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Duolingo AI memo will weigh on Q2 results
It’s bearish, but relax (CSA Images/Getty Images)

Backlash to Duolingo’s AI memo will hit Q2 numbers: Morgan Stanley

Matt Phillips

Live by social media buzz, die by social media backlash.

In the last hour of trading, Duolingo was on its way to a 3% loss for the day, after Morgan Stanley analysts trimmed Q2 estimates for the online language-learning app, which until recently had showed remarkable agility by building its brand through its slightly unhinged social media content.

Then came the company’s decision to publish on LinkedIn a memo outlining its plan to becoming an “AI-first” company.

It was the kind of corporate thought leadership that pervades the executive-friendly networking platform. But readers and users clearly took exception to one section of the memo, where CEO Luis von Ahn said the transition would mean the company will gradually stop using contractors for work that AI could do. It didn’t go well, according to Business Insider:

“The backlash was harsh. Tweets, TikToks, and Reddit posts exploded in outrage. Duolingo has cultivated a big social presence with its meme-loving owl mascot, so the company was a prime target. One TikTok creator implored their fans not to allow Duolingo to return from being canceled.”

There also seemed to be a business impact. Analysts at Jefferies recently suggested that a decline in the growth rate of daily active users (DAUs) may have been linked to the kerfuffle. On Tuesday, Morgan Stanley analysts concurred, noting other evidence since the ill-fated LinkedIn post:

“Since then, we have seen a decline in US users albeit with no impact internationally. This can be shown through a variety of datapoints, Sensor Tower shows US DAUs declined ~5% in the following 2 weeks & another ~5% since, international DAUs have been unaffected ( Exhibit 1 ). Second, the number of people learning a language in English on DUOL has declined ~1% while people learning English has increased ~3% ( Exhibit 2 ). Third, the average views on DUOL’s TikTok videos in June were down ~55% versus April showing reduced virality ( Exhibit 3 ). With the US user weakness occurring after the company gave guidance, we expect DUOL’s DAUs will come in below prior expectations and now model 40% y/y DAU growth, the low-end of guidance.”

Morgan Stanley cut their price target for the stock to $480 from $515, which still implies a roughly 25% upside over the next 12 to 18 months. And the bank’s analysts think that, like most social media phenomena, anti-Duolingo sentiment will prove ephemeral.

“User backlash to tech companies has historically been shortlived. We see some evidence this is following a similar path: US 1-star reviews normalized in June to <5% of the total after spiking in May ( Exhibit 4 ), US DAUs have stabilized since mid-June, and the company has seen views trend upwards on recent TikToks.”

Morgan Stanley maintained its “overweight” (essentially “buy”) rating on the stock, saying “nothing fundamentally alters our bullish thesis.”

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J. Edward Moreno

FDA says it will take “decisive steps” against GLP-1 compounders, HHS refers Hims to DOJ for investigation

The Food and Drug Administration said it would take "decisive steps" to restrict GLP-1 compounding, a day after Hims & Hers announced that it would sell copies ofNovo Nordisk’sWegovy pill.

The FDA specifically called out Hims in the announcement. Additionally, Department of Health and Human Services' General Counsel Mike Stuart said in a post on X on Friday he has referred Hims to the Department of Justice "for investigation for potential violations by Hims of the Federal Food, Drug, and Cosmetic Act and applicable Title 18 provisions."

In a statement, Hims said the company "has always operated with a deep commitment to the safety and best interests of consumers and in compliance with applicable law."

"We have a long history of successfully working with regulators, and look forward to continuing to engage with the FDA to ensure safe access to affordable healthcare," they said.

This marks a significant shift in tone from the FDA, which has done little to prevent companies like Hims from marketing copies of Novo's lucrative weight loss drugs.

Shares of Hims fell 14% after hours. The stock had already taken a hit after FDA Commissioner Marty Makary said in an X post on Thursday that the agency would “take swift action against companies mass-marketing illegal copycat drugs.”

