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Analyzing Key Economic Indicators and Market Trends
In this podcast, Motley Fool analysts Jason Moser and Asit Sharma join host Ricky Mulvey to discuss:
- If the U.S. economy is sliding into a recession.
- Earnings from Amazon, Meta, Microsoft, and Apple.
- Whether investors should be concerned about 20% of the S&P 500‘s market cap being tied to just four companies.
- Two stocks worth watching: Twilio and Reddit.
Later, Motley Fool contributor Rick Munnariz joins host Mary Long to discuss the launch of Universal Studio’s new park, Epic Universe, and the current state of the travel industry.
The U.S. Economic Landscape: Are We Heading for a Recession?
Ricky Mulvey: It’s the Motley Fool Money Radio Show. I’m Ricky Mulvey, filling in for Dylan Lewis. Joining me are Motley Fool Senior Analysts Jason Moser and Asit Sharma. Great to have you both here.
Jason Moser: Ricky, how’s it going?
Asit Sharma: Good to be here, Ricky.
Ricky Mulvey: We’re diving into big macroeconomic trends and technology. Asit, the U.S. GDP shrank by 0.3% this quarter, and shipments to the Port of Los Angeles are projected to be down 35% from last year, according to Port Director Gene Soroka. On a positive note, non-farm payrolls exceeded expectations with 177,000 jobs added in April. However, some airline CEOs, including Southwest’s Robert Jordan, are stating we’re already in a recession. Given these mixed indicators, are we heading towards a recession?
Asit Sharma: Ricky, it’s often said that it takes two data points to identify a trend. The recent contraction in the U.S. economy, mostly occurring late in the quarter, hints towards a difficult upcoming quarter. The plummeting port numbers are critical, as we’ve yet to see the effects of recently implemented tariffs. As the new quarter progresses, we could witness lower product availability and increased prices, affecting consumer sentiment. While some sectors are performing well—like healthcare and certain areas of Big Tech—overall, I wouldn’t be surprised if we formally recognize a recession soon.
Market Reactions and Long-term Investment Strategies
Ricky Mulvey: Jason, what does this data mean for stock investors who are feeling apprehensive about the economy? Are we indeed sliding into a recession?
Jason Moser: The data indicates a clearer picture. Changing course takes time; many companies were preparing for current challenges even as the first quarter ended. Notably, 24% of Americans are canceling significant purchases like homes and cars, and another 32% are delaying big-ticket items. This behavior suggests consumer confidence is waning, which is typical during recessionary periods associated with market downturns.
However, history shows that investors often find opportunities during bear markets, even if it may not feel that way at the time. This is why maintaining a long-term investment strategy is essential. Finding solid companies to invest in remains critical, as economies tend to recover. Political factors will also come into play as we approach the 2026 elections. Thus, it’s vital to stay vigilant and prepared for potential downturns while keeping an eye on promising businesses.
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Amazon and Meta Show Resilience Amid Changing Market Dynamics
Ricky Mulvey: Jason, this is a familiar topic we’ve discussed. During periods of dislocation and uncertainty, larger companies often expand their dominance. Amazon CEO Andy Jassy highlighted this in the latest earnings report, noting, “In uncertain environments, customers tend to choose the provider they trust most.” He reflected on this trend during the COVID-19 pandemic. Asit, do you foresee this trend continuing in the current trading landscape where major players like Amazon could become even more dominant?
Asit Sharma: It’s quite possible, Ricky. Amazon’s significant scale enhances their leverage in the market. Notably, Amazon operates as a platform business within e-commerce, and many overlook this dimension. Jassy mentioned that Amazon sells a substantial volume of goods at lower price points—including around $100 billion in groceries annually. With millions of sellers and hundreds of millions of SKUs on its platform, if some sellers exit due to tariffs, Amazon can effectively substitute those goods. This adaptability could strengthen Amazon further.
Looking at recent performance, Amazon’s net sales grew about 9% to $156 billion, with net income rising impressively to $17.1 billion from $10.4 billion a year earlier. Although they increased inventory in anticipation of tariffs, management appeared unconcerned about those issues. Amazon Web Services (AWS) continues to thrive, achieving gross margins near 38% as it wields pricing power and manages costs efficiently. This was a strong quarter for Amazon, underpinning JMO’s investment thesis. While some short-term challenges may arise as investors recalibrate, the long-term outlook remains promising, fueled by e-commerce growth and ongoing investments in AWS and AI infrastructure. Additionally, Amazon is involved in various ventures, such as launching satellites, indicating a robust business model poised for future growth.
