I can’t tell you how many creators I’ve spoken with who feel trapped on Substack. It’s incredibly easy to get started, but that simplicity comes at a cost. As soon as you want to change a font, create a custom landing page, or add more advanced features, the platform’s limitations become frustrating fast.

And those limitations go beyond design. The deeper issue is control. On Substack, you don’t own your content, can’t control how you earn, and have limited access to your own subscribers.

That’s why so many creators are making the switch to WordPress. It gives you a lot more control over your design, monetization, and subscriber list.

After helping dozens of writers migrate from Substack to WordPress, I’ve developed a straightforward process that makes it manageable. The freedom and flexibility you’ll gain are well worth the effort.

In this guide, I’ll walk you through the entire process: moving your posts, importing your email list, setting up a powerful email system, and launching your new newsletter without losing momentum.

Why Should You Switch From Substack to WordPress?

Many creators switch from Substack to WordPress because it offers more control, flexibility, and monetization options. With WordPress, you can fully customize your site, own your email list, and add features like paid memberships, online courses, and digital product sales—all without platform fees.

Substack does a great job of marketing itself as the simple, all-in-one solution for newsletter creators. It lets you start publishing in minutes and handles the technical details for you.

But that initial convenience eventually becomes a major restriction. As your newsletter grows, you’ll reach the limits of what Substack can do.

The biggest issue is the lack of control, which means your newsletter ends up looking like everyone else’s. You can’t customize signup forms, build unique landing pages, or adjust the layout to match your brand.

Plus, there’s the challenge of monetization. Substack takes a 10% cut of every paid subscription, which adds up quickly.

You’re also locked into their subscription model, which means you can’t sell courses, digital products, or add other revenue streams directly to your site.

And ultimately, Substack controls your relationship with your audience. You can export your list, but the platform dictates how your content is delivered and what analytics you can access. With WordPress, you’re in the driver’s seat.

For full details, see our comparison of Substack vs. WordPress.

What to Expect When Migrating From Substack to WordPress

Migrating your newsletter might sound intimidating, but it’s easier than you think. I’ll break it down into clear, manageable steps.

Here’s a quick overview of what we’ll do together:

• Set Up Your WordPress Foundation: We’ll choose a reliable host, install WordPress, and create the new home for your newsletter.
• Export and Import Your Content: I’ll show you how to download your posts and subscriber data from Substack and move it safely into WordPress.
• Build Your New Email System: We’ll connect your site to a professional email marketing service, giving you full control over your campaigns and automations.
• Finalize the Migration: We’ll import your subscriber list, add redirects so you don’t lose traffic, and customize your site to match your brand.

By the end of this tutorial, you’ll have a professional newsletter platform that you fully own and control.

Step 1: Set Up Your WordPress Website

The first step is to set up the WordPress website that will serve as the new destination for your content.

To do this, you’ll need two things: a domain name and WordPress hosting. While the WordPress software is free, hosting is where your website’s files are stored online.

I always recommend Bluehost to new users. They are an officially recommended WordPress host, their support is excellent, and they make setup incredibly simple. Plus, they offer WPBeginner readers a special deal that includes a free domain name for the first year.

To get started, head over to the Bluehost website and click the ‘Get Started Now’ button.

On the next screen, you’ll choose a hosting plan.

For most newsletter sites, the Basic plan has everything you need. You can always upgrade later if your needs grow.

After that, you’ll set up your domain name, and this part is important.

If you’re starting with a brand new domain, you can claim your free domain now by typing it into the ‘Create a new domain’ box.

But if you already have a custom domain connected to your Substack site (like mynewsletter.com), choose ‘I’ll create my domain later.’ This avoids any downtime while you complete the migration.

After you finish signing up, Bluehost will automatically install WordPress for you.

Just log in to your Bluehost account, find your new site, and click the ‘Edit Site’ button. That will take you straight to your WordPress dashboard.

If you’re using a different host or want more guidance on this part, check out our full guide on how to install WordPress.

Step 2: Install the Necessary Importer Plugins

To import your posts from Substack, you’ll need to install two free plugins. The main one is the Substack Importer, but it relies on a core tool called the WordPress Importer to work correctly.

It might sound a little technical, but I’ll walk you through the fastest way to get it set up.

Prepare the WordPress Importer

Prepare the WordPress Importer

In your WordPress dashboard, go to Tools » Import. At the bottom of the list, you’ll see ‘WordPress.’ Just click the ‘Install Now’ link.

Once it finishes installing, the link will change to ‘Run Importer.’

Here’s an important step: click ‘Run Importer’ now, even though you’re not uploading anything yet. This activates the tool so the Substack Importer works later. If you skip it, you’ll get an error.

After that, you’ll land on the importer’s upload screen—but you can ignore that for now. We’re ready to install the next plugin.

Install the Substack Importer

Next, you need to install the Substack Importer plugin, which will handle the specific format of your Substack export. For detailed instructions, you can see our guide on how to install a WordPress plugin.

Because you have already activated the main WordPress Importer tool, this plugin will install correctly without any issues. Your site is now fully prepared to import your Substack content, which I’ll show you how to do in Step 4.

Step 3: Export Your Content From Substack

Now, we need to go back to Substack one last time to download all of your content. This includes your posts, drafts, and your subscriber list.

You need to log in to your Substack account and go to your publication’s dashboard. Once there, you should click on ‘Settings’ in the top menu and scroll down until you find the ‘Export’ section.

You will see an option to ‘Export your data’. Go ahead and click the ‘New export’ button.

Substack will create a .zip file for you to download that contains all of your posts and images. This zip file will also contain a CSV file with your subscribers’ email addresses and other information. It may take a few minutes if you have a lot of content.

When the export file is ready, you will be notified by email, and you can click the ‘Download’ button to save it to your computer. This file is one of your most valuable assets, so save it somewhere safe.

Step 4: Import Your Posts into WordPress

Now for the exciting part! Let’s move your content onto your new WordPress website. Thanks to the plugin you installed, this process is mostly automated.

Go back to your WordPress dashboard and navigate to Tools » Import. You should now see ‘Substack’ in the list of available importers.

Click the ‘Run Importer’ link below it.

The plugin will ask you to upload the file you got from Substack. Click ‘Choose File’ and select the .zip file containing your post export.

The plugin also provides an optional field to enter your Substack URL. This can help with importing comments and author details, but you can leave it blank if you want.

Then, click ‘Upload file and import’.

On the next screen, you’ll be asked to assign an author for the imported posts. You can create a new author or assign them to your existing WordPress user account.

Before you continue, make sure to check the box next to ‘Download and import file attachments.’

This is an important step that tells WordPress to save all the images from your Substack posts to your new website, so nothing gets left behind.

Click ‘Submit’ to begin. The importer will now work its magic, creating new WordPress posts for each article from your Substack file. This might take a few minutes.

Once it’s finished, go to Posts » All Posts. You should see all of your Substack articles right there in WordPress! Take a moment to click on a few and make sure the content and formatting look correct.

Step 5: Set Up Your Email Newsletter System

WordPress doesn’t send email newsletters by default, which is a major difference from Substack.

Instead, you need a dedicated email marketing service to manage your subscribers and send your newsletters. This gives you far more power and flexibility.

I recommend using Constant Contact. It’s incredibly beginner-friendly, integrates perfectly with WordPress, and offers powerful features like automation and analytics that go way beyond Substack.

With Constant Contact, you can segment your audience, A/B test your subject lines, create beautiful landing pages, and see detailed reports on who opens and clicks your emails.

First, you’ll need to sign up for a Constant Contact account. Once you’re in, you need to create a new email list for your subscribers.

Then, you can easily connect your WordPress website to Constant Contact using the WPForms plugin. It’s the best form builder for WordPress and lets you create beautiful newsletter signup forms that automatically add new subscribers to your Constant Contact list.

We have a complete, step-by-step guide on how to add email subscriptions to your WordPress blog. This tutorial will walk you through setting up Constant Contact, creating a signup form with WPForms, and placing it on your new website.

Step 6: Migrate Your Subscriber List

It’s time to move your most important asset: your subscribers. This step requires care to ensure a smooth transition for your readers.

You need to log in to your Constant Contact account. Then, go to the ‘Contacts’ section and look for the ‘Add Contacts’ button.

You’ll see an option to upload from a file, as you see in the screenshot below.

First, you’ll need to unzip the export file you downloaded from Substack. Inside, look for the CSV file containing your subscribers. The filename will usually be something like email_list.your-publication-name.csv.

Constant Contact will guide you through mapping the columns (like matching the ’email’ column to the email field). Add these subscribers to the new list you created.

Remember, you should only email people who have given you permission. That final email you sent from Substack is a great way to respect your audience and remind them they signed up.

Once they’re imported, I recommend creating a simple welcome email sequence in Constant Contact to re-engage them on the new platform.

Step 7: Point Your Domain to WordPress

With your content and subscribers moved, you’re ready to make your new WordPress site live on your official domain. The steps depend on how you set up your domain in Step 1.

If You Registered a New Domain With Bluehost

You’re all set!

Bluehost automatically pointed the domain to your WordPress site, so you don’t need to do anything else.

If You Have a Custom Domain From Substack

Now is the time to point it to your new host. You’ll do this by changing the domain’s nameservers.

You need to find the nameservers for your new host (for example, for Bluehost, they look like ns1.bluehost.com and ns2.bluehost.com).

Log in to your domain registrar (the company where you bought the domain, like Namecheap or GoDaddy) and find the DNS or nameserver settings. Now, you need to replace the old nameservers with the new ones from your web host.

Our guide on how to change domain nameservers shows you exactly how to do this with screenshots.

After you save your new nameservers, it can take a few hours for the change to update across the internet. This waiting period is called DNS propagation, and it’s perfectly normal.

Step 8: Set Up Permalinks and Redirects

This final technical step is crucial for preserving your SEO and preventing visitors from hitting ‘404 Not Found‘ errors.

Setting Up SEO-Friendly Permalinks

First, we want to make sure your new WordPress URLs are clean and SEO-friendly.

In your WordPress dashboard, go to Settings » Permalinks. Select the ‘Post name’ option and click ‘Save Changes’.

This creates simple URLs like yoursite.com/post-title, which are good for WordPress SEO.

Now, WordPress ‘Post name’ permalinks are very similar to the URLs that Substack creates for your posts. That will make it much easier to redirect the old post URLs to the new ones.

Setting Up Redirects for Your Old Substack Posts

Next, you need to make sure that anyone visiting your old Substack post links will be sent to the right page on your new WordPress site. This is called a redirect, and it’s very important for SEO and user experience.

The good news is that Substack uses a consistent URL structure for posts, like yourdomain.com/p/post-name. Because your new WordPress posts will have a similar URL (yourdomain.com/post-name), you can set up a single rule to redirect all of your old posts at once.

The easiest way to do this is with the free Redirection plugin. First, install and activate the plugin. Then, go to Tools » Redirection in your WordPress dashboard.

Now, you just need to add one new redirect rule.

In the ‘Add new redirection’ section, you need to fill out the fields like this:

• Source URL: ^/p/(.*)$
• Target URL: /$1

After you enter the URLs, check the ‘Regex’ box. This is a very important step that tells the plugin to use the special rule.

Then, just click the ‘Add Redirect’ button.

This single rule automatically finds any link that starts with /p/ and redirects it to the same URL without the /p/.

For example, a link to yourdomain.com/p/my-first-post will now automatically go to yourdomain.com/my-first-post. This saves you from having to create redirects for every single post by hand.

Finding and Fixing Any Missed Redirects

While this regex rule will redirect most of your posts, it’s a good idea to double-check for any that might have been missed. Sometimes, WordPress will change a post’s URL slug during the import process to avoid duplicates.

For example, if you had two Substack posts with similar titles, then WordPress might change one of the new URLs to something like /my-post-title-2. The regex rule wouldn’t catch this specific case.

Luckily, the Redirection plugin makes it easy to find these broken links.

From your WordPress dashboard, go to Tools » Redirection and then click on the ‘404s’ tab. This page will log any time a visitor tries to go to a page on your site that doesn’t exist.

If you see an old Substack URL in this log, it means the redirect for that specific post didn’t work. You can simply hover over the 404 error in the list and click ‘Add redirect’ to create a manual redirect for it.

For detailed instructions, see our guide on how to easily track 404 pages and redirect them in WordPress.

Step 9: Customize Your Site and Go Live

All the technical work is done. Now for the fun part: choosing a professional theme to give your new site its look and feel.

Choosing and Customizing Your Theme

Your WordPress theme controls the entire look and feel of your site. I recommend choosing a theme that is clean, readable, and fast so that it provides a great user experience for your readers.

For newsletter creators, themes like Sydney or GeneratePress are excellent choices because they are lightweight and highly customizable.

Then, just follow our guide on how to customize your WordPress theme to get the exact design you want.

You can also create a custom homepage to welcome new visitors and prominently feature your newsletter signup form.

To build trust with your readers, it’s also a good idea to add a few essential pages to your site. This makes your newsletter feel more professional and established.

I recommend creating:

• An About Page: This is where you can share your story and explain what your newsletter is about.
• A Contact Page: This gives your audience an easy way to get in touch with you, and you should include a contact form.
• A Privacy Policy: This page is legally required in many places and shows readers you respect their data. We have a full guide on how to create a privacy policy in WordPress.

Once these pages are in place and you’ve tested that your site is working correctly, it’s time for the final step: setting up your newsletter and announcing your move.

Step 10: Set Up Your Paid Newsletter in WordPress

One of the best things about moving to WordPress is that you have full control over your income. Instead of paying Substack’s 10% fee, you only pay standard payment processor fees, which means you keep more of your money.

To monetize your WordPress content, you’ll need a membership plugin. I recommend MemberPress because it’s the most powerful and easy-to-use option on the market. It lets you restrict access to your content so that only paying subscribers can view your premium newsletter posts.

Once you install MemberPress, you can create different subscription levels, just like on Substack. For instance, you could offer a monthly plan and a discounted yearly plan.

To get started, you can follow our step-by-step guide on how to create a paid newsletter in WordPress. It will walk you through everything from setting up MemberPress to creating your subscription plans.

But with WordPress and MemberPress, you can go far beyond a simple paid newsletter. You can also:

• Bundle your newsletter with other premium content like online courses, eBooks, or private community access.
• Sell digital downloads like guides or templates directly from your site.
• Create different membership tiers with unique perks for each level.
• Offer premium services like one-on-one coaching or consulting.

This flexibility allows you to build a true membership business around your content, not just a newsletter.

For more options, you can see our guide on how to make money in WordPress.

