The Deep Cracks Are Showing 😬

Welcome to the Daily Rip Market Recap — let’s jump right in. The cracks are showing in the market as AI hype meets reality, and the big tech earnings and Fed decisions are about to set the tone for the weeks ahead. Tuesday’s sell-off caught many off guard, and the culprit was a sobering report on OpenAI.

The Wall Street Journal revealed that OpenAI has been missing its user and revenue targets for over a year. This is a big deal because OpenAI sits at the heart of the AI investment frenzy that’s driving massive capital spending in data centers and chips. The news rattled chipmakers like Nvidia, AMD, Broadcom, and even SoftBank, which saw its shares plunge nearly 10 percent in Tokyo.

Power infrastructure stocks also took a hit, with Vertiv down 8 percent and the semiconductor index falling 4 percent. Why does this matter? The entire AI capex trade depends on the assumption that AI platforms will rapidly grow users and revenue, justifying hundreds of billions in spending.

If OpenAI can’t deliver, the ripple effects could slow down the broader AI investment wave. On the macro front, OPEC lost a key player as the UAE announced it will exit the cartel starting May 1. The UAE cited tensions over production quotas with Saudi Arabia and a fast-moving market shaped by the war.

This departure removes Saudi Arabia’s most credible swing producer ally at a critical time. Oil prices responded by climbing back above 112 dollars a barrel, wiping out recent gains tied to ceasefire hopes. 8 in April, driven by improved job market expectations.

Still, the market’s focus remains on the upcoming earnings from the so-called Magnificent Seven — Amazon, Meta, Microsoft, Google, Apple, Nvidia, and Tesla — with five of them reporting this week. The key number to watch is capital expenditures. Last quarter, these giants projected over 630 billion dollars in AI-related spending for the year.

Tomorrow night, Amazon, Meta, Microsoft, and Google all report, so expect volatility. Adding to the market drama, the Federal Reserve wrapped up its two-day meeting Tuesday, with the rate decision due Wednesday afternoon. 75 percent.

This will likely be Fed Chair Powell’s last press conference in his current role, adding some emotional weight to the event. Now, let’s zoom in on a trending stock that reported after the bell Tuesday — Robinhood. The brokerage known for free trades and meme-stock mania showed signs of diversification but also some struggles.

14 billion. Year-over-year revenue growth slowed to 15 percent, dragged down by a 47 percent drop in crypto revenue to 134 million dollars. On the bright side, options trading revenue rose 8 percent to 260 million dollars, and equities revenue surged 46 percent to 82 million.

8 billion contracts traded, generating 147 million dollars in revenue, up 320 percent. 3 million, and total assets climbed 39 percent to 307 billion dollars. So, while Robinhood missed revenue estimates, it’s clearly expanding its product mix and user engagement beyond crypto.

The question now is whether the revenue miss and higher expenses give bears enough ammunition. Back to AI and tech, the sell-off in chip and infrastructure stocks highlights growing skepticism about the sustainability of the AI spending boom. If OpenAI’s growth stalls, companies like Nvidia and AMD could face headwinds, which would ripple through the tech sector and broader markets.

In other market movers, we saw some notable earnings reactions: - Centene surged nearly 14 percent after beating quarter 1 earnings and guidance. - Starbucks slipped 1 percent amid concerns over foot traffic data. - Joby Aviation dropped 1 percent following testing delays and regulatory hurdles.

5 percent on cost overrun worries. - Monolithic Power Systems tumbled 5 percent after analysts cited slowing demand. - AST SpaceMobile plunged 7 percent after satellite launch timeline setbacks.

5 percent on fears of a slowdown in networking spend. - Universal Health Services collapsed nearly 10 percent after mixed results. - Pentair and Alexandria Real Estate both fell around 10 to 11 percent after missing earnings and revenue targets.

- Critical Metals cratered 18 percent amid profit-taking pressure. These moves show a market grappling with mixed earnings signals and cautious forward guidance, especially in sectors sensitive to capital spending and consumer trends. Looking ahead to tomorrow, the economic calendar is packed.

m. m. On the earnings front, pre-market reports will include SoFi Technologies, Etsy, AbbVie, and Amarin, among others.

After the bell, the spotlight will be on Amazon, Meta, Microsoft, and Alphabet — a quartet that will set the tone for tech and the broader market. To wrap up, the market is at a crossroads. the company's promise is being tested by real-world results, with OpenAI’s struggles casting a shadow over the chip and data center boom.

The Fed’s next move and the Magnificent Seven’s earnings will be crucial in shaping investor sentiment. Oil markets face uncertainty with the company's shakeup, while consumer confidence offers a glimmer of hope. That’s your Daily Rip Market Recap.

Stay sharp, and we’ll see you tomorrow.