Latest news with #RachelWarren
Yahoo
2 days ago
- Business
- Yahoo
Will the NFL Bring the Magic Back to Disney Stock?
In this podcast, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss: The NFL and Disney. Rivian's lost EV credits. Shopify's great quarter. Upstart's explosive growth. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Do the experts think Walt Disney is a buy right now? The Motley Fool's expert analyst team, drawing on years of investing experience and deep analysis of thousands of stocks, leverages our proprietary Moneyball AI investing database to uncover top opportunities. They've just revealed their to buy now — did Walt Disney make the list? When our Stock Advisor analyst team has a stock recommendation, it can pay to listen. After all, Stock Advisor's total average return is up 1,047% vs. just 181% for the S&P — that is beating the market by 865.68%!* Imagine if you were a Stock Advisor member when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,563!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,108,033!* The 10 stocks that made the cut could produce monster returns in the coming years. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 4, 2025 This podcast was recorded on August 06, 2025. Travis Hoium: Disney pulled off a coup locking up the NFL as not just a partner but a part owner of ESPN. Motley Fool Money starts now. Today we're going to get to some of the recent earnings from Rivian, Shopify, and Upstart. But let's start with Disney and the NFL. Disney reported results this morning as we're recording, and they were fine, revenue was up 3% to $23.7 billion. There was a 15% drop in linear TV, so cord cutting is still a huge problem. But the big news is ESPN officially announcing a deal to acquire the NFL network. They get RedZone distribution, NFL's fantasy football business, and more this coincides with ESPN streaming app launching August 21st. You're going to be able to access all of these things all through the streaming app. ESPN also gets six additional NFL games going from 22-28 on that platform. Lou, if you take out political programming over the past year, the NFL accounts for about 98 out of the top 100 shows each year. This seems like a huge get for ESPN. Lou Whiteman: It's definitely a logical fit. It's hard to screw up if your goal is to, I'm going to try and make money off the NFL. That's what history tells us. I'm not really an NFL guy, to be honest. But look, it is the most important live content out there, at least sports content. Adding NFL games and content ahead of launching a streaming service, a no brainer. But Travis, if I had any pushback, I'd say, I think ESPN streaming is going to be a success either way. I'm not sure if I'm Disney how much I'd want to give up to secure this. I think it's a nice to have, not a need. The biggest impact might be outside of ESPN. Fox is launching a similar service. Discovery, Comcast, Paramount, they all have streaming services. They're all scrambling to add live sports. For me, the biggest benefit to Disney having the NFL is that all of these guys won't have the NFL, and the deal makes it a lot harder for all of those competitors. Rachel Warren: This is a landmark deal. There's no doubt about that. That could also be really beneficial for both parties. Bear in mind, you've still got some regulatory hurdles that could be ahead. The agreements also subject to the negotiation of definitive agreements and approval by NFL team owners. But, for example, merging NFL fantasy with ESPN fantasy football, creates a combined official NFL fantasy football experience. That could potentially dominate a large and lucrative market. We've also seen that ESPN will license an additional three NFL games per season to air on the acquired NFL network, which ESPN will now own and operate. That allows Disney to integrate NFL content across its platforms. That could potentially include, merchandising opportunities, theme park experiences, ways of capitalizing on the broader Disney ecosystem. This also, I think, very much aligns with the NFL's interest, as well as they seek to really further monetize their media assets. NFL has previously stated their ambition to reach 25 billion in annual revenue by 2027. But I think if you're looking at this as a Disney shareholder, this is great news for ESPN. Travis Hoium: The story isn't just about ESPN. This is really a Disney streaming story. Every streamer has essentially two challenges. How do you acquire customers and how do you prevent them from churning? This was something that came up a bunch of times during their conference call. The NFL should help with both, especially when you think about bundling them with Disney Plus and Hulu that's going to launch at $30 a month. That sounds expensive, but that's a lot of content for that. We know that Netflix is a Number 1 streaming company with over 300 million subscribers, but Disney Plus has 128 million, 56 million for Hulu, another 24 million for ESPN. Could the bundle that Disney is building position them to be at least Number 2 and potentially challenge Netflix on a different vector with sports and this family entertainment that they have with Disney properties as their competitive advantage. Rachel, what do you think? Rachel Warren: I do think this is a game changer for Disney. I do think it could give it a leg up as it continues to really battle it out for streaming domination against the likes of Netflix. Although these two businesses aren't necessarily one to one. As traditional cable subscriptions decline, though, this deal does allow ESPN to better adapt to the changing media consumption. Habits of fans. Netflix is also investing in live sports, but I do think this ESPN NFL deal really positions Disney to offer a much more robust and specialized sports experience. That could be a key differentiator in the competitive streaming market. They could even leverage the deal to boost advertising revenue through more targeted advertising enabled by that massive sports ecosystem. ESPN is building a comprehensive sports platform. It's creating this one stop shop approach that can appeal both to casual as well as hardcore sports fans. While other streaming services like Netflix are investing in live sports, I think that there is this reality where the combination of ESPN's established brand, the NFL's popularity, and just the underlying financial strength of Disney, it does give ESPN a unique advantage. I do think that it's fair to say that few other platforms can offer such a complete and compelling sports experience. Lou Whiteman: My only real pushback is, I think Disney was pretty well set up even prior to this deal. I think all the moves they've made, Hulu, everything they've done, they are well on their way to being a strong Number 2. In that regard, I'm not sure this is a game changer, but look, my household, we pay for YouTube each month. We subscribe to ESPN Plus. We don't watch a lot of other channels. I'm a soccer geek, so I'm going to hang on to Paramount and Peacock, but I know that's not the majority. I could see a world where Netflix and Disney are all most families really need, and for investors, I don't think it matters who's one and who's two. Travis Hoium: You touched on, Lou. The interesting thing coming up is going to be how much gravity does the NFL hold when it comes to sports rights for other leagues? If this is the place to go for sports, and if you're a sports fan, you have to have ESPN and essentially the Disney bundle. What does that mean for other content? We saw a deal with the WWE and their premium live events announced also this morning. That's going to start in 2026, last for five years. That company is actually owned by TKO who also runs the UFC. They're negotiating a rights deal that ESPN currently has, and they're playing all the streamers off of each other. There's different ways that these companies can go. One would be the MLS route, which went with Apple TV hasn't seemed to be a big success. Is this going to create a gravity for more sports content to end up on the ESPN platform? Lou Whiteman: I think it will. MLS talks growth, and they love to talk about growth. But look, I'm a soccer fan and I don't have Apple TV, and I think a lot of that growth, you better look at the denominator because you're talking about small numbers overall. I'm not the first person to say this, but it does feel like we're going back to the past. We're going back to we pay one or two large sums to an aggregator or a couple of aggregators instead of just a dozen $9 a month subscriptions. I'm not sure that's good news for the consumer. It's maybe just whatever news. But if you're a Disney shareholder, and Disney is transferring all of that value that used to go to the Comcast at the world, and they are now the aggregator, and they're getting that value, I think it's certainly good news for Disney shareholders. Rachel Warren: I do think you're right, Lou. I do think this recent development as well could really bring other players in this space into the fold. The funny thing about MLS commissioner Don Garber had recently said that the season pass available on Apple TV, it's leveraging about 120,000 unique viewers a match. That's a 50% increase from a year ago, but it's considerably lower than the average viewership that MLS games achieved on ESPN. I think it really underscores the importance of that ecosystem. For what it's worth, Disney, ESPN, this is very much a dynamic of going all in on live sports as a core part of the streaming strategy. That recent WWE deal really reinforces this commitment, and UFC remains a high, valuable property for them. It's generated record revenues for the business. It looks like they're still working on renewing their relationship with UFC, who is reportedly seeking a significantly higher yield than they have in the past. But I think that WWE deal could be an indicator of a