LT Weekly: Dec 12, 2025

It’s been a rough past few weeks for the AI sector and the tone from investors has shifted. After a couple of years of giving companies the benefit of the doubt, investors have started to push back on big AI promises and ask for clearer timelines and a better sense of when all this investment will start to pay off. That pressure has been building amid shakier chatter in the sector, as reports of Microsoft missing its AI sales growth targets (which the Co refuted), and CoreWeave lowering full-year guidance due to data center construction delays are starting to temper the rose-colored views many have held on the space.

That backdrop was top of mind heading into Oracle’s earnings this week, and results added further fuel to the fire. The Co missed revenue for the past qtr, but the real hit to sentiment came from CapEx, which came in well ahead of quarterly expectations and full year guidance was unexpectedly raised by $15bn. On the heels of that, Broadcom’s beat-and-raise quarter was not enough to outweigh concerns stemming from a lack of forward visibility on the Co’s AI roadmap. The end result was double-digit post-earnings drop for both companies, and a broader sell-off across AI-exposed names including NVIDIA, CoreWeave, and AMD.

Layered on top of that, the regulatory landscape is shifting as well. The Trump administration signed an executive order this week to block states from setting their own AI rules in favor of a single national framework. Large AI players have been pushing for this, arguing it could ease compliance burdens and support innovation, but states are pushing back.

Despite all these moving parts in the sector, what has not slowed down has been the level of innovation in the sector.  New partnerships and product launches continue to roll out, including OpenAI announcing a major licensing agreement with Disney alongside a $1bn investment, as well as new model releases from OpenAI and Runway. Optimism on AI’s long-term potential remains high, but investor tolerance for heavy spending without a clearer path to ROI is starting to wear thin, and how the two will intersect remains to be seen.

See below for more of what we view as the need to knows for AI developments this week.

It Was A Tough Week For Major AI Infrastructure Players As Chatter Around Oracle Added Fuel To Investor Worry Around An AI Bubble (link)

• Oracle reported FQ2 earnings on Wednesday post-close and it was a difficult print…
  • FQ2 rev MISSED: Came in at $16.06bn vs cons $16.19bn (-0.8% miss)
    • Driven by -0% miss in the Software segment, while Cloud, Hardware, and Services all beat
  • FQ2 op margin MISSED: 9% vs cons 42.1%
  • FQ2 FCF was significantly below: -$9.97bn vs cons -$5.21bn

• …and of particular focus was much higher qtrly and guided CapEx
  • FQ2 CapEx came in much higher than expected: $12.11bn vs cons $8.35bn
  • And FY26 guidance was raised by +$15bn: Expected to come in at $50bn vs earlier guide in FQ1 of $35bn

-> Oracle shares fell -11% after its earnings report Wednesday post-close, and AI-related stocks also declined including CoreWeave falling -0.9%, NVIDIA down -1.6%, and Broadcom down -1.6%

• The next day, on Friday, it was reported that Oracle is delaying some of its data centers from 2027 to 2028…
  • The delays are being attributed to labor and material shortages
  • What is the scope of the Oracle-OpenAI agreement? Oracle is working to deliver a $300bn contract to supply the compute

• …BUT Oracle refuted the report: A Co spokesperson said they remain confident in their ability to meet their obligations
  • “There have been no delays to any sites required to meet our contractual commitments, and all milestones remain on track”

• Broadcom also reported its FQ4 earnings Thursday post-close and it was a beat-and-raise qtr, BUT on the back of Oracle’s report the day before, investors seemed to want even more visibility on the AI roadmap ahead
  • Backlog of $73bn in AI product orders that will be shipped over the next 6 qtrs was questioned by investors, despite that figure being a “minimum”
    • “We do expect much more as more orders come in for shipments within that next six quarters…so our lead time, depending on the particular product it is, can be anywhere from six months to a year,” said CEO Hock Tan
  • AI products tightening margins was also brought up, but mgmt responded that rev is expected to grow fast enough that op margins will continue to expand
  • Mgmt also held off on giving 2026 AI rev forecast, calling it a “moving target”

-> Broadcom fell -11% after its Q3 report, its worst day since January; Oracle continued to slide and fell a further -4.5%; CoreWeave plunged -10.1%, and NVIDIA fell a further -3.3%; AMD also fell -4.8%

At The Same Time, Trump Signed An Order This Week Seeking To Limit State-Level AI Regulation (link/link/link)

• President Donald Trump signed an executive order to create one unified set of rules for AI
  • “To win, United States AI companies must be free to innovate without cumbersome regulation. But excessive State regulation thwarts this imperative,” per the Order

• The order directs the US attorney general to establish an “AI Litigation Task Force” with the responsibility of challenging state AI laws that are “inconsistent” with that policy

• It also directs the secretary of Commerce, within 90 days, to consult with other officials and “publish an evaluation of existing State AI laws that identifies onerous laws that conflict with the policy” 

