The euro area economy has lost momentum at a critical juncture, with fresh data pointing to a fragile expansion now colliding with renewed inflationary pressure, much of it imported through energy markets disrupted by the Iran conflict.

Preliminary figures from Eurostat show the bloc grew just 0.1% in the first quarter, underscoring how geopolitical shocks are feeding directly into economic performance. Also, consumer prices accelerated sharply, with inflation rising to 3% in April from 2.6% in March, reversing earlier progress and moving decisively above the European Central Bank’s 2% target.

The composition of that inflation surge is central to the policy dilemma. Energy prices climbed 10.9% year-on-year, more than doubling the previous month’s pace, reflecting supply disruptions tied to the prolonged blockade of the Strait of Hormuz. For a region heavily dependent on imported energy, the shock has translated quickly into higher transport costs, industrial input prices, and household bills.

This dynamic leaves policymakers confronting a familiar but difficult trade-off. Raising interest rates could help anchor inflation expectations, but risks deepening an already weak growth profile. Holding rates steady, meanwhile, may allow price pressures to become entrenched, particularly if energy costs remain elevated.

The Governing Council is widely expected to keep its benchmark rate unchanged at 2% at its upcoming meeting, pinpointing a preference for caution as officials assess whether the current inflation spike proves temporary or evolves into a broader price cycle. Market expectations suggest the ECB is reluctant to react to what is, at least for now, a supply-driven shock beyond its direct control.

There are, however, early signs that underlying inflation pressures remain contained. Core inflation, which strips out volatile food and energy components, eased slightly to 2.2% in April. That marginal decline indicates so-called second-round effects, where higher energy costs feed into wages and broader pricing behavior, have yet to take hold at scale.

Analysts at Morgan Stanley framed the data as supportive of a wait-and-see stance.

“At the very least, this confirms short-term risks to core inflation are contained and the data do not point to the need [for the ECB] to act fast. This aligns with our long-held view that the ECB will remain on hold in April and will want to keep all options on the table for the next meetings,” the bank said.

Yet the broader macroeconomic backdrop is deteriorating. Economists increasingly warn that the euro zone could be drifting toward stagflation, where weak growth coincides with persistent inflation. That risk is being amplified by the external nature of the current shock. Unlike demand-driven inflation cycles, energy-led price spikes tend to suppress consumption while simultaneously lifting costs, creating a negative feedback loop across the economy.

The strain is already visible in business sentiment and consumer confidence indicators, both of which have softened in recent weeks. Higher fuel prices are eroding disposable incomes, while companies face margin compression as input costs rise faster than they can pass them on.

Economists at Berenberg were blunt in their assessment, warning that the Iran war is “battering European economies.” They pointed to a convergence of pressures, including trade tensions and global competition, alongside the energy shock.

“While the Strait of Hormuz remains largely closed and pervasive uncertainty weighs on confidence, the Eurozone and UK economies will likely suffer a bout of stagflation,” they said.

Crucially, the bank cautioned against a premature policy response. “If the ECB were to hike rates in response to the temporary spike in inflation, the Eurozone may first fall into an unnecessary mini-recession in late 2026 or early 2027 before the economy can start to recover from that policy mistake,” it said.

That warning underlines a deeper concern within markets: that central banks, scarred by the inflation surge of 2022, may overcorrect in the face of a fundamentally different shock. In this case, tightening financial conditions would do little to address the root cause of inflation, constrained energy supply, while exacerbating weakness in investment and consumption.

The euro zone’s position is further complicated by structural vulnerabilities. Energy diversification efforts since earlier crises have reduced dependence on single suppliers, but not eliminated exposure to global price swings. With alternative supply routes stretched and demand rising globally, Europe faces higher costs regardless of sourcing strategy.

For now, the ECB appears inclined to prioritize stability over decisive action, effectively betting that inflation will moderate as energy markets normalize. That assumption, however, rests heavily on geopolitical developments beyond its control.

In the near term, the bloc’s outlook seems to hang on two variables: the duration of the Hormuz disruption and the extent to which elevated energy prices filter into wages and broader inflation dynamics. Until there is clarity on both fronts, analysts expect policymakers to remain constrained, navigating a narrow path between curbing inflation and avoiding a deeper economic slowdown.

Apple delivered quarterly results that topped Wall Street expectations, powered by accelerating growth in its high-margin services business and a rebound in China sales, as investors begin assessing the company’s next chapter under incoming chief executive John Ternus.

