2026-05-12 20:01:49
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The market is punishing tech companies that can’t tell a grand AI story. Few examples are clearer than Sony and Nintendo, the world’s two top console makers, which reported earnings last Friday.
Sony’s stock is down 23% YTD. Nintendo is down ~50% over the past 12 months. Both are facing a memory crunch driven by AI demand for data centers. Both are raising console prices to defend margins.
Meanwhile, Alphabet, Amazon, Meta, and Microsoft can announce $100+ billion CapEx plans and watch investors come back after a brief selloff. Spending on AI infrastructure is treated as an expanding moat. Higher memory costs for consoles are just margin pressure with no upside.
That’s the strange setup for gaming in 2026.
Sony tried on the AI vocabulary this quarter, with physical AI and creator tools. Nintendo stayed quiet and focused on shipping games.
Both companies are executing well in their own ways.
But both are being valued like they’re missing the only story that matters.
Today at a glance:
🎮 Sony: Beyond PlayStation
🍄 Nintendo: The Price Test
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Sony just had its most profitable year ever. But the market focused on what comes next.
FY25 revenue (ending in March 2026) grew 4% Y/Y to ¥12.48 trillion (~$80 billion), while operating income rose 13% Y/Y to ¥1.45 trillion. Yet the March quarter was messy: net profit fell 63% Y/Y to ¥83 billion, far below consensus, dragged down by impairments at Bungie and Pixomondo plus a loss tied to the wound-down Honda EV venture.
The headline miss was ugly, but the underlying story is more interesting.
Sony is becoming a cleaner company: less hardware-heavy, more IP-driven, and more disciplined with capital. The new roadmap is built around gaming services, music catalogs, image sensors, and fab-light manufacturing.
The PS5 sold 1.5 million units in Q4, down from 2.8 million a year ago and the lowest quarter on record for the console. Lifetime shipments reached 93.7 million.
As a result, the revenue for the largest segment of the company was flat Y/Y. That sounds alarming, but the PlayStation business is healthier than the hardware numbers suggest.
Game & Network Services (G&NS) segment operating income fell 42% Y/Y to ¥54 billion in Q4, mainly because Sony booked an ¥88.6 billion Bungie impairment. The write-down reflects weaker future cash-flow expectations after softer engagement in Destiny 2 and delays around Marathon. Sony paid $3.6 billion for Bungie in 2022, making this a costly reminder that live-service games are harder to scale than they look. Strip out one-time charges, and full-year G&NS operating income would have grown 45% Y/Y instead of the reported 12%.
The gaming shift is clear:
Hardware is slowing.
Engagement is holding up.
Software and services are carrying more weight.
PSN monthly active users reached 125 million, up only 1% Y/Y, but still near record levels. Playtime grew along with the user base.
That is the key takeaway. Sony may sell fewer consoles late in the cycle, but the installed base remains deeply engaged. At this stage of the cycle, software it the profit center, while hardware is more of a distribution channel.
The FY26 guide confirms it: G&NS revenue is expected to decline 6% Y/Y, while operating income is expected to grow 30% Y/Y as the Bungie impairment rolls off. Hardware profitability is expected to be roughly flat. The growth comes from software, services, and lower costs.
