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Public.com presents the rundown, your daily market update in 10 minutes. My name is Zaydadmani and today is Friday, July 31st. In today's episode, we'll break down Thursday's massive tech rebound and how an AI hedge fund blow up may have contributed to the July sell off. We'll also recap earnings from Apple and Amazon and why the market is having two very different reactions. Then stick around to the end of the show to find out why YouTube could be the ultimate winner of the streaming wars. We got a great show for you today. Let's go. Stocks had an epic bounce back on Thursday after the Wednesday sell off. The S&P 500 jumped 1.7% yesterday and the NASDAQ popped 2.8% thanks to a surge in AI and chip stocks. Some of the notable names include Sandisk, Micron, Nebius, Corey, they're all up around 20%. And Microsoft might have been the biggest winner. Their stock popped 15%. Following their earnings, they added $450 billion in market cap, which is the largest one day market cap gained by any US company ever. So tech names had a great day and they carried the overall market. But if you look under the surface, nearly 2/3 of the S&P 500 stocks actually finished in the red. So yesterday was one of those days where there was a rotation into tech stocks from other sectors of the market. And you know, one reason for this tech rally might be because of a blow up of an AI hedge fund called Situational Awareness. This story was the talk of the town yesterday. It's a fund that was started by a 25 year old wonderkid and former OpenAI employee Leopold Aschenbrenner. This guy turned $225 million into $20 billion in like two years by investing big on AI infrastructure names. This entire story is pretty crazy. It might be the story of the year. Now, we don't have time to get into all the details right now and honestly, some of the facts are still coming out, so we'll likely do a deep dive on it at some point. But the gist of the story is that the Situational Awareness fund made massive leverage bets on AI infrastructure stocks. And those leveraged bets worked out incredibly well for most of the year. The fund was reportedly up more than 400% through June. But the problem with using leverage is that the losses can be just as brutal. When the AI sell off hit in July, the fund lost roughly two thirds of its value value and they were forced to sell most of their stock portfolio to Citadel this week. Some of the stuff that I'm reading about it is pretty crazy. I can't wait for the four part Netflix stock now. The reason the story matters to the overall market is that some people think that a forced unwind of a hedge fund like this could be a sign that the worst of the AI sell off is over. You know, once a big leverage seller is finally out of the market, you remove a major source of selling pressure. So we'll see if that was the bottom in the AI trade. We'll continue to stay on top of that story along with everything else happening in the markets. We still got a ton of earnings to get through over the next couple weeks. So to definitely get subscribed to the podcast and tune in every day to stay in the loop, let's run through some headlines, starting with Apple. Apple reported a strong quarter last night, but the stock is still trading lower today for a few reasons. Let's talk about the numbers. First, revenues jumped 16% to $109.4 billion. That's a record for the June quarter. IPhone sales were up 22% as demand for the iPhone 17 lineup continues to stay. And Mac sales were up nearly 30% thanks to that new low cost MacBook Neo, which has been flying off the shelves. Overall profits for the quarter came in at $29.8 billion, which exceeded expectations. So that was the good stuff from the earnings, but there were a few weak spots as well. Services revenue grew 12% to $30.7 billion, which looks pretty solid on the surface, but it did slightly miss estimates. Apple blamed some of that miss on weaker App store gaming revenue and and also currency headwinds. China also came in softer than expected with revenues of $18.8 billion, which was below the estimates of roughly $19.6 billion. But I think the biggest problem from Apple's earnings was their forecast. Management expects sales to grow between 9 to 11% this quarter, which is below the roughly 12% growth that Wall street was looking for. And the reason for the soft guidance isn't demand. Apple says it's because of supply constraints. Apple can't seem to make enough devices to meet the demand because they're struggling to secure enough processors and memory chips and other components for their iPhones, Macs and iPads. You know, the AI boom that we're experiencing right now has resulted in a massive supply shortage of these components, and now Apple has to wait in line for supply to catch up. I guess the good news for Apple is that this is a supply problem and not a Demand problem. The bad news though, is that supply constraints are much harder for Apple to fix quickly, especially when every AI company in the world is competing for the same chips. In the meantime, Apple has raised prices on the Macs and iPads because of the memory supply crunch. And some people think they're going to keep raising prices and they're expected to raise prices on the new iPhone when it launches in September. So yeah, Apple stock is taking a hit today because of the weak guidance and concerns around the supply crunch. Shares are down around 7% this morning at the time of this recording. Not going to lie, I'm kind of surprised to see the stock down so much. If you zoom out though, Apple stock has been on a tear over the last couple of months because they've essentially become the anti AI tech company. See, unlike their big tech peers, Apple isn't spending hundreds of billions of dollars on AI capex. And now that the AI trade has started to sour, investors are jumping into Apple as an AI hedge. In fact, Apple's market cap crossed $5 trillion for the first time ever this week. And they overtook Nvidia to be the most valuable company in the world again. They might be given that crown back though, because of the stock price tanking today. By the way, this was also Tim Cook's first final earnings call as CEO after 15 years and a 14x run in the stock price. He hands the keys over to John Turnis starting on September 1st. And I gotta say, Turnus is taking over at an interesting time. I mean, the business itself is doing well, but the company is dealing with major supply chain issues and higher costs. So there's going to be a lot of pressure on JT as he takes over the company. Let's shift gears and talk about Amazon, because the stock is ripping this morning after the company reported blowout earnings and showed that their massive AI spending is paying off. Total revenues jumped 20% to a record $200.6 billion. That easily beat estimates. And the star of the show was AWS, which is Amazon's cloud business. AWS revenues jumped 37% to $42.2 billion. That crushed Wall street estimates of 31 growth. In fact, this was the fastest growth rate for AWS since 2021 and it marked the fifth straight quarter of accelerating, accelerating cloud