Financial Insights: Alphabet, Tesla, and Market Trends Discussed

# Alphabet and Tesla’s Latest Earnings Signal Key Market Trends

### Alphabet’s Growing AI Presence

Recent reports indicate that Alphabet is making notable strides in the cloud sector. Notably, the adoption of the Gemini AI platform has surged to 1.5 billion users monthly. YouTube also saw a 10% increase in user engagement, while subscription and device revenue climbed 19%. These metrics highlight Alphabet’s robust performance, although discussions have focused on the potential separation of its Chrome browser division.

Chrome currently holds a dominant position in the global market with a share of approximately 66%. A noteworthy headline emerged this week when OpenAI’s ChatGPT lead, Nick Turley, expressed interest in acquiring Chrome. The aim would be to develop an AI-first browser experience, a territory where Alphabet may also excel given its ongoing success with Gemini. Despite ChatGPT capturing much of the media attention, Alphabet’s advancements warrant recognition.

### Tesla’s Challenging Quarter

In the wake of Alphabet’s earnings, attention shifted to Tesla, which recently presented one of the most anticipated earnings reports of the quarter. While the numbers did not impress investors, the market response was surprisingly muted.

CEO Elon Musk emphasized his commitment to refocusing on Tesla during the earnings call, stating he would limit his involvement with DOGE to one day a week. This shift likely reassured shareholders. However, the quarter marked a significant decline, with automotive revenue falling 20% to $14 billion and net income plummeting 71% to $409 million. Notably, without automotive regulatory credits worth about $600 million, Tesla would have reported a net loss.

### Production Challenges and Future Outlook

Production issues played a critical role in Tesla’s recent performance, as production decreased by 16% and deliveries stalled by 13% year-over-year. Tesla has also been retooling some of its production facilities and acknowledged that the first quarter often brings consumer hesitation in vehicle purchases.

Looking ahead, questions linger regarding Tesla’s ambitions for an autonomous future. Musk has spoken about plans for millions of Optimus robots by 2029, but achieving these goals requires substantial capital. In previous years, Musk has been adept at raising capital when Tesla’s stock was favorable. However, reduced automotive demand, compounded by strong competition from Chinese manufacturers, raises concerns about the company’s financial flexibility moving forward.

### Market Response to Tesla’s Trends

Recent trends indicate that deliveries have stagnated since Q4 2023. Some analysts suggest delays in consumer purchases may stem from a lack of updates in Tesla’s vehicle lineup. The Model Y began deliveries in March, but it’s uncertain how long investors will grant the company leniency regarding performance.

Musk’s continued promises regarding a low-cost vehicle have yet to materialize. This entry-level model could boost volume and contribute positively to Tesla’s cash flow. While it is too early to draw definitive conclusions, a few more quarters of performance data will be crucial for understanding Tesla’s future trajectory.

### Insights from Chipotle’s Earnings

Shifting gears, Chipotle is entering a critical season for sales. After a challenging first quarter, the outlook for the spring is cautiously optimistic. The fast-casual chain reported a 6% increase in sales to $2.9 billion, albeit with a concerning 0.4% decline in comparable store sales.

The restaurant’s level margin stood at 26.2%, decreasing by 130 basis points year over year. Adjusted earnings per share rose only 7% to 29 cents. They have opened 57 new restaurants, focusing heavily on Chipotlanes. However, ongoing tariffs are expected to have a lingering impact, projected to add about 50 basis points to operating costs. Recent price increases have not fully mitigated inflationary pressures, which suggests that Chipotle faces a challenging road ahead in managing costs while maintaining its customer base.

### Conclusion

As both Alphabet and Tesla navigate their evolving markets, understanding their financial performance and strategic shifts is essential for investors. Meanwhile, Chipotle’s seasonal sales indicators will be watched closely in the coming months. The interplay of these dynamics will undoubtedly shape broader market sentiment moving forward.# Chipotle and ServiceNow Navigate Market Challenges; Intuitive Surgical Thrives

Chipotle Mexican Grill appears to be encountering a slowdown, as evidenced by discussions among management focusing on throughput improvements during recent earnings calls. This constant emphasis indicates a strategic response to declining customer traffic.