• As a reminder…the US currently has no national laws regulating AI
  • BUT more than 1,000 separate AI bills have been introduced in states across the US

• What happens if a state continues to regulate AI? The order instructs federal agencies to explore whether they can restrict grants to that particular state, including…
  • Permitting the Commerce Department to review whether federal broadband funding should be revoked
  • Withholding future discretionary grants by other agencies

• The order is expected to face legal challenges, esp from states w/ provisions already in place
  • California State Senator Scott Wiener said “it’s absurd for Trump to think he can weaponize the DOJ and Commerce to undermine state rights…If the Trump Administration tries to enforce this ridiculous order, we will see them in court”
    • California is expected to be one of the hardest hit by the order: California has passed more laws to regulate AI than any other state, per a Stanford report from earlier this yr
  • Hawaii’s Senator Brian Schatz said he has planned legislation that would seek a full repeal of the order: “Congress has a responsibility to get this technology right – and quickly – but states must be allowed to act in the public interest in the meantime”

• White House AI Czar David Sacks defended the order, saying the provision calling for the Justice Department to sue states over AI rules was designed to go after the most burdensome regulations…

• …and that it eases the growing compliance burden
  • “You have fifty different states running in fifty different directions. That type of compliance regime will be hard for small companies and startups, especially innovators…what we need is a single federal or national framework for AI regulation”

• The order culminates months of lobbying by AI companies, led by OpenAI and Google as well as VC firm Andreessen Horowitz
  • The Cos have argued that differing state laws up across the country risk were holding them back and potentially harming US competitiveness with China in AI

And AI Innovation Continues At Break Neck Speed W/ Hollywood Jumping In & New AI Models Hitting The Scene This Week

• Disney and OpenAI reach an agreement whereby Disney will license its iconic characters to OpenAI + take a $1bn stake in the Co (link/link/link/link)
  • Under the 3-yr licensing agreement…
    • Sora will be able to generate short, user-prompted social videos from a set of ~200 animated characters from Disney, Marvel, Pixar and Star Wars
    • ChatGPT Images will be able to turn a few words by the user into fully generated images in seconds, drawing from the same IP
    • Sora and ChatGPT Images are expected to start generating content in early 2026
  • How will it be integrated into Disney+?
    • Fans will be able to watch curated selections of Sora-generated videos on Disney+
    • OpenAI and Disney will collaborate to utilize OpenAI’s models to power new experiences for Disney+ subscribers
  • Alongside the licensing agreement, Disney will become a “major” customer of OpenAI + make a $1bn equity investment in the Co
    • Disney will use OpenAI’s APIs to build new products, tools, and experiences, including for Disney+, and deploying ChatGPT for its employees
    • Along w/ the $1bn equity investment, Disney will also receive warrants to purchase addtl equity
  • The deal is already getting some pushback from creatives in the industry…
    • The Writers Guild of America said it would meet with Disney, as the announcement “appears to sanction its theft of our work and cedes the value of what we create to a tech company that has built its business off our backs”
    • Danny Lin, president of The Animation Guild, said while animators do not own the rights to Disney characters, “we’re certainly the reason they exist and the reason that they have such earning potential.”
    • SAG-AFTRA said Disney and OpenAI contacted the union to offer assurances the deal would ensure the responsible use of the tech
  • …though Disney CEO Bob Iger said the collaboration with OpenAI will “thoughtfully and responsibly” extend the reach of their storytelling through genAI, while respecting and protecting creators and their works
  • Disney itself has taken a more aggressive stance in going after AI Cos for copyright infringements in recent months –
    • On Wednesday, Disney reportedly sent a cease-and-desist letter to Google, alleging it is infringing Disney’s copyrights on a massive scale
    • In Sept, they sent a cease-and-desist letter to Character.AI with similar allegations.
    • In June, Disney along w/ NBCUniversal became the first major studio to sue a genAI Co when it filed a complaint against Midjourney
    • Earlier this month, Disney teamed with NBCU and WBD to sue the Chinese AI firm MiniMax, alleging large-scale piracy of their respective studios’ copyrighted works

• OpenAI released GPT-5.2 – “the most advanced frontier model for professional work and long-running agents” (link)
  • It is designed to “unlock even more economic value for people”: It is better at creating spreadsheets, building presentations, writing code, perceiving images, understanding long contexts, using tools, and handling complex, multi-step projects
  • The new models that were released include –
    • GPT‑5.2 Instant is a fast, capable “workhorse” for everyday work and learning, with improvements in info-seeking questions, how-tos and walk-throughs, technical writing, and translation
    • GPT‑5.2 Thinking Is for coding, summarizing long documents, answering questions about uploaded files, working through math and logic step by step, and supporting planning and decisions with clearer structure and more useful detail.
    • GPT‑5.2 Pro is their smartest and most trustworthy option for difficult questions where a higher-quality answer is worth the wait
  • GPT-5.2 “sets a new state of the art” across many benchmarks, including GDPval, an eval measuring well-specified knowledge work tasks across 44 occupations
    • Specifically, GPT‑5.2 Thinking beats or ties top industry professionals on 70.9% of comparisons on GDPval knowledge work tasks, including making presentations, spreadsheets, and other artifacts
  • Other key use case callouts –
    • GPT‑5.2 Thinking hallucinates less than GPT‑5.1 Thinking
    • GPT‑5.2 Thinking is also better at front-end software engineering than GPT‑5.1 Thinking
  • Price per million tokens is increasing over previous models “because it is a more capable model”

