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Welcome back! For the Elon Musk fans out there — 37% of you voted in favor of his pay package in our poll — you can now get a similar pair of the Cybertruck shoes he's been rocking.

In today's big story, we're looking at the Apple-Google partnership that shows why hardware has become Wall Street's new favorite bet.

What's on deck:

• Markets: He could be Citi's next CEO. But first, he needs to fix its wealth business.
• Tech: YouTube is crushing it, even compared to Netflix.
• Business: An ALICE, a HENRY, and a DINK walk into a bar. Confused? We'll explain.

But first, GPUs for you.

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The big story

Hardware is hot

Software may still eat the world, but only with the help of some serious hardware.

Marc Andreessen's famous 2011 proclamation about the rise of software has rung true for the past decade. But generative AI has put a considerable spotlight on a less sexy part of tech: hardware.

One of the biggest storylines last week — the unveiling of Apple Intelligence — is an example of that shift.

Much of the discussion leading up to the event was about Apple's rumored partnership with OpenAI. But Apple's behind-the-scenes relationship with Google to train its AI models was just as crucial to the launch, writes Business Insider's Hugh Langley.

The massive data-center footprints that firms like Google, Microsoft, and Amazon have amassed are proving incredibly valuable during the generative AI boom. Like people looking to pack on muscle, large-language models need a place to train. This specialized hardware is the gym they can do it in.

But, following our fitness metaphor, there are only so many gyms in town. That's why we're starting to see unique partnerships between tech giants, like Apple and Google or Oracle and Microsoft.

The increased importance of hardware hasn't gone unnoticed by Wall Street.

The Cloud 2.0 era has meant new opportunities for other players to step up. That's playing out in the stock market, where hardware tech stocks have outperformed software tech stocks by 30 percentage points this year, writes BI's Matthew Fox.

Nvidia is the most obvious example. It's the market's golden child and is close to catching Microsoft as the most valuable company in the world.

But it's not the only one. Chipmaker Broadcom saw its stock explode this week, adding to an impressive year that's seen its shares up roughly 60%. Now it could be the next $1 trillion company.

One of the biggest names in finance is all-in on the hardware, too. Private-equity giant Blackstone is betting big on data centers.

In April, CEO Steve Schwarzman said the firm has a $50 billion portfolio of data centers, with plans to double it. Blackstone President Jon Gray has previously pegged the data-center market at growing to a trillion dollars in the next five years.

All this is not to say that software has lost its luster. After all, a gym is only valuable if there are people looking to use it.

There are plenty of valuable companies in the space with high ceilings (see: OpenAI). But those high-flying AI models also come with controversy (see, again: OpenAI).

So yes, hardware might be boring. But for investors, boring can be good.

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News brief

Your Monday headline catchup

A quick recap of the top news from over the weekend:

• Russian troops surrender to an elite brigade as the Kharkiv front holds, Ukraine says.
• McDonalds is removing its AI drive-thru voice ordering system from over 100 restaurants after its mishaps went viral.
• People are delaying buying new cars, creating a deflationary 'spiral' that's bad news for the auto industry.

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3 things in markets

1. Citi's Andy Sieg bet big on overhauling a struggling wealth business. Merrill Wealth Management's former president took a gamble leaving a strong business for Citi's much smaller wealth division. But if he's able to execute a turnaround, he could be the bank's next CEO.
2. Even as stocks boom, some bears remain. It might seem impossible to bet against the market these days, but these folks are. Five bearish forecasters share why they still see a downturn coming.
3. Dan Sundheim is having a good year. D1 Capital, his $19 billion investment manager, is up 18% in its public-equity-only portfolio this year, a person close to the firm told BI. Despite its gains, the firm has billions allocated to private investments that have dragged down returns.

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3 things in tech

1. Roast me like you mean it. At a sold-out comedy show for techies, audience members eagerly volunteer to be ridiculed by the hosts. It's a mix of being in on the joke and being the butt of the joke.
2. YouTube is the ultimate "must-have" service. In a recent survey of users' favorite entertainment platforms and services, four of the top five spots went to YouTube. It shows the power of the video platform, even compared to streaming giant Netflix.
3. Another Trump presidency could be a double-edged sword for Elon Musk. Musk has been flexing his power as a political influencer lately. And while he hasn't publicly endorsed any candidate, whoever wins the White House could massively impact his businesses through taxation and market stability.