2026-05-09 22:02:32
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Today at a glance:
↗️ AMD: CPU Reawakening
📱 Arm: AGI CPU Demand Doubles
🌐 Arista Networks: Demand Beats Supply
🍟 McDonald’s: Value Plays Through Anxiety
🛍️ Shopify: Growth Deceleration Ahead
📱 AppLovin: Axon Opens to the World
🚖 Uber: Bookings Accelerate
🇩🇰 Novo Nordisk: Oral Wegovy Boost
💉 Pfizer: Defining Period
🏨 Marriott: US Demand Reaccelerates
☁️ Cloudflare: Shrinking To Grow Faster
🤝 MercadoLibre: Growth Over Margins
🛖 Airbnb: Guidance Goes Higher
🥡 DoorDash: Demand Offsets the Misses
☁️ CoreWeave: Backlog Near $100B
🏎️ Ferrari: Scarcity Holds Up
🔒 Fortinet: AI-Era Demand Surge
📈 Coinbase: Crypto Winter Continues
🐶 Datadog: AI Becomes the Engine
💳 PayPal: Lores Lays Out the Cuts
🔲 Block: AI Bet Pays Off
🎤 Live Nation: Antitrust Bill Lands
🇰🇷 Coupang: Recovery Takes Time
💳 Fiserv: Transformation Strain
⚡️ Axon: AI and Counter-Drone Inflection
👽 Reddit: Profitability Tier Unlocked
✈️ Expedia: B2B Carries The Load Again
💬 Twilio: Voice AI Reaccelerates
🌭 Kraft Heinz: Early Traction
🌈 Affirm: Card Engine Keeps Roaring
🌎 Global Payments: Worldpay Era Begins
🏈 Flutter: Howe Out, Predictions In
🍞 Toast: Agentic Platform Hits Stride
🍔 RBI: Burger King's Inflection
📢 HubSpot: Another Pricing Pivot
🌊 DigitalOcean: AI Capacity Surge
👻 Snap: Restructure & Reset
🏠 Zillow: Profit Outlook Spooks Street
🗞️ NYT: Ad Engine Reaccelerates
👑 DraftKings: Predictions Push Goes Live
🧬 Tempus AI: Pharma Brings Visibility
🔥 Match Group: Tinder Rebounds
⚡️ Celsius: Portfolio Plays the Hits
📺 The Trade Desk: Guide Disappoints Again
🚲 Peloton: Turnaround Finds Its Footing
🏴 Klaviyo: Agents Find Leverage
🍿 AMC: Box Office Leverage
AMD’s Q1 revenue rose 38% Y/Y to $10.3 billion ($0.3 billion beat), and non-GAAP EPS was $1.37 ($0.08 beat).
Data Center revenue surged 57% Y/Y to $5.8 billion, ahead of expectations, as EPYC CPUs and Instinct GPUs became the primary growth engine. Free cash flow more than tripled to a record $2.6 billion, showing the AI ramp is already flowing through the model.
The biggest shift was not just GPUs. AMD doubled its server CPU market outlook, now expecting the TAM to grow at a 35%+ annual rate to more than $120 billion by 2030, up from its prior 18% CAGR view. The logic is simple: inference and agentic AI require more CPU compute for orchestration, data movement, parallel execution, and head nodes for accelerators. AMD now expects server CPU revenue to grow more than 70% Y/Y in Q2, with robust growth continuing into the second half and 2027.
The accelerator story also strengthened. AMD said that MI450 and Helios customer forecasts now exceed initial expectations, with production shipments still on track to ramp in the second half. The company pointed to multi-generation partnerships with Meta and OpenAI, plus additional large-scale customer interest, as evidence it can generate tens of billions in annual data center AI revenue in 2027. That matters because AMD is no longer pitching itself as a distant NVIDIA alternative. It’s trying to become the second strategic AI platform for hyperscalers that need more supply and leverage.
Outside Data Center, the picture was less explosive. Client and Gaming revenue rose 23% Y/Y to $3.6 billion, with Client up 26% and Gaming up 11%. Ryzen demand remains strong, especially in commercial PCs, but management warned that higher memory and component costs could pressure second-half PC and gaming demand. Embedded returned to growth, up 6% Y/Y to $873 million, helped by test, aerospace, defense, communications, and broader x86 adoption.
Management guided Q2 revenue to $11.2 billion (a massive $0.7 billion beat at the midpoint), implying 46% Y/Y growth, with adjusted gross margin expected to improve to 56%. The setup is increasingly about execution under constraint: securing enough wafers, back-end capacity, memory, and data center power to meet demand. The next test is whether AMD can turn MI450 and Helios into large-scale 2027 deployments while keeping gross margins in the 55%–58% long-term range.
Arm Q4 FY26 (March quarter) revenue rose 20% Y/Y to $1.5 billion ($20 million beat), and non-GAAP EPS was $0.60 ($0.02 beat).
Licensing surged 29% to $819 million, $43 million ahead of consensus.