Source: OpenAI

-> Separately, OpenAI CEO Sam Altman said this week that Google’s Gemini 3 had less impact on the Co’s metrics than initially feared, and that OpenAI expects to exit its internal “code red” by January; The code red, issued in early December, paused non-core projects and redirected teams to accelerate development in response to Gemini 3, culminating in the launch of GPT-5.2 this week (link)

-> It was also reported by The Information this week that ChatGPT is nearing 900mn weekly active users, up from 800mn in October (link)

• Runway released its first-ever world model, GWM-1 + updated its Gen 4.5 video model (link/link)
  • What is a world model? An AI system that learns an internal simulation of how the world works so it can reason, plan, and act without needing to be trained on every scenario possible in real life
  • How does it work? Through frame-by-frame prediction it creates a simulation with an understanding of physics and how the world behaves over time, the Co said
  • The model is split into 3 versions…GWM-Worlds, GWM-Robotics, and GWM-Avatars with different goals
    • Worlds: Generates, predicts, and reasons about real-world dynamics from visual data
    • Robotics: Made to train and stress-test robots in simulated worlds, including identifying failure modes and policy violations before deployment
    • Avatars: Realistic human avatars that simulate human behavior, communication, and interaction
    • The Co noted that they will eventually merge all these into one model
  • Earlier this month they also launched its Gen 4.5 video model which they also updated along with the new release
    • The enhanced model can now generate one-minute videos with character consistency, native dialogue, background audio, and complex shots from various angles
    • Can also edit existing audio and add dialogues, and edit multi-shot videos of any length
  • What can the models be used for? Game development and virtual environment creation, robotics training, digital communication, and content creation

Source: Runway

Menlo Ventures’ deep dive report “AI Boom vs Bubble” had some interesting data and analysis related to the enterprise AI spend trends that we wanted to highlight this week. The data was based on a survey of ~500 US enterprise decision makers, combined with their insights and a bottoms-up model of the generative AI market spanning model APIs, infrastructure, and applications.

Menlo Ventures estimated that overall enterprise AI spend grew +3.2x in 2025 to reach $37bn, and that these expenditures were roughly evenly split between the AI application layer and AI infrastructure. A few standouts that we’d call out from the report include: 1) coding is the biggest killer app by a long shot and is a $4bn market already; 2) healthcare scribing has been another major use case as well; 3) copilots dominate horizontal AI spend and are 10x bigger than agent spend, for now; and 4) Anthropic and Google have made huge market gains in the Enterprise LLM API space (the report has some good charts).

See more details below and we also included Menlo Ventures’ 2026 Enterprise AI predictions, plus some very handy market maps for departmental AI, vertical AI, and the AI infrastructure stack that we found helpful as well.

Enterprise AI Spend Growth Is “The Fastest Scaling Software Category In History” (Full Report)

• Overall, companies spent $37bn on gen AI in 2025, up +2x y/y (and up from $1.7bn in 2023
  • It now accounts for 6% of the global Saas mkt and it is “growing faster than any software category in history”

• Total enterprise AI spend is broken down roughly 50 / 50 between the Application Layer AI ($19bn) and AI Infrastructure ($18bn)
  • Within the application layer, horizontal AI spend is the largest and fastest growing (in green below)
  • Within AI infrastructure, foundation model API spend is the largest (in green below)

• Coding is AI’s first killer app…it accounts for ~55% of departmental AI spend and is a $4bn market: Other areas of departmental AI spend include IT (10%), marketing (9%), customer success (9%), design (7%), and HR (5%)

• Copilots dominate horizontal AI spend, holding 86% of that spend share ($7.2bn): This is led by ChatGPT Enterprise, Claude for Work, and Microsoft CoPilot
  • Agent platforms like Salesforce Agentforce, Writer, and Glean account for only 10% of the spend

• Foundation model API spend market share by provider, market share trends, and coding market share are below
  • Anthropic and Google have made huge market share gains

• Startups dominate AI applications, earning nearly $2 for every $1 incumbents earn, while enterprise infrastructure spend continues to favor incumbents

• 2026 predictions…
  • AI will exceed human performance in daily practical programming tasks
  • Jevon’s paradox will continue to hold true…net spend on generative AI will rise further despite falling costs of inference
  • With the increase in autonomy and decision-making by agents, the ability to explain and govern the decisions they’re making will increase in importance
  • Models finally move to the edge…compute will continue to move on-device

• ALSO Menlo Ventures also had some helpful market maps…. for departmental AI, vertical AI, and for the AI infrastructure stack…see below:

Mid-2025, WPP took a more cautious view on their full year 2025 and 2026 global ad spend forecasts due to macro/tariff concerns, but the agency giant did an about face this week when they raised those forecasts not only back up, but to levels that were above where they originally started at the beginning of the year. In its This Year Next Year (TYNY) Global End-of-Year update, the firm is now expecting 2025 global ad spend to grow +8.8% y/y and 2026 to expand +7.1% y/y (both ex-US political). The Co’s higher forecasts were largely driven by better-than-anticipated trade tariff results and AI investments.

