Global Stock Brief

Reddit (RDDT) Stock: Users Shrink as US ARPU Jumps 53%

J. Equity. Research — Thu, 05 Nov 2026 11:19:54 GMT

Reddit (NYSE: RDDT) grew third-quarter revenue +53.0% to $895.0 million, then told shareholders that if October’s search trends continue, “current trends would suggest that total DAUqs could fall in Q4, by a low-double-digit percentage from our current base of 130 million DAUqs”. DAUq counts unique users who visit at least once a day. The stock fell -29.2% the next trading day, and the October month-end close of $91.73 sits -60.1% below the September 2025 month-end high of $229.99. Revenue now comes from revenue per user rather than user growth: US DAUq fell -1.7% year over year to 50.7 million while US ARPU rose +52.9% to $13.82.
Reddit runs a network of interest-based communities called subreddits, where people post and comment under pseudonyms. Advertising was 94.6% of Q3 revenue, and most of the rest is content licensing, which sells access to Reddit’s posts and comments. At a $91.73 close it is worth about $17.7 billion on market data.

Reddit one-year share price chart

The question here is how far ARPU gains can carry revenue while search-referred users fall away. The analysis lines up the Q3 2026 earnings release, the Q3 and Q2 2026 shareholder letters on the IR site, the Q3 2026 10-Q and all 11 quarterly earnings releases since the IPO.
Two caveats apply. DAUq and ARPU are company-defined user metrics, not audited figures, and adjusted EBITDA and free cash flow are non-GAAP measures. User figures for 2023 come from the prior-year columns of the 2024 earnings releases.

What the Q3 Shareholder Letter Says About Search Traffic

Q3 letter page 3: business highlights with US and international DAUq and WAUq over five quarters

The Q3 letter runs 21 pages. The page 3 business highlights lead with 130.3 million DAUq (+12%) and 515.2 million weekly active uniques, or WAUq (+16%). The bar chart on the same page shows US DAUq at 53.5 million in Q1 2026, 53.2 million in Q2 and 50.7 million in Q3, two straight sequential declines, while international DAUq of 79.6 million (+24%) held the total flat. The weekly chart below it shows US WAUq falling to 188.5 million from 197.2 million in Q2, roughly where it stood a year earlier at 187.8 million. The page also notes that logged-in and app users grew sequentially in the US and the rest of the world, and it presents the S&P 500 inclusion as proof of “its 1-of-1 financial model”.
Company disclosure (Q3 2026 shareholder letter, October 29, 2026): In the page 4 letter, CEO Steve Huffman wrote, “Our search referral traffic was down meaningfully in Q3, with the decline accelerating later in the quarter.” The biggest hit was to logged-out and web traffic, and during October search traffic dropped by more than 1 million referrals a week on average. The Q2 letter had covered the same subject in one line: “Search referrals were choppy in the quarter, and traffic was more volatile later in the quarter”.
Page 5 answers back. Logged-in and app users make up the vast majority of engagement and “over 80% of the monetization on Reddit”, and both grew from the prior quarter. The share of new app users who return in their first week is up double digits quarter over quarter and more than 50% year over year. “Currently only about 13% of eligible mobile web users are seeing the app conversion prompt”, the letter adds, so there is room to move more web visitors into the app. In Q4 the company will begin testing a logged-in-only Reddit in select markets outside the US.
Checked against the releases, the two messages describe the same numbers from different sides. Global logged-in DAUq reached 53.5 million, up from 50.2 million a year earlier, but US logged-in DAUq of 23.4 million is barely above the 23.0 million of Q1 2025. International DAUq added 15.2 million in a year and covered the 0.9 million lost in the US, and most of the logged-in growth the letter cites came from outside the US.

Q3 letter page 8: US and international revenue with gross margin operating expenses net income and adjusted EBITDA

Page 8 splits revenue into $718.9 million from the US (+50%) and $176.1 million internationally (+67%), with a 91.5% gross margin, net income of $283.3 million (+74%) and adjusted EBITDA of $402.3 million (+70%). Advertising revenue of $847 million grew +54%, which the letter attributes to higher pricing and more impressions. Diluted EPS was $1.40 (+75%) and capex was $1 million. GAAP operating expenses of $557.6 million and non-GAAP operating expenses of $417.3 million differ by $140.3 million, of which $136.0 million is stock-based compensation and related taxes in the page 8 chart.

Q3 letter page 9: ARPU and revenue growth versus cost growth with margin trends

Page 9 is where the slowdown shows. Revenue growth divided by cost growth fell from 1.8 times in Q3 2025 to 1.3 times in Q3 2026, and the incremental adjusted EBITDA margin, the share of each new dollar of revenue that reached adjusted EBITDA, slipped from 60.0% to 53.6%. Revenue growth itself went from 68% to 53%. The adjusted EBITDA margin of 44.9% is still 4.6 points higher than a year ago, but costs are catching up with revenue faster.
The top-right chart calls Reddit a Rule of 98 company, adding revenue growth to adjusted EBITDA margin, 58 points above the usual threshold of 40. That sum has fallen three quarters in a row, from 115 in Q4 2025 to 109, 104 and 98, and nearly all of the drop is in growth while the margin has stayed between 40% and 45%. The ARPU chart leads with global ARPU of $6.87 (+36%), but over the year US ARPU rose $4.78 while international ARPU rose $0.59.
Own calculation (Q3 2026 10-Q): Sales and marketing expense rose +62.7% to $209.4 million, faster than revenue, and took 23.4% of revenue against 22.0% a year earlier. The 10-Q attributes most of it to user and brand marketing and explains flat global DAUq as marketing gains that were “offset predominantly by third-party search engine changes”. Holding the user count steady now shows up as a cost.

Q3 letter page 10: cash fully diluted shares operating cash flow and stock-based compensation

Page 10 covers shares and cash. Fully diluted shares fell -0.3% to 206.3 million, or stayed flat at 207.0 million excluding buybacks. The same chart shows 35,000 shares repurchased in Q1 2026, 1.489 million in Q2 and about 670,000 in Q3, the last for $100 million at an average of $149.81. Stock-based compensation and related taxes were $136.4 million (+46%), or 15% of revenue. Cash and marketable securities stood at $3.0 billion, 36% more than a year earlier, and operating cash flow was 40.6% of revenue.

The Bull and Bear Case for Reddit Shares

The bull case is that the users who pay the bills are holding up. Logged-in and app users, the source of over 80% of monetization, grew sequentially, and US ARPU growth more than covered the US user decline to lift US revenue +49.9%. Net margin is 31.7%, and the company holds $3.033 billion of cash and securities with no borrowings.
The bear case is a shrinking audience. Management itself has warned of a Q4 DAUq decline, the Q3 revenue beat over guidance was the smallest in ten quarters, and Q4 revenue guidance implies growth of +37.8% to +42.0% against 53% in Q3, while user marketing grows faster than revenue.

From the 2024 IPO to the Q4 User Warning

Reddit month-end share price since the IPO with four dates

Reddit, founded 21 years ago, completed its IPO on March 25, 2024, selling 25.3 million Class A shares at $34.00. IPO-related charges produced a $575.1 million net loss in Q1 2024. The company reported its first profit as a public company in Q3 2024, net income of $29.9 million, and the October 2024 month-end close jumped +81.0% to $119.30.
The first user warning came in February 2025. US DAUq slipped from 48.2 million to 48.0 million in Q4 2024, the first sequential decline since the IPO, and the stock fell -47.4% from $199.55 at the end of January to $104.90 at the end of March. Q2 2025 revenue growth of +77.7% sent it +40.2% higher in August to $225.08, and September’s $229.99 is the post-IPO month-end high.
The user problem returned in 2026. US DAUq peaked at 53.5 million in Q1, and Q3’s 50.7 million is the first year-over-year decline in the 11 quarters since Q1 2024. Reddit joined the S&P 500 in 2026, but after the Q4 DAUq warning the October close of $91.73 was -35.6% below September’s. That is still +169.8% above the IPO price.

How Many Reddit Users Arrive From Search?

Reddit US logged-in and logged-out DAUq over 15 quarters with US ARPU

Reddit splits DAUq into logged-in and logged-out users. Logged-out visitors often arrive from search results on the web, which is why the letter says the search decline hit logged-out and web traffic hardest. US logged-out DAUq rose from 13.4 million in Q1 2023 to 30.3 million in Q1 2026, then fell to 27.3 million in Q3, -9.9% from Q1 and -4.2% year over year. US logged-in DAUq grew from 15.2 million to 23.4 million over the same span but has stayed between 22.9 million and 23.4 million for the seven quarters since Q1 2025.
Own calculation (11 quarterly earnings releases): Logged-out users are 53.8% of US DAUq and 58.9% of global DAUq, or 76.8 million of 130.3 million. With logged-out users in the majority, a drop in search referrals hits the headline user count first. Since logged-in and app users generate over 80% of monetization, users outside that group make up a large share of DAUq and less than 20% of monetization.
The disclosure itself changed. In its 2025 10-K, Reddit said it would stop reporting logged-in and logged-out DAUq as of the quarter ended September 30, 2026. The Q3 10-Q kept them, citing increased volatility in referral traffic as third-party search changes, including AI-generated summaries and overviews, and saying “management believes that logged-in and logged-out DAUq remain useful for understanding user trends”. The split the company planned to drop came back in the quarter logged-out users started to fall.

US ARPU and the Shrinking Guidance Beat

Reddit quarterly revenue against the prior top of guidance and the size of each beat over ten quarters

Revenue came from ARPU, not users. Comparing third quarters, US ARPU went from $5.27 in 2023 to $5.88 in 2024, $9.04 in 2025 and $13.82 in 2026. US revenue growth of +49.9% is ARPU growth of +52.9% covering a -1.7% user decline, and US ARPU is 5.7 times international ARPU of $2.43. International ARPU rose +32.1%, but the gap with the US widened from 4.6 times in Q3 2023.
The guidance record shows the slowdown. Revenue has beaten the top of the prior quarter’s guidance for ten straight quarters since Q2 2024, by as much as +16.2% in Q2 2025 and by as little as +2.9% in Q3 2026, against guidance of $860 million to $870 million. The previous smallest beat was +6.1% in Q1 2025.
Own calculation (Q3 2026 letter and earnings releases): Q4 revenue guidance of $1.000 billion to $1.030 billion is +37.8% to +42.0% above the $725.6 million of Q4 2025. Reading the letter’s low-double-digit decline as -10% to -13% from Q3 puts Q4 DAUq at 113.4 million to 117.3 million. To meet guidance with that audience, Q4 global ARPU has to reach $8.53 to $9.09, +24.1% to +32.3% above Q3’s $6.87. Last year’s seasonal Q3 to Q4 ARPU increase was +18.7%.
Q4 is the holiday ad season, so ARPU always rises, but this guidance needs 5 to 14 points more than last year’s seasonal step. It embeds management’s view that pricing gains will outrun the user decline.

How Reddit Makes Money

Reddit is a platform of subreddits that users create and run. The 2025 10-K counts more than 100,000 active communities, and the CEO letter pitches Reddit as the place to read other people’s lived experiences without revealing a real-world identity. Users added another billion posts and comments in Q3. Moderators run individual communities with AI-powered tools from the company, and Reddit’s own enforcement team cut the median time to act on violating content from 58 hours to 5 seconds this year.
Advertising is 94.6% of revenue, $847.0 million of Q3’s $895.0 million. Advertisers pay per click, per thousand impressions, per video view or a fixed fee, and contracts typically run less than 30 days, so ad revenue is resold every quarter rather than locked in. Targeting by community, where users have already declared their interests, is the core of the product. Page 7 of the letter says video ad revenue more than doubled in Q3 and that more than 20 million business decision-makers come to Reddit, and the company has expanded lead generation tools for B2B advertisers.
Reddit is also broadening its advertiser base. The 10-K describes a push from endemic verticals with the most active communities, such as technology and communications, business, legal and finance, and media and entertainment, into automotive, retail, consumer packaged goods and pharmaceuticals. The Q3 letter cites strength in the lower funnel and in travel and B2C services. Reddit Max campaigns, which automate campaign setup, went to general availability with API access, and Reddit Community Intelligence turns billions of posts and comments into marketing insight for brands.
Other revenue was $48.0 million (+34.8%). The 10-Q describes it as content licensing plus products sold directly to users, such as Reddit Premium and Reddit Gold, which are not material. Licensing customers buy the right to access Reddit content over a contract term. Remaining performance obligations on contracts longer than one year were $62.4 million, mostly long-term content licensing. Nine-month other revenue of $130.0 million is about a seventeenth of advertising.
Licensing and search traffic share a root. The 10-Q risk factors ask whether the availability of Reddit data from third-party sources hurts both user traffic and the value of licensing deals, and list whether to sign new deals or renew existing ones as a strategic call. The more search engines and AI tools summarize Reddit posts, the fewer people click through, and the more the value of that data has to be captured by contract.
Geographically, 80.3% of Q3 revenue came from the US and 19.7% from abroad. International DAUq of 79.6 million exceeds the US base, but at $2.43 of ARPU each added international user brings in about a sixth of what a US user does.
The cost base is light. Gross margin is 91.5%, Q3 capex was about $1 million, and operating cash flow of $363.8 million became $362.6 million of free cash flow. Research and development of $263.5 million (+34.2%) and sales and marketing of $209.4 million are the largest expenses, and full-time headcount was 2,555 at the end of 2025. Q3 GAAP operating income was $261.6 million, a 29.2% margin.
The next step is logged-in Reddit. The letter says moving to primarily logged-in will add signals for ad targeting, raise engagement, protect access to Reddit’s data and help with emerging regulation, and notes that “Pretty much all of the major ad-based platforms have gone through this transition”. The trade-off is a smaller logged-out count in exchange for better targeting and tighter control over data access.

Reddit vs Meta Pinterest and Snap

Revenue growth and operating margin at Reddit Meta Pinterest and Snap

On market data, TTM revenue growth was +62.2% at Reddit, +27.5% at Meta, +15.4% at Pinterest and +12.6% at Snap (through June). Operating margins were 37.9% at Meta, 29.4% at Reddit, 5.6% at Pinterest and -3.1% at Snap, so Reddit grows fastest and ranks second on margin.
All four are worth less than a year ago. Reddit’s market value fell -55.1%, against -50.2% at Pinterest, -31.0% at Snap and -16.7% at Meta, so the fastest grower lost the most value.

Forward P/E and price to sales at Reddit Meta Pinterest and Snap

Reddit’s forward P/E of 14.47 is below Meta’s 18.67 and above Pinterest’s 8.76 and Snap’s 7.39. Its price to sales of 5.73 trails Meta’s 6.51 and is 2.4 to 4.0 times Pinterest’s 2.37 and Snap’s 1.42. Meta, Pinterest and Snap mostly sell ads to logged-in app users built around friends, saved images or messaging. With 58.9% of its DAUq logged out, Reddit is more exposed to changes in search, which helps explain a forward P/E below Meta’s despite more than twice its growth.

Reddit’s Price-to-Sales and EV-to-EBITDA Band

Reddit price to sales and EV to adjusted EBITDA over 23 months

The band covers 23 months from December 2024, the first month with four post-IPO quarters of adjusted EBITDA. P/E is left out because trailing GAAP net income only turned positive in Q1 2025; market data puts the trailing P/E at 18.73 and the forward P/E at 14.47.
Own calculation (month-end prices and 11 earnings releases): Price to sales of 5.72 is the lowest of the 23 months (4th percentile, median 14.64, high 25.02). Enterprise value of $14.63 billion, after $3.033 billion of cash and securities, is 10.9 times TTM adjusted EBITDA of $1.338 billion, also a 23-month low (median 45.9, high 91.2).
Both multiples hit bottom because the stock fell while revenue and profit grew. Swapping the $495 million midpoint of Q4 adjusted EBITDA guidance in for Q4 2025 gives four quarters of $1.506 billion and an EV multiple of 9.7. The price now reflects doubt about how long the profit lasts more than its size.

Three Conditions That Move the Stock

US logged-in DAUq shows whether the monetized core is holding. If it stays around 23.4 million through the Q4 search decline and starts to grow after the logged-in tests, a falling DAUq count need not reach revenue. A drop in logged-in users as well would hit the base that drives most monetization.
US ARPU measures how fast pricing covers user losses. Q4 global ARPU of $8.53 or more meets guidance, and US ARPU growth comfortably above the user decline in 2027 would support the stock. Another beat below 3%, or Q4 revenue under the $1.0 billion low end, would weigh on it.
Sales and marketing as a share of revenue is the price of buying users. A ratio falling from 23.4% while DAUq grows again shows marketing paying off. A rising ratio alongside falling DAUq would stall margin expansion.

What to Watch in the December Quarter

The Q4 report, likely in early February 2027, should show whether the DAUq decline stays within the low double digits management flagged, whether revenue clears the $1.000 billion to $1.030 billion range and whether US logged-in DAUq held. Whether the company keeps reporting the logged-in and logged-out split is worth watching too.
One question stays open. Management wants a logged-in Reddit for better targeting, yet logged-out users are 58.9% of DAUq. When the tests outside the US report back, will Reddit accept a smaller DAUq count for higher ARPU, or narrow the rollout?

TSMC (TSM) Stock: 60% Margins and Guidance It Keeps Beating: another long streak of beating the company’s own guidance, useful for comparing the size of each beat with Reddit’s narrowing margin over the top of its range.
Uber (UBER) Stock Analysis: Gross Bookings vs Revenue Gap: a consumer platform where usage and revenue grow at different speeds, a parallel to Reddit’s split between users and ARPU.

Sector RS Rank Nov 4: Gold Miners Lead, Oil & Gas Fall

J. Equity. Research — Wed, 04 Nov 2026 23:06:17 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Lowe’s · Glaukos · Dollar Tree

② What rose today: gold and silver miners, homebuilders, medical devices

③ What pulled back: oil and gas, AI power infrastructure, semiconductors

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Nov 4 Sector RS — 129 ETFs · RRG v2

Democrats won control of both chambers of Congress, and stocks rallied the day after the vote. The Dow jumped +3.03% to 53,356.12, a gain of about 1,569 points. The S&P 500 rose +1.58% to 7,688.62, and the Nasdaq added +1.44% to 25,736.51. WTI crude fell -7.88% to $88.52 on signs of easing tension between the US and Iran. Gold rose +3.32% to $4,071.40. The 10-year Treasury yield slipped to 4.89% from 4.95%, and the VIX fell to 16.61 from 20.83. AI-linked names were the weak spot. Micron lost -7.00%, and Vistra dropped -13.83%.

Nov 4 Major Indexes — 1-Day Change

Nov 4 GICS 11 Sectors — 1-Day Change

Of the 129 ETFs in our universe, 85 closed higher and 44 fell. Consumer discretionary (XLY) led the 11 sectors at +4.26%. Energy (XLE) was last at -4.74%. Eight sectors rose, and three fell. The equal-weight S&P 500 (RSP) gained +1.86%, ahead of the cap-weighted index. This was a broad rally, not a few large names.

Today’s Leading Sectors TOP 5

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
iShares U.S. Medical Devices (IHI)	+6.72%	99	🔺	🔺	🔺
SPDR S&P Retail (XRT)	+5.54%	99	🔺	🔺	🔺
iShares U.S. Home Construction (ITB)	+7.25%	98	🔺	🔺	🔺
Amplify Online Retail (IBUY)	+5.18%	97	🔺	🔺	🔺
Consumer Staples Select Sector SPDR (XLP)	+3.36%	96	🔺	🔺	🔺

The top of the table turned over. Utilities (XLU) fell from 99 to 88, UTES from 99 to 74, and insurance (IAK) from 98 to 93. Retail (XRT), home construction (ITB), and online retail (IBUY) took their places. ITB climbed back from 82 to 98 in the sheet, one day after a sharp drop.

Why They’re Strong — Sector Issues

VanEck Gold Miners GDX Daily

· Gold Miners (GDX) — Up +9.01%, sheet RS rank 34. Gold rose +3.32%, and the miners moved almost three times as much. Equinox Gold rose +12.80%, Newmont +9.90%, and Coeur Mining +8.72%. Junior miners (GDXJ) gained +9.62% and silver miners (SIL) +9.60%. A softer dollar and lower yields helped. The rank is still in the bottom half.

Stocks That Lifted Gold Miners GDX — 1-Day Change

iShares Home Construction ITB Daily

· Home Construction (ITB) — Up +7.25%, sheet RS rank 98. Trex jumped +14.30%, Champion Homes +11.35%, and Floor & Decor +10.92%. The fund fell -3.56% on Tuesday. Lower yields brought buyers straight back.

Stocks That Lifted Home Construction ITB — 1-Day Change

U.S. Global Airlines JETS Daily

· Airlines (JETS) — Up +6.70%, sheet RS rank 69. JetBlue rose +11.95%, Frontier +9.58%, and Allegiant +9.50%. Fuel is a carrier’s largest variable cost, and crude fell -7.88%. The rank was 34 five sessions ago.

Stocks That Lifted Airlines JETS — 1-Day Change

iShares Medical Devices IHI Daily

· Medical Devices (IHI) — Up +6.72%, sheet RS rank 99. Zimmer Biomet rose +13.49%, Intuitive Surgical +9.38%, and Medtronic +6.15%. Health care rallied broadly after the vote. Hospital operator HCA gained +10.34% on hopes that Democrats resist Medicaid cuts.

What Changed From Yesterday

Genomics (GNOM) posted the biggest one-day rank gain, 43 to 71, though about two thirds of it came from a weak day a month ago leaving the window. Gold miners (GDX) went from 25 to 48, and equal-weight biotech (XBI) from 57 to 76.

Biggest 1-Day RS Rank Gains — Yesterday vs Today

Biggest 1-Day RS Rank Losses — Yesterday vs Today

Oil (USO) lost the most, 98 to 61. Energy (XLE) fell from 83 to 60, and two explorer funds lost 22 points each. Utilities (UTES) dropped from 88 to 57, but about two thirds of that came from a strong day a month ago leaving the window. Tuesday’s report called the crypto jump a bounce, not a new trend. Blockchain (BKCH) gave back -2.69% today, so that call held.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

Airlines (JETS) rose from 1 to 75 over the window. Solar (TAN) went from 2 to 68. Gold miners (GDX) started at 98, sank near the bottom, and are back at 48. Oil explorers (XOP) slid from 94 to 46. AI power infrastructure (AIPO) peaked at 83 and ended at 8.

RS Breakdown Warnings

RS Breakdown Warnings — 5 Sessions Ago vs Today

Oil services (OIH) fell from 93 to 40, the deepest drop. Ten more funds qualified, most of them energy: explorers, oil equipment, gas producers, crude oil, and pipelines. Utilities (UTES) and global shipping (BOAT) are on the list too. Eight funds were dropped because Wednesday’s price moved the other way, mostly software and cybersecurity.

RS Rebound Signals

RS Rebound Signals — 5 Sessions Ago vs Today

Airlines (JETS) jumped from 27 to 75, the strongest rebound. Solar, timber, European defense, GLP-1, and wind energy followed. Silver miners (SIL) and gold miners (GDX) also qualified. Two other funds were dropped because the price moved the other way, junior gold miners (GDXJ) among them.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
VanEck Junior Gold Miners (GDXJ)	+9.62%	21	🔽	🔽	🔽
Global X Silver Miners (SIL)	+9.60%	20	🔽	🔽	🔽
VanEck Gold Miners (GDX)	+9.01%	34	🔺	🔽	🔽
iShares U.S. Home Construction (ITB)	+7.25%	98	🔺	🔺	🔺
iShares U.S. Medical Devices (IHI)	+6.72%	99	🔺	🔺	🔺

Why They Rose

Two groups led. Precious metal miners followed gold higher, though all three still sit below their longer averages. Home construction and medical devices were already near the top of the sheet. On the other side, oil (USO) -8.07%, oil explorers (XOP) -6.39%, AI power infrastructure (AIPO) -6.33%, and oil and gas producers (IEO) -6.30% led the decliners. Reports said investors worried that new Democratic governors could slow data center construction.

Leading Sectors: Medical Devices, Retail, Home Construction

① Medical devices (IHI) rank 99, up from 97. The fund is above every average.
② Retail (XRT) also ranks 99. It had slipped to 93 on Tuesday and came straight back.
③ Home construction (ITB) ranks 98, up from 82. It erased Tuesday’s loss in one session.
④ The last report covered the November 3 close. Its three picks from that close to Wednesday’s: Fiserv +6.25%, Neurocrine Biosciences +0.73%, and Sirius XM +8.44%, against +1.58% for the S&P 500. Two of three beat the index. Neurocrine lagged. Sirius XM closed at $33.40, above the $32.59 July high the report flagged. All three stayed above their marks. Recorded as is.

Today’s Three Stocks — Lowe’s · Glaukos · Dollar Tree Stock Forecast

Ninety-one stocks passed the four-part filter. These three fit the day’s leaders.

Lowe’s (LOW) — Home Improvement Retailer Stock Forecast

Lowe's LOW Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Lowe’s (LOW)	92	96	95	+24.9%	iShares U.S. Home Construction 4.5% · SPDR S&P Homebuilders 3.4% · Consumer Discretionary Select Sector SPDR 3.1%

Closed at $229.38, +7.50%. Lowe’s sells home improvement goods to homeowners and contractors. The Lowe’s stock forecast depends on rates and housing turnover. Second-quarter sales rose to $26.0 billion from $24.0 billion, helped by acquisitions. Comparable sales grew only +0.2%. Net earnings were $2.4 billion, and diluted EPS held flat at $4.27. Lowe’s trimmed its full-year sales outlook to about $92.0 billion. The third-quarter report is the next test.

Glaukos (GKOS) — Eye Care Device Maker Stock Forecast

Glaukos GKOS Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Glaukos (GKOS)	85	100	100	+52.7%	iShares U.S. Medical Devices 1.8%

Closed at $246.70, +5.86%, a one-year high close. Glaukos makes implants and drug delivery devices for glaucoma. It reported on October 28. The Glaukos stock forecast rests on its iDose implant. Net sales rose +58% to $211.0 million, and iDose brought in about $76 million. GAAP net income was $2.0 million, after a loss a year ago. The company raised its 2026 sales guidance to $775 million to $785 million and set a first look at $1 billion for 2027.

Dollar Tree (DLTR) — Discount Retailer Stock Forecast

Dollar Tree DLTR Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Dollar Tree (DLTR)	97	96	96	+26.5%	SPDR S&P Retail 1.5% · Consumer Staples Select Sector SPDR 1.5%

Closed at $147.00, +9.64%, a one-year high close. Dollar Tree runs discount stores across the US. No single report explained Wednesday’s move. The Dollar Tree stock forecast leans on steady store traffic. In the second quarter, net sales rose +7.0% to $4.9 billion, and comparable sales grew +3.7%. Diluted EPS was $2.70, including a $1.31 tariff refund benefit. Dollar Tree raised its full-year adjusted EPS outlook to $7.70 to $8.05.

Lowe’s · Glaukos · Dollar Tree Stock Forecast Checkpoints

· Lowe’s stock forecast — The stock gapped up from Tuesday’s close of $213.38. Watch whether it holds above $213.38. The February high close of $287.39 is still far above.

· Glaukos stock forecast — The stock is at a one-year high close. Watch whether it stays above $233.04, Tuesday’s close. The 20-day average sits lower at $188.55.

· Dollar Tree stock forecast — This was the largest one-day gain of the three. Watch whether it holds above $134.07, the close before the jump.

What to Watch on Next Week’s Calendar

🔴 October jobs report, Friday, November 6, 8:30 a.m. ET · 🔴 October CPI, Tuesday, November 10, 8:30 a.m. ET
The 10-year yield fell to 4.89%, and homebuilders led again. A hot jobs or inflation number could undo that quickly.
Vistra results, Friday, November 6, 8:00 a.m. ET · Constellation Energy results, Monday, November 9, 8:00 a.m. ET
AI power infrastructure (AIPO) ranks 8 after peaking at 83. Two power producers report as data center worries grow.
OPEC monthly oil market report, Wednesday, November 11, 8:00 a.m. ET · Occidental Petroleum results, Monday, November 9, 4:00 p.m. ET
Eleven funds sit on the breakdown list, most of them energy. OPEC’s demand view and one producer’s results will test whether oil has found a floor.
🔴 US–China tariff pause deadline, November 10 · 🔴 Anthropic’s planned Nasdaq IPO, roadshow expected the week of November 9
Both could move tech and chip stocks, which lagged on Wednesday.

GE Vernova (GEV) Stock: Deposits Drive the $16B Cash Guide

J. Equity. Research — Wed, 04 Nov 2026 21:02:31 GMT

GE Vernova (NYSE: GEV) raised its 2026 free cash flow guidance to $16 billion to $17 billion from $11.5 billion to $12.5 billion with its third-quarter results. The same guidance implies adjusted EBITDA of about $6.3 billion to $6.9 billion, so the company now expects cash of roughly 2.5 times its operating profit. The difference is money customers paid up front for gas turbine orders and production slots. Strip the $19.511 billion rise in contract liabilities out of nine-month operating cash flow of $16.737 billion and the figure turns negative at $2.774 billion.
GE Vernova was spun off from GE in April 2024 and runs three segments: Power (gas, nuclear, hydro and steam equipment and services), Electrification (transformers, switchgear, HVDC and grid software) and Wind. At an $857.87 close it is worth about $227.1 billion on market data.

GE Vernova one-year share price chart

The question here is how that cash fits the company’s December 2025 target of at least $22 billion of cumulative free cash flow from 2025 through 2028. The analysis lines up the Q3 2026 earnings release, the Q3 presentation and call transcript on the IR site, the Q3 2026 10-Q, the December 2025 investor update transcript and all 11 quarterly earnings releases since the spin-off.
Two caveats apply. Free cash flow and adjusted EBITDA are company-defined non-GAAP measures, and nine-month GAAP net income of $6.687 billion includes a $3.992 billion pre-tax gain from remeasuring the Prolec GE stake. Gas gigawatts under contract and the production rate come from management statements, not audited figures.

What the Q3 Deck Says About Cash and Guidance

Q3 deck page 14: orders backlog revenue adjusted EBITDA and free cash flow snapshot

The Q3 deck runs 43 pages, and pages 4 through 11 cover the Trench Group acquisition announced the same day. The page 14 snapshot puts orders of $29.3 billion against $14.6 billion a year earlier, backlog of $196.7 billion against $135.3 billion, revenue of $12.6 billion with organic growth of +18%, adjusted EBITDA of $1.9 billion at a 15.4% margin, and free cash flow of $5.4 billion against $0.7 billion. Its note on free cash flow credits working capital and stronger adjusted EBITDA, offset by cash taxes, capex and a voluntary retiree benefit payment. Orders ran at 2.32 times revenue.
The page 28 appendix shows how fast the order book turned. Quarterly orders rose from $10.152 billion in Q1 2025 to $29.318 billion in Q3 2026, and equipment made up $24.296 billion of the latest quarter. Services orders barely moved, from $4.392 billion to $5.022 billion. Equipment is ordered years before it ships, often with a deposit, so a surge in equipment orders brings cash in well before revenue.
Company disclosure (Q3 2026 earnings call, October 28, 2026): CFO Ken Parks said working capital was a $5.3 billion cash benefit, “driven primarily by down payments on increased orders and slot reservations at Power”. Asked about financing strains or slot cancellations, CEO Scott Strazik said there was “no change in our cash terms required to secure the equipment”.

Q3 deck page 18: July and October 2026 guidance

Page 18 sets the July and October guidance side by side. Revenue moved to $46.5 billion to $47.5 billion from $45.5 billion to $46.5 billion, the adjusted EBITDA margin to 13.5% to 14.5% from 12% to 14%, and free cash flow to $16 billion to $17 billion from $11.5 billion to $12.5 billion.
Cash rose far more than profit. At the midpoints, adjusted EBITDA guidance went from about $5.98 billion to $6.58 billion, up $0.6 billion, while free cash flow guidance went from $12.0 billion to $16.5 billion, up $4.5 billion. How much is left for the fourth quarter?
Own calculation (11 quarterly earnings releases): Nine-month free cash flow was $15.307 billion, so the full-year range implies fourth-quarter free cash flow of only $0.693 billion to $1.693 billion. That is 14% to 33% of the $5.1 billion quarterly average so far, in a quarter whose implied adjusted EBITDA of $2.19 billion to $2.80 billion would be the year’s highest.
Page 35 lists the buybacks by quarter. The average price paid rose from $303 in Q1 2025 to $720, $952 and $949 in the first three quarters of 2026 and $924 in October, and 2026 purchases through September came to $5.275 billion. The $5.7 billion returned to shareholders in nine months equals 37.2% of nine-month free cash flow, much of which arrived as customer deposits.

Power Margins and Gas Turbine Units in the Q3 Deck

Q3 deck page 15: Power segment EBITDA orders revenue and backlog

Page 15 shows Power segment EBITDA doubling to $1.297 billion from $651 million and the margin rising to 21.4% from 13.4%, with orders of $21.8 billion against $7.8 billion and backlog of $130.9 billion against $84.2 billion. The slide credits price and volume for more than offsetting inflation and capacity spending. The page 30 appendix breaks Q3 Power revenue of $6.067 billion into $5.117 billion of gas, $719 million of nuclear and $231 million of hydro; equipment revenue grew +65% to $2.870 billion while services grew +2% to $3.197 billion.

Q3 deck page 34: gas and wind turbine orders and sales in units and gigawatts

Page 34 counts turbines. Q3 gas turbine orders were 112 units (16.6 GW) against 29 units (7.4 GW) a year earlier, including 55 heavy-duty units and 57 aeroderivatives, while sales were 32 units (5.3 GW). Of the newest HA heavy-duty units, 21 were ordered and 7 sold. Over nine months the company ordered 262 turbines and 36.7 GW and sold 86 turbines and 12.8 GW.
Pricing is the other half. Strazik said Q3 orders were priced more than 20% above fourth-quarter 2025 equipment orders and that “Full year 2026 Gas orders pricing per kW will be approximately 50% higher than full year 2025 orders”. He also warned that fourth-quarter pricing per kW would be lower than the third quarter’s, with fewer aeroderivatives and more 50Hz units.
Power services orders rose +12% organically against +304% for equipment orders, so the margin gain came from equipment price and volume rather than services. Management says the services payoff comes later, as the installed base grows into the 2030s.

The Bull and Bear Case for GE Vernova Shares

GE Vernova quarterly operating cash flow and contract liability build with progress toward the four-year cash target

The bull case is price and backlog. Gas orders carry about 50% higher pricing per kW than a year ago, and equipment backlog of $104.1 billion passed services backlog of $92.7 billion for the first time in the seven quarters shown on page 28. Power’s 21.4% EBITDA margin is near its 2028 target of 22%, and with $13.9 billion of net cash the board doubled the buyback authorization to $20 billion.
The bear case is where the cash comes from. Most of the year’s free cash flow is customer deposits, and 2025 and 2026 together cover 89.6% to 94.1% of a target meant to span four years. Deposits turn into revenue without new cash as turbines ship, which is why the implied fourth quarter drops to a third or less of the run rate.

From the GE Spin-Off to a Four-Year Cash Target

GE Vernova month-end share price since the spin-off with four dates

GE completed the distribution of GE Vernova shares on April 2, 2024, and the first month-end close was $153.71. Free cash flow was $1.701 billion in 2024 and $3.710 billion in 2025. At the December 2025 investor update, management lifted its 2025 to 2028 cumulative free cash flow target from $14 billion to at least $22 billion and set 2028 goals of at least $52 billion of revenue and a 20% EBITDA margin. Parks said he expected “progress collections to continue to be a cash source given the robust demand environment”.
Margins have stepped up toward that goal. Revenue grew from $34.935 billion in 2024 to $38.068 billion in 2025, and the adjusted EBITDA margin rose from 5.8% to 8.4%. Guidance for 2026 is 13.5% to 14.5%, and the 2028 target is 20%.
The balance sheet grew quickly in 2026. On February 2 the company paid $5.254 billion in cash for the remaining 50% of Prolec GE, its North American transformer joint venture with Xignux, and booked the $3.992 billion remeasurement gain. On February 4 it issued $2.6 billion of senior notes, and in August Fitch raised its rating to A- from BBB+.
The share price climbed from $653.57 at the end of 2025 to a month-end high of $1,174.86 in June 2026 and now sits -27.0% below that. It fell -11.5% the week before the Q3 report and rose +5.3% in the week of the report. The 15.6 million shares repurchased since December 2024 cost about $635 each on average.

How Much of the Cash Came From Customer Deposits?

Own calculation (Q3 2026 10-Q): Without the $19.511 billion increase in contract liabilities, nine-month operating cash flow of $16.737 billion would have been negative $2.774 billion. Over the same nine months the company paid $2.681 billion of income taxes, and inventories and receivables absorbed $2.052 billion and $1.667 billion.
Contract liabilities are customer down payments and progress collections received ahead of delivery. The balance rose +76.3% from $25.950 billion at the end of 2025 to $45.747 billion in September, 2.84 times the $16.115 billion of March 2024, and current contract liabilities alone equal 53.0% of total assets of $86.220 billion. The 10-Q attributes the increase to collections in excess of revenue recognition and the Prolec GE acquisition.
The quarterly pattern is consistent. Over the four quarters from Q4 2025, operating cash flow totaled $19.216 billion while contract liabilities grew $25.111 billion and adjusted EBITDA came to $5.247 billion. Excluding deposits, operating cash flow was negative in three of those four quarters.
Set against the four-year target, 2025 free cash flow of $3.710 billion plus 2026 guidance of $16 billion to $17 billion gives $19.71 billion to $20.71 billion, or 89.6% to 94.1% of the $22 billion. On the target as stated, 2027 and 2028 together need only $1.29 billion to $2.29 billion, against 2028 EBITDA of about $10.4 billion implied by the company’s own $52 billion revenue and 20% margin goals.

Gas Turbine Gigawatts and the Production Rate

GE Vernova quarterly orders and revenue with equipment and services backlog over seven quarters

The deposits rest on gas equipment under contract. Strazik said gigawatts in backlog plus slot reservation agreements rose from 83 GW at the start of 2026 to 116 GW in Q2 and 122 GW in Q3, with at least 130 GW expected by year-end. The company shipped 5 GW in Q3 while signing 11 GW, and said “backlog is now greater than our SRA balance”.
A slot reservation agreement holds a production slot in exchange for a payment, and converts to a firm order later. Q3 converted 13 GW of reservations into orders, lifting Power equipment orders +304% to $17.973 billion. The customer base is about 100 customers in 25 countries, roughly 80% traditional utilities and power producers and 20% data centers.
Own calculation (December 2025 investor update and Q3 call): Management planned to reach “a run rate of 20GW annualized by the third quarter of 2026”, and Q3 shipments of 5 GW match it. At that rate, 122 GW under contract equals 6.1 years of output and the 130 GW year-end goal equals 6.5 years.
New deposits keep coming in while contracts outpace shipments, and the balance starts to shrink into revenue once shipments overtake new signings. Management expects gigawatts under contract and Gas Power equipment backlog to keep growing in 2027, and the HA fleet running or on contract to reach at least 400 units by the end of 2027.

How GE Vernova Makes Money

Nine-month revenue of $33.084 billion split 49.9% Power, 31.6% Electrification and 18.7% Wind. Q3 revenue of $12.642 billion was $8.340 billion of equipment and $4.302 billion of services, and most of the $92.7 billion services backlog is long-term maintenance on installed equipment. The company has about 85,000 employees in about 100 countries.
Power sells gas turbines and steam, nuclear and hydro equipment, then earns parts and service revenue for decades. Management says its installed base produces over half of US electricity on any given day and a third of the world’s outside China. Q3 Power revenue was $6.067 billion (+24.8%) with EBITDA of $1.297 billion. In nuclear, the GE Vernova Hitachi BWRX-300 small modular reactor is under construction at Ontario Power Generation’s Darlington site.
Electrification makes transformers, switchgear, HVDC transmission systems and grid software. Q3 revenue of $3.862 billion rose +50.6%, but $945 million came from acquisitions, mostly Prolec GE, leaving organic growth of +16%. Prolec GE has about 10,000 employees at seven plants in the Americas, five in the US, and is expected to add about $3.1 billion to 2026 Electrification revenue of $14.5 billion to $15.0 billion. Equipment backlog reached $42.2 billion, up 60% including $5 billion from Prolec GE. Revenue is mostly equipment, $3.377 billion against $485 million of services, and the 19.1% EBITDA margin compares with guidance of 18% to 20%. Orders fell organically against a year-earlier quarter that included large synchronous condenser orders.
Wind posted Q3 revenue of $2.741 billion, $2.468 billion of it onshore, and EBITDA of $72 million, a turn from a loss. The company expects full-year Wind EBITDA losses of $400 million to $500 million and settled all Vineyard Wind litigation in Q3. Onshore repower orders, which upgrade older turbines, rose to 481 units from 139.
In October GE Vernova agreed to buy Trench Group, a maker of high-voltage bushings, instrument transformers and coils, for $9.0 billion, or 13 times projected 2028 adjusted EBITDA, funded about half with cash and half with debt and expected to close late in 2027. Trench already supplies GE Vernova, which buys most of its bushings externally today. The deck projects Trench revenue of $1.4 billion in 2026 rising to $1.9 billion in 2028 and adjusted EBITDA of $0.5 billion rising to $0.7 billion. The company has also committed $6 billion of capex from 2025 to 2028, including $1 billion for Prolec GE, and $5 billion of R&D; nine-month capex of $1.43 billion was 2.4 times the prior year.

GE Vernova vs Eaton Vertiv Caterpillar and Bloom Energy

Revenue growth and operating margin at GE Vernova Eaton Vertiv Caterpillar and Bloom Energy

Siemens Energy and Mitsubishi Heavy Industries, the direct gas turbine rivals, lack US market data, so the comparison uses Eaton in grid equipment, Vertiv in data center power, Caterpillar in gas gensets and Bloom Energy in on-site fuel cell power. On market data, TTM revenue growth was +16.9% at GE Vernova, +15.5% at Eaton (through June), +35.3% at Vertiv, +20.3% at Caterpillar and +110.6% at Bloom Energy.
GE Vernova’s 8.5% operating margin is the lowest of the five; the others range from 15.3% to 21.1%. Nine-month Wind EBITDA losses of $585 million and $650 million of intangible amortization weigh on GAAP operating income, while Power alone ran a 21.4% EBITDA margin in Q3. Over a year, market value changed +44.0% at GE Vernova, +89.9% at Bloom Energy, +17.5% at Vertiv, +4.4% at Caterpillar and -4.8% at Eaton.

Forward P/E and price to sales at GE Vernova Eaton Vertiv Caterpillar and Bloom Energy

The forward P/E of 37.17 is second to Bloom Energy’s 41.68, with Eaton, Vertiv and Caterpillar at 20.79 to 25.18. Price to sales of 5.13 sits below Bloom Energy’s 15.68 and Vertiv’s 6.83 and above Eaton’s 4.79 and Caterpillar’s 3.68. Caterpillar overlaps most directly, selling gas gensets and small turbines into the same data center market where GE Vernova booked 57 aeroderivatives in Q3.

GE Vernova’s Price-to-Sales and EV-to-EBITDA Band

GE Vernova price to sales and EV to adjusted EBITDA over 23 months

The spin-off leaves 23 months of trailing four-quarter data, starting in December 2024. P/E is left out because the Prolec GE gain puts the trailing P/E at 22.42 against a forward P/E of 37.17.
Price to sales is 5.16, in the 65th percentile of 23 months against a median of 4.63. Enterprise value of $213.1 billion, after $13.9 billion of net cash, is 40.6 times TTM adjusted EBITDA of $5.247 billion, in the 17th percentile against a median of 52.5 and a high of 78.1. The two multiples point in opposite directions, and margin expansion explains the gap. Market value is 13.8 times the $16.5 billion midpoint of 2026 free cash flow guidance, and enterprise value is 20.5 times the $10.4 billion of 2028 EBITDA implied by the company’s targets.

Three Conditions That Move the Stock

Contract liabilities show whether cash keeps running ahead of profit. If the balance keeps rising in Q4 and 2027 as new deposits outpace shipments, free cash flow stays above adjusted EBITDA. If it starts to fall from $45.7 billion, revenue can grow while cash lags EBITDA, and the four-year target becomes a ceiling rather than a floor.
Gas gigawatts and pricing per kW drive the deposits. Passing 130 GW by year-end at 2026 pricing locks in more than six years of output at higher margins. Repeated quarters of lower pricing per kW, or slower conversion of reservations into orders, would cut into both deposits and margins.
Electrification margins and Trench funding test the second growth engine. An EBITDA margin moving toward the top of the 18% to 20% range with net cash intact after Trench adds a real second leg. Falling orders and debt-funded buybacks slowing would undercut it.

What to Watch in the December Quarter

The fourth-quarter report, likely in late January, should show whether free cash flow lands inside the implied $0.69 billion to $1.69 billion, whether contract liabilities grew from $45.7 billion and whether gas contracts passed 130 GW. Parks has guided to “growth in revenue and adjusted EBITDA, adjusted EBITDA margin expansion, and positive free cash flow” for the quarter, and 2027 guidance will show the gap between free cash flow and EBITDA.
One question stays open. Management set a four-year target of $22 billion and said deposits would keep funding cash, then covered most of it in a single year. In 2027 guidance, will it raise the cash target again, or treat 2027 as the year shipments start to overtake deposits?

Oracle (ORCL) Stock Analysis: Cash Flow and Capex Gap: another company where customer prepayments carried operating cash flow, a useful parallel for judging how durable GE Vernova’s deposit-funded cash is.
Dell (DELL) Stock Analysis: Q2 FY2027 Earnings and Guidance: the AI data center buildout seen from the server side, the same demand behind the 20% of gas turbine customers that are data centers.

Sector RS Rank Nov 3: Crypto Stocks Lead, Homebuilders Fall

J. Equity. Research — Wed, 04 Nov 2026 11:12:13 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Fiserv · Neurocrine Biosciences · Sirius XM

② What rose today: crypto stocks, solar, semiconductors

③ What pulled back: homebuilders, food and beverage, copper

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Nov 3 Sector RS — 129 ETFs · RRG v2

US voters went to the polls on Tuesday, and chip stocks led a modest rebound. The Nasdaq rose +0.83% to 25,372.01. The S&P 500 added +0.36% to 7,568.92 and ended a three-session slide. The Dow slipped -0.38% to 51,786.72, with Apple down -1.90%. AMD gained +3.65%, Broadcom +3.07%, and Microsoft +2.74%. Oracle jumped +5.85%. WTI crude edged up +0.44% to $96.88. The 10-year Treasury yield rose to 4.95% from 4.89%, and the VIX eased to 20.83.

Nov 3 Major Indexes — 1-Day Change

Nov 3 GICS 11 Sectors — 1-Day Change

Of the 129 ETFs in our universe, 67 closed higher and 62 fell. Technology (XLK) led the 11 sectors at +1.31%. Consumer staples (XLP) was last at -2.07%. Only four sectors rose, and seven fell. The equal-weight S&P 500 (RSP) lost -0.33%, so the index gain came from a narrow group of large tech names.

Today’s Leading Sectors TOP 5

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Utilities Select Sector SPDR (XLU)	-0.57%	99	🔺	🔺	🔽
Virtus Reaves Utilities (UTES)	+0.83%	99	🔺	🔺	🔽
iShares U.S. Insurance (IAK)	-0.90%	98	🔺	🔺	🔺
iShares U.S. Medical Devices (IHI)	-0.14%	97	🔺	🔺	🔺
Consumer Staples Select Sector SPDR (XLP)	-2.07%	96	🔺	🔺	🔺

Defensive funds still hold the top of the table. Four of the five fell on the day, but their ranks barely moved. Retail (XRT) dropped out at 93. Home construction (ITB) fell from 96 to 82 in the sheet, one session after it led. UTES and medical devices (IHI) took the open spots.

Why They’re Strong — Sector Issues

Global X Blockchain BKCH Daily

· Blockchain (BKCH) — Up +8.53%, sheet RS rank 0. Bitcoin rose about +1.6%, but the miners moved far more. Riot Platforms rose +18.41%, Hut 8 +15.90%, and Galaxy Digital +15.35%. Reports tied the move to US regulators clearing equity perpetual futures. Riot sold off on Monday, so part of this was a bounce.

Stocks That Lifted Blockchain BKCH — 1-Day Change

Invesco Solar TAN Daily

· Solar (TAN) — Up +3.02%, sheet RS rank 63. Array Technologies jumped +22.11%, Shoals +11.45%, and Enphase Energy +8.92%. No single report explained the move. Array reports on November 5.

Stocks That Lifted Solar TAN — 1-Day Change

iShares Semiconductor SOXX Daily

· Semiconductors (SOXX) — Up +2.50%, sheet RS rank 10. Monolithic Power rose +6.78%, MACOM +5.99%, and AMD +3.65% ahead of its report after the close. The rank is still near the bottom. One day of buying does not change that.

Stocks That Lifted Semiconductors SOXX — 1-Day Change

Defiance AI Power Infrastructure AIPO Daily

· AI power infrastructure (AIPO) — Up +4.25%, sheet RS rank 22. GE Vernova rose +6.49%, Quanta Services +5.77%, and Vertiv +5.23%. The fund is still below its 1-month, 1-quarter, and 1-year averages.

What Changed From Yesterday

Aerospace and defense (ITA) posted the biggest one-day rank gain, 69 to 81. Solar (TAN) climbed from 46 to 58, and wind energy (FAN) from 49 to 60.

Biggest 1-Day RS Rank Gains — Yesterday vs Today

Biggest 1-Day RS Rank Losses — Yesterday vs Today

E-commerce (EBIZ) lost the most, 81 to 69. Materials (XLB) slipped from 95 to 86, and natural gas producers (FCG) from 81 to 72. Oil (USO) jumped from 83 to 98, but about three quarters of that came from a weak day a month ago leaving the window, so it is left off the chart. Monday’s report named homebuilders as a leader. Home construction (ITB) then fell -3.56%, so that call did not hold for even one session.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

Solar (TAN) rose from 2 to 58 over the window. Home construction (ITB) went from 17 to 95, and consumer staples (XLP) from 51 to 97. Semiconductors (SOXX) slid from 37 to 5 after peaking at 100. Blockchain (BLOK) fell from 40 to 15.

RS Breakdown Warnings

RS Breakdown Warnings — 5 Sessions Ago vs Today

iShares cybersecurity (IHAK) fell from 99 to 62, the deepest drop. Cloud (WCLD) and four energy funds joined it: oil services, explorers, gas producers, and oil equipment. Copper (CPER) and telemedicine (HEAL) are on the list too. Two funds were dropped because the sheet disagreed, and five because Tuesday’s price moved the other way.

RS Rebound Signals

RS Rebound Signals — 5 Sessions Ago vs Today

Aerospace and defense (XAR) jumped from 36 to 65, the strongest rebound. Pharmaceuticals (XPH) and wind energy (FAN) also qualified. Four other funds were dropped because Tuesday’s price moved the other way, airlines (JETS) among them.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Blockchain (BKCH)	+8.53%	0	🔽	🔽	🔽
VanEck Digital Transformation (DAPP)	+7.95%	2	🔽	🔽	🔽
VanEck Onchain Economy (NODE)	+7.10%	5	🔽	🔽	🔽
Roundhill Meme Stocks (MEME)	+5.33%	1	🔽	🔽	🔽
Defiance AI Power Infrastructure (AIPO)	+4.25%	22	🔽	🔽	🔽

Why They Rose

All five sit in the bottom quarter of the sheet and below every average. This was a bounce in beaten-down funds, not a new trend. On the other side, home construction (ITB) -3.56%, homebuilders (XHB) -2.49%, food and beverage (PBJ) -2.46%, and copper (CPER) -2.18% led the decliners. Yields rose, and rate-sensitive groups gave back part of Monday’s gains.

Leading Sectors: Utilities, Insurance, Medical Devices

① Utilities (XLU) and UTES both rank 99. They held the top even with a mixed day.
② Insurance (IAK) ranks 98 and is above every average. It fell -0.90% but kept its place.
③ Medical devices (IHI) rank 97, up from 93. The fund was nearly flat on Tuesday.
④ The last report covered the November 2 close. Its three picks from that close to Tuesday’s: Mohawk Industries -2.17%, Masco -1.59%, and Royal Caribbean -2.46%, against +0.36% for the S&P 500. All three lagged. Masco closed at $82.18, below the $82.77 level the report flagged. Mohawk and Royal Caribbean stayed above their marks. Recorded as is.

Today’s Three Stocks — Fiserv · Neurocrine Biosciences · Sirius XM Stock Forecast

Twenty-three stocks passed the four-part filter. The day’s leading funds placed none of their holdings on the list, so these three were picked for fresh earnings news.

Fiserv (FISV) — Payments Processor Stock Forecast

Fiserv FISV Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Fiserv (FISV)	99	99	98	+26.6%	Global X FinTech 4.9%

Closed at $58.40, +12.46%. Fiserv runs payment and banking software for merchants and banks. It reported third-quarter results before the open on Tuesday. The Fiserv stock forecast now rests on cost cuts more than growth. Adjusted EPS was $1.75, down -14% from $2.04 a year ago. Fiserv doubled its cost-savings target to $1 billion and plans $500 million in buybacks this quarter. It kept its full-year adjusted EPS guidance of $7.20 to $7.40.

Neurocrine Biosciences (NBIX) — Neurology Drugmaker Stock Forecast

Neurocrine Biosciences NBIX Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Neurocrine Biosciences (NBIX)	99	97	87	+14.3%	SPDR S&P Biotech 1.4% · iShares Biotechnology 1.0%

Closed at $164.85, +13.42%. Neurocrine sells Ingrezza for movement disorders. It reported after the close on Monday. The Neurocrine Biosciences stock forecast hinges on Ingrezza. Revenue rose +41% to about $1.12 billion. Ingrezza brought in $801 million. The company raised its full-year Ingrezza guidance to $2.9 billion to $2.925 billion. GAAP EPS was $1.96, below $2.04 a year earlier, mostly due to a loss on investments.

Sirius XM (SIRI) — Satellite Radio Stock Forecast

Sirius XM SIRI Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Sirius XM (SIRI)	92	97	92	+17.1%	Procure Space 5.1%

Closed at $30.80, +4.16%. Sirius XM runs satellite radio and the Pandora app. It reported on October 29 and has risen in every session since. The Sirius XM stock forecast leans on cash flow. Revenue slipped slightly to $2.15 billion. Net income rose about +7% to $317 million. The company raised its full-year revenue, adjusted EBITDA, and free cash flow guidance by $25 million each.

Fiserv · Neurocrine Biosciences · Sirius XM Stock Forecast Checkpoints

· Fiserv stock forecast — The stock gapped up from Monday’s close of $51.93. Watch whether it holds above $51.93. The 20-day average sits lower at $48.38.

· Neurocrine Biosciences stock forecast — The July 30 high close of $185.50 is still above. Watch whether it holds above $145.35, the close before the report.

· Sirius XM stock forecast — The July 29 high close of $32.59 is the next level. Watch whether it stays above $28.67, the report-day close.

What to Watch on Next Week’s Calendar

🔴 October jobs report, Friday, November 6, 8:30 a.m. ET · ADP private payrolls, Wednesday, November 4, 8:15 a.m. ET
The 10-year yield rose to 4.95%, and homebuilders fell hardest. A hot jobs number could push yields higher still.
Qualcomm and Arm results, Wednesday, November 4, 4:00 p.m. ET · Lumentum results, Thursday, November 5, 4:00 p.m. ET
Semiconductors (SOXX) bounced, but the fund ranks only 10. Chip results will show whether the rebound can last.
🔴 Anthropic’s planned Nasdaq IPO, roadshow expected the week of November 9
AI names drove Tuesday’s index gain. A large AI listing could pull money toward the group, or away from existing tech stocks.
🟡 Possible US decision on renewed Iran strikes after the vote · ConocoPhillips results, Thursday, November 5, 8:00 a.m. ET · Devon Energy results, Thursday, November 5, 4:00 p.m. ET
Four energy funds sit on the breakdown list. Any news on Iran could move oil quickly, and producer results land in the same week.

Boeing (BA) Stock: A $10 Billion Cash Target Built on 777X

J. Equity. Research — Wed, 04 Nov 2026 10:00:49 GMT

Boeing (NYSE: BA) used its third-quarter results to put a number on every year between now and 2029: free cash flow of about $2 billion in 2026, $3 billion in 2027, $6 billion in 2028 and $10 billion in 2029. The first step is already tight. Free cash flow for the first nine months of 2026 was negative $359 million, so the 2026 target needs about $2.36 billion in the fourth quarter alone. Only four of the 29 quarters since mid-2019 produced more.
Boeing builds commercial jetliners, military aircraft and satellites, and sells parts, maintenance and training services through three segments: Commercial Airplanes (BCA), Defense, Space & Security (BDS) and Global Services (BGS). At a $171.55 close the stock is worth about $135.9 billion on market data.

Boeing one-year share price chart

The question here is what the $10 billion target actually rests on. The analysis lines up the Q3 2026 earnings release, the Q3 investor presentation and call transcript on the IR site, the Q3 2026 10-Q and the cash flow tables in 29 quarterly earnings releases since 2019.
Two caveats apply. Free cash flow and core EPS are company-defined non-GAAP measures, and the 2027 to 2029 figures are management targets, not results. Share counts use the 792.4 million common shares on the 10-Q cover and leave out the mandatory convertible preferred stock that turns into common shares in October 2027.

Boeing’s Q3 Deck and the 2026-2029 Cash Flow Targets

Q3 deck page 11: Q3 free cash flow reconciliation and 2026 to 2029 cash flow estimates

The Q3 deck runs 12 pages. Page 3 leads with the U.S. Navy’s F/A-XX selection, an Apache maintenance award and certification of the 737-7 and 737-10. Page 4 shows revenue of $24.2 billion, a GAAP operating margin of 1.5%, core EPS of negative $0.34 and free cash flow of $0.5 billion next to the year-earlier figures. The yearly targets sit in a reconciliation table on page 11: operating cash flow of roughly $6 billion, $8 billion, $10 billion and $14 billion, less capital spending of roughly $4 billion, $5 billion, $4 billion and $4 billion, for free cash flow of $2 billion, $3 billion, $6 billion and $10 billion from 2026 through 2029.
Company disclosure (Q3 2026 earnings call, October 27, 2026): CEO Kelly Ortberg said Boeing now expects “to generate approximately $2 billion of free cash flow in 2026”, narrowing the $1 billion to $3 billion range on page 11 of the Q2 deck. CFO Jay Malave added that “these targets assume that 777X will be certified by mid-year 2027”. Capital spending peaks at about $5 billion in 2027, which Ortberg said includes added investment for F/A-XX development.
Checked against the filings, the 2026 number already asks a lot. Quarterly free cash flow was negative $1.454 billion in Q1, $631 million in Q2 and $464 million in Q3, and the Q3 figure absorbed roughly $700 million of Department of Justice settlement payments. That leaves about $2.36 billion to find in the fourth quarter. How large is that by Boeing’s own record?
Own calculation (29 quarterly earnings releases): Only four quarters since Q3 2019 topped $2.36 billion of free cash flow: Q3 and Q4 2022 and Q2 and Q4 2023. Three of the seven fourth quarters in that span were negative, and the best was $3.131 billion in Q4 2022.
Operating cash flow makes the point sharper. Subtracting nine-month operating cash flow of $2.681 billion from the roughly $6 billion target leaves $3.319 billion for Q4, and only two quarters in the series were bigger: Q4 2022 at $3.457 billion and Q4 2023 at $3.381 billion. Malave said the 2026 figure includes the KC-46A Tanker Lot 13 order and its advance payment, plus seasonal working capital inflows.

Q3 deck page 4: revenue and operating margin and core EPS and free cash flow

The improvement on page 4 owes much to the comparison base. The year-earlier operating margin of negative 20.5% and core EPS of negative $7.47 included the 777X charge. Revenue grew +3.9% because defense (+15.0%) and services (+3.8%) offset a -3.4% decline in commercial airplanes.