Once you are all set up, you can send an email to your subscribers welcoming them to the new website.

Be sure to highlight the benefits of the move, like a better reading experience or new features you’ve added. This is a great way to celebrate the transition and get your readers excited about the future of your newsletter.

Learning WordPress

Congratulations on moving your newsletter to WordPress! You now have a powerful platform that can grow right along with your business.

While WordPress is powerful, you don’t need to learn everything at once. We have plenty of free resources to help you master the basics and get comfortable.

Here are the best free resources our team has created for beginners:

• WPBeginner Blog: Our complete library of WordPress tutorials and how-to articles.
• WPBeginner Videos: Free WordPress video training courses that cover all the basics.
• WPBeginner YouTube Channel: Videos with practical tips for growing your website.
• WPBeginner Solution Center: Our expert recommendations for the best WordPress plugins and tools.

The more you use WordPress, the more comfortable you’ll become. Before you know it, you’ll be wondering how you ever managed with Substack’s limitations.

Alternative: Let an Expert Migrate Your Newsletter

I’ve walked you through all the steps to move from Substack to WordPress. But I know this process can feel like a lot, especially when you’d rather focus on creating content.

If you want to save time and avoid the technical details, then letting an expert handle the migration is a great option.

Our team at WPBeginner can do all the heavy lifting for you. Our Professional Services team will handle the entire migration, from transferring your content and subscribers to setting up your new design. This way, you can focus on writing while we take care of the rest.

Another excellent and reliable service for website migrations is Seahawk Media Services. Their team of WordPress experts can also help you make a smooth transition from Substack.

Using a professional service ensures everything is moved over correctly, giving you peace of mind and a new WordPress site that’s ready to go.

Frequently Asked Questions About Migrating From Substack to WordPress (FAQs)

I know that making a move like this can bring up a lot of questions. To help you out, I’ve compiled answers to some of the most common questions I hear from creators who are making the switch from Substack to WordPress.

Will I lose my subscribers when I migrate from Substack?

No, you will not lose your subscribers. Substack allows you to export your entire subscriber list as a CSV file, which you can then import into an email marketing service like Constant Contact. It’s important to email your list before you move to let them know about the change.

Can I keep my custom domain name when moving to WordPress?

Yes, absolutely. If you have a custom domain connected to Substack, you can point it to your new WordPress hosting provider. Step 7 in this guide shows you exactly how to do that without any downtime.

Is migrating to WordPress expensive?

The initial cost involves web hosting, which can start at just a few dollars per month.

While Substack is free to start, its 10% cut of your revenue becomes far more expensive than WordPress hosting as soon as you start making money. With WordPress, you control your costs and keep 100% of your revenue.

Do I need to be a technical expert to use WordPress?

Not at all. While WordPress is more powerful than Substack, it’s designed to be user-friendly. If you can write a post in Substack, you can write a post in WordPress.

For everything else, there are tons of free resources, including our free WPBeginner videos and our blog tutorials, to guide you.

I hope this tutorial helped you successfully migrate from Substack to WordPress. You now have complete control over your newsletter, from design and functionality to subscriber relationships and monetization options.

We also have an ultimate WordPress migration guide, and you can get inspired by browsing our expert list of popular sites using WordPress as a CMS.

If you liked this article, then please subscribe to our YouTube Channel for WordPress video tutorials. You can also find us on Twitter and Facebook.

The post How to Migrate From Substack to WordPress in 10 Easy Steps first appeared on WPBeginner.

Uber and China-based Baidu are teaming up to deploy more autonomous vehicles throughout the world. The companies plan on bringing thousands of Baidu's Apollo Go vehicles to various regions that will be accessible via the Uber platform, including mainland China and other "global markets outside of the US."

The first joint deployments are expected in Asia and the Middle East later this year. Once launched, Uber riders could be presented with the option to have the trip fulfilled by an Apollo Go vehicle. 

The companies say this collaboration should increase the supply of affordable rideshare options in new areas by "bringing Baidu's advanced autonomous vehicles onto Uber's extensive network." This follows reporting from May in which Baidu announced it was bringing its autonomous vehicles to Europe.

Baidu already operates a fleet of over 1,000 fully driverless vehicles in 15 cities, including Dubai and Abu Dhabi. The company first launched the platform in several Chinese cities back in 2022, including Beijing, Guangzhou and Shanghai.

Don't hold your breath waiting for a US rollout. A recent report by The Wall Street Journal suggests America isn't currently in the cards, as Chinese companies tend to face increased scrutiny over on this side of the pond.

However, there are plenty of budding autonomous vehicle companies chasing the US market. The Alphabet-owned Waymo has been steadily launching in new cities and most of these efforts include a partnership with Uber. The company Avride, which used to be the self-driving unit for the Russian conglomerate Yandex, has been increasing its presence in cities like Dallas and Jersey City. Amazon's Zoox is also still out there, despite a serious software issue that impacted the braking system.

The nominations for the 77th Emmy Awards just dropped and, unsurprisingly, Apple TV+'s Severance led the pack with a whopping 27, including Best Drama. The streamer has another bona-fide hit with the Seth Rogen-led The Studio, which captured 23 nominations.

However, HBO Max received the most kudos by platform, with 142 nominations in total. This is thanks to the second season of The Last of Us, with 16 nominations, and the Batman-adjacent The Penguin. The White Lotus, The Pitt and Hacks also grabbed multiple nominations. This is the highest number of noms the outlet has ever received. Netflix still holds the record, though, with 160 nominations in 2020.

Andor scored 14 nominations, including one for Best Drama. Star Wars shows aren't typically singled out for the high-profile awards, though the first season of Andor was also up for Best Drama, before losing to Succession. No actors from the series were nominated, which is a bummer given the performances by Diego Luna, Denise Gough, Elizabeth Dulau and Stellan Skarsgård, among others.

There was a day when sci-fi programs only received nominations for stuff involving costumes or sets. That sure has changed, with Andor, The Last of Us, Severance, Paradise and Black Mirror receiving so much love this year. Fallout also made an impressive showing last year.

The 77th Emmy Awards will be hosted by comedian Nate Bargatze and is airing live on CBS on September 14 at 8PM ET. Cord cutters will be able to stream it live and on-demand via Paramount+.

Xbox has confirmed the second batch of Game Pass additions for July. There's no obvious headliner here, but there are a bunch of great additions to the catalog. These include indie hits like Wheel World and blockbusters like Robocop: Rogue City. Let's get into it.

Robocop: Rogue City came as a huge surprise back in 2023. A game based on a decades-old sci-fi franchise by a relatively unknown developer? It should have been a train wreck. Instead, it's a solid 3D action title that perfectly captures the vibe of the original film. This is a must-play for children of the 1980s. It'll be available on July 17 for subscribers on all tiers.

Grounded 2 looks to be a fantastic take on the "shrunken teens navigating a yard" genre, as first pioneered in the film Honey, I Shrunk the Kids. The first game was great and Obsidian looks to be upping the ante here in nearly every way, with a larger focus on story, a more immersive world and insects to ride around on. This is a day one Game Pass release, which happens on July 29. It'll only be playable for PC and Ultimate subscribers.

The Annapurna-published Wheel World is finally heading our way on July 23, and it's a day one Game Pass release. This is an open-world bicycle sim with gorgeous cel-shaded graphics. The title promises "impressive vistas, hidden secrets and races that will test your skills." It'll be available for Ultimate and PC subscribers.

Wuchang: Fallen Feathers is another day one release, with availability on July 24. This is a Souls-like action RPG set in the final days of the Ming Dynasty. The combat looks absolutely brutal. Again, only Ultimate and PC subscribers will have access to the game.

Those are just the titles that caught my interest. The shooter High On Life returns to the platform today and the survival horror adventure My Friendly Neighborhood drops on July 17. The prison-based RPG Back to the Dawn will be playable on July 18 and the survival crafting title Abiotic Factor releases on July 22. As always, Game Pass remains one heck of a deal.

Apple just announced a commitment of $500 million over several years to buy rare earth magnets from the US-based company MP Materials. These rare earth magnets are used in a number of products, including iPhones, MacBooks and the Apple Pencil stylus. The American-made magnets will be shipped throughout the world, to help "meet increasing global demand for the material."

MP Materials is the only fully integrated rare earth producer in the country. The two companies have also pledged to work together to improve upon a processing facility in Texas, building a series of manufacturing lines specifically designed for Apple products. Once finished, the factory will "support dozens of new jobs in advanced manufacturing and R&D."

“American innovation drives everything we do at Apple, and we’re proud to deepen our investment in the U.S. economy,” said Apple CEO Tim Cook. “Rare earth materials are essential for making advanced technology, and this partnership will help strengthen the supply of these vital materials here in the United States."

Apple and MP will also team up to create a recycling facility in California and have promised to develop "novel magnet materials and innovative processing technologies" to enhance magnet performance. 

This is all part of Apple's pre-existing pledge to invest $500 billion in the US over the next four years, which is a slight increase over the $430 billion pledged in 2021. Adjusted for inflation, these amounts are essentially the same.

Apple basically pioneered the use of recycled rare earth elements in consumer electronics. It began using these materials back in 2019, in the Taptic Engine of the iPhone 11. The Pentagon recently became the largest shareholder of MP Materials, as rare earth materials are also key components in a range of military weapons systems.

The US Chief Digital and Artificial Intelligence Office (CDAO) is handing out millions of dollars to the leading AI companies to develop military applications. Each of these "awards" are worth up to $200 million, with Anthropic, Google, OpenAI and xAI on the receiving end.

The agency notes that this money will be used to "develop agentic AI workflows across a variety of mission areas." In other words, this is primarily for military applications. A press release says the move will "broaden" the Department of Defense's use of AI to "address critical national security needs."

“The adoption of AI is transforming the department’s ability to support our warfighters and maintain strategic advantage over our adversaries,” said Chief Digital and AI Officer Dr. Doug Matty. He went on to say that this will "accelerate the use of advanced AI" in the "warfighting domain." As part of this effort, CDAO will be providing access to the latest generative AI models to "Combatant Commands, the Office of the Secretary of Defense and the Joint Staff."

For the uninitiated, CDAO is an arm of the Department of Defense that was created in 2022. The stated mission is to accelerate the department's "adoption of data, analytics and artificial intelligence from the boardroom to the battlefield."

It's worth noting that xAI is one of the companies receiving government largesse. This news comes on the same day the company started offering a version of Grok for federal use. It comes less than a week after Grok went totally off the rails and started going off on anti-semitic tirades, referring to itself as "MechaHitler."

It's also a fascinating development because the relationship between xAI CEO Elon Musk and President Donald Trump has soured in recent months. Trump has been threatening to cut Musk's companies off from government subsidies, but it looks like that threat has no teeth given today's announcement.

Meta is building several gigawatt-sized data centers to power AI, as reported by Bloomberg. CEO Mark Zuckerberg says the company will spend "hundreds of billions of dollars" to accomplish this feat, with an aim of creating "superintelligence."

The term typically refers to artificial general intelligence (AGI), which describes AI systems that boast human-level intelligence across multiple domains. This is something of a holy grail for Silicon Valley tech types.

The first center is called Prometheus and it comes online next year. It's being built in Ohio. Next up, there's a data center called Hyperion that's almost the size of Manhattan. This one should "be able to scale up to 5GW over several years." Some of these campuses will be among the largest in the world, as most data centers can only generate hundreds of megawatts of capacity.

Meta has also been staffing up its Superintelligence Labs team, recruiting folks from OpenAI, Google's DeepMind and others. Scale AI's co-founder Alexandr Wang is heading up this effort.

However, these giant data centers do not exist in a vacuum. The complexes typically brush up against local communities. The centers are not only power hogs, but also water hogs. The New York Times just published a report on how Meta data centers impact local water supplies.

There's a data center east of Atlanta that has damaged local wells and caused municipal water prices to soar, which could lead to a shortage and rationing by 2030. The price of water in the region is set to increase by 33 percent in the next two years.

Typical data centers guzzle around 500,000 gallons of water each day, but these forthcoming AI-centric complexes will likely be even thirstier. The new centers could require millions of gallons per day, according to water permit applications reviewed by The New York Times. Mike Hopkins, the executive director of the Newton County Water and Sewerage Authority, says that applications are coming in with requests for up to six millions of water per day, which is more than the county's entire daily usage.

“What the data centers don’t understand is that they’re taking up the community wealth,” he said. “We just don’t have the water.”

This same worrying story is playing out across the country. Data center hot spots in Texas, Arizona, Louisiana and Colorado are also taxing local water reserves. For instance, some Phoenix homebuilders have been forced to pause new constructions due to droughts exacerbated by these data centers.

• The Trump administration is fine with Nvidia selling chips in China.
• Commerce Secretary Howard Lutnick says the best chips will stay within the US.
• Nvidia announced that it has received assurances it can resume selling its H20 chip in China.

The Trump White House says it's content to allow Nvidia to tap into the lucrative Chinese market.

"We don't sell them our best stuff, not our second best stuff, not even our third best," Commerce Secretary Howard Lutnick said on CNBC Tuesday afternoon. "I think fourth best is where we have come out that we're cool."

Nvidia announced on Monday that the Trump administration has signaled it will allow the company to sell its China-specific H20 chip once more. The news sent shares of the world's most valuable company, which eclipsed $4 trillion in market cap last week, even higher.

Nvidia's H20 was designed to be technologically inferior. As Lutnick said, the company also sells three other chips that far surpass the H20's power. Nvidia is already preparing its transition from Blackwell (its most powerful chip) to Blackwell Ultra and has plans for its next superchip, "Vera Rubin."

CEO Jensen Huang has pushed to sell the company's prized chips to China. Before the news, Nvidia said it had lost $8 billion on unshipped orders. The announcement came after Huang met with President Donald Trump at the White House last week.

Lutnick said that the administration shares Huang's view that cutting China off completely from the chips needed to power artificial intelligence advancements won't starve China's AI industry.

"So the idea is the Chinese are more than capable of building their own, right? So you want to keep one step ahead of what they can build so they keep buying our chips, because, remember, developers are the key to technology," Lutnick said.

In the end, Lutnick said, it's better if China becomes reliant on the US for chips.

"So you want to sell the Chinese enough that their developers get addicted to the American technology stack," he said. And that's the thinking. Donald Trump is on it."

• Elon Musk recently announced that there will be a Tesla shareholder vote on investing in xAI.
• Musk's AI focus further blurs the lines between his companies as he looks to integrate AI across his business empire.
• AI development is pricey, and xAI is racing to rival tech giants like OpenAI and Google.