Dylan Lewis: Chipotle always brings up throughput on their calls. Recently, they highlighted new kitchen equipment aimed at enhancing service speed, such as the dual-sided plancha, a three-pan rice cooker, and a high-capacity fryer. These upgrades are crucial when traffic is down because improving throughput can help maintain restaurant margins and offset rising commodity costs. It seems they are returning to foundational strategies.

Jason Moser: Additionally, Chipotle’s future growth could derive from a new partnership with Alsea, a leading operator in Latin America and Europe. This collaboration aims to open restaurants in Mexico, which will be interesting to watch.

Dylan Lewis: I share your excitement. The competition in Mexico will be stiff. On another note, ServiceNow had an impressive week. Following their earnings report, shares rose over 15%. Asit, it appears that spending in software, both private and public, remains robust.

Asit Sharma: Indeed, ServiceNow’s model allows companies to automate processes and reduce costs, making them resilient against tariffs. Current remaining performance obligations, akin to revenue backlog, increased by a strong 22%. This growth often holds more significance than subscription revenues, which also rose 19%. ServiceNow excels at facilitating digital transformation for major firms.

Conversely, government sectors, typically hesitant about working with large transformation companies, seem to be warming to automation and software solutions. Bill McDermott noted that federal contracts for ServiceNow surged by 30% year over year. This increase is notable, especially as governments seek efficiencies while maintaining essential services.

Dylan Lewis: ServiceNow is a significant player in the tech landscape, boasting a market cap of around $200 billion. They are also making strides in AI. What insights have you gathered from recent management comments regarding this area?

Asit Sharma: Their focus on AI is evident. ServiceNow quickly partnered with NVIDIA to incorporate generative AI into their platform. This integration, known as “Assist,” has been well-received due to its simplicity and effectiveness. Companies are adopting it rapidly, indicating strong traction without excessive marketing fuss, highlighting the application’s genuine operational impact.

Dylan Lewis: Lastly, let’s discuss Intuitive Surgical, a popular choice among investors. Jason, what stood out in their recent earnings report?

Jason Moser: Intuitive Surgical remains a strong performer. They reported first-quarter earnings of $2.25 billion, a 19% increase, alongside a non-GAAP earnings per share of $1.81, which is more than a 20% rise from the previous year. The metrics indicate solid progress: worldwide Da Vinci surgeries increased by 17%, with 15% more installed systems, bringing the total installed base to over 10,000 systems globally. Furthermore, approximately 50,000 surgeons across 70 countries are utilizing their technology.

Ion system procedures also exhibited healthy growth, with roughly 31,000 procedures conducted, marking a 58% increase year over year. They placed 49 new Ion systems this quarter, slightly down from 70 last year due to international placement challenges. Intuitive is strategically managing the tariff environment, with approximately 98% of robotic systems manufactured in the U.S. and expecting tariffs to account for an additional cost of about 1.7% of revenue in 2025.

Dylan Lewis: Management’s approach assumes that announced tariffs will take effect. What do you think about this strategy?

Jason Moser: It’s a pragmatic approach—prepare for the worst while hoping for better outcomes. This mindset applies not just in finance but in life as well.

# Big Tech Faces Challenges Ahead of Earnings While Cloud Investments Remain Promising

That’s exactly it. Jason, Asit, guys, we’re going to see you shortly in the show. Up next, our guest Malcolm Ethridge will analyze Big Tech as earnings approach and discuss recession-resistant stocks on his radar. Stay with us on Motley Fool Money.

[MUSIC]

Dylan Lewis: [MUSIC] Welcome back to Motley Fool Money. I’m Dylan Lewis. In recent years, Big Tech has been a favorite for investors, but 2025 has presented challenges for these major companies. Joining me to discuss the state of the industry is Malcolm Ethridge, a financial planner, author, and market commentator. Malcolm, it’s great to have you back on the show.

Malcolm Ethridge: I’m glad to be here. Thanks for having me.

