The software sell-off of early 2026 did not happen because earnings suddenly fell apart.

It happened because investors started to wonder whether AI could make big chunks of traditional SaaS less valuable, or even obsolete.

The rout wiped out $830 billion in market value across software and services stocks in just six trading days after Anthropic’s new Claude plug-ins intensified those fears.

That is the backdrop for Morgan Stanley’s contrarian call.

Keith Weiss is arguing that two of the market’s most beaten-up names, Intuit and Salesforce, have been sold too hard.

What broke the market’s trust in SaaS

The panic was unusually fast because the fear was existential.

Anthropic’s tools were aimed at automating tasks across legal, sales, marketing and data analysis, which hit directly at the subscription model many software companies rely on.

Investors did not just worry about slower growth; they worried that AI agents could do work that customers once paid software vendors to organize, route and track.

Morgan Stanley’s software team said “peak uncertainty has severely impacted Software multiples,” and the sector had already fallen roughly 33% from October 2025 levels.

In that same call, Weiss said investors were underestimating the ability of incumbent software vendors to participate in the AI cycle, not just get run over by it.

That is the core of the bullish case.

Why numbers tell a different story

The irony is that the two stocks Morgan Stanley likes most are not weak businesses at all.

Intuit just reported fiscal second-quarter revenue of $4.7 billion, up 17% year over year, while non-GAAP diluted EPS rose 25% to $4.15.

Global Business Solutions revenue grew 18%, Consumer revenue rose 15%, and TurboTax still grew 12% despite a noisy tax season.

That is why Weiss made Intuit his top pick and kept a $580 price target, which implies about 58% upside from the stock’s level at the time of the note.

Morgan Stanley said the stock’s valuation near 20 times GAAP earnings looked attractive and that the April-quarter print should provide “added clarity on the durability of TurboTax growth” and open the door to upward estimate revisions.

Salesforce tells a similar story, only with a more direct AI angle.

Morgan Stanley included Salesforce among the software names it viewed as most attractive after the February selloff.

The bank argued that the bear case gives too little credit to incumbent vendors that can still win in the AI era.

Salesforce’s own numbers help that argument, as in its fiscal 2026 results, Agentforce and Data 360 annual recurring revenue exceeded $2.9 billion, up more than 200% year over year.

Should investors follow Morgan Stanley’s lead?

That depends on whether the market has priced in extinction when the reality may be adaptation.

The bearish case is not silly, as the investors see AI as a real threat to software pricing power, and that the February rout was driven by exactly that concern.

But Morgan Stanley’s view is that the market has gone too far in assuming disruption means collapse.

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Apple’s biggest overhang over the past two years just turned into one of its strongest earnings positives.

In fiscal second-quarter results released on Thursday, the company said Greater China revenue rose to $20.497 billion, up 28% from a year earlier and comfortably ahead of Wall Street expectations of around $19–19.5 billion.

That made China one of the clearest beats in a quarter that was already strong across the board, with Apple posting record March-quarter revenue of $111.2 billion and earnings per share of $2.01.

Apple stock: From key risk to key support

The contrast with a year ago is sharp.

In Apple’s fiscal second quarter of 2025, Greater China revenue was $16.002 billion, and the region had been a major source of investor concern.

This time, China not only rebounded, but it also stood out as one of the strongest contributors to the overall beat.

Tim Cook said Apple delivered “double-digit growth across every geographic segment” and described the quarter as the company’s “best March quarter ever.”

That matters because China has been central to the bear case for Apple for much of the past two years.

Slower demand, intensifying local competition and persistent concerns about share loss to domestic brands such as Huawei had weighed on sentiment.

Instead, Apple said its installed base of active devices reached a new all-time high, while services revenue also set a record.

In simple terms, China shifted from being a potential drag to a meaningful positive in the quarter.

Signals were there before earnings

This rebound did not come entirely out of nowhere. In late January, Apple’s Greater China revenue jumped 38% to $25.53 billion in the holiday quarter, marking its strongest growth in the region in years.

Then, in March, data showed Apple’s smartphone sales in China rose 23% in the first nine weeks of 2026, even as the broader Chinese handset market declined about 4%.

By April, Counterpoint Research data indicated iPhone shipments in China were up roughly 20% in the first quarter, the fastest growth among major vendors.

