Summary: Consumers remain resilient, and it looks like the Fed is making a case for lowering rates. Nvidia reported a new record for revenue, but can it maintain growth? China would provide a new avenue.
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Macro
Consumers are resilient
"Consumers are cautious, yet resilient. They have shown a willingness to spend when products and experiences meet their needs, but rising costs are forcing consumers to make trade-offs." – Hormel Foods (HRL 0.00%↑) President John Ghingo
"Customers continue to be resilient, but deal-focused and attracted to more predictable sales momentum, including our Black Friday in July sales event." – Best Buy Co. (BBY 0.00%↑) CEO Sue Barry
Companies are hoping for lower rates
"Certainly, the more entry-level products do require more of the mass market to be healthy at the consumer level. And in an elevated interest rate environment, that continues to unfold. We use discounting where needed. Certainly, lower interest rates could help spur things, and we'll see what happens there for finance buyers." – MasterCraft Boat (MCFT 0.00%↑) CEO Bradley Nelson
The Fed appears to be getting ready to cut
"While there are signs of a weakening labor market, I worry that conditions could deteriorate further and quite rapidly, and I think it is important that the FOMC not wait until such a deterioration is underway and risk falling behind the curve in setting appropriate monetary policy. My eagerness to move now is supported by my view that monetary policy is moderately restrictive." – Federal Reserve Governor Christopher Waller
AI may be starting to impact labor markets at a macro level
"Supplementing this hard evidence of falling labor demand is the consistent story from my business contacts that they are not hiring. The mix of reasons is not only uncertainty over tariff policy and slowing demand for their goods and services, but also, increasingly, uncertainty over how to use artificial intelligence, which is especially freezing hiring for some entry-level job." – Federal Reserve Governor Christopher Waller
Trump is amping up pressure
"Pursuant to my authority under Article II of the Constitution of the United States and the Federal Reserve Act of 1913, as amended, you are hereby removed from your position on the Board of Governors of the Federal Reserve, effective immediately...there is sufficient reason to believe you may have made false statements on one or more mortgage agreements." – US President Trump
How will Trump's pressure impact monetary policy?
"President Trump purported to fire me ‘for cause’ when no cause exists under the law, and he has no authority to do so..I will not resign," – Federal Reserve Governor Lisa Cook
International
Stimulus is supporting the consumer in China
”China's consumer market demonstrates remarkable potential and resilience and is driven by sustained pro-consumer policies. We have observed steady growth in overall retail sales, alongside the continuous rise in online retail penetration. We remain very confident in the overall potential of China's consumer market." – PDD (PDD 0.00%↑) Co-CEO Jiazhen Zhao
Inbound travel to China is rebounding
"In particular, China's inbound travel segment has shown outstanding momentum, reflecting growing international interest and confidence in the country as a world-class destination. During the quarter, Trip.com Group's inbound travel bookings increased by over 100% year-over-year, driven primarily by demand from Korea and Southeast Asia, 2 of our most active source markets. T..Today, inbound travel accounts for less than 0.5% of China's GDP, well below the 1% to 2% levels typically seen in developed markets, highlighting substantial room for growth." – Trip.com Group Limited (TCOM 0.00%↑) Co-Founder Jianzhang Liang
China's AI markets are opening for Nvidia
"[President Trump] understands that the American tech stack should be the world standard. Just as the American dollar is the world standard that economies are built on, we want the American tech stack for the world’s technology and industries to be built on, and that includes China...We’ve been approved and licensed to be able to ship to China, and now we’re looking for orders in China." – NVIDIA (NVDA 0.00%↑) CEO Jensen Huang
Chinese tech companies are spending big on AI
"So, turning now to the question about our CapEx, capital expenditures on AI. We will continue to implement our 3-year plan to invest RMB 380 billion in cloud and AI." – Alibaba Group Holding Limited (BABA 0.00%↑) CEO Yongming Wu
Canadian consumer health is mixed
"I do think from a Canadian consumer health perspective, it's really mixed right now. You're seeing signs of stress, particularly in younger clients...there's some green shoots coming, but we're still really cautiously optimistic about the outlook." – The Bank of Nova Scotia (BNS 0.00%↑) Chief Risk Officer Philip Thomas
Canadians are avoiding US brands
"Canada's organic net sales declined nearly 60% as beverage alcohol products produced in the United States remained off the shelves in the majority of the Canadian provinces. -- while our non-U.S. brands, such as Diplomatico and el Jimador continued to deliver growth, they were not able to offset the decline of our brands that are produced in the U.S." – Brown Forman (BF.B) CEO Lawson Whiting
Financials
Bill.com is noticing tariff impact on SMB spending
"As the tariff impact on SMBs becomes due, they have finite wallet sizes. And as they're trying to accommodate the tariffs in their wallet, their spend on some of these discretionary areas starts to reduce." – Bill.com (BILL 0.00%↑) CFO Rohini Jain
Consumer
Consumer spending remains bifurcated by income
"...our lower to middle income customers remain the most challenged, while our higher income customers have proven to be more resilient." – Kohl’s (KSS 0.00%↑) COO Michael Bender
"The consumer environment right now is challenging. The consumer is strained for a variety of reasons." – Hormel Foods (HRL 0.00%↑) President John Ghingo
Dollar General is seeing consumers trade down from all income brackets
"...we're pleased to see growth with customers across all income brackets during the quarter. This includes our core customer who increased spending despite worsening sentiment. In addition, we continue to see trade-in growth with middle- and higher-income customers during the quarter, which we believe is contributing to the nice performance we've seen in our nonconsumable categories." – Dollar General (DG 0.00%↑) VP of IR Kevin Walker
Consumers are being more thoughtful about big-ticket purchases
"In the current environment, customers continue to be thoughtful about big ticket purchases and are willing to spend on high price point products when they need to or when there is technology innovation." – Best Buy Co. (BBY 0.00%↑) CEO Sue Barry
Pet parents are showing some pullback
"We still have high confidence in the brand, but acknowledge that because the consumer discretionary categories continue to be a bit cautious. We have seen the frequency of pet parents treating their pets go down a little bit." – J.M. Smucker (SJM 0.00%↑) CEO Mark Smucker
Gen Z is feeling the impact of inflation
"Gen Z does seem to be experiencing a very pronounced effect from these cyclical headwinds...they don't have a lot of money in their wallet and with rent and all the things we've talked about over the quarter, food and everything else. They get hurt more than anyone else and that tends to be the age group that consumes the most alcohol or has the highest per capita." – Brown Forman (BF.B) CEO Lawson Whiting
US beauty is growing at low to mid single digits
"The growth of the U.S. beauty category has been fairly stable with low single-digit growth in mass and mid-single-digit growth in prestige beauty during the second quarter, according to Circana. Our insights suggest consumers continue to prudently manage their day-to-day spending and are watchful of pricing trends in response to tariffs." – Ulta Beauty (ULTA 0.00%↑) CEO Kecia Steelman
Not everyone is seeing this picture, though
"I know that investors have been concerned understandably about lower-income shoppers and about Hispanic shoppers; those shoppers are very important to us, and they're very sensitive to economic headwinds such as inflation. But based on our second quarter data, we are not seeing any issues at this point." – Burlington Stores (BURL 0.00%↑) CEO Michael O'Sullivan
Technology
Nvidia achieved record revenue in Q2
"We delivered another record quarter while navigating what continues to be a dynamic external environment. Total revenue was $46.7 billion, exceeding our outlook as we grew sequentially across all market platforms. Data center revenue grew 56% year-over-year." – NVIDIA (NVDA 0.00%↑) CFO Colette Kress
Two customers represented nearly 40% of their revenue
"For the second quarter of fiscal year 2026, sales to one direct customer, Customer A, represented 23% of total revenue; and sales to a second direct customer, Customer B, represented 16% of total revenue, respectively, both of which were attributable to the Compute & Networking segment." – NVIDIA (NVDA 0.00%↑)
Top 4 hyperscalers now drive $600B in annual CapEx
"The CapEx of just the top 4 hyperscalers has doubled in 2 years. As the AI revolution went into full steam, as the AI race is now on, the CapEx spend has doubled to $600 billion per year. There's 5 years between now and the end of the decade." – NVIDIA (NVDA 0.00%↑) CEO Jensen Huang
Is it reasonable for one company to represent such a large percentage of the spend?
