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Public.com presents the rundown, your daily market update in 10 minutes. My name is Zaydad Mani, and Today is Thursday, June 4th. In today's episode, we'll break down why Broadcom's record quarter wasn't enough for Wall street and what it means for the AI trade. We'll also tell you about Amazon's massive new cloud deal with Pinterest. Then stick around to the end of the show to find out why some of the biggest companies in the world are quietly cutting back on AI spending. We got a great show for today. Let's go. Well, stocks finally took a breather on Wednesday. The S&P 500 fell 0.7%, snapping a nine day win streak. And the Nasdaq did even worse, dropping 0.9%. But you know, after the run, the stock market has been on a pullback, was probably overdue. Now, there were two main factors that led to a market decline yesterday. The first was the Iran war. And the second one, I can't believe I'm saying this, was tariffs. Let's start with Iran first. Oil prices jumped about 2% yesterday after reports of an Iranian drone strike in Kuwait, followed by US Military strikes near the Strait of Hormuz. The fighting in the Middle east hasn't stopped and the market decided to care about that, at least for yesterday. But I think the bigger news, though, was that the tariff drama is coming back for season two. The Trump administration proposed a new set of tariffs on imports from Syria, 60 countries over forced labor concerns. This new proposal would slap a 10% tariff on countries like Canada, Indonesia and the European Union countries, along with a 12 and a half percent tariff on roughly 45 other countries, including China, India, Japan and South Korea. These tariffs will go into effect on July 7 after a public hearing. So this new proposal is essentially the Trump administration trying to revive parts of its territory tariff agenda after the Supreme Court struck down their universal IPA tariffs earlier this year. And I'm sure these new tariffs will face some legal challenges as well. So, yeah, it seems like tariff uncertainty is back now. Speaking of uncertainty, my God, bitcoin just keeps sliding this week. Bitcoin fell for the fourth straight day yesterday and it's now trading under $63,000. Here's an interesting stat that I came across yesterday. Bitcoin ETFs are on a 12 day outflow streak with about $4 billion pulled out during that time. My take that is that there just aren't enough buyers stepping up to buy the bitcoin dip. And you know, I think that Traders have moved on from crypto into AI stocks and it's hard to blame them with the way that some of these AI names are moving these days. So we'll continue to keep an eye on Bitcoin along with oil prices and now tariffs again. And don't forget tomorrow the May jobs report drops, so that'll tell us how the labor market is holding up. We'll recap that report on tomorrow's show along with everything else happening in the market. So make sure you guys are subscribed to the podcast and tuning in every day. To stay in the loop, let's run through some headlines, starting with Broadcom. Broadcom has been one of the biggest winners of the AI boom over the past couple years. The company's now worth over $2 trillion. Well, they reported earnings last night and the market did not like what they heard and the stock is down big this morning. Now the numbers themselves were pretty good. Revenues jumped 48% from last year to $22.2 billion. Net income nearly doubled to $9.3 billion and free cash flow was more than $10 billion. And the growth has been driven by AI. Broadcom's AI semiconductor revenue hit $10.8 billion, which is up 143% from last year. And the company expects that number to jump to $16 billion in the current quarter, which would be triple what it was in the same quarter last year. See, Broadcom has seen a huge surge in custom AI chips. For some of the biggest names in tech, we're talking Google, Meta, Anthropic and OpenAI. These tech companies want their own custom chips to not be so reliant on Nvidia, so they turned to Broadcom to help with the design. But despite the record quarter and insane growth, Wall street was not impressed. And I think it's because CEO Hock Tan did not raise Broadcom's long term AI chip sales forecast. The company says they're still targeting $100 billion in AI chip revenue in 2027 and I think Wall street wanted to see that number, especially since Broadcom stock has gone up 40% this year. The other red flag from the earnings was what Hock Tan said on the earnings call. He mentioned that Google, which is Broadcom's biggest and longest standing customer, is likely going to diversify its supply chain. In other words, Google might start buying custom chips from other suppliers too, which could impact Broadcom's business long term. So that's why despite a record breaking quarter, Broadcom stock is selling off hard today, down around 15% at the time of this recording. And that sell off is dragging down other chip stocks. Marvell, Intel, Micron are all down around 4 to 5% this morning. Now I think this is a great example of how expectations from investors are getting really high for these chip companies and if they don't meet them, the sell off can be pretty brutal. Let's stick with the AI infrastructure theme and talk about Amazon. Amazon's AWS just signed a $4 billion cloud deal with Pinterest that runs through 2031. This is Pinterest's largest ever infrastructure investment and it's going to power a AI driven discovery on their platform. See, Pinterest has more than 600 million monthly users, so they have a ton of data on people's personal styles