Nick Maggiulli is juggling more than spreadsheets these days. He’s chief operating officer at Ritholtz Wealth Management, but he’s also a blogger, and now a two-time author thanks to his latest book, “The Wealth Ladder,” which quickly shot to New York Times bestseller status. Through his many efforts, Maggiulli has found himself at the forefront of a conversation increasingly relevant to Americans: what it means to have wealth, and how that meaning is rapidly evolving. “Something weird’s going on,” he told Fortune in an interview.

Maggiulli’s insights are rooted in data and everyday observation, but he believes the upper middle class is going through an “existential crisis,” as he noted on his blog “Of Dollars and Data.” He talked to Fortune about what he thinks is going on: “The economy wasn’t built to handle this many people with this much money,” he said, hinting at his research on what he calls the new economic classes of the United States.

In “The Wealth Ladder,” Maggiulli proposes a new, data-backed framework for thinking about affluence. It’s a much bigger topic than just Level 4. He divides American households into six wealth levels, ranging from under $10,000 (Level 1) to $10 million-plus (Level 5 and beyond). The most populous segment is Level 3—those with $100,000 to $1 million in wealth—but he says that Level 4, the so-called “upper middle class,” is notable for its rapid growth and unique challenges.

Maggiulli’s analysis shows the angsty, existential Level 4 was just 7% of the country in in 1989, but as of 2022/23, that had shot all the way up to 18%. Admittedly, inflation means that a millionaire in the late ’90s would have a net worth of around $2 million, also as of 2022/23. But still, he says, this economic class is much bigger than it used to be, especially since the pandemic, and he thinks it’s “starting to have all these impacts throughout the rest of the economy.”

The existential crisis of the upper middle class in the 21st century

This demographic expansion, Maggiulli says, has sparked unexpected economic side effects, from crowded airport lounges to bidding wars for housing and luxury amenities. ““The economy wasn’t built to handle this many people with this much money,” he observes, linking “scarce resource” frustrations to the surging population of affluent Americans. “They’re all competing for a small pool of resources,” he says.

The weirdest thing, Maggiulli says, is that these people are objectively very successful. “They’ve done well in life … but on a relative basis in the United States, the competition for these higher-end goods is very high, so now it feels like we’re all canceling each other out with all this extra wealth.” Wealthy level 4 Americans could always move somewhere else, where their money would go much further, but they are mostly staying in the U.S., where they don’t feel like the millionaires that they’ve become.

It really is different from the late ’90s to now, Maggiulli says, adding that in terms of purchasing power, an American with a net worth of $1 million back then would rank in the top 5% of wealth, whereas that status in the 2020s belongs to someone worth $4 million. “There’s so much wealth being created that the upper end is seeing this competition like never before,” he adds.

UBS Global Wealth Management noticed a similar trend in its 2025 edition of the Global Wealth report, seeing a dramatic rise in the “everyday millionaire,” or EMILLI. At the dawn of the millennium, there were just over 13 million EMILLIs worldwide, UBS found, but that number had shot up to nearly 52 million—a more than fourfold increase in less than 25 years. Even after adjusting for inflation, the number of EMILLIs has more than doubled in real terms since 2000. “There’s a good portion of [these Level 4, everyday millionaires] that feel like they don’t have enough,” Maggiulli told Fortune, “and they feel like they’re just getting by, even though statistically they’re in the top 20% of U.S. households.”

Maggiulli’s remarks recall those of Charlie Munger, Warren Buffett’s long-time right-hand man at Berkshire Hathaway, who died in 2024. The previous year, in his last appearance at the annual meeting for his newspaper holding company, Daily Journal, Munger sounded a similar tune about things being ever better but people feeling ever worse. “People are less happy about the state of affairs than they were when things were way tougher,” Munger said, then made a striking comparison. “It’s weird for somebody my age, because I was in the middle of the Great Depression when the hardship was unbelievable.” Munger said he was powerless to change how unhappy people felt “after everything’s improved by about 600% because there’s still somebody else who has more.”

The importance of assets

Maggiulli’s analysis extends to the composition of wealth across classes: “The poor own cars, the middle class own homes, and the rich own businesses.” He stresses the “rich” in America tend to hold assets like businesses and stocks, not just real estate or commodities. To truly shift up levels, the kind of assets you own really matters.

Nick Maggiulli

Maggiulli told Fortune about the long-anticipated “Great Wealth Transfer,” when baby boomers pass on their $124 trillion fortunes to the Gen Xers and millennials now in or entering midlife. As baby boomers age, their assets are expected to flow into Gen X and eventually millennials, a process he frames as “very normal.” But he cautions that much of this wealth is tied up in illiquid assets like real estate, potentially distorting Americans’ perception of their own affluence.

He’s also candid about what he calls the “broken housing market.” Even affluent adults are forced into renting more often than not: In fact, Maggiulli’s research shows there have never been so many millionaire renters before. Maggiulli says if it seems like economic conditions have driven many Americans to postpone homeownership, he would know, because he’s one of them. “What that means for me personally is that I’m just gonna be renting for a lot longer,” Maggiulli tells Fortune, “because it doesn’t make sense to buy, especially where rates are, prices, everything.” The housing market as currently constructed just “doesn’t add up” for his situation.

For Maggiulli, the key takeaway is adaptability. He analogizes personal finance to fitness: “You can imagine a fitness instructor giving different advice to someone who’s morbidly obese versus someone who’s a well-trained athlete.” Likewise, financial strategies must shift as individuals progress up the “wealth ladder.” This particular ladder isn’t one that you’re meant to keep climbing forever, but a very large ladder with a lot of plateaus on it, some where you stay forever. He says you need to step back and reassess: “Do I need to keep climbing? Is this right for me?”

Alex Bryson, professor of Quantitative Social Science at University College London, told Fortune something similar in an interview about his research into 21st century labor markets, social mobility, and young workers. “People at that time in their lives, when they’re looking to build careers and move on and acquire property and, you know, all the the ladder-type things … it feels as if, perhaps, for some of them, somebody’s removed some of the rungs on that ladder.” Bryson added that “we haven’t necessarily got the same career structures and patterns” in the current economy as in the past.

Maggiulli says he’s not advocating through his book for people to choose one particular path or another, but to be aware of their wealth and their trajectory. “I think a lot of people get there, and they say, ‘Wait, do I want to keep going down this path? Or maybe I can take my foot off the gas and choose a different path where money is not the only thing I’m focusing on.'”

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

This story was originally featured on Fortune.com

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Bank of America Research economists remain convinced that the Federal Reserve will not cut interest rates in 2025, despite a recent wave of disappointing jobs data fueling market speculation of an imminent policy shift. The reason, according to a new research note: The U.S. economy is headed toward a battle with stagflation—not recession—and cutting rates could worsen that toxic mix of stagnation and inflation.

The BofA team, led by senior U.S. economist Aditya Bhave, cited two major Trump administration policies as the key factors in their call: tough new immigration restrictions and a fresh series of import tariffs.

Why it’s not a recession, according to BofA

First things first, Bhave’s team turned to the July jobs report that stunned Wall Street with a net downward revision of 258,000 jobs for May and June. That’s the second largest in modern history outside of the initial pandemic shock and the largest ever in a non-recession year, according to Goldman Sachs calculations. But BofA’s strategists argue this doesn’t spell recession. In fact, the crux of their argument, they say, is that “markets are conflating recession with stagflation.”

The key distinction comes down to labor supply, not just demand. The research points to a sharp contraction in the foreign-born labor force—down by 802,000 since April—as immigration policy has tightened dramatically. This supply-side squeeze is pushing against weaker labor demand, keeping metrics that should indicate labor slack—such as the unemployment rate and the ratio of job vacancies to unemployed workers—basically flat for the past year. Bank of America estimates that break-even job growth, meaning the rate of hiring needed to keep joblessness steady, will hit just 70,000 per month this year. 

Chair Jerome Powell’s recent comments support this interpretation, BofA said. Even if payroll growth slows to zero, the Fed now considers the labor market at “full employment” as long as the unemployment rate doesn’t spike. In July, unemployment inched up to 4.25% from 4.12%, but remains within range-bound levels.

Other economists disagree with this assessment. A team at UBS said the labor market is showing signs of “stall speed,” with a subdued average workweek of 34.25 hours in July—below 2019 levels and far from the “stretching” that’s typical when labor markets are tight owing to worker shortages. Industry-specific data also show that job losses are not concentrated in sectors with large immigrant workforces, further supporting the view that slack comes from weakened demand, not a supply constraint.

By contrast, BofA still sees labor demand holding up, and pointed to average hourly earnings growth of 3.9% year on year in July, and aggregate weekly payrolls increasing by 5.3%.

The debate over demand versus supply is critical as the answer will determine how the Fed responds to stagflationary signals.

BofA explained how two Trump policies are fueling the brewing mix of stagnant growth and inflation that could be taking America back to the 1970s.

Policy No. 1: Immigration restrictions

Trump’s changes to immigration have quietly but dramatically choked off labor supply. BofA analysts said this is happening earlier than they expected, and they remarked that the collapse in the foreign-born labor force has more than offset gains among native-born workers—even though the latter make up more than three-quarters of the total workforce.

Bank of America Research

Sectors that rely heavily on immigrant labor, like construction, manufacturing, and hospitality, have seen disproportionate job losses. Those three accounted for 46,000 of the downward revisions to the May and June data.

“Construction payrolls have stalled out this year, manufacturing has declined for three consecutive months, and leisure and hospitality added just 9K jobs in total in May and June,” BofA said.

That’s notable because leisure and hospitality was a strong spot in the labor market in 2023–24.

Policy No. 2: Tariff escalation

The second pillar of stagflation comes from a new round of import tariffs, particularly on Chinese goods. Since July 4, the overall effective U.S. tariff rate has jumped to about 15%.

Bank of America’s economists warn that tariffs are starting to show up in the inflation data: Core goods prices excluding autos rose 0.53% in June, the fastest in 18 months.

Crucially, underlying core PCE (personal consumption expenditures) inflation remains stuck above 2.5%—well above the Fed’s target. With long-term expectations anchored for now, policymakers are wary of cutting rates before there’s clear evidence that inflation has peaked. Some regional Fed presidents have warned the tariff effect could last deep into 2026.

Risks for the Fed: Cutting now could backfire

Markets are currently pricing in a quarter-point cut by September. But Bank of America says cuts next month would be risky—especially if the labor market is tight owing to supply, not demand. Cutting rates too soon could undermine the Fed’s credibility if inflation simply accelerates in response, forcing a swift reversal.