Royalties grew just 11% to $671 million — a $22 million miss as memory chip shortages weighed on smartphone production.
ACV (Annualized contract value), a metric for normalized license and other revenue, rose 22% Y/Y to $1.7 billion.
Shares fell over 10% as the smartphone slowdown overshadowed AI data center momentum.
The headline story is the Arm AGI CPU, Arm’s first homegrown data center chip and a direct competitive shift against its own customers. Demand more than doubled to over $2 billion across FY27 and FY28, but Arm held its revenue forecast at $1 billion citing TSMC advanced-node wafer constraints. Meta is the lead partner and co-developer. Data center royalty revenue more than doubled Y/Y, with Neoverse CSS holding ~50% market share among top hyperscalers.
CEO Rene Haas saw smartphone unit growth “flip to negative,” though the weakness was concentrated in low-end phones where Arm earns lower royalty rates. The cost of building chips directly is showing up in margins: operating margin fell to 29% from 33% a year ago.
For Q1 FY27, Arm guided revenue to ~$1.26 billion (vs. $1.25 billion consensus) and non-GAAP EPS of ~$0.40 (vs. $0.36 consensus), with both royalty and licensing growing ~20%. Long-term FY31 targets remain intact at $25 billion revenue ($15 billion from AGI CPU, $10 billion from IP) and $9+ EPS. The next quarter test is whether royalty growth reaccelerates as the smartphone memory squeeze eases, and whether TSMC capacity loosens enough to let Arm convert the full $2 billion in AGI CPU demand into revenue rather than the $1 billion currently guided.
2026-05-08 22:03:38
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Comcast called it “Legendary February.” For 17 days, the Winter Olympics, Super Bowl, and NBA All-Star Game all aired across NBCUniversal, generating over $2 billion of incremental revenue.
Disney got its own Super Bowl boost on ABC. Paramount leaned on the NFL and UFC. Roku benefited as tentpole events pulled more ad dollars into connected TV.
The takeaway from media earnings is clear: live sports are one of the few remaining forces powerful enough to reshape an entire quarter.
But the same quarter also showed the trade-off. Comcast’s Media EBITDA swung to a $426 million loss as NBA rights hit the P&L. Disney’s Sports operating income fell 5%. Warner, having walked away from the NBA, saw linear ad revenue dropped 8%.
The bill for being in sports keeps rising. The bill for sitting out may be even higher.
Today at a glance:
🏰 Disney: Streaming Finally Scales
🦚 Comcast: The Sports Bill Arrives
🎥 Warner: Paramount’s Inheritance
⛰️ Paramount: The Easy Part Is Over
📺 Roku: The CTV Toll Booth
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Disney’s fiscal year ends in September, so the March quarter was Q2 FY26.
📸 Big picture: Revenue rose +7% Y/Y to $25.2 billion ($0.3 billlion beat), and adjusted EPS grew +8% to $1.57 ($0.07 beat) in new CEO Josh D’Amaro’s first quarter at the helm. Total segment operating income rose +4% to $4.6 billion, with all three segments beating expectations. Disney also guided FY26 adjusted EPS growth to ~12% and raised its buyback target to at least $8 billion.
📈 Streaming hits double-digit margins: DTC profitability inflected meaningfully. Disney+/Hulu profits jumped +88% Y/Y to $582 million on subscriber growth, January’s price hike, and ad improvements — delivering Disney’s first-ever double-digit DTC margin. Disney has also stopped reporting subscriber counts, mirroring Netflix’s playbook.
🍿 Entertainment swings up: Entertainment revenue grew +10% Y/Y, helped by the Fubo transaction and a stronger film slate. Avatar: Fire and Ash, Zootopia 2, and Pixar’s Hoppers have generated more than $3.7 billion combined at the global box office. Streaming now generates more than 2x the revenue of linear at Disney Entertainment.
🏰 Experiences keep cruising: Experiences revenue rose +7% to $9.0 billion, with operating income up +5% to $2.6 billion. Cruise capacity remains the growth engine, with the fleet set to expand from 8 to 13 ships by 2031. Domestic park attendance dipped -1% on softer international visitation, but global attendance grew +2%, and per-guest spending rose.
