Category: 3. Business

Though Morgan Stanley’s Innovation Lab sits firmly in Manhattan’s Financial District, I hardly saw any of the finance bros who dot the streets outside during my recent tour.

I didn’t know quite what to expect ahead of my visit — robots analyzing market moves? intricate gadgets? — and Megan Brewer, the head of firmwide market innovation and labs, tempered my wildest expectations when she described the space as “effectively a very large data center.” The lab, she said, gives people “all the infrastructure that is needed to test ideas in a secure, scalable fashion.”

Morgan Stanley employees who want to experiment with their own ideas or test third-party products that might help the firm can use the Innovation Lab. Brewer told me that most of the people who use the space are technologists, but that everyone at the bank has access.

“Most people don’t think of banks as where people are sitting there soldering and working on custom design trips,” she said. “But we offer that as well.”

Morgan Stanley is sure to celebrate innovators

And it became clear to me that Brewer’s team is pulling multiple levers to attract and retain the firm’s technologists. She helps run the bank’s Patent Accelerator Program, which guides innovators through the patent process. When someone’s invention earns a patent, Brewer’s team sends a message to their manager. They post on internal sites, frame the physical patent, and note the accomplishment on the person’s company profile. Morgan Stanley has even put patent-holders’ faces on their digital ads in Times Square, Brewer said.

Patents don’t only grant legal control over an invention, but also acknowledge something as a creative, genuinely new idea. Inventions have to be “non-obvious” to get a patent, and they’re a quantitative way for banks to flex their technological chops.

Banks are generally racing to embrace the newest technology. A McKinsey report from late 2024 found that banks have massively increased their tech spending in recent years, and are especially focused on hiring people to produce products in-house.

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While tech companies are cutting back on new-hire offers, my time at Morgan Stanley made it clear that banks might be keen on snapping up some of the available talent. Citi also has a network of physical innovation labs across the world, and many banks have accelerator or innovation programs.

When we were ready to enter the lab, Brewer told me I might need to leave my notebook behind, since it’s flammable. The first room, though, seemed pretty innocuous: a bunch of computers with black screens, and a lone guy sitting at a desktop. I almost felt like I was in a “Black Mirror” episode, the rows of blank monitors a dystopian end-of-world tableau.

The lab was full of high-end, deceptively plain machines

As we kept moving through the lab, the image of a stereotypical bank continued to fade. It was hot and loud inside the data center, with a white noise of whirring machines and fluorescent lighting. Brewer advised me to stand on a vent if I got too hot amid the rows of equipment.

Most of the time, I didn’t know what I was looking at — at one point, it turned out to be the lab’s first GPU. I asked how much it was all was worth, and everyone laughed, saying I didn’t want to know.

“Many millions,” Brewer said, adding that some pieces cost as much as rent on a New York City apartment. (I became very conscious of not stepping on the many blue wires grazing the floor in my kitten heels.)

Huge investment aside, though, some parts of the lab seemed almost scrappy, evidence of exploration and technology that’s still in the works. There were labels made of blue tape and Sharpie, stickers that looked like they came from a name-tag machine, flame-retardant Post-Its.

At the end of the tour, I met an electrical engineer, who was standing in front of a clearly very complex, very impressive machine he’d made. My tour guide told me that he’d already built and patented multiple versions of the chip machine sitting before us, which he was too polite to mention himself.

He carefully explained his project — Morgan Stanley asked that don’t get into specifics here — and indulged my many questions, talking to me in what were likely excruciatingly simple terms. When I asked whether he ever expected to work at a bank, I got an emphatic no and some knowing head-nods from those leading my tour.

Morgan Stanley has around 23,000 tech employees, 15,000 of whom are developers. At the time of this writing, the bank had 249 full-time technology jobs listed on its site.

The lines between banking and Big Tech

I didn’t talk to, or maybe even see, a single banker the whole time I was there, which makes some sense given that Morgan Stanley’s main New York headquarters are in Midtown and I was at a smaller office downtown. People talked in the terms of a startup, pushing themes like innovation that may appeal to an engineer more than the average investment banker.

