Tech Brew Ride Home - The AI Trade

Episode Date: July 30, 2026

Microsoft surged 15% on its fastest cloud growth since 2022, while Meta slid 10% defending its AI spending. Aschenbrenner's hedge fund unwound positions after the AI rout, the EU targeted ChatGPT under the DSA, and airlines let AI set fares. Microsoft's Shares Surge on Fastest Cloud Growth Since 2022 (Bloomberg) Meta Falls After Defending AI Bets to Skeptical Investors (Bloomberg) AI investor Leopold Aschenbrenner forced to unwind all public stock positions after steep losses, sources say (CNBC) Source: the European Commission plans to designate OpenAI's ChatGPT and Roblox as "very large online platforms" under the DSA as soon as August (Bloomberg) Airlines are using AI to adjust seat prices more quickly, capturing more revenue while narrowing the pricing gaps that once let travelers find bargain fares (Bloomberg) Subscribe to the ad-free feed. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the TechBrew right home for Thursday, July 30th, 2026. I'm Brian McCullough today. Microsoft surged 15% on its fastest cloud growth since 2022, while Meta slid 10% defending its AI spending. A Star AI hedge fund is forced to unwind positions after an AI route. The EU targeted chat GPT under the DSA, and if you're flying this summer, it's increasingly you against the AI. Here's what you miss today in the world of tech. Well, we've got a tale of two earnings reports today. First up, Microsoft is up nearly 15% in stock market trading this morning. Quoting Bloomberg, Microsoft shares soared after the company reported the fastest cloud growth in four years suggesting its AI and computing services are making inroads with customers. Azure cloud revenue rose 43% during the fiscal fourth quarter. The company said Wednesday in a statement. That was the fastest quarterly growth since early 2022 and topped average estimate for a 40% increase. Azure revenue surpassed $100 billion for the first time ever during the fiscal year ended in June. Chief Financial Officer Amy Hood said she expected growth in the cloud

unit to accelerate further in the current quarter to about 45%. Demand continues to exceed available supplies, she said, during a conference call with analysts. She also indicated that Microsoft would hold the line on new capital spending this year, which helped send the shares up about 15% to $449.83 as the market opened in New York for the biggest inner-day gain in more than six years. Hood said the company had determined that its data centers and office buildings would likely prove useful for an additional 10 years, a change that will shift some of the company's capital expenditures to operating costs. The net effect is Microsoft's capital spending will likely land at roughly $175 billion this year versus a prior forecast of $190 billion. But outside of that

accounting tweak, the company's 2026 investment expectations, remain unchanged, Hood said. That could ease investor concerns about the company's massive outlays on data centers and chips, even as investors continue to question the spending by some of Microsoft's peers. Microsoft chief executive officer Sachin Adela said the company now counted more than 30 million paid users of Microsoft 365 co-pilot. The AI assistant sold as an add-on to the ubiquitous office software. That's up from roughly 20 million three months earlier. The step-up and paid copilot users is a good result. Bloomberg intelligence analyst Mandip Singh said in an interview on Bloomberg TV, the bundling strategy that Microsoft has continues to work, he said, end quote.

Yeah, I will point out that Microsoft 365, which is, you know, Word, Excel, PowerPoint, Outlook, all that stuff, has over 450 million paid seats. So only 7% of users also pay for co-pilot as of right now, but hey, that figure has 2xed in the past six months. More details from Microsoft earnings in Q4, Microsoft marked a $3.2 billion, gain for its anthropic investment and booked around a $600 million loss for its Open AI investments, but noted a $5 billion gain on its Open AI investment on a full year basis. So they overshot their valuation over Open AI just a little bit, but they're still way up. Meanwhile, shares of meta are down nearly 10% right now, quoting Bloomberg again. Meta platforms gave a disappointing quarterly revenue forecast, stepping up pressure on Chief Executive Officer Mark Zuckerberg

to allay investor concerns that the company isn't swiftly benefiting from its massive outlay on artificial intelligence. The social media giant reported the lowest free cash flow in years, a sign of ballooning expenses for AI bets, including data centers and smart classes, which could amount to $145 billion this year. I get that this is a big investment and it's a big bet, Zuckerberg said. We see the technology working. We're happy with the trajectory of the lab. I'm excited about the products that are coming. And we believe that this is going to be a big thing. In part because it doesn't yet have a cloud computing business and its AI products have at times been considered less competitive than some other AI labs work.