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3 things in business

1. ALICEs and HENRYs and DINKs, oh my! Coverage of the economy is full of these weird acronyms and status labels, with more and more cropping up every day. (Ever heard of a "corporate girlie"?) To stay on top of these ever-expanding tribes, BI's glossary has you covered.
2. They're rich, but they're also really old. America's millionaires are getting older, and they're waiting longer to pass down their wealth. That's a big problem for aspiring millionaires. Younger workers can't amass wealth at the same rate they used to, and it's harder and harder to be self-made.
3. AI is set to dominate the ad industry's biggest event. The Cannes Lions ad festival kicks off this week, and AI is on everyone's minds. Businesses are exploring how they can use the tech to automate ad campaigns and for copywriting — but some worry about the loss of creativity.

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In other news

• The professors turned porn stars.
• You could get partial ownership of an AI company that may have scraped photos of your face online.
• Donald Trump is dangling tax cuts and less red tape to win over top CEOs.
• Nvidians say Jensen Huang is a perfectionist who asks tough questions — and expects them to admit mistakes.
• In the AI arms race, Big Tech keeps shooting itself in the foot and having to roll back flashy releases.
• The most important advancement in AI is making Travis Kelce pregnant.

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What's happening today

• IRS quarterly tax filing deadline.
• Cannes Lions, advertising's biggest event of the year, begins.

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The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London. George Glover, reporter, in London. Annie Smith, associate producer, in London. Amanda Yen, fellow, in New York.

• White Castle uses SoundHound's voice AI system to take drive-thru orders at 15 restaurants.
• White Castle says the aim is to free up time for staff and make sure customers don't feel rushed placing their orders.
• SoundHound, which also works with Panda Express and Chipotle, claims that its tech is "more accurate than a human."

Go to a White Castle restaurant in St Louis, Cincinnati, or Merrillville Indiana, and you may have the option to place your order with someone called Julia.

Julia isn't a cashier, though. Julia is a voice AI.

White Castle is just one in a long line of restaurant chains toying with drive-thrus powered by voice-recognition AI. Chains such as Taco Bell, McDonald's, and Checkers & Rally's have all tested or introduced voice AI drive-thrus.

The aim is to use the tech to free up workers' time so restaurants can either reallocate staff away from order-taking to roles that can't be automated or simply cut their labor costs by reducing the number of workers they need to operate.

But voice AI drive-thrus are far from achieving widespread adoption.

Firstly, they still make mistakes. Last year, restaurant-tech company Presto Automations revealed in an SEC filing that over 70% of its voice AI orders required assistance from off-site human workers. And McDonald's was mocked on TikTok over issues with its voice AI-powered drive-thrus. McDonald's is ending its test with IBM and pulling the technology from its restaurants.

And some critics fear that widespread use of AI at restaurants will ultimately put workers out of jobs, too.

White Castle started using SoundHound's AI voice-recognition services in a restaurant in Merrillville in 2022, Jamie Richardson, White Castle's VP of marketing and publication relations, told Business Insider.

The burger chain now uses it at 15 restaurants, some of which use it for multiple drive-thru lanes, he said.

White Castle previously announced plans to deploy it in more than 100 drive-thru lanes by the end of 2024. Richardson confirmed that it's on track to reach this target.

He said that White Castle's voice AI system was designed to remove a "stress-inducing situation," freeing up time for staff who have to multitask at the drive-thru and taking the time pressure off customers who may otherwise feel rushed. Orders are more accurate, too, he said.

Richardson said that White Castle hadn't cut workers' hours at its restaurants since adding the technology. Instead, workers can focus on preparing food and greeting customers at the drive-thru window when they collect their order, he said.

"It's really been a great investment and one we're eager to continue," he said.

AI was used to solve the labor crunch

Restaurant executives have been paying attention to voice AI drive-thrus for years, but a struggle to recruit and retain workers in the summer of 2021 intensified this.

SoundHound is one of a growing number of companies offering voice AI services to restaurants.

"We're more accurate than a human," Ben Bellettini, SoundHound's senior vice president of restaurant sales, told BI.

If customers don't want to order using the voice AI system, they can ask to speak to a human, he said. But "well over 90%" of orders don't involve any human interaction, he said.