Dylan Lewis: Many investors are aware that Big Tech was a major driver of market performance from 2023 to 2024. However, the MAG7 list for 2025 shows these stocks are currently underperforming. What insights can you share about this trend?

Malcolm Ethridge: First, I want to extend my congratulations. I understand that’s in order, so congrats on your nuptials.

Dylan Lewis: Thank you!

Malcolm Ethridge: Joining the “Married Dudes Club” is a notable milestone, regardless of age. Now, back to the markets—it’s interesting how Tech led for so long and then suddenly paused. There are many factors at play—both man-made and market-driven. However, I don’t think the trade within Big Tech is completely finished. It’s crucial to focus on specific companies, sectors, and perhaps even the products they offer when discussing Big Tech’s future.

Dylan Lewis: That’s a valid point. We often lump these companies together, but they serve various markets, including Cloud services, advertising, and semiconductors. Where do you see ongoing opportunities?

Malcolm Ethridge: One area I find particularly appealing is Cloud computing. Many hyperscalers saw their stock values drop over 20% since February highs. While I won’t delve into individual companies, let’s consider Microsoft and Amazon. Both firms are investing heavily—hundreds of billions collectively—to grow their Cloud businesses. Investing now could provide the growth potential at a discount, making it a strategic move for long-term investors.

Dylan Lewis: Some investors are concerned about whether these Cloud investments will continue if economic headwinds emerge. Will businesses cut back on spending in an uncertain environment?

Malcolm Ethridge: Companies will undoubtedly reassess their spending based on current realities. However, scaling back on necessary investments could prove detrimental longer-term. The funds spent now may be essential for remaining competitive. For example, major players have invested billions to develop large language models, which positions them for future profitability. The follow-up need will also arise for mid- and large-tier businesses to educate themselves on AI implementation. This presents an opportunity for consultants to step in and provide tailored guidance.

Dylan Lewis: Accenture has notably highlighted their AI consulting during earnings calls, given the potential for substantial billable hours in that area.

Malcolm Ethridge: That’s correct. Many clients are unsure about their needs. The initial costs often involve clarifying these needs, and afterward, you bill for the execution of the strategy that develops from this understanding. Consulting in this context is an attractive prospect for business professionals.

Dylan Lewis: Let’s continue discussing Big Tech but shift our focus towards advertising. Can you shed light on the trends in this market?

# Regulatory Scrutiny Looms Over Meta and Alphabet: Investor Concerns Grow

There is growing concern in the market as Meta and Alphabet face intensified regulatory scrutiny. The Federal Trade Commission (FTC) is examining Meta’s control over Instagram and WhatsApp. Meanwhile, Google is under fire regarding its digital advertising business and search operations, with potential remedies from the Department of Justice (DOJ) on the horizon. These developments provoke questions about the future of these businesses and the overall investment thesis surrounding them.

Investor Sentiment on Major Tech Players

Malcolm Ethridge: I anticipate receiving backlash, but I find both companies alarming as potential investments. Personally, I do not hold shares in either. My primary concern with Google is that its future growth may involve self-cannibalization. How does Google transition from its traditional, ad-heavy search results to a model that focuses on single-answer responses, as seen with ChatGPT, without sacrificing the revenue generated from search ads, which accounts for over 90% of its income? This uncertainty makes investing in ad-based companies particularly risky if we are indeed approaching a recession. Advertising budgets are typically the first expenses to be trimmed during economic downturns.

Similar concerns apply to Meta, particularly regarding antitrust issues. The prospect of separating Facebook, Instagram, and WhatsApp raises questions about whether such a breakup would benefit shareholders as much as a standalone YouTube entity might.

Existential Threats and Changing Consumer Behavior

Dylan Lewis: The situation for Google and Alphabet is intriguing, especially with Meta facing competition from TikTok. Google’s core business faces existential challenges as it navigates antitrust issues. The current environment may one day be dramatized on screen. A pressing concern remains whether Google can adapt quickly to changing consumer behaviors and successfully integrate advertisements into new user experiences.

Malcolm Ethridge: I doubt there’s a straightforward solution, and investors may face long-term challenges while the company strategizes its recovery. Perhaps a leadership change is necessary, with a focus on product innovation rather than just operational tactics. To adapt to the transformations brought by AI, a reevaluation of internal strategic thinking is essential.

