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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 it's earnings season and we have the latest results from Spotify and ups, along with news on the singular beverage that's powering Coke's growth. Plus, I'm joined by Dan Ives, the famed tech bull. He names the specific smaller cap stocks he's watching and OpenAI reportedly missing key internal targets. We break down which stocks were sent tumbling on down for Tuesday, April 28, it's Brew Market Daily and I'm Anberry. More market details to come. But first, a ripple of Doubt just hit AI trade caused by OpenAI reportedly missing revenue and user growth milestones, specifically failing to hit a goal to reach a billion weekly active users for ChatGPT by the end of 2025, followed by Mrs. In 2026 to quote multiple monthly revenue targets. That's according to reporting from the Wall Street Journal, with the same report saying that OpenAI's chief financial officer Sarah Fryer, had already raised internal concerns about the company's financial trajectory. Specifically, she's been warning that massive compute spending may be hard to sustain if revenue doesn't keep pace. Well, in recent months, board directors have apparently scrutinized OpenAI's planned data center spend increasingly closely. Now, all of this is critical context when you consider the scale here. OpenAI and its partners are tied to hundreds of billions of dollars in AI infrastructure commitments, with some estimates north of $300 billion potentially getting far higher over time. Well, the market's reaction to this today has been fast and furious. Shares of Oracle dropped sharply at one point around 7% down largely because of its enormous multi year cloud deal tied to OpenAI. On the chip side, Nvidia, Advanced Micro Devices and Broadcom dropped roughly 2 to 4%. That's as investors reassessed how fast AI demand will actually scale. The broader market fell with two the Nasdaq composite down more than 1% at points today. Now, there is one comment that really caught my eye in the Journal's article, and I really recommend checking it out. Fryer is said to have cautioned that the AI giant is not yet ready for the reporting standards required of a public company and that more internal controls need to be put in place before an ipo, something that the markets have pegged as likely for as soon as Q4 of this year. Well, Sarah Fryer's voice is a particularly credible one on this point, by the way. Before joining OpenAI as CFO in June 2024, Fryer was CEO of Nextdoor, taking that company public in 2021. She was previously CFO at Square, where she, you guessed it, spearheaded taking public the company now known as Block. Prior to that, Fryer worked at Goldman Sachs, McKinsey and Salesforce, and she currently serves on the boards of Walmart and Consensys. So with this stellar resume, trust me, Fryer does not want to be the face of a botched IPO. So with a question mark over when OpenAI may in fact IPO and finally get a cash return out to its backers, it also just raised a massive round of new capital, more than $120 billion. This question mark has left a little bit of a blight over the shares of one particular Investor and that SoftBank Group ticker SFTBY down about 10% today. We're going to keep on watching. Coming up, my conversation with famed Wedbush Tech bull Dan Ives and why he views AI today as Las Vegas in 1955. Still, he believes a desert today and America's building the strip. And later, the fallout from today's news that OPEC is losing a member state. But first, a word from our sponsor, Charles Schwab. Trading at Schwab is powered by Ameritrade, bringing you an expanding library of education with even more ways to sharpen your trading skills, access new online courses, insightful webcasts, articles, engaging videos and more, or curated just for traders.
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Plus guided learning paths with content designed to fit your unique interests. And no sifting to find exactly what you need so you can spend your time learning to trade brilliantly. Learn more@schwab.com trading well, it's Tuesday, therefore
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it is money Mover day, and so I wanted to hear from one money mover who's found fans among both institutional and retail investors. And that is, of course, equity analyst and ETF manager Dan Ives. He's the global head of technology research at Wedbush securities. And Dan's analysis covers some of the hottest publicly traded companies in the world, from Nvidia to Tesla. And Dan doesn't just write recommendations on where investors should put their money. He actually deploys capital directly, too. So we discussed the AHA moments from Dan's recent trip to Asia why he thinks that the Sask apocalypse is unwarranted. And Dan looks into his crystal ball to give us some specific science smaller cap stock picks. So I'm delighted to welcome Dan Ives onto the show. DAN ives, Friend of show. You just launched a new etf. You launched one last summer that was focused on the AI revolution and this next one is on AI power and infrastructure. Just give us a little bit of an overview on why you decided to do that.
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It's all based on our research. Like you go back to the the AI 30 and now the power 30. Our research is all about trying to find the derivatives of the AI revolution from from the core players, whether it's MAG7, Nvidia, obviously names like Palantir and Iron and other names that have popped out now from a Power 30. It's trying to identify how are you powering the data centers, who are going to be the winners, whether it's the quantas, the constellations and others. And that's really like, that's the whole goal here is, you know, is really investors that follow our research.
