Autos

Morning Brew Inc, Photo: Adobe Stock

EVs, robotaxis, and billions in write-downs: If everything had gone as GM planned, the automaker’s future would look pretty slick. Instead, its current profitable phase looks more like a rusty, trusty Silverado.

The company made $50 billion in revenue last quarter, up 2.9% from a year ago and slightly ahead of expectations, as its pricey pickups and SUVs did some heavy lifting. GM also unveiled a new $20 billion share buyback, adding to the $29.5 billion it has already spent repurchasing stock since 2023.

But investors weren’t revving their engines. GM narrowed its full-year profit forecast rather than raising it, and shares fell as the company warned that cost pressures like commodities and logistics are worsening.

That’s a pretty clear signal about what management thinks creates the most value right now: Protect margins, spend more carefully on growth, and give excess cash back to investors.

Less EV, more V8

GM sold a higher mix of large pickups and fewer EVs last quarter, padding margins as the company backed away from electric vehicles that have historically lost money. GM is now preparing redesigned Chevrolet Silverado and GMC Sierra pickups, including more versions with premium V8 engines.

So far, that pullback looks well-timed. EVs have fallen to about 6% of the US auto market, while hybrid sales are up 23% this year and now account for 15.6% of total auto sales. GM largely skipped that middle ground during its all-electric push, though CEO Mary Barra said Tuesday the company “will have hybrids” across multiple segments.

The current strategy also depends heavily on Americans continuing to buy big gas-powered vehicles: GM, for one, is leaning into pickups despite higher fuel prices making them more expensive to own.

For now, affluent buyers are still hitting the gas—and they’ll become more important as cars themselves get more expensive to make.

Tariffs join the ride

GM expects about $2 billion in commodity inflation this year, CFO Paul Jacobson said on a call with investors, while tariff costs are tracking near the low end of a $2.5 billion to $3.5 billion forecast. Steel, aluminum, and logistics costs have risen sharply in recent months.

The carmaker has a few ways to protect margins. It can absorb some of the higher costs, squeeze suppliers, or raise prices. GM said it’s considering the latter—so if tariffs and inflation stick around, car buyers may eventually cover more of the bill.

The quarter suggests that automakers can protect profits by selling more premium mixes and cutting back on less-profitable models, but at a certain point, inflation and tariff prices will be passed on to the consumer. The next time you walk into a dealership, a Silverado’s sticker price might make you consider taking the bus. But GM has margins to protect, too.—HC

      

Sponsored By Capital Group

Midterm elections can bring uncertainty to markets—and anxiety for clients. That’s why Capital Group curated a collection of Chart Stories to help you field election-related questions with confidence.

They examined decades of market data in midterm years, including what’s generally typical before the votes are cast and after they’re counted.

This month’s charts include:

• The president’s party has lost seats in most midterm elections.
• Midterms: Historically, choppy markets have been followed by a late-year rally.
• Markets have delivered strong returns after midterms.
• US stocks have outpaced real estate, gold, and cash.

In addition to the individual charts, you’ll find an eight-page Guide to Midterm Elections, ready to share with clients and colleagues.

Stocks

🟢 What’s up

• Northrop Grumman climbed 4.57% after raising its full-year profit outlook, fueled by a demand for defense tech that pushed its order backlog to a record $110 billion.
• Equifax gained 11.33% on quarterly earnings that topped Wall Street estimates.
• Dream Finders Homes jumped 10.93% following the completion of its $2.2 billion acquisition of rival homebuilder Beazer Homes.
• Arcus Biosciences surged 7.27% after reporting promising trial results for its experimental kidney cancer treatment.
• 3M rallied 5.78% after raising its full-year earnings forecast and expanding an Amazon partnership to supply AI data centers.
• Lionsgate Studios popped 14.55% on reports of takeover interest from Legendary Entertainment.
• Berkshire Hathaway climbed 1.43% as investors rotated out of AI stocks and into defensive investments, drawn to the conglomerate’s $350 billion cash pile.

🔴 What’s down

• GE Aerospace slipped 4.66% as investors worried about slowing growth in its lucrative aircraft maintenance and parts business next year.
• Sea Limited fell 9.09% after its CEO raised the possibility of spinning off its digital financial services business, Monee, through an IPO.
• DaVita dropped 6.28% on reports that the Trump administration is preparing measures to increase competition in the dialysis market.
• IREN sank 4.00% amid concerns about how AI cloud providers will finance their expansion, despite IREN’s co-CEO saying the company’s data centers carry no debt.

Stock of the day

Hasbro passes Go, collects $$$

Morning Brew, Inc, Hasbro

It may not have a Monopoly on the industry, but Hasbro’s prospects are looking flush. The toy and entertainment company reported smash earnings today, thanks to a strategic doubling down on the fun-and-games franchises it’s known for.

Revenue jumped 15% to $1.6 billion, beating expectations and prompting Hasbro to raise its full-year outlook. Earnings of $2.90 per share topped estimates by more than a dollar, while adjusted operating profit surged 52% to $541 million. Shares rose tk%.

Hasbro’s winning play? Shifting its product focus to capitalize on consumer trends. Board games are having a moment, and so are cards: The trading card market is expected to more than double by 2035, from $8.4 billion last year to nearly $17 billion.