Commercial Airplanes Defense and Cash in the Q3 Deck

Q3 deck page 5: Commercial Airplanes revenue and operating margin

Page 5 puts BCA revenue of $10.7 billion and an operating margin of negative 6.5% beside $11.1 billion and negative 48.3% a year earlier, and lists the 737-7 and 737-10 certifications, progress toward 47 737s a month, a 777X first delivery in 2027 and a record $612 billion backlog covering more than 6,300 airplanes.
The quarterly trend is less flattering. BCA’s operating loss widened to $697 million from $322 million in Q2, bringing the nine-month loss to $1.582 billion. Malave pointed to lower booking rates tied to production rate adjustments and higher supply chain cost estimates, and he put BCA on a path to about breakeven in early 2028. Since Q3 2019 the segment has posted an operating profit in one quarter out of 29, a $41 million gain in Q4 2023.
Page 6 shows BDS revenue of $7.9 billion and a 6.2% margin, and the slide itself notes that the margin includes a $252 million gain on the sale of HRL Laboratories. It adds $23 billion of orders and a record $101 billion backlog. Page 7 shows Global Services at an 18.3% margin with $5 billion of orders and a $33 billion backlog. The nine-month BDS margin is 3.1%, or 2.0% without the HRL gain, so 6.2% is a single quarter.

Q3 deck page 8: cash and marketable securities and consolidated debt

Page 8 shows $20.7 billion of cash and marketable securities against $45.9 billion of debt, with ratings of BBB- at S&P, Baa3 at Moody’s and BBB- at Fitch, the lowest investment-grade rung at all three. The $10 billion revolving credit facilities are undrawn. Debt has fallen $8.2 billion this year, but that came from $8.415 billion of repayments funded out of cash, which was $29.4 billion at the end of 2025. Cash and debt shrank together, leaving net debt of $25.2 billion.
Own calculation (Q3 2026 10-Q): The four yearly targets add up to $21 billion, less than the $25.2 billion of net debt and 55.5% of the $37.9 billion of cumulative negative free cash flow from 2019 through 2025.

The Bull and Bear Case for Boeing Shares

Boeing annual free cash flow with 2026 to 2029 targets and 29 quarters with the implied Q4

The bull case is backlog and pricing. Total backlog is a record $745.4 billion, 7.85 times trailing twelve-month (TTM) revenue, and Malave said the targets are “underwritten by the robustness in pricing” in that backlog. The 737-10 certification frees about 30 prebuilt 737-7 and 737-10 jets for delivery in 2027, and BDS won F/A-XX on top of a $100.5 billion backlog.
The bear case is where the cash comes from. Nine-month operating cash flow came from customer advances, more than half of this year’s inventory build sits in the not-yet-certified 777X, and management has already said 2027 brings lower commercial deposits and $1 billion more capital spending.

From the 737 MAX Grounding to a 2029 Target

Boeing month-end share price over 10 years with four dates

Boeing’s free cash flow peaked at $13.6 billion in 2018. After the Lion Air crash in October 2018 and the Ethiopian Airlines crash in March 2019, the FAA suspended 737 MAX operations on March 13, 2019, and deliveries did not resume until the fourth quarter of 2020. COVID-19 hit in between, and 2020 free cash flow was negative $19.7 billion. The month-end share price peaked at $439.96 in February 2019; the $171.55 close is -61.0% below that.
Free cash flow turned positive in 2022 and 2023 at $2.3 billion and $4.4 billion. Then a 737-9 door plug blew out in January 2024, the FAA stepped up its oversight of production, and a 53-day strike by more than 30,000 machinists in Washington state followed in September. Free cash flow for 2024 was negative $14.3 billion. In October 2024 Boeing raised $23.9 billion in net proceeds from common and mandatory convertible preferred stock, and the common share count on the 10-Q cover rose from 616.2 million in July 2024 to 792.4 million.
Under Kelly Ortberg, elected CEO in July 2024, Boeing sold parts of its Digital Aviation Solutions business, including Jeppesen and ForeFlight, to Thoma Bravo for $10.55 billion in October 2025, booking a $9.57 billion gain, and in December 2025 it bought fuselage supplier Spirit AeroSystems for about $4.7 billion of Boeing stock. The 737 line climbed from below 38 jets a month in early 2025 to 42 by the fourth quarter. The 2021 deferred prosecution agreement with the Justice Department became a non-prosecution agreement in May 2025, and $689 million held in escrow was released for payment in Q3 2026. The stock is -21.0% from its $217.12 close at the end of 2025 and fell -8.9% in the week of the Q3 report.

How Much of Boeing’s Cash Came From Customer Advances?

Quarter-end inventories and advances over 29 quarters and the 2026 inventory build by program

Own calculation (Q3 2026 10-Q): Without the $8.113 billion increase in advances and progress billings, nine-month operating cash flow of $2.681 billion would have been negative $5.432 billion. Inventories absorbed $6.733 billion over the same period.
Advances are the progress payments airlines and government customers make before delivery. The balance rose from $59.4 billion at the end of 2025 to $67.5 billion in September, equal to 71.1% of TTM revenue. The gap between inventories and advances has ranged from $20 billion to $35 billion since 2019 and stood at $23.4 billion in September, the narrowest since the start of 2024. Customers are financing the inventory build.
Will those deposits keep coming at this pace? Backlog rose from $682.2 billion to $745.4 billion this year, $611.8 billion of it commercial. Malave said of BCA deposits that “It’s trending to be a record year”, and that 2027 will be lower, sizing it at “a few billion dollars of impact”. The 2027 target is $1 billion above 2026, but stripping out the roughly $700 million DOJ payment that will not recur leaves growth of about $300 million.
External view (Wolfe Research analyst Myles Walton, Q3 2026 earnings call): Walton noted that excluding the DOJ payment, the walk to 2027 adds only “a few hundred million dollars of growth” and asked how large the 2027 advance shortfall would be.

The 777X Inventory and the Certification Timeline

The 10-Q breaks the $6.269 billion balance sheet inventory increase down by program: $3.656 billion for 777X, $2.233 billion for the 737 and $505 million for the 787. The 777X accounts for 58.3%. Its inventory rose from $6.129 billion to $9.785 billion, and deferred production costs inside it more than quadrupled from $651 million to $2.731 billion. The 777X inventory alone equals 38.8% of net debt.
Deferred production costs build up when units cost more to make than the program’s average, on the accounting assumption that later units will recover the difference. The 737 balance rose too, from $11.777 billion to $14.036 billion.
No 777X has been delivered yet. Boeing builds about one a month and expects to hold that rate for most of 2027. The 10-Q says it expects approval for the final phases of flight testing by the end of 2026 and is still certifying a fix for an engine durability issue found in 2025. On program cash, Malave said “we continue to expect 2027 to be a significant use of cash”, with 2028 improving before the program turns cash positive in 2029. The $10 billion target assumes that sequence does not slip a year.
Company disclosure (Q3 2026 10-Q): The 777 and 777X programs had “near break-even gross margins” at the end of September, and Boeing lists supply chain shortages, delivery timing, customer considerations and certification requirements as risks that could lead to further losses.

How Boeing Makes Money

Q3 revenue of $24.19 billion split into $10.72 billion from Commercial Airplanes, $7.94 billion from Defense, Space & Security and $5.57 billion from Global Services. Over nine months the mix was 44.6%, 32.4% and 23.0%. BCA books revenue when it delivers jets. It handed over 161 airplanes in Q3, one more than a year earlier, but fewer 777s (5 versus 9) and 787s (22 versus 24), the higher-priced widebodies, cut revenue.
The customers are airlines and lessors worldwide; Turkish Airlines, Ethiopian Airlines and Lufthansa all ordered in the quarter. The 737 is built in Renton, Washington, and the 787 in Charleston, South Carolina, where the 787 has stabilized at eight a month and a second final assembly building will add a third line, with most of the new capacity due online late next year. Spirit AeroSystems, now part of Boeing, builds 737 fuselages in Wichita, Kansas, and Ortberg named fuselages as the next focus once the wing problems are fixed.
The widebody lineup is in transition. The commercial 767 ends production by 2027 and continues only as the KC-46A tanker airframe, and FAA approval to build the current 777 Freighter beyond 2027 let Boeing add 21 units to its accounting quantity. A wing component supplier disrupted the 777 Freighter and 767 tanker lines in Q3, and the resulting abnormal production costs will be expensed as incurred through the first half of 2027.
Profit comes from services. Global Services sells parts, maintenance, modifications and training to airlines and governments, and earned $1.019 billion at an 18.3% margin in Q3, 2.88 times Boeing’s total operating income of $354 million. Over nine months it earned $2.958 billion, 3.09 times the company total. Excluding the Digital Aviation Solutions business sold in 2025, BGS revenue grew +11%, and both the commercial and government sides earned double-digit margins.
Defense builds F-15 and F/A-18 fighters, Apache and Chinook helicopters, the KC-46A tanker, satellites and missile seekers for the Pentagon and allied governments, and recognizes most revenue as costs are incurred. It delivered 30 aircraft and three satellites in Q3, including 12 remanufactured Apaches and seven KC-46s, and Spirit added about $160 million of revenue. Fixed-price development contracts such as KC-46A and MQ-25 have produced repeated charges, and management targets high single-digit margins by the end of the decade.
Commercial output is set by the production rate. The 737 delivered 367 jets in nine months, so the 500-jet goal would need 133 in Q4; the best quarter in the series was 129 in Q2 2026, and Boeing now says it will fall short. The 787 delivered 62, so even the low end of the 90 to 100 range needs 28 in Q4, against a best of 27 since 2022. The plan targets 52 737s a month in the second half of 2027, and Ortberg said “right now wings are what have caused us the instability”.

How Boeing Compares With Airbus GE RTX and Lockheed Martin

Revenue growth and operating margin at Boeing Airbus GE Aerospace RTX and Lockheed Martin

On market data, Boeing’s TTM revenue growth of +17.5% trails only engine maker GE Aerospace (+19.6%), but its operating margin of -0.3% is the only negative one of the five. Airbus posted +6.2% growth and an 8.8% margin, RTX +11.6% and 13.1%, and Lockheed Martin +7.9% and 10.8%. Boeing’s comparison period includes the strike-hit fourth quarter of 2024.
The five are rivals, suppliers and customers at once. The 737 MAX flies on CFM’s LEAP-1B, an engine from GE Aerospace’s joint venture with Safran, so higher Boeing output lifts GE’s engine sales, and RTX’s Collins Aerospace supplies Boeing with components. Boeing’s $135.9 billion market value is below Airbus at $169.5 billion; over a year market value changed -16.3% at Boeing, -11.6% at Airbus, -5.9% at GE Aerospace, +14.0% at RTX and +31.0% at Lockheed Martin.

Forward P/E and price to sales at Boeing Airbus GE Aerospace RTX and Lockheed Martin

Boeing’s forward P/E of 214.97 is not comparable with the others at 19.89 to 33.97, because next year’s earnings estimate is close to zero. Its price-to-sales ratio of 1.43 is the lowest of the five, below Airbus at 1.95 and Lockheed Martin at 1.86, and the gap reflects margins. At Airbus’s 8.8% margin, Boeing’s TTM revenue of $94.9 billion would produce about $8.35 billion of operating income; the $10 billion cash target needs profit of roughly that order.

Boeing’s Price-to-Sales and EV-to-Sales Band

Boeing price to sales and EV to sales over 120 months

Earnings and book value cannot anchor a band here. Shareholders’ equity was negative in 25 of the 29 quarters since Q3 2019 and turned positive only after the 2025 divestiture gain, which also inflates TTM GAAP earnings. Two sales multiples stand in.
Price to sales is 1.43, in the bottom 19.2% of the 120 months since November 2016 against a median of 1.84. Enterprise value to sales, which adds net debt, is 1.70, in the bottom 13.3% against a median of 2.20. Before the 737 MAX grounding the medians were 1.84 and 1.87.
The low sales multiples already price in margins that have not come back. Market value is 13.6 times the 2029 cash target and 45.3 times the 2027 target. On October 15, 2027 the 5.75 million mandatory convertible preferred shares become 33.5 million to 40.2 million common shares, equal to 4.2% to 5.1% of the current count.

Three Conditions That Move the Stock

777X certification timing is the premise of the 2029 target. If the final flight test approval arrives by the end of 2026 as the 10-Q expects, and certification and a first delivery date hold for mid-2027, the largest swing factor in the cash path narrows. A slip into 2028 would add to the $9.785 billion of 777X inventory and push the program’s cash turn back a year.
Quarterly 737 deliveries show whether the production rate is real. Q4 deliveries near 133 would confirm stability at 47 a month and support the plan for 52 in late 2027. Deliveries below Q3’s 124 would mean the wing problems persist.
Advances and Q4 free cash flow show the quality of the cash. If inventory growth stalls and Q4 delivers about $2.36 billion to meet the 2026 target, the multi-year plan gains credibility. A large miss, or a target met only with the KC-46A advance, would leave the $3 billion 2027 target exposed to the drop in deposits.

What to Watch in the December Quarter

The fourth-quarter report, likely in late January, should give 737 and 787 deliveries, Q4 free cash flow and the advances balance, along with whether the 777X has cleared its final flight test phase. From the first quarter, deliveries of the roughly 30 prebuilt 737-7 and 737-10 jets should start to pull inventory down.
One question stays open. 737 deferred production costs rose $2.259 billion in nine months to $14.036 billion, and the 10-Q expects the full $14.760 billion including tooling to be recovered from units with firm orders. As the line moves toward 52 a month, will that balance start to shrink, or will start-up costs on a new line push it higher?

Oracle (ORCL) Stock Analysis: Cash Flow and Capex Gap: another company where customer prepayments carried operating cash flow, useful for judging how durable Boeing’s advance-funded cash is.
Texas Instruments (TXN) Stock Analysis: Cash Flow and Capex: a multi-year free cash flow path that depends on capital spending coming down, a parallel to Boeing’s 2027 capex peak.

MakeMyTrip (MMYT) Stock: Discounts Ate the Booking Growth

J. Equity. Research — Tue, 03 Nov 2026 21:59:16 GMT

MakeMyTrip (NASDAQ: MMYT) grew gross bookings +20.9% in constant currency to $2.72 billion in the September 2026 quarter, but reported revenue in dollars rose only +2.5% to $235.2 million. Two things filled the gap: a rupee roughly 10% weaker than a year earlier and $108.9 million of customer inducements, the discounts and incentives that are netted out of revenue. Inducements grew +22.3% and equaled 46.3% of revenue, the highest share in the 18 quarters since April to June 2022.
MakeMyTrip is India’s largest online travel company, selling flights, hotels and holiday packages, bus tickets, rail tickets and car rentals through the MakeMyTrip, Goibibo and redBus apps. Its fiscal year ends in March, so this was the second quarter of fiscal 2027. At a $42.68 close the stock is worth about $4.0 billion on market data.

MakeMyTrip one-year share price chart

The questions here are how much of that booking growth survives the discounts, and what the planned India listing of its main subsidiary means for the $1.44 billion of convertible notes that holders can put back in July 2028. The analysis lines up the fiscal Q2 2027 results 6-K, the same release on the IR site, the July 2026 6-K on the MMT India listing, the June 2025 equity and convertible note filings with the indenture, and 18 quarterly results filings since 2022.
Two caveats apply. Constant currency growth and Adjusted Margin are company-defined non-IFRS measures. The India offering has only been filed confidentially, so its size and price are not public, and the funding math below leaves it out. Air bookings per flight segment is a proxy, because package flights count in segments but not in air gross bookings.

What the Q2 Results Deck Says About Growth and Currency

The results document on the IR site opens with a summary table that puts IFRS and non-IFRS figures side by side. Gross bookings up 20.9%, Air Adjusted Margin up 14.3%, Hotels and Packages up 20.2%, Bus up 29.0% and Others up 29.8% are all constant currency growth rates. In the same table, reported revenue grew 2.5%, Air revenue fell -7.2% and Hotels and Packages revenue fell -1.0% in dollars.
Company disclosure (fiscal Q2 2027 results 6-K, October 26, 2026): MakeMyTrip said the rupee depreciated against the dollar by approximately 10% year on year and that “international long-haul outbound travel from India remained subdued, as elevated fuel prices led to higher airfares”, while strong domestic demand partly offset that. Group CEO Rajesh Magow said, “We delivered strong growth despite a challenging travel environment.”

Q2 results document page 1: IFRS and non-IFRS summary table

Page 2 puts numbers on the currency effect. Adding $19.8 million of translation impact to Q2 revenue of $235.2 million gives constant currency revenue of $255.0 million, so 8.7 percentage points separate the 2.5% reported growth from the 11.2% constant currency growth. For the first half the gap was 9.2 points, with reported revenue up 4.5% and constant currency revenue up 13.7%.

Q2 results document page 2: reported growth and currency impact and constant currency growth

Own calculation (fiscal Q2 2027 results 6-K): Even without currency, revenue and Adjusted Margin moved apart. Constant currency revenue grew 11.2% while constant currency Adjusted Margin grew 19.9%, because revenue nets out the inducements and Adjusted Margin adds them back.
The profit lines split the same way. Adjusted net profit before tax was $46.2 million, up 27.0%, while IFRS profit was $1.8 million. The reconciliation shows that $29.5 million of the $44.4 million gap is interest on liabilities carried at amortized cost, mainly the convertible notes, with share-based compensation of $6.3 million, acquired-intangible amortization of $3.2 million and tax of $5.1 million making up most of the rest. The company’s preferred profit measure leaves the note interest out.

Inducements and Unit Metrics in the Q2 Results Deck

The page 3 table builds each segment’s Adjusted Margin from IFRS revenue plus inducements minus service cost. Air revenue of $56.7 million plus $52.0 million of inducements gives Air Adjusted Margin of $108.6 million, so Air inducements equal 91.7% of Air revenue. Hotels and Packages revenue of $107.1 million plus $50.7 million of inducements minus $41.0 million of service cost gives $116.8 million.

Q2 results document page 3: segment revenue plus inducements as Adjusted Margin

The company describes inducements as costs “in the nature of customer incentives, customer acquisition costs and loyalty program costs”. They are deducted from revenue under IFRS, but management evaluates segments on Adjusted Margin with those costs added back. Marketing and sales promotion expense, booked separately as an operating cost, was $38.9 million, up 2.6%; together with inducements that is 62.9% of revenue.
The unit metrics on page 15 show volume. Flight segments fell from 14.76 million to 13.93 million, -5.6%, while hotel and package room nights rose 18.5% and bus tickets 24.7%. Air Adjusted Margin as a share of air gross bookings slipped from 7.2% to 6.9%, Hotels and Packages edged up from 18.1% to 18.2%, and Bus held at 10.4%. For the first half the air rate went from 7.0% to 6.6%, a wider gap than in Q2 alone. Hotels and Packages service cost fell from $44.8 million to $41.0 million, which the company put down to rupee translation partly offset by strong car booking demand in India.

Q2 results document page 15: flight segments and room nights and bus tickets and margin rates

Air gross bookings still grew 10.6% to $1.58 billion. With fewer segments and more bookings, the increase came from fares, which matches the company’s own explanation about fuel prices and airfares. The release credits hotel growth to room nights and bus growth to ticket volumes, but its air commentary does not mention segment counts.
The press release also leads with the Myra AI trip assistant: more than 90,000 daily conversations, more than 55% from Tier II and Tier III cities, more than 53% of post-booking flight and hotel queries resolved, and users completing about 1.7 times more bookings than non-users. It said Myra assisted more than 3,000 completed bookings a day. At 92 days that is about 276,000 bookings in the quarter, a small slice next to 13.9 million flight segments and 40.9 million bus tickets.

The Bull and Bear Case for MakeMyTrip Shares

The bull case is volume. Hotel room nights grew 18.5% and bus tickets 24.7%, Adjusted Operating Profit rose 4.7% to $46.2 million and adjusted net profit before tax rose 27.0%. Cash and term deposits total $816.5 million, and an India listing of the main subsidiary would bring in sale proceeds.
The bear case is discounts and air. Adjusted Margin rose $28.0 million while inducements rose $19.9 million, and flight segments have fallen for three quarters in a row. In July 2028 holders of $1.44 billion of convertible notes can demand cash, the stock trades at 35.1% of the $121.50 conversion price, and price to sales of 3.88 sits in the bottom 3.6% of the past 56 months.

From the Trip.com Buyback to an India Listing

The stock’s highest month-end close in a decade was $114.74 in November 2024. In June 2025 MakeMyTrip sold ordinary shares at $90 for net proceeds of about $1.62 billion and issued $1.44 billion of 0% convertible notes due 2030, using both to repurchase Class B shares from Trip.com. The repurchase agreement put Trip.com’s voting power at about 45.30% and aimed to cut its threshold ownership to 19.99% or lower.
Basic weighted average shares fell from 115.1 million to 98.0 million in the following quarter. From the July to September 2025 quarter on, amortized interest on the notes added $27.5 million to $29.5 million a quarter to finance costs, and IFRS profit for that quarter was a loss of $5.7 million. In September 2025 long-time CFO Mohit Kabra became Group COO and former Wipro executive Dipak Bohra became CFO.
In March 2026 the company bought a majority stake in regional group-tour operator Flamingo Transworld and said it had merged redBus India into MakeMyTrip (India) and was evaluating an India listing of that entity. The March month-end close of $37.29 was -54.6% below the $82.12 at the end of 2025. On July 17 the subsidiary confidentially filed a pre-filed draft prospectus with India’s market regulator. The stock recovered to $56.95 by the end of July and closed October at $42.68.

MakeMyTrip month-end share price over 10 years with four dates

How Much of the Margin Growth Went to Discounts?

Own calculation (fiscal Q2 2027 results 6-K): Adjusted Margin grew from $266.9 million to $294.9 million, up $28.0 million. Inducements rose $19.9 million over the same period, and service cost on gross-basis sales fell $2.3 million, so IFRS revenue grew just $5.8 million. About 71% of the Adjusted Margin increase went back out as inducements.
Measured against air, hotel and bus gross bookings, inducements were 4.11% in Q2, against 3.75% a year earlier and 3.15% two years earlier, and the highest in 18 quarters. The same ratio ran between 3.1% and 3.3% from April to June 2023 through January to March 2025, so the company is now giving back about one more dollar per $100 of bookings.

Quarterly IFRS revenue and inducements and inducements as a share of bookings over 18 quarters

The increase sits in air and hotels. Air inducements rose from $41.8 million to $52.0 million, +24.3%, and Hotels and Packages inducements from $42.4 million to $50.7 million, up 19.4%, while bus inducements went from $4.3 million to $6.1 million. The company gave no separate reason for the rise; hotel inducements grew at about the same pace as hotel room nights.

Flight Segments and Fares

Own calculation (18 quarterly results filings): Air gross bookings divided by flight segments came to $113.2 in Q2, up 17.2% from $96.6 a year earlier and the highest in 18 quarters. Segments peaked at 15.36 million in October to December 2025 and have fallen for three straight quarters to 13.93 million.

Quarterly flight segments and air gross bookings per segment over 18 quarters

Higher fares fill the same bookings with fewer passengers. Air Adjusted Margin as a share of bookings went from 7.2% to 6.9%, so margin did not keep up with fare-driven bookings, and air inducements still rose. In its March release MakeMyTrip estimated that “nearly one in three domestic air passengers in India booked their air ticket through our company during fiscal year 2025”, which ties its air volume to domestic air traffic.

How MakeMyTrip Makes Money

MakeMyTrip is an asset-light marketplace. For flights, standalone hotels and bus tickets the supplier is responsible for the service, so revenue is the net amount after paying the supplier; for holiday packages and car bookings through its Savaari subsidiary it acts as principal and books gross revenue. That is why management reports Adjusted Margin by segment.
On Q2 numbers, per $100 of gross bookings MakeMyTrip kept $10.8 of Adjusted Margin, handed $4.0 back as inducements and added $1.8 of gross-basis service cost, leaving $8.6 of IFRS revenue.
Q2 revenue splits into Hotels and Packages 45.5%, Air 24.1%, Bus 16.6% and Others 13.8%, while Adjusted Margin splits into Hotels and Packages 39.6%, Air 36.8%, Bus 15.3% and Others 8.3%. Air is 57.9% of gross bookings but only 36.8% of Adjusted Margin, because the Hotels and Packages margin rate of 18.2% is 2.6 times Air’s 6.9%. Bus bookings work out to about $10.6 a ticket, or roughly $1.1 of Adjusted Margin per ticket at 10.4%.
Others covers car bookings and ancillary services such as foreign exchange, prepaid forex cards, cross-border remittances, visa processing, travel insurance and travel credit. Others revenue was $32.3 million, up 21.6%. Outside India the company sells flights and hotels in the United Arab Emirates, and redBus operates in parts of Southeast Asia and Latin America.
The company says it started in 2000 serving Indians living in the United States and entered India with its India website in September 2005. It later bought Goibibo and redBus, and has added Quest2Travel in corporate travel, Simplotel in hotel technology, BookMyForex, Savaari and Happay. As of December 2025 it reported more than 87 million lifetime transacting retail customers, more than 77,000 SME and corporate customers and more than 549 million app downloads.
Costs after inducements are mostly people and operations. Personnel expense fell 4.9% to $38.4 million on rupee translation and lower share-based compensation, while other operating expenses such as payment gateway and hosting charges rose 9.3% to $63.7 million. Adjusted Operating Profit of $46.2 million was 15.7% of Adjusted Margin.

The 2028 Put and the MMT India Listing

Company disclosure (2030 notes indenture, June 23, 2025): The notes total $1.4375 billion and carry no interest. Holders may require MakeMyTrip to repurchase them for cash at 100% of principal on July 3, 2028, and the notes mature on July 1, 2030. The pricing release set the initial conversion price at about $121.50, a 35% premium to the $90 offering price.
Cash of $427.9 million and term deposits of $388.6 million total $816.5 million, $621.0 million short of the put amount. First-half free cash flow (FCF, operating cash flow minus capital spending) was $67.1 million, down 19.8%, and the company bought back 345,158 shares for $17.2 million in Q2 under a $200 million program for shares and both note series. Equity attributable to shareholders is negative $91.0 million.
Own calculation (fiscal Q2 2027 results 6-K): If first-half FCF continues for the eight quarters to June 2028, it adds about $268.2 million, still about $352.8 million short of the principal. That assumes the stock stays below the conversion price and most holders put the notes; continued buybacks would widen the gap.
The July 6-K ties the India listing to this. The offering is expected to be a sale of MMT India shares by MakeMyTrip and its Singapore subsidiary ibibo Holdings, MMT India will remain a consolidated subsidiary, and the proceeds are expected to fund growth, acquisitions and “repurchases of different classes of securities (including convertible securities)”.

How MakeMyTrip Compares With Booking Expedia and Trip.com

The peers are Booking and Expedia, the two largest global online travel agents, and Trip.com, which held about 45% of MakeMyTrip’s voting power before the June 2025 buyback. On market data, trailing four-quarter revenue growth was 14.5% at Trip.com, 12.9% at Booking, 12.0% at Expedia and 5.5% at MakeMyTrip, and operating margin was 34.9% at Booking, 17.4% at Expedia, 16.1% at Trip.com and 15.2% at MakeMyTrip. MakeMyTrip’s figures run to September; the others run to June.

Revenue growth and operating margin at MakeMyTrip Booking Expedia and Trip.com

Forward P/E is 70.27 at MakeMyTrip against 13.31 at Booking, 12.55 at Expedia and 10.10 at Trip.com, inflated by the note interest in IFRS earnings. On price to sales MakeMyTrip is at 3.76, behind Booking’s 3.94 and ahead of Trip.com’s 2.58 and Expedia’s 2.19. Over the past year market value fell -47.9% at Trip.com and -47.0% at MakeMyTrip, against -32.0% at Booking and +26.2% at Expedia.

Forward P/E and price to sales at MakeMyTrip Booking Expedia and Trip.com

MakeMyTrip’s Price-to-Sales and Price-to-Margin Band

Equity is negative, so price to book does not work, and note interest absorbs most of IFRS profit, so the band uses price to IFRS sales and price to Adjusted Margin instead.
Dividing market value by trailing revenue of $1.07 billion gives price to sales of 3.88, about half the 7.44 median of the 56 months since March 2022 and in the 3.6th percentile. The low was 3.47 in March 2026 and the high 14.58 in November 2024. On trailing Adjusted Margin of $1.20 billion the multiple is 3.45, against a 6.96 median. The 3.76 on market data differs because of the share count used.

MakeMyTrip price to sales and price to Adjusted Margin over 56 months

The two multiples have drifted apart. In November 2024 price to sales was 1.025 times price to Adjusted Margin; in October 2026 it was 1.125 times, the gap that growing inducements opened between margin and revenue.

Three Conditions That Move the Stock

Inducements were 4.11% of air, hotel and bus bookings in Q2. A return to the 3% range in the December quarter would narrow the gap between IFRS revenue and Adjusted Margin; staying above 4% means discounts keep taking a large share of bookings.
Flight segments were 13.93 million in Q2 after three quarterly declines. Rising segments would mean passengers, not fares, are lifting air bookings; further declines with higher bookings per segment would put more pressure on the 6.9% air margin rate.
The MMT India offering terms matter most for the notes. If MakeMyTrip’s share of the sale proceeds exceeds the $621.0 million gap between cash and the 2028 put, it can fund note repurchases; if the listing slips, the company will need refinancing or other funding before July 2028.

What to Watch in the December Quarter

The December quarter results, likely in late January, should show the inducement ratio, flight segments and the rupee again. The inducement ratio is best compared with 3.81% in the same quarter a year earlier to strip out seasonality.
One question stays open. The July 6-K says MakeMyTrip may later look at giving shareholders “a security at MMT India level that is fungible and listed across India and US capital markets”, and the 2030 notes indenture has a clause that swaps the underlying shares when they are replaced by newly listed equity. If the India listing goes that far, what will noteholders actually receive on conversion?

Trip.com (TCOM) Stock Analysis: Antitrust Fine and Guidance: the Chinese online travel agent that held about 45% of MakeMyTrip’s votes until June 2025, useful for comparing growth and multiples.
Uber (UBER) Stock Analysis: Gross Bookings vs Revenue Gap: another platform where reported revenue and gross bookings diverge, a parallel to MakeMyTrip’s inducements.

Chevron (CVX) Stock: Refining Carried Q3 as Brent Fell

J. Equity. Research — Tue, 03 Nov 2026 08:56:35 GMT

Chevron (NYSE: CVX) reported third-quarter 2026 adjusted earnings of $10.36 billion, $1.62 billion below the second quarter, -13.5%. Most of that gap is an accounting swing the company calls timing effects, which went from a $1.54 billion benefit in Q2 to a $1.58 billion drag in Q3. Strip them out and adjusted earnings rose from $10.44 billion to $11.94 billion, +14.4%, in a quarter when Brent averaged $97 instead of $104. The extra profit came from refining.
Chevron is a Houston-based integrated oil company. Its upstream business finds and produces crude oil and natural gas, and its downstream business refines crude into gasoline, diesel and jet fuel, markets fuels and makes chemicals. At the $235.52 close on results day and 1.951 billion shares outstanding at the end of September, the company is worth about $459.5 billion. Q3 net income on a GAAP basis was $9.92 billion, 2.8 times the $3.54 billion of a year earlier.

Chevron one-year share price chart

The question here is how long the refining margins that carried the third quarter can last. The analysis lines up the Q3 2026 earnings release, the Q1 2026 earnings release where timing effects were first explained, the 29-page Q3 earnings presentation, the August sensitivities and guidance sheet, the 2025 10-K and 32 earnings releases going back to 2019.
Two caveats apply. The figures come from the earnings release, and the Q3 10-Q notes are not included. Timing effects are a company-defined category rather than an audited line item, and the per-barrel refining figure below divides US downstream earnings by crude throughput, so it also contains chemicals, marketing and renewable fuels.

What the Q3 Slides Say About Timing Effects

Slide 9 walks from Q2 earnings of $12.07 billion to Q3’s $9.92 billion in 15 bars. Special items took $438 million and currency $94 million, and the rest is split into upstream, downstream and other. The two longest negative bars are upstream timing effects of $1.72 billion and downstream timing effects of $1.41 billion. The longest positive bar is downstream margins at +$1.24 billion.
Company disclosure (Q3 earnings presentation, October 30, 2026): Chevron said adjusted third-quarter earnings were $1.6 billion lower than the prior quarter. It attributed the upstream decline to lower realizations, lower liftings and unfavorable timing effects, and said downstream rose on higher refining margins and volumes that more than offset unfavorable timing effects.

Q3 earnings slide 9: Q2 to Q3 earnings walk with timing effects

Own calculation (slide 9): The two timing bars add up to -$3.12 billion, close to twice the $1.62 billion fall in adjusted earnings. Take timing out and the remaining bars sum to -$443 million for upstream, +$1.74 billion for downstream and +$209 million for other, a net gain of $1.50 billion. Downstream alone improved $234 million more than the whole company.
Appendix slides 16 to 19 break timing effects out by segment. In Q3 international upstream booked -$1.05 billion and international downstream -$358 million; in Q2 the same two segments had +$742 million and +$887 million. On the US downstream bridge, margins alone added $1.23 billion.
Slide 15 runs the same walk against Q3 2025, from $3.54 billion to $9.92 billion. The upstream realizations bar is +$3.73 billion and the downstream margins bar +$3.66 billion, nearly the same length, while timing effects cost $1.14 billion in upstream and $590 million in downstream. Over the year, higher oil prices and wider refining margins each added about the same amount.
Slide 8 summarizes the quarter: return on capital employed (ROCE) of 17.7%, or 18.4% adjusted, organic capex of $3.9 billion, $3.5 billion in dividends and $2.5 billion of buybacks, with debt at 0.6 times and net debt at 0.4 times trailing operating cash flow. The prepared remarks add that Q4 capex should rise in line with past years while 2026 still finishes at the low end of the annual capex guidance.

Cash Flow and Entitlement Barrels in the Q3 Slides

Slide 10 starts from $16.6 billion of operating cash flow excluding working capital. Adding $1.7 billion from asset sales and affiliate loan repayments and subtracting $4.0 billion of capex gives adjusted free cash flow of $14.2 billion; after $3.5 billion of dividends, $2.5 billion of buybacks and $3.5 billion of debt repayment, cash rose from $8.5 billion to $12.8 billion. The company noted that sharp commodity price increases late in the quarter hurt working capital.

Q3 earnings slide 10: 14.2 billion dollars of adjusted free cash flow and shareholder returns

Slide 11 bridges production from 4.07 million barrels of oil equivalent per day to 3.98 million. Australia added 45,000 barrels a day and the Eastern Mediterranean 30,000, while Guyana fell 65,000, Angola 35,000 and Tengizchevroil (TCO) in Kazakhstan 25,000. The panel on the right blames entitlement impacts and turnarounds. Under production sharing contracts, a higher oil price means fewer barrels are needed to recover costs, so the company’s share shrinks.

Q3 earnings slide 11: production bridge from 4.07 to 3.98 million barrels a day

Own calculation (August sensitivities and guidance): Chevron set 2026 production guidance of 3.98 million to 4.10 million barrels a day at $60 Brent and said each $10 change in Brent moves full-year output by about 15,000 barrels a day. Nine-month Brent averaged $94, $34 above that assumption, worth roughly 51,000 barrels a day. Adding that back to the nine-month average of 3.97 million gives about 4.02 million, inside the guidance range.
Slide 6 collects capacity added by debottlenecking existing plants rather than building new ones: more than 85,000 barrels a day upstream and 20,000 barrels a day in refining, plus a 20% increase at TCO’s Third-Generation Plant that takes total processing to slightly over 1 million barrels a day. Yet TCO production fell 25,000 barrels a day on slide 11, so the added capacity did not yet show up in Q3 volumes. The company only said TCO has run near full rates in recent months. At Pasadena the slide claims a refinery capacity gain of about 15% at nominal cost, and the 10-K shows Pasadena throughput rising from 65,000 barrels a day in 2024 to 110,000 in 2025.

The Bull and Bear Case for Chevron Shares

The bull case rests on earnings before timing effects. In a quarter when Brent was -6.7%, adjusted earnings excluding timing rose +14.4%, and US refineries ran a record 1.093 million barrels a day. The company describes the -$2.98 billion of nine-month timing effects as a lag that unwinds when prices fall.
The bear case rests on where that profit came from. The $4.93 billion of downstream earnings was earned in what management calls “a supply-constrained market”, and upstream production was -2.6% year over year because higher prices cut entitlement barrels. Price to book of 2.37 times is the highest in the 59 months since December 2021.

From Noble Energy to Hess and Venezuela

In Q2 2019 Chevron booked $740 million of earnings from the Anadarko merger termination fee. In Q2 2020 it lost $8.27 billion as, in its own words, “The economic impact of the response to COVID-19 significantly reduced demand for our products and lowered commodity prices”. It closed the Noble Energy acquisition that October, adding Eastern Mediterranean gas, the DJ Basin in Colorado and more Permian acreage, and the $69.50 month-end close that month is the lowest in 10 years.
In Q2 2022 Chevron earned $11.62 billion with $3.52 billion from downstream, the largest downstream result since at least Q4 2018 until Q2 2026. In October 2023 it completed the PDC Energy acquisition and announced the Hess deal, which brought a 30% stake in Guyana’s Stabroek block plus Bakken and Gulf of America assets. The Hess deal closed in July 2025; the quarterly weighted share count went from 1.719 billion to 1.939 billion and book value per share from $85.17 at the end of June to $97.91 at the end of September.
On September 1, 2026 Chevron switched its Venezuelan joint ventures to equity accounting, so Q3 production includes only one month of them. The stock went from $152.41 at the end of 2025 to $235.52, +54.5%, the highest month-end close in a decade.

Chevron month-end share price over 10 years with four dates

Adjusted Earnings Without Timing Effects

Among 32 earnings releases since 2019, the words timing effects first appear in the Q1 2026 release. Chevron described them as mismatches between earnings recognition on financial derivatives marked to market before the physical crude or products are delivered, together with “the impact of LIFO inventory accounting”. The Q3 presentation says more timing effects arise while prices rise and they unwind when prices fall.
Own calculation (four quarters of earnings releases): Q1 adjusted earnings of $2.79 billion included about -$2.94 billion of timing effects, so earnings before timing were $5.73 billion. The same calculation gives $10.44 billion for Q2 and $11.94 billion for Q3, three straight quarterly increases. Nine-month timing effects total -$2.98 billion against +$200 million in the first nine months of 2025.

Q2 to Q3 adjusted earnings bridge and quarterly earnings before timing effects

Against a year earlier the gap is wider. Earnings before timing were $3.52 billion in Q3 2025 and rose 3.4 times in a year while Brent moved from $69 to $97. Chevron’s August sheet puts full-year after-tax sensitivity at about $600 million per $1 of Brent, or $150 million a quarter. A $7 lower Brent from Q2 to Q3 would suggest about $1.05 billion less, but the realizations bar on slide 9 was only -$705 million. The sheet notes that contract LNG prices follow Brent with a three-to-four-month lag, and international gas realizations rose from $7.84 to $9.44 per thousand cubic feet.

How Much Does Chevron Earn per Barrel It Refines?

Q3 downstream earnings of $4.93 billion are the highest in 32 quarters since Q4 2018, with $3.59 billion from the US. The previous US high was $2.44 billion in Q2 2022. Downstream was 46.4% of combined upstream and downstream earnings in Q3, compared with 25.6% a year earlier.
Own calculation (15 quarters of earnings releases): Dividing US downstream earnings by crude throughput times days in the quarter gives $35.65 per barrel in Q3, $24.76 in Q2 and $6.52 a year earlier. The figure went from $11.66 in Q1 2023 to -$4.24 in Q4 2024 and from $2.07 in Q1 2026 to 17 times that level two quarters later. Throughput of 1.093 million barrels a day was +2.7% year over year, so most of the gain came from margin per barrel.

Quarterly upstream and downstream earnings and US downstream earnings per crude barrel

With US refineries running at nearly 98% utilization, extra volume has to come from debottlenecking, and the company plans another 7% at Pascagoula by 2030. International refinery runs rose to 665,000 barrels a day from 598,000 in Q2, but international product sales were -9% year over year because of “supply disruptions from the Middle East conflict”.
Cash followed the earnings. Q3 free cash flow (FCF, operating cash flow minus capex) was $12.0 billion, and dividends of $3.48 billion plus buybacks of $2.50 billion returned $5.98 billion, a 49.9% payout of FCF. Over nine months Chevron returned 65.5% of $28.55 billion in FCF, net debt fell from $34.46 billion at the end of 2025 to $20.73 billion, and net debt to trailing operating cash flow went from 1.0 to 0.4 times.

How Chevron Makes Money From Oil Fields and Refineries

Upstream produced 3.98 million barrels of oil equivalent a day in Q3, roughly half in the US (2.04 million) and half abroad (1.94 million). Per the 2025 10-K, 43% of proved reserves are in the US, 15% in Australia and 11% in Kazakhstan.
The Permian Basin anchors US output and has topped 1 million barrels a day for six straight quarters. The DJ Basin from Noble and PDC, the Bakken from Hess and the deepwater Gulf of America, where Anchor, Ballymore and Whale have ramped up, fill out the rest. Abroad the main pillars are the 50%-owned TCO, the operated Gorgon (47.3%) and Wheatstone LNG projects in Australia, and the 39.7%-owned and operated Leviathan gas field in Israel.
Guyana’s Stabroek block, 30% owned since Hess, is the growth asset. The 10-K says the fourth floating production vessel, One Guyana, started up in August 2025 with capacity of about 250,000 gross barrels a day, and the January 2026 release recorded the investment decision on Hammerhead, the seventh development. The August guidance sheet also warns that cost recovery in Guyana reduces net entitlement as it progresses, the same direction as the 65,000-barrel drop on slide 11.
Upstream profit follows prices. The August sheet puts full-year sensitivity at about $600 million per $1 of Brent and about $700 million per $1 of Henry Hub gas. In Q3 US liquids realized $62.72 a barrel, international liquids $86.09, and US natural gas $1.88 per thousand cubic feet.
Downstream refines crude and sells fuels and chemicals. The five US refineries are Pascagoula in Mississippi (369,000 barrels a day), El Segundo (290,000) and Richmond (257,000) in California, Pasadena in Texas (125,000) and Salt Lake City in Utah (58,000), with operable capacity of 1.099 million barrels a day at the end of 2025. Slide 5 adds that more than 80% of US refinery turnarounds in the last two years were completed in first-quartile duration.
Outside the US Chevron owns 60.6% of the Map Ta Phut refinery in Thailand and half of two joint-venture refineries: GS Caltex’s Yeosu refinery in South Korea, with 800,000 barrels a day of total capacity and described in the 10-K as one of the world’s largest, and the 290,000-barrel Singapore refinery. Chemicals sit in the 50%-owned Chevron Phillips Chemical, and 11 biofuel plants in the US and Germany make renewable diesel and biodiesel.
International downstream earned $1.35 billion in Q3, 2.7 times the $499 million of a year earlier, even as international product sales fell. The company put it down to higher margins on refined product sales.
TCO shows up in cash flow too. Chevron said operating cash flow rose partly on increased cash distributions from TCO, and adjusted FCF includes a $1 billion TCO loan repayment. Capex of $4.01 billion included $1.67 billion of US upstream spending, down from $2.38 billion a year earlier on lower Permian spend, and the company expects to finish 2026 at the low end of its $18 billion to $19 billion organic capex range.

Venezuela’s Production Plan and Its Reserves

Slide 4 shows a plan to lift gross production from Chevron’s three Venezuelan joint ventures to about 600,000 barrels of oil a day by 2031. The bars imply roughly +37% a year from 2022 to 2026 and +15% or more a year from 2026 to 2031, with total costs under $20 a barrel and an internal rate of return of about 55% at $70 flat Brent. The release says the joint ventures plan to invest $7 billion over five years, and Chevron markets all of their crude, most of it to US refineries including Pascagoula and El Segundo.

Q3 earnings slide 4: the Venezuela production growth plan

Company disclosure (2025 Form 10-K, February 24, 2026): Chevron’s Venezuelan interests include 39.2% of Petroboscan, 30% of Petropiar and 35.8% of Petroindependencia, and “As of December 31, 2025, no proved reserves are recognized for these interests.” The company said it operated there under licenses issued by the US government.
After the switch to equity accounting, Venezuela contributes through affiliate income and distributions rather than consolidated production. Chevron expects Q4 affiliate distributions of $3.0 billion to $3.5 billion including Venezuela, and gross joint-venture output of about 300,000 barrels a day by year end, +20% over 12 months. Whether the 600,000-barrel plan turns into booked reserves is first testable in the 2026 10-K.

How Chevron Compares With ExxonMobil Shell and TotalEnergies

The peers are ExxonMobil, the largest US oil company, and the European integrated majors Shell and TotalEnergies, all of which combine production with refining and chemicals. On market data, trailing four-quarter revenue growth was +19.9% at Chevron, +19.5% at ExxonMobil, +19.4% at Shell and +16.8% at TotalEnergies. Operating margin was 17.0% at TotalEnergies, 15.3% at Shell, 15.2% at Chevron and 12.8% at ExxonMobil.

Revenue growth and operating margin at Chevron ExxonMobil Shell and TotalEnergies

Valuation splits along the Atlantic. Forward P/E is 13.44 at ExxonMobil, 12.77 at Chevron, 8.87 at Shell and 8.38 at TotalEnergies, and dividend yield is 4.16% at TotalEnergies, 3.02% at Chevron, 2.88% at Shell and 2.20% at ExxonMobil. Over the past year Chevron’s market value rose +71.4%, ahead of ExxonMobil’s +53.8%, TotalEnergies’ +48.3% and Shell’s +34.2%.

Forward P/E and dividend yield at Chevron ExxonMobil Shell and TotalEnergies

Chevron’s Price-to-Book and Dividend Yield Band

Quarterly net income has swung between $2.2 billion and $12.1 billion this year, so the band uses book value and dividends instead of P/E.
Using month-end prices and book value from 32 earnings releases, month-end price over quarter-end book value per share gives a price to book of 2.37 times, the highest of the 59 months since December 2021, above the previous high of 2.31 in May 2022 and the 1.86 median. Annualizing the $1.78 quarterly dividend gives a 3.02% yield, the lowest of the 59 months, against a 4.02% median and a 5.03% high in April 2025.

Chevron price to book and dividend yield over 59 months

Forward P/E on market data is 12.77. Annualizing nine-month adjusted EPS of $12.73 gives $16.97 and a multiple of 13.9 times, which assumes Q3’s refining profit carries into Q4.

Three Conditions That Move the Stock

US downstream earnings were $3.59 billion in Q3, or $35.65 per barrel of crude. Chevron expects Q4 downstream turnarounds at Pascagoula and Richmond to cost $400 million to $500 million after tax. If the per-barrel figure returned to the 2025 average of $3.63, US downstream would earn about $365 million at Q3 throughput, roughly $3.22 billion less and equal to 31.1% of Q3 adjusted earnings.
Timing effects stand at -$2.98 billion for nine months. A Brent average below Q3’s $97 would let some of that unwind into earnings, but the $600 million per dollar realization sensitivity works the other way. A higher Brent improves realizations and books more timing losses.
Production was 3.98 million barrels a day in Q3, and Q4 guidance calls for 175,000 to 225,000 barrels a day of turnarounds and downtime, including a major turnaround at Wheatstone LNG, curtailment in the Partitioned Zone and October hurricane downtime in the Gulf of America. Holding the 3.98 million low end of full-year guidance and collecting $3.0 billion to $3.5 billion of affiliate distributions including Venezuela are the upstream checks.

What to Watch in the Fourth Quarter

Q4 will carry a one-time after-tax loss of about $3 billion to $4 billion on closing the Hess Midstream transaction, treated as a special item. Chevron said it agreed to cut Bakken midstream costs by about half but cannot recognize those future savings as an asset, so GAAP net income and adjusted earnings will diverge again.
One question stays open. The $35.65 per-barrel US refining figure was earned in what Chevron calls a supply-constrained market; once that eases, does it stay above the single digits of 2025?

Casey’s (CASY) Stock Analysis: Fuel Margin Drove Q4 Profit: a fuel retailer whose profit swung on fuel margin, useful next to Chevron’s refining margin at the other end of the same chain.
Linde (LIN) Stock Analysis: Price, Volume and Margin Trends: another industrial company read through a price, volume and margin bridge, the same way Chevron’s slides split its earnings.

Sector RS Rank Nov 2: Homebuilders Lead, Oil & Gas Fall

J. Equity. Research — Mon, 02 Nov 2026 23:05:44 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Mohawk Industries · Masco · Royal Caribbean

② What rose today: homebuilders, medical devices, retail

③ What pulled back: oil and gas, cybersecurity, oil services

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Nov 2 Sector RS — 129 ETFs · RRG v2

WTI crude fell -7.55% to $96.26 on Monday as hopes grew for US-Iran talks. The oil fund (USO) lost -7.08%. Cheaper oil helped push the 10-year Treasury yield down to 4.89% from 4.93%. The Dow rose +0.41% to 51,983.98. The S&P 500 slipped -0.51% to 7,541.40, and the Nasdaq fell -1.07% to 25,164.32. Microsoft lost -2.83% and Palantir -3.13%, so tech kept dragging. Exxon Mobil fell -4.05% and Chevron -3.29%. The VIX rose to 21.15 from 19.42.

Nov 2 Major Indexes — 1-Day Change

Nov 2 GICS 11 Sectors — 1-Day Change

Of the 129 ETFs in our universe, 66 closed higher and 63 fell. Consumer discretionary (XLY) led the 11 sectors at +2.41%. Energy (XLE) was last at -3.96%. Eight sectors rose and three fell. The equal-weight S&P 500 (RSP) gained +0.76%, so the typical stock did better than the index.

Today’s Leading Sectors TOP 5

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Consumer Staples Select Sector SPDR (XLP)	+1.58%	99	🔺	🔺	🔺
Utilities Select Sector SPDR (XLU)	+0.55%	99	🔺	🔺	🔽
SPDR S&P Retail (XRT)	+2.05%	98	🔺	🔺	🔺
iShares U.S. Insurance (IAK)	+1.48%	97	🔺	🔺	🔺
iShares U.S. Home Construction (ITB)	+4.56%	96	🔺	🔺	🔺

The table turned over almost completely. Last report’s top five held four energy funds. Oil and gas exploration (IEO) slipped to 94, and energy (XLE) to 90. Staples, retail, insurance, and homebuilders took their places. Utilities (XLU) is the only holdover.

Why They’re Strong — Sector Issues

iShares Home Construction ITB Daily

· Home construction (ITB) — Up +4.56%, sheet RS rank 96. Cavco rose +7.09%, Meritage Homes +7.04%, and Mohawk Industries +6.58%. Lower yields after the oil drop gave builders a lift.

Stocks That Lifted Home Construction ITB — 1-Day Change

iShares Medical Devices IHI Daily

· Medical devices (IHI) — Up +3.52%, sheet RS rank 93. IDEXX Laboratories jumped +21.85%, the biggest move in the fund. Boston Scientific added +5.57% and Baxter +5.30%.

Stocks That Lifted Medical Devices IHI — 1-Day Change

SPDR Retail XRT Daily

· Retail (XRT) — Up +2.05%, sheet RS rank 98. Upbound rose +10.34%, The RealReal +8.86%, and Academy Sports +4.46%. Walmart gained +3.38%. Retail now sits near the top of the sheet.

Stocks That Lifted Retail XRT — 1-Day Change

US Global Airlines JETS Daily

· Airlines (JETS) — Up +4.16%, sheet RS rank 55. Cheaper fuel is the plain reason. JetBlue rose +11.23% and United +4.80%. The fund is still below its 1-quarter and 1-year averages.

What Changed From Yesterday

Homebuilders (XHB) posted the biggest one-day rank gain, 72 to 90. Home construction (ITB) climbed from 81 to 98, and airlines (JETS) from 43 to 58.

Biggest 1-Day RS Rank Gains — Yesterday vs Today

Biggest 1-Day RS Rank Losses — Yesterday vs Today

Cybersecurity (BUG) lost 27 points, 82 to 55, and nearly all of it was Monday’s price drop. Oil services (OIH) fell from 88 to 64, and oil and gas explorers (XOP) from 95 to 74. Friday’s report said oil and gas leadership was still holding. One session later, that call broke.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

Home construction (ITB) rose from 31 to 98 over the window. Airlines (JETS) climbed from 1 to 58, and solar (TAN) from 7 to 46. Oil (USO) went from 52 to 83 but has dropped well off its peak of 100. Cybersecurity (BUG) slid from 91 to 55.

RS Breakdown Warnings

RS Breakdown Warnings — 5 Sessions Ago vs Today

First Trust cybersecurity (CIBR) fell from 92 to 36, the deepest drop. Cloud, software, and two more cyber funds joined it. Oil and gas explorers (XOP), refiners (CRAK), and IEO are on the list too. All nine match the sheet’s direction over the same five sessions.

RS Rebound Signals

RS Rebound Signals — 5 Sessions Ago vs Today

Airlines (JETS) jumped from 29 to 58, the strongest rebound. Aerospace and defense (XAR) and European defense (EUAD) also qualified. Three other funds were dropped, two because Monday’s price moved the other way and one because the sheet disagreed.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Invesco Solar (TAN)	+4.65%	53	🔽	🔽	🔽
iShares U.S. Home Construction (ITB)	+4.56%	96	🔺	🔺	🔺
U.S. Global Jets (JETS)	+4.16%	55	🔺	🔽	🔽
SPDR S&P Homebuilders (XHB)	+3.58%	87	🔺	🔺	🔽
iShares U.S. Medical Devices (IHI)	+3.52%	93	🔺	🔺	🔺

Why They Rose

Solar topped the list, but it is below all three averages. Home construction and medical devices are the stronger names here. Both sit above their 1-month, 1-quarter, and 1-year averages. On the other side, meme stocks (MEME) -7.22%, oil (USO) -7.08%, cybersecurity (BUG) -5.87%, and oil services (OIH) -5.48% led the decliners. Okta fell -11.22% inside the cyber group.

Leading Sectors: Homebuilders, Medical Devices, Retail

① Home construction ranks 96 and climbed 67 points over the window. Monday’s yield drop added fuel.
② Medical devices rank 93 and are above every average. IDEXX gave the group a one-day push.
③ Retail ranks 98. The gain was broad, from Walmart to small chains.
④ The last report covered the October 30 close. Its three picks from that close to Monday’s: Regeneron +3.60%, Eli Lilly -0.46%, and Cheniere Energy -5.65%, against -0.51% for the S&P 500. Regeneron beat the market, and Lilly edged past it. Cheniere closed at $311.67, below the $318.94 level the report flagged. Recorded as is.

Today’s Three Stocks — Mohawk Industries · Masco · Royal Caribbean Stock Forecast

Sixty-three stocks passed the four-part filter. These three fit the day’s leaders.

Mohawk Industries (MHK) — Flooring Maker Stock Forecast

Mohawk Industries MHK Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Mohawk Industries (MHK)	98	98	90	+17.5%	iShares U.S. Home Construction 1.5%

Closed at $148.58, +6.58%, a one-year closing high. Mohawk makes carpet, tile, and laminate flooring. It reported on October 29 and has gained in both sessions since. The Mohawk Industries stock forecast leans on housing demand. For the third quarter, net sales rose about +1% to $2.8 billion. Diluted EPS was $2.72. The board approved a new buyback of up to $500 million.

Masco (MAS) — Plumbing and Paint Stock Forecast

Masco MAS Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Masco (MAS)	88	95	95	+22.2%	SPDR S&P Homebuilders 3.7% · iShares U.S. Home Construction 3.4%

Closed at $83.51, +3.56%, a one-year closing high. Masco owns Delta faucets and Behr paint. It reported on October 28. The Masco stock forecast rests on margins more than sales. Net sales rose +3% to $1.966 billion. Operating profit rose +12% to $338 million, and EPS rose +30% to $1.17. Masco raised its adjusted EPS guidance to $4.65 to $4.75.

Royal Caribbean (RCL) — Cruise Line Stock Forecast

Royal Caribbean Cruises RCL Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Royal Caribbean (RCL)	93	97	86	+15.6%	Consumer Discretionary Select Sector SPDR 2.0%

Closed at $321.07, +4.52%. Fuel is a large cost for cruise lines, so Monday’s oil drop helped. The company reported on October 27. The Royal Caribbean stock forecast now has cheaper fuel on its side. Revenue rose +9% to about $5.6 billion. GAAP EPS was $6.45. Full-year adjusted EPS guidance moved up to $17.85 to $17.95, even with higher fuel costs at the time.

Mohawk Industries · Masco · Royal Caribbean Stock Forecast Checkpoints

· Mohawk Industries stock forecast — The stock cleared its August 14 high close of $140.10. Watch whether it holds above $140.10. The 20-day average is far lower at $124.20.

· Masco stock forecast — The prior one-year high close was $82.77 on July 2. Watch whether the stock stays above $82.77 after a +9.8% climb from its report-day close.

· Royal Caribbean stock forecast — The February 9 high close of $348.03 is still above. Watch whether it holds above $295.92, the report-day close, if oil bounces.

What to Watch on Next Week’s Calendar

🔴 US midterm elections, Tuesday, November 3 · Possible US decision on renewed Iran strikes after the vote
Oil fell -7.55% on hopes for US-Iran talks. Any sign of renewed strikes after the election could reverse Monday’s move in energy and airlines.
AMD results, Tuesday, November 3, 4:00 p.m. ET · Qualcomm and Arm results, Wednesday, November 4, 4:00 p.m. ET
The Nasdaq fell again while the Dow rose. Chip results will show whether the tech slide keeps going.
Marathon Petroleum results, Tuesday, November 3, 8:00 a.m. ET · ConocoPhillips results, Thursday, November 5, 8:00 a.m. ET · Devon Energy results, Thursday, November 5, 4:00 p.m. ET
Oil and gas explorers (XOP) dropped from 95 to 74 in a day. Producer results land right after that break.
🔴 October jobs report, Friday, November 6, 8:30 a.m. ET · ISM services index, Wednesday, November 4, 10:00 a.m. ET
Homebuilders rose on lower yields. A hot jobs number could push the 10-year back above 4.89%.

AstraZeneca (AZN) Stock: Oncology Fills the Farxiga Gap

J. Equity. Research — Mon, 02 Nov 2026 21:44:11 GMT

AstraZeneca (NYSE: AZN) grew third-quarter 2026 revenue +6.7% to $16.21 billion and Core EPS 17% to $2.79, and the stock closed results day at $186.65, +7.02%. Break the quarter down by therapy area, though, and oncology alone added $1.13 billion against a year-earlier quarter, more than the company’s entire $1.02 billion increase. Everything outside oncology shrank in aggregate, and at the center of that is Farxiga, the diabetes, heart failure and kidney drug that lost exclusivity in the US and fell -24.8%.
AstraZeneca is a UK drugmaker that sells cancer medicines, cardiovascular, renal and metabolic (CVRM) drugs, respiratory and immunology (R&I) products, infectious disease medicines and rare disease treatments from its Alexion unit. Its ordinary shares have traded directly on the New York Stock Exchange since February 2026. At $186.65 and 1.554 billion shares, its market value is about $290.1 billion.

AstraZeneca one-year share price chart

The question here is how long oncology growth can fill the hole Farxiga is leaving. The analysis lines up the Q3 2026 results 6-K, the H1 2026 results 6-K, the FY 2025 results 6-K, the 46-page Q3 results presentation and 28 results filings going back to 2019.
Two caveats apply. AstraZeneca reports growth at constant exchange rates (CER), while the calculations here use actual dollars, so the two can differ by a point or two. The ex-Farxiga figures subtract the two products’ product revenue from total revenue, and the 2030 target is set at Q1 2024 exchange rates, so comparing it with reported dollars is approximate.

What the Q3 Deck Says About Growth Without Farxiga

Q3 results deck slide 5: total revenue up 7% and up 12% excluding Farxiga and Brilinta

Slide 5 of the Q3 deck lines up three growth rates for the first nine months: total revenue +7%, total revenue excluding Farxiga and Brilinta +12%, and Core EPS +14%. Underneath it adds 12 positive Phase III readouts and first approvals for four new medicines (Etcamah, Baxfendy, Amlypave and Klygefa). The footnote defines the +12% as growth calculated excluding Farxiga and Brilinta following loss of exclusivity in certain major markets.
Taking those two products out is not a small adjustment. In 2025 Farxiga sold $8.41 billion and Brilinta $823 million, together 15.7% of $58.74 billion in total revenue, and their combined nine-month sales fell from $7.01 billion to $5.86 billion, -16.3%.
Company disclosure (Q3 results 6-K, October 30, 2026): AstraZeneca said nine-month revenue rose 7% as double-digit growth in Oncology, R&I and Rare Disease offset headwinds from Farxiga and Brilinta loss of exclusivity and volume-based procurement in China. In its cash flow commentary it named working capital “including the impact of Farxiga loss of exclusivity in the US” as the main reason operating cash flow fell $1.34 billion year over year.
Own calculation (Q3 results 6-K): In the third quarter alone, total revenue grew 6.7%, but without the two products it went from $12.91 billion to $14.53 billion, +12.5%. Over nine months the ex-Farxiga figure rose 13.2%, from $36.23 billion to $41.02 billion, consistent with the company’s +12% at CER.
The Farxiga table in the filing explains where the decline comes from. US sales over nine months were $795 million, down 36%, with the note “Multiple generics launched in Q2 2026”. Emerging Markets fell 21% at CER on generic competition and China’s volume-based procurement (VBP) from Q1 2026, and Japan saw a generic diabetes entry in Q4 2025. Only Europe grew, up 6% at CER despite a UK generic.
Slide 6 shows the mix. Oncology is 47% of nine-month product revenue, CVRM 18%, R&I 16% and Rare Disease 16%. By region the US is 42%, Europe 23%, emerging markets outside China 15% and China 12%. Europe grew 10% at CER and China was the only region in decline, at -3%.

The 2030 Revenue Target and the Growth It Requires

Q3 results deck slide 15: oncology revenue over eight quarters by product

Slide 15 stacks oncology revenue by product for eight quarters and headlines $21.9 billion in the first nine months (+16%) with +17% in Q3. The right side lists Tagrisso +12% on continued first-line combination uptake, Imfinzi +26%, Calquence +16%, Enhertu +35% on global demand and US launch momentum, Truqap +9%, and Datroway at $78 million. The footnote names Daiichi Sankyo as the partner on Enhertu and Datroway and Merck on Lynparza.

Q3 results deck slide 26: the 80 billion dollar 2030 revenue ambition

Slide 26 opens with an $80 billion 2030 target described as on track and a 13% total revenue CAGR since 2023. The footnote says the ambition is risk-adjusted, does not depend on future M&A and uses Q1 2024 exchange rates. The other boxes promise 25-plus potential blockbusters by 2030 (16 already delivered in 2025), 20 new molecular entities by 2030 (14 launched) and more than 20 high-value Phase III readouts through 2027, which leaves at least nine blockbusters and six new medicines to come in four years.
Own calculation (FY 2023 to FY 2025 results 6-Ks): Total revenue went from $45.81 billion in 2023 to $58.74 billion in 2025, a 13.2% compound rate that matches the slide. By year, though, growth was 18.0% in 2024 and 8.6% in 2025, and the first nine months of 2026 were +8.4%. Reaching $80 billion in 2030 from the 2025 base takes 6.37% a year. If Q4 2026 simply repeats Q3, 2026 revenue is $63.09 billion (+7.4%), and the remaining four years need 6.1% a year.
Slide 7 adds that this year’s 12 positive Phase III programmes represent more than $10 billion of peak-year revenue, a figure the footnote says is not risk-adjusted. Tozorakimab in COPD, efzimfotase alfa in hypophosphatasia and the gastric cancer antibody-drug conjugate sonesitatug vedotin produced their first Phase III data. CEO Pascal Soriot said the company is “on track to deliver our 2030 ambition and to sustain growth through the next decade.” The slide does not mention that the Farxiga decline that cuts into that path only began in Q2 2026.

The Bull and Bear Case for AstraZeneca Shares

The bull case is oncology and margin. Oncology revenue was $7.77 billion in Q3, up 17%, and Core operating profit rose 20% at CER, faster than revenue. Management kept full-year guidance and says the 2030 target is on track.
The bear case is the speed of the Farxiga decline. Farxiga peaked at $2.19 billion in Q1 2026 and fell to $1.61 billion in Q3, down 26.8% in two quarters. If Q3’s pace holds for a year, Farxiga and Brilinta take about $2.5 billion out of revenue, equal to 4.3% of 2025 sales.

From Alexion to a Direct NYSE Listing

AstraZeneca month-end share price over 10 years with four dates

AstraZeneca began consolidating rare disease specialist Alexion on July 21, 2021, with the stock at a $114.11 month-end close. Alexion’s Soliris and Ultomiris became today’s Rare Disease unit, 16% of nine-month 2026 revenue. At its May 2024 investor day the company set the $80 billion 2030 revenue target, with the stock at $153.78.
In July 2025 AstraZeneca announced plans to invest $50 billion in US manufacturing and R&D by 2030. In October 2025 it announced an agreement with the US administration under which American patients get medicines at “prices that are equalised with those available in wealthy countries”, select chronic disease drugs are sold direct to consumers, and Section 232 pharmaceutical tariffs are delayed for three years. The same month it broke ground on a $4.5 billion plant in Virginia.
Ordinary shares started trading on the NYSE on February 2, 2026, and the old American Depositary Share listing on Nasdaq ended on January 30. February’s $208.45 month-end close was the 10-year high. The stock fell to $161.47 at the end of September before a +15.6% October brought it back to $186.65, still -10.5% from the peak and +6.4% for 2026.

How Much of the Growth Came From Oncology?

Year-over-year revenue change by source in 2026 and quarterly Farxiga and Brilinta sales

Own calculation (seven quarters of results 6-Ks): In Q1 2026 total revenue rose $1.70 billion from a year earlier and oncology supplied $1.15 billion, or 68%. In Q2 oncology’s $1.02 billion increase exceeded the company’s $927 million total, and in Q3 oncology added $1.13 billion against a total of $1.02 billion. Outside oncology, revenue fell $88 million in Q2 and $111 million in Q3.
The reason is plain. Farxiga’s year-over-year change went from +$136 million in Q1 to -$347 million in Q2 and -$530 million in Q3, and with Brilinta the Q3 drag was $601 million. In the same quarter R&I added $259 million and Rare Disease $217 million, so the Farxiga decline alone was larger than both gains combined.
If Farxiga’s $1.61 billion and Brilinta’s $75 million Q3 sales simply held for a year, they would total $6.42 billion and $300 million, about $2.51 billion less than in 2025. Because the Farxiga decline has widened every quarter since Q1, assuming it stops at Q3’s pace is the optimistic case.
Oncology’s weight has grown accordingly, from 41.5% of total revenue in Q1 2025 to 47.9% in Q3 2026. With one therapy area close to half of sales, the growth of a handful of cancer drugs now sets the company’s growth rate.

The Oncology Drugs Doing the Work

Annual revenue against the 2030 target and quarterly sales of four oncology drugs

The oncology gain is concentrated. Against Q3 2025, immunotherapy Imfinzi rose from $1.60 billion to $1.99 billion, +$389 million; Enhertu from $714 million to $969 million, +$255 million; and lung cancer drug Tagrisso from $1.86 billion to $2.09 billion, +$223 million. Blood cancer drug Calquence added $149 million and Datroway went from $24 million to $78 million. Lynparza, sold with Merck, slipped to $811 million, -3.1%.
Outside oncology, asthma biologic Tezspire grew 49.5%, Strensiq 33.3% and Ultomiris 16.9%, while Soliris fell 35.5% as patients converted to Ultomiris and, in the US, because Soliris is “Affected by biosimilar pressure”.
Part of the growth is shared with partners. Q3 Alliance Revenue was $1.11 billion, up 36%, more than five times the total revenue growth rate. The deck lists Enhertu, Lynparza, Datroway, Beyfortus, Tezspire and Wainua as partnered medicines, and the company’s share of partner sales in their territories comes in as Alliance Revenue.
Profit grew faster than sales. Q3 Core gross margin was 82%, a point higher than a year earlier, and Core operating profit was $5.86 billion, up 20% at CER and 36% of revenue. Trailing four-quarter Core EPS was $10.12, $3.00 more than reported IFRS EPS of $7.12, the gap being items such as amortization of intangibles from Alexion and other deals. Guidance is given on a Core basis.
Net debt rose $2.46 billion in nine months to $25.83 billion at the end of September, and the deck puts net debt to EBITDA at 1.2 times. In October the company completed a $2 billion equity investment in Summit Therapeutics, giving it “rights equivalent to approximately 12.0% of Summit Therapeutics’ outstanding common stock”, and agreed to test Summit’s PD-1/VEGF bispecific ivonescimab with its own antibody-drug conjugates.

How AstraZeneca Makes Money Across Three Businesses

Revenue comes in three forms. Product Sales of medicines AstraZeneca sells itself were $43.96 billion over nine months, 94% of the total; Alliance Revenue from partner-sold medicines was $2.81 billion; and Collaboration Revenue from licensing and milestones was $113 million.
The businesses are Oncology, BioPharmaceuticals and Rare Disease. Oncology covers lung cancer (Tagrisso, Imfinzi), breast cancer (Enhertu, Datroway, Truqap, Etcamah), blood cancer (Calquence) and ovarian and prostate cancer (Lynparza). Enhertu and Datroway are antibody-drug conjugates co-developed with Daiichi Sankyo. The deck’s tumour maps for lung, breast, gastric and bladder cancer show the strategy of covering the same patients with several drugs, from first-line treatment to therapy around surgery.
BioPharmaceuticals spans CVRM, R&I and infectious disease. CVRM includes Farxiga, cholesterol drug Crestor, potassium binder Lokelma and newly approved hypertension drug Baxfendy. R&I includes inhalers Symbicort and Breztri, biologics Fasenra and Tezspire and lupus drug Saphnelo; nine-month R&I revenue was $7.27 billion, up 12%, and COPD candidate tozorakimab was filed in the US and Japan. Infectious disease, renamed from Vaccines and Immune Therapies in 2026, was $735 million, down 11%, about 2% of revenue.
Rare Disease is Alexion. Complement C5 inhibitors Ultomiris and Soliris are the core, alongside hypophosphatasia drug Strensiq and Koselugo. Nine-month revenue was $7.54 billion, up 12%, with Ultomiris at $4.02 billion (+16%), Strensiq $1.64 billion (+38%) and Soliris $1.08 billion (-25%). Efzimfotase alfa for hypophosphatasia has been filed in the US, EU and China.
The cost structure is research heavy. Nine-month Core R&D was $10.77 billion, 23% of revenue, and SG&A $11.82 billion, 25%. With an 83% Core gross margin, AstraZeneca can spend nearly half of sales on R&D and selling and still keep a 35% Core operating margin. In Q2 it also paid a $1.10 billion upfront fee to CSPC Pharmaceuticals for a collaboration built on an AI-driven peptide discovery platform and once-monthly dosing technology.
Manufacturing is moving toward the US. According to the 9M 2025 filing, the Virginia plant will produce drug substance for the weight management and metabolic pipeline, including oral GLP-1 AZD5004, baxdrostat and oral PCSK9 laroprovstat, as well as antibody-drug conjugates. The US is 42% of revenue, and the tariff delay gives the company three years to build more of that supply domestically.
Shareholder returns run through the dividend. Nine-month operating cash flow of $10.89 billion less $2.28 billion of capital expenditure leaves free cash flow (FCF) of $8.61 billion, and dividends paid of $4.96 billion were a 57.6% payout of that FCF.

How AstraZeneca Compares With Three Pharma Peers

Revenue growth and operating margin at AstraZeneca Merck Novartis and GSK

The comparison set is Merck, whose Keytruda leads immuno-oncology and which also partners with AstraZeneca on Lynparza; Novartis, a European pharma group overlapping in cardiovascular and immunology; and GSK, the other large UK drugmaker, with respiratory and vaccine businesses. On market data, trailing four-quarter revenue growth is +7.3% at AstraZeneca, +4.9% at Merck, +4.3% at GSK and +1.8% at Novartis. Operating margin is 31.9% at Novartis, 29.4% at GSK, 28.3% at Merck and 25.7% at AstraZeneca, whose figure appears to be on a reported basis that includes intangible amortization, below its 36% Q3 Core margin.

Forward P/E and dividend yield at AstraZeneca Merck Novartis and GSK

Forward P/E is 17.46 at Merck, 16.83 at AstraZeneca, 16.80 at Novartis and 9.94 at GSK. Dividend yield is 3.65% at GSK, 2.27% at Merck, 1.92% at Novartis and 1.73% at AstraZeneca. Over the past year market value rose 70.6% at Merck, 30.7% at Novartis, 13.8% at AstraZeneca and 7.5% at GSK.

AstraZeneca’s Core P/E and Dividend Yield Band

AstraZeneca Core P/E and dividend yield over 59 months

Reported P/E is 26.20, but the same measure spiked to 1,625 times in 2021 when Alexion amortization hit earnings, so the band uses Core EPS, the basis on which the company guides.
Using month-end prices and trailing Core EPS of $10.12, the Core P/E is 18.44, a little below the 19.22 median of the 59 months since December 2021 and in the 37th percentile. The low was 15.34 in September 2022 and the high 24.24 in August 2024. Dividend yield on trailing dividends of $3.23 is 1.73%, below the 2.12% median; the low of 1.54% came in February 2026, the month of the NYSE listing.
Core EPS grew from $2.38 in Q3 2025 to $2.79 in Q3 2026, and the Core P/E went from 15.96 at the end of September back to 18.44 a month later. The 2025 dividend was $3.20, and the 2026 interim dividend of $1.06 compares with $1.03 a year earlier.
Outside view (market data consensus, right after Q3 results): Of 12 analysts, 7 rate the stock strong buy, 2 buy, 2 hold and 1 strong sell, with an average price target of $206.66. Average revenue estimates are $63.3 billion for 2026 and $67.38 billion for 2027.

Three Conditions That Move the Stock

Farxiga quarterly sales were $1.61 billion in Q3. A Q4 number below $1.5 billion would make the $2.5 billion annual drag estimated at Q3’s pace larger; holding in the $1.5 billion range would suggest European demand and emerging-market pricing are slowing the decline.
Oncology’s quarterly increase has run at $1.0 billion to $1.1 billion a year earlier throughout 2026. As long as it stays larger than the Farxiga and Brilinta decline, total revenue keeps growing; if Imfinzi and Enhertu slow, the shrinkage outside oncology shows straight through to the total.
Core EPS guidance for 2026 is a low double-digit increase. Nine-month Core EPS growth of 14% leaves room in Q4, but a 2027 guide below mid-single-digit growth for revenue and Core EPS would make the roughly 6% a year needed for $80 billion in 2030 harder to reach.

What to Watch in the Full-Year Report

Full-year results in early February should show Q4 Farxiga sales, the rate of US decline and AstraZeneca’s first 2027 guidance. Because 2027 is the first full year of US generic Farxiga, how much decline that guide assumes will show how much room oncology really has.
One question stays open. Between the point where Farxiga sales bottom out and the point where the 2027 Phase III readouts turn into revenue, can oncology alone keep the company growing at about 6% a year?

Medtronic (MDT) Stock Analysis: Why EPS Stayed Flat Despite 10-Year-High Revenue Growth: another large healthcare company, useful for comparing how revenue growth does or does not reach EPS against AstraZeneca’s Core EPS growing faster than sales.
Qualcomm (QCOM) Stock Analysis: Non-Handset Mix and Margin: a company working to grow beyond one dominant product line, a parallel to AstraZeneca replacing Farxiga revenue with oncology.

Intel (INTC) Stock: A 6.1% Q4 Cut as Servers Pass PCs

J. Equity. Research — Mon, 02 Nov 2026 10:46:25 GMT

Intel (NASDAQ: INTC) beat its own guidance in the third quarter of 2026, with revenue of $16.51 billion (+20.9%) and non-GAAP EPS of $0.52 against a $0.38 guide, and then guided fourth-quarter revenue to $15.0 billion to $16.0 billion with a non-GAAP gross margin of 38.0%. The $15.5 billion midpoint is 6.1% below Q3, and the stock closed the day after the report at $65.76, -28.58%. Split the guide by segment and data center revenue (DCAI) passes client PC revenue (CCPG) for the first time in at least eight years, but most of that crossover comes from a PC decline of more than 20%, not from server growth.
Intel designs x86 processors for PCs and servers, builds most of them in its own fabs, and is turning those fabs into a foundry business that also makes chips for outside customers. At $65.76 and 5.315 billion shares outstanding, its market value is about $349.5 billion, and Q3 revenue was $16.51 billion.

Intel one-year share price chart

The question here is whether server growth can carry the fixed factory costs that a PC slowdown leaves behind. The analysis lines up the Q3 earnings release, the Q3 10-Q, the August offering prospectus supplement, the Q3 investor presentation, the CEO and CFO prepared remarks and 32 quarterly releases going back to the December 2018 quarter.
Two caveats apply. Intel gave its Q4 segment outlook only as ranges, a mid-teens increase for DCAI and a decline of more than 20% for CCPG, so the Q4 segment figures below are backed out of those ranges. The Fab 28 impact of about $300 million in revenue and 2 percentage points of gross margin is also what management called an early assessment.

What the Q3 Investor Deck Shows by Segment

Q3 investor deck slide 7: DCAI revenue and operating margin over five quarters

Slide 5 of the Q3 deck says revenue came in $0.2 billion above the July outlook midpoint, non-GAAP gross margin 2.1 points above and non-GAAP EPS $0.14 above. The footnote adds, in small type, that GAAP EPS was $0.60, down $0.30 from a year earlier. The release reconciliation explains the gap: Q3 2025 GAAP EPS included a $1.20 per share gain from divestiture, the quarter in which Intel closed the sale of 51% of Altera.
Nine quarterly releases show that Intel has beaten the midpoint of its revenue guide in each of the last eight quarters, but the size of the beat shrank from +11.3% in Q1 2026 and +12.8% in Q2 to +1.3% in Q3, the smallest of the eight. Margin and EPS beat by a wide margin in the same quarter that revenue barely cleared the bar.
Slide 7 shows DCAI revenue climbing from $4.1 billion in Q3 2025 to $4.7 billion, $5.1 billion, $6.3 billion and then $7.3 billion. Segment operating income tripled from $1.0 billion to $3.0 billion over those five quarters and operating margin went from 23.4% to 41.5%. The text on the right cites demand across hyperscale, enterprise and neo-cloud customers, purpose-built silicon (PBS) revenue that more than doubled year over year and rising interest driven by agentic AI workloads.
The CFO told investors that DCAI revenue is on track to finish 2026 nearly $10 billion above what the company expected entering the year, and that “demand for DCAI products continues to meaningfully exceed available supply.” Granite Rapids on Intel 3 is now the largest server product family. DCAI operating profit rose about $600 million from Q2 on higher revenue and lower operating expenses, and PBS revenue grew more than 50% sequentially.

Q3 investor deck slide 8: CCPG revenue and the memory shortage note

Slide 8 puts CCPG revenue at $8.5 billion, $8.2 billion, $7.7 billion, $8.9 billion and $8.1 billion over the same five quarters, with a 28.2% segment margin in Q3. The first line on the right reads that industry-wide memory shortages are hurting the size of the PC market. Management had flagged memory as a second-half risk earlier, and said the pressure built late in Q3 and changed how customers were buying.
The other two lines on the slide are good news. Wildcat Lake, a cost-optimized PC chip built on Intel 18A, grew units about 70% sequentially and sold out, and AI PC revenue rose +35% from a year earlier. Total CCPG revenue still fell -5.1%.
Slide 9 covers Intel Foundry. The operating loss narrowed from $2.3 billion in Q3 2025 to $1.9 billion and the loss margin from -54.8% to -27.7%, which the slide credits to better yields and cycle times lowering wafer costs. External foundry revenue was $411 million, up $118 million from Q2, but the CFO said most of that increase came from a non-recurring customer program.

The Q4 Guide and the Fab 28 Accident

Q3 investor deck slide 11: Q4 outlook framed year over year

Slide 11 shows the Q4 outlook in large type: revenue of $15.0 billion to $16.0 billion, non-GAAP gross margin of 38.0% and non-GAAP EPS of $0.25. Every comparison under those numbers is year over year: revenue up $1.8 billion, gross margin up 0.1 point and EPS up $0.10, all measured at the midpoint of the revenue range. On a GAAP basis the release guides to a 37.1% gross margin and $0.10 of EPS.
Own calculation (Q3 release and slide 11): Against Q3 the same guide reads very differently. Revenue at the midpoint is $1.01 billion lower, non-GAAP gross margin drops 6.1 points from 44.1%, and non-GAAP EPS falls $0.27 from $0.52. Of the eight Q4 revenue guides Intel has given alongside Q3 results since 2019, a 6.1% sequential decline is the steepest, ahead of -5.5% in 2022 and -5.1% in 2020.
By segment, the CFO guided DCAI revenue up mid-teens sequentially, with PBS growing faster than DCAI overall, and CCPG revenue down more than 20% as “customers move quickly to reduce weeks of inventory and align purchases with their expectations for 2027 consumption.” He tied the margin decline mainly to “lower overall revenue against our fixed-cost base as we adjust client wafer starts to current demand conditions.” The guide also absorbs about $300 million of revenue and 200 basis points of gross margin from Fab 28, and “almost all of the $300m impact from Fab 28 is related to 10nm server products.”
Filing footnote (Q3 10-Q, quarter ended September 26, 2026): In mid-October an accident at the manufacturing facility in Kiryat Gat, Israel, caused employee casualties and injuries and halted production. Operations had been suspended for about two weeks and were expected to resume by the end of October, and Intel expects Q4 charges for scrapped inventory, remediation and cleanup and under-absorbed overhead.

The Bull and Bear Case for Intel Shares

The bull case is the server business. DCAI revenue is 1.78 times its level a year ago, its 41.5% operating margin is 13.3 points above the PC segment, and management says supply, not demand, is the constraint. Guiding DCAI up mid-teens in Q4 while losing about $300 million of server revenue to Fab 28 is the core of that argument.
The bear case is the factory network. Because Intel makes its own chips, lower PC wafer starts leave fab fixed costs sitting on less revenue, and the 38.0% Q4 margin guide is the result. The August offering added shares, and the stock now trades -30.8% below the $95 offering price.

Intel month-end share price over 10 years with four dates

On August 1, 2024, Intel paired its Q2 results with a cost reduction plan and said it would suspend the dividend starting in Q4. The stock ended that month at $22.04 and bottomed at a $19.43 month-end close in January 2025. In August 2025 the Commerce Department agreed to buy 433.3 million shares at $20.47 in connection with government grant disbursements, a 9.9% stake, and SoftBank bought 87 million shares at $23.00 the same year while Nvidia bought 215 million at $23.28.
On April 8, 2026, Intel bought back the 49% stake in its Ireland Fab 34 joint venture that Apollo had acquired in June 2024, paying $14.2 billion. Two weeks later Q1 revenue came in +11.3% above the guidance midpoint with a $14.3 billion Q2 guide, and the stock went from $44.13 at the end of March to $94.48 at the end of April, +114.1%. The June month-end close of $139.63 was the 10-year high. In the Q3 remarks CEO Lip-Bu Tan said “We are only a year and a half into this journey” of rebuilding the company.
On August 10 Intel announced a $15 billion common stock offering, upsized it to $20 billion the same day, and with the underwriters’ option sold 242,105,262 shares at $95 for $23.0 billion of gross proceeds and $22.62 billion net. The close after the Q3 report, $65.76, is -52.9% from the peak and still +78.2% for 2026.

Will Data Center Revenue Pass Client Revenue in Q4?

Data center and client revenue over seven quarters with the implied Q4 split and non-GAAP gross margin

Own calculation (32 releases and CFO remarks): Treating mid-teens as +13% to +17% on Q3 DCAI revenue of $7.32 billion gives Q4 DCAI of $8.27 billion to $8.56 billion, while a 20% decline on CCPG revenue of $8.10 billion caps Q4 CCPG at $6.48 billion. Even at the most conservative end of the guide, DCAI comes out ahead. The two segments move from a $779 million CCPG lead in Q3 to a $2.43 billion DCAI lead at the midpoint, and of that $3.21 billion swing, $2.11 billion or two-thirds comes from the CCPG decline and $1.10 billion from DCAI growth.
That would be a first. Across all 32 quarterly releases from Q4 2018 to Q3 2026, data center revenue never exceeded client revenue, and through three segment reorganizations it came closest in Q2 2020 at 74.9% of client revenue. The ratio was 54.1% in Q1 2025 and reached 90.4% in Q3 2026.
The crossover needs a closer look. Revenue outside the two segments (external foundry sales, all other and intersegment eliminations) was $1.10 billion in Q3. If it stays there, the $15.5 billion midpoint minus $8.42 billion of DCAI and $1.10 billion of other revenue leaves CCPG at $5.99 billion, -26.1% from Q3, inside management’s range of a decline of more than 20%.
Fab 28 sits on the DCAI side. Nearly all of the roughly $300 million revenue hit falls on 10nm server products, so the mid-teens DCAI guide already absorbs it. Adding Fab 28 back, the Q4 revenue midpoint would be $15.8 billion, 4.3% below Q3.

What Sits Behind the 38% Margin Guide

Non-GAAP gross margin bottomed at 29.7% in Q2 2025 and climbed to 44.1% over five quarters, and the 38.0% Q4 guide is back at the 37.9% of Q4 2025. Of the 6.1-point sequential drop, management assigned 2 points to Fab 28; the remaining 4.1 points come from fixed factory costs spread over lower revenue and from a mix shift toward PBS.
Segment margins make that look odd at first. DCAI earned a 41.5% operating margin in Q3 against 28.2% for CCPG, so a shift toward servers should lift profitability. But Intel makes much of the silicon for both segments in its own fabs, and Intel Foundry still lost $1.85 billion on $6.70 billion of revenue in Q3. When PC chip volume drops, fab utilization drops with it, and the unabsorbed cost lands in the company-wide gross margin.
Filing footnote (Q3 10-Q): GAAP earnings move the other way. The 132 million shares still held in escrow under the August 2025 government agreement are accounted for as a derivative liability marked to fair value each quarter, and the mark-to-market loss of $12.6 billion over nine months produced a nine-month net loss attributable to Intel of $11.44 billion, or $2.22 per share. The filing says “We expect to recognize further such gains or losses in future periods based on future decreases or increases of our stock price.”
Own calculation (Q2 and Q3 10-Qs and weekly closes): The $13.7 billion liability divided by 132 million unreleased shares is $103.8 per share, 84.4% of the $123.00 close just before quarter end, and the same ratio was 85.0% in June. If it holds through Q4 and the stock stays at $65.76, the liability shrinks to about $7.3 billion and GAAP results pick up a gain of about $6.4 billion that non-GAAP EPS leaves out.

The Stock Offering and the Apollo Buyback

Intel cash and short-term investments against debt and four new share issue prices

Cash and short-term investments fell from $37.42 billion at the end of 2025 to $29.73 billion in June, after the Apollo buyback, and rose to $54.01 billion in September after the offering. Total debt went from $46.59 billion to $50.13 billion, so net cash moved from -$9.17 billion to +$3.87 billion.
Company disclosure (8-K, April 8, 2026): Intel funded the $14.2 billion repurchase with cash on hand and a $6.5 billion bridge loan. The Q2 10-Q shows $6.5 billion of senior notes issued in the same quarter, and over nine months Intel raised $13.0 billion of term debt, including the bridge, and repaid $9.0 billion.
Intel’s own adjusted free cash flow shows the deal plainly. The measure adds net SCIP partner contributions, so the payment to Apollo comes straight out of it: adjusted free cash flow was -$8.42 billion in Q2, after -$2.02 billion in Q1 and before +$1.64 billion in Q3, for -$8.80 billion over nine months.
The 10-Q cash flow statement explains the rest. Cash and short-term investments rose $16.59 billion over nine months. Net offering proceeds of $22.62 billion minus $14.44 billion of partner distributions, mostly Apollo, leaves $8.18 billion, about half the increase. Operating cash flow of $13.18 billion exceeded capex of $11.83 billion by $1.35 billion, and the Arizona joint venture partner contributed $5.03 billion while net borrowing added $4.0 billion. Roughly 63% of the net proceeds effectively refilled the $14.2 billion paid to Apollo four months earlier.
The share count on the 10-Q cover rose from 5.044 billion in July to 5.315 billion in October, +5.4%, and is up 30.0% from 4.089 billion in April 2022. Basic weighted shares in Q3 were 5.244 billion, +16.2% from a year earlier, so the same net income now spreads over that many more shares.

How Intel Makes Money From Chips and Factories

Intel reports two businesses. Intel Products sells chips through CCPG (PC processors) and DCAI (server processors), and its $15.42 billion of Q3 revenue was most of the company’s $16.51 billion. Intel Foundry booked $6.70 billion, but most of that is wafers sold to Intel Products, so about $6.29 billion is eliminated in consolidation and external foundry revenue was $411 million.
The weight inside Intel Products has shifted in a year. CCPG was 52.5% of product revenue in Q3 and DCAI 47.5%, against 67.5% CCPG a year earlier. Through 2025 Intel earned roughly two-thirds of its product revenue from PCs; on the Q4 guide it becomes a company that sells more server chips than PC chips.
Profit comes from products and the foundry takes some back. In Q3, CCPG earned $2.29 billion of operating income on $8.10 billion of revenue and DCAI $3.04 billion on $7.32 billion, $5.32 billion together, a 34.5% product margin. Add $179 million from all other, subtract the $1.85 billion foundry loss and $1.06 billion of unallocated corporate costs and eliminations, and company operating income was $2.52 billion.
CCPG sells notebook and desktop CPUs plus chips for industrial edge devices. In Q2 2026 Intel renamed it from the Client Computing Group to the Client Computing and Physical AI Group, and management said the edge business held up better than PCs on edge and physical AI design wins. Its customers are PC makers, so when memory prices push up system prices and OEMs cut inventory, Intel’s orders fall first. Panther Lake on Intel 18A is in volume production, and Nova Lake, the first client product on 18A-P, is expected to launch with twice the design wins of Panther Lake.
DCAI sells Xeon server CPUs and custom silicon. Granite Rapids on Intel 3 is the workhorse, Clearwater Forest, the first 18A server chip, is shipping for revenue, and Diamond Rapids on 18A-P is due to ramp in 2027. PBS designs chips to the specifications of hyperscalers and AI labs; management said it has tripled over three years and is poised to triple again. Intel also introduced an inference GPU, the D-series, formerly code-named Crescent Island.
Management’s case for server CPU demand runs through AI agents. The CEO said 2027 demand for Clearwater Forest is significant, especially in CPU-dense agentic rack-scale infrastructure, and in October Intel demonstrated racks with more than 46,000 cores at about 133 kilowatts. Slide 6 calls the server CPU foundational to AI infrastructure, and the CFO’s release quote cites “our strongest data center revenue growth in 15 years.” Intel also announced plans to buy Classiq, an Israeli quantum computing software company.
Intel Foundry runs fabs in Oregon, Arizona, Ireland and Israel plus packaging sites in New Mexico and Malaysia. Intel 18A is ramping in Oregon and Arizona, where Fab 62 is the second high-volume 18A fab, and Intel released its 0.9 process design kit for 14A to select customers in October. Demand for EMIB, which ties multiple chips into one package, is strong outside Intel, but a shortage of advanced organic substrates limited output in Q3. The Ohio site is still under construction.
Foundry revenue is the internal price Intel Products pays for wafers, so the segment narrows its loss either by cutting wafer cost through yield or by winning outside customers. Slide 4 lists better Intel 3 and 18A yields, the 14A 0.9 PDK and EMIB-T yield as signs of improved execution. Intel does not name foundry customers, but the CEO said he is encouraged by progress with multiple potential 14A customers and expects 18A-P to be an attractive node for outside customers.
Ownership of the fabs is part of the model. The Ireland joint venture is 100% Intel again after the April buyback, while an investment partner holds 49% of the Arizona joint venture and contributed $5.03 billion over nine months. Intel owns 76% of Mobileye, the driver-assistance chip company, and deconsolidated Altera, the FPGA maker, after selling 51% in September 2025.

How Intel Compares With Three Chip Peers

Revenue growth and operating margin at Intel AMD Nvidia and TSMC

The comparison set is AMD, which competes with Intel in both PC and server x86 CPUs, Nvidia, whose AI accelerators take the largest share of data center budgets, and TSMC, the contract manufacturer Intel Foundry is chasing. Nvidia is also an Intel shareholder after its 2025 purchase. On market data, trailing four-quarter revenue growth is +83.4% at Nvidia, +39.5% at AMD, +36.2% at TSMC and +12.1% at Intel, and operating margin is 65.2%, 58.0%, 15.7% and 10.3% in the same order. AMD and Nvidia report on June and July quarters, one quarter behind Intel.
AMD fights Intel chip for chip, Nvidia sells the accelerators that sit next to the CPU in AI servers, and TSMC builds chips for both of them, which makes it the benchmark Intel Foundry has to meet to win outside work. Intel’s 10.3% includes the foundry loss; product-only operating margin in Q3 was 34.5%, above AMD’s trailing 15.7%.

Price to sales and forward P/E at Intel AMD Nvidia and TSMC

Price to sales is 19.95 at AMD, 16.31 at Nvidia, 12.14 at TSMC and 5.84 at Intel, the lowest of the four. Forward P/E is 45.09 at AMD, 42.61 at Intel, 19.07 at TSMC and 16.92 at Nvidia, so on earnings Intel is the second most expensive. One-year market value change is +93.2% at Intel, +92.1% at AMD, +47.6% at TSMC and -1.8% at Nvidia.

Intel’s Price-to-Sales and Price-to-Book Band

Intel price-to-sales and price-to-book over 59 months

Trailing GAAP EPS is negative because of the escrow share losses, so there is no P/E, and non-GAAP EPS also turned negative between Q3 2024 and Q2 2025, which rules out an adjusted P/E band. Sales and book value are the yardsticks instead.
Using month-end prices and 10-Q equity, market value over trailing revenue of $59.89 billion gives a price-to-sales ratio of 5.84, more than twice the 59-month median of 2.38 since December 2021; only six months were higher. The high was 12.31 in June 2026 and the low 1.44 in September 2022. Price to book on Intel stockholders’ equity of $114.91 billion is 3.04 against a median of 1.46, with a low of 0.82 in August 2024.
The book value denominator swung twice this year. In Q2, $13.5 billion of the Apollo payment came out of equity and escrow losses piled up, taking stockholders’ equity down to $87.5 billion; the Q3 offering brought it back to $114.9 billion. The 8.02 price-to-book reading in June combined the price peak with that shrunken equity base.
Outside view (market data consensus, right after Q3 results): Of 49 analysts, 11 rate Intel a strong buy, 1 a buy, 36 a hold and 1 a strong sell, so holds make up more than 70% of ratings.

Three Conditions That Move the Stock

DCAI revenue should land between $8.27 billion and $8.56 billion if the guide holds. If Fab 28 recovers on time and PBS keeps growing, a number at the top of that range says the server crossover is more than a one-quarter event; a number below it says supply is limiting growth before demand does.
Non-GAAP gross margin is the measure of what the PC cutback costs. A return to the 40% range in Q1 would show the hit was temporary; if OEM inventory cuts run into Q1 and Intel trims wafer starts further, margin stays below 38% and Q3’s 44.1% becomes the number from a quarter when PCs and servers filled the fabs together.
Share count stands at 5.315 billion after the offering. Net cash turned positive at $3.87 billion in September, but the CEO said Intel is evaluating ways to accelerate the Ohio build-out, and if bigger capex leads to another equity raise, each share’s claim thins again. The 132 million escrow shares and the government’s 240.5 million warrants are also still outstanding.

What to Watch in the Q4 Report

Fourth-quarter results in late January will show how far CCPG actually fell and what Intel guides for PCs in Q1. The CEO said “We expect the current environment to persist until memory availability and prices begin to normalize,” and promised more on Nova Lake at CES in January.
One question stays open. Once PC makers bring inventory weeks back to normal, will Intel’s PC chip orders recover before memory prices settle?

AMD Stock Analysis: Q2 2026 Earnings and the Debt Raise: Intel’s closest CPU rival, useful for comparing AMD’s debt raise with Intel’s equity offering and term debt.
TSMC (TSM) Stock: 60% Margins and Guidance It Keeps Beating: the foundry benchmark, a contrast with Intel Foundry’s -27.7% operating margin.
NVIDIA (NVDA) Stock Analysis: Guarantees and Cash Flow: the company that bought Intel shares at $23.28 in 2025, a read on the data center spending that drives DCAI demand.

Verizon (VZ) Stock: Record Adds and Flat Revenue Ex Frontier

J. Equity. Research — Mon, 02 Nov 2026 04:43:48 GMT

Verizon (NYSE: VZ) added 406,000 postpaid phone customers in the third quarter of 2026, its best third quarter in five years, and its new mobility and broadband service revenue line grew +2.9% to $23.49 billion. The 10-Q tells a different story underneath: fiber revenue added through the Frontier acquisition rose $765 million, more than the entire $651 million increase in service revenue. Strip out fiber and service revenue was -0.5% year over year.
Verizon sells wireless phone and data plans, fiber internet and fixed wireless access (FWA) home internet to consumers and businesses, and collects most of its revenue as monthly service fees. At $44.73 and 4.145 billion shares outstanding, its market value is about $185.4 billion, and Q3 revenue was $34.31 billion.

Verizon one-year share price chart

The question is whether record subscriber growth is turning into revenue. Frontier, the fiber company Verizon bought on January 20, 2026, now sits inside revenue, EBITDA and guidance, and the numbers the company highlights point one way while the legacy wireless numbers point another. The analysis lines up the Q3 earnings release, the Q3 10-Q, Frontier’s Q3 2025 earnings release, the Q3 investor presentation, the financial and operating information file, the Q3 call transcript and 32 quarterly releases back to the December 2018 quarter.
Two caveats apply. The 10-Q says fiber revenue rose primarily because of Frontier but does not size Frontier separately, so the ex-fiber figures here also remove growth in Verizon’s own Fios fiber business. The Frontier comparison numbers come from Frontier’s last quarter as a standalone company, Q3 2025.

What the Q3 Investor Deck Says About Net Adds and Guidance

Slide 4 of the Q3 deck puts three numbers in large type on the left: 137,000 postpaid account net adds (up 313,000 from a year earlier), postpaid phone churn of 0.94% against 0.98% a year earlier, and 3.3 million postpaid upgrades, down 20.3%. On the right, postpaid phone net adds go from 44,000 in Q3 2025 to 616,000 in Q4 2025, then 55,000, 184,000 and 406,000 in the first three quarters of 2026.

Q3 investor deck slide 4: postpaid phone and broadband net adds

The banner under the slide says growth is coming from improved volumes. The release adds that promotional cost of acquisition fell 41% and retention cost fell 30%. With fewer customers upgrading phones, equipment revenue was -9.0%, which the company attributed to customers keeping devices longer and to its decision to cut device subsidies.
The account comparison needs its base year. The 313,000 improvement works because Verizon lost 176,000 postpaid accounts in Q3 2025, so this year’s 137,000 gain mostly wins back what was lost a year ago. The same slide shows broadband net adds slipping from 322,000 to 314,000, so the volume recovery is concentrated in phones.
Slide 7 raised guidance for the third straight quarter. Postpaid phone net adds moved from the upper half of 750,000 to 1 million up to 1.1 million to 1.2 million. Adjusted EPS growth moved from 6%-7% to 7%-7.5%, free cash flow growth from 9%-10% to approaching 12%, and capex stayed at $16.0 billion to $16.5 billion. Mobility and broadband service revenue growth moved to the upper half of 2.5%-3%.

Q3 investor deck slide 7: 2026 guidance and the Frontier footnote

Own calculation (deck slide 7 and operating file): Nine-month postpaid phone net adds were 645,000, so hitting the new range takes another 455,000 to 555,000 in Q4 alone. That is less than the 616,000 of Q4 2025, Dan Schulman’s first quarter as CEO, but more than this year’s Q3.
The first footnote on the slide is the key to reading it: 2026 guidance includes Frontier’s results from January 20, 2026. A company that was not in last year’s numbers is in this year’s, so every growth rate in the guidance table carries some acquisition effect.

The New Service Revenue Line and Frontier

Slide 5 lines up mobility and broadband service revenue at +2.9%, adjusted EBITDA at +8.0% and adjusted EPS at +8.3%. The service revenue line is new for 2026: it groups wireless service, FWA, Fios internet and other fiber services, and Verizon recast 2025 on the same basis. Growth has gone from 1.6% in Q1 to 2.8% in Q2 and 2.9% in Q3.
Reading the recast series quarter by quarter shows something else. Consumer service revenue moved from $19.02 billion in Q4 2025 to $19.18 billion in Q1 2026, an increase of only $156 million in the quarter that Frontier joined on January 20. Page 5 of the operating file shows headcount falling from 100,200 a year earlier to 89,900 at the end of 2025, rising to 99,600 with Frontier and settling at 93,300 in September.
Filing footnote (Q3 10-Q, quarter ended September 30, 2026): The first driver of the Consumer increase was “an increase of $700 million in fiber broadband revenue primarily due to the inclusion of Frontier results”, while postpaid revenue fell $299 million because of “the amortization of wireless equipment sales promotions and acquisition related discounts”. Business added $65 million of fiber and lost $96 million of postpaid revenue, which the filing blamed on new customers choosing lower-tier plans.

Q3 investor deck slide 6: nine-month cash flow and debt

Slide 6 covers cash. Nine-month operating cash flow was $29.9 billion, capex $11.9 billion and free cash flow $18.0 billion, against $8.8 billion of dividends and $4.0 billion of buybacks. Total debt rose from $146.8 billion to $166.2 billion and net unsecured debt to adjusted EBITDA from 2.2x to 2.3x. The 10-Q says Verizon paid about $9.8 billion in cash for Frontier and assumed about $12.9 billion of its debt.
The 2.3x looks better quarter by quarter. Page 5 of the operating file shows the ratio at 2.2x in September and December 2025, jumping to 2.6x in March 2026 right after the deal, then 2.5x in June and 2.3x in September, as Frontier EBITDA built up in the denominator and cash flow paid down debt.
Own calculation (operating file and 10-Q): The $651 million increase in Q3 service revenue across Consumer and Business splits into +$765 million of fiber, -$395 million of postpaid and +$281 million of everything else. Without fiber the change is -$114 million, or -0.5%, and Q2 worked out to -0.6% on the same basis.

The Bull and Bear Case for Verizon Shares

The bull case rests on profit and cash. Adjusted EBITDA margin hit a record 40.2%, nine-month free cash flow grew +14.3% and covered $12.8 billion of dividends and buybacks, and Verizon added subscribers while cutting promotion spending.
The bear case rests on where revenue comes from. Service revenue growth came from Frontier’s fiber, postpaid accounts sit at 34.47 million, the same as a year ago, and revenue per account (ARPA) fell 1.9% to $168.08. Net unsecured debt rose to $123.7 billion and the leverage target is now a 2027 event.

From the C-Band Auction to the Schulman Era

In February 2021 Verizon won 3,511 licenses in the FCC’s C-band auction, with the stock at a $55.30 month-end close. Shares then fell to $32.41 by September 2023, when the adjusted P/E hit its 59-month low of 6.72 and annual free cash flow had dropped from $23.58 billion in 2020 to $14.05 billion in 2022.

Verizon month-end share price over 10 years with four dates

In September 2024 Verizon agreed to buy Frontier, and in October 2025 the board named Dan Schulman, a director since 2018 and former PayPal CEO, as chief executive. His first quarter, Q4 2025, produced 616,000 postpaid phone net adds but the lowest adjusted EBITDA of the last seven quarters at $11.86 billion, and $1.72 billion of severance plus $583 million of asset rationalization charges cut operating income to $5.00 billion.
The Frontier deal closed on January 20, 2026, at $38.50 per Frontier share in cash, and on January 30 Verizon also closed Starry, a fixed wireless provider serving apartment buildings in five markets. The stock went from $40.73 at the end of 2025 to $50.02 at the end of August before falling back to $44.73, a 2026 gain of +9.8%.

How Much of Service Revenue Growth Came From Fiber?

Company disclosure (Q3 call transcript): The CFO said “Wireless service revenue once again improved sequentially, and we expect to see year-over-year growth in Q4.” Wireless service revenue in Q3 was still below the prior year.

Service revenue change by source and quarterly free cash flow against dividends

The nine-month picture is the same. Fiber revenue rose about $2.07 billion across the two segments (about $1.9 billion in Consumer and $170 million in Business), while postpaid revenue fell about $1.35 billion (about $1.1 billion and $251 million). Take fiber out of the $1.63 billion nine-month increase in service revenue and the result is about -$439 million.
Frontier’s own numbers fit the gap. In its last standalone quarter, Q3 2025, Frontier reported revenue of $1.55 billion and adjusted EBITDA of $637 million, with consumer fiber broadband revenue of $521 million, up 25.8%. The 10-Q says the acquired companies’ revenue was less than 5% of total revenue and skips pro forma figures because the impact “would not have been material to our consolidated statements of income.”
Own calculation (releases and Frontier release): Subtract Frontier’s year-ago adjusted EBITDA of $637 million from Verizon’s $1.03 billion Q3 EBITDA increase and roughly $390 million remains, about 3.1% growth rather than 8.0%. Doing the same with Frontier’s $1.55 billion of revenue turns Verizon’s $492 million revenue increase into a decline of about $1.06 billion.
Frontier shows up in costs too. The 10-Q names $292 million of higher personnel costs from added Frontier headcount as the first reason Consumer cost of services rose, and amortization of acquired intangibles went from $189 million to $289 million.

Promotion Amortization and Revenue per Account

Postpaid phone lines grew from 93.25 million to 94.52 million, +1.4%, but postpaid accounts, the unit that pays the bill, are 34.47 million, within 1,000 of a year ago. Because Verizon lost so many accounts in Q3 2025, this year’s best quarter in over a decade only brought the count back to where it was.

Postpaid phone net adds and postpaid ARPA over seven quarters

ARPA fell from $171.27 in Q3 2025 to $166.47 in Q1 2026 and recovered to $168.08 in Q3, for year-over-year changes of -2.0%, -1.7% and -1.9%. Accounts times ARPA, a rough proxy for monthly postpaid revenue, is also down 1.9%.
The 10-Q explains why. Device discounts are spread over the contract as a reduction of service revenue, so promotions granted in one quarter keep cutting revenue in later quarters. Consumer equipment revenue in Q4 2025 was $7.11 billion, more than $1.7 billion above any other quarter in the series, the same quarter Verizon added 616,000 postpaid phones.
Management pairs that drag with lower promotion spending. If acquisition promotion cost really fell 41% in Q3, the amortization left behind by today’s new customers is smaller, and the Q4 return to wireless service revenue growth is the first number that will test that reading.

How Verizon Makes Money From Wireless and Broadband

Mobility and broadband service fees are 68.5% of revenue; the rest is device sales and other revenue such as legacy copper products. Devices carry thin margins and mainly hold customers in place, so cutting subsidies also shrinks this low-margin revenue on purpose.
Consumer revenue was $26.43 billion in Q3, 77% of the total, made up of $19.78 billion of service, $4.28 billion of equipment and $2.38 billion of other revenue such as copper-based wireline products and regulatory fee recovery. Business revenue was $7.02 billion, with $3.71 billion of service and $2.47 billion of other wireline services.
Consumer sells phone plans, Fios and Frontier fiber internet and FWA to households, while Business sells wireless lines, wireline networks and managed security services to large companies, government agencies and small businesses. More than a third of Business revenue comes from copper and dedicated circuits, which makes that segment more about defense than growth.
Profit comes from Consumer. Its segment EBITDA margin rose to 45.3% from 43.0% a year earlier against 27.6% in Business, and Consumer operating income of $8.09 billion makes up most of the company’s $8.65 billion.
Wireless revenue comes from plans and add-ons. The release credits Simplicity, a plan structure that leans on simpler pricing and an expanded loyalty program rather than subsidies. Schulman put it this way: “By prioritizing customer-first offerings like Simplicity and our expanded loyalty program over heavy subsidies, we are winning loyal, high-value customers while expanding margins, reducing churn, and generating strong sustained cash flow.” The 10-Q lists perks and premium plan adoption as partial offsets to the postpaid decline, and interest on device installment plans sold by agents lands in other revenue.
Wireless lines totaled 147.10 million at the end of September, including 126.83 million postpaid and 94.52 million postpaid phones. Prepaid had 19.34 million lines and lost 12,000 in Q3, with prepaid revenue per line up 2.5% to $33.51.
Broadband comes in two forms. Fiber connections jumped from 7.67 million a year ago to 11.07 million with Frontier, and FWA, which delivers home internet over wireless spectrum, grew from 5.39 million to 6.37 million. Of 314,000 broadband net adds in Q3, 155,000 were fiber and 159,000 FWA, and FWA adds were down 39.1% from 261,000 as the company shifts weight toward fiber.
Fiber is about bundling. Management said on the call that customers with both phone and broadband churn less than single-product customers and that over 55% of new fiber customers choose 1-gig-plus speeds. Verizon expects more than 32 million fiber passings by year-end and 40 million to 50 million over the medium term, and targets more than $1 billion of run-rate cost synergies from Frontier by 2028. Frontier extended the fiber footprint to 31 states and Washington, D.C., and had 8.8 million fiber passings before the deal.
FWA fills the gaps fiber does not reach. Management plans to scale a faster FWA service using its 1,700 MHz of millimeter-wave spectrum starting in Q4 and to cover another 10 million to 15 million homes with FWA beyond the fiber build. In Q2 the Business segment moved its international wireline connectivity and managed network services business to held for sale.
There is also a new revenue line. The release announced a $2 billion-plus AI infrastructure agreement with Amazon Web Services under AI Connect, which leases fiber capacity and existing network real estate to AI computing customers. Management said on the call that it has not yet recognized significant AI Connect revenue and expects the impact to begin in 2027.

How Verizon Compares With Three Telecom Peers

The comparison set is AT&T and T-Mobile in U.S. wireless and Comcast, whose cable network competes with Verizon in broadband. AT&T sells wireless and fiber like Verizon, T-Mobile has been the fastest-growing wireless competitor, and Comcast is the customer pool that FWA and fiber draw from. On market data, trailing four-quarter revenue growth is +9.3% at T-Mobile, +3.5% at AT&T, +1.4% at Verizon and -0.2% at Comcast, and Verizon’s figure already includes Frontier.

Revenue growth and operating margin at four US telecom and cable companies

Trailing operating margin on market data is 23.5% at Verizon, 23.0% at T-Mobile, 22.6% at AT&T and 14.7% at Comcast. Verizon’s GAAP margin is lower at 20.9% because market data counts Q4 2025 operating income at $7.64 billion rather than the $5.00 billion in the release, apparently excluding the severance charges.

Trailing P/E and dividend yield at four US telecom and cable companies

Trailing P/E is 7.40 at Comcast, 11.43 at Verizon, 11.49 at AT&T and 15.13 at T-Mobile. Dividend yield is highest at Verizon at 6.33%, then Comcast at 5.69%, AT&T at 5.18% and T-Mobile at 2.99%. Over the past year market value rose 9.3% at Verizon and fell 19.8% at AT&T, 21.7% at Comcast and 31.1% at T-Mobile, leaving Verizon as the only gainer of the four.

Verizon’s Adjusted P/E and Dividend Yield Band

Price divided by trailing twelve-month adjusted EPS of $4.98 gives 8.98 times, almost exactly the 8.97 median of the 59 months since December 2021. The high was 10.65 times in February 2026, right after the Frontier close, and the multiple has since returned to the median as adjusted EPS rose while the stock fell. Dividend yield is 6.29%, against a median of 6.31%, and peaked at 8.09% in September 2023.

Verizon adjusted P/E and dividend yield over 59 months

GAAP P/E is higher at 11.41 because the Q4 2025 severance and Frontier intangible amortization ($289 million in Q3) depress GAAP earnings. The quarterly dividend rose from $0.69 in the second half of 2025 to $0.7075 in Q1 2026, and the $11.48 billion of dividends paid in 2025 used 57.0% of that year’s $20.13 billion of free cash flow.
Outside view (market data consensus, right after Q3 results): Of 24 analysts, 9 rate the stock strong buy, 3 buy and 12 hold, with an average price target of $50.65. Average adjusted EPS estimates are $5.06 for 2026 and $5.31 for 2027.

Three Conditions That Move the Stock

Wireless service revenue was still below last year through Q3. If it turns positive in Q4 as management expects and ARPA returns to last year’s level, subscriber growth is turning into revenue; if promotion amortization drags on and ARPA keeps falling, service revenue growth stays dependent on Frontier.
Service revenue excluding fiber ran near -0.5% in Q2 and Q3. From Q1 2027 Frontier is in the year-ago base as well, so the distinction disappears and service revenue growth becomes a clean read on Verizon without the acquisition.
Net unsecured debt was $123.7 billion at the end of September, up from $112.0 billion a year earlier, after $9.48 billion of Frontier cash and $4.38 billion of spectrum purchases over nine months. Verizon spent 71.1% of nine-month free cash flow on dividends and buybacks; if the leverage target slips past 2027, debt reduction moves ahead of buybacks.

What to Watch in the Q4 Report

Fourth-quarter results in late January should show whether wireless service revenue actually grew year over year and which way ARPA moved. Management promised its 2027 outlook on that call, and because Frontier enters the year-ago base in 2027, the service revenue guide may land below this year’s 2.5%-3%.
One question stays open. Once the amortization from the heavy Q4 2025 device promotions runs off, will postpaid revenue per account get back to the $171 range?

Ciena (CIEN) Stock Analysis: Can Growth Catch the Price?: an optical networking supplier tied to the same fiber build-out, useful as a read on the demand behind Verizon’s AI Connect and fiber plans.
Oracle (ORCL) Stock Analysis: Cash Flow and Capex Gap: an AI infrastructure buyer whose capex outran cash flow, a contrast with Verizon’s capex of $11.9 billion against $18.0 billion of nine-month free cash flow.

ServiceNow (NOW) Stock: Armis Inside an 18.5% cRPO Guide

J. Equity. Research — Sun, 01 Nov 2026 21:41:12 GMT

ServiceNow (NYSE: NOW) grew third-quarter 2026 subscription revenue +20.9% to $3.99 billion and posted a 32.5% non-GAAP operating margin. The stock still fell -26.95% the next trading day, from $150.13 to $109.67. The number the market fixed on was fourth-quarter cRPO guidance of 18.5%, and the company’s own investor deck attributes about 1.75 percentage points of that figure to Armis, the security company it bought in April. Take Armis out and the guide is about 16.75%.
ServiceNow sells subscriptions to a cloud platform that started by automating IT help desks and now runs customer service, HR and security workflows inside large companies. At $109.67 and 1.038 billion shares outstanding, its market value is about $113.8 billion, and Q3 revenue was $4.11 billion.

ServiceNow one-year share price chart

The question is what ServiceNow grows at once acquisitions are stripped out. cRPO, current remaining performance obligations, is contracted revenue the company expects to recognize over the next 12 months, and for a subscription business it is the earliest read on next year’s sales. The analysis lines up the Q3 earnings release, the Q3 10-Q, the Q1 earnings release, the 27-page Q3 investor deck and 32 quarterly releases back to the December 2018 quarter.
Three caveats apply. The Q3 call transcript was not available, so management commentary comes from the release and the July call and is paraphrased. The Armis contribution is the company’s own figure rounded to the nearest 0.25 point, and the Armis share of Q2 actuals uses the roughly 1.25 points the Q1 release assumed in guidance. The 10-Q does not present pro forma results for the 2026 deals.

What the Q3 Investor Deck Says About Armis

Bill McDermott opened the release by calling the quarter “more than another beat-and-raise quarter” and an inflection point. Slide 7 puts the scorecard on one page: subscription revenue of $3.988 billion, up 20.5% in constant currency, cRPO of $13.65 billion, up 21% in constant currency, a 32.5% non-GAAP operating margin and a 20% free cash flow margin.
Slide 11 breaks the beat into pieces. Q3 subscription revenue equals the July guidance midpoint of $3.978 billion plus $2 million of currency and $8 million of performance. The full-year midpoint moved from $15.770 billion to $15.785 billion, and $12 million of that $15 million increase came from currency, leaving $3 million of actual guidance change.

Q3 investor deck slide 11: subscription revenue against guidance with currency and performance

The $8 million of performance is 0.2% of the guidance midpoint. For a company that has beaten its cRPO guide by more than a point in most quarters since 2022, the beat label was carrying more weight than the number behind it, and the full-year raise was $3 million once currency is set aside.
Slide 9 gives Armis a table of its own. In constant currency, Armis adds about 1.75 points to fourth-quarter growth in both subscription revenue and cRPO, and about 1.25 points to full-year subscription growth. It costs about 0.75 point of non-GAAP operating margin in Q4 and for the year, about 0.25 point of subscription gross margin and about 2 points of full-year free cash flow margin.

Q3 investor deck slide 9: the Armis impact inside 2026 guidance

Slide 10 lays out guidance. Q4 subscription revenue is $4.245 billion to $4.255 billion, 21.5% in constant currency, with cRPO growth of 18.5% and a 32% non-GAAP operating margin. The currency column shows about 1 point of tailwind in Q4 subscription growth, about 1.5 points for the year and almost none for cRPO. Full-year non-GAAP subscription gross margin is guided at 81%, about 2.5 points lower than a year ago, of which Armis explains only about 0.25 point.
Own calculation (deck slides 9 and 10): Removing the Armis contribution leaves fourth-quarter constant-currency growth of about 19.75% for subscription revenue and about 16.75% for cRPO. Q3 actuals were 20.5% and 21%.
Slide 22 shows profitability holding up. The 32.5% non-GAAP operating margin in Q3 is one point below last year’s 33.5%, and adding back the roughly 0.75 point Armis costs puts it close to last year’s level. Free cash flow margin was 31.5% in 2024 and 35.0% in 2025, and this year’s 36% target already absorbs the Armis drag.

What the Deck Says Is Left Out of cRPO

Slide 8 is the company’s own explanation of why cRPO looks lighter. ServiceNow now bundles AI deployment specialists into select large deals, and under ASC 606 the value of that help is carved out of the subscription contract, booked as professional services and in some cases left out of cRPO. Customers who get the help adopted AI twice as fast in their first five weeks, the slide says. The shift moved about 0.25 point of subscription growth into services in Q3 and should move about 0.5 point in Q4, and the company says it returns to subscription revenue at renewal.
The same slide says cRPO excludes contracts with termination-for-convenience clauses inherited through acquisitions, which will leave about 0.5 point of backlog growth out of cRPO at the end of Q4, and may exclude direct public-sector deals in the future. The Q1 release had already warned that some Armis customer contracts carry those clauses.

Q3 investor deck slide 14: remaining performance obligations and cRPO growth

Slide 14 shows total remaining performance obligations of $29.7 billion, up 22%, and cRPO of $13.65 billion, with constant-currency growth between 20.5% and 21.5% for five straight quarters. Even if the deployment carve-out and the termination clauses are worth a full point combined, the Q4 guide excluding Armis would be about 17.75%, still well below Q3’s 21%.
The cost of those specialists already shows in the income statement. Professional services revenue was $118 million in Q3, up from $108 million, but the GAAP professional services gross loss was $39 million, a margin of -32.5%.
The 10-Q is less forthcoming than the deck. It attributes the $689 million year-over-year rise in Q3 subscription revenue to growth “primarily driven by increased purchases by new and existing customers” and skips pro forma figures because “the effects of these acquisitions were not material to our consolidated results of operations.” The deck and the Q1 release are the only places Armis is sized.

Q3 investor deck slide 16: customers above 5 million dollars in annual contract value

Slide 16 shows customers above $5 million in annual contract value rising from 553 to 680, +23.0%, with average contract value up from $14.6 million to $15.4 million, or +5.5%. Because the average grew more slowly than the count, most of the gain came from customers crossing the threshold rather than from existing giants getting bigger. Slide 15 notes that the 2011 customer cohort grew from $100 of initial contract value to $3,730, and slide 17 puts the renewal rate at 98%. With almost no churn, a slower cRPO comes down to the pace of new and expansion deals.

