LT Weekly: May 30, 2025

All eyes were on NVIDIA this week as it continues to be a key proxy for the health of the AI trade and overall progress of AI deployments. There was a loud sigh of investor relief with NVIDIA’s better than expected results/guidance, especially given concerns about the Co being in the US/China tariff crosshairs ahead of the print. Regarding the impact from US export controls on the H20 GPU (custom-built for China), NVIDIA took a $4.5bn charge in FQ1 related to unsellable inventory and expects a “meaningful” decrease in China Data Center revenue in FQ2. At this point, the $50bn China market is “effectively closed” to NVIDIA due to the H20 export ban, and while they are exploring “limited ways to compete,” Hopper “has effectively reached the end of the road” there. Despite the setback, the Co expects to offset the China shortfall with broad-based strength across other regions & industries and guided to overall “modest” seq rev growth across all platforms next qtr, which was a key positive.

Continuing on the product update front, NVIDIA’s Blackwell architecture is driving the fastest ramp in company’s history. Hyperscalers like Microsoft are deploying tens of thousands of Blackwell GPUs each week, which is leading to large jumps in inference demand. The rollout of the further improved GB300 series has begun, offering 50% more high-bandwidth memory and denser inference performance, and NVIDIA expects to continue improving the performance of Blackwell through its operational life.

Another key point flagged on the call was the transition from generative to agentic AI, which is well underway and is expected to transform every industry and drive exponential infrastructure needs for years to come. In order to support this growth, the Co is positioning itself at the forefront of a global AI infrastructure buildout, with nearly 100 AI factories currently under development, and “many, many more” expected to follow, given the expectation that “every factory today that makes things will have an AI factory that sits with it.” NVIDIA is also staying true to its commitment to build the entire AI stack domestically, emphasizing that “President Trump wants US tech to lead,” and AI is viewed as foundational infrastructure, on par with electricity or the internet.

All in all, NVIDIA delivered this qtr, but it feels like investors are still somewhat skittish about a shoe potentially dropping during this AI revolution. See below for the key takeaways from the call.

-> NVIDIA rose +3.3% the day post earnings and ended the week up +2.9%; YTD, the stock is up +0.6% 

FQ1 Headline Results Beat Across The Board (FCF Was A Standout)

• Total rev was up +69% y/y (vs +78% y/y in FQ4) and finished +1.7% above cons
  • Datacenter rev (89% of total rev) was a tad below estimates: Incr’d +73% y/y (vs +93% y/y in FQ4) and was -0.6% below cons
  • Gaming rev beat by a significant +33%; ProViz also beat by +2.2%, while Automotive & Robotics and OEM & Other missed by -0.6% and -1.4%, respectively

• Non-GAAP gross margin was very strong @0% vs cons 55.6%

• Non-GAAP op income was up +29% y/y (vs +73% y/y in FQ4) and also beat cons by +8.5%
  • Non-GAAP op margin of 52.8% beat cons of 50.1%

• Adj EPS of 81c was easily ahead cons 74c   

• FCF incr’d +75% y/y (vs +38% y/y in FQ4) and beat cons by +36%

H20 Export Controls Is A Headwind In FQ2, But Growth Outside China Is Expected To Offset

• FQ2 rev guidance will be impacted by the loss of H20 rev: Total rev is expected to be $45bn, plus or minus 2% vs cons $45.84bn
  • BUT expect “modest” seq growth across all platforms
  • In Data Center, the continued ramp of Blackwell will be partially offset by a decline in China rev (expect loss in H20 rev of ~$8bn due to export control limitations)

• FQ2 non-GAAP gross margin was in-line w/ the Street: 72.0%, plus or minus 50bp
  • Expect better Blackwell profitability to drive “modest” seq improvement in gross margins
  • Continue to work toward achieving gross margins in the mid-70% range late this year

• FQ2 non-GAAP OpEx was higher than cons: $4bn vs cons $3.84bn
  • Continue to expect FY26 OpEx growth to be in the mid-30% range

China $50bn Data Center Market Is “Effectively Closed” Due to Export Controls With Limited Near-Term Recovery Options  