and preferences and they want to use AI to help people find and buy things they would like on the Internet. So that's going to take a ton of compute. So they're turning to AWS for those computing needs. And a key part of this deal is that Pinterest will be using Amazon's custom train in chips to train and run their AI models. And they're going to use Amazon's Graviton chips to handle the broader computing workload. And that's why this deal matters to For Pinterest, this is about scaling their AI discovery, but for Amazon, this is about defending AWS and proving that their own chips can power major AI workloads. AWS is still the biggest player when it comes to cloud computing, but it's now the slowest growing of the top three. Microsoft Azure and Google Cloud are posting much faster revenue growth thanks in part to the growing demand for AI workloads. But look, Amazon is starting to catch up. AWS's growth re accelerated in recent quarters and if Amazon can get more customers to build on Trainium Graviton chips instead of Nvidia chips, it could lock in their lead as the dominant cloud provider. Moving forward, Pinterest is just the latest partnership. AWS also has commitments from AI heavyweights like Anthropic and OpenAI, which have roughly committed to spending a hundred billion dollars on AWS. Shares of Amazon are up more than 1% this morning in reaction to this deal. So yeah, I would keep an eye on Amazon. I feel like they haven't gotten as much love when it comes to AI compared to the other Max 7 companies, but they might be a sleeping giant here. Let's talk about some stocks making moves today. UnitedHealth shares are moving higher this morning after bank of America upgraded the stock to a buy rating and raised their price target to 450 a share. Bank of America thinks the UnitedHealth's strategy shift is working. The company has been cutting costs, cutting less profitable memberships, improving margins, and investing in AI. As a result, shares of UnitedHealth are up around 6% this morning and up nearly 20% for the year. Now, on the flip side, CrowdStrike is taking a hit this morning after reporting earnings last night. And similar to Broadcom, this is a classic case of good numbers, bad reaction. The cybersecurity company saw revenues jump 26% to $1.39 billion, and the company swung to a profit for the first time in over a year. CEO George Kurtz said that cybersecurity and AI are colliding, calling it the company's Mythos moment. He was referring to Anthropic Mythos model, which is so powerful that Anthropic held off on a public release over cybersecurity concerns. CrowdStrike is actually one of the companies that has early access to this model, and it could help them build better AI security tools. But, you know, despite the hype around AI and cybersecurity, the company's guidance for the current quarter came in right in line with expectations. And when your Stock is up 60% on the year and you're talking about the Mythos moment, you got to bring more juice to the table than that. As a result, CrowdStrike stock is down around 8% this morning at the time of this recording. Let's wrap the show with a fun fact. Companies are starting to cut back on AI usage because it's costing too much money. See, for the last year, many companies have been pushing their employees to use AI for everything. You know, write code with it, made slide decks with it, summarize meeting minutes, rewrite emails, you name it. In fact, there's even a term now for this called token maxing, where employees were basically competing to use as much AI as possible to look productive. Well, now some of these companies are rethinking that strategy because of how expensive it is. The usage is measured in tokens. The more you use AI, especially for more complex tasks, the more tokens you burn. And once companies started rolling out these AI tools across their entire workforces, those invoices from the AI companies got really large. According to the Wall Street Journal, Uber blew through entire annual AI budget by March. And that's just one example. Walmart had to cap how much employees could use an AI tool for spreadsheets and presentations, and then Microsoft actually limited employees access to some anthropic tools, and there's also a rumor going around that one unnamed company accidentally spent $500 million on tokens in a single month after they rolled out Claude to its entire workforce without setting any usage limit. See, companies were so blinded by what I could do that they didn't take into account that token maxing might not be profitable. So I think companies are starting to come to that reality now. And I wonder what this means for revenue growth for OpenAI and Anthropic. Now, both these companies have seen a surge in revenue, especially Anthropic, as more and more enterprises adopted AI usage over the last few months. But if these companies are starting to cut back on AI spend, will Anthropic see a significant slowdown in the revenue growth? And then that begs the question, does Anthropic see this coming and is that why they're rushing to IPO now? I don't know the answers to those questions. I'm just speculating here, but it's definitely something I'm thinking about as Anthropic and OpenAI move towards an ipo. Well, all right guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like five extra seconds, consider giving us a five star rating on Apple. So Spotify, YouTube, wherever you listen to your podcast, all that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching and commenting. Shout out to Mike for all the work behind the scenes and we'll see you guys back here tomorrow.