Meta has faced recurring investor skepticism that it will recoup this spending. Meta announced several new AI-related business lines in recent months, including a consumer chatbot subscription and a pay-to-use AI model for developers, though those are in early stages. On the call Wednesday, Zuckerberg teased another potential business line, a cloud computing business where meta would sell computing power to other companies. The CEO said that a substantial amount of meta's computing power currently goes toward training its own AI models, a necessity for being a leading AI lab. But he also said that meta has a large number of offers from companies interested in buying

its computing power at a meaningful premium over what Meta spent to acquire it. That has created an opportunity, he added, saying that Meta must now think through the tradeoff of selling the computing power it has for a profit versus continuing to use it for its own products and services. These calculations are happening at the same time that Meta is also buying computing power from independent data center operators, so-called neoclouds as well. There is just nowhere near enough compute for all the demand, he added, when asked about the idea of meta being both a buyer and a seller. Bloomberg earlier reported on Meta's plans to develop a cloud computing business. Meta adjusted its full-year capital expenditure forecast to

$130 to $145 billion, slightly lifting the bottom end from a previous projection of $125 to $1.45, billion in one sign of the enormity of Meta's AI investments. The company's free cash flow in the second quarter fell to $784 million of the lowest level since the third quarter of 2022, according to data compiled by Bloomberg. Meta's strong revenue growth will once again be overshadowed by its capital expenditure projections, wrote Minda Smiley, senior analysts at E-Marketer. Even though meta didn't raise projections, that won't stop investors from pressing for more information regarding plans for a potential computing business and any other details on how Meta is thinking about monetizing AI. Still, Zuckerberg projected confidence to end the company's analyst call predicting

investors will ultimately benefit from meta's AI gamble. My personal bet is that the people who invest in this are going to be rewarded and feel very good over time, he said, end quote. Also, this is not meta-related, but I didn't want to do a full segment on it, so I'm going to just squeeze this in here. Samsung also reported earnings yesterday. Their Q2 revenue was up 130% year-on-year-on-year, their operating profit was up 1,814% on robust AI demand, by which I mean, of course, memory chip demand. And this is a bit of Wall Street inside baseball, but it is very much AI-related. Ex-OPEOPEO'SR researcher Leopold Aschenbrenner's situational awareness hedge fund is this morning

facing margin calls after heavy losses during the recent AI stock route. quoting CNBC. The battered $24 billion hedge fund founded by former OpenAI researcher Leopold Aschen Brenner is unwinding many of its trades after big losses on artificial intelligence stocks and a bad bet against software stocks left it scrambling to raise cash, according to people familiar with the matter. The prime brokers for the fund, situational awareness, have begun rushing to raise cash to meet margin requirements, the people said. A large investment firm has apparently reached a deal to buy the funds, publicly traded assets, people familiar with the deal said, the buyer of the assets couldn't be determined. Situational awareness has sustained significant losses in recent weeks as its portfolio of AI

infrastructure investments such as S.K. Heenix declined while short positions in software companies such as Adobe moved sharply against it, the people said. Several of the firm's prime brokers, including Bank of America, Goldman Sachs, and J.P. Morgan Chase have been working with the fund as it seeks to meet margin requirements or reduce positions in an orderly fashion, according to people familiar with the discussions. The brokers have and marketing a group of the firm's holdings on both the long and short side for sale prior to Thursday's start of trading, according to people familiar with the situation. The turmoil is an early and potentially significant test of the investment thesis that made Ashen Brenner one of the most closely

watched figures in the AI trade. The 25-year-old built the firm around the idea that increasingly powerful AI systems would require a vast expansion of chips, memory, data centers, and electricity generation. The fund's largest holdings at the end of the first quarter included Nebius Group, Sandisk, Micron, and Corwieve, according to filings. All four of these stocks are down more than 35% this month alone. Ashen Brenner became prominent in technology and investing circles after publishing a series of essays in 2024, arguing that rapid advances in artificial intelligence would require an enormous expansion of computing power, advanced semiconductors, memory, and energy infrastructure.

Those ideas became the intellectual foundation for situational awareness after he left OpenAI. Ash and Brenner graduated from Columbia University as valedictorian at the age of 19 before joining OpenAI's superalignment team. He was fired in 2024 over what the company described as an improper disclosure of internal information. Ashen Brenner has disputed that characterization, saying he shared a largely non-confidential planning document with outside researchers for feedback and has said his dismissal followed tensions over warnings he raised about Open AI's security practices. Open AI has said those concerns were unrelated to his departure. Hashan Brenner is engaged to Avital Balwit, the chief of staff for Anthropic CEO Dario Amadai, according to an October profile in Fortune, which cited a situational awareness LP spokesperson, end quote.