Ricky Mulvey: Asit, while I appreciate CEO Jassy’s focus on core services, the bulk of Amazon’s operating income still stems from AWS, which has increased by over 20% year over year. AWS has recently signed agreements with Adobe, Uber, and NASDAQ, alongside cost-saving measures totaling half a billion dollars for customers. Given these financial results, what insights do you have as an investor?
Asit Sharma: The substantial investment Amazon made in its e-commerce capabilities over the past several years has effectively positioned them to absorb market pressures, including any potential tariffs. All the developments you mentioned are pivotal to their success. AWS is expanding significantly, and Amazon currently invests at an astounding run rate of $100 billion yearly into its GPUs, data centers, and other technological advancements. They believe enterprises have another 10-20 years to fully transition to cloud services. This perspective supports my view of AWS as a dominant force behind Amazon’s performance.
Ricky Mulvey: Shifting gears, Meta is sharing its vision involving AI and augmented reality. It appears to be leveraging AI to enhance user engagement and sales. Jason, what are your main takeaways from Meta’s recent quarter?
Jason Moser: Ricky, it’s interesting how the term “Metaverse” has almost vanished. The company, which rebranded itself on that premise, has not mentioned it significantly in recent communications. This pivot towards AI investment seems appropriate. Meta claims its AI is nearing one billion users, a milestone Mark Zuckerberg emphasizes for impactful growth. Meta’s total revenue reached $42.3 billion, a 16% increase from the previous year, with earnings per share jumping 37% to $6.43. However, I remain cautious about the Reality Labs segment, which focuses on immersive technologies. Revenue from this division dropped to $412 million but still incurred significant operating losses—$4.2 billion for the quarter. Such losses are consistent, raising concerns, especially as they’ve raised their capital expenditure guidance for the year to a range of $64 billion to $72 billion, up from a previous forecast of $60 billion to $65 billion.
Ricky Mulvey: Meta’s financial trajectory certainly raises key questions. We’ll explore more on other tech-related topics after the break. You’re listening to Motley Fool Money.
# Major Tech Companies Show Strong Financials Amid Market Uncertainty
Investors React Positively to Microsoft’s Cloud Growth
Microsoft’s recent earnings report has garnered significant investor attention, particularly due to its robust cloud revenue performance. Despite ongoing economic anxiety, Microsoft reported its cloud revenue increased by 20% to reach $42.4 billion. This category encompasses both Azure and Microsoft 365 cloud services. Notably, Azure alone saw a 33% growth, with AI initiatives contributing 16 percentage points to this acceleration. Overall, Microsoft’s total revenue hit $70 billion, marking a 13% increase year-over-year, while net income rose 18% to approximately $26 billion. This data showcases Microsoft’s ability to thrive despite market volatility.
Potential Concerns in Microsoft’s Strategy
While Microsoft’s performance is commendable, concerns arise from its capital expenditures. The company is investing all of its increased operating cash flows—$37 billion this quarter—into capital expenses, particularly in AI-related infrastructure. This forward-looking approach poses some risk, as it depends on future returns from these investments. However, CEO Satya Nadella is well-versed in cloud management, suggesting an informed strategy moving forward.
Apple’s Strategic Investments Amidst Mixed Results
Apple announced plans to invest $500 billion in the U.S., alongside a $100 billion share repurchase plan intended to buy back 3% of its shares. Despite this ambitious strategy, the company reported modest revenue growth of just 5%. Earnings per share rose 8%, although slightly missing analyst expectations. Factors such as tariffs could result in additional costs of up to $900 million for Apple, but these are anticipated to be manageable. A notable highlight in their earnings was a 15% increase in iPad revenue, possibly attributed to preemptive purchasing amid tariff talks. Apple continues to diversify its supply chain, with significant investments in India, expected to contribute over 20% of global iPhone production by 2025.
Market Concentration of Major Players
The four companies discussed—Meta, Apple, Amazon, and Microsoft—collectively represent about 20% of the S&P 500’s market capitalization. While concentration in major stocks can be concerning, current economic conditions may favor such a concentration as these companies remain profitable. As economic pressures continue, these established firms are likely to strengthen their market positions.
