ENTERTAINMENT

YouTube Is Giving Streaming Companies A Run For Their Money

Isn’t it fitting that YouTube’s logo is red? The color, symbolizing both love and hate, perfectly captures how the platform is adored by users and despised by competitors. From Cocomelon to Mr. Beast shorts, the platform’s free videos, live sports, and movies have made it a go-to source for the world’s entertainment needs — and the envy of growth-conscious investors.

Tuning to the Tube: YouTube has dominated smaller mobile device and laptop screens, but over the last year, the streaming giant has made a bid for the bigger screens. In May, YouTube accounted for a record 9.7% of TV viewing time among households tracked by Nielsen, surpassing Netflix ($NFLX) and Hulu. Its rising status — especially among younger viewers seeking high-quality, free entertainment from creators — makes Alphabet’s ($GOOG) fastest-growing business segment look even more attractive.

• Needham & Co. estimates that YouTube would be worth $455B as a standalone company — over 50% of Netflix’s market cap and more than Disney ($DIS) and Comcast ($CMCSA) combined.

• While YouTube generates most of its revenue from advertising, it has also expanded its paid YouTube Premium and Music tiers to over 100M subscribers in recent months.

YouTube’s Star Performance

YouTube’s dominance in TV streaming, extensive reach, and diverse content offerings have drawn more advertisers to the platform. The Hollywood strikes during the pandemic prompted advertisers to pivot their spending from network TV to YouTube, further boosting ad sales. YouTube’s commitment to paying out $70B to creators over three years and launching advertiser-friendly initiatives like YouTube Select has cemented its status as a key advertising hub.

• YouTube’s second-quarter advertising revenue represented 10% of Alphabet’s total revenue, surpassing $7.7B — and is on track for $42B in 2025.

• Goldman Sachs retained its buy rating on Alphabet, raising the price target from $195 to $211, expecting higher YouTube ad revenue growth in the medium to long term (BBG).

Channel surfing to Monopoly: Several tech and competition advocacy groups have called on the US Department of Justice to investigate YouTube for bolstering Google’s dominance in home entertainment. They argue that YouTube’s automatic installation on US smartphones and TVs unfairly enhances Google’s market power — stating that YouTube’s status as a top streaming service in competition with traditional cable and other streaming platforms boosts Alphabet’s “prospects for living room dominance.”

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LARGECAP RECAP

🇹🇼 Trump Suggests Taiwan, Responsible for America’s AI Stock Boom, Should Pay For US Defense

After weeks of eerie silence, Donald Trump, the Republican nominee, is once again hogging the airwaves with headlines, platitudes, and warnings. And when Trump speaks, investors listen — especially now that he’s the popular pick to win the White House. This time, AI investors have something to worry about — with the country responsible for America’s AI stock gains in his crosshairs.

• In an expansive interview with Bloomberg Businessweek, Trump suggested that Taiwan should pay the US for defense, saying, “Taiwan doesn’t give us anything.”

• This news moved shares of major chipmakers and AI beneficiaries, including TSMC ($TSM), Nvidia ($NVDA), and ASML ($ASML) — which fell 8%, 6%, and 13%, respectively, intraday.

Trumpeting threats: A hallmark of Trump’s ideology is that countries take too much from America — and give little back. His reelection could have tectonic impacts on the global economy. In Europe, he has proposed less involvement with NATO, and in Asia, he has suggested aggressive tariffs on countries benefiting from American economic hegemony, aiming to reverse decades of job loss and offshoring. However, experts warn that these pro-American policies could inadvertently create a “disaster,” leading to more conflicts, economic angst, or outright war.

Warning: Do you hold these 3 stocks? A 50% loss means you’ll need a 100% rebound… just to break even. And now, one Wall Street legend shows how to protect your downside from a stock market crash with his $5,000 system. It reveals the rating (BEARISH, BULLISH, NEUTRAL) for 3 popular stocks – chances are you have them in your portfolio. Check it out for free today.*

Markets & Economy

Adidas’ earnings surprise raises outlook: Adidas hiked its 2024 earnings guidance to €1B from €700M after better-than-expected Q2 results, pushing the stock higher. Revenue rose 11% year-over-year, with 16% growth excluding struggling Yeezy sales. [Read]

Battery storage boom attracts investors: Wall Street is funding large-scale battery projects to profit from stabilizing the power grid. Intersect Power secured $837M for three Texas battery installations, highlighting the sector’s growth potential. [Read]

Spirit Airlines guides losses lower: The budget carrier warned of a Q2 adjusted loss of $160M to $173M, worse than previously estimated. After a failed acquisition, Spirit ($SAVE) grapples with weak fares, market oversupply, and an engine recall. [Read]

Business & Wealth

Amazon ad portal crash disrupts Prime Day: Amazon’s ($AMZN) marketing portal for merchants experienced a two-hour outage on Tuesday night, affecting sellers’ ability to manage ad spending during the crucial sales event. [Read]

GitLab explores potential sale: The Google-backed software developer is working with investment bankers, attracting acquisition interest from peers like Datadog ($DDOG). GitLab ($GTLB) is valued at around $8B. [Read]

Democrats overwhelmingly favor Biden withdrawal: A new AP-NORC poll shows nearly two-thirds of Democrats believe that President Joe Biden should step aside for another candidate to take on Trump. [Read]

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DIGIT OF THE DAY

Markets Predict Nearly 100% Chance of Fed Rate Cut in September

Traders have consulted crystal balls and are eagerly anticipating rate cuts. As of yesterday, the CME FedWatch tool showed nearly a 100% probability of a Federal Reserve rate reduction by September, up from 70% last month. This expectation has driven gold to a record $2,465 per troy ounce and pushed the DOW to a new high, gaining ~4% over the past week.

• This shift follows a 0.1% drop in the June Consumer Price Index from the previous month — bringing annual inflation to its lowest in three years.

• On Monday, Powell suggested that the Fed might lower rates even before inflation hits the 2% target, given the recent encouraging inflation data.

Better times ahead: Since Oct. 2022, there have been concerns about whether major tech stocks, which have significantly risen, can keep outperforming. However, the anticipation of rate cuts has spurred a shift from tech stocks to small caps and sectors like real estate and financials. This is evident from the Russell 2000, a benchmark for small-cap US stocks, which has climbed ~7% in the past five days, while the tech-heavy Roundhill Magnificent Seven ETF ($MAGS) has fallen over 7%.