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Today at a glance:

1. 🌐 IBM: Software Pivot & Mainframe Surge

2. 🧴 P&G: Innovation Over Inflation

3. 🧠 Lam Research: $140B Billion AI Upshift

4. 💼 UnitedHealth: Retrenchment Rallies

5. ⚡ GE Vernova: Supercycle Accelerates

6. 💳 Amex: Spending Resiliency

7. ⚙️ Texas Instruments: Hibernation Ends

8. 📞 AT&T: Convergence Pivot

9. 🛩️ Boeing: Operational Stabilization

10. 🦾 Intuitive Surgical: Innovation Premium

11. 🛰️ Lockheed Martin: Friction in the Ramp-Up

12. 💊 Sanofi: Dupixent Engine

13. 🧑‍💻 ServiceNow: AI Margin Pressure

14. 💼 Moody’s: Record Issuance

15. 🛩️ United Airlines: Flying Into a Headwind

16. 🛩️ Southwest: Turbulence in the Outlook

17. 🏡 Appfolio: Agent Adoption Skyrockets

1. 🌐 IBM: Software Pivot & Mainframe Surge

IBM delivered a solid Q1, reporting revenue growth of 9% Y/Y to $15.9 billion ($0.3 billion beat) and adjusted EPS of $1.91 ($0.10 beat). Despite the outperformance, shares tumbled more than 10% as management left full-year guidance unchanged. While the market wanted more, the underlying numbers show that the software-led strategy and AI initiatives are still gaining traction.

The z17 cycle remains a powerhouse, driving a 15% jump in Infrastructure revenue. The IBM Z mainframe unit alone surged 51%, a record quarter that debunked fears that AI upstarts would quickly cannibalize demand for legacy servers. The Software segment grew 11% Y/Y, led by a 16% increase in Data to $1.5 billion. Notably, Red Hat OpenShift ARR reached $2 billion, and the early close of the Confluent acquisition further bolsters IBM’s data-streaming arsenal.

Productivity is becoming a core part of the story. Internal AI tools are delivering 45% average productivity gains for IBM’s own developers, helping to expand operating margins by 140 basis points. Free cash flow hit $2.2 billion—the highest Q1 print in a decade. Crucially, the narrative on AI has shifted: IBM stopped reporting the standalone AI bookings dollar figure and instead reported a 30% generative AI penetration in its Consulting backlog.

Looking ahead, IBM reaffirmed its FY26 outlook of more than 5% revenue growth and a $1 billion Y/Y increase in free cash flow. The board also raised the quarterly dividend to $1.69, marking 31 consecutive years of increases. With the integration of Confluent and HashiCorp underway, IBM is betting that its Sovereign Core software and hybrid cloud governance will make it the indispensable foundation for regulated enterprises scaling AI.

2. 🧴 P&G: Innovation Over Inflation

P&G rebounded in Q3 FY26, reporting revenue growth of 7% Y/Y to $21.2 billion ($720 million beat) and core EPS of $1.59 ($0.03 beat). Organic sales growth slightly rebounded to 3%, a recovery from the stagnation seen last quarter. Crucially, this growth was earned through a healthy mix of a 2% increase in volume and 1% in pricing, signaling that consumers are responding well to P&G's strategy of pairing price hikes with meaningful product innovation.

The Beauty segment was the leading segment, with 11% revenue growth and organic sales jumping 7% behind successful product reformulations and new package sizes in North America and Europe. However, the war in Iran has triggered an estimated $150 million after-tax headwind for the remainder of the fiscal year due to rising energy and logistics costs. CFO Andre Schulten warned that if oil remains above $100 per barrel, the company could face a massive $1 billion hit in FY27, potentially leading to further price increases.

Despite the top-line beat, management noted that fiscal 2026 EPS will likely land toward the lower end of its $6.83–$7.09 guidance range. The company is intentionally absorbing short-term margin pressure—gross margins fell 1 point to 50%—to protect its demand creation budget. With all 10 product categories showing organic growth, P&G is betting that maintaining brand momentum through heavy marketing and R&D will outweigh the immediate sting of rising commodity costs.

3. 🧠 Lam Research: $140 Billion AI Upshift

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🗓️ Earnings season is picking up speed

Tomorrow, we’ll break down 17 key reports for PRO members, including IBM's mixed quarter as AI reshapes its business and ServiceNow’s aggressive M&A push.

Today, the spotlight is on Tesla and Intel, two companies now tied together by Musk’s Terafab project. Here’s what their latest results revealed.

1. 🚖 Tesla: $25 Billion AI Pivot

2. 🏭 Intel: CPU Renaissance

3. 🚀 SpaceX: Potential Cursor Acquisition

1. 🚖 Tesla: $25 Billion AI Pivot

Tesla’s AI and robotics pivot got materially more expensive this quarter.

Management raised FY26 CapEx guidance to $25 billion, up sharply from $9 billion in FY25, to fund projects tied to AI training clusters, Terafab, and Optimus 3.

With the AI5 chip already taped out and a $3 billion dedicated research fab under construction at Giga Texas, Tesla is investing beyond vehicles and into the physical infrastructure behind its AI ambitions.

Income statement:

• Revenue grew 16% Y/Y to $22.4 billion ($0.2 billion beat).

• Gross margin reached 21% (+5pp Y/Y).

• Operating margin improved to 4% (+2pp Y/Y).

• Non-GAAP EPS was $0.41 ($0.06 beat).

Cash flow:

• Operating cash flow grew 17% Y/Y to $0.5 billion.

• Free cash flow grew 117% Y/Y to $1.4 billion.

FY26 outlook:

Tesla again withheld full-year guidance. Management continues to improve overall profitability over time, as AI, software, and fleet-based profits boost the existing hardware-related baseline.

So, what to make of all this?

• 🚘 Automotive held up: Automotive revenue grew 16% Y/Y, showing signs of life after a difficult 2025. Tesla delivered 358K vehicles in Q1, missing the 365K consensus. It was still 6% above last year’s soft comparison, when factory retooling and protests weighed on results. Some of that volatility may also reflect lingering distortion from the EV tax credit deadline, which pulled demand forward before its September 2025 expiration.

• ⚡️ Energy lumpiness: The Energy segment saw a 12% revenue decline as storage deployments fell to 8.8 GWh, down sharply sequentially. Management said the business remains inherently lumpy because results depend on customer deployment timing, but still expects FY26 deployments to exceed FY25.

• 🔌 Services and Other surge: Revenue in Services and Other jumped 42% Y/Y to $3.8 billion, helped by the Full Self-Driving (FSD) subscription moving from $8,000 for lifetime access to $99/month, plus record Supercharger usage. With FSD subscribers up 51% Y/Y to 1.28 million, Tesla is steadily turning its installed base into a higher-margin recurring revenue stream.

• 📈 Margin recovery with a catch: Gross margin climbed to 21%, but the improvement was heavily aided by non-recurring windfalls, including $230 million in Automotive warranty write-downs and $250 million in Energy tariff recognitions. The headline improvement looked encouraging, but these one-time items partly masked pressure from excess inventory and softer global demand.

• 🚧 The Hardware 3/4 operational burden: Musk said Hardware 3 lacks the memory bandwidth for future autonomy, pushing Tesla toward Hardware 4 and beyond. To manage the retrofit process, Tesla plans dedicated city-based retrofit centers and a separate v14 software update path for HW3. That expands the cost and complexity of supporting a massive legacy fleet while trying to move the platform forward.

• 🚖 Robotaxi rollout: Following the Austin launch, Tesla has officially expanded its unsupervised Robotaxi service to Houston and Dallas. The service is slated for a rapid multi-state expansion (targeting 12+ states by year-end). The bigger message was that Cybercab development remains on schedule for 2026. The risk is that regulatory approvals now matter as much as technical progress.

• 💰 Free cash flow warning: Tesla’s balance sheet grew to $44.7 billion in cash, a critical war chest given the road ahead. While Q1 produced a surprise $1.4 billion in positive free cash flow, management warned that the heavy $25 billion CapEx cycle will likely push FCF into negative territory for the remainder of 2026. This cash burn phase is the price of admission for the growth expected from Cybercab and Semi volume production in late 2026.

Bottom Line: Tesla is spending like a company that wants to own the full AI mobility stack, not just sell more cars. The quarter showed an auto business that is holding up, a services engine that is gaining quality, and a balance sheet still strong enough to fund the push. The trade-off is obvious: free cash flow could come under pressure as CapEx surges. But management is clearly choosing long-term platform control over near-term efficiency.

2. 🏭 Intel: CPU Renaissance

Intel is finally seeing the payoff from its reset, as AI inference and agentic workloads lift demand for CPUs, wafers, and advanced packaging.

While Intel missed the first GPU-led wave, surging demand for Xeon server processors helped drive a major revenue and adjusted EPS beat this quarter.

With a strategic role in the Terafab project and the repurchase of its Irish fabrication facility, Intel is repositioning its balance sheet to reclaim a larger role in global AI infrastructure.

Income statement:

• Revenue grew 7% Y/Y to $13.6 billion ($1.2 billion beat).

• Gross margin improved to 39% (+2pp Y/Y).

• Operating margin was -23% (-21 pp Y/Y).

• Non-GAAP EPS $0.29 ($0.28 beat).

Cash flow:

• Operating cash flow grew 35% Y/Y to $1.1 billion.

• Free cash flow improved to an outflow of $2.0 billion.

Q2 FY26 outlook:

• Revenue ~$14.3 billion ($1.2 billion beat).

• Non-GAAP EPS $0.20 ($0.12 beat).

So, what to make of all this?

• 🧠 CPU Renaissance: Intel’s Data Center and AI revenue rose 22% to $5.1 billion as inference and agentic workloads boosted demand for Xeon. As AI shifts from training giant models to serving real-world applications, the CPU is becoming more central to the data center stack again.

• 📉 Foundry momentum: Foundry revenue rose 16% to $5.4 billion, while Client Computing revenue was held back by supply constraints and a still-tight PC environment. The move toward higher-priced AI PCs helped support an adjusted gross margin of 41%. The bigger takeaway is that Intel now looks more constrained by supply than by demand.

• 🏭 Terafab strategic pivot: Intel is joining the Terafab project as a strategic partner, offering design and advanced packaging resources for the Austin-based facility. This partnership, alongside the US government’s 10% stake, secures Intel’s position at the heart of the Sovereign AI movement and strengthens the strategic case for its Foundry Services division.

• 💰 Balance sheet flex: Intel repurchased the 49% stake in its Fab 34 joint venture in Ireland for $14.2 billion, reclaiming full control of a strategic manufacturing asset. The move signals growing confidence in long-term demand and in Intel’s ability to fund its next phase from a stronger footing.

• 🚀 Guidance blowout: Intel guided Q2 revenue to $13.8 billion–$14.8 billion, well above expectations. The message was clear: demand is there. The next challenge is scaling production and packaging capacity fast enough to keep up.

Bottom Line: Intel is no longer just a turnaround story. It is becoming a capacity story. The quarter showed that Xeon, packaging, and foundry demand are all benefiting from the shift toward inference and agentic AI. The question now is less whether Intel is relevant and more whether it can scale supply fast enough to match the opportunity.

3. 🚀 SpaceX Might Acquire Cursor

SpaceX is pushing deeper into AI. After its $250 billion merger with xAI in February, the company announced a major partnership this week with Cursor, a leader in vibe coding.

