• Stocks: With the peak of earnings season in the rearview mirror, investors spent the day sitting on their hands, waiting for a deal between the US and Iran that has yet to materialize.
• Commodities: Oil prices climbed as traders bet that peace talks aren’t moving forward anytime soon after President Trump told Axios that he’s “only semi-negotiating” with Iran.
• Predictions: JPMorgan is getting more bullish, raising its full-year S&P 500 forecast for the second time in two months.

AI

Illustration: Morning Brew Inc., Photo: Tom Williams/Getty Images

There’s one more last-minute addition to your beach-read list: a 6,500-word AI manifesto by none other than Mark Zuckerberg.

Today, Zuck released a prolific proclamation on the “Path to a Positive AI Future,” in which he (unsurprisingly) doubled down on his perspective that AI is the answer to the world’s problems—but emphasized that no one central source of power should control it. As you’d expect, it was filled with the characteristic charisma and wit of Silicon Valley’s favorite fashionista.

We read it, so you don’t have to. Here are some of the takeaways:

• Meta is weighing in on the policy debate: Zuckerberg wrote that the government should be involved in reviewing new models before they’re released, to avoid slowing down releases.
• He added that Meta will release more open-source AI models, meaning that Meta’s coding and architecture are public.
• Zuckerberg also introduced a new self-governance system. Meta’s independent board will review new models and determine if they meet the company’s safety standards.

Meta’s reality check

Zuck’s PR efforts to rebrand AI come off as less than earnest when you realize something: It’s in Meta’s best interest to convince the masses that texting a picture of a rash to an AI bot will lead to exponential advances in medicine. In its Q2 earnings announcement just over a week ago, Meta reported that its free cash flow plunged 91% year over year.

The reason, of course, is capex: Meta is spending between $115 billion and $135 billion on building datacenters this year, up from $72.2 billion in 2025. Investors are growing wary that if Meta doesn’t make its AI dreams a reality soon enough, all that spending will tank the stock. Datacenter bans sweeping the nation could thwart that goal, of course. That’s partly why Zuck unveiled a $1 billion fund to invest in communities around datacenters.

There’s an even more meta (pun unintended) wrinkle: Everyone hates Zuck AI.

But luckily, Zuck quelled readers’ fears at the beginning of the manifesto by simply saying…that they shouldn’t have them. “Still, it is surprising that the discourse from many developing AI is so filled with doom,” Zuckerberg wrote. “Each time there is fear that people will be left behind. But each time humanity has come out with more people sharing greater prosperity, health, and freedom. We believe this will be true with AI as well.”

Now if you’re thinking: That sounds suspiciously like what ChatGPT would write about itself—that’s because Zuck is the closest anyone’s gotten to personifying AI in the flesh.—LB

      

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Stocks

🟢 What’s up

• Berkshire Hathaway gained 1.46% as quarterly profit more than doubled, boosted by new investments under CEO Greg Abel.
• Microsoft rallied 1.21% on a report from The Information that it plans to increase production of its own AI chips.
• Boat dealer MarineMax surged 46.08% after agreeing to a $1.5 billion all-cash buyout from Blackstone Infrastructure’s Safe Harbor Marinas.
• Varex Imaging jumped 48.75% on a $18.90-per-share cash buyout agreement with Teledyne Technologies.
• Archer Aviation climbed 11.99% on plans to acquire three Boeing subsidiaries, with Boeing taking a roughly 20% stake in the company.
• Hewlett Packard Enterprise advanced 2.72% following a Morgan Stanley upgrade that cited accelerating AI-driven demand for computing and storage.
• Sunrise Energy Metals rose 9.49% after securing backing for a $400 million US investment tied to its Australian scandium project.

🔴 What’s down

• Apple fell 1.53% following a Jefferies downgrade over concerns that a long-awaited iPhone redesign may not materialize.
• Intel slipped 4.06% on plans to raise $15 billion through a common stock offering.
• Sionna Therapeutics plummeted 91.18% after its experimental cystic fibrosis drug failed to meet key goals in a proof-of-concept trial.
• Monday.com dropped 4.84% on quarterly guidance that came in below Wall Street expectations.
• Software company N-able lost 35.67% after issuing weaker-than-expected revenue and EBITDA guidance for the current quarter.
• eBay declined 3.81% on reports that GameStop is considering abandoning its takeover bid.

Stat of the day

Earnings season check-in

Illustration: Morning Brew Inc., Photo: Adobe Stock

About 90% of the S&P 500 has reported earnings, and with the season coming to a close, it feels like a good time to step back and take stock of the market.