AI has increasingly become the connective tissue of Musk Inc.

In the last week, Elon Musk has shed light on two potential efforts to channel funding into his AI company, xAI, through his broader business empire.

Over the weekend, Musk said Tesla shareholders would vote on a potential investment in xAI, after responding to a Wall Street Journal report that SpaceX is looking into investing $2 billion into the AI venture. Earlier in the week, the billionaire also announced that xAI's chatbot Grok would be integrated into Tesla "next week at the latest."

It's no surprise that Musk is leaning into AI — the CEO has spoken about the idea in many of Tesla's earnings calls over the last year. What sets his approach apart, analysts say, is the way he's blending the boundaries between his companies.

"What's different from most other companies is the relationship and interplay between his private companies and a public company (Tesla)," Garrett Nelson, senior VP and equity analyst at CFRA Research, told Business Insider. "Most other companies are doing everything under one corporate umbrella."

These aren't the first examples of Musk blurring the lines between his companies, but they're the latest indication that Musk Inc., the constellation of companies under his leadership, is becoming increasingly centered on AI.

Tesla is an 'AI robotics company'

Musk has long pushed for Tesla's focus on AI and robotics by prioritizing projects like autonomous driving, humanoid robots, and building out its Dojo supercomputer, his ambitious bid to rival Nvidia.

In a 2024 earnings call, the Tesla CEO said, "We should be thought of as an AI robotics company," and those who think of Tesla merely as an auto company are holding "the wrong framework."

With the recent launch of Tesla's robotaxi service in Austin, that push is appearing more prominent, especially as Tesla's auto business, in contrast, grapples with a loss in sales momentum.

Musk has promoted the advantages of buying into the "Muskonomy," pitching it as a way for shareholders to tap into his business empire, which includes SpaceX, X, xAI, and The Boring Company. Musk has even said he would prioritize "longtime shareholders" of his other companies if any of his businesses were to go public.

Nelson told BI that Musk leveraging his other companies and resources could help Tesla meet its AI demands for autonomous driving.

"Tesla's data needs are massive if its approach to autonomous driving is going to be successful (and scalable), as its approach will require the development of a global neural network," Nelson said.

While exploring ways to pool resources across companies might benefit the broader Musk ecosystem, it could carry risk.

Last week, Grok sparked backlash with antisemitic outbursts on X, potentially putting investors on edge about integrating the chatbot into Tesla's EVs. xAI apologized for the incidents and said that new instructions to prioritize engagement could have reflected "extremist views" from user posts on X.

Last year, Musk also sparked concern among investors when he diverted a $500 million shipment of Nvidia chips intended for Tesla to X and xAI instead. When asked about the move in a Tesla earnings call, he said it was beneficial to Tesla because the carmaker lacked the infrastructure at the time to use the chips.

Gadjo Sevilla, an analyst at EMARKETER, a sister company to Business Insider, said that Musk may be leaning on SpaceX and Tesla to fund xAI because he views them as more "mature businesses." However, he said that shifting GPUs from Tesla to xAI in the past showed where Musk's priorities were, and that could delay innovation at the automaker.

"The strategy of cannibalizing one business to prop up another one could take its toll," Sevilla said. "Especially since competing carmakers are focused on developing one type of product, EVs."

Musk seems to be ruling out the idea of a merger between Tesla and his AI startup for now. In response to an X user asking Tesla shareholders to weigh in on whether Tesla and xAI should be combined, Musk replied with a flat "No."

Staying in the AI race is a costly venture

Investing in AI efforts might make sense from a strategy perspective, but it comes with a hefty price tag.

The development, training, and implementation of foundational AI systems, like xAI's Grok 4, costs many, many billions.

In March, Musk announced that xAI had acquired X in an all-stock deal, valuing the AI startup between $33 billion and $80 billion. Since founding the company two years ago, he's raised major funding, including around $12 billion in Series A, B, and C funding rounds last year. The company is expected to spend about $13 billion this year, however, and is rapidly burning through its cash reserves, Bloomberg reported.

Musk's challenges keeping up with AI costs aren't unique. In a May letter to California's attorney general, OpenAI revealed concerns about competitors who are "far better funded, conventional for-profit businesses."

Larger tech giants, like Amazon, Microsoft, Google, and Meta, aren't showing any signs of backing down from their AI spending spree. Earnings reports from earlier this year indicate that their combined capital expenditures are set to exceed $320 billion in 2025, a notable rise from the roughly $246 billion the four companies spent in 2024.

Amazon plans to allocate over $100 billion this year toward expanding AWS and scaling AI infrastructure. Meta specifically has said it plans to spend $60 billion to $65 billion in capex on its strategy this year.

Zuckerberg certainly isn't slowing down.

On Monday, he announced Meta would spend "hundreds of billions" on compute to build superintelligence. Wall Street seemed to approve, with Meta's stock rising 1.3% following the news, suggesting that its concern isn't about overspending on the AI race — but rather underspending and falling behind.

• We bought our Subaru Outback in 2018 when we had our first child.
• It's been a super reliable car, but with three growing kids, we've outgrown it.
• We tested the new electric 2025 Volkswagen ID Buzz, and we loved it.

We've had our Subaru Outback since 2018, when my first child was just a newborn.

Now that our kids are 7, 5, and 5, while the car is still as reliable as day one, it's become a source of stress because our kids fight so much in it from the lack of space.

My husband had been suggesting a minivan for our family, with three rows to space the kids out and sliding doors for easy loading. I, however, refuse to be a minivan mom. I find them ugly and impractical.

That all changed when I saw the new electric Volkswagen ID Buzz, so we decided to test it with our family — and now we are torn.

We need more space for our family so decided to test out the electric Volkswagen ID Buzz.

There's no denying we need more space in the car. With three car seats, growing limbs, and all the stuff from school and sports, the back row is tight.

That's the major cause of fights in our car, which makes any trip (short or long) incredibly stressful for whoever is driving.

As for the rest of the car, it's got what we need: a big trunk, the ability to place a turtle top, and an overall reliable engine.

My first car was a Volkswagen Golf, which I loved, so I've always been a bit partial to the brand. We also tested the Volkswagen Atlas Crossport, which has two rows instead of three, and even having just a bit more space in the second row made our kids more comfortable and manageable.

When we saw previews on social media of the ID Buzz, VW's new version of their 1950s Bus, I was intrigued. It looked cuter than a van, but still offered what we thought we needed.

The third row is a true row.

When the kids saw the VW ID Buzz, they all squealed in excitement. I won't lie, it looks so cool in person. Even while driving it to summer camp drop off, we saw people turn around to do a double take and kids pointing as we drove past. If you don't like the attention, be warned that this car attracts all the looks.

The ID Buzz we tested didn't have captain seats, so we had to lower one seat for one of our kids to sit in the third row. As I was setting up the car seats, I noticed that the third row is a full row. I'm 5'6" tall and was able to sit comfortably with extra space for my legs.

Loading the kids was pretty easy.

You can open the sliding doors with the key, and even with the seat lowered, it was easy for all three of them to navigate their bodies inside.

One detail I loved was the ability to open the doors three different ways: from the remote, as mentioned, from the actual door, and also from a button near the driver's seat.

This last option made it so I could get in the car, type in our destination on the screen, and not have to wait around to close the doors.

It doesn't have a ton of bells and whistles.

One of the biggest complaints online has been the interior design, which some feel is lacking compared to how innovative the exterior design is. For my family's needs, this wasn't a problem at all.

Coming from a 2017 car to a 2025 model, we could tell the difference in things like heated seats in the middle row and a more dynamic screen (our Subaru's screen doesn't even show a map). That said, the VW ID Buzz doesn't have that many bells and whistles, and I actually like that.

We recently drove a BMW 7 Series after getting a free upgrade from a rental car company, and I really disliked all the extra buttons in the back row.

My kids kept changing the temperature and radio station, annoying everyone.

The trunk space was limited but enough for day-to-day use.

The trunk space in the ID Buzz is nonexistent compared to the space in our Subaru Outback if the third row is in use. I do like that the ID Buzz has two baskets that can be covered by a platform, allowing us to store groceries or sports equipment without taking up precious trunk space.

While the amount of space wouldn't be an issue on a day-to-day basis, if we were going on a road trip, the space in the trunk does feel a bit limited.

But there was one major drawback for us.

Overall, I've found the Volkswagen ID Buzz easy to drive, fun, and reliable. While there's criticism for the range — which is advertised at 230 miles — as a city car to move kids from one location to the other, the range felt fine. We were able to run almost a full week without charging, and then stopped to charge while during groceries for about 30 minutes.

The one criticism I have for the ID Buzz is its price point. The 4-wheel-drive, which is what we would need in Maine, is retailing at over $72,000. This puts it over our other car, an Audi Q7, the 2025 model of which is now retailing at $70,000 and is considered a luxury SUV.

• $12.5 trillion BlackRock had a record first half for fundraising in its iShares ETF line.
• The firm wants to lean more heavily into higher-fee private market offerings.
• CEO Larry Fink and CFO Martin Small laid out the firm's goals on BlackRock's earnings call Tuesday.

There are lots of big numbers that come up on BlackRock earnings calls. It's what happens when you're the largest asset manager in the world.

The key thing for investors in the firm and competitors tracking the behemoth from afar is deciphering which of the gaudy current-day figures will keep growing and which of the optimistic projections will actually happen.

BlackRock already manages $12.5 trillion in assets across institutions, insurers, pensions, and wealthy people, mostly in public markets. It's spent the last year and a half acquiring businesses that would help it move more of that money into lucrative private markets, where fees are higher and capital is stickier.

At its investor day last month, the firm laid out its goal to hit $35 billion in annual revenue in 2030, an increase from $20 billion in 2024.

Business Insider highlighted five stats from the firm's Tuesday call with analysts to demonstrate asset manager is currently and where it hopes to be in five years.

$152 billion

The net inflows into BlackRock products in the first half.

The influx of assets was led by a record six months from the firm's iShares ETF line, which brought in a net $192 billion of new money.

BlackRock's existing business, particularly its low-fee index investing funds, is the biggest pile of money in the industry and is still growing consistently.

Still, the first half of the year was not perfect, as some of the firm's actively traded products experienced a performance dip.

58%

The decline in performance fees collected by BlackRock in the first half of 2025 compared to the first half of 2024.

Rocky equity and bond markets worldwide, caused primarily by the trade policies proposed by President Donald Trump, have been challenging for investors of all sizes to deal with.

At BlackRock, the firm's profit margin dipped to 43.3% this quarter compared to 44.1% in last year's second quarter, and CFO Martin Small attributed 75% of that drop to the decline in performance fees.

Active equity funds in particular have had a rough 12-month stretch, the firm's earnings supplement shows: Only 40% of assets are above the index or peer median.

The firm also noted that private market funds brought in fewer performance fees than last year, but the firm's ambitions for that space remain as large as ever.

$450 million

The amount of revenue HPS Investment Partners is expected to add to BlackRock's coffers in the third quarter, according to Small. The deal for the $165 billion private credit shop closed at the start of July, and Small said the firm will issue the equivalent of up to 13.8 million shares of BlackRock common stock to retain the team at the firm.

The retention of HPS's team will be critical for BlackRock, which wants to fundraise significantly for its private-credit and infrastructure offerings over the next five years.

$400 billion

The fundraising goal for private market fundraising through 2030. Small said he expects it to ramp up in 2028 as HPS and Global Infrastructure Partners, the firm's other large private market investor acquisition, become more ingrained in the firm.

CEO Larry Fink said that he was in Asia last week, where demand for infrastructure and other private-public partnerships is already "beyond our imagination."

Those partnerships — the firm has pulled in Singapore's Temasek in its artificial intelligence infrastructure push — will be needed if the manager hopes to hit its revenue goals.

30%

The proportion of the firm's revenue that it wants to derive from its private markets funds and tech services platform, led by Aladdin, by 2030.

The New York-based firm made nearly $10.7 billion in revenue in 2025's first half, driven by its equity ETFs, which hauled in $2.8 billion in revenue alone. Tech services, meanwhile, made roughly a third of that in the same time frame.

BlackRock's Aladdin platform already serves more than 200 institutional clients, effectively making the firm an infrastructure provider to many of its clients and some of its competitors.

But the firm's fundraising push for its private market offerings also includes the hope that individual retirement accounts in the US will soon be open to such options.

Fink and Small both said that litigation reform is needed before that could happen, but are optimistic about what they've heard out of Washington on the subject.

"We think we have all the building blocks here," Small said.

Correction July 15, 2025: An earlier version of this story misstated BlackRock's revenue target for its private markets and technology businesses by 2030. The goal is for these segments to account for 30% of the firm's revenue, not 40%.

Chinese firms have begun rushing to order Nvidia's H20 AI chips as the company plans to resume sales to mainland China, Reuters reports. The chip giant expects to receive US government licenses soon so that it can restart shipments of the restricted processors just days after CEO Jensen Huang met with President Donald Trump, potentially generating $15 billion to $20 billion in additional revenue this year.

Nvidia said in a statement that it is filing applications with the US government to resume H20 sales and that "the US government has assured Nvidia that licenses will be granted, and Nvidia hopes to start deliveries soon."

Since the launch of ChatGPT in 2022, Nvidia's financial trajectory has been linked to the demand for specialized hardware capable of executing AI models with maximum efficiency. Nvidia designed its data center GPU to perform the massive parallel computations required by neural networks, processing countless matrix operations simultaneously.

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A week after Grok's antisemitic outburst, which included praise of Hitler and a post calling itself "MechaHitler," Elon Musk's xAI has landed a US military contract worth up to $200 million. xAI announced a "Grok for Government" service after getting the contract with the US Department of Defense.

The military's Chief Digital and Artificial Intelligence Office (CDAO) yesterday said that "awards to Anthropic, Google, OpenAI, and xAI—each with a $200M ceiling—will enable the Department to leverage the technology and talent of US frontier AI companies to develop agentic AI workflows across a variety of mission areas." While government grants typically take many months to be finalized, Grok's antisemitic posts didn't cause the Trump administration to change course before announcing the awards.

The US announcement didn't include much detail but said the four grants "to leading US frontier AI companies [will] accelerate Department of Defense (DoD) adoption of advanced AI capabilities to address critical national security challenges." The CDAO has been talking about grants for what it calls frontier AI since at least December 2024, when it said it would establish "partnerships with Frontier AI companies" and had identified "a need to accelerate Generative AI adoption across the DoD enterprise from analysts to warfighters to financial managers."

