Hello, N2K’ers!

Thanks to all of you who entered Cheddar’s world-famous News Haiku™ competition. Pick this week’s winner from our three finalists in today’s poll of the day below 👇🏻 and we’ll do this all again here next week.

Now, let’s talk about the news you Need2Know, eh?

—Matt Davis, Need2Know Chedditor

News You Need2Know

• Amazon to pay NYT $20m a year in AI deal

• Meta stock surges after booming Q2 results

• Microsoft becomes second $4 trillion company

• What the Fed's pause means for the economy

• The meme-stock craze explained

What’s the stock market up to, eh?

$SPX ( ▼ 1.51% ) $DJI ( ▼ 1.17% ) $NDX ( ▼ 2.22% )

Companies mentioned in today’s newsletter*

$AMZN ( ▼ 8.19% )  $NYT ( ▲ 0.46% )  $META ( ▼ 3.35% )  $MSFT ( ▼ 1.75% )  $NVDA ( ▼ 2.3% )  $C ( ▼ 2.06% )  $DNUT ( ▼ 5.39% )  $OPEN ( ▲ 10.05% )  $RKT ( ▲ 12.46% )  $KSS ( ▼ 0.28% )  

*We’re mentioning private companies here now, too.

Amazon to pay NYT $20m a year in AI deal

Amazon $AMAZ ( 0.0% ) has inked a multiyear deal with the New York Times $NYT ( ▲ 0.46% ) valued at $20 million annually, granting Amazon’s AI bots training access to content from the Times’ news, cooking sections, and The Athletic.

The deal highlights the growing intersection between journalism and AI. With companies like Amazon increasingly relying on data to train sophisticated AI tools, partnerships with renowned news platforms have become both lucrative and strategic.

While details about how the content will be used remain sparse, it is evident that both parties stand to benefit. For Amazon, this is an opportunity to enhance its AI products with credible, curated data. For the Times, it represents a steady revenue stream in an industry grappling with shifting advertising models and digital subscriptions.

Song of the day: Hudson Westbrook, ‘Damn Good Taste in Whiskey’

This is a “laid back drinking song” from rising Texas country star Hudson Westbrook, centered around how he has “bad taste in women, but damn good taste in whiskey.” Although I bet he also has terrible taste in whiskey, but the hook is catchy. I’m curious about his taste in men!

Meta stock surges after booming Q2 results

Meta’s $META ( ▼ 3.35% ) bold bets on AI appear to be yielding remarkable results, as the tech giant beat Wall Street’s Q2 expectations and saw its stock surge by nearly 12% in after-hours trading. The company reported $18.34 billion in earnings — up 36% from the previous year — with revenue jumping 22% to $47.52 billion. Analysts had expected $44.81 billion, making the earnings report a significant overperformance.

Central to Meta’s growth is its focus on AI and infrastructure investments. “Not only has Meta made demonstrable strides with AI, but it’s helping to future-proof itself as a growth company,” said Mike Proulx, research director at Forrester. These advancements come as Meta continues to face external challenges, including an ongoing antitrust case that could force it to separate Instagram and WhatsApp from its core portfolio.

CEO Mark Zuckerberg also highlighted Meta’s vision for AI, particularly “personal superintelligence.” In his words, Meta aims to “put this power in people’s hands to direct it towards what they value in their own lives.” Unlike rivals focusing on automating work, Zuckerberg envisions tools like AI-integrated glasses driving the change. Meta’s recent $14.3 billion investment in AI company Scale further underscores its determined pivot toward the future.

With daily active users across its platforms up 6% year-over-year, Zuckerberg’s strategy is clearly resonating in the short term.

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Quote of the Day

Microsoft becomes second $4 trillion company

Microsoft’s $MSFT ( ▼ 1.75% ) flagship Azure cloud computing platform has hit a major milestone, reporting $75 billion in annual revenue — an impressive 34% increase from the previous year. The news was disclosed during the company’s Q2 earnings report, which also highlighted a 24% spike in quarterly profit, beating Wall Street expectations and fueling investor enthusiasm.

CEO Satya Nadella attributed much of the growth to Microsoft’s commitment to scaling its data center capacity to meet increasing demand for cloud and AI services. “We continue to scale our own data center capacity faster than any other competitor,” Nadella said during an investor call.