The structure is unusual. SpaceX has the option to acquire Cursor later this year for $60 billion, or pay $10 billion fee tied to the partnership if a full acquisition does not happen.

Bridging the coding gap

The timing of this deal suggests where Musk sees a gap in his AI strategy. Despite xAI’s massive valuation, Musk admitted last month that his chatbot, Grok, was “behind in coding” and needed a complete rebuild.

Cursor brings something xAI’s giant compute buildout still does not: a product developers already use at scale. This is not just about fixing Grok’s coding weakness. It is also about connecting compute to an app layer that already matters.

By partnering with Cursor, SpaceX gets a shortcut into one of the most valuable layers of the AI stack:

• Compute play: Cursor has been constrained by limited processing power. SpaceX is solving this by giving them access to Colossus, a supercomputer powered by 200,000 NVIDIA GPUs (equivalent to a million H100s).

• Talent pull: xAI has already hired two of Cursor’s senior engineering leads to report directly to Musk. A full acquisition would consolidate top coding talent under one roof.

• Model leverage: Cursor relies on models from rivals today, but a deeper partnership could move more of that stack closer to xAI over time.

• Data advantage: Cursor may hold one of the richest proprietary datasets on how developers interact with coding models in the wild, which could become valuable training fuel over time.

Cursor also has a reason to lean in. It depends on rival models today, leaving it exposed as the frontier labs push deeper into coding themselves.

Why not buy it now?

The structure may also reflect timing. With SpaceX preparing for an IPO, a full acquisition now could complicate the story and force broader disclosure changes. A partnership-first approach gives Musk a way to lock Cursor closer to the ecosystem without pulling the trigger immediately.

Bottom Line: SpaceX is using its compute advantage to accelerate its AI push without committing to a full acquisition today. The Cursor deal helps close a product gap now while reinforcing a bigger idea for investors: SpaceX is becoming a hybrid of satellite platform, launch infrastructure, and AI optionality.

Stay tuned for our full breakdown of the company’s financials once the S-1 goes live in the coming months.

That’s it for today!

Stay healthy and invest on.

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Author’s Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization’s views.

Disclosure: I am long TSLA, GOOG, and NVDA in the App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.

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As it turns 50, Apple is entering its most delicate transition since the iPhone.

Tim Cook inherited Steve Jobs’ creation in 2011 and transformed it into one of the most efficient profit machines in corporate history. In September, he will hand the reins to hardware chief John Ternus.

Now, Ternus must show that Apple can still invent what comes next.

Today at a glance:

• 📱 Apple After Tim Cook

• 🤝 Amazon + Anthropic Part Deux

📱 Apple After Tim Cook

For 15 years, Tim Cook’s biggest product wasn’t a device. It was Apple’s operational excellence. He inherited a company built on the creative gravity of Steve Jobs and transformed it into a disciplined, $4 trillion fortress.

Under Cook, Apple became a cash-printing machine. Revenue and profit roughly quadrupled, while the stock climbed nearly 20x, driven by buybacks and a higher multiple.

AirPods and the Apple Watch arrived under Cook, but his real legacy was turning Apple into a profit-maximizing engine through supply-chain excellence and high-margin Services. Cook improved the operations and maximized the terminal value of the iPhone era.

The transition to John Ternus suggests Apple wants its next chapter to be defined less by optimization and more by product ambition. Apple is elevating an operator rooted in hardware execution at the exact moment the company needs its next device story.

Cook isn’t leaving the building. He’ll transition to Executive Chairman to manage global policy and his high-stakes relationship with the Trump administration. However, the CEO office will now belong to a 25-year Apple veteran described as “Tim Jr.” in style but an engineer by trade.

The $4 Trillion Inheritance

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Premium members get:

• 📊 Monthly reports: 200+ companies visualized.

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PRO members get everything PLUS:

• 📩 Saturday PRO reports: Timely insights on the latest earnings.

Today at a glance:

1. ⚡️ TSMC: Agentic Shift Acceleration

2. 🔬 ASML: AI Demand Boosts Outlook

3. 💊 J&J: Oncology Powers Guidance

4. 👔 Morgan Stanley: Record Trading

5. 🏛️ Goldman Sachs: Equities Hit Records

6. 🥤 PepsiCo: Snack Volume Returns

7. 🧬 Abbott: Strategic Reset

8. 🏦 Schwab: Trading Records

9. 📈 Blackrock: iShares Momentum

1. ⚡️ TSMC: Agentic Shift Acceleration

TSMC’s Q1 FY26 results reflected a massive transition, as demand for AI infrastructure moved from speculation to concrete financial gains. Revenue skyrocketed 41% Y/Y to $35.9 billion ($0.4 billion beat), while net income surged 58%. Management raised its full-year 2026 revenue growth forecast to above 30%, up from the previous ~30% target.

Gross margins expanded to a staggering 66%, far exceeding the analyst consensus of 64.5%. CEO C.C. Wei noted that the industry is moving beyond generative AI into agentic AI—where platforms perform actions rather than just answering queries—leading to a step-up in chip demand that shows no sign of cooling.

TSMC’s dominance is now almost entirely tied to its most advanced leading-edge technologies. Chips made with 7nm or smaller nodes accounted for 74% of total wafer revenue. The high-performance computing (HPC) segment, which houses the powerhouse AI chips for NVIDIA and AMD, now accounts for 61% of total revenue. That compares to just 41% four years ago.

While the 3nm ramp-up continues to accelerate (now 25% of revenue), management is keeping its foot on the gas. Capital expenditure is trending toward the top end of the $52–$56 billion range for 2026. This aggressive spending serves as a warning shot to rivals like Intel. C.C. Wei pointedly remarked that there are “no shortcuts” to foundry leadership, emphasizing that manufacturing excellence and customer trust cannot be bought overnight.

Despite the blowout numbers, shares dipped slightly as investors digested potential macro risks. CFO Wendell Huang acknowledged that the conflict in the Middle East could drive up costs for specialized chemicals and gases, such as helium. While it is “too early to quantify” the exact impact on profitability, management remains confident in their supply chain resiliency and energy stability in Taiwan.

TSMC is also doubling down on its global footprint, with total US investment pledges now reaching $165 billion. As the firm prepares for a sequential 10% revenue jump in Q2, the narrative is clear: TSMC is the indispensable foundation of the AI era, and for now, its fabs are running hot with no significant competition in sight through the end of the decade.

Check out the earnings call transcript on Fiscal.ai here.

2. 🔬 ASML: AI Demand Boosts Outlook

ASML kicked off Q1 2026 with a solid beat, proving that the semiconductor industry’s lithography intensity is only increasing. Revenue rose 13% Y/Y to €8.8 billion (€110 million beat), while GAAP EPS of €7.15 comfortably topped estimates. Citing an insatiable appetite for AI infrastructure, management raised and narrowed its full-year 2026 sales guidance to €36-€40 billion (an improvement from €34-€39 billion previously).

The quarter’s bottom line was particularly robust, with a 53% gross margin that exceeded guidance. This was driven by a strong mix in the Installed Base business, where customers are paying for upgrades and services to squeeze more capacity out of existing tools while waiting for new systems to arrive.

The narrative remains dominated by demand for EUV (Extreme Ultraviolet). CEO Christophe Fouquet noted that customers are “sold out for 2026” and that ASML is racing to ensure it isn’t responsible for the bottleneck in global chip production. The firm expects to ship at least 60 Low NA EUV systems this year and has already mapped out a path to 80 units in 2027. Surprisingly, the older Immersion DUV business also showed resilience; previously expected to decline due to China trade tensions, demand has turned flattish as chipmakers potentially accelerate purchases ahead of new export curbs.

Geopolitics remains the primary overhang. China’s share of system sales dropped to 19% this quarter (down from 36% in Q4), aligning with management’s long-term target of 20%. While US lawmakers recently introduced the MATCH Act to further restrict equipment sales and servicing, management asserted that their new guidance range can “accommodate potential outcomes” of these export discussions. Despite the raised outlook, shares dipped 5% on the news as a slightly soft Q2 revenue guide of €8.4–€9.0 billion fell just shy of lofty analyst expectations for the bridge into the year’s second half.

3. 💊 J&J: Oncology Powers Guidance

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Netflix walked away from the Warner Bros. Discovery merger in February, avoiding a bidding war with Paramount Skydance. Investors initially cheered the discipline, and the failed deal delivered a $2.8 billion breakup fee that boosted Q1 results.

That relief didn’t last. Shares fell nearly 9% after earnings, as investors looked past the windfall and focused on what comes next: a business that now has to justify its premium valuation through price hikes, ad-tier scaling, and internal efficiency.

Its unchanged 13% revenue growth outlook for 2026 implies slower momentum from here. Now that the M&A shortcut is gone, Netflix must prove it can build the next leg of growth on its own.

Today at a glance:

• 🍿 Netflix Q1 FY26

• 🎯 3 Strategic Priorities

• 📈 Streaming Market Share

• 🛰️ Amazon: Buying the Spectrum

🍿 Netflix Q1 FY26

Income statement:

• Revenue +16% Y/Y to $12.2 billion ($80 million beat).

• Operating margin 32% (+1pp Y/Y).

• EPS $1.23 ($0.11 miss).

• Termination fee of $2.8 billion included in ‘other income’ (see visual).

Balance sheet:

• Cash and short-term investments: $12.3 billion.

• Debt: $14.4 billion.

FY26 guidance (unchanged):

• Revenue +12%-14% to ~$51.2 billion.

• Operating margin 31.5% (+2pp Y/Y).

So, what to make of all this?

• 📈 Top-line momentum: Revenue rose 16% Y/Y and was slightly ahead of expectations. While Netflix no longer provides subscriber counts, management attributed the beat to slightly higher-than-planned membership growth. The growth was global, with Latin America (+19%) and Asia-Pacific (+20%) growing the fastest.

• 📢 Ads on track: The advertising segment remains a primary growth engine. Netflix reiterated its projection for ad sales to double to ~$3 billion in 2026. This trajectory is essential to the multi-tier strategy, serving as a safety net against churn as inflation pressures consumers to cut back on non-essentials.

• 📉 Cautious Q2 guidance: Management guided for an operating margin of 32.6%, a 150bp decline Y/Y. The softer outlook reflects front-loaded content amortization, with margin expansion expected to resume in the second half. Netflix has been a story of steady margin expansion if we zoom out.

• 🏷️ Price increase kicks in: In March, Netflix hiked the price of its standard ad-free plan by $2 to $20/month. Since this was announced late in Q1, the financial impact was not reflected in these results but is expected to be a primary driver of revenue growth in the coming quarters.

• 👔 End of an era: Co-founder Reed Hastings announced he will step down from the board in June after 29 years. His departure marks the final transition to the Ted-and-Greg era of leadership. Symbolically, it reinforces that Netflix is now being judged less as a visionary disruptor and more as a scaled media platform expected to deliver steady growth and disciplined returns.

🎯 3 Strategic Priorities

Netflix is evolving into a diversified entertainment ecosystem. To compete with legacy media conglomerates and social apps like TikTok or YouTube, management is focusing on three fronts:

1. Content: Netflix is expanding beyond binge-worthy series to capture more “moments of truth.” Live events drove record sign-ups in Japan this quarter, while podcasts and games aim to make Netflix more of a regular destination rather than a weekend-only app.

