Prof G Markets: Big Tech Breaks Away From the Pack as Markets Stumble on Tariff Blitz

Release Date: August 4, 2025

In this episode of Prof G Markets, hosts Scott Galloway and Ed Elson delve into the tumultuous landscape of capital markets, focusing on the divergence between Big Tech giants and the broader market amidst a wave of new tariffs. The discussion provides insightful analysis on earnings reports, the impact of trade policies, the evolving role of consulting firms in an AI-driven economy, and the burgeoning autonomous driving sector.

1. Trade Deals and Tariff Announcements

The episode kicks off with a comprehensive overview of the recent trade maneuvers by the Trump administration. Multiple trade agreements were announced, targeting major economies with significant tariff hikes:

• Japan: Tariffs set at 15%, down from the initially threatened 25%, accompanied by a pledge of $550 billion in U.S. investments.
• European Union: Mirroring Japan's approach with a 15% tariff on most EU goods and a $600 billion investment commitment.
• South Korea: Similar framework to Japan and the EU.
• Canada and Mexico: Canada faces a 35% baseline tariff rate, while Mexico's 25% tariff received a 90-day extension.

Jesse Pujol highlights the lack of legally binding agreements, noting, "None of the deals have been signed with any signatures... they just think it's great" ([06:37]).

2. Impact on Big Tech Companies

Microsoft

Dan Shalon praises Microsoft for its robust performance, stating, "Microsoft announced they spent $30 billion on CapEx... spending more money on AI infrastructure than Germany and Israel spend on their military combined" ([07:27]). Microsoft’s Azure public cloud business now generates over $75 billion annually, propelling its market cap to $4 trillion.

Meta (Facebook)

Meta surprised the market with a significant earnings beat, driven by AI efficiency tools. Dan Shalon remarks, "Meta’s active users increased by 6%, reaching a base of three and a half billion" ([13:54]). The company doubled its CapEx to $17 billion, underscoring its aggressive investment in AI and talent acquisition.

Ed Mylett adds, "Mark Zuckerberg does have probably some of the biggest balls in the history of business" ([16:41]), highlighting Zuckerberg's unconventional strategies in AI and acquisitions.

Amazon

Amazon's AWS reported an 18% revenue growth, which, while exceeding expectations, lagged behind Microsoft's and Google's growth rates. Jesse Pujol notes, "Shares fell more than 7% in after-hours trading" ([09:28]), reflecting investor concerns over AWS's position in the competitive cloud market.

Apple

Apple showcased strong earnings with a 10% overall sales increase and a 13% spike in iPhone sales. Tim Cook transparently discussed the impact of tariffs, mentioning, "Customers upgraded early because tariffs mean prices are going to go up" ([20:47]). Apple's robust cash reserves of $133 billion position it well for future investments in AI, despite facing significant tariff costs.

3. Bifurcation of the Economy: Tech vs. Traditional Companies

Scott Galloway and Ed Elson discuss the growing divide between the "Magnificent Seven" tech giants and the remaining 493 companies in the S&P 500. Scott states, "The investment strategy has slowly been moving to a point where income inequality is going to get even worse" ([34:56]). This bifurcation is exacerbated by policies that favor tech companies, allowing them to thrive despite broader economic challenges impacting traditional industries.

4. The Consulting Industry and AI's Impact on Jobs

The hosts explore the surge in consulting firm revenues and job postings amidst economic uncertainty. Jesse Pujol points out, "Consulting firms like KPMG and McKinsey reported double-digit growth in revenue" ([46:49]). Ed Mylett critically examines the future of consulting, suggesting that AI could render many consulting roles obsolete: "AI can do that in an eighth of a second" ([48:46]).

They discuss the paradox where consulting firms may see increased profitability while the demand for human consultants diminishes due to AI advancements.

5. IPO Highlight: Figma's Successful Launch

Figma's IPO is celebrated as a standout success story. Jesse Pujol and Ed Elson commend the company's impressive performance, with Scott Galloway noting, "Figma priced at $33 and it ripped up more than 200%" ([67:04]). The hosts highlight Figma's collaborative platform as a competitive edge, positioning it as a formidable player against established giants like Adobe.

6. Autonomous Driving Race: Uber vs. Waymo

The autonomous driving sector is heating up with significant moves from major players:

• Uber: Plans to deploy over 20,000 robotaxis in the U.S. within six years, partnering with EV maker Lucid and autonomous tech startup Nuro.
• Waymo: Launching a robo-taxi service in Dallas in partnership with Avis, signaling a potential rift from its existing partnership with Uber.

Ed Mylett offers a bullish outlook on Waymo, stating, "Waymo is going to do for Alphabet what Musk is hoping AI will do for Tesla" ([56:30]). He predicts Waymo's vertical integration and Alphabet's financial strength will position them as leaders in the autonomous vehicle market.

Jesse Pujol adds, "If you are to go vertical, how do you do it?" ([63:03]), emphasizing the strategic decisions companies must make to dominate the robo-taxi race.

7. Upcoming Earnings to Watch

Looking ahead, the hosts identify key companies set to release their earnings in the coming week:

• Palantir
• AMD
• Disney
• Uber
• Shopify
• Eli Lilly

They also revisit their previous prediction on Figma's IPO, celebrating its success while acknowledging they underestimated the magnitude of its growth.

8. Jerome Powell and Future Rate Cuts

The conversation turns to Federal Reserve Chairman Jerome Powell and the speculation surrounding potential rate cuts. Jesse Pujol predicts, "We're not going to see a September rate cut" ([69:35]), citing robust GDP and PCE data. Ed Mylett agrees, suggesting Powell may resist political pressure: "He's going to look straight into the eyes of Donald Trump and go, fuck you, boss" ([69:36]).

Conclusion

The episode concludes with a reflection on the shifting dynamics in the capital markets, emphasizing the resilience and strategic investments of Big Tech companies amidst regulatory and economic turbulence. The hosts underscore the importance of maintaining focus on data-driven decisions, especially in an era dominated by AI advancements and evolving trade policies.

Notable Quotes:

• Dan Shalon [07:27]: "Microsoft spent $30 billion on CapEx... spending more money on AI infrastructure than Germany and Israel spend on their military combined."

• Jesse Pujol [06:37]: "None of the deals have been signed with any signatures... they just think it's great."

• Ed Mylett [13:54]: "Meta’s active users increased by 6%, reaching a base of three and a half billion."

• Scott Galloway [34:56]: "The investment strategy has slowly been moving to a point where income inequality is going to get even worse."

• Ed Mylett [56:30]: "Waymo is going to do for Alphabet what Musk is hoping AI will do for Tesla."

• Jesse Pujol [67:04]: "Figma priced at $33 and it ripped up more than 200%."

• Ed Mylett [69:36]: "He's going to look straight into the eyes of Donald Trump and go, fuck you, boss."

This detailed summary encapsulates the key discussions, insights, and conclusions from the episode, providing a comprehensive overview for those who haven't had the chance to listen.