• Stocks: The Nasdaq climbed, regaining some of its recent losses, as traders shifted back into key tech stocks—particularly chipmakers like AMD, which releases quarterly earnings after the bell.
• Bonds: Treasury yields shifted upwards as investors anticipated results from US midterm elections.
• Commodities: Oil prices fell for the second day in a row as midterm elections and rumored peace talks bolstered hopes that the US and Iran may reach a diplomatic agreement to end conflict.

Earnings

Morning Brew Inc,

Between the nearly three-month wait for its new foldable iPhone and the debut of its first touchscreen MacBook, Apple has had plenty of reasons to take a victory lap lately, and its latest earnings added to the list.

In John Ternus’ first earnings report as CEO, Apple delivered record quarterly revenue of $114.5 billion, up 12% from a year earlier and ahead of Wall Street’s expectations. EPS rose 14% to $2.10, also beating estimates. Among the highlights:

• iPhone sales jumped 17% to $57.6 billion, fueled by strong demand for the premium iPhone 18 Pro lineup.
• Services revenue reached a record $31.6 billion, helped by Apple’s growing ecosystem of subscriptions and digital offerings.
• Greater China revenue surged 21%, a welcome sign of strength in a market where Apple has faced fierce competition from domestic rivals.

And unlike its Magnificent Seven peers, Apple has largely resisted Silicon Valley’s AI spending frenzy, focusing on AI features built into its devices rather than pouring hundreds of billions into data centers.

But that wasn’t enough for investors: Shares fell 1.90% today, as Apple warned that rising memory-chip prices would squeeze profit margins during the crucial holiday shopping season.

Apple’s Siri-ous problems

As AI companies compete for memory chips to power their data centers, suppliers are prioritizing more lucrative AI-related products, driving up costs for consumer electronics makers. Ternus described the memory-pricing environment as “unprecedented,” and Apple expects gross margins to fall to between 45% and 46% this quarter from 47.9% last quarter (although that number also benefited from tariff refunds).

Apple has another problem: Its most recognizable AI offering is still…Siri.

While rivals like Google and OpenAI have raced ahead with increasingly sophisticated chatbots, Apple’s longtime assistant has struggled to keep up. The company launched a revamped, AI-powered Siri in September, with plans to introduce more advanced features and eventually charge heavy users for additional AI access. But getting people to pay for Siri might be tricky when its responses have ranged from mildly helpful to downright weird.

A split decision

As investors weigh Apple’s strong sales against its growing list of challenges, Wall Street analysts are split on where the stock goes next.

• Argus Research: Raised its price target from $375 to $400 and maintained a Buy rating, pointing to strong iPhone sales and an upbeat holiday outlook despite rising component costs.
• Morgan Stanley: Trimmed its price target from $355 to $350 but maintained an Overweight rating, citing Apple’s pricing power and strong product lineup while flagging slowing services growth.
• KeyBanc: Maintained its Underweight rating and $250 target, arguing that slowing hardware demand and weaker services growth leave Apple extremely overvalued.

Apple still expects holiday-quarter revenue to grow 7% to 10%, but it has to prove that sales can offset rising costs. And as investors grow increasingly wary of Big Tech’s AI spending spree, Apple may end up enjoying the fruits of its restraint.—SY

      

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Stocks

🟢 What’s up

• Coinbase gained 5.53% despite weaker quarterly crypto trading volumes and a Morgan Stanley downgrade to Underweight that slashed its price target by 53%.
• Bloom Energy climbed 9.07% following a Barclays upgrade to Overweight, citing stronger-than-expected demand for its power systems.
• ON Semiconductor rose 3.55% on better-than-expected third-quarter results.
• Fiserv surged 12.46% on plans to double its cost-savings target to $1 billion and repurchase $500 million in shares this quarter.
• AMD rallied 3.65% ahead of its quarterly earnings report as chip stocks rebounded from last week’s steep selloff.
• Electrical equipment company Eaton gained 7.03% on stronger-than-expected quarterly results.
• Aehr Test Systems surged 26.50% following an earnings beat and raised full-year outlook, with revenue tripling to a record $33 million.

🔴 What’s down

• Pfizer slipped 2.30% despite reporting solid quarterly revenue and raising its full-year outlook.
• Zebra Technologies dropped 8.76% despite beating third-quarter earnings expectations.
• Dynatrace sank 14.74% as a recent acquisition is expected to reduce its fiscal 2027 profit margin by 1.75 percentage points.
• Gartner tumbled t% on a disappointing outlook, despite beating quarterly earnings expectations.

Stock of the day

Palantir’s private party

Morning Brew Inc.

Consider this one a win for small-government advocates: In one way, Palantir is doing less business with Uncle Sam. Specifically, the data intelligence firm is doing more business with everybody else.