• China as a % of FQ1 Data Center rev was down seq due to H20 export licensing controls
  • FQ2 Outlook – expect a “meaningful” decrease in China Data Center rev

• US govt export control on H20 (data center GPU designed specifically for the China mkt) will have “a material adverse impact” on NVIDIA’s biz going forward
  • Exports controls issued on April 9^th did not provide a grace period for NVIDIA to sell through its inventory
  • Incurred a $4.5bn charge in Q1 associated w/ H20 excess inventory and purchase obligations
  • “We are still evaluating our limited options to supply Data Center compute products compliant with the US government’s revised export control rules”

• Plans for replacing H20? Has NVIDIA been approved to ship a new modified version into China?
  • These new limits are “kind of the end of the road for Hopper” and “make it impossible for us to reduce Hopper any further for any productive use”
  • “We have limited options…the key is to understand the limits and see if we can come up with interesting products that could continue to serve the Chinese market”
    • “We don’t have anything at the moment, but we’re considering it. We’re thinking about it”
  • “The President has a plan. He has a vision and I trust him”
    • “We have nothing to announce today. And when the time comes, we’ll engage the administration and discuss that”

• “China is one of the world’s largest AI markets and a springboard to global success – the question is whether one of the world’s largest AI markets will run on American platforms”
  • Half of the world’s AI researchers are based in China
  • $50bn China market is “effectively closed” to the US due to the H20 export ban
  • “Export restrictions have spurred China’s innovation and scale”
    • “China’s AI moves on with or without US chips”
    • “Shielding Chinese chipmakers from US competition only strengthens them abroad and weakens America’s position”
  • “The US has based its policy on the assumption that China cannot make AI chips. That assumption was always questionable, and now it’s clearly wrong”
    • “The AI race is not just about chips. It’s about which stack the world runs on”
    • “As that stack grows to include 6G and quantum, US global infrastructure leadership is at stake”
  • “Export controls should strengthen US platforms, not drive half of the world’s AI talent to rivals”

• “America wins when models like DeepSeek and Qwen runs best on American infrastructure”: “When popular models are trained and optimized on US platforms, it drives usage, feedback and continuous improvement, reinforcing American leadership across the stack”
  • “US platforms must remain the preferred platform for open-source AI. That means supporting collaboration with top developers globally, including in China”

 Despite Export Restrictions, Emphasized That “President Trump Wants US Tech To Lead”

• “It’s really terrific to see that the AI diffusion rule was rescinded,” which will now enable the global adoption of the American AI stack
  • “President Trump wants America to win…and recognizes that we have to get the American stack out to the world and have the world build on top of American stacks instead of alternatives”

• Committed to building the full AI stack – from chips to supercomputers – onshore
  • TSMC is building six fabs and two advanced packaging plants in Arizona to make chips for NVIDIA
  • SPIL and Amkor are also investing in Arizona, constructing packaging, assembly, and test facilities
  • Partnering w/ Foxconn and Wistron to build AI supercomputer factories in Houston and Fort Worth, Texas
  • “Our goal – from chip to supercomputer – built in America within a year”

• AI deals annc’d by Trump on the Middle East tour are “wins for America, creating jobs, advancing infrastructure, generating tax revenue and reducing the US trade deficit”
  • Announcements include a 500-megawatt AI infrastructure project in Saudi Arabia and a 5-gigawatt AI campus in the UAE

• “The US will always be NVIDIA’s largest market and home to the largest installed base of our infrastructure”

Expect A Steady Cadence Of New AI-Factory Deals Worldwide As Nations And Enterprises Race To Build Capacity – “It’s Essential Infrastructure”

• Nearly 100 NVIDIA-powered AI factories are in development this quarter, doubling y/y, with the avg GPU count per deployment also doubling
  • “Just about every country needs to build out AI infrastructure and there are umpteenth AI factories being planned”

• New AI factory projects are expanding across industries and geographies
  • NVIDIA’s full-stack architecture is powering these builds, with customers like AT&T, BYD, Capital One, Foxconn, MediaTek, and Telenor
  • Strategic sovereign cloud projects have been announced in Saudi Arabia, Taiwan, and the UAE