We eventually left the lab and emerged into a similarly harshly lit hallway, the walls lined with cardboard boxes, before passing through a door and into the shinier, more central office area. I stepped into the bathroom before leaving; it was designed in the crisp image of the finance aesthetic, with a few cubbies holding hair straighteners.

Looking around, I remembered where I was: a bank at the tip of Manhattan, not a tech company in California. I wondered, though, how the lines between the two will continue to blur — and how much they’ve blurred already.

Nationwide is under fire for refusing to give members a binding vote on a controversial 43% pay rise for its chief executive, Debbie Crosbie, which could total up to £7m.

Campaigners say it leaves the mutual’s members with fewer rights than shareholders of listed UK banks and exposes a worrying “loophole” in building society rules.

Nationwide argues that after its £2.9bn takeover of Virgin Money Crobie’s pay should compete with that offered by banks such as Lloyds and NatWest. However, the board is only offering members an “advisory” vote at its annual general meeting (AGM) on 25 July, meaning there are no repercussions if they reject it.

Large high street banks are required to hold a binding vote on their pay policies at least once every three years, under laws governing large businesses listed on the London Stock Exchange. If shareholders reject the policy, they have to revert to the old pay plan and put a revised pay deal to shareholders within 12 months.

Nationwide could do the same, but said it is already going further than required under the Building Societies Act, which only requires binding votes for the election of board members.

“As part of our commitment to member engagement and transparency, Nationwide voluntarily puts the remuneration policy to the membership on an advisory basis at the AGM and we currently have no plans to change this approach,” a spokesperson said.

While Nationwide has never held a binding vote on pay, it has also never proposed such a large renumeration package for its chief executive, which could result in a record payout worth up to £7m from current levels of £4.8m. That is close behind NatWest Group, which in April secured backing for a package worth up to £7.7m for chief executive Paul Thwaite.

Luke Hildyard, the director of the High Pay Centre thinktank, described the situation as a “loophole in the governance of building societies”.

“Mutuals are supposed to have a more collective approach to business than corporate banks, but while the banks are required to revise pay policies that are rejected by a majority of shareholders, and provide a response to the stock market if more than 20% vote against, building societies can in theory ignore their members.”

“The Nationwide case, where there may be significant discomfort with the huge pay out planned for the chief executive, highlights the need for the loophole to be closed,” he said.

Crosbie’s £7m pay deal has angered some members. “I’m a Nationwide customer and didn’t know about this? Please send me a voting form immediately,” one posted on X. “Building societies are supposed to be the good guys. The apple has fallen far from the tree,” another claimed.

Sara Hall, the co-executive director at campaign group Positive Money said Nationwide “hiking its chief executive’s pay because that’s what the big banks are doing would be completely at odds with what building societies are supposed to stand for”.

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The move is “counterintuitive for an institution whose main selling point is putting its customers before shareholders”, Hall added.

A Nationwide spokesperson pushed back against the criticism, saying its pay proposals – although advisory – “always received overwhelming member support”.

“Any suggestion that we would ever ignore a vote against it is simply ridiculous. We always consider their views and at the last AGM over 94% of votes were in favour of the proposed remuneration policy,” they said.

“Nationwide delivered record member value last year, we are still first for customer satisfaction among high street banks, and more people switched their current accounts to Nationwide than to any other brand.

“We have managed this because we can attract, retain and motivate talented leaders. Even after the changes that are being proposed at the AGM, Nationwide’s chief executive will still be paid substantially less than the other large banks.”

Are you happy? Do you sleep well? Do you have many friends? Are you a workaholic?

Those are some of the questions Katelin Eagan, 27, said she had to answer recently when she was applying for a job.

She agreed to take a cognitive and personality assessment as part of the hiring process, but was a bit bewildered. Many of the questions had nothing to do with the engineering position, which, after completing the tests and going through several months of silence, she was eventually rejected for.

Eagan says she’s been applying for jobs full-time since the start of the year. Her efforts haven’t panned out yet, which she attributes partly to how competitive her field has become and employers having room to be picky.

