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Home to the Rachel Maddow Show, Morning Joe, the Briefing with Jen Psaki and more voices you know and trust. Ms. NOW is your source for news, opinion and the world. Our name is new, but you'll find the same commitment to justice, progress and the truth that you've relied on for decades. We'll continue to cover the day's news, ask the tough questions and explain how it impacts you. Ms. Now. Same mission, new name. Learn more at Ms. Dot Now, the ubiquitous $10 billion company you maybe haven't heard of. We unveil Aramark Alphabet hits a record high How Berkshire Hathaway got it there and everyone seems to be talking about I just not everyone in the S&P 500 we break down who's silent and who's chatty on putting hard numbers around AI's impact for Monday, November 17, it's Brew Markets Daily and I'm Ann.
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Foreign.
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More market details to come. But first, who's talking about AI? Well, it certainly feels like everyone is, but a fascinating report just out on Friday from Goldman Sachs breaks down the AI mentions so far this earnings season, which ends this week. I know we're all exhausted, but we're getting there with a hotly awaited appearance from the ultimate AI giant, Nvidia. Over half 53% of S&P 500 companies did not discuss AI's impact on productivity during recent third quarter earnings calls, despite that being the place that the market's really looking for to understand corporate impact of the AI tools. Now the survey of The S&P 500 earnings shines a light on who was the most silent about AI boosting efficiency, and that was the utilities, energy and material sectors, where fewer than 30% of calls talked about it. In the specific play, consumer sectors and healthcare hovered around 40%, while industrials and information technology hit just around half. Now the sectors that were chattiest were communication services, where nearly 75% of companies discussed AI's impact, and also financials, where two thirds did so coding, call centers or customer support, marketing, supply chain management and forecasting featured as the functions AI addressed the most. But in terms of putting actual numbers around it, and this is what struck me, only a handful, that's 1% of the S&P 500 actually quantified the impact on profitability of AI this quarter. Let's take one example. C.H. robinson, the $18 billion market cap logistics player, attributed part of its $116 million increase in expected profit growth through 2026 to AI initiatives and ServiceNow said, quote, we are raising our full year operating margin target by 50 basis points as AI operational efficiencies continue to drive incre leverage. So that's one specific example in software, although that sector does face the existential question of whether AI native systems will replace it entirely. Now the general lack of concrete numbers has been one reason that market chatter around the risk that there's an AI bubble has been picking up while returns to infrastructure names like Nvidia seem clearer. Because after all those big AI CapEx budgets we keep hearing about will get split spent on the tangible stuff like chips, AI enabled cost cutting or revenue generation is less clear outside of that specific realm. Well, Wednesday is the big Nvidia earnings and we have massive retailers like Walmart, Target and Home Depot also reporting this week. Well, we'll be playing AI mentions bingo. Now we know what to listen out for or to perhaps notice as missing Coming up, Sinclair makes a move on EW scripts, what's brewing in TV station news, and Berkshire Hathaway moves into Big Tech. We look at Alphabet, but First Brew Markets Daily is sponsored by Public. Before the show, our producer John was going through the features on Public to try to decide which one to talk about today.
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That's right, and there are so many features and I didn't know where to start, but of course I'm always looking to get interest on my money. I discovered you can access industry leading yields with Public's suite of fixed income products.
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BrewMarkets paid for by Public Investing Full disclosures in Podcast Description well, let's take.
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A look at a few companies making the headlines today that may not seem particularly glamorous, but they are pretty interesting because both of them are sort of everywhere in some shape or form. Well, for the first one, we're going to start with Aromark, which provides food and facility services. So think large scale destinations. Think about colleges, hospitals, even prisons, sports arenas. Big pieces of real estate that need to be taken care of. And I've got a personal background to some of this. I'm particularly excited to break it down. But first a little bit of Background, John, because we did see Aramark come out with earnings today.
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That's right. Aramark ticker ArkansasMK, market cap of $10 billion. And a little background. It was founded almost 90 years ago. It became Aramark in 1994.
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And.
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And it's gone public three times. It's gone public private back and forth, most recently in 2013. The company reported quarterly earnings this morning, revenue of $5 billion, up 14% year over year, which missed estimates.