Future Perspectives on the Travel Industry
Shifting gears, listeners will explore the travel industry, particularly with Universal Orlando’s Epic Universe opening later this month—the first major theme park launch in over two decades in the U.S. This development will serve as a focal point for discussions around the performance of hotel chains and cruise lines as the travel market evolves.
# Universal Epic Universe: A Thrilling Addition to Orlando’s Theme Parks
Universal’s Epic Universe marks the first new park opening in Orlando in over 25 years. This expansive park consists of five distinct areas: Super Nintendo World, the Wizarding World of Harry Potter, the Ministry of Magic, a How to Train Your Dragon Isle, and a celestial park featuring fountains and restaurants. Additionally, there’s a dark universe that showcases classic monsters. We have Rick Munarriz, who recently returned from a preview of the park. Rick, can you share your thoughts on Universal Epic Universe?
Rick Munarriz: I spent three days at the park, and I’m eager to return because it’s incredible. This is the most impressive park I’ve seen before its official opening. However, like any new park, it faces some initial challenges. The major ride, the Ministry of Magic, still has some technical issues. It’s critical for them to resolve these within three weeks. While it’s not difficult to join the virtual line, this ride has been down more often than operational, making it challenging to experience. I managed to ride it just once during my visit. That said, the park boasts beautiful designs and a robust ecosystem with a variety of restaurants. There’s even a hotel located at the back of the park, complete with a private entrance for guests. It’s an amazing development for Orlando, but it could benefit from additional rides to accommodate future crowds.
Mary Long: You’ve touched on the park’s beauty and its need for more rides. It’s also about the experience beyond just attractions. The advanced animatronics play a significant role in enriching visitors’ experiences. Can you elaborate on this?
Rick Munarriz: Universal has a rich history rooted in the movie industry. They initially focused on creating rides based on films, featuring simulated experiences. However, visitors wanted more interaction. Epic Universe delivers on this by including numerous animatronics throughout the park, making characters come alive. For example, the Harry Potter Forbidden Journey ride simulates a Quidditch match with death eaters, but now imagine that concept transformed to feature Universal Monsters—Frankenstein and Dracula up close, and a werewolf chasing you. It’s a level of immersion that elevates the theme park experience beyond anything I’ve seen before. Once the technical issues are resolved, I believe this park will attract significant interest in Central Florida’s tourism sector.
Mary Long: Experiencing this park as a guest versus as an investor presents different insights. Did any aspects stand out to you financially during your visit?
Rick Munarriz: My family and I spent three days together at Epic Universe, including two nights at the Grand Helios Hotel, and the total cost exceeded what we typically spend on annual passes at Universal. There’s substantial revenue potential here. As an investor, it’s exciting to see consistent consumer spending in this environment. Notably, Epic Universe isn’t offering annual passes, which means daily entry prices are around $140 to $160, instead of the typical $500 to $700 for unlimited access. This pricing strategy indicates a healthy financial forecast for the park.
Mary Long: When considering Comcast’s overarching business, theme parks play a relatively smaller role compared to Disney’s portfolio. Would you say the theme park segment of Comcast is undervalued by investors?
Rick Munarriz: Yes, that’s a fair assessment. Theme parks constitute only about 6% to 7% of Comcast’s overall revenue, whereas Disney depends on them for up to a third of its business. Comcast is primarily recognized for its cable and broadband services, which may overshadow the potential of its theme parks. Recent developments show Comcast is now focusing more on this growth avenue, having recently finalized plans for a theme park in the UK. Despite their previous attempts to acquire Disney, they could successfully emulate Disney’s model and launch more global theme parks. Given the steady demand for such experiences, the theme park operations are likely to gain more investor attention moving forward.
Mary Long: The park’s timing coincides with both peak travel season and some recent downturns in the airline industry. Analysts have also lowered expectations for hotel stocks. From your observations at Epic Universe, how does the current travel landscape look overall?
Rick Munarriz: Naturally, I share the broader caution many feel regarding the travel industry right now. The upcoming months may present challenges. However, I noticed plenty of guests were eager to spend, which can be a positive indicator for the market. Despite potential risks, parks like Epic Universe may continue to attract visitors.