The Bull and Bear Case for ServiceNow Shares

The bull case rests on the guidance habit. Actual cRPO growth beat the prior quarter’s constant-currency guide in 17 of 19 quarters since 2022, by an average of 1.56 points over the last eight. The non-GAAP P/E of 28.94 sits in the bottom 6.8% of the 59 months since December 2021.
The bear case rests on what the acquisitions hide. Excluding Armis, the Q4 cRPO guide of about 16.75% is the lowest of 20 constant-currency guides, GAAP operating income fell -32.7%, and $11.28 billion spent on three deals turned $8.56 billion of net cash into $0.56 billion of net debt.

From McDermott’s Arrival to Three Acquisitions

In October 2019 ServiceNow filed an 8-K saying John Donahoe would leave to run Nike and Bill McDermott, who had led SAP, would take over. Subscription revenue that quarter was $899 million; by the fourth quarter of 2025 it was $3.47 billion, 3.9 times larger. On a split-adjusted basis the stock went from a $49.45 month-end close in October 2019 to a $225.00 weekly close in January 2025, and the company split its shares five for one on December 17, 2025.

ServiceNow month-end share price over 10 years with four dates

The later McDermott years are about acquisitions. In December 2025 ServiceNow bought Moveworks, an AI assistant for employee requests, for $2.41 billion in stock and cash. Veza, an identity security company, followed in March 2026 for $1.24 billion, and on April 20 it paid $7.64 billion in cash for Armis, which finds and secures connected devices. The three deals total $11.28 billion. On the July call McDermott said Armis tracks 7 billion devices in real time.
Shares are down -28.4% this year from $153.19 at the end of 2025. The April month-end close, after Armis closed, was $88.31; the stock reached $147.99 in August before falling again after Q3. It is -51.3% below the January 2025 high.

How Often Has the cRPO Guidance Been Beaten?

Own calculation (32 earnings releases): ServiceNow has issued constant-currency cRPO guidance since the first quarter of 2022. In 17 of the 19 quarters through Q3 2026, actual growth beat the prior guide. The two misses were Q2 2022 at -1.0 point and Q4 2022 at -0.5 point, the average gap was +1.32 points and the largest beats were +2.5 points in Q3 2023 and Q3 2025.

cRPO growth in constant currency against the prior quarter guide over 19 quarters

The guide itself has stepped down from 29.5% for Q1 2022 to 18.0% for Q3 2025. The new 18.5% is the second-lowest on its face, but at about 16.75% excluding Armis it is the lowest of all 20. If ServiceNow beats by its recent eight-quarter average, Q4 would come in near 20.1%, or about 18.3% without Armis, roughly two points below the 20.25% it delivered in Q2 once that quarter’s estimated 1.25-point Armis share is removed.
Subscription revenue tells a similar story. Constant-currency growth eased from 20.0% in Q1 2025 to 19.0% in Q1 2026, then jumped to 23.0% in Q2 and settled at 20.5% in Q3. The company said in July that Q2 pulled some on-premises federal revenue forward from Q3.
The full-year guide makes the point most simply. Before Armis, the January guide for 2026 subscription growth was 19.5% to 20% in constant currency. It is now 21%, and subtracting about 1.25 points for Armis brings it back to about 19.75%, inside the original range.

Acquisitions Reshaped GAAP Profit and the Balance Sheet

GAAP operating income was $385 million in Q3, -32.7% from $572 million, while non-GAAP operating income rose +17.4% to $1.34 billion. The $953 million gap is stock-based compensation of $633 million (15.4% of revenue), amortization of acquired intangibles of $198 million, severance of $87 million and acquisition costs of $35 million. Amortization is six times last year’s $33 million.

GAAP and non-GAAP operating margin and quarterly capex over 15 quarters

GAAP operating margin fell from 16.8% to 9.4%, after 4.1% in Q2. GAAP net income was $277 million, down 44.8%, and diluted EPS of $0.27 compares with non-GAAP EPS of $1.00. Subscription gross margin was 73.5% on a GAAP basis and 80% non-GAAP.
The balance sheet carries the deals. Goodwill rose from $3.58 billion at the end of 2025 to $10.01 billion and intangibles from $1.12 billion to $3.59 billion, together 42.7% of total assets of $31.83 billion. Cash and marketable securities fell from $10.06 billion to $6.96 billion while debt rose from $1.49 billion to $7.52 billion.
Filing footnote (Q3 10-Q, quarter ended September 30, 2026): ServiceNow paid part of the Armis price with a $4.0 billion term loan in April and refinanced it with $4.0 billion of senior notes in May. Over nine months it issued $4.53 billion of commercial paper and repaid $2.48 billion, and spent $2.23 billion on buybacks, including an accelerated program that retired 18.5 million shares at an average $107.97. It bought no stock in Q3 and has about $4.2 billion of authorization left.
Capex went the other way. Q3 capital spending was $91 million, -61.3% from $235 million, and nine-month capex was $346 million, -45.1%. Q3 free cash flow was $822 million, and trailing twelve-month free cash flow was $5.15 billion, or 33.4% of revenue.
Company disclosure (Q3 earnings release): CFO Gina Mastantuono pointed to “reducing capex and raising our full-year free cash flow margin target by 100 basis points to 36 percent.” McDermott asked: “What other company at the forefront of the agentic enterprise has no capital or compute constraints?”

How ServiceNow Makes Money From Workflow Subscriptions

Subscriptions are 97% of revenue. The 10-K says customers are typically invoiced annually in advance, revenue is recognized over the contract term and contracts are generally non-cancellable. That is why cRPO works as a floor under the next year’s revenue, and why contracts that can be terminated for convenience, like some of Armis’s, are kept out of it. Self-hosted software is recognized upfront on delivery, and that portion was $96 million of Q3 subscription revenue.
The 10-K frames the company as the layer between AI and the systems that actually run a business. AI models, it says, can surface insights but “they cannot independently execute transactions, route approvals, update systems of record” without a platform that carries the decision through. To investors worried that AI agents will shrink seat-based software, that is ServiceNow’s answer: more agents need more governance. The Q3 release also highlighted a Google Cloud integration that lets employees run ServiceNow workflows inside Gemini Enterprise.
The product set has three groups. Technology workflows cover IT service management, IT operations, asset management, security operations, risk and now Armis. CRM, industry and core business workflows cover customer service, field service, HR, legal and procurement, plus Moveworks. Creator workflows include App Engine, for building custom apps, and data connection tools.
Slide 18 shows the trailing twelve-month mix of net new contract value shifting. Technology workflows fell from 52% to 48% over the year while CRM, industry and core business rose from 28% to 34%. A company that started in the IT department is spreading into customer service and HR, and Armis and Veza give security its own leg.
Geographically, 62.7% of Q3 revenue, $2.57 billion, came from North America, 25.0% from Europe, the Middle East and Africa and 12.3% from Asia Pacific and other regions. Customers above $5 million in annual contract value numbered 420 at the end of 2023, 502 at the end of 2024 and 603 at the end of 2025 before reaching 680 in Q3, and 19 deals in the quarter added more than $5 million of net new contract value each.
AI earns money through price and through usage. On the July call management said customers moving to the AI-native editions were paying 20% to 30% more, and the Q3 release raised the year-end AI annual contract value target from $1 billion at the start of the year to $1.7 billion, with agentic AI consumption in production up more than 13 times. The same day ServiceNow announced a deeper OpenAI partnership that starts with a ServiceNow plugin for ChatGPT.

How ServiceNow Compares With Three Software Peers

The comparison set is Salesforce, Workday and Adobe. Salesforce overlaps in customer service, Workday in HR, and Adobe shares the enterprise subscription model. Salesforce and Workday figures run through July and Adobe’s through August. Trailing four-quarter revenue growth is +21.8% at ServiceNow against +13.3% at Workday, +12.0% at Adobe and +11.2% at Salesforce.

Revenue growth and GAAP operating margin at four subscription software companies

On GAAP operating margin the order flips: Adobe 36.3%, Salesforce 21.5%, Workday 12.0% and ServiceNow 9.7%, weighed down by deal amortization and stock compensation near 15% of revenue. Market data counts ServiceNow’s Q4 2025 operating income as $589 million rather than the $443 million in the release, so the ServiceNow figure here uses the release.

Trailing and forward P/E at four subscription software companies

Trailing GAAP P/E is 78.89 for ServiceNow, 40.26 for Workday, 21.40 for Salesforce and 13.85 for Adobe, and forward P/E is 23.95, 16.20, 15.74 and 9.24. Over the past year market value fell 21.9% at Salesforce, 27.3% at Workday, 35.5% at Adobe and 42.2% at ServiceNow. The worry that AI agents will cut seat counts hangs over the whole group, and the fastest grower has seen its multiple shrink the most.

ServiceNow’s Non-GAAP P/E and Price-to-Sales Band

The share price divided by trailing non-GAAP diluted EPS of $3.79 gives 28.94 times, in the bottom 6.8% of the 59 months since December 2021 and less than half the 62.58 median. The low was 24.05 in April 2026, the month Armis closed. Price to sales is 7.38 times, in the bottom 5.1%, against a median of 14.91.

ServiceNow non-GAAP P/E and price-to-sales over 59 months

GAAP P/E is 78.90, 2.7 times the non-GAAP multiple. The same share price reads very differently depending on whether stock compensation and deal amortization count as costs, so the band uses the non-GAAP EPS the company reports every quarter.
Outside view (market data consensus, right after Q3 results): Of 49 analysts, 35 rate the stock strong buy, 9 buy, 3 hold, 1 sell and 1 strong sell, with an average price target of $155.17. The average 2027 revenue estimate is $19.29 billion and EPS $4.89, some of it not yet updated for the Q3 guide.

Three Conditions That Move the Stock

cRPO growth excluding Armis is guided at about 16.75% for Q4. A beat in line with history, landing in the high 18s, would mark the guide as conservative. A result near 17% would confirm that the underlying pace has stepped below Q3’s 21%. Fourth-quarter results will show which reading the selloff priced.
GAAP operating margin was 9.4% in Q3. With $3.59 billion of intangibles amortizing mostly over five to six years, the $198 million quarterly charge will persist, and closing the gap to the 32.5% non-GAAP margin requires stock compensation to fall below the mid-teens share of revenue.
Net debt was $563 million at September 30. Paying down roughly $2 billion of commercial paper from free cash flow would reopen buybacks within the $4.2 billion authorization, while more borrowing would put deal debt ahead of shareholder returns.

What to Watch in the Q4 Report

Fourth-quarter results, expected in late January, should show how far cRPO beat the 18.5% guide and whether the 2027 outlook sizes Armis separately. From Q2 2027 the year-ago quarter also contains Armis, so most of its contribution drops out of growth rates and organic growth becomes visible on its own.
One question stays open. How much will the AI deployment carve-out, which the company says returns to subscriptions at renewal, lift cRPO growth in 2027?

CrowdStrike (CRWD) Stock Analysis: GAAP vs Non-GAAP Results: another security-heavy software company with a wide GAAP to non-GAAP gap, useful next to ServiceNow’s 9.4% GAAP and 32.5% non-GAAP margins.
Adobe (ADBE) Stock Analysis: Valuation After the CEO Change: a subscription software peer whose multiple has also compressed, a reference for ServiceNow’s 28.94 times non-GAAP P/E.

Amazon (AMZN) Stock: AWS Up 39% and Free Cash Flow Negative

J. Equity. Research — Sun, 01 Nov 2026 09:39:09 GMT

Amazon (NASDAQ: AMZN) posted its highest operating margin ever in the third quarter of 2026, 13.9%, and AWS revenue grew +39.3%. In the same quarter gross capital expenditures of $77.26 billion were nearly double operating cash flow of $42.42 billion, and free cash flow for the trailing twelve months fell to -$42.36 billion.
Amazon runs an online store, a marketplace for third-party sellers, an ad business, Prime subscriptions and the AWS cloud. It closed at $243.79 when it reported results, for a market value of about $2.64 trillion on 10.81 billion shares, and traded as low as $231.48 after hours, -5.05%.

Amazon one-year share price chart

The question is whose commitments filled the AWS backlog. Remaining performance obligations, mostly AWS, reached about $496 billion at June 30, up $252 billion in six months, and in those same two quarters OpenAI and Anthropic, two AI labs Amazon has invested in, each added $100 billion or more in commitments. The analysis lines up the Q3 earnings release, the Q2 10-Q, the OpenAI partnership 8-K, the Q2 earnings slides, 32 quarterly releases back to the December 2018 quarter and 31 backlog disclosures in 10-Ks and 10-Qs.
Three caveats apply. The Q3 10-Q was not yet filed, so backlog and investment balances are as of June 30. Net income includes revaluation gains on the Anthropic stake, with non-operating income of $69.80 billion over the last four quarters, so the valuation work uses operating income instead of earnings. The Q3 call transcript was not available in English, so management commentary comes from the July call and is paraphrased.

What the Q2 Slides Promised About Free Cash Flow

Slide 12 of the Q2 earnings deck carries a banner at the bottom: the long-term goal is to optimize free cash flows. Above it, trailing twelve-month free cash flow falls from $18.2 billion in Q2 2025 to -$7.6 billion in Q2 2026, and a footnote says operating cash flow rose 33% over the same year. Amazon defines free cash flow as operating cash flow less purchases of property and equipment net of proceeds from sales and incentives.

Q2 earnings slide 12: trailing free cash flow and the long-term goal

Q3 pushed the bar further down. Trailing free cash flow reached -$42.36 billion against +$14.79 billion a year earlier, and the release explains that net purchases of property and equipment rose $94.8 billion year over year. “This increase primarily reflects investments in artificial intelligence.” Net capex of $210.66 billion over twelve months now exceeds operating cash flow of $168.30 billion, taking net capex from 88.7% to 125.2% of operating cash flow.
Slide 11 covers AWS. Q2 revenue of $42.2 billion was up 37% and operating income of $16.6 billion up 64%, with trailing revenue of $148.4 billion and operating income of $54.7 billion. In Q3 AWS revenue reached $45.98 billion, +39.3%, and operating income $17.77 billion, lifting the margin from 34.6% a year earlier to 38.7%.

Q2 earnings slide 11: AWS segment revenue and operating income

Slide 7 charts net income of $62.6 billion for Q2, with a footnote that it includes $53.4 billion of pre-tax non-operating income, primarily from the Anthropic investment. Q3 net income of $20.69 billion came in below last year’s $21.19 billion for the same reason in reverse: the release says Q3 2025 included $9.5 billion of pre-tax gains from Anthropic.

Q2 earnings slide 7: net income with the Anthropic gain footnote

Slide 3 split Q2 revenue of $200.6 billion into North America at 58%, International at 21% and AWS at 21%; in Q3 the AWS share rose to 22.8%. Slides 4 to 6 showed trailing revenue of $775.7 billion, up 16%, and trailing operating income of $93.7 billion, up 23%. With Q3 added, trailing operating income is $104.37 billion, up 37.0% from $76.20 billion a year earlier. Slide 13 pairs the share count with a second long-term goal, managing dilution efficiently, and shares outstanding rose only 0.7% this year to 10.811 billion, with no buybacks and no stock sales.

What the Q3 Release Says About AWS Growth

The release headline called the 13.9% operating margin Amazon’s highest ever and the 39.3% AWS growth its fastest in nearly five years, on a $184 billion annualized run rate.
Company disclosure (Q3 earnings release): Andy Jassy wrote that AWS growth has “projected revenue growth rates of over 40% both in 2027 and in 2028” and added: “There has never been a trillion dollar revenue business, and we may have two of them in the next 5-10 years.”
The highlights open with new AWS agreements with Meta, NVIDIA, OpenAI, Salesforce and Oracle. Fortune 500 spending on Bedrock, the AWS inference service, rose nearly 7 times and total Bedrock token volume nearly 17 times from a year earlier. Tens of thousands of customers use AgentCore, the agent service, and deployed twice as many agents in Q3 as in the prior three quarters combined, and Lambda passed a $1 billion annualized run rate.
Fourth-quarter guidance calls for revenue of $240.0 billion to $247.0 billion, up 12% to 16%, and operating income of $28.5 billion to $33.5 billion against $25.0 billion a year earlier. The midpoint of $243.5 billion sits close to the pre-report market data consensus of $244.31 billion. Advertising grew 12% excluding currency in Q3 because of Prime Day timing, and Amazon expects high-teens growth in Q4. It still expects about $220 billion of cash capex for 2026.
Own calculation (Q3 release and July call): Gross capex for nine months was $175.67 billion and net capex $172.19 billion. If the full year lands near $220 billion, fourth-quarter net capex would be about $47.8 billion, well below Q3’s $75.88 billion. On the July call management said it had planned about $200 billion at the start of the year, so the annual figure has already been raised once.
The July call also laid out the investment cycle. Data center capital goes out about two years before servers in it earn revenue, while servers and network gear pay back in under three years on average and last at least five to six years. Most AI capacity is signed on contracts of at least five years, most 2027 capacity is already reserved, and Amazon expects to double its 2025 power capacity by the end of 2027.

The Bull and Bear Case for Amazon Shares

The bull case rests on profit quality. AWS growth has risen for six straight quarters from 16.9% in Q1 2025 to 39.3%, operating income grew +61.2%, and market value divided by trailing operating income, at 25.25 times, is the lowest in the 59 months since December 2021.
The bear case rests on cash and customers. Trailing free cash flow is -$42.36 billion, long-term debt rose from $65.65 billion at the end of 2025 to $173.13 billion, and this year’s commitment expansions from the two AI labs alone make up more than 40% of the June backlog. The same two companies drive the revaluation gains inside net income.

From an Anthropic Stake to the OpenAI Investment

Amazon invested $8.0 billion in Anthropic convertible notes between Q3 2023 and Q4 2025, and portions converted to nonvoting preferred stock in Q1 2025 and Q1 2026. Each new Anthropic funding round reprices that stake, and the 10-Q reports upward adjustments of $50.5 billion in Q2 2026 and $62.8 billion for the first half, primarily from the Anthropic preferred stock.

Amazon month-end share price over 10 years with three dates

On February 27, 2026 Amazon and OpenAI announced a multi-year partnership. The release lists “OpenAI to consume 2 gigawatts of Trainium capacity through AWS infrastructure” alongside AWS becoming the exclusive third-party cloud distribution provider for OpenAI Frontier, and Amazon agreed to invest $50 billion. The 10-Q shows $15.0 billion in Series C preferred stock at signing, $13.7 billion in Q2 and the remaining $21.3 billion after June 30.
The balance sheet carries both roles. Private equity investments outside the equity method, mostly the Anthropic and OpenAI preferred stock, rose from $16.2 billion at the end of 2025 to $122.3 billion at June 30, and other assets reached $358.78 billion at September 30, 2.9 times the year-end figure. Q3 cash flow shows $23.99 billion spent on acquisitions and non-marketable investments.

How Much of the AWS Backlog Comes From Two AI Labs?

Filing note (Q2 10-Q): Commitments not yet recognized in contracts longer than one year were about $496 billion at June 30, primarily AWS, and “The weighted-average remaining life of our long-term contracts is 6.4 years.” The same note says AWS expanded its existing $38.0 billion commitment with OpenAI by $100.0 billion over 8 years in Q1 and expanded its Anthropic commitment by more than $100.0 billion over 10 years in Q2, both including obligations tied to the performance of AWS chips.
Own calculation (31 backlog disclosures): The backlog went from $200 billion in Q3 2025 and $244 billion in Q4 2025 to $364 billion in Q1 2026 and $496 billion in Q2. The OpenAI expansion of $100 billion accounts for most of the Q1 increase of $120 billion, and the Anthropic expansion of more than $100 billion for most of the Q2 increase of $132 billion. Together the two expansions make up at least 79% of the six-month increase and at least 40% of the June backlog.

AWS backlog over 11 quarters with weighted remaining life and AWS revenue growth

Contract terms lengthened at the same time. The weighted remaining life went from 3.8 years in Q3 2025 to 4.1, 5.5 and 6.4 years. The backlog is up +154.4% from $195 billion a year earlier, but the pace at which it turns into revenue is slower than the headline growth suggests; the June balance is 3.1 times AWS’s trailing revenue of $161.38 billion.
The backlog also has limits. It counts only contracts with original terms longer than one year, so pay-as-you-go usage is excluded, and the 10-Q notes that “The amount and timing of revenue recognition will be driven by customer usage and our performance in accordance with contractual obligations”. Because both lab contracts include chip performance obligations, slower chip supply would also slow revenue recognition.
On the July call Jassy described AI demand as a barbell, with AI labs consuming enormous compute at one end and ordinary enterprises only beginning to run inference in production at the other. The backlog’s weight sits at the lab end of that barbell.

Capex Outran Cash Flow for Three Quarters

Q3 operating cash flow rose +19.4% to $42.42 billion while gross capex rose +120.1% to $77.26 billion. After $75.88 billion of net capex, quarterly free cash flow was -$33.46 billion against +$1.30 billion a year earlier, following -$17.20 billion in Q1 and -$7.69 billion in Q2. For nine months, operating cash flow of $113.84 billion was up 33.8%, but free cash flow was -$58.35 billion.

Quarterly operating cash flow against gross capex and free cash flow over 15 quarters

Quarterly gross capex is 5.4 times its level of $14.21 billion in Q1 2023. The cost is arriving: depreciation and amortization rose +24.7% to $20.95 billion in Q3. Net property and equipment grew from $357.03 billion to $508.86 billion in nine months, and total assets passed $1.24 trillion.
Debt filled the gap. Amazon raised $115.10 billion of long-term debt in nine months, $48.10 billion of it in Q3, and in June signed a $17.5 billion delayed-draw term loan with lenders led by Citibank. Cash and equivalents fell from $86.81 billion to $55.78 billion over the same period.

How Amazon Makes Money From Retail and AWS

Of Q3 revenue of $201.94 billion, online stores brought $68.47 billion (33.9%), third-party seller services $46.49 billion (23.0%) and AWS $45.98 billion (22.8%). Advertising added $19.64 billion (9.7%), subscriptions such as Prime $14.01 billion (6.9%) and physical stores $5.71 billion (2.8%).
The 10-K defines each line. Seller services are commissions and fulfillment and shipping fees from sellers who sell in Amazon’s stores, where Amazon is not the seller of record. Advertising covers sponsored ads, display and video ads sold to sellers, vendors and publishers and billed by clicks or impressions. Subscriptions are Prime fees and digital video, audiobook, music and e-book access, and AWS bills compute, storage, database and other services as they are used.
Prime Day timing distorts the quarter. The release says Prime Day fell in Q2 in most large countries this year, cutting Q3 growth by about 4 percentage points. Excluding currency, online store growth went from 15% in Q2 to 2% in Q3, seller services from 16% to 10% and advertising from 26% to 12%, while subscriptions held at 12%. Combining the two quarters cancels the shift: online stores +7.8%, seller services +12.6% and advertising +18.1% versus the same two quarters of 2025.
By segment, North America earned $8.72 billion on $112.85 billion of revenue (7.7% margin, up from 4.5%) and International $1.58 billion on $43.11 billion (3.7%, up from 2.9%). AWS operating income of $17.77 billion was 63.3% of the company total from 22.8% of revenue, and over four quarters AWS earned $61.02 billion on $161.38 billion, a 37.8% margin. AWS supplied $12.98 billion, or 59.6%, of the $21.78 billion revenue increase.
Retail profitability is improving too. North America and International together grew revenue +6.0% to $155.96 billion while operating income rose +72.1% to $10.30 billion, lifting the retail margin from 4.1% to 6.6%. Jassy says broader selection and faster delivery are winning share with better margins, and on the July call Amazon said it would more than double its robotic arms in 2026.
AWS also designs its own chips, Trainium for AI and Graviton for general computing. On the July call management said the chip business runs at more than $25 billion a year and that both Anthropic and OpenAI have made multi-year, multi-gigawatt Trainium commitments. Newer bets include grocery, pharmacy, the Amazon Leo satellite network and Zoox, and in April Amazon agreed to buy Globalstar while signing Apple to use Amazon Leo for iPhone and Apple Watch satellite services.

How Amazon Compares With Three Big Peers

The peers are Microsoft and Alphabet, AWS’s cloud rivals, and Walmart, the benchmark for physical retail, since Amazon combines both businesses. Market values are $3.94 trillion for Microsoft, $3.49 trillion for Alphabet, $2.63 trillion for Amazon and $961.97 billion for Walmart on market data.

Revenue growth and operating margin at four cloud and retail companies over four quarters

Trailing four-quarter revenue growth was +22.2% at Alphabet, +17.9% at Microsoft, +15.4% at Amazon and +6.2% at Walmart, with Walmart through July. Over the same trailing four quarters, operating margins were 47.1% at Microsoft, 33.3% at Alphabet, 13.1% at Amazon and 4.0% at Walmart. Amazon’s revenue of $797.46 billion is close to Walmart’s $735.84 billion, but its operating income of $104.37 billion is 3.6 times Walmart’s $29.38 billion.

Trailing and forward P/E at four cloud and retail companies

Trailing P/E on market data is 14.82 for Alphabet, 19.60 for Amazon, 27.68 for Microsoft and 43.94 for Walmart; both Alphabet and Amazon look cheaper than they are because equity gains inflate net income. Forward P/E is 40.35 for Walmart, 27.38 for Amazon, 26.00 for Microsoft and 20.50 for Alphabet, and one-year market value changes were +15.5% at Walmart, +11.0% at Alphabet, +8.6% at Amazon and -0.4% at Microsoft.

Amazon’s Operating Income Multiple and Price-to-Sales Band

Market value divided by trailing operating income of $104.37 billion is 25.25 times, the lowest of the 59 months since December 2021 and well below the median of 39.41. When operating income was depressed in May 2023 the multiple reached 93.44. Market value rose 8.6% over the past year while trailing operating income grew +37.0%.

Amazon market value to operating income and price-to-sales over 59 months

Price to sales of 3.31 sits at the 61st percentile, almost exactly on the median of 3.23, within a range of 1.68 in December 2022 to 4.01 in January 2025. At the after-hours price of $231.48, the operating income multiple drops to 23.98.
Outside view (market data, after the Q3 report): Of 60 analysts, 42 rate the stock a strong buy, 16 a buy and 2 a hold, with an average price target of $332.41. Average revenue estimates are $828.64 billion for 2026 and $949.99 billion for 2027, and another data source puts the P/E at 34.04 against a five-year median of 55.81.

Three Conditions That Move the Stock

AWS growth was 39.3% in Q3. If quarterly numbers track Jassy’s call for more than 40% in 2027 and 2028 and the backlog grows from enterprise contracts beyond the two labs, the concentration question fades; growth slipping toward the low 30s would point to a backlog that converts slowly over long contracts.
Trailing free cash flow is -$42.36 billion. Fourth-quarter net capex of about $47.8 billion under guidance would improve that figure, while a 2027 capex plan above 2026 would mean more borrowing on top of the $115.10 billion raised this year.
The OpenAI and Anthropic stakes carried $122.3 billion at June 30. New funding rounds or listings would reprice them and swing net income; a slowdown in either lab’s compute demand or funding would hit the backlog and the stakes at the same time.

What to Watch in the Q3 10-Q and Q4 Report

The Q3 10-Q, due shortly, will show the September backlog, its weighted life and the carrying values of the two lab stakes. Fourth-quarter results in early February should bring the 2027 capex plan and show whether Q4 net capex actually fell toward $47.8 billion.
One question stays open. Excluding the two AI labs Amazon has invested in, how much has the AWS backlog from ordinary enterprise customers grown from $195 billion a year ago?

NVIDIA (NVDA) Stock Analysis: Guarantees and Cash Flow: a supplier that backs OpenAI through lease guarantees, useful for comparing it with Amazon’s mix of equity stakes and cloud contracts with the same customer.
Oracle (ORCL) Stock Analysis: Cash Flow and Capex Gap: another cloud provider whose capex outran operating cash flow, a reference for Amazon’s 125.2% net capex ratio.

Alphabet (GOOGL) Stock: Equity Raise and Cloud Up 103%

J. Equity. Research — Sun, 01 Nov 2026 01:38:16 GMT

Alphabet (NASDAQ: GOOGL) bought back no stock in the third quarter of 2026. It sold $12.4 billion of new common shares and raised $29.0 billion of debt instead, and capital expenditures of $51.36 billion ran ahead of operating cash flow of $42.29 billion, leaving free cash flow at -$9.07 billion after -$5.86 billion in the second quarter.
The company behind Google Search, YouTube, Android and Google Cloud closed at $324.89 when it reported results, for a market value of about $3.99 trillion on 12.29 billion shares. The next morning the stock opened at $286.88, -11.7%.

Alphabet one-year share price chart

The question is whether Google Cloud’s $567.7 billion revenue backlog turns into revenue fast enough to carry a 2026 capex budget of $195 billion to $205 billion and the $84.75 billion equity raise announced in June. The analysis works from the Q3 earnings release, the Q3 10-Q, the June equity raise 8-K, the Q3 earnings slides, the Google Cloud strategy deck from September and 32 quarterly releases going back to the December 2018 quarter.
Two caveats apply. P/E here strips out the effect of gains and losses on equity securities that Alphabet itself discloses in a footnote every quarter, because $8.21 of the trailing four-quarter GAAP diluted EPS of $19.16 came from those gains. The Q3 call transcript was not available in English, so management commentary comes from the July call and is paraphrased.

What the Q3 Slides Show About Cloud and Capex

Slide 3 of the Q3 earnings deck lists the models Alphabet shipped between July and October: Gemini 3.6, 3.7 and 3.8 Flash, Gemini 4 Argon and Carbon, the image model Nano Banana 2.1 and the music model Lyria 3.5. Slide 4 puts revenue growth of 25% next to a half-trillion-dollar run rate, about 32 billion tokens a minute across first-party models (up 40% from the prior quarter), more than one billion monthly Gemini app users, and Search revenue growth of 12% with the fastest growth in Search queries in five years.
Sundar Pichai opened the release with “We had a strong quarter and are now on a half-trillion dollar revenue run rate.” He also said demand for TPU systems is strong across a wide range of customers.
Slide 9 isolates Google Cloud. Revenue doubled from $15.16 billion to $30.71 billion and operating income more than tripled from $3.59 billion to $11.12 billion, lifting the margin from 23.7% to 36.2%. The release adds that “TPU systems sales were also a meaningful contributor to revenue growth.” According to the 10-Q, those are product sales of hardware, software and installation delivered into customer data centers.

Q3 earnings slide 9: Google Cloud revenue and operating income

Slide 11 charts five quarters of capex: $23.95 billion, $27.85 billion, $35.67 billion, $44.92 billion and $51.36 billion, with year-over-year growth climbing from 83% to 114%. Slide 12 lists free cash flow for the same quarters, negative in the last two, and trailing twelve-month free cash flow down from $73.55 billion to $19.75 billion, -73%.

Q3 earnings slide 11: capital expenditures over five quarters

Slide 10 explains what a TPU system sale actually ships. A tray holds four proprietary chips on one liquid-cooled board, a rack holds 16 TPU machines with battery backup, and a pod ties 144 racks to three optical switch racks. High-bandwidth memory, optical circuit switches, software for JAX and PyTorch, inference engines and post-sales support and warranty come in the same package.
Company disclosure (Q3 earnings release): Alphabet sold 12 million Class A shares for $4.3 billion and 24 million Class C shares for $8.1 billion through its at-the-market program during the quarter, issued senior unsecured notes for net proceeds of $28.7 billion, and in October declared a quarterly dividend of $15.63 per share on each series of its mandatory convertible preferred stock.

What the Google Cloud Deck Says About Contracts and Payback

Google Cloud CEO Thomas Kurian presented a strategy deck at a Goldman Sachs conference on September 8. Slide 6 states that the majority of AI infrastructure total contract value is committed five-year contracts and that the AI server payback period is two years, a blended average of AI infrastructure and AI solutions that excludes TPU system sales.

Google Cloud strategy slide 6: AI contract terms and payback period

The other two boxes on the slide are expectations. Alphabet expects TPUs to pay back twice as fast as GPUs in the cloud business, an estimate tied to Gemini Enterprise scaling in the first half of 2027, and it cites third-party estimates that its custom AI chip business is about twice the size of the next largest cloud competitor’s.
Slide 4 sizes the business. Based on second-quarter annualized revenue, 17 Google Cloud product lines bring in more than $1 billion a year. Customers have consumed more than 50% above their commitments on average, new customer additions more than doubled from a year earlier, and deals worth $100 million to $1 billion more than doubled in both number and value. Slide 5 claims the eighth-generation TPU delivers up to 2.7 times the training price-performance of the seventh and 80% better inference price-performance.
On the July call, CFO Anat Ashkenazi said the cloud backlog stood at $514 billion, mostly general GCP contracts, with more than half expected to be recognized within 24 months. She said most revenue from TPU system sale contracts lands in 2027, that Alphabet planned to use more third-party capacity in the third quarter while its own capacity was short, with some near-term margin pressure, and that 2026 capex guidance rose from $180 billion to $190 billion to a new $195 billion to $205 billion.
Own calculation (Q3 10-Q and July call): Nine-month capex of $131.95 billion leaves $63 billion to $73 billion for the fourth quarter under that guidance. Recognizing just over 55% of the $567.7 billion backlog within 24 months implies about $312 billion, or roughly $156 billion a year, 1.7 times Google Cloud’s trailing four-quarter revenue of $93.17 billion. Cloud backlog rose from $513.9 billion to $560.8 billion in the quarter; adding back Q3 cloud revenue of $30.71 billion implies about $77.6 billion of new commitments, 2.5 times what the segment billed.

The Bull and Bear Case for Alphabet Shares

The bull case rests on cloud speed. Google Cloud revenue grew +102.6% with a 36.2% margin, the backlog is up +260% from $157.7 billion a year ago, and EPS excluding equity securities rose +21.9% to $2.67 in Q3. The company’s own payback figure for AI servers is two years.
The bear case rests on where the cash comes from. Free cash flow has been negative for two quarters, buybacks are zero, the share count is up 1.7% in nine months, and the preferred stock costs about $1.2 billion a year in dividends. Capex is set to rise again in 2027, and on earnings excluding equity gains the stock trades at 29.67 times, above its five-year median.

From Buybacks to New Shares and Debt

Alphabet spent $328.55 billion on buybacks from 2019 through 2025, rising from $18.40 billion in 2019 to $61.50 billion in 2023 and $62.22 billion in 2024. Diluted shares fell from 13.90 billion in the fourth quarter of 2019 to a low of 12.20 billion in the second quarter of 2025, and in April 2025 the board authorized another $70 billion of repurchases.

Alphabet month-end share price over 10 years with three dates

The direction changed in the second half of 2025. Quarterly buybacks fell to $11.50 billion in Q3 and $5.50 billion in Q4, then to zero in 2026. Alphabet closed its $29.5 billion acquisition of security company Wiz on March 11, 2026, and on June 1 announced an $80 billion equity raise, upsized the next day to $84.75 billion. Berkshire Hathaway took $10 billion in a private placement, and the release notes that “This investment by Berkshire Hathaway adds to the position it has built since Q3 2025.”
Debt grew in parallel. The June release said Alphabet had raised more than $85 billion of debt in six currencies over the prior year, taking total debt above $100 billion, and long-term debt reached $125.10 billion at September 30, up +168.8% from $46.55 billion at the end of 2025. It described the raise this way: “This equity offering is part of Alphabet’s plan to fund its investments in a balanced way while retaining a healthy balance sheet.” On the July call Ashkenazi said the company had no plans to return to the equity market for now, apart from at-the-market sales tied to employee stock taxes.

How Much Dilution Does the Equity Raise Add?

The $84.75 billion has four parts: $18 billion of common stock, $16.75 billion of mandatory convertible preferred stock, a $40 billion at-the-market program and the $10 billion Berkshire placement. The common offering sold 25,459,689 Class A shares at $355.20 and the same number of Class C shares at $351.80, and underwriters exercised their options in full for 29,278,642 of each. With its option also exercised, the preferred offering reached 385 million depositary shares, or $19.25 billion.
Filing note (Q3 10-Q): Net proceeds were $20.5 billion from the public offering, $10.0 billion from the private placement and $19.0 billion from the preferred stock, plus $12.4 billion from the ATM in Q3, with $27.6 billion of ATM capacity left. The 10-Q states that “The proceeds from offerings under the ATM Program are primarily intended to be used to meet tax obligations associated with employee equity grants.” The June release put that use at about $30 billion for calendar 2026.

Quarterly buybacks against debt and equity issued and free cash flow over 15 quarters

The preferred stock pays 6.25% a year and converts automatically on May 15, 2029. Each Series A preferred share becomes 2.2520 to 2.8160 Class A shares and each Series B share 2.2740 to 2.8420 Class C shares, adding roughly 43.6 million to 54.5 million common shares, 0.35% to 0.44% of the September count. Alphabet paid $1.0 billion for capped calls to offset dilution up to $532.67 for Class A and $527.80 for Class C, 50% above the offering prices.
Own calculation (Q3 release and 10-Q): Equity raised in the first nine months of 2026 totals $61.93 billion, $42.87 billion of common and $19.06 billion of preferred, against $39.81 billion spent on buybacks in the same months of 2025. Shares outstanding rose from 12.088 billion to 12.294 billion, +1.7%, and Q3 diluted weighted shares of 12.368 billion were up 1.4% from a year earlier.
The ATM changes how employee stock taxes are paid. Alphabet used to withhold shares when awards vested and pay the tax in cash; those net payments reached $17.42 billion in nine months against $9.00 billion a year earlier. Selling shares in the market to cover the same tax keeps that cash in the company but adds to the share count.

Negative Free Cash Flow and a Bigger Debt Load

Third-quarter operating cash flow fell -12.6% to $42.29 billion while capex rose +114.4% to $51.36 billion. Capex took 121.4% of operating cash flow, against 49.5% a year earlier.
Capex returns as cost. Depreciation rose +49.2% to $8.37 billion in Q3, and on the July call Ashkenazi said depreciation and data center operating costs such as energy would keep weighing on the income statement. Quarterly capex is now 8.2 times its level of $6.29 billion in the first quarter of 2023, so higher depreciation will run for years.
Debt did most of the funding. Alphabet issued $85.22 billion of debt in nine months and repaid $8.88 billion, a net $76.34 billion. Cash and marketable securities of $265.10 billion at September 30 were more than double the year-end figure, but they include $75.2 billion of SpaceX shares that are subject to short-term restrictions on sale. Total assets crossed $1 trillion, at $1.003 trillion.

How Alphabet Makes Money From Ads and Cloud

Of Q3 revenue of $127.58 billion, Google Search and other brought $63.35 billion (49.7%), up 12.0%. YouTube ads added $11.21 billion (8.8%), up 9.2%, and Google Network, which places ads on partner sites, $7.46 billion (5.8%), up 1.4%. Subscriptions, platforms and devices, which covers YouTube Premium, Google One, Google Play and Pixel phones, brought $14.29 billion (11.2%), up 11.0%, and Google Cloud $30.71 billion (24.1%), up 102.6%.
The 10-K describes the ad business as performance and brand advertising across Google Search, YouTube and Network partner properties. To keep those search access points, Google pays traffic acquisition costs (TAC) to browser providers, carriers, device makers and software developers, and to Network partners. Q3 TAC was $16.37 billion, 20.0% of ad revenue of $82.01 billion, against 20.1% a year earlier.
Subscriptions are also counted by users. The June release said Alphabet had reached 350 million paid subscriptions, and the Q3 release counts more than 150 million YouTube Music and Premium subscribers including trials. The 10-K notes that Google One offers access to the most capable Gemini models, so consumer AI plans also land in this line.
Google Cloud earns money from GCP infrastructure and AI solutions, Workspace and TPU system sales, recognized by consumption, over a subscription term or on delivery for product sales. Wiz now reports inside the segment. Kurian’s deck calls Google Cloud the only provider offering first-party products across the whole AI stack, from infrastructure and models to data, security, agents and applications. Other Bets earns revenue mainly from autonomous transportation and internet services and lost $2.05 billion in Q3.
Segment profit comes from Services and Cloud. Google Services earned $39.16 billion with its margin up from 38.5% to 40.7%, and Cloud earned $11.12 billion. As the release puts it, “Alphabet-level activities primarily reflect expenses related to our shared AI research and development,” and that cost rose from $4.47 billion to $7.66 billion.

Google Cloud quarterly revenue and margin with the revenue backlog over five quarters

Google Cloud lost $1.24 billion on revenue of $3.83 billion in the fourth quarter of 2020. It turned its first profit of $191 million in the first quarter of 2023 and earned $11.12 billion fourteen quarters later. The backlog went from $157.7 billion and $242.8 billion at the end of Q3 and Q4 2025 to $467.6 billion in Q1 2026, nearly doubling in one quarter, and $560.8 billion of the September total belongs to Cloud.
Costs follow the buildout. Cost of revenues rose 24.3% to $51.42 billion, and other cost of revenues, everything except TAC, rose 32.3% to $35.05 billion; the 10-K lists YouTube content costs, infrastructure depreciation, device inventory and energy and network costs there. Inventory jumped 5.5 times to $13.31 billion, research and development rose 36.2% to $20.64 billion, and net property and equipment grew from $246.60 billion to $372.83 billion in nine months.

How Alphabet Compares With Three Big Tech Peers

The peers are three U.S. large caps whose profits ride on the same AI data center buildout and the same ad and cloud demand. Microsoft sells Azure and Office, Amazon sells retail and AWS, and Meta sells ads and pours the proceeds into AI capacity. Market values are $3.97 trillion for Alphabet on market data, $3.94 trillion for Microsoft, $2.75 trillion for Amazon and $1.57 trillion for Meta.

Revenue growth and operating margin at four big tech companies over the last four quarters

Trailing four-quarter revenue growth was +27.5% at Meta, +22.2% at Alphabet, +17.9% at Microsoft and +15.8% at Amazon, with Amazon through June. Over the same trailing four quarters, operating margins were 47.1% at Microsoft, 37.9% at Meta, 33.3% at Alphabet and 12.1% at Amazon, which puts Alphabet second on growth and third on margin.

Trailing and forward P/E at four big tech companies

On market data Alphabet has the lowest trailing P/E of the four at 16.96, but that figure includes equity gains. Excluding them it is 29.67, above Microsoft’s 27.73. Forward P/E is 27.38 for Amazon, 26.03 for Microsoft, 22.70 for Alphabet and 18.50 for Meta, and over the past year market values moved +26.4% at Alphabet, +14.8% at Amazon, -0.2% at Microsoft and -15.6% at Meta.

Alphabet P/E Without Equity Gains and Price-to-Sales Band

On EPS excluding equity securities, the trailing P/E of 29.67 sits at the 81st percentile of the 59 months since December 2021, above the median of 24.88. The high was 39.07 in April 2026 and the low 18.69 in December 2022. The GAAP P/E of 16.96 is the lowest in 59 months only because equity gains made up 42.8% of trailing EPS.

Alphabet P/E excluding equity gains and price-to-sales over 59 months

The price-to-sales ratio of 8.48 is also at the 81st percentile, above a median of 6.06, with a high of 11.15 in April 2026 and a low of 4.04 in December 2022. Trailing EPS excluding equity securities rose +25.3% to $10.95 from $8.74. At the next-day opening price of $286.88, the P/E falls to 26.2 and price-to-sales to 7.49.
Outside view (market data, after the Q3 report): One data source shows a P/E of 29.64 against a five-year median of 25.44 and price-to-sales of 8.53 against 6.25. Of 58 analysts, 42 rate the stock a strong buy, 12 a buy and 4 a hold, with an average price target of $428.70, and average revenue estimates are $500.29 billion for 2026 and $627.77 billion for 2027.

Three Conditions That Move the Stock

Backlog conversion comes first. If just over 55% of the backlog is recognized within 24 months, that is about $156 billion a year, 1.7 times cloud’s trailing revenue. Cloud revenue that keeps rising from the $30 billion range while the backlog keeps growing gives the capex a visible payback; a stalled backlog with slowing cloud growth would mean spending ran ahead of demand.
Capex as a share of operating cash flow was 121.4% in Q3. Fourth-quarter capex of $63 billion to $73 billion under guidance is higher than Q3’s $51 billion. If 2027 operating cash flow grows as fast as 2027 capex, free cash flow turns positive; if it stays negative, Alphabet leans further on the $27.6 billion of ATM capacity left and on more debt.
Share count was 12.294 billion in September. Selling the remaining ATM capacity and converting the preferred stock would add to it for years and eat into the 25.3% growth in EPS excluding equity gains. Restarting buybacks under the $69.5 billion still authorized would reverse that trend.

What to Watch in the Next Earnings Report

The next numbers come with fourth-quarter results in early February. The first figure to check is the 2027 capex guidance, followed by how fast the remaining $27.6 billion of ATM capacity is used, the change in the $567.7 billion backlog and the size of TPU system sales, most of which Alphabet expects to recognize in 2027.
One question stays open. If operating cash flow cannot cover 2027 capex, will Alphabet’s next dollar of funding come from bonds or from shares?

Oracle (ORCL) Stock Analysis: Cash Flow and Capex Gap: another cloud provider whose capex outran operating cash flow, useful for comparing how each company funds the gap.
Shopify (SHOP) Stock Analysis: Net Income vs. Equity Gains: a second case where gains on investments inflated net income, showing why a footnote-adjusted P/E matters.

Microsoft (MSFT) Stock: OpenAI Is 10.8% of Revenue

J. Equity. Research — Sat, 31 Oct 2026 22:33:47 GMT

Microsoft (NASDAQ: MSFT) reported revenue of $92.28 billion for the first quarter of fiscal 2027, the three months to September 30, 2026, +18.8% from a year earlier. Its 10-Q shows that $10.0 billion of that, 10.8% of the total, came from a single customer: OpenAI, in which Microsoft holds an equity-method stake of about 24%. Revenue from OpenAI was $24.1 billion for all of fiscal 2026, or 7.3% of sales, and receivables owed by OpenAI rose from $6.0 billion to $7.2 billion in one quarter.
Microsoft sells Azure cloud capacity, Microsoft 365 subscriptions, Windows licenses, Xbox content and LinkedIn and search advertising. At $531.01 a share it is worth $3.94 trillion. The stock fell -30.1% from a month-end close of $533.50 in July 2025 to $373.02 in June 2026, then rose +42.4% back to where it started.

Microsoft one-year share price chart

The question here is how much of this quarter’s growth came from OpenAI, and how much weight that one customer now carries in Microsoft’s revenue, backlog and capital spending. The analysis lines up the Q1 earnings release, the Q1 10-Q and the fiscal 2026 10-K with the 22-page segment deck filed in September and 32 quarterly releases going back to the December 2018 quarter.
Two caveats apply. Capital expenditures here are cash additions to property and equipment from the cash flow statement, which exclude the finance leases Microsoft adds in its own capex figure. The Q1 call transcript was not available, so management commentary comes from the July call and the September deck.

What the September Deck Changed in Segments and Azure

The deck Microsoft filed on September 2 replaced its three segments, Productivity and Business Processes, Intelligent Cloud and More Personal Computing, with two: Agents and Infra, and Devices and Consumer. Satya Nadella’s letter in the deck opens with “There’s no question AI represents a profound shift in both technology and business.” and says the reporting now mirrors how the business is run, with “full transparency of quarterly revenue across each of our key businesses” including Azure, Microsoft 365 cloud, Industry solutions and ads.

Segment deck slide 9: three fiscal 2026 segments mapped to two fiscal 2027 segments

Slide 9 maps the old structure to the new one. GitHub cloud and Security Copilot moved out of Azure into Microsoft 365 cloud, and Healthcare and Life Sciences cloud moved into a new Industry solutions line. The letter puts it this way: “Under this reporting structure, Azure becomes more purely our consumption-based platform and infrastructure business.” In exchange, Microsoft now reports Azure revenue in dollars, and the Q1 10-Q shows $33.17 billion. Slide 13 defines the new Azure as revenue from cloud and AI consumption-based services and virtual desktop offerings.
Slides 11 and 13 change several metric definitions. Microsoft 365 commercial seats now include paid GitHub seats, search and advertising now includes LinkedIn Marketing Solutions and Premium subscriptions, and Industry solutions cloud combines Dynamics 365, LinkedIn Talent and Sales Solutions and Healthcare cloud. LinkedIn no longer appears as a line of its own.
Slide 15 restates fiscal 2026 under the new segments. Agents and Infra produced revenue of $268.13 billion and operating income of $136.37 billion, a 50.9% margin, while Devices and Consumer produced $63.71 billion and $18.87 billion, a 29.6% margin. About 88% of operating income now sits in Agents and Infra.
Slide 18 restates the investor metrics. Under the new definition Azure grew 40%, 39%, 40% and 42% through the four quarters of fiscal 2026, almost the same as before, and then 48% in Q1 of fiscal 2027. Microsoft 365 commercial cloud was restated to 18%, 17%, 20% and 16% over the same four quarters, so the acceleration after the change shows up in Azure while the subscription line stayed in the high teens.

Segment deck slide 18: fiscal 2026 investor metrics restated under the new definitions

Company disclosure (Q1 earnings release): CFO Amy Hood said Microsoft Cloud revenue was $63.9 billion with growth accelerating to 30%, and added: “Results exceeded expectations across revenue, operating income, and earnings per share.” The release listed Microsoft 365 commercial cloud revenue up 17%, or 18% adjusted for a one-point benefit in the prior year, Microsoft 365 consumer cloud up 17% and Industry solutions cloud up 10%. Its headline was “Microsoft Announces First Quarter Results.” The seven releases from January 2025 to July 2026 all began with “Microsoft Cloud and AI Strength.”

How Q1 Compared With the July Outlook

Slide 20 restates the outlook Microsoft gave on July 29 in the new segment structure: revenue of $89.85 billion to $90.95 billion, Agents and Infra of $75.15 billion to $75.75 billion, Devices and Consumer of $14.7 billion to $15.2 billion, a roughly flat operating margin, a tax rate of about 20%, and capital expenditures “Expected to be over $50 billion including the impact of the useful life update.”

Segment deck slide 20: the July outlook for Q1 restated in the new segments

Own calculation (slide 20, Q1 release and 10-Q): Revenue of $92.28 billion beat the top of the range by $1.33 billion, and both Agents and Infra at $76.8 billion and Devices and Consumer at $15.5 billion came in above their ranges. Cost of revenue of $29.72 billion was inside the range and operating expenses of $16.64 billion came in below it, so operating margin was 49.8% against 48.9% a year earlier rather than flat. Other income excluding OpenAI was -$234 million against guidance of about -$100 million, and the tax rate was 20%.
The useful life change came from the July call. Hood said that from fiscal 2027 Microsoft extends the useful life of datacenter and office buildings from 15 to 25 years. The operating income effect is small, she said, but more future datacenter leases will be classified as operating leases rather than finance leases, which lowers the company’s capex figure because finance leases count as capex and operating leases do not.
The July call also separated OpenAI from the backlog. Hood said commercial remaining performance obligation (RPO) rose 84% to $678 billion, but 25% excluding OpenAI, and that all of the sequential growth came from customers outside frontier model companies. Commercial bookings rose 18% excluding OpenAI and 10% including its Azure commitment.

The Bull and Bear Case for Microsoft Shares

The bull case rests on breadth. Revenue and Agents and Infra beat the top of guidance, Azure accelerated to 48%, and margin held near 50% while capex doubled. Backlog excluding OpenAI grew 25% as of July, and the trailing P/E of 27.71 is below its 59-month median of 32.73.
The bear case rests on concentration. OpenAI went from 7.3% to 10.8% of revenue, and the same company is a 24% equity-method investee that owes Microsoft $7.2 billion. Capex now takes 67.9% of operating cash flow, free cash flow fell -27.4%, and RPO has not grown from the prior quarter.

The 10-K traces the relationship to a long-term strategic partnership established in 2019 and states that “Microsoft is a major investor in OpenAI and will continue to receive revenue-sharing payments.” Microsoft also holds intellectual property rights to OpenAI’s models and infrastructure. In October 2025 OpenAI formed a public benefit corporation and completed a recapitalization, and Microsoft now accounts for its stake under the equity method; the 10-K put it at about 25% on an as-converted basis at June 30, 2026.

Microsoft month-end share price over 10 years with three dates

The numbers changed shape after that. Commercial RPO reached $625 billion in the December 2025 quarter, +110% from a year earlier, and GAAP diluted EPS of $5.16 in that quarter included dilution gains from the recapitalization. The stock then fell to a month-end close of $373.02 in June 2026, a trailing P/E of 20.77 and the lowest in 59 months. Microsoft extended the partnership again in April 2026 and moved to two segments in September.
OpenAI gains and losses have swung reported earnings both ways. A year ago the OpenAI investment cost $4.06 billion in other income and $3.09 billion in net income; this quarter it added $272 million to other income and $207 million to net income. That is why GAAP net income rose +32.0% while net income excluding OpenAI rose +18.1%.

How Much of Microsoft’s Growth Came From OpenAI?

Filing note (Q1 10-Q): The 10-Q explains that “As an equity method investee, OpenAI is a related party” and discloses revenue from commercial arrangements with OpenAI, including revenue-sharing payments, of $10.0 billion for the quarter. Receivables from OpenAI were $7.2 billion at September 30 against $6.0 billion at June 30. The stake fell from about 25% to about 24%, and Microsoft has funded $12.0 billion of a $13.0 billion commitment.
Own calculation (10-Q, 10-K and restated results): OpenAI revenue of $24.1 billion was 7.3% of fiscal 2026 revenue of $331.84 billion, and this quarter’s $10.0 billion is 10.8% of $92.28 billion. It is $3.98 billion above the fiscal 2026 quarterly average of $6.03 billion, equal to 27.2% of the quarter’s $14.61 billion revenue increase. Set against Azure revenue of $33.17 billion, it is 30.2% of Azure’s size.

Commercial RPO over five quarters and the OpenAI share of revenue

Backlog growth and backlog level tell different stories. Commercial RPO rose +73% to $677 billion, but after jumping to $625 billion in the December 2025 quarter it has moved to $627 billion, $678 billion and $677 billion. The 10-Q says about 30% will be recognized within 12 months, with a weighted average duration of about 2.3 years, which puts roughly $203 billion of it into revenue over the next year.
Azure carried most of the growth. Azure revenue rose from $22.38 billion to $33.17 billion, +48.2%, and that $10.78 billion increase was 73.8% of the company’s total revenue increase. Microsoft does not split OpenAI revenue by product, so the share that is Azure consumption rather than revenue sharing cannot be read from the filings. Receivables of $7.2 billion are equal to 72% of the quarter’s OpenAI revenue.

Capex Doubled and Free Cash Flow Fell

Cash additions to property and equipment were $39.37 billion, up from $19.39 billion, +103.0%. Operating cash flow rose +28.7% to $58.0 billion, but capex rose faster, so free cash flow fell from $25.66 billion to $18.63 billion, -27.4%.

Quarterly operating cash flow against capex and free cash flow over 13 quarters

Own calculation (13 releases, Q1 FY24 to Q1 FY27): Capex rose from 43.0% to 67.9% of operating cash flow in a year. Quarterly capex went from $9.92 billion in Q1 of fiscal 2024 to $29.88 billion in Q2 of fiscal 2026 and $39.37 billion now, roughly four times in 13 quarters.
Shareholder returns held up. Buybacks fell from $5.65 billion to $4.38 billion, dividends rose from $6.17 billion to $6.76 billion, and the release put Q1 returns at $10.2 billion. The useful life change also shifts how the cash shows up: an operating lease lowers the company’s capex figure, but its full payment runs through operating cash flow, which a finance lease does not, so the same datacenter changes both numbers.

How Microsoft Makes Money After the Segment Change

Under the new product lines, Q1 revenue was $33.17 billion from Azure (35.9%), $27.78 billion from Microsoft 365 cloud (30.1%), $8.41 billion from productivity and server licensing (9.1%) and $6.55 billion from search and advertising (7.1%). Xbox brought $5.38 billion and Industry solutions $5.34 billion, 5.8% each, Windows OEM and devices $3.55 billion (3.8%), and Frontier and support services, the renamed Enterprise and Partner services, $2.11 billion (2.3%).
Growth split between cloud and devices. Azure grew +48.2%, Microsoft 365 cloud +17.2%, search and advertising +10.3% and Industry solutions +9.1%, while Windows OEM and devices fell -22.0%, productivity and server licensing -3.1% and Xbox -2.3%. Agents and Infra grew 25% to $76.8 billion and Devices and Consumer fell 3% to $15.5 billion, so 83% of revenue now comes from Agents and Infra.
The two segments earn money differently. Agents and Infra bundles cloud subscriptions and consumption, licensing and consulting for business customers. Devices and Consumer bundles Windows licenses sold through PC makers, Surface devices, Xbox content and hardware, and Bing and LinkedIn advertising. Because Azure is now purely consumption-based, its revenue follows usage and the capacity built to serve it. Microsoft 365 is billed per seat, and under the deck’s definitions Microsoft 365 commercial cloud now includes Microsoft 365 Copilot, GitHub cloud and Security Copilot.
The 10-Q says “Microsoft Cloud gross margin percentage decreased to 66% driven by sales mix shift to Azure”, as Microsoft Cloud revenue of $63.9 billion grew 30%. On the July call Nadella said Microsoft offers more than 11,000 models in its cloud, including OpenAI, Anthropic, Mistral and xAI models alongside its own MAI family, and that its Maia 200 chip delivers 30% better performance per dollar than existing hardware. Sourcing models from several labs is one way to dilute the dependence on OpenAI.
The consumer promises have not yet shown up in the numbers. In July Nadella said Xbox is being reset for long-term growth with a goal of returning it to growth in fiscal 2027, and that Windows should be the best place to run secure edge AI. In the first quarter Xbox fell 2.3% and Windows OEM and devices fell 22.0%. Hood said on the same call that headcount was down 2% from a year earlier.

How Microsoft Compares With Three Cloud Peers

The peers are three U.S.-listed cloud companies whose earnings ride on the same AI datacenter demand and capex cycle. Alphabet sells search advertising and Google Cloud, Amazon sells retail and AWS, and Oracle sells databases and Oracle Cloud Infrastructure. Market values are $3.97 trillion for Alphabet, $3.94 trillion for Microsoft, $2.75 trillion for Amazon and $438.17 billion for Oracle.

Revenue growth and operating margin at four cloud companies over the last four quarters

Trailing four-quarter revenue growth was +22.2% at Alphabet, +21.6% at Oracle, +17.9% at Microsoft and +15.8% at Amazon, with Amazon through June and Oracle through August 2026. Over the same trailing four quarters, operating margins were 47.1% at Microsoft, 34.3% at Oracle, 33.3% at Alphabet and 12.1% at Amazon.

Trailing and forward P/E at four cloud companies

Trailing P/E was 27.73 for Microsoft, 22.66 for Oracle, 20.47 for Amazon and 16.96 for Alphabet, while forward P/E was 27.38 for Amazon, 26.03 for Microsoft, 22.70 for Alphabet and 16.97 for Oracle. Microsoft is the most expensive of the four on trailing earnings but cheaper than Amazon on forward earnings. Over the past year market values moved +26.4% at Alphabet, +14.8% at Amazon, -0.2% at Microsoft and -45.6% at Oracle, opposite results from the same AI datacenter demand.

Microsoft’s P/E and Price-to-Sales Band

On GAAP diluted EPS the trailing P/E of 27.71 sits at the 29th percentile of the 59 months since December 2021, below the median of 32.73. The high was 39.11 in July 2025 and the low 20.77 in June 2026. Since June the stock rose 42.4% while trailing EPS rose from $17.96 to $19.16, or +6.7%, so most of the rebound came from the multiple expanding 33.4%.

Microsoft P/E on GAAP EPS and price-to-sales over 59 months

The price-to-sales ratio of 11.38 is at the 46th percentile, near the median of 11.81, with a low of 8.37 in June 2026. Because margins held steady, the two multiples moved together and both bottomed in June 2026; neither sits in the upper half of its 59-month range.
Outside view (consensus estimates, market data): Average EPS estimates are $19.76 for fiscal 2027 and $23.69 for fiscal 2028, putting the stock at 26.9 times and 22.4 times. A second data source shows a P/E of 29.44 against a five-year median of 33.48, and a price-to-sales ratio of 11.41 that it also places below its five-year norm.