growth. So this is a sign that all the money that Amazon has spent on AI infrastructure and CapEx is starting to pay off. The company spent more than $54 billion on AI infrastructure last quarter alone, which pushed their free cash flow to negative $7.6 billion for the last 12 months. But even with all of this spending, the company says they don't have enough capacity to meet demand. AWS's backlog reached 496 billion billion and that's why Amazon has no plans to slow down the spending. In fact, Amazon raised their CapEx forecast for the year. They're now projecting CapEx to hit $220 billion this year, partly because of rising component prices like memory and storage. And you know what's funny here? The market absolutely love this. Amazon stock is up more than 10% this morning at the time of this recording. You know, it's kind of crazy how the reaction by the market to Amazon's earnings are so different to Google's earnings last week. Google also reported strong cloud growth and a big backlo and they also raised their capex as well. Yet the stock sold off 7% in reaction to that earnings report. Amazon reported pretty similar stuff and the stock is surging now. I gotta say, CEO Andy Jassy did do a great job on the earnings call hyping up Amazon's position in the AI space. He said that AWS customers are already reserving compute capacity for 2028. And he also said that AWS could very possibly become a trillion dollar a year revenue business. So Jassy is talking a big game and the market seems to be buying it for now. So yeah, this earnings report is a big win for Amazon investors because for the last year or so, the stock has been pretty flat. So maybe this earnings report will spark a rally moving forward. Let's talk about some stocks making moves today. Rivian shares are moving higher this morning after the EV maker reported a better than expected quarter and showed early signs that the launch of their cheaper R2 SUV is paying off. Revenues for the quarter jumped 27% to $1.66 billion. That beat estimates. And the number that stood out to me was gross profit. Gross profit came in at $179 million, which was a huge improvement from the $206 million loss the company had in the same quarter last year. So that's almost a $400 million swing in 12 months. Now, there is an important caveat here. Rivian's automotive business still lost around $36 million on a gross profit basis. So they're still losing money on. But their software and services business, which includes a partnership with Volkswagen, generated $215 million. And it carried the company into the positive territory. But I got to say, the vehicle business is moving in the right direction. Deliveries rose 14% to more than 12,000 vehicles. And a big reason for that was the R2 SUV, which is Rivian's cheaper midsize car. The demand for the R2 has been solid. In fact, management raised their delivery guidance for the year to 65 to 70,000 vehicles. The company also cut their CapEx projections by $250 million. So they're planning to deliver more cars and spend less money. That's a combo that investors like to hear. And shares of Rivian are up more than 3% this morning at the time of this recording. If you zoom out though, Rivian stock is down around 13% for the year, but they are outperforming Tesla. Now on the flip side, Reddit stock is getting hammered this morning despite reporting what looked to be an incredible quarter. Revenues last quarter jumped 6.61percent to $85 million and profits came in at $253 million. Both those metrics beating expectations. And then on top of that, the company also raised their guidance as well. So Reddit pulled off the earnings trifecta. Yet the stock is tanking right now, down around 15% this morning at the time of this recording. And the main reason that Reddit stock is dropping is because of their warnings about search traffic. CEO Steve Huffman admitted that search referrals were choppy. See, Reddit depends on Google to send it new users from their search results. But these days Google is answering most of their questions with their AI overview. If that AI overview summarizes the Reddit content instead of linking to Reddit directly, that could lead to less users on Reddit itself. In fact, the effects of this might already be happening because US Daily users slip slightly from the previous quarter. So that was enough for investors to freak out. And Reddit stock is taking a hit this morning. And you know, it's been a tough year for the company. Shares were already down 25% heading into this earnings report, and it looks like things just got worse. Let's wrap the show with a fun fact. The Peacock streaming service will soon be a part of YouTube. NBCUniversal and YouTube agreed to a deal that starting next year, YouTube Premium subscribers in the US will get Peacock Premium at no additional cost. And to me, the key part of this deal is that the Peacock content will be accessible directly inside YouTube, so you won't have to use the Peacock app at all to watch the content on there. So now my wife can watch Love island right from YouTube without bugging me for the Peacock password all the time. Longtime listeners know I'm a big fan of YouTube Premium. I think it's the best value when it comes to entertainment, even though it has gotten more expensive over the years. But it looks like YouTube was adding more content to it, which is nice to see. I think YouTube is in a good position to be like the next generation cable company, and I mean that in a good way. See, everyone already watches YouTube, and YouTube Premium already has 125 million members globally. YouTube also has YouTube TV for live TV and sports. So because they have a huge audience, they become an attractive spot for other media companies to put their content on. So if they sign more deals like this one with Peacock, where they include the content from that streaming app directly inside YouTube, it could address one of the biggest pain points that we have with streaming today. Everyone hates that you have to constantly switch between the streaming apps to find the content you want to watch. I think YouTube could be the home where all the content lives in the near future. So I'm bullish on YouTube long term. Hopefully they can add more content partners onto their platform. And I gotta say, Netflix has to be worried about this. Let me know in the comments on what you guys think. Do you want YouTube to be the spot where all the content from all the streaming apps live, or do you not want YouTube to have all that power? Drop your thoughts on Spotify and in the comments section on YouTube. Well, all right, guys, that's the rundown for today. That's the rundown for this week. Hope you guys enjoyed today's episode. Just a heads up, no deep dive this weekend, but we do have an interview. I recorded one with Alex Heath. He's one of the most plugged in reporters in Silicon Valley. That should be going up sometime this weekend, so keep an eye on your podcast feed for that. Thank you guys so much for listening, watching and commenting. Shout out to V and Kevin for all the work behind the scenes, and we'll see you guys back here for the interview.