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It's "Crypto Week" in Congress, and experts continue to warn that legislation Donald Trump wants passed quickly could give the president ample opportunities to grift while leaving Americans more vulnerable to scams and financial ruin.

Perhaps most controversial of the bills is the one that's closest to reaching Trump's desk, the GENIUS Act, which creates a framework for banks and private companies to issue stablecoins. After passing in the Senate last month, the House of Representatives is hoping to hold a vote as soon as Thursday, insiders told Politico.

Stablecoins are often hyped as a more reliable form of cryptocurrency, considered the "cash of the blockchain" because their value can be pegged to the US dollar, Delicia Hand, Consumer Reports' senior director monitoring digital marketplaces, told Ars.

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In mid-2022, when BYD executive Lian Yubo was asked to compare Chinese manufacturing with Tesla’s technology, he remarked that Elon Musk was an example that all Chinese carmakers could learn from.

“Tesla is a very successful company no matter what. BYD respects Tesla and we admire Tesla,” he said in an interview on Chinese state media.

Yet just three years later, Tesla’s technological lead over its Chinese rivals has narrowed dramatically. It is fighting to stay ahead in the world’s largest car market, its sales are falling in many other countries and its efforts to develop fully self-driving vehicles are running into regulatory roadblocks.

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This story was originally published by ProPublica. This article is co-published with The Texas Newsroom and The Texas Tribune as part of an initiative to report on how power is wielded in Texas.

Texas Gov. Greg Abbott doesn’t want to reveal months of communications with Elon Musk or representatives from the tech mogul’s companies, arguing in part that they are of a private nature, not of public interest, and potentially embarrassing.

Musk had an eventful legislative session in Texas this year. In addition to his lobbyists successfully advocating for several new laws, Abbott cited the Tesla and SpaceX CEO as the inspiration for the state creating its own efficiency office and has praised him for moving the headquarters for many of his businesses to the state in recent years.

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Image source: The Motley Fool.

DATE

Tuesday, July 15, 2025 at 7:30 a.m. ET

CALL PARTICIPANTS

Chairman and Chief Executive Officer — Laurence D. Fink

Chief Financial Officer — Martin Small

Need a quote from one of our analysts? Email [email protected]

TAKEAWAYS

Assets Under Management: Record $12.5 trillion in AUM at the end of Q2 2025, marking a new high for the firm.

Net Inflows: $68 billion in total net inflows in Q2 2025, $116 billion of net inflows in Q2 2025, excluding institutional index outflows; The institutional index saw $48 billion in net outflows in Q2 2025, primarily due to a $52 billion single-client redemption in fixed income in Q2 2025 (The institutional channel delivered 3% organic base fee growth in Q2 2025).

Organic Base Fee Growth: 6% organic base fee growth in Q2 2025, Marking four consecutive quarters of at least 5% organic base fee growth (as-adjusted, organic, Q2 2025); 7% organic base fee growth over the 12 months ended June 30, 2025.

Revenue: $5.4 billion in revenue in Q2 2025, up 13% year-over-year, driven by organic growth, higher markets, base fees from the GIP transaction, and increased technology revenue.

Operating Income: $2.1 billion in operating income in Q2 2025, an increase of 12% year-over-year driven by higher revenues.

Earnings per Share: $12.05 earnings per share in Q2 2025, up 16% year-over-year, reflecting higher nonoperating income, a higher tax rate, and increased share count in as-adjusted Q2 2025 results.

Net Investment Gains: $433 million, primarily from noncash mark-to-market gains on minority investments in Circle and co-investment portfolios in Q2 2025; BlackRock holds approximately 2.3 million shares of Circle common stock.

Base Fee and Securities Lending Revenue: $4.5 billion, rising 15% year-over-year in Q2 2025, including approximately $240 million contributed by GIP in Q2 2025.

Effective Fee Rate: Annualized, down 0.4 basis points in Q2 2025 compared to Q1 2025 due to $36 million lower catch-up base fees from private markets fundraising and equity market declines in April.

Estimated Base Fee Run Rate: The entry rate to Q3 2025 is approximately 5% higher than total Q2 2025 base fees, excluding the HPS impact; with HPS, the jump is around 10%.

HPS Acquisition Details: Added $165 billion in client AUM and $118 billion in fee-paying AUM as of July 1; expected to contribute approximately $450 million to Q3 2025 revenue, including $225 million in management fees, and to boost the effective fee rate by 0.6 basis points in Q3 2025.

Performance Fees: $94 million in performance fees in Q2 2025, declining year-over-year due to lower private markets, liquid alternatives, and long-only product performance revenue.

Technology and Subscription Revenue: Technology services and subscription revenue rose 26% year-over-year in Q2 2025, driven by growth in Aladdin and the Preqin acquisition, which contributed approximately $60 million in revenue in Q2 2025.

Annual Contract Value (ACV): Increased 32% year-over-year in Q2 2025, including the Preqin acquisition, 16% organic ACV growth including currency effects in Q2 2025.

Total Expense: Total expense increased 14% year-over-year in Q2 2025, reflecting 12% higher compensation tied to acquisitions and operating income in Q2 2025, and 16% higher general and administrative expense year-over-year in Q2 2025, primarily due to GIP and Preqin.

Direct Fund Expense: Direct fund expense rose 23% year-over-year in Q2 2025, largely due to higher ETF AUM and net inflows.

As-Adjusted Operating Margin: 43.3% as-adjusted operating margin in Q2 2025, down 80 basis points year-over-year, mainly due to reduced performance fees and lower performance-related compensation.

Share Repurchase: $375 million of common shares were repurchased in Q2 2025; with plans to continue at least $375 million per quarter in share repurchases for the remainder of 2025 based on current expectations.

Dividend Target: Dividend payout ratio targeted between 40%-50% of GAAP net income, with a historical average of 50% of GAAP net income over the last 5 years; dividend per share has grown at over a 15% CAGR since 2003 (based on GAAP dividends).

Private Markets Fundraising: GIP V closed at $25.2 billion, exceeding its $25 billion target for GIP V in Q2 2025 and marking the largest infrastructure fundraise in BlackRock and GIP history; SLS II secondary fund closed at over $2.5 billion in Q2 2025.

Private Markets Fundraising Target: $400 billion in gross private markets fundraising targeted from 2025 to 2030, with expectations of higher run rates in later years.

ElmTree Acquisition: Agreement announced to acquire ElmTree Funds with $7.3 billion in client AUM ($3.1 billion fee-paying); the transaction is expected to close in Q3 2025; closing expected in Q3 2025 pending regulatory approval.

ETF Net Inflows: $85 billion in ETF net inflows in Q2 2025, diversified by channel, with over one third from European clients using local ranges; fixed income ETFs led with $44 billion in net inflows in Q2 2025, active ETFs drew $11 billion in net inflows in Q2 2025, digital asset ETPs added $14 billion in net inflows in Q2 2025.

Cash AUM: Cash AUM increased 25% year-over-year for the 12 months ended June 30, 2025; $22 billion in net inflows in Q2 2025, bringing total cash AUM to nearly $1 trillion as of Q2 2025.

Aladdin and Technology Platform: Technology ACV growth reached 16% year-over-year in Q2 2025, driven by ongoing adoption.

IBIT (iShares Bitcoin Trust): Surpassed $75 billion in AUM at the end of Q2 2025 and reached $80 billion in AUM as of the morning of the Q2 2025 earnings call.

Tokenized Liquidity Fund: Now holds $3 billion in AUM as of Q2 2025; manages more than $50 billion for Circle stablecoin cash reserves as of Q2 2025.

SUMMARY

BlackRock, Inc. (NYSE:BLK) reported record levels in AUM, and sustained as-adjusted organic base fee expansion above its 5% target in Q2 2025. New business momentum was reinforced by strong technology and subscription revenues, up 26% year-over-year in Q2 2025 (as-adjusted)—with the Preqin and HPS acquisitions contributing significant incremental growth to AUM, revenues, and client offerings in Q2 2025, and expected to further increase revenue and AUM in Q3 2025. Fundraising successes in private markets, including the landmark $25.2 billion close for GIP V in Q2 2025 and rising digital asset flows, demonstrate expanding capabilities across asset classes and geographies.

Laurence Fink said, "Momentum is only accelerating, and many of our recent milestones have not yet reflected in our results." underscoring anticipated further gains from the recent acquisitions.

Leading ETF inflows, particularly in fixed income, active, and digital asset strategies, reinforce BlackRock's positioning in global capital markets and evolving investor preferences.

Management indicated that the institutional, retirement, and insurance channels continue to drive organic growth opportunities, especially with expanded access to private markets and technology solutions.

The announced dividend policy targets payments in line with sustained earnings growth, while disciplined capital deployment balances reinvestment with consistent share buybacks and targeted M&A.

Discussions of stablecoin reserve opportunities and tokenized asset management suggest potential for new client inflows and strategies aligned with regulatory and technological evolution.

INDUSTRY GLOSSARY

GIP: Global Infrastructure Partners, a leading private infrastructure investment platform acquired by BlackRock.

HPS: HPS Investment Partners, a global investment firm specializing in private credit, acquired by BlackRock.

Preqin: A provider of data, analytics, and insights on the alternative assets industry, recently acquired by BlackRock.

Aladdin: BlackRock's integrated investment management and risk analytics platform.

iShares: BlackRock's brand for its exchange-traded fund (ETF) family.

ACV: Annual Contract Value, a measure of recurring revenue from technology services and subscriptions.

IBIT: iShares Bitcoin Trust, BlackRock's spot Bitcoin ETF product.

DCIO: Defined Contribution Investment-Only; refers to investment services provided exclusively for defined contribution plans.

ETF: Exchange-Traded Fund, traded on exchanges and composed of a basket of securities.

SLS II: Secondary and Liquidity Strategies II, BlackRock’s secondaries private markets fund.

SMAs: Separately Managed Accounts; customized investment portfolios managed for individual clients.

BPIIF: BlackRock Private Investment Fund, used for private equity exposures in glidepath solutions.

SubCo Units: BlackRock Subordinate Company units, issued as equity compensation during acquisitions and exchangeable for BlackRock common stock.

Full Conference Call Transcript

Martin Small: Thanks, Chris. Good morning, everyone. It's my pleasure to present results for the second quarter of 2025. Before I turn it over to Larry, I'll review our financial performance and business results. Our earnings release discloses both GAAP and as-adjusted financial results. I'll be focusing primarily on our as-adjusted results. At our Investor Day last month, we communicated our ambitions for BlackRock in 2030. Our leadership team and our employees have seen and contributed to that vision over the last 2 years. We anticipated where our clients and markets were going. We've established strength at the foundation of our platform in ETFs, Aladdin, whole portfolio, fixed income, cash management.

They're the strong foundations to serve clients and deliver on our organic growth objectives. We executed on organic business builds in structural growth categories, including digital assets, active ETFs, model portfolios and systematic equities, and we've executed on 3 major acquisitions. We've built a premier investment and technology platform across public and private markets, one that's only at the beginning of a durable long-term runway for growth. Building on our record results in 2024, we continue to see the proof points of the success of our strategy into 2025. We generated 7% organic base fee growth and over $650 billion of net inflows over the last 12 months.

This success has been built on multiyear sustained growth in iShares, fixed income, systematic tax-managed strategies in Aladdin and now expansions in private markets. We believe these engines will enable us to more consistently rise above 5% organic base fee growth. We posted 6% organic base fee growth in the second quarter for our fourth consecutive quarter of 5% or higher organic base fee growth. We finished the second quarter with record AUM, record units of trust of $12.5 trillion. We once again delivered double-digit year-over-year growth in revenue, operating income and earnings per share. GIP V closed above its $25 billion target, making it the largest private market fund raise in the histories of both BlackRock and GIP.

We took early commercial steps to bring a first-of-its-kind public-private target date solution to retirees with Great Gray, a leading collective investment trust platform. And earlier this month, we closed our acquisition of HPS Investment Partners, a major milestone as we evolve towards our ambitions of 30% revenue contribution from private markets and technology by 2030. Second quarter net inflows of $68 billion were impacted by low fee institutional index redemptions, which saw $48 billion of net outflows. Excluding that activity, BlackRock delivered approximately $116 billion of net inflows in the quarter. Turning to financial results.

Second quarter revenue of $5.4 billion was 13% higher year-over-year, driven by the impact of organic growth and higher markets on average AUM, base fee is consolidated in the GIP transaction and higher technology services and subscription revenue, which includes the onboarding of Preqin. Operating income of $2.1 billion was up 12%, and earnings per share of $12.05 was 16% higher versus a year ago. EPS also reflected higher nonoperating income, a higher tax rate and a higher share count in the current quarter. Nonoperating results for the quarter included $433 million of net investment gains driven by mark-to-market noncash gains on minority investments, including Circle and in our co-invest portfolio.

We own approximately 2.3 million shares of Circle common stock, which will continue to be marked through investment income going forward. Our as-adjusted tax rate for the second quarter was approximately 25%, and we continue to estimate that 25% is a reasonable projected tax run rate for the remainder of 2025. The actual effective tax rate may differ because of nonrecurring or discrete items or potential changes in tax legislation. Second quarter base fee and securities lending revenue of $4.5 billion was up 15% year-over-year, driven by the positive impact of market beta on average AUM, organic base fee growth and approximately $240 million in base fees from GIP.

On an equivalent day count basis, our annualized effective fee rate was down 0.4 basis point compared to the first quarter. This was partially due to the impact of catch-up base fees associated with private markets fundraising, which were $36 million lower relative to the first quarter. Significant intra-month equity market declines in April were also a contributing factor. As a result of market and FX movements into the end of the quarter, we entered the third quarter with an estimated base fee run rate approximately 5% higher than our total base fees for the second quarter. That's excluding the impact of HPS.

The closing of HPS added $165 billion of client AUM and $118 billion of fee-paying AUM on July 1. We expect HPS to add approximately $450 million of revenue, including $225 million in management fees in the third quarter of 2025. We expect HPS to positively impact BlackRock's overall effective fee rate by approximately 0.6 of a basis point. Performance fees of $94 million decreased from a year ago, reflecting lower performance revenue from private markets, liquid alternatives and long-only products. Quarterly technology services revenue and subscription revenue was up 26% compared to a year ago. Growth reflects sustained demand for our full range of Aladdin technology offerings and the impact of the Preqin transaction, which closed on March 3.