Three Conditions That Move the Stock

OpenAI revenue and receivables will appear again in the next related-party disclosure. If OpenAI revenue keeps growing while receivables grow more slowly, the largest customer is paying on time for its growth; if receivables pile up faster than quarterly revenue or the stake is diluted further, the same 10.8% turns into concentration risk.
Capex as a share of operating cash flow was 67.9% in Q1. If operating cash flow grows faster than capex and that share falls, free cash flow recovers; above 70%, free cash flow of $18.63 billion shrinks toward the $10.2 billion Microsoft returned in Q1 through dividends and buybacks.
Azure growth was 48% under the new definition. Holding near 50% would show the $677 billion backlog turning into revenue at pace; a slowdown to the low 40s would combine with a flat RPO to lower growth expectations.

What to Watch in the Second-Quarter Report

The next numbers arrive with second-quarter results in late January. The first checkpoints are how OpenAI revenue, receivables and the stake change in the related-party note, whether commercial RPO grows again from $677 billion, and the capex figure including finance leases with any fiscal 2027 outlook.
One question stays open. The filings do not split the $10.0 billion between Azure consumption and revenue sharing, so if OpenAI ever cuts its spending, how many points of Azure’s 48% growth would go with it?

NVIDIA (NVDA) Stock Analysis: Guarantees and Cash Flow: another supplier tied to OpenAI through receivables and guarantees, useful for comparing how the same customer weighs on both sides of the AI supply chain.
Oracle (ORCL) Stock Analysis: Cash Flow and Capex Gap: a cloud peer whose capex has outrun operating cash flow, a reference point for Microsoft’s 67.9% capex-to-cash-flow ratio.

Sector RS Rank Oct 30: Oil & Gas Lead, Chips Fall

J. Equity. Research — Fri, 30 Oct 2026 23:05:35 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Regeneron · Eli Lilly · Cheniere Energy

② What rose today: oil and gas, pharmaceuticals, consumer staples

③ What pulled back: semiconductors, technology, cloud computing

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Oct 30 Sector RS — 129 ETFs · RRG v2

October ended with the worst day for stocks since June. Intel fell -28.58% after its outlook missed estimates, and the chip group went down with it. The Nasdaq closed at 25,437.00 (-2.86%), the S&P 500 at 7,580.07 (-1.82%), and the Dow at 51,770.31 (-1.09%). AMD lost -10.88%, Broadcom -5.48%, and Nvidia -4.22%. Amazon slipped -1.41% after reports focused on its record cash burn, which added to worries about AI spending. The VIX rose to 19.42 from 17.20. Oil and gas producers moved the other way.

Oct 30 Major Indexes — 1-Day Change

Oct 30 GICS 11 Sectors — 1-Day Change

Of the 129 ETFs in our universe, 28 closed higher and 99 fell. Two were flat. Energy (XLE) led the 11 sectors at +1.91%. Technology (XLK) was last at -4.89%. Six sectors rose and five fell. The equal-weight S&P 500 (RSP) lost only -0.79%, so the damage sat mostly in the biggest names.

Today’s Leading Sectors TOP 5

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
iShares U.S. Oil and Gas Exploration (IEO)	+2.42%	99	🔺	🔺	🔺
Energy Select Sector SPDR (XLE)	+1.91%	99	🔺	🔺	🔺
SPDR Oil and Gas Exploration (XOP)	+2.13%	98	🔺	🔺	🔺
Utilities Select Sector SPDR (XLU)	+0.67%	97	🔺	🔺	🔽
United States Oil Fund (USO)	+0.38%	96	🔺	🔺	🔺

Energy now holds four of the five spots. Oil (USO) slipped from first to fifth. Oil and gas explorers (XOP) and utilities (XLU) came in. Health care providers (IHF) fell to 93 and cybersecurity (IHAK) to 90, so both left the table.

Why They’re Strong — Sector Issues

iShares Oil and Gas Exploration IEO Daily

· Oil and gas exploration (IEO) — Up +2.42%, the day’s best gain, sheet RS rank 99. Refiners did most of the lifting: Valero rose +3.92%, Phillips 66 +3.37%, and PBF Energy +3.26%. Chevron gained +1.75% after reporting third-quarter results the same morning.

Stocks That Lifted Oil and Gas Exploration IEO — 1-Day Change

VanEck Pharmaceutical PPH Daily

· Global pharmaceuticals (PPH) — Up +2.06%, sheet RS rank 89. Takeda rose +4.50%, Jazz +3.92%, and Eli Lilly +3.19%. Regeneron jumped +13.33% on its third-quarter report, though it sits in biotech funds, not this one.

Stocks That Lifted Global Pharma PPH — 1-Day Change

SPDR Consumer Staples XLP Daily

· Consumer staples (XLP) — Up +1.41%, sheet RS rank 94. Mondelez gained +3.85%, Hershey +3.33%, and PepsiCo +2.65%. We found no single report behind the move. It looks like money leaving chips for steadier earners.

Stocks That Lifted Consumer Staples XLP — 1-Day Change

VanEck Agribusiness MOO Daily

· Agribusiness (MOO) — Up +1.56%, sheet RS rank 58. It is still below its 1-quarter average, so this is a small move off a weak base.

What Changed From Yesterday

The GLP-1 obesity fund (OZEM) posted the biggest one-day rank gain, 47 to 64. Agtech (KROP) followed, 29 to 45. Global pharmaceuticals (PPH) climbed from 81 to 95.

Biggest 1-Day RS Rank Gains — Yesterday vs Today

Biggest 1-Day RS Rank Losses — Yesterday vs Today

Cloud computing (WCLD) lost 20 points, 96 to 76, and most of it was Friday’s price drop. Timber, natural gas, and residential REITs are left off the chart because most of their gains came from a weak day a month ago leaving the window. Thursday’s report called the defense move a rebound, not a new uptrend. Aerospace and defense (XAR) fell -3.37% on Friday, which fits that reading.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

Oil and gas exploration (IEO) rose from 76 to 96 over the window. Global pharmaceuticals (PPH) climbed from 42 to 95, and agribusiness (MOO) from 40 to 62. Semiconductors (SOXX) slid from 33 to 7, and technology (XLK) from 64 to 25. Pharma made the biggest climb of the five.

RS Breakdown Warnings

RS Breakdown Warnings — 5 Sessions Ago vs Today

Cloud computing (CLOU) fell from 83 to 47, the deepest drop. Software (IGV), cybersecurity (CIBR), WisdomTree cloud (WCLD), the metaverse fund (METV), and video games (ESPO) joined it. All six match the sheet’s direction over the same five sessions.

RS Rebound Signals

RS Rebound Signals — 5 Sessions Ago vs Today

No fund qualified on Friday. Five candidates were dropped because Friday’s price fell, including aerospace and defense (XAR) and genomics (GNOM). The broad sell-off erased every rebound signal.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
iShares U.S. Oil and Gas Exploration (IEO)	+2.42%	99	🔺	🔺	🔺
SPDR Oil and Gas Exploration (XOP)	+2.13%	98	🔺	🔺	🔺
VanEck Pharmaceutical (PPH)	+2.06%	89	🔺	🔺	🔺
Energy Select Sector SPDR (XLE)	+1.91%	99	🔺	🔺	🔺
First Trust Natural Gas (FCG)	+1.81%	95	🔺	🔺	🔺

Why They Rose

Energy took four spots and pharma one. All five sit above their 1-month, 1-quarter, and 1-year averages. That is rare on a day when the S&P 500 fell -1.82%. On the other side, blockchain (BKCH) -9.13%, semiconductors (SOXX) -8.24%, meme stocks (MEME) -7.95%, and digital transformation (DAPP) -7.81% led the decliners. Gold fell -3.63%, and silver (SLV) lost -5.67%.

Leading Sectors: Oil and Gas, Pharmaceuticals, Consumer Staples

① Oil and gas exploration ranks 99 on the sheet and rose on a down day. The leadership is a month old and still holding.
② Pharmaceuticals rank 89 and climbed most over the month. Lilly’s and Regeneron’s reports give the move earnings support.
③ Consumer staples rank 94. The gain came without a clear report, so it reads as defense against the chip sell-off.
④ The last report covered the October 29 close. Its three picks from that close to Friday’s: Herc Holdings -4.71%, Fortive -0.93%, and Elbit Systems -3.43%, against -1.82% for the S&P 500. Only Fortive beat the market. Elbit also closed below the $790.00 level the report flagged. Recorded as is.

Today’s Three Stocks — Regeneron · Eli Lilly · Cheniere Energy Stock Forecast

Forty-eight stocks passed the four-part filter. These three fit the day’s leaders.

Regeneron (REGN) — Biotech Drugmaker Stock Forecast

Regeneron REGN Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Regeneron (REGN)	100	98	98	+26.3%	iShares Biotechnology 5.5% · Global X Aging Population 3.0% · SPDR S&P Biotech 1.4%

Closed at $927.89, +13.33%, a one-year closing high. Regeneron makes Dupixent with Sanofi, plus the eye drug EYLEA HD and the cancer drug Libtayo. It reported before Friday’s open. The Regeneron stock forecast now rests on whether this growth rate lasts. For the quarter ended September 30, revenue rose +36% to $5.116 billion. GAAP net income rose +33% to $1.949 billion, or $18.45 per share. Regeneron also expanded its Sanofi deal, with $1.0 billion up front to be booked in the fourth quarter.

Eli Lilly (LLY) — Obesity Drug Stock Forecast

Eli Lilly LLY Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Eli Lilly (LLY)	95	96	96	+23.3%	iShares U.S. Pharmaceuticals 26.3% · VanEck Pharmaceutical 22.1% · Health Care Select Sector SPDR 16.4%

Closed at $1,417.54, +3.19%, a second straight one-year closing high. Lilly sells the diabetes and obesity drugs Mounjaro and Zepbound. It reported on October 29. The Eli Lilly stock forecast is built on demand for those two drugs. For the quarter ended September 30, revenue rose +39% to $24.4 billion. Earnings per share rose +16% to $7.22. The company raised its full-year revenue guidance to $91.0 to $92.0 billion.

Cheniere Energy (LNG) — LNG Exporter Stock Forecast

Cheniere Energy LNG Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Cheniere Energy (LNG)	97	94	95	+21.3%	Global X MLP and Energy Infrastructure 4.9%

Closed at $330.32, +3.57%, a one-year closing high. Cheniere is the largest US exporter of liquefied natural gas. It reported on October 29 and has closed higher in both sessions since. The Cheniere Energy stock forecast leans on its raised outlook. For the quarter ended September 30, revenue was $6.17 billion and net income $1.17 billion. Full-year adjusted EBITDA guidance moved up to $8.75 to $9.25 billion. The quarterly dividend rose to $0.625, up more than +12%.

Regeneron · Eli Lilly · Cheniere Energy Stock Forecast Checkpoints

· Regeneron stock forecast — The stock cleared its September 2 high close of $852.03 in one jump. Watch whether it holds above $852.03 as the report-day gap settles.

· Eli Lilly stock forecast — The report-day close was $1,373.70 on October 29. Watch whether the stock stays above $1,373.70. The 20-day average sits far lower at $1,246.01.

· Cheniere Energy stock forecast — The stock is up +10.6% in five sessions. Watch whether it holds above $318.94, the report-day close. A drop below $297.77, the last close before the report, would erase the post-report move.

What to Watch on Next Week’s Calendar

🔴 Apple and Palantir results, Monday, November 2, 4:00 p.m. ET · AMD results, Tuesday, November 3, 4:00 p.m. ET · Qualcomm and Arm results, Wednesday, November 4, 4:00 p.m. ET
Semiconductors (SOXX) rank 13 on the sheet after Friday’s -8.24% drop. AMD reports right after a -10.88% fall. These results will show whether the Intel shock spreads or stays contained.
🔴 US midterm elections, Tuesday, November 3 · 🔴 October jobs report, Friday, November 6, 8:30 a.m. ET
The VIX rose to 19.42 and the 10-year yield eased to 4.93%. The election and the jobs data are the two big tests for that mood.
Marathon Petroleum results, Tuesday, November 3, 8:00 a.m. ET · ConocoPhillips results, Thursday, November 5, 8:00 a.m. ET · Devon Energy results, Thursday, November 5, 4:00 p.m. ET
Oil and gas exploration (IEO) ranks 99, and refiners led its Friday gain. A producer, a refiner, and a shale driller report in the same week.
Pfizer results, Tuesday, November 3, 8:00 a.m. ET · Amgen results, Tuesday, November 3, 4:00 p.m. ET · Moderna results, Friday, November 6, 8:00 a.m. ET
Pharmaceuticals rose behind Lilly and Regeneron. The group needs more than two strong reports to keep climbing.

Sector RS Rank Oct 29: Defense Lead, Software Fall

J. Equity. Research — Thu, 29 Oct 2026 23:06:25 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Herc Holdings · Fortive · Elbit Systems

② What rose today: aerospace and defense, homebuilders, pharmaceuticals

③ What pulled back: software, cloud computing, communication services

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Oct 29 Sector RS — 129 ETFs · RRG v2

Alphabet fell -12.64% on October 29 after its quarterly report, and it pulled the Nasdaq down with it. The Nasdaq closed at 26,184.72 (-1.38%), the S&P 500 at 7,720.39 (-0.30%), and the Dow at 52,342.56 (-0.25%). Software took a second hit: ServiceNow dropped -26.95% and Fortinet -20.09%. Below the surface, the market was healthier. The equal-weight S&P 500 (RSP) rose +1.2%, and the 10-year yield eased to 4.99% from 5.05%.

Oct 29 Major Indexes — 1-Day Change

Oct 29 GICS 11 Sectors — 1-Day Change

Of the 129 ETFs in our universe, 66 closed higher and 63 fell. Health care (XLV) led the 11 sectors at +2.40%. Communication services (XLC) were last at -1.87%. Nine sectors rose and two fell. Only the two big-tech sectors ended in the red.

Today’s Leading Sectors TOP 5

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
United States Oil Fund (USO)	+0.97%	99	🔺	🔺	🔺
iShares U.S. Oil and Gas Exploration (IEO)	-0.50%	98	🔺	🔺	🔺
Energy Select Sector SPDR (XLE)	+0.38%	97	🔺	🔺	🔺
iShares U.S. Healthcare Providers (IHF)	+1.11%	96	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	-1.30%	96	🔺	🔺	🔺

Oil (USO) held first place. Cloud computing (WCLD) slid to 92 and cybersecurity (BUG) to 89, so both left the table. Energy (XLE) and health care providers (IHF) took their places. All five still trade above their 1-month, 1-quarter, and 1-year averages.

Why They’re Strong — Sector Issues

SPDR Aerospace and Defense XAR Daily

· Aerospace and defense (XAR) — Up +4.58%, the day’s best gain, sheet RS rank 54. FTAI Aviation jumped +17.27%, Huntington Ingalls +13.23%, and Textron +11.67%. L3Harris rose +6.84% after beating estimates and raising its outlook, according to reports.

Stocks That Lifted Aerospace and Defense XAR — 1-Day Change

iShares Home Construction ITB Daily

· Home construction (ITB) — Up +3.49%, sheet RS rank 72. Builders FirstSource rose +12.85%, Installed Building Products +6.17%, and Floor & Decor +5.87%. The lower 10-year yield helped the whole housing chain.

Stocks That Lifted Home Construction ITB — 1-Day Change

First Trust Industrial Renaissance AIRR Daily

· Industrial renaissance (AIRR) — Up +2.44%, sheet RS rank 46. Huntington Ingalls +13.23%, Karman +9.77%, and Kratos +5.88% did most of the lifting. Defense names showed up in two different funds’ leader lists.

Stocks That Lifted Industrial Renaissance AIRR — 1-Day Change

iShares US Pharmaceuticals IHE Daily

· US pharmaceuticals (IHE) — Up +2.84%, sheet RS rank 79. Eli Lilly rose +6.63% to a one-year closing high, and Merck gained +3.83%. Both beat estimates and raised their full-year forecasts, according to reports.

What Changed From Yesterday

Aerospace and defense (XAR) posted the biggest one-day rank gain, 36 to 57. Almost all of it came from Thursday’s +4.58% move. Home construction (ITB) followed, 57 to 75.

Biggest 1-Day RS Rank Gains — Yesterday vs Today

Biggest 1-Day RS Rank Losses — Yesterday vs Today

Cloud computing (CLOU) and software (IGV) each lost 32 points, and most of it was Thursday’s price drop. Wednesday’s report said humanoid robotics (HUMN) needed a second strong day. It fell -3.35% instead and dropped from 60 to 40. That call did not hold.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

Home construction (ITB) climbed from 13 to 75 over the window, and aerospace and defense (XAR) from 38 to 57. Industrial renaissance (AIRR) moved from 34 to 45. Software (IGV) slipped from 85 to 56, and communication services (XLC) from 28 to 16. Homebuilders made the biggest climb of the five.

RS Breakdown Warnings

RS Breakdown Warnings — 5 Sessions Ago vs Today

Social media (SOCL) fell from 60 to 29, the deepest drop. Oil refiners (CRAK), gaming and esports (HERO), and the metaverse fund (METV) joined it. Four others, including e-commerce (EBIZ) and residential REITs (REZ), were dropped because Thursday’s price moved the other way or was flat.

RS Rebound Signals

RS Rebound Signals — 5 Sessions Ago vs Today

Aerospace and defense (XAR) rose from 33 to 57, the largest move. Space and deep sea (ROKT) and space (UFO) also qualified. Four other funds, including humanoid robotics (HUMN) and data centers (DTCR), were dropped because Thursday’s price fell.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
SPDR S&P Aerospace and Defense (XAR)	+4.58%	54	🔺	🔽	🔽
iShares U.S. Home Construction (ITB)	+3.49%	72	🔺	🔺	🔽
SPDR S&P Homebuilders (XHB)	+3.37%	75	🔺	🔺	🔽
iShares U.S. Aerospace and Defense (ITA)	+3.16%	59	🔺	🔽	🔽
iShares U.S. Pharmaceuticals (IHE)	+2.84%	79	🔺	🔺	🔺

Why They Rose

Defense and housing each took two spots. Pharmaceuticals (IHE) is the only one of the five above all three averages. The defense funds are still below their 1-quarter and 1-year averages. On the other side, blockchain (BKCH) -3.76%, silver (SLV) -3.63%, cloud computing (CLOU) -3.56%, and software (IGV) -3.52% led the decliners.

Leading Sectors: Aerospace and Defense, Homebuilders, Pharmaceuticals

① Aerospace and defense ranks 54 on the sheet. It is still below its 1-quarter and 1-year averages, so Thursday reads as a rebound, not a new uptrend.
② Homebuilders rank 72 and climbed most over the month. The move depends on yields staying near 5%.
③ Pharmaceuticals rank 79 and sit above all three averages. Lilly’s and Merck’s beats give the move earnings support.
④ The last report covered the October 28 close. Its three picks from that close to Thursday’s: Labcorp +2.20%, GE HealthCare +0.79%, and GRAIL +0.66%, against -0.30% for the S&P 500. All three beat the market again. Recorded as is.

Today’s Three Stocks — Herc Holdings · Fortive · Elbit Systems Stock Forecast

Thirty-six stocks passed the four-part filter. These three fit the day’s leaders.

Herc Holdings (HRI) — Equipment Rental Stock Forecast

Herc Holdings HRI Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Herc Holdings (HRI)	94	100	99	+39.4%	First Trust RBA American Industrial Renaissance 3.5%

Closed at $173.95, +4.68%, its highest close since February. Herc rents construction and industrial equipment to contractors and large project builders. It reported on October 27 and has closed higher in all three sessions from that day. The Herc Holdings stock forecast rests on data center and infrastructure demand. For the quarter ended September 30, total revenue rose +5% to $1.364 billion, and equipment rental revenue rose +12% to a record $1.254 billion. Net income was $104 million, or $3.10 per share. The company raised its full-year guidance for the second time this year.

Fortive (FTV) — Industrial Instruments Stock Forecast

Fortive FTV Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Fortive (FTV)	82	89	94	+20.1%	Global X U.S. Infrastructure Development 1.1%

Closed at $65.84, +2.70%, a one-year closing high. Fortive makes test tools, sensors, and safety software for factories and utilities. It reported on October 28. The Fortive stock forecast is built on steady growth more than a single jump. For the quarter ended September 30, revenue rose +7.8% to $1.11 billion. Net earnings rose +47.4% to $173 million, or $0.57 per share. The company raised its full-year adjusted EPS range to $3.10 to $3.14.

Elbit Systems (ESLT) — Israeli Defense Electronics Stock Forecast

Elbit Systems ESLT Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Elbit Systems (ESLT)	90	86	93	+18.4%	SPDR Kensho Final Frontiers 2.4%

Closed at $807.41, +3.61%. Elbit is an Israeli maker of drones, electronic warfare gear, and artillery systems. We found no single report behind Thursday’s move. The Elbit Systems stock forecast rests on its order book. For the quarter ended June 30, revenue rose +15.9% to about $2.29 billion, and net income rose to $173.6 million, or $3.61 per share. The backlog reached a record $32 billion. The third-quarter report is expected in late November, based on past timing.

Herc Holdings · Fortive · Elbit Systems Stock Forecast Checkpoints

· Herc Holdings stock forecast — The report-day close was $156.06 on October 27. Watch whether the stock holds above $156.06. The February high close of $181.12 is the next level above.

· Fortive stock forecast — The stock cleared its July high close of $64.09 on Thursday. Watch whether it stays above $64.09 as the post-report move settles.

· Elbit Systems stock forecast — The stock is up +8.6% in five sessions. Watch whether it holds above $790.00, the October 27 close. A drop below $724.32, its 20-day average, would end the short-term uptrend.

What to Watch on Next Week’s Calendar

🔴 Apple results, Monday, November 2, 4:00 p.m. ET · Palantir results, Monday, November 2, 4:00 p.m. ET · AMD results, Tuesday, November 3, 4:00 p.m. ET
Software (IGV) fell from 88 to 56 in one day, and communication services rank 16. These reports will show whether the selling stays with Alphabet and software or spreads.
🔴 US midterm elections, Tuesday, November 3 · General Dynamics results, Friday, October 30, 8:00 a.m. ET
Aerospace and defense (XAR) posted the day’s best gain but ranks only 54. A defense prime’s report and the election outcome are the next tests for the rebound.
Employment Cost Index, Friday, October 30, 8:30 a.m. ET · ISM manufacturing, Monday, November 2, 10:00 a.m. ET · ISM services, Wednesday, November 4, 10:00 a.m. ET
Homebuilders rose as the 10-year yield slipped back under 5%. Hot wage or activity data would push yields up and test that move first.
AbbVie and Regeneron results, Friday, October 30, 8:00 a.m. ET · Pfizer results, Tuesday, November 3, 8:00 a.m. ET · 🔴 Tesla Optimus Gen 3 production, November–December
Pharmaceuticals (IHE) rose behind Lilly and Merck. These reports will show whether the rest of the group can follow. Humanoid robotics (HUMN) fell to 40, and Tesla’s Optimus timeline is that theme’s next test.

Coca-Cola (KO) Stock: The IRS Appeal and 1.3x Leverage

J. Equity. Research — Thu, 29 Oct 2026 21:04:29 GMT

Coca-Cola (NYSE: KO) grew unit case volume +5% in the third quarter of 2026, lifted net revenues +7.4% to $13.38 billion and raised its full-year guidance. On the same call, CFO John Murphy explained why net debt sits at 1.3 times comparable EBITDA, below the company’s own 2.0x to 2.5x target: Coca-Cola is waiting for an appeals court ruling in its transfer pricing dispute with the IRS, and he said the company is “anticipating a decision in the coming months in the IRS case.”
Coca-Cola makes beverage concentrate and syrup, sells it to independent bottlers around the world and runs the brand marketing behind them. At $91.73 a share the company is worth $394.6 billion. The stock is +31.2% in 2026 on month-end closes, and its latest monthly close is the highest in ten years.

Coca-Cola one-year share price chart

The question here is how much money rides on a single court decision and how much of it the balance sheet room Coca-Cola has deliberately kept would cover. The analysis lines up the Q3 earnings release and the Q3 10-Q with the company’s investor decks, 32 quarterly releases and every tax disclosure since 2020.
Two caveats apply. The trailing P/E of 26.98 uses GAAP diluted EPS of $3.40 over four quarters, including a Q4 2025 impairment on the African bottling business held for sale. The tax figures are the company’s own year-end estimates, and whether the method would reach later years depends on the courts and the IRS.

What Slide 31 Says About the IRS Case and Leverage

Slide 31 of the investor overview deck sets a net debt leverage target of 2.0x to 2.5x and lists five priorities for 2026: invest in brands, grow the dividend in line with free cash flow, stay flexible on acquisitions, buy back stock only to offset employee plan dilution, and manage the balance sheet with the court case in mind. The last item reads: “Judiciously manage balance sheet ahead of decision on IRS tax case.” The buyback line no longer promises a lower share count. It promises a flat one.

Investor overview slide 31: capital return model and 2026 priorities with a 2.0x to 2.5x leverage target

The CAGNY 2026 deck lists defending the company’s position in the IRS dispute as one of five balance sheet tasks and puts 2025 debt capacity at 2.5x leverage at $16 billion, $8 billion more than in 2015. The same slide shows a 2025 return on invested capital of 23% and says 96% of revenue now comes from outside the company-owned bottling segment. Slide 24 of the overview deck compares Coca-Cola with large consumer staples peers: average organic revenue growth since 2017 of 7% against 4%, operating margin change since 2017 of +5 points against -3 points, and ROIC of 23% against 12%.
Company disclosure (Q3 2026 earnings call): Murphy said Coca-Cola has thought through the range of outcomes and feels ready to handle a best case and a worst case. In his words, “So the name of the game has really been to strengthen the balance sheet.” He added that capital returns, for now, will come mainly through the dividend.
Own calculation (Q3 non-GAAP call schedules and CAGNY 2026 deck, company formula): Net debt of $25.02 billion divided by trailing comparable EBITDA of $19.51 billion gives 1.28x. Room to the bottom of the target at 2.0x is about $14.0 billion and room to the top at 2.5x is about $23.7 billion. At the end of 2025 the same figures were $6.5 billion and $15.6 billion.
The cash flow statement matches the message. In the first nine months Coca-Cola paid $6.84 billion of dividends and bought back $900 million of stock, $545 million net of stock issuance. Diluted shares were 4.324 billion in 2017 and 4.313 billion in 2025.

What the Q3 Call Said About Pricing and Shipments

Slide 26 of the overview deck describes the long-term growth model as organic revenue growth of 4% to 6%, built from 2% to 3% price/mix and 2% to 3% volume. It also says that in about half of the years since 1990 the beverage industry grew between 3% and 5%.

Investor overview slide 26: long-term growth model split into price/mix and volume

Q3 came in on the other side of that split. Price/mix was +1%, below the model, while volume was +5%, above it. Murphy broke the price/mix figure down on the call: “This was driven by four points of pricing actions, partially offset by three points of unfavorable mix,” which he attributed to geographic mix, the timing of investments and category mix. Concentrate sales rose +7%, and the release says that “Concentrate sales were 2 points ahead of unit case volume due to the timing of concentrate shipments.”
Margins tell a cleaner story. The Q3 margin schedule shows comparable gross margin of 62.69% against 61.03% a year earlier, a gain of 1.66 points. Strip out 0.45 points of currency and 0.28 points from last year’s sale of the Nigerian finished product business and the underlying gain is 0.93 points, which matches Murphy’s three-part explanation.
Company disclosure (Q3 2026 earnings release): Coca-Cola raised its 2026 outlook for organic revenue growth from about 5% to at least 5%, for comparable currency neutral EPS growth excluding acquisitions and divestitures from 7% to 8% to at least 9%, for comparable EPS growth from 9% to 10% to at least 11%, and for free cash flow from about $12.4 billion to at least $13.0 billion. It also lowered its underlying effective tax rate outlook from 19.9% to 19.7%, with a footnote that reads: “This does not include the impact of ongoing tax litigation with the U.S. Internal Revenue Service, if the company were not to prevail.”
The fourth quarter is where the timing comes back. Murphy said the quarter has six fewer days and that some segments should see slight destocking: “Therefore, we expect concentrate shipments to slightly trail unit case volume for the full year.” He also said the bottling system tends to get ahead of an unpredictable environment by building inventory. Year to date, concentrate sales are +6% against unit case volume of +4%. The sale of a portion of Coca-Cola Beverages Africa (CCBA) to Coca-Cola HBC, expected to close in Q4, should cut comparable net revenues by about 4 points in Q4 and about 8 points in 2027.
Own calculation (nine-month release table and 2025 quarterly revenue): Weighting nine-month organic growth of 8% and the full-year floor of 5% by 2025 quarterly revenue implies Q4 organic revenue of about -4.2%, or between -2.6% and -5.7% once rounding in the nine-month figure is allowed for. The day count alone, 90 days against 96, is a 6.2% headwind.

The Bull and Bear Case for Coca-Cola Shares

The bull case rests on breadth and balance sheet strength. Volume rose 5% to 6% in every region outside North America, management cited 22 straight quarters of global value share gains, and guidance went up. A win on appeal would return $6.6 billion and leave about $30.3 billion of room to 2.5x leverage.
The bear case rests on the ruling and the quality of growth. A loss would put about $22.0 billion at stake, 5.6% of the market value, and lift the tax rate by about 3.8 points. Price/mix is below the long-term model, Q4 organic revenue is likely negative, and price-to-sales is at a 59-month high.

From a 2015 Tax Notice to the 2026 Appeal Hearing

The dispute began on September 17, 2015, when the IRS sent a notice of deficiency seeking about $3.3 billion of additional federal income tax for 2007 through 2009. The IRS wanted to reallocate more than $9 billion of income from foreign affiliates licensed to make and sell Coca-Cola products back to the U.S. parent. At issue is whether the parent was paid an arm’s-length price by those licensees. Coca-Cola’s defense rests on a method it agreed with the IRS in 1996 and wrote into a closing agreement, which the IRS audited and accepted in five successive audit cycles covering 1996 through 2006 before the 2015 notice replaced it.

Coca-Cola month-end share price over 10 years with three tax case dates

On November 18, 2020, the Tax Court predominantly sided with the IRS, and the stock closed that month at $51.60. A supplemental opinion on November 8, 2023 also sided with the IRS on the blocked-income regulations covering royalty limits in Brazil. On August 2, 2024 the court entered a decision for $2.7 billion of additional tax for 2007 through 2009, $6.0 billion with interest, which Coca-Cola paid as a deposit on September 10, 2024 and would get back with interest if it wins.
Coca-Cola appealed to the Eleventh Circuit on October 22, 2024, and the court heard the case on June 25, 2026. In the meantime, on October 1, 2025, the Eighth Circuit reversed the Tax Court in the 3M case and held the blocked-income regulation inconsistent with Section 482. The Q3 10-Q says: “Both of these conclusions are highly supportive of the Company’s position in its case and reinforce its prior conclusions.”
Management changed during the wait: James Quincey moved to executive chairman on March 31, 2026 after nine years as CEO, and COO Henrique Braun took over. On the Q2 call Murphy put the timing of a ruling at six to twelve months after the hearing, and on the Q3 call he narrowed that to the coming months. Month-end closes moved from $71.86 in the deposit month to $81.27 in the hearing month and $91.73 now.

How Big Is the Tax Bill If Coca-Cola Loses?

The estimate has grown with every annual filing. Coca-Cola’s year-end calculation of the potential liability was $12 billion for 2020, $13 billion for 2021, $14 billion for 2022 and $16 billion for 2023. After the $6.0 billion deposit for 2007 through 2009, the company began reporting only the remaining years from 2010, restated the end-2023 figure at $10 billion, and then reported $12 billion for 2024 and $14 billion for 2025. With the deposit added back, the total was $18 billion at the end of 2024 and $20 billion at the end of 2025.
Filing note (Q3 10-Q): If the company loses, it would not receive a refund of the $6.0 billion deposit or the related accrued interest receivable of $589 million, and it “would likely be subject to significant additional liabilities for subsequent years.” The remaining incremental tax and interest for 2010 through 2025 is estimated at about $14 billion as of the end of 2025, and applying the same method in 2026 added about $450 million in Q3 and $1.4 billion in the first nine months. Continued application in 2026 would raise the effective tax rate by about 3.8 points, up from 3.5 points in the 2023 to 2025 filings.
Own calculation (Q3 10-Q and Q3 release): Adding $6.0 billion, $589 million, $14 billion and $1.4 billion gives about $22.0 billion at stake, 5.6% of the market value, of which about $15.4 billion would be new cash going out. Applying a 23.5% tax rate instead of 19.7% to the 2026 comparable EPS floor of $3.33, which is 1.11 times the 2025 figure of $3.00, gives $3.17, a 4.8% cut.

Tax case exposure including the 6.0 billion deposit and debt capacity to the leverage target

Borrowing the full $15.4 billion would take net debt to 2.07x comparable EBITDA, near the bottom of the target range. A win would return $6.6 billion, cut leverage to 0.94x and open up about $30.3 billion of room to 2.5x, 7.7% of the market value. Room at 2.5x grew from $15.6 billion at the end of 2025 to $23.7 billion, which is why a loss would still leave leverage inside the target. The deposit also earns interest through the tax line, $155 million in the first nine months, which would stop with a loss.

Concentrate Shipments Ahead of Unit Cases

Concentrate sales measure what Coca-Cola ships to bottlers, while unit case volume measures what bottlers sell on to customers, counted as an average per day. The gap between the two reflects bottler inventory and differences in the number of selling days.

Concentrate sales minus unit case growth and price/mix vs volume over 32 quarters

Across 32 releases from Q4 2018 to Q3 2026, and leaving out quarters with extra days, concentrate ran at least 2 points ahead of unit cases mainly because of shipment timing three times: +3 in Q1 2022, +4 in Q2 2024 and +2 in Q3 2026. The first two reversed in the following quarter, to -4 and -1. In Q3 2026 concentrate ran ahead in all four geographic segments, by 2 points in North America, Latin America and Asia Pacific and 1 point in EMEA.
The balance between price and volume has also flipped. From 2022 to 2024 price/mix averaged +10.2% a quarter and volume +2.5%, while in the first three quarters of 2026 the averages were +1.7% and +4.3%. High inflation in Argentina pushed Latin American price/mix to an average of 18.2% a quarter from 2022 to 2024, and slide 45 of the overview deck shows annual organic revenue growth of 16% in 2022 and 12% in 2024 before 5% in 2025. Q3’s 1% price/mix ties Q4 2025 for the lowest reading since Q3 2021.

How Coca-Cola Makes Money From Concentrate

Coca-Cola runs two lines of business. According to the 2025 10-K, concentrate operations made up 59% of net operating revenues and 85% of unit case volume, while finished product operations, which sell through company-owned bottling and distribution companies, made up the rest. Finished product operations bring more revenue but lower gross margins, which is why the company has kept selling bottlers to independent partners. The bottling investments segment fell from 52% of net revenues in 2015 to 12% in 2025.
In most markets Coca-Cola uses an incidence-based concentrate pricing model. The price it charges for concentrate moves with bottler pricing, the channel where the finished drink is sold and package mix, so when bottlers push smaller, cheaper packs for affordability, Coca-Cola’s price/mix moves with them. That is one route into the three points of unfavorable mix in Q3. In 2025 the five largest independent bottlers, Coca-Cola FEMSA, Coca-Cola Europacific Partners, Coca-Cola HBC, Arca Continental and Swire Coca-Cola, handled 44% of worldwide unit case volume.
Under the 10-K, bottlers may make and sell Coca-Cola beverages only in a defined territory and must buy all the concentrate or syrup for them from the company or an approved supplier. U.S. expanding bottler agreements renew in 10-year terms with mandatory incidence pricing.
Slide 36 of the overview deck splits 2025 by region. Of 33.8 billion unit cases, EMEA sold 30%, Latin America 29%, Asia Pacific 24% and North America 17%. Of $48.1 billion of comparable net revenues, North America took 40%, and of $15.0 billion of comparable operating income it took 36%. Latin America turned 29% of volume into 13% of revenue but 23% of operating income. Bottling investments produced 12% of revenue and only 2% of operating income.

Investor overview slide 36: 2025 unit case volume and revenue and operating income by region

The regions diverged in Q3. North America volume was even, with operating income +5%, which Braun put down to the timing of the July 4 holiday and temporary problems in some finished goods businesses. Latin America grew volume 6% and price/mix 7%, and currency lifted reported revenue to +25%. Asia Pacific grew volume 6% but price/mix was -2%, and EMEA grew volume 5% while losing value share in France and the United Kingdom. Coca-Cola Zero Sugar grew 16%. Equity method investments, including bottlers and Monster Beverage, were $20.71 billion and earned $653 million in Q3.

How Coca-Cola Compares With Three Beverage Peers

The peers are three U.S.-listed beverage companies that compete for the same shelf space. PepsiCo sells drinks and snacks and does much of its own bottling, so its revenue is about twice Coca-Cola’s at half the margin. Keurig Dr Pepper sells coffee systems and soft drinks, and Monster sells energy drinks. Monster is also a company Coca-Cola holds an equity stake in, and Coca-Cola’s bottlers distribute its drinks under coordination agreements that pay Coca-Cola fees.

Revenue growth and operating margin at four beverage companies over the last four quarters

Trailing four-quarter revenue growth was +27.5% at Keurig Dr Pepper, +20.3% at Monster, +7.1% at Coca-Cola and +6.4% at PepsiCo, with Keurig Dr Pepper and Monster through Q2 2026. Keurig Dr Pepper’s figure includes its acquisition of JDE Peet’s and preparation for a 2027 separation. Operating margins were 32.2% at Coca-Cola, 30.5% at Monster, 18.5% at Keurig Dr Pepper and 16.0% at PepsiCo.

Trailing and forward P/E at four beverage companies

Trailing P/E stood at 42.28 for Monster, 35.30 for Keurig Dr Pepper, 27.06 for Coca-Cola and 16.68 for PepsiCo, and forward P/E at 37.21, 14.38, 26.45 and 15.66 in the same order. Coca-Cola grows at about PepsiCo’s pace but trades at 1.6 times its multiple, and its 2.31% dividend yield is about half of PepsiCo’s 4.46%.

Coca-Cola’s P/E and Price-to-Sales Band

On GAAP diluted EPS the trailing P/E of 26.98 sits at the 66th percentile of the 59 months since December 2021, close to the median of 26.16. The low was 22.03 in September 2025 and the high 29.82 in September 2024. The multiple was 23.00 in December 2025, and the +31.2% move in the stock since then is the product of trailing EPS growth of +11.8% and a P/E expansion of +17.3%.

Coca-Cola P/E on GAAP EPS and price-to-sales over 59 months

The price-to-sales ratio of 7.73 is the highest of the 59 months, 1.32 points above the median of 6.41. Operating margin rose from 19% to 24% a quarter in 2024 to 33% to 35% in 2026, so each dollar of revenue now carries more earnings, which keeps the P/E near the middle while the sales multiple sits at the top. A 3.8-point higher tax rate would lift the P/E by about 5% at the same share price.
Outside view (consensus estimates, market data): Average EPS estimates are $3.33 for 2026 and $3.52 for 2027, which puts the stock at 26.1 times 2027 earnings. A second data source shows a P/E of 27.46 against a five-year median of 24.33 and a price-to-sales ratio of 7.71 against a five-year median of 6.38.

Three Conditions That Move the Stock

The Eleventh Circuit ruling is the largest variable. A win returns $6.6 billion and leaves about $30.3 billion of room to 2.5x that could go to buybacks or acquisitions. A loss sends out about $15.4 billion of cash and raises the effective tax rate by about 3.8 points, which takes 2026 comparable EPS down 4.8%.
Price/mix was 1% in Q3. If the three points of unfavorable mix fade and price/mix returns to the 2% to 3% in the long-term model, organic growth can stay at 4% to 6% even as volume slows. If it stays near 1%, volume has to beat a 2026 that included the World Cup.
Concentrate shipments get tested in Q4. If destocking is as slight as guided and Q4 organic revenue lands near -4%, 2027 starts clean. If more of the early shipments reverse, Q4 and Q1 2027 revenue both take the hit.

What to Watch in the Fourth-Quarter Report

The next set of numbers arrives in February 2027 with Q4 results and the first 2027 guidance. The first checkpoints are how far Q4 concentrate shipments trailed unit cases and whether Coca-Cola reaffirms 4% to 6% organic growth on a revenue base about 8% smaller after CCBA leaves.
One question remains open. If Coca-Cola loses, the 3.8-point tax increase is a recurring cost rather than a one-time charge. How much of that scenario is in a 2027 EPS estimate of $3.52 and a trailing P/E of 26.98?

Linde (LIN) Stock Analysis: Price, Volume and Margin Trends: another company whose growth splits into price and volume, useful for comparing how Coca-Cola’s mix shifted from price to volume.
Adobe (ADBE) Stock Analysis: Valuation After the CEO Change: a large company valued after a CEO handover, a reference point for Coca-Cola’s first year under Henrique Braun.

Freeport-McMoRan (FCX) Stock: Minorities Get 42% of Growth

J. Equity. Research — Thu, 29 Oct 2026 13:02:03 GMT

Freeport-McMoRan (NYSE: FCX) earned $1.17 billion for common stockholders in the third quarter of 2026, +74.2% from a year earlier, while it sold 749 million pounds of copper against 977 million, -23.3%. The realized copper price did the work: $6.54 a pound against $4.68, +39.7%. Management now points to Grasberg’s recovery for copper sales growth of 23% in 2027 and 11% in 2028, but a footnote on slide 7 of the call deck shows that 460 million of the 1.1 billion extra consolidated pounds between 2026 and 2028, or 41.8%, belong to noncontrolling interests rather than to FCX shareholders.
Freeport mines copper, gold and molybdenum in Arizona and New Mexico, Peru and Chile, and at the Grasberg district in Indonesia, and is one of the largest listed copper producers in the world. At $66.60 a share it is worth $95.6 billion. The stock is +31.1% in 2026 on month-end closes but -12.1% below its August high of $75.74.

Freeport-McMoRan one-year share price chart

The question here is how much of Grasberg’s volume recovery reaches FCX shareholders if copper cannot hold the price that made 2026’s earnings. The analysis lines up the Q3 earnings release and the 30-page Q3 call slides with copper sales, minority shares and unit costs from 23 quarterly releases since 2021, and checks them against the 2025 10-K and the Q2 10-Q. The P/E uses trailing twelve-month (TTM) GAAP diluted EPS of $2.38, or 27.98 times; first-quarter EPS includes a $0.14 gain from the Grasberg insurance settlement. Unit net cash cost is the company’s measure after by-product credits, and it excludes idle facility and restoration costs from the incident. Volumes are consolidated, including minority shares, unless noted.

What Slide 7 Says About Sales and Minority Shares

Q3 2026 call slide 7: copper and gold and molybdenum sales outlook to 2028

Slide 3 of the Q3 deck sets operating cash flow at $2.0 billion against $1.7 billion, adjusted EBITDA at $3.2 billion against $2.8 billion and adjusted net income at $1.3 billion against $0.7 billion, and lists projected copper sales growth of 23% in 2027 and 11% in 2028. Slide 7 draws consolidated copper sales of 3.6 billion pounds in 2025, 3.0 billion in 2026, 3.7 billion in 2027 and 4.1 billion in 2028, and gold sales of 1.07, 0.65, 1.0 and 1.2 million ounces. Slide 22 projects fourth-quarter sales of 875 million pounds of copper, +16.8% from Q3, and 300 thousand ounces of gold, nearly three times Q3.
The footnote on slide 7 reads: “Consolidated copper sales include 1.11 bn lbs in 2025, 0.81 bn lbs in 2026e, 1.10 bn lbs in 2027e and 1.27 bn lbs in 2028e for noncontrolling interests.” For gold the minority share is 538, 324, 512 and 615 thousand ounces. FCX owns 48.76% of PT Freeport Indonesia (PTFI), which runs Grasberg; the rest sits with Indonesia’s state mining holding company MIND ID and related parties.
Own calculation (slide 7 footnote, 2025 to 2028 estimates): From 2026 to 2028 consolidated copper sales rise by 1.1 billion pounds, +36.7%, and 460 million of those pounds, 41.8%, go to noncontrolling interests. FCX’s own share rises from 2.19 billion to 2.83 billion pounds, or +29.2%, and 52.9% of the 550 thousand extra ounces of gold go to minority holders. In 2027 alone, consolidated sales grow 23.3% and FCX’s share 18.7%.
Slide 6 splits the growth into three tracks: the Grasberg recovery, adding 700 million pounds in 2027 and 400 million in 2028; new leach technologies, from a 220-million-pound annual run rate to 300 million in 2027; and expansions at Bagdad (200 to 250 million pounds a year), Safford and Lone Star (300 to 400 million) and El Abra (700 million). On the same call, CFO Maree Robertson said 2026 copper sales were trimmed by about 2% on weaker U.S. and Chilean output, and 2027 by about 2.5% on an updated mine plan.
Company disclosure (Q3 earnings release): CEO Kathleen Quirk said, “Favorable pricing for our products, particularly for copper and molybdenum, drove strong margins with substantial conversion to bottom-line results, highlighting the strength of our diversified portfolio.”
Filing note (2025 10-K): The 10-K explains that FCX took about 81% of PTFI’s net income through 2022 and 48.76% from 2023 on. The February 2026 memorandum of understanding with Indonesia keeps FCX at 48.76% through 2041 and at about 37% from 2042.

Idle Facility Costs and Copper Price Sensitivity

Q3 2026 call slide 9: EBITDA and cash flow at copper prices from 5 to 7 dollars

Slide 20 holds 2026 unit net cash cost at $1.90 a pound, and its footnote excludes $1.2 billion of projected idle facility and restoration costs from the mud rush incident, $0.25 billion of it in Q4. The release explains why: “a portion of PTFI’s production and delivery costs will be recognized as idle facility costs, which are non-inventoriable.” Q3’s $244 million, or $1.59 per pound of PTFI copper, sat outside reported unit costs.
Own calculation (five releases, Q3 2025 to Q3 2026): Adding the idle and restoration costs back over copper sales puts Q3 unit cost at $2.40 rather than $2.07, and Q4 2025 at $2.86 rather than $2.22. Spreading $1.2 billion over 3.0 billion pounds lifts the 2026 guidance from $1.90 to $2.30.
On the call, Robertson described these as essentially fixed costs, said they would no longer be broken out from 2027 and would sit in unit costs, and called it an accounting classification rather than a change in cost. She added that PTFI copper sales should rise from about 700 million pounds this year to 1.2 billion next year. The 2027 unit cost will be the same fixed cost spread over more pounds, not a cost that disappears.
Slide 9 puts the sensitivity for the 2027 and 2028 average at $390 million of EBITDA and $300 million of operating cash flow for each $0.10 a pound in copper. Robertson said annual EBITDA would be above $12 billion at $5 copper and about $19.5 billion at $7. Slide 8 puts the 2026 energy cost impact at about $500 million versus 2025 and spot sulfuric acid at more than double the 2025 average, and 2027 capital spending is now about $5.2 billion, roughly $400 million above the July estimate. Slide 10 shows that about half of 2027’s $2.0 billion of discretionary projects are Kucing Liar development and a Grasberg LNG power plant, and discretionary spending is excluded from the cash flow used to set shareholder returns.
Slides 5 and 24 track the restart. The Grasberg Block Cave mining rate rose from 53 thousand to 70 thousand metric tons a day between Q2 and Q3, Production Blocks 2 and 3 hit planned rates in both quarters, material handling upgrades finish in early 2027, and Production Block 1S is due to restart by mid-2027.

The Bull and Bear Case for Freeport Shares

The bull case rests on volume and demand. Grasberg mill throughput reached 67% of capacity in Q3, and the company expects 80% by mid-2027 and close to full capacity by year-end 2027. Management says this growth needs no new capital, the Bagdad expansion decision is due in Q4, and Q4 copper and gold sales should be the year’s highest. U.S. customers report strong copper demand from power, data centers and transportation.
The bear case rests on the source and ownership of earnings. Q3’s profit gain came from price, not volume, and about 42% of the extra copper ahead belongs to minority holders. The $1.2 billion kept out of 2026 unit costs returns to costs in 2027, capital spending is rising to $5.2 billion, price-to-book of 4.56 sits in the 88th percentile of 59 months, and gold exports from Indonesia face a 10% export duty question.

Freeport’s month-end close went from $6.75 in March 2020 to $49.74 in March 2022. The 2018 transaction gave MIND ID and related parties 51.24% of PTFI, but the former joint venture’s profit-sharing kept FCX’s take near 81% through 2022. TTM EPS was $3.45 in March 2022; once FCX’s share of PTFI profit fell to 48.76% in 2023, it was $1.79 by March 2023. The minority share of consolidated copper sales rose from 19.9% in 2022 to 34.0% in 2024.

Freeport month-end share price over 10 years with three events

In September 2025 an external mud rush at the Grasberg Block Cave underground mine halted production, and the stock closed that month at $39.22. Consolidated copper sales fell from 1.016 billion pounds in Q2 2025, the last full quarter before the incident, to 657 million in Q1 2026. In November 2025 the company published its restart plan and added a risk factor warning that the phased restart might not go as planned. PTFI booked a $699 million pre-tax insurance settlement in Q1 2026, restarted Production Blocks 2 and 3 at the end of March, and restarted its smelter in late August. With the February rights memorandum in hand, the stock is now 1.70 times its incident-month close.

How Did Higher Copper Prices Cover the Volume Drop?

Q3 copper revenue, sales times realized price, rose $326 million, from $4.572 billion to $4.898 billion. Selling 228 million fewer pounds cost -$1.067 billion, and the higher price added +$1.393 billion, more than covering it.

Minority share of the copper sales outlook and the Q3 copper revenue change by price and volume

Own calculation (23 releases, Q1 2021 to Q3 2026): Q3’s 749 million pounds of copper sales were the fourth lowest of the 23 quarters. The realized price, however, has set a new high four quarters running, from $4.68 in Q3 2025 to $5.33, $5.78, $6.17 and $6.54, and diluted EPS of $0.81 ranks third behind $1.04 in Q1 2022 and $0.94 in Q3 2021.

Quarterly copper sales with minority share and realized price vs unit net cash cost over 23 quarters

By region, Q3 unit cost was $3.16 in the U.S. and $2.39 in South America, while Indonesia showed a credit of $0.84 a pound because gold credits exceeded costs, down from $0.92 a year earlier. Gold fell further than copper: Q3 sales of 105 thousand ounces were -68.8%, and the company said about 60 thousand ounces of refined Indonesian gold moved into Q4. PTFI produced 249 million pounds of copper in Q3 but sold only 153 million, the difference sitting as in-process inventory at the restarted smelters. Lower gold sales mean lower by-product credits, which is why consolidated unit cost of $2.07 came in above July’s $2.00 estimate.
The Q4 outlook follows the same pattern. Unit cost is guided at $1.68 because gold sales rise to 300 thousand ounces; adding Q4’s $250 million of idle costs over 875 million pounds gives $1.97. For 2026 as a whole, production exceeds sales by about 100 million pounds of copper and 70 thousand ounces of gold held at PTFI’s smelters. Molybdenum helped on price: the realized price rose from $24.07 to $32.46 a pound and sales from 19 to 22 million pounds, and U.S. mine by-product credits rose from $0.61 to $0.89 a pound.
Gold exports carry an open issue. The release says that “current regulations (specifying a 10% export duty) conflict with the terms in PTFI’s special mining business license (IUPK),” and PTFI is seeking clarity from the government before exporting gold beyond domestic demand in Q4.

How Freeport Makes Money From Three Regions

Copper made up 75% of 2025 revenue, gold 15% and molybdenum 8%. In the U.S., Freeport runs seven copper mines, including Morenci (72% interest), Bagdad, Safford and Sierrita in Arizona and Chino and Tyrone in New Mexico, plus a smelter in Miami, Arizona, and a refinery in El Paso; it sold 66% of 2025 U.S. copper as rod for wire makers, and Morenci led Q3 U.S. sales at 123 million pounds. South America has Cerro Verde in Peru (55.66%) and El Abra in Chile (51%), and the Climax and Henderson mines in Colorado make it the world’s largest molybdenum producer.
Costs differ sharply by region. Slide 21 puts 2026 unit net cash cost at $3.08 in the U.S. and $2.59 in South America, while Indonesia shows a credit of $1.25 because gold by-products exceed costs. At normal rates Grasberg’s three underground mines produce about 1.7 billion pounds of copper and 1.3 million ounces of gold a year, and slide 23 plans Grasberg copper output of 0.8 billion pounds in 2026, 1.5 billion in 2028 and 1.6 billion in 2030.

Q3 2026 call slide 23: Grasberg copper and gold production plan to 2030

In Indonesia, PTFI’s smelter and the 66%-owned PT Smelting can produce up to about 800 thousand metric tons of cathode a year, and a precious metals refinery handles the gold, so PTFI now sells refined copper and gold instead of concentrate. Copper reserves split 38% U.S., 40% South America and 22% Indonesia, while 97% of gold reserves are in Indonesia. About $1.6 billion has gone into Kucing Liar, Grasberg’s next ore body, with roughly $4 billion more through 2033.

U.S. Copper Tariffs and the Bagdad Expansion

The 10-K says Freeport supplies about 70% of U.S. refined copper. A 50% Section 232 tariff on semi-finished copper took effect in August 2025, but “refined copper, including cathodes, concentrates and scrap, was exempted from the tariff,” and a possible refined copper tariff of 15% in 2027 rising to 30% in 2028 was still under review in the Q2 10-Q. COMEX copper averaged 7% above LME in 2025, but Q3 realized prices were nearly identical across regions: $6.55 in the U.S., $6.56 in South America and $6.48 in Indonesia.
The leach program has slipped a year. The 10-K reported, “In late 2025, we achieved an annual run rate of approximately 240 million pounds of copper,” with a 2026 target of 300 million. The Q3 release targets growth “from the current run rate of approximately 220 million pounds of copper per annum to 300 million pounds in 2027.” A next-generation additive that recovered more than four times as much copper as the first version in lab tests goes to the field in 2027. U.S. mines also ran 3% to 5% below plan in Q3 because of extreme weather, with unit cost at $3.16.
Bagdad is next. Doubling concentrator capacity would add 200 to 250 million pounds of copper a year for about $4.5 billion of incremental capital, with the decision due in Q4. El Abra’s expansion, more than 700 million pounds a year for about $7.5 billion, entered environmental review in March, and initial studies on a 300 to 400 million pound Safford and Lone Star expansion finish in 2027.

How Freeport Compares With Three Copper Peers

The peers are three U.S.-listed copper producers whose earnings ride the same copper price: Southern Copper, a low-cost pure copper miner in Mexico and Peru; Teck, a Canadian copper and zinc miner; and Hudbay, a mid-sized copper producer in the Americas.

Trailing four-quarter revenue growth and operating margin at four copper producers

Over each company’s latest four quarters, revenue grew +40.5% at Teck, +38.7% at Southern Copper and +12.1% at Hudbay, but only +1.7% at Freeport (Teck and Hudbay through Q2 2026). All four enjoyed the same copper rally; Freeport alone sold less. Operating margin was 58.6% at Southern Copper, 32.6% at Teck, 29.9% at Hudbay and 29.3% at Freeport.

Trailing and forward P/E at four copper producers

Trailing P/E is highest at Freeport, 27.98, against 25.99 at Southern Copper, 17.38 at Teck and 13.64 at Hudbay, while forward P/E is 25.10 at Southern Copper, 16.82 at Freeport, 14.98 at Teck and 13.32 at Hudbay. The gap between trailing and forward P/E is 11.16 at Freeport against 0.89, 2.40 and 0.32 at the peers, so the market is already pricing in the Grasberg recovery. Under its financial policy Freeport returns up to 50% of available cash flow and keeps net debt within a $3 billion to $4 billion target; it returned $955 million through Q3, $650 million in dividends and $305 million in buybacks, and net debt was $1.8 billion excluding $3.2 billion of PTFI downstream project debt.

Freeport’s P/E and Price-to-Book Band

Freeport P/E on GAAP EPS and price-to-book over 59 months

The P/E on TTM GAAP diluted EPS is 27.98, in the 44th percentile of the 59 months since December 2021 and below the 29.52 median. The low was 8.89 in June 2022 when earnings were high, and the high 46.66 in May 2024. The P/E sits below its median with the stock near a high because the copper price lifted EPS too.
Price-to-book is 4.56, in the 88th percentile and 0.90 above the 3.66 median; the peak was 5.42 in August. Beyond $20.98 billion of equity attributable to FCX, the balance sheet carries $12.63 billion of noncontrolling interests, so a large share of book assets does not belong to FCX shareholders.
Outside view (consensus estimates, market data): Average EPS estimates are $1.03 for Q4, $3.33 for 2026 and $4.33 for 2027. The 2027 figure is 5.9% above its level 90 days ago, putting the stock at 15.4 times 2027 and 20.0 times 2026 estimates.

Three Conditions That Move the Stock

Realized copper price was $6.54 a pound in Q3. With each $0.10 worth $390 million of 2027 and 2028 EBITDA, copper holding above $6 lets volume growth lift earnings; a move back to the $5 range would use the extra volume to fill in for lower prices.
Grasberg throughput was 67% of capacity in Q3. If it reaches 80% by mid-2027 and Production Block 1S restarts on time, fixed costs spread over more pounds and unit cost falls; if dry-weather milling problems or restart delays hold volume back, unit cost rises in the same year idle costs move into it.
Indonesian gold exports affect part of the 300 thousand ounces planned for Q4. If the government allows exports without duty under the IUPK and completes the rights extension, gold credits keep Indonesian costs low; a 10% duty or a delayed extension would put Indonesian costs and the post-2041 ownership terms back in question.

What to Watch in the Fourth-Quarter Report

The next numbers come with Q4 results around January 2027. The first check is whether Freeport actually sold 875 million pounds of copper and 300 thousand ounces of gold, and what 2027 unit cost guidance looks like once idle costs are included; the Bagdad investment decision should come before that.
One question remains open. Filings do not show how much of the fixed cost moving into 2027 unit costs will shrink as volume grows and how much, like energy and sulfuric acid, will keep rising. In a year when copper is cheaper than today, can earnings still grow for shareholders who keep only about 58% of the extra copper?

Linde (LIN) Stock Analysis: Price, Volume and Margin Trends: another materials company whose results split into price and volume, useful for comparing how much of Freeport’s 2026 profit came from price alone.
Sumitomo Electric (5802) Stock Analysis: Data Center Optics: a wire and cable maker riding data center and power grid spending, the same demand that takes 66% of Freeport’s U.S. copper as rod.

Nucor (NUE) Stock: $247 a Ton and a 17% Import Share

J. Equity. Research — Thu, 29 Oct 2026 04:39:58 GMT

Nucor (NYSE: NUE) reported third-quarter 2026 net sales of $11.25 billion, +32.0% from a year earlier, and GAAP diluted EPS of $5.80 against $2.63. Management called it the strongest quarter in three years. Yet steel mills pre-tax earnings per ton were $247, only 46.3% of the $533 Nucor earned in Q4 2021, while the mill spread, the external selling price per ton minus scrap cost, recovered to $812, or 83.7% of that quarter’s $970. The question running through this piece is why the market now pays close to a peak price-to-book multiple for a company earning about half its peak profit per ton, and where that case could crack.
Nucor melts scrap in electric arc furnaces to make sheet, bar, structural and plate steel, then turns part of that steel into joists, deck, tubing, racks, doors and utility towers; the company calls itself North America’s largest recycler. At $271.79 a share it is worth about $61.9 billion, and the stock is +66.6% in 2026 on month-end closes, above its March 2024 high of $197.90.

Nucor one-year share price chart

The analysis rebuilds 20 quarters of mill earnings per ton from 16 earnings decks and 23 quarters of prices and scrap costs from three year-end appendices, checked against the Q3 earnings release, the Q3 deck, the 2025 10-K and the Q2 10-Q. The P/E uses trailing twelve-month (TTM) GAAP diluted EPS of $15.71, or 17.30 times. The spread is a simple difference between the external mill price and scrap cost per gross ton, not Nucor’s internal metal margin, and since “On average, it takes approximately 1.1 tons of scrap and scrap substitutes to produce one ton of steel,” it slightly understates raw material cost.