potential path forward for UFC and NFL deal could create an environment where other players could fear getting left out in the cold if they don't ink a deal soon. Travis Hoium: Now, ESPN is trying to integrate everything together, not only all these sports rights, but also as Rachel mentioned, fantasy sports and sports betting. Now, this is going to be a interesting thread for [inaudible] team to try to work their way through because only a small percentage of people are actually betting on sports, but it sounds they're going to be integrating this quite a bit. Do you think that they're going to be able to pull this off correctly, Lou? Because if I'm seeing all betting information on the ESPN app, that could be a turn off for me as excited as I am to see something like fantasy sports there. Lou Whiteman: I think Pandora's box is open, and I think it'll be fine. Disney, look, they have the history of trying to be more thoughtful about this stuff than others. I definitely think it's something you have to worry about, but I don't think this derails them. I think they figured this out, because I think we're all getting used to betting a lot quicker than we thought we would, whether we do it or not. Travis Hoium: Let's end this segment with a bowl prediction. I have a bowl prediction for you too that I want your thoughts on Disney's streaming revenue with Disney Plus and Hulu is currently on a $24.7 billion run rate that does not include ESPN Plus. Netflix has a $44.3 billion run rate as of the most recent quarter. ESPN is going to be going over the top with $30 per month. Is Disney's streaming business going to be bigger than Netflix in 2026? I think it is. But what are your thoughts Rachel? Rachel Warren: I do think that that's absolutely the case that they could in fact be the bigger streaming company than Netflix by 2026. One analyst report that I saw had estimated that Disney Plus could reach something like 294 million subscribers by next year, and that would exceed the projections for Netflix of around 286 million. Ultimately, these are two fantastic businesses. They do cater to different types of streaming needs as well. I think Disney can be a winner and continue to be so really regardless of whether or not it actually exceeds Netflix's subscriber figures. But bowl prediction, I think it's possible. Lou Whiteman: I think probably is the answer, but like Rachel said, I don't think we should obsess on this, and I don't think as investors, it really matters. I don't think Disney's really competing with Netflix. I think they are competing to make sure it is them and Netflix, and they are the big other thing here. Look, Disney and Netflix have much different economics inside streaming, much different total businesses. Just Disney has all things going on. As an investor, I don't want to read too much into comparison. I'm ready to call Disney a winner. I'm not ready to call them Netflix in terms of profitability and stuff. That's how I view it as an investor. Travis Hoium: Their experiences business hit $2.5 billion in quarterly operating income. That's a business that Netflix doesn't have, so they are playing a different game. Next up, we're going to check in on EVs and shopping trends. You're listening to Motley Fool Money. Lou Whiteman: Wish you could lock in rates without locking out liquidity? Meet LDDR a LifeX treasury bond ladder ETF built to simplify your cash flow plan for the next 10 years. With LDDR, you can lock in today's interest rates for a decade. It's built to deliver predictable monthly cash flow that boosts interest income by including tax free return of principle. That means the potential for higher, more stable cash flow without worrying about rate cuts, reinvestment risk or market swings. LDDR, take the guesswork out of your cash flow plan. Learn more at The LifeX ETFs return principal over the life of an ETF and therefore expected to have little or no assets remaining to distribute at the time of liquidation. Individual bonds carry an obligation to fully return the principal to shareholders at maturity. However, ETFs have no such obligation. The net asset value of the ETFs will decline over time as income payments are made to shareholders. The tax discussion herein is general in nature. Investors should consult with their tax advisor about the effect that an investment in LifeX ETFs could have on their tax situation. Investors should consider the investment objectives, risks and charges and expenses of LDDR carefully before investing. The prospectus contains this and other information about the investment company and can be obtained by visiting or by calling 1-888-331-5558. The prospectus should be read carefully before investing. Investing in the LifeX ETFs involve risk. Principal laws is possible. The LifeX income ETFs are distributed by Foresight Financial Services, LLC. Travis Hoium: The EV space has struggled in 2025, and it looks like things are going to get worse before they get better, the elimination of the EV tax credit and restrictions on states' ability to create emissions restrictions, which ends up being regulatory credits for companies like Rivian and Tesla are hitting companies hard. Rivian said last night that they're going to generate $140 million less in revenue than they thought from those credit sales. This seems like a huge hit for EV companies. But is this going to be a boon for Detroit Lou? Lou Whiteman: Change is inherently risky for the incumbents. That's the whole point. The simple fact, and I think we have enough data to call it fact that things are going slower than planned, and we're losing some of these subsidies. Yes, that is indeed a boon for the incumbents. It could be bad news from the newcomers. I think Rivian is probably fine. I respect what they do, but look, Travis, it cracks me up to see it, the number of words and the number of calisthenics they use to get to the word profit in their profitability timeline, that's never a great sign. Meanwhile, Detroit's legacy business provides cash flows that Rivian and Teslas can't match. I think it's a pretty good time to be the incumbents. One word of caution, though, is, I don't necessarily want to call, especially all of the legacy automakers winners because of this. I think the future is going to be messy and uncertain. I think it'll involve consolidation. It'll involve reshuffling. I would really honestly be surprised if any of these stocks outperform the market over the next five years. But if nothing else, the idea that Detroit is toast and these newcomers are just going to inherit the world, I think that's done and dusted. The future likely involves Tesla, GM, Toyota, Ford, and maybe even Rivian, at least in brands, but it's going to be messy from here. Rachel Warren: Regulatory credits are earned by producing vehicles with low or zero emissions. That was a crucial revenue stream for EV manufacturers like Rivian and Tesla. While those regulatory credit changes do negatively impact EV makers, they could absolutely be a positive development for more traditional automakers. But I think the long term impact on EV adoption really remains to be seen. Some analysts have anticipated something like a short term surge in sales at least as consumers are trying to really take advantage of the expiring federal EV tax credit, but I still think there's tremendous potential in this space. The short term look ahead could be challenging, though. Travis Hoium: Shopify is the big winner in trading today after they came out with earnings. This is a hidden gems recommendation going all the way back to 2018. It's been recommended multiple times, starting at $14.05, so well over a 10 bagger since then. Rachel, what did we learn from Shopify about the quarter? Rachel Warren: This was a great quarter for Shopify. They beat on essentially all key metrics of note. They reported revenue of 2.7 billion. That was a beat from what analysts were projecting. They beat on the bottom line. GMV rose 31% year over year. That was also a beat. But importantly, and this is something that investors were really wanting to hear, what is the impact of tariffs? At least for now, Shopify leadership has indicated that while they had anticipated some impact from tariffs, those effects really did not materialize as strongly as they expected in Q2. For example, CFO Jeff Hoffmeister stated that they hadn't observed a slowdown in US demand in transactions. Even though they saw merchants raising prices in some cases, this seemingly wasn't due to significant tariff related cost increases. They also noted that Shopify hadn't seen any meaningful changes in cross border activity or buyer behavior, despite the existing trade tensions. Importantly, only 4% of Shopify's global gross merchandise volume is shipped under de minimis exemptions. This suggests that the impact of removing that exemption is having a limited effect on the company's overall business. This was a really great quarter, and certainly the market responded positively to those developments. Lou Whiteman: I think the tariff commentary is what's juicing the stock. I think a lot of us were confident that tariffs wouldn't ruin Shopify's business, but it was still really interesting to hear them talk about how little of an impact it has had. Here's the thing, though. I don't think the tariff story has played out yet. I do think the impact on mainstream will creep higher in the quarters to come, and it will inevitably to some extent, impact consumer spending. Just as before, I don't for a second, think this is going to ruin Shopify, but investors who might have been overly worried yesterday should not be totally dismissive today. I'm a happy holder of Shopify, but I'm personally zero interested in buying into this rally. Travis Hoium: I want to get to Upstart quickly. They reported over 100% revenue growth, but the stock is down today. Rachel, quickly, what did we learn from Upstart? Rachel