2. Technology: Management is leaning on AI to improve efficiency and discovery. The acquisition of Ben Affleck’s AI startup, InterPositive, suggests Netflix wants to give filmmakers AI-powered production tools. On the consumer side, a vertical video discovery feed with TikTok-like browsing is coming later this month.

3. Monetization: Ads and pricing work together. The ad tier now drives 60% of new sign-ups, giving Netflix a lower-cost entry point, more room for targeted third-party bundling, and more flexibility to raise prices elsewhere.

Bottom line: Ads and pricing can support low double-digit growth, but investors may still want clearer evidence that Netflix’s rising content spend is generating the kind of returns that justify its premium multiple (well above 30x forward earnings).

📈 Streaming Market Share

According to Nielsen, streaming accounted for 48% of US TV time in February, up from 43.5% a year ago and at an all-time high. The growth came at the direct expense of cable, which fell to a 20% share, down from 23% a year ago.

Netflix captured 8.4% of US TV time in February, slightly up from 8.2% a year ago. This somewhat flattish engagement has become a regular topic on the earnings calls. But co-CEO Greg Peters often points to retention as a better metric than hours watched to evaluate Netflix’s ability to steadily raise prices.

Warner + Paramount (part of ‘Other’) remained small at 3.4% market share in February if we combined them (+0.9pp Y/Y).

Peacock was a big winner in February, with 3.0% market share (up 2X from a year ago), thanks to the trifecta of Super Bowl LX, the Milan Cortina Winter Olympics, and the NBA All-Star Weekend. But these are one-off major sports events, and the share boost is likely to be short-lived. This is textbook cable-stealing, and not at the expense of other streamers.

YouTube remains the streaming king, with a 12.7% share of US TV time, up from 11.6% a year ago, but still below its July 2025 peak.

🛰️ Amazon: Buying the Spectrum

Amazon has spent years—and billions—trying to catch up to SpaceX in the low Earth orbit (LEO) satellite race. While Elon Musk’s Starlink already has a massive head start with 10,000 satellites, Amazon Leo is shifting its strategy from raw scale to strategic integration. Following a major partnership to bring Wi-Fi to Delta Air Lines, Amazon is now moving from the cockpit to the pocket.

Amazon’s $11.6 billion acquisition of Globalstar is a definitive play for the signal in your smartphone. By swallowing the satellite operator, Amazon is buying a regulatory shortcut to challenge Starlink’s direct-to-device (D2D) dominance, with plans to launch its own consumer service by 2028.

Why Globalstar?

The disparity in orbit remains massive: SpaceX has roughly 10,000 satellites to Amazon’s ~265 today.

However, Globalstar provides two things Amazon couldn’t get quickly:

• Buying the spectrum: Access to radio frequency licenses that allow satellites to talk directly to unmodified smartphones.

• Securing the customer: A “long and proven track record” with Apple, which uses Globalstar for its Emergency SOS features.

Ben Thompson notes that this deal might be less about Amazon becoming a phone company and more about Apple vs. Musk. In his view, Apple likely "made this deal happen" to avoid being forced to negotiate with SpaceX and to maintain control over its ecosystem. For Amazon, it's a win-win: they deepen their AWS relationship with Apple while gaining the infrastructure to track their own global logistics and drone fleets.

Why the Middling Assets Matter

Critics point out that Globalstar’s 24 satellites are aging “bent-pipe” relays—technology that simply bounces a signal without processing it. But for Amazon, the satellites are disposable; the regulatory rights are eternal.

Aparna Venkatesan, astronomy professor at the University of San Francisco, explained to Wired:

“It’s tapping into this package of already preapproved global spectrum rights [...] it’s going to get connected to this huge iPhone market. So I think that’s a very compelling business package.”

Bottom line: Starlink is building the fastest, largest network. Amazon is building the most integrated ecosystem. By controlling the spectrum that powers the iPhone's safety features, Amazon ensures that even if it loses the numbers game in space, it remains an essential service on the ground.

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Disclosure: I own AMZN, META, and NFLX in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.

Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.

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A new earnings season is here with the big banks kicking us off.

Later this week, we’ll have a look at Netflix and the picks and shovels of the AI era, TSMC and ASML.

The banking sector’s first report card of 2026 arrived amidst a world on edge. The soft landing narrative was abruptly challenged by the outbreak of the Iran war, a conflict that has sent shockwaves through energy markets.

Against this volatile backdrop, the results were surprisingly robust. But the numbers hidden beneath the surface tell a story of a widening divide. While the ultra-wealthy are seeing their portfolios balloon from record equity prices, the gas pump tax is beginning to bite at the lower end.

Let’s break down the results.

Today at a glance:

• JPMorganChase: Trading Powerhouse

• Bank of America: Equities Take the Crown

• Wells Fargo: Expansion Squeeze

• Citigroup: Turnaround Hits High Gear

The Big Picture

As a reminder, banks make money through two main revenue streams:

1. 💵 Net Interest Income (NII): The difference between interest earned on loans (like mortgages) and interest paid to depositors (like savings accounts). It’s the primary source of income for many banks and depends on interest rates.

2. 👔 Noninterest Income: The revenue from services unrelated to interest. It includes fees (like ATM charges), advisory services, and trading revenue. Banks relying more on noninterest income are less affected by interest rate changes.

Here are the significant developments shaping Q1 FY26:

• 🚢 Strait of Hormuz shockwave: Geopolitics is no longer a distant concern. Wells Fargo reported that gasoline spending has surged nearly 30% since the conflict began. While Jamie Dimon notes the economy remains resilient for now, there is a growing consensus that it takes several months for high fuel costs to drain excess savings and force a pullback in discretionary spending.

• 🎰 Traders feast on volatility: Market chaos is a goldmine for the desks. JPMorgan (+20%) and Citigroup (+19%) delivered historic trading results as tensions in the Middle East and AI-driven tech swings forced a massive rebalancing of global portfolios. For the big banks, volatility is proving to be a highly profitable hedge against slowing loan growth.

• 🤖 Private credit boogeyman: The big banks disclosed over $100 billion in exposure to private credit. While Jamie Dimon insists the banks are “not particularly worried” because they sit behind a large loss cushion, investors are hyper-focused on how these loans—often tied to software firms—will hold up as AI disrupts traditional business models.

• 🏦 NII peak is here: The era of easy interest income is fading. JPMorgan and Wells Fargo both signaled that Net Interest Income (NII) is reaching a ceiling. As the ‘higher-for-longer’ environment finally begins to normalize and deposit costs remain sticky, the banks are shifting their focus from lending margins to fee-based businesses such as Wealth Management and Equities.

• 🏛️ Basel III Endgame U-Turn: In a surprising regulatory win for the banks, the Fed issued a revamped proposal that could actually decrease capital requirements by nearly 5% for the largest firms. This pivot suggests Washington is prioritizing market liquidity and lending capacity.

• 📉 K-Shaped consumer: The resilience is real, but it’s uneven. JPMorgan saw credit card spending rise 9%, yet Wells Fargo noted “rising stress” for less affluent customers. We are seeing a divergence: the high-end consumer is buoyed by asset growth (stocks/real estate), while small businesses are tightening their belts, with new lending at JPM dropping 10%.

• 🔑 Takeaway: The big banks are thriving on market volatility and high-end wealth fees, but they are sounding the alarm on sticky energy inflation that could erode consumer savings by the second half of the year.

Let’s visualize them one by one and highlight the key points.

JPMorganChase: Trading Powerhouse

• Net revenue grew 10% Y/Y to $49.8 billion ($1.6 billion beat):

  • Net interest income (NII): $25.4 billion (+9% Y/Y).

  • Noninterest income: $24.5 billion (+11% Y/Y).

• Net income: $16.5 billion (+13% Y/Y).

• Adjusted EPS: $5.94 ($0.48 beat).

• Key developments:

  • 📈 Trading breaks records: JPMorgan’s traders delivered their highest-ever quarterly revenue, pulling in $11.6 billion (+20% Y/Y). The performance was fueled by record-breaking results in equities and a 21% surge in Fixed Income. Volatility from the Middle East conflict and AI-driven tech swings created a perfect environment for the trading desks to capture volume.

  • 📉 NII outlook trimmed: Despite the earnings beat, the stock saw pressure after management lowered full-year Net Interest Income guidance to $103 billion (down from $104.5 billion). While Q1 NII was strong at $25.4 billion, CFO Jeremy Barnum signaled that tailwinds are fading, suggesting future quarters may flatten as the interest rate environment shifts.

  • 💰 Investment Banking rebound: After a disappointing end to 2025, Investment Banking fees came roaring back, surging 28% Y/Y to $2.9 billion. The standout was M&A advisory, which saw a massive 82% jump to $1.3 billion. This broad-based recovery helped offset a minor 7% dip in debt underwriting and silenced concerns about a prolonged slump in dealmaking.

  • 🛡️ Credit reserves stabilize: The massive reserve from the Apple Card integration has moved into the rearview mirror. The bank added just $191 million to credit reserves this quarter—significantly lower than the $3 billion analysts feared—thanks to a release in consumer reserves and stable net charge-offs.

  • ⚖️ Regulatory friction: Jamie Dimon used the earnings call to blast proposed ‘Basel III Endgame’ rules, which could force the bank to hold an additional $20 billion in capital. Dimon argued these requirements lack a clear purpose and could hinder the bank’s ability to deploy capital effectively.

  • 🔑 Takeaways: A historic performance from the Wall Street desks drove a strong beat. The integration issues in late 2025 have been resolved. While the slight trim to NII guidance was underwhelming, the resurgence in Investment Banking and the record-setting trading floor suggest JPM is successfully pivoting its profit engines.

• Key quote:

  • CEO Jamie Dimon: “The US economy remained resilient in the quarter, with consumers still earning and spending and businesses still healthy. At the same time, there is an increasingly complex set of risks—such as geopolitical tensions and wars, energy price volatility, and large global fiscal deficits.”

Bank of America: Equities Take the Crown

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Today at a glance:

1. 🛩️ Delta: Fuel Shock Litmus Test

2. 🍺 Constellation Brands: Sober Outlook

3. 🌿 Tilray: Global Pivot

1. 🛩️ Delta: Fuel Shock Litmus Test

Delta kicked off FY26 by proving its premium-heavy business model can be a shield against geopolitical chaos. Despite an unprecedented spike in jet fuel prices driven by the conflict in the Middle East, the airline easily cleared Wall Street’s expectations.

Premium Resilience vs. Energy Spikes

Q1 was a battle between record-high demand and record-high fuel bills. Delta pivoted quickly to fare recaptures and capacity cuts.

Revenue rose 13% Y/Y to $15.9 billion ($1.0 billion beat). Remuneration from the American Express partnership grew in the double digits, while the Maintenance, Repair, and Overhaul (MRO) segment more than doubled its revenue to $380 million. They are both part of “Other” revenue.

Adjusted EPS landed at $0.64, surging 40% Y/Y and comfortably beating the $0.57 consensus. That was despite fuel expenses rising by $330 million in Q1 alone, with jet fuel prices jumping 10% in March.

Delta's fuel costs ended the quarter at a two-year high of $2.80 per gallon, a sharp move that added $330 million in unbudgeted expenses in March alone. This visual confirms why management is bracing for this trend to accelerate toward $4.30 per gallon in the June quarter.

