that Uber’s partnerships with Waymo and other AV players put it in a prime position to dominate the autonomous vehicle space. Uber’s platform, he emphasized, is unmatched in its ability to offer AV companies the scale they need without the headache of building their own network.

After a rough start to the year, Uber’s stock is gaining traction. With a focus on innovation and expansion, Uber seems ready to stay ahead in the race for the future of transportation.

Calendar
On The Horizon

Tomorrow

With recession jitters on the rise, all eyes are on the labor market. But while jobs bring in the cash, it’s the way Americans spend it that really tells the story. As spending slows—thanks in large part to sky-high inflation—companies start to feel the pinch, forcing McDonald’s to keep those $5 deals on the menu a bit longer.

That’s why tomorrow’s consumer credit report is so important: it’s a snapshot of not just how much people are spending, but also how much debt they’re piling up—the good (mortgages) and the not-so-good (credit cards). Normally, this report flies under the radar, but this time it could be key in shaping monetary policy in the coming months.

Wednesday: Disney ($DIS), Novo Nordisk ($NVO), Sony ($SONY), Shopify ($SHOP), CVS Health ($CVS), Hilton Worldwide ($HLT), Lyft ($LYFT), Monster Beverage ($MNST), Warner Bros. Discovery ($WBD), Robinhood ($HOOD), Duolingo ($DUOL)

Before Market Open:

• Disney ($DIS) has hit some turbulence lately, with sky-high prices at theme parks, fierce streaming competition, and cautious consumer spending weighing it down. But recent box office wins have revived some optimism, and Wall Street still believes in the Magic Kingdom: 21 out of 26 analysts rate the stock as a “buy,” with a target price about 40% higher than its current level. Consensus: $1.19 EPS, $23.05 billion in revenue.

• Shopify ($SHOP) has had a rough 2024, with its stock nosediving due to worries over slowing consumer spending, challenging economic conditions for small businesses, and declining revenue. Investors are eager for signs of a turnaround this quarter, and given the stock’s current valuation, it might just catch the eye of bargain hunters. Consensus: $0.20 EPS, $2.01 billion in revenue.

After Market Close:

• Robinhood ($HOOD) blew past analyst expectations last quarter, delivering an EPS of $0.18 versus the expected $0.05. Investors are crossing their fingers for a repeat performance this quarter, though volatility in cryptocurrencies—a favorite among Robinhood traders—could put a dent in trading revenue and profits. Consensus: $0.15 EPS, $631.82 million in revenue.