The research note concludes that unless the August jobs report brings a sharp rise in unemployment—specifically above 4.4%—or inflation softens unexpectedly, the Fed is likely to hold steady through the end of the year. Any move to cut rates now would require “putting more faith in a forecast of labor market deterioration and transitory tariff effects than in the data in hand,” the strategists write.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

This story was originally featured on Fortune.com

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Four former Intel board members are backing President Donald Trump’s surprise attack on the company’s CEO, but they are pushing for a shake-up that is both more dramatic and wholly in line with their vocal criticism of late.

In a rare collective statement provided exclusively to Fortune, the former directors said the fate of CEO Lip-Bu Tan should be decided by Intel shareholders and its board, but called for a radical restructuring that would spin off Intel’s manufacturing arm into an independent company to secure America’s chipmaking dominance.

The group of former Intel board members—Charlene Barshefsky, Reed Hundt, James Plummer, and David Yoffie—pointed out that the company is on its fourth CEO in seven years with little improvement in results. They argued that only a dramatic break could restore Intel’s competitiveness and protect U.S. national security interests, with a rescue plan focused specifically on emancipating Intel’s “Foundry” business, the manufacturing assets in which Intel produces semiconductor chips for its own products and for third-party customers. These advanced chip fabrication facilities are increasingly top of mind for President Donald Trump, his Chinese counterpart, Xi Jinping, and the entire tech industry, watching as the drama unfolds.

Intel was long the leader in chips but has fallen behind Nvidia, TSMC, and other players in recent years, as Barshefsky, Hundt, Plummer, and Yoffie argued in the pages of Fortune. Intel has two main businesses, one being the Foundry and the other, called simply Intel Products, which includes its flagship PC and server microprocessors, as well as networking equipment and software. Both are essential for computing, but only the Foundry is key to national security, which has been a key point in trade talks between Trump and Xi. The group of former directors argued that splitting the chips manufacturing entity from the rest of Intel would directly address both market competitiveness and the nation’s strategic need for advanced semiconductors.

The group called for Intel shareholders to insist on the split, which would create a new, independent manufacturing entity, with its own CEO and board. To make the new company competitive with TSMC, the former directors called for remaining funds under the CHIPS Act to go toward supporting the company and to help “persuade American design firms to place orders.” That would position the new company as an alternative to TSMC, “both for cutting-edge chips needed for data-center and other commercial purposes and for national security requirements.”

Mounting pressure

The statement comes as pressure on Intel intensifies, after President Donald Trump publicly called for CEO Lip-Bu Tan’s resignation over his “conflicted” status and alleged ties to Chinese technology firms. Trump’s demand, posted on Truth Social Thursday morning, sent shock waves through U.S. tech circles and drew swift responses from the company. 

Tan responded in a letter to staff, posted publicly on Intel’s website, claiming there has been “misinformation” about his career and past leadership roles. The embattled CEO said that Intel is “engaging” with the Trump White House to “address the matters that have been raised and ensure they have the facts.” He added that he fully shares the president’s commitment to advancing U.S. national and economic security. 

President Trump’s intervention followed Sen. Tom Cotton’s warnings over reports of Tan’s prior investments in Chinese firms, some allegedly tied to China’s military. Trump’s demand for an immediate CEO change provoked a 3% drop in Intel’s stock Thursday, compounding board-level discord and market concerns about the company’s stagnation and loss of ground to rivals such as Nvidia and AMD.

In his note to staff on Thursday, Tan defended his integrity and claimed the current board was “fully supportive” of the work currently underway at Intel, while insisting that throughout his four decades in the industry, he has “always operated within the highest legal and ethical standards.”

Intel did not immediately respond to a request for comment.

In a previous statement to Fortune, however, the company pushed back on criticism, saying its board and CEO are “deeply committed to advancing U.S. national and economic security interests” and were making “significant investments aligned with the President’s America First agenda.”

Intel noted it has been manufacturing in the U.S. for 56 years and is investing billions of dollars in domestic semiconductor R&D and manufacturing, including a new Arizona fab that will run the most advanced process technology in the country. The company added that it was “the only company investing in leading logic process node development in the U.S.” and said it looked forward to “continued engagement with the Administration.”

Correction, Aug. 8, 2025: A previous version of this story incorrectly stated that the four former directors called for the ouster of Intel’s CEO. The group of former directors said that Intel shareholders should make the decision about the CEO.

This story was originally featured on Fortune.com

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Airbnb, the house-sharing pioneer long synonymous with offering travelers alternatives to traditional hotels, is now making hotels a cornerstone of its growth strategy. The company’s second-quarter 2025 earnings release and subsequent analyst call delivered both impressive financials and a candid roadmap for transformation, confirming that embracing hotels is no longer taboo for Silicon Valley’s home-sharing unicorn.

Airbnb blew past Wall Street expectations, reporting Q2 revenue of $3.1 billion—up 13% year-over-year—and adjusted earnings of $1.03 per share. Net income reached $642 million, and the company booked 134 million “nights and experiences,” a 7% annual increase. The accelerated demand extended globally, with Latin America and Asia Pacific leading growth, even as North America growth softened.

Investors seemed more attuned to Airbnb’s cautious guidance for the second half of 2025 as execs expect slower revenue and softer margins due to tough year-over-year comparisons and stepped-up investments in technology and regulatory compliance. Chesky called out increased competition from hotels and mounting regulatory pressure on short-term rentals as ongoing headwinds, forecasting Q3 revenue between $4.02 billion and $4.1 billion while confirming heavy investments in new initiatives might compress margins in the near term.

Investors responded by sending Airbnb’s stock down over 6% following the call, with the stock down more than 7% since earnings as of press time.

And about those hotels: Chesky said Airbnb will be competing more directly head-to-head with that segment of the travel sector.

“We’re going to be going significantly more aggressively into hotels,” Chesky said toward the end of the call. He added that Airbnb has spoken with hotels around the world, especially independent, boutique and bed-and-breakfast locations. “We’ve spent a lot of time looking at hotels as a business. We think it’s really compelling, and we think that there’s going to be a lot more to do with hotels on Airbnb.”

Airbnb’s hotel phase

Crucially, Airbnb’s call centered around its expansion “beyond the core”—including hotels. Chesky referred to it as an “and, not a or” strategy: Airbnb will maintain its iconic homes product while ramping up hotel supply, especially internationally where it’s still seeing opportunity for growth. “A huge percent of hotels in Europe are independents,” Chesky said.

Why the shift? Airbnb’s data suggests many travelers browse home listings but don’t always book, citing lack of availability or preference for hotel amenities. By integrating hotels, Airbnb fills network gaps—especially in cities and peak periods, when home options are limited.

The company’s HotelTonight application was offered by Chesky as an example of a successful acquisition. “We’ve historically primarily focused on building organically, but we absolutely are open to acquisitions, and we are going to be looking at it. And I think that we are now in a better place to consider acquisitions now that … we have this new expanded strategy where we’re focused not just on all aspects of traveling, but also living.”

It’s an open debate for some communities on Reddit whether a hotel or an Airbnb is the better choice. One thread, r/TravelHacks, features a discussion of whether there’s even a difference at this point. A commenter wrote the general consensus seemed to be that Airbnbs are better for large groups and hotels for solo trips, albeit dependent on the location. Surely, this is a gap that Chesky and Airbnb would like to see close.

Tech-powered hospitality and lifestyle expansion

Hotels are only part of Airbnb’s ambitious remake. Chesky also described efforts under way to turn Airbnb into what he described as an “AI-first application.” The company is betting on its AI-powered customer service agent to drive efficiency and personalization.

He said this agent, leveraging 13 specialized models trained on tens of thousands of customer interactions, has already managed to reduce the necessity for human intervention by 15%.

Chesky told analysts he believes “AI apps” will quickly become dominant—and Airbnb, as a “non-AI-native application,” needs to transform in that direction.

“We’re starting with customer service. We’re bringing into travel planning,” he said.

Then he described that what could look like.

“It will not only tell you how to cancel your reservation, it will know which reservation you want to cancel,” Chesky said. “It can cancel it for you and it can be agentic, as in it can start to search and help you plan and book your next trip.”

The CEO outlined future plans for deeper AI integration ranging from expanding language support to building toward a platform that can serve as an “everything app” for travel and experiences.

Chesky concluded the call by reinforcing Airbnb’s commitment to innovation and stressing what the company will not become: a commodity. “I don’t think we’re going to be the kind of thing where you just have an agent or operator book your Airbnb for you because we’re not a commodity. But I do think it could potentially be a very interesting lead generation for Airbnb.”

Earlier in the call, Chesky said Airbnb is probably the biggest travel brand in the U.S. and that the company’s current moves are about growing beyond that.

“What we’re trying to do is build a platform, a platform that has homes, services, experiences, hotels, of course, and much more. And we’re going to try to be expanding this platform and continue to [launch] new businesses over and over again.”

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

This story was originally featured on Fortune.com

© Gerald Matzka—Getty Images for Airbnb

Krispy Kreme has officially terminated its much-hyped national partnership with McDonald’s, as Krispy Kreme CEO Josh Charlesworth said it had created “unsustainable operating costs,” leading to lease impairment and termination costs of $28.9 million. In other words, not enough doughnuts made enough dough. The fallout from the failed partnership was laid bare in Krispy Kreme’s latest earnings report, a sharp contrast from McDonald’s own resilient financial showing amid sector headwinds.

Krispy Kreme and McDonald’s mutually agreed to end their partnership, effective July 2, 2025, after an attempt to distribute Krispy Kreme doughnuts in approximately 2,400 U.S. McDonald’s locations. Initially hailed as a major growth opportunity, the collaboration floundered under operational pressure and insufficient returns.

“Our two companies partnered very closely, each supporting execution, marketing, and training, delivering a great consumer experience,” Charlesworth said in a public statement. “Ultimately, efforts to bring our costs in line with unit demand were unsuccessful, making the partnership unsustainable for us.”

Krispy Kreme’s Q2 2025 earnings statement details $28.9 million in lease impairment and termination costs directly attributed to the McDonald’s tie-up, on top of $22.1 million in asset charges. The company’s leadership made clear these losses forced a strategic retrenchment, ending what was once projected to be a coast-to-coast doughnut blitz by the end of 2026.

