Hey Snackers,
Spotify Wrapped dropped yesterday, with Bad Bunny reigning as Spotify’s global top artist and Taylor Swift coming in second place. Since its 2015 launch, Wrapped has only gained more online traction with each iteration, as searches for “spotify” peak around the time that Wrapped goes live. With competition in the music streaming space mounting — and Spotify’s ever-rising subscription prices making it the costliest service of the bunch — we did a deep dive into how the platform’s ultra-personalized roundups translate to business for the company.
Despite most BATMMAAN stocks trading lower, with only two rising, the S&P 500 and Nasdaq 100 gained yesterday thanks to a broad-based rally. The Russell 2000 outperformed, as a surprise decline in private sector jobs further solidified expectations of a rate cut at next week’s Fed meeting.
Some investors are trying to pivot to what’s next after AI. Two sectors keep on coming up.
The AI trade is dominating markets coverage these days, but even its biggest boosters realize that nothing can last forever, and that exponential growth can only continue so long until it becomes just your standard incremental growth. So, what’s the next big thing? This week offers some clues.
Robotics certainly has the eye of the administration. Robotics stocks got a lift on Wednesday on the heels of a report from Politico that Commerce Secretary Howard Lutnick is going “all in” to support the industry, with iRobot, Richtech Robotics, Serve Robotics, and WeRide all up on the news.
Some think it’s quantum computing. For instance, D-Wave Quantum was up big on Wednesday after Evercore ISI initiated coverage on the annealing quantum specialist with an “outperform” rating and price target of $44, implying upside of nearly 76% from where the stock closed on Wednesday.
Analyst Mark Lipacis called it a “leading play as the computing industry sees its next Tectonic Shift to a Quantum Computing Era,” highlighting three key things the firm offers: commercial revenues; a full-stack play, with services, software, and hardware; and an ample cash hoard to develop its technology.
“Each successive Tectonic Shift in Computing surprised investors with new workloads, and created stock performance of 100x-to-1,000x for full-stack ecosystem leaders,” Lipacis wrote. “To be clear, with over 40 quantum companies competing and no clear-cut leaders, we expect a shakeout, but to capture full-alpha, history shows you need to get in 10-years before the Tectonic Shift actually happens.”
The Takeaway
I know we said that these are trades for what comes after AI, but honestly, they too are part of the AI trade — just a nascent spin-off. It’s not a surprise that some of the robotics companies’ biggest fans are at the heart of the AI boom.
While the Politico report frames that robotics announcement as a shift in focus by the White House from AI toward robots, it’s really a variation on that same theme. Leading AI firms like Nvidia are positioning themselves to be heavily involved in “physical AI,” which is effectively a catch-all for the brains behind robotics and autonomous technology. This week, SoftBank CEO Masayoshi Son detailed how it’s not mechanical robotics that will change the world, but rather the “physical AI with embodiment into robots.”
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Netflix wants Warner Bros., but its investors have doubts
It’s an all-out battle among Comcast, Paramount Skydance, and Netflix to capture the spoils of winning the bidding war for Warner Bros. Discovery and become the king of entertainment.
Right now, it seems Netflix, which is said to be targeting WBD’s streaming assets and studio business but not its networks, is ahead in the race after making a reportedly mostly cash offer, but there’s a problem:
In a Reuters report on Wednesday, sources noted that most subscribers to Netflix, which has long been the biggest streaming service in the world, already subscribe to HBO Max, so the merger wouldn’t dramatically boost the streamer’s market share.
In other words, if you’re lowering costs for customers and not getting many more of them, it’s not clear how such an acquisition would add much value.
Shareholders seemed to agree with those sources, and the stock went into the upside down on the report.
Paramount Skydance and Comcast have also reportedly freshened up their pitches, and Comcast too wants only a piece of the WBD pie, while Paramount wants the whole kit and caboodle. To understand what each is bidding for and what they’ll get, Chartr created this helpful Sankey diagram.
The Takeaway
In a particularly dramatic-sounding Bank of America note earlier this week, a group of analysts wrote: “The global media industry stands at the precipice of historic transformation.” Meanwhile, no matter who comes out on top in the bidding war, one winner is clear: analysts forecast the bidding war could propel Warner Bros. Discovery’s value to around $70 billion, significantly above its valuation before the acquisition talks began.
The Best Thing We Read Today
Consulting’s 30-year climb just hit a wall
According to Bureau of Labor Statistics data, consulting’s share of total US employment has grown more than 4x since 1990. But the age of consulting as we know it, when armies of associates mercilessly grind through endless slide decks and dashboards, may be nearing an end after the industry hit a very specific, AI-shaped wall, as dramatically charted here.
Snacks Shots
🏈 NFL: Tonight the Dallas Cowboys take on the Detroit Lions, and Dallas is favored by the market* with about a 60% chance to win. Still, that’s pretty close for a Thursday night game, and both teams are playing with their playoffs on the line.
🏎️ F1: This weekend the Formula 1 season comes to a close in Abu Dhabi, and this year’s Drivers’ Championship is still very much up for grabs. McLaren’s Lando Norris leads the standings with 408 points, Max Verstappen of Red Bull is 12 points behind, and Oscar Piastri is four points behind Verstappen. Norris wins the title if he places third or better on Sunday; the market’s giving him a 72% chance of winning.
📊 Jobs Numbers: Yesterday payroll company ADP reported that private companies cut 32,000 workers in November, with smaller businesses in particular seeing payrolls shrink by 120,000. That’s coloring expectations for the number out of the BLS on December 16. Right now the market’s pricing in an 81% chance that the number for November is, in fact, positive.
*Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.
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Off The Charts
What Else We're Snackin'
Apple’s iPhone sales for 2025 have hit a record high
Anthropic has reportedly hired a law firm to prepare for a possible IPO next year
With Puma’s stock under pressure, Chinese giants are circling the storied brand
Hims & Hers will acquire blood collection company YourBio, just weeks after it rolled out its Labs app
Tesla sales dropped in Germany, adding to declines across Europe
Snack Fact Of The Day
Delta says the 43-day government shutdown will cost it $200 million in Q4.
Today's Earnings
Earnings expected from Kroger, Dollar General, Ulta, and HPE
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