The drivers point to a mix of cyclical and policy support rather than a purely one-off surge.

Apple appears to have benefited from e-commerce discounting and eligibility for state-backed subsidies on certain iPhone models.

Tim Cook also told analysts that Greater China revenue rose 33% in the first half of the fiscal year, with March-quarter growth at 28% and retail traffic increasing by double digits.

What this means for AAPL now

The bigger implication is for valuation, as China was the key variable analysts were watching heading into the report.

Now the question is whether the rebound marks a short-term boost or the early stages of a more durable recovery.

Earlier in the year, analysts had described the 38% holiday-quarter growth as unusually strong, while still flagging longer-term competitive pressures.

That tension remains, but the latest data gives Apple a stronger footing in that debate.

The slowdown from 38% growth in the holiday quarter to 28% in the March quarter is also worth noting.

This is not a case of China suddenly becoming an easy growth market again.

Instead, it suggests the region may no longer be a consistent drag, which is enough to shift the narrative and reopen the upside case for the stock.

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Asian markets opened Friday on a cautious note as a sharp swing in oil prices kept risk appetite fragile and reminded traders how quickly Middle East headlines can ripple through global markets.

Brent crude briefly surged to a four-year high above $126 a barrel on Thursday after reports that the US military would brief President Donald Trump on possible action against Iran.

By Friday, Brent was holding near $111.60 a barrel, and US crude was around $105.50, a sign that the market was still volatile but no longer in panic mode.

Oil keeps geopolitics front and centre

The bigger issue for traders is not just the level of oil, but the speed of the move.

Brent’s June contract touched $126.41 before expiring on Thursday, and remained elevated on Friday at $111.66 for Brent and $105.53 for US crude.

That kind of whipsaw matters because it quickly feeds into inflation expectations, transport costs and the outlook for central banks across import-dependent Asia.

Asia remains especially exposed to higher energy prices because much of the region relies on imported oil and gas.

Japan and Australia hold up

The regional tone was mixed, not outright risk-on.

Australia’s S&P/ASX 200 rose 1%, and Tokyo’s Nikkei 225 gained 0.7%, helped by a softer sense of panic around oil and a supportive lead from US corporate earnings.

Asian shares were rebounding on Friday, with holiday closures limiting the reaction across the region and helping to keep trading thin.

MSCI’s broad Asia-Pacific index outside Japan edged 0.3% higher, underscoring that the broad picture was one of stability rather than enthusiasm.

Elsewhere, the tone was weaker.

Hong Kong’s Hang Seng index ended at 25,776.53, down 1.28%, while South Korea’s KOSPI fell 1.38% to 6,598.87.

Mainland China was only marginally firmer, with Shanghai up 0.11%.

Geopolitics drives market mood

For the rest of the session, investors will be focused on whether oil can hold around current levels or resume its climb.

A sustained move higher would keep pressure on Asian inflation, currency markets and import bills, especially for economies that rely heavily on energy imports.

The markets are still balancing that risk against broader support from strong US tech and industrial earnings, including results from Alphabet, Caterpillar and Apple, which have helped Wall Street and improved the global backdrop for equities.

That leaves Asia trading with a familiar split: exporters and some cyclicals can still find buyers, but risk-sensitive markets are more reluctant to chase gains as geopolitical headlines dominate.

With many bourses closed for May Day and the region running on a holiday-thinned tape, Friday’s action is being driven less by domestic data and more by geopolitics, crude and global earnings momentum.

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US inflation accelerated sharply in March as rising oil prices linked to the Iran conflict pushed costs higher.

Brent crude surged to near four-year highs before retreating amid escalating geopolitical tensions.

Bitcoin hovered near key support around $75,000 as investor positioning tightened.

Meanwhile, Meta Platforms shares fell despite strong earnings, while Alphabet Inc. rallied on robust cloud growth.

US inflation rises as growth improves modestly

US consumers faced renewed price pressures in March, with inflation rising at its fastest monthly pace in nearly two years.

The personal consumption expenditures (PCE) index climbed 0.7% during the month, while annual inflation accelerated to 3.5%, marking the highest level since spring 2023.

Core inflation, which excludes food and energy, remained elevated at 3.2% annually, reinforcing concerns that underlying price pressures persist.

The increase was largely driven by higher gasoline and energy costs as geopolitical tensions between the US and Iran intensified.

At the same time, the US economy showed resilience. Gross domestic product expanded at a 2% annualised pace in the first quarter, up from 0.5% in the prior quarter.

Growth was supported by steady consumer demand and a sharp rise in business investment, particularly in artificial intelligence.

Consumer spending rose 0.9% in nominal terms, though real spending increased just 0.2%, indicating inflation is eroding purchasing power.

The combination of firm growth and rising prices presents a complex backdrop for the Federal Reserve as it weighs its policy path.

Brent crude volatile as geopolitical risks deepen

Oil markets remained highly sensitive to developments in the Middle East.

Brent crude surged to as high as $126 per barrel before falling more than 3% to settle near $114, while US West Texas Intermediate crude slipped to around $105.

The volatility follows reports that the US military may present plans for potential action against Iran, alongside an ongoing blockade that has constrained supply. Since late February, both Brent and WTI have rallied roughly 60%.

Analysts warn that continued supply constraints, particularly through the Strait of Hormuz, could keep prices elevated, with some projections suggesting oil could climb toward $140–$150 per barrel if disruptions persist.

Bitcoin consolidates near key $75,000 support zone

Bitcoin is trading near $76,350, hovering just above a cluster of key cost-basis levels that have emerged as critical support.

The $75,000 level has become a focal point, aligning with the average cost basis for recent investors and sitting close to institutional positioning via US spot ETFs at around $76,700.

This clustering has increased price sensitivity within a tight range.

Derivatives data suggests a liquidity corridor between $74,000 and $80,000, with significant liquidation risks on both sides.

Roughly $2.69 billion in long positions are at risk near $74,000, while short liquidations near $80,000 total about $4.48 billion.

Analysts note that holding above key realized price levels signals stronger investor conviction, though a decisive breakout is needed to shift momentum more firmly bullish.

Meta falls while Alphabet rallies on AI-driven divergence

Shares of Meta Platforms dropped around 8% despite reporting better-than-expected earnings, as investors reacted negatively to rising capital expenditure tied to artificial intelligence.

Meta posted strong results, with earnings per share of $10.44 and revenue of $56.3 billion, but raised its capex outlook to $135 billion.

The increased spending weighed on sentiment and pressured free cash flow.

Chief Financial Officer Susan Li said, “Our experience so far has been that we have continued to underestimate our compute needs.”

Analysts expressed caution about returns on investment, with some lowering price targets despite maintaining positive ratings.

In contrast, Alphabet Inc. shares surged 9% to a 52-week high after delivering strong earnings and robust cloud growth.

Revenue rose 22% to $110 billion, while Google Cloud sales jumped 63%.

CEO Sundar Pichai highlighted strong demand for AI-driven services but acknowledged capacity constraints, saying, “Our cloud revenue would have been higher if we were able to meet the demand.”

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US stocks rallied on Thursday, with the Dow Jones Industrial Average surging nearly 800 points and the S&P 500 and Nasdaq both reaching fresh all-time highs, as strong corporate earnings helped investors look past geopolitical tensions in the Middle East.

The Dow rose 790 points, or 1.62%, while the S&P 500 gained 1.02% and the Nasdaq advanced 0.89%.

The rally capped a strong month for equities, with all three major indexes posting their best performances in years.

Earnings strength powers market rally

Investor sentiment was buoyed by upbeat earnings from key companies, particularly in industrials and technology.

Shares of Caterpillar jumped nearly 10% after the company reported better-than-expected quarterly results and raised its annual revenue outlook. The stock’s gains provided a significant lift to the Dow, with Caterpillar widely viewed as a bellwether for global economic activity.

Technology stocks also contributed to the advance. Alphabet Inc. rose roughly 10% after reporting strong first-quarter revenue and boosting its capital expenditure guidance to as much as $190 billion for 2026.

However, not all tech names participated in the rally. Meta Platforms fell around 7%, while Microsoft dropped about 4%, as investors reacted to rising artificial intelligence-related spending and concerns about capital intensity.

Economic data and oil prices in focus

Economic data released on Thursday offered a mixed but generally supportive backdrop for markets.

