GDP Who?

📉 GDP turned negative, marking the first economic contraction in three years.

May 01, 2025

Silver banana goes to…



In this issue of the peel:

  • 📉 GDP turned negative, marking the first economic contraction in three years.

  • 🖥️ Microsoft and Meta delivered solid reports, setting the stage for big tech earnings.

  • 📈Stocks shrugged off the negative GDP report, reversing course to end in positive territory.

Market Snapshot

Banana Bits

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Macro Monkey Says

GDP Contracting

The U.S. economy took an unexpected (or completely expected, depending on who you talk to) detour in the first quarter of 2025, with GDP shrinking by 0.3%—the first contraction since early 2022. 

This downturn was primarily driven by a 41.3% import surge, as businesses hurried to stockpile goods ahead of anticipated tariffs under President Trump's administration. Since imports are subtracted in GDP calculations, this rush significantly impacted the overall economic output. ​

Despite the headline contraction, there were silver linings. Consumer spending grew by 1.8%, and business investment saw a notable increase of 21.9%, particularly in equipment purchases. Exports also edged up by 1.8%. However, government spending declined by 5.1%, and the trade deficit widened, offsetting these gains. ​

Inflation indicators showed mixed signals. The Personal Consumption Expenditures (PCE) price index rose by 3.6%, up from 2.4% in the previous quarter, suggesting that inflationary pressures remain a concern. ​

The Takeaway?

While the economy hit a bump in Q1 2025, it's not all doom and gloom. The contraction was largely due to a temporary surge in imports ahead of new tariffs, a factor that may not persist in subsequent quarters. 

Strong consumer spending and business investment indicate underlying economic resilience. However, the situation warrants close monitoring, especially concerning inflation and trade policies.

Career Corner

Question

Focusing on my TMAY + 7 stories over the weekend, given I have two different working experiences (3 years of experience), should my stories solely focus on my current job? Is it fair to bring up stories from school at this point?

Answer

Would focus just on work unless it’s really a lights-out / best-ever type of story.

I would offer a different point of view. I find non-work-related stories help to make a candidate more three-dimensional and separate you a bit from the pack.

Just think about the interviewer listening to an entire day of stories from all candidates about a time when they were doing a work project, versus that one candidate who chats about how much effort he or she put in to qualify for a sports team, or win a competition, etc.

For a third perspective, I would encourage talking about both for different answers. I think group projects in school seem a bit junior when you’re 3 years out, so for those types of questions, I would focus on work or post grad extracurriculars, but I think it’s absolutely fair game to talk about athletics/extracurriculars from college and it’s good to show different dimensions of yourself.

Just make sure it’s not every question; they will want to see what you’ve learned in your jobs. Additionally, follow the sentiment from the interviewer. When I was doing lateral hiring, I noticed that some interviewers seemed less interested in anything college-related, so I would make sure I spoke mostly about work in those.

Head Mentor, WSO Academy

What's Ripe

Oddity Tech (ODD) 30.4%

  • Regardless of all the news surrounding consumers cutting back on spending, the makeup business is booming. Oddity reports very strong Q1 results, with sales rising 27% year-over-year. 

  • The company raised its full-year guidance, and management indicated that tariff impacts are expected to be manageable and largely offset by cost efficiencies.

Wingstop (WING) 14.5%

  • Slap tariffs on anything you want, but the chicken wing industry will never go away. Wingstop’s stock soared after crushing earnings. The stock price has now reached new all-time highs.  

What's Rotten

Bausch + Lomb (BLCO) 15.7%

  • Bausch + Lomb declined sharply after its Q1 earnings report. The 3.5% revenue increase just wasn’t enough to impress analysts. They also lost $212 million for the quarter, sending the stock down 43% from its 52-week  high. 

Super Micro Computer (SMCI) 11.5%

  • One company had the power to take down the entire semiconductor sector, including Nvidia and AMD. Super Micro Computer posted a dud of an earnings report, blaming delayed customer orders for missing expectations. 

  • SMCI went down in a blaze of glory, though, sparking a selloff across AI and data center stocks. Analysts say it’s probably just a Supermicro hiccup—not a full-blown AI slowdown—but they still trimmed their price targets just in case.

Thought Banana

Big Tech Earnings Coming in Strong

After yesterday’s market close, Meta and Microsoft reported their first-quarter earnings, showcasing impressive growth driven by artificial intelligence (AI) investments.​

Meta's Performance

Meta reported a 16% year-over-year revenue increase, reaching $42.3 billion, and a 35% rise in net income to $16.7 billion. The company's advertising revenue remained robust, contributing significantly to these results. 

Meta also raised its 2025 capital expenditure forecast to between $64 billion and $72 billion, emphasizing its commitment to AI infrastructure and data centers. CEO Mark Zuckerberg highlighted the progress in AI initiatives, including the Meta AI app and the Llama API platform for developers. ​

Microsoft's Performance

Microsoft reported a 13% increase in revenue, totaling $70.1 billion, and an 18% rise in net income to $25.8 billion. The company's Intelligent Cloud segment, which includes Azure, saw a 21% revenue increase, reaching $26.8 billion. 

Microsoft's investments in AI, particularly through partnerships like OpenAI, have been pivotal in this growth. CEO Satya Nadella emphasized the role of cloud and AI in enhancing business productivity and growth. ​

The Takeaway?

Both Meta and Microsoft have demonstrated that strategic investments in AI and cloud technologies can lead to substantial growth, even amid economic uncertainties. 

Their strong performances not only reflect their adaptability but also set a positive tone for the broader tech industry. Investors and analysts will be watching closely to see how these companies continue to leverage AI for future success.

The Big Question: Are Meta and Microsoft proving AI is the new oil—or just the latest investor buzzword?

Banana Brain Teaser

Previous

60% of the members of a study group are women, and 45% of those women are lawyers. If one member of the study group is to be selected at random, what is the probability that the member selected is a woman lawyer?

Answer: 27%

Today

If x(2x + 1) = 0 and (x + 1/2)(2x - 3) = 0, then x = ?

Send your guesses to [email protected]

❝

The function of economic forecasting is to make astrology look respectable.

John Kenneth Galbraith

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Happy Investing,
Chris, Vyom, Ankit & Patrick