“I think there’s definitely a lower amount than I thought there would be,” she said of available roles.

But that may be only part of the story. Employers are growing increasingly selective, partly because many are seeing a flood of seemingly perfect candidates, many of whom are suspected of using AI to finesse their applications, according to recruiters and hiring assessment providers who spoke to BI.

The solution many companies have come to?

Make everyone take a test — and see who candidates really are, irrespective of what ChatGPT suggested they put on their résumés.

According to surveys conducted by TestGorilla, one firm that administers talent assessments for employers, 76% of companies that had hired in the 12 months leading up to April said they were using skills tests to determine if a candidate was a right fit, up from 55% who said they were using role-specific skills tests in 2022.

Employers seem most interested in testing for soft skills — amorphous qualities like communicativeness and leadership — as well as administering general aptitude and personality tests, Wouter Durville, the CEO of TestGorilla, told Business Insider.

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TestGorilla’s Critical Thinking test was completed more than 100,000 times in the first quarter of this year, a 61% increase compared to the same quarter in 2024.

The firm also offers a Big 5 personality assessment, which was completed more than 127,000 times in the first quarter — a 69% increase compared to last year.

Demand among US employers in particular has been “massive,” Durville said, adding that many firms have turned to tests as a result of being overwhelmed with job applications. The US is the largest market for the firm, which is based in the Netherlands.

“The biggest thing is people just want to hire the best people. It’s very selfish and it’s fine,” Durville said.

Canditech, another firm that offers hiring assessments, says it’s also seen rapid growth in the last year. In 2024, the assessment usage grew 135% compared to the prior year, CEO Guy Barel told BI. He estimates that assessment usage is on track to soar 242% year-over-year.

Barel says the surge is partly due to the job market tipping more in favor of employers. In many cases, companies he works with are flooded with “tons of candidates” and looking to “move forward as fast as possible,” he said.

Criteria, another skills-based assessment provider, says test usage has more than doubled in recent years.

“AI is kind of creating this authenticity crisis in talent acquisition, because everyone can and is putting their résumé into ChatGPT.” Criteria CEO Josh Millet told BI. “It’s all about demonstrating your ability or your skill or your personality in an objective way that’s a little bit harder to fake.”

The AI job market

Jeff Hyman, a veteran recruiter and the CEO of Recruit Rockstars, estimates that demand for testing among his clients has increased by around 50% over the last 18 months.

That’s due to a handful of different reasons, he said — but companies being inundated by job applications is near the top, thanks to candidates leaning more on AI to gain an edge and send out résumés en masse, he says.

Hyman says a typical job he tries to fill for a client has around 300 to 500 applicants, though he’s spoken to companies trying to fill roles with more than 1,000 candidates within several days of being posted online.

The number of job applications in the US grew at more than four times the pace of job requisitions in the first half of 2024, according to a report from WorkDay.

Companies also want to test candidates’ soft skills as remote work grows more common, Hyman adds — and they want to be sure they’re getting the right person. Depending on the size of the organization, a bad hire can cost a company anywhere from $11,000 to $24,000, a survey conducted by CareerBuilder in 2016 found.

According to TestGorilla, 69% of employers who issued tests this year said they were interested in assessing soft skills, while 50% said they were interested in assessing a candidate’s cognitive ability. A separate survey by Criteria ranked emotional intelligence as the most sought-after skill among employers, followed by analytical thinking.

“It’s about their personality and to see if they are a good fit to the organization, if they share the same DNA,” Durville said, though he noted that, in many cases, companies find the results of the tests to be shaky as a sole evaluation metric.

TestGorilla, Canditech, and Criteria told BI that employers say they’re enjoying the time and cost savings of administering tests.

According to TestGorilla, 82% of employers who said they used skills-based hiring — a catch-all term for hiring based on proven skills — said they were satisfied with new hires, compared to 73% of US employers on average.

Canditech, meanwhile, claims its assessments can help employers cut down on hiring time by as much as 50%, and reduce “unnecessary interviews” by as much as 80%, according to its website.

