AI Stocks Aren’t the Only Market Play. How Earnings Are Easing Recession Fears.
Oct 22, 2025 06:45:00 -0400 | #Markets #The Barron's Daily
(ANTHONY WALLACE/AFP via Getty Images)
What do KPop Demon Hunters, SUVs, Scotch tape, and protein shakes all have in common? At first glance not all that much, except they suggest consumer spending is holding up and that’s fueling the stock market.
Netflix , General Motors, 3M, and Coca-Cola all reported strong earnings on Tuesday. They operate in very different areas and that’s a healthy sign of a broadening market. It’s hard to suggest those results can be attributed to artificial intelligence powering a bubble.
For skeptics still attached to the idea of AI investment masking wider weakness, maybe data from banks are more convincing. Western Alliance Bancorp shook off worries about bad loans to post a higher profit, as did fellow regional lender Zions Bancorp. Capital One felt so good about how borrowers are paying back credit cards and auto loans that it released $760 million it had been holding back to cover potential losses.
There are still concerns about tariff headwinds, a weakening labor market, and pressure on lower-income consumers. Earnings from the likes of budget airline Southwest and toy company Hasbro should give a fuller picture, but right now corporate reports suggest the U.S. economy is still healthy as the Federal Reserve lowers interest rates. That means areas other than technology could be undervalued, such as the lagging consumer sector.
It’s a bit too early to be looking for an awkward acronym for a new set of stock market champions in the style of the FAANG (Facebook, Amazon, Apple, Netflix and Google) grouping, but there are hints of a rotation.
The Magnificent Seven megacap stocks still rule the S&P 500 , with the tech-heavy group expected to report 14% growth for the third quarter, ahead of the 7.8% forecast for the rest of the index’s constituents. But the gap looks to be closing and that’s probably a good thing.
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Netflix Revenue Is Rising. Its Outlook Beat Expectations.
While falling short of third-quarter profit expectations, Netflix turned in revenue and earnings gains and offered a better-than-expected outlook, with results driven by growth in membership, rising ad revenue, and price increases to its media streaming options.
- Netflix expects fourth-quarter revenue to rise 17% from the year-earlier period. While it no longer reports its subscriber numbers, it said it hit its highest quarterly view share ever in the U.S. and U.K., which has grown 15% and 22%, respectively since the fourth quarter of 2022.
- Third-quarter adjusted earnings of $5.87 a share fell short of expectations because of a dispute with Brazilian tax authorities that hadn’t been factored into estimates. Revenue was $11.51 billion, up 17% from a year ago.
- Some Netflix investors have worried about growth following years of strong subscriber and revenue gains. Netflix has cracked down on password sharing and introduced lower priced ad-tiers. These initiatives helped boost growth. But now it has to find new ways to keep existing customers interested and attract new ones.
- Netflix has shifted its focus to bringing on new content, including live events, family games, video podcasts, and, Netflix originals, to help keep growth accelerating. It has scored big with K-Pop Demon Hunters, which boosted revenue and led to deals with Mattel and Hasbro for licensed toys and merchandise.
What’s Next: Rival streaming firm Warner Bros. Discovery, which is raising prices across the board for its HBO Max platform, is an M&A target. It has initiated a review of strategic alternatives in light of interest it has received from multiple parties, but it wouldn’t be more specific.
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Jobs Data Is Delayed, But the Hiring Trends Are Emerging
Although September employment data has been delayed during the government shutdown, employers are hiring fewer workers than needed to keep the unemployment rate steady. From January to April, employers added an average of 123,000 jobs a month, but that dropped to just 22,000 jobs added in August.
- Goldman Sachs economist Elsie Peng said the biggest factors behind this hiring stagnation are declining immigration, government cuts, the growing use of artificial intelligence, and uncertainty around tariff policy and economic risks.
- White House spokesman Kush Desai said Trump’s economic agenda has tamed the inflation crisis, delivered real wage growth, and secured trillions of dollars in investments “to make and hire in America.” The administration has cut 97,000 federal jobs as of August, according to Bureau of Labor Statistics data.
- Goldman Sachs isn’t the only one calling out the Trump administration’s immigration restrictions. Apollo Global Management’s chief economist, Torsten Sløk, said that foreign-born labor force growth is “significantly weaker than normal,” with fewer people looking for jobs and fewer people getting hired.
- Employment in the technology sector is down 90,000 from its peak in 2023, calculates Joseph Politano of Apricitas Economics. Tech jobs grew by 300,000 during the post-Covid boom in 2022, and the sector contributed about 150,000 positions a year before the pandemic.
What’s Next: Net immigration into the U.S. dropped from about three million at its peak in 2023 to an estimated annualized pace of 500,000 this year, because of cuts in the number of asylum seekers and other immigrants allowed entry. Most economists expect payroll growth to remain weak this year.
— Megan Leonhardt and Janet H. Cho
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Novo Nordisk’s Boardroom Drama Escalates Under Pressure
An unexpected board drama at Denmark’s Novo Nordisk punctuates an already tumultuous year in which the maker of the blockbusters Ozempic and Wegovy plans to slash 9,000 workers globally. Novo Nordisk is still struggling to recover from a stock selloff after Wegovy lost its once-commanding market lead.
