← The Rundown
The Rundown
Musk Loses Landmark Court Case Against OpenAI, Google & Blackstone to Create New AI Company
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Public.com presents the rundown. Your daily market update in 10 minutes. My name is Zaydad Mani and Today is Tuesday, May 19th. In today's episode, we'll tell you why Elon Musk just lost his $150 billion lawsuit against OpenAI. We'll also break down Google and Blackstone's new partnership to take on Nvidia and Corey, then stick around to the end of the show to find out why Amazon might be replacing me with Alexa. We got a great show for you Day. Let's go. Stocks had a lackluster start to the week. The S P 500 fell by 0.1% on Monday while the Nasdaq dropped by 0.5%. Now the Dow Jones did finish in the green, but nobody cares about the Dow. So you know what was interesting is that the overall breadth of the market was pretty solid on Monday. More than 350 stocks in the S P 500 were in the green. The problem was that chip stocks sold off again, continuing the pattern from Friday. In fact, the semiconductor index has now worst two day stretch since October, dropping more than 6% since Thursday's close. And you know, I think one reason that chip stocks are selling off right now is because the market is a bit nervous about Nvidia's earnings, which are coming up on Wednesday. Nvidia is the largest company in the world and makes up 8% of the entire S&P 500. So there's a lot riding on Nvidia's earnings. To be fair though, Nvidia has crushed earnings pretty much every time over the last three years, so we'll have to see if they can do it again. Zooming out though, Earnings season is coming to a close and overall it's been a fantastic quarter. S&P 500 companies are on track for 28% profit growth, which is the best since 2021, and strong earnings have been a big driver of the market rally in recent weeks. But here's the thing though. While the stock market is celebrating the strong earnings, the bond market is now starting to flash warning signs. The 10 year treasury yield hit 4.62% on Monday, which is the highest level since February of last year. And then the 30 year treasury is above 5.1%. I think it's a sign that bond traders are getting nervous about the Iran situation again and the impact that elevated oil prices could have on inflation. And as bond yields go up, that impacts borrowing costs across the entire economy. We're talking mortgages, car loans, credit cards, business loans, all of it. So we'll see how this all ends up playing out. You know, now that earnings season is winding down, oil prices and the Iran conflict are starting to be top of mind again for investors. But hey, if Nvidia blows out earnings again this week, then chip stocks should go back to rallying. So we'll see what ends up happening. We're gonna stay on top of all this stuff for you guys, so make sure you are subscribed to the podcast and tuning in every day to stay in the loop. Let's run through some headlines, starting with Elon Musk and OpenAI. Elon Musk just lost his lawsuit against OpenAI and Sam Altman. Elon Musk was suing OpenAI and CEO Sam Altman to to unwind OpenAI's transition from a nonprofit to a for profit company. He was also seeking $150 billion in damages and he wanted Sam Altman and President Greg Brockman removed from leadership. Well, after a three week trial, the jury deliberated for less than two hours yesterday and unanimously sided with OpenAI. The judge agreed with the jury and dismissed the entire case. Now here's a quick backstory on all the drama. OpenAI was founded back in 2015 as a nonprofit with the mission of building AI for for the benefit of humanity. Elon Musk was one of the co founders of OpenAI alongside Sam Altman, Greg Brockman and a few others. But then elon left in 2018 after a power struggle. And after he was gone, Sam Altman turned OpenAI into a for profit company. He raised billions of dollars from Microsoft. And fast forward to today. OpenAI is one of the most valuable companies on the planet. So now Elon is accusing OpenAI and Sam Altman for stealing a charity and enriching themselves. And I got to say, this trial did reveal some wild numbers. OpenAI's president Greg Brockman confirmed under oath that his stake in OpenAI is now worth close to $30 billion. So yeah, people got very rich from this. But what's interesting about this trial is that the jury never actually ruled on whether OpenAI did anything wrong. They ruled that Elon Musk waited too long to sue, saying that the statute of limitations had expired. And you know, during the trial, OpenAI's lawyers also showed evidence that Elon discussed turning OpenAI into a for profit company himself as early as 2017. And you know, at one point he wanted 90% stake of the equity for himself. The timing of this lawsuit does feel like sour grapes on Elon's part. He sued in 2024. Right after OpenAI became a wildly successful company, and right after he launched his own competing AI company called xai. So, yeah, I think this might just be a case of sour grapes. Now, Elon did say he's going to appeal this decision. He posted on X saying that the jury ruled on a calendar technicality and not the merits. So this saga might not be over. But I do think this is a big win for OpenAI because it clears up a big legal roadblock for OpenAI to IPO this year. If they had lost this case, that would have put the entire IPO in jeopardy. So this verdict gives OpenAI the green light to go public, which might be happening sometime later this year. Sticking with the AI theme, let's talk about a deal that could shake up the entire AI infrastructure industry. Google and Blackstone