👋 Bye to a good earnings season

Last week, Nvidia’s quarterly report marked the informal end to nearly seven weeks of SEC-approved earnings excitement, and long story short: the numbers were good.

Early on, we thought the season would be dominated by tariffs. Even though the Rose Garden tariff announcement happened in April, so it wouldn’t have directly hit Q1 earnings, we expected revised guidance and outlooks to be… gloomy. And there’s no denying that mentions of the word “tariffs” on S&P 500 companies’ earnings calls jumped to unprecedented levels, and we heard a lot about “recession” and “uncertainty” as well, though there was one name we really didn’t hear.

But in the end for the market, earnings turned out to just… be about the actual earnings? Earnings per share at S&P 500 companies rose 12.7% compared to the same quarter last year, almost double what analysts predicted. Additionally, while forecasts for earnings wobbled a bit, consensus EPS expectations are basically back to where they were before the 10-Qs started flying.

We also wondered if the DeepSeek freak-out would lead to fewer CEOs talking about AI on Q1 earnings calls, but nope: the number of S&P 500 companies mentioning AI hit a fresh record this season. Facebook belabored how the metaverse is actually AI, Walmart said AI is improving product searches and letting people exit Sam’s Club without waiting in line to get their receipts checked, and Costco is following in its footsteps. 

And, of course, Nvidia mentioned the ways AI is helping it mint money. Its sunny Q2 outlook boosted much of the AI supply chain higher, as well.

The Takeaway

While the first quarter generally went even better than expected, it’ll be the Q2 reports that truly reveal the impact of President Trump’s on-again, off-again trade policies. We did see many companies declining to give guidance and a lot of creative language in how execs talked about the current “dynamic environment.” Luckily for us, we only have to wait about six weeks to find out.

Read more.

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  See Tom Cruise’s highest-grossing blockbusters, charted.
  

• Why Palantir has been the single best Trump trade: With its focus on AI software, and perhaps more importantly, government contracts and political connections to Trump, Palantir has skyrocketed over 600% since 2023. While Meta’s already invested billions into AI, it’s taking a page out of Palantir’s playbook with its recent deal to develop products with military equipment supplier Anduril, including a “sci-fi style military helmet.” 
  
  What nobody on Wall Street will say out loud: the key to the success of the “Trump trades.”  

Musk’s foray into divisive politics created the perfect storm to destroy Tesla stock value. Then he went quiet on his government work and started talking about shiny things like AI, full self-driving cars, and humanoid robots again. 

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