← The Rundown
The Rundown
Google Revamps Search for the AI Era, Target's Turnaround Gains Steam as Sales Surge
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Public.com presents the rundown, your daily market update in 10 minutes. My name is Zaydad Mani and Today is Wednesday, May 20th. And today's episode we'll recap all the AI announcements from Google at their IO conference yesterday. We'll also recap earnings from Target, Kava and Loes, then stick around to the end of the show to find out which OpenAI co founder just jumped ship to Anthropic. We got a great show for you today. Let's go. Stocks were down for the third straight day yesterday. The S P 500 dropped 0.7% while the Nasdaq fell 0.8%. The stock market is now in its worst three day stretch since March, which was during the start of the Iran war. And this sell off right now is being driven by the bond market. And we've talked a lot about the bond market this week. And yields continue to climb. The 10 year treasury yield hit 4.69% yesterday, which was the highest level since January of 2025. And the 30 year yield spiked to above 5.19%, which is a level that we haven't seen since 2007. You know, whenever comparisons to 2007 start flying around, I get a bit nervous. And here's the thing, when bond yields go up, that tends to bring down stocks because some investors take their money out of the stock market and park that money into treasury bonds and collect the 5% interest. So in general, rising yields tend to be a headwind for stocks and that could continue to drag down the market in the short term. This is going to be a tough environment for new Fed Chair Kevin Warsh to step into. Kevin Warsh is officially being warning as the new Fed chair at the White House this Friday and he's replacing Jerome Powell. And you know, President Trump picked Kevin Warsh because he wanted someone who would cut interest rates immediately. But I don't see how he's going to be able to convince the other members of the Fed board to cut when inflation is running this hot and bond yields are surging. So yeah, good luck to Kevin in his new job. And speaking of the Fed, the Fed is actually releasing their April meeting minutes this afternoon, which would give us even more insight into how worried Fed officials are about inflation and whether rate hikes are back on the table. In fact, the market is now pricing in a 55 chance of a rate hike this year. We'll recap anything noteworthy from the Fed meeting minutes on tomorrow's show. And we're also going to be talking Nvidia earnings because those drop tonight. So yeah, tomorrow's episode will be packed. I'm also in New York this week. If you're watching this on video, you can see that I'm recording this in a hotel room. But yeah, a lot going on to end the week. As we head into the long weekend, make sure you guys are subscribed to the podcast and tuning in every day. We're to stay in the loop. Let's run through some headlines, starting with Google. Google held their annual IO developer conference yesterday and they dropped a ton of AI announcements. First up is a new model called Gemini 3.5 Flash. That's not the default model powering the Gemini app and also Google Search. I messed around with it yesterday for a bit. Seems better, but I still prefer Claude by far. Google says they're planning to launch Gemini 3.5 Pro since sometime next month, so we'll see how that does. The other big announcement was the launch of AI agents. Google announced something called Gemini Spark, which is basically a personal AI agent that can take action on your behalf across your connected apps. Think like booking reservations to a restaurant or planning a party or making travel plans. This is Google's answer to the open Claw hype from earlier this year. Now, personally, I'm not sure how many normal people want to run AI agents. I think we'll see much higher adoption of AI agents in the enterprise, but Google seems to think that consumers want to use it too. Now, on top of those announcements, Google also announced updates to Google Flow, which lets you make and edit AI photos and videos. There's also something called Google Pics now that can edit photos. And they introduced a new video model called Omni that can generate and edit videos. I like what tech YouTuber Marques Brownlee aka MKBHD, said. He said that there are too many names and AI products coming from Google now that it's so confusing. No, you got Nano, Banana and Veo and, and Spark and Flow and now Omni. I'm not even sure what all these products do, so they really need to simplify this stuff, especially if they're trying to get like the normal consumer, you know. Now, speaking of the normal consumer, what seemed to get the most attention was Google's plans to change the search bar. They said they're going to show more AI generated responses and even generate custom apps in the search results to answer people's questions. So Google seems to be going further away from the 10 blue links that have been part of the Google search results since the company was founded. I saw A ton of frustration from people online about this change. Seems like a lot of people prefer the 10 blue links. And look, this is a pretty big change in gamble for Google because search ads is their biggest business by far and it's still growing 19% year over year according to the latest earnings. So for them to move away from the thing that makes them the most money, I mean, they must be pretty convinced that ads inside AI answers are going to pay even more down the line. It's a pretty big change. Let me know what you guys think about Google's plans to show more AI search answers instead of links. The market seems to be pretty skeptical though. Google stock was down around 2% yesterday. Let's shift gears and talk about Target because they reported earnings this morning and had their best earnings surprise in years, but yet the stock is still down today. Let's talk about the numbers. First, revenues hit $25.4 billion, beating expectations by about $800 million, which is the biggest revenue beat Target has had since November of 2021. And what stood out to me was that same store sales were up 5.6%, which is the first positive same store sales in five quarters. So that means that shoppers are back to the store. The company said that store and Digital traffic grew 4.4% and digital sales were up nearly 9%. On top of that, Target also raised their full year outlook. The company now expects net sales to grow by 4% year over year, which is 2 percentage points higher than what they were guiding for before. Overall, this was a solid report for Target and a sign that things are starting to turn around under their new CEO, Michael Fidelity, who took over on February 1st. Fun fact about him, he actually started at Target back in 2003 as an intern and now he's running the company, which is pretty cool. Since taking over, he's focused on refreshing the merchandise, upgrading stores, and leaning into categories like baby health and wellness and beauty, which all saw strong growth this quarter. But for some reason, the market wasn't loving the report. Target stock is actually down around 6% this morning. I think it's a sign that investors might be worried about the overall health of the consumer moving forward. Right now, gas prices are high, inflation is creeping back up, and discretionary spending, like stuff that Target sells is, is exactly the kind of things people cut out when they're feeling squeezed on their budget. So that might be what's dragging down Target stock this morning. Also, I should mention Target stock was up around 25% this year heading into the earnings report. So some of the good news was already priced in. By the way, Walmart reports earnings tomorrow morning. So I'm really curious to see what they have to say. We'll recap those earnings on tomorrow's show. Let's talk about some stocks making moves today. Shares of Kava are getting a boost this morning after the Mediterranean food chain crushed earnings last night and raised their outlook for the year. Revenues jumped 32% to $438 million, beating estimates by about $20 million. And same store sales grew 9.7%, which absolutely blew past the 6% estimates that Wall street was expecting. What's impressive to me is that this growth was driven mostly by more people actually walking through the door, and not just higher prices. See, right now the restaurant industry is struggling to get customers in the building, but Kava is actually bringing in new diners and existing ones are coming back more often as well, actually raising their full year. Same store sales forecast to a range of 4 and a half percent to 6 and a half percent, which is up from the previous range of 3 to 5%. So kava is expecting growth to accelerate. And here's the part that I like the most. Kava only raised prices by about 1.4% on average, and they didn't touch the prices for their most popular items like chicken and falafel bowls. So even with oil prices right now driving up supply costs, they're absorbing a lot of that right now instead of passing it on to customers. I think that might be a big reason why customers are going back to Cava. Personally, I go to Kava like once a week, sometimes twice a week. Invest. Investors were liking what they heard. Shares of Kava are up around 3% this morning at the time of this recording, and the Stock is up 33% on the year. Now, on the flip side, Lowe's stock is slipping this morning despite the home improvement retailer beating earnings expectations. Revenues came in at $23.1 billion, which was up 10% year over year. And this was also the fourth straight quarter of positive comparable sales growth. But yet the stock is still down this morning because, for one, the earnings beat wasn't very, very impressive, especially when other companies are crushing expectations right now. But I think more importantly, investors are worried about the frozen housing market. And things could get worse now with bond yields surging. You know, as bond yields go up, that pushes up mortgage rates, and that could lead to even less home sales and people doing home renovation, which is not great for Lowe's business. Now, Lowe's did say they still expect total sales to grow 7 to 9% this year. And online sales were up 15, which was a bright spot. But that wasn't enough for investors. Shares are down around 3% this morning and down nearly 15 on the year. Let's wrap the show with a fun fact. Andrej Karpathy, one of the co founders of OpenAI, is joining Anthropic. The people that I know that are deep in the AI space are freaking out about this. Karpathi is one of the most respected AI researchers on the planet. He actually co founded OpenAI back in 2015, and then Elon Musk poached him to run AI at Tesla in 2017, where he led the autopilot team. He then left Tesla to go back to OpenAI in 2022, but then he left OpenAI in 2024. Now he's joining Anthropic. For my sports fans out there, this is like Kevin Durant joining the 73 win warriors back in 2016. Anthropic has been on an absolute tear this year. They have so much hype, so much growth, and in some estimates, they've passed Open AI in revenue and now they're hiring one of the best AI researchers on the planet. I mean, I can't imagine what his compensation package is. I think Anthropic knows they have so much momentum right now and they don't want that slowing down anytime soon. By the way, I've actually watched some of Andre's videos on YouTube. He does a fantastic job explaining some of the technical details of LLMs. Highly recommend checking that out if you guys want to learn more about AI. Let's just hope that Andre's time at Anthropic doesn't end the way that Kevin Durant's time did with the Warriors. 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, 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, listening, watching and commenting. Shout out to Mike for all the work behind the scenes and we'll see you guys back here tomorrow.