What We Learned This Week

Disney Meets AI: Disney announced a $1 billion investment in OpenAI, marking one of the most notable cross-industry partnerships in the AI space to date. As part of the deal, Disney will allow its characters to be used in videos generated by OpenAI’s Sora platform, and it will also receive warrants allowing it to purchase additional equity at OpenAI’s current $500 billion valuation. The move underscores how interest in AI is no longer limited to hyperscalers and pure-tech players. Traditional media, entertainment, and IP-driven businesses are increasingly looking for ways to align themselves with the platforms shaping the next generation of content creation.

What makes this deal particularly striking is Disney’s willingness to open up its intellectual property, something the company has historically guarded with extreme care. Disney rarely licenses its characters and has been aggressive in protecting them when misuse occurs. In this case, the calculus appears pragmatic. AI-generated content using Disney IP was likely inevitable, and fighting it outright would be costly and ultimately ineffective. By partnering directly with OpenAI, Disney gains a seat at the table, some influence over usage guidelines, and financial upside along the way. There will almost certainly be friction and missteps as this unfolds, but the broader takeaway is clear: AI’s advance is unavoidable, and the focus has shifted from resistance to shaping the rules of engagement.

Leadership Reset: Lululemon shares moved higher after the company announced its CEO will step down at the end of the year, marking a clear inflection point after a prolonged period of underperformance. The brand has struggled with operational execution, supply chain challenges, and a product lineup that has failed to re-ignite consumer excitement. Pressure has been building from both the market and the company’s founder, and the board has now engaged an external search firm to find a successor with experience leading companies through transformation. In the interim, the CFO will step in as CEO.

While leadership change was widely viewed as necessary, it’s far from sufficient on its own. Competitive pressure from newer brands like Vuori and Alo continues to intensify, and the company’s latest outlook did little to suggest an immediate turnaround. The CEO transition creates an opportunity for reset, but execution will matter far more than optics. Investors may welcome the acknowledgment that change is needed, but confidence will only return once Lululemon shows it can stabilize operations, sharpen its product vision, and reclaim relevance in an increasingly crowded market.

Priced for Perfection: Costco reported another strong quarter this week, beating expectations and pointing to solid holiday demand, something many retailers can’t say right now. The company highlighted continued momentum in e-commerce, growing engagement from younger shoppers signing up for memberships, and the ongoing benefit from last year’s membership fee increase. Operationally, there was very little to fault. The business continues to execute exactly as designed, with steady traffic, disciplined pricing, and a model that remains highly resilient even as consumer behavior shifts.

Yet none of that was enough to excite the market. The stock fell after earnings and is down more than 10% this year, largely because Costco is now priced as a near-perfect business. Its consistency, once a major tailwind, has become a hurdle - positive results are simply expected, not rewarded. That makes the stock less interesting for short-term traders looking for upside surprises. Over longer time horizons, however, this is exactly how durable compounders behave: they rarely dazzle in any single quarter, but they quietly deliver over time. Costco may not be exciting in the moment, but for patient holders, it’s hard to argue with the track record.