Happy Thursday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

• 🟩 | US stocks rose on the first trading day of May on surprisingly bullish earnings from several tech giants.

• 📈 | One Notable Gainer: Meta Platforms’ $META ( ▼ 0.42% ) stock climbed after its positive report reignited AI optimism.

• 📉 | One Notable Decliner: Chipmaker Qualcomm $QCOM ( ▼ 0.16% ) didn’t benefit from the rise in sentiment. Its stock fell following a light revenue forecast.

MARKET MOVERS

CVS, Eli Lilly, Microsoft

$CVS ( ▲ 1.7% ) CVS tops estimates, hikes guidance as insurance business shows some improvement (CNBC)

$LLY ( ▼ 0.77% ) Eli Lilly downplays CVS move to drop Zepbound coverage, shares plunge (Reuters)

$MSFT ( ▼ 0.35% ) Why Microsoft’s stock is seeing an unusually large gain after earnings (MarketWatch)

$BDX ( ▼ 0.11% ) Medical-products maker Becton Dickinson says cuts in global research funding have hurt sales (Morningstar)

$CARR ( ▼ 1.07% ) Carrier Global Fully Mitigates Tariffs Through Price Increases (Bloomberg)

OVERHEARD ON THE STREET

CNBC: Weekly jobless claims rose to a higher-than-expected 241,000 last week, while continuing claims hit their highest level since November 2021.

Reuters: US manufacturing shrank for a second consecutive month in April as tariffs intensified.

WSJ: Amid falling profits and stock prices, Tesla’s $TSLA ( ▲ 2.87% ) board is reportedly searching for a CEO to succeed Elon Musk.

Axios: President Trump threatened sweeping new sanctions on China and any other country that purchases oil from Iran.

FOX: Kohl’s $KSS ( ▼ 1.3% )  fired its CEO after finding he directed the company to engage in vendor deals involving conflicts of interest.

TOMORROW’S TRADE IDEA, TODAY

Spending Slower? I Hardly Know Her!

AI Spending Defies Tariff Fears

Reports of the AI trade’s demise were greatly exaggerated.

Despite investor concerns and looming tariffs on imported data center components, Microsoft $MSFT ( ▼ 0.35% ) and Meta $META ( ▼ 0.42% ) reaffirmed their commitment to massive AI infrastructure investments. Their latest earnings reports show significant capex, with Microsoft raising its figure 53% to nearly $17 billion.

Wall Street reacted positively to the news, and both stocks rallied today. Analysts are confident that their strong commitment to investment in the AI space is a bullish signal for continued development. Here are some names that stand to benefit.

Riding the Wave

Microsoft and Meta’s robust spending is fueling optimism across the semiconductor and hardware supply chains. Citi $C ( ▼ 0.24% ) analyst Christopher Danely believes this could be great news for companies like Broadcom $AVGO ( ▲ 0.1% ) , AMD $AMD ( ▼ 1.12% ) , and Micron $MU ( ▼ 0.86% ) .

Broadcom reported more than $4 billion in AI revenue last quarter, a 77% year-over-year increase. Analysts from JPMorgan $JPM ( ▲ 0.67% ) and Barclays $BCS ( ▲ 0.65% ) emphasized that these huge earnings should dispel fears of an AI investment slowdown and bolster the industry’s strength.

Cloud Networking Could Benefit

With cloud giants doubling down on AI, the companies that support their infrastructure stand to gain, too. That could include firms like Arista Networks $ANET ( ▼ 0.83% ) , Amphenol $APH ( ▲ 0.01% ) , and Coherent $COHR ( ▲ 0.35% ) .

Arista appears to be a favorite among analysts, due to its deep ties with Microsoft and Meta, which accounted for around 35% of its revenue in 2024. Microsoft is currently sourcing over 60% of its switching gear from Arista. Experts believe broader Ethernet adoption and accelerating cloud demand should serve as further catalysts for growth.

Despite macroeconomic uncertainty, companies haven’t slowed their spending on AI. Investors have already sped up their spending on related stocks as a result.

ON OUR RADAR

WSJ: Trump removed National Security Adviser Mike Waltz following the Signal group chat military leak.

CNBC: NVIDIA $NVDA ( ▼ 1.1% ) criticized Anthropic’s support for US export restrictions, calling claims of Chinese AI chip smuggling “tall tales”.

AP: The US and Ukraine signed a deal granting America access to Ukraine’s rare earth minerals.

CNN: A proposed federal law would require Apple $AAPL ( ▼ 0.71% ) and Google $GOOGL ( ▼ 1.2% ) to verify users' ages.

BI: Here are the “smartest things” economists are saying about a potential recession.

WEDNESDAY’S POLL RESULTS

Are you bullish or bearish on Brinker International (EAT) over the next 12 months?

🟨🟨🟨🟨🟨⬜ 🐂 Bullish

🟩🟩🟩🟩🟩🟩 🐻 Bearish

And, in response, you said:

• 🐂 Bullish — “They seem to be in a good space right now; especially w/ the Chili's brand, plus there's some astute marketing going on as well. Value proposition in high gear.”

• 🐻 Bearish — “When things get tight, you don’t go out to eat!”

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