Peloton‘s fitness business shows resilience amid economic headwinds, as the company downplays tariff impacts while emphasizing its subscription-based revenue model. Despite hardware sales falling 27 percent and subscription revenue dropping 4 percent year-over-year, Peloton remains confident about its market position and is leveraging AI to improve customer experience while exploring pricing adjustments to address macroeconomic pressures.
The big picture: Peloton emphasized its identity as “predominantly a subscription business” during its Q3 2025 earnings call, suggesting fitness spending tends to remain stable even during economic downturns.
- CFO Liz Coddington pointed to data showing fitness spending continued to grow during the 2008-2009 GDP decline, indicating “the fitness industry has some resilience to external economic factors.”
- CEO Peter Stern indicated the company is evaluating pricing strategies in response to tariffs, noting it’s been nearly three years since subscription prices were increased.
Tariff impact: Peloton disclosed modest financial effects from current and potential tariffs on its hardware and apparel products.
- The company’s hardware faces 25 percent tariffs due to aluminum components, while its apparel line is subject to pending China tariffs.
- Peloton forecasts approximately $5 million in free cash flow headwinds for Q4 2025 resulting from these tariffs.
Hardware strategy: The company is offsetting higher-priced equipment with financing options and operational improvements.
- Coddington highlighted zero percent interest financing, a bike rental program, and lower-priced refurbished models as alternatives for cost-conscious consumers.
- Peloton is piloting “dedicated vans stocked with Peloton spare parts” to improve repair services and boost customer satisfaction.
AI implementation: Stern devoted significant attention to how artificial intelligence is enhancing Peloton’s operations and customer experience.
- Customer support staff now use AI agents for call note-taking, while AI-powered translations have enabled subtitling for 3,300 classes in Q3, with current capacity at roughly 100 classes daily.
- The company has deployed Google Gemini to most team members and launched AI-powered personalized fitness plans, which have already been adopted by half a million users.
Financial outlook: Despite declining hardware and subscription revenues, Peloton slightly raised its financial guidance.
- The company increased its outlook from $247.6 million to $247.7 million, showing modest confidence despite overall losses.
- New COO Charles Kirol has been appointed with a mandate focused on supply chain logistics and cost management.
Recent Stories
DOE fusion roadmap targets 2030s commercial deployment as AI drives $9B investment
The Department of Energy has released a new roadmap targeting commercial-scale fusion power deployment by the mid-2030s, though the plan lacks specific funding commitments and relies on scientific breakthroughs that have eluded researchers for decades. The strategy emphasizes public-private partnerships and positions AI as both a research tool and motivation for developing fusion energy to meet data centers' growing electricity demands. The big picture: The DOE's roadmap aims to "deliver the public infrastructure that supports the fusion private sector scale up in the 2030s," but acknowledges it cannot commit to specific funding levels and remains subject to Congressional appropriations. Why...
Oct 17, 2025Tying it all together: Credo’s purple cables power the $4B AI data center boom
Credo, a Silicon Valley semiconductor company specializing in data center cables and chips, has seen its stock price more than double this year to $143.61, following a 245% surge in 2024. The company's signature purple cables, which cost between $300-$500 each, have become essential infrastructure for AI data centers, positioning Credo to capitalize on the trillion-dollar AI infrastructure expansion as hyperscalers like Amazon, Microsoft, and Elon Musk's xAI rapidly build out massive computing facilities. What you should know: Credo's active electrical cables (AECs) are becoming indispensable for connecting the massive GPU clusters required for AI training and inference. The company...
Oct 17, 2025Vatican launches Latin American AI network for human development
The Vatican hosted a two-day conference bringing together 50 global experts to explore how artificial intelligence can advance peace, social justice, and human development. The event launched the Latin American AI Network for Integral Human Development and established principles for ethical AI governance that prioritize human dignity over technological advancement. What you should know: The Pontifical Academy of Social Sciences, the Vatican's research body for social issues, organized the "Digital Rerum Novarum" conference on October 16-17, combining academic research with practical AI applications. Participants included leading experts from MIT, Microsoft, Columbia University, the UN, and major European institutions. The conference...