Uber is trying to buy Delivery Hero. It would give Uber greater market access in Asia and the Middle East. PCE showed continued increases in inflation and GDP is weaker than expected. The Powell Fed never got inflation under control and the GDP numbers are polluted by wasteful government spending that doesn’t help US citizens, but is still added to GDP. Ferrari shows its first full EV and the design is derided by Ferrari purists. Others suggest its designed for the rapidly growing Chinese EV market who might not mind the change in styling language. Amazon gets an agreement from Snowflake for $6B of Graviton custom chips. (Anyone else remember when $6B was a lot of money?) Custom silicon is taking share for specific applications, but nothing has slowed growth at Nvidia, AMD, and Intel. Investors love companies that benefit from high switching costs. Customers hate it (with the exception of Apple customers who love its walled-garden). We’ll explain more in this week’s educational topic along with an example or two that should resonate with you.
This week, we’ll address the following topics:
- Uber bids for Delivery Hero. It’s a big premium but below prior takeover offers. Great opportunity for Uber to grab share in Asia and the Middle East.
- Personal Consumption Expenditures shows continued inflation while a weak GDP revision causes growth concerns. I still think GDP is a function of government spending rather than value creation.
- Ferrari unveils its first electric vehicle and the internet criticized the clunky design. DKI’s interns point out that the intended market is in EV & luxury-focused China.
- Snowflake is buying $6B of Amazon Graviton chips. Custom silicon is gaining share as Nvidia, Intel, and AMD all report growing chip sales.
- Are you a captive of switching costs? Let’s find out in this week’s educational topic.
Let’s take a moment to credit DKI Interns, Kunal Arora and Elijah Killorin who did the heavy lifting for the 5 Things including topic selection, research, and image generation. Their ability to deliver high-level work is made more impressive by the fact that they tend to finish everything early. Well done!
1) Uber Issues $13.4B Takeover Bid for Delivery Hero:
Uber increased its stake in Delivery Hero from 25% to 37% after buying a position in co-investor Aspex Management. This comes as the company made a $13.4B bid to purchase the entire company around $38 per share. Delivery Hero is the world’s largest local delivery platform for food and quick e-commerce, operating in over 65 countries and headquartered in Berlin, Germany.
Nice premium for the Delivery Hero Shareholders.
DKI Takeaway: Uber Eats operates in 45 countries meaning this acquisition would give it market leading positions in previously under-penetrated markets overnight. This would include areas like Asia and the Middle East. DoorDash continues to consolidate, and this move represents Uber’s shot at hindering its ability to capture uncontested market share. It’s a massive opportunity for the company if the two sides can come to terms and the deal is completed. Some hurdles still exist including a current disagreement on price. Major shareholders have previously rejected offerings going up to $44.28 (38 euros) per share, meaning Uber may need to pay a larger premium. EU regulatory inquiries are also a possibility.
2) PCE is high and GDP is Government-Supported:
The Bureau of Economic Analysis released the April Personal Consumption Expenditures (PCE) report and revised Q1 GDP estimate. Headline PCE rose 0.4% in the month, bringing the annual rate to 3.8%, the highest level since May 2023. Core PCE, which excludes food and energy, rose 0.2% for the month and 3.3% vs last year. The revised Q1 GDP estimate came in at 1.6% annualized, down from the initial 2.0% reading, with Core PCE running at an annualized rate of 4.4% during the quarter.
The PCE number is the quarterly figure annualized.
DKI Takeaway: The report shows growth slowing and inflation remaining elevated, leaving the Fed little room to maneuver. The GDP revision was driven by inventory drawdowns and softer healthcare spending rather than a broad deterioration in demand, suggesting the slowdown may be less alarming than the headline implies. Consumers are feeling pressure, but still spending. Regardless of which figure you prefer, inflation remains well above the Fed’s target meaning the next move might be a rate hike. My biggest concern is GDP remains a function of government spending regardless of whether that spending creates value or not. Expect to see spending supporting GDP calculations while an expanding money supply leads to continued inflation.
3) Ferrari Unveils Its First Electric Vehicle:
Ferrari unveiled its first fully electric car called the Luce. It’s a five-seat luxury car with four electric motors, which deliver over 1,000 horsepower resulting in a top speed of over 190 MPH. The car is priced at $640K and deliveries are expected to begin in Q4. Due to the clunky design and different styling language from previous Ferrari models, overall commentary was negative. Many suggest that the car was intentionally designed to look different and still compete as a high-status purchase in China where consumers want high-status luxury goods and prefer EVs.
Ferrari’s $RACE is one of the best stock tickers of all-time.
DKI Takeaway: Ferrari unveiled this car knowing there would be backlash from traditional customers, but this car is aimed at the Chinese market. Ferrari’s China sales have fallen from 1,500 units in 2022 to 900 in 2025. Gas-powered Ferraris face 75% tariffs in import duties and taxes. An electric vehicle allows Ferrari to avoid these taxes re-enter an untapped market for the brand.
4) Amazon and Snowflake Strike $6B Deal for AWS Graviton Chips:
Snowflake has agreed to pay $6B over the next 5 years to Amazon for its Graviton chips. This puts Snowflake close to Apple and Meta as Amazon’s largest customers for ARM-based CPU computing power. Post-announcement, and on the same day as its earnings, Snowflake’s stock rose 38%.
Custom silicon is taking share.
DKI Takeaway: Amazon has continued to draw in massive CPU customers. This is direct competition for Intel and AMD. It also presents a barrier against Nvidia extending its GPU dominance into CPUs. As Agentic AI use increases, CPU demand is surging. We are beginning to see the training phase of AI that led to massive GPU growth now shift to inferencing, where CPUs dominate. While competitors like Intel and AMD offer similar products, Amazon continues to win deals with attractive pricing. Earlier this month, we highlighted Google’s $5B deal with Blackstone with Google providing its custom TPUs (Tensor Processing Unit). Custom silicon isn’t taking over the market, but it is gaining share of growing computing budgets where users have very specific needs.
5) Educational Piece: Switching Costs:
Switching costs are the costs a customer faces for leaving one product or service for another. These costs can be financial, time spent learning a system, or even the loss of familiarity. An example of switching costs would be switching from one music provider to another which would include losing your playlists, followed artists, and familiarity with the app.
DKI Takeaway: Switching costs show why the best businesses don’t always need the best product. When companies have high switching costs and are harder to leave, they can afford to raise prices, invest in new products, and survive downturns. When a company lacks high switching costs they need to continuously outcompete their competitors on price or quality which is hard to do long-term. Telecom companies used to have huge switching costs when moving to a new carrier meant you had to change your phone number. Now that cell phone numbers are portable, the carriers have to compete on service and price. The way they now create lock-in is offering a discount on a new phone or tablet, and in that situation, the customer is choosing that 2-3 year relationship and receiving something of value in exchange.
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