Preqin added approximately $60 million to second quarter revenue. Annual contract value, or ACV, increased 32% year-over-year, including the Preqin acquisition. ACV growth increased 16% organically, also including the impact of currency exchange tailwinds. Total expense increased 14% year-over-year, reflecting higher compensation, sales asset and account expense and higher G&A. Employee compensation and benefit expense was up 12%, reflecting higher head count associated with the onboarding of GIP and Preqin employees and higher incentive compensation linked to higher operating income. G&A expense increased 16%, primarily driven by the GIP and Preqin acquisitions and higher technology spend. Sales, asset and account expense increased 14% compared to a year ago, primarily driven by higher direct fund expense and distribution costs.

Direct fund expense was up 23% year-over-year, mainly due to higher average ETF AUM and net inflows. Our second quarter as-adjusted operating margin of 43.3% was down 80 basis points from a year ago, partially due to the impact of lower performance fees. We'll continue to execute on our financial framework of aligning organic growth with controllable expenses. This approach has yielded profitable growth and operating leverage in good markets, and we believe it adds more resilience to our operating margin when markets contract. We welcomed approximately 800 new colleagues to BlackRock following the close of the HPS transaction.

Inclusive of the HPS acquisition impact at present, we would expect a low teens percentage increase in 2025 core G&A expense with the onboarding of GIP, Preqin and HPS as the main driver of the year-over-year core G&A increase. In addition, we'd expect our adjusted compensation to net revenue ratio to be modestly higher due to compensation associated with performance-related revenues from HPS. Our capital management strategy remains, first, to invest in our business to either scale strategic growth initiatives or drive operational efficiency and then to return excess cash to shareholders through a combination of dividends and share repurchases. At times, we may make inorganic investments where we see an opportunity to accelerate growth and support our strategic initiatives.

At the closing of the HPS transaction, we issued and delivered approximately 8.5 million BlackRock SubCo units subject to 2- to 3-year lockup periods. SubCo Units are exchangeable on a one-for-one basis with BlackRock common stock. We also issued approximately 1 million BlackRock restricted stock units, primarily for retention of HPS employees. Additional SubCo Units may be issued in approximately 5 years, subject to achievement of certain post-closing conditions and financial performance milestones. If all contingent consideration is achieved, all SubCo Units are exchanged for shares of common stock and all RSUs vest and are settled as common stock, we do not expect to issue more than approximately 13.8 million additional shares of common stock in aggregate.

SubCo Units issued will be included in our as-adjusted diluted shares outstanding and will be captured in our as-adjusted results going forward. We repurchased $375 million worth of common shares in the second quarter. At present, based on our capital spending plans for the year and subject to market and other conditions, we still anticipate repurchasing at least 375 million of shares per quarter for the balance of the year, consistent with our January guidance. In May, we made a minority investment and established a strategic alliance with Generation Life with the goal of developing investment solutions for Australian retirees.

Last week, we announced our agreement to acquire ElmTree Funds, a real estate investment firm with $7.3 billion in client AUM, of which $3.1 billion is fee paying. The transaction is expected to close in the third quarter of 2025, subject to regulatory approvals and customary closing conditions. In the second quarter, BlackRock generated total net inflows of $68 billion. Excluding low-fee institutional index outflows, BlackRock's net inflows were $116 billion. ETF net inflows of $85 billion were diversified by channel, and over 1/3 were driven by our clients in Europe using local ranges. Fixed income ETFs led inflows with $44 billion and active ETFs and digital asset ETPs added $11 billion and $14 billion, respectively.

Retail net inflows of $2 billion reflected continued strength in Aperio and our systematic liquid alternatives funds. Institutional active net inflows of $7 billion were driven by insurance client fixed income mandates and strength in infrastructure, private credit and liquid alternatives. Institutional index net outflows of $48 billion were impacted by a single client redemption of $52 billion, primarily from fixed income. Our institutional channel delivered 3% long-term organic base fee growth in the quarter, benefiting from client demand for active and alternatives. Finally, our scale and our active approach with clients around liquidity management are driving sustained growth in our cash platform.

Cash AUM is up 25% over the last year, and we generated $22 billion of net inflows in the second quarter. The BlackRock platform is powered by foundational growth businesses linked to long-term growth in capital markets and fast-growing client and product channels. By combining BlackRock's capabilities with GIP, Preqin and HPS, we've laid the groundwork for an exciting future. We're already steadily delivering above 5% organic base fee growth and our new colleagues from HPS are only going to help us build from here. There is a bright future ahead to grow with clients, build great careers for our employees and deliver profitable growth for our shareholders. I'll turn it over to Larry.

Laurence Fink: Thank you, Martin. Good morning, everyone, and thank you for joining the call. Over many years, BlackRock has worked to serve the ambitions of each and every client around the world from the largest asset owners to individuals, just getting -- with a start with investing. We design and deliver strategies and products that fit their unique long-term needs and aspirations. We delivered in a way that best serves each client, whether it's through whole portfolio solutions, opportunistic investments or customized models and SMAs. Throughout BlackRock's history, we've been relentless and anticipating the future needs of our clients and taking strategic actions to evolve for them. Our sustained multiyear growth has been powered by our whole portfolio approach.

We were the first provider to blend active and index at scale through our acquisition of BGI and iShares. Our integration of active and index investing propelled the next 15 years of success for our clients and shareholders. iShares AUM was about $300 billion when we announced our acquisition. And today, it's approaching $5 trillion. And now we're building on our fundamental -- our foundational platform to redefine the whole portfolio again by bringing together public and private markets across both asset management and technology. That foundational platform has powered performance for clients and sustained organic base fee growth through cycles. We believe our expansions can drive even higher growth.

Our trust and comprehensive relationships we have with clients across our core businesses like Aladdin, ETFs, fixed income and retirement are now driving even a broader -- with even a broader opportunity set. We're seeing secular demand for capabilities we developed in recent years like digital assets, active ETFs, systematic strategies and customized SMAs through Aperio and SpiderRock. The strength of BlackRock platform is also expanding the growth potential of GIP and HPS. They're both premier firms in their own right, but they recognize how our client relationships and the completeness of our platform could help us all achieve new heights together.

BlackRock's ethos of change, the integration of firms and the best parts of their culture, that's what allows us to be more adaptive with our clients. Our history of integration is very different, and it sets us apart from any other public or private markets firm in the industry. BlackRock's breadth and scale has differentiated us with our clients of all sizes worldwide. We're delivering an integrated approach to help our clients across all aspects of public and private markets investing. We enable a seamless view into investment management into technology and data on one single platform.

We remain steadfast in our One BlackRock culture, making sure clients have access to all of BlackRock in a comprehensive, consistent way in every region with every client. Our long-standing relationships and history of reinvention are resulting in a higher, more diversified organic base fee growth. We're now generating 6% organic base fee growth for the second quarter and the first half of 2025 and 7% over the last 12 months. Revenues, operating income and earnings per share each grew double digit. Total inflows were $116 billion, excluding the index activity, Martin mentioned. Growth is being powered by both our largest core businesses and newer initiatives. iShares ETFs have had a record first half inflows.

Our technology ACV growth reached a fresh high of 16%. These strong fundamentals alongside client demand for private markets, digital assets, Aperio and systematic strategies propel another consecutive quarter above target organic growth and a record AUM of $12.5 trillion. Our global reach delivers diversification and upside to our platform with gains in international currencies lifting AUM by over $170 billion in the quarter. We manage $4.5 trillion for -- in AUM for clients outside the United States. Many of our largest growth opportunities are outside our home market, including our work in India and the Middle East alongside our established presence in Europe and Asia.

BlackRock is executing on a deepening set of opportunities across technology and data in public and private markets. Momentum is only accelerating, and many of our recent milestones have not yet reflected in our results. Two weeks ago, we closed our acquisition of HPS Investment Partners. We're excited to welcome Scott, Scott and Mike and the entire HPS team to BlackRock. We see immense growth ahead for our combined franchise. Together, we'll be able to serve investors and borrowers across all of the private financing needs. Client feedback has been extremely positive as we integrate GIP, HPS and Preqin. For many companies, periods of M&A contribute to a pause in client engagement. We're seeing the opposite.

Clients are eager to put more capital to work with BlackRock. They appreciate our reputation as long-term investors and partners were not transactional. We're helping them invest in compelling long-term growth themes like the global needs of new infrastructure investments in the fast-evolving debt financing landscape. These are creating differentiated private market opportunities for our clients. At the end of June, we marked the major milestone with a final close of GIP V's flagship infrastructure strategy. It surpassed its target raising $25.2 billion. That's a validation of how clients are embracing the logic of the BlackRock GIP combination. Many would expect a change in ownership to dampen fundraising.

In our case, it ultimately ended up driving an even higher fundraising ability. GIP V represents the largest ever client capital raise in a private infrastructure fund, and our AI partnership continues to attract significant capital interest, including the recent additions of Kuwait Investment Authority and Temasek. The diversification benefits and potential for higher returns offered by private markets also make them an attractive investment for retirement accounts, a space where BlackRock has been a leader. We were recently selected by the great, great trust company to provide a custom target date fund glidepath that strategically allocates across public and private markets.

We have a wealth of expertise in the defined contribution space, and we're looking to expand across to private markets across a variety of retirement solutions. Retirement is core to BlackRock. In the United States and internationally, we are a trusted expert in advising clients, advising governments and policymakers on how they can help their constituents achieve a more secure futures and retire with dignity. Demographic shifts and financial pressures are driving governments and corporations to rethink their retirement plans and the retirement systems, putting significant money in motion. In the Netherlands, for example, I transitioned from defined benefits to a hybrid form of defined contribution is well underway.

BlackRock is working with clients to manage this transition and improve investment outcomes for plan members. We had a related $30 billion outsourcing mandate with a Dutch client fund in early July. We take a blended approach of being deeply local and powered by our global platform. We deploy capital in a public and private markets in every country in which we operate and beyond. And we are consistently studying what's driving capital flows both within each country and within each region. Our ability to execute at scale at the local levels differentiates our international business.

We're bringing a global framework to India through our Jio BlackRock offering in partnership with JFS and Reliance, who already serves hundreds of millions of individuals across India. There are huge advancements taking place through the digitization of currency and identification, but India remains a country of savers, not investors. Our joint venture, Jio BlackRock recently launched its first funds, raising over $2 billion with over 67,000 customers. We look forward to helping more and more people participate in the growth of local and global capital markets and global connections. Our acquisition of Preqin will be a key to enabling more transparency and clarity in private markets.

In just the first few months since our closing of the Preqin acquisition, we've seen strong early demand from both GPs and LPs as they are looking to better analyze and benchmark their private market allocations. It's through better analytics, standardized benchmarks and more widely available performance data, we can close the information gap and enable even more future growth in private markets investing. In the public markets, our iShares business continues to be a powerful growth engine and a key driver of industry innovation. After nearly 30 years in approaching $5 trillion in assets, innovation remains at the heart of our franchise.

Our newest investments and product launches from just over the last few years are driving outsized growth, contributing to record flows in the first half of 2025 and 12% organic base fee growth in ETFs this quarter. Our active ETFs delivered $11 billion of net inflows, and our digital asset products continue to set new records. IBIT, at quarter end, crossed over $75 billion in AUM with another $12 billion of net inflows. As of this morning, it crossed over $80 billion. iShares ETPs are bridging the traditional capital markets with fast-growing cryptocurrency markets. They're also bringing new investors to the iShares brand.

Nearly 1/3 of the investors who first came to BlackRock for IBIT have gone on to purchase other iShares products. It's this type of capability expansion that drives durable growth and new client opportunities for our business. From category innovation and iShares to new ventures across the world, the investments we made across our platform are paying off. Many of the categories that are leading our growth barely existed 2 years ago, categories like active ETFs, digital assets and our scaled private markets franchise. Just as importantly, BlackRock's core businesses like ETFs, Aladdin and cash management continue to be a growth engine for the firm and are cornerstones of many client relationships.

A lot of firms got out of the cash business after the financial crisis when fee waivers were in place during a sustained period of low rates. But we recognize a simple thing. Every client needs to hold cash. Cash management has been the first entry point for many of our clients, who have gone on to build large mandates with BlackRock. Our cash AUM is nearly $1 trillion, and I think it's remarkable considering we're not a direct retail business or a DTC bank. At BlackRock, we think of cash as another avenue for innovation.

We see a great untapped opportunity for cash and liquidity, where people want to use the technologies of digital assets to access traditional instruments, like treasuries. Our tokenized liquidity fund now has $3 billion in AUM and what started as a small corporate investment and asset management relationship with Circle in 2022 has grown meaningfully. We delivered a significant gain to shareholders this quarter in connection with the IPO and subsequent trading activity, and we now manage more than $50 billion for Circle stablecoin cash reserves. We're entering our seasonally strongest back half of the year with considerable momentum and a robust pipeline. Our recent closing of HPS will help us offer even more to clients.

We believe our clients and shareholders will be beneficiaries as GIP, HPS and Preqin are now all coming together in a shared BlackRock story. We are intentionally organizing to bring clients under one unified firm, not a collection of enterprises, and we have aligned our cultures and aligned each and everybody's interest. The opportunity to deliver the full reach of BlackRock's capabilities to more individuals, to more companies and governments and regions is greater today than ever before. Our comprehensive platform is deeply connected to our clients to the capital market and to the future trends that are driving portfolios. These are just the early days in our next phase of growth at BlackRock.

Operator, let's open it up for questions.

Operator: [Operator Instructions] We'll take our first question from Michael Cyprys with Morgan Stanley.

Michael Cyprys: With the number of acquisitions closed over the last year now under your belt, I was hoping you could talk about the progress that you're making here, bringing HPS, in particular, and GIP together with BlackRock, how the conversation is progressing in particular with insurance clients, to what extent you're seeing new mandate wins or expanded relationships there? And then can you just update us on the traction in the wealth and retirement channels as it relates to private market and multiliquid strategies and talk about some of the steps you're looking to take over the next 12 months?

Laurence Fink: Great question. Thank you, Michael. Well, I think as we showed in the closing of the second quarter, the client feedback has been extremely strong. I actually was in Asia this past week, and the opportunities we have with insurance companies with wealth management across Asia and every other region is stronger than we ever imagined. As we said, GIP V closed above our target of 25.2%. Our AIP fund will have a lot of positive announcements in the coming quarters. So we announced in the past quarter that we added Temasek and Kuwait Investment Authority as a part of our investment team.

And we are confident that we'll be able to raise the full $30 billion that we announced in equity. And once we then begin those projects, we'll have to raise another $100 billion in associated debt to finance those type of projects. And we're working with the hyperscalers as we speak right now on this, and we have some really great opportunities ahead of us in that. Those are just 2 examples the opportunities we see with GIP.