Looking for Investment Opportunities

Dylan Lewis: Despite concerns about major tech firms, where do you see promising investment opportunities in the broader market?

Malcolm Ethridge: I am particularly interested in two sectors right now: cybersecurity and streaming services. Cybersecurity has become paramount, especially in challenging economic times when advertising budgets may be cut. However, companies cannot afford to skimp on security measures. It’s akin to car insurance; every business needs protections against cybersecurity threats. This makes cybersecurity a resilient field for capital investment. One could consider firms like CrowdStrike and Palo Alto, or even ETFs like BUG and CIBR.

On the other hand, Netflix and Spotify present compelling investment opportunities as well. If the economy does weaken, individuals will likely tighten their spending on travel and dining out. However, many may still subscribe to services like Netflix for entertainment during downtimes. Users are unlikely to drop their subscriptions due to the value they provide. This line of reasoning is supported by investors’ positive reactions to Netflix’s performance reports. For those who find Netflix too pricey, Spotify remains an alternative that’s still scaling its user base.

Consumer Loyalty and Market Resilience

Dylan Lewis: We often discuss a “snap test” for businesses—would people miss them if they disappeared? I believe both Netflix and Spotify would pass this test. Their monthly fees are low and often overlooked. Personally, as both a shareholder and user, I would be significantly affected if either service ceased to exist.

Malcolm Ethridge: Spotify demonstrated its market resilience during the 2021 controversy surrounding the Joe Rogan Experience. Users showed an impressive degree of loyalty, opting to stay rather than switch to competitors like Apple Music or Amazon Music. This loyalty indicates a strong consumer base that values existing playlists and personalized recommendations. The growing subscriber base for both Netflix and Spotify suggests they are on parallel trajectories, with considerable overlap in their user demographics.

“`html

Market Insights: Analyzing Investment Opportunities in Real Estate and Tech

Dylan Lewis: Both of you approach the analysis of companies by considering how consumer and business spending fits into current market dynamics. This perspective acts as a key filter for evaluating potential business success in today’s environment. Are there any other factors you’re focusing on as you assess companies right now?

Real Estate Market on the Radar

Malcolm Ethridge: One area I’m particularly intrigued by is the real estate market. Currently, there’s volatility, as a single tweet can sway the market by 10% in either direction. However, I believe that once we see a substantial catalyst—specifically a 50 basis point reduction in the 10-year treasury rate—that could sustainably lower mortgage rates for more than a week, we will see opportunities. This adjustment would allow the mortgage market to recover. When that happens, it could be an excellent time to invest in major wholesale mortgage companies like United Wholesale, Rocket, and other competitors. This sector has been relatively dormant but is poised for revival. Historically, we experience a pattern of two years of stagnation followed by two years of growth. Given the current restrictive interest rates, we might now be on the verge of a surge in this industry, which is definitely on my watchlist.

Dylan Lewis: Always a pleasure to chat with you, Malcolm. Thanks for your insights.

Malcolm Ethridge: Glad to be here.

Dylan Lewis: Listeners, you can find more of Malcolm’s thoughts on X with his “Malcolm on Money” weekly newsletter. Now, let’s welcome Jason Moser and Asit Sharma back after the break to examine additional stocks on our radar this week. Stay tuned to hear more on Motley Fool Money.

[BACKGROUND] As always, those speaking on the show may have interests in the stocks discussed, and The Motley Fool may hold formal recommendations for or against those stocks. Always exercise caution and do not make investment decisions based solely on this discussion. All personal finance content adheres to Motley Fool Editorial standards and is not influenced by advertisers.

This Week’s Radar Stocks

I’m Dylan Lewis, joined by Asit Sharma and Jason Moser. Jumping right into our radar stocks, let’s hear from Asit first. What’s drawing your interest this week?

