• Stocks: Indexes broke a three-day losing streak, propelled by New York Federal Reserve President John Williams saying he’s not yet convinced the Fed should hike rates in September.
• Commodities: US diesel prices hit their highest point since April. Energy Secretary Chris Wright told CNBC that 17 million barrels of oil passed through the Strait of Hormuz on Monday, the most since the start of the war.
• Economy: Treasury Secretary Scott Bessent called for calm from the G20 finance summit amid a mounting bond crisis. Meanwhile, more bad labor market news has investors fretting about Friday’s big jobs report—and what it means for the Fed’s interest rate decision.

Earnings

Illustration: Morning Brew Inc., Photo: Adobe Stock

A few months ago, President Trump told Americans to “go out and buy a Dell computer” while ringing the NYSE opening bell from the White House for the very first time. Shares of the tech giant have climbed 110% since then, including a 15.8% pop today after Dell revealed a blowout quarter.

Dell reported record quarterly revenue of $47 billion, up 58% from a year ago and above Wall Street’s $44.9 billion estimate. Adjusted earnings more than tripled to $7.04 per share, blowing past expectations of $4.91.

The strong quarter was helped by growth across Dell’s more traditional businesses: Revenue at its PC division grew 20%, its fastest pace in five years, while traditional server and networking sales jumped 122%, and storage revenue climbed 26%.

Beyond the desktop

You might be wondering how the company behind your very average corporate laptop is suddenly putting up numbers like these.

Well, Dell isn’t just a PC company anymore: It has become one of the biggest beneficiaries of the AI infrastructure boom. Nvidia GPUs may get most of the attention, but companies also need servers, networking, and storage to put those chips to work, and Dell supplies much of that infrastructure.

Take a look at just how big that business has become:

• Dell’s Infrastructure Solutions Group (aka servers) generated a record $31.8 billion in revenue, up 89% from a year ago and now accounting for roughly two-thirds of the company’s total sales. Operating income from the division surged 225% to $4.8 billion.
• Dell recorded $16.4 billion in revenue from AI-optimized servers during the quarter, double last year’s level.
• But customers ordered $60.9 billion worth of AI servers, giving Dell a book-to-bill ratio of roughly 3.7x. In other words, for every $1 of AI servers Dell shipped, customers ordered almost $4 more.

Dell doubles down

Looking ahead, Dell raised its full-year revenue forecast by a whopping $25 billion, which would put annual growth at nearly 70%. It also lifted its forecast for AI server sales to $74 billion, up 200% from last year.

Morgan Stanley, Goldman Sachs, and Citi raised their price targets after the report, citing stronger demand for both AI-optimized and traditional servers, and better-than-expected margins given soaring memory costs.

That said, Dell isn’t necessarily cheap: Shares are already up 291% this year, and before earnings, the stock traded at about 20 times forward earnings, nearly double its five-year historical average.

But with numbers like these and a presidential endorsement to boot, buying Dell sure sounds a lot less boring than it once did.—SY

      

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Stocks

🟢 What’s up

• GitLab jumped 9.98% on stronger-than-expected quarterly results, with revenue up 21% as AI adoption fueled demand for its software development platform.
• AST SpaceMobile climbed 11.83% following a Berenberg Buy rating that endorsed its satellite-to-phone strategy.
• Brown-Forman gained 3.87% thanks to a narrow earnings beat, despite revenue falling short of expectations.
• Eos Energy Enterprises surged 18.75% on a deal with MN8 Energy to provide battery storage for Google data centers.
• Reddit rose 9.27% as Baird maintained its Neutral rating ahead of upcoming renewals for key data-licensing deals.
• GoPro soared another 37.4% as the hype for its pivot to AI continues to grow.

🔴 What’s down

• Palo Alto Networks fell 9.28% as investors took profits despite strong quarterly results.
• Credo Technology slipped 20.04% despite an earnings beat, with investors underwhelmed by a smaller-than-usual revenue beat and outlook.
• MongoDB dropped 13.54% despite growth at its Atlas cloud database business.
• PG&E fell 5.16% as lingering concerns over wildfire-related liabilities prompted the utility to launch a broad strategic review.
• Marc Jacobs and DKNY parent G-III Apparel tumbled 11.5% as quarterly sales declined and the company forecast lower full-year revenue.
• FuelCell Energy sank 15.69% on disappointing quarterly results, including a 29% year-over-year drop in revenue.

Stock of the day

Uber slams the brakes

Illustration: Morning Brew Inc., Photos: Adobe Stock

The war between ridesharing and robotaxis has claimed its latest casualty: Uber, which will lay off 10% of its workforce, cutting about 3,300 roles.

In an email to employees, CEO Dara Khosrowshahi explained that the decision is meant to trim management layers to “make Uber simpler and faster.” What it’s really doing is freeing up more capital for autonomous vehicles, on top of the $10 billion that the company has already earmarked for driverless cars. Investors hailed the move, pushing shares up today by 1.61%.

