Brew Markets – January 29, 2026

Episode: "A Robust Starbucks Investor Day & Defense Earnings Roundup"

Host: Ann Berry
Podcast: Brew Markets by Morning Brew

Overview

In this episode, host Ann Berry dives deep into two headline stories: Starbucks’ high-profile Investor Day and the latest earnings from America’s largest defense contractors. Ann offers an insider’s account of Starbucks' future plans and experience upgrades, before teaming up with producer John to break down pivotal defense earnings in a lively, role-play format. The episode wraps with sharp commentary on the day’s major tech sector swings, including Meta's bullish AI spend and Microsoft's cloud challenges.

Starbucks Investor Day: Reclaiming the “Third Place”

[00:01–06:21]

Main Theme

Ann Berry attends and reviews the new-look Starbucks Investor Day, highlighting CEO Brian Niccol’s ambitious turnaround strategy and the company’s expensive push towards elevating the in-store experience, loyalty, and technology.

Key Insights & Discussion Points

• "Reclaim the third place" and "be the world's greatest customer service company" were the rallying cries at the event, quoting CEO Brian Niccol.
• Ann sips a “1971 roast” as she describes the atmosphere and impressive organization of the event in Manhattan’s Glasshouse space.
• Store design previews: Chic, smaller spaces (Crate & Barrel furniture, exclusive Stranger Things & Harry Potter merch) intended to revitalize physical customer experience.
• Technology upgrades:
  • Milan-inspired Mastrina coffee machines for higher efficiency (“efficiency can be beautiful”)
  • Smart, AI-powered point-of-sale systems to predict customer orders
  • AI tablets supporting baristas (training, inventory, cleaning instructions)
• Data points:
  • “60% of Starbucks customers still go into its stores” – underscoring the critical importance of the in-person experience.
  • Starbucks Rewards: 60% of 2025 revenue stemmed from loyalty program members; new tiered loyalty program launching March to boost visits.
• Market reaction was muted: Despite an elaborate presentation and strong store sales growth (4% global same-store sales), “the Starbucks share price...just kept watching it tick down.”
• Financials & Strategy:
  • Heavy CapEx: $2.5–3 billion investment last year (expect to rise)
  • Goal: 5% annual revenue growth and 1.5% margin expansion by FY ’28.
  • Valuation is “fully valued at 20x EBITDA, 30–35x P/E” with “middling growth.”

Notable Quotes

• Brian Niccol, CEO Starbucks [~00:20]:

  “If you walk in and it’s a soulless place or it’s empty, you don’t feel good about your cup of coffee.”

• Ann Berry, on the event [01:53]:

  “It was very jazzy, it was very well orchestrated...but as I focused on trying everything out...I just kept watching [Starbucks’] share price tick down.”

• Ann Berry, on strategy [05:45]:

  “The beautiful design outlook and the investment in customer experience is expensive—and I mean very expensive...the market really does need the roots to take hold and be visible for the share price to have another catalyst.”

Defense Earnings: Record Budgets, New Risks

[07:02–17:45]

Main Theme

With the U.S. defense budget set to soar—thanks to a proposed 50% Trump-era hike to $1.5 trillion—Berry and John role-play as the four biggest defense contractors, summarizing their latest earnings and unique opportunities or risks.

Key Sector Insights

• Defense is not just a controversial sector; it supports hundreds of thousands of jobs and drives significant technological innovation (e.g., cross-pollination into healthcare).
• President Trump’s plans underpin strong tailwinds, but companies are under fresh scrutiny on execution, growth, and how they use shareholder money.

Lockheed Martin (LMT) [08:33]

• Market cap: $147B | Stock up 39% YoY
• Qtr earnings: $5.80/share (in line); $20B rev (beat)
• Missile business strong; quadrupling THAAD missile production (from 96 → 400/yr)
• Risks: F-35 accounts for 25% of business, but drone tech trends pose long-term threat.
• Quote, John as Lockheed [09:17]:

  “The majority of analysts have a hold on my stock.”

General Dynamics (GD) [10:07]

• Market cap: $95B | Stock up 40% YoY
• EPS: $4.17 (beat); Rev: $14.4B (beat by $500M)
• Core strength: Shipbuilding—especially nuclear submarines.
  • Electric Boat productivity up; submarine tonnage +13% YoY
  • Backlog: $180B (+24% YoY)
• Most analysts rating: Hold, pending more quarters of consistent execution.

RTX (Raytheon) [12:18]

• Market cap: $269B | Stock up 60% YoY
• EPS: $1.55 (beat); Revenue: $24B (beat by $1.5B)
• Products: Iconic missiles (Sidewinder, Javelin, Tomahawk) and engines (Pratt & Whitney).
• Backlog: $268B (defense contracts $107B)
• Key tension:
  • President Trump’s recent executive order may curtail dividends/buybacks unless deadlines/ budgets met; CEO compensation could come under scrutiny.
  • No buybacks this quarter—a break from historically “serial buyback company.”
• Quote, John as RTX [13:25]:

  “Just two weeks ago, Trump signed an executive order that could restrict defense contractors’ ability to pay dividends and conduct share buybacks if we don’t deliver on time and on budget... So this quarter, we announced that we are not doing any buybacks.”

