• Stocks: Indexes ebbed and flowed all day as investors wavered ahead of the first batch of Mag 7 earnings from Tesla and Alphabet (more on that below).
• Commodities: Oil prices climbed following the 11th straight day of US strikes against Iran, with Secretary of State Marco Rubio saying Iranian negotiators “don’t seem to be serious” about making a deal.
• Trade: President Trump plans to apply 200% tariffs to generic drugs manufactured outside the US beginning in August 2028. Here’s what that means for patients, and which stocks will pay the price.

Earnings

Morning Brew Inc.

Magnificent Seven earnings are finally here.

The biggest week of quarterly reports hits a high note this afternoon when Alphabet and Tesla give investors their first read on AI spending, growth, and whether Big Tech’s massive investments are finally paying off.

Alphabet is expected to report EPS of $2.88 on $117.1 billion in revenue. But investors will be watching whether the company can justify another quarter of massive AI spending, with quarterly capex set to more than double to $45.1 billion. Shareholders are pinning their hopes on Google Cloud, which is forecast to report 63% year over year revenue growth.

Meanwhile, Tesla is expected to earn $0.55 per share on $27.3 billion in revenue. Investors will be focused on its robotics and autonomous driving ambitions, as Tesla ramps capital spending to about $25 billion this year—more than doubling last year’s total of under $10 billion—and burns an expected $2.9 billion in cash this quarter.

What to watch

Alphabet and Tesla will set the tone, but every Magnificent Seven company has a key number investors will be watching:

• Microsoft (down 19.29% YTD): Wall Street expects $87.7 billion in revenue and EPS of $4.24. Azure cloud growth—forecast at up to 40%—will be the key metric, while investors also look for a clearer path to expanding free cash flow margins.
• Meta Platforms (down 4.99% YTD): Analysts forecast $60.26 billion in revenue and $7.23 EPS, with investors looking for AI-driven improvements to keep fueling the company’s all-important advertising revenue.
• Apple (up 19.87% YTD): Wall Street expects $108.89 billion in revenue and $1.89 EPS, with iPhone demand taking center stage during Tim Cook’s final earnings call.
• Amazon (up 6.08% YTD): Analysts are looking for $196.98 billion in revenue and EPS of $1.82. Amazon Web Services growth will be the key metric, with Bank of America forecasting cloud revenue to accelerate by 33%.
• Nvidia (up 13.71% YTD): Investors will be looking for revenue of $91.8 billion and EPS of $2.08, and datacenter growth remains the key metric (as usual).

The spending spree continues

Capex will once again be at the center of this earnings season, especially as investors rotate out of the Magnificent Seven and into memory chip makers.

But there’s some good news: Analysis shows that Microsoft, Alphabet, Amazon, Meta, and Oracle will generate roughly $340 billion more in annual operating cash flow in 2027 than they did in 2025. Then again, combined capital spending is expected to increase by an even larger $534 billion over the same period.

But hey, at least there’s finally some tangible progress. Let’s just hope earnings tell the same story.—SY

      

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Stocks

🟢 What’s up

• AMD added 1.45% on a new partnership with Anthropic that includes a potential investment of up to $5 billion.
• Super Micro Computer surged 19.84% after preliminary results showed far stronger profitability than investors expected.
• Westinghouse Air Brake Technologies gained 10.08% on higher full-year revenue guidance, supported by stronger freight and transit demand.
• Rocket Lab eked out a gain of 0.91% after securing a $266 million contract from the US Air Force.
• CME Group rose 5% with earnings and revenue topping estimates, capping its strongest first half on record.
• Philip Morris advanced 3.33% thanks to an earnings beat and a rebound in Zyn nicotine pouch shipments.

🔴 What’s down

• Reddit fell 8.32% amid reports it may block Google from using its content to train AI models.
• Aviation company AAR tumbled 9.76% after its quarterly profit margins failed to meet Wall Street expectations.
• Software company Pegasystems dropped 16% on weaker-than-expected second-quarter results.
• GE Vernova slipped 8.69% as a 40% decline in its wind business weighed on earnings.
• ServiceNow declined 6.47% ahead of earnings, with investors worried that AI could pressure its per-user software model.

Hot commodity of the day

Oil is so passé

Morning Brew Inc., Photo: Adobe Stock

Oil is in the spotlight every day thanks to conflict around the Strait of Hormuz, while natural gas has largely flown below the radar. But some on Wall Street are starting to notice the opportunities in nat gas—and you should too.