US gross domestic product expanded at a 2% annualised pace in the first quarter, up from 0.5% in the previous quarter, though slightly below expectations of 2.2%.

At the same time, jobless claims fell to their lowest level since 1969, pointing to continued labor market strength.

Oil prices, which had surged earlier in the week on concerns over supply disruptions linked to the US-Iran conflict, reversed course on Thursday.

Brent crude fell more than 3% to around $114 per barrel, while West Texas Intermediate declined to about $105.

Despite the pullback, crude remains elevated, with prices up roughly 60% since late February, reflecting ongoing geopolitical risks and supply constraints.

Strong monthly gains despite geopolitical tensions

Thursday’s rally helped cement a strong performance for US equities in April.

The S&P 500 is on track for a gain of more than 10% for the month, marking its best performance since November 2020.

The Nasdaq is heading for a jump of over 15%, its strongest showing since April 2020, while the Dow is set to rise more than 7%, its best month since November 2024.

At the same time, inflation remains a concern. Rising energy prices tied to the Middle East conflict have kept year-on-year inflation above 3%, complicating the outlook for Federal Reserve policy.

While geopolitical risks persist, the combination of strong earnings and resilient economic data has helped sustain bullish momentum in equities, at least for now.

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Shares of Apple Inc. edged lower in after-hours trading on Thursday, slipping 0.48% despite the company delivering better-than-expected fiscal second-quarter results, as investors weighed strong product demand against ongoing supply constraints.

The company posted revenue of $111.18 billion and earnings of $2.01 per share for the quarter ended March 28, beating analyst expectations of $109.46 billion and $1.95 per share, respectively.

The performance underscores continued consumer demand for Apple’s ecosystem, particularly its flagship smartphone lineup.

iPhone demand drives revenue growth

iPhone sales remained the primary growth engine, rising 21.7% year-on-year to nearly $57 billion.

The gains were fueled by strong demand for the iPhone 17 lineup, as customers continued upgrading devices at a brisk pace.

However, sales came in slightly below expectations of $57.21 billion, reflecting supply constraints tied to advanced processor chips.

Chief executive Tim Cook acknowledged the impact, noting that demand exceeded supply.

“The demand was off the charts. And there’s just a little less flexibility in the supply chain at the moment for getting more parts,” Cook told Reuters.

Chief Financial Officer Kevan Parekh also pointed to constraints in chip availability, as suppliers such as Taiwan Semiconductor Manufacturing Company allocate more capacity to artificial intelligence chipmakers.

Despite these challenges, Apple benefited from strong momentum in China, where iPhone sales jumped 28% following a 38% increase in the previous quarter.

The company also secured the top position in global smartphone market share for the March quarter, according to Counterpoint Research.

Margins and product strategy support profitability

Apple’s profitability remained a key highlight, with gross margins coming in at 49.3%, above expectations of 48.38%.

The performance reflects the company’s ability to navigate rising component costs, particularly in memory and storage.

The product strategy under incoming CEO John Ternus has also played a role in sustaining demand.

Premium iPhone 17 models gained additional features at higher price points, while entry-level devices 17e and base iPhone 17 maintained stable pricing.

Beyond smartphones, Apple reported solid performance across other product categories.

Mac sales reached $8.4 billion, exceeding estimates of $8.02 billion, supported in part by the launch of the lower-cost MacBook Neo.

Analysts see the new device as a potential entry point into a broader market segment dominated by budget laptops, expanding Apple’s reach among price-sensitive consumers.

Services growth and leadership transition in focus

Apple’s services division continued to deliver steady growth, generating $30.98 billion in revenue, above analyst expectations of $30.39 billion.

The segment, which includes the App Store and subscription offerings, remains a key driver of high-margin revenue.

Other categories also performed well, with iPad sales reaching $6.91 billion and wearables generating $7.9 billion, both ahead of forecasts.

Geographically, Greater China revenue came in at $20.5 billion, surpassing expectations and signaling a continued recovery in a key market.

The company also announced an additional $100 billion share buyback authorization, maintaining its capital return strategy.

Attention is now shifting to the upcoming leadership transition, with Tim Cook set to step down in September.