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It's interesting, actually. We're going to get to why estimates were missed overall on the earnings side. But let's just talk about that revenue piece for a moment. This is one that was sort of dressed up as good news, that sort of became bad news. The company said, John, that this missing of the revenue outlook was primarily because even though there actually was a large influx of new contracts, which of course is good news, the onboarding, so the start of those clients actually getting fully in place and then actually paying their bills to Aramark got delayed. So that's not lost revenue so much as sort of pushed out for a quarter. It's also pretty interesting. Just when we want to take a look at the cost side of the business, there's one area that really caught our eye in terms of impacting earnings and that is medical expenses. I haven't seen this in a while and certainly not with this specificity. It's where the management team actually said that one of the actions they were taking to bring down cost was reducing in the medical plans available to employees the amount of coverage they were going to get in the future for GLP1s. Just goes to show that the sheer scale and the cost of that to some employers is beginning to hit home. Aramark in particular, though, just to put numbers around it, 270,000 employees worldwide. So you can imagine how those aggregate dollars do add up.
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Yeah, it can take a big hit. And the company said that starting January they're going to have a different plan with the GLP ones. And the market reacted today. Shares were down 4%, down 2% year to date. And like you mentioned, they did highlight some big wins. They delivered a billion dollars in annualized net new business, including recently awarded a contract with the University of Pennsylvania Health System. That's, they said, the largest of their health system contracts to date. And I've just been struck by how many industries and areas this company touches because as you mentioned, they're in education, they provide services for hospitals and prisons. So one of their biggest areas is sports. And so they highlighted collegiate sports businesses they manage concessions that saw double digit revenue growth year over year. And in sports, they also include corrections prisons. And they said that corrections continue to experience new business growth as outsourcing remains strong. And so I believe that's the, the privatization of prisons. And they're making money there.
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Yeah, they lump it together in one reporting segment, just to be clear. So the sports piece of it, pretty interesting. They did call out that there was strong attendance in the NFL, the NBA and NHL, but there was one sport that wasn't doing quite so well, one.
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Sport that wasn't doing well for them specifically because the stadiums that they service, those MLB teams did not go very far in the playoffs. And so they didn't get that revenue from all the hot dogs and soda that they might sell. Their. So I think that another thing that they highlighted was education that with high retention rates, meal plan optimization, increased student enrollment. And so that's something that you might not consider. You see these trends of are more people applying and enrolling in college or fewer. There's all these different areas that these trends affect. Aramark.
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So one of the reasons that this caught our eye and we wanted to shine a light on it, Aramark is one of these businesses that is literally everywhere. If you walk into your office building, it's entirely possible that you're being greeted at the desk desk by somebody who's going to let you up by an Aramark employee. If you think about who's stocking the pantries, if you have an office, if you think about who it is that's literally running the cafeteria and schools, it is often someone like an Aramark. There's a couple of other folks who do food services, Sodexo, for example, a European business being one of them. And this, this sort of sector has a special place in my heart, sort of in my background. I actually ran an outsourced business services business as a CEO for a bit. But I've been investing behind this space for over a decade. And so one of the things that you said, John, which sort of encapsulated it, this business touches so many different sectors and as a result it's pretty diversified. And so when you go and look back in history and you look at times of recession, when you look at downturns, a couple of things happen, which is why I track these pretty carefully. Number one is that diversification often insulates these kinds of businesses because it's, it's pretty not unlikely, but it does happen. But it's less likely that every single sector gets hit at exactly the Same time with the exact level of depth of impact in the things that. In the event that. The event that the economy is going poorly, for example. So that kind of diversification usually plays pretty well. These also are the kinds of businesses that, if you think about it, if you are a big school, if you're a big college, you don't want to keep changing your providers all the time. Right. There's an element of stickiness to this. So they're often relatively attractive contracts, which means that is recurring revenue here. So again, the lack of displacement, at least at scale, makes this somewhat interesting. The other thing I would just point out here, and I remember starting to look at these businesses in 2009 during downturns, is when companies like this tend to see more potential clients going to them and saying, look, our own business is being squeezed. We need to outsource more. We can't afford to carry this as an in house fixed cost as an in house service. And they go to folks like Aramark and say, will you please take on our cleaning or will you please take on our security services? Will you please take on managing our concessions so that we don't need to have, so we don't have to hire people and keep them full time to do it. So that's why we wanted to shine the light on this one. We do find that sometimes these businesses that are less glamorous, but they're kind of hiding in plain sight. Right? Because again, it's that sort of idea of invest what? You know, I'm not saying that now is particularly good time or bad time to think about moving money into these kinds of stocks. Again, there are others like Cintas. Aramark had a uniform business that spun out in 2023 called Vestas. But it is wor. Just thinking because there is a sort of moment in time, folks are saying, oh, they're wondering how to deploy their money. Things look kind of expensive. Is there going to be a correction in the economy next year? So this is the kind of thing that we're taking some time to get educated about right now.
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And before we move on, my history with Aramark is that when I was a first year student in college, I was a student advisor to the cafeteria. And in return they gave me a cake to take home every month. Every month they were supposed to raffle off a birthday cake to a student and they didn't want to go through the process. And so I just got to take home the cake every month.
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You just got home to take. That's really fantastic. I Thought you're going to stop it. You just got a birthday cake. You didn't realize this became a monthly occurrence. I would happily celebrate your birthday 12 times a year, for what it's worth, John, let's move on to Sinclair broadcasting, which has 185 owned and operated local TV stations in 85 markets around the United States. So that's a lot of markets. So again, this is another company that's sort of operating in plain sight everywhere. Now, if you're in Columbia, South Carolina, Sinclair owns, for example, Wach, Fox, channel 76. If you're in Portland, Oregon, Sinclair owns KATU, ABC, channel 22. So it gives you a sense of the kinds of stations that they're operating. Well, Sinclair has been making moves to grow by acquiring another station group, E.W. scripps, which operates 60 stations in 40 markets. And it was disclosed today that Sinclair has taken an 80.2% stake in scripts. So it's not impossible and it's not totally and utterly rare, but it's not often that you see a public company like a Sinclair buying a stake in another public company like Scripps, as has just happened in this case. And there's clearly an intention behind it. Scripps has been very open and said, we're doing this because ultimately we want to buy EW Scripts. This isn't a secret. And in the filing, Sinclair said it's been engaged in, quote, constructive discussions regarding a potential acquisition and believes that if an agreement were reached that a transaction could be completed within nine to 12 months. So we're going to go through the market impact, but we also want to circle back to something important here, which is there is a raging debate around what consolidation in local news ultimately means. But let's start with the market.
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Yes, absolutely. Shares in Sinclair were up 5% today, and in E.W. scripps, the shares were up as much as 40%. And Sinclair, perhaps their shares were up because they indicated that there could be a $300 million annual synergy in the event of there being a deal. And just for context, you were about to talk about the state of the business. Shares are down in Sinclair 30% over the last five years, and shares in EW Scripts are down 60% over the last five years. So local television, local news, it's a tough business to be in.
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And it's just the same as we've seen with the cable channels, for example. Everybody is feeling this in traditional media. Everyone's feeling the loss of ad dollars. And what's been going on has been consolidation in the industry. And another piece at play here is that this is a regulated industry. We have to remember this. It's regulated by the fcc. And so when these deals come about it, it's important to remember that this does go through a policy process and increasingly, potentially a political process is something that we're just going to sort of come back to now if we take a look at the actual deal dynamic. Let's take a look at what's going on. And Scripps is kind of playing hard to get, or it's pretending hard to get. So just to go back to this. Shares and Scripps were up as much as 40% today. Its market cap is only about $270 million. It's not a big company. Sinclair, by the way, $1.1 billion in marketing cap that as of Friday. So Sinclair is definitely the whale scripts, definitely the minnow here in terms of relative sizes. But Scripps, the target, said its board and management would evaluate offers, plural, and do what is in the best interest of shareholders, employees and communities and audiences around the US and there's one quote here saying the board will take all steps appropriate to protect the company and the company shareholders from the opportunistic actions of Sinclair or anyone else. And it's that word opportunistic, John, which is sort of open to interpretation. It doesn't sound like Scripps is opening its arms to Sinclair and saying, give me a hug.
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Right. But they're saying. Are they saying if the price is right, we'll. We'll take it into consideration?
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Yeah. Well, it seems to be. I think it's pretty clear. It's saying evaluate offers. And it sounds to me like Scripps is basically saying, we're going to try and negotiate, make sure that if we are going to go up for sale, that we get lots of interest from different parties and we're going to take the most aggressive pricing. That's, that's how I read that one. But there was also just one thing here to bear in mind. Again, just go back to the fcc. There is probably going to be regulatory risk here. A single broadcaster is prohibited from owning TV stations that reach more than 39% of TV households. And if you just think about the markets that both Sinclair and Scripps reach, you put them together, it's hard to imagine that this is not going to at least have to go through some scrutiny and at least go through a review.
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And talking about politics, Sinclair was one of two station groups that pulled Jimmy Kimmel's late night show just a couple months ago in September. And they were seen as playing along with the White House. And so of course FCC chairman Brendan Carr, he himself was pushing or insinuating that Kimmel should remain off the air. And so Sinclair in that moment put themselves in good standing with the White House, with the fcc. And the FCC is going to be ultimately making this decision whether this acquisition can happen.