There is no question in my mind that with rising deficits with more and more governments, the conversations we're having, whether it's in Europe or the United States or Japan that the role of public-private financing and the role of infrastructure financing is going to grow dramatically. And so we see some huge, huge opportunities. Another big opportunity that GIP just closed was purchasing all the Malaysian airports. It's just another example of the opportunity. And we are still progressing with the proposed announcement of our ports transaction with Hutchison. So all of that is just a good example of some of the growth opportunities we see. But the resiliency and the conversations have never been greater.

Related to private credit and HPS, we're just at the beginning. But we could -- we'll have a lot to discuss in the third quarter, but the flow opportunities of HPS during the period of time of announcement and closing did not abate at all. So we are seeing across the board a very large acceptance of the industrial logic of the combination of HPS, GIP and BlackRock. And I would say that was quite a big difference than when we did the BGI transaction in 2009.

Today, clients are looking at the merits of what BlackRock can do, our history of integration, our history of bringing one culture together, bringing the best of all the acquired organizations to be part of us to build a new foundational structure around BlackRock. On insurance, with having $700 billion of AUM with insurance companies, and that is continuing to grow, we are continuing to see more and more opportunities where we could be driving private markets with the insurance companies that we already manage. In wealth, very, very exciting. If there is a change in the opportunity related to the 5 contributions, it is only going to accelerate the opportunities we have in the private market space with retirement.

50% of our assets that we manage is in retirement. And so the relationships we have with plans is enormous. If you look at our success in LifePath, if you look at our success in our target date products, if you look at our success in what we're trying to do now a LifePath Paycheck where now we have over $500 billion in that alone, our relationships with these supply contribution plans is as strong as ever. We're innovating, we're creating opportunity.

Now if you overlay the opportunity for wealth worldwide, whether it's wealth in Japan, wealth in the United States, wealth in any region, the need, especially here in the United States because you have a much higher threshold related to fiduciary responsibility is going to be analytics and data. And if that moves forward, if there's that opportunity, the need for analytics and data will more than ever create huge opportunities for Preqin and the future opportunity of growth with Preqin eFront. And so we believe all these changes, the integration of -- and blending of both public markets and private markets is going to all be centered around having a base of great analytics and data.

And I am more certain than ever, the acquisition of Preqin alongside eFront is going to be generating much more opportunity for BlackRock. And I believe we are well positioned, whether it's well positioned because of the product profile we have with HPS and GIP and what -- but with the foundational position we're in, in the retirement space in the defined contribution space, overlaying all the analytics data that we have under Aladdin now puts us in a position that we could have broader, deeper conversations with our clients, and I'm very much looking forward to having those deep conversations with each and every client.

Operator: Your next question comes from Craig Siegenthaler with Bank of America.

Craig Siegenthaler: So I actually want to continue with that retirement commentary to Mike's question. So our question is on the potential migration of privates into target funds in the U.S. 40(k) channel. We did see the Great Gray win news in late June. That was a positive sign. But I think BlackRock may be getting ready to launch its own target date fund with private allocation. So I was hoping you could update us on your strategy time line. And also, what are you willing to see from the Department of Labor, the SEC or Congress before you launch your own target date fund with private allocations?

Laurence Fink: Thank you. Martin?

Martin Small: Thanks so much for the question. As Larry mentioned, Craig, more than half the $12 trillion of assets plus that we manage at BlackRock related to retirement. And so building better portfolios retirees is at the heart of what we do. I think we have real ambitions also to bring the same tried and true portfolio construction characteristics that built the DB market. So defined benefit has long been allocating to both public and private markets. If you think of the largest public plans across corporate and across the public sector, they've always been private market investors. That opportunity should be there for individuals and their long-term tax-advantaged accounts as well. We're the #1 DCIO, the defined contribution investment-only firm.

We're a top 5 private markets manager following our recent acquisitions. So we think we have all the building blocks here. As I said on the last call, and I think Larry alluded to, for the opportunity, I think, to be most tangible in larger plans, we'll likely need to see litigation reform or at least some advice reform in the U.S. to add private markets exposure into DC plans. What I would say relative to the call last quarter is we're really encouraged by the recent dialogue with policymakers on these topics and some of the activity by trade associations that I think has been helpful in really building a fact base and consensus around this.

There's still significant work to do, but we feel positive momentum is certainly building. We're really proud of our recent announcement with Great Gray to build and power the glidepath for their public-private target date solution. As I mentioned on the call, I think the real advantage that BlackRock brings here is that we've been doing glidepath technology across target date funds for 30-plus years. We feel that this is a place that we have particular strength and can add a lot of value rather than just rote allocations of X percent to public markets and Y percent to private markets.

That glidepath is so important as you go from the accumulation to the end of the target date and ultimately to a decumulation phase. So with Great Gray, we're going to provide the underlying index equity as well as fixed income exposures as well as our private equity exposures through our product, BlackRock Private Investment Fund, BPIF. We're ultimately working on other products, and we would expect to launch a proprietary LifePath with privates target date fund, I believe, sometime in 2026. So we're excited about that as a way of continuing to bring public-private whole portfolio investing to the retirement market.

Laurence Fink: Let me just add one thing, just the industrial logic and why this is so imperative. If through broadening the investment profile of what could be included in a defined contribution plan, if you believe over a 30-year horizon, you could add 50 basis points, which is not an unrealistic target. It adds 18% to the corpus 30 years later. That should be compelling enough. Now the reality is, though, there is a lot of litigation risk. There's a lot of issues related to the defined contribution business. And this is why the analytics and data are going to be so imperative way beyond just the inclusion. And so this is one thing that we are very certain on.

As this moves forward, the need for analytics and data and the role of Preqin, eFront, Aladdin is only going to be a larger set of opportunities for BlackRock in this space.

Operator: We'll go next to Alex Blostein with Goldman Sachs.

Alexander Blostein: I wanted to ask you guys around profitability. You've made a number of acquisitions, obviously, now they're kind of coming into the run rate. As you think about the adjusted operating margin for the back half, curious to get your thoughts. But also as you pointed out at the Investor Day, the 45% plus adjusted operating margin, obviously, is quite healthy. So maybe help us sort of think through the cadence and scaling of the business as these 2 acquisitions kind of come into the full run rate and you continue to grow some of your faster-growing areas of the business.

Martin Small: Great. Thanks, Alex, for the question. I'll take that one. So we talked about the strategy at Investor Day in terms of growing the business. BlackRock continues to deliver industry-leading margin. The margin in the second quarter of 43.3% was about 80 bps lower year-over-year. That's really partially due to the impact of lower performance fees. Over the cycle, we see a very clear path to continue to target a 45% or greater margin profile. About 75% of that second quarter margin decline is really due to lower performance fees as well as the lower performance-related compensation in the quarter. Just as a reminder, we defer a portion of compensation that's linked to performance fees for talent retention.

So in years where we see higher performance fees, we also see higher deferrals, which impact comp expense in future years. The remainder is really just a margin impact from higher expense offset by acquisitions. So what I'd say is with the HPS acquisition now closed on July 1, as I mentioned in my remarks, we expect low teens percentage increase in our 2025 core G&A. That's primarily driven by the onboarding of our 3 acquisitions. Ex HPS, G&A would remain in our mid- to high single-digit percentage increase range. And at Investor Day, I talked a lot about how we've executed on our financial framework by keeping controllable expenses with inorganic growth since 2023.

That's really driven profitable growth and margin expansion. And we aim to continue to align organic revenue growth and controllable expenses. That's compensation -- that's compensation across base salaries and benefits as well as G&A, right? We think of controllable expenses, traveling together, comp and base salaries and benefits as well as G&A. For the second quarter, our controllable expenses, excluding acquisitions, are in line with our last 12 months of organic revenue growth of 7%. On a go-forward basis, I'd say we're in a period now where expense consolidation from recent acquisitions, it's coloring obviously, the comparisons. And next year will really be a full year where we get the impact of HPS and Preqin.

Those acquisitions are essentially self-funding, and GIP, HPS and Preqin, they've all been double-digit FRE and ACV growers. So once we're through this period of consolidation in the back half of the year, we expect you'll continue to see controllable expense in line with organic base fee growth. That's what we've delivered since we introduced this framework in '23 and over the last 12 months. And so as we start to see that really strong FRE and ACV growth, overall organic growth, I think you can expect us to continue to be able to drive towards our 45% or greater margin profile.

The last thing I'd say is just we have a really strong entry rate, as I mentioned, into Q3. Our entry rate is 5% higher going into Q3. That's pre-HPS. With HPS, it's more like 10% higher in terms of the base fee jumping off point. So I think we have a really sound entry point into the back half of the year, even though we get some more consolidated expenses from bringing these acquisitions together. It's really important to bring people together. We've got a lot of energy about co-locating people on real estate. We know we need to do events where we bring people together. We have to go see our clients.

All of those things in the long term are both growth and revenue accretive for BlackRock.

Operator: We'll go next to Dan Fannon with Jefferies.

Daniel Fannon: I was hoping just on HPS now closed, Larry, you mentioned the growth there has been strong. I was hoping you could put some numbers around recent flow trends there. And as we think about the second half of the year, what products are in market and how we should think about organic growth or fundraising for that part of the business for the remainder of the year?

Laurence Fink: Good. I want to turn that to Martin. .

Martin Small: So thanks for the question. Definitely, an exciting time at BlackRock and for our clients in private markets. I think we talked a fair amount about this at Investor Day, but I'll give a little bit more color. We're obviously looking to scale private markets fundraising through a systematic approach to our clients. Now integrating GIP and HPS, we have a really robust and I think exciting road map for '25 as well as the out years, which includes the next vintage of several strategies and thematic products. Let me just give you sort of a list of the things that are out in the marketplace today. We have fundraising going on across mid-cap and emerging markets infrastructure equity.

We have investment grade, high-yield and credit-sensitive infrastructure debt, direct lending and junior capital, private equity secondaries, real estate debt and some more targeted strategies in Europe and Asia on real estate equity. As Larry and I both mentioned on the call, we successfully closed GIP V, surpassing its $25 billion fundraising target. We also closed our secondary and liquidity strategies II, SLS II, the next of our secondaries fund at over $2.5 billion. At Investor Day, we talked about targeting $400 billion in gross private markets fundraising through -- from 2025 to 2030. We believe that will be led again by our infrastructure and private financing solutions platforms. We're really building on very strong absolute and relative performance.

I think very strong DPIs on the platform relative to the peer group, this power of vintage, LP re-ups and track record, we really feel we're in the best position that we've ever been in there to get closer to clients. I wouldn't expect that $400 billion to be a straight line average for 5 years. So don't just take this last 6 months and average it. We'd expect more of a ramp-up to higher fundraising levels in the later years, call that 2028 through 2030. And again, as Scott Kapnick said, as Adebayo said, as Larry said, as Raj said, consistent investment performance is the license to grow.

So all of our teams are going to be blisteringly focused on delivering for clients as the key input to our fundraising goals. So I think between now and the end of the year, we'll continue to execute on those targets, bringing us towards our $400 billion in gross fundraising out to 2030.

Operator: We'll go next to Ben Budish with Barclays.

Benjamin Budish: Maybe just another follow-up on the private markets strategy. So you announced the acquisition of ElmTree, a smaller tuck-in, but just curious, how are you thinking about inorganic opportunities? Is this sort of an acquisition that had been on your radar? Is it something that's sort of that you had been seeking or came across your desk? How does it kind of fit in? And should this be indicative of maybe future M&A? Or do you feel pretty good about the assets that you have today as they are?

Martin Small: Thanks so much for the question. So our main focus right now is fully integrating our acquisitions and realizing the planned synergies. It's about delivering great integration experiences for all of our clients that are seamless and our employees. I think as we've shown in our results, we don't need M&A to meet or exceed our organic growth targets. We were doing that before M&A. And now we're running on the trailing 12 months at 7% organic base fee growth. So these capabilities are helping us lift through our targets. So we're going to continue, I think, to be very prudent, selective, tactical with our capital and financial position and in how we look at M&A.

We've made several smaller tactical acquisitions to bolster certain areas of the business. The planned acquisition of ElmTree, which we're very excited about, which brings triple net lease, the intersection of real estate and credit, which we think is very germane to our insurance clients and our wealth clients. And also previous acquisitions like Kreos in growth-oriented lending and SpiderRock, which helps extend our capabilities and SMAs. We also announced a minority investment in Viridium earlier this year, which also, I think, is accretive to private credit and alternatives. So these acquisitions alongside with our minority investments, they bring incremental capabilities to better serve clients and generate attractive shareholder returns.

And so as I said at Investor Day, I think because of large-scale M&A in the near to intermediate term, we've rounded out that agenda. We're going to continue to look at things that we think are complementary in terms of capabilities across private markets and technology.

Laurence Fink: I would just add a few other things that we've been building, but organically, and the opportunities we see, we believe fundamentally that every country in the world is going to be attempting to build out their own capital markets. They see the success of the United States, one of the great reasons of the U.S. position in the world today is having a strong banking system and a strong capital market system. We talked about this at an Investor Day. But the -- what we saw in India and what we're trying to do and bring out and expand its retirement system platform there is a good example of the expansion of the global capital markets.

Yesterday, we had a conversation with another very big organization and a strong position in a growing developing country with huge opportunity to do the same thing we're doing with Reliance and Jio BlackRock. We've already announced what we are trying to do in the Middle East and Saudi Arabia related to expansion of a mortgage-backed securities market. So we are not just looking at tuck-in acquisitions, but the opportunity we have to expand our position as more and more countries are expanding their capital markets and playing a bigger role in that.

And I think India is just the beginning where we believe we're going to build out a very large-scale asset management platform in India itself is going to be -- these are the seeds that we are doing that are probably being obscured by all the inorganic things we are doing. But I want to just give you that color that we see the expansion of the global capital markets as a primary driver of future success for BlackRock over the next 5 years.

And having our global footprint being in 100 different countries, just gives us a unique opportunity to be working with more and more governments worldwide, helping them think about how they expand their capital markets and how do they expand their own Pillar 3 retirement system as a leader in retirement. This is a conversation we're having with everybody. And I mentioned in my -- in one of the prior questions related to what's going on in Netherlands, moving from DB to a hybrid DC. These are all big changes, but they present huge and unique opportunities for BlackRock.

And so inorganic opportunities are still going to be -- if they're compelling, we will still be doing those types of transactions, especially tuck-in areas in private markets or tuck-in technology. But the opportunity to grow organically as the capital markets grows worldwide is something that we are very excited about over the next 5 years.

Operator: We'll go next to Bill Katz with TD Cowen.