Global content driving advertising remains the biggest spending category (58% share of global ad rev) but global commerce ad revenue surpassed that of TV for the first time.

See more color below on our key takeaways from the update…

WPP Media Revised Up Their 2025 & 2026 Global Advertising Forecasts To Levels Above Their Earlier Expectations At The Start Of The Year  (link/link/link)

• During WPP’s June update, the Co cut its 2025 global ad revenue forecast from +7.7% y/y to +6% y/y (ex US political) due to disruptions to global trade and continued deglobalization pressures weighing on advertising investment

• Now, it is raising its 2025 forecast back up, but from +6% y/y to a higher +8.8% (ex-US political), reaching $1.14 trillion
  • For reference, 2024 global ad rev grew +9.7% y/y (ex-US political)

• Additionally, the firm raised its 2026 global ad revenue forecast from +6.1% y/y to +7.1% y/y (which is also above its original +6.3% y/y at the start of the year)

• The drivers for the higher 2025 and 2026 growth estimates are largely attributed to trade tariff outcomes proving more favorable than expected and the AI investment boom

• Over a 5-year period, the CAGR of global ad spend is +6.3% y/y

Looking At Key Trends In Channel Dynamics, Commerce Ad Revs Is Projected To Pass That Of Total TV For The First Time

• Global content-driven advertising remains the largest category at $663.5bn (58% share of global ad rev)
  • Gaming represents the fastest-growing content advertising channel and is forecast to increase +29.5% y/y to $8.5bn in 2025
    • BUT…gaming is still an extremely small % of total 2025 global ad revenue (just 0.7%)
  • Newspaper advertising is expected to be stable at $31.4bn in 2025 before declining
  • Digital out-of-home (DOOH) is forecast to represent 43.9% of total OOH rev by 2030, reaching $31.4bn
• Global commerce ad revs are projected to reach $178.2bn in 2025 (which is an increase from the $169.9bn estimate as of June 2025 and surpasses TV ad spend for the 1^st time)
• The report also included channel data on content-driven ad rev share
  • Gaming and social/other digital is expected to continue to grow
  • TV, audio, magazines and newspapers are continuing their declines

Source: WPP

Drilling Down Into The Top 15 Markets

• Compared to 2024, the top 10 markets remain mostly the same, except Brazil now surpassed Canada in ad rev

Source: WPP

• 2025 y/y growth is expected to:
  • Accelerate in…the US, Japan, Brazil, & Australia
  • Decelerate in…China, the UK, Germany, France, Canada, & India

On the streaming side of things this week, Roku’s latest insights show how TV, movies, sports, Gen Z behavior, and platform-level viewing patterns shaped up 2025 and how those shifts are setting up major trends for 2026. Their findings ranged from TV moments that audiences obsessed over, to genres and stars that are driving spikes in search, to the way app-hopping and seasonal binge cycles are reshaping viewing. It also highlights the growing role of CTV as AI disrupts search, social, and the broader internet.

See our key takes from their report below…

Roku’s Top TV Moments In 2025 (link/link)

• SNL 50 was a major moment
  • Searches for the 50^th Season of NBC’s Saturday Night Live peaked around its anniversary special in Feb
  • The top-searched episodes were hosted by Ariana Grande, Jean Smart, and Shane Gillis

• Awards still matter
  • After the Emmys, searches for award winners like The Studio (+111%), Severance (+103%), and Adolescence (+151%) more than doubled

• Love Island USA became a surprise juggernaut
  • Peacock’s Love Island USA was the #1 searched show on Roku this summer, with searches growing +180% vs the prior season

How Did Movies On Their Platform Perform This Year?

• Original horror comes back…the genre grew +20% y/y
  • Original horror surged in 2025, led by the breakout film Sinners, which generated more than 2x the search volume of the next highest horror title

• The new Pope drove a surge for Conclave
  • In the days after the election of Pope Leo XIV, Chicago-area Roku homes were +42% more likely than the rest of the country to search for Focus Features’ Conclave

• Stars still sell
  • Adam Sandler and Ariana Grande topped Roku’s most-searched actor lists due to megahits like Happy Gilmore 2 and Wicked

How Did Sports & Live Entertainment Perform?