So far, things are going pretty darn good: Bank of America reported that second-quarter earnings per share rose 30% YoY, with 76% of companies beating analysts’ EPS estimates; the best results since early 2021. As for revenue, FactSet noted that the revenue growth rate for the entire S&P 500 is forecast to hit 15%—and if it does, that’ll be the highest revenue growth since Q4 2021.

That all sounds well and good, but some analysts are starting to get worried that growth is going to slow down soon. Median EPS growth for AI-related companies climbed to 28%, while non-AI stocks only saw 12% growth, according to BofA—but Wall Street consensus says AI companies will only see their EPS rise 16% next quarter.

That’s still pretty good, but as BofA pointed out, investors may demand earnings acceleration. Good isn’t enough when it comes to AI earnings, and investors are already worried about accelerating capex from the biggest names in the AI game. This earnings season was very solid, and it helped the market hit new highs last week—but if AI companies can’t keep up the pace, it could spark a serious loss of faith in the hyperscalers that are supporting the entire market.—MR

Banking

Illustration: Morning Brew Inc., Photos: Adobe Stock

Just when you thought private credit’s woes were over, they’ve returned—and they’re worse than ever.

Recent quarterly reports from funds overseen by Ares Management, Blackstone, Blue Owl Capital, and Golub Capital hit their highest levels of default since at least 2021, according to a Wall Street Journal analysis. At Blue Owl, 2.8% of loans were in default in the second quarter—its highest share in at least five years—while nonperforming loans at the other three managers also reached five-year highs.

Much of the concern over the health of private credit firms has centered on their investments in software companies suddenly vulnerable to AI disruption, which account for more than 20% of the loans in many private credit portfolios. But the recent trouble has surfaced elsewhere: highly leveraged manufacturers and healthcare companies getting squeezed by higher oil prices.

Those companies are being added to what private credit firms call “watchlists”—borrowers they’re concerned may struggle to repay their debt. At Ares, Golub, and KKR, those watchlists are now the largest they’ve been in roughly four years.

Back to the banks

Defaults aren’t private credit’s only headache. The industry is also losing ground to the very banks it spent the last decade taking business from.

Years of higher-for-longer interest rates have left heavily indebted companies paying hefty interest on their private credit loans. As a result, many are now rushing to refinance with cheaper syndicated bank loans whenever they can. In fact, companies are moving from private credit into bank loans about three times as often as borrowers are going the other way, according to JPMorgan and KBRA DLD data.

That shift is starting to show up in returns. Private credit funds that used to generate annual gains of 10% or more are now struggling to deliver even 7%. Banks, meanwhile, are benefiting from the refinancing wave: Commercial and industrial lending—the traditional business loans that banks make to companies—grew at a 14.2% annualized pace in the second quarter, up from just 4.4% a year earlier.

One silver lining: A cooling labor market has reduced expectations for additional Fed rate hikes. That lowers the risk of borrowing costs climbing even higher for the indebted companies held in many private credit portfolios. But private credit funds are stuck in an uncomfortable reality: They’re being squeezed from both ends as weak borrowers fall behind, while many of their strongest borrowers are leaving altogether.—SY

      

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News

• Spotify’s new feature could destroy the podcast industry.
• Nvidia inked a deal with Wall Street titans including Apollo, Blackstone, and BlackRock to finance—you guessed it—AI infrastructure.
• AI cybersecurity fears are boosting CrowdStrike and Palo Alto Networks to record highs.
• The AI revolution is making vintage computers the hot new collectible.
• The Iran war has been a boon for China’s electric vehicle companies.
• Remember crypto? The red hot AI trade is diverting cash from digital assets to Silicon Valley.

Calendar

Economic reports: The NFIB Small Business Optimism Index gives us a look at how the backbone of the American economy is holding up, while the July report on Existing Home Sales gives us a glance at the housing market.

Earnings announcements: Lumentum, CoreWeave, Constellation Software, Venture Global, Super Micro Computer, On Holding, eToro, and Cava are among the many companies dropping their latest quarterly reports tomorrow.

recs

✈️ Flying is terrible these days, and there’s a simple explanation: Airlines really don’t want you to buy their economy tickets, so they make life as difficult as possible.

💪 Tech stocks had a wild week. Here’s how the narrative shifted, and the one powerhouse stock that suddenly looks like a steal.

🧠 When analysts discuss “the economy,” what are they actually talking about? Words matter when it comes to investing, so make sure you get them right.

🏠 90210 didn’t make the list: These are the 10 most in-demand zip codes for homebuyers.

⚖️ A little something for bears and bulls alike: Here are three stocks to sell this month, and three stocks to buy.