"For us to grow into that $600 billion a year, representing a significant part of that CapEx isn't unreasonable. And so I think the next several years, surely through the decade, we see just a really fast-growing, really significant growth opportunities ahead." – NVIDIA (NVDA 0.00%↑) CEO Jensen Huang
The US controls 60% of the world's compute
"$600 billion only represents the top 4 hyperscalers. We still have the rest of the enterprise companies building on-prem. You have cloud service providers building around the world. The United States represents about 60% of the world's compute. And over time, you would think that artificial intelligence would reflect GDP scale and growth, and so -- and would be, of course, accelerating GDP growth. And so our contribution to that is a large part of the AI infrastructure." – NVIDIA (NVDA 0.00%↑) CEO Jensen Huang
50% of the world's AI researchers are in China
"The China market, I've estimated to be about $50 billion of opportunity for us this year if we were able to address it with competitive products. And if it's $50 billion this year, you would expect it to grow, say, 50% per year. As the rest of the world's AI market is growing as well. It is the second-largest computing market in the world, and it is also the home of AI researchers. About 50% of the world's AI researchers are in China. The vast majority of the leading open source models are created in China. And so it's fairly important, I think, for the American technology companies to be able to address that market." – NVIDIA (NVDA 0.00%↑) CEO Jensen Huang
Open source models may be critical to winning the future of AI
"And open source, as you know, is created in one country, but it's used all over the world. The open source models that have come out of China are really excellent. DeepSeek, of course, gained global notoriety. Qwen is excellent. Kimi's excellent. There's a whole bunch of new models that are coming out. They're multimodal. They're great language models. And it's really fueled the adoption of AI in enterprises around the world because enterprises want to build their own custom proprietary software stacks. And so open source model's really important for enterprise. It's really important for SaaS who also would like to build proprietary systems. It has been really incredible for robotics around the world. And so open source is really important, and it's important that the American companies are able to address it...We just have to keep advocating the sensibility of and the importance of American tech companies to be able to lead and win the AI race and help make the American tech stack the global standard." – NVIDIA (NVDA 0.00%↑) CEO Jensen Huang
GPUs are being depreciated over 6-year lifespans
"Like we feel incredibly comfortable with the industry standard of 6-year depreciation for the GPUs. And what makes us comfortable around that is the long-term structure of our contracts and our ability to continuously recontract them for different use cases as they come off their first contract. We've seen that with Amperes. We are seeing that with Hoppers as some of them -- the early contracts roll off." – CoreWeave (CRWV 0.00%↑) CFO Nitin Agrawal
We're going to need a lot more networking infrastructure
"So if you look at a chatbot, I ask a question, and I get an answer back. Those typically have very spiky traffic patterns. The utilization spikes up, but then comes right back down. When you think about Agentic and there's a 7x24 kind of operation, the traffic patterns start to get much more sustained and persistent over time. And so our current infrastructure is simply not built to go out and accommodate that level of traffic pattern. And then you add to that physical AI, where you're going to need some more edge-based computing and edge-based networking, that's only going to compound the requirements. So if you think about AI in 3 phases, you started from a chatbot, you go to an agent and then you go to physical as the 3 most logical phases right now. Phase 2 and 3, your infrastructure requirements go up quite precipitously, both in campus branch as well as in data centers." – Cisco Systems (CSCO 0.00%↑) EVP Jeetendra Patel
Cybersecurity concerns are growing