Microsoft’s fiscal fourth-quarter profit reached $34.3 billion, or $3.65 per share, surpassing analyst expectations of $3.37 per share. The company briefly touched $4 trillion in market value yesterday, only the second company after $NVDA ( ▼ 2.3% ) to do it.

Azure, launched over a decade ago, has become a cornerstone of Microsoft’s AI strategy. The platform’s integration with AI tools, like chatbots and enterprise-focused solutions, is positioning Microsoft as a key player in the growing AI ecosystem. Azure still trails its primary competitor, Amazon Web Services, which reported $107.6 billion in annual revenue for its fiscal year ending in December.

Should you check your 401(k) today?

👎️ 

No.

What the Fed's pause means for the economy

The Federal Reserve's decision to hold interest rates steady has left many wondering about the future of the economy. To break down this "wait-and-see approach," we spoke with Nathan “Spread” Sheets at Citigroup $C ( ▼ 2.06% ) .

Sheets explained that the Fed is keenly observing how tariffs impact inflation and what the "ultimate implications are going to be for growth in the labor market." He notes that the tariffs haven't yet "manifested themselves in a big way in terms of the prices we pay," and the economy has remained "surprisingly resilient." This resilience, despite some softening in growth, has created a dilemma for the Fed: "You cut to support the economy. Well, the economy still looks OK. You halt to fight inflation. Well, inflation doesn't look like it's too much out of control. So they decide to wait and see for now."

When it comes to the data that matters most, Sheets emphasizes the labor market. "I think that clearly the labor market is front and center; that's what the Fed is looking at in particular," he said, adding that the upcoming labor market report will be closely watched for "job creation."

The dual dissents from fellow Fed board members Michelle Bowman and Christopher Waller also caught attention. Sheets highlighted the historical significance: "It's the first time in over 30 years that we've had two governors dissent on a policy decision." He acknowledged a "real debate to be had" about whether the Fed should be more proactive in supporting the labor market, but also points to the "very divisive political environment" and the impending end of Chairman Powell's term, suggesting "a lot of different interpretations to those dissents." 

Perhaps the biggest takeaway from the meeting, according to Sheets, is the shift in market expectations. Before the decision, there was anticipation of two or three rate cuts, but now "the market has shifted expectations a bit and reduced the probability of a cut in September and now, if anything, is asking: ‘Is it one or is it two?’" 

Finally, Sheets touched on the unusual presidential visit to the Fed. He found that the "open controversy and the open pressure that's being applied is extremely unusual." 

The meme-stock craze explained

Are meme stocks back? What does their resurgence signal about current market conditions and retail investor sentiment? We asked Spencer Jacob, investing columnist at the Wall Street Journal, who notes a "weaker version" of the 2021 GameStop and AMC frenzy, dubbing the new frontrunners "dork stocks" after the first letters of their ticker symbols: Krispy Kreme $DNUT ( ▼ 5.39% ) , Opendoor $OPEN ( ▲ 10.05% ) , Rocket Companies $RKT ( ▲ 12.46% ) , and Kohl's $KSS ( ▼ 0.28% ) . While not as extreme, he emphasizes, "it's definitely the same trend and the same techniques being used to push them higher."

The ethos, Jacob explains, remains consistent. There's a smaller group aiming to "create some mayhem with their brokerage accounts" using "weapons of mass destruction, asymmetric warfare." Jacob warns that this speculative activity "absolutely tells you something about the broad market, and it's not a good thing." He points to a historical pattern where a "spike in the values and trading in unprofitable companies, speculative companies, that tends to proceed...the wheels start to fall off."

Interestingly, retail investors are largely driving this rally, having "outsmarted the pros, at least briefly" by buying dips aggressively. This has emboldened them, as "the reward for being contrarian was extreme."

Poll of the Day: News Haiku(TM)

Poll Results: You’re skeptical of online gardening

You answered:

🟨⬜️⬜️⬜️⬜️⬜️ I'm excited to try 'growing a garden' on the Internet. (64 votes)

🟩🟩🟩🟩🟩🟩 This is ridiculous. Kids want to try gardening? They should try gardening for real! (371 votes)

435 Votes via @beehiiv polls