Breakfast News: Alphabet's AI Ambitions

Breakfast News: Alphabet's AI Ambitions

1. Alphabet Commits $6.8B to U.K. AI

Alphabet (GOOG -0.04%) has announced plans to invest $6.8 billion over two years in AI development in the U.K., as Chief Investment Officer Ruth Porat outlined the "profound opportunities" in the country.

• "Pioneering work in advanced science": Porat will be part of the team opening a $1 billion data center in the U.K. today, with further funds being used for expanding Google's AI unit DeepMind along with expanding the search and maps products.
• Google Gemini overtakes ChatGPT as the most popular iPhone app: Google's flagship AI model has dethroned ChatGPT in both the U.K. and U.S. App Store charts, with the viral success of its image generator since release in August.

2. Oracle Rises on TikTok Deal News

Oracle (ORCL -0.91%) closed almost 3.5% higher following the U.S. and China reaching a preliminary deal on TikTok, with Oracle emerging as the top candidate to buy the U.S. operations of the social media app.

• "A deal was also reached on a 'certain' company that young people in our Country very much wanted to save": President Trump hinted at the agreement earlier Monday, with Treasury Secretary Scott Bessent later confirming the framework, ahead of the September 17 U.S. ban for TikTok if it doesn't divest ownership.
• Oracle servers store TikTok's U.S. user data: Oracle was previously in discussions with the White House regarding the purchase, with an existing overlap with business relationships.

3. Trump's Fed Pick Confirmed for Rate Vote

President Trump's Fed governor nominee Stephen Miran was confirmed just in time to participate in the FOMC meeting this week, with existing governor Lisa Cook remaining in place following a Court of Appeals ruling.

• Both can cast votes on interest rate decisions: The president has made it clear he wants interest rates lowered, with Miran potentially looking to push for a larger rate cut this week of 0.5% versus the consensus 0.25% view.
• SEC prioritizing Trump's push on quarterly reporting: Wall Street's main regulator is under pressure to remove the mandate for listed companies to report earnings on a quarterly basis, potentially reducing a short-term management focus.

4. PLAY and HAIN Suffer Earnings Woes

Recently recommended as a 'Sell' in Rule Breakers, Dave & Buster's (PLAY 3.92%) fell over 17% after the market closed following Q2 earnings missing analyst expectations, with declining same-store sales as the new CEO tries to drive a turnaround.

• "I believe there has been a very clear executional failure that will be rectified": CEO Tarun Lal outlined on the earnings call previous missteps that impacted the quarter, including a lack of training, excessive promotions, and overemphasis on certain items.
• A cocktail of lower sales and operational challenges: Hain Celestial (HAIN 1.30%) closed down almost 25% after posting disappointing results and not providing any financial guidance for fiscal 2026, with a formal strategic review of the business now underway.

5. U.S. Treasury Bonds Top Global Peers

U.S. Treasury bonds have returned 5.8% so far this year, the best performing bond out of the 15 largest sovereign debt markets, as short-term yields fall with the prospect of interest rate cuts.

• Fed rate cuts looming: Interest rate futures are now pricing in almost three 0.25% cuts through to year-end, with concerns around the labor market acting to push up bond prices (and lower yields) with investor purchases.
• Excess yield versus global peers at three-year low: The differential between the yield on Treasuries versus global sovereign bonds fell to 120bps, down from 200bps in January, due to poor sentiment in other nations, such as Japan and France.

6. Your Take

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