Krispy Kreme’s cringey earnings

The financial repercussions were a contributor to Krispy Kreme’s disappointing second-quarter earnings, which detailed a revenue decline and significant net loss for the period ended June 29, 2025. Revenue came in at $379.8 million, down 13.5% year over year and missing analyst projections. Adjusted earnings per share were -$0.15, below the estimated -$0.03. Organic revenue saw a slight dip of 0.8%, while the company took noncash charges totaling $406.9 million, the overwhelming portion of a $441 million net loss.

Charlesworth said the poor results primarily reflect the McDonald’s deal. “We are quickly removing our costs related to the McDonald’s partnership and growing fresh delivery through profitable, high-volume doors with major customers,” he added, saying the company expects to begin recouping profitability in the third quarter.

Krispy Kreme is now accelerating plans to exit unprofitable partnerships, refocus on profitable channels (including supermarket and convenience partnerships), and pursue international franchise expansion. It’s also selling its remaining stake in Insomnia Cookies and refranchising further markets, including in Australia, New Zealand, Mexico, and the U.K., with the aim of lightening its balance sheet and unlocking cash for future investments.

McDonald’s sees stability and growth

For McDonald’s, the Krispy Kreme partnership was a small experiment compared with the size of its regular business. The doughnut sales represented only a minor part of the breakfast menu, and their removal has not dented McDonald’s financial performance.

According to McDonald’s second-quarter earnings, the company has weathered economic uncertainty and changing consumer habits with surprising strength. Global comparable sales rose 3.8%, with U.S. same-store sales up 2.5%. Consolidated revenues came to $6.84 billion, up 5% year over year and beating analyst expectations. Net income increased 11% to $2.25 billion and adjusted earnings per share came in at $3.19.

CEO Chris Kempczinski emphasized that McDonald’s remains committed to delivering “delicious, affordable, and convenient options” and will continue to drive growth through digital investment and menu innovation, recently announcing the return of popular items and new promotions.

McDonald’s referred Fortune to a joint announcement with Krispy Kreme about the canceled partnership. Charlesworth noted in the announcement that the two companies had “partnered very closely” on the venture in roughly 2,400 McDonald’s restaurants, but that it was unsustainable. The announcement also stated that Krispy Kreme represented a small, nonmaterial part of McDonald’s breakfast business, and that breakfast remains a core pillar of McDonald’s business strategy. Krispy Kreme declined to comment.

The road ahead for Krispy Kreme

With the McDonald’s arrangement behind it, Krispy Kreme’s turnaround blueprint involves shifting focus toward higher-margin retail channels, franchise growth, and operational cost reduction. The company’s leadership has suspended dividends and renegotiated credit agreements, raising fresh capital to stabilize operations.

Charlesworth acknowledged the hit but remains optimistic: “We are now moving decisively to eliminate costs tied to this partnership and expect to return to profitability by the third quarter, focusing on sustainable, profitable growth going forward.”

Krispy Kreme’s market reaction, however, was muted: The stock has fallen nearly 70% since January—benchmarking profound investor skepticism regarding the path to recovery. McDonald’s has gained slightly more than 5% over the same period.

This failed partnership highlights the risk and complexity of scaling niche products in the hypercompetitive world of fast food, especially as American consumers remain price- and convenience-driven. For McDonald’s, meanwhile, it’s business as usual—the golden arches shine on, doughnuts or not.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

This story was originally featured on Fortune.com

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The jobs market is kind of going through it right now. The July jobs report stunned Wall Street with a massive downward revision of payrolls in May and June, prompting President Donald Trump’s controversial firing of Erika McEntarfer, the public servant responsible for the data.

Not only did payrolls grow by just 73,000 in July, below Wall Street estimates, but the revisions also showed that the spring had two consecutive months of growth below 20,000. The unemployment rate edged up to 4.2% from 4.1%, as the labor force shrank. Added to this sluggish cocktail is new data showing a remarkable surge in layoffs in July as well.

Employment consultancy Challenger, Gray & Christmas publishes a monthly “job cut” report and the July edition makes for some reading. According to the data, employers across the U.S. announced 62,075 job cuts last month—a 29% increase from June but a stunning 140% surge over July 2024 and a decisive end to the typical midsummer lull in workforce reductions. And nearly half of these cuts—49%—were related to artificial intelligence (AI) and “technological updates.”

The report says these cuts are “well above average for this month since the pandemic,” and one of the highest July pullbacks in the past decade, evidence that deep, technology-driven changes are rippling through the labor market. For perspective, the average number of job cuts announced in July from 2021 to 2024 was just 23,584. Even against the broader decade’s average of 60,398, this year’s total is notably higher.

Headlines, including in Fortune, have linked surging layoffs to increasing adoption of artificial intelligence (AI) in the enterprise, and Challenger Gray agrees, partially. A bigger impact is cutbacks in government employment as a result of the Department of Government Efficiency (DOGE), previously with Elon Musk in an ambiguous advisory role. A big part of the DOGE cuts, of course, is to encourage increasing AI adoption within the government. “We are seeing the Federal budget cuts implemented by DOGE impact non-profits and healthcare in addition to the government,” said Andrew Challenger, Senior Vice President and labor expert for Challenger, Gray & Christmas. “AI was cited for over 10,000 cuts last month, and tariff concerns have impacted nearly 6,000 jobs this year.”

The AI effect

Beyond the more than 10,000 jobs in July that were eliminated specifically due to AI adoption, an additional 20,219 cuts were attributed to “technological updates” including automation and new software workflows. Challenger Gray said this suggests “a significant acceleration in AI-related restructuring.”

While AI’s influence dominates headlines, federal budget cuts—known as the “DOGE Impact”—are another pillar driving this year’s wave of layoffs. The government sector has announced 292,294 job cuts this year, most at the federal level, as courts greenlight sweeping reductions. These have affected not just direct government roles, but also non-profits and healthcare through downstream funding losses, totaling an additional 13,056 layoffs.

Other economic stressors remain ever-present: Market and economic conditions have accounted for 171,083 cuts year-to-date, inflation and weaker demand have shuttered stores and plants (120,226 layoffs), while restructurings and bankruptcies contributed 66,879 and 35,641 cuts, respectively.

Where the layoff storm is hitting

Job cuts are distributed unevenly across the U.S. The East Coast has seen the most dramatic year-over-year increase, rising 219%, spurred by federal agency reductions in Washington, D.C., as well as steep jumps in states like New Jersey (+362%) and New York (+43%). Out West, California has also been roiled by 114,676 layoffs (+50%). In the South, job cuts climbed 34% overall, with Georgia and Florida seeing spikes of over 70%.

The tech sector tops private-sector losses, with 89,251 cuts year-to-date—a 36% jump from last year—reflecting AI’s disruptive role and ongoing work visa uncertainty. Retail has announced 80,487 layoffs so far in 2025, up 249% from a year ago, as inflation and tariffs push more stores to downsize or close their doors. Non-profit job cuts are up 413%, with mounting operational costs compounded by lost federal support. While the automotive sector’s year-to-date layoffs fell 31% from 2024, July alone saw nearly 5,000 jobs lost due to new tariffs, its most affected month since late last year.

Announced hiring plans provide little relief: just 86,132 new jobs have been planned by U.S. employers through July; this has consistently remained well below pre-pandemic levels. Technology hiring continues to slump, down 58% year-over-year with only 5,510 tech positions announced so far in 2025.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

This story was originally featured on Fortune.com

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President Donald Trump sent a jolt through the tech industry on Thursday, demanding the immediate resignation of Intel’s CEO, Lip-Bu Tan, and branding him as “highly conflicted.” The call, issued via Trump’s Truth Social platform, follows a request earlier in the week from Republican Sen. Tom Cotton to the Intel chairman, demanding answers about Tan’s ties to China.

“The CEO of Intel is highly CONFLICTED and must resign, immediately. There is no other solution to this problem. Thank you for your attention to this problem!” Trump wrote Thursday morning.

Tan only took the helm at Intel in March 2025, and his appointment was initially welcomed by investors, with Intel’s stock rising as much as 15% following his start. Tan took over from Pat Gelsinger, long considered a star CEO in the chips and semiconductor space, who was reportedly forced out by the board, which had grown frustrated with Intel losing market share to Nvidia.

By late July, Tan sent a memo to employees informing them of significant ongoing layoffs and other cost-cutting measures, and shares were trading below their springtime level by that point. On Thursday, shares fell as much as 3% in premarket trading after Trump’s post.

Why Trump thinks Tan could be ‘conflicted’

The conflict centers on Tan’s financial and professional ties to Chinese companies, particularly those with links to China’s military and technology sector. According to a Reuters investigation in April, Tan—either directly or via his venture funds—has invested at least $200 million in at least 20 Chinese advanced manufacturing and semiconductor firms between 2012 and 2024. The probe identified several companies with links to the Chinese People’s Liberation Army.

These revelations gained new urgency after Sen. Cotton sent an open letter to Intel’s board, also reported by Reuters, questioning Tan’s allegiances and whether the company could be trusted with nearly $8 billion in federal subsidies under the CHIPS and Science Act—money designed to shore up domestic chip fabrication critical to U.S. security, finalized during the Biden administration.

Cotton’s letter demanded to know whether Intel had required Tan to divest any interests in Chinese technology companies or firms tied to China’s Communist Party and its armed forces. The senator referenced not just Tan’s investments, but also his leadership of Cadence Design Systems, a major chip design company. Less than two weeks before Cotton’s letter was issued, in late July, Cadence admitted to violating export rules by providing technology to a Chinese military university and agreed to pay a $140 million fine as a result.

Broader political context

Trump’s demand comes just one day after he announced plans to impose a 100% tariff on imported computer chips, part of his broader economic campaign against reliance on foreign—especially Chinese—technology, with America’s lead in chips a key tension point. Trump’s comments are also stoking new leadership drama for Intel, which has already cycled through several CEOs and directors in recent years amid fierce competition from Nvidia, AMD, and Samsung.

The dustup threatens to further destabilize Intel at a critical moment. The company, which once dominated the global chip market, has been battling to regain its competitive edge in artificial intelligence processors and advanced semiconductor manufacturing. Just days before Trump’s remarks, Intel said it was separating its networking division to streamline its operations under Tan’s leadership.

Intel has pledged $100 billion toward U.S. chip manufacturing and packaging, with major projects in Arizona, Ohio, Oregon, and New Mexico. The company received almost $8 billion in direct CHIPS Act funding for these expansions. Companies including Micron Technology, Samsung, and Apple have also pledged large-scale investments in American manufacturing.