Reporting earnings yesterday, Palantir disclosed a profit of $1.13 billion as revenue rocketed up 96% to $2.31 billion last quarter. That’s mainly thanks to the firm’s US commercial business, where revenue jumped 148% to $984 million—and surpassed US government business for the first time in its history. (That revenue grew 96% to $953 million.)

Palantir attributes its surge in commercial revenue to businesses turning away from major AI labs. “The demand for our sovereign AI solutions that we began building long before the language models arrived has been absolutely ravenous,” Chief Executive Alex Karp wrote in a letter to shareholders.

Translated: Big AI may have remade the markets, but its risks (and debt load) have some companies taking their tech in-house. Karp has historically slammed frontier AI developers for using enterprises’ internal data to train their models and profit. Palantir’s strategy is to offer these commercial companies a way to use AI without giving data to an OpenAI or Anthropic. But even if customers are convinced, investors may not be: Palantir stock lost 1.65% today thanks to a slowdown in new commercial bookings and concerns about its high valuation.—GR

Tech

Morning Brew Inc.

Your next bout of retail therapy could involve an AI personal shopper who knows your size, remembers your taste, and never judges your late-night impulse purchases. But letting it swipe your credit card? That’s another story.

Online shopping platforms are racing to put AI to work, both for customers and the people selling to them. Shopify offered a glimpse of that today, reporting that orders referred by AI chatbots jumped 3.3 times from a year ago.

Investors weren’t as enthusiastic. Shopify shares tumbled 8.74% after quarterly revenue of $3.74 billion and $119 billion in merchandise sales missed expectations, despite growing 32% and nearly 30%, respectively.

Meet the unpaid AI intern

Shopify provides the software that merchants use to run online stores, taking a cut of certain transactions. Now it’s giving those merchants an AI assistant called Sidekick, essentially a chatbot built right into their store dashboard.

Need to set up a Black Friday discount or figure out why sales dropped last week? Ask Sidekick. Its daily merchant users grew 3.7 times year-over-year, and it created roughly two-thirds of the store automations built on Shopify last quarter.

But even unpaid interns cost money when they’re powered by AI. Sidekick comes bundled with Shopify subscriptions, and the computing bills helped squeeze that business’s gross margin to 79%, below the company’s longstanding approximately 80% target.

Rivals are experimenting with different arrangements. Wix uses AI to help businesses build websites, while Etsy tried letting customers buy products inside ChatGPT—although that experiment ended in March thanks to disappointing sales. (Its newer approach emphasizes AI-powered product discovery instead.)

Your cart, your rules

Consumers appear increasingly willing to let AI help find products, even if they’re not ready to hand over the entire checkout process.

Shopify said AI-referred traffic grew 2.6 times year-over-year, and 74% of AI-attributed purchases came from outside its 100 largest product categories. That could give obscure products and smaller merchants a better shot at being discovered. A major disclaimer: “Volume is, of course, small,” Shopify President Harley Finkelstein said on an investor call. But “it’s growing.”

Meanwhile, brick-and-mortar stores aren’t going anywhere. Sales processed through Shopify’s in-store technology grew 30%, as retailers including Canada Goose and MAC Cosmetics expanded their use of the platform.

AI shopping could be a double-edged sword for e-commerce platforms. Shopify could benefit even when shoppers never visit its merchants’ websites, earning money from the transactions happening behind AI assistants. But if those assistants control what consumers see and buy, they could also gain leverage over the merchants and platforms doing the selling—and make choices for them without much transparency into why.

For investors, the question is who captures the bigger slice of each purchase. Shopify is already paying for AI, while AI-driven sales remain small. If AI platforms end up controlling the customer relationship, Shopify risks doing more of the work without capturing much more of the profit. Sidekick works around the clock, never complains, and never asks for a raise. But it bills like a McKinsey consultant.—HC

      

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News

• US regulators approved this crypto-trading favorite for regulated exchanges, clearing the way for stock-linked perpetual futures.
• Americans have wagered a whopping $33 million on one midterm race, turning an unlikely political contest into a betting frenzy.
• OpenAI is discreetly rebranding its data centers, though it’s yet to be seen if the new name it’s using will change the public’s opposition to them.
• Bill Ackman thinks Wall Street is becoming a “casino,” warning that this kind of trading in particular is getting out of hand.
• Some parents are paying up to $80,000 for exclusive sperm-donor rights, turning family planning into a limited-edition purchase.
• Hackers reportedly turned supermarket freezers into 122-degree ovens, leaving European grocers scrambling—and a lot of bad smells behind.
• Who would’ve guessed that fake job interviews could help hackers steal $6.3 billion in crypto? Certainly not Binance.

Calendar

The ADP employment report will offer early clues about private-sector hiring. Then, Arm and Qualcomm lead chip earnings. McDonald’s, Uber, Kraft Heinz, SharkNinja, MercadoLibre, Novo Nordisk, CVS Health, Expedia, McKesson, and Datadog also report.

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