🏈 Sports stuck in transition: Sports revenue grew just +2%, while ESPN operating income fell -5% to $652 million on lower ad revenue and higher rights costs. Q3 sports operating income is guided to fall -14% on rights timing. CFO Hugh Johnston also shut down the linear-spinoff debate, calling it “highly complex” and unlikely to create value.
🤖 D’Amaro’s vision: In a 3,000-word shareholder letter, D’Amaro positioned Disney+ as the company’s “digital centerpiece” — a single hub for streaming, games, parks bookings, and merchandise. AI is also being deployed for ad targeting and labor forecasting at the parks.
Bottom Line: D’Amaro inherited a better setup than Iger did, and his first move gives Disney a strategy investors can finally model: Disney+ as the front door to streaming, sports, games, parks, and commerce. ESPN and parks remain pressure points, but the quarter made the bull case cleaner.
📸 Big picture: Revenue rose +5% Y/Y to $31.5 billion ($1.1 billion beat), or +11% pro forma post-Versant. Adjusted EPS fell -27.5% to $0.79 ($0.06 beat), and adjusted EBITDA declined -9% to $7.9 billion as NBA rights costs hit the P&L for the first time.
📉 Broadband losses moderate: Comcast lost only 65,000 domestic broadband customers, far better than the ~170,000 analysts feared and the first Y/Y improvement since Q4 2020. The catch: domestic broadband revenue still fell 5% to $6.3 billion as $45/month price guarantees and free wireless bundles compress ARPU.
📱 Wireless sets a record: Xfinity Mobile posted its best net additions quarter ever, with domestic wireless service revenue up +15% to $977 million. The real test arrives in 2H 2026, when bundled free lines hit their one-year mark and convert to paid. Early cohorts are seeing “a significant majority” roll over.
🦚 Peacock breaks $2 billion: Peacock added 5 million paid subscribers to reach 46 million, with revenue up +71% Y/Y to $2.1 billion. EBITDA losses widened to $432 million on NBA costs, but management called Q1 the “peak dilution” and guided Peacock to “approach profitability” in Q2.
🎢 Epic Universe keeps printing: Theme parks revenue jumped +24% to $2.3 billion, with EBITDA up +33% to $551 million, fueled by Epic Universe’s first full year in Orlando. International parks softened, but US parks show no concerning pullback.
📺 ‘Legendary February’ comes at a cost: The 17-day Olympics/Super Bowl/NBA All-Star stretch generated $2.2 billion in advertising alone, more than doubling Media ad revenue. Yet Media EBITDA still swung to a $426 million loss as NBA costs hit the segment.
Bottom line: Comcast’s pivot is working, but the trade-off is visible: lower broadband ARPU today in exchange for better retention and a larger wireless base tomorrow. If free lines convert to paid in 2H, the strategy starts to compound. If not, Comcast just bought stability at a steep price.
📸 Big picture: Revenue dipped -1% Y/Y to $8.9 billion ($10 million beat), or -3% in constant currency. GAAP EPS came in at -$1.17 ($1.08 miss), with the $2.9 billion net loss almost entirely driven by the $2.8 billion Netflix termination fee Paramount paid on WBD’s behalf, plus acquisition-related amortization and restructuring. Excluding those items, the results were broadly in line.
🍿 Studios still on a roll: Studios revenue surged +35% Y/Y to $3.1 billion, with adjusted EBITDA up +199% to $775 million. Wuthering Heights anchored the slate, and CEO David Zaslav reaffirmed the goal of at least $3 billion in WB Studios EBITDA for the year. The “Warner Bros.” side is doing exactly what the bull case requires.
📈 Streaming crosses 140 million: HBO Max launched in the UK, Germany, Italy, and Ireland, helping the company “meaningfully exceed” its prior 140 million subscriber target. Streaming revenue rose +9% to $2.9 billion, and EBITDA grew +29% to $438 million. Management now expects to exit 2026 with more than 150 million subscribers globally.
