Good morning. Andrew here. Watch this space: Meta is said to be in talks to settle a major lawsuit over teens and social media. The discussions, first reported by Bloomberg, come in the second week of a jury trial over whether Meta designed its platforms to be addictive to young people. The 29 states behind the suit are seeking roughly $200 billion in damages. Any settlement could be a watershed moment for tech, rewriting how social media companies interact with teenagers and younger people. (Was this newsletter forwarded to you? Sign up here.)
Inside the central bank of A.I.Wall Street will be paying close attention when Nvidia reports earnings today, looking for clues about the future of the artificial intelligence boom. But beyond the quarterly numbers, investors will scrutinize Nvidia’s expanding portfolio of A.I. investments as skeptics question the company’s efforts to undergird the industry’s trillion-dollar ecosystem. Sri Muppidi digs into the details. Nvidia has ramped up its investments in start-ups, money that could then be spent on its own chips. Those deals are made through its corporate development arm and a venture capital arm, NVentures. The investments include more than $30 billion in OpenAI and commitments for up to $10 billion in Anthropic, as well as stakes in cloud computing providers and data center operators. In the last week alone, it has announced:
The company’s total stakes in private companies, included as nonmarketable securities on its balance sheet, stood at $43 billion as of April 26. That’s roughly double from the previous quarter. Nvidia has also taken large stakes in publicly traded companies. That includes $5 billion worth of Intel stock that Nvidia bought last fall as part of a data center venture, a stake now worth about $22 billion. Nvidia also holds sizable stakes in start-ups that have since gone public, including SpaceX and CoreWeave. Its total marketable securities stood at about $30 billion in the first quarter, up more than double from the previous quarter. Nvidia has used its financial firepower in other ways, too. It recently announced a $500 billion partnership with Wall Street giants to help A.I. companies get cheaper access to computing power, which could go toward buying more Nvidia chips. But some analysts are worried that Nvidia could become the central bank of the A.I. economy. The investments in the chipmaker’s own customers have raised concerns that the deals amount to vendor financing that could be unsustainable and possibly dangerous. “At the end of the day, these customers don’t have the credit profile to support the revenue profile that they want to achieve,” James Kisner, an analyst at Water Tower Research, said. He added, “You’re betting on the customer’s solvency.”
The U.S.-Canada trade war heats up. Ottawa yesterday unveiled retaliatory tariffs on a wide range of U.S. imports, including aluminum foil and steel bridges. The U.S., which last weekend put new levies on Canada, is weighing even more duties on its northern neighbor, Bloomberg reports. Separately, Beijing has lashed out at the Trump administration over its threats to impose sanctions on Iran’s biggest trading partners, one of which is China. Oil prices slide ahead of a pivotal inflation report. Brent crude, the international benchmark for oil, traded around $85.15 a barrel this morning as Iran and Oman discussed a “temporary joint maritime corridor” in the Strait of Hormuz. Separately, economists expect to see a mild slowing of inflation in today’s Personal Consumption Expenditures report, due at 8:30 a.m. Eastern. The Trump administration submits its nuclear deal with Saudi Arabia to Congress. The proposal, which would allow the country to enrich its own fuel for nuclear reactors, would give American companies a central role in developing Saudi nuclear infrastructure. But the plan has drawn concerns about nuclear proliferation in the Middle East. C.E.O.s’ war paradoxThe war with Iran has disrupted supply chains, driven up energy prices from Los Angeles to London and roiled the global bond market. Yet that turmoil isn’t evident in the stock markets — or in business leaders’ commentary on corporate earnings calls this quarter. Quiet around the topic may have helped bolster Wall Street’s narrative about a resilient economy and solid business conditions. But analysts caution that the positive vibes could fade if the war drags on, Bernhard Warner reports. Inside the numbers: So far this earnings season, 225 U.S.-listed companies have explicitly mentioned war-related topics during analyst calls, down from 540 in the previous quarter, according to the research firm AlphaSense.
Executives are shifting the focus away from war. While many companies have discussed the business impact of rising fuel prices in general terms, “they have cloaked it in the language of finance,” Ed Moya, a market intelligence strategist at AlphaSense, told DealBook. That has meant fewer direct references to Iran or the Strait of Hormuz on earnings calls, and more discussion of tighter profit margins and strapped consumers. Walmart was an exception. Last week, John Rainey, Walmart’s C.F.O., warned analysts that the Strait of Hormuz crisis could continue to drive up prices for fertilizer, and eventually food. The company reported its worst quarterly growth in more than six years, sending its stock tumbling. Some market watchers wonder if the narrative will grow downbeat soon. Investors seem content with record corporate profits right now. But skeptics think war talk will come up more as C.E.O.s get pressed on their forecasts for next year, which may suffer from costlier fuel and transport costs and higher interest rates. “The true test will come next earnings season,” Moya told DealBook, adding that analysts would be “really digging in and asking, ‘How are you pricing in this war?’”
Bill Gates: A.I. could destroy usBill Gates, the billionaire co-founder of Microsoft, says he’s worried about artificial intelligence. In an interview with Karen Weise of The Times, he said the tech industry had played down its fears about job losses and the risks to human life because there was too much money on the line. He also published a lengthy essay on his personal website outlining his thoughts. Gates is in a unique position. He told The Times that because he’s a technologist who no longer runs a company — he stepped down as Microsoft’s C.E.O. in 2000 and left its board in 2020 — he’s well placed to warn about the technology’s risks. (That said, he didn’t criticize Microsoft or any other tech companies by name.) He said he was in a “state of shock” that there wasn’t more urgency to mitigate A.I.’s risks: He said mass job losses, if not addressed, were inevitable because A.I. will spread across the economy and leave little room for one industry to absorb the refugees from another. The biggest tech companies in the world, including Microsoft, are racing to help corporate customers implement A.I., which could replace many workers. Mr. Gates said companies are just responding to market incentives, but those incentives may conflict with what’s best for society. The problems of mass unemployment outweigh the benefits of efficiency, “so the price signals aren’t connected to humanity’s need to have gainful activity, both from a fulfillment and economic point of view,” he said. Gates proposed ways to cushion the blow from A.I.:
Gates is stepping back into the spotlight after emerging from scandal, including his interactions with Jeffrey Epstein, which he had to testify before a House committee about in June. “I think people understand what I did do, what I didn’t do and that I learn when I make mistakes,” he told The Times.
QUOTE OF THE DAY “I write everything using A.I. now for the same reason I use a calculator when I do math problems.”Stanley Druckenmiller, confirming that he used an artificial intelligence tool in writing his Wall Street Journal opinion essay criticizing Treasury Secretary Scott Bessent. The editor of The Journal’s opinion section, Paul Gigot, defended running the piece, saying, “A.I. is a fact of modern life.”
Dolly Parton’s media machineThe death of Dolly Parton yesterday, and the remembrances and encomiums that followed, have shown how the dazzling (and often bedazzled) star of country music could unite an often fractious country. Parton left a giant mark on American culture through her music and outsize personality. But her work was no 9-to-5 job: She also created a business empire that earned her a fortune — estimated at $450 million — and set an example for other celebrities. Parton maintained ownership of her publishing rights, an early example of artists preserving their intellectual property. In the 1960s, she and two uncles set up Owepar, a publishing company, to protect the copyrights to their music. (She famously rejected Elvis Presley’s request to cover her song “I Will Always Love You” over a demand for 50 percent of the royalties.) Parton’s focus on music rights proved prescient, given the hundreds of millions of dollars that musicians have made by selling theirs and the relentless focus that Taylor Swift put on reclaiming hers. Parton’s ventures expanded far beyond music:
In Parton’s own words, from a 1977 interview with Barbara Walters: “I would like to be a superstar. I guess all people dream of that. So in order to be a superstar you can’t be just a superstar in one area. That means you have to appeal to a majority of people, and that’s what I’m trying to do.” We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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