Several former board members of Intel criticized the company’s performance in a commentary for Fortune earlier this week, arguing that “U.S. advanced semiconductor manufacturing has been withering for some time.” The coauthors include Charlene Barshefsky, a former U.S. trade representative, Reed Hundt, a former chair of the Federal Communications Commission, James Plummer, a former dean of engineering at Stanford, and David Yoffie, a professor at Harvard Business School. “The once-leading Intel appears to be dropping out of the race. Missed deadlines, poor execution, and a misguided strategy to retain manufacturing within Intel while also serving as a foundry for its fabless chip competitors resulted in a dearth of customers,” they wrote.

Intel did not immediately respond to a request for comment.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

This story was originally featured on Fortune.com

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Are you a “coffee badger”? You know the type, the colleague who shows up at the office just long enough to be seen—typically to swipe their badge, greet colleagues, grab a coffee … and then sneak out at some point to keep working remotely, the way millions have for years now.

This new buzzword is stirring anxiety in boardrooms, as “coffee badging” shows that what started as a cheeky work-around to return-to-office mandates post-COVID has become a significant challenge for companies grappling with the changing rules of workplace engagement.

The scope of the problem

Recent surveys show that coffee badging is not a fringe behavior: It is now practiced by a staggering portion of the workforce. According to data from multiple sources, 44% of hybrid workers in the U.S. acknowledge coffee badging, and more than 58% of respondents in a survey of 2,000 American workers admit to having done it at least once. But the issue isn’t confined to a small segment of multinationals or tech workers. In fact, three out of every four companies—75%—report struggling with employees coffee badging, making it a widespread concern across industries and company sizes.

Business Insider recently delivered a scoop that coffee badging has gotten so bad at Samsung’s U.S. semiconductor division that it explicitly scolded workers about it and rolled out an RTO (return-to-office) monitoring tool. While celebrating that “more smiling faces can be seen in the hallways,” Samsung announced its new “compliance tool for People Managers” will “ensure that team members are fulfilling their expectation regarding in-office work—however that is defined with their business leader—as well as guarding against instances of lunch/coffee badging.”

Samsung’s move followed a coffee-badging crackdown at Amazon. It has gotten so bad there that managers are having one-on-one conversations with employees about how many hours they are literally returning to the office. “Now that it’s been more than a year, we’re starting to speak directly with employees who haven’t regularly been spending meaningful amounts of time in the office to ensure they understand the importance of spending quality time with their colleagues,” Amazon previously said in a statement to Fortune.

Why are so many companies struggling?

Return-to-office mandates were supposed to restore normalcy and boost productivity. Instead, they’ve triggered a silent revolt.

Employees—especially millennials—are leveraging hybrid policies in their favor, finding the least disruptive way to comply, while minimizing commute and office time.

One study found that even 47% of managers admitted to coffee badging themselves, underscoring how deeply this behavior is ingrained across hierarchies. That’s actually higher than the number of individual contributors (34%) who are java swiping.

How companies respond

Faced with a widespread and hard-to-measure trend, companies are experimenting with everything from stricter tracking to radically new incentives. First is, simply, tracking badge swipes: Gartner reported that 60% of companies were tracking employees as of 2022, more than doubling since the beginning of the pandemic and only greater in magnitude since. Others, like Amazon, now require a minimum number of work hours in-office, not just a badge swipe.

A minority are shifting from hours-based to results-based evaluations, hoping to boost authentic office engagement. Others court employees with improved amenities and greater schedule autonomy, aiming to make office time more appealing than mandatory. Still, leaders worry that coffee badging signals deeper disengagement—and that one-size-fits-all RTO strategies are backfiring.

Looking ahead

Coffee badging is not just about workers skirting policies; it’s a symptom of a deeper disconnect between traditional workplace expectations and the realities of white-collar work in 2025. As long as employees can be productive remotely—and view in-person time as a performative hoop—companies will need to rethink the value proposition of the office, not just the enforcement.

With the majority of companies reporting struggles and nearly half of hybrid workers engaging in the practice, coffee badging isn’t going away soon. Rather than fighting it with stricter rules, organizations may need to listen to what it reveals about employee motivation, engagement, and the future of work culture itself.

Are you a coffee badger? Do you have them on your team, or know of others who swipe in and out after a brief appearance? We’d love to hear from you. Get in touch at [email protected].

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

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The streaming wars entered yet another iteration on Wednesday as Disney announced a major change to the division that it calls direct-to-consumer: Disney+ will integrate Hulu’s operations, transforming into something that looks a lot like the old linear TV bundle. As CEO Bob Iger told investors on the company’s third-quarter earnings call, “combining Hulu into Disney+ [will] create a unified app experience, featuring branded and general entertainment, news, and sports, resulting in a one-of-a-kind entertainment destination for subscribers.”

The night before Disney released its third-quarter earnings, the company confirmed it had struck a deal with its longtime partner in sports, the National Football League, an asset and equity swap that sees the NFL getting a 10% stake in Disney’s ESPN division and ESPN/Disney acquiring several streaming assets from the NFL. The NFL’s 10% stake in ESPN is valued between $2 billion and $3 billion, per estimates from Octagon.

ESPN will gain the rights to three additional NFL games per season, previously broadcast by the NFL’s own networks, meaning more of America’s highest-rated TV shows, live football broadcasts, will be Disney’s as the company fortifies its streaming war chest. Disney has been reconstructing ESPN to survive the decline of linear TV with the launch of a stand-alone streaming service, and it will now plug in content beloved by football fanatics: the NFL Network, NFL RedZone distribution rights, and NFL Fantasy Football. In streaming, Netflix and Amazon have each acquired more NFL rights over recent years, so Disney’s move shows it’s playing defense and some offense, too, on this front.

Disney also announced an expanded agreement with the WWE, another recent Netflix partner, which subsequently emerged as a $1.6 billion deal that will make Disney the home of the marquee event, WrestleMania. Iger said on the earnings call that ESPN “will be the exclusive home for WWE Premium Live Events, further expanding ESPN’s rights portfolio.” On Disney’s plans in this area, Iger added Disney is “building ESPN into the preeminent digital sports platform with our highly anticipated direct-to-consumer sports offering.”

Disney revealed in its earnings that the sports division, anchored by ESPN, saw revenue fall 5% to $4.3 billion, mainly because of higher NBA and college-sports rights fees. Segment profit, however, soared 29% to $1 billion as a merger in its Indian unit took some losses off its balance sheet.

Streaming profitable amid linear TV, movie studio decline

Overall, third-quarter earnings showed resilience in key business segments for Disney such as streaming and theme parks, even as its traditional TV and film studio divisions showed fatigue. Total revenue for the quarter ended June 28 rose 2% year over year to $23.7 billion, just under Wall Street forecasts, while adjusted earnings per share climbed 16% to $1.61, surpassing analyst expectations of $1.47. Net income before taxes rose 4% to $3.2 billion.

A headline achievement for Disney was the solid performance of its streaming business, which posted a 6% revenue increase to $6.2 billion and achieved operating profit of $346 million—a substantial turnaround from a $19 million loss reported in the same quarter last year.

Subscriber metrics reflected steady gains, with Disney+ ticking up 1% quarter over quarter for a total of 128 million and Hulu by the same margin to 55.5 million subscribers. The combined Disney+ and Hulu subscriber base climbed to 183 million, up 2.6 million versus the previous quarter. Disney also finalized its acquisition of the remaining stake in Hulu from Comcast NBCUniversal in June, setting the stage for a tighter integration of its streaming brands later this year.

Meanwhile, Disney’s studio entertainment segment saw more modest 1% revenue growth to $10.7 billion, weighed down by a 15% drop in operating income to $1 billion. Theatrical releases, including original animated and live-action remakes, underperformed compared with last year’s strong box-office showing with Inside Out 2. Additionally, Disney’s linear TV networks, including ABC and Disney Channel, recorded a 15% year-over-year decline in revenue to $2.3 billion, underscoring ongoing challenges from cord-cutting and lower international results following the Star India deal.

Looking ahead, Disney expects total subscriptions for Disney+ and Hulu to rise by over 10 million in the next quarter, driven in part by an expanded agreement with Charter Communications.

Theme parks and experiences shine

Disney’s “Experiences” segment—which covers theme parks, cruise lines, and consumer products—delivered robust numbers, outstripping earlier forecasts. Third-quarter revenue increased 8% year over year to $9.1 billion, fueled by a 22% surge in operating income at domestic parks and experiences to $1.7 billion. Disney pointed to strong guest spending and higher occupancy rates at its parks and cruise lines, especially at Walt Disney World, despite the highly anticipated opening of competitor Universal’s Epic Universe in Orlando. Executives emphasized the “continued resilience” of Disney’s park business in the face of new competition.

Guidance raised, optimism for 2025

Notably, Disney raised its guidance for fiscal 2025, projecting adjusted earnings of $5.85 per share—an 18% increase over the prior year. The company also anticipates double-digit segment operating income growth in entertainment and sports, with an 8% gain in experiences for the full year. CEO Bob Iger affirmed Disney’s commitment to global expansion, noting more active park expansions than at any time in Disney’s history and highlighting ongoing strategic investments in streaming, theme parks, and sports as drivers for future growth.

“Disney is not done building, and we are excited for the future,” Iger said, following the earnings release.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

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The mighty American consumer may have finally met their match, and it’s a giant hulking rectangular box that hosts very few people inside, but rather a huge nest of servers, storage systems, and networking equipment. Consumer spending in the American services economy is so large it can boggle the mind, representing roughly two-thirds of gross domestic product. To paraphrase the long-running coffee chain Dunkin’, America runs on spending.

But this mighty American consumer has slow seasons, and the summer of 2025 appears to be one of them. There are several interconnected factors, namely, recent jobs growth now appearing much smaller than previously thought and the impact of artificial intelligence on the workforce. But those hulking rectangular boxes, the massive data centers sprouting up across the country, are emerging as a giant magnet for dollars in a way that rivals consumer spending itself.

Giant tech companies have spent so much on data centers in 2025 that their spending is now contributing more to U.S. economic growth than consumer spending, long considered the nation’s economic engine. If you make the reasonable assumption that spending on data centers equates to AI capital expenditures, defined as capital deployed for information processing equipment and software, then the pattern is clear: A ton of money is flowing into one concentrated area, and the outcome of that is uncertain.