With strong demand, resilient margins, and expanding product lines, Apple enters its next phase with momentum, though supply constraints and evolving AI strategies remain key areas to watch.

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Shares of Apple edged higher on Thursday ahead of its fiscal second-quarter earnings report, with investors closely watching leadership changes, artificial intelligence strategy, and margin pressures tied to rising component costs.

The stock gained about 1.3% and was trading at $273.70. Apple stock has been muted in 2026 with less than 1% gain in the year so far.

Expectations are high as the iPhone maker prepares to release results after the market close.

Strong growth expected in earnings and revenue

Analysts surveyed by FactSet expect Apple to report net income of $28.52 billion, or $1.95 per share, up from $24.78 billion, or $1.65 per share, a year earlier.

Revenue is projected to reach $109.46 billion, compared with $95.36 billion in the same quarter last year.

A key focus will be iPhone performance, with revenue expected to climb 21% year-over-year to $56.5 billion.

Growth in the Mac segment is also in focus, with analysts forecasting a 2% increase to $8.12 billion, supported by demand for newer devices such as the lower-priced MacBook Neo and the Mac Mini.

Services, Apple’s highest-margin business, are expected to continue expanding, with revenue projected to rise 14% to $30.4 billion.

Strong product sales would likely support further gains in this segment, which includes offerings such as the App Store and Apple Music.

CEO transition and AI strategy under scrutiny

Investors are also assessing Apple’s leadership transition after the company confirmed that long-time CEO Tim Cook will step down on September 1.

He will be succeeded by John Ternus, the company’s head of hardware engineering.

The timing of the transition has raised questions among analysts.

“These will be big shoes to fill and the timing of Cook exiting stage left as CEO could make sense but also creates questions,” said Wedbush Securities analyst Dan Ives.

Other analysts view the move as a strategic shift.

“We see this move as a transition from Cook’s operations driven era to a more hardware, and engineering-led model under Ternus, signaling a renewed emphasis on product innovation and next-generation devices,” wrote Raymond James analyst Melissa Fairbanks.

Artificial intelligence is another key theme.

Investors are looking for updates on how AI will be integrated into Apple’s ecosystem, particularly improvements to its Siri chatbot.

However, expectations for major announcements remain limited ahead of the company’s Worldwide Developers Conference scheduled for June.

Margin pressures and market share gains in focus

Rising memory costs remain a concern for the broader tech hardware sector, as demand for AI-related components continues to outpace supply.

These pressures have forced several manufacturers to raise prices, though Apple has so far avoided significant price increases.

Analysts say this strategy may be helping the company gain market share, particularly in smartphones.

Data from Counterpoint Research showed iPhone shipments in China rose 20% year-over-year in the first quarter, even as overall shipments declined.

Greater China revenue is expected to increase 19% to $19 billion in the second quarter, despite ongoing competition from local players such as Huawei.

Still, investors will be watching closely for any signs that rising costs are impacting margins.

Product gross margins are expected to come in at 37.6%, up from 35.9% a year earlier.

While Apple’s stock has been less volatile than many of its tech peers, market participants remain focused on how the company navigates its transition phase.

Jed Ellerbroek, a portfolio manager at Argent Capital Management, said in a WSJ report that “Google, Amazon, Microsoft, I was on the edge of my seat for those. I’m not going to be on the edge of my seat tonight.”

With strong expectations already priced in, the upcoming results will be key in determining whether Apple can sustain its steady momentum.

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The artificial intelligence supercycle has transitioned from a speculative phase led by chipmakers to an industrial execution phase governed by physical constraints.

As the market digests the massive capital expenditures (capex) required to monetize large language models (LLMs), global demand for foundational infrastructure continues to outpace supply.

Industry forecasts now project the global AI infrastructure sector will compound at an annual rate of nearly 25% through the end of this decade.

That said, investors are now increasingly pivoting toward the “operational layer,” the specialized systems required to house, cool, and power high-density compute clusters.

To that end, Vertiv, DigitalOcean, and Hut 8 represent three primary bottlenecks of this buildout: thermal management, scalable inference access, and electrical baseload.

Vertiv (NYSE: VRT): thermal management economics

High-density GPU clusters generate unprecedented thermal loads, rendering traditional HVAC systems obsolete.