William Katz: So maybe switching gears a little bit. Just thinking through from here. In a world of consolidating the recent transactions and being "more prudent" going forward. How do you think about capital returns? It seems like you're going to be generating a ton of free cash flow over the next several years. Just trying to think through the interplay between dividend and buyback and maybe the total payout ratio?

Laurence Fink: Martin should be taking.

Martin Small: Bill, thanks so much. I appreciate the question. Hope you're having a great summer. As I mentioned at Investor Day and again a little bit today, our capital management strategy continues to be to invest first in the business and then return cash to shareholders through dividends and share repurchases. We repurchased 375 million worth of common shares in the second quarter and expect to purchase at least 1.5 billion worth of shares for full year 2025, subject to market and other conditions. Our share repurchases, again, they're an output of rather than an input to our capital management strategy. We invest first and whatever falls out is the shareholder return.

I'd say on dividends, we recognize very much that dividend income and growth is an important part of many of our investors' portfolios. We continue to target a dividend payout ratio between 40% to 50%. And over the last 5 years, we paid an average of 50% of our GAAP net income and dividends. We steadily increased the dividend since we started in 2003. And over this time, our dividend per share has grown at a CAGR of over 15%.

Over the last 5 years, we paid on average 50% of our GAAP net income and dividends and our dividend payout ratio is intended to ensure that the growth in operating and net income under our 2030 strategy that we talked about at Investor Day, will translate into commensurate dividend growth at high single to low double-digit rates. And as I mentioned at Investor Day, and I'll say it here again to avoid the payout ratio impact from the noncash amortization of acquisition-related intangibles, we'll adjust this amortization in calibrating our dividend to the payout ratio.

But again, we think that the 2030 strategy that we discussed at Investor Day should translate into dividend growth at high single to low double-digit rates.

Operator: We'll go next to Brian Bedell with Deutsche Bank.

Brian Bedell: Just if I can maybe switch gears a little bit to iShares in Europe and fixed income in particular. If you can just talk about how you're continuing to see -- you're continuing to see strong organic growth in the fixed income, iShares franchise. Maybe if you can talk about where you see yourselves on the long-term development of substitution of fixed income securities for iShares ETP? And then especially in Europe, I think you talked about this at Investor Day. You see pretty strong growth potential as Europe sort of democratizes their retail investor base. How do you see that progressing here coming into the second half?

And you see that more just on the equity side or the alternative iShares or also on the fixed income iShares side?

Unknown Executive: So thanks for the question. More growth, more people using iShares ETFs along the active side of the world, alongside of active using the wrapper for hedging purposes, just more and more and more use cases that we're seeing, and it is really caught on in Europe now as a primary wrapper end market to be involved in. So we continue to show industry-leading results. We have the #1 share of global ETF flows year-to-date as the iShares and ETF become the vehicle choice, and we're the industry leader and probably have the most diversified offering of anyone.

That diversification is reflected in our organic revenue, which is nearly 3x the next largest issuer and inflows where 38 iShares products had over $1 billion of net inflows this quarter. So that diversification is working for us. We're seeing outsized strength from our highest conviction growth areas like fixed income, active, now digital assets and European listed ETFs. And Martin mentioned before, bond ETFs led the way at $44 billion, followed by digital assets, $14 billion, active ETFs, $1.1 billion and precision and other at $1.8 billion. Europe, as you highlighted, saw $29 billion of net inflows.

So we will continue to evolve our ETF business and increase access to all kinds of markets more efficiently, more transparently and conveniently. So this is a business that we continue to capture the flag globally and also help our clients expand the use of that product to areas that we didn't think of that we're responding with solutions to our clients with this wrapper.

Laurence Fink: Let me just add a few more things. As the European markets evolve and change and as regulation really focused on the remunerations, the beginnings of the access to ETFs in Europe is only just beginning. Europe is 5, 6 years behind the United States in terms of access. It's just all evolving now. iShares is about $1 trillion in Europe, 40% market share, and we are in a position now, especially in like countries, as we said, changing away from defined benefit to defined contributions in Europe, you're going to see more and more the financial advisory organizations of Europe. You're going to see more and more of the digital organizations in Europe, adapting more and more ETF-based strategies.

Similarly, as we've seen in the United States. So we believe Europe is just starting to launch the same type of growth rates that we saw in the United States in terms of the adaptation of ETFs. And if you now intersect the role of digital ETFs, to me, that is creating more and more enthusiasm, more access to ETFs, more interest in ETFs. And as I said in my prepared remarks, we are seeing more and more clients, who first started using ETFs or IBIT are now looking at ETFs and iShares as a vehicle to expand way beyond their first entry into a digital platform. So we're very well positioned.

And I look at the opportunities in Europe similarly to the type of growth rates we saw in the U.S. over the last 5 years.

Operator: We'll go next to Patrick Davitt with Autonomous Research.

Patrick Davitt: You touched on this briefly, but stablecoin is obviously top of mind for many investors on the back of Circle's IPO, and you're managing that money has been a strong boost to those flows for you. So through that lens, could you speak to how you see what looks like a fairly significant emerging opportunity for asset managers to manage these reserves? Is there a pipeline of other potential mandates, like the Circle 1? And then finally, within that, maybe some color on why these platforms can't or don't want to just invest the treasuries directly versus using your money funds or other people's money funds?

Laurence Fink: Yes, in my world tour, working with central banks and regulators, conversation about stablecoin is vibrant right now. And so what we are going to see is more competitive type of stablecoins. They may have some role in diversifying away from dollar as we digitize more and more currency. But the opportunity for BlackRock in our world in both stablecoin or all the entire role of tokenization of financial assets, tokenization of real assets like real estate is going to be the future. And we believe more than ever before that we are as well positioned as any organization in the world to be part of the conversations as stable coins are going to be growing and developing.

Related to buying money market funds or buying -- having a role, playing a role as a manager, those conversations are broad. But if you're going to show that a stablecoin truly is a substitute for a currency, it must be invested in those currencies bonds. And so I would hope that, that will remain as a consistent feature of each and every stable coin. And I believe that is going to be one of the big issues. There is questions remaining with some other stablecoins as to what is the collateral backing some of that.

And if we're going to put our name associated with it, we believe each and every stable coin should be invested in short-term government bonds that backs that stablecoin. We want to make sure it's legitimatized, but it's also safe and it's a great digital substitution for each and every country's cash as a cash substitute. And I think that is going to be moving very rapidly, but it is surprising even to me, the dialogues that we're having with central banks and how they are looking to now use their own digitized currency or using stablecoins to digitize their currency.

And so we believe this is just the beginning, and we will be playing a significant role as stablecoins are developed in each and every country. They believe it will fit the needs of their own monetary policy, and there are policies related to their capital markets.

Operator: Ladies and gentlemen, we have reached the allotted time for questions. Mr. Fink, do you have any closing remarks?

Laurence Fink: Yes. Thank you, operator. I want to thank all of you for joining us this morning and for your continued interest in BlackRock. Our second quarter results demonstrated the strength of our global relationships and how our platform is powering the portfolios of the future. We're so excited to welcome our new colleagues from HPS to our global offices in the coming months, and we're working closely together to better serve our clients across all their investment needs, which in turn should drive stronger and more durable results as we did in this quarter for you, our shareholders. Everyone, thank you. Have a good summer. Enjoy the quarter. Bye-bye.

Operator: This concludes today's teleconference. You may now disconnect.

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Key Points

• BlackRock delivered mixed earnings, leading to a sell-off.

• However, the bottom-line beat means shareholders shouldn't worry.

• Chalk today's decline up to a routine round of profit-taking after a big recent run.

• 10 stocks we like better than BlackRock ›

Shares of BlackRock (NYSE: BLK), the world's largest asset manager, fell 5.4% on Tuesday as of 3 p.m. ET.

BlackRock reported earnings that actually beat on the bottom line, but missed on the top line. With a somewhat full valuation and investors wary of how fast the world's largest asset manager can grow with markets at all-time highs, the stock shed some recent gains.

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A mixed quarter isn't good enough for Wall Street's expectations

In the second quarter, BlackRock grew revenue 12.7% to $5.42 billion, while adjusted non-GAAP (generally accepted accounting principles) earnings per share grew 16.3% to $12.05. That top-line number actually missed expectations, but the bottom-line figure handily beat expectations by $1.23.

The culprit behind the miss on revenues was a single institutional client that redeemed $52 billion on lower-fee indexes. That redemption led to lower-than-expected net inflows of $68 billion; however, as the redemption was of relatively low-fee indexes, BlackRock was still able to maintain strong profit growth.

Solid growth was also expected, too, because of BlackRock's $12.5 billion acquisition of Global Infrastructure Partners, which closed in October 2024.

Image source: Getty Images.

Nothing except profit-taking

Today's sell-off likely has more to do with profit-taking following the stock's near-40% recovery off of April's lows than anything else. BlackRock shares also came into the day trading around 27 times earnings, while paying a dividend yield just under 2%.

That's not terribly expensive for a really high-quality growth company, although it's not especially cheap for a financial stock. Therefore, long-term investors in BlackRock stock should continue to hold, though those who don't would probably do well to wait for more market-related fear and a lower valuation to enter.

Should you invest $1,000 in BlackRock right now?

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The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and BlackRock wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The Bank of New York Mellon Corporation (NYSE:BK) reported Q2 2025 results on July 15, 2025, delivering earnings per share of $1.93, up 27% year over year, and total revenue surpassing $5 billion for the first time, up 9% year over year.

Pretax margin improved to 37%, return on tangible common equity (ROTCE) reached 28%, and the company achieved approximately 500 basis points of positive operating leverage, highlighting the effectiveness of its ongoing transformation strategy.

The earnings call with management reveals critical insight into BNY's digital asset initiatives, disciplined capital management, and platform expansion -- all with lasting significance for long-term investors.

Digital Assets and Platform Innovation Establish New Competitive Advantage

During Q2 2025, BNY Mellon secured high-profile stablecoin custody mandates with Societe Generale (announced in June 2025) and Ripple (announced in July 2025), demonstrating expanding traction in digital finance infrastructure.

The bank continues to leverage its early investments in digital assets, offering a range of services from issuance to custodianship, and operates bitcoin custody services natively, reaching 100 markets globally through its buy-side trading solutions.

"Last month, Societe Generale selected BNY to act as reserve custodian for their first USD stablecoin in Europe. And last week, Ripple announced that BNY will act as primary custodian of Ripple's US stablecoin reserves. Today, BNY is a leader in servicing the growing stablecoin market, enabling companies to create and use stablecoins by providing wide-ranging services from issuance to ongoing operations."
— Robin Vince, Chief Executive Officer

BNY is providing long-term resilience and expanding its addressable market among institutional clients seeking regulated solutions.

Disciplined Capital Management Preserves Flexibility Amid Strong Returns

BNY ended the quarter with an 11.5% CET1 (Common Equity Tier 1) ratio, unchanged sequentially, and returned $1.2 billion to shareholders, achieving a 92% total payout ratio year-to-date, underscoring consistent capital discipline. The Federal Reserve's 2025 stress tests confirmed BK's stress capital buffer remains at the 2.5% regulatory floor, and the board declared a 13% dividend increase following the results.

"With regards to our second quarter results, our Tier 1 leverage ratio was 6.1%, down 17 basis points sequentially. Tier 1 capital increased by $689 million, primarily reflecting capital generated through earnings and a net increase in accumulated other comprehensive income, partially offset by capital returns through common stock repurchases and dividends. Average assets increased primarily driven by deposit growth. Our CET1 ratio at the end of the quarter was 11.5%, unchanged from the prior quarter. Over the course of the second quarter, we returned $1.2 billion of capital to our common shareholders, resulting in a 92% total payout ratio year to date."
— Dermot McDonogh, Chief Financial Officer

Operating Model Transformation Drives Enduring Efficiency and Organic Growth

Fifty percent of BNY's workforce now operates within its new platform operating model; this reorganization has already contributed to 500 basis points of positive operating leverage in Q2 2025. In parallel, widespread adoption of the Eliza AI platform among employees and initial deployment of digital employees are cited as foundational for future efficiency gains and new solution development for clients.

"With more than half of our people at BNY working in the model today, we remain on track to complete our phased transition into the platform's operating model by this time next year. Already, we are starting to see the impact of this new way of working, enabling our people to launch more new solutions, deploy more code releases, and come together better than ever before to support our clients."
— Robin Vince, Chief Executive Officer

The platform operating model and AI adoption are lowering the annual expense growth trajectory—guided at approximately 3% for full-year 2025 (excluding notable items)—while embedding scalable innovation capacity, which management expects will benefit future growth.

Looking Ahead

Management raised its forecast for full-year 2025 net interest income to high single-digit percentage growth and reaffirmed expectations for solid fee revenue growth, with expenses (excluding notable items) guided to rise approximately 3%. The effective tax rate is projected at 22% to 23% for the full year.

BNY Mellon plans to return roughly 100% of 2025 earnings via dividends and buybacks.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

In this podcast, Motley Fool contributors Tyler Crowe and Matt Frankel discuss:

• Taiwan Semiconductor's most recent earnings report.
• The torrid pace of AI spending.
• Lower mortgage rates are taking the cork off existing home sales and refinancing.
• Insulation contractor TopBuild now does roofs.
• Ferrero will acquire WK Kellogg.
• Two stocks worth watching this earnings season

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy.

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A full transcript is below.

Should you invest $1,000 in Taiwan Semiconductor Manufacturing right now?

Before you buy stock in Taiwan Semiconductor Manufacturing, consider this:

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Now, it’s worth noting Stock Advisor’s total average return is 1,053% — a market-crushing outperformance compared to 180% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

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*Stock Advisor returns as of July 15, 2025

This podcast was recorded on July 10, 2025.

Tyler Crowe: Taiwan Semiconductor's earnings say full steam ahead for AI, and the housing market is getting some of its best news in a while. You're listening to Motley Fool Money. Welcome to Motley Fool Money. I'm Tyler Crowe, and joining me today is Motley Fool analyst Matt Frankel. Matt, thanks for being here.

Matt Frankel: Thanks for having me. It's always fun to be on with you.

Tyler Crowe: We do a lot of conversations. Offline and doing one here is going to be great. On today's show, the snacking industry is actually coming for the breakfast aisle. The housing market saw its first green shoots in a while. There's merger talk in the building supply industry, and Matt and I are going to give some earnings watches for the upcoming quarter. But we're going to start today's show with Taiwan Semiconductors because they just released their second quarter or June earnings earlier today. Taiwan Semiconductor manufacturing's revenues rose about 39% in the quarter, and TSMC CEO C.C. Wei said that AI chip demand still, they think is outstripping the current supply that they have, and the company has pledged to spend $100 billion ramping up manufacturing. Now, Matt, I'm probably not alone in being flabbergasted, every time I hear a projection about spending and CapEx related to AI. NVIDIA just passed the four trillion dollar market cap threshold a couple days ago, and it's still hard to wrap my head around. I think the easy question is, will AI spend, continue to grow? I think that's a little too easy. I want to ask you, do you see AI CapEx spending continuing at this rate?

