00:00 Speaker A
Now time for some of today’s trending tickers. We are watching Amazon, Alphabet and Estee Lauder. First up, Amazon, getting an upgrade from BNP Paribas to outperform from neutral saying, and the analysts saying that they are optimistic the tech giant will top profit expectations in its next earnings report. The company also announcing a new tool for its ring doorbell camera, AI generated summaries that inform users of potentially suspicious activity. I want to bring back in Simian Heiman, who is the ProShares Global Investment strategist here, as you think about Amazon here and and where they’ve sat not only within the mag 7 trade, but also within this broader AI trade, at the same time where they’re susceptible to the mindset of the consumer on the e-commerce side of the business, where we know that’s not the one that’s generating the lion share of the profit margins for the company at a whole.
00:56 Simian Hyman
They have a couple different things going on there and just before the the break, we talked about the weakness this morning a little bit in the consumer spending. And there is a decent chance that we’ll see a little bit more of that in the back of the back half of the year, even if the tariffs are on that low low end of, you know, where the bar might have been set on liberation day, that still can take a nick out of consumer spending. Um, the AI trade doesn’t seem to have, you know, any slowdown in front of us. We’re waiting to see the productivity implications, but it’s an arms race right now.
01:41 Speaker A
Absolutely. Meanwhile, BNP Paribas downgrades Alphabet to neutral from outperform. The analyst sees short-term risk for the company’s earnings. Back in April, Alphabet saw its quarterly revenue impacted by slowdown in sales, mainly in its cloud computing and devices. The company’s core business is also being threatened by regulatory challenges. Shares of alphabet there, still holding on to gains, they’re up by about 7/10 of a percent on the day. You talk about a business that is still, by and large, the majority of its revenue advertising dollars. But the differentiation, or diversification of its revenue streams here, now leading more into, of course, on the hardware side, the Pixel phone and some of the other devices that they can bring to the consumer market. And then additionally, at the same time, trying to ensure that for Alphabet and and how they are kind of looking across other strategic bets that they’re making that they’re not spending more that than that’s impacting some of the profit margin that investors have come to expect at this point.
02:57 Simian Hyman
I think still one of the things that intrigues me most about the market over the last several years is how it differs from what we experienced in the late 90s. The famous book that was called the Innovator’s Dilemma that came out in the late 90s. And the premise of the book was that technological innovation could not be capitalized on by incumbent companies because it threatened their existing cash cows too much. They just couldn’t figure it out and disruptive companies would come in. But this time around, they’re not so young, the mag 7. These are companies that have been around for 20 or even 50 years. Right. So I think that’s it’s very different this time because so much money is needed. Yes, you see see a few new names here and there, but I think the moats around the amount caused by the amount of money that it requires to stay in that AI game is protecting the folks who aren’t quite as young as the disruptors of a generation ago.
04:29 Speaker A
That’s a really good point and if you just added to my summer reading list as well here, so uh two and one. HSBC upgrading Estee Lauder as well, we’re tracking this buy rating and raising its price target to $99. The analysts expecting the beauty products company to double its earnings between 2025 and 2027, mostly due to its cost cutting and reorganization efforts. Shares of Estee Lauder up by about 3.3% right now. As we think about where Estee Lauder typically sits within the consumer mix, right now it could even still be seen as one of those little luxuries that consumers, if they’re not purchasing some of the big ticket items that they may be I’ll I’ll still go out and get something that helps with my my self-care mindset, if you will, and that might be where Estee Lauder is still seeing this potential momentum over the next few years here too.
05:31 Simian Hyman
There’s still a bifurcation of the consumer in the US and around the world, and to the extent that there are the classic bite-sized or lower end luxury brands, we always used to talk about Coach in that kind of framework. There certainly may there there may very well be an opportunity for those firms to do a little bit better when the consumer slows than paradoxically, perhaps the folks who are on the bargain end of the spectrum.