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Quoting Bloomberg, OpenAI's ChatGDPT and video game company Roblox will be subject to stricter scrutiny and monitoring requirements under the European Union's content moderation rules after surpassing a threshold of 45 million monthly users in the block. The EU's executive arm will designate ChatGPT's search function as a very large search engine and Roblox as a very large online platform in line with the Digital Services Act, a person familiar with the matter said. The designations will come as soon as August, the person said, asking not to be identified because the decision was confidential. The DSA requires all social networks and search engines to clamp down on illegal

and harmful content on their platforms. The VLOPs, which also include META and Elon Musk's X, must also file transparency reports, detail risk mitigation plans, and pay an annual fee to the European Commission. Companies that breach the DSA risk fines of as much as 6% of their annual global sales. A commission spokesperson declined to comment. Open AI and Roblox didn't immediately respond to request for comment. The DSA aims to... to protect children online by compelling tech companies to safeguard their experiences. Roblox, which has faced criticism over its child safety protections, recently implemented stronger controls over who kids talk to and what games they play.

The company is also moving more into advertising, which the DSA aims to make more transparent when it comes to marketing to kids. The commission has opened more than a dozen probes into online platforms since the DSA came into force in 2022, end quote. Finally today, if you're searching for bargain airline tickets, increasingly, it's you against the AI, apparently, quoting Bloomberg. Airlines have long relied on analytics to devise pricing rules, such as increasing fares by 20% once a flight is a quarter full.

Now, artificial intelligence is enabling carriers to change seat prices more quickly by weighing dozens of variables in real time, helping capture more revenue while shrinking the pricing gaps that once allowed travelers to find bargain fares. Driven by soaring costs, carriers from Delta Airlines to Virgin Atlantic are increasingly adopting the technology to squeeze more revenue from every flight. For travelers, that will likely mean higher fares on busy routes as fewer seats are sold below what airlines believe customers are willing to pay, and flights are packed closer to capacity. The shift marks a new era in airline pricing, replacing rules and spreadsheets with predictive models that continuously adjust

fares to demand. Consumers should expect that airlines will be smarter about their pricing and will exploit that capability to raise fares where possible and cut prices, where they have room to stimulate demand, said Brian Terry, an analyst at New York-based Alton Aviation Consultancy. Airlines will see these conditions clearer, more in advance and with more certitude, allowing them to adjust pricing both upwards and downwards, more dynamically, he said. The technology could also work in travelers' favor on quieter flights. Passengers should expect to pay less on off-peak and lower-demand routes, as airlines use AI to stimulate bookings and fill empty seats, Terry said.

The push comes as airlines grapple with rising labor, maintenance, and fuel costs, increasing pressure to extract more revenue from every flight. Establish airline software providers, including Amadeus and Pros, now offer AI-powered pricing tools as airlines modernize their revenue management systems. While airlines have typically turned to dynamic pricing to adjust fares based on demand, advances in AI are making those systems faster and more sophisticated, according to aviation analyst Guy Leach. Machine learning models can more accurately forecast demand by analyzing historical booking patterns, seat inventory, and seasonal trends, while also continuously

tracking competitors' fares and capacity changes to update prices in near real time. Israeli startup Fetcher is among the companies helping drive the shift, used by nearly a dozen global carriers, including Canada's WestJet and Brazil's Azul Airlines. Its AI platform enables continuously updated fares as market conditions change. During disruptions, triggered by the Middle East conflict, Fetcher's software immediately incorporated factors including oil price swings, competitors' existing markets, flight cancellations, and changing route demand to reprice flights around the world. On average, its AI-driven technology raises revenue by filling more seats on a particular flight rather than by raising ticket prices, the firm said. Our models analyze

dozens, if not hundreds of classes of variables to come up with fares. You can only do that now because of AI, said Yuri Yermichali, the company's co-founder and chief AI officer sir. The platform knows to address offerings immediately every time something changes in the market. AI is also helping airlines generate more revenue even after tickets are sold. Say a passenger books a popular flight months in advance at a lower fare than a week before departure demand surges. Atlanta-based operational intelligence company Volantios AI platform, which has access to an airline's bookings, identifies people who may be willing to switch to a less crowded flight in exchange for a voucher. The vacated seat can then be resold to a last-minute business traveler for $1,000,

extracting more revenue. The airline gets more money for the seat and the passenger is rewarded for their flexibility, said Azim Baro de Walla, co-founder and chief executive officer of Volantio, which counts Japan Airlines among its customers. Still, the growing use of AI and airline pricing is also fueling concerns over how the technology could evolve. Consumer advocates and U.S. lawmakers last year warned airlines could eventually use generative AI for surveillance pricing by charging different customers, different fares for the same seat based on personal data, such as browsing history or income. For carriers, though, the appeal of all this is straightforward.

It's the ultimate secret sauce from an airline perspective, said Alton Aviations, Terry. It's easier to lift revenue in today's environment than it is to cut costs. And to do that, airlines continue to push the boundaries on where to generate new revenue, end quote. Nothing more for you today. Talk to you tomorrow.