The company reported fiscal second-quarter revenue of $111.18 billion, ahead of analyst expectations of $109.66 billion, while earnings per share came in at $2.01 versus estimates of $1.95. Revenue rose 17% from a year earlier, marking one of Apple’s strongest quarterly growth performances in recent years.

Yet beneath the headline beat, the report also highlighted a deeper transition underway inside the company. iPhone revenue, long the core engine of Apple’s business, narrowly missed expectations for the second time in three quarters, reinforcing investor concerns about whether the company can sustain hardware-driven growth in an increasingly mature smartphone market.

iPhone sales totaled $56.99 billion, slightly below forecasts of $57.21 billion, even as overall iPhone revenue rose 22% year-on-year. The mixed picture suggests Apple continues to benefit from pricing strength and customer loyalty, but is facing a more demanding environment for unit growth globally.

The earnings release also marks Apple’s first quarterly report since the announcement that Tim Cook will step down after 15 years leading the company. Cook is scheduled to become executive chairman in September, with longtime hardware chief John Ternus taking over as CEO.

That leadership transition is drawing unusual scrutiny because it comes at a pivotal moment for Apple. The company is confronting several simultaneous challenges: slowing smartphone replacement cycles, intensifying competition in artificial intelligence, supply chain constraints, and growing investor pressure to define its long-term growth strategy beyond the iPhone.

Cook sought to reassure investors during the earnings call, saying, “We have the right leader ready to step into the role,” adding that Apple possesses the talent and structure to realize the “promise of this company.”

Much of Wall Street’s focus is now shifting toward how aggressively Ternus intends to reposition Apple around artificial intelligence.

Earlier this quarter, Apple announced a partnership with Google to integrate the Gemini AI model into Siri, a notable move for a company historically reluctant to rely heavily on external platforms for core consumer experiences. The partnership was widely interpreted as an acknowledgment that Apple has fallen behind rivals in generative AI development.

Unlike competitors such as Microsoft and Meta, which have spent aggressively to embed AI across products and infrastructure, Apple has taken a slower, more cautious approach. Investors are now looking for clearer signs that the company can translate AI adoption into consumer demand and ecosystem expansion.

But Apple’s services division continues to emerge as the stabilizing force within the business.

Services revenue climbed nearly 16% year-on-year to $30.98 billion, surpassing expectations and reinforcing the importance of recurring subscription income to Apple’s broader strategy. The segment includes iCloud, Apple Pay, AppleCare, and entertainment subscriptions, all of which benefit from the company’s vast installed base of active devices.

The significance of services extends beyond revenue growth. It is also central to Apple’s margin expansion.

Gross margin rose to 49.3%, ahead of expectations and significantly above levels historically associated with hardware-heavy consumer electronics companies. Apple’s ability to extract more revenue from existing customers through software, payments, and subscriptions is increasingly helping offset slower growth in core devices.

The company’s improving profitability profile also underscores why investors continue assigning Apple a premium valuation even as hardware sales mature.

Another bright spot came from China.

Revenue from Greater China rose 28% year-on-year to $20.5 billion, rebounding sharply from the prior year’s weakness and easing concerns that Apple was losing ground permanently in one of its most strategically important markets. China remains Apple’s third-largest regional business after the Americas and Europe.

The recovery is notable given intensifying domestic competition from Chinese smartphone makers and rising geopolitical tensions between Washington and Beijing. Apple has faced mounting pressure in China both commercially and politically, making the rebound an important signal for investors monitoring the company’s international resilience.

Meanwhile, Apple’s spending profile points to a company investing heavily for its next phase.

Research and development expenses jumped 33% year-on-year to $11.42 billion, far outpacing revenue growth. The increase underlines major industry dynamics, where major technology firms are racing to strengthen AI capabilities, semiconductor design, and next-generation computing platforms.

Apple is also navigating broader supply chain challenges tied to the AI infrastructure boom. Executives noted that global memory shortages, driven by surging demand for AI systems, are affecting availability and costs across the electronics industry. Similar pressures were recently highlighted by Microsoft and Meta as both companies increased capital expenditure forecasts.

In consumer hardware, Apple introduced several new products during the quarter, including the iPhone 17e, refreshed iPad Air models, and the MacBook Neo, a lower-cost laptop targeted at students and budget-conscious consumers. The Neo, priced at $599, signals Apple’s attempt to widen its addressable market at a time when consumers globally are becoming more price sensitive.

The company also announced an additional $100 billion share repurchase authorization and raised its quarterly dividend by 4% to 27 cents per share, reinforcing Apple’s continued emphasis on shareholder returns.