Mill Profit in the Q3 Deck After the Q2 Refund

Q3 2026 deck slide 12: adjusted pre-tax earnings by segment over five quarters

Slide 12 of the Q3 deck stacks segment pre-tax earnings for five quarters. Steel mills went from $793 million in Q3 2025 to $522 million, $1.128 billion, $1.556 billion and $1.788 billion. In Q3 steel products earned $465 million and raw materials $105 million, while corporate and eliminations took $491 million, the same as Q2 after excluding a $61 million mark-up on Nucor’s stake in the fusion company Helion. The slide credits higher volumes and realized pricing in the mills, partly offset by higher costs.
Slide 17 puts steel mills shipments at 7.23 million tons, a record for the third quarter in a row, and earnings per ton at $247 against $123 a year earlier. Steel products shipped 1.36 million tons (+15%) and earned $341 a ton against $270, and slide 5 says joist and deck shipments rose 20% from Q2 with realized pricing up $110 a ton. Raw materials earned less as Louisiana direct reduced iron (DRI) production fell 13% and prices eased.
Filing note (Q2 10-Q): Steel mills earnings in Q2 included “a reduction to cost of products sold of $130 million related to cash refunds associated with prior periods’ raw materials procurement costs.” On the Q3 call the CFO, Jack Sullivan, described it as a tariff refund that did not recur in Q3.
Own calculation (refund-adjusted mill earnings): Without the refund, Q2 steel mills earned $1.426 billion, or $200.8 a ton. Q3’s $1.788 billion is +14.9% over reported Q2 but +25.4% over the refund-adjusted figure, and per-ton earnings rose from $200.8 to $247.

Q3 2026 deck slide 11: EPS and EBITDA and capital spending and free cash flow

Slide 11 compares Q3 2025, Q2 2026 and Q3 2026: EBITDA rose from $1.265 billion to $2.279 billion and free cash flow from $532 million to $1.607 billion, while capital spending fell from $807 million to $629 million. Free cash flow, a non-GAAP measure Nucor added to the release this quarter, totals $2.661 billion for nine months.
The release’s outlook: “We expect earnings in the fourth quarter of 2026 to be generally in-line with or modestly higher than the third quarter.” Slide 14 sees mills and steel products stable as higher pricing offsets seasonally lower volumes, and raw materials slightly lower on DRI prices. Sullivan added that shipments have historically fallen about 7% from Q3 to Q4, with five to six fewer shipping days, so the quarter depends on price making up for volume.
Company disclosure (Q3 earnings release): CEO Leon Topalian said, “Supported by robust demand across key end markets, Nucor has generated approximately $2.7 billion of free cash flow and returned nearly $1.4 billion to shareholders through the first nine months of the year.” He pointed to the first heat at the West Virginia sheet mill in September and the start-up of a second galvanizing line at Nucor Steel Berkeley as milestones.

Q3 2026 deck slide 6: US steel demand and finished steel import share

Slide 6 is titled “Trade Policy Leveling the Playing Field.” The bars show US carbon and alloy steel demand as a monthly average, and the line shows the finished-steel import share: 23.0% in 2022, 21.1% in 2024 and 21.6% in Q1 2025, falling to 14.3% in Q4 2025. Then it turns: 14.5% in Q1 2026, 16.1% in Q2 and 17.2% in Q3. The slide notes that imports through Q3 are down about 13% from 2025 and about 24% from 2024, and on the same page states: “Domestic shipments have increased Q/Q in 2026, even as import market share has grown from ~14% in 4Q’25 to ~17% in 3Q’26.”
A box at the bottom of the slide adds: “Massive surge y-o-y in imports from South Korea (+57% through Q3) despite Section 232 measures.” On the call, Topalian said imports had risen in recent months despite the Section 232 tariffs, including from Korea, and that Nucor would work closely with the administration to keep trade measures effective.
Own calculation (import tonnage from slide 6): Multiplying demand by import share gives monthly import tonnage. Imports averaged 1.38 million tons a month in the first three quarters of 2026, 12.9% below 1.59 million a year earlier, which matches the slide’s figure of about 13%. By quarter, though, Q3 imports of 1.55 million tons were 14.7% above Q3 2025’s 1.35 million and 37.4% above the Q4 2025 low of 1.13 million.

US finished steel import tonnage rebuilt from slide 6 and the Q3 change from a year earlier

The year-to-date decline compares against a heavy first half of 2025; the quarterly trend has already turned above last year. In Q3, US demand rose +6.0% from a year earlier, domestic supply (demand minus imports) +4.4% and imports +14.7%. Of the 510 thousand tons of added monthly demand, about 200 thousand, or 38.8%, went to imports.
Filing note (2025 10-K risk factors): Nucor wrote that the Section 232 tariffs were fully reinstated in 2025 without exceptions or exclusions and broadened to about 600 fabricated steel products. The same section warns that “if relatively higher U.S. steel prices or a stronger U.S. dollar make it attractive for foreign steelmakers to export their steel products to the United States,” a resurgence of imports “could create downward pressure on U.S. steel prices.”
In Q3, Nucor’s external mill price was +18.8% from a year earlier and its sheet price +21.1%. The condition the 10-K describes, high US prices, and the result the deck reports, imports rising under the tariff, showed up in the same quarter.

The Bull and Bear Case for Nucor Shares

The bull case rests on volume and cash. Mill shipments set records three quarters running, and management expects 2026 to be the third-best year in Nucor’s history and 2027 to be stronger. Capital spending is past its 2024 to 2025 peak, and the 3-million-ton West Virginia mill ramps toward 50% utilization by the end of 2027.
The bear case rests on earnings quality and imports. The spread is back near 84% of its 2021 peak while earnings per ton are below half, and the depreciation and start-up costs behind that gap will not shrink in 2027. Import share has risen three quarters in a row, and price-to-book stands at 2.71, just below the April 2022 peak of 2.76.

From Steel Mills to Doors Racks and Towers

Nucor’s month-end close rose from $48.73 in January 2021 to $154.78 in April 2022. Diluted EPS peaked at $9.67 in Q2 2022, and in June 2022, when TTM EPS reached $32.59, the P/E was 3.20. The market treated those earnings as a peak that would not last, and quarterly EPS did fall to $0.67 by Q1 2025.
Over the same years the company pushed beyond steel, deploying about $19 billion over six and a half years, half organic and half acquisitions, according to the CEO. The 10-K records 51% of California Steel Industries and Summit Utility Structures, the seed of the towers business, in 2022, then Southwest Data Products for $115 million and the door maker Rytec for $565 million in 2024.

Nucor month-end share price over 10 years with three events

The stock fell to $109.36 in May 2025, at a price-to-book of 1.27, and has since risen 2.49 times as the tariff reinstatement cut imports and prices and shipments rose together in 2026. CFO Steve Laxton became president and COO in January 2026, and Jack Sullivan, who had run investor relations, became CFO in March.

Why Does Nucor’s Profit per Ton Lag the Mill Spread?

The Q3 mill spread of $812 a ton is 83.7% of Q4 2021’s $970, but earnings per ton of $247 are 46.3% of $533. Where a quarter appears in more than one deck the numbers agree, except Q1 2026 scrap cost, revised from $403 in the release to $404 in the Q3 deck.

Mill spread and steel mills earnings per ton over 20 quarters and the gap between them

Own calculation (spread minus earnings per ton): The gap between the spread and earnings per ton widened by $128, from $437 in Q4 2021 to $565 in Q3 2026. Of the 20 quarters, only Q3 and Q4 2022 ($575 and $574) were wider. The gap holds conversion costs such as power, alloys and labor, plus depreciation, start-up costs at new mills and the difference between external prices and internal transfers.
Part of the gap can be traced. Depreciation in the 10-K rose from $735 million in 2021 to $1.226 billion in 2025, +66.7%, and reached $967 million in the first nine months of 2026. Q3 pre-operating and start-up costs of $124 million equal $17.1 per mill ton, and Nucor expects 2027 start-up costs to be similar to or higher than 2026. Sullivan also cited supplies, freight, energy and planned outages for higher Q3 conversion costs.
In dollars, consolidated pre-tax earnings were $3.490 billion in Q2 2022 and $1.867 billion in Q3 2026: mills $1.028 billion lower, steel products $665 million lower, raw materials $159 million lower and corporate $228 million less negative. Steel products earned $927 a ton in Q3 2022 against $341 now; the unusual 2022 margins on joists and deck have not returned.
Volume moved the other way. Mill shipments rose from 5.87 million tons in Q4 2021 to 7.23 million, +23.2%, so even with per-ton earnings below half, mill pre-tax earnings are back to 57.1% of the peak. The market is looking ahead to West Virginia’s 3 million tons spreading depreciation and start-up costs over more tons.
Government data (FRED WPU1017 and CAPUTLG3311A2S): The steel mill products price index averaged 381.1 in Q3, 24.4% above a year earlier and 85.7% of its Q4 2021 level, in line with Nucor’s mill price at +18.8% and 83.4%. Industry capacity utilization averaged 74.3% against Nucor’s 89%.

How Nucor Makes Money Across Three Segments

Steel mills melt scrap and substitutes such as DRI and pig iron into sheet, bar, structural and plate steel, selling 79% of 2025 shipments to outside customers and 21% to Nucor’s own steel products segment. The 10-K lists six sheet mills with about 14.5 million tons of capacity, 15 bar mills with 9.8 million, two structural mills and three plate mills with 3.6 million, selling mainly to service centers, fabricators and manufacturers. Electric arc furnaces make Nucor more sensitive to scrap prices but lighter on fixed costs, the company says. In 2025 net sales were $32.49 billion at an average $1,221 a ton.
Of Q3’s 5.66 million tons of external mill sales, sheet was 2.56 million, bar 1.84 million, plate 0.70 million and structural 0.57 million. Plate shipments rose from 594 thousand tons to 782 thousand, +32%, with the Brandenburg plate mill in Kentucky supplying about 240 thousand, roughly a third. The Lexington rebar micro mill in North Carolina ran close to 80% utilization in Q3.
Steel products buys steel from the mills and turns it into building and industrial products: joists and deck that hold up roofs and floors in warehouses, data centers and factories (about 1.3 million tons of capacity), fabricated rebar, tubing, metal buildings, insulated panels, warehouse and data center racks, overhead doors and utility structures. Of Q3’s 1.36 million tons of external shipments, tubular products were 375 thousand, up from 206 thousand a year earlier, and joists and deck sold for $2,560 a ton.
Raw materials combines The David J. Joseph Company’s scrap processing and brokerage, the Louisiana DRI plant and natural gas production; most output feeds Nucor’s own mills, so Q3 external sales were 508 thousand tons. A carbon capture project with ExxonMobil at the DRI plant started in Q3 and can store up to 800 thousand tons of CO2 a year.

New Demand From Data Centers and the Power Grid

Data centers are about 15% of the total backlog, the CEO said, alongside chip plants, gas-fired power, LNG terminals, nuclear and utilities. The 10-K says the Southwest Data Products deal added airflow containment, cabinets, caging and installation for data centers. Slide 10 cites investor-owned utility capex of about $1.4 trillion over 2026 to 2030 and state DOT contract awards of $159 billion in FY2026, 60% above 2022.
The towers and structures business makes transmission poles and substation structures. Slide 9 reports that “Backlog has more than doubled YTD, and extends into Q1 2028,” and that “North American transmission spend exceeded ~$65 billion in 2025, and is on pace to grow to over $100 billion by 2030.” Nucor announced a $165 million expansion in Indiana and Alabama to add about 50% capacity and raised its long-term annual EBITDA target for the business from $150 million to about $200 million. It is qualified with more than 30 utilities and has multi-year supply agreements with several of the largest.
Autos are a market where Nucor says it is underweight. Its flat-rolled automotive shipments are up 4% year to date, and the new automotive galvanizing line at Berkeley in South Carolina, with 500 thousand tons of capacity, started in October and targets 50% utilization in Q2 2027 and full output by the end of 2027. In West Virginia, after the first heat in September and the first coils to internal divisions in October, the hot mill, cold mill and construction-grade galvanizing line should make first coils by December, “building to 50% utilization run rate by YE 2027.” The 10-K puts the mill’s net cash outlay at about $3.65 billion.

How Nucor Compares With Three US Steel Peers

The peers share the same US steel demand and import competition. Steel Dynamics also makes sheet and bar in electric arc furnaces, Cleveland-Cliffs is an integrated blast-furnace producer focused on automotive sheet, and Commercial Metals is an electric arc furnace producer centered on rebar.

Trailing four-quarter revenue growth and operating margin at four US steelmakers

Over each company’s latest four quarters, revenue grew +26.0% at Steel Dynamics, +21.8% at Nucor, +20.4% at Commercial Metals and +7.8% at Cleveland-Cliffs (Commercial Metals through its August 2026 quarter). Operating margin was 13.3% at Nucor, 11.5% at Steel Dynamics and 9.3% at Commercial Metals, while Cleveland-Cliffs was at -0.1%, close to an operating loss. Within the same demand recovery, the scrap-based producers earn the higher margins.

Trailing and forward P/E at four US steelmakers

Trailing P/E is 18.49 for Steel Dynamics, 17.33 for Nucor and 10.95 for Commercial Metals, and Cleveland-Cliffs lost money over the past four quarters. Forward P/E is 11.58 for Nucor, 11.10 for Steel Dynamics, 9.20 for Commercial Metals and 7.23 for Cleveland-Cliffs. The two sheet-focused electric arc furnace producers trade at similar multiples, and Nucor, with the best margin, carries the highest forward multiple.
The balance sheet sets Nucor apart: net debt of $3.45 billion is 0.5 times trailing EBITDA, and its A-, A- and A3 ratings are the highest among North American steelmakers. Committed to returning at least 40% of annual net earnings, Nucor returned $1.362 billion through Q3, 42.3% of nine-month net earnings of $3.218 billion, including 2.03 million shares bought at an average $247.04.

Nucor’s P/E and Price-to-Book Band

Nucor P/E on GAAP EPS and price-to-book over 59 months

The P/E on TTM GAAP diluted EPS is 17.30, in the 71st percentile of the 59 months since December 2021, the first month with four quarters of data. The median is 10.95, the low 3.20 in June 2022 when earnings peaked, and the high 26.85 in August 2025 when earnings bottomed. In a cyclical business the multiple is lowest when profit is highest, so the P/E alone says little about value here.
Price-to-book says more. At 2.71 it sits in the 97th percentile, just under the April 2022 high of 2.76. TTM EPS was $27.96 then and is $15.71 now, 48.2% of the June 2022 peak of $32.59. A peak-era book multiple on half the peak earnings means the market expects this upturn to last longer than 2022’s, carried by higher volume and lower capital spending.
Outside view (consensus estimates, market data): Average EPS estimates are $5.67 for Q4, $19.53 for 2026 and $21.02 for 2027. The 2027 figure is 16.3% above its level 90 days earlier, putting the stock at 12.9 times 2027 and 13.9 times 2026 estimates. The Q4 estimate sits below the company’s guidance of earnings in line with or modestly above Q3’s $5.80.

Three Conditions That Move the Stock

Sheet price was $1,189 a ton in Q3, +21.1% from a year earlier. If prices keep rising in Q4 as guided and offset the seasonal drop in shipments, the spread closes more of the distance to its 2021 peak; if prices roll over, the wider $565 cost gap eats into earnings per ton first.
Import share rose from 14.3% in Q4 2025 to 17.2% in Q3 2026, three quarters in a row. If trade cases and Section 232 enforcement push the share back below 15%, domestic prices hold; if imports under the tariff, like those from Korea, push it toward 20%, the price pressure the 10-K warns about arrives.
West Virginia utilization targets 50% by the end of 2027. If shipments ramp on schedule and 2027 capital spending falls, depreciation and start-up costs spread over more tons and free cash flow grows; if the ramp slips, 2027 start-up costs at or above 2026’s keep weighing on earnings.

What to Watch in the Fourth-Quarter Report

The next numbers come with Q4 results around January 2027. The first check is whether price rose enough to hold earnings per ton at $247 while mill shipments followed their usual seasonal drop of about 7%. Nucor also said it would lay out its 2027 capital plan on that call, along with the timing of West Virginia’s first commercial shipments.
One question remains open. Filings do not split the $565 gap between the part that shrinks as volume grows, depreciation and start-up costs, and the part that stays, such as energy and labor. If imports rise again and prices turn, which side of that gap will Nucor’s profit per ton lean on first?

Linde (LIN) Stock Analysis: Price, Volume and Margin Trends: another industrial materials company where results split into price and volume, useful for comparing how pricing drives margin at Nucor’s mills.
Texas Instruments (TXN) Stock Analysis: Cash Flow and Capex: a company coming off a heavy capital spending cycle, a direct parallel to Nucor’s falling capex and rising free cash flow.
Sumitomo Electric (5802) Stock Analysis: Data Center Optics: a supplier riding data center and power grid spending, the same demand behind about 15% of Nucor’s backlog.

Sector RS Rank Oct 28: Robotics Lead, Video Games Fall

J. Equity. Research — Wed, 28 Oct 2026 23:06:32 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Labcorp · GE HealthCare · GRAIL

② What rose today: humanoid robotics, genomics, meme stocks

③ What pulled back: video games, solar, transportation

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Oct 28 Sector RS — 129 ETFs · RRG v2

The Fed held rates at 3.75% to 4% on October 28, and stocks barely moved. The S&P 500 closed at 7,743.98 (+0.28%), the Nasdaq at 26,549.85 (+0.27%), and the Dow at 52,475.10 (+0.19%). Two officials voted for a hike, and the statement kept the door open to more. The 10-year yield rose to 5.05%, while the VIX eased to 16.91. The oil fund (USO) gained +1.64%.

Oct 28 Major Indexes — 1-Day Change

Oct 28 GICS 11 Sectors — 1-Day Change

Of the 129 ETFs in our universe, 83 closed higher and 46 fell. Technology (XLK) led the 11 sectors at +0.80%. Utilities (XLU) were last at -0.84%. Six sectors rose and five fell.

Today’s Leading Sectors TOP 5

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
United States Oil Fund (USO)	+1.64%	99	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	-0.69%	98	🔺	🔺	🔺
WisdomTree Cloud Computing (WCLD)	+0.04%	97	🔺	🔺	🔺
Global X Cybersecurity (BUG)	-0.85%	96	🔺	🔺	🔺
iShares U.S. Oil and Gas Exploration (IEO)	+0.43%	96	🔺	🔺	🔺

Oil (USO) moved up to first place. Cybersecurity (IHAK) slipped to second. Oil and gas exploration (IEO) came back in at 96, and energy (XLE) dropped out at 95. All five still trade above their 1-month, 1-quarter, and 1-year averages.

Why They’re Strong — Sector Issues

Global X Genomics GNOM Daily

· Genomics (GNOM) — Up +3.93%, sheet RS rank 79. Beam Therapeutics jumped +15.58%, Twist Bioscience +8.51%, and 10x Genomics +7.18%. No single report explained the gene-editing names. Genmab rose +28.3% the same day on a late-stage cancer trial, which helped biotech broadly.

Stocks That Lifted Genomics GNOM — 1-Day Change

Roundhill Meme Stocks MEME Daily

· Meme stocks (MEME) — Up +3.79%, but the sheet RS rank is only 5. AXT rose +10.56%, CoreWeave +7.32%, and Nebius +6.96%. The fund is still -18.22% over one month.

Stocks That Lifted Meme Stocks MEME — 1-Day Change

iShares Future AI and Tech ARTY Daily

· Future AI (ARTY) — Up +3.00%, sheet RS rank 38. Oracle jumped +10.73%, CoreWeave +7.32%, and Seagate +4.51%. We found no single report behind Oracle’s move.

Stocks That Lifted Future AI ARTY — 1-Day Change

Roundhill Humanoid Robotics HUMN Daily

· Humanoid robotics (HUMN) — Up +4.43%, the day’s best gain, sheet RS rank 50. Much of the fund trades outside the US, and no single report explained the move.

What Changed From Yesterday

Humanoid robotics (HUMN) posted the biggest one-day rank gain, 40 to 60. Almost all of it came from Wednesday’s +4.43% price move. Genomics (GNOM) followed, 48 to 67.

Biggest 1-Day RS Rank Gains — Yesterday vs Today

Biggest 1-Day RS Rank Losses — Yesterday vs Today

Solar (TAN) fell from 47 to 26, and most of it was Wednesday’s -2.48%. Tuesday’s report said chips still needed to get back above their 1-month average. SOXX rose +2.13% but is still below it. That call stays open.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

Genomics (GNOM) fell from 97 to 67 over the window, and future AI (ARTY) from 91 to 30. Humanoid robotics (HUMN) moved from 53 to 60. Solar (TAN) went from 20 to 26, and gaming (HERO) from 59 to 54. Wednesday’s two leaders took different paths to get here. Humanoid robotics is back above where it started, while genomics is bouncing after slipping from the top.

RS Breakdown Warnings

RS Breakdown Warnings — 5 Sessions Ago vs Today

Oil refiners (CRAK) fell from 84 to 48, the deepest drop. Video gaming (ESPO), gaming and esports (HERO), and the Magnificent Seven (MAGS) joined it. Leisure and entertainment (PEJ) was dropped because Wednesday’s price moved the other way. Residential REITs (REZ) was dropped because the sheet moved the other way.

RS Rebound Signals

RS Rebound Signals — 5 Sessions Ago vs Today

Humanoid robotics (HUMN) rose from 21 to 60, the largest move. Metals and mining (XME) and data centers (DTCR) also qualified. One other fund, sports betting (BETZ), was dropped because its five-day price fell.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Roundhill Humanoid Robotics (HUMN)	+4.43%	50	🔺	🔽	🔽
Global X Genomics (GNOM)	+3.93%	79	🔺	🔺	🔺
Roundhill Meme Stocks (MEME)	+3.79%	5	🔽	🔽	🔽
Global X Blockchain (BKCH)	+3.21%	1	🔽	🔽	🔽
VanEck Digital Transformation (DAPP)	+3.06%	2	🔽	🔽	🔽

Why They Rose

Genomics (GNOM) is the only one of the five above all three averages. The other four are bounces from low ranks, and three of them are crypto-linked or meme funds. On the other side, gaming and esports (HERO) -2.61%, solar (TAN) -2.48%, video gaming (ESPO) -2.05%, and transportation (IYT) -1.67% led the decliners. Enphase Energy fell -16.0% on a weak forecast, and Landstar -17.8% on higher claim costs, according to reports.

Leading Sectors: Humanoid Robotics, Genomics, Meme Stocks

① Humanoid robotics ranks 50 and is still below its 1-quarter and 1-year averages. It needs a second strong day to show this is more than a bounce.
② Genomics ranks 79 and is the one leader in an uptrend on all three averages. Health care funds back it up: providers (IHF) rank 93 and health care (XLV) 90.
③ Meme stocks rank 5 and are down -18.22% over one month. One up day does not change that.
④ The last report covered the October 27 close. Its three picks from that close to Wednesday’s: Ryerson +1.12%, Synopsys +1.57%, and Radware +4.68%, against +0.28% for the S&P 500. All three beat the market. Recorded as is.

Today’s Three Stocks — Labcorp · GE HealthCare · GRAIL Stock Forecast

Fifty-three stocks passed the four-part filter. These three fit the day’s leaders.

Labcorp (LH) — Clinical Lab Testing Stock Forecast

Labcorp LH Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Labcorp (LH)	99	96	92	+16.7%	iShares U.S. Healthcare Providers 3.3%

Closed at $360.25, +8.78%, a one-year closing high. Labcorp runs lab tests for doctors and hospitals and drug-trial services for pharma companies. It reported before the open. The Labcorp stock forecast now rests on its raised outlook. For the quarter ended September 30, revenue rose +6.9% to $3.81 billion. Operating income was $402.1 million, up from $396.6 million, and net earnings were $262.8 million, or $3.22 per share. Adjusted earnings per share rose +14.5% to $4.78, and the full-year range went up to $18.30 to $18.70.

GE HealthCare (GEHC) — Medical Imaging Stock Forecast

GE HealthCare GEHC Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
GE HealthCare (GEHC)	98	95	88	+14.1%	iShares U.S. Medical Devices 4.2% · Global X Telemedicine and Digital Health 4.1%

Closed at $75.82, +6.62%, its highest close since early March. GE HealthCare makes scanners, ultrasound machines, and patient monitors. It also reported before the open. The GE HealthCare stock forecast improved on margins more than sales. For the quarter ended September 30, revenue rose +7.2% to $5.51 billion. Net income jumped +37.9% to $615 million, or $1.36 per share. The company raised its full-year adjusted EPS range to $4.95 to $5.05.

GRAIL (GRAL) — Cancer Blood Test Stock Forecast

GRAIL GRAL Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
GRAIL (GRAL)	95	99	91	+15.6%	SPDR S&P Biotech 1.5%

Closed at $157.88, +4.83%, a one-year closing high. GRAIL sells Galleri, a blood test that screens for many cancers at once. An FDA advisory panel voted in its favor earlier this month, according to reports. The GRAIL stock forecast is still a story about approval and insurance coverage. For the quarter ended June 30, revenue rose +25.7% to $44.7 million. The operating loss widened to $173.8 million from $158.9 million, and the net loss was $110.2 million.

Labcorp · GE HealthCare · GRAIL Stock Forecast Checkpoints

· Labcorp stock forecast — The stock cleared its August high close of $339.34 on Wednesday. Watch whether it stays above $339.34 as the post-report gap settles.

· GE HealthCare stock forecast — The report gap started from $71.11, Tuesday’s close. Watch whether the stock holds above $71.11. The March high close of $79.02 is the next level above.

· GRAIL stock forecast — The stock is up +19.1% in five sessions. Watch whether it holds above $154.08, the October 5 high close. A drop below $136.58, its 20-day average, would end the short-term uptrend.

What to Watch on Next Week’s Calendar

🔴 September PCE inflation and third-quarter GDP, Thursday, October 29, 8:30 a.m. ET · 🔴 Bank of Japan meeting, October 29–30
The Fed left the door open to another hike, and the 10-year yield is at 5.05%. A hot inflation number would test the rate-sensitive funds first.
Eli Lilly, Merck, and Bristol Myers Squibb results, Thursday, October 29, 8:00 a.m. ET · Gilead and Stryker, Thursday, October 29, 4:00 p.m. ET · AbbVie and Regeneron, Friday, October 30, 8:00 a.m. ET
Genomics (GNOM) and health care providers (IHF) led Wednesday. These reports will show whether the rest of health care follows Labcorp and GE HealthCare.
🔴 Amazon results, Thursday, October 29, 4:00 p.m. ET · 🔴 Apple results, Monday, November 2, 4:00 p.m. ET · 🔴 Samsung Electronics results, Wednesday, October 28, 9:00 p.m. ET
Future AI (ARTY) rose +3.00% but ranks 38. Amazon’s cloud numbers and Samsung’s memory outlook will show whether the AI bounce has earnings behind it.
🔴 US midterm elections, Tuesday, November 3 · 🔴 Tesla Optimus Gen 3 production, November–December
Humanoid robotics (HUMN) posted the day’s biggest gain. Tesla’s Optimus timeline is the next company test for that theme.

Robinhood (HOOD) Stock: Two Numbers for One Adjusted EPS

J. Equity. Research — Wed, 28 Oct 2026 21:50:38 GMT

Robinhood (NASDAQ: HOOD) posted record third-quarter 2026 revenue of $1.42 billion, but growth slowed to +11.8% and GAAP diluted EPS fell -16% from $0.61 to $0.51. In the same quarter the company introduced two new non-GAAP measures, Adjusted Net Income and Adjusted EPS. The reconciliation in the earnings release filed with the 8-K and the one on slide 47 of the IR deck carry opposite signs for the tax effect of the adjustments, so the same second quarter shows Adjusted EPS of $0.50 in the release and $0.55 in the deck. What remains open is what the new yardstick tells investors in a year when growth is coming down.

Robinhood one-year share price chart

Robinhood started as a commission-free app for stocks, options and crypto and now also runs prediction-market event contracts, the Gold subscription, a credit card, banking and retirement accounts. At $94.56 a share the company is worth $85.0 billion. The stock is -16.4% in 2026 and -35.6% below its October 2025 month-end high of $146.78. The analysis lines up nine quarters of revenue detail and the adjustment tables in the 49-page Q3 deck with the third-quarter earnings release and the 10-Q, and checks them against the Q1 and Q2 decks and the June 8-Ks on the convertible notes and layoffs. The P/E uses trailing twelve-month (TTM) GAAP diluted EPS of $2.17, or 43.58 times; the valuation band swaps Q4 2024 GAAP EPS of $1.01 for the company’s $0.54 figure before a tax benefit. Event contracts are derivatives that pay out on the outcome of an event such as a game or an economic release.

What the Q3 Deck Says About Adjusted EPS

Q3 2026 deck slide 4: revenue and costs and EBITDA and net income with two EPS lines

Slide 4 of the Q3 deck sets four panels side by side: revenue of $1.42 billion (+12%), Adjusted Operating Expenses and SBC of $664 million (+8%), adjusted EBITDA of $808 million (+9%) and net income of $476 million (-14%). Under the net income bars it adds two lines. From Q3 2025 onward, diluted EPS reads $0.61, $0.66, $0.38, $0.62 and $0.51, while Adjusted EPS reads $0.61, $0.66, $0.40, $0.55 and $0.60. The footnotes say Q2 included a $129 million gain, or $0.14 a share, mainly from deconsolidating Robinhood Ventures Fund I (RVI), and Q3 included $67 million of unrealized losses on RVI, or $0.07.
Slide 20 extends net income to nine quarters. Of the $916 million earned in Q4 2024, $424 million came from a deferred tax benefit and a regulatory accrual reversal. A footnote adds: “For purposes of comparison, we have produced Adjusted EPS for historical periods starting with Q1 2025.” The phrase Adjusted EPS appears 14 times in the Q3 deck and not once in the Q1 or Q2 decks, and the 10-Q does not use it at all. The release explains that the measures were “introduced this quarter to provide a view of profitability before certain non-operating items.”

Q3 2026 deck slide 20: nine quarters of net income and Adjusted EPS

Slide 22 uses the Rule of 40, revenue growth plus adjusted EBITDA margin, to “demonstrate the power of our business model.” On a trailing twelve-month basis the total fell from 131% in Q3 2025 to 108%, 98%, 94% and 77%. In the same bars, TTM revenue growth went from 75% to 52%, 42%, 38% and 21%, while the adjusted EBITDA margin stayed at 56% in all five. The total still clears 40%, but the part that shrank every quarter is growth.

Q3 2026 deck slide 22: revenue growth plus adjusted EBITDA margin

Slide 10 puts Q3 net deposits at $15.7 billion, a 17% annualized rate against platform assets, the lowest of the nine quarters on the slide, whose rates run 29%, 42%, 37%, 25%, 29%, 19%, 22%, 28% and 17%. Slide 18 lowers the top of the 2026 outlook for Adjusted Operating Expenses and SBC by $25 million to $2.675 billion to $2.75 billion, citing efficiency gains. Subtracting the $1.912 billion spent through Q3 leaves $800.5 million for Q4 at the midpoint, +20.6% above Q3’s $664 million.
Company disclosure (Q3 earnings release): CFO Shiv Verma said, “Customers are trusting us with more of their assets as we deliver on our product roadmap, leading to our highest quarter ever for revenues.” October net deposits had already topped $13 billion month to date, including $6 billion from the Dell family’s contribution to Trump Accounts.

Two Versions of Adjusted Net Income

Quarterly GAAP EPS vs new Adjusted EPS and the same quarter's Adjusted Net Income in release vs deck

The reconciliation in the release starts from net income attributable to Robinhood of $468 million, adds $2 million of SBC tied to the CFO transition, $67 million of unrealized losses and $9 million of intangible amortization, then adds a $4 million tax impact to reach Adjusted Net Income of $550 million. Slide 47 adds the same items and subtracts the $4 million to reach $542 million. Same quarter, same items, opposite sign on the tax line.
The gap is wider in Q2. That quarter’s adjustment removes the $129 million RVI gain, with a $23 million tax impact. The release subtracts it and gets $454 million, or $0.50 a share; the deck adds it and gets $500 million, or $0.55. Q3 2025 also differs: $565 million ($0.62) in the release against $561 million ($0.61) in the deck. When adjustments raise pre-tax income, the tax effect normally reduces it, so the deck’s direction looks like the conventional one.
Own calculation (adjusted EPS): The headline “Adjusted EPS down 3%” comes from the release, $0.62 to $0.60, or -3.2%. On deck figures it is $0.61 to $0.60, or -1.6%, and Adjusted Net Income falls 2.7% in the release and 3.4% in the deck. For the first nine months of 2026 the release shows $1.375 billion while the deck’s quarters add to $1.409 billion; on the release’s 913 million diluted shares that is $1.54 a share against the release’s $1.51.
The new measure does not only flatter results. In Q2 Adjusted EPS sits $0.12 (release) or $0.07 (deck) below GAAP EPS of $0.62, and in Q3 it sits $0.09 above. Over nine months the release shows Adjusted EPS and GAAP EPS both at $1.51, so the gains and losses largely cancel. The open issue is that a measure defined for the first time came out with two different numbers in two company documents, and the Q4 release will show which Q2 figure the company keeps.

The Bull and Bear Case for Robinhood Shares

The bull case rests on assets and activity. Platform assets reached $396 billion (+19%), Gold subscribers 5.2 million (+34%), equity notional volume $992 billion (+53%), options contracts 905 million (+48%) and the margin book $22.1 billion (+59%), all records. Fourteen business lines now earn $100 million or more a year, and October deposits topped $13 billion by mid-month.
The bear case rests on the pace and source of growth. TTM revenue growth fell from 75% to 21% in a year, and of the $150 million Q3 revenue increase, event contracts added $146 million while crypto took away $148 million. Those event contracts now face state pushback: Robinhood agreed to stop offering new sports-related contracts in Ohio by November 2. Monthly active users fell 0.8 million from a year earlier to 13.0 million.

From Layoffs to an Event Contract Exchange

Robinhood month-end share price since listing with three events

Robinhood listed in 2021, and its first month-end close of $44.32 in August 2021 fell to $8.22 by June 2022. The company cut about 9% of staff in April 2022 and about 23% in August. Quarterly EPS went from -$0.57 in Q1 2023 to $0.18 in Q1 2024, 2024 was profitable for the full year, and the stock rose +192.5% in 2024 and +203.5% in 2025 on month-end closes, 17.9 times from the June 2022 low to October 2025.
2026 changed the shape of the company. In January, Rothera, a joint venture with Susquehanna International Group (SIG), paid about $79 million for 90% of MIAXdx, a CFTC-licensed exchange and clearinghouse now called Rothera E&C that offers futures and derivatives including prediction markets. Shiv Verma became CFO in February and the CTO left in May. In June the company cut about 10% of staff, saying it acted “from a position of business strength,” and sold $2.2 billion of 0% convertible notes due October 2029 with a $174.42 conversion price, using $290 million of the proceeds to buy back 2.743 million shares.

Where Did the $150 Million of Q3 Revenue Growth Come From?

Transaction revenue by product and the Q3 revenue change by line

Transaction revenue rose +19% to $867 million. Event contracts grew from $27 million to $173 million, 6.4 times; options rose 31% to $399 million and equities 41% to $121 million, while crypto fell -55% from $268 million to $120 million. Crypto’s share of transaction revenue dropped from 36.7% to 13.8%, and event contracts now supply 20.0%.
Net interest revenue fell 9% to $415 million, its first year-over-year decline in the deck’s nine quarters. Securities lending swung from $87 million to -$19 million, which slide 41 attributes to “reduced demand for hard-to-borrow securities,” while margin interest rose from $153 million to $244 million and credit card interest from $17 million to $50 million. Other revenue rose from $88 million to $142 million, of which $47 million was Trump Account service revenue.
Quarterly revenue growth ran +100.0% in Q3 2025, +26.5% in Q4, +15.1% in Q1 2026, +32.3% in Q2 and +11.8% in Q3. The Q3 2025 base was lifted by $268 million of crypto revenue, so once crypto halved, revenue grew only as much as other lines could fill in.

Costs and Mark-to-Market Losses Behind Lower EPS

While revenue rose $150 million, GAAP operating expenses rose $100 million to $739 million. The provision for credit losses climbed from $26 million to $71 million as the credit card book grew, and costs tied to Trump Accounts, Rothera and marketing were added. The company’s own Adjusted Operating Expenses and SBC rose only 8% to $664 million, so much of the increase sits in items outside its outlook, mainly credit losses.
Own calculation (operating margin): Using quarterly operating income from market data, GAAP operating margin slipped from 49.8% ($635 million) to 48.1% ($685 million). Operating income rose $50 million, but the $67 million RVI loss below the operating line took net income attributable to Robinhood from $556 million to $468 million.
Some costs come straight out of revenue. Robinhood pays customers a match when they transfer assets from other brokers or contribute to retirement accounts, records the match as an asset and amortizes it against revenue over about four years. The Q3 contra revenue was $60 million; matches paid since 2023 total about $1.19 billion, and about $768 million remains to be amortized.

How Robinhood Makes Money

Q3 revenue split 60.9% transaction-based, 29.1% net interest and 10.0% other. Transaction revenue comes mostly from routing customer orders to market makers and from crypto and event contract fees, and the release’s risk factors cite “our reliance on transaction-based revenue, including payment for order flow.” Net interest comes from margin loans, customer cash, securities lending and the credit card; other revenue is mainly Gold fees and Trump Account services.
Slide 16 counts businesses with $100 million or more in annualized revenue: one in 2019, three in 2020, nine in 2024, eleven in 2025 and fourteen in 2026, with Rothera added in Q3. Funded customers reached 28.7 million (+1.9 million), investment accounts 30.4 million and ARPU $200 (+5%). WonderFi customers, acquired on June 1, count from June. Monthly active users, however, were 13.0 million, 45.3% of funded customers, down 1.1 million in a single quarter, so trading revenue leans more on a smaller group of active users.
Gold is a paid membership: after a 30-day trial, subscribers pay a flat fee for perks the 10-K lists, including higher cash sweep interest, a 3% IRA match and no interest on the first $1,000 of margin. Subscribers reached 5.2 million, 18% of funded customers and about 40% of new ones. The Gold Card has 1.3 million customers and more than $19 billion of annualized payment volume, and Robinhood Banking holds nearly $5 billion from over 350 thousand customers. Robinhood custodies Trump Accounts; the Treasury’s automatic enrollment created accounts for nearly 70 million children, and a $6.25 billion Dell pledge put $250 in 25 million of them.

The Regulatory Risk Around Event Contracts

Event contracts generated $173 million in Q3 on 16.4 billion contracts traded, more than seven times a year earlier. The 10-Q says Robinhood controls Rothera through its right to appoint the CEO and a board majority, and Rothera E&C holds DCM, DCO and SEF licenses. “Rothera reached over $100 million in annualized revenues in its first full quarter of operation,” the release says.
The same 10-Q lists the risks. On October 2 the Ohio Casino Control Commission demanded that Robinhood stop offering sports-related event contracts in the state, and on October 26 Robinhood agreed to stop new sports contracts there by November 2 while appeals proceed. Kentucky has sued Kalshi, Robinhood and Coinbase. Illinois taxes prediction-market operators from July 2026, and North Carolina and Kentucky from January 2027. On federal excise tax, the company states: “We have not collected or remitted federal excise tax on event contracts offered through RHD because we do not believe these contracts are subject to such tax.”

How Robinhood Compares With Three Brokerage Peers

The peers are Interactive Brokers, an electronic broker with many professional and international clients; Charles Schwab, the largest full-service broker by client assets; and Coinbase, which competes head-on in crypto and prediction markets.

Trailing four-quarter revenue growth and operating margin at four brokerage and crypto companies

Over each company’s latest four quarters, revenue grew +20.9% at Robinhood, +18.1% at Schwab and +17.9% at Interactive Brokers, while Coinbase fell -10.0% (through Q2 2026). Operating margins rank Interactive Brokers 77.4%, Schwab 51.1%, Robinhood 45.7% and Coinbase 6.5%. A year ago Robinhood’s TTM growth was 75%; now it grows at about the peers’ pace with the third-highest margin.

Trailing and forward P/E at four brokerage and crypto companies

The multiples have not caught up. Robinhood trades at 43.56 times trailing earnings, 1.4 times Interactive Brokers’ 31.40 and 2.9 times Schwab’s 15.26, while Coinbase lost money over the past four quarters. Forward P/E is 34.28 for Robinhood, 25.83 for Interactive Brokers, 11.93 for Schwab and 107.64 for Coinbase. On capital, Robinhood has bought back $1.3 billion of stock since Q3 2024, 27 million shares at about $48, and $690 million this year. Slide 23 shows $6 billion of corporate cash, investments and stablecoin; net of the $2.2 billion convertible, that is about $3.8 billion of net cash, and diluted shares were 918 million against 922 million a year earlier.

Robinhood’s P/E and Price-to-Book Band

Robinhood P/E on GAAP EPS and price-to-book over 28 months

The P/E on TTM GAAP EPS is 43.58, in the 36th percentile of the 28 months since July 2024. The median is 46.70, the low 32.26 in March 2025 and the high 75.66 in October 2025. Price-to-book is 8.50, in the 57th percentile against a median of 7.79. TTM EPS slipped from $2.27 in Q2 to $2.17 in Q3, the first decline in the band period. On the 2026 consensus of $2.17 the stock trades at 43.6 times, and on the 2027 consensus of $2.96 at 31.9 times.
Outside view (consensus estimates, market data): The average Q4 EPS estimate is $0.63 from 22 analysts, and the average 2027 revenue estimate of $6.86 billion from 28 analysts is 28.8% above the 2026 estimate, in a range of $6.31 billion to $7.75 billion.

Three Conditions That Move the Stock

Event contract revenue was $173 million in Q3, 20.0% of transaction revenue. If Ohio-style demands do not spread and Rothera adds non-sports and earnings contracts, the line that replaced crypto keeps growing; if state suits and taxes cut sports contracts, transaction growth falls back on options and equities alone.
Net interest revenue was $415 million, down 9%. If the margin book and the credit card keep lifting interest income and securities lending bottoms out, revenue growth can reaccelerate; if lower short-term rates cut customer cash income further, the year-over-year decline that began in Q3 continues into Q4.
Net deposits were $15.7 billion, a 17% annualized rate. If October’s roughly $7 billion excluding the Dell contribution holds as a monthly pace and active users stop falling, asset-based revenue picks up again; if inflows lean on one-off Trump Account money, the active customer base behind trading revenue keeps shrinking.

What to Watch in the Fourth-Quarter Report

The next numbers come with Q4 results around February 2027: the reconciliation table, event contract revenue after the Ohio exit, and what followed October’s $13 billion of deposits. Whether the release restates Q2 Adjusted EPS as $0.50 or $0.55 will show how the company settled the tax line.
One question remains open. Most of Q3’s revenue gain came from event contracts filling the crypto hole, and in the same quarter the company launched a new adjusted earnings measure with two different numbers. If state regulators start to box in event contracts, what keeps Robinhood’s 21% TTM revenue growth intact?

CrowdStrike (CRWD) Stock Analysis: GAAP vs Non-GAAP Results: another company where the gap between GAAP and adjusted earnings is the story, useful for comparing how each defines its adjustments.
Bitmine (BMNR) Stock Analysis: mNAV Below 1 and Dilution: a crypto-linked stock, a direct comparison with the crypto revenue that fell 55% at Robinhood.
American Express (AXP) Stock Analysis: Credit Metrics Reset: a card issuer’s credit metrics, useful context for the credit loss provision that nearly tripled as Robinhood’s card book grew.

Sector RS Rank Oct 27: Metal Miners Lead, Refiners Fall

J. Equity. Research — Tue, 27 Oct 2026 23:06:20 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Ryerson · Synopsys · Radware

② What rose today: metals and mining, uranium, semiconductors

③ What pulled back: oil refiners, oil and gas explorers, residential REITs

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Oct 27 Sector RS — 129 ETFs · RRG v2

Technology carried the market for a second day on October 27. The Nasdaq closed at 26,477.81 (+1.18%), the S&P 500 at 7,722.60 (+0.60%), and the Dow at 52,377.57 (+0.03%). Chip stocks rallied as Anthropic’s IPO filing kept the AI trade alive, according to reports. Oil eased on hopes for Middle East talks. The oil fund (USO) fell -1.41%, and refiners took the worst of it. The 10-year yield held at 4.99%, and the VIX slipped to 17.52 as the Fed’s two-day meeting began.

Oct 27 Major Indexes — 1-Day Change

Oct 27 GICS 11 Sectors — 1-Day Change

Of the 129 ETFs in our universe, 88 closed higher and 40 fell. One had no trade. Technology (XLK) led the 11 sectors at +1.70%. Energy (XLE) was last at -2.05%.

Today’s Leading Sectors TOP 5

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
iShares Cybersecurity and Tech (IHAK)	+1.27%	99	🔺	🔺	🔺
Global X Cybersecurity (BUG)	+1.81%	98	🔺	🔺	🔺
WisdomTree Cloud Computing (WCLD)	-1.03%	97	🔺	🔺	🔺
Energy Select Sector SPDR (XLE)	-2.05%	96	🔺	🔺	🔺
United States Oil Fund (USO)	-1.41%	96	🔺	🔺	🔺

Cybersecurity took the top two seats. Cloud computing (WCLD) slipped from first to third. Oil and gas exploration (IEO) fell -3.53% and dropped out at 95. Energy (XLE) took its seat. Three of the five closed lower, yet all five still trade above their 1-month, 1-quarter, and 1-year averages.

Why They’re Strong — Sector Issues

SPDR Metals and Mining XME Daily

· Metals and mining (XME) — Up +4.68%, sheet RS rank 30. USA Rare Earth jumped +16.72%, Kaiser Aluminum +10.22%, and MP Materials +9.07%. No single report explained the move. It came on a day when the most beaten-down commodity funds bounced together.

Stocks That Lifted Metals and Mining XME — 1-Day Change

Global X Uranium URA Daily

· Uranium (URA) — Up +4.37%, but the sheet RS rank is only 9. Centrus Energy rose +11.15%, Energy Fuels +8.86%, and NuScale +8.16%. The fund is still -10.64% over one month.

Stocks That Lifted Uranium URA — 1-Day Change

iShares Semiconductor SOXX Daily

· Semiconductors (SOXX) — Up +3.91%, sheet RS rank 26. Entegris rose +7.05%, ON Semiconductor +6.22%, and AMD +5.45%. Nvidia’s planned $3 billion investment in Meta added to the AI story, according to reports.

Stocks That Lifted Semiconductors SOXX — 1-Day Change

iShares Cybersecurity and Tech IHAK Daily

· Cybersecurity (IHAK) — Up +1.27%, sheet RS rank 99 and first place. It has gained +13.33% in five sessions.

What Changed From Yesterday

Gold (GLD) posted the biggest one-day rank gain, 37 to 52. Only about a quarter of it came from Tuesday’s +1.21%. The rest came from a weak day a month ago leaving the calculation window.

Biggest 1-Day RS Rank Gains — Yesterday vs Today

Biggest 1-Day RS Rank Losses — Yesterday vs Today

Oil refiners (CRAK) fell from 65 to 42, and almost all of it was Tuesday’s -3.73% price move. Monday’s report said chips needed to get back above their 1-month average. SOXX rose again but is still below it. That call stays open.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

Metals and mining (XME) fell from 92 to 31 over the window, and uranium (URA) from 95 to 9. Semiconductors (SOXX) moved from 20 to 15. Oil and gas exploration (IEO) climbed from 80 to 97, and cloud computing (WCLD) from 93 to 100. Tuesday’s rally came from the bottom of that chart, not the top.

RS Breakdown Warnings

RS Breakdown Warnings — 5 Sessions Ago vs Today

Oil refiners (CRAK) fell from 78 to 42, the deepest drop. Social media (SOCL), video gaming (ESPO), global pharma (PPH), gaming (HERO), and health care (XLV) joined it. Four other funds met the point threshold but were dropped because Tuesday’s price moved the other way.

RS Rebound Signals

RS Rebound Signals — 5 Sessions Ago vs Today

Solar (TAN) rose from 16 to 47, the largest move. Digital infrastructure (IDGT) and space (UFO) also qualified. Sports betting (BETZ) was dropped because Tuesday’s price fell. Data centers (DTCR) was dropped because the sheet moved the other way.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Roundhill Meme Stocks (MEME)	+6.73%	4	🔽	🔽	🔽
VanEck Rare Earth and Strategic Metals (REMX)	+4.84%	3	🔽	🔽	🔽
SPDR Metals and Mining (XME)	+4.68%	30	🔽	🔽	🔽
Sprott Critical Minerals (SETM)	+4.61%	8	🔽	🔽	🔽
Global X Blockchain (BKCH)	+4.45%	0	🔽	🔽	🔽

Why They Rose

All five rising funds rank 30 or lower, and all five sit below their 1-month, 1-quarter, and 1-year averages. This was a bounce in the market’s weakest corners. On the other side, oil refiners (CRAK) -3.73%, oil and gas exploration (IEO) -3.53%, oil and gas explorers (XOP) -2.37%, and residential REITs (REZ) -2.32% led the decliners.

Leading Sectors: Metals and Mining, Uranium, Semiconductors

① Metals and mining ranks 30 and is down -4.67% over one month. One strong day does not lift it back above its 1-month average yet.
② Uranium ranks 9. Cameco reports on Friday, which is the first company test for this bounce.
③ Semiconductors rank 26 after two up days. Intel reports on Thursday, and SOXX still needs to clear its 1-month average.
④ The last report covered the October 26 close. Its three picks from that close to Tuesday’s: Lockheed Martin -1.92%, Tenable +0.91%, and Booz Allen Hamilton +0.05%, against +0.60% for the S&P 500. One of the three beat the market. Recorded as is.

Today’s Three Stocks — Ryerson · Synopsys · Radware Stock Forecast

Thirty-two stocks passed the four-part filter. These three fit the day’s leaders.

Ryerson (RYZ) — Metals Service Center Stock Forecast

Ryerson RYZ Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Ryerson (RYZ)	89	83	95	+20.8%	SPDR Metals and Mining 1.2%

Closed at $29.34, +4.67%, its highest close since late July. Ryerson cuts, processes, and distributes steel and aluminum, and it merged with Olympic Steel in February. The Ryerson stock forecast depends on whether that merger pays off. For the quarter ended June 30, sales rose +71.6% to $2.01 billion, mostly from the merger. Operating income rose to $34.4 million from $5.8 million, and net income was $15.5 million. Third-quarter results come after the close on Wednesday, October 28.

Synopsys (SNPS) — Chip Design Software Stock Forecast

Synopsys SNPS Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Synopsys (SNPS)	88	85	88	+13.6%	VanEck Fabless Semiconductor 5.3% · iShares Expanded Tech-Software 2.9% · VanEck Semiconductor 2.0%

Closed at $474.42, +4.42%. Synopsys sells the software and chip designs that companies use to build processors. It has gained +12.3% in three sessions. The Synopsys stock forecast leans on the Ansys deal, which closed in July 2025. For the quarter ended July 31, revenue rose +42.4% to $2.48 billion and operating income more than doubled to $357.5 million. Net income was $545.8 million, or $2.84 per share.

Radware (RDWR) — Application Security Stock Forecast

Radware RDWR Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Radware (RDWR)	98	99	95	+20.5%	Global X Cybersecurity 1.5%

Closed at $35.50, +9.91%, a one-year closing high. Radware protects websites and apps from attacks, more and more of it as a cloud service. No single report explained Tuesday’s jump. The Radware stock forecast is a sales story first. For the quarter ended June 30, revenue rose +11% to $82.3 million, while operating income fell to $2.5 million from $5.1 million. Management blamed most of the drop on a stronger Israeli shekel.

Ryerson · Synopsys · Radware Stock Forecast Checkpoints

· Ryerson stock forecast — Results arrive Wednesday after the close. Watch whether the stock holds above $28.03, Monday’s close. The July high close of $31.03 is the next level above.

· Synopsys stock forecast — The stock just moved back above its 20-day average of $472.69. Watch whether it stays above $472.69 this week. The May high close of $534.56 sits well above.

· Radware stock forecast — The stock is up +21.0% in five sessions. Watch whether it holds above $32.30, Monday’s close. A drop below $30.12, its 20-day average, would end the short-term uptrend.

What to Watch on Next Week’s Calendar

🔴 Fed rate decision, Wednesday, October 28, 2:00 p.m. ET · September PCE inflation and third-quarter GDP, Thursday, October 29, 8:30 a.m. ET
This is the first decision since September’s hike. The 10-year yield sits at 4.99%. Chip funds rallied from a rank of 26 and tend to react most to a rate surprise.
🔴 Alphabet and Microsoft results, Wednesday, October 28, 4:00 p.m. ET · 🔴 Amazon results, Thursday, October 29, 4:00 p.m. ET · 🔴 Apple results, Monday, November 2, 4:00 p.m. ET
Technology led the 11 sectors on Tuesday, and cloud computing (WCLD) ranks 97. These four reports decide whether the tech rally has earnings behind it.
Phillips 66 results, Wednesday, October 28, 8:00 a.m. ET · Exxon Mobil and Chevron results, Friday, October 30, 8:00 a.m. ET
Oil refiners (CRAK) carry the day’s deepest breakdown warning. Phillips 66 is the first refiner to report after Tuesday’s drop.
Cameco results, Friday, October 30, 8:00 a.m. ET
Uranium (URA) rose +4.37% but ranks only 9. Cameco is the largest US-listed uranium miner, so its outlook will show whether this bounce has demand behind it.

Bloom Energy (BE) Stock: Revenue Runs Ahead of Cash

J. Equity. Research — Tue, 27 Oct 2026 22:09:37 GMT

Bloom Energy (NYSE: BE) grew third-quarter 2026 revenue +138.1% to $1.24 billion, posted a 23.1% non-GAAP operating margin and earned $250.3 million for common stockholders. Operating cash flow in the same quarter was an outflow of $27.1 million. The gap sits in contract assets, revenue Bloom has recognized but not yet billed, which rose from $241.2 million at the end of 2025 to $858.6 million at the end of September, 3.56 times higher. What remains open is how fast earnings the company has guided up three times this year turn into cash.

Bloom Energy one-year share price chart

Bloom makes solid oxide fuel cell power plants that turn natural gas, biogas or hydrogen into electricity without burning it, and sells them as on-site generation to data centers that cannot wait for a grid connection. At $193.30 a share the company is worth $57.15 billion. The stock is +122.5% in 2026 but -36.1% from its June month-end close of $302.70, and it fell -11.24% on the trading day after results. The analysis lines up 15 quarterly releases with quarterly cash flow from the filed statements and checks them against the third-quarter earnings release, the 10-Q, the 2025 10-K, four quarterly IR decks and the call remarks. Third-quarter diluted weighted shares were 324.3 million, 10.0% more than basic shares, because of convertible notes. The P/E uses trailing twelve-month (TTM) non-GAAP diluted EPS of $2.61; on TTM GAAP diluted EPS of $1.64 it is 117.9. Fourth-quarter figures are the full-year guidance midpoint minus the first three quarters.

What the Q3 Deck Shows About Guidance

Q3 2026 deck slide 5: 2026 guidance raised for the third time

Slide 5 of the third-quarter deck sets 2026 guidance at revenue of $4.4 billion to $4.6 billion, non-GAAP gross margin of about 34%, non-GAAP operating income of $960 million to $1,030 million and non-GAAP EPS of $3.10 to $3.40. The $4.5 billion revenue midpoint is +122% above 2025 revenue of $2.02 billion. The first guide in February was revenue of $3.1 billion to $3.3 billion, operating income of $425 million to $475 million and EPS of $1.33 to $1.48, so in eight months the revenue midpoint rose +40.6%, the operating income midpoint +121.1% and the EPS midpoint +131.3%. CFO Simon Edwards said in the release: “Our year-to-date performance and customer demand give us confidence to raise our 2026 outlook for the third time this year.”
Slide 4 sets the third quarter beside a year earlier: revenue from $519.0 million to $1,235.8 million, non-GAAP operating income from $46.2 million to $285.7 million and non-GAAP EPS from $0.15 to $0.94. Slide 17 shows the diluted EPS math: the denominator of 324.3 million shares assumes the convertible notes turn into stock, against 294.8 million basic shares, and the numerator moves from $302.8 million of non-GAAP net income to $306.4 million.
Slide 6, titled “Growing Revenue and Expanding Margins,” draws revenue bars of $1.0 billion to $2.0 billion from 2021 to 2025 before the 2026 guide, with non-GAAP gross margin climbing from 22% to 34%. Guiding to more than double revenue with gross margin up nearly 4 points is the company’s way of saying it added volume without giving up price.

Q3 2026 deck slide 6: annual revenue and non-GAAP gross margin

Slide 7, “Demonstrating Operating Leverage,” shows non-GAAP operating expenses falling from 26% of revenue to 19% in 2025 and 12% at the 2026 midpoint, and non-GAAP operating income moving from a $38 million loss in 2021 to $221 million in 2025. In the third quarter revenue rose +138.1% while non-GAAP operating expenses rose +26.2%.

Q3 2026 deck slide 7: operating expense ratio and non-GAAP operating income

Company disclosure (third-quarter call remarks): Product revenue passed $1 billion for the first time, 87% of the total, and is recognized when control passes to the customer. The outlook is built in two layers: backlog assessed customer by customer for site readiness and conversion timing, and a probability-weighted view of pipeline customers who need power within the quarter. The timing of a few shipments around year-end will decide where the company lands in the range.
Own calculation (implied fourth quarter): Subtracting $3,052.3 million of revenue for the first three quarters from the $4.5 billion midpoint leaves $1,447.7 million for the fourth quarter, up 86.2% year over year. The same method gives fourth-quarter non-GAAP operating income of $340.0 million and EPS of $1.09. Unsatisfied performance obligations for product and installation in the 10-Q were $661.2 million, 45.7% of that implied quarter.

The Cash Flow Slide That Disappeared

Slide 10 of the fourth-quarter 2025 deck, published in February 2026, carried the title “Driving Profitability and Generating Cash.” Operating cash flow bars ran from -$61 million in 2021 through -$192 million and -$372 million to $92 million in 2024 and $114 million in 2025, with a 2026 bar marked $200 million. Slide 8 of the April deck kept the layout, raised adjusted EBITDA guidance from $475 million to $525 million up to $650 million to $800 million, and relabeled the cash bar as more than $200 million.

Q1 2026 deck slide 8: adjusted EBITDA and the operating cash flow goal

The second-quarter deck in July and the third-quarter deck in October run 19 pages each. Neither has that slide, and the word cash does not appear in either one. Over the same stretch the revenue guidance midpoint rose from $3.2 billion to $4.5 billion and the non-GAAP operating income midpoint from $450 million to $995 million. The April adjusted EBITDA range is also gone from the third-quarter deck.
Checked against the numbers, the cash target has already been met. Operating cash flow for the first nine months was $272.9 million, above February’s $200 million, and 8.9% of revenue against the 6.2% that February’s target implied. What stands out is that the company raised profit guidance three times without updating the cash target and then dropped the slide; profit guidance more than doubled while the cash goal sat at $200 million and then vanished. On the call Edwards said third-quarter operating cash flow was a $27 million use, with net income offset by growth in inventory, contract assets and receivables.
Company disclosure (third-quarter call remarks): Billing follows contract milestones and can fall in a different quarter, so cash collection can lag revenue recognition, and the difference sits in contract assets and receivables until collected. The timing of large shipments and collections varies by quarter and evens out over time. Third-quarter free cash flow was a $181 million use, year-to-date free cash flow was $42 million positive, and the quarter ended with $2.5 billion of cash.

The Bull and Bear Case for Bloom Shares

The bull case rests on the pace of earnings. Third-quarter non-GAAP operating income of $285.7 million exceeded the $221 million Bloom earned in all of 2025, and non-GAAP EPS beat consensus by 39% to 242% in each of the last four quarters. The 10-K notes that generator interconnection queues “at the end of 2024 totaled 2,300 gigawatts,” and CEO KR Sridhar said in the release: “What began with hyperscalers is rapidly moving across market segments because every business needs reliable power to grow.”
The bear case rests on the path from earnings to cash. Third-quarter net income exceeded operating cash flow by $276.1 million, with $954.0 million tied up in contract assets, receivables, inventory and vendor advances. Brookfield joint ventures in which Bloom holds equity bought 26.0% of third-quarter revenue, and $306.5 million of share value given to Oracle will be deducted from future revenue. In July a short-seller report questioned the supply chain and the stock fell -32.0% that month. The 10-Q says: “We rejected the report’s conclusions regarding our supply chain.”