Microsoft, Google, Amazon, and Meta are the main players investing at staggering levels to build and upgrade data centers that support the exponential demand for AI computing power, with those four companies alone forecasting a record $364 billion of capital investment in 2025. Combined, the so-called Magnificent Seven tech giants spent more than $100 billion on data center projects in just the past three months, as calculated by the Wall Street Journal’s Christopher Mims.

All this spending has to have an impact on the economy. Analyst estimates from Renaissance Macro Research indicate that so far in 2025, the dollar value contributed to GDP growth by AI data center expenditure surpassed the total impact from all U.S. consumer spending—the first time this has ever occurred.

So far this year, AI capex, which we define as information processing equipment plus software has added more to GDP growth than consumers' spending. pic.twitter.com/D70FX2lXAW

— RenMac: Renaissance Macro Research (@RenMacLLC) July 30, 2025

Or as Rusty Foster, author of the widely read media blog Today in Tabs, puts it: “Our economy might just be three AI data centers in a trench coat.” This recalls the classic comedic device of several children wearing a long jacket, pretending to be an adult, as memorably portrayed in Netflix’s BoJack Horseman, when “Vincent Adultman” successfully maintained the illusion for several dates with Princess Carolyn. But then the bubble popped, or the trench coat came off.

Why is this happening now?

Several forces are driving this unprecedented investment wave. The boom in generative AI and advanced large language models—technologies that require vast amounts of computing resources—has forced tech giants to rapidly increase their physical infrastructure. Data from McKinsey projects that between 2025 and 2030, companies worldwide will need to invest a remarkable $6.7 trillion into new data center capacity to keep up with AI demand.

AI data center spending has grown at least 10-fold since 2022, with the well-known business blogger Paul Kedrosky estimating that it’s nearing 2% of total U.S. GDP by itself. “Honey, AI capex is eating the economy,” he writes, arguing that AI capex is so big that it’s “affecting economic statistics, boosting the economy, and beginning to approach the railroad boom.”

Apollo Global Management’s Torsten Slok, without wading into the data center capex question, has assembled research showing that the AI boom has surpassed the market value of the tech boom of the late ’90s, which became known as the “dotcom bubble” after speculative mania burst and a recession set in.

Kedrosky makes a similar point, contrasting capex booms from throughout financial history, notably the telecom boom of 2020 related to 5G/fiber technology and the railroad boom of the 19th century as the United States embraced a transportation revolution. “Capital expenditures on AI data centers is likely around 20% of the peak spending on railroads, as a percentage of GDP, and it is still rising quickly,” Kedrosky writes. “And we’ve already passed the decades-ago peak in telecom spending during the dotcom bubble.” Noah Smith, a widely read economics Substacker, asks the obvious question: “Will data centers crash the economy?”

The impact on the broader economy

This surge in tech investment has had profound downstream consequences. Without the AI data center building spree, GDP might have actually contracted in the face of uncertain macroeconomic conditions. So data center spending may have staved off—or postponed—a recession.

Money flooding into AI infrastructure is being diverted from other sectors, including venture capital, traditional manufacturing, and even consumer-facing startups. Unlike historical infrastructure booms such as those for railroads or telecom, AI data centers are short-lived, fast-depreciating, and require continuous hardware upgrades—suggesting this pattern of investment may remain volatile and capital-hungry for years to come.

As AI redefines industries, the flow of capital into the physical backbone of this technology—vast data centers—has upended old assumptions about what drives America’s economy. Consumer spending, though still immense in absolute terms, is not keeping up with the extraordinary scale and speed of investment by tech giants determined to lead in the AI era. The trajectory suggests that the U.S. economy in 2025 is being shaped not so much by the purchasing power of its people, but by the relentless arms race for AI compute capacity—an unprecedented, tech-led growth engine.

[This headline was updated to clarify that data-center spending has surpassed consumer spending as a share of GDP growth.]

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

This story was originally featured on Fortune.com

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The U.S. economy is experiencing a noticeable slowdown in mid-2025, with sluggish domestic demand growth, muted job gains, and new tariff actions poised to impact both inflation and overall economic momentum, according to a recent analysis from UBS Global Research.

The US Economics Weekly note from the Swiss bank noted real GDP grew at an annualized rate of just 1.2% in the first half of 2025, a significant step down from the more robust pace observed in 2023 and early 2024. Quarter-over-quarter growth figures point to a sequential weakening, the team led by economist Jonathan Pingle added, particularly in domestic demand, which has dropped from above 3% last year to around 1% in recent quarters.

Labor demand is responding in kind. Monthly nonfarm payroll growth has slowed sharply, with July seeing an increase of only 73,000 jobs—well below expectations and accompanied by sizeable downward revisions for previous months. The three-month average for job gains is now just 35,000 per month, a rate described as “stall speed” by Federal Reserve Vice Chair Michelle Bowman and Governor Chris Waller. (Both Bowman and Waller are prominent names floated to replace Fed chair Jerome Powell, a figure the Trump White House has extensively criticized.) The unemployment rate ticked up to 4.25%, the highest level since 2021, and the broadest measure of labor underutilization, known as U-6, is also trending higher—more than a percentage point above pre-pandemic levels.

Crucially, Pingle’s team found shrinking labor force participation rather than a sudden immigration or population shock is behind the weaker labor force growth. “The drop in the labor force participation rate has masked how much slackening is actually taking place,” the report contends, noting that multiple demographic groups, including Black Americans and teenagers, are showing higher unemployment and falling participation.

Population growth as recorded by the household survey is holding steady near previous years’ levels—contradicting assertions that tighter immigration is meaningfully constricting the labor market. UBS notes this contradicts statements from Jerome Powell: “Despite Chair Powell’s pronouncement at the post FOMC press conference that the immigration slowdown was slowing population growth and thus labor force growth, that is not what is happening in the actual data. The Household Survey and Establishment Survey look more like the labor market is slackening, and the household survey itself estimates that population growth is not slowing.”

The average workweek remains subdued, sitting at 34.25 hours in July—below 2019 levels and far from the “stretching” typical when labor markets are tight due to worker shortages. Industry-specific data show that job losses are not concentrated in sectors with large immigrant workforces, further supporting the view that slack comes from weakened demand, not a supply constraint.

Tariffs set to climb, threatening further drag

Tariff policy, after a series of negotiations and executive actions, is on track to become even more restrictive. The new suite of reciprocal tariffs, including a 35% rate on Canadian imports (excluding USMCA-compliant goods) and across-the-board hikes affecting nearly 70 countries, is expected to raise the U.S. weighted average tariff rate (WATR) from about 16% to approximately 19% starting in early August. UBS estimates this will subtract 0.1 to 0.2 percentage points from growth over the next year.

Sectoral carve-outs persist, but with the EU now facing a 15% tariff on most exports to the U.S.—lower than originally proposed, but still a significant rise—UBS expects direct pressure on prices for automobiles, semiconductors, pharmaceuticals, and more. Presidential proposals to slap a 200% tariff on pharmaceuticals remain under discussion, but would have massive implications if implemented.

Rate cuts on the horizon

With evidence mounting that both growth and labor markets are softening and that tariffs may further boost core inflation from 2.8% currently to as high as 3.4% by year-end, pressure is building for the Federal Reserve to ease monetary policy. While Chair Jerome Powell kept a possible September rate cut on the table, he offered little forward guidance, stating that the totality of incoming data will dictate the next move. UBS maintained its expectation that the Federal Open Market Committee will cut rates by 25 basis points in September and by as much as 100 basis points before the end of 2025.

Ultimately, the bank found that the U.S. economy has entered a clear slowdown as 2025 unfolds, with fading domestic momentum, cooling job growth, and the shadow of higher tariffs likely to dampen the outlook further. UBS researchers argue that the data show a demand-driven deceleration, not a supply squeeze, and that the Fed will likely act soon to cushion the landing.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

This story was originally featured on Fortune.com

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Palantir Technologies just achieved a milestone that would have seemed outlandish even to its boldest promoters a year ago: a first-ever billion-dollar quarter, propelled by a runaway boom in artificial intelligence that is now fundamentally transforming how the company operates—and how many employees it believes it needs.

The software and data analytics giant reported $1 billion in revenue for its most recent quarter, up 48% year over year, as it dramatically outpaced Wall Street estimates and posted surges in both commercial and government contracts. U.S. revenue alone jumped 68% to $733 million, with domestic commercial sales skyrocketing 93%. Profit, too, soared by 33% to $327 million, and Palantir raised its outlook for the year, projecting full-year revenues of $4.14 billion to $4.15 billion.

The company’s “rule of 40” score—a key measure of growth plus profit margin—hit a near-unprecedented 94%, “once again obliterating the metric,” according to CEO Alex Karp. Palantir’s executives made it clear there is one main source for these new levels of productivity: artificial intelligence, blended into every layer of its business and rapidly automating tasks that once required armies of highly paid coders and IT staff.

Karp was notably exuberant on both the earnings call and in his shareholder letter. “This was a phenomenal quarter,” he wrote in the earnings release. “We continue to see the astonishing impact of AI leverage.”

In a statement provided to Fortune, Karp warned that “America is in the lead in government and commercial, but we could lose the lead. We must have an all-of country, all-in effort to keep America first or we will lose.” He urged the U.S. to double down on its current incumbent status as a beacon for the emerging technology. “It’s not a given that we win just because we’re ahead. In fact, being so far ahead is often a danger zone.”

In a subsequent appearance on CNBC, Karp said, “We’re planning to grow our revenue … while decreasing our number of people,” and described what AI is enabling his company to do. “This is a crazy, efficient revolution. The goal is to get 10x revenue and have 3,600 people. We have now 4,100.” Karp also laid out the company’s goals on the earnings call with analysts, explaining that it won’t conduct mass layoffs, but will freeze hiring and rely on AI to multiply every employee’s productivity. This has already been underway: In March, the company cut its IT workforce from 200 to fewer than 80 full-time employees.

Earnings call victory lap

Karp and other Palantir executives celebrated their astonishing quarter on the analyst call, saying that Palantir’s bespoke models are core to maximizing the impact of large language models. “LLMs simply don’t work in the real world without Palantir,” chief revenue officer Ryan Taylor said. “This is the reality fueling our growth.”

Taylor discussed how Palantir is thriving where other firms are not seeing the return on investment yet from AI. “LLMs, on their own, are at best a jagged intelligence divorced from even basic understanding,” Taylor said in remarks reported by Business Insider. “In one moment, they may appear to outperform humans in some problem-solving task, but in the next, they make catastrophic errors no human would ever make.”