For investors, however, the central question increasingly revolves around Apple’s identity in the post-Cook era.

Under Cook, Apple evolved into one of the world’s most profitable and operationally disciplined companies, expanding far beyond hardware into services and ecosystem monetization. Ternus now inherits a company that remains financially dominant but faces greater uncertainty about where its next transformative growth engine will emerge.

Nvidia is expanding its influence far beyond chips and data centers, moving deeper into the fast-growing world of enterprise artificial intelligence with a new investment in Swedish legal technology startup Legora at a valuation of $5.6 billion.

The investment, made through Nvidia’s venture arm NVentures, formed part of a $50 million extension to Legora’s Series D fundraising round, lifting the total raise to $600 million after an earlier close in March. The extension also attracted participation from Atlassian, Adams Street Partners, and Insight Partners, underscoring how aggressively investors are pursuing companies positioned to commercialize generative AI in specialized industries.

The deal is notable not simply because of the valuation, but because it marks Nvidia’s first major known investment in legal technology, a sector that until recently was viewed as relatively insulated from automation due to its reliance on expertise, regulatory complexity, and human judgment.

That assumption is now rapidly changing.

Legora is building AI agents designed to automate legal workflows, from document review and drafting to research and compliance tasks. The company is part of a broader wave of startups attempting to transform professional services industries through what is increasingly being called “agentic AI” — systems capable not merely of assisting workers, but executing multi-step tasks autonomously under human supervision.

Its chief executive, Max Junestrand, described the shift as a new phase for enterprise AI, where the focus is moving from raw model capability toward practical deployment inside large organizations.

“The real breakthrough is in how they’re applied, where AI doesn’t just assist, but executes autonomously with the right level of human oversight,” he said.

The significance of Nvidia’s involvement extends beyond capital. Over the past two years, the chipmaker has emerged as one of the most influential power brokers in the AI economy, using investments to deepen ties with startups that are likely to become major consumers of its infrastructure. NVentures has increasingly functioned as an ecosystem builder, linking Nvidia’s hardware dominance with the software companies shaping the next generation of AI applications.

That strategy has become especially important as competition intensifies across the AI stack. While firms such as OpenAI and Anthropic dominate attention around frontier models, Nvidia is positioning itself as the enabling layer underneath the entire ecosystem, ensuring that whichever companies emerge as winners are likely to remain dependent on its computing architecture.

Legal technology is becoming one of the clearest examples of how generative AI is spreading into high-value white-collar industries. Historically, automation transformed repetitive industrial labor first. The current AI cycle is instead targeting knowledge work, particularly sectors built around document-heavy processes and specialized research.

That has triggered both enthusiasm and anxiety within the legal profession. Supporters argue AI tools can dramatically improve efficiency, reduce costs, and free lawyers from routine administrative work. But critics warn that rapid deployment raises questions around confidentiality, hallucinations, regulatory liability, and the erosion of junior-level legal training traditionally built around manual review tasks.

The surge in capital flowing into the sector is seen as an indication of investor conviction that these risks will not prevent adoption. Global funding for AI-focused legal technology firms reached $3.7 billion in 2025 and is on pace to match or exceed that level again this year. In March, U.S.-based rival Harvey raised $200 million at an $11 billion valuation, intensifying competition for dominance in the emerging market.

Legora’s growth trajectory illustrates how quickly the sector is scaling. The company expanded from 40 employees to 400 within a year, establishing operations across Europe, North America, Asia, and Australia. It says it has surpassed $100 million in annual recurring revenue, a milestone increasingly viewed by venture investors as proof that enterprise AI adoption is moving from experimentation to large-scale deployment.

Its customer base also signals the direction of the market. Legora now serves major corporate legal departments, including Barclays, alongside international law firms such as Linklaters and White & Case. The involvement of established firms suggests that AI adoption in legal services is becoming less of a fringe innovation and more of a competitive necessity.

The broader backdrop is a global race to dominate applied AI. European startups, long overshadowed by Silicon Valley, are beginning to attract record levels of capital as investors search for commercially viable AI businesses beyond foundational model developers. According to Dealroom data, European AI startups have already raised more than $15 billion this year and are on track to surpass last year’s record.

The Legora investment is another indication that Nvidia sees the next phase of the AI boom extending well beyond infrastructure. The early phase of the cycle was defined by the scramble for chips, computing power, and large language models. The next phase is increasingly about industry-specific applications capable of generating durable, recurring revenue.

Legal services, once considered resistant to technological disruption, are now becoming one of the latest battlegrounds in that transformation.