Read more

Hims, long flying under regulators’ radar, finally strikes a nerve with its Wegovy pill copy

Hims, long flying under regulators’ radar, finally strikes a nerve with its Wegovy pill copy

The FDA specifically called out Hims in the announcement. Additionally, Department of Health and Human Services' General Counsel Mike Stuart said in a post on X on Friday he has referred Hims to the Department of Justice "for investigation for potential violations by Hims of the Federal Food, Drug, and Cosmetic Act and applicable Title 18 provisions."

In a statement, Hims said the company "has always operated with a deep commitment to the safety and best interests of consumers and in compliance with applicable law."

"We have a long history of successfully working with regulators, and look forward to continuing to engage with the FDA to ensure safe access to affordable healthcare," they said.

This marks a significant shift in tone from the FDA, which has done little to prevent companies like Hims from marketing copies of Novo's lucrative weight loss drugs.

Shares of Hims fell 14% after hours. The stock had already taken a hit after FDA Commissioner Marty Makary said in an X post on Thursday that the agency would “take swift action against companies mass-marketing illegal copycat drugs.”

Read more
Tasha Matsumoto
2/6/26
Tech rebound propels stocks to best day since May

The S&P 500, Nasdaq 100, and Russell 2000 all climbed higher as the AI trade was back on.

Chicago Bulls Dennis Rodman (91) and Michael Jordan (23) in action, rebounding vs Charlotte Hornets
Max Knoblauch

Airlines rise, continuing their volatile 2026, as US-Iran talks may foreshadow some oil supply relief

Airline stocks are surging on Friday, as the market appears to be pricing in some medium-term oil pricing relief following talks between the US and Iran. Iranian officials referred to the meeting as “a good beginning.”

Shares of budget carriers, which have tighter margins and are more sensitive to fluctuations in fuel costs, are leading the surge. Frontier Airlines and Allegiant up more than 13%, while major airlines like United Airlines, American Airlines, and Delta Air Lines are also up at least 6%. JetBlue and Alaska Air are similarly up about 6%.

The market more broadly is rebounding on Friday, with the S&P 500 up 1.6% and bitcoin recovering some of this week’s losses.

Airlines have been volatile to start 2026 amid geopolitical tensions, varying annual forecasts, and the impact of winter storms.

markets
Luke Kawa

The AI supply chain is soaring thanks to Amazon’s capex budget

If tech companies are going to spend way more than expected on capex, well, that means other companies are poised to benefit from that massive spending spree.

Amazon’s plan for $200 billion in business investment this year was the exclamation point to end a reporting period that saw every Magnificent 7 hyperscaler that provides guidance offer a 2026 capex budget well above what Wall Street had anticipated.

Here’s a look at the different parts of the supply chain that are soaring on the persistent demand for, and seeming scarcity of, AI compute:

Big Tech capital expenditure soared in 2025. It’s going up another 50% in 2026.

Big Tech capital expenditure soared in 2025. It’s going up another 50% in 2026.

Here’s a look at the different parts of the supply chain that are soaring on the persistent demand for, and seeming scarcity of, AI compute:

markets
Matt Phillips

For memory chips, the “parabolic price hike” is continuing to ramp higher

The remarkable run-up in prices for memory chips continued into early February, analysts at Bernstein Research say, driven largely by data center demand from hyperscalers and cloud service providers (CSP).

Prices for NAND flash memory wafers — a type of memory used in devices, as it retains data even when powered down — soared 35% between the end of 2025 and February 2.

Spot prices for DRAM — ubiquitous short-term data storage chips — jumped about 28% in that period. But that massively understates the remarkable shift in pricing for what were long seen as commodity tech hardware inputs. DRAM prices are more than 2,000% over the last year, while NAND prices are up more than 600% in that period.

The ongoing momentum provides still more support for memory chip plays like Micron and Sandisk, which have been big market winners in recent months.

In a note published earlier this week, Bernstein Research analysts wrote:

“The parabolic price hike continued in Jan. Indicated price increase for 1QCY26 is much stronger than we expected and we hence see upside to our near term memory pricing projection. Unrelenting CSP demand remained the main driver. PC and Mobile demand hasn’t been destroyed yet because of lean inventory & pull-forward purchase. Going forward price hike is expected to continue but likely at a slower rate, as PC and Mobile demand should contract meaningfully this year. Price however may stay elevated throughout this year, supported by CSP demand.”

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