Chief technology officer Shyam Sankar said that “20 years of grinding has built a unique moat and a massive lead.” He also claimed that “AI is giving the American worker superpowers,” citing advances seen at an AI summit in D.C., with examples including an ICU nurse, a factory worker, a hospital administrator, and an electric vehicle battery maintenance technician.

Karp was so bullish on Palantir’s particular employment of AI technology that he issued a challenge to higher education and elite institutions like the Ivy League. All the previous credentials for success are worthless, he suggested. “If you did not go to school, or you went to a school that’s not that great, or you went to Harvard or Princeton or Yale, once you come to Palantir, you’re a Palantirian—no one cares about the other stuff,” Karp said. He added that the environment at Palantir is different from what most workers have experienced: “Most of them come from university, where they’ve just been engaged in platitudes.”

Karp told CNBC that he wants to engage with unions as re-industrialization will require AI, arguing that blue-collar workers’ salaries should go up as a result. “This is an America story,” he said. Another statement from Karp: “Just tell the haters: Read ’em and weep.”

“Palantir is clearly benefiting from AI industry momentum across its government and commercial customer bases,” noted William Blair analysts. Meanwhile, Bank of America Research reiterated its buy rating, saying it expects growth to continue as Palantir “remains the best in class for deploying and operationalizing AI into enterprises.”

This article has been updated with a statement provided to Fortune by Palantir CEO Alex Karp.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

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President Donald Trump announced Tuesday that Treasury Secretary Scott Bessent will no longer be considered for the role of Federal Reserve chair, clarifying a key point of intrigue as the White House narrows the search for a successor to Jerome Powell. Trump’s decision, revealed during a CNBC interview, comes after weeks of speculation about Bessent’s possible appointment and spotlights the shifting dynamics in the Trump administration’s approach to the nation’s central bank.

“Well, I love Scott, but he wants to stay where he is,” Trump said. “I asked him just last night, ‘Is this something you want?’ He replied, ‘Nope, I want to stay where I am.’ Trump said he was taking Bessent off the list of potential Powell successors.

Trump’s announcement seems to finally end mounting rumors that Bessent might slide into the Fed’s top job. Bessent, who made his name as a hedge-fund chief before joining the Treasury, has become one of the most visible defenders of Trump’s economic and trade policies—earning a reputation for vocal support and public criticism of the Fed’s reluctance to cut interest rates in line with Trump’s repeated demands.

Mounting criticism of Powell from the Trump White House

The Federal Reserve chairmanship, currently held by Jerome Powell, will become vacant when his term expires in May 2026. Trump has spent the past year openly criticizing Powell for what he views as slow progress on interest-rate reductions and costly overhaul projects at the Fed’s headquarters, often making ominous threats about firing Powell and undermining central bank independence. Amid criticism on this encroachment from prominent voices including JPMorgan CEO Jamie Dimon, Trump has relented and signaled that he does not intend to remove Powell before the end of his term.

Bessent, for his part, has repeatedly sought to tamp down speculation about his interest in the Fed job. In late June, he told CNBC he believes he has “the best job in Washington” and intends to stay put as long as the president sees fit. Still, Bessent has remained closely tied to the selection process and has made waves by calling for internal reviews at the Fed, while also being the first member of Trump’s cabinet to confirm an official process was underway to choose Powell’s successor.

Bessent’s criticism has differed from that of other Trump advisors, who have questioned Powell’s oversight of the $2.5 billion renovation project at central bank headquarters in Washington. Trump and his advisors have openly discussed the possibility of firing Powell “for cause,” with some officials suggesting that the headquarters renovation could provide legal justification. Trump himself visited the construction site with Powell, the two of them engaging in a bizarre argument on live TV, wearing hard hats and looking at construction plans.

As the vetting process accelerates, Trump’s rhetoric signals his intent to pivot toward a Fed chair who closely aligns with his priorities: lower interest rates, responsiveness to White House goals, and a more circumspect approach to the Fed’s non-monetary functions.

Talking to Bloomberg Intelligence in July, Bessent said, “There are a lot of good candidates inside and outside the Federal Reserve.” Kevin Hassett, director of the National Economic Council, has been floated as a potential Powell successor, as have Kevin Warsh, a former Fed governor and Wall Street veteran with close ties to the Trump administration; Michelle Bowman, the current Fed vice chair; and Christopher Waller, a sitting Fed governor.

For now, the vacancy remains a matter of speculation, but Bessent’s self-removal from contention lends some additional shape to the race. In his own words, Bessent says he will “go where the president thinks that I am best suited,” yet maintains his preference for the Treasury role. Trump is expected to announce his final selection for Powell’s replacement soon, ushering in a new phase for the nation’s monetary policy.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

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As the U.S. labor market shows clear signs of stalling, one of Wall Street’s leading strategists is sounding a sharp warning: With America’s workforce in a demographic crunch and historic changes in immigration policy under way, it is “quite possible that the next five years will see no growth in workers at all.”

The implications, according to David Kelly, Chief Global Strategist at JPMorgan Asset Management, are profound for the Federal Reserve and for investors—chief among them, the need for exceptional caution before lowering interest rates.

Kelly used his regular “Notes on the Week Ahead” research note to survey the implications—perhaps assess the damage—of Friday’s shocking jobs report, which revised downward job creation in May and June by 258,000 jobs. Furthermore, employers added just 73,000 jobs in July, well below the 110,000 consensus estimate. This left the average monthly increase for the past quarter at a paltry 35,000 jobs. The unemployment rate ticked up to 4.2% in July, as both employment numbers and labor force participation slipped further.

Kelly also highlighted signs of tightness in the labor market, namely the decline in the labor participation rate from 62.65% in July 2024 to 62.22% in July 2025. That translates to almost 1.2 million fewer people aged 16 and over who are working or actively looking for a job.

He attributed about half this decline to Americans aging into retirement, but noted the participation rate has also fallen among those aged 18 to 54.

Kelly commented on these signs of labor tightness as pivotal context for the wider question of the labor supply in the economy, with long-running trends implying that the Federal Reserve and embattled chair Jerome Powell will face major challenges fighting inflation going forward—meaning ever-slimmer chances of the all important rate cut the market wants so much.

The worker problem in the economy

The aging population and declining labor participation also speak to a deeper, structural challenge that will persist well into the future.

According to Census projections, he noted the working-age population will actually contract in coming years without immigration returning to previous levels.

Kelly highlights the Census prediction that the population aged 18 to 64 would actually fall by over 300,000 people in the year ending July 2026, and continue to fall at roughly that pace through 2030. He notes that the retirement wave and recent changes to major immigration programs are further sapping labor supply, reducing potential growth.

Fed’s dilemma: inflation, growth, and political pressure

This squeeze comes at a time when the Federal Reserve is under immense political pressure to lower interest rates, with President Trump and his allies calling for easier money to offset the effects of new tariffs and support flagging markets.

Yet Kelly argues the central bank must tread carefully, as cutting rates into a structurally tight labor market risks spurring wage and price inflation rather than accelerating economic growth.

He observed that U.S. economic growth has averaged 2.1% per year since the beginning of the 21st century, largely driven by a 0.8% annual increase in the workforce.

“Starting from a point of roughly full employment, given the continued retirement of the baby boom and considering the possibility that deportations and voluntary departures of immigrants entirely offset new immigration in the next few years, it is quite possible that the next five years will see no growth in workers at all,” he added.

If this happens, the economy will grow more slowly, Kelly predicted, “but will only be capable of growing more slowly without igniting higher inflation.”

For the Fed, the message is clear, he adds: Be extremely cautious about any rate cuts. For investors, it’s a warning to temper expectations for rapid economic gains or a sustained bull market driven by easy money. In other words, American “exceptionalism” isn’t a given, going forward.

Investors, Kelly said, “should no longer bet broadly on a strongly rising U.S. economic tide or lower interest rates.”

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

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In a candid and far-reaching discussion on Nikhil Kamath’s YouTube channel, legendary venture capitalist Vinod Khosla, one of Fortune‘s most powerful people in business, delivered some advice for Gen Z. It could be seen as a stark warning or as simple pragmatism: the single most important skill for young workers at this moment is not specialization, but the ability to learn rapidly and adapt continuously. His reasoning is simple yet profound: “ChatGPT can teach you any new areas,” rendering traditional academic paths and fixed skill sets increasingly obsolete. The title of the episode was more blunt: “College Degrees Are Becoming Useless.”

The Sun Microsystems co-founder, known for his contrarian views and unwavering certainty in technological possibilities, painted a future where artificial intelligence (AI) will fundamentally transform the job market. He asserted that “there isn’t a job where AI won’t be able to do 80% of 80% of all jobs” within the next three to five years. He explained that the vast majority of all job functions will be replicable by AI, hence the 80% of 80% estimate. It recalled Sam Altman’s claim that AI will make result in “intelligence too cheap to meter.”

Looking 10 to 15 years out, Khosla said, he believes “there’s no chance there’s a job that humans do that AI can’t do almost as well.” He allowed for some minor exceptions and said even heart or brain surgery an AI should theoretically be able to perform to a high level, although regulation may not allow it. This rapid pace of change, faster than the world has seen in the last 50 years, demands a radical shift in how young people approach their careers, he argued.

For a 22-year-old wondering where to focus their efforts, Khosla’s advice is clear: “you have to optimize your career for flexibility, not a single profession.” He emphasized that the value of learning lies not in mastering one specific trade like welding, finance, or even accounting, but in cultivating “the ability to learn” in its own right. He claimed that at 70 years old, he is learning at a much faster pace than ever before, and every young person should strive for this capability. This includes thinking from first principles and jumping into diverse fields, whether physics, biology, or finance, because AI tools will facilitate the rapid acquisition of new knowledge.

Khosla argued that even disciplines like computer science are valuable less for programming expertise (which AI increasingly handles) and more for the “process of thinking” and understanding systems and architectures they impart. The ultimate goal for a young individual, he suggests, is to choose a path where “your knowledge compounds and your capability compounds over time,” mirroring the principle of financial compounding in knowledge acquisition.

The quality of the entrepreneur

For aspiring entrepreneurs, Khosla advises a strategic focus, since he believes that anybody in any industry not using AI will be rendered obsolete by somebody who is using the tool. While AI may democratize technology, he said, success will hinge on the innate “quality of the entrepreneur” — their ability to think strategically, envision long-term goals, select the right teams, and wisely choose who to trust for advice. Khosla believes the current shortage is not of technology or capital, but of “great entrepreneurs who know how to make these choices.”

