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Meta Connect developer conference
(Andrej Sokolow/Getty Images)
Avocado, toast?

Meta reportedly delays the launch of its new AI model because it’s just not that good

Meta’s AI leaders have “instead discussed temporarily licensing Gemini to power the company’s AI products, though no decisions have been reached,” according to The New York Times.

Luke Kawa

Here’s The New York Times with something that Meta CEO Mark Zuckerberg probably wishes had never seen the light of day:

Per the NYT, the social media giant is postponing the release of its new foundational AI model, originally planned for this month, until at least May, citing three people with knowledge of the matter.

The model, which is code-named “Avocado,” reportedly did not perform as well as offerings from Google, OpenAI, and Anthropic “on internal tests for reasoning, coding, and writing.”

In what’s seemingly a concession to Google’s prowess, Meta’s AI leaders “had instead discussed temporarily licensing Gemini to power the company’s AI products, though no decisions have been reached,” according to the report.

Gemini 3.0’s launch was extremely warmly received by the public and the stock market, resulting in a halo effect that saw companies tied to its supply chain soar while firms with lots of exposure to OpenAI sank.

Meta’s prior model, Llama 4, was also plagued by delays and performance issues. Soon thereafter, the firm began bolstering its bench with a high-profile hiring spree, including onboarding Scale AI founder Alexandr Wang after investing $14.3 billion into the startup. Earlier this year, Meta CTO Andrew Bosworth told the press that these new models under development were “very good.”

The social media giant’s capital expenditure over the past two years has totaled nearly $107 billion, as it and other so-called hyperscalers and foundational model companies race to build better AI models and monetize their new capabilities.

But based on this report, aggressively accumulating talent and deploying compute does not ensure that your models will be best-in-class.

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Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemons geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected halo effect across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemons valuation has already been steadily compressing for years. While it was once one of retails richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi ONeill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brands growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

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US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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