SoundHound says that using its voice AI drive-thru is faster than ordering at a human agent because customers don't have to wait for a cashier to be free when they pull up to the ordering station or wait for them to manually enter orders into their till.

SoundHound doesn't just offer services for drive-thrus. It also provides voice AI tech for restaurants to take orders over the phone and at digital kiosks and offers back-of-house technology where staff can ask questions through a tablet or headset and get information from their employee handbook on what to do if the fridge breaks or how to clean the fryer.

• Elon Musk says he voted for Joe Biden in 2020. He seems increasingly interested in Donald Trump in 2024.
• One reason Musk might root for Trump: The SEC, led by a Biden appointee, is poking around his 2022 Twitter deal.
• It's purely theoretical for now, but The Wall Street Journal suggests that the SEC might push for severe penalties against Musk this time.

Elon Musk has made it clear that he doesn't like Joe Biden. He also seems increasingly interested in Donald Trump, though he won't come out and say he's formally backing him.

So here's another reason for him to move more firmly into the Trump camp: The US Securities and Exchange Commission, currently run by Biden appointee Gary Gensler, keeps dogging him.

The SEC has spent the last couple of years investigating Musk's purchase of Twitter — and the way he did, and didn't, disclose the fact that he was buying up Twitter shares prior to buying it in 2022.

Now The Wall Street Journal suggests that the agency is getting closer to making a formal case, and floats the notion that it could cost Musk his role as the CEO of Tesla, as well as chief technical officer at Twitter/X:

"The SEC hasn't filed any enforcement action so far against Musk over his Twitter trading. If the SEC makes a formal complaint against Musk for fraud, regulators are likely to again ask a court to bar him from serving as an officer or director of a public company, former officials said, exposing him to the possibility of removal from Tesla."

Context: The SEC has already gone after Musk in the past. In 2018, it sued him for making false statements about taking Tesla private and reached a settlement that amounted to a very, very light wrist slap on one of the world's richest men.

Musk has spent a lot of time since then complaining about the SEC publicly and in court, where he has unsuccessfully tried to have the settlement voided.

But this time, the Journal says, the SEC would want to do something more meaningful. And if that's the case, you could imagine Musk having that much more incentive to back Trump, and hope that Trump takes office in time to appoint a SEC head who would stop or reverse the agency's actions.

Caveats: The last time the SEC went after Musk, Trump was in the White House, and Trump appointee Jay Clayton was running the SEC. So a Trump victory doesn't guarantee a pass.

Just as important: The Journal piece includes lots of to-be-sures from legal experts about the difficulty of the SEC winning a case against Musk. Violating the spirit of SEC disclosure rules isn't the same as committing outright fraud. But Musk would certainly prefer not having to go to court to find out.

• "Inside Out 2" took $295 million at the global box office over the weekend.
• It's a record opening for an animated movie when factoring in exchange rates, Disney said.
• The success is a boost for Disney as the summer blockbuster season gets underway.

"Inside Out 2" smashed box-office records this weekend, giving Disney a big boost as the summer blockbuster season kicks off.

Pixar's owner said on Sunday the film took $155 million in the US as part of a $295 million worldwide total, good enough for the biggest opening for an animated movie when using current exchange rates and like-for-like markets.

On that measure it's a better debut than "The Super Mario Bros Movie" managed and is also the biggest worldwide opening weekend of the year, Deadline reported. Latin America in particular embraced "Inside Out 2" with open arms, giving it a $61 million total across the region.

Disney also said "The Incredibles 2," released in 2018, was the only Pixar release to perform better in the US across its opening weekend.

The first "Inside Out" made $90 million in the summer of 2015 with a $858 million global total.

"Disney and Pixar are back, and so is the summer box office," Shawn Robbins, a film and theatrical consultant, said in a post on X last week after the House of Mouse said "Inside Out 2" made $13 million from domestic previews.

Disney shares were up 1% to about $101 in premarket trading.

The film's strong debut comes at a time when the rise of streaming services has made it tougher for theaters to attract audiences. Universal's "The Fall Guy," which some had positioned as a potential summer blockbuster, underperformed expectations when it was released last month. Last year's Hollywood strikes have also complicated release schedules for studios this year.

This will also be the first year since 2009 that Disney fails to debut a Marvel film in the second quarter. The franchise's only picture of 2024, the R-rated "Deadpool & Wolverine," is due in late July.