just announced that they're creating a brand new AI cloud company together. Now, I know on the surface that's kind of a weird pairing. A Wall street investment firm teaming up with a tech giant, but it's actually a smart move by Google. Here's how this partnership is going to work. Blackstone is investing $5 billion of their own money, and they're going to be the majority owner of this new company. And then Google is going to be providing the technology, specifically their custom AI chips called TPUs. So basically, Google and Blackstone are building a new AI cloud provider that will compete with companies like Core Weave and Nebbyous. But instead of packing their Data centers with Nvidia's GPUs, they're going to be packing them with Google's GPUs. So this news is sending Core Weave and Nebia stock down about 4% this morning at the time of this recording. Now, the reason this is a big deal is because this is the latest push by Google to commercialize their own AI chips. See, up until now, TPUs have mostly been used internally by Google to power Things like search, YouTube, Gemini and Google Cloud. But now Google is starting to commercialize their chips more aggressively, and that puts them in direct competition with Nvidia. So I'm really curious to see how this all plays out. Personally, I think this is a smart move by Google to, you know, monetize their TPUs. Now, as for Blackstone, they've been pushing hard into the AI infrastructure industry over the last few years. And this is just the latest example. Blackstone already has over $150 billion in data center assets. I think big picture, Blackstone is positioning themselves to be the landlord of the AI boom. Also One more thing regarding Google Today, Google IO kicks off, which is Google's annual developer conference. The keynote is taking place this afternoon. There are rumors that Google will announce their latest AI model for Gemini at that keynote, so that should be interesting. Now I feel like Gemini has lost a lot of hype this year to Claude, so we'll see if they can recapture some of that hype. I'll definitely be watching that keynote and I'll recap anything noteworthy on tomorrow's show. Let's talk about some stocks making moves today. Shares of Amir Sports are rising this morning after the company beat on Q1 earnings and raised their outlook for the year. Amir Sports Sports is the parent company behind popular brands including Salomon, arc' Teryx and Wilson, and demand for these products is up across the board. First quarter revenue grew 32% to $1.95 billion, topping the $1.8 billion that analysts were expecting. So on the back of these solid results, management raised their full year guidance. They now expect 2026 revenues to grow 20 to 22%, up from the prior forecast of 16 to 18% growth. As a result, the stock is up around 4% this morning at the time of this recording. But you emerged today. Shares are down around 7% year to date. Now on the flip side, Home Depot stock is down today even though the company technically beat on earnings. Revenues came in at $41.8 billion, topping estimates of 41.5 billion. And adjusted earnings per share came in at 3.43, also topping estimates. But Wall street was more focused on the weaker parts of the earnings report. For example, comparable sales only grew.66%, which was weaker than expected. And comparable transactions, which is the actual number of people coming through the door and buying stuff, fell for the fourth straight quarter. And you know this has been the story for Home Depot for a while now. The company's only posted comparable sales growth above 1% once in the last three and a half years. And a big reason for that is the frozen housing market. With mortgage rates so high right now, less people are buying homes are doing big renovations and that's putting a damper on Home Depot's growth. So as a result, shares of Home depot are down around 2% this morning at the time of this recording. Let's wrap the show with a fun fact. Amazon just launched a new feature for Alexa plus that can generate an entire podcast episode on demand. So you just tell Alexa what topic you want to learn about and then it'll create a podcast with AI generated voices. So yeah, it seems like Amazon is trying to replace me with Alexa. Now, to be fair, they are partnering with some legit news outlets like Reuters, the ap, the Washington Post, which you know, of course, so the information could be decent. But thankfully, AI is still terrible at telling jokes and making puns, so my job should be safe in the short term. And personally, I've never been bullish on AI generated content. I think people want to hear a real person with real opinions breaking stuff down. But maybe I'm in the minority here. Maybe in 10 years people won't care that a podcast host is AI generated. That being said, I think this new Alexa feature says something interesting about how people consume information now. You know, I think a lot of people would rather listen to an engaging breakdown of a topic than then sit and read a long article. I also saw that Amazon is now generating AI podcasts about product reviews for certain items on their websites. So, yeah, consumption habits are changing and Amazon is clearly leaning into that and they're trying to supercharge it with AI. So, yeah, let me know in the comments on what you guys think. Do you think that AI generated podcasts will replace human podcasters in the next five to 10 years? Depending on what the answers are, I might have to brush up on my civil engineering again. 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 again 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.