What We Learned This Week

Bags No Longer Fly Free: Starting this week, Southwest Airlines will begin charging for checked bags—$35 for the first, $45 for the second—with only limited exceptions for top-tier flyers or co-branded credit card holders. It’s the latest in a string of changes that mark a clear shift away from the brand’s hallmark perks. In 2026, Southwest will also begin assigning seats and has started introducing basic economy fares and extended legroom options—steps that align more closely with the traditional airline playbook.

For years, Southwest stood apart by avoiding hub-and-spoke models, offering simpler service to secondary airports, and refusing to nickel-and-dime customers. But in an environment of softening travel demand and increasingly aggressive price competition, it’s no longer practical to sit out on $7 billion in annual bag fee revenue like they did last year. The airline industry is relentlessly commoditized, and most carriers end up mirroring each other out of necessity. Ironically, the very innovations that once made Southwest different reshaped the broader industry—until scale and efficiency pushed everything toward the middle. Now that Southwest is starting to look more like its peers, the question is whether it can still compete as effectively without the unique model that originally set it apart.

Vibes vs. Value: Tesla shares have surged more than 60% since early April—a substantial move that’s had little to do with fundamentals. In fact, vehicle sales have continued to decline both domestically and abroad. The real driver has been a sharp shift in sentiment, largely sparked by Elon Musk’s renewed focus on Tesla after spending much of the past year entangled in political ventures and side projects. His commitment to doubling down on the core business, alongside ongoing hype around upcoming product developments, was apparently enough to turn the tide.

It’s a reminder of how much Tesla trades on narrative and momentum more than near-term results. For many investors, the long-term thesis has shifted from being a car company to a play on robotics, AI, and next-gen infrastructure—which helps explain why its valuation continues to resemble a high-growth tech platform more than a traditional automaker. But that also makes it incredibly difficult to approach the stock tactically. Day-to-day moves often say more about vibes than value. If you’re a long-term believer, the case may very well still hold. But for anyone trying to trade it in the short term, the volatility and unpredictability are closer to roulette than research.

AI Still Working: Nvidia once again delivered the most anticipated earnings report of the quarter—and it didn’t disappoint. Revenue and earnings beat expectations, and forward guidance came in strong. The only real blemish continues to be China, where export controls have taken a meaningful toll. Nvidia noted its current-quarter guidance would have been $8 billion higher without those restrictions, and margins also took a hit. But beyond that, demand remains exceptionally strong. The company is effectively the backbone of the AI infrastructure buildout, and so far, has had little trouble offsetting lost China sales elsewhere.

The stock has rebounded sharply and is now approaching its all-time highs after stumbling earlier in the year. The broader risk is less about near-term execution and more about the long game—specifically, how China responds. With U.S. export limits tightening, Chinese firms are aggressively ramping domestic chip development in an attempt to close the gap. Nvidia still holds a massive lead in both capability and scale, and there’s little evidence it’s slowing down. But as geopolitical tensions remain high, it’s clear that global dynamics—not just performance—will shape the company’s future trajectory.