📺 Linear keeps bleeding: Global Linear Networks revenue fell -8% Y/Y to $4.4 billion, with EBITDA down -9% to $1.6 billion. Ad revenue declined -8% in constant currency, with the absence of the NBA accounting for 7 points of the drop. CFO Gunnar Wiedenfels said the company has “long stopped viewing our linear networks as linear networks” — a tacit acknowledgment that the segment is being managed for cash, not growth.
🪧 The deal is almost done: WBD shareholders approved Paramount Skydance’s $31/share cash offer in April. Closing remains targeted for the end of Q3, pending foreign regulatory approval. WBD ended the quarter with $30.1 billion in net debt, or 3.4x leverage — Paramount’s inheritance.
Bottom Line: WBD’s quarter was good enough underneath the accounting noise, but the stock is no longer trading on operations. With Paramount’s offer locked in, investors are effectively underwriting deal timing, regulatory risk, and the ticking-fee sweetener. The operational story is real, but the trade is no longer about WBD.
📸 Big picture: Revenue rose +2% Y/Y to $7.4 billion ($70 million beat) in Paramount Skydance’s second quarter under new ownership. Adjusted EPS came in at $0.23, down from $0.29 a year ago, while adjusted EBITDA jumped +59% to $1.2 billion. The company reaffirmed its 2026 outlook of $30 billion in revenue and $3.8 billion in adjusted EBITDA.
📉 TV Media keeps sliding: Linear remains the drag, with TV Media revenue down -6% Y/Y to $3.7 billion, better than the -9.5% Wall Street feared. Affiliate and ad revenue both declined, though total advertising improved versus Q4, and management expects ad growth to return in 2H 2026.
📈 Streaming holds up: Direct-to-Consumer revenue grew +11% Y/Y to $2.4 billion, with Paramount+ revenue up +17% to $2.0 billion on a +14% ARPU lift from January’s price hike. Paramount+ ended with 79.6 million subscribers after exiting low-value international hard-bundle subs, and management expects near-term subs to stay “flattish” as more bundles roll off.
🎬 Studio finds its footing: Filmed Entertainment revenue grew +11% to $1.3 billion, anchored by Scream 7 — now the highest-grossing entry in the franchise’s history. Ellison reaffirmed the target of 30 theatrical films per year, with 15 on the 2026 calendar. Landman also became the most-watched series in Paramount+ history.
♟️ WBD closing in Q3: Paramount drew $2.2 billion on its credit facility to help pay Netflix’s $2.8 billion breakup fee, ending Q1 with $1.9 billion in cash and $15.5 billion in gross debt. The $110 billion WBD deal cleared a shareholder vote in April and remains targeted to close by the end of Q3, pending regulatory approval.
Bottom Line: Ellison’s team delivered the kind of clean quarter Paramount needed before taking on WBD. But this was the easy part: cost cuts, better execution, and a cleaner streaming story are only the opening act. The real test begins when Paramount inherits WBD’s debt, linear decline, and integration complexity.
📸 Big picture: Revenue grew +22% Y/Y to $1.25 billion ($50 million beat), and EPS swung to a $0.57 profit ($0.24 beat) versus a $0.19 loss a year ago. Adjusted EBITDA jumped +165% to $148 million, and free cash flow hit $148 million — the second-highest on record.
📈 Platform accelerates: Platform revenue grew +28% Y/Y to $1.1 billion, lifted by the Olympics and Super Bowl. For the first time, Roku broke out Platform into two segments: Advertising revenue grew +27% to $613 million, while Subscriptions grew +30% to $519 million. Roku said its video ad growth outpaced both the broader US CTV and digital ad markets.
📉 Devices stay a loss-leader: Devices revenue fell -16% Y/Y to $118 million, with a -16% gross margin on lower player unit sales and promotional pricing. The strategy hasn’t changed: hardware exists to seed the platform.
📊 100 million households: Roku passed 100 million streaming households globally, with its devices used by more than half of all US broadband households. Streaming hours rose +8% Y/Y to 38.7 billion, and Q1 was Roku’s best quarter ever for new Premium Subscription sign-ups.
