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Am I The Ad Rev?

Investors give Reddit a big upvote after its latest earnings report

Reddit reported its second-quarter earnings after the bell on Thursday.

Max Knoblauch

Reddit shares surged over 12% in after-hours trading after the internet’s Thunderdome reported its second-quarter earnings on Thursday.

The social media company posted earnings of $0.45 per share, below expectations of $0.69 (yes, we see it) per analysts polled by FactSet. Revenue spiked to $500 million, well above Wall Street’s $426 million consensus and up 78% from last year. In May, Reddit forecast second-quarter revenue of between $410 million and $430 million.

The company’s advertising business continued to make up the vast majority of its top line, bringing in $465 million, up 84% from last year. In the second quarter, advertising made up 93% of Reddit’s revenue. Some analysts believe Reddit’s value as a potential dataset for AI could expand in the quarters to come, which could pump the company’s “other revenue” category higher.

Daily active users rose to 110.4 million, better than expected and up 21% from last year’s 91.2 million. Lurkers made up more than half of that total, growing 24%, compared to 17% growth in logged-in visitors. Reddit has previously blamed Google’s algorithm for swings in its unique visit totals.

Looking ahead, Reddit sees sales climbing to a range of between $535 million and $545 million in the third quarter, well above analysts’ expectations of $473 million.

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Luke Kawa

OpenAI reportedly seeking alternatives to Nvidia chips, unhappy with inference performance

Reuters reports that OpenAI is “unsatisfied” with Nvidia’s latest AI chips and has been seeking alternatives since last year, citing a whopping eight sources familiar with the matter.

This news comes on the heels of a recent report from The Wall Street Journal that Nvidia’s plan to invest $100 billion in OpenAI had stalled.

Nvidia CEO Jensen Huang seemingly confirmed the WSJ reporting in comments to the press over the weekend, but still struck a positive public tone on OpenAI, indicating that the chip designer would be participating in its upcoming funding round.

Sources inside OpenAI appear to be choosing a more combative response.

Per Reuters, the specific shortcoming OpenAI sees in Nvidia’s offering involves inference, or the “thinking” being done by AI models.

Now, the idea that OpenAI is seeking alternatives to Nvidia, or at least additional sources, is well known: the ChatGPT maker struck highly publicized deals in October with Advanced Micro Devices that the chip designer said would “deliver tens of billions of dollars in revenue” as well as custom chip specialist Broadcom to develop and deploy 10 gigawatts of custom AI accelerators.

So this really has the feel of, “I dumped her, she didn’t dump me!”

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Michael Jordan #23 dribbles towards the net circa the 1990's during a game.
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Luke Kawa

Microsoft is the biggest drag on the US stock market since Gemini 3’s launch

Microsoft is the publicly traded company that, due to its partnership with OpenAI, had a place of pride at the epicenter of the AI boom.

It doesn’t have that much to show for it.

Thanks to last week’s plunge following the release of its earnings, the tech behemoth is now trailing the SPDR S&P 500 ETF for the first time since November 30, 2022 — the day ChatGPT was released. It’s the only member of the so-called Magnificent 7 to trail the fund that tracks the benchmark US stock index over this stretch.

The OpenAI relationship has been more of a burden than a boon for the company as of late, as the ChatGPT maker’s cash burn and competitive pressures have cast a pall over its partners.

Per data from Bloomberg, Microsoft has been the biggest drag on SPY since the release of Gemini 3, shaving off 80 basis points. Alphabet, on the other hand, has been the largest driver of the ETF’s advance over this period.

Max Knoblauch

Airline stocks climb as oil prices retreat on easing US-Iran tensions

West Texas Intermediate crude futures fell more than 5% on Monday, following President Trump’s comments over the weekend that Iran was “seriously talking” with the US — a sign that tensions between the countries could be easing.

That drop-off boosted major US airlines, which stand to benefit from lower fuel costs. Shares of carriers including Frontier, United Airlines, JetBlue, and Delta Air Lines were all up in the mid- to high single digits.

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