Natural gas prices are well off their January highs, dropping about 8% year to date. A report from the US Energy Information Administration on Tuesday said that natural gas output is set to climb to a record high this year, but that demand will drop—and as we all learned in Econ 101, high supply and low demand sets nat gas up for further losses.

But that might just give investors a chance to buy for cheap ahead of a turnaround in the coming years. That same EIA report said that domestic nat gas consumption will climb higher in 2027, while LNG exports will rise from a record 15.1 billion cubic feet per day last year to 18.1 Bcf/d in 2027. Matthew Smith, founder and CIO of the investment management firm Chronometer Partners, believes supply won’t be able to keep up with all that demand next year, and that by the second half of 2028 we’ll see a serious shortage in natural gas. Then, it will get worse.

“The fuel everyone thinks is abundant is not. By 2029 and 2030, natural gas will be in frighteningly short supply relative to structural, incremental demand for the fuel,” Smith wrote.

It’s not all doom and gloom—Smith says there will be plenty of stocks that profit from the shortage. Natural gas producers like Comstock Resources, midstream players like Kinder Morgan, and alternative power providers like Cameco and Clearway Energy all look set up for success. Maybe it’s time you started setting up your portfolio as well.—MR

Bonds

Morning Brew Inc., Photo: Adobe Stock

Amid a tech selloff, an oil crisis, and the resurgence of war in the Middle East, you might wonder why you should pay attention to boring old bonds. But right now, the bond market is flashing a serious warning sign investors need to pay attention to.

The 30-year Treasury yield has traded above 5% for 27 days this year, the longest stretch since the financial crisis kicked off back in 2007. What that means is that the interest rate the US government has to pay to borrow money for the next 30 years is staying high (keep in mind, bond prices and yields move inversely).

That’s not exactly a vote of confidence for the US from bond investors, and it signals that many are concerned about the US’ fiscal sustainability. It’s easy to understand why: despite inflation decelerating in June, prices are still rising at a pace above the Fed’s 2% target. Oil prices spiked again today to their highest in six weeks, with reignited conflict between the US and Iran promising to keep pushing inflation higher.

On top of fear that inflation will stay higher for longer, investors are still concerned about the ballooning US debt pile. Another factor putting pressure on the Treasury market is that bond investors have a new source of competition: Large tech companies like Microsoft, Apple, and Amazon are issuing plenty of long-dated corporate bonds to fund their AI pipedreams.

Fixed income, broken economy

While 5% is a largely psychological number, if history is any indication, it’s not great news for equities.

When investors can get a 5% risk-free yield from bonds, there’s less reason for them to wager on similar returns from stocks. On top of that, higher borrowing costs weigh on businesses, which could in turn hurt share prices, underscoring the safety of bonds.

There’s also the issue of mortgage rates, which tend to follow Treasuries (specifically the 10-year note). When mortgage rates rise, it makes it harder for people to buy homes, weighing on homebuilding stocks, since investors surmise that higher mortgage rates will equal fewer new homes being built.

However, according to Michael Darda, the chief economist at Roth Capital Partners, that’s counterintuitively a good thing for homebuilder stocks. He says that investors have been too pessimistic about homebuilders, arguing that buying these stocks cheap has been a great investment over the past few years, and will likely continue to pay out in the long term.

Any headline that compares the current market to 2007 is understandably spooky—but there are still opportunities beyond Treasuries if you know where to look.—LB

      

News

• Apple is revamping its lineup of MacBooks and iMacs.
• A new Senate bill would ban federal officials (including the President) from sponsoring digital assets.
• Meet the investors stashing away millions in taxpayer-subsidized retirement accounts.
• A record-high amount of private equity assets are stuck in so-called “zombie funds.”
• OpenAI cyber models autonomously attacked developer platform Hugging Face in an incident that sounds like something out of a sci-fi novel.

Calendar

Economic reports: In a week where economic details are thin on the ground, the only thing worth watching is the usual weekly initial jobless claims.

Earnings announcements: The quarterly reporting season is starting to hit its stride, with numbers from Intel, SK Hynix, RTX, T-Mobile US, Thermo Fisher Scientific, SAP, Union Pacific, Blackstone, BNP Paribas, Lockheed Martin, Newmont, Freeport-McMoRan, Comcast, Honeywell, Digital Realty Trust, American Airlines, Nasdaq, Dow Chemical, and Nokia.

recs

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🎢 Forget AI, invest in humans: Goldman Sachs says these 36 stocks focused on consumer experiences will benefit from strong demand and low valuations.

👓 Why do companies keep pushing AR glasses? Check out this deep dive into the wearables war and why surveillance is suddenly so trendy.

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