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But interestingly, Sinclair also tried to touch on something else in this filing today saying that its scale would strengthen local reporting. And that's sort of an interesting thing here too because FCC chairman Brendan Carr has also said recently, quote, localism is one of the key guide stars of our policy. We don't want local broadcasters to ultimately go the way of newspapers. And of course he's referencing the fact that local newspapers have pretty much disappeared. You know, we're here in New York, I sometimes see some of the free newspapers clear ads supported if I go to a bookstore and I grab it or on the subway. But they have really disappeared. And there is this whole question around what happens if we don't have access to local news? Who's going to shine the light if there's local government corruption? Who's going to shine the light if there's going to be a big new construction project that we all need to know about that might interfere with our daily lives? So a real question up there as to what might come next. We do know that Sinclair is pretty determined to try and get to scale, looking at various potential sales, looking at potential mergers as well. And so at the moment, really sort of acquisition hunting. It had looked at proposing, it had looked at merging with Tania, which ultimately agreed to sell to nexstar. In that case, Sinclair would have been the smaller party being acquired. Well, let's take a quick break and when we come back, we take a look at why Alphabet hits new highs in the final market numbers for the day. And now a word from our sponsor, Surf Air Mobility. Surf Air Mobility is focused on building a platform aimed at transforming air travel.
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More about Surfair Mobility's mission and technology at surfair.com morning brew that's surfair.com morning.
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Surfair Mobility, Inc. Toast the holidays in a new way and raise a glass of Rumchata, a delicious creamy blend of horchata with rum. Enjoy it over ice or in your coffee. Rumchata, your holiday cocktail, just got sweeter. Tap or click the banner for more Drink responsibly. Caribbean rum with real dairy cream Natural and artificial flavors. Alcohol 13.75% by volume 27.5 proof Copyright 2025 Agave Loco Brands, Pojoaquee, Wisconsin. All rights reserved. Well, it's 4pm on the east Coast. The market's closing. There is the closing bell and we don't have a ticker tape, but we'll throw it over to our human ticker, our producer, John that's right.
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The S&P 500 finished down 0.9%, the NASDAQ was down 0.8% and the Dow finished down 1 2/10 of a percent on the day. Some market headlines Ford Motor is partnering with Amazon to allow the automakers franchise dealers to sell certified pre owned vehicles through the Amazon platform. Customers will be able to secure financing, start paperwork and schedule a pickup time for the vehicles at participating4dealers. We covered this. Earlier this year, Amazon partnered with Hertz to sell its used vehicles through Amazon's platform. Shares in Ford were down about 3% today, shares in Amazon were down nearly 2%. And the company, Sealed Air Ticker SE has struck a deal to be acquired by private equity firm CD&R for about $6.2 billion in cash. And what is Sealed Air? It's the company founded six decades ago by two men that accidentally invented bubble wrap iconic packaging.
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The bubble wrap. Well, just as a final Berkshire Hathaway has made a rare push into technology and Alphabet investors are absolutely delighted. That's because a quarterly 13F filing has just emerged showing that Berkshire held roughly $4.3 billion of Alphabet stock as of September 30th. So it's now Berkshire's 10th largest public equity investment, still not as big as the firm's positions in Apple. Which is its largest, American Express or Coca Cola? It's one of the parting disclosures of Berkshire CEO and founder Warren Buffett, who's retiring and who has famously hesitated about investing growth tech companies. He's always seen Apple, for example, as a consumer products play well. The decision to go into the stock was most likely delegated to incoming Berkshire CEO Greg Abel and the guys running the public equity book for the company. The move, though, still looked aligned with Buffett's style. When we take a look at Alphabet's valuation, it has been lower than many of its AI driven mega cap peers, the parent of Google trading at just over 25 times next year's earnings compared with Microsoft at just over 30 times or broadcom at just over 50 times. Still a relative discount, though of course those multiples would have nudged up today with Alphabet's share price rise. And to Buffett's team, cash is of course king. So let's touch on that with Alphabet throwing off a whopping $48 billion of operating cash flow last quarter alone, while September 30 was a while ago already. So we're going to have to see if Berkshire has added to, sold or maintained its position since then. And things are fluid in Omaha. If we take a look at the comparison with the prior quarter, Berkshire did sell 15% of its shares in Apple. It did sell 6% of shares in bank of America, but added 16% to its stake in the insurer Chub. We are definitely going to keep on watching that portfolio. That's all for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Anne Barry and produced by John Cotto, Tarek Abdelatif and Emily Milian. Our technical director is Uchenawa Ogu. Brittany Dutaco is our audio engineer. The President of Morning Brew Inc. Is Devin Emery. We'd love to hear from you. If you have any feedback a company you'd like us to cover, send an email or voice Memo to brewmarketshoworning brew.com.
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Wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Bre Daily. I'll be back here tomorrow with Brew Market same time, same place.