From electronics to discount chains, retailers just reported another round of earnings—and the results did not disappoint.

• Best Buy topped both revenue and earnings expectations, driven by strength in gaming and computing, while highlighting its growing use of OpenAI and Gemini tools to improve the customer experience. Executives also said they aren’t currently concerned about rising memory prices weighing on demand. Shares rose 15.79%.
• Kohl’s also beat top- and bottom-line forecasts while posting its strongest comparable sales growth in four years. The retailer reaffirmed its full-year guidance, offering investors a rare bright spot after the stock’s 23.71% slide this year amid sluggish sales trends. The stock popped 20.48% today.
• Meanwhile, Dollar Tree reported better-than-expected earnings and raised its fiscal-year outlook. The discount chain’s strategy of raising prices to offset softer foot traffic is paying off, while a new partnership with DoorDash will bring on-demand delivery to its US stores. Shares jumped 17.87%.

Swipe now, save later

The wave of strong retail earnings comes at a strange moment for the US consumer. Inflation remains stubbornly high, with headline PCE inflation rising 3.8% year over year and core PCE climbing 3.3%—both their highest levels since 2023, though still in line with expectations. At the same time, personal income was flat last month, even as prices continued moving higher.

But consumer spending still rose in April, as Americans increasingly dipped into their savings: The personal savings rate plunged from 5.5% last April to 2.6%, its lowest level in four years.

The Fed’s balancing act

These inflation readings are the first major test under new Fed Chair Kevin Warsh’s leadership. The numbers arrive as investors increasingly bet that AI-driven productivity gains could eventually justify lower interest rates, by helping the economy grow without fueling inflation. But St. Louis Fed President Alberto Musalem said there still isn’t enough evidence of that shift, especially with inflation remaining well above the Fed’s 2% target.

But New York Fed President John Williams struck a more optimistic tone, maintaining that the Fed remains in a strong position to manage any economic fallout from the US-Iran war. He also said he expects the recent rise in inflation to peak in the coming months.

For retailers, that means the fight for consumers’ wallets is only getting more intense. As budgets tighten and inflation remains elevated, companies are competing harder than ever for the same discretionary dollar.—SY

🟢 What’s up

• IBM rose 3.53% on plans to invest more than $10 billion into quantum computing over the next five years.
• Arm Holdings gained 10.76% as Mizuho lifted its price target, pointing to long-term AI CPU growth tailwinds.
• Biotech company Agilent Technologies jumped 16.87% after beating earnings expectations and lifting its full-year outlook.
• Hormel Foods climbed 12.55% following its sixth straight quarter of organic sales growth.
• Dell advanced 4.23% thanks to a $9.7 billion Pentagon software contract.
• Nebius Group rose 8.62% after a hedge fund run by a former OpenAI employee disclosed a 5.6% stake in the company.

What’s down

• Railway stocks Norfolk Southern and Union Pacific fell 5.42% and 4.45%, respectively, after regulators paused the review of their proposed $71.5 billion merger.
• Data storage company Everpure slipped 14.81% despite reporting first-quarter margins in line with expectations.
• Synopsys declined 8.61% even though it beat quarterly estimates and reached a board agreement with activist investor Elliott Investment Management.
• Burlington Stores dropped 7.93% despite beating earnings expectations and raising guidance.
• Semiconductor company Photronics tumbled 36.42% as weak quarterly guidance disappointed investors.

Back in the day, the winners of the AI trade tended to be the same old stocks—Nvidia, the Mag 7, maybe a handful of others. But now there seems to be a newly crowned AI champ every other day: Micron, Intel, Sandisk, and more have enjoyed impressive hot streaks this year, and today we’ve got yet another superstar to add to the mix.

Snowflake soared 36.48% for its best day of trading ever after the cloud storage company reported stellar earnings, beating both revenue and EPS forecasts, and raising guidance. Management also announced that the number of customers paying $1 million or more for Snowflake’s services soared from 26 to 46 over the last year.

But its biggest customer by far has always been Amazon Web Services, and its deal with Snowflake just got bigger. Snowflake provides AWS with AI infrastructure, and Amazon’s hungry for even more, so the two inked a $6 billion deal that should see Snowflake rake in an additional $1.2 billion per year.

What makes Snowflake’s win today particularly impressive is how much it’s been losing lately. The stock had tumbled 14% over the last 12 months as of yesterday, well behind its AI-centric peers. But the new deal with Amazon, coupled with strong fundamentals and a relatively low valuation compared to the competition, have all combined to make Snowflake the newest AI winner.—MR

These days, Uncle Sam is going on a bigger shopping spree than your post-divorce uncle grabbing gadgets at Best Buy.

Dronemaker Unusual Machines surged 57.2% after the Wall Street Journal reported that the Trump administration is in negotiations to ink funding deals with a slew of private-sector drone companies.

You may think of drones as your brother’s annoying Christmas present, but the US government is more interested in the lethal kind. The Iran war has heightened the Pentagon’s need for drone technology, as well as anti-drone measures. The US is hoping that by funding the nascent domestic drone industry, it can not only boost production, but lower the costs of the weapons.

While the White House has not confirmed the report, that hasn’t stopped investors from going all-in on Unusual Machines, which is currently the only publicly traded dronemaker that the WSJ noted could be a potential deal recipient.

Here’s the other drone companies the US could be bankrolling:

• Performance Drone Works, which already has a contract to provide the military with reconnaissance drones, according to the WSJ.
• Neros Technologies, a startup developing first-person-view drones, could also get a US-sponsored windfall.

Other dronemakers not mentioned in the WSJ report rose on the news that the entire industry could be getting a boost: Ondas rose 22.69%, Red Cat Holdings jumped 32.61%, and AeroVironment rose 18.26%.

Zoom out: This isn’t the first time Unusual Machines has flown into the spotlight: Back in November 2024, the stock surged 250% in two days after the company announced that Donald Trump Jr. would join as an advisory board member (he’s also a shareholder).

For retail investors, Unusual Machines is also a ‘picks and shovels’ drone play: It not only owns its brands, it also makes the materials needed to build military drones. But investors are making a highly speculative play based more on politics than balance sheet fundamentals.

The stakeholder in chief

The US government is taking a hands-on role in fostering the industries it wants to see grow. Since August, the Trump administration has taken stakes in chipmakers like Intel, as well as a slew of quantum-computing companies, plus made major investments in critical minerals giants.

It’s a double-edged sword: On one hand, a governmental boost does strengthen domestic industries and makes the US less reliant on foreign supply chains. And for the lucky companies selected, their share prices tend to explode. But critics have pointed out that Uncle Sam picking winners and losers can distort free-market forces.

For better or worse, the wheeling and dealing doesn’t seem to be ending anytime soon.—LB

• Anthropic just topped OpenAI as the most valuable AI startup.
• Billionaires’ family offices are cutting their US exposure.
• More workers are dipping into their 401ks as retirement balances decline.
• One million prospective new car buyers have ditched the auto market since the start of the decade.
• The semiconductor rally is the most bet-against bull run in history.
• The Treasury department confirmed it has taken steps towards making a $250 bill featuring Donald Trump.

Economic announcements: The week ends on a quiet note, with no major announcements of note.

Earnings reports: The April US advance goods trade balance wraps the week, and we’ll also get both retail and wholesale inventories for April.