Beyond individual careers, Khosla and Kamath talked about the wider implications of AI on the economy. Khosla said it should drive down the cost of many things, acting as a deflationary force on many services, and he envisioned an AI-powered utopian future where services like education, medical expertise, and legal advice become “almost free.” He speculated that in 20 to 25 years, $10,000 might buy more goods and services than $50,000 does today, thanks to the deflationary impact of machines providing abundant services.

The career path open to Gen Z

Khosla is far from the only thought leader weighing in on the employment prospects for Gen Z in the age of AI. Anthropic CEO Dario Amodei and Nvidia CEO Jensen Huang have engaged in an ever-more-heated war of words over the former’s doomsday prediction that 50% of all white-collar jobs will be wiped out. Geoffrey Hinton, the so-called “godfather of AI,” has largely agreed with Amodei, saying that only the “very skilled” will remain employed. Huang and Federal Reserve chair Jerome Powell have largely agreed with Khosla, arguing that creativity and constant learning will create new jobs for the economy in a virtuous cycle.

Goldman Sachs chief economist Jan Hatzius has looked at the data and echoed Khosla’s argument that college degrees are losing value, finding that the “safety premium” of a college degree is disappearing. Berkeley economist Brad DeLong agrees that the college degree is losing its status, but casts the blame away from AI and toward the policy uncertainty plaguing the economy, arguing that many Gen Z college graduates are going unhired because conditions are just too risky for most companies. Goldman seems to agree with DeLong, finding in July that AI was overhyped as a reason for most corporate layoffs. Meanwhile, the Federal Reserve isn’t completely sold on the revolutionary prospects of AI, arguing that it may be a revolutionary invention like the electric dynamo, but may end up being a one-off boost to productivity, like the light bulb.

Gen Z, for its part, seems to be craving more human connection. Starbucks recently announced it would sunset its mobile-only locations, thought to be more appealing to Gen Z and a desire for “frictionless” experience, in favor of a renewed emphasis on hospitality and human-to-human connection. The generation has been weathering criticism of late that they lack in social skills necessary for success, with the stereotypical “Gen Z stare” at the center of the conversation. Careers site Glassdoor, for its part, has punctured the myth of “conscious unbossing” by Gen Zers, finding that they are becoming managers at exactly the same historical rate as any other generation, AI notwithstanding.

Ultimately, Khosla’s message for the next generation is one of relentless pursuit of learning and adaptability. In a world rapidly being reshaped by AI, the ability to continuously reinvent oneself and embrace new knowledge may be the ultimate differentiator for survival and success. The human capacity to learn new things, after all, is endless.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

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Standard Chartered CEO Bill Winters is standing out in the global banking sector by maintaining a flexible, hybrid work policy and resisting the rigid office mandates now sweeping through much of Wall Street. As peers from companies like JPMorgan and Goldman Sachs urge staff back to traditional office rhythms, Winters has doubled down on a philosophy of employee autonomy and trust, placing his bank in sharp contrast to its US and UK peers.

In a recent interview with Bloomberg Television, Winters was unequivocal: “We work with adults, and the adults can have an adult conversation with other adults and decide how they’re going to best manage their team.” He emphasized that the approach is “working for us,” adding, “How other companies make that work? Everybody’s got their own recipe.” For Standard Chartered, that recipe is rooted in flexibility, allowing teams and managers to agree on in-office schedules that fit their business needs and personal lives.

Winters, who himself follows a hybrid schedule and aims to be in the office four days a week, says his approach is about fostering responsibility. “Our MDs want to come to the office. They come to the office because they collaborate. They manage their people. They lead teams. But if they need the flexibility, they can get it from us,” he said. This hands-off stance has helped the bank retain talent, keep attrition low, and, according to Winters, maintain a productive workforce that manages to deliver results in a post-pandemic landscape.

Standard Chartered’s performance is thriving at the moment. In the second quarter of 2025, the bank reported a 48% jump in pre-tax profit—performance Winters points to as validation of the flexible model. On the second-quarter earnings call with analysts, Winters commented on the strong results, saying they are “testament to our ability to deliver exceptional services in support of our clients’ needs, and it is clear that our strategy is working.”

A bank unlike the others

The bank’s flexible policy stands in contrast to a growing wave of office mandates from industry rivals. JPMorgan, Goldman Sachs, and HSBC have all tightened office attendance requirements in the last year. JPMorgan CEO Jamie Dimon has criticized remote work for slowing decision-making and inhibiting innovation, recently directing most employees to return to the office full-time. Goldman Sachs CEO David Solomon has similarly dismissed remote work as “not a new normal” but an “aberration that we are going to correct as quickly as possible.” HSBC, too, recently directed its managing directors to return to the office at least four days a week.

Other banks, like Citi, remain more flexible but still require at least three days of in-office attendance, while offering hybrid employees set windows for remote work. The trend across many sectors, including tech and telecommunications, is toward stricter in-office requirements, with some large employers warning that ongoing remote work could put jobs at risk.

Despite these pressures, Standard Chartered is holding its ground. Winters and the bank’s leadership remain vocal in their conviction that flexibility works—citing strong business results, low attrition, and positive feedback from employees, especially those balancing care responsibilities or preferring non-traditional schedules. The company was among the first major banks to formally adopt hybrid work in November 2020 and has shown little inclination to change course, even as industry sentiment shifts.

Companies who stand by remote or flexible work schedules say it leads to a better talent pool, less turnover, and a happier workplace, while critics say it’s corrosive to the human element that goes with great teamwork. Winters dismisses such concerns. He insists that, with the right leadership, teams remain collaborative and engaged, and that forcing staff into rigid molds can actually hinder, rather than help, performance.

As Wall Street and other sectors debate the future of work, Standard Chartered’s approach offers a compelling case study in the value—and business logic—of empowering employees to strike their own balance.

Standard Chartered did not respond to a request for comment.

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In 2025, CEO turnover in the United States is shattering prior records and shifting the very nature of executive leadership. According to fresh data from executive placement firm Challenger, Gray & Christmas, the number of CEO departures at U.S. companies increased to 207 in June—a 23% jump from May’s 168. While this represents a 12% decrease from the 234 departures logged in June 2024, the first half of 2025 tells a story of acceleration: A whopping 1,235 CEOs left their posts. That’s a 12% increase from last year and the highest year-to-date total since Challenger began tracking this data in 2002.

This wave of exits isn’t simply a statistical outlier, the firm says. More than ever, companies are relying on interim chiefs, and the short-term revolving door has become so common that the highest-paid corner office is increasingly looking like a “gig economy” job, Challenger says, adding: “2025 marks the rise of the CEO gig economy.”

CEOs as gig workers

Through June 2025, a staggering 33% of newly named CEOs had stepped into their roles on an interim basis, compared to just 9% during the same period last year. Many of these leaders, including veterans who navigated companies through the Covid-19 pandemic, are returning to guide firms on their own terms, choosing flexible, project-based tenures over the once-standard multi-year engagement.

“With growing uncertainty across the economy, shifting corporate values like DEI, the impact of tariffs, potential deregulation, evolving consumer behavior, and the rapid implementation of new technologies such as AI, identifying the right leader for long-term success has become increasingly difficult,” said Andy Challenger, labor and workplace expert at Challenger, Gray & Christmas.

Interim roles offer both organizations and executives a strategic edge: companies gain agility and fresh perspectives swiftly; executives gain exposure and maintain flexibility.

The perils of the C-suite gig economy

There are real risks to a gig-like approach to the corner office. Teams led by an interim or short-term CEO may struggle with trust, long-term cohesion, and cultural stability. “When teams know their leader could leave at any moment,” Andy Challenger notes, “it’s harder to build lasting cohesion or trust.” Frequent leadership turnover can disrupt culture, diminish morale, and spark higher employee attrition—particularly if staff feel their voices aren’t heard or priorities are in constant flux.

Another sharp trend is the even split between internal and external interim CEOs: 53% were selected from within the organization, while 47% came from outside. When interim roles become permanent, internal and external candidates fare equally: 20% of each ultimately landed the role long-term.

The surge in CEO gig work contrasts with another shift: the lagging rate of new women CEOs. Only 25% of new CEOs appointed in 2025 are women, down from 28% last year.

Industries with surging turnover

Some sectors have been especially hard hit. The government/non-profit space leads (or trails), with 256 CEO exits through June—1.6% higher than last year’s 252 exits through the first half. The space has seen the highest turnover in both years.

Then there’s a big drop to technology, with 138 CEO departures through June, one of the highest monthly totals of the year; the turnover represented a 16% increase from 2024 as well. Health care/products saw 121 exits, a 20% increase from 2024. Hospitals, a subset, saw 68 departures, up 3%. Financial firms had 76 CEO exits year-to-date, a 29% increase year-over-year.

This upheaval reflects broad changes—uncertainty, rapid tech shifts, pressure on traditional leadership models—that are turning the CEO role into something more fluid, flexible, and, increasingly, temporary. In this era of “gig economy” leadership, both organizations and executives face new rules—and new risks—in navigating the future of the C-suite.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

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Dan Sheridan has worked at Brooks Running for over 25 years, and he’s been CEO for over a year now, but he says he’s still learning things every day from his own boss: Warren Buffett. The 95-year-old investing legend is famous as the “Oracle of Omaha” for his deep business acumen. You won’t see Sheridan disagree with that sentiment.

“We’re so fortunate,” Sheridan recently told Fortune‘s Leadership Next podcast, reflecting on Brooks’ status as a wholly owned subsidiary of Berkshire Hathaway. “Our ownership structure may be the greatest in the world, right? We’re owned by—who I would call the GOAT of capitalism—Warren Buffett,” Sheridan remarked. “GOAT,” of course, stands for “greatest of all time,” an acronym from the sports world increasingly spreading to other walks of life.

The remark is more than a casual compliment. For Brooks Running, being part of the Berkshire Hathaway family has meant a rare degree of stability and confidence, especially in a retail world known for its fickleness and fast pivots.

Sheridan, a 25-year Brooks employee who took the reins as CEO in April 2024, fondly recalls his encounters with Buffett over the years, including the annual Berkshire Hathaway shareholder meetings. These gatherings, often a pilgrimage for investors and business enthusiasts, also became a time for Brooks to celebrate milestones with its famously hands-on owner.