🔮 Guidance raised again: Roku lifted full-year Platform revenue guidance to ~+21%, raised adjusted EBITDA to $675 million, and reiterated the path to $1 billion in free cash flow by 2028 “if not sooner.” Q2 guidance calls for Platform revenue growth of +20% Y/Y.
Bottom Line: Roku doesn’t need to own sports rights to benefit from them. As tentpole events pull more ad dollars into connected TV, Roku acts like a toll booth on the shift. The H2 caution matters, but it sounds more macro than company-specific.
📊 Stay tuned for nearly 50 companies visualized tomorrow in our PRO coverage!
That’s it for today!
Stay healthy and invest on!
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Disclosure: I own AAPL, AMZN, GOOG, NFLX, and ROKU in App Economy Portfolio. I share my ratings (BUY, SELL, or HOLD) with App Economy Portfolio members.
Author's Note (Bertrand here 👋🏼): The views and opinions expressed in this newsletter are solely my own and should not be considered financial advice or any other organization's views.
2026-05-05 20:03:31
Welcome to the Premium edition of How They Make Money.
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This week, we’ll visualize more than 50 reports ranging from Airbnb to Zillow.
Today, we break down some of the companies that already reported on what was an unusually busy Monday.
Today at a glance:
🕵️ Palantir: Tokens Are the New Coal
🦉 Duolingo: Top of Funnel Goes Flat
🛵 Grab: The Indonesia Overhang
📌 Pinterest: Buyback for the Ages
Palantir’s US business doubled in twelve months, and CEO Alex Karp says the company cannot meet demand.
CTO Shyam Sankar gave the framing of the quarter:
“Tokens are the new coal; AIP is the train.”
Inference costs are collapsing. GPT-4-equivalent performance is now roughly 1,000x cheaper than three years ago. As a result, the universe of agent workflows that make economic sense is expanding fast. That’s Jevons paradox. But it also comes with the risk of unreliable model output.
Now, Palantir’s AIP (Artificial Intelligence Platform) and the underlying ontology are the harness that makes raw model output safe enough to put into production. Every agent action is governed, attributed, and traceable. In short, the more abundant cheap tokens become, the more valuable the layer that turns them into deployable work.
Q1 revenue grew 85% Y/Y to $1.63 billion ($90 million beat), Palantir’s fastest growth as a public company, and the 11th consecutive quarter of acceleration. Adjusted EPS came in at $0.33 ($0.05 beat). The Rule of 40 score hit 145, up from 127 last quarter, putting Palantir in rarefied air alongside NVIDIA, Micron, and SK Hynix.
Net dollar retention jumped to 150% (up from 139% in Q4 FY25), and adjusted free cash flow hit $925 million at a wild 57% margin.
The US now accounts for 79% of total revenue and surged +104% Y/Y.
💼 US Commercial: $595 million (+133% Y/Y, +18% Q/Q).
🪖 US Government: $687 million (+84% Y/Y, +21% Q/Q).
Management noted US Commercial growth would have been +143% Y/Y absent a large customer transitioning from commercial to government. International commercial, by contrast, grew just +26% Y/Y to $179 million — Europe remains the laggard, and Karp’s call commentary made clear he has limited patience for it.
Bookings matter more than revenue at this stage of the curve.
RDV (Remaining Deal Value) is Palantir’s total committed but not yet recognized revenue, indicating the visible runway. RDV nearly doubled to $11.8 billion. US Commercial RDV alone surged 112% Y/Y to $4.92 billion. That’s the cushion under FY26 guidance and the reason management keeps raising its outlook.
FY26 revenue is now expected to grow 71% Y/Y to $7.7 billion (compared to 61% previously). That includes a 120% growth to $3.2 billion for US Commercial.
Bottom Line: Palantir fundamentals have improved so much that even the nosebleed valuation has come down to ~70x forward EBITDA. That’s still high compared to the rest of the market, but not outrageous for a company expected to nearly double free cash flow this year.
2026-05-03 22:03:07
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☁️ Mega-Caps: Apple, Alphabet, Microsoft, Amazon, Meta, Tesla.
🧬 Pharma: Lilly, AbbVie, Merck, Sanofi, Amgen, AstraZeneca.