Northrop Grumman (NOC) [14:54]

• Market cap $98B | Stock up 44% YoY
• EPS: $7.23 (beat estimates by $0.25); Revenue: $12B (beat by $100M)
• Focus: Aerospace (stealth bombers, F-35 sensors/ comms)
• Accelerating B-21 bomber production via $4.5B in new congressional funding
• Backlog: $95B (record), outlook: 5% sales growth (slightly below analyst consensus)
• Quote, Ann as Northrop [15:47]:

  “We continue to work closely with the US Air Force to increase production rates, and we finished 2025 with a record backlog of over $95 billion.”

Additional Notes

• Unusual role-play format made the segment engaging and informative.
• Highlighted growing political scrutiny (dividends, exec pay), and supply limitations for all contractors.
• Palantir flagged as “one to watch” for next earnings—straddling defense & software innovation.

Market Headlines: Tech’s Wild Swings

[18:43–21:56]

Main Theme

Berry and John break down the day’s biggest sector moves, focusing on the tech giants where AI spending and business strategy are reshaping market sentiment.

Key Highlights

• Microsoft (MSFT) [18:43]:
  • Shares fell 12% post-earnings; strong cloud & service revenue, but weak personal computing figures and slower Azure growth after huge capex spend.
  • Market is uneasy with “Microsoft’s concentration with OpenAI,” as OpenAI “now represents about 45% of RPO…too high a percentage for some part of the market’s liking.” (19:07)
• Tesla [20:00]:
  • Beat Q4 earnings, but stock down 3% on lower car sales.
  • Ending Model S & X programs; doubling down on Cyber Cab (driverless) and Optimus robot lines.
  • Tesla will spend $20B on AI in 2026—well ahead of previous and analyst expectations.
  • Tesla also to invest more in Elon Musk’s xAI startup.
• Meta (Facebook) [21:13]:
  • Stock popped over 10% even as it guided 2026 capex up to $115–135B (from $72B in ‘25), signaling market faith in AI-driven growth plans.
• Meta vs Microsoft [21:29]:
  • Ann Berry: “Meta getting a vote of confidence... Microsoft not getting the benefit of the doubt. Folks saying, your concentration with OpenAI a little too scary for us...”
• Nasdaq [21:56]:
  • Nasdaq Inc. Q4 earnings: Just under $1/share; $1.4B revenue (beat), stock up nearly 0.5%.
  • Teaser: Ann will interview Nasdaq Vice Chair Bob McCooey on tomorrow’s show about IPO pipeline, virtual vs physical locations, and retail investor dynamics.

Notable Quotes & Memorable Moments

| Timestamp | Speaker | Quote | |-----------|------------|---------------------------------------------------------------------------------------| | 00:20 | Brian Niccol| “If you walk in and it’s a soulless place or it's empty, you don't feel good...” | | 01:53 | Ann Berry | “It was very jazzy, it was very well orchestrated...I just kept watching [...].” | | 05:45 | Ann Berry | “The beautiful design outlook and the investment in customer experience is expensive…”| | 09:17 | John (LMT) | “The majority of analysts have a hold on my stock.” | | 13:25 | John (RTX) | “Trump signed an executive order that could restrict... So this quarter, [..] no buybacks.”| | 15:47 | Ann (NOC) | “We continue to work closely with the US Air Force to increase production rates...” | | 19:07 | Ann Berry | “OpenAI now represents about 45% of [Microsoft’s] RPO...too high a percentage for some part of the market’s liking.” | | 21:29 | Ann Berry | “Meta getting a vote of confidence... Microsoft not getting the benefit of the doubt…” |

Structured Timeline & Timestamps

• [00:01–06:21]: Starbucks Investor Day – Immersive event, store design, tech upgrades, financial targets, and lukewarm market reaction.
• [07:02–17:45]: Defense stocks earnings roundup – Lockheed Martin, General Dynamics, RTX, Northrop Grumman; industry’s political and operational pressures.
• [18:43–21:56]: Stock market headlines – Microsoft Azure worries, Tesla’s pivot and AI ramp-up, Meta’s AI confidence, Nasdaq’s earnings.

Conclusion

This Brew Markets episode delivers an “on-the-ground” flavor regarding the future of one of America’s biggest brands (Starbucks) and peels back the curtain on the high-stakes world of defense contracting amid record budgets and shareholder scrutiny. The latter half zeroes in on extreme moves in the tech sector, showing where investors are rewarding—or punishing—massive AI and infrastructure bets.

For Next Episode

• Ann will interview Nasdaq Vice Chair Bob McCooey on IPO pipeline and why Nasdaq is ramping up physical presence in Dallas, plus other hot investor topics.

This summary captures the episode’s essential takeaways, key soundbites, and flow, designed for anyone wanting the full story without having listened in.