- All seven of Novo Nordisk’s independent directors, including board chair Helge Lund, will resign in November after a disagreement with the nonprofit foundation that controls the company. The foundation will replace them with a slate led by former CEO Lars Rebien Sørensena. Five others will stay on the board.
- The foundation, which holds more than 25% of Novo Nordisk’s shares and controls 70% of the votes, has been pushing for change at Novo. Sørensen said on Tuesday’s investor call that the foundation wanted a “comprehensive renewal” of the board, but the board disagreed.
- Weight loss drug Wegovy lost its way in the past year as new competitors emerged, particularly the drugs offered by pharmaceutical rival Eli Lilly plus knockoff versions of its GLP-1 drugs. Novo is negotiating with the Trump administration to cut some drug prices.
- Novo’s CEO Mike Doustdar is only two months into his job, after the board announced plans to fire his predecessor, Lars Fruergaard Jørgensen, in May.
What’s Next: On Nov. 14, Novo will hold an extraordinary general meeting of shareholders to elect new board members nominated by the Novo Nordisk Foundation, led by Sørensen, who was CEO from 2000 through 2016.
— Josh Nathan-Kazis and Janet H. Cho
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This Buffett Imitator Amassed Nickels as an Inflation Hedge
If gold has caught your eye lately, pay attention to what one investor has done with another metal. Taking a page from Warren Buffett, who bought up silver in the early 1960s on a bet the metal wouldn’t be used to mint coins forever, a Buffett imitator claims he’s doing the same with the nickel.
- That would-be Buffett, Kyle Mitchell, posted on X that he has purchased $250,000 in nickels—some five million of the coins —in a bet that the U.S. will change the composition of them, currently 75% copper and 25% nickel. The current metal value in the five-cent coin is six cents.
- It cost the U.S. mint 14 cents to make a nickel in fiscal 2024, including the metal value and production costs. Mitchell’s post, which has nearly 10 million views, says “Most people would call me insane,” but he went on to explain his rationale.
- “It’s an asymmetrical bet that the U.S. Mint will eventually debase the coinage again, that metal scarcity and inflation will continue to erode the dollar and that a bag of nickels will one day be worth more dead than alive,” he said. Barron’s hasn’t been able to contact Mitchell.
- Mitchell tweeted that he had room to store all the nickels, which weigh about 55,000 pounds. The problems with a nickel accumulation strategy abound: the sheer weight of the coins, storage challenges, and the inability to melt them. Banks don’t generally carry more than $50 or $100 of them.
What’s Next: Right now, the nickel is the only minted U.S. coin whose metal value is more than its face value. In an absolute worst-case scenario, Mitchell points out that his $250,000 investment in nickels will still always be worth at least $250,000.
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Taylor Swift Fiance Kelce Invests in Six Flags, Stock Jumps
Super Bowl winner, Taylor Swift’s fiancé, and now activist investor. Travis Kelce, the Kansas City Chiefs tight end, has joined an investment group to take a stake in the theme-park operator Six Flags .
- New York-based hedge fund Jana Partners, the National Football League star, and other investors have a combined stake of 9% of Six Flag’s shares, a position that would be valued at about $230 million as of Tuesday’s closing bell.
- Jana managing partner Scott Ostfeld unveiled the position during the 13D Monitor Active-Passive Investor Summit on Tuesday afternoon. He wants the company to improve marketing and customer experiences, according to The Wall Street Journal. The group also believes technological development, fresh leadership, and a potential sale could boost Six Flags stock, which trades under the ticker FUN.
- Shares got a much-needed boost, jumping nearly 18% on the news. Before Tuesday’s move higher, the stock was down about 47% in 2025—on track for its worst year since 1987, according to Dow Jones Market Data. It’s been dragged down by bad weather, economic uncertainty, and several rides breaking down.
- “I am a lifelong Six Flags fan and grew up going to these parks with my family and friends,” Kelce said. “The chance to help make Six Flags special for the next generation is one I couldn’t pass up.”
What’s Next: Kelce will probably help bring awareness to the activist investor group, rather than make key strategic decisions about Six Flags. Former Gap CEO Glenn Murphy and Reddit Chair Dave Habiger are also in the consortium. Both are potential board nominees, Jana’s Ostfeld said, but Kelce isn’t.
— George Glover and Liz Moyer
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Dear Quentin,
About a decade ago, I set up dynasty trusts for my two children. I funded them with cash and equities that I transferred from my personal stock account. While I am in relatively good health, I just turned 80 and I know I am in the home stretch. The equities that I transferred to the trusts were mostly “Magnificent Seven” companies. These stocks have, over the years, appreciated significantly.
The dynasty trust allows for these trusts not to be considered when determining my estate tax, but whenever they are sold by my descendants, they will have to pay significant capital gains. If, however, I transfer these stocks back into my personal stock account, they will be subject to the step-up rule and thus not taxed at all and will instead be valued at the date of my death. They will, however, then be subject to 40% estate tax.
How do I decide what approach I should take? Do I leave them to pay capital-gains tax on the dynasty trust or estate tax on my personal account?
— Octogenarian Mother
Read the Moneyist’s response here.
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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner