Companies

Google’s AI strategy appears to be working in Search. In our 200-query check, ad presence within AI Overviews became more common over the past two months. We still haven’t seen ads in AI Mode, even though the company has been clear that those are being tested. This aligns with management’s commentary that higher query volume has positively impacted Search revenue. Bottom line: Google is likely to post a strong quarter in Search and continue guiding investors that it’s successfully navigating the AI transition. Street expectations for September have risen, with the whisper number now calling for 13% Search growth, up from 12% in print and 11.7% in June.

Here are the five pressure points for this Wednesday and Thursday’s earnings from Google, Meta, Microsoft, Amazon, and Apple (and an Nvidia bonus). Big picture: The setup carries more risk than it did three months ago, as investor confidence is notably higher heading into this round of reports. That said, the key takeaway will likely remain that we are still in the early stages of AI adoption, and the largest technology companies continue to hold their ground.

The September numbers and earnings call were largely uneventful with a slight negative around some recalibration investors will be making on the timing of unsupervised Robotaxi and FSD. The big picture remains intact: Tesla is the best-positioned company for AI…

OpenAI announced Atlas, their first browser. The product is built on familiar tabs, which will make it inviting to Chrome users, and delivers a step-function improvement in functionality, with better personalization and agents. While there was no mention of monetizing search, the long-term impact of OpenAI on Google’s cash cow remains an open question. In the end, Atlas sets a new bar, one that Google will likely be able to meet, which is central to maintaining and growing their search business.

Shares of TSLA are up 35% since June earnings, compared to the Nasdaq’s 9% gain. While the bar may appear high heading into Wednesday’s report, I see most paths pointing to shares continuing higher. Investors have fully bought into the company’s long-term vision, and that vision will be reiterated on the call.

The road to purchasing Meta Display led through a local Best Buy, where a mandatory demo was required to ensure proper fitting. In the end, I found the technology impressive, the use case still limited, and the fashion grade below average. The bottom line: Meta is making the right move by investing $20B annually into Reality Labs, but the return on that investment will take years.

When I hear about a sale, I wonder if the price was marked up just before the event. To better understand the true average sale price during Amazon’s recent Prime Big Deal Days, we spot-checked 50 random items on the sale day and rechecked prices a week later. We believe the week-later price reflects the true price, given that only a third of the items returned to their “original price.” On average, Prime Day yielded a 24% savings for shoppers compared to the price a week later. This savings is higher than the 16% we measured in 2023 for Cyber Monday, a small data point suggesting retailers are getting more aggressive with discounts.

Last Friday, Liz Reid, head of Google Search, joined the WSJ’s 'Bold Names' podcast. In a vacuum, it would have been a non-event. In the context of investor fears around Google Search being displaced by generative AI, and the proximity of her comments to Google reporting September results (Oct 29), the podcast took on new meaning. Her message was simple: AI has been a positive for Google’s search business. Search accounts for just over half of revenue, and I estimate close to 75% of profits. Even though shares of GOOG are up 33% over the past three months (Nasdaq up 9%), the stock still trades at a 15% discount to other Mag 7 comps.

We’re now three weeks into the iPhone 17 cycle, and investor sentiment remains upbeat despite the October 3 Jefferies downgrade. Since launch, the global lead time data reinforces this optimism: wait times suggest demand is running modestly ahead of last year. Together, these datapoints support the case that iPhone unit growth will return next year, modestly exceeding the Street’s 5% growth consensus.

Tesla surprised investors by announcing that the rumored cheaper, slimmed down Model Y is essentially the same as the standard version, just with fewer color, wheel and seat options, priced at $40K, down 11% from $45K. This move signals that Tesla is becoming more aggressive in selling the Model Y in a post–tax credit world, which should help deliveries grow 16% next year (per Street estimates) compared to a 9% decline this year. I believe a truly affordable $30K model is still in the works for 2027, which will be key to winning autonomy.

Apple’s decision to shelve Vision Pro in favor of glasses underscores that the optimal AI-first form factor is still unsettled. Apple is now following Meta’s push into glasses, while Jony Ive joined OpenAI in May to pursue a different path: a screenless pocket companion. I believe the phone will remain the dominant AI-first device over the next three years. Beyond that, the shift will move toward pocket companions that work alongside phones and watches. Glasses, despite Apple’s pivot, are likely capped at a few hundred million units a year, limited by comfort, privacy, and fashion.

September deliveries of 497k were well ahead of the 475k high-end of the whisper, up 7% y/y after being down 13% in June and March. I believe the vast majority of the upside was driven by a 35% quarter over quarter jump in US sales from the tax credit, which in theory means investors should largely throw out the positive number. My "throw it out" logic misses a bigger point; the future will be autonomy and the ability to get EV units in the market profitably is a key competitive advantage. On that measure, the September deliveries are a long-term win for the company.