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So I'm taking a look at the top holdings. This is a Friday, April 24th in the AI Power and Infrastructure ETF. You've got in there. G Venova, Siemens Energy, Bloom Energy CEO coming at you on for an interview. Vertiv Holdings. We're in the thick almost of earnings season. What do you think this earnings season is going to look like for these kinds of names?
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It's bullish because when you there's more data centers under construction today than active data centers. So when you think about all the Capex and everything we're seeing from the hyperscalers and what you're seeing from intel and what you're going to see all day from Nvidia and others and we saw from our Asia trip the last few weeks like it's we're in the third inning of this whole thing playing out and that's bullish for the power players, is bullish for the data center. There's going to be so many derivatives that's playing out across tech.
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Talk to us about your findings from your Asia trip. And it's it's actually been a minute since I was out there specifically on a work trip, but I always come back from Asia feeling as I've had a glimpse into the future. What did you see? What were the big aha moments you had coming back from the latest field trip?
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To me it's really demand, the Supply. It's still 10 to 112 to 1 for Nvidia chips. Like we didn't see any sort of worries about when it comes to helium or from a supply perspective. And that was a huge positive. Just given what we've seen, given the geopolitical industry and some of the worries there, I think the biggest thing is just like, look, this, this memory super cycle is going to continue to play out. And I think what you see in hardware will translate into the hyperscalers and it's going to translate into big tech. And I think it just shows where you have less than what, 3% of companies in the US that have truly gone down the AI path. I think it just shows how early days we are. And that's why me and you have talked to go over the years. We're going to see Nasdaq 20,000, Nasdaq 25,000 and we're gonna see Nasdaq 30,000. The bears, when they're in their caves, always looking for some catastrophe. And remember the, the bears have called seven or eight of the last two downturns the last 20 years.
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Just dig into something. You threw, you just threw away a big comment in there, Dan. You just literally just hid in there. That under 3% of companies in the US have really done a deep dive into or moving it into, into AI. How exactly do you define that? What, what are you measuring when you say that?
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And that's talking to customers. I mean we talk, if I talk to like covering tax since late 90s, like so many customers that we talk to. So I'm talking 100, 150 enterprises, all different sizes. The reality is, is that we're still early days in the beginning stages of this whole thing playing out. And that's where I think investors continue to underestimate the scale and scope of AI. And for the first time in 30 years, the US is ahead of China when it comes to tech. And that's why you're starting to see this spread out from an intel to a Cisco to a, to a Dell. And it goes back to our whole view. It's not just about seven names, ten names. It's spreading.
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Let's talk about how it's spreading and maybe where there is not enough awareness that the spread is on the come. Could you just give us your perspective on the Saskopolis? Where are you on the software names?
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It's the most disconnected narrative in my career relative to the anthropic AI go spheres. Are there going to be some software companies disintermediated vibe coding, call center parts and marketing no doubt. But the view that a Salesforce, a service now a workday, an Oracle, a Microsoft, that they're going to be disinterested, that a crowd strike a pal. Alto, I just strongly disagree because the reality is is that right now investors are painting software with the same brush every company. These are AI native stacks when they come to Anthropic and OpenAI and when you look at what these install based players have built, it's not just about install base, it's data. It's ultimately really the, the data that they've built. Yeah, that's, that's their moat.
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I completely agree with you that data is the moat. And you've talked about CrowdStrike and Palo Alto. Look, I'm with you. It's sort of. I've been perplexed by the sell off in those cyber stocks just because I feel as though now more than ever you need cybersecurity to top of mind and there they are as the lead providers. But talk to me about some others which I think have been partners of the anthropics of the world like a figma and you can look at the Microsoft Office suite of products and now I think we're seeing signs that Anthropic can actually displace some of its partners. Am I being too bearish when it comes to that particular use case?
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I think that is like, that's part of like the big debate, like can they just replace partners? I think some of that's easier said and done. Something if you look at like anthropic Dario. It's more like AI alarmism is what I'll call it in terms of just if they went after glasses, Warby park would be down 50%. So. So I think part of that is a little dystopian in a little way. Overdone. But it also speaks to like if you look at survey data in the United States like under TSA lines, it's AI. If an employee feels that AI is just gonna take their job.