Vertiv has captured a dominant market share by supplying a direct-to-chip liquid cooling architecture that delivers nearly double the thermal efficiency of legacy air-cooling while consuming 50% less power.

This operational necessity aligns Vertiv stock with a sub-sector projected to grow at a whopping 18% annualized rate through 2035.

Validating its market position, VRT recently recorded 30% year-over-year increase in revenue –  supported by a multibillion-dollar backlog.

Crucially, unlike many speculative infrastructure peers, Vertiv is already profitable and commands significant pricing power within a severely supply-constrained data center environment.

DigitalOcean (NYSE: DOCN): the scalable inference cloud

While hyperscalers focus on massive model training, DigitalOcean offers an accessible “inference cloud built for scale” aimed at mid-sized enterprises.

The company generated $900 million in revenue last year – up 15% year-over-year – but the more meaningful shift is in its customer composition.

Sales from clients spending over half a million annually surged 76%, while the $1 million+ customers tranche more than doubled in 2025.

By optimizing for machine learning inference, a more power-efficient phase than initial training, DigitalOcean stock is seeing non-GAAP earnings expansion outpace top-line growth.

This move upmarket suggests a strengthening “competitive moat” as AI workloads migrate from experimental stages to broad commercial production.

Hut 8 (NASDAQ: HUT): monetizing megawatts

The ultimate constraint on AI buildout has shifted from silicon supply to the electrical grid – and that’s what Hut 8 has set out to fix with its radical pivot from crypto mining to vertically integrated power and data center operator.

As of late 2025, the Nasdaq-listed firm managed a 1,000-megawatt production portfolio, with 300 megawatts under construction and a 1,200-megawatt developmental pipeline.

This energy-centric model allows Hut 8 stock to bypass utility grid delays currently stalling large-scale AI projects.

Financial momentum is accelerating as well, with 2025 sales hitting $235 million – a 45% year-on-year increase.

Although Hut 8 remains the highest-risk play due to continued unprofitability, its “power-first” strategy addresses the industry’s most acute long-term bottleneck.

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Shares of Blue Owl Capital rose sharply on Thursday after the firm revealed it had sold roughly half of its stake in SpaceX at a valuation of $1.25 trillion, underscoring a significant return on its early investment.

The stock climbed more than 10% during the session, as investors responded positively to the update alongside better-than-expected quarterly results and steady growth in assets under management.

SpaceX stake delivers outsized returns

Co-Chief Executive Officer Marc Lipschultz said the firm had generated approximately 10 times its initial investment in SpaceX, according to comments made during the earnings call.

Blue Owl was among the early lenders to SpaceX before eventually acquiring equity stakes in 2021 across two classes of shares.

The partial exit highlights the firm’s ability to capitalize on high-growth private market opportunities.

SpaceX is reportedly considering a public listing later this year at a valuation that could reach $1.75 trillion, potentially raising around $75 billion in what would be the largest initial public offering to date.

If realized, the listing could also propel founder Elon Musk to become the world’s first trillionaire.

Strong earnings and fundraising momentum

Blue Owl’s first-quarter results further supported the stock’s gains.

The firm reported revenue of $753.8 million, exceeding analyst expectations of $687.23 million.

Assets under management rose to $314.9 billion at the end of the quarter, marking a 15% increase from a year earlier.

Distributable earnings climbed 11% to $292.5 million, above forecasts of $285.6 million, while fee-related earnings rose 14% year-on-year to $393.6 million.

“Performance remains strong across Credit, Real Assets, and GP Strategic Capital, and we believe that the current market landscape tends to favor firms with patient capital and longer duration, such as Blue Owl,” said co-CEOs Doug Ostrover and Marc Lipschultz.

The company also reported total fundraising of $9 billion during the quarter, up from $6.7 billion a year earlier.

Growth was driven by real estate, infrastructure, and other segments, while fundraising in its core credit business remained relatively flat at $4.1 billion.

Private credit pressures and portfolio shifts

Despite the strong headline figures, challenges remain within Blue Owl’s private credit business.

Growth in its flagship direct-lending unit has slowed amid investor concerns over exposure to software companies and the broader impact of artificial intelligence on the sector.

The firm experienced a wave of redemption requests in the first quarter, primarily from individual investors.