• Have “line of sight” to projects requiring “tens of gigawatts” of AI infrastructure
  • “6G is going to be built on AI and that infrastructure needs to be built out”
  • “Going to see AI go into enterprise, which is on-prem because so much of the data is still on-prem”

• “Every factory today that makes things will have an AI factory that sits with it”
  • “And the AI factory is going to be […] creating AI and operating AI for the factory itself, but also to power the products and the things that are made by the factory”

• “I think we’re in the beginning of the build-out, and there should be many, many more announcements in the future”

Blackwell Ramp Was The Fastest In Co History / Transition From Hopper Is “Nearly Complete”

• Blackwell contributed to ~70% of Data Center compute rev in FQ1
• GB200 NVL is accelerating the AI infrastructure buildout w/ new architecture designed for large-scale, cost-efficient AI workloads
  • NVL racks are now generally available for enterprises, model builders, and sovereign AI customers
  • Enables Data Center scale workloads at the lowest cost per inference token
  • Major hyperscalers are each deploying on avg ~1,000 NVL72 racks or 72,000 Blackwell GPUs per week and are on track to further ramp output this qtr
    • Microsoft has already deployed “tens of thousands” of Blackwell GPUs and is expected to ramp to “hundreds of thousands” of GB200s, with OpenAI as one of its key customers
  • “Key learnings from the GB200 ramp will allow for a smooth transition to the next phase of our product roadmap, Blackwell Ultra”

• GB300 is rolling out w/ GB200 compatibility and 50% inference performance gains
  • Sampling of GB300 systems began earlier this month at the major CSPs
    • Expect production shipments to start later this qtr
  • Built on the same Blackwell architecture and with identical physical, electrical, and mechanical specs as GB200, enabling a drop-in upgrade
  • Allows CSPs to reuse GB200 infra while maintaining high yields
  • New B300 GPUs feature 50% more high-bandwidth memory (HBM) and deliver a 50% increase in dense FP4 inference performance over B200

• Expect to continue improving the performance of Blackwell through its operational life
  • As they have done with Hopper and Ampere (i.e., increased the inference performance of Hopper by 4x over 2 yrs)
  • While Blackwell is still early in its lifecycle, software optimizations have already improved its performance by 1.5x in just the last month

 “Sharp Jump” In Inference Demand Is Driving Exponential Token Growth And Broader AI Deployment     

• OpenAI, Microsoft and Google are seeing a “step function leap” in token generation
  • Microsoft processed over 100 trillion tokens in Q1, up +5x y/y

• NVIDIA Dynamo on Blackwell NVL72 is boosting AI inference throughput by 30x, enabling next-gen reasoning models
• Startups using B200 chips are tripling their AI model output and revenue, esp for complex reasoning models like DeepSeek R-1, per Artificial Analysis
• Developer adoption is broadening across sectors, from LLM providers like Perplexity to financial services firms like Capital One

“Transition From Generative To Agentic AI…. Will Transform Every Industry, Every Company, And Country”

• “Think it is fairly clear now that AI is going through an exponential growth, and reasoning AI really busted through…and I think a lot of people are crossing that barrier and realizing how incredibly effective agentic AI is”

• Introduced Llama Nemotron family of open reasoning models “designed to supercharge agentic AI platforms for enterprises”
  • Built on the Llama architecture and available as NVIDIA Inference Microservices (NIMs) in various sizes for flexible deployment
  • Post-training enhancements delivered a 20% accuracy boost and 5x increase in inference speed, with adoption by Accenture, Deloitte, Microsoft, and others

• “Agentic AI is game-changing”: “We envision AI agents as a new digital workforce capable of handling tasks ranging from customer service to complex decision-making processes”

Incremental Color On Other Verticals

• Gaming rev was a record and came in well ahead of Street estimates: Up +42% y/y (vs down -11% y/y in FQ4) and beat cons by +33%
  • “We greatly improved our supply and availability in Q1 and expect to continue these efforts in Q2”

• Professional Visualization rev was slightly better than expectations: Grew +19% y/y (vs +10% y/y in FQ4) and beat by +2%
  • Tariff related uncertainty temporarily impacted FQ1
  • But demand is “strong” and expect seq rev growth to resume in Q2 (growth was flat seq in FQ1)

• Automotive & Robotics rev was a touch below cons: Up +72% y/y (vs +103% y/y in FQ4) and missed by -0.6%
  • Y/Y growth was driven by the ramp of self-driving “across a number of customers” and “robust” demand for NAVs

NVIDIA was not the only one this week expounding on the agentic opportunity – Salesforce (CRM) was beating the same drum! CEO Marc Benioff views the era of agentic AI as the driver for its growth transformation ahead and this technology proliferation is at the early stages, but there are some gating factors to consider as it relates to Enterprise adoption. Corporate data is highly controlled, governed, and secured, not to mention it needs to be harmonized across organizations. That’s where Salesforce comes into play and is also one of the reasons Benioff is so excited about the $8bn acquisition of Informatica (“it’s an awesome acquisition for us”) which was announced in addition to FQ1 earnings this week.

In terms of Salesforce’s FQ1 more specifically, stronger than expected business activity in the SMB segment was a key upside surprise and top line driver this qtr, though margins were a tad light. The FQ2 guidance slightly topped consensus while the Co raised its fiscal year 26 revenue guidance by $450m at the mid-point citing FX tailwinds. Mgmt is currently assuming a “consistent” demand environment in its outlook with the caveat that it could change.

Almost all the focus on the call was on the strong growth of Agentforce and Data Cloud. The Co has 8,000 Agentforce customers, 4,000 of which are paying and Agentforce reached more than $100mn in AOV which is “much faster than any product in our history, and we’re not even fully deployed on all geographies, currencies or languages.” Salesforce believes it is the only Co delivering a digital labor force at scale. Also, Data Cloud surpassed 22 trillion records, up 175% y/y and Data Cloud and AI ARR grew more than 120% y/y, and it’s “more than a billion-dollar part of our business.” Agentforce and Data Cloud are also helping to drive adoption of more CRM clouds given it is “deeply integrated and connected to every single one of our products.”

This all sounds good but when will the agentic scale be large enough to accelerate overall y/y sales growth from the current high-single digit levels? The Company provide a few drivers but it was rather higher level. Driving growth (while maintaining strong margins) was stressed several times is a key priority of theirs. This growth acceleration is something that investors are certainly keen to see…

Below are more of our key takeaways on the results and updates.

-> Salesforce fell -3.3% post its print and ended the week down -2.8%; The stock is down -20.6% YTD

The SMB Segment Drove A Stronger-Than-Expected FQ1 Top Line, Though Margins Were A Tad Light

• Revs were slightly ahead of cons estimates, growing +8% y/y vs +8% y/y in FQ4
  • Subscription & Support grew +9% FXN

• The growth in SMB “really surprised us”: This segment achieved “really strong” double-digit new bookings growth

• Non-GAAP margin of 32.3% was a little light vs cons 32.5%

• FQ1 revenue attrition ended the qtr at slightly above 8% (in line with recent trends)
• Vertical performance –
  • Comms & Media and Health & Life Sciences performed well
  • Retail & Consumer Goods and Public Sector were “more measured”

• Strong y/y growth in performance obligations –
  • Remaining performance obligation ended Q1 up +13% y/y
  • Current remaining performance obligation (CRPO) ended Q1 up +12% y/y (+11% ex-FX), which is better-than-expected, driven by strong renewal performance

CRM Raised Fiscal 26 Revenue Guidance Citing FX Tailwinds… Mgmt Is Assuming A “Consistent” Macro Demand Environment

• Fiscal 26 guidance reflects a “consistent” demand environment…“of course, if the environment changes. Our results may be impacted”
  • Raised revenue guidance from $40.5-40.9bn to $41-41.3bn (higher by $450mn at the mid pt) due to FX tailwinds: Implies +8-9% y/y growth (+8% ex-FX), up from +7-8% growth previously
    • Reiterated +9% y/y FXN Subscription & Support revenue growth due to momentum in Data Cloud and some contribution from Agentforce this year partially offset by weaker Marketing & Commerce and slower growth in their exploration base
  • Reiterated –
    • Non-GAAP op mrgns of 34% & GAAP of 21.6%
    • Op CF growth of 10-11% & FCF growth of 9-10%

• FQ2 guidance also above expectations:
  • Revenue guidance was +1.1% ahead of cons (+8-9% reported &+7-8% ex-FX)
  • Non-GAAP EPS was also +1.1% ahead of cons
  • CRPR growth +10% y/y (including a $300mn FX tailwind)…+9% ex-FX
  • Reminder that CRPO will continue to be materially impacted by the cumulative effect of the measured sales performance that started in FQ2’23 and the slower exploration base

“I Love Informatica”…Salesforces Buys The Co For $8bn Equity Value

• Deal basics –
  • Value: $8bn in equity value ($25/share for Informatica shareholders)
    • The per share price was +30% above the close May 22^nd (before press speculation hit and the stock rallied)
  • Accretion: Always aim to achieve accretion on non-GAAP op margin, non-GAAP EPS, and FCF by year 2 post-close but the goal would be to achieve accretion “as quickly as possible”
  • No chg to capital return strategy
  • Expect to close by early fiscal year ’27 (i.e., Feb 2026)

• Benioff is extremely enthusiastic about the Informatica acquisition…
  • “We probably spent the last 20 years discussing how to bring the companies together”
  • “It’s an awesome acquisition for us”
  • “This is a great price for a great company… It’s got great multiples, it’s accretive, it’s non-dilutive. It’s coming together in an incredible way, and this is a moment where Informatica is more important to our customers than ever before, because of what’s happening with AI”

• Strategic rationale –
  • The deal will “unite our number one AI CRM and of course, their number one AI MDM and ETL and bringing these things together”
  • Informatica will enable them to unify or harmonize or activate all the data across the entire enterprise
    • “Informatica combined with Salesforce’s Data Cloud combined with Tableau combined with other key assets that we’re going to bring to bear. This is what is creating this incredible data business”
  • Informatica will “help us accelerate and expand our data strategy”
  • Salesforce will leverage its scaled distribution to drive Informatica’s capabilities

The Ramp Of Agentforce Has Been Unparalleled & Data Readiness Is Critical For All Companies

• Agentforce has ~8,000 customers and 4,000 are paid: “In a relatively short period of time, I’ve never seen in my career over 45 years in enterprise software, this idea that we now have 8,000 customers, 4,000 of whom are paying, many of them who have done scaled deployments where this is working in months. It just makes no sense, actually to me”
  • Agentforce reached more than $100mn in AOV which is “much faster than any product in our history, and we’re not even fully deployed on all geographies, currencies or languages”
  • Even though Agentforce is only in its second quarter, 30% of its new bookings also came from existing customers increasing their consumption
  • CRM launched hundreds of pre-built Agentforce templates for different industries to make it faster and easier for customers to deploy Agentforce
  • Earlier this month, intr’d Flex Credits which is a new consumption-based pricing model given client feedback

• Salesforce believes it is the only Co delivering a digital labor force at scale: “We are really delivering at this point, probably more agents and more conversations, and more capability to more enterprises than any other vendor in the world. I really see us as the number one agent platform already, and it’s only been a few months”
• Data Cloud surpassed 22 trillion records, up +175% y/y
• Nearly 60% of their top 100 deals included investments in both Data Cloud and AI
  • But just 50% of Data Cloud’s Q1 new bookings came from existing customers

• Data Cloud and AI ARR grew more than 120% y/y, and it’s “more than a billion-dollar part of our business”

Enterprise Agentic AI Is Different Than Consumer AI Applications Like ChatGPT

• Consumer gen AI platform are seen as a commodity: Gen AI platforms like ChatGPT, Gemini. You.com, Perplexity, Anthropic, DeepSeek, etc. are “mostly the same and trained on the same datasets; that is why these models have not improved much on the accuracy side in consumer”

• Enterprise AI has different requirements: In contrast, the enterprise has datasets that are highlight controlled, governed and secured so that is a constraint vs the consumer adoption curve
• Companies also need to fully harmonize their datasets, “which is why Informatica is so critical now more than ever”

Agentforce & Data Cloud Are Also Driving Adoption Of More Clouds In General

• Agentforce & Data Cloud are deeply unified and connected, but they are also “deeply integrated and connected to every single one of our products”
  • “This drives the flywheel of success as well as lower attrition as customers realize the benefits of our platform”

• For all the Agentforce deals for the qtr on avg, there were 4 other clouds on those deals on average

• Sales Cloud, Service Cloud, and Platform were all included in nine of their top-10 wins

• More than half of their top-10 deals included six or more clouds, with Sales and Service Cloud in nearly 80% of those deals

• In FQ1, closed more than 30 net new annual bookings over $1mn that include both data and AI
• Tableau was included in more than 70% of their deals over $1mn, and MuleSoft in nearly half of those deals

What Will It Take For CRM To Accelerate Top Line Growth?

• Salesforces’ growth transformation will come from agentic…“there’s one more huge transformation that is really underway, and it’s really driven by this agentic AI moment. And that is the growth transformation”
• The Co talked a lot about market segments and distribution capacity expansion helping to ignite growth
  • SMB is one of the big areas of growth (growing mid to high teens) – the Co is reallocating capacity into the low end of the market
  • Lots of growth in geographic regions like Japan – the whole of APAC is “on fire” and France and UK out delivered
  • Hired 1-2k salespeople and can now supercharge key areas

• Core tech like Data Cloud and data activation business and agentic business is growing triple digits…if CRM can accelerate that to “high triple-digits, that would accelerate the growth of the company”

• The Co is focused on driving higher revenue growth but reiterated several times while also maintaining margins

In addition to tech giants like Nvidia and Salesforce reporting at the tail-end of the TMT earnings season, there were also a swath of consumer companies that reported this week, which were a particular point of interest given all the ongoing chatter around tariffs and their potential for pricing inflation.

We took a look at a select group of consumer companies that have reported earnings in the last four weeks, and while market reactions have varied, a key focus amongst both companies and investors was individual company’s pricing strategy in response to increasing pressure from tariffs, inflation, and general concerns around consumer spending behavior.

It was interesting to hear that many retailers are taking a layered approach to price increase mitigation, starting with negotiating better terms with vendors, shifting countries of origin, optimizing transportation methods (for example, moving from air to sea freight), and only then, if necessary, raising prices, and doing so selectively. Urban Outfitters, for instance, laid out this exact playbook, emphasizing pricing as a last step rather than the first. Others, like e.l.f. Cosmetics, have been more upfront with planned increases, citing the direct impact of tariffs and inflation. Best Buy, on the other hand, has already implemented price increases but noted that only a small portion of its assortment was affected, given that just 2–3% of its products are directly imported and most of its inventory is sourced domestically.

This emphasis on US-based supply chains was echoed by other retailers as well. The Home Depot, for example, has said it doesn’t anticipate broad-based price hikes, pointing to its largely domestic sourcing as a key reason they’ve been able to stay price competitive.

While retailers are taking steps to navigate current pressures, it’s still early days and the coming months will reveal how well they can balance cost challenges with customer satisfaction amidst ever evolving trade policies and inflation landscape.

See below for our consumer stocks’ earnings scorecard and details on comments about pricing strategies during these uncertain times.

How Has The Street Reacted To Retailers’ Earnings Reports? 

While there were some winners in reaction to earnings, more companies than not traded in the red post earnings prints

Some Companies Have Already Implemented Or Announced Concrete Price Increases… 

• Best Buy has already passed on tariff-related price raises (link)
  • “Due to mitigation efforts by both vendors and by Best Buy, the increased product costs that are flowing to us are lower than the tariff rates. As of mid-May, we have already made the related price and promotional adjustments to our assortment,” said CEO Corie Sue Barry
  • Co did flag that it only directly imports ~2%-3% of their overall assortment
• e.l.f Cosmetics will raise its prices by $1 starting Aug 1^st (link)
  • “Not gonna lie, inflation and tariffs are hitting us hard…Bringing you the best of beauty is getting more $$$, so in August our prices will go up by $1. We’re keeping an eye on the tariff situation as it evolves,” the Co said on an Instagram post
• Birkenstock will implement a “low single-digit price increase globally” (link)
  • “We will be fully offsetting the effects from current existing tariffs…we’re not raising in one region only, we see it as a global exercise”

Other Companies Are Considering Or Are In The Process Of Raising Prices… 

• Walmart said in mid-May that the company expects to raise some prices because of Trump’s tariffs
  • Even with the China deal, Walmart CEO Doug McMillon said during its earnings call that “we aren’t able to absorb all the pressure given the reality of narrow retail margins.”
  • Consumers could see higher prices as soon as the end of May and more in June, Walmart’s CFO, John David Rainey, told CNBC (link)
• Mattel said it would increase prices for some products in the US to counter higher input costs due to the Trump administration’s sweeping tariffs (link)
• Under Armor will raise prices on some of its products (link)
  • Will now plan targeted price hikes and diversify its supply chain across countries facing relatively lower levies under the Trump administration, per CFO David Bergman

• Ralph Lauren plans to raise prices more than previously planned in order to offset tariffs (link)
  • Mgmt had already been planning to increase prices again on some items for the fall, but is now looking at bigger hikes for the fall and for the following spring in response to tariffs

• Macy’s said it will be “surgical” with price changes (link)
  • “It’s not a one-size-fits-all kind of approach. There are going to be items that are the same price as they were a year ago. There is going to be, selectively, items that may be more expensive, and there are items that we might not carry because the pricing doesn’t merit the quality or the perceived value by the consumer,” said CEO Tony Springer

• TJX Cos said it would shift its prices in tandem with traditional retailers (link)
  • “If retails do move out there, we will adjust our retails to preserve that gap. That could mean they go up on certain items,” said CEO Ernie Herrman

• Urban Outfitters may consider “gently and sparingly raising some prices” to mitigate tariff effects (link)
  • “Please note that any price increases will be very strategic, protecting opening price points and only targeting areas where we believe we could raise prices without affecting the overall customer experience,” said CEO Francis John Conforti

While Other Companies Are Holding Off… 

• The Home Depot doesn’t plan to increase prices – “we don’t see broad based price increases for our customers at all going forward”
  • “We intend to generally maintain our current pricing levels across our portfolio,” CFO Richard McPhail told CNBC, adding that a majority of company’s products come from the United States
  • However, that tariffs could make some products unavailable – “There’s items that we have that could potentially be impacted from a tariff that, candidly, we won’t have going forward,” said Home Depot’s merchandising chief, Billy Bastek

• Lowe’s is also focused on staying price competitive (link)
  • “We’re going to be really price competitive in the home improvement channel, like we always are. We’re not in the habit of donating market share to the competition. And so in this environment, we’re going to be as keenly focused on competing on price as we are every single day”

• Costco said raising prices would be “last resort” (link)
  • “The evolving landscape with tariffs is adding complexity and challenges for how we operate our business, but we believe our expertise in buying and limited SKU count model give us greater agility to navigate the environment and ultimately increase our member values compared to the market

• Target says tariffs risk “massive” costs, but price hikes are a “last resort” (link)
  • “The difficulty level has been incredibly high given the rates we’re facing and the uncertainty about how these rates in different categories might evolve. We’re focused on supporting American families and how they manage their budgets”

We all know there is a lot of competition in video streaming and arguably too many players. While Netflix stands apart from the field, the focus on driving greater levels of profitability has been a key theme for the rest of the streaming services lot. With that said, growing subscribers is still essential to scale the businesses. Being part of a distribution partners’ bundle has helped to drive adoption, but Disney is now creating its own “always on” bundle playbook with the launch of its Disney+ Perk program for its D+ and bundled subscribers, and shortly with the launch of its Hulu Perks program as well. They are leveraging their flywheel and offering exclusive access to Disney experiences, not to mention savings/discounts on some top brands. What will be the next move in the streaming wars?? See below for more color on Disney’s new programs. (link / Disney page)

-> At the end of cal Q1, Disney+ had 126mn subs globally and Hulu had 54.7mn subs

• Disney+ Perks Program
  • Timing: Launched in the US this past Thursday; An international rollout will come later this year
  • The perks are “always-on” vs limited-time promos
  • Experiences/IP
    • Enter a sweepstakes to win tickets to the world premiere of “Freakier Friday” in LA (occurring sometime in mid or late July)
    • Enter a sweepstakes to win a 4-night cruise on the Disney Destiny, the newest ship in the Disney fleet, sailing from Fort Lauderdale beginning November 2025
    • Early access to the closed release of Disney Pinnacle by Dapper Labs, a monthly Mystery Capsule + until June 26 to claim a $10 Dapper credit
    • Discounts at WDW Resort (with rates starting at $99/night at Disney’s All-Star Sports Resort w/ stays of two nights or longer)
    • Free “Monopoly Go!” and Star Wars TIE fighter in-game TOKEN
    • Free in-game emoji for “Disney Emoji Blitz”
  • Free trials
    • A 6-mo free DashPass delivery membership from DoorDash (for new members only)
    • A 3-mo free trial of the Clear+ travel verification program
    • A 2-mo Super Duolingo free trial
  • Partner Discounts
    • 20% off Adidas online purchases
    • 15% off purchases at Funko.com and Loungefly.com

• Hulu Perks program
  • Timing: Will launch June 2
  • Experiences/Content
    • Subscribers have a chance to win tickets to ABC’s “Jimmy Kimmel Live!”, Lollapalooza in Chicago and San Diego Comic-Con
    • Enter sweepstakes to win items from (or inspired by) Hulu originals and exclusives like “The Handmaid’s Tale,” “A Complete Unknown” and “Only Murders in the Building”
  • Partner Discounts
    • Will include Microsoft, Pure Green and LG Electronics

• New perks “will drop regularly”

In addition to Disney’s new perks programs (Theme #4), there was another notable steaming video update out this week, as Neilsen’s Gracenote report had some stats and charts on streaming video content that we found interesting. As an example, while overall content volumes continue to step up, in the month of April, ONLY ~6% of all programs accounted for A MASSIVE 75% of US audience viewing minutes!  It goes to show how a small number of key shows are really dominating viewership minutes.

More key takeaways are below and see link to Gracenote /  link to Gracenote Data Hub if you want to further dive in.

• Total video content being offered by Amazon Prime Video, Netflix, Disney+, Paramount+, and AppleTV+ in aggregate in Q2 was up ~6% vs Q1
  • An increase in TV content (the largest bucket by far) was up +6.3% q/q, while movie content was up +4% q/q

• Total UNIQUE video content being offered by this group of streamers in aggregate was up ~5% q/q

Source

• Netflix led the group regarding growth in total catalog during Q2 relative to Q1…the increase in available content by platform
  • Netflix up +18.2% (massive bump up)
  • Apple TV+ up +3.7%
  • Amazon Prime Video up +3.2%
  • Disney+ up +1.6%
  • Paramount+ up +1%

Source

• Amazon offers the highest percent (67.1%) of total content (TV shows, movies, and sports programing) out of the total on major streaming services… Netflix offers 20.1% (up from 17.9% in the previous qtr)
  • Regarding sports programming specifically, Amazon is still in the lead, offering 34% of the total but Netflix is a close second at 24%

Source

• Drama remains the dominant genre across the services (25.5%), but documentaries account for nearly 33% of TV shows across the five services

• AppleTV+ continues to have the highest % of exclusive content (93.3%) and slightly increased their % vs Q1
  • The rest of the group slightly decreased their % of exclusive content

• AppleTV+ produces the most content in the US (79.8%) vs the streaming group, while Netflix produces the least in the US (33.2%)

• For the month of April, US audiences watched ~500 trillion minutes of streaming programs and ONLY 5.7% of all programs accounted for 75% of viewing minute

• The AI job replacement scare resurfaces this week…Anthropic’s CEO said this week that AI may wipe out half of all entry-level white-collar jobs and spike US unemployment to 10-20% in the next 1-5 years! (link)
• More telcos moving into finance…NTT Docomo agreed to acquire online bank SBI Sumishin Net Bank for $2.9bn, a 49% premium (link)
• Bitcoin gets another endorsement… Square is piloting real-time bitcoin payments, letting attendees scan and spend crypto for T-shirts, hoodies, and hats at the BTC Inc. pop-up store (link)
  • The capability is expected to expand to all eligible merchants by 2026, pending regulatory approval
  • The initiative is part of a broader strategy to offer small businesses more payment options and position bitcoin as the internet’s native currency