Uber’s belt-tightening is an attempt to keep pace in the robotaxi race, which has been gaining momentum and giving rideshare companies a run for their money.

• In the lead: Alphabet’s Waymo boasts over 4,000 driverless vehicles across 14 US cities.
• In second place: Amazon’s Zoox offers its toaster-shaped rides in 12 cities, albeit some still with training wheels (aka drivers) attached.
• In third: Tesla’s retrofitted Model Y robotaxies roam six cities. Plus, the unveiling of the company’s two-seat, steering-wheel-free Cybercab tomorrow could help Elon Musk play catch-up.

Meanwhile, Uber has taken more of a piggyback approach. After the company’s foray into building its own autonomous vehicles literally crashed and burned with an infamous pedestrian fatality in 2018, it ditched those plans and started recruiting other companies’ cars onto its platform—including those from Waymo and Zoox. Lyft has followed in Uber’s tire tracks with its own partnerships with Waymo, among others.

Honestly, it’s not a bad call: Riding on other companies’ coattails does sound a whole lot easier than sitting in the driverless driver’s seat yourself.—JD

Energy

Illustration: Morning Brew Inc., Photos: Adobe Stock

If you thought the TV show Landman was dramatic, just wait until you hear about the US’s antics in Venezuela.

Today, Chevron announced a major expansion of its Venezuela operations. The company will invest $7 billion over the next five years, more than doubling its oil production in the country, from its current 280,000 barrels per day to about 600,000 barrels per day by 2031. It’s also physically expanding, gaining more acreage in the Orinoco Belt, a major oil hub. Chevron said that its operations in Venezuela have already upped production by 15% this year.

But what may seem like a straightforward arrangement is far more complicated below the surface. Last week, President Trump said that the US struck its own deal with Venezuela: The US will get majority control of one-fifth of the country’s oil reserves, and as part of the deal, the US will have a stake in North American Blue Energy Partners, a private company led by Venezuelan oil baron Alejandro Betancourt.

This agreement immediately drew cries of corruption from politicians, while analysts expressed skepticism about how this venture will practically work. And there’s another, more pressing problem: The plan requires $100 billion in funding, and nobody has raised their hand to pay for it so far.

Given the US’s ongoing conflict with Iran and how it has hindered oil flow through the Strait of Hormuz, the government is desperate to get oil wherever it can. The Trump administration seems set on reviving the oil industry in Venezuela, so investors should expect more deal announcements to come soon.

A long time coming

Venezuela has the globe’s largest proven crude oil reserves at an estimated 300 billion barrels, but its energy industry has been hobbled by political chaos and sanctions. Right now, Venezuela only produces about 800,000 to 1.2 million barrels per day, a small fraction of what it could produce if fully scaled up. But because much of Venezuela’s oil is extra-heavy crude, it needs more technology to refine, making major investments like Chevron’s even more crucial.

Chevron, the US, and the Venezuelan government have created a complicated web of fragile alliances over the years. When a slew of other oil producers like ExxonMobil and ConocoPhillips left Venezuela in the early 2000s, Chevron decided to stick around, obtaining backdoor exemptions from the US government to continue operating in the nation. Now, instead of starting from scratch, Chevron has the people, infrastructure, and operating knowledge to scale up in Venezuela.

It looks like Chevron’s crude call is paying off.—LB

      

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News

• Google gets a pass: A federal judge ruled that the tech behemoth’s ad business won’t be broken up.
• Private payrolls jumped 38,000 in August, coming in below expectations.
• Southwest Airlines is making major moves in the cutthroat airline lounge game.
• Younger Americans are forgoing home ownership altogether—and building wealth through stocks instead.
• Like, just chill: A hostile takeover battle between two leading cannabis companies has begun.
• The state of New Jersey has asked the Supreme Court to review a case over whether the state or federal government can regulate prediction markets.

Calendar

Economic reports: Weekly initial jobless claims keep the labor market news rolling in, while the US trade balance for July will provide a backdrop for the trade war sparking back up again.

Earnings announcements: Lululemon, Docusign, Ciena, and Campbell’s are up to bat.

Everything else: The college football season kicks off tomorrow, giving fans who’ve been jonesing for some action their fix with games every day through Monday.

recs

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🛟 The AI trade is getting more volatile, so it might be time to look elsewhere. Here are six safe dividend aristocrats with strong yields that can give your portfolio stability.

🪙 21 major banks, including Goldman Sachs, Bank of America, and Wells Fargo, are launching a stablecoin.

🏘️ 10 not-so-fun facts about the housing market, including how US homes are getting smaller, and that the median first-time buyer is now 40 years old, up from 30 in 2008.

⚠️ The US gained international credibility for how it handled the last financial crisis back in 2008. But the next crisis will be different, mostly because the country isn’t willing to stop it.

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This time last week...

🧠 Readers’ most-clicked article was about the 10 stocks that top fund managers have been buying recently. Remember, it’s never a bad idea to see what the “smart money” is investing in.