The Rundown - Walmart Posts First Profit Miss in Three Years, Meta Freezes AI Hiring

Episode Date: August 21, 2025

Stock market update for August 21, 2025. This video is for informational purposes only and reflects the views of the host and guest, not Public Holdings or its subsidiaries. Mentions of assets are not recommendations. Investing involves risk, including loss. Past performance does not guarantee future results. For full disclosures, visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Public.com/disclosures⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.

Public.com presents the rundown. Your daily market update in under 10 minutes. My name is Zadadmani, and today is Thursday, August 21st. In today's episode, we'll tell you what Walmart said in their earnings report about consumers and tariffs. We'll also tell you why Meta is putting a freeze on AI hiring. Then stick around to the end of the show to find out McDonald's plans to win back more customers. I even throw out a couple suggestions for them. We get a great for you today. Let's go. Another day, another tech stock beat down.

Markets spent all of Wednesday in the red with the S&P 500 dropping 0.2%, and the NASDAQ losing 0.7%. It was mostly tech stocks again driving this sell-off with every single Mag 7 stock finishing lower yesterday, with the worst performer being Apple losing nearly 2%. Now, the good news here is that the markets recovered from their morning session lows thanks to an afternoon rally. So it could be a sign that we might be in for a potential comeback in the latter half of the week. Now, Jerome Powell's speech on Friday at Jackson Hole will likely play a big role in how the markets end the week.

And we've been hyping it up all week, hoping that Jerome Powell drops hints of a rate cut for the September meeting. Right now, the CME Fed Watch tool is pricing in an 82% chance of a 25 basis point cut at the September meeting. That still leaves an 18% chance of no rate cut, which is basically a dice roll. I'm sure those odds will change depending on what Jerome Powell says in his speech. That speech is scheduled for Friday morning at 10 a.m. Eastern. I think I'll be recording the show as the speech is happening. So make sure you guys tune in for that for an instant reaction. Let's run through some headlines.

Starting with Walmart. The largest retailer in the world reported earnings this morning, and they reported their first profit miss in three years. Their adjusted earnings per share came in at 68 cents, which was six cents shy of Walmart. Street's expectations. Company blames this miss on one-time charges like restructuring costs, so it shouldn't impact their earnings moving forward.

And despite the miss on profits, sales for the quarter beat expectations with US same store sales up 4.6 percent, and e-commerce sales jumped 25 percent globally and up 26 percent in the US. So that's a big signal that shoppers are still showing up, especially shopping online, which my wife is doing a lot more when it comes to Walmart. earnings are always tightly watched because they're the largest retailer in the world, and they're seen as a bellwether for the health of the consumer. They're basically America's economic thermometer. In this earnings report, investors were looking for signs of weakness in

consumer spending and the impact of tariffs. About a third of a Walmart sales in the U.S. is sourced internationally from China, Canada, Mexico, Vietnam, and India. Now, Walmart's executives say they've been adjusting the impact of tariffs on a category-by-category basis, Meaning for some items, the company has been absorbing the cost increase, but for others, they've passed on the price increase to consumers, especially on discretionary stuff. But overall, Walmart says they haven't observed any changes in behavior from shoppers, but they also expect tariff-related costs to continue to drift higher. From my perspective, it seems to be an okay earnings report, especially with a strong

growth in sales and e-commerce. But the market has taken a more cautious approach with Walmart stock down about 2% this morning at the time of this recording. Now let's shift gears and talk about meta. According to a report from the Wall Street Journal, meta has hit a pause button on their AI hiring spree, and that's catching some people off guard. The Wall Street Journal reports that after months of scooping up more than 50 AI researchers and engineers,

with some getting nine-figure pay packages, meta has frozen hiring inside their AI division. And the freeze even blocks internal transfers unless you get a sign-off from chief AI officer Alexander Wong. This hiring freeze comes right after Meta announced another massive AI reorganization. They're splitting their meta superintelligence lab into four separate groups focused on research, superintelligence, products, and infrastructure. Meta is also considering downsizing the AI team now. In fact, some AI executives are already headed for the exit, including Meta's VP of Generative AI, who just left to become Figma's chief design officer. I mean, you've got to admit, this is a pretty big pivot.