# Travel Industry Faces Uncertainty Amid Economic Concerns
As travel-dependent businesses like hotel operators and airlines navigate challenges, international travel remains uncertain due to ongoing trade tensions. While domestic travel is generally strong in the U.S., a weakening economy could have a significant impact. Corporate travel is vulnerable; if companies aren’t hiring, they’re less likely to send employees to conventions or business meetings. Furthermore, individual consumers may cut back on travel spending if financial insecurities arise. Caution is warranted until there is clarity about economic recovery.
Mary Long: Some travel companies are navigating these challenges better than others. Hilton reported its earnings earlier this week, showing no signs of concern about the wider economic landscape. Their first-quarter profits reached $300 million, a 13% increase from the year before. Given the strong performance, Hilton even raised its outlook for the remainder of the year. Are they ignoring the broader macroeconomic factors, or have they identified opportunities that others have overlooked?
Rick Munarriz: While I wouldn’t say they’ve completely cracked the code, Hilton is gaining market share and outperforming competitors. Their guidance for 2023 predicts a revenue increase per room in the U.S. of 0% to 2%, which is notably higher than the overall industry outlook of 0.4% to 0.5% from Goldman Sachs. Hilton’s earnings are growing faster than their revenue, indicating effective management. However, if travel declines, Hilton cannot guarantee business will remain steady.
Mary Long: Shifting to the cruise industry, we saw mixed results this week. Norwegian Cruise Line Holdings posted decreased earnings year-over-year, while Royal Caribbean exceeded Wall Street expectations and raised its guidance. What can we infer from these varying performances within the cruise sector?
Rick Munarriz: The results illustrate that a rising tide does not lift all ships. Royal Caribbean’s stock has climbed 63% over the past year, while Norwegian Cruise Line’s stock has remained flat. Royal Caribbean reported a 7% revenue increase, whereas NCL saw a decline. Royal Caribbean’s proactive guidance contrasts sharply with NCL’s, which had to lower its expectations. Historically, Royal Caribbean has outperformed its competitors on growth and profitability, making it a favored choice among investors.
Although both companies are witnessing strong bookings, Norwegian Cruise Line’s difficulties stem, in part, from having several ships in dry dock for refurbishment. When you analyze their historical performance, the disparities between Royal Caribbean and Norwegian are evident.
Mary Long: NCL’s CEO, Harry Sommer, suggested that travelers often prefer cruises during economic downturns because they provide greater value than land-based vacations. Historically, does this trend hold true for cruise companies?
Rick Munarriz: To some extent, yes, but it’s not a guarantee. For those living near major cruise ports in Florida, the convenience is significant. Cruises offer a unique experience that has evolved greatly over the last 20 to 30 years, making them more appealing. However, I can’t fully endorse Sommer’s viewpoint that the cruise industry would thrive in tough economic times. Historical data suggests that challenging economic conditions will generally impact all travel sectors, including cruises. Currently, people tend to book cruises well in advance, and cancellations appear stable. Nevertheless, if the economy worsens, it could adversely affect the entire industry.
Mary Long: Thank you, Rick Munarriz, for your insights into the travel industry and the dynamics affecting hotel and cruise companies.
Ricky Mulvey: Stay tuned for our upcoming segment on Radar Stocks. You’re listening to Motley Fool Money.
The legend lives on from the Chippewa on down of the big lake they call Gitche Gumee. The lake, it is said, never gives up for dead when the skies of November turn gloomy. With a load of iron ore, 26,000.
As always, people on the program may have interests in the stocks they discuss, and the Motley Fool may have formal recommendations for or against. Please do not buy or sell stocks based solely on what you hear.
# NFT Controversy and Company Earnings: Key Financial Insights
I’m Ricky Mulvey, sitting in for Dylan Lewis, and today I’m joined by Asit Sharma and Jason Moser. Before diving into Radar Stocks, let’s discuss an interesting NFT story. According to 404 Media, last week, thousands of NFTs worth millions vanished from the internet. This happened because the project manager switched the NFTs in the Clone X artifact project to a free Cloudflare plan. Buyers who initially invested in these NFTs were met with error messages when trying to access their digital collections. Fortunately, the NFTs are back online. As Matthew Holt reported, one of the original appeals of NFTs was their permanence on the internet, akin to real-world assets. However, instances like this raise concerns about their potential disappearance. Fools, are we feeling sympathy for the NFT community here?