• Scripted comedy to live sports?
  • Fans of Apple TV’s golf comedy Stick also streamed real golf
  • Stick viewers were 2.8x more likely than Happy Gilmore 2 to search for The Masters

• NFL & MLB ruled the Sports Zone
  • NFL teams were the most favorite in 24 states on the Roku Sports Zone
  • MLB loyalty dominates the coasts and across the Great Lakes

• Pro wrestling was a breakout
  • Roku searches grew (+275%), outpacing auto racing (+75%) and MMA (+69%) as the fastest-growing sports on the platform

Gen Z On The Platform Is Showing A Lot Of Interest In Animation

• Gen Z adults were animation-focused
  • ~2/3 of Roku searches from Gen Z were for animated titles
  • The oldest Gen Z’ers are 28 years old, watching anime, adult animation, and animated films with cult-like followings

CTV Viewing Trends Across States, Months & Apps 

• Viewers tend to rotate apps, switch between free and paid services, and binge in predictable seasonal cycles

• Which states streamed the most?
  • In 2025, Mississippi streamed more hours per capita than any other state, followed by Alabama, Kentucky, Arkansas, and West Virginia
• Which months saw the most streaming?
  • January, with more than 1/3 of sessions lasting 8 hours or longer
  • The top streaming weekend of the year followed Thanksgiving, showing that people love to binge while they are home for the holidays
• Apps used per home…the median is 9
  • The median Roku household streamed across nine apps in 2025, 3 of which were free to watch
  • During the year, the avg home added 4 new apps and dropped four apps

Roku Also Predicted 5 Key Trends That Will Shape 2026 (link)

• TV gets way more personalized via AI: The Co is predicting that AI-driven personalization will cut the time it takes viewers to find a show
  • In 2025, streaming viewers spent ~20 minutes on avg to find their next watch, up from 7.5 minutes in 2019
  • In 2026, AI-driven recommendations “will reverse the trend”
• Netflix and YouTube are already doing this with their recommendation engine

• Netflix influences 80% of viewing hrs and expands its “effective product catalog” roughly 4x compared to a non-personalized system
  • Netflix has also teamed up with OpenAI to improve discovery further
• YouTube’s engine drives 70% of viewing

Source: Roku

• The ad-free viewer goes extinct as 100% of audiences see video ads
  • Today, most Roku streaming households (96%) see video ads and Nielsen reports that content with ads accounts for ~74% of all TV viewing
  • Subscriptions to services with ads incr’d +32.7% y/y in Q2 2025

• What is driving this shift?
  • Americans are watching YouTube occasionally, and most YouTube viewing includes ads
  • Amazon has also contributed as the Co turned ad-free viewers into ad-supported when it began showing ads to all Prime Video users in 2024 (unless they paid $2.99 a month to continue an ad-free experience)
  • Ad-supported Prime Video now reaches 130mn US customers

• How much time are viewers spending on ads? Most streaming services show ads for between 4-8 mins per hr, according to Wurl
  • In August 2025, Amazon showed 2-3.5 mins per hour, but that incr’d months later to 4-6 mins per hour
  • No major players have embraced the level of ad loads of linear TV, which can stretch to 16-19 mins

Source: Roku

• CTV will continue to become increasingly valuable
  • AI summaries are replacing the need for traditional search results, causing traffic and ad volume to decline
  • Due to AI, social media is also becoming a riskier, less reliable place for marketers
    • Most consumers can’t tell real content from AI content, which causes confusion and trust issues
    • This led to a 72% increase in offensive or unsafe content
  • AI is affecting the way people search: AI answer engines reduce clicks, which hurts both advertisers and publishers
    • Advertisers lose ad effectiveness, and publishers lose traffic and rev
  • In H2 2026, both marketers and publishers will look to CTV, which is mostly insulated from genAI
    • They believe ~50% of streaming advertisers will subsidize CTV ad spend increases w/ budgets siphoned from search and social

Source: Roku

• TV collides with the creator economy: The creator economy is booming, with ~50mn creators making and monetizing content for 5bn social media users globally, according to Deloitte
  • In 2026, creators will expand their presence on CTV through licensing, ads, and more
  • At least one major streaming service beyond YouTube will add a “creator” tab
  • Roku is already seeing this move: In August, viewership of creator-led content on The Roku Channel grew ~80% in streaming hrs per household y/y

Source: Roku

• Hyperlocal advertisers embrace CTV, following the lead of political campaigns…2026 will be a tipping point for locally targeted campaigns thanks to the midterm elections
  • Political campaigns will lead the way, proving that self-serve TV ads combined with AI-generated creative can help candidates turn out the vote
    • “Law firms, hair salons, real estate agencies, and other regional businesses will follow”
  • Local ad dollars are already flowing to CTV, reaching ~$2.8bn in 2025, ~8% of all local video advertising
  • In 2026, they predict that genAI will help many local advertisers boost the effectiveness of their ads by 30% compared to linear

It is interesting timing that just as linear cable networks are being separated or spun, Wall Street research out this week found that Q3 was the first time in eight years that pay-TV subscribers in total actually grew, with 300k+ new subs in the quarter. While the pay-TV mkt is still shrinking y/y, the rate of decline has continued to ease. What is driving the improvement? A seasonal lift in vMVPDs due to the start of football season plus Charter’s better-than-expected video performance in Q3.

Against this backdrop, Charter CEO Chris Winfrey shared some initial insights this week on the Co’s’s recently launched Spectrum App Store, which expands its video offering with SVOD-bundled packages. Nearly half of eligible video customers who access the App Store are using it, indicating meaningful runway for adoption ahead, and users typically activate several apps once engaged. Comcast is also making changes with its plans, rolling out simplified, all-in Xfinity TV pricing that includes equipment, removes annual contracts, and offers additional savings for existing internet customers.

Elsewhere, YouTube TV is projected to become the largest US pay-TV provider by 2027, surpassing both Charter and Comcast, marking the first time a vMVPD would lead the market.

While everyone has been calling for the death of the linear cable nets, it’s also a reminder that the industry isn’t standing still. Traditional operators are experimenting with new ways to engage subscribers, while to be fair, virtual providers like YouTube continue to gain ground.

See below for of what we thought were key developments in the pay-TV sector this week.

• Total pay-TV subscribers grew for the FIRST TIME in 8 yrs, per MoffettNathanson’s “Cord-Cutting Monitor” report (link/link): PayTV added +303k net subs in Q3
  • BUT y/y, overall Pay-TV is still declining (though at a lesser qtrly %age): It was down -5.8% y/y overall in Q3, versus yr-ago qtr’s -6.7% y/y
  • What drove the improvement? vMVPDs saw a big seasonal surge + Charter’s improved video performance
    • The start of the NFL season in Q3 drove a +1.43mn increase in total vMVPD additions in Q3 (up from +1.36mn in prior yr qtr)
    • Charter also shrank its video losses dramatically (-70K vs -294K last yr) driven by its new SVOD-bundled cable package, which reduced drag in the category
  • Traditional pay-TV still fell q/q in Q3, but again, by less: Down -10.2% y/y in Q3 vs -12.4% y/y in Q3:24
    • This is the 3rd consecutive qtr of improvement in the decline rate of traditional pay-TV

-> Separately, but related, Nielsen also found that ad-supported TV viewing in Q3 peaked in September, driven by the start of the football season; After peaking in July with 48% of the overall ad supported pie, streaming lost 3.6 share pts, down to 44.4% in September, while broadcast gained 4.4 share pts, jumping to 29.1% thanks to a strong sports slate, while cable remained fairly consistent (link)

• On this topic…Charter this week provided an update on its recently launched Spectrum App Store – seeing early traction with much more room to grow (link)
  • But it will take some time for the adoption curve to improve: The Co is finding that it is taking some time for customers to realize that these apps are part of their pay-TV svs and not a short-term promo
    • “So why wouldn’t it be 100% [participation]…customers have become so accustomed to a promotional offer…that getting them to understand and buy in that this is permanently included as part of your subscription is included for free … It’s not a gimmick,” said CEO Chris Winfrey
  • But once customers activate the first app, they tend to quickly activate more
    • Nearly half of Charter video customers who have access to the App Store are using it
    • Amongst those users, most are now activating “well over” three apps at this point
  • As a reminder… Charter currently offers about a dozen ad-supported apps from programmers for no extra cost to video customers who subscribe to eligible video plans; Combined, they represent $125 in value

Source: Charter

• YouTube TV is on track to become the largest US pay-TV operator by 2027, per Omdia (link)
  • It is set to surpass Charter and Comcast (end of 2025 -> 2027 forecast)
    • Charter: 11.4mn subscribers -> 10.0mn subscribers (-1.4mn)
    • Comcast: 10.6mn subscribers -> 9.2mn subscribers (-1.4mn)
    • YouTube: 9.3mn subscribers -> 10.4mn subscribers (+1.1mn)
  • This will mark the first time a virtual pay-TV provider will claim the top spot

Source: Omdia

• Comcast revamps its Xfinity TV plans w/ simplified, all-in pricing and no annual contracts (link/link)
  • Every new package now comes standard with an included X1 4K TV box, an X1 4K TV box, Xfinity’s voice remote, Multiview, Enhanced 4K, StreamStore and Fan View
  • How does it work? Customers pay a single rate that rolls in all associated fees, w/o worrying about renting equipment, breaking contracts or special promos that expire
  • Customers who already have Xfinity Internet will save an extra $10/mo for bundling w/ their video package
    • New Xfinity TV plans come a couple of months after Comcast similarly relaunched its Xfinity Internet packages with streamlined, all-in pricing and includes a year of unlimited mobile
  • How does this compare to the competition? When bundled together w/ internet and mobile, Customers could save over $70/mo for a yr when compared to AT&T and Verizon
  • To flag…the cost of Comcast’s skinny sports bundle somewhat incr’d in the overhaul: Comcast launched its Sports & News TV bundle in January at a discounted $70/mo when paired with internet; It now costs $80/mo for the same bundle
    • BUT there are no major extra fees or extra costs for the X1 set-top box, which is valued at $14/mo