Navigating the Strait of Hormuz

Management’s outlook for the June quarter was a mix of aggressive margin protection and a wait-and-see approach to the full year:

• $2 Billion Fuel Headwind: Delta expects its fuel bill to be $2 billion higher in Q2. To combat this, the airline is slashing capacity by 3.5%, specifically targeting less profitable red-eye and midweek flights.

• Price Hikes: Delta is guiding for low-teens revenue growth on flat capacity. It intends to pass higher costs directly to consumers through fare hikes and increased bag fees.

• FY26 Outlook Reaffirmed: CEO Ed Bastian refused to walk back his $6.50–$7.50 EPS guidance for the full year, though he noted a formal update would depend on the fuel environment stabilizing over the next few months.

Bastian’s core thesis is that high fuel prices act as a catalyst for change, separating high-margin winners from weaker competitors who cannot pass on costs. While the Pakistan-brokered ceasefire and the reopening of the Strait of Hormuz provided a relief rally for the stock, Delta is clearly bracing for a challenging fuel environment by leaning into its affluent customer base.

2. 🍺 Constellation Brands: Sober Outlook

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• 📈 Broadcom: $100B AI Target

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Anthropic Leapfrogs OpenAI

Earlier this week, the AI race leaderboard just saw a historic—and controversial—flip.

Anthropic announced its annual revenue run rate (ARR) has topped $30 billion. It was just a few days after OpenAI disclosed its ARR was roughly $24 billion. These numbers can be a bit confusing, but they are essentially the revenue from the past month multiplied by 12.

Founded by a team of former OpenAI employees, the safety-first AI lab has officially leapfrogged its competitor. While OpenAI is busy navigating C-suite volatility (more on that below), Anthropic has been catching up at breakneck speed.

Before we declare a new king of AI, we have to look at the accounting. Anthropic said the bigger number, but the two companies count their chips differently:

• Anthropic’s gross method: They record the full amount a customer pays, then count the cloud provider’s cut (AWS/Azure/GCP) as an expense later.

• OpenAI’s net method: They typically record only what they actually receive after Azure takes its share.

If we compared apples to apples, the gap would likely vanish. However, in the game of venture scale and market perception, Anthropic clearly has momentum in its favor.

The launch of its latest model, Mythos, doubles down on this enterprise-first strategy. The model, hilariously dubbed too powerful to be publicly released, is restricted to vetted partners at a 5x price premium ($125 per million output tokens). It’s a specialized tool for automated cybersecurity. In testing, Mythos autonomously uncovered thousands of previously unknown security flaws across every major operating system, including bugs that had survived decades of human review.

Anthropic now has over 1,000 enterprise customers spending $1M+ annually, and just secured a massive 3.5 gigawatt compute partnership with Google and Broadcom.

Today at a glance:

• 🏭 Intel: Team Blue Joins Musk’s Terafab

• 🤖 OpenAI: One Battle After Another

• 🥑 Meta: The Avocado Moment

🏭 Intel: Team Blue Joins Musk’s Terafab

Two weeks ago, we looked at Elon Musk’s audacious plan to solve his own chip supply constraints by building Terafab—a 100-million-square-foot vertical integration play in Austin. Our takeaway then was that while the vision was grand, the balance sheet was the ultimate bottleneck.

This week, the math changed. Intel has officially joined the Terafab joint venture.

After a high-profile handshake between Musk and Intel CEO Lip-Bu Tan at Intel’s campus last weekend, the chip giant is now a cornerstone partner alongside Tesla, SpaceX, and xAI. It’s a full-stack collaboration to restructure how silicon is built.

Why Intel? The Packaging Pivot

When we first discussed Terafab, the skepticism focused on how Musk could replicate decades of specialized foundry expertise from scratch. Intel’s entry provides two things Terafab was missing: 18A Node IP and Advanced Packaging (EMIB-T).

Intel is bringing its System Foundry approach to Austin. By integrating Intel’s packaging technology under the Terafab roof, Musk can achieve that “recursive design loop” he promised—linking logic, memory, and specialized space-hardened chips in a single, high-efficiency flow.

For Intel, this is the ultimate win for its foundry turnaround. Being the primary partner for Tesla’s Optimus and SpaceX validates Intel as the only US firm capable of leading-edge logic at this scale.

The new structure places Intel as the foundational brain, SpaceX as the bank, and Tesla/xAI as the primary customers.

Sovereignty Over Procurement

This partnership moves Terafab from a speculative moonshot to a serious sovereignty play. By anchoring the project with Intel’s 18A process, Musk is hedging against capacity constraints at TSMC and Samsung while keeping the entire supply chain within US borders.

Bottom Line: With Intel bringing its manufacturing muscle to the table, the Terafab is becoming more concrete. The question for investors shifts from “Can they build it?” to “Who owns the margins when the silicon starts rolling off the line?”

🤖 OpenAI: One Battle After Another

Between a brutal New Yorker expose and a sudden leadership vacuum, OpenAI is making moves that look more like brand defense than technological innovation.

The $100M+ Side Quest

OpenAI just acquired TBPN (Technology Business Programming Network), a niche tech talk show, for a price tag reportedly in the “low hundreds of millions.”

• In context: In 2024, Spotify renewed its deal with Joe Rogan for $250 million to reach 20M+ people globally. OpenAI just spent a similar order of magnitude on a channel with roughly ~70,000 viewers per episode.

• Wait, but why? According to Sam Altman, it’s a narrative play. By owning a builder-friendly media channel, OpenAI is attempting to bypass traditional journalism. They are buying a space to speak directly to the tech elite, free from the performative attacks of mainstream news.

• Not so independent: The two hosts, John Coogan and Jordi Hays, will report to Chris Lehane, OpenAI’s chief political operative. They also now have an obvious financial stake in OpenAI’s success, even if the exact terms of the deal were not disclosed. OpenAI says the show will remain editorially independent. But once a media channel is owned by the company it covers, skepticism comes with the territory.

The New Yorker Reality Check

The timing of the TBPN deal follows a devastating 16,000-word New Yorker investigation this week that paints a grim picture of OpenAI’s internal culture.

• Trust Gap: The report cites memos from former leaders (including Anthropic’s Dario Amodei) alleging a pattern of manipulation and deception by Sam Altman.

• Safety claims vs. reality: While OpenAI publicly claims to prioritize AI safety, the report alleges that only 1%-2% of the company’s compute has gone toward safety research, often using older hardware.

• Winning at all costs: Most startling, the report says OpenAI discussed a “prisoners’ dilemma” strategy that would pit world powers against one another to secure the hundreds of billions needed for its infrastructure buildout.

An Emptying C-Suite

While OpenAI is buying media companies, its executive bench is suddenly looking thinner. Several pillars of its leadership team came under pressure.

1. Fidji Simo (AGI Deployment Lead): Taking medical leave.

2. Kate Rouch (CMO): Stepping down to focus on cancer recovery.

3. Brad Lightcap (COO): Moved to “Special Projects” to help oversee a new private-equity joint venture.

4. Sarah Friar (CFO): The Information reports a growing rift with Altman over IPO timing. Friar has reportedly warned that a 2026 IPO may be too early given OpenAI’s projected cash burn, which could exceed $200 billion before the company reaches steady cash flow.

Bottom Line: When a company’s executive bench is thinning and its ethics face fresh scrutiny, optics management is starting to look as important as product development.

🥑 Meta: The Avocado Moment

After a year of playing catch-up and a series of high-profile Llama disappointments, Meta just threw its hat back in the ring. On Wednesday, the company debuted Muse Spark, the first model from Zuck’s new Meta Superintelligence Labs (MSL).

The market loved it as shares jumped 8%.

Closed For Now

For the first time, Zuck is walking away from his open source mantra.

• Closed-Source Pivot: Muse Spark (internally known as Avocado) is a closed-source model. Its code and weights are staying behind Meta’s firewall. It will be available via Meta AI (both the app and the browser).

• The Wang Era Begins: Muse Spark is the first major model tied to Alexandr Wang’s new superintelligence effort after Meta’s $14.3 billion Scale AI deal. Wang is a known proponent of closed models.

• Monetization: Meta is inching closer to the commercial AI playbook with private API access, even if paid pricing hasn’t been announced yet. It would be a major development because virtually all of Meta’s revenue still comes from advertising.

Bloomberg reported that Muse Spark was trained using several third-party open-source models, including Alibaba’s Qwen. If accurate, that could raise fresh questions about model provenance and political optics in Washington.

How Does it Perform?

• The Good: Muse Spark looks strong in science, math, health, and visual understanding. Meta says the upgraded assistant supports Instant and Thinking modes, with a more advanced Contemplating mode rolling out to boost reasoning through multiple subagents.

• The Bad: It still trails frontier leaders in coding. Zuck himself has been managing expectations, calling this a “data point on our trajectory” rather than a final frontier.

Is Distribution Enough?

Meta is leaning into its greatest competitive advantage: distribution. The company is embedding Muse Spark into apps that reach 3.5 billion users. The model seems to target consumers over software engineers. Could Meta capture a meaningful share of AI queries simply by owning the apps already on everyone’s phones?

This puts OpenAI in a precarious strategic position. With Anthropic increasingly dominant in the high-margin enterprise market and Meta/Google owning the digital advertising world, OpenAI’s business looks stuck between a rock and a hard place.

Bottom Line: Meta is no longer the benevolent provider of free models. By closing the source and hiring the most expensive researchers in the world, Zuck has turned Meta into a direct commercial rival to the leading AI labs. For now, the market is valuing Meta primarily on its existing advertising business. That may be proven wrong if the company can start driving meaningful revenue from its proprietary models.

That's it for today.

Happy investing!

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Disclosure: I own AAPL, GOOG, META, NVDA, and TSLA in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members. 

Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.

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The market’s valuation map has officially flipped upside down.

While AI labs like OpenAI and Anthropic are raising capital at eye-watering 30x to 40x forward revenue multiples, the public markets are telling a different story.

The data reveals two extremes:

• AI ramp cycle discount: NVIDIA grew revenue by more than 70% last quarter, yet now trades at roughly 21x forward earnings — trailing the S&P 500 average for the first time since 2013. Similarly, Amazon now trades meaningfully below its historical valuation range as investors focus on the size of its spending bill.

• Status quo premium: Conversely, Walmart has crossed a $1 trillion market cap, trading at a staggering 43x forward earnings despite modest 4% growth. The market is awarding a higher multiple to a brick-and-mortar retailer than to the world’s leading cloud infrastructure provider.

This is the irony of the AI scare trade. Investors are no longer viewing heavy R&D and CapEx as a moat-expanding advantage. Instead, they are treating ambition as a liability, rewarding low-drama retailers and staples with tech-like multiples simply because their earnings are easier to model.

Today at a glance:

1. The Absurdity Index: Flight to safety versus AI discount.

2. The Macro Catalyst: Why the Iran conflict triggered a duration reset.

3. The Efficiency Trap: Solving the Jevons Paradox of AI.

4. Software’s Big Reset: The ‘terminal value’ panic in SaaS.

5. The Meta Irony: Why the market is ignoring the most proven AI ROI.

6. The 3-Step Filter: Separating ‘deserved discounts’ from ‘generational moats.’

1. The Absurdity Index

In a rational market, you pay a premium for growth. In the 2026 AI scare trade, that logic has been inverted. Investors are currently paying up to avoid companies ramping their AI infrastructure spending.

