Bill Ackman pours billions into 2 tech stocks amid AI boom

Al Root

The wait to try Tesla's robo-taxi service for most residents of Austin, Texas, not to mention investors and reporters, is almost over.

Tesla CEO Elon Musk tweeted recently that his company's robo-taxis would be "open access next month." That's September. So anyone wanting to try out the offering and compare it to Alphabet's Waymo self-driving taxi operation should be able to do it in two to six weeks.

Tesla launched its self-driving taxis in Austin eight weeks ago. It was a modest launch with a handful of Tesla Model Ys ferrying Tesla-selected passengers around a limited section of Austin with a safety monitor in the front passenger seat. Still, the car did the driving, and Tesla has slowly expanded the area of Austin served by its self-driving cars.

But Tesla hasn't yet opened up the service to anyone willing to try it. That, apparently, will change soon. There should be additional software upgrades by September. Tesla's robo-taxis essentially run using the company's Full Self Driving, or FSD, software. The AI-trained product improves — which is to say drives a little better — with each new iteration.

"The FSD release in about 6 weeks will be a dramatic gain," added Musk in a tweet from August 10. "It's going through training and testing now."

Tesla's self-driving systems use optical cameras and the FSD software. Waymo, which completes more than 250,000 fully autonomous taxi rides each week, uses radar, laser-based radar, or lidar, and cameras, along with advanced software.

Waymo is the much larger self-driving taxi service now, but Tesla is betting its simpler, less costly, camera-only technology and manufacturing scale will make it the self-driving leader. Essentially, any Tesla manufactured recently running the most up-to-date FSD software can become a robo-taxi, and Tesla can make millions of cars a year.

Winning in self-driving cars is a big deal for both companies and anyone else designing self-driving cars. Wall Street pegs the opportunity for AI-trained ride-hailing services in the trillions of dollars. For many analysts bullish on Tesla stock, the company's AI projects, including humanoid robots and self-driving technology, account for up to 75% of the company's total valuation.

Tesla is valued at roughly $1 trillion. Tesla stock closed at $322.16 the day before it launched the robo-taxis on June 22. It closed on Friday at $328.54, up a little more than $6 a share.

Investors might be waiting to see additional progress before bidding shares higher. Musk, as always, has big plans. "I think we'll probably have autonomous ride-hailing in probably half of the population of the U.S. by the end of the year," said Musk on Tesla's second-quarter earnings conference call in July. "That's at least our goal, subject to regulatory approvals. I think we'll technically be able to do it...But we are very, very cautious. We don't want to take any chances."

Austin represents only a tiny fraction of the U.S. population. Getting to 50% in just a few months would be an impressive feat.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

By Bill Peters

UBS analysts say retailers' price increases have been 'modest,' but say they could 'meaningfully accelerate' up ahead

Walmart reports earnings on Thursday.

When prices go up, the store is one of the most obvious places where consumers feel it. When the nation's biggest retailer, Walmart Inc., reports results on Thursday, the results will offer the clearest picture yet of the consumer from corporate America, as some signs emerge that U.S. tariffs could be nudging prices higher.

As those signs emerge, the results - along with those of Walmart's (WMT) rivals this week - will also be a test of executives' ability to talk candidly about the impact, as President Donald Trump pressures Walmart to swallow the costs of his trade war. The results will also offer a chance for chains to talk about the back-to-school season and Amazon.com Inc.'s bigger splash in grocery delivery.

"Thus far, retailers' price increases have been modest, broadly speaking," UBS analyst Michael Lasser said in a research note on Wednesday.

However, he later added: "That being said, we believe the pace of inflation is set to meaningfully accelerate and weigh more fully on the consumer."

Elsewhere, Target Corp. (TGT) reports Wednesday, after BofA analysts said the chain might have to hike prices more than Walmart to cover higher tariff-related costs. Those steeper price increases would arrive on top of Target's struggles with consumers still focused on bargains and basics like groceries, for which Target is less of a destination.

Home Depot Inc. (HD) and Lowes Cos. (LOW) report on Tuesday and Wednesday, respectively, as the housing market awaits an interest-rate cut. However, the home-improvement chains are dealing with what Mizuho analyst David Bellinger called "a weak, weather-impacted spring selling season."

Discounters TJX Cos. (TJX), Ross Stores Inc. (ROST) also report during the week, as lower-income shoppers feel deeper pains from inflation. Results are also forthcoming from BJ's Wholesale Club Holdings Inc. (BJ) and clothing retailer Buckle Inc. (BKE). Beauty brands Coty Inc. (COTY) and Estee Lauder Cos. (EL) also report during the week, as increased competition forces the beauty industry to recalibrate.

Elsewhere, results are due from Intuit Inc. (INTU), Workday Inc. (WDAY) and Zoom Communications Inc. (ZM).

Amazon CEO Andy Jassy said last month that "we haven't yet seen diminishing demand nor prices meaningfully appreciating." Lasser said he believed Walmart started to make "modest" changes to its prices toward the latter half of its second quarter. He said he believed Costco Wholesale Corp. (COST) "has experienced a similar dynamic in July."

Retail sales were up in July, the second straight monthly gain, after shoppers felt upbeat enough to keep spending. However, they were spending more partly due to higher prices.

David Silverman, senior director at Fitch Ratings, said those sales were "healthy." Sales of discretionary items like electronics and home-improvement products slowed, he said, but there were "more stable" results in clothes and furniture.

"It's unclear how much of sales in these categories could be pulled-forward as consumers anticipate price hikes later this year," he said. The firm recently tempered its outlook on U.S. retailers to account for souring consumer health, as tariffs kick in.

Eugenio Aleman, Raymond James' chief economist, said in a note on Friday that "Going forward, inflationary effects from tariffs should start making inroads into these nominal retail numbers and we should expect to see weakness in consumer demand during the rest of the year, which tracks with our view of a weakening economy."

Amazon.com last week said customers in more than 1,000 cities and towns could order fresh groceries with same-day delivery, with a bigger expansion in the U.S. by year-end. Analysts said the move was a direct shot at other retailers and delivery platforms that do a similar grocery business online. Shares of Walmart, Instacart (CART) and some of their peers fell on the news.

The Trump administration has pitched tariffs as a way to return manufacturing the U.S., box out China and bring in government revenue. But economists have worried that they will ultimately lead to higher prices for consumers, as businesses charge more to make up for the extra costs. A handful of nations have struck trade deals with the U.S. Industry-specific tariffs remain headwinds.

In May, Walmart Inc. said its prices would go up as Trump's tariffs upended global trade. Trump reacted angrily, telling Walmart: "EAT THE TARIFFS," and Treasury Secretary Scott Bessent said the company, in the end, would. Afterward, other chains, coincidentally or not, took a more circuitous approach to talking about their own plans to either raise prices or find ways stomach the extra costs.

Marc Busch, a professor at the school of foreign service at Georgetown University, said in an interview that executives were trying to keep their heads down to avoid an unpredictable president's wrath. The administration, he argued, was "literally picking winners and losers," as some smartphones get exemptions from tariffs, while Walmart gets told to eat them, and the president singles out others.

Executives might not speak out more boldly about the tariff impact, and lawmakers might not intervene, until trade-deal specifics turn up, or deeper fissures form in the markets, economy and trade relations, he said.

"The panic is percolating, and the only question is, when does it go live?" he said. He later added: "Without the public pronouncements, Congress will continue to sit on its hands, and that will deepen the crisis."

-Bill Peters

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.