Reddit Rethinks Google Deal & 3M Beyond the Post-it Note

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**Ann Berry** (0:26)
Nike, the sneaker OG just changed course in China, but is it repeating a past mistake? We have the latest on its turnaround. 3M, the century-old industrial mainstay just achieved record margins from post-its to fiber optics. We dig into the conglomerate's turnaround strategy.
And Reddit, preparing maybe for a showdown with Google. We explore why their multimillion-dollar deal could be coming to an end. For Wednesday, July 22nd, it's Brew Markets Daily. And I'm Ann Berry.
More market details to come. But first, one of the most intriguing and slightly uncomfortable relationships in artificial intelligence may be heading for a showdown. According to a report from the Wall Street Journal, Reddit may not renew its AI licensing agreement with Google when the current deal expires. Now, that agreement signed in 2024 is reportedly worth about $16 million a year, providing Reddit's vast archive of conversations to Google to help train and power its AI products. So why would Reddit walk away from that kind of money, especially after getting its mitts on the cash, meant upsetting some portion of its users, frustrated that Redditors provide their content for free while Reddit turns around and monetizes it. Now, although only a small portion of Reddit's more than $2 billion of annual revenue, that $60 million in licensing income mostly drops straight to the bottom line. So it does represent a decent chunk of Reddit's $520 million plus of net income last year. So the issue here is traffic. Publishers increasingly argue that Google's AI generated summaries answer users' questions without redirecting them back to the original websites. In other words, Google is using the content of Reddit and others like them to keep people on Google itself. That means fewer clicks, fewer ad impressions, and as a result, less revenue for the sites creating the information in the first place. Which is why the Wall Street Journal reports Reddit is among a growing list of publishers actually rethinking whether these AI licensing deals are really worth it. Well, this report caught my eye because it gave me an eerie sense of deja vu.
I was on the Wikipedia site recently, as I often am, and one of its requests for donations popped up, citing a drop in traffic for a reduction in its income. Now, the online encyclopedia is the number one, that's the most cited source on ChatGPT, as one example, which does link back to sources in its answers and summaries, but the problem is just limited click through. Users can't be bothered to go and see the source. Now, no final decision has been announced by Reddit, and the public airing of its concerns, frankly feels like a negotiating tactic aimed at securing a richer deal from Google. Even way back in September, Reddit was reported to be in early talks to strike its next agreement with Google, aiming to extract more value from its treasure trove of fresh, authentic human conversations generated by its roughly 1.5 billion monthly average users. Nevertheless, investors not taking any chances on this one, Reddit stock dropping by 20 bucks, that's about 11% on the news we're going to keep on watching.
We're coming up in a moment. We delve into 3M's 120 year evolution from a failed mining company to the maker of Scotch tape and now you can guess an AI play. But first a few headlines from the day's trading session, kicking things off with Super Micro Computer, which is the company that builds the physical servers that house AI chips so those chips can actually run.

**John** (4:09)
That's right. Shares in the Super Micro Company, ticker SMCI, surged over 20% today after the company said it landed more than $60 billion in new orders last quarter, pushing its backlog to record revenue levels. And those go-go AI build results have lifted shares in server-making rivals, Dell stock up 9% today, and Hewlett Packard Enterprise trading nearly 4% higher.

**Ann Berry** (4:32)
Well, it's been a volatile year for Super Micro Computer. It's not been alone from that perspective, but its shares at this point are trading nearly flat this year after tumbling in June. At that time, the company announced an equity raise to purchase components to fulfill those tens of billions of dollars in AI server orders. That was a big purchase and it was expensive. And that type of shift in capex spend toward AI is once again hitting software. So let's take a look at shares in Pegasystems, which fell over 17% after the company missed top and bottom line earnings estimates and issued a pretty dire AI warning.