TMTB EOD Wrap

Good afternoon. QQQs -19bps. Rates climbed 2-3bps across the curve ahead of the likely Fed cut on Wednesday, where discussion centers around whether a rate cut might be more than offset by a hawkish pivot in fwd guidance. Despite the index being down as large-cap internet weighed, underneath the surface it felt more beta risk-on as TMT mo paired rallied 1.4%, non-profitable tech was +1%, and BTC related names +2% while Strong Balance Sheet, Telecom, and TMT Quality were down.

Let’s get straight to the good stuff…

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INTERNET

• NFLX -3.5% lots of noise today. In addition to the morning’s two downgrades, Paramount made a hostile bid at $30/share although Paramount’s is for all of WBD including the cable assets.

  

  Co-CEOs Greg Peters and Ted Sarandos were also at the UBS Media and Communications conference where they argued NFLX is the best and most natural owner of WBD’s assets, framing the deal as pro-consumer, pro-creator, and pro-jobs, and noting the PSKY hostile bid was well anticipated and they’re very happy with the PSKY deal already struck.
  They said they see major value in unlocking WBD’s deep library, especially HBO/high-end drama, and adding three new verticals (film studio, TV studio, HBO brand) while keeping WBD’s creative units intact. They think regulators will be comfortable given combined NFLX+WBD would still have only ~9.2% U.S. TV viewership (vs YouTube’s 13%), and management stressed the deal increases content spend and employment. Deal aside, they remained very bullish on the 4Q/2026 slate (Stranger Things drops, Narnia, more), live events and sports, and advertising, while continuing to grow revenue faster than content spend and expand margins.

• GOOGL -2% weak all day presumably on ChatGPT 5.2 likely being released early this week (although PolyMarket implies it won’t be tomorrow). Adweek had an article saying Google is telling advertisers it will bring ads to Gemini in 2026

“In separate calls with at least two advertising clients, Google reps indicated that ad placements in Gemini are targeted for a 2026 rollout, though details on formats, pricing, and testing remain unclear, according to one buyer, who spoke under condition of anonymity in order to discuss the meeting. This buyer said the plan is separate from advertisements in AI Mode, Google’s AI-powered search experience launched in March.”

However, GOOGL’s head of global ads denied it:

On the same day, OpenAI pulled ad suggestions. TheVerge

OpenAI has turned off some promotional app messages in ChatGPT after users complained that the chatbot was showing them ads. In a post on X, OpenAI’s chief research officer, Mark Chen, said that the company is working to improve the experience after showing ChatGPT users in-app messages promoting companies like Peloton and Target, and that “this kind of suggestion” has now been disabled.

“I agree that anything that feels like an ad needs to be handled with care, and we fell short,” said Chen. “We’re also looking at better controls so you can dial this down or off if you don’t find it helpful.”

Some good takes in TMTB chat below: