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Many employees can't afford a hefty medical bill that pops up out of the blue. But it happens. And employees who are financially stressed are understandably more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, Aflac plans help with out of pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more@aflac.com Frumarkets that's aflac.com Frumarkets
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Olive Garden, the Capital Grill, Chewy's Darden restaurants reported earnings. And it isn't endless bowls of pasta spearheading growth. Alexa wants to do your shopping. We sit down with an Amazon exec to find out if customers are buying the AI assist and the hyperscalers are saying thanks for the memory. We have the latest from Micron's earnings and the ripple effect being felt in the price for consumer products for Thursday, June 25, it's brew markets Daily Amazon Holiday. I'm Jon Gritteau. More market details to come, but first, a trip down memory lane that wraps up at Xbox. More on that in a moment. All week, the markets were eagerly awaiting earnings at a Micron trillion dollar US Based memory manufacturer. Investors were wondering what a look at the company's books might indicate about the durability of massive AI spend. Well, some of those questions were answered last night after the bell when Micron reported third quarter earnings. The blockbuster numbers were even better than expected and MU shares rose nearly 20% this morning before settling in closer to a 15% rise on the day. Some of the details inside that earnings report revenue in the quarter more than quadrupled from the previous year, hitting $41 billion and exceeding expectations. And for the current quarter, the company raised its forecast to 50 billion, which is nearly five fold the amount brought in a year ago. But perhaps the most consequential disclosure from the earnings call wasn't the revenue number. It was the structure of 16 long term contracts that Micron signed with data centers, hyperscalers and automakers. Micron has locked in approximately $100 billion in minimum contracted revenue over the next three to five years. And 22 billion of that is already showing up as upfront customer cash. In other words, customers like Microsoft, Amazon, Google, they're paying Micron now to guarantee that they get memory later. And this is an important shift. The memory chip industry has a long history of boom bust cycles. Massive demand, capacity ramps up, supply floods the market, prices crash, factories sit idle and the cycle starts over. But today, Micron is locking in margins even if demand weakens but here's the rub for consumers, the AI boom is consuming so much memory that there's mounting supply pressures on components for smartphones, PCs and all the devices that we use every every day. So just a few hours ago, Apple announced it's raising the prices of its MacBooks and iPads. The company's all important iPhone has been spared the price change. Investors reacted and shares in Apple dropped 6%. And hours after Apple's announcement earlier today, Microsoft said that on August 1st the price of Xbox gaming consoles will also be going up. Shares of Microsoft are now trading 3.5% lower. One final thought on the boom bust and memory wars, Keep a lookout for the finger pointing on Apple's latest earnings call. CEO Tim Cook noted that Apple faces increased margin pressure due to spiking memory and storage prices, hence today's actions on price. Meanwhile, without naming names, an executive at Micron last night said that during the memory market's last turndown, the company couldn't make investments in future production, in part because certain customers took advantage of Micron's position to pay rock bottom prices. We'll be keeping an eye on how those 16 long term contracts play out for Micron and the broader market. Coming up in a moment is spin through the headlines that are moving markets today, including earnings out of Darden restaurants and BlackBerry. But first, this episode is brought to you by Aflac. Emily, how would you feel if I gave you $1,000 right now?
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I'd be very happy.
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And then what if I took $1,000 away from you right now?
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Like by force?
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No, just suddenly. Do you think it would throw you off or take your focus or negatively impact your work?
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Very much so, yes.
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That's exactly why Aflac aims to pay claims fast, accurately and fairly at no direct cost to businesses to help employees with expenses not covered by health insurance. Plus, some Aflac plans may be eligible for pre tax deductions and that could provide potential tax savings. To learn more, head to aflac.com brewmarkets that's aflac.com BrewMarkets later in the show, I'm joined by Daniel Rauch, Vice president at Amazon, to discuss Alexa's next chapter and and why he trusted her to buy him Bob Dylan tickets. But first, a few headlines from today's trading session.
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Kicking it off with a government release this morning of the Personal Consumption Expenditures Price Index, or pce. The report captures what people actually buy and adjusts when they swap one thing for another. That makes it a cleaner read on where prices have really headed and is why it traditionally serves as the Fed's preferred inflation gauge, and the numbers came in hot. The CPE rose 4.1% from a year ago, its highest reading since 2023, and more than doubled the Fed's 2% inflation target.