From a Revenue Restatement to AI Data Center Power

Bloom month-end share price since listing with three events

Bloom was founded in 2001 and listed in 2018. Its first month-end close of $29.95 in August 2018 fell to $3.06 by October 2019. In February 2020 the audit committee said the 2018 annual statements and the 2018 and 2019 quarterly statements should no longer be relied upon: revenue from servers sold under managed services agreements had been booked upfront at installation, but should have been treated as financing transactions “in which revenue is recognized over the life of the Impacted MSAs.” The restatement cut revenue by $165 million to $180 million without affecting cash. When to recognize revenue was the first test of Bloom’s public life.
From 2021 to 2024 Bloom posted revenue of $972.2 million to $1.47 billion a year and its month-end close stayed between $8.77 and $34.91. In November 2024 utility AEP agreed to buy up to 1 gigawatt of fuel cells, in August 2025 Bloom set up a financing structure with Brookfield, and in October 2025 it agreed to a warrant with Oracle. The stock rose +291.2% in 2025 and from the October 2019 low to June 2026 it climbed 98.9 times.

Where Did $249 Million of Q3 Profit Go?

Quarterly revenue with the implied fourth quarter and quarterly net income vs operating cash flow

Third-quarter net income was $249.0 million and operating cash flow a $27.1 million outflow. In the release’s cash flow statement, non-cash items including $57.2 million of stock-based compensation added $79.9 million, while increases of $430.3 million in contract assets, $175.2 million in receivables, $170.4 million in inventory and $178.0 million in other long-term assets, mostly vendor advances, absorbed cash. Those four items total $954.0 million, 77.2% of quarterly revenue. Customer deposits and deferred revenue added $309.3 million and payables and accruals $343.4 million.
The pattern is seasonal. Bloom’s operating cash flow is weak in the first three quarters and concentrated in the fourth: in 2024 the first nine months totaled -$392.3 million before a fourth-quarter inflow of $484.2 million, and in 2025 -$304.1 million before $418.1 million. In 2026 the first nine months are already $272.9 million positive, and TTM operating cash flow of $691.0 million is 132.1% of TTM net income of $523.0 million.
Own calculation (cash conversion): Operating cash flow covers 132.1% of net income over the latest four quarters but only 52.3% in the first nine months of 2026. Only a fourth quarter in which contract assets and receivables turn into cash, as in 2024 and 2025, would lift full-year operating cash flow above net income.

Contract Assets and Customer Deposits

Third-quarter bridge from net income to operating cash flow and collection days

The contract asset rollforward in the 10-Q shows that of $428.3 million at the start of the third quarter, only $33.5 million, or 7.8%, moved to receivables during the quarter. A year earlier, 24.4% did. Revenue recognized but not billed by quarter-end was $463.9 million, 37.5% of third-quarter revenue, up from 31.0%. The first critical audit matter in the 2025 10-K is the timing of product revenue recognition at customer acceptance, which depending on the contract means delivery, mechanical completion or commencement of operations. The 10-Q ties the growth in receivables and contract assets to “the timing of milestone billings and customer acceptance cycles.”
The same 10-Q points the other way too. Customer deposits rose by $583.1 million to $661.4 million, which the company attributes to new deposits on recently signed agreements and milestone payments. Net of deposits and deferred revenue, receivables and contract assets rose by $269.8 million, just 30.6% of the $880.4 million gross increase.
In days, the third quarter fits the seasonal pattern. Receivables plus contract assets equaled 198 days of quarterly revenue in Q3 2024, 119 in Q3 2025 and 111 in Q3 2026, and fell to 77 and 73 days in the fourth quarters of 2024 and 2025. Inventory days fell from 177 to 104. Vendor advances rose from $17.4 million to $327.0 million, advance payments to suppliers for future goods, services and equipment.

Brookfield Joint Ventures and the Oracle Warrant

Many of Bloom’s customers are financiers that own the generators rather than the companies that use the power. The 10-K explains that “the majority of our end user customers prefer to pay for the power they will consume from our Energy Server product,” so Bloom sells servers to a financier that supplies power to the end customer. The Brookfield structure set up in August 2025 plays that role. Bloom holds 6.2% of the Bolt joint ventures inside Brookfield’s AI Infrastructure Fund, down from 9.9%, and 15.0% of ORC HoldCo, and does not consolidate them.
Related-party revenue was $321.6 million in the third quarter, 26.0% of revenue, and 22.9% over nine months. Two customers exceeded 10% of third-quarter revenue, at 43% and 26%, the second being the related party, and related-party receivables were 30.8% of the total. Bloom’s maximum exposure to loss is listed at $63.4 million, and the decision not to consolidate the joint ventures was the second critical audit matter in the 2025 10-K.
The Oracle relationship leaves a different mark. Tied to a partnership to supply on-site power to Oracle’s AI data centers, Bloom agreed in October 2025 to give Oracle a warrant for 3,531,073 shares at $113.28 and issued it on April 9, 2026. Oracle exercised on a cashless basis on May 1 for 1,905,433 shares, plus 248,798 inducement shares worth $72.3 million for choosing net settlement. The $323.9 million fair value is accounted for as “consideration payable to a customer’s customer” and is deducted from revenue as the Oracle servers are delivered. By September $17.3 million had been deducted, and the remaining $306.5 million equals 107.3% of third-quarter non-GAAP operating income.

How Bloom Energy Makes Money

The 10-K lists the Energy Server for power and the Bloom Electrolyzer for hydrogen, and almost all revenue comes from the Energy Server, which converts fuel into electricity “without combustion or moving parts” and scales by adding modules. Third-quarter revenue split into product at $1,073.6 million (86.9%), installation at $84.9 million, service at $67.6 million and electricity at $9.8 million. Slide 18 of the deck shows non-GAAP gross margins of 38.4% for product, 21.4% for service, 25.7% for electricity and -3.5% for installation.
Service contracts follow product sales. Power modules can be replaced while a server stays online, and Bloom earns service revenue from long-term maintenance agreements; service gross margin topped 20% for a second straight quarter. The deck’s risk factors list a shift toward a “consult only model particularly for large load sites.”
The U.S. supplied 97% of third-quarter revenue. South Korea is the next-largest market, with nearly 682 megawatts deployed since 2018 through SK ecoplant and SK eternix. AEP’s 2024 agreement covers up to 1 gigawatt with an initial order of 100 megawatts, and in 2025 the top three customers accounted for 43%, 13% and 12% of revenue. Manufacturing runs in Fremont, California and Newark, Delaware; third-quarter capital spending of $153.5 million was 66.4% of the nine-month total, and Sridhar called 5 gigawatts of annual capacity a milestone on a long journey while explaining the Fremont expansion.

How Bloom Compares With Three Power Peers

The peers sell into the same AI data center power demand. GE Vernova sells gas turbines, Vertiv sells power and cooling equipment inside data centers, and FuelCell Energy makes fuel cell plants like Bloom.

Trailing four-quarter revenue growth and free cash flow margin at four AI power companies

Over each company’s latest four quarters, revenue grew +110.6% at Bloom, +26.2% at Vertiv, +13.0% at GE Vernova and +1.0% at FuelCell. Free cash flow margin reverses the order: GE Vernova 30.1%, Vertiv 25.5%, Bloom 11.4% and FuelCell -73.5%. GE Vernova’s free cash flow margin is more than four times its 6.6% operating margin, while Bloom’s sits below its 15.3% GAAP operating margin. One collects cash ahead of profit and the other after.

EV to sales and forward P/E at four AI power companies

Bloom trades at 15.00 times EV to sales against 6.54 for Vertiv, 5.03 for GE Vernova and 2.57 for FuelCell, and at 39.91 times forward earnings against 38.80 for GE Vernova and 24.53 for Vertiv; FuelCell has no earnings multiple. A sales multiple three times GE Vernova’s with a similar forward P/E means the market expects Bloom’s margins to keep rising. From their June month-end closes Bloom fell -36.1%, GE Vernova -30.6%, Vertiv -42.0% and FuelCell -69.1%, so the slide since June was a group move, with Bloom’s post-results drop on top of it.

Bloom’s P/E and Price-to-Sales Band

Bloom P/E on non-GAAP EPS and price-to-sales over 23 months

The P/E on TTM non-GAAP EPS is 74.06, in the 26th percentile of the 23 months since December 2024, when TTM EPS first turned positive. The median is 118.85, the low 43.49 in June 2025 and the high 250.00 in May 2026. Price-to-sales is 14.92, in the 57th percentile against a median of 14.21. TTM EPS grew 13.7 times from $0.19 to $2.61 and the multiple topped 200 in four months, so the band reads more as earnings catching up with the stock than as a distribution. On the 2026 guidance midpoint of $3.25 the stock trades at 59.5 times, and on the average 2027 estimate of $5.31 at 36.4 times.
Outside view (consensus estimates, market data): The average fourth-quarter non-GAAP EPS estimate is $1.11, close to the $1.09 implied by guidance, and the first-quarter 2027 estimate is $0.97. The average 2027 revenue estimate from 27 analysts is $7.05 billion, ranging from $5.32 billion to $8.26 billion.

Three Conditions That Move the Stock

Operating cash flow was $272.9 million in the first nine months and a $27.1 million outflow in the third quarter. If the fourth quarter brings an inflow above $400 million and full-year cash flow exceeds net income, doubts about earnings quality fade; if contract assets keep growing and full-year cash flow falls short of net income, the view that growth ties up cash as fast as it arrives takes hold.
Contract asset billing was 7.8% of the opening balance in the third quarter. If it moves back toward last year’s 24.4%, the build was an acceptance-timing gap; if it stays low while the balance rises, the acceptance judgment the auditor flagged becomes the issue again.
Related-party revenue was 26.0% of third-quarter revenue. If sales outside the Brookfield joint ventures grow and the share falls, demand looks broad; if the share rises, more revenue comes from financing vehicles in which Bloom holds equity.

What to Watch in the Fourth-Quarter Report

The next numbers are fourth-quarter operating cash flow, the contract asset rollforward and 2027 guidance in the report due around February 2027. The company set a $200 million cash flow goal in February, then dropped the slide in July and raised only revenue and profit guidance.
One question remains open. In the third quarter 37.5% of recognized revenue was unbilled at quarter-end, and 26.0% of revenue came from joint ventures in which Bloom holds equity. If Bloom turns $858.6 million of contract assets into cash while recognizing $1.45 billion of new revenue in the fourth quarter, the earnings prove themselves; will 2027 guidance bring back a cash flow target?

Oracle (ORCL) Stock Analysis: Cash Flow and Capex Gap: the end customer behind Bloom’s warrant, useful for comparing how cash flow trails AI growth at both companies.
Plug Power (PLUG) Stock Analysis: GAAP vs Operating Loss: a hydrogen fuel cell peer that still loses money, a contrast with Bloom’s 23.1% non-GAAP operating margin.
NVIDIA (NVDA) Stock Analysis: Guarantees and Cash Flow: the AI accelerator leader whose data center buildout drives the power demand behind Bloom’s orders.

Western Digital (WDC) Stock: Pricing Outran Exabytes

J. Equity. Research — Tue, 27 Oct 2026 09:01:12 GMT

Western Digital (NASDAQ: WDC) grew fiscal first-quarter 2027 revenue +55% to $4.38 billion, but 61.1% of the increase came from a higher price per terabyte rather than from shipping more hard drives. Management reported exabyte shipments up 22% and blended average selling price per terabyte up 28%. In February the company set a three-to-five-year model that assumes mid-20s nearline exabyte growth and “Stable pricing” to reach EPS above $20, yet the December-quarter EPS guide of $5.80 already annualizes to $23.20. What remains open is whether the earnings that pricing built will survive a year in which prices flatten, as the company’s own model assumes.

Western Digital one-year share price chart

Since spinning off its flash business as Sandisk in February 2025, WD has been a pure hard disk drive company, and 88.3% of first-quarter revenue came from cloud customers. At $343.67 a share it is worth $128.6 billion. The stock is +99.5% in 2026 but -46.2% from its June month-end close of $638.72; it fell -20.1% in the two weeks before results and rose +3.5% in results week. The analysis lines up seven post-spin quarterly releases with the exabyte bars in each quarterly deck and checks them against the first-quarter earnings release, the 10-Q, the fiscal 2026 10-K, the February 2026 Innovation Day deck, the August investor presentation and the call remarks. WD’s fiscal year ends around late June, so July to September is its first quarter; this piece uses the company’s quarter names. Quarterly comparisons and the valuation band use post-spin HDD figures only. Revenue per terabyte is revenue divided by exabytes shipped, a calculation that differs slightly from the company’s blended ASP. The P/E uses trailing twelve-month (TTM) non-GAAP diluted EPS of $13.05; on TTM GAAP EPS of $25.77, which includes gains on the Sandisk stake, it is 13.34.

What the Quarterly Deck Shows About Price and Volume

Fiscal Q1 2027 deck slide 5: revenue and gross margin with exabytes shipped

Slide 5 of the first-quarter deck shows revenue rising from $2.82 billion in fiscal Q1 2026 to $4.38 billion and non-GAAP gross margin from 43.9% to 58.1%, while exabytes shipped rose from 204 to 248, of which 223 were nearline. Over five quarters the revenue bars grew 1.55 times and the exabyte bars 1.22 times; the gap between the two slopes is price. Slide 4 shows cloud at 88% to 89% of revenue in every one of those quarters.
Slide 3 says “Revenue, non-GAAP gross margin, non-GAAP EPS above high end of guidance” and cites a “Strong free cash flow margin of 31.4%.” The large figures on the same slide label free cash flow as $1.6 billion and operating cash flow as $1.4 billion. The cash flow statement in the release shows the reverse: operating cash flow of $1.60 billion and free cash flow of $1.38 billion after $227 million of capital spending. The 31.4% margin matches $1.38 billion, so the slide’s two headline figures carry each other’s labels.
Company disclosure (first-quarter call remarks): WD shipped 248 exabytes, up 22% year over year and 8% sequentially. Blended ASP per terabyte rose 28% year over year, up from mid-teens growth the prior quarter, with strength in nearline, non-nearline and parts of the consumer and client businesses. Some business is under long-term agreements, some of which are expiring and being renewed, and pricing is also strong for exabytes outside contracts.
Management tied the price gains to total cost of ownership: higher-capacity drives put more data in each rack and use less power, so customers save even at a higher price per terabyte. In Q&A, CEO Irving Tan listed contractual price escalators in long-term agreements, repricing as contracts expire and better spot prices for nearline customers outside agreements in a supply-short market. CFO Kris Sennesael said year-over-year incremental gross margin was above 80%. The CEO’s release quote put it plainly: “Fiscal 2027 is off to a strong start, with results exceeding expectations, driven by robust customer demand and disciplined execution.”
Own calculation (price vs volume): Splitting the $1.56 billion revenue increase between exabytes and revenue per terabyte, volume at last year’s unit price accounts for $607.8 million and the higher unit price for $955.2 million, or 61.1%. The same split gives price 25.8% of the increase in fiscal Q3 2026 and 50.8% in Q4. Holding price at last year’s level with costs unchanged, a 17% tax rate and 383 million diluted shares, first-quarter non-GAAP EPS would have been about $2.57 instead of $4.64.

A Long-Term Model Built on Stable Pricing

August 2026 investor presentation slide 14: three-to-five-year financial model

Slide 14 of the August investor presentation repeats the model first shown on page 47 of the February Innovation Day deck. It targets revenue growth above 20% a year, supported by “Nearline EB mid-20s CAGR” and “Stable pricing,” along with gross margin above 50%, operating margin above 40%, free cash flow margin above 30%, capital spending of 4% to 6% of revenue and EPS above $20. A footnote sets calendar 2025 as the baseline. When the model came out, TTM non-GAAP EPS was $6.99. Slide 12 of the same deck shows fiscal 2024 to 2026 revenue rising from $6.3 billion to $9.5 billion and $12.9 billion, a 43% annual rate, with non-GAAP operating margin rising from 5% to 24% and 37%.

Fiscal Q1 2027 deck slide 7: December-quarter guidance

Slide 7 of the October deck guides December-quarter revenue to $5.1 billion plus or minus $100 million, non-GAAP gross margin of 60% to 61%, operating expenses of $400 million to $410 million, a tax rate of about 17% and EPS of $5.80 plus or minus $0.20 on about 380 million diluted shares. The revenue midpoint is +16.4% above the first quarter and +69.0% above a year earlier, and EPS is +25.0% above the first quarter.
Company disclosure (first-quarter call remarks): Demand remains robust, customer engagement is deepening and visibility keeps improving. Management sees the first quarter as the low point for exabyte growth, which should accelerate through the rest of the fiscal year. Capital spending should average 4% to 6% of revenue over five years but run slightly above that range for the next two, and areal density gains from head and media technology will grow exabytes without adding unit capacity.
Own calculation (calendar revenue vs the model): Calendar 2025 revenue was $10.73 billion. Adding the December-quarter guide midpoint to the first three quarters of 2026 gives $16.57 billion, up 54.3%. Nearline exabytes over the latest four quarters were 823 against 690 in calendar 2025, up 19.3%, below the model’s mid-20s rate, so almost all of the gap between the model’s 20%-plus revenue growth and the actual 54.3% is price.

The Bull and Bear Case for WD Shares

The bull case rests on results running ahead of the company’s own targets. In all six post-spin quarters revenue beat the guidance midpoint by 2.7% to 6.9%, and gross margin landed 0.3 to 2.5 points above the top of the guided range. Management says it has visibility into demand from its top seven customers through 2030, and first-quarter free cash flow was $1.38 billion, 31.4% of revenue.
The bear case rests on where the profit comes from. Price explained 61.1% of first-quarter revenue growth while the company’s model assumes stable pricing. Analysts asked about capacity additions by the smallest competitor, rumors of industry consolidation and the timing of neo-cloud spending, and management said rising DRAM and NAND input costs will keep near-term cost-per-terabyte declines below 10% a year. In the first quarter WD bought back 2.0 million shares and issued 14.0 million to settle convertible notes.

From Sandisk Spin-Off to a Pure HDD Company

WD month-end share price over ten years with three events

The past two years changed the shape of the company. On February 21, 2025 the flash business became Sandisk, and WD kept 28.8 million Sandisk shares. According to the 10-K, it used 21.3 million of them in June 2025 to cut about $800 million of term loan debt, 5.8 million in February 2026 to retire notes, and the last 1.7 million in fiscal Q4 2026 to acquire 4.8 million of its own shares. The 10-K states: “As of July 3, 2026, we no longer held shares of Sandisk common stock.”
Those disposals inflated GAAP earnings. The first-quarter deck’s reconciliation shows gains on the retained Sandisk interest of $611 million, $1.10 billion, $2.73 billion and $2.05 billion across the four quarters of fiscal 2026, and none in fiscal Q1 2027. GAAP EPS was $8.21 in the fourth quarter but $4.63 in the first, almost equal to non-GAAP EPS of $4.64. In February 2026 the remaining preferred shares converted into 7 million common shares.
On spin- and dividend-adjusted year-end closes, the old WD swung with memory and storage cycles: the stock moved -51.6% in 2022, +66.0% in 2023, +13.9% in 2024 and +283.8% in 2025. From $63.99 at the end of June 2025 it reached $638.72 at the end of June 2026, 9.98 times higher.

How Much of the Growth Is Price?

Quarterly exabytes shipped and revenue per terabyte

Across seven post-spin quarters, revenue per terabyte falls into two phases. It was nearly flat at $13.82 in fiscal Q3 2025, $13.71 in Q4 and $13.81 in fiscal Q1 2026, then moved through $14.03 in Q2 to $15.03 in Q3, $16.22 in Q4 and $17.66 in fiscal Q1 2027. Year-over-year gains were +8.8%, +18.3% and +27.9%, larger each quarter.
Exabytes shipped rose from 166 to 248 over the same stretch. Growth was 33.7% in fiscal Q3 2026, 21.6% in Q4 and 21.6% in fiscal Q1 2027, with nearline at 21.9%. As volume growth slowed, price growth sped up, and first-quarter revenue growth reached 55%.
Management called the first quarter the trough for exabyte growth. The new ePMR platform with up to 40TB should account for about 30% of nearline shipments in the December quarter and 50% in the March quarter. First-generation HAMR drives are due to finish qualification with two hyperscale customers in the first quarter of 2027 and to begin volume shipments in the first half of the year.

Six Straight Beats and the EPS Goal

Year-over-year revenue increase split into volume and price with quarterly non-GAAP EPS

Against the guidance midpoint, actual results came in higher in all six post-spin quarters. EPS beat by 17.2% in fiscal Q4 2025, 15.6% in fiscal Q1 2026, 13.3% in Q2, 18.3% in Q3, 9.5% in Q4 and 16.0% in fiscal Q1 2027. EPS beats ran larger than revenue beats because gross margin cleared the top of the guided range every time.
Quarterly non-GAAP EPS rose from $0.75 in fiscal Q1 2025 to $4.64 in fiscal Q1 2027, 6.2 times higher. The $5 line, the quarterly equivalent of $20 a year, is first crossed by the December-quarter guide of $5.80.
Outside view (consensus estimates, market data): The average non-GAAP EPS estimate for fiscal 2027, ending June 2027, is $24.85, up 36.3% from $18.23 ninety days earlier, and the fiscal 2028 estimate rose 45.7% to $39.55 from $27.15. Fiscal 2028 estimates range from $21.95 to $57.04, 2.6 times apart.
The width of that range reads like a disagreement about pricing. The low estimate sits near the company’s $20 model, while the high estimate is closer to a world in which this year’s price gains continue.

How Western Digital Makes Money

WD makes high-capacity hard drives for data centers and sells them mostly to hyperscale cloud operators. The August deck cites IDC that “80% of storage within the cloud is on HDDs” and says about 90% of WD revenue comes from the cloud. Data that is kept for a long time and reused, such as AI training sets and inference logs, is where hard drives win on cost. The 10-Q splits first-quarter revenue into cloud at $3.87 billion (88.3% of the total, +54.1%), client at $320 million (+119.2%) and consumer at $193 million (+19.1%). By ship-to region, the Americas rose 89.2% to $2.08 billion and supplied 62.8% of the year’s revenue increase, Asia rose 45.4% to $1.71 billion, and Europe, the Middle East and Africa rose 9.0% to $592 million.
The customer base is concentrated but widening. The top 10 customers made up 64% of first-quarter revenue, down from 73% a year earlier, and two customers each exceeded 10% of revenue, at 14% and 13%, compared with four a year earlier. Management said demand is broadening to frontier AI labs, neo-cloud players and hybrid cloud OEMs. The 10-K names Seagate, Toshiba and NAND flash suppliers as competitors.

August 2026 investor presentation slide 8: hard drive capacity roadmap

Slide 8 of the August deck lays out the product plan by calendar year. Reading the slide’s markers, ePMR moves from 40TB in 2026 to 60TB in 2028, while HAMR, which heats the recording medium with a laser to raise density, goes from 40TB and 44TB in 2026 to 60TB in 2028 and 100TB around 2029. Slide 9 shows average nearline capacity rising from 23TB through 32TB, 40TB and 44TB to more than 100TB, and slide 10 adds “20% capacity increase via software” through UltraSMR. Second-generation HAMR qualification starts in the second half of 2027 with 5TB per platter on an 11-disk platform.
Capacity per drive is what links this plan to pricing. More terabytes per drive lets WD grow exabytes without new factories or assembly lines, and lets customers store more data in the same rack and power budget. Management says vertical integration in heads and media is why it can raise density faster than rivals that rely on third-party components. Slide 11’s footprint includes wafer fabs in San Jose and Fremont, head plants in the Philippines and Thailand, media plants in Malaysia and Shenzhen, and drive assembly in Prachinburi and Bang Pa-in, Thailand.

How WD Compares With Three Storage Peers

The peers are Seagate, the other hard drive maker; Sandisk, the NAND company WD spun off in 2025; and Micron, the memory maker. All four sell into AI data center storage demand, but only WD and Seagate make hard drives.

TTM revenue and growth at four storage and memory companies

WD’s TTM revenue of $14.48 billion is larger than Seagate’s $12.20 billion and smaller than Sandisk’s $20.25 billion and Micron’s $133.19 billion. Its growth of +43.0% is close to Seagate’s +34.1%, while Sandisk at +175.3% and Micron at +256.3% ride a far sharper memory price cycle.
WD trades at 11.90 times forward earnings, below Seagate at 17.20 and above Sandisk at 5.76 and Micron at 4.97. EV/EBITDA follows the same order: WD 20.30, Seagate 32.33, Sandisk 13.86 and Micron 8.49. From the end of June, WD fell -46.2%, Seagate -34.7%, Sandisk -45.6% and Micron -24.0%, so WD dropped more than its direct HDD rival.

Forward P/E and EV/EBITDA at four storage and memory companies

WD’s return on invested capital (ROIC) of 64.19% is below Seagate’s 85.92%, Micron’s 93.42% and Sandisk’s 102.23%, while its free cash flow yield of 3.33% is above Seagate’s 2.17%. In the first quarter WD returned $1.06 billion, $1.00 billion in buybacks and $56 million in dividends, or 76.8% of free cash flow, raised the quarterly dividend 17% to $0.175 and has $2.26 billion left on its authorization.
The share count still rose. Per the 10-Q, settling convertible notes cost a $7.25 billion conversion premium paid in 14.0 million common shares, while buybacks retired 2.0 million. Cover-page shares rose from 339.0 million in January to 374.3 million in October, +10.4% in nine months. Remaining convertible principal is $141 million, and cash of $1.31 billion less $791 million of debt leaves net cash of $523 million.

P/E and Price-to-Sales Since the Spin-Off

WD P/E on non-GAAP EPS and price-to-sales over 17 months since the spin-off

The P/E on TTM non-GAAP EPS is 26.33, in the 35th percentile of the 17 months since June 2025, when the first four post-spin quarters became available. The median is 35.80, the low 12.72 in June 2025 and the high 76.68 in June 2026. Price-to-sales is 8.88, in the 65th percentile against a median of 8.54. Seventeen months is more a path than a distribution, so the direction of the multiple matters more than its rank.
June’s 76.68 was the point where the stock ran ahead of earnings. Since then TTM EPS rose from $8.33 to $13.05 while the shares fell, cutting the multiple to a third. On the December-quarter guide annualized to $23.20 the stock trades at 14.81 times, on the fiscal 2027 estimate of $24.85 at 13.83 and on the fiscal 2028 estimate of $39.55 at 8.69. The GAAP P/E of 13.34 includes $6.50 billion of Sandisk gains from fiscal 2026 and no longer fits a company that holds no Sandisk stock.

Three Conditions That Move the Stock

Revenue per terabyte was $17.66 in the first quarter, +27.9% year over year. If long-term agreement repricing and strong spot prices keep price growth above exabyte growth, earnings stay above the company’s model; if competitor capacity or slower neo-cloud spending flattens unit prices, revenue growth falls back toward exabyte growth of about 20%.
Exabyte shipments were 248 in the first quarter, up 21.6%. If 40TB ePMR reaches half of nearline shipments in the March quarter and HAMR enters volume production in the first half of 2027, pushing growth above the mid-20s, revenue can grow as the model says even if prices stabilize; if HAMR qualification slips, volume and price could weaken together.
Non-GAAP gross margin was 58.1% in the first quarter and the December guide range is 60% to 61%. If value engineering absorbs higher memory input costs and incremental margin stays near 75%, gross margin in the 60s becomes the base; if input costs rise faster than prices, the run of six quarters above the top of the guided range ends.

What to Watch in the January Report

The next numbers are December-quarter price-per-terabyte growth, exabyte growth and the March-quarter guide. Management called the first quarter the trough for exabyte growth and expects HAMR qualification to finish in the first quarter of 2027.
One question remains open. The three-to-five-year model holds prices stable and relies on exabytes for 20%-plus growth, yet the latest quarters lean on price far more than the model does. If prices flatten in the next round of long-term agreements, can the extra exabytes from HAMR alone keep quarterly EPS above $5?

TSMC (TSM) Stock: 60% Margins and Guidance It Keeps Beating: an AI hardware supplier with its own run of guidance beats, useful for comparing how two companies price scarce capacity.
NVIDIA (NVDA) Stock Analysis: Guarantees and Cash Flow: the AI accelerator leader whose data center buildout drives the storage demand behind WD’s cloud revenue.
Applied Materials (AMAT) Stock Analysis: Guidance Record: another hardware company with consecutive beats against its own guidance, a direct comparison with WD’s six straight beats.

Sector RS Rank Oct 26: Cyber ETFs Lead, Clean Energy Fall

J. Equity. Research — Mon, 26 Oct 2026 23:06:12 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Lockheed Martin · Tenable · Booz Allen Hamilton

② What rose today: cybersecurity, semiconductors, aerospace and defense

③ What pulled back: clean energy, fintech, oil

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Oct 26 Sector RS — 129 ETFs · RRG v2

Technology carried the market on October 26. The Nasdaq closed at 26,169.38 (+0.82%), the S&P 500 at 7,676.77 (+0.70%), and the Dow at 52,361.58 (+0.28%). Reports tied the move to Anthropic’s IPO filing, which revived the AI trade after two losing weeks for the S&P 500 and the Nasdaq. The 10-year Treasury yield held at 4.99%. The oil fund (USO) fell -1.95%, and the VIX eased to 18.39.

Oct 26 Major Indexes — 1-Day Change

Oct 26 GICS 11 Sectors — 1-Day Change

Of the 129 ETFs in our universe, 95 closed higher, 33 fell, and one was flat. Technology (XLK) led the 11 sectors at +1.69%. Communication services (XLC) was last at -1.57%.

Today’s Leading Sectors TOP 5

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
WisdomTree Cloud Computing (WCLD)	+0.73%	98	🔺	🔺	🔺
iShares U.S. Oil and Gas Exploration (IEO)	+1.40%	97	🔺	🔺	🔺
United States Oil Fund (USO)	-1.95%	96	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	+3.04%	96	🔺	🔺	🔺
Global X Cybersecurity (BUG)	+2.98%	95	🔺	🔺	🔺

Four of the five seats held from Friday. Oil and gas exploration (IEO) came in at 97 and energy (XLE) slipped to 94. The oil fund kept its seat on a down day. That shows how far ahead of the field it ran this month.

Why They’re Strong — Sector Issues

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG) — Up +2.98%, sheet RS rank 95, and +14.60% over five sessions. Rapid7 jumped +20.25% and Tenable +8.12%. No single report explained Monday’s move, so this reads as money staying with last week’s winners.

Stocks That Lifted Cybersecurity BUG — 1-Day Change

iShares Semiconductor SOXX Daily

· Semiconductors (SOXX) — Up +2.85%, but the sheet RS rank is only 21. Analog names did the lifting: Texas Instruments +4.72%, NXP +4.64%, Analog Devices +4.31%. The fund is still -14.12% over one month and below its 1-month and 1-quarter averages.

Stocks That Lifted Semiconductors SOXX — 1-Day Change

SPDR Aerospace and Defense XAR Daily

· Aerospace and defense (XAR) — Up +2.60%, sheet RS rank 35. Lockheed Martin rose +5.13% after Morgan Stanley upgraded it on reduced F-35 uncertainty, according to reports. The fund still sits below all three moving averages.

Stocks That Lifted Aerospace and Defense XAR — 1-Day Change

WisdomTree Cloud Computing WCLD Daily

· Cloud computing (WCLD) — Up +0.73%, sheet RS rank 98 and first place. Its 1-month return of +16.06% remains the best in our universe.

What Changed From Yesterday

Cybersecurity (CIBR) posted the biggest one-day rank gain, 77 to 92. About half of it came from price. The other half came from a weak day a month ago leaving the calculation window.

Biggest 1-Day RS Rank Gains — Yesterday vs Today

Biggest 1-Day RS Rank Losses — Yesterday vs Today

Clean energy (ICLN) fell from 43 to 26, and about two thirds of that drop was Monday’s -2.93% price move. Friday’s report said oil services would give back first if oil turned. Oil fell, yet oil services (OIH) still rose +1.27%. That call has not been tested yet.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

Cybersecurity (BUG) climbed from 62 to 98 over the window. Semiconductors (SOXX) touched 100 and now sit at 13. Humanoid robotics (HUMN) moved from 33 to 43, clean energy (ICLN) from 17 to 26, and communication services (XLC) dropped from 61 to 31.

RS Breakdown Warnings

RS Breakdown Warnings — 5 Sessions Ago vs Today

Natural gas (UNG) fell from 73 to 14, the deepest drop. Communication services (XLC), social media (SOCL), metaverse (METV), and e-commerce (EBIZ) joined it, so the warning now covers internet and media stocks just before Alphabet reports. Eight other funds met the point threshold but were dropped: seven rose on Monday, and one moved the other way on the sheet.

RS Rebound Signals

RS Rebound Signals — 5 Sessions Ago vs Today

Dividend REITs (SRET) rose from 24 to 60, the largest move. Humanoid robotics (HUMN), banks (KBWB), broker-dealers (IAI), pharmaceuticals (XPH), and space (UFO) also qualified. Three other funds met the threshold but fell on Monday and were dropped.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
iShares Cybersecurity and Tech (IHAK)	+3.04%	96	🔺	🔺	🔺
Global X Cybersecurity (BUG)	+2.98%	95	🔺	🔺	🔺
iShares Semiconductor (SOXX)	+2.85%	21	🔽	🔽	🔺
VanEck Semiconductor (SMH)	+2.74%	31	🔽	🔽	🔺
VanEck Fabless Semiconductor (SMHX)	+2.64%	25	🔽	🔽	🔺

Why They Rose

The rising table is two cybersecurity funds and three chip funds. The cybersecurity pair already rank near the top. The chip funds rank 21 to 31, so Monday was a bounce inside a downtrend. On the other side, clean energy (ICLN) -2.93%, fintech (FINX) -1.97%, the oil fund (USO) -1.95%, and communication services (XLC) -1.57% led the decliners.

Leading Sectors: Cybersecurity, Semiconductors, Aerospace and Defense

① Cybersecurity ranks 95 to 96 with all three moving averages below the price. Tenable reports on Wednesday. That is the first test of whether the rally has earnings behind it.
② Semiconductors led the rebound but rank only 21. A move back above the 1-month average would turn a bounce into a trend change.
③ Aerospace and defense ranks 35 and sits below every average. Lockheed’s record backlog gives the group a reason, and L3Harris and General Dynamics report this week.
④ The last report covered the October 23 close. Its three picks from that close to Monday’s: Zscaler +2.08%, Qualys +3.90%, and Seadrill -0.76%, against +0.70% for the S&P 500. Two of the three beat the market. Recorded as is.

Today’s Three Stocks — Lockheed Martin · Tenable · Booz Allen Hamilton Stock Forecast

Fifty-five stocks passed the four-part filter. These three fit the day’s leaders.

Lockheed Martin (LMT) — Fighter Jets and Missile Defense Stock Forecast

Lockheed Martin LMT Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Lockheed Martin (LMT)	97	98	96	+22.3%	Global X Defense Tech 9.3% · iShares Aerospace and Defense 5.6% · SPDR Kensho Final Frontiers 4.2%

Closed at $635.20, +5.13%, its highest close since early April. Lockheed builds the F-35 and the PAC-3 missile. Morgan Stanley’s upgrade followed a ten-year F-35 production agreement, according to reports. The Lockheed Martin stock forecast rests on a backlog that keeps growing. For the quarter ended September 27, sales rose +11.3% to $20.71 billion and net earnings rose +14.0% to $1.85 billion, or $7.97 per share. Reports put the backlog at a record $292.0 billion.

Tenable (TENB) — Exposure Management Software Stock Forecast

Tenable TENB Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Tenable (TENB)	100	99	100	+44.0%	Global X Cybersecurity 5.1% · iShares Cybersecurity 5.0% · WisdomTree Cloud 1.8%

Closed at $48.21, +8.12%, a one-year closing high. Tenable scans corporate networks and cloud accounts for security gaps. It has gained +23.84% in five sessions. The Tenable stock forecast hinges on margins. For the quarter ended June 30, revenue rose +8.6% to $268.5 million and operating income was $12.4 million, against a loss of $7.4 million a year earlier. Third-quarter results come after the close on Wednesday, October 28.

Booz Allen Hamilton (BAH) — Defense and Cyber Consulting Stock Forecast

Booz Allen Hamilton BAH Daily

Stock	RS 1D	RS 5D	RS 1M	1M Return	Held By
Booz Allen Hamilton (BAH)	99	97	89	+14.3%	iShares Cybersecurity 3.1%

Closed at $83.36, +6.44%, its highest close since early June. Booz Allen sells consulting, cyber, and AI work to US defense and civil agencies. Monday’s gain followed an analyst upgrade, according to reports. The Booz Allen Hamilton stock forecast is a profit story, not a sales story. For the quarter ended September 30, revenue fell -3.9% to $2.78 billion and operating income fell -13.4% to $245 million. The company still raised its fiscal 2027 adjusted EPS outlook to $6.50 to $6.70.

Lockheed Martin · Tenable · Booz Allen Hamilton Stock Forecast Checkpoints

· Lockheed Martin stock forecast — The stock is up +15.86% in five sessions. Watch whether it holds above $604.18, Friday’s close. The March high close of $676.70 is the next level above.

· Tenable stock forecast — Guidance calls for third-quarter revenue of $270.0 to $273.0 million. Watch whether revenue clears $273.0 million on Wednesday, and whether the stock holds above $44.59.

· Booz Allen Hamilton stock forecast — Sales are still shrinking. Watch whether the stock holds above $78.32, Friday’s close. A drop below $73.00, its 20-day average, would end the short-term uptrend.

What to Watch on Next Week’s Calendar

🔴 Fed rate decision, Wednesday, October 28, 2:00 p.m. ET · September PCE inflation and third-quarter GDP, Thursday, October 29, 8:30 a.m. ET
This is the first decision since September’s hike. The 10-year yield at 4.99% will react first, and growth stocks such as the chip funds feel it most.
🔴 Alphabet and Microsoft results, Wednesday, October 28, 4:00 p.m. ET · Amazon results, Thursday, October 29, 4:00 p.m. ET
Communication services (XLC) carries a breakdown warning at 31. Cloud computing (WCLD) holds first place at 98. These three reports decide which of the two is right.
NXP results, Tuesday, October 27, 4:00 p.m. ET · 🟡 Intel results, Thursday, October 29, 4:00 p.m. ET
NXP rose +4.64% and Intel +4.04% on Monday. Their numbers will show whether the chip bounce, at a rank of 21, has demand behind it.
L3Harris results, Thursday, October 29, 8:00 a.m. ET · General Dynamics results, Friday, October 30, 8:00 a.m. ET
Aerospace and defense (XAR) ranks only 35 after Monday’s +2.60%. Two more prime contractors will show whether Lockheed’s backlog is an industry trend.

Lam Research (LRCX) Stock: Supply Caps the December Guide

J. Equity. Research — Mon, 26 Oct 2026 22:54:58 GMT

Lam Research (NASDAQ: LRCX) reported September-quarter revenue of $8.22 billion, +54.4% from a year earlier, and a non-GAAP operating margin above 40% for the first time. Management has raised its 2026 wafer fabrication equipment (WFE) outlook on every call this year, from a $135 billion range in January to the mid-$150 billion range in October, and put a first number on 2027: above $200 billion. Yet the December-quarter revenue guide of $8.6 billion is only +4.6% above the September quarter, after the July guide had implied +20.5% growth, and management said it would have been slightly higher without near-term supply chain constraints. What remains open is what sets the pace at which a $200 billion market turns into Lam revenue: demand, or cleanrooms and components.

Lam Research one-year share price chart

Lam builds deposition tools that lay thin films on silicon wafers and etch tools that carve circuit patterns into them, and sells them to chipmakers such as Micron, Samsung Electronics, SK hynix and TSMC. At $230.10 a share the company is worth $287.4 billion. The stock is +34.4% in 2026 but -46.9% from its June month-end close of $433.33, and it fell -12.8% in the week of the results. The analysis parses 32 quarterly earnings releases since the fourth quarter of 2018 and checks them against the September-quarter earnings release, the 10-Q, the fiscal 2026 10-K, six investor decks from July 2025 to October 2026 and the call remarks. Lam’s fiscal year ends in June, so the September quarter is its fiscal first quarter of 2027; this piece uses calendar quarters. Non-GAAP figures exclude items such as acquired intangible amortization, per-share figures before the October 2024 ten-for-one split are divided by ten, and the P/E band uses trailing twelve-month (TTM) non-GAAP diluted EPS of $6.76. On TTM GAAP EPS of $6.71 the P/E is 34.29.

Four Raises to the 2026 WFE Outlook

January 2026 deck slide 8: 2025 and 2026 WFE outlook

Slide 8 of the January 2026 deck put 2025 WFE at about $110 billion and 2026 in a “$135B range,” with the note that “Cleanroom space remains key constraint” and that 2026 spending would be weighted to the second half. The April deck raised the figure to “$140B with bias to upside,” the July deck moved to “the low $150B range,” and the October deck went to the mid-$150 billion range. The 2025 outlook followed the same path: the July 2025 deck lifted it to about $105 billion from about $100 billion, the October 2025 deck to slightly above $105 billion, and the year ended near $110 billion.
The language about 2027 shifted each quarter as well. In April, Lam said the higher 2026 view “Sets stage for compelling 2027 WFE growth outlook.” In July, under the heading “CY27+: Extraordinary set-up,” the deck noted that “Customers have announced multi-year timelines for new fab projects” and highlighted a September guide of $8.1 billion, more than 20% above the June quarter. October was the first deck to attach a number to 2027.

October 2026 deck slide 5: record results and the 2026 and 2027 WFE outlook

Company disclosure (October deck and call): Slide 5 reads “WFE: CY26 mid-$150B range” and “Preliminary CY27 >$200B,” followed by “Cleanroom space availability and supply chain constraints for certain components limiting industry’s ability to fully meet end demand.” Management expects DRAM to lead 2027 growth, followed by leading-edge foundry and logic and then NAND, and expects systems revenue to “grow well over 40% for the year” in 2026, the third straight year in which Lam outgrows WFE.
On the call, CEO Tim Archer said customer visibility extends through 2028 but that it was early to give a precise WFE figure. The January call, when Lam normally gives detail, should bring a clearer view of cleanroom schedules and supply constraints. The $200 billion is a demand number; how fast tools get installed depends on cleanrooms and parts.
Own calculation (share of WFE): Calendar 2025 revenue was $20.56 billion. Adding the December-quarter guide midpoint to the first three quarters gives $29.38 billion for 2026, up 42.9%. WFE moving from about $110 billion to the mid-$150s, taken as $155 billion, is a 40.9% rise, so revenue as a share of WFE edges up from 18.7% to 19.0%. The same ratio applied to $200 billion of 2027 WFE gives about $37.9 billion.

The December-Quarter Guide and Supply Constraints

October 2026 deck slide 17: December-quarter revenue and margin and EPS guidance

Slide 17 sets the December-quarter guide at revenue of $8.60 billion plus or minus $400 million, a non-GAAP gross margin of 52.5% and an operating margin of 40.5%, each plus or minus one point, and EPS of $2.33 plus or minus $0.15 on about 1.253 billion diluted shares. The margins are slightly above September’s 52.4% and 40.2%, but the revenue midpoint is only +4.6% higher and EPS +5.9%. The low end of the range, $8.2 billion, is -0.2% below September.
Company disclosure (call remarks): The guide would have been slightly higher without the near-term supply chain constraints Lam is managing, and some shipments planned for December will go out in the March quarter. China will be a much lower share of December-quarter revenue than in September. The non-GAAP tax rate rose to 16.5% from 11% in the June quarter, is expected to stay in that range, and management asked analysts to update their models for it.
The September quarter itself was unusual. Revenue rose +22.3% sequentially, the largest of 31 quarter-to-quarter changes since late 2018, and systems revenue rose from $4.25 billion to $5.73 billion, +34.9%, the largest since 2020 and well ahead of the next-best +20.2% in the third quarter of 2023. Deferred revenue grew from $2.43 billion to $2.66 billion. Lam also held about $468 million of shipments to Japanese customers not yet recognized as revenue, because title “does not transfer until customer acceptance.”
Slides 15 and 16 point the same way. Non-GAAP operating expenses rose from $916 million to $1,004 million, which management tied to incentive pay and growth programs such as Akara, Halo and Dextro. Inventory rose from $4.28 billion to $4.55 billion, yet inventory turns improved from 3.0 to 3.4, the highest in nearly seven years, and days sales outstanding fell from 72 to 63. Capital spending rose from $189 million to $258 million, and headcount grew by about 1,900, mostly factory and field staff for manufacturing expansion and tool installation.
Own calculation (tax and guidance beats): At the June quarter’s 11% tax rate, September-quarter non-GAAP EPS would have been about $2.345, or +6.6% above the reported $2.20. Reported EPS beat the July guide midpoint of $2.15 by 2.3%, against an average beat of 7.7% over the previous eight quarters.

The Bull and Bear Case for Lam Shares

The bull case rests on a record of delivery and on the 2027 number. Revenue has beaten the guidance midpoint in 27 of the 30 quarters with guidance since early 2019, management raised its 2026 WFE view four times, and it now sees 2027 above $200 billion. CEO Tim Archer put the quarter down to execution: “With AI driving higher semiconductor demand and greater device complexity, our focus on operational execution helped Lam deliver record revenue, profit, and earnings per share in the September quarter.” Free cash flow was $3.24 billion, 39.4% of revenue.
The bear case rests on the next quarter and the multiple. The December guide slows to +4.6%, the tax rate is higher and China’s share will fall. The P/E of 34.04 on TTM non-GAAP EPS is in the 82nd percentile of 83 months; it has more than halved from 74.46 at the end of June but remains above the 22.82 median.

From a 48% China Mix to an AI Memory Cycle

Lam Research month-end share price over ten years with four events

The past four years reshaped Lam’s customer map twice. Quarterly revenue fell from $5.28 billion in the fourth quarter of 2022 to $3.21 billion in the second quarter of 2023, -39.2%. According to the 10-K, Lam began a restructuring in fiscal 2023 and had terminated about 1,760 employees by June 2024.
China filled the gap. Its share of revenue was 14% in the fourth quarter of 2018 and peaked at 48% in the third quarter of 2023, staying in the 40s through the first quarter of 2024. As Taiwan’s share grew to 27% in the second quarter of 2026, China’s fell to 26%, before rebounding to 35% in the third. The ten-for-one stock split took effect in October 2024.
From 2025, memory investment for AI servers drove growth. September-quarter memory systems revenue rose about 120% from a year earlier, and quarterly revenue of $8.22 billion is 2.56 times the 2023 trough. On a year-end basis the stock moved -41.6% in 2022, +86.4% in 2023, -7.8% in 2024 and +137.0% in 2025.

How Fast Can Systems Revenue Keep Growing?

Quarterly systems and customer support revenue and results against guidance

The release describes systems revenue as “sales of new leading-edge equipment in deposition, etch, clean, and other wafer fabrication markets.” Customer support (CSBG) revenue covers services, spares, upgrades and non-leading-edge Reliant tools. September-quarter systems revenue was $5.73 billion, +61.6% year over year, and CSBG was $2.49 billion, +40.0%. CSBG was nearly flat sequentially at +0.6% and fell to 30.3% of revenue.
Systems revenue of $13.71 billion in the first three quarters of 2026 already exceeds the $13.38 billion recorded for all of 2025.
Own calculation (2026 targets): Multiplying 2025 systems revenue by 1.4 and subtracting the first three quarters shows that December-quarter systems revenue of $5.02 billion would deliver 40% growth for the year, -12.5% below the September quarter. CSBG needs $2.27 billion in the December quarter for 30% annual growth, against $2.49 billion in September.
The margin over guidance is narrowing. Of the 30 quarters with guidance since early 2019, revenue missed the midpoint only in the first quarter of 2020 (-10.6%), the fourth quarter of 2021 (-3.9%) and the first quarter of 2022 (-4.5%). Over the previous eight quarters the average beat was 2.4% on revenue and 7.7% on non-GAAP EPS. September’s 1.5% revenue beat tied the low of that stretch, and the 2.3% EPS beat was the smallest since the first quarter of 2022.

WFE Raises and a Sector-Wide Sell-Off

Lam's 2026 WFE outlook by call and a price index of four equipment makers

Lam’s outlook and its stock parted ways in July. The company lifted its 2026 view to the low $150s at July results, yet the stock fell -32.38% that month; in October, when it added the 2027 figure, it fell -29.96%. In June the shares had risen +36.29% to the highest month-end close of 2026.
The decline was industry-wide. From the end of June, Applied Materials fell -47.8% and KLA -51.7%, close to Lam, while ASML, which sells lithography tools, fell -21.0%. Applied had risen +60.6% and KLA +57.0% in June, so much of the decline reversed June’s spike. Indexed to the end of 2025, Lam stands at 134, Applied and ASML at 147 and KLA at 120.
Outside view (consensus estimates, market data): The average non-GAAP EPS estimate for fiscal 2027, ending June 2027, is $9.63, up 17.2% from $8.22 ninety days earlier, and the fiscal 2028 estimate rose 19.6% to $12.15 from $10.16. At $230.10 the shares trade at 23.89 times the fiscal 2027 estimate and 18.94 times fiscal 2028.
Estimates rose while the stock fell, so the multiple compressed. Fiscal 2026 non-GAAP EPS was $5.82, so the fiscal 2027 estimate implies growth of 65.5%.

How Lam Research Makes Money

Lam has built wafer fabrication equipment since 1980. Fiscal 2026 revenue was $23.2 billion and R&D spending $2.4 billion, and headcount reached about 24,300 at the end of September, up from about 22,400 in June. Its 14 primary locations include Fremont and Livermore in California, Hwaseong, Osan and Yongin in South Korea, Hsinchu and Taoyuan in Taiwan, and Batu Kawan in Malaysia.
The core of the business is deposition and etch. Deposition lays thin films on a wafer one layer at a time; etch removes material to form the circuit pattern. 3D NAND, which stacks hundreds of layers and drills deep holes through them, leans heavily on both steps, and Lam describes itself as having the “industry’s largest NAND installed base.” The 10-K names Micron, Samsung Electronics, SK hynix and TSMC as major customers, and non-U.S. sales were about 93% of revenue in each of the last three fiscal years.

October 2026 deck slide 13: September-quarter systems revenue mix and revenue by region

Slide 13 shows September-quarter systems revenue split 46% foundry, 46% memory (26% non-volatile memory and 20% DRAM) and 8% logic and other. On the call, management said NAND revenue rose about 40% sequentially as customers moved to 256-layer-plus devices, with early investment in 384-layer devices. DRAM revenue was a record in dollars but fell to 20% of systems revenue from 23%, and foundry was driven by leading-edge nodes, advanced packaging and mature-node spending in China.
Lam’s growth argument is that its addressable market is widening. Management said device complexity and 3D scaling have expanded its served addressable market (SAM) by four points of WFE over the past few years, and the July deck pointed to a “Faster trajectory toward high-30s SAM % of WFE.” The October deck adds that AI workloads need QLC, TLC and SLC storage tiers, and that “SLC storage tier adoption could become a meaningful driver of NAND wafer capacity, requiring more capacity for the same bit demand.”
In foundry, logic and DRAM, each node transition brings new tool demand. The Akara conductor etch tool has been adopted by multiple chipmakers, and management said it raises output per wafer by up to 50%. Backside power delivery below 2 nanometers moves power wiring to the back of the wafer, which adds deposition, plating and etch steps.
By region, China was 35% of revenue, Korea 20%, Taiwan 18%, Japan 9%, the U.S. 8%, Southeast Asia 6% and Europe 4%. In dollars, the 10-Q shows China at $2.89 billion, +26.4% year over year, Korea at $1.63 billion, +110.5%, and Taiwan at $1.48 billion, +44.3%.
Own calculation (outside China): Excluding China, September-quarter revenue rose from $3.04 billion to $5.33 billion, +75.4%, or 2.9 times China’s 26.4% growth. Most of the past year’s growth came from outside China.
CSBG grows with the installed base. Lam expects CSBG revenue to grow more than 30% in 2026, and the deck adds “Expect >15% revenue growth in CY27 YoY.” It credits Equipment Intelligence and Dextro cobots with winning performance-based service contracts at several memory makers. The Aether dry resist for EUV patterning is “Ramping in HBM high-volume manufacturing,” and Lam now expects about $2.5 billion of cumulative Aether revenue by the end of the decade, about $1 billion more than before. Panel plating systems have shipped to more than 20 customers.

How Lam Compares With Three Equipment Peers

The peers are three other front-end equipment makers: Applied Materials, with the broadest tool range including deposition and etch; KLA, in inspection and metrology; and ASML, in lithography.

TTM revenue and growth at four chip equipment makers

Lam’s TTM revenue of $26.13 billion is below Applied’s $30.84 billion and ASML’s $44.98 billion and above KLA’s $13.58 billion. Its growth of +33.4% is the fastest of the four, ahead of ASML at +22.5%, KLA at +11.7% and Applied at +7.8%. The company with the most memory exposure has grown fastest in this cycle.
Multiples run the other way. Lam’s EV/EBITDA of 28.05 is the lowest of the four, against 29.29 for Applied, 31.59 for KLA and 32.17 for ASML. On forward P/E from market data, Lam is at 22.39, Applied 21.39, KLA 26.65 and ASML 24.74.

EV/EBITDA and return on invested capital at four chip equipment makers

Lam’s return on invested capital (ROIC) of 79.14% trails only ASML’s 92.13%, ahead of KLA at 66.75% and Applied at 35.64%. Its free cash flow yield of 2.27% is also second to ASML’s 3.92%, above KLA’s 1.98% and Applied’s 1.88%. In the September quarter Lam returned $1.34 billion, $1.01 billion in buybacks and $325 million in dividends, or 41.2% of free cash flow. It aims to return 85% of free cash flow over the long term, has $3.0 billion left on its buyback authorization and raised the quarterly dividend from $0.26 to $0.33, +26.9%. It ended September with $7.45 billion of cash after repaying $750 million of maturing debt.

P/E and Price-to-Sales Over 83 Months

Lam Research P/E on non-GAAP EPS and price-to-sales over 83 months

The P/E on TTM non-GAAP EPS is 34.04, in the 82nd percentile of 83 months since December 2019. The median is 22.82, the 90th percentile 39.10, the low 10.40 in September 2022 and the high 74.46 in June 2026. Price-to-sales of 11.00 is in the 89th percentile, about 1.9 times the 5.90 median.
June’s 74.46 marked a point where the stock ran ahead of earnings. Over the next four months TTM EPS rose and the shares fell, more than halving the multiple, yet it still sits in the top fifth of the distribution. The 23.89 multiple on fiscal 2027 estimates is close to the band median, but it depends on those estimates being met.

Three Conditions That Move the Stock

Quarterly revenue guidance stands at $8.6 billion for December, +4.6%. If the March-quarter guide in January returns to double-digit growth as delayed shipments come back, the slowdown looks temporary, as management says; if it stays in single digits, supply constraints become a ceiling on revenue.
The 2027 WFE outlook was first put above $200 billion in October. If January keeps or raises that figure and Lam holds about 19% of WFE as revenue, roughly $37.9 billion of 2027 revenue comes into view; if cleanroom and parts constraints pull it down, the pattern of quarterly raises seen in 2026 breaks.
China’s revenue share was 35% in September, and management expects it to be much lower in December. If Korean and Taiwanese memory spending lifts revenue toward the top of the guidance range, growth continues on a new customer map; if other regions cannot fill the gap, December revenue drifts toward the $8.2 billion low end.

What to Watch in the January Report

The next numbers are the detailed 2027 WFE outlook and the March-quarter guide due with January results, along with December-quarter CSBG revenue. Management says customer visibility runs through 2028, but the same remarks say cleanroom space and certain components limit how fast the industry can install tools.
One question remains open. While 2026 WFE rose from about $110 billion to about $155 billion, Lam’s revenue grew 42.9%, slightly faster. If 2027 WFE passes $200 billion but cleanrooms and parts slow tool installation, will Lam’s revenue follow the market forecast or its suppliers’ capacity?

Applied Materials (AMAT) Stock Analysis: Guidance Record: the closest peer and its run of guidance beats, a direct comparison with Lam’s 27 beats in 30 quarters.
ASML Stock Analysis: The Bookings Line That Went Missing: the lithography leader in the same WFE cycle, useful for comparing how each company signals future demand.
TSMC (TSM) Stock: 60% Margins and Guidance It Keeps Beating: one of Lam’s largest customers, whose leading-edge and packaging spending sits behind the foundry share of Lam’s systems revenue.

Chubb (CB) Stock: A Record Reserve Release and a 6.2% Yield

J. Equity. Research — Mon, 26 Oct 2026 09:15:26 GMT

Chubb (NYSE: CB) earned $2.06 billion of property and casualty underwriting income in the third quarter, and $511 million of it came from releasing reserves set aside for claims in earlier years. That is the largest quarterly release in the 32 earnings releases since the fourth quarter of 2018. Strip it out and underwriting income was $1.55 billion, -18.3% below the $1.90 billion earned the same way a year earlier. In the same quarter North America commercial net premiums written fell -2.7%, while the third-quarter financial supplement shows the market yield on Chubb’s fixed income portfolio at 6.2%, a full point above its 5.2% book yield. The question is what is holding up Chubb’s earnings as commercial insurance prices soften, and whether higher reinvestment rates and cost cuts are big enough to replace an unusually large reserve release.

Chubb one-year share price chart

Chubb sells commercial and personal property, casualty, accident and health, and life insurance in 54 countries and territories, and invests the premiums it collects until claims are paid. At $355.11 a share the company is worth $135.84 billion, and the stock is +28.2% over one year but -1.3% in the week of the results. The analysis parses every quarterly release since the fourth quarter of 2018 and checks the company’s account against the third-quarter earnings release, the call, the December 2025 investor deck and the 2025 10-K. Reserve releases are management’s own re-estimate of old claims. Core operating income is a non-GAAP measure, redefined this quarter to exclude acquired intangible amortization; the P/E band uses core operating EPS as originally reported, summed over the trailing four quarters (TTM).

The Investor Day Case for Outperforming Soft Markets

December 2025 investor presentation page 7: U.S. P&C pricing cycles and operating income for Chubb and peers

Page 7 of the December 2025 investor presentation lays U.S. commercial P&C price changes since 2000 over shaded hard and soft markets and plots Chubb’s core operating income against an average of commercial peers. In the 2004 to 2011 soft market Chubb’s operating income compounded at 12.9% a year while peers shrank 5.0% a year; in the 2014 to 2018 soft market Chubb grew 7.3% a year against a 4.1% annual decline for peers. The pricing line peaks in 2021 and slides toward zero by the twelve months to September 2025. The slide’s headline reads “We have outperformed peers during P&C soft market cycles and grown our income.”
Company disclosure (December 2025 investor presentation): Chubb says it is better positioned than in prior soft markets on competitive profile, capability, diversification, product, distribution, balance sheet, brand and people, and sets medium-term targets of core ROE of 14% or more, core ROTE of 20% or more, and double-digit growth in tangible book value per share.
Third-quarter results clear two of those three bars: annualized core operating ROE was 14.9% and core operating ROTE 21.6%, but tangible book value per share grew +5.7%, short of double digits, and +15.4% only excluding accumulated other comprehensive income (AOCI). Page 5 ranks Chubb seventh among global P&C insurers by 2024 revenue but second by income and first by margin.

December 2025 investor presentation page 6: business mix and exposure to the commercial P&C cycle

Page 6 splits expected 2025 premiums and deposits of $57 billion by division and marks roughly 25% as highly exposed to the commercial P&C cycle and 75% as having lower or no exposure. Large risk is 20% ($11.4 billion), E&S 10%, middle market and small commercial 23% ($13.2 billion), personal lines 18%, agriculture 5%, consumer accident and health 5% and life 17% ($9.5 billion). The page also claims a combined ratio about 7 points better than peers over five years and an administrative expense ratio of 8.2% against 14.2% for peers. A digital transformation page targets, three to four years out, about 20% fewer staff and run-rate savings of about 1.5 combined ratio points.
Own calculation (cost target in dollars): Backing P&C net premiums earned out of underwriting income and the combined ratio gives about $12.96 billion for the third quarter, so one combined ratio point is worth about $518 million a year and the 1.5-point target about $777 million. The third-quarter administrative expense ratio was 7.1% against 7.4% a year earlier, and 7.8% against 8.0% for nine months.