We are witnessing a duration reset. The market has stopped asking “How much can this grow?” and started asking “How easily can I model next quarter?” This has pushed the valuations of boring staples to levels historically reserved for SaaS darlings.

The 13-year anomaly

For the first time since 2013, NVIDIA is trading at a discount to the S&P 500 average.

Think about the irony: The company providing the picks and shovels for the AI revolution is being valued more conservatively than the average American corporation.

Look closely at the chart: Apple now trades at a 30x multiple, while NVIDIA sits at 21x. Apple—a company that just turned 50 and is currently grappling with stagnant iPhone cycles and a delayed AI strategy—is being rewarded with a certainty premium because it is a proven cash machine. The market is effectively saying it values Apple's past more than NVIDIA’s future.

Why the map is distorted

This distortion isn’t because Walmart’s fundamental moat suddenly expanded threefold. It’s because its earnings path is cleaner.

When you buy Walmart at 43x, you are buying psychological relief. You are paying a premium to avoid worrying about Anthropic blog posts, Blackwell chip yields, power grid constraints, or geopolitical tensions in Taiwan or Iran.

The great AI rotation exists because the market is treating massive infrastructure spending as a leak in the boat rather than a motor on the back. By rewarding predictability and punishing reinvestment, the market is signaling a risk-off sentiment.

The irony is that by overpaying for the flavor of the month, investors may be locking themselves into subpar long-term returns.

2. The Macro Catalyst

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Anthropic’s Claude Code Leak

Anthropic just handed competitors a rare look under the hood of one of its most important products. During a software update, human error exposed roughly 500,000 lines of Claude Code-related source code, and the files were quickly mirrored across the internet.

Importantly, the leak did not expose Claude’s model weights. What spilled out was the product layer around Claude Code, including architecture details and unreleased features, giving rivals a clearer view into how Anthropic built one of the hottest coding agents in AI. Claude Code generates $2.5 billion in annual revenue, a figure that has doubled since January.

The timing is brutal. Anthropic is reportedly targeting a $380 billion IPO later this year. This lapse is especially awkward for a company that has tried to differentiate itself on safety and operational discipline.

It also comes as Anthropic fights the US government over its designation as a supply-chain risk after refusing certain military uses of its models. A federal judge has temporarily blocked that designation, but the broader clash with Washington remains an overhang.

Anthropic’s core pitch was never just model quality. It was also trust. Now it has to prove that trust can survive a very public operational failure.

Today at a glance:

• 👟 Nike: Topsy Turvy Turnaround

• 🛰️ Amazon: Delta Bets on the Underdog

• 🤖 OpenAI: The $122 billion Round

👟 Nike: Topsy Turvy Turnaround

Nike’s February quarter looked better on the surface than underneath. Revenue was flat Y/Y at $11.3 billion ($50 million ahead of expectations), and earnings per share also cleared the consensus. But the stock still fell 15%, a sign investors remain unconvinced that the turnaround is gaining real traction.

The revenue beat deserves an asterisk. While reported revenue growth was flat, the top line actually declined 3% Y/Y in constant currency.

The bigger problem is margins. Gross margin fell to 40% as Nike leaned harder on wholesale (up 5%) and stepped back from higher-margin direct sales (down 4%). In other words, Nike’s product sales are steady, but moving through less profitable channels.

Nike is effectively trading direct sales for wholesale volume to clear inventory. While this keeps the Swoosh on shelves, it is a significant drag on the bottom line that has now persisted for six straight quarters.

International remains the bigger headache.

• China sales fell 7% Y/Y as local competitors like Anta and Li-Ning continued to take share.

• Meanwhile, the EMEA growth of 2% Y/Y missed estimates. The current quarter (Q4) will have to contend with the war in Iran, but Q3 results show Nike was already losing momentum in the region well before the conflict began.

• North America showed a modest 3% gain, but it wasn’t enough to offset the persistent weakness elsewhere.

The weakness also goes beyond the core Nike brand. Converse revenue plunged 35% to just $264 million, another sign the company’s innovation and brand issues are broader than performance running alone.

Nike remains a ‘show me story.’ CEO Elliott Hill has been in the seat for 18 months. His comment that "the pace of progress is different across the portfolio" suggests a recovery taking much longer than anticipated. The stock just hit its lowest price since 2014, but ongoing earnings compression means it remains richly valued, well above 20x forward earnings. Until Direct stabilizes, this turnaround still looks incomplete. For now, Nike is still asking investors for patience.

🛰️ Amazon: Delta Bets on the Underdog

The space race used to be about national pride and planting a flag on the moon. In 2026, it’s all about who can stream 4K videos at 35,000 feet.

This week, Delta Air Lines announced a massive partnership with Amazon Leo (formerly known as Project Kuiper), a low Earth orbit satellite constellation. The plan is to bring high-speed Wi-Fi to 500 aircraft starting in 2028. For Amazon, this is a critical validation of its $10 billion satellite bet.

Amazon Leo is, of course, in direct competition with SpaceX’s Starlink. The disparity in raw infrastructure is almost comical. Starlink currently has over 10,000 operational satellites and has already signed up United, Southwest, and Air France. Amazon Leo has roughly 200. That said, Amazon is authorized to launch thousands more, aiming for a total network size that could eventually exceed 7,700 satellites.

Delta CEO Ed Bastian chose an ecosystem over a pure connectivity provider. By tapping Amazon, Delta integrates with AWS to personalize seat-back screens and bring Amazon’s content and shopping library directly into the cabin.

Earlier this year, Elon Musk publicly clashed with Ryanair’s Michael O’Leary after Ryanair passed on Starlink. Delta’s move shows that as competition expands, airlines may value broader commercial alignment as much as raw satellite scale.

This deal arrives as SpaceX prepares for a historic 2026 IPO. Following its February merger with xAI, SpaceX is reportedly seeking a $1.75 trillion valuation and aiming to raise up to $75 billion. Starlink’s first-mover advantage is central to that bull case. But Delta’s decision shows Amazon does not need to match SpaceX satellite for satellite to win important customers. If AWS relationships, commerce, and content can help close the gap, the Starlink monopoly narrative starts to weaken.

🤖 OpenAI: The $122 Billion Round

OpenAI closed a staggering $122 billion funding round, catapulting its valuation to $852 billion. To put that in perspective, Sam Altman’s firm is now worth more than JPMorgan Chase and already sits among the 15 most valuable companies in the world.

OpenAI’s announcement read less like a press release and more like a draft for an IPO prospectus. The company touted:

• 900 million weekly active users (on track to hit 1 billion in 2026).

• 50 million paying subscribers.

• $2 billion in monthly revenue (implying ~$24 billion ARR).

• Growing 4x faster than Google or Meta did at the same stage.

Perhaps the most notable shift is in the revenue mix. Enterprise sales now account for 40% of the business and are on track to reach parity with consumer subscriptions by year-end. That helps explain the pivot to enterprise and coding.

This new war chest is meant to fund an AI infrastructure roadmap expected to require roughly $1.4 trillion over time.

The biggest checks came from three players. Amazon committed $50 billion, although $35 billion is tied to IPO or AGI milestones. NVIDIA and SoftBank each committed $30 billion.

Amazon and NVIDIA are not investing purely for financial return. They both benefit if OpenAI remains a major buyer of compute and infrastructure in a market where heavy AI spending lifts the whole ecosystem.

In a move typically reserved for public companies, OpenAI raised $3 billion directly from individual investors through bank channels and secured placement in Cathie Wood’s ARK ETFs. Bringing individual investors into the round does two things: it creates a larger base of brand evangelists and helps frame a future IPO valuation.

Still, private-market enthusiasm does not guarantee public-market upside. Plenty of companies that went public in 2022 ended up trading below their last private valuations. OpenAI may still command enormous demand when it lists, but what happens after the IPO debut is far less certain.

OpenAI now has the market cap of the incumbents and a CapEx plan that rivals the Mag 7. What it lacks is an incumbent-like cash machine. Quite the opposite: cash burn for 2026 alone is expected to exceed $14 billion.

That’s where the economics start to matter. Sacra estimates OpenAI’s gross margin was just 33% in 2025, well below the 46% target. Inference costs (the chips and electricity required to answer prompts) rose almost as fast as revenue. This is not the kind of high-margin model that powered Meta and Google in their early years.

To justify its latest valuation, OpenAI would need to generate $24 billion in profit, not in revenue. With margins like these, that points to a business closer to $250 billion in annual revenue, or about 10x today’s run rate.

That leaves little room for strategic misfires like Zuck’s Metaverse. Capital-intensive businesses cannot afford too many expensive detours, and OpenAI does not have Meta’s luxury of funding moonshots from a wildly profitable core business. The recent Sora stumble is a reminder that not every big bet will land, even with strong execution.

The $852 billion question is whether OpenAI can start generating real cash before investors start challenging the multiple.

That's it for today.

Happy investing!

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Thanks to Fiscal.ai for being our official data partner. Create your own charts and pull key metrics from 50,000+ companies directly on Fiscal.ai. Save 15% with this link.

Disclosure: I own AAPL, GOOG, META, NVDA, and TSLA in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members. 

Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.

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🔥 The March report is here!

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What to expect in this monthly report?

• 🚙 EVs: Rivian, Xiaomi, NIO.

• 💳 Fintech: StoneCo, dLocal.

• 🥫 FMCG: Celsius, General Mills.

• 😎 Tourism: Carnival, Vail Resorts.

• 🛢️ Energy: Aramco, Chevron, Oxy.

• ⚙️ Semis: Broadcom, Micron, Marvell.

• 🤖 AI infrastructure: Oracle, CoreWeave.

• 🌐 Internet platforms: Tencent, Meituan.

• ☁️ Workflow: Asana, DocuSign, GitLab, UiPath.

• 📊 Data: C3.ai, HPE, MongoDB, Rubrik, Samsara.

• 🛡️ Cybersecurity: CrowdStrike, Okta, SentinelOne.

• 👟 Consumer brands: Nike, Adidas, Lululemon, On.

• 📦 E-commerce: Alibaba, Sea, JD, Pinduoduo, Chewy.

• 🛒 Retail: Costco, Target, Best Buy, Home Depot, Lowe’s.

• And more, like Accenture, Adobe, Darden, Didi, FedEx, GameStop.

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Today at a glance:

1. 📦 PDD: Growth Pivot

2. 📱 Xiaomi: Memory Crunch

3. 🛵 Meituan: The Subsidy War

4. 🛳️ Carnival: Energy Volatility

5. 🐶 Chewy: Loyalty Flywheel

1. 📦 PDD: Growth Pivot

Temu parent PDD Holdings capped off FY25 with Q4 revenue rising grew 12% Y/Y to $17.7 billion ($0.4 billion miss), an acceleration from the single-digit growth seen earlier in the year.

The core story is Temu’s stabilization. After struggling with the end of the US de minimis tax exemption, the global bargain app regained momentum during the holiday season and now operates in nearly 100 markets. Transaction services revenue (which includes Temu) surged 19% to $9.1 billion in Q4, suggesting that PDD is successfully navigating the new tariff landscape by diversifying into Europe and optimizing its supply chain.

While growth improved, net income slid 11% to $3.5 billion ($0.52 EPADS miss). The company continued its aggressive campaign of “deliberate sacrifice” to fortify its ecosystem. Margins compress slightly for another quarter.