"Last week, I had conversations with CIOs of massive companies that everyone's heard of that say, there's no way we're going to be able to do this AI stuff if we don't get our identity foundation in order. So that's clear and present." – Okta, Inc. (OKTA 0.00%↑) CEO Todd McKinnon
AI compute will have to become more power-efficient
"The way to solve the power need is to make the compute more power efficient, and there's multiple different ways, including in packaging, to do that. And so I think you'll see all those designs move forward." – Applied Materials (AMAT 0.00%↑) VP Brice Hill
Industrials and Transport
Tariff uncertainty is causing paralysis in customer behavior and order timing
"From a customer perspective, if customers are placing orders, the last thing you want is the customer places an order when there's a tariff. And then the tariff goes away. And now their COGS are higher. So they're waiting till the last minute when they need their product. They say, okay, now ship it to me. Because the window between order and build, and sell is much shorter. So it's less likely. So that's about what we call the paralysis." – ON Semiconductor (ON 0.00%↑) CEO Hassane El-Khoury
“Some are waiting because they want to be sure that this is the final number that is going to be in place. Others are fine with it, or we will have negotiations.” – Lamborghini CEO Stephan Winkelmann
The cost of tariffs will ultimately have to be passed on to end consumers
"So there was a lot of hesitancy....Given that most of the railcars are covered hoppers used in agricultural and commodity movement, there is no ability for a Cargill or a Louis Dreyfus or a Bunyukhi to absorb a 25% cost increase on a railcar that should cost a 110,000 and become a 135. For them to absorb that, all the price of commodities will go up, and that will appear in the grocery stores, everywhere. There’ll be massive inflation." – FreightCar America (RAIL 0.00%↑) CFO Michael Riordan
China's auto market surged in H1 2025, with NEVs making up 44.3% of total sales amid 40%+ YoY growth
"According to the statistics from the China Association of Automobile Manufacturers, the production and sales volume of China’s automobiles in the first half of 2025 amounted to 15.621 million units and 15.653 million units, representing a year-on-year growth of 12.5% and 11.4% respectively, hitting another record high. In particular, new energy vehicles in China continued to make dazzling achievements, with production and sales volume rising sharply to 6.968 million units and 6.937 million units, representing year-on-year increases of 41.4% and 40.3%, respectively. The sales volume of new energy vehicles accounted for 44.3% of the total sales volume of new vehicles." – BYD (BYDDF)
Materials & Energy
Energy is still the primary constraint in AI infrastructure
"And of course, what you get for that is not a GPU. I think people -- we're famous for building the GPU and inventing the GPU, but as you know, over the last decade, we've really transitioned to become an AI infrastructure company. It takes 6 chips just to build -- 6 different types of chips just to build a Rubin AI supercomputer. And just to scale that out to a gigawatt, you have hundreds of thousands of GPU compute nodes and a whole bunch of racks. And so we're really an AI infrastructure company, and we're hoping to continue to contribute to growing this industry, making AI more useful, and then very importantly, driving the performance per watt because the world, as you mentioned, limiters, it will always likely be power limitations or AI -- building limitations. And so we need to squeeze as much out of that factory as possible." – NVIDIA (NVDA 0.00%↑) CEO Jensen Huang
AI infrastructure energy demands have surged from 10 MW to gigawatt‑scale deployments in just 18 months
"About 18 months ago or so, we were talking about 10-megawatt plus scale deployments with our customers, which then transitioned to 50, 100-megawatt kind of deployment scales for our customers. And today, the conversations we are having with our customers on the pipeline front are more in the gigawatt-plus scale of deployments. So the demand for this infrastructure continues to expand at an unprecedented rate, and we are very well positioned to take advantage of that demand." – CoreWeave (CRWV 0.00%↑) CFO Nitin Agrawal