• Markets: Stocks soared yesterday as a tech rally shifted the bad vibes from earlier in the week. The rise was fueled by Microsoft, which went absolutely berserk, spiking more than 15% in the largest-ever single-day jump in a company’s market value after impressing investors with its latest earnings report.

JUST KEEP SWIMMING

Nick Iluzada

The US economy is growing at a slower pace, but it’s not letting anything knock it down. GDP growth sank to 1.5% last quarter, the government estimated yesterday, down from 2.1% in the previous quarter and below the 1.8% that economists expected.

But, after stripping out volatile government spending and trade numbers, the US economy still grew a relatively healthy 3.9% despite jitters from the Iran war—largely because Americans kept shopping:

• Growth in consumer spending, aka the mighty fuel of the US economy, accelerated to 3.2%, from 0.5% in Q1.
• Analysts say that household budgets were aided by bigger-than-usual tax refunds this spring and gas price declines in June stemming from a ceasefire in the Iran war, which has since unraveled.

A separate government report showed that cheaper gas contributed to overall consumer prices falling in June by 0.1% for the first time in six years, though the annual inflation number of 3.7% was still above the Fed’s goal of 2%. Analysts warn that Americans’ purchasing power might run out of steam this quarter as resumed fighting in Iran reignites inflation.

The AI splurge economy

Much of the economic expansion was driven by growth in business investment, courtesy of companies spending big on AI infrastructure. More than half of the overall GDP growth in Q2 was driven by AI-related investments like data center construction, according to an estimate by Stripe’s Chief Economist Ernie Tedeschi.

However, some corporate AI spending might have actually dampened the official GDP number, since many chips and other supplies came from abroad, accelerating import growth.

Looking ahead: The government will likely revise its Q2 growth estimate in the coming weeks, and the Federal Reserve will be watching closely as it weighs whether to raise interest rates in September to fight stubbornly high inflation.—SK

      

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World

Tour de headlines

Josh Edelson/Getty Images

🍎 Tim Cook has hosted his last earnings call as Apple CEO. The tech giant reported fiscal Q3 earnings yesterday, the final check-in with investors before CEO Tim Cook passes the baton to John Ternus on Sept. 1. The results were a mixed bag: Revenue beat expectations on surging iPhone and Mac sales, but supply constraints and weakness in China and in its services business dampened Cook’s going-away party. Ultimately, investors didn’t love what they heard, as the stock fell in after-hours trading. The report puts a dent in what had been a major hot streak for the iPhone maker, whose stock reached a record high earlier this week in part because investors appreciated that it wasn’t spending as much on AI as rivals were.

☁️ Sunny skies for Amazon’s cloud unit. Like Apple, Amazon reported quarterly earnings yesterday. Unlike with Apple, investors were deeply pleased with Amazon’s showing. The company’s stock jumped 9% in after-hours trading after it said that sales of its cloud computing unit, Amazon Web Services, grew the fastest since Q4 of 2021. The growth was so impressive that investors didn’t seem to mind that Amazon also hiked its AI spending projection for 2026 from $200 billion to $220 billion—an act that has recently spooked investors, who are worried that tech companies are splurging too much on data centers without enough return on that investment. But for one quarter, at least, Amazon’s revenue wins kept investors cheery.

⚽ UEFA nations are boycotting FIFA over its private investment plan. European countries are doing what Italy has unintentionally done since 2014: boycotting the World Cup. The governing body, which organizes soccer throughout Europe, announced that its 55 member nations will not participate in FIFA competitions—including the 2030 World Cup—unless FIFA abandons its plan to sell equity in the tournament to private investors. The soccer world plunged into turmoil earlier this week when FIFA President Gianni Infantino revealed the arrangement, which involves Josh Kushner, the brother of President Trump’s son-in-law, Jared Kushner. According to the Associated Press, Infantino’s controversial plan could threaten his 11-year presidency of FIFA.—AE

SANDWICH PICK

Kevin Carter/Getty Images

Jersey Mike’s debuted on the New York Stock Exchange yesterday, the culmination of a relatively quick turnaround from its sale to private equity firm Blackstone last year.

The purveyors of the Big Kahuna Cheese Steak priced its IPO at $23 per share to raise ~$1 billion, making it the largest IPO in the restaurant sector since Krispy Kreme raised $500 million with its 2021 IPO. The newly dubbed JMKE opened lower, at $21, and closed the day down ~6% from its IPO price.

Fast food: PE companies tend to hold for years, but Blackstone fast-tracked the sandwich chain for public trading in 18 months. Blackstone moved so quickly because of Jersey Mike’s rapid growth in recent years and the public’s current voracious appetite for IPOs:

• Since 2019, Jersey Mike’s has tripled sales while smoking rival Subway. Per the Wall Street Journal, the average Jersey Mike’s location made $1.36 million in sales last year while Subway averaged $510,000 (although Subway has many more locations).
• This year is shaping up to be a record one for IPOs—there has been $146.1 billion of common stock offered in the first six months of 2026 (more than half from SpaceX), which is already more than the combined totals between 2022 and 2025.