Strategic Reinvestment

Management has launched a massive three-year strategy aimed at “building another Pinduoduo” by shifting focus from raw traffic to deep supply-chain integration.

• Support program: PDD is pouring resources into merchant support and last-mile logistics, including a new “free delivery to villages” pilot that establishes warehouses in remote rural areas to unlock untapped consumption.

• Regulatory headwinds: The quarter was not without friction. Beijing authorities deepened their probe into PDD’s accounting and tax practices following a highly publicized literal fistfight between employees and regulators in December.

• Supply chain conviction: Co-CEO Jiazhen Zhao emphasized that 2026 marks a new decade for the firm, with an “all-in” mindset on supply chain investment that will continue to pressure short-term margins.

Outlook & Geopolitics

Despite the earnings miss, the stock jumped post-earnings as investors cheered the revenue acceleration and easing trade tensions. The US Supreme Court’s recent ruling against certain 2025 tariffs and the potential creation of a “US-China Board of Trade” have provided a much-needed reprieve for cross-border e-commerce.

PDD’s balance sheet remains a fortress, with cash and short-term investments climbing to ~$60 billion. Management continues to warn that quarterly profits will fluctuate as they prioritize merchant retention over short-term earnings.

2. 📱 Xiaomi: Memory Crunch

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• 📈 Broadcom: $100B AI Target

• ☁️ Micron: Demand Goes Vertical

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AI is leaving the chat box

This week, Anthropic launched a research preview that allows Claude Code and Cowork to take direct control of your computer—pointing, clicking, and typing like a human operator. Through a new feature called Dispatch, users can assign a complex task from their phone and return later to a finished deliverable on their desktop.

It follows the recent hype around OpenClaw, whose founder, Peter Steinberg, just joined OpenAI. Steinberg’s move is a clear signal that OpenAI is preparing its own response. It’s the latest display of the intensifying AI agent race. While Anthropic is doubling down on autonomous work, others can no longer afford to fall behind.

Today at a glance:

• 🤖 OpenAI: The End of Side Quests

• 🏭 Terafab: The Silicon Bottleneck

• 📱 Apple: Maps Turn Into Ad Space

🤖 OpenAI: The End of Side Quests

OpenAI spent the last two years acting like it could build everything at once: the chatbot, the coding assistant, the browser, the shopping layer, the hardware device, and even a video-generation app aimed at creators and studios. That made the company look unstoppable, but also increasingly spread out.

Anthropic has been gaining ground with developers and enterprise users, especially in coding. Meanwhile, OpenAI has been juggling a growing list of products competing for the same talent, attention, and compute. Consumer experiments may generate buzz, but they do little to help if the company is heading toward an IPO and needs to show a clear path to profitability.

In recent weeks, OpenAI made clear that the era of endless experimentation may be fading. Leadership is reportedly pushing the company away from distracting side quests and back toward coding and enterprise productivity.

Here’s what that looks like in practice:

• Sora App shuttered: Just six months after its splashy standalone launch, OpenAI is closing the Sora app. Despite hyper-realistic results, the resource-intensive nature of video generation has made it an early casualty of the new lean strategy.

• $1 billion Disney deal collapses: The partnership, which intended to bring Disney characters into the Sora ecosystem, was officially terminated this week. It is a stark admission that the Hollywood dream is being deprioritized in favor of more stable revenue streams.

• Desktop super app: Rather than maintaining fragmented products like the Atlas browser and Codex coding tool, OpenAI is folding them into a single unified desktop interface. The goal is to stop users from context-switching.

• Transaction retreat: OpenAI is stepping back from owning the payment flow inside ChatGPT. Instead of handling purchases directly, it is repositioning as a product discovery and referral layer, offloading the operational complexity of e-commerce to retailers.

ChatGPT’s success has made OpenAI, as Ben Thompson put it, an accidental consumer tech company. Altman & Co. then tried to build ten startups under one roof. Now OpenAI is being forced to act less like a playground for new ideas and more like a business with a clearer center of gravity.

While apps like Sora were flashy and viral, video generation is expensive, difficult to moderate, and full of copyright landmines. When you are preparing for a possible IPO, these are the kinds of projects that get scrutinized fast. Viral clips of dogs driving cars don’t carry the same weight as high-margin enterprise seats.

That pressure is showing up most clearly in enterprise. Anthropic’s momentum with Claude Code and its $2.5 billion revenue run-rate has made the battle for workplace adoption much more urgent. OpenAI seems to have decided that the biggest prize is becoming the default software layer for work, and that changes how it thinks about resources. Every GPU spent on a side quest is one not being used to win the high-stakes battle for the developer’s desktop.

Instead of chasing every adjacent opportunity, the company now seems to be asking a simpler question: Does this help us win coding and enterprise? If the answer is no, it becomes much easier to cut, even if the project is flashy and has big-name partners attached.

For years, frontier AI companies were rewarded for launching whatever felt like a big idea. This next phase is less about proving how many cool things you can launch and more about proving you know which ones are actually worth building. OpenAI is starting to act less like an AI theme park and more like a company picking its battles. Sam Altman has already proven he is exceptional at fundraising and dealmaking. Now comes the hard part. OpenAI has to prove it can be exceptional at generating cash.

🏭 Terafab: The Silicon Bottleneck

Elon Musk’s newest big idea is not a rocket or a robotaxi. It’s a chip factory. This week, Musk unveiled Terafab, a chip-manufacturing joint venture between Tesla, SpaceX, and xAI that early reports peg at ~$25 billion.

The project aims to supply the specialized compute needed for self-driving cars, humanoid robots, and a newly revealed “Orbital Data Center” system. Musk’s vision is split into two distinct lines: the AI5/AI6 series for terrestrial robotics and the D3 series, which are high-power chips hardened for the hostile environment of space.

Terafab matters because it exposes a growing reality at the center of the AI boom. The Big Three foundries (TSMC, Samsung, and Intel) cannot expand quickly enough to meet Musk’s exponential projections. As Musk bluntly put it:

“We either build the Terafab or we don’t have the chips.”

The scale is almost incomprehensible. Musk suggested Terafab will eventually span 100 million square feet—roughly 10x the size of Giga Texas—requiring over 10 gigawatts of power. Musk says bringing fabrication, memory, and packaging under one roof in Austin could create a ‘recursive design loop,’ allowing chips to be designed, printed, and tested in days rather than months. If successful, it would give Musk’s companies far more control over the chip-development cycle.

Here is what stands out from a business perspective:

• The ambition is enormous: Terafab targets 1 Terawatt of annual compute. For context, analysts have argued that ambition is on the order of current relevant global semiconductor capacity.

• Pivot to space-first compute: In a surprising twist, Musk says roughly 80% of Terafab’s output would eventually be dedicated to space-based AI satellites. He argues that solar irradiance is 5x stronger in orbit, potentially making space-based inference cheaper than terrestrial data centers within three years.

• The xAI link-up: Terafab shows how closely xAI is becoming tied to Musk’s broader industrial ecosystem. That may strengthen the strategic logic, but it also raises fresh questions about how the spending is divided across Tesla, SpaceX, and xAI.

The cost question is unavoidable. Building a 2nm-capable fab from scratch is one of the most capital-intensive bets in industrial history. Even before reaching full scale, Terafab will pressure capital budgets that are already stretched thin.

Tesla is the most vulnerable link here. Its decline in vehicle sales and margin compression leave little room for error. While it generated $6.2 billion in Free Cash Flow in 2025, Goldman Sachs estimates that figure could turn negative in 2026.

SpaceX is currently the bank for this vision, with a potential $750 billion IPO on the horizon to fund these orbital ambitions. Skepticism remains high because chip manufacturing has moved toward specialization for a reason. NVIDIA designs, TSMC manufactures, and ASML provides the tools. By trying to pull the entire stack under one roof, Musk is betting that vertical integration can overcome decades of specialized industry expertise.

Still, Musk may be right about the broader bottleneck. If Tesla wants 10 billion Optimus robots by 2040 and SpaceX wants a million AI satellites, then chip supply stops being a procurement issue and starts becoming a fundamental constraint on the entire vision. Musk has made vertical integration look visionary before, but Terafab is a reminder that the ultimate bottleneck is the balance sheet.

📱 Apple: Maps Turn Into Ad Space

Apple just found a new place to sell ads.

This week, the company announced Apple Business, a free all-in-one platform that bundles device management, corporate mail, and brand tools. The company removed the monthly subscription fees previously required for these management tools.

In other words, Apple is lowering the barrier for millions of small businesses to formalize their digital presence. This free offering functions as a customer acquisition tool for Apple's newest high-margin revenue stream: Ads are coming to Maps.

Starting this summer in the US and Canada, businesses will be able to buy priority placement at the top of Maps search results and inside a new Suggested Places feed. It is a direct page from the Google Maps playbook, launched nearly 13 years later.

The shift toward advertising is a necessity for Apple’s valuation.

Apple still makes the bulk of its revenue from Products. But Services generated $86 billion in gross profit over the last 12 months (LTM). That’s good for 42% of Apple’s overall gross profit. The gap between Products and Services is narrowing rapidly. The two lines below will eventually cross. It’s a matter of when, not if.

Apple’s Services division now operates at a 77% gross margin—nearly double the margin of the Products segment. Every dollar of local ad revenue Apple generates from a coffee shop or retailer is almost pure profit, helping insulate the bottom line as hardware upgrade cycles lengthen.

This ad push also serves as a hedge against regulatory headwinds.

For years, a massive chunk of Apple’s Services profit came from a single source: the multi-billion dollar check Google pays to be the default search engine on Safari. Analysts now estimate this payment has ballooned to $28 billion annually.

The latest antitrust rulings in late 2025 and early 2026 did not ban these payments, but they did deliver a structural wake-up call. The courts stripped away Google’s ability to demand exclusivity, meaning Apple is now legally free to promote rivals alongside Google. More importantly, the ruling forces these contracts to be renegotiated every 12 months.

For Apple, the DOJ's message was clear: you can keep the money for now, but you can no longer outsource your search destiny to a single partner. By building its own search ad ecosystem inside Maps, Apple is essentially insourcing its revenue. They are moving from renting their search traffic to Google to owning the search intent themselves.

Apple is selling local intent. Unlike an App Store search, a Maps search happens at the very end of the purchase funnel. By turning Maps into a high-margin ad platform, Apple is showing that some of its most valuable economics come not from the glass and aluminum in your pocket, but from the data on where you’re going next.

That's it for today.

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Disclosure: I own AAPL, GOOG, META, NVDA, and TSLA in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members. 

Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.

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Uber is suddenly everywhere in autonomy

Robotaxis were supposed to threaten Uber.

Instead, Uber is trying to become the platform they run through.

In just a few weeks, the company has announced a flurry of partnerships across the autonomy stack — from software providers to fleet operators to vehicle manufacturers. NVIDIA. Zoox. Wayve. Motional. And the list keeps growing.

With nearly $10 billion in Free Cash Flow in 2025 alone, Uber now has the firepower to shape the future of autonomy.

The latest move came last week: a $1.25 billion investment in Amazon-backed Rivian to deploy up to 50,000 fully autonomous robotaxis by 2030.

At first glance, it looks like Uber is simply hedging its bets. But the strategy is now abundantly clear. Uber doesn’t want to build the best self-driving technology. It wants to own the marketplace around it.