Jason Moser: Personally, I’ve always been transparent about my skepticism toward crypto and NFTs. I struggle to articulate their tangible value. This situation exemplifies my concerns because understanding how this technology works is complex, and assets can seemingly vanish overnight. The lingering question remains—what if they just disappear? Ensure you fully comprehend what you’re entering before diving in.
Ricky Mulvey: Asit, as both a father and an investor, what advice would you give to parents if their kids express interest in purchasing NFTs?
Asit Sharma: I would advise my kids to consider it like taking out the trash. On some days, you might be mindful, while other days you could overlook potential issues. With NFTs, attention is crucial. A similar narrative exists in the Bitcoin world. There’s a case of someone trying to retrieve a hard drive worth millions from a landfill due to lost assets. Digital assets emphasize a critical point—if you engage with them, understand their storage and custody because it truly matters.
Ricky Mulvey: Now, let’s turn to our Radar Stocks. Dan Boyd, what’s the first stock on our list this week? Let’s begin with Jason Moser.
Jason Moser: I’m focusing on Twilio (Ticker: TWLO). Twilio recently reported earnings that showed a solid start to the year, with revenue growth of 12%. They’ve also achieved another quarter of positive GAAP profitability. Active customer accounts rose by 7% to 335,000, and the dollar-based net expansion rate improved to 107%, indicating successful customer relationship growth. The company’s new offering, Conversation Relay, is becoming a valuable tool for developers creating AI voice agents. Under CEO Khozema Shipchandler’s leadership since early 2024, Twilio seems to be on a productive path toward growth and profitability. Interestingly, the term ‘tariff’ didn’t even appear once in the conference call.
Ricky Mulvey: That’s an interesting detail. Dan, what’s your take on Twilio?
Dan Boyd: This company may seem a bit dull, especially without any excitement comparable to McCormick but what’s happening?
Jason Moser: I sense some playful banter here, Dan.
Ricky Mulvey: Asit, what’s catching your attention this week?
Asit Sharma: I’m paying attention to Reddit, which generates revenue from advertising, including display ads and sponsored posts. Their latest results were impressive, with total revenue climbing 61% year-over-year to $392 million, yielding a free cash flow of $126 million. This demonstrates a turnaround from previous losses. One statement from their earnings call resonated with me: Reddit’s open structure aids content discovery across the web. They remain one of the few major platforms that don’t require sign-ins for content access, supporting internet knowledge dissemination, even if it’s a bit promotional.
Ricky Mulvey: Dan, any quick thoughts on Reddit?
Dan Boyd: Great insights! What’s your favorite subreddit?
Asit Sharma: I can’t disclose that here, but I’ll share post-broadcast.
Ricky Mulvey: That raises some concerns, Asit.
Asit Sharma: Why should that be a concern?
Ricky Mulvey: The internet can be unpredictable. But it’s time to conclude. Dan, which stocks are on your watch list?
Dan Boyd: Following a somewhat ominous tone earlier, I’ll keep an eye on Twilio because usually, boring is a sign of stability.
Ricky Mulvey: That wraps up this week’s Motley Fool Money radio show. The show is mixed by Dan Boyd. Thank you to Asit and Jason; we’ll catch you next time.
Disclosure statements: John Mackey, former CEO of Whole Foods Market and member of The Motley Fool’s Board of Directors, and Randi Zuckerberg, former Facebook spokesperson and sister to Meta Platforms CEO Mark Zuckerberg, are also board members. Asit Sharma owns shares in Adobe, Amazon, Cloudflare, Marriott International, Microsoft, Reddit, and Walt Disney. Dan Boyd holds shares in Amazon and Walt Disney. Jason Moser owns shares in Adobe, Amazon, Cloudflare, McCormick, and Twilio. Mary Long does not hold shares in any mentioned stocks. Rick Munarriz has shares in Apple, Comcast, Nintendo, Norwegian Cruise Line, Royal Caribbean Cruises, and Walt Disney. Ricky Mulvey owns shares in Meta Platforms and Walt Disney. The Motley Fool holds positions and recommends Adobe, Amazon, Apple, Bitcoin, Cloudflare, Goldman Sachs Group, Meta Platforms, Microsoft, Twilio, Uber Technologies, and Walt Disney, as well as recommending Comcast, Hyatt Hotels, Marriott International, McCormick, Nintendo, and Southwest Airlines. They also suggest long January 2026 $395 calls and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views expressed here are those of the author and do not necessarily reflect those of Nasdaq, Inc.