Warren: They had their first GAAP profitable quarter since Q2 of 2022. As you noted, revenue surged 102% year over year. They also originated 159% more loans than one year ago. More than 90% of its loans processed through its AI driven underwriting platform are completely automated without human intervention. They're continuing to build really strong relationships with their funding partners, seeing the success from their newer home equity line of credit product. Over 50% of funding is coming from committed partnership agreements. It's adding a lot more stability to its business model. It was pretty great results for Upstart. Lou Whiteman: I'm a happy shareholder here, too, but if we're honest, the risk reward here remains high. We had another quarter where evidence that the partners like the platform. They're doing a good job, filling the demand that's there. But to me, the COVID recession, with all the stimulus, that doesn't really count as a true downturn. With Fintex, there are always a lot of unknowns until a company has proven its model works through a real sustained downturn. My big takeaway from Upstart is they did nothing to diminish the build bull case, but there's still just so much we won't know for a while. Travis Hoium: As always, people on the program may have interests in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. Don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisers are sponsored content and provided for informational purposes only to see our full advertising disclosure. Please check out our show notes. For Lou Whiteman, Rachel Warren, and Dan Boyd behind the glass, and the entire Motley Fool team, I'm Travis Hoium. We'll see you tomorrow. Lou Whiteman has positions in Shopify and Upstart. Rachel Warren has positions in Apple and Shopify. Travis Hoium has positions in Shopify and Walt Disney and has the following options: long December 2027 $5 puts on Rivian Automotive. The Motley Fool has positions in and recommends Apple, Netflix, Shopify, Tesla, Upstart, and Walt Disney. The Motley Fool recommends Comcast, General Motors, and TKO Group Holdings. The Motley Fool has a disclosure policy. Will the NFL Bring the Magic Back to Disney Stock? was originally published by The Motley Fool
Globe and Mail
6 days ago
- Business
- Globe and Mail
Tariffs and Trade Wars Can't Slow Big Tech's Momentum
In this podcast, Motley Fool contributors Lou Whiteman, Rachel Warren, and Jon Quast discuss: The Federal Reserve's decision to keep rates steady. A shift in smartphone production. Microsoft and Meta Platforms commit to continued elevated capital expenditures. and commit to continued elevated capital expenditures. Who will be the next $4 trillion company? To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » A full transcript is below. Should you invest $1,000 in Meta Platforms right now? Before you buy stock in Meta Platforms, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Meta Platforms wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $619,036!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,092,648!* Now, it's worth noting Stock Advisor's total average return is 1,026% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 4, 2025 This podcast was recorded on July 31, 2025. Rachel Warren: Tariffs and Trade wars can't slow big tech momentum. Motley Money starts now. I'm Rachel Warren, joined today by Motley Fool analysts Lou Whiteman and Jon Quast. Today, we're talking Mag 7 spending plans and tariff turmoil, but we have to start with the big macro picture first. We learned Wednesday that the US economy returned to growth in Q2. US gross domestic product, which is a measure of the value of goods and services produced across the economy, rose by 3% in the second quarter. That's up from a 0.5% contraction in the first quarter of the year, and it's actually ahead of the consensus estimate. We also saw that consumer spending rose by more than 1% in Q2. Now, this was as exports declined single digits, and imports fell by more than 30%, reversing a major surge that we saw in Q1 of 2025. Jon, the big takeaway for me is consumer spending seems to be holding up well even as businesses have turned cautious. But the question is, with all the headwinds the economy is facing, do you think that this can continue? Jon Quast: Yes, this can absolutely continue. Rachel, consumer spending can hold up. Now, listen, I could give you so many reasons on why to be skeptical on why the opposite is true. First and foremost, there's 1.2 trillion in credit card debt out there right now. That's up 30% in just the last three years. It would seem that consumers are spending, yes, but it also seems like they're spending on credit. So that's a party that the music is going to end, eventually, it would seem, and when that music ends, there could be a contraction to consumer spending. That said, I do say it can hold up because there's almost always a reason to be skeptical, and yet consumer spending almost always holds up. We will probably see shifts in consumer spending, and I think that is playing out. You take, for example, a company such as Kellanova. This is the company that was spun out from Kellogg's. It makes Pringles, Pop-Tarts. It reported financial results this morning on July 31, and it saw a softening of demand, and that is playing out for a variety of snacking companies right now. That's kind of a pervasive trend. People trending away from snacks. That's interesting. On the other hand, you have a company such as Carvana. They're selling 41% more cars in the most recent quarter compared to a year ago. There is this incredible shift of consumer spending, and it doesn't always make sense, from snacks to cars. But yeah, overall, I think that consumer spending can hold up. Lou Whiteman: Jon's right. You have to be crazy to bet against the American consumer. But you know what? I'm feeling a little crazy right now, Rachel. I'm more worried about the consumer right here than I'm business. I think businesses can snap back as the companies adjust to whatever the new normal is with tariffs. But heading into back-to-school and then the holiday season, I do think Main Street is going to feel the pushback of higher prices, maybe more so than tariffs have just been creeping in. My guess is, if GDP does continue to push higher in the second half, and I do think it'll push higher in the second half, I think it'll be a reverse at the second quarter with business, not the consumer doing the heavy lift. Rachel Warren: A healthy job market with low unemployment rates and rising wages. That's a primary driver of sustained consumer spending, and wage gains have been outpacing inflation. Consumers, in some cases have more disposable income to spend. Rising asset values can contribute to that wealth effect. and that can also make consumers feel more confident to spend. We've seen this dynamic where lower and middle-income consumers might be more vulnerable to economic shifts, but those in the top third of the income distribution area are thriving and account for a significant portion of spending. Now, it's worth noting the Federal Reserve left rates unchanged at its meeting on Wednesday. Now we know the Federal Reserve is likely to lower interest rates in September. You've got some economists predicting a further cut in December, according to recent reports. While the Fed held rates steady at their July meeting, the decision was not unanimous. There were two dissenting votes advocating for a rate cut. With tariff policy seemingly changing by the minute, it's hard to know what to expect. More on tariffs and big tech in a minute. You are listening to Motley Fool Money. Welcome back. We might not yet know the final tariff rates for various US trade partners, but we are beginning to see an impact from the aggressive moves. India has reportedly overtaken China to become the top source of smartphones sold in the US, and that's fueled by Apple's shift to assemble more phones in the country. Vietnam now ranks second, and China has fallen from first to year ago to third. Now, Lou, the White House wanted to move smartphone assembly out of China, but I don't think India was the destination it had in mind. Does Tim Cook have to worry about backlash from Washington, and what are your thoughts on the tariff Mayhem? Lou Whiteman: I think Tim Cook probably believes he can outlast the tariff push, and I think he's probably right. Look, this was the inevitable outcome of raising tariffs on China. There was never much of a chance that large corporations were just going to overnight shift manufacturing to the US. They'd have to build an entire supply chain, manufacturing footprint. There's just so much complexity, and they'd have to do it largely from scratch. It's just not going to happen. It didn't make sense for companies like Apple to do that. It made sense for them to lean into other markets where they are established. If tariffs do shift manufacturing back to the US, it'll take time. For now, the message from Washington, with all of this chaos has been things shift so fast, there's no reason for corporations to make any real massive CapEx moves. The chaos this week that just reinforces it, I think. The best move if you're a CEO is to roll with it and not make too many big company-altering decisions. That's what Apple's doing in India, and I think that makes sense. It's what honestly, they should be doing. Rachel Warren: We are now just hours away from the White House's August 1 deadline for countries to strike trade deals or face higher tariffs, and we've seen a flurry of activity, we appear to be in deals with Taiwan, Thailand, and Cambodia. The UK led the charge on trade agreements with the US. They struck one as early as May. Vietnam was the second to ink a deal with the Trump administration. President Trump announced a trade agreement on July 2nd that saw the tariff imposed on Vietnam slash from 46% to 20%. Japan was the second major Asian economy to come to an agreement with the US after China. They saw their tariff rate cut to 15%. They were also the first to see a lower preferential tariff rate for their key automobile sector. Now, the EU's agreement with the US was struck just days ago, and that was after lengthy negotiations. EU goods are now facing a 15% baseline tariff rate. South Korea is the latest country to reach an agreement as well on Thursday, with the terms being somewhat similar to the one Japan received. It's worth noting, though, the US has managed to make only about eight deals in 120 days. Some of our key trading partners remain without a deal so far. That includes Canada, Australia, and India. Jon, the situation is and will remain fluid. But as an investor, how closely are you watching all of this wheeling and dealing? Jon Quast: I'm not watching it closely at all, and I'll give you two reasons why. First of all, when I buy a stock, I have an investment thesis, and so this thesis is basically my reasoning for why the stock I bought is going to outperform the market average, and in my thesis, I try to conservatively account for risk, such as geopolitical risk. Like what we're talking about right here. If something can be broken, if my thesis can be broken based on changes in economic policy, I'm generally not that interested. I'm looking for something that doesn't really matter what these big changes in economic policy will be. The underlying trends for my thesis are still intact. I'll give you an example. Mercado Libre in South America. I've lived in South America. I can attest to how much paper money is still used in those economies, but that is changing so fast. Those economies are digitizing extremely fast, and Mercado Libre is a financial technology company. It's also an e-commerce company. You start looking at the pervasive trend that the economy is going digital, that's not going to change, and so I really see Mercado Libre being a long-term winner, regardless of what changes happen in the economic policy. Another reason I'm not really watching this closely is because even if there is a trade deal in place, even when something comes down, it seems like, and I believe this is fair to say, things in Washington these days are far from settled, and so if we get news today, that might change tomorrow. I really don't see a ton of value of following it too closely. I really think about Investing Great Charlie Munger. He said, "I figure that I want to swim as well as I can against the tides. I'm not trying to predict the tides". And I think it's a good rule to live by. Lou Whiteman: I think that's spot on. One of the advantages of being a long-term investor is, everything near-term is noise. I'm looking for companies that, whatever may come, can survive and thrive over the long term. I don't necessarily want to predict the weather. I just want to know that sometimes it's sunny, sometimes it rains, and I want companies that can do OK with both. I think that's exactly right, Jon. Rachel Warren: I think that's right, guys. Up next, we have Microsoft and Meta Earnings and their aggressive AI spending plans. We'll be back with you in a minute. You're listening to Motley Fool Money. Microsoft and Meta platforms were both out with earnings last night. Now, both companies posted double-digit growth that easily topped expectations, but the focus was on spending plans. Meta Platforms ' CFO, Susan Lee, said," We really believe that this is the time for us to make investments in AI," and that's really backing up the company's planned $85 billion in CapEx this year. Microsoft, for its part, said that they expect to spend 30 billion in the current quarter alone, which at an annualized rate would be even more than Meta or Alphabet is spending. Jon, the numbers here are almost mind-numbingly large. But the core businesses of these companies they are generating billions in cash, so they can afford the investment. Should investors be worried or excited about these spending plans? Jon Quast: I believe that investors should be absolutely thrilled, ecstatic with these plans. You're right. These numbers are mind-numbing. In fact, they're so big, we really can't even wrap our heads around them, 85 billion. Look, there are 500 companies in the S&P 500. With 85 billion, Meta could purchase any one of about 75% of these companies. These are the biggest, most profitable companies in the US, and they can buy most of them with 85 billion. That's a lot of money, and we're just talking about Meta with that. You start adding in Microsoft, Alphabet, all the mega caps, they're going to collectively spend about 320 billion this year in CapEx compared to 230 billion last year. That's nearly a 40% jump from last year. I think if you're a shareholder of any of these companies, it's basically good news because they need to invest in their futures at scale, and so it's going to cost a lot of money. But these companies have also made many shareholder-friendly moves in recent years, such as share buybacks and dividends, and so I feel like there's a good balance here. I think beyond that, though, investors need to think, Where is that 320 billion going to go? That's a lot of cash. I think companies such as NVIDIA and AMD are going to see ongoing, strong demand for their chips. I think even industrial players, such as HVAC and Electrical company Comfort System USA, they've got a rising backlog right now as they're trying to meet all this demand for the facilities being built to support AI. I think there's a lot to be excited about when you see how much money is getting thrown around. Rachel Warren: It's clear that Meta and Microsoft are increasing their investments in AI because they see it as a crucial driver for future growth and also to maintain their competitive advantage in various sectors. It's interesting because, of course, Meta's fallen a bit behind the competition here the last few years. But then you have its recent launch if it's Meta super-intelligence labs, their hiring spree that they've been on in a bid to catch up in the AI race. It's getting a lot of attention from investors. Lou, what are your thoughts on what we're seeing? Lou Whiteman: To me, Microsoft has the most clear use case for AI outside of just refining its own business or internal work. Alphabet and Meta are mostly deploying AI for internal uses. Alphabet is hoping to use AI to reinvent search, but it's early days there. But Microsoft, thanks to 365, thanks to Office, all these massive businesses they have a clear lane to the corporate user to deploy AI. It may not be a sustainable advantage. There could be a way to catch up, but I think it's a real advantage right now over these just cloud players. I think we're going to see companies with those strong B2B connections, like Microsoft, like Salesforce, even Oracle. I think they're going to lead the way on deploying AI to the workforce, this next step that is really showing the payoff and all this investment. Rachel Warren: Investors pushed Microsoft higher following earnings. The company joined in NVIDIA as the second member of the $4 trillion market cap club. Time for a bold prediction, guys. What will be the next company to break the $4 trillion market cap threshold, Jon? Tell us. Jon Quast: Rachel, this might be a little bit of a surprise, but I think that Alphabet is the best position to make a run at a $4 trillion market cap. When you look at the valuations of the mega cap companies, for me, Alphabet is the one that makes the most sense. It does seem like it has a fair valuation right now. But when it comes to its financial position, competitive strengths, opportunities, it's as good as any of them, if not better than others. I think the only risk here is that it gets broken up. But honestly, any company making a run at four trillion has to be worried about being broken up at some point. Lou Whiteman: I hate to go into Alphabet here because I think you're probably right, but I'll take the Dark Horse. Meta is currently sixth on the list. It isn't even quite two trillion yet, but look, that advertising business is a powerhouse, and I don't see another business like it elsewhere with less headwinds up ahead than I think Alphabet and some of the others. I'll take Meta, though I'll be honest, I don't think any of these guys get there in the near term, so it could be a long race. Rachel Warren: It is certainly an exciting time to be a tech investor and to be investing in the world of AI. So many opportunities there. As always, people on the program may have interests in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Lou Witman and Jon Quast, as well as our man behind the glass, Bart Shannon, and the entire Motley Fool Money team, I'm Rachel Warren. Thanks for listening. We'll see you tomorrow. Jon Quast has positions in MercadoLibre. Lou Whiteman has positions in MercadoLibre. Rachel Warren has positions in Alphabet and Apple. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, MercadoLibre, Meta Platforms, Microsoft, Nvidia, Oracle, and Salesforce. The Motley Fool recommends WK Kellogg and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Yahoo
6 days ago
- Business
- Yahoo
Tariffs and Trade Wars Can't Slow Big Tech's Momentum