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Yeah.
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And raise their electricity bill, why would they be positive? I mean I see from Palantir and I think we're gonna see it from like on the consumer perspective with names like Apple, Google, Meta and others AI from robotics to humanoids to what it's going to do for pharmaceutical to biotech. The amount of positives are huge. I just think right now the problem is it's a view. It just cuts jobs, which cuts seats, lowers pricing pressure and views the software businesses basically structurally broken. And I think that really is what I Strongly disagree with.
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You have also got a unique perspective Dan, because you are such a well known bull. You have grown up in a Wall street that's been very analytically focused right. Your whole career it's about been about return on investment and software for such a long time has provided real tangibility when it comes to return on investment. That's related to technology. But there are big questions now people are saying well what is going to be the ROI in the boardrooms of the names you cover like Meta and Alphabet and Amazon? What dialogue do you think is being had there? Are they even talking about ROI and if so what at what levels do you think?
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Well first off like right now it's, it's an arms race. So like there's no big tech coming right now that can just like slow down. If we went to earnings and there was big tech company, they slow down catbacks stocks down 15, 20% because you would view it that they in this arm, whether it's Microsoft, whether it's Amazon, whether it's Google, Meta, they saw something. Yeah, they're pivoting and I do that that'd be a negative. Okay. Despite like free cash flow and earnings and everything. They're trying to figure out use cases. Use cases and monetization. But when you get meta you have billions of users. They're going to monetize when it comes to, on the advertising side, when it comes to Apple, they're going to mod. They're essentially going to be a toll collector on the consumer highway. I just think right now this is like Vegas 1955, it's desert. We're building the script. It's very easy where if it's a year later and there's an issue on a building in 1956 everyone's like ah, trip things not going to happen that whole concepts create. I'm just saying like that's where we are. We're Talking about an 8 year old today is not going to need a driver's license when they're 16 because autonomous.
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Let's talk about one example in tech at the moment that there isn't sort of the crack in the building on this on the Vegas strip that you're talking about. But there is sign of a real pivot and I'd love to talk about Tesla's earnings which, which came out so recently and so much of the conversation was actually about the non auto side of the business. Question for you Dan, do you think that Tesla and SpaceX should just merge at this point?
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Well, I mean we talk, I think there's an 80, 90% chance that they will merge by 2027. Because I think that's the holy grail for Musk. From a data perspective, they have all the AI technology under one roof. But it's our view, like Tesla, if you want to focus on electric vehicle delivery margins, capex cash flow right now, you wouldn't buy the name. But it's my view you have to see around the corner to what's essentially from a physical AI perspective, Tesla and Nvidia, the two best physical AI plays in the world. And I just believe it is the path that SpaceX and Tesla are going to merge.
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Let's go back to data, because it comes up over and over again. There are some companies out there I've personally been really frustrated by because I've looked at them and said these things have got treasure troves of data. They were first movers and the two that really get me are PayPal and Adobe. Do you think that they're capable of a Lazarus moment that they can finally find some technological edge that gets them to mine and use their data in a way that brings them back up to par 100%?
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But that's what, that's why Adobe's made the changes. Like there's a view. You think Adobe is just going to sit here on a treadmill 2.0 speed just watching its business get eaten. But it comes down to like the data, the brand, the amount of cash they have in terms of acquisitions and other than they can do and pivots. And I just think, I do think when you look at PayPal and Adobe, they will lead to pivot. You could say Salesforce bending off another example, maybe like way underestimated how quick this is going to happen. But you can't call the game in the third inning. Like I'm just saying, you have to see it. But and I get from an investor perspective any like little fly in the ointment, like servicenow, like any issue in terms of small guidance. Stocks down 15%. Like IBM, small stocks down like 8, 10% because we're just going through because of the goose trade, AI ghost trade, anthropic black cloud. It's very easy right now as an investor institutionally you own hardware, you own semis, your own memory, you buy more, you buy more software. Do not enter zone. And that's like the wrong view.
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So let's just stay on Adobe for a second. Dan, when the company announced it's doing this really big share buyback, you know its market Cap is called 100 Billion and Change and it's just announced a $25 billion share repurchase program. Do you look at that, given what you just said, which is Adobe's got the data, it's got the brand, it's lagged behind. Do you look at that move and say, what are you guys doing? You should actually keep that cash and keep it in your war trust to fund a pivot. Particularly since you don't know who your CEO is going to be next and what your CEO's next strategy is going to be.