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And much of that increase was driven by higher energy prices due to the war in the Middle East. But the US Consumer remains resilient despite the rising rates. Americans continue to shop, and those figures coming in higher than expected, up 0.7% from the previous month. And the report comes just a week after Fed Chair Kevin Warsh held his first policy meeting, where officials left interest rates unchanged. With inflation remaining high, markets are increasingly pricing and the possibility of a rate hike later this year. The Fed's next decision is scheduled for July 29th. Moving on to earnings results, shares of Darden restaurants ticker DRI are down over 2% today after the parent company of the Olive Garden, the Capital Grill and Chewy's, among others, missed revenue estimates and issues softer than expected guidance.
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Darden also operates Ruth's Chris Steakhouse and Longhorn Steakhouse, and the company pointed to higher beef costs and pressuring its bottom line. But diners are still heading out for that steak dinner. Same restaurant sales beat expectations led by Longhorn Steakhouse, where comparable sales jumped over 9%. Olive Garden fared less well, posting a gain of around 2% lower but still an increase. And one interesting note, Darden said traffic from diners under the age of 35 softened slightly slightly and this is the
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awkward part in this show where I wonder which of us is over or under 35. Moving on, sticking with earnings but pivoting to Software shares in BlackBerry ticker BB surged more than 20% today, while the erstwhile devices manufacturer, now a software company, beat Wall street expectations and raised its full year revenue forecast.
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The stronger outlook was largely driven by its QNX division, a secure operating system used in safety critical technologies from cars to devices.
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That's right, BlackBerry's QNX runs digital dashboards and is found on over 200 different makes and models of vehicles for a total of 275 million worldwide.
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That is a lot. QNX revenue climbed nearly 26% in the first quarter, while its backlog approached a billion dollars Once the smartphone OG the future looks bright for BlackBerry software story the company has a 6 billion dollar market cap and the share price is up over 100% in the last 12 months.
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Now this is the week that in recent years has turned into a competitive summer sales bonanza, with Walmart deal days and Amazon's prime day. And for its part, Amazon is touting its new and improved Alexa, which is ready to help you navigate the offerings for tracking prices to finding deals. Amazon says its AI assistant is changing the way customers shop and how they do tasks around the house. But is it actually simplifying life and how trusting are consumers of an AI enabled device that can make purchases? To discuss, we welcome Daniel Rauch, vice president of Alexa and Echo at Amazon to the show. One take is that it's convenience versus privacy. You can decide. I'm just gonna start with something level setting. What's the difference between Alexa and Echo? Because we talked about it around the office today and people were saying, no, Alexa is the sphere. No, it's the dot. It's the hockey puck. It's the. So just start us off with the basic of what we're talking about, the basics.
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Echo is the awesome set of smart speakers and smart displays. So the physical hardware itself, those are called Echo devices. Alexa is this ambient AI assistant, Alexa plus, ready to do more for you around the house and anywhere else you take her. So Alexa is the assistant. But of course, we hear all the time customers say, my Alexa in the bathroom or living room or kitchen, which is fine by us, by the way.
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Yes, exactly. I think, I wonder if that's been a challenge because the product has been around for 10 years and there's so many different ways of adoption and people who have had the product or a similar product in their home for 10 years, how do you get the word out or how, how important is it to let the consumers know that there is a new product in new tech?
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It's really important because I think Alexa is so much more capable than the original Alexa. You know, we completely rebuilt the experience from the ground up. It's the age of generative AI. Our vision for Alexa has been really consistent over time. You know, it's this really thoughtful, helpful assistant fades into the background when you don't need her, but is there at a moment's notice when you do, to help you in your everyday life. So the vision's been really consistent. But of course, in this age of generative AI, we're just able to do so much more. So we built Alexa to do just that.
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What are some of those things that Alexa can do? I'm sure there's a million, but what are some highlights?
