Happy Friday, investors. We’re entering the last trading day of the week with stocks at record highs and five of the Magnificent 7 earnings in the books.

Helps that the S&P 500 is wrapping up its best month in five years, too.

Now, there’s no way we can go into the weekend without first talking about Apple.

Tim Cook waited for Apple's best start to a year on record to step aside for a new era.

With its latest blowout earnings and the coronation of an engineer as the next CEO, Apple is betting that the AI era will be won on devices, not in the cloud.

The other Big Tech executives — Sundar Pichai, Sam Altman, Satya Nadella, and Mark Zuckerberg — are all software people.

Meanwhile, Apple incoming CEO John Ternus has spent over two decades inside the hardware vertical that produced Apple Silicon and the company’s leading chips.

On top of another record quarter of iPhone sales, his ascension confirms Apple’s bet on a more physical moat.

Of course, beating earnings expectations across the board makes the strategy easier to fund.

Apple also made a notable shift in its capital strategy.

It approved another $100 billion in share buybacks, increased its dividend by 4% to $0.27 per share and dropped its long-standing goal of reducing its net cash to zero.

In other words, Apple no longer wants to run down its cash reserves, and instead will maintain more flexibility with its balance sheet. 

And if we take a cue from its incoming engineer-CEO, it’s not a leap to expect Apple to deploy more capital into chips and hardware.

"There is no one on this planet I trust more to lead Apple into the future than John Ternus," Cook said on the earnings call.

For much of the last two years, the market has worried that Apple was losing the AI race. 

Yet its second-quarter earnings results should remind investors that it wasn’t even playing in the same category.

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📈 US GDP grew at a 2% rate in the first quarter. Economic growth held steady to start the year with companies investing heavily into AI, rebounding from the fourth quarter and government shutdown. (WSJ)

📊 PCE inflation rose to the highest level since 2023. That lowers the likelihood of Fed rate cuts in 2026. Plus, real disposable income fell for the second month. (Barron’s)

📈 Caterpillar shares surged after its strong earnings beat. EPS came in at $5.54 against $4.63 expected on revenue of $17.4 billion, and the company raised its full-year outlook as AI infrastructure demand drove a 32% jump in power generation sales. (Yahoo Finance)

🗓 May 1, 1975: This marked Wall Street's "Mayday." The SEC's Rule 19b-3 took effect and abolished the NYSE's 183-year-old fixed-commission system, opening the door to discount brokers and the cost collapse that reshaped retail investing.

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