Asit Sharma: This week, I’m focused on NASDAQ (symbol: NDAQ), the company behind the NASDAQ exchange. In times of market volatility, trading volumes typically rise, leading to increased profits as many seek derivatives to manage risk. Furthermore, NASDAQ has been successful in attracting listings away from the NYSE, particularly for tech IPOs. Under CEO Adena Friedman’s leadership, the company has diversified beyond relying solely on trading volumes. Its financial services unit and licensing operations contribute significantly to its revenue. Recently, NASDAQ has shown organic growth of 10% to 11% annually, transitioning from a strategy focused solely on acquisitions. This adaptive growth strategy means that even if market trading volumes decline, NASDAQ can maintain robust performance. This makes it a compelling company to monitor.

Dylan Lewis: Asit, you’re adding a trading exchange to your radar. Dan, any thoughts or comments about NASDAQ?

Dan Boyd: At the end of financial podcasts that rhyme with Marketplace, they often mention NASDAQ being up or down. Is that the same stock we’re discussing or something different?

Asit Sharma: They are indeed referring to the NASDAQ exchange. NASDAQ (the company) operates that exchange and facilitates new listings. If you’re launching an IPO as a tech company, you aim for NASDAQ. However, as I pointed out, they have diversified their business significantly.

Dan Boyd: So they refer to the exchange itself, not referring to the stock?

Asit Sharma: Correct, they discuss the exchange, but it’s essential to note that NASDAQ, the stock, represents the broader operations of the company.

Dylan Lewis: Jason, you have chosen an interesting exchange as your radar stock this week. What do you have for us?

Jason Moser: In light of current developments, I believe it’s an appropriate time to discuss Adobe, particularly as they have been named an official partner of the NFL. This enhancement to their pre-existing partnership means all 32 NFL teams will be utilizing Adobe applications to enhance fan engagement. The NFL is a significant market, and this collaboration is notable as Adobe continues to ramp up investments in AI to remain competitive within the industry. I look forward to seeing the outcomes of this partnership.

Dylan Lewis: Dan, you’re familiar with Adobe. Any comments or questions?

Dan Boyd: Absolutely, I use Adobe products regularly. When I think of Adobe, I think about their ongoing integration with football as well.

Asit Sharma: That’s certainly the first association for me as well.

Dylan Lewis: Given their efforts to expand and form strategic partnerships, what’s your take, Dan? Is Adobe on your watchlist this week?

Dan Boyd: Adobe is a necessary tool, but I have mixed feelings. I’m a fan of their products.

Dylan Lewis: Will you be adding it to your watchlist?

Dan Boyd: I’m uncertain about the NASDAQ component, Asit, my apologies.

Asit Sharma: No worries, I’m not entirely sure either.

Dylan Lewis: Thank you both, Jason and Asit, for sharing your insights on stocks. Dan, your contributions are always appreciated. That concludes this week’s Money radio show. The show is produced by Dan Boyd. I’m Dylan Lewis. Thanks for listening, and we’ll see you next time.

John Mackey, former CEO of Whole Foods Market and Amazon subsidiary, serves on The Motley Fool’s board. Suzanne Frey, an executive at Alphabet, also serves on the board. Randi Zuckerberg, former market development director and spokesperson for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is another board member. Asit Sharma holds positions in Adobe, Amazon, Intuitive Surgical, Microsoft, and ServiceNow. Dan Boyd has investments in Amazon and Chipotle Mexican Grill. Dylan Lewis has a position in Spotify Technology. Jason Moser holds positions in Adobe, Alphabet, Amazon, and Chipotle Mexican Grill. The Motley Fool has positions in and recommends Accenture Plc, Adobe, Alphabet, Amazon, Apple, Chipotle Mexican Grill, CrowdStrike, IBM, Intuitive Surgical, Meta Platforms, Microsoft, Netflix, ServiceNow, Spotify Technology, and Tesla. The Motley Fool also recommends Nasdaq and Palo Alto Networks. Additionally, it recommends long January 2026 $395 calls on Microsoft, short January 2026 $405 calls on Microsoft, and short June 2025 $55 calls on Chipotle Mexican Grill. The Motley Fool has a comprehensive disclosure policy.

The views and opinions expressed herein belong solely to the author and do not necessarily reflect those of Nasdaq, Inc.

“`