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There are. There are millions, I would say if we sat down to count, really, I think about it in two buckets. I think there are the things that you might sort of classically say Alexa can do, she can play songs for you or she can do smart home commands in the original Alexa, but they were arcane. You had to speak a certain way. You had to say turn on John's Beds side Lamp 2 or something to get the actual device controlled. Or you had to know the specific name and album and artist of the song you wanted with Alexa. On those traditional Alexa tasks, it's just a whole new experience. You chat with Alexa about new music you want to discover. Bob Dylan was touring this summer. I didn't know about his new album, but I'm really deep on Bob Dylan. But Alexa is just that much deeper. So we had a whole conversation about the new album. She played it for me, she related it to tracks from his early days. We played old albums and then I bought tickets to see him at, you know, there was a winery. He was playing here within the last couple weeks using Alexa, all with Alexa. So that's sort of a look at what Alexa classically has done made new. And those things have grown phenomenally. Like we didn't think music could be bigger on Alexa because music's the biggest thing. 25% more streaming time customers spend with Alexa because of how delightful it is to discover music.
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That sounds like an interaction. Let's break down what actually happened because there is a conversation around agentic AI and going shopping for you and having your credit information and credit card information to go by. So how much information did you have to give Alexa in that example?
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So Alexa is connected to my Ticketmaster account. That's like a one time connection between those apps and then you're done. And the thing that I think it's remade about the ticket purchasing experience just to take one of the many new things Alexa can do. You know, it's, it can be challenging. You go, you go look for something you're not sure about whether an artist or a sports team or whatnot is coming your way. But Alexa can do all the research for you, finds the schedule, can watch for a given price, for a given concert, for example, and then because she's connected to my Ticketmaster account, can just easily purchase the tickets for me. So as an extension of that conversation, rather than doing part of the journey for customers, Alexa plus can do the whole thing.
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Have you found that customers are adopting
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that opportunity, the payment in a lot of places? Actually, I think we've also just seen, you know, other AIs experiment with just shopping for the home, for example, for, you know, getting groceries. It's amazing to use Alexa to again complete a whole journey, do research on a new recipe, find the ingredients that you might be missing, you know, at your local store, order groceries and then they're on the doorstep through Amazon prime delivery from, you know, say my neighborhood Whole Foods. And I get the whole cooking journey done by having her walk me through the recipe. So I think what's what I would say about shopping? I think other AIs have even talked about it as a side hustle. It's such a deep, complex, challenging space. Customers need to really trust that you're that you're going to complete a journey on their behalf. Well and you have to spend time and focus and energy on it.
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So right, if you get to the Bob Dylan concert and you think these seats are not perhaps what I wanted or you know, you have to trust that not only the payment side but the seat selection correct Study and play come together on a Windows 11 PC and for a limited time, college students
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get the best of both worlds.
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Get the unreal college deal, everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 Premium and a year of Xbox Game Pass ultimate with a custom color Xbox wireless controller. Learn more@windows.com studentoffer while supplies last ends June 30 terms@akams.collegepc Marvel Television's Wonder man
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an eight episode series now streaming on Disney A superhero remake.
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Not exactly what we'd expect from an Oscar winning director. Action Simon Williams audition for Wonder Man.
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I'm gonna need you to sign this. Assuming you don't have superpowers.
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I'll never work again if anyone found out monolips are sealed.
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Marvel Television's Wonder man all eight episodes
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now streaming only on Disney let's talk
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about grocery how important is it for Alexa to be part of this process of getting groceries, making it frictionless, and doing that in a non brick and mortar way?
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I think using an excellent AI assistant like Alexa to help you shop is just transformative for the shopping experience. It's the reason we're seeing that shopping is up threefold with Alexa. It's the reason that Alexa is in the Amazon retail shopping app now. It's a tab on the bottom of the interface. Alexa is always available and can sort of help you complete journeys not only across the kinds of things I was talking about like hey, what's the recipe added to my list? What am I missing? Oh, I need those items delivered, but also across devices so you can start that conversation in your kitchen about what you want to cook that night you can complete the journey. Maybe you're off at work and you add some other things to your shopping list, and you use Alexa right in your Amazon shopping app to complete the journey. And like we were talking about, knowing that, you know, knowing which items can be delivered today and which can't, you know, knowing that you have a trusted payment method attached and that transaction is going to be completed securely, no questions asked, and that the items will be delivered on time, you know, in the right place at the right moment. That's a complicated task to complete. Having Alexa as the AI assistant walking all the way through it is. Is awesome. And that's why we see customers really responding.
