Stock Market Recap:
Markets saw mixed results yesterday, with the S&P 500 rising while the Dow lagged. Concerns over tariffs have eased for now, but Philip Morris surged as its nicotine pouch brand, Zyn, fueled another earnings beat.
Amazon Set to Overtake Walmart in Revenue
Amazon is poised to surpass Walmart in quarterly revenue for the first time, generating $187.8 billion, eclipsing the $180 billion analysts expect from Walmart’s Q4 earnings. Walmart has held the title of the world’s highest revenue-generating company for 12 years, though Amazon has had a higher market cap since 2015.
The Shift in Revenue Streams:
- Amazon Web Services (AWS): Cloud computing revenue has more than doubled since 2020, now contributing ~17% of annual sales.
- Digital Advertising Growth: Amazon’s ad revenue grew 19% year-over-year in Q3 2024, bringing in $14 billion.
- Competition: Walmart is adapting by investing in digital ads, including acquiring Vizio, mirroring Amazon’s use of Prime Video for advertising. Meanwhile, Amazon aims to expand its grocery business to challenge Walmart’s lead in that sector.
Key Developments
- Judge Delays Trump’s Federal Worker Buyout Deadline: A federal judge in Massachusetts paused the deadline for federal employees to accept Trump’s buyout offer until at least Monday, when legal arguments will be heard. As of yesterday, over 60,000 workers—or 3% of the federal workforce—had accepted the deal, which aims to cut government spending.
- Honeywell Breaks Into Three Companies: Following a move similar to GE’s 2021 split, Honeywell will separate its aerospace, automation, and materials divisions. The restructuring is a win for activist investor Elliott Investment Management, which pushed for the breakup last year.
- DeepSeek Ban Proposal on U.S. Government Devices: Lawmakers introduced a bipartisan bill to prohibit the DeepSeek chatbot on government devices, citing national security risks linked to potential data access by the Chinese Communist Party. The proposal mirrors the TikTok ban on government devices in 2022.
Ongoing Panama Canal Dispute
Panama’s President José Raúl Mulino refuted the U.S. State Department’s claim that Panama had agreed to waive canal fees for U.S. government vessels. Secretary of State Marco Rubio later clarified that the U.S. “expects” Panama to eliminate the charge, raising concerns about treaty violations.
- Background: The original 1977 treaty mandates equal treatment for all canal users.
- Context: Trump has suggested regaining U.S. control of the canal, citing China’s growing influence over its operations, a claim Panama denies.
Starbucks Tightens Mobile Ordering Rules
In an effort to reduce service bottlenecks, Starbucks has made changes to its mobile ordering system:
- Customers are now limited to 12 items per order instead of 15.
- Some drink modifications, including adding a splash of milk or lemonade to Refreshers, are now restricted.
- The company plans to cut 30% of its menu by September to improve efficiency.
Top Stories
- AMC Theatres increased Stubs A-List prices but now allows members to watch an additional movie per week.
- Roblox stock dropped after underwhelming bookings data, adding to concerns in the gaming sector.
- Anheuser-Busch seeks to rebrand ‘domestic’ beer as ‘American’ to differentiate U.S.-made brands.
- YouTube is advertising on TikTok, targeting content creators as TikTok faces potential U.S. bans.
- Quiksilver, Billabong, and Volcom will shutter all U.S. stores following their parent company’s bankruptcy filing.
