The Wall Street Journal reported this morning, citing anonymous sources inside the company, that OpenAI has fallen short of its own internal targets for revenue and user growth in recent months. OpenAI hasn’t reported earnings publicly. They aren’t even a public company yet. But the report was enough to spook investors, and the Nasdaq spent most of Tuesday in the red as AI-linked stocks sold off.
Everyone was watching the carnage. Nobody was paying attention to what was happening on the other side of the market.
Boring Had a Great Day.
Three companies that have nothing to do with artificial intelligence reported earnings this morning. No data centers. No GPU announcements. No Elon Musk. All three beat Wall Street’s expectations. One raised its annual earnings guidance. One posted its best quarterly earnings growth since 2021. And one beat on both revenue and profit, then watched its stock drop anyway, which is a completely different story than it looks like at first glance.
Here’s what I saw.
Coca-Cola (KO)
Coca-Cola reported this morning. Earnings per share came in at $0.86 on a comparable basis, up 18% from a year ago. Revenue beat expectations. And the company raised its full-year earnings guidance to 8% to 9% growth, up from the 7% to 8% range they had guided previously.
The stock barely moved. That’s what happens when a company does exactly what everyone expected, maybe a little better. No drama. No capex surprises. No talk of spending “substantially higher” in future years. Just steady, reliable earnings growth and a dividend that has been raised for 64 consecutive years.
People forget that Coke isn’t just a soda company. It’s a global distribution machine, operating in more than 200 countries. When inflation hits, Coke raises prices. When currency moves hurt, the diversification cushions it. When recessions come, people still drink soda. The business is not exciting. The returns have been.
At around $70 per share, Coke trades at roughly 23 times forward earnings and yields just under 3%. That’s not cheap by historical standards, but it’s reasonable for a company this stable. If you’re looking for something to own for the next ten years and not think about, Coke belongs on a short list.
Verizon Communications (VZ)
Verizon reported this morning and delivered adjusted earnings per share of $1.28, a 7.6% increase over last year. That’s the company’s best quarterly earnings growth since 2021. The company also added 55,000 net new postpaid phone subscribers and raised its full-year earnings guidance to 5% to 6% growth.
Verizon has been a frustrating stock for a long time. The company took on a lot of debt to build its 5G network, and the payoff has been slow. Investors lost patience. The stock got beaten down. Then something shifted. The infrastructure spending cycle started winding down. Free cash flow improved. The dividend, which currently yields about 6.2% at recent prices, started looking very secure.
The AI buildout is actually a long-term tailwind for Verizon. Data centers need connectivity. Edge computing needs networks. The physical infrastructure that AI runs on, ultimately, runs on cables and spectrum that companies like Verizon own. That story hasn’t fully been priced in.
I’m not saying Verizon is a growth stock. It isn’t. But at a 6.2% dividend yield with improving earnings momentum, it’s a stock that pays you to wait. In a market where everyone is chasing the next chip company, a 6% yield looks better and better.
United Parcel Service (UPS)
UPS is the one on this list where the story is a little more complicated. The company beat earnings estimates this morning, with revenue of $21.2 billion and profits above what Wall Street expected. The stock dropped anyway.
Why? Transition costs. UPS has been in the middle of restructuring its relationship with Amazon, which used to be its biggest customer. Pulling back from Amazon-related volume frees up capacity for higher-margin business, but it also means short-term margin pressure while that transition plays out. Investors saw the profit miss on some margin metrics and hit the sell button.
This is the kind of situation where I slow down and read more carefully. Sometimes a stock drops on good news because investors are skittish. Sometimes it drops because something is actually wrong. In UPS’s case, I think the selloff is more the former than the latter.
The company reaffirmed its full-year revenue guidance, which is a meaningful signal. Management is not panicking. The transition is painful but it’s intentional. UPS is trading around $103 right now, off from its 52-week high of $122. At that price, it yields about 5.5% and trades well below where it was when the business was less profitable per package.
I wouldn’t back up the truck today. But if you’ve had UPS on your watchlist and you’re a long-term investor, today’s pullback is worth paying attention to.
What This Week Told Me
An anonymous leak about an AI company’s internal numbers was enough to rattle the Nasdaq. That’s where we are right now. The AI trade is real, but it’s also fragile in the short term, and investors are jumpy heading into what might be the most important earnings week of the year.
The next time the AI narrative cracks, the money has to go somewhere. Some of it goes to cash. Some of it goes to bonds. And some of it finds its way into companies like Coke and Verizon. That’s not a prediction. It’s just how markets have always worked.
Boring had a great day today. It might have a few more great days ahead.
— Tom