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This seems like a lot of conversation. Is it ever a point where it's just easier to look at a screen or to understand everything in full?
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We do also see that customers sometimes want to work on their Echo show in their kitchen, so they'll use that big screen to add more items to their basket or to review what's already in their basket. It can be much easier to shop on a screen. So you start a journey in one place. You realize, actually, I want to review everything in my cart. I think I just added 16 things and I'm on an Echo dot. Sure. Pick up your phone, and Alexa on your shopping app knows exactly where you left off in voice and can help you complete that journey right there on that screen.
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This is going back to the early days of Alexa, but we used to listen in on my grandmother's requests that had been recorded. They were humorous, but also it was a good way to just sort of keep tabs and make sure everything was okay. But it also meant that her requests to Alexa, and this was years ago, were being stored somewhere. They were on some server that we could reference. So what is Amazon's stance on policy with all these devices? Are things. Is all that data being stored? What's happening with it?
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Yeah. So, you know, I think our foundational principles around privacy and security haven't changed. And they're really. They're really paramount in terms of everything we build. So your data is your data. You can see on your account exactly what Alexa heard. You can manage those, we would say utterances, let's say, one at a time. You can delete them all if you want to. But we, you know, we do provide visibility into everything that Alexa hears across the full range of devices. And customers are completely in control of those of those data sets. They're theirs.
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Are they. Is it always on? That's still the question a decade later. Is it always listening. Do you have to activate it?
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Alexa is always ready to respond. Alexa is not always listening. Alexa is monitoring for that wake word and then engaged. And there are some really foundational parts of that experience too. When Alexa hears you and is understanding what you're saying, you see a blue light indicator, you know, and that persists the whole time that you're communicating to Alexa. And then it goes away when you guys are done talking and you know the full length of the time that that blue light is on, you know that Alexa can hear you. And then when it's off, Alexa is monitoring just for her name.
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As we're listening to this conversation, it is Prime Day week.
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And it is Prime Day week. Correct. I like how you said that. I'm going to use that, John, by the way.
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And I just think of, I associate that with being in July and of course, we're in June right now. So what has changed? I know this isn't necessarily your area, but what are we looking at with Prime Day this week?
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I mean, customers love Prime Day. That's what I would say. So we do bigger and better every year. There are some unique things that Alexa can do this year as part of Prime Day, which I think are worth noting. She can set deal alerts for you. So if there's a particular item that you're interested in, like I'm looking for a new running watch, for example, you could set a price and say, right in your Amazon shopping app, for example, or on the Echo show in your kitchen, hey, you know what, if that, if that gets down to 199 bucks, just go ahead and buy it for me. Alexa will complete the purchase for you. You can set categories of interest, like, hey, let me know about some new gym clothes or if there's anything in, you know, weights. I'm thinking about this because summer's coming. It's time to get in shape. But those are the kinds of things that, that I'm watching for. So I think, you know, we see overall that shopping is up 3x with the new Alexa plus experience. But we know that in the context like Prime Day, there can be so much to try to pay attention to that we've really focused on some of these curation activities where Alexa can just help you navigate.
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Daniel Rauch, vice president of Alexa and Echo at Amazon. Thank you so much for joining us, John.
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I really appreciate the time.
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Well, it's 4:00pm on the east Coast. The markets are wrapping up for the day, and The S&P 500 finished flat. The Dow finished up a tenth of a percent and the NASDAQ was down nearly half of a percent for the day. And that's all for today's Brew Markets Daily. Brew Markets Daily is hosted by Anne Barry and produced by John Croteau, Tarka Delatif, Aveni Laroya and Emily Millarn. Our technical director is Lonnie Fiskus. Brittany Dottocco is our audio engineer. Catering by the Memory Cafe. The president of Morning Brew Inc. Is Devin Emery. Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. We'll see you back here tomorrow. Same time, same place.
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This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block. Or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it, ready to make anything online make sense. There's no place like Chrome. Check responses, set up required compatibility and availability. Various 18.