In this podcast, Motley Fool contributors Lou Whiteman, Rachel Warren, and Jon Quast discuss: The Federal Reserve's decision to keep rates steady. A shift in smartphone production. Microsoft and Meta Platforms commit to continued elevated capital expenditures. Who will be the next $4 trillion company? To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Should you invest $1,000 in Meta Platforms right now? Before you buy stock in Meta Platforms, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Meta Platforms wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $619,036!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,092,648!* Now, it's worth noting Stock Advisor's total average return is 1,026% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 4, 2025 This podcast was recorded on July 31, 2025. Rachel Warren: Tariffs and Trade wars can't slow big tech momentum. Motley Money starts now. I'm Rachel Warren, joined today by Motley Fool analysts Lou Whiteman and Jon Quast. Today, we're talking Mag 7 spending plans and tariff turmoil, but we have to start with the big macro picture first. We learned Wednesday that the US economy returned to growth in Q2. US gross domestic product, which is a measure of the value of goods and services produced across the economy, rose by 3% in the second quarter. That's up from a 0.5% contraction in the first quarter of the year, and it's actually ahead of the consensus estimate. We also saw that consumer spending rose by more than 1% in Q2. Now, this was as exports declined single digits, and imports fell by more than 30%, reversing a major surge that we saw in Q1 of 2025. Jon, the big takeaway for me is consumer spending seems to be holding up well even as businesses have turned cautious. But the question is, with all the headwinds the economy is facing, do you think that this can continue? Jon Quast: Yes, this can absolutely continue. Rachel, consumer spending can hold up. Now, listen, I could give you so many reasons on why to be skeptical on why the opposite is true. First and foremost, there's 1.2 trillion in credit card debt out there right now. That's up 30% in just the last three years. It would seem that consumers are spending, yes, but it also seems like they're spending on credit. So that's a party that the music is going to end, eventually, it would seem, and when that music ends, there could be a contraction to consumer spending. That said, I do say it can hold up because there's almost always a reason to be skeptical, and yet consumer spending almost always holds up. We will probably see shifts in consumer spending, and I think that is playing out. You take, for example, a company such as Kellanova. This is the company that was spun out from Kellogg's. It makes Pringles, Pop-Tarts. It reported financial results this morning on July 31, and it saw a softening of demand, and that is playing out for a variety of snacking companies right now. That's kind of a pervasive trend. People trending away from snacks. That's interesting. On the other hand, you have a company such as Carvana. They're selling 41% more cars in the most recent quarter compared to a year ago. There is this incredible shift of consumer spending, and it doesn't always make sense, from snacks to cars. But yeah, overall, I think that consumer spending can hold up. Lou Whiteman: Jon's right. You have to be crazy to bet against the American consumer. But you know what? I'm feeling a little crazy right now, Rachel. I'm more worried about the consumer right here than I'm business. I think businesses can snap back as the companies adjust to whatever the new normal is with tariffs. But heading into back-to-school and then the holiday season, I do think Main Street is going to feel the pushback of higher prices, maybe more so than tariffs have just been creeping in. My guess is, if GDP does continue to push higher in the second half, and I do think it'll push higher in the second half, I think it'll be a reverse at the second quarter with business, not the consumer doing the heavy lift. Rachel Warren: A healthy job market with low unemployment rates and rising wages. That's a primary driver of sustained consumer spending, and wage gains have been outpacing inflation. Consumers, in some cases have more disposable income to spend. Rising asset values can contribute to that wealth effect. and that can also make consumers feel more confident to spend. We've seen this dynamic where lower and middle-income consumers might be more vulnerable to economic shifts, but those in the top third of the income distribution area are thriving and account for a significant portion of spending. Now, it's worth noting the Federal Reserve left rates unchanged at its meeting on Wednesday. Now we know the Federal Reserve is likely to lower interest rates in September. You've got some economists predicting a further cut in December, according to recent reports. While the Fed held rates steady at their July meeting, the decision was not unanimous. There were two dissenting votes advocating for a rate cut. With tariff policy seemingly changing by the minute, it's hard to know what to expect. More on tariffs and big tech in a minute. You are listening to Motley Fool Money. Welcome back. We might not yet know the final tariff rates for various US trade partners, but we are beginning to see an impact from the aggressive moves. India has reportedly overtaken China to become the top source of smartphones sold in the US, and that's fueled by Apple's shift to assemble more phones in the country. Vietnam now ranks second, and China has fallen from first to year ago to third. Now, Lou, the White House wanted to move smartphone assembly out of China, but I don't think India was the destination it had in mind. Does Tim Cook have to worry about backlash from Washington, and what are your thoughts on the tariff Mayhem? Lou Whiteman: I think Tim Cook probably believes he can outlast the tariff push, and I think he's probably right. Look, this was the inevitable outcome of raising tariffs on China. There was never much of a chance that large corporations were just going to overnight shift manufacturing to the US. They'd have to build an entire supply chain, manufacturing footprint. There's just so much complexity, and they'd have to do it largely from scratch. It's just not going to happen. It didn't make sense for companies like Apple to do that. It made sense for them to lean into other markets where they are established. If tariffs do shift manufacturing back to the US, it'll take time. For now, the message from Washington, with all of this chaos has been things shift so fast, there's no reason for corporations to make any real massive CapEx moves. The chaos this week that just reinforces it, I think. The best move if you're a CEO is to roll with it and not make too many big company-altering decisions. That's what Apple's doing in India, and I think that makes sense. It's what honestly, they should be doing. Rachel Warren: We are now just hours away from the White House's August 1 deadline for countries to strike trade deals or face higher tariffs, and we've seen a flurry of activity, we appear to be in deals with Taiwan, Thailand, and Cambodia. The UK led the charge on trade agreements with the US. They struck one as early as May. Vietnam was the second to ink a deal with the Trump administration. President Trump announced a trade agreement on July 2nd that saw the tariff imposed on Vietnam slash from 46% to 20%. Japan was the second major Asian economy to come to an agreement with the US after China. They saw their tariff rate cut to 15%. They were also the first to see a lower preferential tariff rate for their key automobile sector. Now, the EU's agreement with the US was struck just days ago, and that was after lengthy negotiations. EU goods are now facing a 15% baseline tariff rate. South Korea is the latest country to reach an agreement as well on Thursday, with the terms being somewhat similar to the one Japan received. It's worth noting, though, the US has managed to make only about eight deals in 120 days. Some of our key trading partners remain without a deal so far. That includes Canada, Australia, and India. Jon, the situation is and will remain fluid. But as an investor, how closely are you watching all of this wheeling and dealing? Jon Quast: I'm not watching it closely at all, and I'll give you two reasons why. First of all, when I buy a stock, I have an investment thesis, and so this thesis is basically my reasoning for why the stock I bought is going to outperform the market average, and in my thesis, I try to conservatively account for risk, such as geopolitical risk. Like what we're talking about right here. If something can be broken, if my thesis can be broken based on changes in economic policy, I'm generally not that interested. I'm looking for something that doesn't really matter what these big changes in economic policy will be. The underlying trends for my thesis are still intact. I'll give you an example. Mercado Libre in South America. I've lived in South America. I can attest to how much paper money is still used in those economies, but that is changing so fast. Those economies are digitizing extremely fast, and Mercado Libre is a financial technology company. It's also an e-commerce company. You start looking at the pervasive trend that the economy is going digital, that's not going to change, and so I really see Mercado Libre being a long-term winner, regardless of what changes happen in the economic policy. Another reason I'm not really watching this closely is because even if there is a trade deal in place, even when something comes down, it seems like, and I believe this is fair to say, things in Washington these days are far from settled, and so if we get news today, that might change tomorrow. I really don't see a ton of value of following it too closely. I really think about Investing Great Charlie Munger. He said, "I figure that I want to swim as well as I can against the tides. I'm not trying to predict the tides". And I think it's a good rule to live by. Lou Whiteman: I think that's spot on. One of the advantages of being a long-term investor is, everything near-term is noise. I'm looking for companies that, whatever may come, can survive and thrive over the long term. I don't necessarily want to predict the weather. I just want to know that sometimes it's sunny, sometimes it rains, and I want companies that can do OK with both. I think that's exactly right, Jon. Rachel Warren: I think that's right, guys. Up next, we have Microsoft and Meta Earnings and their aggressive AI spending plans. We'll be back with you in a minute. You're listening to Motley Fool Money. Microsoft and Meta platforms were both out with earnings last night. Now, both companies posted double-digit growth that easily topped expectations, but the focus was on spending plans. Meta Platforms ' CFO, Susan Lee, said," We really believe that this is the time for us to make investments in AI," and that's really backing up the company's planned $85 billion in CapEx this year. Microsoft, for its part, said that they expect to spend 30 billion in the current quarter alone, which at an annualized rate would be even more than Meta or Alphabet is spending. Jon, the numbers here are almost mind-numbingly large. But the core businesses of these companies they are generating billions in cash, so they can afford the investment. Should investors be worried or excited about these spending plans? Jon Quast: I believe that investors should be absolutely thrilled, ecstatic with these plans. You're right. These numbers are mind-numbing. In fact, they're so big, we really can't even wrap our heads around them, 85 billion. Look, there are 500 companies in the S&P 500. With 85 billion, Meta could purchase any one of about 75% of these companies. These are the biggest, most profitable companies in the US, and they can buy most of them with 85 billion. That's a lot of money, and we're just talking about Meta with that. You start adding in Microsoft, Alphabet, all the mega caps, they're going to collectively spend about 320 billion this year in CapEx compared to 230 billion last year. That's nearly a 40% jump from last year. I think if you're a shareholder of any of these companies, it's basically good news because they need to invest in their futures at scale, and so it's going to cost a lot of money. But these companies have also made many shareholder-friendly moves in recent years, such as share buybacks and dividends, and so I feel like there's a good balance here. I think beyond that, though, investors need to think, Where is that 320 billion going to go? That's a lot of cash. I think companies such as NVIDIA and AMD are going to see ongoing, strong demand for their chips. I think even industrial players, such as HVAC and Electrical company Comfort System USA, they've got a rising backlog right now as they're trying to meet all this demand for the facilities being built to support AI. I think there's a lot to be excited about when you see how much money is getting thrown around. Rachel Warren: It's clear that Meta and Microsoft are increasing their investments in AI because they see it as a crucial driver for future growth and also to maintain their competitive advantage in various sectors. It's interesting because, of course, Meta's fallen a bit behind the competition here the last few years. But then you have its recent launch if it's Meta super-intelligence labs, their hiring spree that they've been on in a bid to catch up in the AI race. It's getting a lot of attention from investors. Lou, what are your thoughts on what we're seeing? Lou Whiteman: To me, Microsoft has the most clear use case for AI outside of just refining its own business or internal work. Alphabet and Meta are mostly deploying AI for internal uses. Alphabet is hoping to use AI to reinvent search, but it's early days there. But Microsoft, thanks to 365, thanks to Office, all these massive businesses they have a clear lane to the corporate user to deploy AI. It may not be a sustainable advantage. There could be a way to catch up, but I think it's a real advantage right now over these just cloud players. I think we're going to see companies with those strong B2B connections, like Microsoft, like Salesforce, even Oracle. I think they're going to lead the way on deploying AI to the workforce, this next step that is really showing the payoff and all this investment. Rachel Warren: Investors pushed Microsoft higher following earnings. The company joined in NVIDIA as the second member of the $4 trillion market cap club. Time for a bold prediction, guys. What will be the next company to break the $4 trillion market cap threshold, Jon? Tell us. Jon Quast: Rachel, this might be a little bit of a surprise, but I think that Alphabet is the best position to make a run at a $4 trillion market cap. When you look at the valuations of the mega cap companies, for me, Alphabet is the one that makes the most sense. It does seem like it has a fair valuation right now. But when it comes to its financial position, competitive strengths, opportunities, it's as good as any of them, if not better than others. I think the only risk here is that it gets broken up. But honestly, any company making a run at four trillion has to be worried about being broken up at some point. Lou Whiteman: I hate to go into Alphabet here because I think you're probably right, but I'll take the Dark Horse. Meta is currently sixth on the list. It isn't even quite two trillion yet, but look, that advertising business is a powerhouse, and I don't see another business like it elsewhere with less headwinds up ahead than I think Alphabet and some of the others. I'll take Meta, though I'll be honest, I don't think any of these guys get there in the near term, so it could be a long race. Rachel Warren: It is certainly an exciting time to be a tech investor and to be investing in the world of AI. So many opportunities there. As always, people on the program may have interests in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show notes. Lou Witman and Jon Quast, as well as our man behind the glass, Bart Shannon, and the entire Motley Fool Money team, I'm Rachel Warren. Thanks for listening. We'll see you tomorrow. Jon Quast has positions in MercadoLibre. Lou Whiteman has positions in MercadoLibre. Rachel Warren has positions in Alphabet and Apple. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Apple, MercadoLibre, Meta Platforms, Microsoft, Nvidia, Oracle, and Salesforce. The Motley Fool recommends WK Kellogg and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. Tariffs and Trade Wars Can't Slow Big Tech's Momentum was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
6 days ago
- Business
- Yahoo
Coffee, Chips, and Credit Cards
In this podcast, Motley Fool contributors Travis Hoium, Lou Whiteman, and Rachel Warren discuss: Tesla's chip deal with Samsung. Earnings reports from Spotify, Visa, Starbucks, and Booking Holdings. Are you bull or bear? To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. A full transcript is below. Should you buy stock in Starbucks right now? The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $631,505!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,103,313!* Now, it's worth noting Stock Advisor's total average return is 1,039% — a market-crushing outperformance compared to 181% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 4, 2025 This podcast was recorded on July 30, 2025. Travis Hoium: Is earning season selling us a Bill of Goods. Motley Fool Money starts now. I'm Travis Hoium joined by longtime fools, Lou the Legend Whiteman, and from a vacation that never ends. Rachel Warren. Today we're going to get to earnings from Spotify and get a pulse on the consumer. Let's start with Tesla. We learned this week that Samsung's new fab in Texas is going to be making Tesla's AI six Chip. This follows AI 5, which is being fabbed by TSMC. AI 6 is going to be used for humanoid robots, cars, and even AI data centers. Tesla could spend over 16.5 billion dollar on these chips, and Elon Musk is going to get to walk the line, making sure it's efficient, something Samsung apparently can't do itself. Rachel, what does this say about Tesla and Samsung's chip ambitions? Rachel Warren: Well, what's interesting about this is that Samsung didn't name the counterparty in its filing. They cited a request from that second party to protect trade secrets. But they said the effective start date of the contract was July of this year. Its end date is in 2033, and then Elon Musk later confirmed in a reply to a post on X that Tesla was, in fact, the counterparty. But I think this deal is great news for both companies for different reasons. Samsung definitely needs this deal, in my view. The partnership provides a much needed anchor client for Samsung's new semiconductor fabrication facility in Taylor, Texas. That could also validate their investment in US based chip manufacturing and potentially attract other clients. Samsung has been facing serious challenges due to increased competition, particularly in the memory chip market, and they've really been struggling to keep up with the demand for advanced AI chips. Their logic chip business has also faced challenges and in foundry services, which is manufacturing chips for other companies, they are behind TSMC. Now, for Tesla's part, it's gaining greater control over a crucial element of its AI infrastructure. It's diversifying its supply chain, and it's reducing reliance on a single manufacturer. That could mitigate a range of potential future risks and ensure a more stable supply of critical components. And finally, it positions Tesla to maintain a competitive advantage in a rapidly evolving AI and automotive landscape. It suggests that they're planning for future generations of AI chips that could ensure a pipeline of advanced technology for years to come. Travis Hoium: Lou, I have lots of questions about how many chips Tesla is going to need going forward for vehicles, robots, and those AI data centers because a lot of those products just frankly, don't exist yet. But US chip manufacturing does seem to be booming. The TSMC plant in Arizona, going through another addition, their costs actually seem to be sort of under control there. It's not as expensive as they feared. Has the US chip tide shifted over the past couple of years? Lou Whiteman: Fun fact, lost in a narrative, but the US has more semiconductor plants than Taiwan. The US is second only to Japan in terms of semi production and that's been true for a while. Context matters, though? Taiwan, thanks to its national champion, Taiwan Semi, and their deals with Nvidia, all of these AI players, they have a strong share of the cutting edge chips used in AI. Obviously, that's the focus, so that's what we're looking at. I don't think we can say the tide has shifted. It's way too early to raise the mission accomplished banner. The US is making steady progress, and this deal is definitely part of that progress. But, look, we are still very reliant on Taiwan for those high powered AI chips, and that hasn't shifted. That's still true. Travis Hoium: If these chips do their job, hopefully one of these humanoid robots can do my laundry or mow the lawn for me sometime in the near future. Let's move on to earnings. You may be listening to this podcast on Spotify, so we should probably check in on their earnings. Revenue for the second quarter of 2025 was up 10% to 4.2 billion euros. Free cash flow was 700 million euros. That's a huge improvement from a few years ago, but the stock was down as much as 12% on Tuesday. Lou, was this really a disappointing quarter? Lou Whiteman: Relative to expectations, yes, but I think it is important to look at the big picture here. Yes, revenue missed estimates, and, yes, the company posted an unexpected loss. But if you look at it, the revenue miss was mostly due to about 100 million euros worth of currency fluctuation losses. Back that out, back out just the currency conversion noise and revenue is basically in line, which is much better. On the earning side, there were some higher personnel costs. There is some cost creep, but much of the loss was tied to what they call social charges, which is basically stock based compensation. Back all this out. It's worth noting that the underlying numbers how the business is doing looked a lot better. Free cash flow is up 43% to 700 million euros. The all important number of premium subscribers continues to grow up 12% to 276 million. There are no signs of distress here. There are no signs of worry. This is still a very, very good operating business. They just got caught up in some accounting things. Rachel Warren: Yeah. These results warrant the stock dropping and having its worst trading day in two years? I think that might be a bit of a market overreaction. But it does also fit in with the types of market movements we've seen in recent earning seasons. When a company misses on maybe a couple key metrics. Even if the overall picture remains positive, as it does, in my view, for Spotify. CEO Daniel Eche acknowledged that the company's ad supported revenue growth. It's been slower than anticipated. And he attributed that to execution challenges rather than actual strategic issues. It's worth noting that their ad supported revenue declined by about 1% year over year in the quarter. But revenue from premium subscribers actually rose 12% from one year ago. It's also worth noting monthly active users grew 11% year over year to 696 million. That means that Spotify added 18 million monthly active users in Q2 versus the guidance they had previously given for 11 million. And they also achieved premium subscriber net additions of 8 million, which far exceeded their guidance of 3 million. You also saw gross margin rise to 31.5%, and a lot of that was attributable to premium revenue growth outpacing music costs, as well as improved contributions from areas like podcasts and music. Spotify is expecting continued strong user and subscriber growth. Going into Q3, they're looking to achieve as many as 710 million monthly active users and 281 million premium subscribers. They had about 8.4 billion euros of liquidity on hand, as well, at the end of the quarter. I still think this is a solid business. Travis Hoium: Yeah, they talked a lot about improving that ad business on the conference call. We'll see if they can do that in the future. For some context, Spotify stock is up 385% in the past three years, even after yesterday's drop. But the price of sales multiple is up 240%. A lot of multiple expansion there. When stocks go up, expectations rise, and sometimes even a good report isn't enough to impress investors. I think that's the big story. Next up, we're going to talk coffee and credit cards, get a glimpse of how the consumers doing. You're listening to Motley Fool Money. The biggest question this time of year is what is the consumer feeling? How healthy are they? Last week, banks said that consumers were doing fine. Late on Tuesday, we heard from visa Starbucks and Lou, let's start with visa because they have the widest view of the economy overall. What did we learn? Lou Whiteman: Visa topped expectations, grew adjusted earnings by 23%. But as you say, the big news, CEO Ryan McNern's comments about the consumer, that's what really stood out. He called the consumer spending resilient, even non discretionary, which I found interesting. He also said it has remained so past the end of the quarter into July. So, all as well, great news. But it is worth noting, Travis, that even with this perceived strength, Visa held guidance steady for the rest of the year. No beaten race here. It appears they're at least hedging their bets a bit or at least a little worried. Definitely not sounding the alarm, but I'm still curious about what's going on and what will go on in the months to come. Travis Hoium: Rachel, this one shocked me. Starbucks stock is down over the past six years. That's really a turnaround story right now. Brian Nichol has been brought in to change the direction of the business. Are we seeing progress from their recent results? Rachel Warren: This is definitely a period of transition for the business for Starbucks, and the turnaround is taking time. This is really evidenced by the fact that Starbucks reported that same store sales fell for a sixth straight quarter in their recent report. GAAP earnings per share of $0.49 actually declined 47% year over year. That's a couple of those facts, but we are seeing progress. For example, their net revenue of 9.5 billion dollar in their fiscal third quarter. That exceeded analyst expectations of 9.3 billion in the recent quarter. It was also up 4% year over year. Notably, Starbucks saw its first sales gain in China since 2023 with a 2% increase in comparable store sales, and that was driven by a 6% increase in transactions. Now, we've heard reports that Starbucks is weighing a sale of its China business. That remains to be seen. But this was also the third consecutive quarter of improvements in US transaction comp, although we're still seeing negative growth there. Now Barista turnover is at its lowest since the pandemic. Starbucks is investing an additional $500 million in labor hours for US stores over the next year. It's looking to really improve its customer service and store operations. Finally, Starbucks just announced that they're going to be introducing a new stand-alone store prototype in 2026 with a drive through and more seating. That could be interesting to watch, as well. Travis Hoium: Yeah. These numbers coming out from restaurants and fast food chains or coffee chains are all over the place. I'm really having a hard time. Chipotle's quarter was a little bit weak. The same store sales comps were down. It just seems very company specific right now. Let's go to our final one of the day. That's Fun fact, over the last 20 years, booking stock is up 22,407%. Just a phenomenal run. They reported last night after the market closed, results were solid, but outlook was weak. What's going on, Lou? Lou Whiteman: Yeah. Just an amazing company and a big winner over the years for Motley fool members, so really, really fun to watch. As you say, a really solid quarter came in ahead of estimates, but they did set profit guidance slightly below expectations. I'm going to emphasize slightly here because at the midpoint, they see revenue of 8.63 billion in the current quarter, which is maybe $60,000,000 short of consensus, which is funny that that could cause a sell off. But Travis, you mentioned it before with Spotify, I think the same is true of booking. Great company, great quarter holding up very well in what we thought maybe could be a tricky environment, but there were so much expectations baked into the stock it just had to let off a little steam post earnings. As a long term holder, I don't see much reason to worry about this quarter, even if the stock did sell off. Rachel Warren: Yeah. The company exceeded analyst estimates for Q2 revenue and earnings per share. But it's Q3 guidance for revenue as well as room night growth was lower than anticipated. The market probably also didn't love that double digit decline in earnings, but a lot of this goes back to near term investments the company's making in its platform that are putting pressure on the bottom line. This deceleration of growth, even from strong absolute levels, seems to be scaring some investors. Some might believe the travel boom following the pandemic could be reaching a plateau or perhaps are concerned about a weakening macro environment. This is still a fundamentally well financially bolstered business. Room nights in this recent quarter grew 8% compared to one year ago. Gross bookings were up 13% year over year. Revenue rose 16%. They also reached a major milestone with their connected trip transactions on the flagship platform. This is where customers choose to book more than one travel vertical, and that connected trip transactions cohort represented a low double digit share of total transactions. That was up 30% year over year. They also saw growth across other verticals, including flight tickets up 44%. Travel is a cyclical space, but booking does have a very solid and well run business, and I think they have the