The Newest Trillion Dollar Chip Giant

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Hello, and happy Sunday! Today’s Brunch covers the latest in social media habits, speculative market drama, and major industry shifts. Here’s what’s trending:

• Gen Z’s social media picks: YouTube, Instagram, and TikTok dominate, while BeReal carves a niche.

• SoundHound’s surge: Retail traders push the AI company’s stock up 700% this year.

• Broadcom’s trillion-dollar milestone: AI revenues propel the chipmaker into elite territory.

• US data center boom: Record-breaking demand fuels construction for AI infrastructure.

• Rent the Runway’s struggle: The fashion rental pioneer continues to face challenges as competitors thrive.

The Social Media Favorites of Gen Z

A Pew Research survey from 2023 highlights the social media habits of U.S. adults aged 18 to 29, showcasing the platforms that dominate their digital lives. YouTube 🎦 leads the pack, with an overwhelming 93% of younger adults using it to consume both long-form and short-form video content. Instagram (78%) and Snapchat (65%) also shine, reflecting Gen Z’s love for visual storytelling.

Meanwhile, TikTok, known for its bite-sized entertainment, has captivated 62% of this demographic. Though still a niche platform, BeReal shows signs of carving out a space among younger users, with 12% adoption—a stark contrast to the 3% of 30-49-year-olds and 1% of 50-64-year-olds who use the app.

The data underscores how visual and video-focused platforms continue to dominate, shaping how younger adults engage with social media.

Retail Traders Fuel SoundHound’s Wild Stock Surge

SoundHound AI, the voice-AI software company, hit a record high Friday, surging nearly 25% in what appeared to be a short squeeze. The California-based small cap, which powers voice features in devices like TVs and service vendors such as restaurants, has soared 700% this year, fueled by retail trading hype around AI-related companies.

But the enthusiasm looks far removed from financial reality. The company, which went public via SPAC in 2022 and hasn’t yet turned a profit, is trading at a jaw-dropping 40x its next 12 months' sales. For context, Amazon, a global titan, has a price-to-sales ratio of 3-5 times, peaking at 22x during the dot-com bubble.

This extreme valuation has attracted short sellers, with short interest climbing to over 25% of SoundHound’s float. 😈💰Yet, instead of a drop, the stock’s rise — likely amplified by record call-option trading — forced shorts to cover their positions, driving Friday’s explosive rally.

Short squeezes like this highlight the high-stakes drama of speculative trading, where sentiment can overpower fundamentals, at least temporarily.

AI Gold Rush Pushes Broadcom Over $1 Trillion Mark

Broadcom is on fire. The chipmaker’s shares soared nearly 20% on Friday, propelling its market cap past the coveted $1 trillion mark for the first time, thanks to booming AI revenues. 🚀 Broadcom joins elite company, standing alongside trillion-dollar giants like Apple, Nvidia, Microsoft, Amazon, Alphabet, Meta, and Tesla.

The rally came after the company reported stronger-than-expected profits and a 220% spike in AI-related sales. 👀 Broadcom’s AI chips, particularly its XPUs and Ethernet networking solutions, are thriving as demand for AI infrastructure surges — a silver lining as overall chip demand outside of AI slows.

Broadcom is now the third-best-performing stock in the VanEck Semiconductor ETF this year, trailing only Nvidia and Marvell Technology. With AI continuing to drive chip innovation, Broadcom’s massive quarter suggests it’s staking its claim in the industry’s most lucrative growth area.

AI Fuels Unprecedented Demand for US Data Centers

The US is gearing up for a data center construction boom in 2025, with 4,750 facilities expected to be under construction, according to CBRE. 🏗️ 🚧 This marks an increase from the 2024 record of 4,250, and astonishingly, nearly matches the total number of existing data centers in the country.

Demand is sky-high, driven by tech companies’ appetite for AI infrastructure. Vacancy rates are at record lows, and much of the new construction is already leased before completion. However, building these facilities takes longer than ever as developers wait for power upgrades to meet massive energy demands.

The surge reflects how crucial data centers have become in powering the AI revolution and meeting growing digital infrastructure needs.

Fashionable Fail: Rent the Runway Stock Takes Another Hit

Rent the Runway had another rough outing on Wall Street. Despite reporting earnings in line with expectations on Monday, its stock dropped over 20%, now sitting more than 97% below its 2021 IPO price.📉📉📉 The company's revenue has been stagnant, hovering under $80 million per quarter since 2022, and it has never reported a profitable quarter in its 14-year history.

Meanwhile, Urban Outfitters’ subscription rival, Nuuly, seems to be outshining Rent the Runway. Launched in 2019, Nuuly has grown from $2 million in quarterly revenue to over $97 million, turning profitable in late 2023.

Rent the Runway has made some progress, trimming its net losses to $56.5 million this year, down from $113 million last year. But with stiff competition and ongoing operational challenges, the road to recovery looks anything but fashionable.