Source: Comcast

The AV industry reached several new milestones this week, led by Waymo crossing 450k weekly paid rides, which is nearly double its April level, per CNBC citing a letter from Waymo’s investor Tiger Global. The Co is rapidly expanding into new cities and freeways and logged 14mn robotaxi trips in 2025, tripling last year’s level and implying ~$286mn in revenue. But at the same time, safety scrutiny has been on the rise and Waymo this week also issued a voluntary software recall after investigations found its vehicles illegally passed stopped school buses in Austin and Atlanta. This prompted an active NHTSA review of ~700 incidents this year, though no injuries have been reported.

Amazon’s Zoox is also pushing ahead and announced plans to begin charging for rides in Las Vegas in early 2026 and later in the Bay Area. Zoox surpassed 1mn autonomous miles and is shifting focus toward moving more people. With that said, meaningful revenue remains years away. And on the OEM front, Nissan and Wayve signed a major agreement to integrate Wayve’s AI Driver into Nissan’s next-gen ProPILOT system, making it the first large-scale commitment to deploy Wayve AI across mass-produced vehicles beginning in 2027.

Read more of what we thought was more important below this week…

Waymo Hit A New Milestone, But Could They Be Moving Too Fast? (link/link/link/link)

• Waymo crossed 450k weekly paid rides, according to a letter from investor Tiger Global that was viewed by CNBC
  • This is up +200k since April, when they hit 250k weekly rides
  • In the letter Tiger Global wrote: “Waymo is the clear leader in autonomous driving…with a product that is 10x safer than human drivers”
    • Waymo is one of Tiger’s largest positions in their 2024 fund
    • Waymo declined to comment on the matter
  • As a recap for this year: Waymo’s expansions include its debut on freeways in 3 cities, and autonomous driving in cities including Miami, Dallas, Houston, San Antonio and Orlando
  • Where is Tesla? They have run limited pilots in Austin and operate a ride-hailing service in the Bay Area

• BUT… at the same time, Waymo launched a software recall
  • The Co is issuing a voluntary recall after school bus safety concerns came to light earlier this year
    • The recall won’t pull cars from the road but will instead see them updated
  • It comes after an investigation by Nexstar’s KXAN found the Cos vehicles illegally passed school buses with their stop arms out in Austin, Texas
    • The Austin Independent School District said similar incidents occurred ~19x this school year
    • The National Highway Traffic Safety Administration (NHTSA) opened an investigation in October
  • No injuries have been reported, but parents and law enforcement alike are raising red flags about the vehicles’ programming
  • Austin isn’t the only place this is happening: Atlanta Public Schools said it recorded ~6 similar stop-arm violations between May-December
    • NHTSA has been reviewing ~700 Waymo-related incidents since January 2025
    • The Co said these incidents make up a tiny fraction of its service

-> Waymo reported completing 14mn robotaxi trips in 2025, triple its 2024 volume; With an avg ride price of $20.43, the company could have generated over $286mn in revenue, before taxes and ride-hailing fees; Despite currently operating in only 5 US cities, Waymo plans to expand to 20 international cities; The Co also projects reaching 20mn trips by the end of 2026 (Dec 10^th)

Amazons Zoox Will Start Charging For Rides In 2026, Shifting Their Focus On People Not Packages (link/link)

• Zoox expects to start charging passengers for rides in Las Vegas in early 2026, with paid rides in the San Francisco Bay Area coming later next yr, a company executive said on Monday
• CTO Jesse Levinson said that Zoox is “laser focused” on moving people around cities
  • He sees the addressable marketplace as being “just profoundly huge”
  • This directive came “all the way from the very top” at Amazon, despite the retailer’s significant interest in driverless package delivery
    • “It’s harder to move people around than packages in terms of what you have to do with your vehicle,” Levinson said
    • On the other hand, “automating package delivery is rife with its own challenges because the boxes have to get in and out of the vehicle”
  • Zoox crossed the 1mn mile technical threshold for autonomous rides last week, Levinson said
    • They currently provide rides to passengers free of charge in portions of Las Vegas
    • Zoox is opening the wait list to use the service in San Francisco
  • Despite the progress to start charging fares, Zoox won’t generate revs that are “meaningful” for at least several more yrs
    • He added that the revenue you can generate from the robotaxi is “quite a bit more” than the expense to run robotaxis
  • How can they stand out from the competition?
    • A competitive element for Zoox is its battery, said Levinson
    • It’s more environmentally and economically friendly because it requires less charging

-> Separately but related, Uber expects it will take 5–10 years before self-driving vehicles make up more than 10% of global trips on its network. Additionally, Uber annc’d that by the end of 2026, robotaxi services will be available in over ten markets, with potential markets including Hong Kong and Japan (link/link)

A New Nissan & Wayve Deal Was Another Notable Development

• Nissan and Wayve annc’d an agreement to collaborate on integrating the next-gen ProPILOT series with Wayve AI tech across Nissan vehicles (link)
  • Under the new agreement, Nissan and Wayve will integrate “Wayve AI Driver” into the next generation ProPILOT series, enabling deployment in mass-produced vehicles
    • Nissan plans to introduce the first model equipped with this new gen of ProPILOT in Japan in fiscal year 2027

• Nissan intro’d ProPILOT in 2016 for single-lane highway assistance and launched ProPILOT 2.0 in 2019, adding multi-lane support and hands-off functionality
  • These features are now available across multiple Nissan models
  • Building on this foundation, Nissan is developing its next-generation ProPILOT integrated with Wayve AI
  • In September 2025, Nissan unveiled a prototype featuring Wayve’s AI software, “Wayve AI Driver” integrated with Nissan’s “Ground Truth Perception“ tech

• Nissan is the first automaker to commit to deploying Wayve AI systems at scale across a broad range of vehicles
  • Wayve’s end-to-end embodied AI can adapt efficiently to new cities and vehicle platforms with minimal additional development
  • When combined with ProPILOTvarious sensor configurations including cameras, radar and LiDAR, it can deliver intelligent driving across many vehicles

• Deploying the system into mass-produced vehicles will allow Nissan and Wayve to learn from diverse real world conditions

IDC’s newest global IT spend (hardware, software, and IT services) projections, which were released this week, point to a whopping +15% y/y growth rate in 2025. The last time growth was that strong was in 1996 when Windows 95 was launched and expanded PC usage and internet adoption. What is the driver of this new super cycle this go around? AI, of course. Total IT spending is slated to reach $4.25 trillion this year and this forecast has essentially been revised up 7x!

Will this level of spending hit a wall? IDC does not see that on the horizon. Their surveys indicate that most businesses plan to increase IT budgets again in 2026. IDC itself now forecasts a decelerating, but still healthy growth of +10% y/y in 2026. This would still represent one of the strongest years for the industry since the 1990s. However, one potential risk to be aware of is that an expected memory component shortage could drive up PC prices next year. Even so, expectations are optimistic… “even in a moderate recession, most IT spending would continue. The likelihood of a ‘perfect storm’ similar to the IT market crash of 2001 remains low” (link)

While IDC remains bullish, the debate regarding future IT spending trends will likely continue to be top of mind.

Source: IDC

• TKO shares fell -2.4% after the Co provided margin guidance that fell short of expectations (link/link)
  • TKO execs stated on the Wall Street conference circuit that they expect adj EBITDA margins “in excess of 35%” next yr, vs consensus 37.5% per Bloomberg
  • The Co also discussed an upcoming UFC event scheduled to take place at the White House on June 14
    • They described the event as “a spectacle on steroids” compared to previous productions at venues like the Sphere
    • However, they acknowledged that “there will be no ticket sales,” which “will hurt us financially”

-> Despite the knee jerk sell-off, TKO shares closed up +3% this week and is up +48% YTD

• Millions of teens lose access to their accounts as Australia’s world-first social media ban begins (link/link)
  • Australia’s world-first ban on social media for users aged under 16 came into effect this week
  • Who is involved? Facebook, Instagram, Threads, X, YouTube, Snapchat, Reddit, Kick, Twitch and TikTok are expected to have taken steps from Wednesday to remove accounts
  • Platforms that do not comply with the rules risk fines of up to $32.09mn (A$49.5mn)
  • Guardian Australia has received several reports of those under 16 passing the facial age assurance tests
    • The gov flagged it is not expecting the ban will be perfect from day one
  • Polling has consistently shown that 2/3 of voters supported raising the minimum age for social media to 16
    • The opposition, including leader Sussan Ley, recently voiced alarm about the ban, despite waving the legislation through parliament
  • The ban has garnered worldwide attention, with several nations indicating they will adopt a ban of their own, including Malaysia, Denmark and Norway
    • The European Union passed a resolution to adopt similar restrictions
    • A spokesperson for the British government told Reuters it was “closely monitoring Australia’s approach to age restrictions”

• A recent survey showed that European CEOs are downbeat on Europe & favor US investment (link/link)
  • What was the survey? It was of the European Round Table for Industry, which comprises about 60 CEOs and chairs of companies such as ASML, BASF and Vodafone
  • What was found? Respondents found that the biz case for investing in Europe was weakening further and that the European Union was too slow to implement required reforms
    • ~38% said they would invest less than they had planned 6 months earlier in Europe or had put decisions on hold
    • ~8% said their European investments would increase
    • ~45% said they intend to invest more in the US
  • A “large majority” of survey respondents said they had seen little or no positive impact from EU initiatives in critical areas
    • These included regulatory simplification, single market completion, competition policy and energy affordability

Source