financial fortitude to withstand any near term shakiness in the overall sector. Travis Hoium: Yeah. It doesn't seem like any of these companies are reporting bad results. It's just a matter of what those expectations are. Now that we're far enough into earning seasons to get a feel for what the economy looks like or at least what we think it's going to look like over the next three months or so, and what the market is looking for. That's maybe even more important. I want to give you both a chance to put yourselves on a scale, 100% bull, 100% bear. Where are you on the economy and the market? Rachel Warren: I'd say it probably falls somewhere in the middle. I want to say that roughly 80% of S&P 500 companies that have reported Q2 earnings so far have exceeded earnings per share estimates. That's outperforming both the five year and the ten year averages of about 78% and 75% respectively. In the near term, you've got the impact of policy shifts like tariffs. You've got macro pressures that could stem from them, that could pose realistic challenges both for the economy and the market and I think it's important to recognize that. Could we see another bear market? Absolutely. As a long term investor, though, I do remain incredibly bullish about prospects for great businesses to generate excellent returns for faithful shareholders and for the market's ability to rise with the passage of time. That's what I'm focusing on. Lou Whiteman: For the market, I'm probably 55, 45 in favor of bullishness. Stocks, generally speaking, yeah, they're on the pricey side, if you look at the indexes, and I think that might limit upside for the second half of the year. But I don't see the elements of a crash building. I think the market can grind at these levels, maybe slowly raise. I don't think it's going to be a dramatic up or a dramatic down. The economy, Travis, that side worries me a bit more. I still think that the tariffs are just beginning to hit Main Street, and they're going to hit it a lot worse in the months to come. I don't think that deflates the markets, though, because I think, A, investors are aware of it and, B, if you look back to Sam Adams last week, I think in some cases, we have now estimated such an effect that the tariffs, if they net out at 15% or whatever, I think we might have actually overstated some of the impact in the quarters to com in our estimates. I do think the market can grind higher from here, even if it gets worse on Main Street, but it does feel like it's just going to be a bit of a trudge from here. It's not going to be a rocket ship market or just crisis on the street market. It's just going to be onward. Travis Hoium: Lou, you brought up tariffs, and I want to get an idea for as we're ending the Q2 earnings season going into Q3, are you expecting more impact from tariffs, whether that's costs that impact company's margins or consumers just behaving differently? If something is more expensive, maybe you don't reduce the amount of money you're spending overall, but the volume goes down because that average sale price is going up for the items that you're buying. What sort of trends are you looking for there as we go to the second half of the year? Lou Whiteman: Here's my best guess. I do think that on both of those, it's a headwind, both for the companies and just the consumer habits. I think it might be manageable enough that we're talking about maybe estimates are in trouble or estimates have to come down a bit, but it's not going to derail a growth story. I think it's going to just be more than noise. It's going to be a headache, but it's not going to be to the extent that it really drives down the economy or drives down the market. Travis Hoium: A lot to watch in the second half of the year, and we'll be covering it all on Motley Fool Money. As always, people on the program may have interest in the stocks they talk about in the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Pool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check our show notes. For Lou Whitman, Rachel Warren and our production magician Bart Shannon and the entire Motley Fool team, I'm Travis Hoium. We'll see you tomorrow. Lou Whiteman has positions in Booking Holdings and Shopify. Rachel Warren has positions in Shopify. Travis Hoium has positions in Shopify and Spotify Technology. The Motley Fool has positions in and recommends Booking Holdings, Chipotle Mexican Grill, Nvidia, Shopify, Spotify Technology, Starbucks, Tesla, and Visa. The Motley Fool recommends the following options: short September 2025 $60 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy. Coffee, Chips, and Credit Cards was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Newsweek
6 days ago
- Newsweek
Woman Who Left US in 2017 Discovers Unexpected Consequence of Living Abroad
An American woman's TikTok video detailing the long-term cultural dislocation that comes from living abroad has gone viral on TikTok. Rachel Warren, 30, who goes by @sheislostinikea on TikTok, lives in Copenhagen, the Danish capital. In the viral video, she reflects on the strange feeling of being culturally frozen in time when living far from home. The clip has racked up more than 120,000 views since it was posted on August 3. "A lot of people don't really think about the consequences of living abroad," Warren says in the video. "And one of the weird ones is that your cultural context of your home country will forever be stuck in a sort of time capsule based off of the time you for cultural time capsule is forever stuck around 2017." Warren, who grew up in the suburbs of Washington, D.C., as well as northern Virginia, told Newsweek that she has been living in Copenhagen since 2019 but first arrived in the spring of 2016 for her studies and visited a few times between 2017 and 2019. "I did live in the U.S. for 10 months before I came over permanently," she said. "But during that time, I was living with my parents and saving as much money as I could for graduate school and the move that I wasn't really experiencing the culture, which is why I say I feel a bit more stuck around 2017." Warren's reflections on culture shock and time displacement come as more Americans are considering moving abroad. A February 2025 survey by Talker Research found that 17 percent of Americans said they would like to move outside the U.S. in the next five years, with Canada being the top choice. Another five percent reported they were already making plans, and two percent said they had begun the process of relocating overseas. Millennials made up the largest share of interested migrants, with 25 percent expressing interest, according to the survey. For Warren, her journey overseas was shaped by both curiosity and love. "I grew up around a lot of military kids and internationals so was always very curious about other countries," she told Newsweek. "In 2016, I studied abroad in Copenhagen and absolutely fell in love with the city and country. I also fell in love with a guy but didn't want that to be my only reason for being there, so applied for graduate school. He and I are still together." While her partner is not Danish—he is German—Warren said that fact has actually made her long-term stay more feasible. "Being an EU [European Union] citizen actually makes it easier for me to stay because partnership visas under Danish rules are much more difficult and expensive than getting partnership visas under EU rules," she said. Warren said the changes in the U.S. since she left, particularly following the era of President Donald Trump being in office and the COVID-19 pandemic, have been jarring when she returns to visit. "I am still in shock over the changes that came about because of Trump and COVID," she told Newsweek. "Some of the changes are good like the push towards more telehealth options and more digitalization in general. But other things are incredibly weird to me, like people ordering so many Amazon packages and DoorDash things even when they are living in a city. And overall people seem more isolated and don't seem to hang out with each other as much." Warren also noted how public life in the U.S. has changed in ways she finds unfamiliar. "I also forget how polarized things are. There have always been people with strong opinions but now it seems like people are living in different realities," she said. "The last time I was in the U.S. was in November and I was freaked out by the fact that so many stores have their items locked up now. Also, tipping culture has changed and people tipped more and for things that weren't tippable before I left." The distance has also impacted her sense of pricing and norms. "I don't know how much things cost. If you've ever watched Arrested Development [the television series], there's one clip that's like 'how much can a banana cost? $10?' and I feel like that," Warren said. Her time in Denmark has also reshaped her views on work and social welfare, noting that she used to a "little suspicious" about aspects of European and Danish life. "I couldn't imagine a company being productive when all their employees have so many days off but it works," she said. "Also, I cannot believe that the U.S. does so little when it comes to maternity care. In Denmark, they also have paternity leave, which I think is brilliant." She said: "My priorities have definitely changed. I care more about living a happy healthy life than individual achievements." A screenshot from a viral video posted by Rachel Warren (@sheislostinikea on TikTok), an American living in Denmark, talking about the long-term consequences of living abroad. A screenshot from a viral video posted by Rachel Warren (@sheislostinikea on TikTok), an American living in Denmark, talking about the long-term consequences of living abroad. @sheislostinikea on TikTok Do you have a travel-related video or story to share? Let us know via life@ and your story could be featured on Newsweek.