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If the stock was 30% higher for, I would agree with you. Garage sale price. I believe that's the right move here. Book it goes back like think about Apple during Cook's 10. They bought what, 43% of the shares relative to to what's out there and they'll also do M and A and they could raise more capital through debt market or whatever. But I think right now that is the right move.
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Give us your take since you brought up Tim Cook, Dan, on the leadership changes that we're seeing at the top of so many of these tech OGs. And I have a question for you because I want your perspective on a thesis that I've been creating. And you're not shy, so you'll shoot it down if you think it's ridiculous. I feel as though we've seen a wave of top notch American CEOs step down. We saw Doug McMillan step down Walmart and he said I'm not, I was not going to be the guy to deal with the next wave of AI. We saw Quincy say it. Stepping down from Coca Cola, said it to cnbc, which I know you're very a frequent commentator on the Adobe CEO has stepped down. I'd be hard pushed to think it's not AI related Now seeing Tim Cook and Reed Hastings stepping down as executive chair at Netflix. Do you think this is actually a ton of signs that people are throwing up their hands and saying, look, we were great in the last era, but we just don't have the skill set.
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I think there's some of that. I think also like there's a lot of these. They've done it for years. 10, 15, 20. They recognize this is not quick fix. This is not like a quarter or two. These are structural moving mountains. And a lot of times like there's different people. I could argue like Cook. Cook's a logistics mastermind, a public Persona globally a whisperer to presidents. 10 politician, 9% CEO born. It comes like innovation. AI. What's going to be the next step by Turnus is more the person that's going to lead it. And also the last thing Kirk coins do is what? So announce WWDC in June and then a year from now hand it, it's like rather hand the baton in the beginning rather than midstream. And I think that's how a lot of these CEOs are thinking about it.
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So give us a quick look into your crystal ball, dad, as, as parting thoughts. You're so well known for covering big tech. You know, you've been such a consistent bull on the mag 7 and more broadly, are there any smaller cap companies that you're looking at in your own time even? And you say, you know, folks haven't cottoned on to this yet.
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Yeah, look, I think when you look specifically like in cyber security, I think there's a lot of names sort of like I think that space is going to see massive consolidation. So like some names like Tenable, Varunas, Qualis, I'm just giving examples on the cybersecurity side that I think are well positioned. I will see a lot of M and A. I think when it comes down to, you know, names that many aren't sort of talking about. Iron's a good example of one that like we think are going to be front and center. I think the quantum names, you're going to see them continue to get a lot of momentum. But overall when you look at like just AI and you look at software and you look at everything that's happening, like the Palantir, the Snowflake, MongoDB, I think you have a recovery in that name. Like I think what's going to start to happen is you'll start to now see specifically in software and even across some of the hardware players, these, like when I look like a micron as an example, I think that's a name that's going to have like, you know, a huge run ahead.
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Thank you for being specific. That's what I really love about talking to you because you're so unafraid to put real names and real positions and real points of view.
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And so are you. And so are you. But that's, but the reality, that's, but that's what investors need. They don't need some 20 minute warranties wearing a bow tie where you leave and you're like what's the names to earn?
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Well, big thanks to Dan Ives. Let's take a break and when we come back, we'll take a spin through the earnings headlines that move the market today.
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VanEck's got a question for the market?
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Ask away.
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What if Energy, gold and infrastructure, long ignored by many investors, are becoming increasingly important again?
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Vaneck shares that the assets building the future aren't all in tech. Data centers need electricity, AI needs copper, and gold is signaling that the old rules about money, debt and currency could be shifting. This is something VanEck's real assets team has been highlighting for years.
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RAX the Vaneck Real Assets ETF can give investors active, diversified exposure across all of it in one allocation. It's built for this environment. Vaneck notes that if you're building a portfolio for a new era, and Real Assets Racks offers diversified exposure in one place.
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Learn more@vaneck.com brewracks that's@vaneck.com Brew R A
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A X Read fun disclosures in the podcast Description Study and play come together on a Windows 11 PC and for a limited time, College students get the best of both worlds. 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 student offer while supplies last ends June 30 terms at aka mscollegepc
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There it is, the closing bell. It's 4pm on the east Coast. The market's wrapping up for the day. We don't have a ticker tape, so we'll throw it over to our human ticker.
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Our producer John The S&P 500 finished down a half a percent, the Nasdaq was down nearly a full percent, and the Dow finished flat for the day. Brent crude oil, the global energy benchmark, jumped over $110 a barrel for the first time in three weeks. That's amid continued uncertainty around peace negotiations and the reopening of the Strait of Hormuz.