And the economics behind that strategy tell a much bigger story.

Today at a glance:

1. 🚖 Not just Rivian

2. 🧠 Uber’s new playbook

3. ⚖️ The hybrid advantage

4. 📊 Who really wins here

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Today at a glance:

1. 🇨🇳 Alibaba: $100 Billion AI Bet

2. 🌐 Accenture: AI Transition Continues

3. 🚚 FedEx: Efficiency Over Expansion

4. 🍪 General Mills: Reinvestment Pains

5. 🫒 Darden: Strategic Shifts

6. 🚖 Didi: Cost of Conquest

7. 🧘🏻 Lululemon: Global Tug-of-War

8. ✍️ DocuSign: Billings Hit $1 Billion

9. 🏥 HealthEquity: Asset & Margin Records

10. 🌎 dLocal: $1 Billion Milestone

1. 🇨🇳 Alibaba: $100 Billion AI Bet

Alibaba’s Q3 FY26 (December quarter) saw revenue rise 2% Y/Y to $40.7 billion ($1.4 billion miss), though like-for-like growth (excluding exited businesses like Sun Art and Intime) was a more robust 9%.

The headline story was a 67% plunge in adjusted net income, as the company doubled down on its investment phase. This aggressive spending centers on three areas: quick-commerce subsidies, user experience, and a massive build-out of AI infrastructure.

The company is effectively cannibalizing short-term retail profits to fund a full-stack AI future:

• Cloud Intelligence Group: Revenue growth accelerated to 36% Y/Y, with AI-related product revenue posting its tenth consecutive quarter of triple-digit growth. CEO Eddie Wu set a bold new target to reach $100 billion in annual Cloud and AI revenue within five years. To accelerate monetization, Alibaba recently hiked prices for cloud and storage services by up to 34%.

• T-Head & Token Hub: Alibaba is vertically integrating its AI via its proprietary chip unit, T-Head, which has now shipped over 470,000 AI chips. The newly formed Alibaba Token Hub (ATH) group consolidates all AI units under Eddie Wu to streamline the adoption of “Model-as-a-Service” (MaaS).

• China E-commerce & Quick Commerce: While core e-commerce revenue grew 6%, the Quick Commerce segment surged 56% to ~$3 billion. This business is currently a loss leader used to defend market share against Meituan and JD.com, with a goal of hitting RMB 1 trillion in Gross Merchandise Value (~$143 billion) by FY28.

The quarter included significant headwinds. The surprise departure of Junyang Lin, a lead Qwen developer, raised questions about research continuity. In addition, while the Qwen App surpassed 300 million MAUs, the rise of agentic AI has given Tencent’s Weixin/WeChat ecosystem an early advantage.

Alibaba’s management characterized the current profit dip as a deliberate choice. They project that the Quick Commerce segment will turn profitable by FY29 and that the integration of T-Head chips will enable “non-linear leaps” in cloud profitability by reducing reliance on expensive external silicon.

2. 🌐 Accenture: AI Transition Continues

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AI is reshaping capital allocation

Capital is shifting aggressively toward chips, data centers, and model infrastructure. At the same time, management teams are openly questioning how much human labor their future operations actually require.

ServiceNow CEO Bill McDermott recently warned that AI agents could push unemployment for new college graduates into the mid-30% range within two years. While that prediction sounds extreme, the broader shift is already manifesting in corporate behavior.

This week offered three very different examples of that shift.

Today at a glance:

• 🤖 Meta: More Chips Fewer Humans

• 📱 Tencent: Agents Meet Distribution

• ☁️ Micron: Demand Goes Vertical

🤖 Meta: More Chips Fewer Humans

Meta’s massive AI CapEx ramp continues to materialize, one infrastructure deal after another.

This week, the company signed a deal worth up to $27 billion over five years with AI cloud provider Nebius, including $12 billion of dedicated capacity starting in early 2027. It is another reminder that Zuck is racing to lock in as much compute as possible before capacity tightens further.

At the same time, Reuters reported that Meta is considering layoffs that could affect 20% or more of its workforce, though the company pushed back, calling the report speculative. If it happens, it would be Meta’s biggest cut since the ‘year of efficiency’ layoffs in 2023.

The two headlines are connected. Meta is not slowing its AI spending. It is reallocating. The company wants more data centers, more chips, and fewer workers doing jobs that AI can increasingly automate. Reuters noted that analysts estimate cuts of that size could save roughly $6 billion. That barely moves the needle for a company planning ~$125 billion in 2026 CapEx.

The bigger picture is that Meta is starting to look like the clearest example of what the AI era may do to Big Tech cost structures. The new org chart may be built less around adding headcount and more around adding compute.

📱 Tencent: Agents Meet Distribution

Tencent’s core business is strong enough to fund a much more aggressive AI push. Q4 revenue rose 13% Y/Y to RMB 194 billion (~$28 billion), while net profit climbed 15%, helped by the higher-margin mix shift toward gaming and advertising.

• Gaming led the quarter: Overseas gaming revenue surged 32% to RMB 21.1 billion in Q4. Success was driven by Supercell’s recovery (notably Clash Royale) and the breakout hit Delta Force. Meanwhile, China gaming revenue grew 15% to RMB 38.2 billion, supported by evergreen titles and the launch of Valorant Mobile.

• Ad tech is scaling efficiently: Marketing services rose 17% to RMB 41.1 billion. Tencent said its AiM Plus ad model uses generative AI to create and target content, helping the business outgrow the broader Chinese advertising market.

Tencent’s previously measured AI posture is giving way to a much more aggressive one. The company now plans to double AI investment to over RMB 36 billion in 2026 (~$5 billion), funded in part by reduced share buybacks. That push also includes a major Hunyuan 3.0 upgrade expected in April, backed by a restructured research team.

• Agents inside the super app: Tencent is moving beyond chatbots to agentic AI. It recently launched QClaw (an AI assistant integrated into WeChat) and WorkBuddy, leveraging the viral OpenClaw framework to automate tasks like travel booking and ride-hailing for its 1.42 billion MAUs.

• Cloud is becoming a profit engine: Business Services generated a record RMB 5 billion in adjusted operating profit for the year, showing that Tencent’s pivot toward higher-quality PaaS and SaaS is working.

GPU supply constraints held back hardware purchases in Q4, but Tencent expects that to change in 2026 as H200 chips become more available. The bigger takeaway is that Tencent now has the cash flow, distribution, and product surface area to turn AI from an experiment into a real platform advantage.

☁️ Micron: Demand Goes Vertical

Micron just released its Q2 FY26 earnings (February quarter), and the results suggest this cycle is accelerating faster than even bullish investors expected. While the stock dipped on aggressive spending plans, the underlying fundamentals remain extraordinary.

Breaking Every Record

Revenue for Q2 skyrocketed 196% Y/Y to $23.9 billion, beating consensus by over $4.5 billion. To put that in perspective, Micron’s revenue guidance for the next quarter alone (~$33.5 billion) now exceeds the full-year revenue of every year in the company’s history through 2024.

Gross margins hit 74%, up from 56% just three months ago. Micron’s guidance for the next quarter points to an 81% gross margin, a figure that actually edges out NVIDIA’s current levels.

The $25 Billion Price Tag

So, why did the stock slide? The answer lies in the massive capital requirements to stay on top.

• CapEx surge: Micron raised its FY26 CapEx forecast to over $25 billion, up from the $20 billion discussed last quarter.

• 2027 ramp: Management warned that fiscal 2027 spending will “step up meaningfully,” increasing by more than $10 billion over 2026 levels.

• The investor dilemma: Revenue is booming, but some investors are uneasy about how much cash Micron must pour into fabs in Idaho and New York to keep up.

The Shortage Broadens

The memory shortage has evolved beyond an AI-only narrative. It is now rippling through the broader electronics ecosystem.

• HBM4 momentum: Micron has begun volume shipments of HBM4 for NVIDIA’s next-generation platforms, securing its position in a market many feared it would lose to SK Hynix and Samsung.

• A longer shortage? While analysts once hoped supply would normalize by 2027, some industry leaders now think tightness could persist for four to five more years.

• Consumer spillover: HP recently said memory prices roughly doubled in a single quarter. As Micron prioritizes high-margin AI memory, standard PC and phone manufacturers are fighting for scraps, driving hardware costs higher for everyone.

What to Watch Next

• NVIDIA’s Vera Rubin allocation: The next major catalyst is the volume of HBM4 orders for NVIDIA’s upcoming Vera Rubin line. Any shift in how NVIDIA allocates these orders between the Big Three (Micron, Samsung, SK Hynix) will move the needle significantly.

• Margin ceiling: With gross margin guidance at 81%, the market will be watching to see whether Micron is nearing a ceiling for profitability or whether pricing power can push margins even higher.

For now, Micron is one of the primary beneficiaries of AI’s second-order effects. Training and inference need compute, compute needs memory, and the world still cannot build enough of it. The open question is no longer whether the demand is real, but how long supply can remain this far behind it.

That's it for today.

Happy investing!

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“The inference inflection has arrived.”

That was Jensen Huang’s message at NVIDIA’s annual GTC keynote on Monday.

The company came into the event with something to prove. NVIDIA is already worth more than $4.4 trillion, but the stock had been under pressure this year as investors looked for evidence that the AI boom was still expanding. Huang’s answer? NVIDIA now sees at least $1 trillion of AI chip revenue opportunity through 2027.

But that number comes with an important catch.

This is not a new annual revenue guide. It is a cumulative platform forecast extending the old $500 billion through 2026 outlook by one more year. In other words, the message from GTC was less about a sudden new explosion in near-term sales and more about something arguably more important. NVIDIA is trying to prove that the next phase of the AI race will be defined by inference, agentic workloads, and the full AI factory. And the company intends to own all three.

Let’s cover in plain English the four key takeaways and what they imply for NVIDIA’s outlook, the broader AI trade, and the public companies tied to it.

Today at a glance:

1. A trillion-dollar outlook with a catch

2. Inference is the new battlefield

3. The moat moves up the stack

4. Winners and losers from GTC

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• ☁️ Oracle: The Art of Leverage

• 🏔️ The $111B Hollywood Gamble

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Today at a glance:

1. 🛢️ Aramco: Geopolitical Storms

2. 🖥️ HPE: Networking Takes the Wheel

3. 🔷 Rubrik: Mission Control for the AI Era

4. 🤖 UiPath: Growth Ceiling

5. 👁️ SentinelOne: New Leadership

6. ⚡️ NIO: Profit Inflection Point

7. 🎿 Vail Resorts: Worst-Case Winter

1. 🛢️ Aramco: Geopolitical Storms

Saudi Aramco is operating at the center of a global energy crisis. While the financial headlines from its annual report show a slight retreat in profit and revenue, the narrative is dominated by the company’s response to the Iran war and the strategic blockade of the Strait of Hormuz.

Despite the extreme volatility in the Middle East, Aramco maintained a high level of profitability, though it cooled slightly from the record-breaking previous years:

• Profit & revenue: Full-year net income dipped to $93.4 billion (down from $106.2 billion in 2024). Total revenue fell 7% Y/Y to $445.7 billion, primarily due to lower average crude prices, which hit $64.10/bbl in Q4.

• Shareholder returns: In a historic move, Aramco announced its first-ever $3 billion share buyback program. It also raised its Q4 base dividend by 3.5% to $21.9 billion, marking the fourth consecutive year of dividend growth.