But Hyman thinks there are some issues with hiring tests. For one, he says employers turn down candidates who don’t score well “all the time,” despite them being otherwise qualified for the job.

The trend also appears to be turning off job candidates. Hyman estimates around 10%-20% of applicants will outright refuse to take a test if employers introduce it as a first step in the hiring process, though that’s a practice Canditech’s Barel says is becoming increasingly common.

Hyman says he frequently has conversations with employers urging them not to put so much weight on test results, due to the potential for a mis-hire.

“That’s lazy hiring, to be honest. I think that’s not the right way to go about it,” he said.

ISLAMABAD: The Power Division has assured development partners that commercial operations of the Competitive Trading Bilateral Contract Market (CTBCM) are expected to begin by the end of September 2025.

The new system will allow bulk power consumers with a demand of 1 MW or more to purchase electricity through direct contracts with competitive suppliers.

The operationalisation of the Independent System and Market Operator will be a key part of this transition. The framework for open access charges and the allocation of wheeling capacity is in the final stages of preparation.

A phased market opening will follow, supported by the establishment of market rules and wheeling charges.

During a meeting with representatives of nearly a dozen development partners, the Power Division discussed updates on power sector reforms, industrial and agriculture pricing packages, grid capacity strategy, and distribution sector reforms, including private sector participation and investment readiness.

The Power Division said capacity costs, denominated in US dollars, have risen from Rs 11.1 per kWh to Rs 18.8 per kWh due to currency depreciation. However, fuel costs have remained steady with the addition of lower-cost generation.

The government said it aims to de-link capacity costs from currency movements and increase reliance on domestic energy sources for long-term sustainability.

Electricity tariffs remain high due to taxes and duties, adding pressure on consumers. The circular debt continues to grow due to inefficiencies and poor debt pricing. A roadmap to address this debt is under development.

Inefficient pricing has raised debt servicing costs and reduced demand.

The government has introduced the Bijli Sahulat package for the winter, offering power at marginal cost plus a small margin. A similar approach is being considered for industrial users to boost grid usage without adding subsidies.

The mechanism would offer marginal pricing while protecting fixed cost recovery through base tariffs.

To increase consumption, the government has proposed a three-year package from March 2025 to December 2027 for industrial and agricultural users. The plan projects an increase in demand of 3,745 MW in March–June 2025, 10,720 MW in 2026, and 11,018 MW in 2027.

The proposed rate is Rs 22 per unit for both sectors, with industrial users saving Rs 10.50 per unit and agricultural users saving Rs 7.77 per unit compared to current rates.

Nepra has set total fixed charges at Rs 2.505 trillion based on 106 billion units. A 5–10 percent drop in demand does not reduce these costs due to their fixed nature, highlighting the importance of increasing usage for cost recovery.

Development partners raised the need for clear pricing over the next three to five years and urged the government to avoid policies that shield inefficient domestic industries. They also stressed the need to finalize wheeling charges and market rules by September, track and publish marginal generation costs, accelerate grid and metering upgrades, and begin structured talks with industry on long-term energy policy.

The government said it is preparing a 10-year plan for generation and transmission planning. It also highlighted the importance of digital tools such as SCADA and AMI for data use and performance tracking.

The Energy Infrastructure Development and Management Company will take over planning and execution of PSDP-funded transmission projects by FY26/27. Board approvals are in progress and the CEO hiring is expected by year-end.

ISMO has been formed by combining technical teams from NTDC and CPPA-G, and will handle market operations independently of NTDC.

Ongoing transmission projects aim to expand northward evacuation capacity by 2,000 MW over the next three to four years. Development partners noted the urgency of investing in grid upgrades to meet the projected 25 percent rise in industrial demand.

They flagged several projects delayed at the planning or early implementation stage and urged quick resolution of legacy design and execution issues.

The planned rollout of 35 million advanced metering infrastructure units will require improved digital capacity and change management within distribution companies.

SINGAPORE/NEW YORK: Global investors are heading into U.S. President Donald Trump’s Wednesday deadline for trade tariffs palpably unexcited and prepared for a range of benign scenarios that they believe are already priced in.