Back in 2014, as Brooks marked its 100th anniversary, Buffett made a special trip to Seattle to commemorate the occasion. Speaking before Brooks employees, Buffett distilled his investing philosophy into a single, memorable challenge. “Berkshire focuses on the long term, and your jobs are simply this: to make sure the brand is stronger at the end of the year than it was at the beginning,” Sheridan recounted. The advice resonated deeply—and has continued to shape his outlook as a leader.

‘You have to do a thousand things to keep your brand strong’

At first glance, the maxim sounds simple. But as Sheridan points out, “The truth is, that’s a huge thing for us to do. You have to do a thousand things to keep your brand strong. You have to create great product. You have to keep your morale and your culture going. You have to keep your customers happy. For me in my leadership role, that’s how I think about it: Is our brand strengthening every season, in every market?”

This focus on gradual and consistent improvement echoes the Warren Buffett playbook, eschewing quick fixes and risky gambles for what Sheridan calls “investment, really hard decisions, and capability.” For Brooks, that has meant steady investment in innovation and technology, careful brand cultivation, and an unwavering connection to its core community of runners. But Sheridan is alert from something he learned from another Berkshire GOAT, Buffett’s long-time right-hand-man, Charlie Munger.

Mind your ABCs

Sheridan has adopted a leadership mantra learned at Munger’s heel: Avoid the “ABCs” of corporate decay. “He talks a lot about organizations avoiding the ABCs: arrogance, bureaucracy, and complacency.” For Sheridan, this is more than a cautionary tale; it’s a daily discipline.

“I approach things with low arrogance because I don’t know everything. So I’m super curious in how I approach people,” Sheridan said. He stresses the importance of humility and listening, aiming to foster an organization where questions are invited and learning is constant—echoing a central tenet of Munger and Buffett’s shared philosophy of lifelong learning.

Sheridan’s intolerance for bureaucracy is equally strong. “I often say I’m allergic to bureaucracy … even in nonprofits or school committees that I’m asked to be on, my first question is, ‘Is there a lot of bureaucracy in this organization?’ I can’t function in that. I don’t know how to function in it. And so, Brooks is a place where there’s low bureaucracy,” Sheridan remarked.

This approach has helped keep Brooks nimble—despite its size and growing global reach. Complacency, the third danger, is ever-present at market leaders like Brooks. “I think every organization can rest on your history, and we’re not immune to that at Brooks,” Sheridan acknowledged.

Brooks breaks forward

Brooks Running currently holds the No. 1 position in performance-running shoes in both the U.S. and Germany, and has seen record-breaking growth in international markets—posting a 15% jump in global revenue in the first quarter of 2025, with surges as high as 221% in Asia Pacific and Latin America. But Sheridan is adamant: “In every other market, we’ve got a lot of room to grow.”

Brooks has been on a growth tear in recent years, posting $1.2 billion in revenue for 2023, with North America accounting for the lion’s share. Sheridan played a key role in navigating the company through everything from global supply-chain disruptions to the changing dynamics of consumer taste in the sporting-goods arena. Now, with a fresh mandate from both Buffett and the board, Brooks is looking to expand further overseas, especially in China and Europe.

That growth, according to Sheridan, depends on ruthlessly avoiding complacency and focusing on daily execution. Brooks’ recent expansion—from Olympic athlete partnerships to surging popularity in China and Europe—has been fueled by this mindset.

“We're owned by who I would call the G.O.A.T. of capitalism: Warren Buffett.”

On the latest episode of #LeadershipNext, @brooksrunning CEO Dan Sheridan shared the best piece of advice he’s received from investing legend and Berkshire Hathaway CEO Warren Buffett.

🎧 Listen to… pic.twitter.com/DFmBmO0MRn

— FORTUNE (@FortuneMagazine) July 29, 2025

The CEO’s leadership style, shaped by nearly three decades at Brooks, has also been marked by a willingness to “keep your head above the clouds, but your feet in the mud,” Sheridan said earlier this year. For Sheridan, balancing a high-level vision with hands-on operational focus is crucial in leading a brand through rapid industry changes, fierce competition, and expanding global complexity.

For Brooks Running, the “GOATs of capitalism” at Berkshire Hathaway aren’t just distant boardroom figures—they are active mentors whose business philosophy shapes every major decision. By embracing humility, slashing through red tape, and refusing to coast on past wins, Sheridan aims to write the next chapter in Brooks’ century-plus story—one defined by resilience, adaptability, and above all, staying hungry.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. 

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High Noon has issued a voluntary recall of its popular vodka seltzer after it was discovered that some cans had been erroneously labeled as Celsius energy drinks. The recall, announced on Tuesday and coordinated with the Food and Drug Administration, applies to two production lots of High Noon Beach Variety packs (12-pack/12 fluid ounce cans), with the seltzers mislabeled as CELSIUS® ASTRO VIBE™ Energy Drink, Sparkling Blue Razz Edition with a silver top. No illnesses or adverse events have been reported for this recall to date, the FDA said.

The two production lots were distributed to retailers in Florida, Michigan, New York, Ohio, Oklahoma, South Carolina, Virginia, and Wisconsin between July 21 and July 23, 2025. The affected High Noon Beach Variety packs are marked with the following lot codes: L CCC 17JL25 (14:00 to 23:59) and L CCC 18JL25 (00:00 to 03:00). Celsius-labeled cans with the lot code L CCB 02JL25 (2:55 to 3:11) are also included in the recall.

According to the FDA, the labeling error originated with a packaging supplier that services both the High Noon and Celsius brands. The supplier inadvertently shipped empty Celsius cans to High Noon, resulting in vodka seltzer being packaged into cans labeled for an energy drink product.

High Noon, which is produced by E&J Gallo Winery, stated, “We are working with the FDA, retailers, and distributors to proactively manage the recall to ensure the safety and well-being of our consumers.” The company emphasized that only a “small batch” of product was affected and continues to collaborate with regulatory agencies to trace and remove the mislabeled cans from shelves as quickly as possible.

A Gallo spokeswoman told Bloomberg attributed the issue to “a labeling error from our can supplier,” declining to provide the name of the packaging supplier. Although product recalls are common, mislabeled alcohol is quite rare. High Noon has seen explosive growth, growing from a launch in 2019 into the top-selling seltzer by 2022, dethroning the incumbent Tito’s.

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Starbucks CEO Brian Niccol is closing a convenience that was explicitly targeted toward Gen Z’s taste for “frictionless” experiences: their mobile-only “pickup” stores. The move signals a deliberate shift away from the high-speed, tech-driven model that defined much of the chain’s recent expansion. The coffee giant will convert or close approximately 80 to 90 of these mobile order-only locations nationwide by the end of 2026, Niccol said on Tuesday’s earnings call with analysts, marking the end of a six-year experiment that catered to on-the-go customers who seemed to prefer mobile ordering to lingering over a latte.

Announcing the closures, Niccol was direct about the rationale on Starbucks’ Tuesday call with analysts. “We found this format to be overly transactional and lacking the warmth and human connection that defines our brand,” he said.

Built primarily in urban centers, airports, and hospitals, these stores were designed to maximize convenience—no cash registers, limited or zero seating, and an efficient grab-and-go experience orchestrated through the Starbucks app. Starbucks wants to bring back the warm coffeehouse.

The move comes amid a period of challenge and transition for Starbucks. Sales at stores that have been open for at least one year have declined for six straight quarters, with North American sales have dropped by 2% most recently. Analysts point to customer fatigue with impersonal, tech-centric transactions and “soulless” atmospheres, especially as competitors offer new forms of hospitality and engagement. It’s also a tricky needle to thread, as Starbucks disclosed in its earnings that 31% of all transactions are mobile, making it a critical part of the business.

The company remains committed, according to Niccol, to enhancing digital and mobile experiences through technical upgrades to the Starbucks app and its Rewards program, set for rollout in 2026. But Starbucks’ other actions are suggesting that these experiences shouldn’t feel mobile.

Niccol, who took over as CEO in September 2024, has staked his turnaround strategy on restoring the brand’s emotional resonance, echoing former CEO Howard Schultz’s recognition that consumers needed a “third space” that wasn’t home or work. Niccol argued on the call that customer-value perceptions are near two-year highs, and they’re driven by gains among Gen Z and millennials, who make up over half of Starbucks’ customer base. It shows that younger consumers wanted more warmth than previously thought.

Uplift through green aprons

Starbucks has a program under way to “uplift” its coffee houses, which involves investing $150,000 per store to upgrade seating, lighting, and atmosphere in more standard locations. The chain’s new prototype stores—already being piloted in New York City—reintroduce cozy chairs, power outlets, and large tables, fostering a more communal and linger-friendly environment. Niccol said some mobile-only stores will get converted to this new setup, where it makes sense.

“We plan to complete an evaluation of our North American portfolio by the end of this fiscal year to ensure we have the right coffee houses in the right locations to drive profitability and deliver the Starbucks experience,” Niccol said on the earnings call.

Starbucks is also piloting smaller-format stores with limited seating to blend convenience with a sense of place—another sign the brand isn’t abandoning quick service, but is instead recalibrating its approach. As the company prepares to sunset its transactional pickup model, Starbucks is doubling down on its legacy: coffee shops as community anchors, not just efficiency engines. The era of the “app-only” Starbucks is ending, as the company bets that its future lies in connection, not just convenience.

These investments are part of Niccol’s $500 million “Green Apron Service” initiative, intended to restore “hospitality” to the center of its business. It involves a revamped barista dress code featuring, yes, the green apron, but also emphasizes personalized service. Starbucks believes this is what Gen Z really wants, not a frictionless mobile order that barely involves interacting with a human. There is other evidence that Gen Z craves more human connection, with 91% telling the Harris Poll they want more of a balance between remote and office work.

Starbucks COO Mike Grams spoke with CNBC earlier this week and also offered thoughts on how the company views Gen Z. He argued in favor of an approach the company describes as “hospitality” and, when asked about evolving “social cues,” he described how Starbucks is working to lean into a more subjective experience. “Connection is different things to different people,” he said, arguing that Starbucks baristas are well positioned “to understand what each individual customer wants in that moment in time.” In other words, Starbucks is risking a collision with the “Gen Z stare,” because it’s working to make sure that the human connection is front and center in its business.

When reached for comment, Starbucks referred Fortune to the earnings report and Niccol’s comments on the analyst call.

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