💊 Healthcare: J&J, UnitedHealth, Abbott, Intuitive Surgical.
🧩 Semis: TSMC, Intel, KLA, Texas Instruments, Qualcomm.
🏦 Banks: JPMorgan, BofA, Wells Fargo, Citigroup, Schwab.
💻 Software: IBM, SAP, ServiceNow, Atlassian, AppFolio.
💰 Wealth: Morgan Stanley, Goldman Sachs, BlackRock.
🥤 Beverages: Coca-Cola, PepsiCo, Constellation.
✈️ Airlines: American, Delta, Southwest, United.
📡 Telecom: AT&T, T-Mobile, Comcast, Verizon.
☕ Restaurants: Starbucks, Chipotle, Domino’s.
🛡️ Defense: Boeing, Airbus, Lockheed Martin.
🍿 Entertainment: Netflix, Roku, Spotify.
💳 Payments: Amex, Visa, Mastercard.
🔬 Equipment: ASML, Lam Research.
📲 Hardware: Samsung, SanDisk.
📈 Brokers: SoFi, Robinhood.
🚗 Autos: Rivian, GM, Ford.
🏨 Travel: Hilton, Booking.
Plus Modelez, UPS, P&G, GE Vernova, Tilray, and more.
2026-05-02 22:02:29
Welcome to the Saturday PRO edition of How They Make Money.
Over 300,000 subscribers turn to us for business and investment insights.
In case you missed it:
📊 Monthly reports: 200+ companies visualized.
📩 Tuesday articles: Exclusive deep dives and insights.
📚 Access to our archive: Hundreds of business breakdowns.
📩 Saturday PRO reports: Timely insights on the latest earnings.
Today at a glance:
📱Apple: The Ternus Setup
☁️ Microsoft: The AI Bottleneck
🕶️ Meta: CapEx Spooks Wall Street
📱 Samsung: AI Chip Profits Explode
💊 Eli Lilly: GLP-1 Volume Engine Roars
💳 Visa: Fastest Growth Since 2022
💳 Mastercard: Cross-Border Cracks Show
⏳ AbbVie: Skyrizi and Rinvoq Deliver
🥤 Coca-Cola: Affordability Momentum
🧬 AstraZeneca: Oncology Carries Again
🦠 Merck: Bridge Drugs Show Traction
🔬 KLA: Demand Visibility Extends
📶 T-Mobile US: Accounts Over Lines
📡 Verizon: Schulman's Early Win
🧬 Amgen: Growth Outrun Patent Cliff
🛩️ Airbus: Engine Shortage Bites
📲 Qualcomm: Data Center Lights Up
💾 Sandisk: Memory Trade
🏝️ Booking: Middle East Cuts the Cycle
🎧 Spotify: Guidance Hits the Skip Button
💡 Cadence: Hexagon Mutes the AI Tailwind
📦 UPS: Transition Quarter
🏨 Hilton: US Demand Snaps Back
🪶 Robinhood: Crypto Drag, Prediction Surge
🍪 Mondelez: Cocoa Cost Hangover Lingers
🚗 GM: Iran Cost Spike
🚙 Ford: One-Time Boost Lifts Guide
☕️ Starbucks: The Turn Arrives
🌯 Chipotle: Comps Turn Positive Again
👾 Roblox: Safety Hits New Users Growth
🏦 SoFi: Strong Quarter Wrong Reaction
☁️ Atlassian: Cloud Reaccelerates Hard
⚡ Rivian: R2 Production Begins
🦷 Align: Volume Holds But US Softens
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Apple's Q2 revenue rose 17% Y/Y to $111.2 billion ($1.6 billion beat) and adjusted EPS was $2.01 ($0.07 beat). These were March quarter records despite supply constraints.
iPhone revenue grew 22% to $57.0 billion.
Services accelerated 16% to a record $31.0 billion.
China rebounded 28% to $20.5 billion.
As we covered last week, CEO Tim Cook will step down on September 1, with hardware chief John Ternus taking over.
Two structural shifts arrived alongside the print:
First, Apple ended its "net cash neutral" capital return policy. It was a 2018 pledge to return every excess dollar to shareholders until cash on hand matched debt. That commitment shrank Apple's net cash from $151 billion in 2018 to $62 billion today. Going forward, Apple will manage cash and debt independently and will no longer be obligated to return excess cash. The board still authorized $100 billion in fresh buybacks and a 4% dividend hike, but Q2 buybacks were cut in half despite free cash flow growing 28% Y/Y, signaling Apple wants to deploy its cash differently for the first time in years.
Second, R&D spending jumped 34% Y/Y. Historically, Apple has run lean on R&D, and the surge suggests the company might be ready to ramp up its spending.
Cook said memory costs will be “significantly higher” in Q3 (June quarter) and worsening beyond, a growing margin headwind. He didn’t commit to whether Apple will raise prices. Mac supply constraints (Mac Mini, Mac Studio, MacBook Neo) are expected to last “several months.” Despite all that, Apple guided Q3 revenue growth to 14%–17%, well above the ~9% consensus.
The setup for the Ternus era is becoming clearer. Apple has a record installed base of 2.5+ billion devices, a balance sheet with more flexibility, and a growing need to catch up in AI. Ending the net-cash-neutral policy gives the company more room to maneuver. The obvious question: is Apple preparing to deploy more capital toward AI, M&A, or a broader product reset?
The next iPhone cycle may reset expectations, but only if the Gemini-powered Siri overhaul convinces users that Apple’s AI gap is finally closing.
Microsoft’s quarter was strong, but the AI story is shifting from demand to deployment. Q3 revenue rose 18% Y/Y to $82.9 billion ($1.5 billion beat), and GAAP EPS was $4.27 ($0.22 beat).
Azure grew 39% Y/Y in constant currency, narrowly ahead of consensus.
The AI business reached $37 billion in ARR, up 123% Y/Y.
Copilot paid users rose to 20 million, still only ~4% of Microsoft’s 450+ million paid M365 commercial seats.
OpenAI stake: Unlike Alphabet and Amazon, Microsoft didn’t show a massive “other income” windfall from its private equity bets this quarter. OpenAI’s historic $122 billion round valuing the company at $852 billion closed too late to be booked in the March quarter. This means Microsoft’s 27% stake is due for a massive upward adjustment that will likely distort GAAP net income in the June quarter, similar to the “Anthropic bump” Alphabet and Amazon just booked.
The CapEx story is the dominant narrative. Q3 CapEx was $31.9 billion, 8% below projections due to timing, not lower ambition. Management also disclosed a ~$190 billion CapEx outlook for calendar 2026, including $25 billion tied to higher component pricing. The implied ramp is steep, raising a simple question: Can Microsoft turn spending into usable capacity fast enough?
Two strategic shifts occurred this quarter.
Microsoft and OpenAI signed a revised agreement that ends OpenAI's revenue-share payment to Microsoft after 2030, in exchange for extending Microsoft's royalty-free access to OpenAI's frontier models through 2032. It resolves months of tense negotiations that had led OpenAI to consider antitrust action.
CEO Satya Nadella signaled a structural pricing model shift: per-seat licensing is migrating toward “per user and usage”, with GitHub Copilot already transitioning. This could be a boon for monetization.
The company is also adapting its organization. Hood flagged ~$900 million in Q4 one-time costs from a voluntary retirement program covering ~7% of US-based employees.
Microsoft guided Q4 revenue growth of 13–15%, with Azure expected at 39–40% in constant currency. The contrast with cloud peers matters: AWS and Google Cloud both reported stronger acceleration this week, so at face value, it makes Microsoft look like an AI laggard.
The nuance lies in capacity. Nadella and Hood were explicit: demand for AI and cloud services continues to exceed supply. Microsoft appears sold out in several key regions, so Azure’s ~40% growth may be less a demand ceiling than a physical ceiling. The company can’t plug in GPUs and open data centers fast enough. That’s the AI Power Grid problem.
The bull case remains intact. Microsoft has $627 billion in remaining performance obligations, nearly doubling Y/Y. But the next phase depends on execution: converting backlog into revenue, bringing capacity online, and proving that AI monetization can outpace the infrastructure bill.