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And before we get to earnings, more major energy news coming out of the Middle east today. And that's the United Arab Emirates saying it will exit OPEC at the end of the week. Well, it's a significant crack in the cartel that coordinates production among many of the world's largest oil producers and by adjusting supply, strongly influences global oil prices. The UEA was the group's third largest oil producer, only behind Saudi Arabia and Iraq, and has been an OPEC member for nearly 60 years.
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UAE leaders told Bloomberg they want the freedom to respond to post war market demands on their own terms. The nation can pump about 4.8 million barrels of oil a day, but OPEC's rules currently limit output to 3.4 million. Additionally, throughout the war, Abu Dhabi has criticized fellow Gulf members for failing to do more to protect the country from attacks by Iran.
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The UAE is not the first member of OPEC to leave. Angola departed at the top of 2024, Ecuador left at the start of 2020 and Qatar left in January 2019 to focus on natural gas production.
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All right, pivoting now to earnings season, nearly 200 companies reported quarterly results today. Ann, let's fire through some highlights right,
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ticking it off with ticker KO the Coca Cola Company market cap over $340 billion shares were up as much as 6% today as the beverage maker post than expected earnings and revenue. That's as Coke seemed to meet consumer demand for more cost and health conscious product options across the board. Global unit case volume was up 3%, helped by the broader rollout of mini cans. Those are smaller drinks with lower price points and Coke Zero Sugar, which saw its volume up 13% in the quarter. Coke CFO John Murphy said today that Coke Zero is far and away the company's best innovation in the last 25 years.
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I was recently in Japan and Coke Zero was everywhere with no sign of Diet Coke. I found that very interesting. Let's move to Streaming Shares in Spotify ticker spot dropped nearly 13% today as weak guidance overshadowed and earnings beat first quarter. Revenue rose 8% from last year and monthly active users rose 12% to over 750 million, both above estimates. But the company's forecast for premium subscribers fell short of the 300 million Wall street expected. Spotify said it plans to continue investing in AI initiatives like AI DJs that curate playlists. That spend weighs on operating income but is increasing the time users spend on the platform.
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Just a reminder, Spotify founder Daniel X stepped down as CEO at the beginning of this year. We asked then was he doing it right as the company was at the top? Well, we see now this was coming just as AI risk and opportunity for ramp up for the company. Meanwhile, UPS shares slid around 4% despite beating both top and bottom line estimates. Net income slipped to $864 million, down from 1.2 billion a year ago. Domestic revenue declines, which the shipping giant said had been expected, also came in due in large part to the scaling back of its partnership with Amazon. Amazon was once UPS's largest customer, but last year United Parcel Service called the online deliveries quote extraordinarily dilutive to margins. With the reduction of Amazon volume, UPS is resizing its network reconfiguring routes and closing distribution centers. That restructuring saved ups $600 million in Q1 and the company expects to reach $3 billion in savings this year.
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And finally, over to a company we don't hear about as much, even though it has a market cap over $80 billion. That's American Tower Corporation Ticker. Very simply, the company develops communications infrastructure like towers and leases that space to wireless service providers. AMT shares were up nearly 2% today after the company raised its full year forecast after posting strong first quarter results. Makes me think of the derivatives of the AI revolution, dan Ives spoke about. AMT CEO said on the call today. The growth drivers of our business continue to strengthen with the rapid expansion of AI driven workloads pointing towards sustained investments in high quality digital infrastructure.
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Lots going on. More earnings to come. Not only this week, but next week too. We are rushing to stay on top of it. That's it for today's Brew Markets Daily,
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and if you enjoyed today's episode, please tell a friend, but keep it from your enemies. Brew Markets Daily is hosted by Anne Barry and produced by John Croteau, Tarek Abdelatif, Avani Laroya and Emily Milian. Brittany to Taco is our audio engineer and the President of Morning Brew Inc. Is Devin Emery. We'd love to hear from you. If you have a topic you'd like us to COVID leave a comment or send an email to brewmarketshoworningbrew.com Wake up
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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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Some follow the noise. Bloomberg follows the money because behind every headline is a bottom line, whether it's the funds fueling AI or crypto's trillion dollar swings. There's a money side to every story. And when you see the money side, you understand what others miss. Get the money side of the story. Subscribe now@bloomberg.com.