Up next: Inspire Brands, the owner of chains that include Arby’s, Buffalo Wild Wings, and Dunkin’, could be the next restaurant operator to go public. It filed confidentially for an IPO in May with the intent to raise $2 billion, per Bloomberg.—DL

      

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Situational Awareness

It’s times like these when it’s very important to have a company name that doesn’t dunk on itself if something goes wrong. AI hedge fund Situational Awareness put out an emergency call to unload more than $10 billion from its public portfolio this week after absorbing massive losses. Billionaire Ken Griffin’s fund Citadel promised to buy a majority of the stock at a heavy discount yesterday.

Situational Awareness was founded two years ago by 25-year-old Leopold Aschenbrenner, a former OpenAI staffer who wrote the popular essay “Situational Awareness” in 2024 about how he expected AI to change everything. The fund invested huge amounts of leveraged cash in the software and hardware companies that it believed the AI revolution would depend on:

• The hedge fund grew its portfolio to $45 billion in early July.
• But recent investor jitters about the sustainability of the industry have cratered many of the fund’s biggest holdings, like Nebius, Micron, and Sandisk. (All three rebounded yesterday, but Aschenbrenner had already sold them 🫠.)

Looking ahead…Per some reports, Situational Awareness was also floating the sale of its stake in Anthropic, but the fund denied that. With the cash influx from Citadel, it’s possible that the fund is simply trying to keep its head above water until Anthropic’s expected IPO later this year. But the rest of Wall Street is on edge because large hedge funds crashing out have been early signs of crises.—MM

      

Dave’s sports desk

Jersey patches are coming for your college teams

SoFi, Chase

On Fridays, the Brew’s Dave Lozo looks at a sports business story that says a lot more than just the final score of a game.

This week, Ohio State and Notre Dame agreed to massive multi-year deals to place corporate logos on their sports jerseys as soon as tomorrow:

• Ohio State will receive a reported $17 million per year from JPMorgan Chase to wear the Chase bank logo on all of the school’s jerseys.
• Notre Dame is partnering with SoFi on a patch deal reportedly worth between $18 million and $20 million annually.

This new avenue for name, image, and likeness (NIL) revenue is a result of the NCAA granting schools permission to sell up to two logos on apparel during the regular season and an additional logo for conference championships.

Other schools that will be donning brand logos when college football season starts next month include Arkansas (Tyson Foods), Wisconsin (Culver’s), and LSU (Woodside Energy).

More to come: Penn State could be the next major university to form a brand partnership, with Pennsylvania-based Utz and Hershey among the predictions from the school’s student newspaper.—DL

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The feeling of getting a 5/5 on the Brew’s Weekly News Quiz has been compared to pressure washing a garbage can. (Don’t knock it ‘til you’ve tried it.)

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News

What else is brewing

• The Iran war seemingly expanded to Egypt after the country’s officials said that two tankers at its port in the Mediterranean were hit by drones yesterday. No one has claimed responsibility for the attack, which comes as Iran and its Houthi allies in Yemen widen strikes across the Middle East.
• President Trump said he may pull Todd Blanche’s nomination to be attorney general until two Senate Republican holdouts, John Cornyn and Thom Tillis, leave office in January.
• Atherton, an enclave in Silicon Valley home to tech billionaires, surpassed Miami’s Fisher Island to become the most expensive zip code in the US, Bloomberg reported.
• The Walking Dead and its multiple spinoffs will stream on Netflix in addition to AMC+ starting in 2027, as part of a $500 million deal between AMC Global Media and the streaming giant.
• The New York Mets became the first MLB team to sign a deal with a prediction market yesterday—the only time they will come in first in anything this season.
• Spotify launched a running mode that can match songs to your tempo, duration, and, we assume, how quickly you upload the route to Strava for kudos.

recs

• Maps of the real locations in famous novels.
• The 25 best documentaries of all time.
• How to eat and drink to minimize jet lag on your next trip.
• Perhaps the most nostalgic Lego set we’ve seen.**

^{*A message from our sponsor. **This is a product recommendation from our writers. When you buy through this link, Morning Brew may earn a commission.}

Play

Decipher: In this edition of our code-cracking puzzle, you have to decipher a quote from a famous athlete. Play Decipher here.

Friday trivia

“baggage” and “PARADROP” are the longest lowercase/uppercase words with what specific trait?

Answer

“baggage” is the longest possible lowercase word where each letter has a hole in it. “PARADROP” is the longest uppercase word where each letter has a hole in it.

Source: Adam Aaronson via Puzzle a Day

Word of the Day

Today’s Word of the Day is: paradrop, meaning “the delivery of personnel or supplies from an aircraft via parachute.” You were wondering what that meant after reading today’s puzzle, weren’t you? Thanks to Carson from San Antonio for the suggestion. Submit another Word of the Day here.