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Adelaide
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Kate
The AI news just never stops flowing, and neither did the earnings reports this past week. I'm Kate with marketexture and this is a refresh, your weekly download on what went down in advertising. Today is Monday, May 5th. This week we're covering Perplexity Building a browser OpenAI moving towards Shoppable results and a quick earnings reports roundup. So let's get into it. Kicking things off with Perplexity, who CEO Era Van Srivenas gave more insight into his vision for their browser comment, which is set to launch in May. In an interview with the Verge, he said, the reason we're doing the browser is that it might be the best way to build agents. A browser is essentially a containerized operating system. It can let you access other third party services through hidden tabs if you're already logged into them, scrape the page on the client side and perform reasoning and take actions on your behalf. Perplexity is building for a future Internet, one that prioritizes interoperability and non human interfacing within an agentic browser. And one element Srinivas emphasized was the need for their browser to function on the operating system level and be integrated with it rather than sitting on top of it. Kind of like how you currently access Perplexity on a Chrome browser. As pretty much the only LLM that has consistently prioritized advertising product development, it should come as no surprise that one of the primary aims behind owning the browser would be so Perplexity had access to a vast amount of granular user data for hyper personalized advertising. And on one hand it would be so convenient to have an assistant or consultant that knew all of your purchase preferences, your lifestyle and behaviors, and could then discover products or services and complete purchases on your behalf. On the other hand, it's giving an even more invasive form of Google and they're kind of in hot water right now. On top of browser ownership, Perplexity just struck a deal with Motorola to be pre installed on its new Razer phones. By the way, if anything could convince me to leave the clutches of Apple, it's millennial nostalgia for the power move that is snapping your hot pink razor shut. Pair that with an AI that puts Apple intelligence on the defensive. Sold Perplexity is also in talks with Samsung in hopes that they'll be able to strike a similar deal there. These deals help Perplexity take steps toward breaking apart the stranglehold that companies like Google and Microsoft have over embedding their software within their hardware, like Google Search being pre installed on Android devices, or Copilot being pre installed within Microsoft products. This makes it difficult for any outsiders to break through. While Perplexity is building what it perceives to be the necessary architecture of the next iteration of the Internet, it is interesting to see them following a playbook that so closely resembles many of the steps that landed Google in court. This also presents a bit of irony. Much of Perplexity's recent momentum toward building on a browser and securing the ability to pre install their app on OEMs wouldn't have been possible without Google's current legal woes. Moving on in the theme of AI powered personalization and purchasing, OpenAI announced that users will now be able to shop directly within ChatGPT search results. In a LinkedIn post, OpenAI stated their goal with this rollout was to make the shopping experience simpler and faster to find, compare and buy products within ChatGPT. Perplexity and Microsoft's Copilot already offer this capability, but Chat GPT joining in could accelerate consumer adoption of what's being termed agentic commerce. This ability to shop directly within chat results illuminates the shift towards consumers remaining within one interface for the majority of their web browsing needs. That means that within this next imagining of the shopping experience, websites serve an entirely different purpose, not for consumer browsing, but for AI agents to quickly ingest and reason across the data that those sites contain. This gives them the ability to serve as a consultant for the consumer, tailoring recommendations to their specific needs and tastes directly within one ongoing conversation. Alongside this announcement, rumors have started to swirl that OpenAI is also integrating Shopify into ChatGPT, giving the platform access to product data from a wide variety of merchants. And to be clear, OpenAI wants you to know that none of the shopping experience would be supported by ads, at least for now. Finally, let's close things out with a quick earnings reports roundup where most team members have received and exceeds expectations on their performance reviews. Starting things off with Apple, which beat Wall street expectations, reporting $95.4 billion in revenue versus the expected 94.66 billion. Hardware saw varying revenue upticks with iPhone sales creeping up just under 2%, Macs climbing nearly 7% and iPads jumping 15%. Services brought in $26.65 billion and 11.65% annual growth rate, which is weak to the 14.2% growth they saw this time last year, but still solid considering its double digit revenue growth. When it comes to what drove the increases in hardware revenues, Tim Cook said there wasn't obvious evidence of hardware being propelled by pull forward of consumers stocking up on these products ahead of tariffs, but it's very possible the threat of rising prices helped Apple end the quarter on a high note. I mean I was one of those people who was going to rush out and buy a new phone to save some dollars. Moving over to Meta, which also beat expectations, pulling in $42.31 billion, a 16% increase in large thanks to ad impressions rose 5% while pricing jumped 10%. When it comes to AI, Meta continues to bet big, bumping its capex guidance up from a range of 60 billion to 65 billion to a new estimate of 64 billion to 72 billion. The bulk of that spend will continue to be pumped into AI infrastructure like data centers and expected cost increases within infrastructure hardware. Hopefully this means that at some point Meta AI will truly be useful. In the meantime, Meta will need to continue to produce strong ad offerings to keep the ad spend flowing and funding their AI ambitions. Jumping over to Alphabet, who reported $90.23 billion in revenue, up 12% and ahead of Wall Street's 10% target. Their search and other category delivered $50.7 billion, up almost 10% year over year, while YouTube ad revenue just missed expectations at $8.93 billion versus the forecasted $8.95 billion loose change. While Google produced strong ad revenue results for this quarter, the end of the de minimis trade loophole may continue to have negative impacts on ad spend for Google, like we saw with Timo and Shein who both stopped spending within Google sh. Now on to Amazon which landed right in line with expectations at $29.3 billion in revenue. They do have a cloudier outlook moving forward. They're expecting a 10 basis point hit to Q2 sales due to tariffs and broader economic headwinds. Unfortunately for Amazon, those words of caution caused their stock to drop about 4%. Most of Amazon's revenue comes from online stores and third party sellers, with ad services only contributing a small slice of the pie. This makes Amazon more vulnerable than its magnificent seven counterparts to changing consumer purchase behaviors in light of tariff uncertainty. Finally, Microsoft reported a 13% revenue increase, bringing in just over $70 billion. In contrast to Amazon, their revenues primarily come from software and cloud services, which make them particularly resilient in the face of economic downturn, even if their hardware business does end up taking a bit of a hit. In closing, AI challengers like Perplexity and OpenAI continue to come for Legacy Big Tech's lunch, while earnings reports illuminate where priorities are landing and who's best positioned to weather economic turbulence. That's all we have time for today. Thanks for joining us for the refresh, and we'll catch you next week.