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- 📈 AppLovin's AI Bet Pays Off
📈 AppLovin's AI Bet Pays Off
Apple AI Threatens Google Search, Disney Eyes Middle East Expansion, Wegovy Sales Recovery Anticipated, Google Bets on Nuclear Power, AppLovin shares pop on earnings beat
Evelio Silvera
May 08, 2025
Good morning.
⚡ The Fast Five → Apple AI Threatens Google Search, Disney Eyes Middle East Expansion, Wegovy Sales Recovery Anticipated, Google Bets on Nuclear Power, AppLovin shares pop on earnings beat
🔎 Market Trends → Late chip rally lifts stocks after Fed holds rates steady; US Futures Jump on News of US-China Trade Talks
And now…
⏱️ Your 5-minute briefing for Thursday, May 8, 2025:
MARKET BRIEF
Before the Open
As of market close 05/07/2025.
Pre-Market
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Fear & Greed
Markets in Review
Fed Flags Risks, But Bulls March On
The Dow rose 0.7%, the S&P 500 gained 0.4%, and the Nasdaq added 0.3% Wednesday as investors shrugged off the Fed’s caution and rallied behind solid corporate earnings.
The Big Picture:
Markets kept climbing even as the Federal Reserve signaled heightened uncertainty around inflation and unemployment. Rates held steady for the third straight meeting, but policymakers warned the balance of risks is shifting.
Still, upbeat earnings from key names kept sentiment resilient. Disney (DIS) and Rockwell Automation (ROK) beat expectations and raised guidance—offering investors a comforting contrast to macro uncertainty.
With US-China officials set to meet in Switzerland and the EU drafting a new tariff list, trade remains the wildcard. But for now, markets are betting on diplomacy—or at least delay.
Market Movers:
Disney (DIS) soared 10.8%, the best performer on the Dow, after surprising with a Q2 profit jump and lifting its full-year outlook.
Rockwell Automation (ROK) popped 11.9% after a strong quarter and upgraded earnings forecast.
Nvidia (NVDA) rose 3.1%, with investors eyeing possible easing of chip export restrictions to Gulf countries.
Marvell (MRVL) dropped 8% after narrowing revenue guidance and postponing its 2026 investor day—signaling some macro jitters.
What They’re Saying:
“The Fed is unlikely to cut interest rates earlier than December unless there are definitive signs that the labor market is deteriorating.” — Ryan Sweet, Chief US Economist, Oxford Economics
WHAT WE’RE WATCHING
Events
Today: Department of Labor - Unemployment Claims - 8:30am
Why You Should Care: Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy.
Earnings Reports
Today: Anheuser-Busch, Monster Beverage, Coinbase, Restaurant Brands International, Shopify, HubSpot
Tomorrow: Honda Motor Company, Coca-Cola, Brookfield Renewable Corporation, Cheniere Energy Partners, EchoStar Corporation
MARKET BRIEF
Leading News
AppLovin's AI Bet Pays Off in Spades, Shares Soar on Gaming Unit Sale
Photo Credit: Thomas Fuller | SOPA Images | Lightrocket | Getty Images
Why it matters:
AppLovin's strategic pivot to AI-powered advertising is creating massive shareholder value while shedding lower-performing gaming assets — offering a masterclass in how tech companies can successfully reinvent themselves in the AI era.
Zoom Out:
AppLovin (APP) shares surged up to 15% after hours as the advertising technology firm reported earnings that handily beat Wall Street expectations, with EPS of $1.67 vs $1.45 anticipated and revenue of $1.48 billion vs $1.38 billion expected . The company simultaneously announced the sale of its underperforming mobile gaming business to Tripledot Studios for $400 million in cash plus a 20% stake in Tripledot.
The company's advertising segment delivered $1.16 billion in Q1 revenue, a stunning increase from $678 million a year ago, showing the remarkable potency of its AI-powered AXON advertising platform despite short-seller attacks in February.
Key Insights:
The gaming divestiture represents smart capital allocation. While AppLovin originally floated selling its apps business for around $900 million in February, the $400 million cash deal plus equity stake allows management to focus entirely on its high-margin advertising technology while maintaining upside exposure to mobile gaming.
AI transformation is working spectacularly well. The company's AXON algorithm—the core of its AI advertising platform—continues to undergo self-learning improvements with early data showing "substantial returns" for advertisers. The platform is now expanding beyond gaming into lucrative e-commerce markets, creating multiple growth vectors.
TikTok ambitions reveal bold strategic vision. AppLovin published a blog post Wednesday outlining a proposed merger with ByteDance's TikTok that would cover "all assets outside China"—a move CEO Adam Foroughi called "a long shot" but potentially transformative. This reveals a management team willing to swing for the fences.
Market Pulse:
"We believe the AI-enabled advertising software platform continues to be one of the best AI opportunities within the mid cap market," stated ClearBridge Mid Cap Strategy, which used short-seller-driven weakness to add to its position.
Bull’s Take:
AppLovin demonstrates the immense wealth creation possible when companies successfully pivot to AI-powered business models. With advertising revenue growing at a CAGR above 40% and shares up over 700% in 2024 , this remains one of the most compelling ways to play AI's commercial application in digital advertising.
Headlines
Apple seeking to add AI search to Safari. Alphabet drops. (link)
Disney to open theme park in the Middle East (link)
Novo Nordisk hopes to see US Wegovy sales recover soon (link)
Google to back development of 3 nuclear sites to ‘move at speed required’ for AI, American innovation (link)
Musk’s xAI to Use Tesla Batteries at Memphis Supercomputer (link)
China agrees to trade talks with the U.S. and rolls out more stimulus as tariffs hit economy (link)
CRYPTO
Fear & Greed
Headlines
DAILY SHARE
On the Socials
*Hat-tip to alifarhat79
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