Meta Faces a Mountain of Lawsuits Amid a Costly AI Pivot
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Oil prices rise on another flare-up in the Middle East. Plus, meta battles a mountain of social media lawsuits just as it tries navigating a costly AI transformation. And we'll look at signs that Europe's luxury brands could be starting to move past years of sluggish demand.
The very rich seem to be spending a lot. What the industry calls aspirational, kind of middle-class consumers are still not spending as much as they were. So we're still a long way from the boom years.
It's Wednesday, July 29th. I'm Luke Vargas for The Wall Street Journal, and here is the AM edition of What's News, the top headlines and business stories moving your world today. Iran has launched a surprise ballistic missile attack on American forces in Jordan, which could pile new pressure on President Trump to renew the war in earnest, just as negotiations to reopen the Strait of Hormuz and broader peace talks had been picking up speed. The U.S. military said that all of the missiles were intercepted and that American and Saudi fighter jets had carried out strikes in Iraq on groups that Iran's Revolutionary Guard had previously directed to attack U.S. troops and Saudi energy infrastructure. In markets news, shares in South Korea's SK Hynix have fallen almost 10 percent, even after the world's second-largest memory chipmaker reported a 13-fold jump in its net profit for the second quarter.
Despite strong demand for advanced chips from the Nvidia supplier, those results fell short of high market expectations and have done little to ease concerns about spending on AI infrastructure. Well, as we mentioned yesterday, Visa is planning to cut around 7% of its workforce as the company adjusts to a changing payments industry. But in its latest earnings report, it signaled that its customers are doing all right as it posted higher revenue on strong consumer and business spending. Here was CFO Chris Suh.
And the strength I would also note is pretty broad-based. We're seeing improvements around credit and debit, discretionary spend, non-discretionary spend, card present, card not present. and across the spend bands as well. As I remarked in my commentary, we didn't see any signs of weakening across the lower parts of the spend band either.
Those results came as the conference board yesterday said that U.S. consumer confidence declined in July for the third straight month on softening assessments of current business and labor market conditions.
How did Iran's surprise missile attack affect oil markets and global risk sentiment?
Well, splitting the difference between those outlooks are Europe's luxury brands. Shares of Gucci parent Kering are up more than 10% after it posted a rise in revenue this morning, while Hermes recorded a similar uptick in second quarter sales growth. Reporter Nick Kostoff covers luxury from our Paris bureau and says that while the sector is seeing strong spending from the ultra-wealthy, aspirational consumers are still holding back.
Companies like Richemont, which owns Cartier and Van Cleef, like Hermès, obviously, which makes the Birkin bag and the Kelly, those companies which are catering to the wealthiest are doing just fine. And the companies that are more exposed to the middle classes, i.e. LVMH and caring with Gucci, they're still not doing great. I think one other thing to note in the results, this is something that the LVMH CFO flagged on the call, but that in the pockets where there is a lot of wealth being created because of the AI boom, i.e. the US, South Korea, these luxury companies are seeing very positive results.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–3:06
2
How did Iran's surprise missile attack affect oil markets and global risk sentiment?
3:06–11:10
3
What details explain SK Hynix's stock drop despite a 13-fold profit jump?
11:10–13:36
4
Why is Visa cutting staff while reporting stronger consumer spending?
13:36–14:17
Speakers
4 identifiedMore from WSJ What’s News
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