Zuck just spent the entire summer running blank checks to hire away the best AI talent, and now all of a sudden he's hitting the brakes hard and even down. And it just reiterates that there might be a vibe shift right now when it comes to AI. Meta seems to be reigning into spending. OpenAIs Sam Alpin is outright saying that AI is a bubble and that their chat GPT5 launch was a misfire. And then you also had a study from MIT that found that 95% of generative AI investments by companies are yielding no returns. And that might be what's driving the markets lower this week. Because AI has been propping up the stock market for the last few years at this point. But if that's actually starting to fizzle out, it could mean trouble ahead for tech stocks. I mean, Nvidia's earnings next week, we're going to be a pretty

big deal anyways, but now the stakes feel so much higher. Let's talk about some stocks making moves today. HPE shares are climbing this morning after Morgan Stanley upgraded the stock to a buy rating with a $28 price target. Morgan Stanley is betting that HPE's July quarter will look solid thanks to two big tailwinds, strong PC sales, and the AI boom, of course. Stanley thinks that HPE is well positioned thanks to enterprise customers throwing money at AI infrastructure. Plus, HPE also closed on their $14 billion acquisition of Juniper networks. Juniper makes all the behind-the-scenes internet stuff like routers, cloud hardware, the boring but essential tech that you need to keep your Wi-Fi working. The acquisition should

make HPE's revenue less cyclical and make them more vertically integrated, which Wall Street loves. Shares of HPE are up more than 3% this morning. Now, on the flip-s, side, shares of Cotee are having a rough day after the cosmetics company said they expect declining sales for the current quarter, and they posted a surprise loss in the recent quarter. Coet's U.S. sales declined by 8% in Q2, and that decline was driven by its struggling consumer beauty segment, which includes brands like Cover Girl. But Cotee is struggling across the board. Even their prestige business, which includes Kylie Cosmetics and Gucci fragrances,

fell 5% in Q2. But to make matters worse, Cotee plans to raise prices on premium fragrances to offset tariff costs. I don't know about you guys, but anyone who stayed awake in Econ 101 knows that falling demand plus raising prices, probably not a good combo. Turns out no amount of makeup could make this earnings report look pretty, and investors are bailing with a stock down 20% this morning in reaction to the earnings report. Let's wrap the show with a fun fact. McDonald's is cutting the prices of their combo meals.

Now, McDonald's combo meals have gotten pretty expensive lately with Big Mac combo prices jumping 27% between 2019 and 2024. In fact, in some parts of the country, a Big Mac combo cost as high as $18, which honestly at that point, you might as well just go to five guys. But starting in September, McDonald's plans to reduce the price of their combo meals, with the prices being 15% less than if you bought each item separately. McDonald's is also bringing back the extra value meal with $5 breakfast deals and $8 Big Mac or McNugget specials. So McDonald's continues to lean into making their food affordable again.

These efforts are starting to pay off because McDonald's saw an increase in sales last quarter for the first time in a year. So leaning back into affordability might keep that momentum going. I wonder if they would ever consider bringing back the old school playplaces. I'm not sure if they still have them anymore. I'm sure the lawyers forced them to take that down. But if McDonald's really wants to lean into the nostalgia, I mean, bring those back. Because those really gave McDonald's some character back in the day. Well, all right, guys, that's the rundown for today.

Hope you guys enjoyed today's episode. By the way, the show just crossed 50,000 subscribers on Spotify this week. That is incredible. Thank you to everyone that subscribes to the show that listens every single day. Also, a special shout out to everyone that takes the time to comment on these episodes. All that engagement really does help us out, and it helps us. other people find the show. We also got a special announcement.

We are actually going to be expanding the show. The rundown is now going to come out seven days a week. Monday through Fridays are going to be shows like this, 10-minute market recaps. Saturday, we're going to have a deep dive where we focus on one topic. And then on Sunday, we're going to have an interview. Our first interview is dropping this Sunday, and we got some great guests lined up for the next few weeks. So keep an eye on your podcast feed this weekend for the interview episode.

And let me know what you guys think about the expanded format. Thank you guys again for listening. and watching, shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here tomorrow.