Working some Magic

One trick of that trade is Magic: The Gathering, which gave Hasbro’s profits a coup. The card game’s sales surpassed $600 million last quarter, up 34% from last year and beating a record it set a quarter prior.

Nor has Magic used up its stardust: CEO Chris Cocks told investors that the franchise’s fanbase is still expanding, and production is scaling to meet it.

Compare that to competitor Mattel, who’s failed to capitalize on its star franchise. After a blockbuster 2023, the company blew its Barbie moment, botching momentum and profits; today, it’s contending with pressure to consider a sale.

The lesson holds no sleight of hand: Bet on the brands holding the winning cards, and you could come out on top.—GR

M&A

Morning Brew Inc, Photo: Adobe Stock

A storm is brewing in Silicon Valley, where the winds of the so-called SaaSpocalypse threaten to blow away the software industry as we know it. Rather than batten down the hatches, Salesforce is picking up provisions to ride it out.

The software giant announced today that it will acquire Braze for $5.66 billion in cash; Salesforce’s fifth-largest acquisition. Braze, an AI-powered marketing platform that helps businesses build and personalize messages to consumers, serves enterprise customers like Canva, Equinox, Venmo, and Dairy Queen.

For Salesforce, the acquisition aims to strengthen its existing marketing business and expand Braze’s services to Salesforce’s much larger customer base.

Adapt or get swept away

It’s an aggressive but perhaps necessary move amid the SaaSpocalypse—the volatile market that enterprise software companies have endured this year because of artificial intelligence. Investors are debating whether AI agents and tools could make traditional subscription products obsolete, and SaaS developers have weathered the resulting tumult.

The storm intensified last week after CoreWeave’s debt triggered a broader tech selloff, dragging down software companies alongside chipmakers and cloud providers. On Friday, the iShares Expanded Tech-Software Sector ETF plunged 4.8%.

Salesforce is trying to outrun the disruption by becoming the provider of agents itself. Braze is its 15th acquisition since May 2025, tossed into Salesforce’s cart alongside an $8 billion deal for AI data manager Informatica and a $3.6 billion purchase of AI customer service org Fin. Together, the acquisitions enable Salesforce to build a platform where agents carry out business tasks, and customers are charged for their AI usage in addition to subscriptions.

The price of survival

But while Braze shares surged more than 51% on the announcement, Salesforce slipped, then recovered, as investors questioned the 58% premium on its latest purchase.

While it’s true that Braze is a fast-growing business, with revenue up 26% last quarter, the company remains unprofitable under standard accounting rules. That makes a valuation of more than six times its projected annual sales another headwind to investors.

The premium “seems a bit odd unless it was competitive,” Evercore ISI analyst Kirk Materne wrote in a note. While he acknowledged that the logic was right, “The timing and price are likely to be a bit of a debate.” Analysts at BTIG, meanwhile, see strategic value in the acquisition, arguing in a note that Salesforce could benefit from consolidating the fragmented field of marketing software.

There’s no telling what Silicon Valley will look like after a SaaSpocalypse tears through. But one thing’s for sure: When a storm approaches, you may not want to stand still.—SY

      

Sponsored By Capital Group

90 years of market data. How do midterm elections impact markets? Does control of Congress really matter for investors? The team at Capital Group addresses these questions + more with Chart Stories, a digital destination designed to help you guide clients toward their investment goals.

News

• AI cloud company Elice plunged 32% in its Seoul debut, waving a serious red flag for these American AI stocks.
• Polymarket drew forceful criticism for, then removed, a trading market tied to outcomes of the “Cornell 7” case.
• Amazon will hire more than 300,000 holiday workers, up 20% from last year, even as competitors are feeling much gloomier this season.
• Brazil’s GLP-1 boom has developed an underground delivery network involving a few very familiar messaging apps.
• The White House is preparing a new $8 billion lifeline for farmers as oil prices and inflation make money tighter on the range.
• Mark Wahlberg thinks the longevity craze shouldn’t require a $20,000 membership—so he’s building an affordable gym version.
• Instacart is paying $5 million to settle a probe over which workers were favored in recruiting practices.

Calendar

Some major AI and tech earnings start pouring in tomorrow, with Meta, Tesla, IBM, and semiconductor-equipment maker Lam Research reporting. Philip Morris, AT&T, SAP, Texas Instruments, Thermo Fisher Scientific, Abbott Laboratories, and Moody’s also release their quarterly numbers.

recs

💼 Family empires, financial breaches, and a multibillion-dollar alimony: The messy divorce of Two Sigma’s John Overdeck offers key money lessons for anyone partnering up.

🥤 Don’t miss this Diet Coke moment. One major alcohol brand is launching a new line that could deliver serious returns—and analysts recommend you invest in shares now.

📲 Can you hear me now? A telecom-focused analyst says this phone and cable brand is a solid pick for portfolios.

🌬️ Headwind, meet tailwind. The US midterms may put the stock market in a very favorable state—and this data explains how you can take advantage.

💉 A super-shot in the arm: A blockbuster trial has given one drugmaker a $1 billion opportunity, and researchers argue that the market is overlooking it.

^{*A message from our sponsor.}

This time last week...

🏠 Readers’ most-clicked story was for parents who want to help their kids buy their first home—without things getting weird.