Foreword

Alyson Shontell

Editor-in-Chief

Good morning. Last week, Fortune closed its latest print issue (subscribe here), which focuses on global business rivalries and the geopolitical reordering that’s being driven by AI, numerous wars, and tariff uncertainty.

In two of our feature stories, we highlight emerging business leaders who are becoming formidable competitors in AI. Perplexity, led by Aravind Srinivas, has its sights set on taking search share away from Alphabet’s (No. 7) Google with its popular generative AI product, which is optimized to answer factual questions accurately (unlike some of its hallucination-prone AI rivals). The startup has earned an $18 billion valuation from investors like Jeff Bezos and chip giant Nvidia (No. 31).

Meanwhile at Meta (No. 22), 28-year-old Alexandr Wang, the cofounder of Scale AI, has been hired and named the company’s first-ever Chief AI Officer. His task: Build super intelligence with a team of AI rockstars who have been hired away from OpenAI, Anthropic, and Google.

Grab a cup of coffee and give those both a read if you want to learn what two of the leading AI minds have in store for us all.

Deals & Developments

FCC regulators approved the $8.4 billion merger between Paramount Global (No. 147) and Skydance Media more than a year after the deal was first announced. The approval comes less than a month after Paramount settled a lawsuit with President Donald Trump, agreeing to pay him $16 million related to allegations of unfair editing of a 60 Minutes interview with Kamala Harris during the 2024 election. Read more
Northern Trust (No. 269) CEO Michael O’Grady denied reports, originally published in June by the Wall Street Journal, that the bank was approached by Bank of New York (BNY) (No. 113) to discuss a merger. His comments followed warnings from Senator Elizabeth Warren (D-MA) that a potential merger could violate antitrust laws.
Union Pacific (No. 177) and Norfolk Southern (No. 346) have acknowledged that they are in “advanced” merger talks, although questions remain about whether the deal will be approved by regulators. Last week’s edition of Fortune 500 Digest noted that the merger was being discussed, according to Associated Press reporting, but neither railroad company had confirmed. The companies, if merged, could create a west-to-east coast-to-coast railroad in the U.S.

Overheard

“Whenever we see a small company with a good idea, we’re on fire.”

—L’Oréal deputy CEO Barbara Lavernos on how M&A and innovation keep the beauty brand ahead

On earnings calls:

Alphabet (No. 7) saw revenue of more than $96 billion, beating Wall Street’s expectations and marking a 14% year-over-year increase. CEO Sundar Pichai praised Search specifically, which he credited with double-digit revenue growth.
General Motors (No. 18) reported that tariffs put in place by the Trump Administration amounted to a $1.1 billion hit, while its net income of $1.9 billion was down from $2.9 billion in the same period a year ago.
Tesla (No. 43) missed Wall Street’s expectations with $22.5 billion in revenue for Q2, down about 12% from the same quarter last year. During the company’s earnings call, CEO Elon Musk expressed optimism about the company’s Robotaxi service in Austin and offered vague hints about a new, “more affordable” Tesla model on the way.
IBM (No. 68) posted $16.98 billion in Q2 revenue, a year-over-year increase of almost 8%. Software revenue missed analyst expectations despite growing 10%, however, which CEO Arvind Krishna attributed to clients who “reprioritized their spend to the hardware” in the company’s earnings call.
Capital One Financial (No. 82) held its first earnings call since acquiring Discover in May. Chairman and CEO Richard Fairbank noted that the company is “fully mobilized and hard at work on integration,” but added that integration will cost more than the $2.8 billion the bank had expected. Overall, Capital One posted $12.5 billion in net revenue, up 25% from the previous quarter.
Intel (No. 86) CEO Lip-Bu Tan emphasized the need for cost-cutting in a memo to employees on the same day it reported a net loss of $2.9 billion. “Over the past several years, the company invested too much, too soon—without adequate demand,” Tan wrote. “There are no more blank checks. Every investment must make economic sense.”

Other earnings calls that took place this week: Verizon Communications (No. 30), Lockheed Martin (No. 59), Charter Communications (No. 79), Coca-Cola (No. 97), Halliburton (No. 194), Keurig Dr Pepper (No. 284), Blackstone (No. 321),