Just days before the end of a 90-day pause he announced on his April 2 “Liberation Day” tariffs, Trump said the first batch of letters outlining the tariff levels they would face on exports to the United States would be sent to 12 countries on Monday.

Investors who have been tracking this date for months expect more details to emerge in the coming days and protracted uncertainty too, anticipating Trump will not be able to complete deals with all of America’s trading partners in the coming week.

And they are not overly concerned.

“The market has gotten much more comfortable, more sanguine, when it comes to tariff news,” said Jeff Blazek, co-chief investment officer of multi-asset at Neuberger Berman in New York.

“The markets think that there is enough ‘squishiness’ in the deadlines – absent any major surprise – to not be too unsettled by more tariff news and believe that the worst-case scenarios are off the table now.”

Both the tariff levels and effective dates have become moving targets. Trump said on Friday that tariffs ranging up to 70% could go into effect on August 1, levels far higher than the 10%-50% range he announced in April.

So far, the U.S. administration has a limited deal with Britain and an in-principle agreement with Vietnam.

Deals that had been anticipated with India and Japan have failed to materialize, and there have been setbacks in talks with the European Union.

World stocks are meanwhile at record highs, up 11% since April 2.

They fell 14% in three trading sessions after that announcement but have since rallied 24%.

“If Liberation Day was the earthquake, the tariff letters will be the aftershocks. They won’t quite have the same impact on markets even if they are higher than the earlier 10%,” said Rong Ren Goh, a portfolio manager in the fixed income team at Eastspring Investments in Singapore.

“This financial system is so inundated with liquidity that it is hard to cash up or delever at the risk of lagging the markets, with April serving as a painful reminder for many who derisked and were then forced to chase the relentless recovery in the subsequent weeks.”

Taxes and the FED

Investors have also been distracted by weeks of wrangling in Congress over Trump’s massive tax and spending package, which he signed into law on Friday.

Stock markets have celebrated the passage of the bill, which makes Trump’s 2017 tax cuts permanent, while bond investors are wary the measures could add more than $3 trillion to the nation’s $36.2 trillion debt.

The S&P 500 and Nasdaq indexes closed at record highs on Friday, notching a third week of gains. Europe’s STOXX 600 benchmark is up 9% in three months.

Musk announces forming of ‘America Party’ in further break from Trump

But the risks of tariff-related inflation have weighed on U.S. Treasuries and the dollar, and jostled expectations for Federal Reserve policy.

Rate futures show traders no longer expect a Fed rate cut this month and are pricing in a total of just two quarter-point reductions by year-end.

The dollar has suffered a knock to its haven reputation from the dithering on tariffs.

The dollar index , which reflects the U.S. currency’s performance against a basket of six others, has had its worst first half of the year since 1973, declining some 11%. It has fallen by 6.6% since April 2 alone.

“The markets are discounting a return to tariff levels of 35%, 40% or higher, and anticipating an across-the-board level of 10% or so,” said John Pantekidis, chief investment officer at TwinFocus in Boston.

Pantekidis is cautiously optimistic about the outlook for U.S. stocks this year, but the one variable he is watching closely is interest rate levels.

For now he expects to see interest rates dip in the second half, “but if the bond market worries about the impact of the bill and rates go up, that’s a different scenario.”

Do you go to Ikea for the food? Then the company has good news for you. 

The home-furnishings retailer recently said it would slash the price of its U.S. in-store menu by half from Monday through Friday, with kids eating for free during the week, starting in August. That will mean lower prices on things like Swedish meatballs, pancakes and salmon fillets at more than 50 stores across the country. 

“We believe everyone should have access to delicious, nutritious meals without straining their budget,” said Lisa Ford, Ikea’s U.S. food commercial manager, in a statement to Investopedia.

Big retail chains that sell everything from bulk packs of shampoo, toilet paper and diapers to sofa sets, lamps, clothing and jewelry are looking to up their game when it comes to ready-to-eat meals—and managing prices in a bid to keep shoppers happy and fed. 