• Capital investment: The company executed a massive $52.2 billion capital program. Looking ahead to 2026, spending is expected to peak between $50 billion and $55 billion as it invests in liquids-to-chemicals and new energy.

The regional military escalations forced Aramco into an emergency logistical shift. With the Strait of Hormuz blocked, CEO Amin Nasser warned of “catastrophic consequences” for the global economy if shipping does not resume.

• The East-West lifeline: To bypass the blockade, Aramco is rerouting its Arab Light and Extra Light grades via the East-West pipeline to the Yanbu port on the Red Sea. This route reached its full 7 million bpd capacity on March 11.

• Production cuts: Because the pipeline cannot handle Aramco’s full export volume, the company has reduced output by 2 million bpd. According to the International Energy Agency (IEA), this is the largest oil supply disruption in history, with roughly 10 million bpd of regional production currently offline.

• Refinery recovery: The giant Ras Tanura refining complex, the largest in the kingdom, successfully restarted operations on March 10. While it is currently operating at limited capacity, the facility has recovered from the drone attacks that occurred earlier this month.

While the IEA has authorized a record 400 million barrel reserve release to cap prices, analysts warn this is only a temporary bridge. With Brent crude swinging back near $100 per barrel and tanker insurance rates soaring, the market is grappling with a physical shortage. The coming weeks will determine if the global economy can absorb these costs or if the persistent blockade will trigger a more severe inflationary crisis.

2. 🖥️ HPE: Networking Takes the Wheel

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Today at a glance:

1. 🎨 Adobe: AI Scare Trade

2. 🎟️ Live Nation: Keeping Ticketmaster

3. 🤖 Meta: Going Deeper Into Custom AI Chips

🎨 Adobe: AI Scare Trade

Adobe’s Q1 2026 results came with the end of an era.

The architect of Adobe’s cloud transformation, CEO Shantanu Narayen plans to step down after 18 years. Despite beating estimates across the board, shares fell about 7% as investors weighed leadership uncertainty and persistent fears around AI disruption.

Adobe’s AI strategy is starting to show up in the numbers:

• Double beat: Revenue grew 12% Y/Y to $6.4 billion ($120 million beat). Non-GAAP EPS reached $6.06, well above the $5.87 expected.

• Strong user growth: Monthly active users reached 850 million (+17% Y/Y). Creative Premium MAU surged 50%, fueled by the freemium funnel for Express and Firefly.

• Cash powerhouse: Adobe generated nearly $3 billion in operating cash flow and maintained a sky-high non-GAAP operating margin of 47%.

• Next billion-dollar business: ARR from AI-first applications such as Firefly for Enterprise more than tripled Y/Y. Firefly ARR has already crossed $250 million, and Narayen called it Adobe’s next billion-dollar pillar. Still, it remains a tiny portion of total ARR, which grew 11% to $26.1 billion.

The CEO transition follows a similar move at Workday, where the CEO recently stepped aside for a founder-led AI pivot. Narayen will remain as Chair of the Board and CEO until a successor is found. The timing of the exit is curious, given that the board recently approved a new long-term performance share program for Narayen that doesn't vest until early 2029.

This transition comes at a delicate time for the company. AI is a growth engine, but it is also a double-edged sword. Adobe said its traditional stock business, which generates $450 million a year, is declining faster than expected as users shift to generative AI alternatives. This shift captures the core SaaSpocalypse anxiety. The company is successfully selling AI tools, but those tools are also cannibalizing its own high-margin legacy segments.

Adobe is betting its 850 million user base will eventually graduate into paid tiers as they hit AI paywalls for advanced generative features. Q2 guidance was ahead of Wall Street estimates, targeting revenue of $6.43-$6.48 billion, but it still implies a slowdown (+9-10% Y/Y). For a company trying to prove AI can bring reacceleration, single-digit growth is nothing to write home about.

The market remains deeply skeptical, with shares down nearly 30% so far in 2026. At less than 12x forward earnings, Adobe is no longer priced like a premium software franchise. The challenge for the next CEO is straightforward: prove Adobe can turn its AI funnel into durable monetization before rivals and AI-native tools reshape the category around it.

🎟️ Live Nation: Keeping Ticketmaster

The long-running antitrust battle over Live Nation and Ticketmaster took a surprising turn this week.

The US Department of Justice (DOJ) reached a settlement with Live Nation, allowing the company to keep Ticketmaster and avoid the structural breakup regulators had initially pursued. Importantly, the deal does not include a federal financial penalty.

Instead, the agreement focuses on operational concessions designed to increase competition:

• Ticketmaster must allow venues to sell up to 50% of tickets through rival marketplaces.

• Service fees at Live Nation-controlled venues will be capped at 15%.

• The company must terminate exclusive ticketing agreements at 13 amphitheaters and offer both exclusive and non-exclusive ticketing proposals going forward.

• The existing DOJ consent decree will be extended for eight years with stronger oversight provisions.

One detail jumps out in how Live Nation makes money. Despite dominating the live events ecosystem, Live Nation’s profits remain surprisingly thin. The company generated $25.2 billion in revenue but only $0.7 billion in net income in FY25, a net margin of just 3%.

That’s because the bulk of the business is concert promotion, where most ticket revenue flows to artists and production costs. Critics argue the company’s market power lies less in massive margins and more in control of the ecosystem (promotion, venues, and ticketing all under one roof).

The biggest headline today is that Ticketmaster stays inside the empire.

Breaking up Live Nation’s ticketing and promotion businesses had been the core structural risk hanging over the stock since the lawsuit was filed in 2024.

However, the legal fight is far from over.

More than two dozen US states rejected the settlement and plan to continue pursuing the case in court, arguing that the agreement fails to address what they view as a monopoly over live events.

Live Nation has set aside $280 million to cover potential damages tied to those state claims.

For now, the outcome removes the most extreme scenario of a forced divestiture of Ticketmaster. But it leaves a lingering legal overhang as the state-led case moves forward.

🤖 Meta: Going Deeper Into Custom AI Chips

Meta unveiled a roadmap for four new in-house AI chips this week: MTIA 300, 400, 450, and 500. The chips will roll out through 2027 and are designed to support everything from content ranking and recommendations to gen AI inference.

The bigger point is inference. Meta is increasingly designing chips not just for training models, but for running AI workloads efficiently at scale. This matters because AI is becoming a much larger cost center for Meta.

It also hints at a narrower focus. Earlier this month, reports said Meta had scrapped some of its most ambitious training-chip efforts, including Iris and Olympus, after design struggles. That makes this roadmap look less like a full challenge to NVIDIA and more like a focused attempt to optimize the workloads Meta knows best.

Meta is not doing this alone. The MTIA family is being co-developed with Broadcom, which gives Meta access to proven silicon expertise while accelerating its roadmap. Meta wants to hit a blistering 6-month release cadence to ensure its hardware doesn’t become obsolete before it even reaches the data center.

Despite this in-house push, Meta is still spending billions with NVIDIA and AMD. In fact, Meta just signed a massive $100 billion deal with AMD for 6 gigawatts of MI450 GPUs. Ultimately, the goal is not to replace third-party chips overnight, but to diversify suppliers, lower costs, and better optimize chips for its own workloads.

Every recommendation, every generated image, every chatbot response has to run somewhere. If Meta can lower inference costs across Facebook, Instagram, WhatsApp, and its ad stack, the savings add up fast.

There is still execution risk. Custom chips are expensive to design, take years to bring into production, and only really pay off at huge scale. Meta is betting that better bandwidth density can lower the cost of inference at scale.

Inference is often constrained less by raw compute than by how quickly data can move between memory and processors. By designing for this specific constraint, Meta claims that the MTIA 500 will deliver 27.6 TB/s of bandwidth, potentially outperforming even NVIDIA’s specialized Rubin chips for Meta’s internal workloads.

The biggest AI spenders increasingly want more control over their own infrastructure economics. After spending over $70 billion in 2025, Meta is guiding to $115–$135 billion in capital expenditures in 2026. It’s the third-largest infrastructure budget, only behind Amazon and Google.

Meta’s AI bill is getting so large that even small efficiency gains start to matter. Custom chips are becoming one of the clearest ways to protect margins as inference scales.

That’s it for today!

Happy investing!

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Disclosure: I own AMZN, AMD, AVGO, GOOG, LYV, META, and NVDA in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.

Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.

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Big Tech heads to the bond market for AI

Alphabet sold a $31.5 billion global bond deal in February to help fund its AI expansion. Amazon is now targeting at least $37 billion in a new bond sale tied to AI infrastructure.

Oracle, meanwhile, said it plans to raise $45 billion to $50 billion this year through a mix of debt and equity to expand cloud capacity.

What makes Oracle different is the balance-sheet starting point. Alphabet and Amazon are raising debt from a position of financial strength. Oracle is trying to finance its AI buildout while already carrying a reputation as the most leveraged among the major tech platforms.

New reports suggest Oracle is preparing thousands of job cuts and slowing hiring as the cost of that buildout mounts. The debate is now all about how much financial strain Oracle must absorb before that demand turns into durable returns.

Free cash flow flipped to negative $25 billion in the trailing 12 months (TTM), with $11 billion used in Q3 alone. What could possibly go wrong?

ORCL is trading over 50% below its September peak. The stock has always been central to Larry Ellison’s empire. Now it matters even more, because that equity is helping support the family’s massive Warner bet.

Let’s see what we learned this quarter.

Today at a glance:

1. ☁️ Oracle: The Art of Leverage

2. 🤖 Microsoft: Borrowing Anthropic’s Best Trick

1. ☁️ Oracle: The Art of Leverage

Q3 FY26 key metrics:

• ☁️ Revenue growth accelerated (with a catch): Total revenue reached $17.2 billion, up 22% Y/Y. In constant currency, growth was just 18%, meaning some of the upside came from FX rather than from underlying demand.

• 📦 Backlog keeps climbing: RPO reached $553 billion, up 325% Y/Y and 6% sequentially. Management also said many new AI contracts require less Oracle funding because customers are prepaying or supplying GPUs directly.

• ⚡ OCI accelerated again: Oracle Cloud Infrastructure (OCI) revenue grew 84% Y/Y to $4.9 billion, up from 68% last quarter. Total cloud revenue rose 44% to $8.9 billion, while multicloud database revenue surged 531%.

• 💵 Guidance moved higher: Management reaffirmed FY26 revenue guidance of $67 billion and raised FY27 revenue guidance by $4 billion to $90 billion.

Income statement:

• Revenue grew +22% Y/Y to $17.2 billion ($0.3 billion beat).

  • ☁️ Cloud +44% Y/Y to $8.9 billion.

  • 🌐 Software +3% Y/Y to $6.1 billion.

  • 🖥️ Hardware +2% Y/Y to $0.7 billion.

  • 💼 Services +12% Y/Y to $1.4 billion.

• The shift to IaaS compressed gross margins to 65% (-6pp Y/Y).

• Operating margin was 32% (+1pp Y/Y).

Cash flow:

• Operating cash flow TTM was up 13% to $24 billion.

• Free cash flow TTM was negative $25 billion and remains under immense pressure due to the CapEx ramp.

• Management kept the FY26 capital expenditure outlook intact at $50 billion.

Balance sheet:

• Net debt: $114 billion (over 4x net leverage based on $28 billion EBITDA TTM).

So what to make of all this?

Read more