Matt Frankel: Well, a 40% year over year growth rate is only sustainable for so long. This is an acceleration. It's worth mentioning. Last year, in 2024, Taiwan Semi reported 30% year over year revenue growth. This is a pretty big acceleration after an already very strong year. I think over the past 30 years, Taiwan Semi's revenue's grown at about 18% annualized rate. It's really picked up in the past couple of years because of all this AI spending. This is a massive business, especially for one that doesn't make any of its own products. It makes products on behalf of other companies. All of their customers, just to mention some on their customer list, Apple is their biggest one. But they also make chips for NVIDIA, AMD, Broadcom, Tesla there are a lot of companies they make chips for on a third party basis, and these are deep pocketed companies that are all committing a lot of money to AI investment. When you ask will this continue if you're asking over the next five years, I could see that growth rate actually being sustained. But if you're asking beyond, at some point, we're going to hit a peak, but I don't think we're there just yet.

Tyler Crowe: The interesting thing is a lot of the companies I follow are like in the construction industry related to AI, like all the electrical supply contractors and the builders and things like that. Their backlogs for AI data centers and all that stuff is still growing at really large rates. Their remaining performance obligations, their word for backlogs, have been growing at similar rates, which is also, to me, a leading indicator for a lot of this because you got to build the data center before you can put any chips in it. Beyond the same thing, beyond the five years, it starts to get really murky because we're 40% for five years straight is a lot, but certainly over the next 2-3 year window, it doesn't seem unrealistic to continue to keep doing this.

Matt Frankel: One of the really good ways to get ahead of demand is to look at what the data center industry is doing, and I'm glad you brought up building for that reason because so many data centers are being built right now. There's a lot of if you look at, Digital Realty Trust or Equinix's, construction activity, there's a lot going on, and it creates like a forward looking projection, if you will, because, the company will order a new data center, start building it. At some point later, it's going to be filled with chips and things like that. That's a really good forward indicator of how demand is doing.

Tyler Crowe: Let's put the rubber of the road here really quick regarding Taiwan Semi. It's a recommendation in the Hidden Gems dividend service and several other molecule services. After seeing these results and the current valuation that we're looking at for Taiwan Semi, do you still see the stock as a buy?

Matt Frankel: Given how quickly its revenue is growing, it trades for about 24 times forward earnings, there's not a lot to dislike about this company. That 1.2 trillion dollar valuation sounds high, but it really isn't when you look at how the business is doing.

Tyler Crowe: If we're looking at these numbers for 2, 3, 4 years, a company can grow into a 26 times forward earnings valuation or forward earnings valuation pretty quick. It's hard to see it being an awful investment from here at current valuations. Next up, mortgage rates are on the decline, and the housing market is responding quick.

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Tyler Crowe: The housing market has been looking for something, anything resembling good news lately. Finally, it got a little bit. The average rate for a 30 year mortgage in the United States has declined five weeks in a row, and it's now down to 6.77%. Now, that certainly isn't the sub 3% mortgages that we saw in the 2021 period, but it is a nice improvement from the greater than 7% mortgage rates we've seen so far this year, and I know I have been like mortgage rate shopping for quite some time. Matt, the housing market appears to be taking advantage of this situation much faster than we've seen other mortgage rate movements lately, and something you've been following is like housing volume is really picking up because of this.

Matt Frankel: You mentioned the other mortgage rate moves. This isn't the first time we've seen mortgage rates cool off from the highs, which is why this move is a surprise to a lot of people. Mortgage rates peaked at about 8% when inflation was really high. But even they've come down a little bit, then they go up, then they come down, they go up, and they have oscillated between 7.5% and like six and three quarters in recent times. All the other times it's happened, this is a key difference. All the other times it's happened, there hasn't been a lot of housing inventory. Now that's changed. There's a lot more inventory on the market with this decline. People who want to buy houses are taking advantage, just to name some of the statistics just last week alone, week over week, application volume was up more than 9%. Refinancing is 56% higher than it was a year ago. People who got mortgages in the 8% range are finding it valuable to refinance right now. Purchase applications are up 25% year over year on a seasonally adjusted basis. The numbers really look surprisingly strong, given that, you know, over the past week, the average mortgage rates down two basis points. It's not like it's been a sharp decline in the past week, but now buyers are suddenly coming into the market.

Tyler Crowe: Following the housing move for the past couple of years, it's been trying to poke somebody a stick and say, Come on, do something and it's funny to actually see it finally happening. Part of me wonders if it's a little bit mortgage and also our mortgage rates, excuse me, and a little bit of just like the people have been putting it off and using this as that time to start taking the lid off, especially with the buying season here in the spring and summer. Now, you and I and a couple other people, longtime Motley Fool contributors, analysts. We spend way too much time talking about housing, investing in housing, investing in real estate. There's some side channels that get a little unhinged. But with mortgage rates are declining, the probability of a rate cut actually looks to be in sight something that I have been hesitant to say for quite some time. There is pent up demand for homes. Matt, with this backdrop, what stocks in this particular market look interesting to you?

Matt Frankel: I've been saying the Home Builders forever, and so have you, but it's really tough to gauge the dynamics of Home Builders when existing homes are becoming more appealing than they had been for a long time. I won't say that. I'm really looking at rocket right now, RKT the largest lender. They're a very profitable company. I think refinancing in particular is a big opportunity. I mentioned refinancings up 56% year over year, and that's because rates fell to 6.77%. Imagine if rates fall to 6% or 5% in the next couple of years, Americans are sitting on $35 trillion in home equity that's the most ever, and a lot of it's just waiting to be tapped. A lot of people want to do big projects, but won't because it's expensive.

Tyler Crowe: Actually, the Refi number was the one that really stood out to me, as well. I didn't go to the mortgage originators, like Rocket. I actually went to the home repair and remodel industry because, again, this is everyone stared at their walls in 2020, 2021, did all those projects, and now it's been like three or four years. Everyone's starting to get that itch to do projects again and lower mortgage rates. A refinancing is a good opportunity to that. I've been looking at companies like Home Depot that have underperformed just about the time the interest rates started to climb a few years ago, we had that big pull forward in remodel activity and things like that. Home Depot and a lot of other building supply companies, and one company in particular is TopBuild. It's an insulation distribution and installation contractor specifically for insulation. That company just so happens to be the company we're going to be talking about next. Continuing on our theme of the housing market, home repair, building products, there's a company Top bill. They just mentioned it as a distribution installation contractor. They recently announced it's going to acquire Progressive Roofing. Matt, can you just give a quick breakdown of what this deal looks like?

Matt Frankel: Progressive Roofing, as the name implies, they're one of the largest commercial roofing installers in the United States. They make about 70% of their money from what's called reroofing, which is people like me needing a new roof and maintenance and 30% from new construction homes, both of which can get pretty nice tailwinds, if the real estate market keeps going as it's going. The deal is it's $810 million in cash. It looks like a great deal for TopBuild if if the market heads in the right direction. That's about nine times progressives EBITA over the past 12 months. They expect there to be some synergies, like whenever you acquire two businesses that have some overlap, you can usually combine some operations and things like that and get some cost savings. It looks like a strong acquisition. They're going to have to take on debt to do it. TopBuild has about 300 million in cash right now. Another roughly half a billion dollars will need to come up with through debt, but they have a really healthy balance sheet, about 1.4 billion in debt with $11 billion market cap business and highly profitable. I like this deal. I think this is not the last consolidation we're going to see in the industry in 2025.

Tyler Crowe: We've seen some more splashy things when it comes to acquisitions here. Brad Jacobs of XPO Logistics and United Rentals and a bunch of other we'll call it the boring economy guy who rolls up companies is getting into building supplies with QXO. It seems to be a hot activity lately as mergers acquisitions roll ups in this industry. TopBuild as I said, installation of insulation the real dirty work. Anybody that's done contracting work knows that insulation stinks as a job to do. But it's been a spectacular investment after it got spun out of Masco Corporation in 2015, several Motley Fool recommendation services. You and I have been following this company in this industry for quite a while. For TopBuild, much of its success has come from rolling up those small distributors and installation contractors across North America. It's been their calling card is going and buying out mom and pops who are maybe coming to the end of their time of wanting to run a business or some small regionals that success story of Bolt-on acquisitions. Now, roofing isn't insulation. Honestly, I'm a little anxious when a company makes an acquisition that is slightly tangential to what they're doing. Am I being a little too apprehensive here, because, I do tend to be a little bit more nervous than you.

Matt Frankel: Well, insulation and roofing are related parts of the building process. It's not like they're an insulation company, and they're acquiring a concrete manufacturer or something like that. It's a very related part of the business. But I do get your point. Some of the synergies I mentioned come from the fact that there's a lot of overlap in the processes. You generally don't put in a new roof without checking your insulation at the same time. There is a lot of overlap here. But no, I definitely get your point when companies start to step outside of their wheelhouse a little bit. It'll be worth watching, but it looks like the price is right, so they have some wiggle room to have a learning curve in there, if you will.

Tyler Crowe: I'm probably a little too nervous by nature, but I do have to admit, as I've looked at this deal, I think overall, we can talk about the business stuff. But more importantly, for me, I think management has developed enough of a track record that I'm willing to give them the benefit of the doubt right now or tie goes to the base runner, I guess, if you will. With the refinance market picking up so could activity in the roofing business along with installation. It might be a good time to be making this acquisition. Speaking of M&A, we're going to move on to our next store here, which is going from roofing to the breakfast aisle because that seems to be getting a hot market that also just happens to be getting a little bit sweeter. Earlier today, Ferrero Rocher or Ferrero International, the Italian private company has agreed to acquire WK Kellogg for about an enterprise value of 3.1 billion. WK Kellogg, of course, was the cereal business that was split out of Kellanova I believe it was either last year or a couple of years ago. It was a relatively recent split for the two companies where Kellanova wanted to focus on the snacking industry. WK Kellogg was going to take the cereals.

But Ferrero Rocher is very much a candy company, and it's interesting to see them going in this direction. It's about $23 per share for WK Kellogg in cash. About 31% premium Keeling's closing price today. Matt, what did you actually think about this deal? I know it's hard to really put a pin on private companies, especially an Italian one. We don't seem to have a lot of information on private Italian companies here in the US public markets. But we've seen tons of M&A activity and flirting with M&A activity. We saw Mondelez and Hershey talking about getting together early or late last year. Do you have any insights as to why you think there's so much talk and commotion in particular in the package food industry lately?

Matt Frankel: Well, in this particular case, there's a couple key takeaways. One is that Ferrero has been building out its US portfolio for some time. They acquired all of Nestle's US candy business a couple of years back, for example. You might have some of their products in your house right now and not know it. It's summertime. A lot of people keep those bomb popsicles in their fridge. That's a Ferrero product. They have a lot of brands that are very well known to Americans. Second, and this goes more to the broad package food industry that you were talking about. The definite trend is to not only diversify your product portfolio, but diversify it in a way toward healthier products. Now, I know a lot of Kellogg cereals, frosted flakes are not health food, but things like Kashi and raisin bran and rice krispies. We've seen a lot of the companies that specialize in sweets, like Coca-Cola, Pepsi, really diversifying to not necessarily health foods, but to more healthy brands that are that consumers seem to want more nowadays than their traditional products. I think it's a diversification maybe anticipate some changing tastes in the market to insulate themselves from being just a sweets company. That's a common trend that we've been seeing throughout the packaged food industry.

Tyler Crowe: Seems like it's an industry that has been struggling with debt, with trying to figure out a lot of what they're doing with their maybe some brands that are getting a little stale, trying to do some refreshes at the same time. For a lot of these snacking companies, really high cocoa prices haven't exactly helped them along the way when it comes to trying to make a lot of this work. A lot of dividend stalwarts have been really, I would say struggling to really grow the business, and we've seen it in their valuations of late. Honestly, with the package food company industry, I don't know if I'm that interested in any stocks right now, but it's certainly much more fascinating to watch with a lot of these portfolio reshufflings. Is there anyone in particular that is on your radar?

Matt Frankel: I honestly think Pepsi and Coca-Cola are the two standouts in the industry still and have done the best job of adapting to changing tastes over time out of all the package food companies. I'd probably give it to Pepsi because they have a lot more food than beverage.

Tyler Crowe: On our way out here, let's take a quick 30 seconds. Second quarter earnings is coming up. What are you watching?

Matt Frankel: Well, banks are the obvious answer just because they're reporting first, but they're also a really good proxy for just general consumer health. By looking at things like loan defaults, by looking at, trading volume trends, how volatile things have been there. There's a lot you can tell from bank earnings that have implications on pretty much every other company in the United States. That's really what I'm watching next week. Prologis is another company that reports early that we've talked about that is on my radar. They say they're nearing an inflection point. I want to see if we're there yet.

Tyler Crowe: This quarter, I'm actually going to be watching Home Depot for a lot of the reasons that we mentioned when we're talking about mortgage rates. Less for the actual earnings, but I really want to dive into the earnings transcript and see if some of this activity that we just talked about with Refi is translating into increased demand. If management thinks that this is a continuing trend or a little bit of a short term blip that we've been hoping would actually last longer than a couple of quarters here with the mortgage market. Matt, thank you so much for joining me today on Motley Fool Money. As always, people on the program have interest in the stocks they talk about and the Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and are not approved by advertisers. Advertisements or sponsored content are provided for informational purposes only. See our Fool advertising disclosure. Please check out our show notes. I'm Tyler Crowe. Thanks for listening. We'll see you tomorrow.

Matt Frankel has positions in Advanced Micro Devices, Digital Realty Trust, Prologis, and Shopify and has the following options: short January 2026 $135 calls on Shopify. Tyler Crowe has positions in Prologis. The Motley Fool has positions in and recommends Advanced Micro Devices, Digital Realty Trust, Equinix, Hershey, Home Depot, Nvidia, Prologis, Shopify, Taiwan Semiconductor Manufacturing, Tesla, and TopBuild. The Motley Fool recommends Broadcom, Nestlé, WK Kellogg, and XPO and recommends the following options: long January 2026 $90 calls on Prologis. The Motley Fool has a disclosure policy.