Lipschultz said the withdrawals reflected sentiment rather than fundamentals.

He noted the company is actively reducing its exposure to software investments. “Working down our exposure to software given the level of uncertainty,” he said, adding that while some loans have been marked down, they still maintain a margin of safety.

He also emphasized that the redemption activity was largely driven by headlines rather than underlying performance, stating it showed “continued strong support from our partners and what we believe has been a headline-driven, not fundamental-driven redemption environment.”

Performance in the direct-lending business reflected these pressures, with gross returns slipping to negative 0.44% in the first quarter.

Trailing 12-month returns declined to 8.5%, down from 12.4% in the previous quarter and 13.3% a year earlier.

As Blue Owl navigates shifting market dynamics, the firm reiterated its commitment to maintaining its fee-related earnings margin target, with potential measures including tighter expense management.

The combination of strong investment gains, particularly from SpaceX, and steady operational performance appears to have reassured investors, even as risks persist in parts of its core lending business.

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Shares of Tesla rose about 1.3% on Thursday to $377.56, supported by a production milestone for its long-awaited electric truck, even as broader markets also advanced.

The S&P 500 gained 0.4%, while the Dow Jones Industrial Average rose 1.3%.

The move stood in sharp contrast to the bruising suffered by several of its large-cap technology peers.

Nvidia slid more than 3% as markets weighed the risk that Big Tech’s custom chip ambitions could gradually erode demand for third-party GPUs.

Meta tumbled sharply — closer to 10% — after its earnings call, with investors apparently unconvinced that the spending surge would translate into near-term returns.

Microsoft, too, retreated roughly 5% following its results, even as analysts lifted their price targets on the back of strong cloud and AI revenue growth.

Against that backdrop, Tesla’s advance made it one of the few high-profile names in the technology and innovation space to finish the session in the green

Semi production milestone

The move in Tesla’s stock followed confirmation that the first Tesla Semi truck rolled off the company’s high-volume production line on Wednesday.

“First Semi off high volume line,” Tesla said in a post on social media platform X.

The Semi, first unveiled in 2017, is an all-electric truck designed for long-haul freight.

According to Tesla, the long-range version can travel approximately 500 miles on a single charge.

The company has committed to ramping production this year, with longer-term ambitions to produce up to 50,000 units annually.

That would represent a meaningful share of the roughly 500,000 semi-trucks sold each year across the US and Europe.

Economics linked to energy prices

The business case for the Tesla Semi is closely tied to fuel costs.

Benchmark crude oil prices were around $116 per barrel early Thursday, up significantly from about $70 prior to the onset of the Iran conflict.

Higher fuel prices increase operating costs for traditional diesel trucks, potentially improving the relative economics of electric alternatives.

Diesel expenses for a conventional truck can reach around $100,000 annually, while electricity could reduce those costs by 40% to 70%, depending on usage and infrastructure.

The Semi is expected to cost around $290,000, a premium compared to traditional trucks, though not outside the range for commercial fleets considering long-term savings.

However, the vehicle’s range and reliance on charging infrastructure may limit its applicability across certain routes and markets.

Rising capex to support growth

In January, Tesla said it planned to more than double its capital expenditure this year to over $20 billion.

The investments are focused on expanding capacity across several areas, including autonomous vehicles, humanoid robots, battery production, and lithium supply.

These investments reflect a shift toward what the company has described as “physical AI,” encompassing autonomous driving and robotics.

AI remains central to valuation

Despite the positive reaction to the Semi milestone, Tesla’s stock has remained under pressure in recent months, down about 14% year-to-date and more than 2% lower following its March-quarter results.

Investor attention has increasingly shifted toward the company’s progress in artificial intelligence initiatives, particularly its robotaxi service and humanoid robot program.

Tesla launched its robotaxi service in Austin, Texas, in June, but expansion to additional cities has been slower than expected.

This has raised concerns about the timeline for scaling the business and generating meaningful revenue.

While the Semi milestone marks incremental progress in Tesla’s diversification beyond passenger vehicles, the broader investment case remains tied to its ability to deliver on its AI ambitions.

The company’s ability to scale both its commercial vehicle production and its autonomous technology platforms will be key factors in shaping investor sentiment in the months ahead.

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