A reputation for serving food worth eating can be good for business, industry experts say, making a shopping trip feel more like an experience. And when it’s done right, it can be a draw. 

“Retailers are looking to drive more traffic into their locations,” said R.J. Hottovy, head of analytical research with Placer.ai, which analyzes shopper foot-traffic patterns. “They want shoppers to stay longer in the stores and malls and potentially buy more products.”

Some retailers’ forays into food have scored them runaway hits. Costco’s $1.50 hot-dog-and-soda combo, which debuted in the 1980s, has become a staple for its devoted shoppers.

It’s not just bargain outlets that offer sustenance. You can enjoy breakfast—or lunch or afternoon tea—at Tiffany’s flagship Fifth Avenue store in New York City. One of the oldest examples of a retailer embracing in-store dining is the Walnut Room, which dates back to 1907 and is found on the 7th floor of Macy’s on Chicago’s State Street.

Department stores historically aspired to become one-stop shopping destinations for urban populations, said Huseyn Abdulla, assistant professor with the department of supply chain management at the University of Tennessee’s Haslam College of Business. 

“But it was also a way to keep customers in the department store as long as possible with the intent of converting this traffic into more sales,” he said.

Ikea has served its meatballs to shoppers for about 40 years. It sells more than a billion of them worldwide a year, and the company says about a fifth of its shoppers go to its stores just to dine.

The draw, the company says, is the affordable menu, with an average meal—it sells breakfast, lunch and kids’ meals—costing an average of about $11 before the upcoming discounts, Ikea said.

“One of the pain points for a lot of consumers over the last couple of years has been food inflation and overall food prices,” said Hottovy. “Ikea probably is not going to be making a lot of profit on food but if it gets more people into stores and encourages them to buy something else from its stores, then it’s a smart move.”

The “reciprocal” tariffs deadline, Federal Reserve meeting minutes, and Amazon Prime Day highlight this week’s economic and business calendar.

Investors will also be watching for data on consumer credit levels and jobless claims. Delta Air Lines and Conagra Brands lead this week’s corporate earnings.

Markets were at highs at the end of last week’s trading, which was shortened by the Independence Day holiday. The S&P 500 and Nasdaq finished Thursday at record highs, while the Dow wasn’t far off its own high-water mark. President Donald Trump on Friday signed a big taxation-and-spending bill into law.

Read to the bottom for our calendar of key events—and one more thing.  

Tariff Deadline, Prime Day, FOMC Meeting Minutes in Spotlight

After a 90-day pause on the elevated “Liberation Day” tariffs, the deadline for the U.S. to negotiate new deals with a host of trading partners comes Wednesday. Tariffs could go back to the levels announced in April for countries that haven’t yet negotiated a deal. President Trump has announced trade deals, including agreements with the U.K. and Vietnam, but several other countries have yet to reach agreements on the import taxes. Trump said he has ended negotiations with Canada. It’s unclear if Trump will reimpose the tariffs or extend the deadline again for countries that haven’t reached a deal. 

Wednesday’s release of the minutes from the June Federal Reserve meeting will give investors insight into how Fed officials are viewing the economy, as central bankers watch economic data as they decide how to set interest-rate policy. Reports on consumer credit levels and jobless claims also will be released this week.

Investors will be watching Amazon (AMZN) as it begins its annual “Prime Day” sale on Tuesday. After sales hit an all-time high at last year’s event, Amazon has extended this year’s sale to four days from two. 

Corporate earnings reports will trickle in this week, preceding the full start of earnings season the following week. Delta Air Lines (DAL) earnings are scheduled for Thursday, following a quarterly sales increase with higher passenger revenue. Slim Jim parent Conagra Brands (CAG) reports on the same day, coming after an underwhelming previous-quarter earnings report that showed sales and profit declined due to supply constraints.  Levi Strauss (LEVI) also will deliver its quarterly earnings update the same day, as the company grapples with how to handle tariffs. 

Quick Links: Recap Last Week’s Trading | Latest Markets News

This Week’s Calendar

Monday, July 7

Tuesday, July 8

• Amazon Prime Day begins
• Consumer credit (May)
• More Data to Watch: NFIB small business optimism index (June)
• Key Earnings: Aehr Test Systems (AEHR)

Wednesday, July 9

• U.S. “reciprocal” tariffs deadline
• Wholesale inventories (May)
• Minutes for June FOMC meeting
• Key Earnings: AZZ (AZZ) and Bassett Furniture (BSET)

Thursday, July 10

• Initial jobless claims (Week ending July 5)
• Key Earnings: Delta Air Lines, Conagra Brands, Levi Strauss

Friday, July 11

• Monthly U.S. federal budget (June)
• Amazon Prime Day ends

One More Thing

College is a big step for students, but only about one in five of their parents believes they can handle the bills for tuition and other costs. Investopedia’s Elizabeth Guevara takes a closer look at how parents are handling the cost of college.

AI infrastructure platform Cerebrium has raised an $8.5 million seed round led by Gradient Ventures, with participation from Y Combinator and Authentic Ventures.

Cerebrium, cofounded in Cape Town by CEO Michael Louis and CTO Jonathan Irwin and headquartered in New York, is a platform used by its customers’ engineering teams to build and scale multimodal AI applications — which can process different types of data, including text, images, and audio.

Cerebrium works across three main categories, Louis said: Voice AI, real-time digital avatars, and healthcare.

Cerebrium provides the infrastructure building blocks behind the scenes — such as model inference and training, and data processing — allowing engineers to focus on their core product and workflows, Louis told BI. It also helps customers to deploy their applications in different regions.

“We believe specialized infrastructure, which scales elastically, will be essential as real-time AI becomes core to customer experiences,” Gradient partner Eylul Kayin said in a statement.

Louis formerly founded the e-commerce startup OneCart, which was acquired by Walmart-owned Massmart in 2021. The idea for Cerebrium came as the team struggled to build machine learning at the on-demand grocery delivery company, Louis said.

Cerebrium offers serverless CPU and GPU infrastructure that spins up and down quickly, making it ideal for volatile workloads and cost-effective for clients, Louis said. “What that means is you only get charged for that exact time that it was basically running for,” he said.

The company currently counts only four engineers and is generating millions in annual recurring revenue. It counts among its clients AI-generated video purveyor Tavus and voice AI companies Deepgram and Vapi.

The company will use funds to hire more engineers to meet enterprise demand and introduce new features, Louis said.

Here’s a look at the pitch deck Cerebrium used to raise $8.5 million in seed funding. Some slides and details have been redacted in order to share the deck publicly.

The Magnificent Seven entered 2025 on a high note. Since then, the tune has meandered all over the place. 

Looking ahead, analysts expect the group of tech giants to continue to benefit from their size and position in the AI race, which could both fuel future growth and offer protection for investors concerned about trade-fueled uncertainty. But they also warn that their earnings growth relative to other leading companies may slow—and even in artificial intelligence, investors may start to look to other stocks in search of gains. 

Below, we’ll catch you up on the year so far for the Magnificent Seven—and go into more detail about some of the likely drivers of their performance that await in the months to come. 

How We Got Here

xExcitement about AI propelled the tech giants—Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Amazon (AMZN), Alphabet (GOOG), Meta (META), and Tesla (TSLA)—to two years of outsized gains. The stocks, like the broader market, were pushed higher by post-election optimism about President-elect Donald Trump’s promises to cut taxes, roll back regulations, and welcome the business community to Washington with wide-open arms. 

No company stood to benefit more than Tesla, whose CEO Elon Musk was expected to wield immense influence within the White House after publicly, and expensively, supporting Trump’s campaign. Instead, Tesla’s sales–and stock–crashed as Musk took a public role in Trump’s administration that led to both political opposition and concern about his work with the carmaker. 

Meanwhile, Trump’s tariffs sparked panic on Wall Street that pummeled high-flying tech stocks. By the time Trump paused the tariffs, the Roundhill Magnificent Seven ETF (MAGS) was trading more than 30% below its December high. 

Things have recovered since. Easing trade tensions, a strong U.S. economy, and resilient businesses helped the “Mag 7” claw back nearly all of those losses in the second quarter, with the Roundhill ETF having edged into the green year-to-date.

Three of the Mag 7—Nvidia, Microsoft, and Meta—are up double digits since the start of 2025 and are currently at or near record highs. Amazon and Alphabet remain slightly off their records. Apple and Tesla are down 14% and 19%, respectively, year-to-date.

These tech titans face plenty of risks—including high valuations, ongoing tariff negotiations, and geopolitical tensions that could threaten their businesses—in the second half. But experts say they also have the opportunity to use their size and deep pockets to bolster their positions in AI, which could lead to both long-term gains and near-term share-price benefits.

Hyperscalers Continue To Spend Big on AI

At times in the first half of 2025, it looked like tech giants might scale back their AI investments.

The success of China’s DeepSeek and its efficient AI reasoning model raised questions about whether hyperscalers needed to add as much computing capacity as expected. Trump’s implementation of sweeping tariffs threatened to plunge the U.S. into a period of stagflation and suppress consumer and business spending. 

Hyperscalers stood by plans to continue spending big on AI. Microsoft, Amazon, Alphabet, and Meta this year all indicated that their cloud and AI businesses were constrained by insufficient computing capacity. Cumulatively, the four companies are expected to spend more than $300 billion on infrastructure in 2025, with much of that earmarked for data centers and equipment required to train and deploy AI. 

That spending is expected to continue benefitting the companies that design, make, and market the most advanced semiconductors, including Nvidia and Broadcom (AVGO). It should also boost sales of networking technology companies like Arista Networks (ANET), Amphenol (APH), and Coherent (COH).

Earnings Growth Could Moderate

The Mag 7 have been the main drivers of S&P 500 earnings growth in the last two years. 

The group’s profits grew nearly 28% in the first quarter, slightly below their average over the prior three quarters. The remainder of the S&P 500 reported growth of about 9%. The gap between the two groups, now 19 percentage points, was nearly 30 percentage points as recently as the second quarter of 2024.

That gap is expected to narrow further over the next year, with FactSet projecting the rest of the index’s growth will be on par with the Mag 7’s by the first quarter of 2026.

A possible caveat: Over the past year, analysts have consistently overestimated how quickly the broader market would catch up with the Mag 7.

Size Should Be a Bulwark Against Volatility

Tariffs and economic uncertainty could help the Magnificent 7 in the second half. 

Analysts at Janus Henderson expect second-quarter U.S. earnings, which kick off with big bank results in mid-July, will come under pressure from tariff anxiety before rebounding later in the year as the trade outlook becomes clearer and mitigation strategies take effect. 

“Companies with strong balance sheets, scale, pricing power, and supply chain flexibility could weather this earnings pressure and recover faster,” they wrote.

Most of the Mag 7 operate high-margin businesses. All have scale that should give them a competitive advantage in times of uncertainty. 

Against “a backdrop of sluggish interim growth and higher-for-longer rate environment, we are likely to see a repeat of the 2023-2024 playbook of unhealthy narrow market leadership and high market concentration,” JPMorgan analysts expect.

But The AI Trade Is Broadening

The extent to which the Mag 7 companies are synonymous with the AI trade could decline and take some of the wind out of their stocks’ sails.

JP Morgan analysts expect “a broadening AI theme” that could “accelerate further with the potential for greater productivity and efficiency gains.” Semiconductor, power, data center, and cybersecurity are their preferred AI themes outside the Mag 7. 

To be sure, the Mag 7 are still some of Wall Street’s favorite AI stocks. “Our preferred way to play the AI theme are the hyperscalers,” particularly Microsoft, “and key data/analytics consumption names,” including Snowflake (SNOW) and MongoDB (MDB), said Citibank application software analyst Tyler Radtke. 

Citi analysts covering systems and back-office software have also emphasized the importance of AI monetization in the coming months. Companies that can develop AI programs that improve their customers’ efficiency—like Cyberark (CYBR) in the cybersecurity space and Monday.com (MNDY) in project management software—are best positioned to lead the AI rally, some argue.