Book Yields Versus Reinvestment Rates

December 2025 investor presentation page 32: book yields and reinvestment rates for P&C insurers

Page 32 of the investor deck plots portfolio book yields against new money yields for 23 P&C insurers at the end of June 2025. The diagonal marks where the two are equal, and Chubb sits just above it at a book yield of roughly 5.1%. In mid-2025 Chubb could reinvest at only slightly more than its existing book. The third-quarter supplement shows how quickly that changed: the average market yield of fixed income investments went from 5.2% at the end of 2025 to 5.5% in the first and second quarters and 6.2% in the third, while the average book yield moved from 5.1% to 5.2%. Average duration lengthened from 4.7 to 5.0 years.
Page 9 says the invested asset grew from $32 billion to $166 billion over 20 years, with a $146 billion liquid portfolio rated A on average and $20 billion in private assets that Chubb wants to lift to about 15% of the portfolio; about half of the private book is the Strategic Holdings partnership with KKR. In the third quarter that partnership agreed to sell its stake in insurance broker USI to Aon, which the release says “is expected to result in a realized gain of $460 million on an investment of $740 million.”
Company disclosure (third-quarter call): Management put the third-quarter fixed income portfolio yield at 5.2% and the average new money rate at 6.2% at September 30, with 88% of invested assets in fixed income and 12% in equity-related exposure. It described the $4.5 billion of net realized and unrealized losses caused by higher rates as temporary, saying the portfolio’s maturity profile and higher reinvestment rates will amortize them fairly quickly.
Asked whether new money yields more than 100 basis points above book yields could push the industry toward cash-flow underwriting, Chairman and CEO Evan Greenberg said only at the margin: comparing loss cost inflation with new money rates, the industry is not writing at 10% or 12% interest rates.

The Bull and Bear Case for Chubb Shares

The bull case rests on underlying underwriting and investment income. Current accident year underwriting income excluding catastrophes rose +3.3% to $2.26 billion at a combined ratio of 82.6%. Adjusted net investment income of $1.89 billion was a quarterly record, and new money now earns a point more than the book. On core operating EPS the stock trades at 12.14 times, in the 28th percentile of the past 83 months.
The bear case rests on pricing and earnings quality. Management said commercial P&C is getting more competitive, especially in the U.S. and London, and that in a number of areas pricing is not keeping up with loss costs; North America commercial property pricing fell -4.2%. Reserve releases made up 24.8% of underwriting income, and the stock trades at 1.86 times book value, in the 95th percentile of the same 83 months.
Outside view (sell-side research aggregate, October 2026): Of 43 analysts, 22 rate the stock Buy and 18 Hold, with an average price target of $357 and a range of $301 to $387. After the results Mizuho raised its target from $347 to $350; earlier in October Wells Fargo, HSBC and Cantor Fitzgerald cut theirs.
The average target sits just +0.5% above the share price.

From ACE to a Global Insurer With an Asian Life Arm

Chubb shares over ten years with four markers

The 10-K says Chubb “was incorporated in 1985 at which time it opened its first business office in Bermuda.” That company was ACE, which bought The Chubb Corporation in 2016 and took its name. It added Cigna’s Asian accident, health and life business in 2022, took control of China’s Huatai Insurance Group on July 1, 2023 (about 87.2% owned at the end of 2025), and bought Liberty Mutual’s P&C businesses in Thailand and Vietnam in April 2025. Life insurance reached 14% of 2025 consolidated net premiums earned.
The deepest drawdown came with Covid: in the second quarter of 2020 pre-tax catastrophe losses reached $1.81 billion, P&C underwriting swung to a $929 million loss, and month-end price to book bottomed at 0.93 times in April. The 2022 rate shock pushed book value per share down to $114.79, and in the first quarter of 2025 catastrophe losses of $1.64 billion, including $1.47 billion from the California wildfires, cut underwriting income to $441 million.
From the end of November 2016 at $128 the stock has risen 2.77 times. It rose 14.1% in 2022, 2.4% in 2023, +22.3% in 2024 and 13.0% in 2025, and is up 13.8% so far in 2026.

How Much of Underwriting Income Came From Reserve Releases?

Quarterly favorable prior period development and the third-quarter underwriting income bridge

A P&C insurer books an estimate of future claim payments as reserves in the year an accident happens. If later payments come in below that estimate, the difference flows back into earnings as favorable prior period development. Chubb’s third-quarter release of $511 million is the largest in 32 quarters, $150 million above the previous high of $361 million in the third quarter of 2025, and 2.49 times the 2019 to 2025 quarterly average of $205 million.
On the call, CFO Peter Enns said active companies released $562 million, $575 million from short-tail lines less $13 million of adverse long-tail development, while the mostly environmental corporate run-off portfolio added $51 million. Loss reserves exceed $71 billion. Greenberg repeated that Chubb is slow to recognize favorable development and quick to recognize adverse development, and said the long-tail strengthening came from the 2019 to 2022 accident years.
Own calculation (reserve dependence): Reserve releases were 24.8% of third-quarter underwriting income against 16.0% a year earlier. Without them underwriting income fell -18.3% to $1.55 billion. Nine-month releases of $1.08 billion were +24.9% higher than the $865 million a year earlier, while nine-month catastrophe losses of $1.68 billion were lower than the prior year’s $2.56 billion.
Third-quarter catastrophe losses of $705 million were 2.5 times the prior year’s $285 million. Current accident year income grew $72 million while catastrophes rose $420 million, and the $150 million increase in releases covered part of the gap, limiting the fall in underwriting income to $198 million.

North America Commercial Lines and Falling Property Rates

December 2025 investor presentation page 14: North America gross premiums by business and combined ratio

Page 14 of the investor deck splits $38.2 billion of expected 2025 North American gross premiums into major accounts ($11.5 billion, the only piece labeled low growth), middle market and small commercial ($9.5 billion), E&S ($4.6 billion), high-net-worth personal lines ($8.1 billion, a 60% market share) and agriculture ($4.5 billion).
Third-quarter North America commercial net premiums written fell -2.7% to $5.51 billion. Major accounts and E&S wholesale fell -5.0%, middle market and small commercial grew 0.8%, and the company says the segment grew 1.7% excluding lower large account property and financial lines exposure, including additional reinsurance, which Greenberg said cut growth by about 4.5 points. Property pricing fell 4.2%, casualty rose 5.7% and financial lines 2.1%, while shared and layered property fell -11%.
The North America commercial combined ratio rose 4.8 points to 86.3%, including 3.1 points of catastrophes and 1.0 point of underlying loss ratio, which Greenberg attributed entirely to the lower share of property. North America personal lines grew +5.3% with a 60.3% combined ratio and Overseas General grew +6.7%, led by Latin America at 11.7%. The release adds: “I fully expect North America commercial growth to improve in future quarters.”

Unrealized Bond Losses and Book Value Without AOCI

Quarterly adjusted net investment income and book value per share with and without AOCI

When rates rise, bonds already owned lose value. Available-for-sale fixed maturities had a market value of $125.80 billion against an amortized cost of $134.09 billion, an unrealized loss of $8.29 billion, up from $1.99 billion at the end of 2025. After-tax realized and unrealized portfolio losses were $4.48 billion in the quarter, and AOCI widened to a $9.48 billion deficit from $4.98 billion at the start of the year.
That opens a $24.79 gap between book value per share of $191.43 and $216.22 excluding AOCI; tangible book value per share excluding AOCI rose +15.4%. Adjusted net investment income barely moved from $882 million in the first quarter of 2019 to $950 million in the second quarter of 2022, then rose 2.1 times to $1.89 billion once rates climbed. The CFO said private equity returns were below normal and gave no investment income guidance.
Own calculation (reinvestment uplift): If the entire $146.88 billion of fixed income at amortized cost repriced to the 6.2% market yield, pre-tax investment income would rise by about $1.47 billion a year, worth 2.84 combined ratio points. If one fifth reprices each year in line with the 5.0-year duration, the first-year gain is about $294 million, 0.57 points. Spreading the $8.29 billion unrealized loss over the same five years implies about $1.66 billion a year pulling back toward par if rates stay put.

How a Property and Casualty Insurer Makes Money

Chubb’s 2025 consolidated net premiums earned came 38% from North America commercial P&C, 27% from Overseas General, 14% from life, 13% from North America personal P&C, 5% from agriculture and 3% from global reinsurance. North America commercial runs from property, casualty and directors’ and officers’ cover for multinationals to small business policies and E&S lines placed through wholesale brokers. Personal lines insure homes, cars, valuables and boats for high-net-worth families, Rain and Hail sells federal crop insurance, Overseas General sells commercial and consumer cover, life combines Huatai Life, Chubb Life and Chubb Benefits, and Chubb Tempest Re writes reinsurance.
The second-quarter 2026 corporate presentation describes Chubb as “The largest commercial lines insurer in the U.S. and one of the largest financial lines writers globally.” Some 46% of the business is written outside the U.S., and 2025 gross premiums were $41.0 billion in North America, $12.1 billion in Asia, $8.8 billion in Europe, the Middle East and Africa, and $4.0 billion in Latin America. Distribution runs through brokers, agents, banks, mobile carriers and direct marketing, and Greenberg said Chubb is Mexico’s third-largest auto insurer and the largest direct marketer of consumer accident and health insurance in Asia and Latin America.
Chubb earns money two ways. Underwriting income comes from collecting more in premiums than it pays in claims and expenses, measured by the combined ratio: the third-quarter P&C ratio of 84.1% was a 58.7% loss ratio, an 18.3% acquisition cost ratio and a 7.1% administrative expense ratio, so Chubb spent $84.10 for every $100 of premium. Investment income comes from the money held between collecting premiums and paying claims, which for casualty lines can mean years. The balance sheet carried $91.83 billion of unpaid losses and $28.61 billion of unearned premiums, operating cash flow was a quarterly record of $6.07 billion, and the $180.80 billion portfolio holds $138.59 billion of fixed income, 31% rated AA and 26% A.
Consolidated net premiums written rose +1.9% to $15.14 billion, and life segment income rose +11.4% to $369 million, mostly from mainland China, Hong Kong, Korea and Taiwan. The roughly $8.5 billion high-net-worth business grew about 5.5%. Over nine months Chubb returned $4.47 billion, 52.0% of core operating income, through $3.30 billion of buybacks at an average $332.33 and $1.17 billion of dividends, and diluted shares fell -2.9%. The CFO called the roughly 50% payout an outcome rather than a rule.

How Chubb Compares With Four U.S. Insurers

Trailing revenue and growth for five U.S. P&C insurers

Trailing twelve-month revenue is $61.96 billion at Chubb, $48.92 billion at Travelers, $29.32 billion at Hartford, $26.74 billion at AIG and $14.87 billion at W. R. Berkley, with growth from Hartford at +8.9% and Chubb at +5.3% to AIG at -2.4%. Travelers writes U.S. commercial and personal lines, AIG commercial and personal insurance at home and abroad, Hartford small business and group benefits, and W. R. Berkley specialty and E&S lines. All four face the same commercial pricing cycle, so forward P/E and price to book are the yardsticks.

Forward P/E and price to book for five U.S. P&C insurers

Forward P/E is 15.34 times at W. R. Berkley, 13.02 at Travelers, 12.32 at Chubb, 10.31 at Hartford and 9.62 at AIG. Price to book is 2.90 times at W. R. Berkley, 2.81 at Travelers, 1.92 at Hartford, 1.86 at Chubb and 1.05 at AIG. Over one year Travelers shares rose +48.3%, Chubb 28.2%, Hartford 10.1%, AIG 2.9% and W. R. Berkley 2.8%.
Own calculation (relative size and book): Chubb’s market value of $135.84 billion is 1.66 times Travelers’ $81.63 billion. On reported book value Chubb ranks fourth of the five on price to book; on book value excluding AOCI it trades at 1.64 times, and on tangible book value at 2.80 times.

P/E on Core Operating EPS and Price to Book Over 83 Months

Chubb P/E on core operating EPS and price to book over 83 months

On trailing core operating EPS of $29.26 the stock trades at 12.14 times, in the 28th percentile of the 83 months since December 2019, against a median of 12.95. The low was 10.53 times in April 2020 and the high 17.46 times in April 2021. Fourth-quarter 2023 core operating EPS of $8.30 included a one-time $2.76 per share deferred tax benefit from Bermuda’s new corporate income tax, so the band uses the $5.54 the company reported excluding that benefit.
Price to book of 1.86 times sits in the 95th percentile against a median of 1.58, near the 1.91 peak of November 2022. On book value excluding AOCI the multiple is 1.64 times, in the 93rd percentile of 53 months, so unrealized bond losses add about 0.22 to the headline multiple. The share price is 6.9% above the $332.33 average nine-month buyback price.

Three Conditions That Move the Stock

The current accident year combined ratio excluding catastrophes was 82.6% in the third quarter. Holding the low 82s while commercial property prices fall would support management’s explanation that mix, not price, moved the North America loss ratio; a move above 83% would mean the pricing gap management described is reaching earnings.
Favorable prior period development was $511 million. If releases drift back toward the 2019 to 2025 average of about $200 million a quarter and underwriting income still holds near $2 billion, current year business is carrying the result; if earnings fall in step with releases, a quarter of this quarter’s underwriting income was borrowed from reserves.
The market yield on fixed income was 6.2% against a 5.2% book yield. If that gap persists and adjusted net investment income climbs past $1.9 billion a quarter, investment income can offset slower underwriting; if rates fall and the gap closes, investment income growth slows, but unrealized losses shrink and book value recovers.

What to Watch in the Fourth Quarter

The next numbers are fourth-quarter North America commercial premium growth and its underlying loss ratio, whether cheaper catastrophe reinsurance spreads into broader price competition, which quarter books the $460 million USI gain, and whether reserve releases stay near third-quarter levels.
One question remains open. In the two soft markets on Chubb’s investor day slide its operating income kept growing; this time a 6.2% reinvestment yield is helping as well. How long can that investment income cover a shrinking North American commercial book?

American Express (AXP) Stock Analysis: Credit Metrics Reset: another financial company whose reported credit measures shifted over 85 months of filings, useful next to Chubb’s reliance on its own reserve estimates.
Shopify (SHOP) Stock Analysis: Net Income vs. Equity Gains: earnings lifted by items outside the core business, a parallel to separating reserve releases from Chubb’s current year underwriting.
Lennar (LEN) Stock: 12.9% Incentives and a 0.89x P/B: a company cutting effective prices in a softening market and valued on book, a contrast with Chubb’s 1.86 times book multiple.

United Airlines (UAL) Stock: Fuel Recapture Stalls at 72%

J. Equity. Research — Mon, 26 Oct 2026 03:07:43 GMT

United Airlines (NASDAQ: UAL) set a quarterly revenue record of $17.88 billion in the third quarter, but fuel expense rose $1.85 billion and operating income excluding special items fell from $1.32 billion to $1.23 billion. Management said on the call that United recovered 72% of the fuel cost increase, short of the 80% to 90% it had projected in July for the quarter. Fourth-quarter guidance of $0.50 to $1.50 in adjusted EPS assumes fuel at about $4.80 a gallon. When United laid out its United Next plan in June 2021, the 2026 target was an adjusted pre-tax margin of about 14% on fuel at $2.20. The question is how much of a fuel bill running far above plan United can pass through in fares, and whether that pace gets it to the double-digit pre-tax margin management wants in 2027.

United Airlines one-year share price chart

United flies from seven hubs: Chicago, Denver, Houston, Los Angeles, New York/Newark, San Francisco and Washington. At $97.93 a share the company is worth $31.82 billion, and the stock is -28.1% below its weekly high of $136.11 at the end of June and -12.4% for 2026. It fell -10.6% the week before the results and rose +1.9% in results week. The analysis parses 31 quarterly releases since 2019 and checks them against the third-quarter earnings release, the 10-Q, the call, the 2025 10-K and investor updates. Fuel recapture is a management figure with no published formula. Adjusted EPS, adjusted pre-tax margin and CASM-ex (operating cost per available seat mile excluding fuel and special items) are non-GAAP measures, and the P/E band uses adjusted EPS summed over the trailing four quarters (TTM).

The 2021 Investor Day Plan Built on Lower Costs

June 2021 investor day deck page 42: 2023 and 2026 financial targets

Page 42 of the deck United presented at its June 29, 2021 investor event set 2023 and 2026 targets against 2019. For 2026 it called for capacity growth of 4% to 6% a year, TRASM (total revenue per available seat mile) about 1% below 2019, CASM-ex about 8% below, fuel at $2.20 a gallon, an adjusted EBITDA margin near 20%, an adjusted pre-tax margin near 14%, adjusted net debt under $18 billion and adjusted total debt under 2.5 times adjusted EBITDAR. The 2019 baseline was 15.18 cents of TRASM, 10.21 cents of CASM-ex, $2.09 fuel and a 9.4% margin. Page 37 says it plainly: “Expect margin growth even if TRASM is down ~(4%) in 2023 and down ~(1%) in 2026, versus 2019.”
Company disclosure (June 2021 investor deck): United Next would retire more than 200 single-cabin regional jets by 2026 and lift North American seats per departure from 104 in 2019 to about 134. Alongside larger aircraft, the deck promised “over $2B of structural cost savings independent of gauge increase” and targeted free cash flow conversion of at least 80% from 2026.
The gap opened early. The 2023 targets were TRASM and CASM-ex both about 4% below 2019, a pre-tax margin near 9% and adjusted net debt of $25 billion. Actual 2023 TRASM was 18.44 cents, +21.5% above 2019, CASM-ex was 12.03 cents, +17.8%, and the adjusted pre-tax margin was 8.0%. Fares moved more than 20% the opposite way from plan, non-fuel costs followed them up, and the margin landed a point short.

June 2021 investor day deck page 33: CASM-ex bridge to 2026

Page 33’s cost bridge takes CASM-ex from 10.21 cents in 2019 to about 9.8 cents in 2023, with roughly 0.8 cents of inflation offset by about 0.7 cents of cost savings and 0.5 cents from bigger aircraft, and then to about 9.4 cents in 2026, as about 1.5 cents from gauge and asset utilization outweighs about 0.6 cents of inflation and 0.4 cents from shorter domestic stage length. Page 14 has the Boeing 737 MAX 10 and Airbus A321neo joining the fleet in 2023. The plan leaned on costs, not fares.
Nine months into 2026, TRASM is 19.78 cents, +30.3% above 2019, and CASM-ex is 13.36 cents, +30.9%. Fuel averaged $3.65, 65.9% above the $2.20 plan, and the nine-month adjusted pre-tax margin was 4.9%. Converted to an annual rate, seat miles grew 2.45% a year from the first nine months of 2019, below the 4% to 6% target.

Bigger Aircraft and More Premium Seats

June 2021 investor day deck page 17: seats per short-haul departure

Page 17 shows total seats per short-haul departure on the North American mainline and regional fleet rising from 104 in 2019 and 109 in 2022 to about 134 in 2026, about 30 more seats per departure. Page 18 puts premium seats per short-haul departure at 31 in 2019, 39 in 2022 and 53 in 2026, an increase of about 75%. On the third-quarter call CEO Scott Kirby congratulated Boeing on certifying the MAX 10 and said United looks forward to its first delivery next year, four years later than the deck planned. The 2025 10-K says United expects to “take delivery of over 630 new narrow- and widebody aircraft by the end of 2034.”

Third-quarter investor update page 2: 2026 fleet plan

The fleet plan in the third-quarter investor update shows mainline aircraft rising from 1,100 at the end of the first quarter to 1,143 at the end of the third and 1,166 by year-end. Boeing 737 MAX aircraft went from 268 to 304 and A321neo/XLR from 66 to 76, while smaller A319/A320s fell from 142 to 129 and are planned at 122 by year-end; 787s rose from 85 to 95. The 50-seat regional fleet, which includes the dual-class CRJ550, grew from 171 to 177 with 186 planned by year-end. The update does not break out single-cabin jets, so it cannot confirm the 2021 retirement promise.
Company disclosure (third-quarter investor update): United expects 2026 adjusted capital expenditures of about $7.5 billion and a fourth-quarter profit sharing accrual of $50 million to $140 million.
Nine-month adjusted capital expenditures were $5.36 billion against $4.35 billion a year earlier, and third-quarter operating cash flow fell to $465 million from $1.22 billion. Third-quarter free cash flow was -$1.84 billion, and TTM free cash flow was $802 million.

The Bull and Bear Case for United Shares

The bull case rests on fares and customer mix. Third-quarter TRASM rose +15.9%, premium revenue 17% and loyalty revenue 17%, and “Contracted business revenue was up 26% during the quarter.” United expects fourth-quarter revenue growth to accelerate and “set another record with an over 20% year-over-year increase,” and it is targeting CASM-ex growth of 2% to 3% in 2027.
The bear case rests on fuel and debt. The fourth-quarter fuel assumption of $4.80 is above the third quarter’s $3.90, and each cent per gallon is worth about 2.5 cents of quarterly EPS. Adjusted net debt of $20.47 billion is $1.5 billion higher than a year earlier, net leverage is 2.4 times, and the P/E on TTM adjusted EPS of 11.10 times sits in the 91st percentile of 44 months.
Outside view (sell-side research aggregate, October 2026): Of 47 analysts, 31 rate the stock Buy and 16 Hold, with an average price target of $159 and a range of $140 to $190. Between October 20 and 22, Evercore ISI raised its target from $135 to $160 and Bernstein from $153 to $160, while Jefferies cut from $155 to $142, BMO from $140 to $135 and Argus from $135 to $125.
The average target is +62.4% above the share price.

From Covid to United Next and the Newark Disruption

United Airlines shares over ten years with four events

Covid produced the deepest trough. Second-quarter 2020 revenue was $1.48 billion, 13% of the $11.40 billion a year earlier, and capacity fell to 12% of the prior-year level. The adjusted pre-tax margin was -219.0%, and the stock fell -50.9% in 2020.
United Next followed in June 2021. The stock rose 1.2% in 2021, fell 13.9% in 2022 and rose 9.4% in 2023 before gaining +135.3% in 2024. The month-end P/E bottomed at 3.33 times in October 2023.
In May 2025 an event at Newark “drove extensive negative news coverage that drove customer bookaway,” according to the second-quarter 2025 investor update, which noted that Newark accounted for more than 20% of capacity measured in available seat miles. The stock still rose 15.2% in 2025 to $111.82. In 2026 fuel took over. The average price rose from $2.78 a gallon in the first quarter to $4.19 in the second, the stock fell to $86.60 in the week of March 13, and in April United cut its full-year guidance. Shares peaked at $136.11 in the last week of June and fell again after jet fuel spiked late in the third quarter.

How Much of a $1.85 Billion Fuel Bill Did Fares Recover?

Quarterly fuel price per gallon and the third-quarter operating income bridge

The average fuel price was $3.90 a gallon in the third quarter, +60.3% above $2.43 a year earlier, while consumption rose 0.8% to 1.243 billion gallons. Fuel expense climbed $1.85 billion, or +61.6%, to $4.84 billion. CFO Michael Leskinen said on the call that United recovered 72% of the increase, explaining that much of the unexpected rise came within the quarter while most revenue was already booked. He expects fourth-quarter recapture to be similar to the third quarter, below the 100% United had expected, because jet fuel spiked at the end of the third quarter.
Own calculation (operating income bridge): Using the 10-Q income statement and excluding special items, third-quarter operating income went from $1.32 billion a year earlier to $1.23 billion as revenue rose $2.65 billion, fuel $1.85 billion and non-fuel costs $895 million. The revenue gain covered the fuel increase 1.44 times but not the non-fuel increase on top of it. At the 2021 plan price of $2.20, third-quarter fuel would have cost $2.11 billion less, 11.8% of revenue.
Within non-fuel costs, salaries and related costs rose $406 million, or 8.9%. The 10-Q puts the increase “primarily due to increased pay as a result of the increase in flying activity, a 5.4% increase in headcount” along with raises under the flight attendant contract. The CFO said third-quarter CASM-ex growth of +7.8% now carries the full run-rate of that contract and the effect of near-term capacity cuts, and called the third quarter the peak.

Guidance Cuts and the $4.80 Fuel Assumption

United’s 2026 adjusted EPS guidance went from $12.00 to $14.00 in January to $7.00 to $11.00 in April and $9.00 to $11.00 in July, and the October update dropped the full-year range. In April the company assumed revenue would recover 40% to 50% of fuel increases in the second quarter, 70% to 80% in the third and 85% to 100% in the fourth. In July it raised the bar: “The Company expects to recover 80% to 90% of the fuel price increase in the third quarter and 100% of the fuel price increase by the fourth quarter of 2026.” The third quarter came in at 72%.
Set against results, quarterly guidance was $1.00 to $1.50 in the first quarter against $1.19, $1.00 to $2.00 in the second against $1.99, and $2.50 to $3.50 in the third against $2.54. The third-quarter range assumed fuel at $3.69 a gallon; the actual was $3.90.
Company disclosure (third-quarter investor update): Fourth-quarter adjusted EPS of $0.50 to $1.50 assumes an all-in fuel price of about $4.80 a gallon, based on the Gulf Coast jet forward curve on October 16. In the short term each $0.01 change in fuel price equals about 2.5 cents of quarterly EPS, and consensus assumes about $4.35 fuel, about $0.45 below the company’s assumption and worth about $1.00 of quarterly EPS.
Own calculation (2026 EPS): First- to third-quarter adjusted EPS totals $5.72, so the fourth-quarter range implies $6.22 to $7.22 for 2026, -41.4% to -32.0% below 2025’s $10.62. The fourth-quarter range is -83.9% to -51.6% below last year’s $3.10, and its $1.00 width equals about 40 cents of fuel on the company’s own sensitivity.

United Next Targets Against 2026 Fares and Costs

United Next 2026 targets against nine-month 2026 results

Nine-month TRASM of 19.78 cents is 4.75 cents above the roughly 15.03 cents the 2021 deck implied for 2026. CASM-ex of 13.36 cents is 3.97 cents above the roughly 9.39-cent target, and fuel at $3.65 is $1.45 above plan. Fares and non-fuel costs have both risen about 30% from 2019 while fuel runs 66% above plan, and the adjusted pre-tax margin of 7.8% in 2025 and 4.9% for nine months of 2026 is far from 14%.
Debt targets have moved the same way. Adjusted net debt of $20.47 billion is above the under-$18 billion goal, and adjusted total debt of $35.12 billion divided by TTM adjusted EBITDAR of $8.38 billion gives 4.19 times, against a target below 2.5 times and above the 3.2 times the deck showed for 2019. United’s own net leverage measure, adjusted net debt over adjusted EBITDAR, is 2.4 times; the CFO repeated a goal below 2 times and said United remains determined to reach investment grade metrics and ratings next year.

How a Hub Airline Makes Money

United earns money from passengers, cargo and other revenue. In 2025 passenger revenue was $53.44 billion, cargo $1.78 billion and other revenue, which includes MileagePlus partner income, $3.85 billion, with other revenue growing +10.4% against 3.1% for passengers. In the third quarter domestic passenger revenue of $10.73 billion, 60.0% of the total, rose +19.3%, Atlantic revenue of $3.85 billion rose 10.5%, Pacific revenue of $1.84 billion rose 17.6% and Latin America revenue of $1.45 billion rose +23.1%. Cargo revenue rose 22.7% and other revenue 13.0%.
Fares have reversed direction. In 2025 passenger revenue rose in all four regions, but average fare per passenger fell 1.9% domestically, 0.8% across the Atlantic, -3.5% across the Pacific and 2.1% in Latin America. If 2025 was a year of adding seats at lower fares, the third quarter of 2026 held capacity to +1.3% and raised prices.
The unit of sale is the seat. United sells premium cabins (United First, Polaris and Economy Plus), standard economy and Basic Economy separately on the same aircraft and uses the price gaps to lift unit revenue. Premium cabin revenue rose 17% on 2.5% more capacity, non-premium revenue 18.4% on 0.5 points of capacity growth, and Basic Economy revenue 16%. Business revenue rose 22% and leisure revenue 16%, while leisure load factor fell 1.3 points, a sign of some resistance to higher fares.
The second engine is MileagePlus. Chase pays United for miles earned on co-branded cards; third-quarter compensation from Chase rose 15% and co-brand card spending 13%, and United expects one million new card accounts in 2026. In 2025 about 10.9 million award tickets were used on United and United Express, and “These awards represented approximately 10.3% of United’s total revenue passenger miles.”
The third engine is the hub network. United’s seven hubs sit in the largest U.S. metro areas, and in the third quarter it served 241 airports in the U.S. and Canada on its largest domestic schedule ever. From the second quarter of 2027, FAA limits at Chicago O’Hare will cap United at 600 daily flights. United belongs to Star Alliance and runs four joint business arrangements, including Air Canada and the Lufthansa Group across the Atlantic and ANA across the Pacific.
Regional flying under the United Express brand is operated by CommuteAir, GoJet, Mesa, Republic and SkyWest under capacity purchase agreements. United pays them fees and bears fuel and landing fees itself, so regional fuel costs land on United’s income statement.
On top of the network sits Starlink Wi-Fi, installed on more than 640 aircraft and free for MileagePlus members in every cabin. More than 5.4 million customers used it in September, and the release says “Starlink is now available on about half of all United flights, including regional flights,” with the whole fleet covered by the end of 2027.

How United Compares With Four U.S. Airlines

TTM revenue and growth at five U.S. airlines

TTM revenue is $71.80 billion at Delta, $65.55 billion at United, $60.98 billion at American, $31.55 billion at Southwest and $15.31 billion at Alaska. Growth runs from Southwest at +14.5% and Delta at +14.1% to United and American at +12.3% and Alaska at 8.2%. Delta and American are network carriers with hubs and long-haul flying like United, Southwest is mostly domestic and Alaska is West Coast focused. All five swing with fuel and industry capacity, and American and Alaska are loss-making on a TTM basis, so price to sales and EV/EBITDA are the yardsticks.

Price to sales and EV/EBITDA at five U.S. airlines

Price to sales is 0.70 times at Delta, 0.65 at Southwest, 0.49 at United, 0.25 at Alaska and 0.13 at American. EV/EBITDA is 7.31 times at United, 8.82 at Southwest, 8.84 at Delta, 10.73 at American and 15.21 at Alaska. Over one year Southwest shares rose +37.8%, Delta 33.8% and United 4.1%, while American fell 7.8% and Alaska -17.6%. United’s $31.82 billion market value is 0.63 times Delta’s $50.24 billion on 0.91 times its revenue, and its EV/EBITDA is the lowest of the five.

P/E on Adjusted EPS and Price to Sales Over 44 Months

United Airlines P/E on adjusted EPS and price to sales over 44 months

On TTM adjusted EPS of $8.82 the stock trades at 11.10 times, in the 91st percentile of the 44 months since March 2023, against a median of 7.53. The low was 3.33 times in October 2023 and the high 15.01 times in June 2026. The band starts in March 2023, the first month the trailing four quarters no longer included pandemic losses. Price to sales of 0.49 times is in the 64th percentile against a median of 0.45.
A shrinking denominator explains much of the high P/E. On the $6.72 midpoint of implied 2026 adjusted EPS the P/E is 14.57 times; on 2025’s $10.62 it is 9.22 times, closer to the band median.

Three Conditions That Move the Stock

Fuel recapture was 72% in the third quarter. A fourth quarter above that pace and a path toward the 100% target for 2027 would let margins recover even with fuel high; recapture stuck near 72% means every rise in fuel prices comes straight out of earnings.
The fuel price per gallon is assumed at $4.80 for the fourth quarter. If prices follow the 2027 forward curve the CFO cited, about $4.50 in the first quarter falling to $3.70 by the fourth, each cent saved is worth 2.5 cents of quarterly EPS; fuel holding above $4.80 removes one of the conditions for a double-digit pre-tax margin in 2027.
CASM-ex growth was 7.8% in the third quarter. Slowing to the 2% to 3% United plans for 2027 would let fare increases reach earnings; growth above 5% from labor and airport costs would keep margins flat even if recapture improves.

What Has to Go Right for a Double-Digit Margin

The next numbers are fourth-quarter recapture and 2027 guidance. Kirby said a double-digit pre-tax margin in 2027 needs at least one of lower fuel prices, lower industry capacity, or an industry willing to trade load factor for yield, and that Starlink’s unit revenue lift alone will not be enough. One analyst on the call pointed out that fourth-quarter domestic capacity is up roughly 8% to 9% at both United and American.
One question remains open. The 2021 plan aimed for a 14% margin with fares 1% below 2019 and costs 8% lower; fares are now 30% higher and costs 31% higher. With fuel at 1.7 times the plan price, will demand keep absorbing the fare increases needed to recover all of it?

Delta Air Lines (DAL) Stock: 23.6% EPS Guidance Cut on Fuel: the closest network peer cut guidance on higher fuel, a direct comparison with United’s 72% recapture.
Casey’s (CASY) Stock Analysis: Fuel Margin Drove Q4 Profit: a fuel seller whose margin rose with fuel prices, the other side of the trade.
Trip.com (TCOM) Stock Analysis: Antitrust Fine and Guidance: a travel booker, for comparing how demand holds up as fares rise.

Philip Morris (PM) Stock: Cigarette Pricing Carries ZYN

J. Equity. Research — Sun, 25 Oct 2026 22:11:30 GMT

Philip Morris International (NYSE: PM) reported record third-quarter adjusted EPS of $2.36, but cigarette pricing did the heavy lifting. Over nine months, adjusted operating income rose $1.35 billion while the price variance alone added $1.89 billion, and $1.61 billion of that came from international combustibles. The U.S. business built around ZYN, which PMI bought with Swedish Match, moved the other way: nine-month adjusted operating companies income (OCI) fell to $550 million from $958 million, and management guided fourth-quarter U.S. adjusted OCI to around zero as it moves ZYN from 15-pouch to 20-pouch cans. The question is whether smoke-free products can take over as the profit engine once the U.S. investment phase ends, while cigarettes are still paying for it.

Philip Morris International one-year share price chart

PMI sells Marlboro cigarettes, IQOS heated tobacco, ZYN nicotine pouches and VEEV e-vapor products outside the U.S. and, increasingly, inside it. At $199.47 a share the company is worth $310.9 billion, and the stock is +24.4% in 2026 and +38.2% over one year, though it fell -2.8% from the prior week’s high of $205.20 in results week. The analysis parses 32 quarterly releases since the fourth quarter of 2018 and checks them against the third-quarter earnings release, its supplemental schedules, the third-quarter deck and prepared remarks, the 10-Q and the 2025 10-K. Adjusted EPS and adjusted OCI are non-GAAP measures that exclude acquired intangible amortization and one-off items; the P/E band sums adjusted EPS over the trailing four quarters (TTM). Stockholders’ equity is negative, so there is no price-to-book band.

The Investor Deck on ZYN’s 20-Pouch Can

Third-quarter 2026 deck slide 18: U.S. ZYN shipments and offtake share

Slide 18 of the third-quarter deck shows U.S. ZYN shipments of 2.3 billion pouches in the first quarter, 2.9 billion in the second and 3.2 billion in the third, up 4.2% from a year earlier and 13% excluding a September 2025 promotion. The line below it tracks ZYN’s Nielsen offtake share falling from 47.5% in March to 44.6% in June, then recovering to 46.0% in September after the launch of ZYN ULTRA and new flavors.
Company disclosure (third-quarter prepared remarks): Starting in October, PMI is moving its 1.5mg, 3mg and 6mg flagship variants from 15 to 20 pouches per can, which “translates into approximately 25% less revenue-per-pouch” all else equal. U.S. segment SG&A rose to about $370 million in the third quarter and will rise about 10% more in the fourth. Management added: “We expect an abnormally low level of U.S. profitability in the fourth quarter, with adjusted OCI around zero or slightly negative.”
The release frames the move as pricing strategy: “The change to 20-pouch cans is designed to align the value proposition across the portfolio and optimize ZYN’s price premium.” The remarks also say the step-up was flagged at second-quarter earnings, that fourth-quarter shipments should be broadly in line with or modestly above the third quarter, and that “Looking beyond Q4, we view the Q3 level of spend to be sufficient to support the brand.” On the call, CFO Massimo Andolina said consumers who had left ZYN for higher-nicotine competitors were returning after the 9mg and 11mg ZYN ULTRA launch.
Slide 19 lists the rest of the plan: ZYN ULTRA and new dry flavors approaching full distribution, 1.5mg and 8mg flagship variants rolling out, and a fourth-quarter ramp of the “When It Clicks” campaign. The FDA authorized 11 ZYN ULTRA variants on August 21, bringing ZYN to 31 authorized variants.
The filings show what the investment costs. U.S. net revenue over nine months was $2.32 billion, 7.1% of the group and -5.2% from a year earlier, and the U.S. nine-month adjusted gross margin was 64.1% against 71.2%. Third-quarter U.S. adjusted OCI of $171 million adds back $205 million of adjusting items; before them the segment’s OCI was -$34 million. The 10-Q notes that “Non-amortizable intangible assets substantially consist of the ZYN trademarks,” which carry $4.59 billion on the balance sheet and are tested for impairment each second quarter.

Cigarette Pricing and the Margin Bridge

Third-quarter 2026 deck slide 20: combustible pricing and international combustible gross profit

Slide 20 shows combustible pricing of 8.9% in 2023, 8.7% in 2024 and 7.6% in 2025, rising again to 9.1% for the first nine months of 2026. International combustible gross profit grew 0.4% organically in 2023, 7.4% over nine months of 2026 and 9.8% in the third quarter. Marlboro’s international share hit a record 11.4%.
Company disclosure (third-quarter earnings release): Combustibles net revenue grew 7.8% organically on 8.9% pricing, and the quarter also benefited from restructured distribution terms in certain markets, “which is not expected to recur at the same level in future quarters.” Full-year combustible pricing is expected above 8%.

Third-quarter 2026 deck slide 9: nine-month adjusted operating margin bridge

Slide 9’s bridge takes the nine-month adjusted operating margin from 42.0% to 42.9%: gross profit added 0.8 points, SG&A cost 0.2 points and currency plus acquisitions added 0.3 points. In the third quarter alone the margin rose from 43.1% to 44.7%, and SG&A helped by 0.5 points, which the remarks attribute to G&A savings and a prior-year comparison that included certain combustible charges. Cumulative gross savings since 2024 have passed $2 billion, ahead of the three-year goal.
Slide 10 strips out the U.S.: international organic revenue grew 7.0% over nine months, gross profit 9.1% and OCI 11.4%. International smoke-free revenue grew 9.9% and gross profit 11.8%, reaching a 70.0% gross margin, but in the third quarter those rates slowed to 3.4% and 3.3%, while international combustibles grew revenue 7.8% and gross profit 9.8%. PMI blames shipment timing in Japan and expects smoke-free to reaccelerate in the fourth quarter.
Own calculation (profit bridge): Nine-month adjusted operating income rose from $12.71 billion to $14.06 billion, an increase of $1.35 billion, while the price variance was $1.89 billion, or 139.7% of the increase. International combustibles supplied $1.61 billion, 85.1% of the price variance; volume and mix cost $261 million and costs $650 million.

The Bull and Bear Case for PMI Shares

The bull case rests on smoke-free momentum and cash. Smoke-free shipments grew +2.7% in the third quarter, international smoke-free revenue rose 9.9% organically over nine months at a 70.0% gross margin, operating cash flow is guided to a record of about $13.5 billion, and the dividend was raised for the 19th straight year to $6.40.
The bear case rests on where profit growth comes from and what the market pays for it. Pricing explained more than all of the nine-month profit increase, mostly from cigarettes, and U.S. ZYN is entering a lower revenue-per-pouch phase. The P/E on TTM adjusted EPS of 24.27 sits in the 92nd percentile of 47 months, and the 3.01% dividend yield is in the 6th percentile, near the low end of its range.
Outside view (sell-side research aggregate, October 2026): Of 25 analysts, 17 rate the stock Buy, 7 Hold and 1 Sell, with an average target of $212 and a range of $192 to $225. UBS moved to Neutral in September and raised its target from $192 to $201 the day after results; Barclays raised its target from $205 to $225 in July.
The average target is +6.3% above the share price.

From Swedish Match to a 42% Smoke-Free Business

PMI shares over ten years with four events

The stock’s trajectory changed around the November 2022 acquisition of Swedish Match, which the 10-K describes as “creating a global smoke-free combination led by the companies’ IQOS and ZYN brands.” Smoke-free products rose from about 32% of revenue in 2022 and about 37% in 2023 to 41.5% in 2025, when smoke-free revenue reached close to $17 billion.
On September 28, 2023 PMI set 2024 to 2026 growth targets. Under a 2022 agreement with Altria, it regained full U.S. rights to IQOS on April 30, 2024, and the 10-Q still carries those reacquired rights at a gross $2.78 billion. In early 2025 the FDA authorized ZYN, which PMI’s February 2025 release called “long-awaited.”
The stock fell -7.0% in 2023, then rose +27.9% in 2024 and +33.3% in 2025. The month-end P/E bottomed at 14.71 in October 2023 and peaked at 26.71 in May 2025. In February 2026 PMI said “we have delivered our three-year CAGR targets on operating income and EPS in just two years,” and set new targets for 2026 to 2028.

Is ZYN’s U.S. Recovery Showing Up in Profit?

Quarterly U.S. ZYN shipments and U.S. segment adjusted OCI

U.S. ZYN shipments were 205 million cans in the third quarter of 2025, up 37%, and 196 million in the fourth, up more than 19%, for 794 million in 2025. Distributor destocking cut first-quarter 2026 shipments to 2.3 billion pouches, or 155 million cans, -23.5%, before a recovery to 2.9 billion (+1.8%) and 3.2 billion (+4.2%).
Profit did not follow. U.S. adjusted OCI was $437 million, $353 million and $168 million in the first three quarters of 2025, and $100 million, $279 million and $171 million in 2026. Third-quarter U.S. revenue rose 22.7%, largely because last year’s promotional discounts did not repeat.
Own calculation (ZYN and U.S. profit): Backing out 2025 from the 2026 growth rates gives about 3.04 billion pouches in the first quarter and 2.85 billion in the second; with the reported third and fourth quarters, the total matches the 794 million cans reported for 2025 within one million cans. If fourth-quarter U.S. adjusted OCI lands near zero as guided, the 2026 total of about $550 million will fall short even of the $958 million earned in the first nine months of 2025.

Pricing and the Fourth-Quarter EPS Guide

Nine-month adjusted operating income bridge and quarterly adjusted EPS

Quarterly adjusted EPS climbed from $1.56 in the first quarter of 2022 to $2.36. The 2026 range of $8.29 to $8.44 is 9.9% to 11.9% above 2025’s $7.54, including $0.18 of currency benefit, down from $0.27 in February and $0.24 in July. Reported diluted EPS fell -4.9% to $2.12 mainly on fair value losses on listed stakes in India and Sri Lanka. The remarks say a low prior-year tax rate cut third-quarter EPS growth by about 4 points, and Middle East energy costs plus Ukraine disruption together trim about 1 point of full-year growth.
Company disclosure (third-quarter earnings release): Currency-neutral adjusted EPS growth is expected at 7.5% to 9.5%, more likely at the midpoint or lower half given U.S. investment and geopolitical costs. PMI targets net debt to adjusted EBITDA of close to 2.0x by year-end and plans no share repurchases.
Subtracting nine-month adjusted EPS of $6.52 implies $1.77 to $1.92 for the fourth quarter, 4.1% to 12.9% above last year’s $1.70. The February 2026 targets call for 9% to 11% annual currency-neutral EPS growth from 2026 to 2028, so the first year’s 7.5% to 9.5% guide already sits below that range.

How Philip Morris Makes Money

PMI now reports three segments: International Smoke-Free, International Combustibles and the U.S. Third-quarter revenue was $3.87 billion, $6.73 billion and $845 million respectively, and international businesses made up 93% of nine-month revenue. Nine-month adjusted gross margins were 70.0%, 68.0% and 64.1%. Nine-month revenue grew +12.3% in international smoke-free and +7.7% in combustibles, while the U.S. declined 5.2%.
By volume, cigarettes still dominate: 452.2 billion units over nine months (-1.2%), against 124.5 billion heated tobacco units (+6.7%), 14.9 billion oral units (-5.3%) and 4.0 billion e-vapor units (+68.1%), for 595.6 billion in total (+0.5%).
IQOS heats tobacco sticks (HTUs) in a device instead of burning them, so PMI sells the device once and the consumables repeatedly. Third-quarter HTU shipments were 41.5 billion, up 1.5%; IQOS took 9.9% of combined cigarette and HTU volume where it is sold, and PMI holds about three quarters of global heated-tobacco volume. Sticks come in tiers: premium TEREA and LEVIA, and mainstream DELIA and SENTIA. Japan is the largest market. Third-quarter adjusted in-market sales there grew 3.4%, or 1.3% excluding pantry-loading ahead of an October tax increase, IQOS holds about 68% of the heated category, and a further tax step in April 2027 will be the third change in 12 months.
ZYN is a tobacco-leaf-free nicotine pouch. It now has 31 FDA marketing authorizations and 20 modified-risk orders in the U.S., and sells in 62 international markets, where nine-month shipments reached 1.5 billion pouches, up 6.3% like-for-like. VEEV shipments grew 61.6% in the third quarter, it leads Europe’s closed-pod segment, and it launched in South Korea in August.
International combustibles is a pricing business. Third-quarter cigarette shipments were flat at 158.0 billion, but 8.9% pricing, led by Turkey, the Philippines, Indonesia and Poland, lifted revenue, and volumes held up in markets such as Turkey, Indonesia and Egypt where smoke-free products are banned or scarce. PMI’s cigarette and HTU share of the international market passed 30% for the first time.
The U.S. segment holds ZYN, the reacquired IQOS rights, cigars and the Aspeya wellness unit. U.S. IQOS volumes remain below the 50 million units the release table reports. Smoke-free products are sold in 110 markets to an estimated 43 million adults, and PMI has spent more than $16 billion on them since 2008.

How Philip Morris Compares With Three Tobacco Peers

TTM revenue and growth at four tobacco companies

TTM revenue is $43.14 billion at PMI, $34.20 billion at BAT, $20.44 billion at Altria and $507 million at Turning Point Brands, with growth of +24.5% at Turning Point, +7.9% at PMI, 0.9% at Altria and 0.7% at BAT. Altria sells Marlboro, on! pouches and NJOY vapes in the U.S.; BAT sells cigarettes, heated products, pouches and vapes in the U.S. and Europe; Turning Point sells Zig-Zag papers and Stoker’s chewing tobacco in North America. Growth rates diverge, so EV/EBITDA and dividend yield are the yardsticks.

EV/EBITDA and dividend yield at four tobacco companies

EV/EBITDA is 17.43 at Turning Point, 17.16 at PMI, 11.56 at BAT and 11.46 at Altria. Dividend yields are 5.98% at Altria, 5.54% at BAT, 3.21% at PMI and 0.50% at Turning Point. Over one year PMI shares rose 38.2%, Altria 31.8% and BAT 16.2%, while Turning Point fell -28.8%. On forward P/E, PMI trades at 22.78 against 12.89 for Altria and 12.00 for BAT.

P/E on Adjusted EPS and Dividend Yield Over 47 Months

PMI P/E on adjusted EPS and dividend yield over 47 months

On TTM adjusted EPS of $8.22 the stock trades at 24.27 times, in the 92nd percentile of the 47 months since December 2022, against a median of 19.82. The band starts there because adjusted EPS has added back acquired intangible amortization since 2022. The dividend yield on $6.01 of TTM declared dividends is 3.01%, in the 6th percentile, against a median of 4.07%.
On the $8.365 midpoint of 2026 guidance the P/E is 23.85. Net debt of $40.88 billion is 2.17 times adjusted EBITDA, down from 2.53 at the end of 2025, and the stockholders’ deficit narrowed to $5.95 billion from $8.03 billion. Shareholder returns come only through the dividend, and the $6.40 rate equals 76.5% of guided 2026 adjusted EPS.
Own calculation (cash coverage): Guided operating cash flow of about $13.5 billion less the $1.5 billion capex midpoint leaves free cash flow of about $12.0 billion; $6.40 times 1.559 billion shares is about $9.98 billion, or 83.1% of it.

Three Conditions That Move the Stock

U.S. adjusted OCI was $171 million in the third quarter and is guided near zero in the fourth. If third-quarter spending levels in 2027 bring enough extra 20-pouch volume to outrun the 25% lower revenue per pouch, U.S. profit can return toward 2025 levels; if shipments stall near third-quarter levels, the profit gap lasts longer.
Combustible pricing was 9.1% over nine months. Price increases above 8% without volume losses let international combustibles keep funding smoke-free investment; if pricing fades once one-off distribution benefits are gone, the base of profit growth weakens.
IQOS HTU shipments were 41.5 billion in the third quarter, with 39.5 to 40.5 billion guided for the fourth. If shipments catch up with in-market sales after Japan’s third tax step, the smoke-free revenue share climbs again; if Japanese sales stay at about 1% growth, the promised smoke-free reacceleration slips.

What to Watch in the Fourth Quarter

The next numbers are U.S. revenue and adjusted OCI after the 20-pouch transition, and the medium-term targets due at an investor day in the second quarter of 2027. The remarks put underlying third-quarter U.S. ZYN growth at 13% excluding promotions, and offtake share recovered 1.4 points from its June low.
One question remains open. PMI chose to cut ZYN’s revenue per pouch by about a quarter and run U.S. profit near zero for a quarter to protect the brand’s price premium. Can ZYN grow volume fast enough to hand smoke-free products the job of driving profit before cigarette pricing slows?

Linde (LIN) Stock: 40% More Profit, No Volume Growth: another company whose profit grew on price rather than volume, a direct parallel to PMI’s cigarette business.
Shopify (SHOP) Stock Analysis: Net Income vs. Equity Gains: reported earnings moved by stakes in listed companies, as PMI’s GAAP EPS was this quarter.
AutoZone (AZO) Stock Analysis: ROIC Down 11 Quarters: a quality compounder whose multiple compressed, useful against PMI’s P/E near the top of its band.

Intuitive Surgical (ISRG) Stock: The 3% to 5% Instrument Cut

J. Equity. Research — Sun, 25 Oct 2026 11:06:40 GMT

Intuitive Surgical (NASDAQ: ISRG) grew third-quarter revenue +21.7% to $3.05 billion and non-GAAP diluted EPS 25% to $3.00, and the shares rose +6.0% in the week of the results. On the same day the company said pricing actions starting in 2027 will lower instrument revenue per da Vinci procedure by roughly 3% to 5% at constant mix, and the third-quarter 10-Q shows a $450 million charge to settle a class action over the service and repair of its instruments. The question is how much procedure growth it takes to keep instrument revenue growing once the company cuts what it collects per surgery.

Intuitive Surgical one-year share price chart

Intuitive sells or leases da Vinci surgical robots and Ion lung-biopsy robots to hospitals, then earns on the instruments and accessories used in every procedure and on service contracts. At $452.29 a share and 346.64 million shares on the 10-Q cover, the company is worth $156.78 billion, -24.1% below the weekly high of $595.55 set in the week of February 14, 2025. The 3% to 5% figure is a company estimate that holds procedure, product, and regional mix constant and applies to da Vinci instruments only; Intuitive reports quarterly procedure growth rates rather than counts, and its instrument revenue also includes Ion. Non-GAAP figures exclude share-based compensation, litigation charges, and other items, and third-quarter GAAP diluted EPS was $1.49. P/E uses trailing twelve-month (TTM) EPS.

Recurring Revenue and Unit Prices in the Q3 Deck

Q3 2026 investor presentation page 7: recurring revenue share and unit prices

Page 15 of the third-quarter investor presentation puts da Vinci procedure growth of 14%, installed base growth of 12%, 546 systems placed, $3.05 billion of revenue, a 69.9% non-GAAP gross margin, and $3.00 of non-GAAP EPS on one slide. Page 7 shows recurring revenue rising from 71% of the total in 2017 and 2018 to 84% in 2024 and 2025, and lists the unit economics beside the chart: $0.6 million to $3.1 million per da Vinci system sold or placed on a sales-type lease, $900 to $3,700 of instruments and accessories per da Vinci procedure, $95,000 to $225,000 a year in service per system, and operating leases that are either fixed-payment or usage-based. Chief executive Dave Rosa said in the release that customers performed, on average, “over 10,000 procedures per day throughout the period.”
Company disclosure (Q3 release, 2026 outlook): Worldwide da Vinci procedure growth of approximately 14% to 15%, with the company expecting to be closer to the midpoint; non-GAAP gross margin of 68.7% to 69.3% of revenue, including a tariff impact of about 0.9% of revenue excluding recognized refunds; and non-GAAP operating expense growth of 11% to 13%.
On the call, chief financial officer Jamie Samath narrowed the July procedure range of 13.5% to 15.5% and lifted the margin range from 68% to 69%. The third-quarter non-GAAP gross margin of 69.9% included a one-time $28 million refund of tariffs paid earlier under IEEPA; without it the margin was 68.9%, up 0.9 points from a year earlier. Non-GAAP operating expenses rose 18% on variable compensation, headcount, and prototype costs, with R&D growing faster than SG&A. He explained revenue growing faster than procedures by a richer mix of da Vinci 5, SP, and Ion, deeper integration with hospital systems, and upgrade volume.
The same call quantified the pricing. Starting in the first half of 2027 Intuitive will extend the useful life of a subset of core EndoWrist instruments on its fourth- and fifth-generation platforms and introduce volume-based pricing, and in China a billing-code policy change cuts instrument prices from November. Together these lower da Vinci instrument revenue per procedure by about 3% to 5% at constant mix, which management compared with the 7% it estimated when it launched its first extended-use program in 2020.
Own calculation (size of the cut): Third-quarter instrument and accessory revenue of $1.80 billion was 59.0% of the total. Annualized at $7.19 billion and multiplied by 3% to 5%, the cut is $216 million to $359 million a year, or 1.8% to 2.9% of annualized revenue. Because that base includes Ion instruments, the real effect is smaller.

How Leasing Changes System Placements

Page 6 of the deck splits annual system placements from 2020 to 2025 into greenfield or incremental systems and trade-ins, and stacks the installed base by region with 12% growth in 2025. Page 9 shows multi-port da Vinci procedures topping 3.0 million in 2025, up 17%, an installed base above 10,700 systems, up 12%, and utilization per system up 3%. Page 13 adds Ion: more than 140,000 procedures in 2025, up 51%, and more than 990 installed systems, up 24%. In the third quarter Intuitive placed 315 da Vinci 5 systems out of 546, against 240 a year earlier, and 56 Ion systems against 50.

Q3 2026 investor presentation page 6: annual placements and installed base by region

On the call management said da Vinci placements rose 28%, da Vinci 5 and SP made up 65% of them, and placements of the lower-cost XiR and X more than doubled. The average selling price of purchased systems held at about $1.6 million because the higher da Vinci 5 mix was largely offset by more XiR. Net placements, the ones that grow the installed base rather than replace systems, rose 40%.
Of the 546 third-quarter placements, 291 were operating leases and 160 of those were usage-based, meaning the hospital pays per procedure. The 10-Q puts nine-month operating lease revenue at $787 million, up 24.5%, and the variable portion tied mostly to usage at $504 million, up 32.6%. The 10-K says plainly, “We are increasingly offering usage-based arrangements as part of our business model,” and warns that revenue falls in periods when usage drops and that some leases let customers cancel, return, or upgrade without penalty.
Leasing also shows up in cash. Systems for leases are built from inventory and then transferred to property and equipment: $422 million in 2023, $615 million in 2024, $809 million in 2025, and $671 million in the first nine months of 2026. The cash goes out through inventory inside operating cash flow, and the transfer is disclosed as a non-cash item, so free cash flow defined as operating cash flow less capital spending does not show it as investment.

Intuitive quarterly da Vinci placements by contract type and free cash flow against buybacks

Own calculation (lease mix): Operating leases rose from 49.5% of quarterly placements in the second quarter of 2023, when Intuitive first split out usage-based leases, to 53.3% in the third quarter of 2026, and usage-based leases from 27.5% to 29.3%. In the first quarter of 2022 operating leases were 34.7%.

The Bull and Bear Case for Intuitive Shares

The bullish case rests on volume and mix. Total procedures rose 15% in the third quarter, instrument revenue per da Vinci procedure rose from $1,800 to $1,860 on more SP and da Vinci 5, 84% of revenue is recurring, and the stock trades at 41.76 times non-GAAP EPS, the 10th percentile of 83 months.
The bearish case is about U.S. growth and price. U.S. da Vinci procedures grew 10%, which an analyst on the call called the slowest since Covid; the 2027 pricing and the November China cut take 3% to 5% off instrument revenue per procedure; the antitrust settlement pairs $450 million with injunctive relief; and nine-month buybacks were 154.1% of free cash flow.
Outside view (sell-side research aggregate, October 2026): Of 57 analysts, 40 rate the stock Buy, 12 Hold, and 5 Sell, with an average price target of $491 and a range of $357 to $651. The day after the results Leerink raised its target from $454 to $503, Baird from $500 to $550, and Barclays from $485 to $500, while RBC lowered its target from $600 to $550.
The average target sits 8.6% above the share price.

From Extended Use Instruments to an Antitrust Settlement

On July 21, 2020, alongside second-quarter results, Intuitive introduced an extended-use program for “select Xi/X instruments possessing 12 to 18 uses compared to the current 10 use instruments,” and cut prices on other instruments used in lower-acuity procedures. The release said, “These actions will reduce the cost for customers to treat patients, which, in turn, will reduce the Company’s revenue per procedure.” The numbers bore that out: instrument revenue grew 12.8% in the fourth quarter of 2021 while da Vinci procedures grew 19%, and from the first quarter of 2021 to the third quarter of 2022 instrument growth mostly trailed procedure growth. Results from the third quarter of 2021 onward reflect a three-for-one stock split.

Intuitive Surgical shares over ten years with four markers

Between May and July 2021 hospitals filed class actions “alleging antitrust allegations relating to the service and repair of certain instruments manufactured by the Company,” consolidated as In re: da Vinci Surgical Robot Antitrust Litigation. In October 2026 Intuitive agreed, without admitting liability, to settle for “a one-time payment of $450 million and mutually agreed injunctive relief,” subject to court approval. A separate antitrust suit by the instrument repair company SIS, filed in May 2021, went Intuitive’s way at trial in January 2025, but on August 13, 2026 the Ninth Circuit reversed and remanded; Intuitive petitioned for rehearing en banc on September 29, and the 10-Q says it cannot estimate a possible loss.
In March 2024 the FDA cleared da Vinci 5, and Dave Rosa succeeded Gary Guthart as chief executive, with Guthart becoming executive chair. The shares fell 26.1% in 2022, then gained 27.1% in 2023, +58.5% in 2024, and 8.0% in 2025, and are down -21.7% in 2026.

How Much Procedure Growth Does a 3% to 5% Price Cut Need?

Instrument revenue per da Vinci procedure was about $1,860 in the third quarter, up 3.3% from $1,800 a year earlier, which management attributed to SP growth and da Vinci 5-specific instruments, partly offset by procedure mix. The 2027 actions target high-volume benign procedures such as cholecystectomy and inguinal hernia repair, especially outside the United States and in outpatient settings, and the extended-use instruments need 510(k) clearance in the U.S., which is under way.

Instrument revenue and da Vinci procedure growth with revenue per procedure after the price cut

Own calculation (break-even volume): A 3% cut takes $1,860 to $1,804 and a 5% cut to $1,767. To hold instrument revenue level, procedures would have to grow 3.1% to 5.3% more than they would without the cut, against 2026 guidance of 14% to 15% da Vinci procedure growth.
Over the last six quarters instrument revenue growth beat da Vinci procedure growth by 0.5 to 7.3 points. The 7.3-point gap in the first quarter of 2026 includes direct sales from the Italian, Spanish, and Portuguese distributors Intuitive bought on March 1, which the 10-Q calls not significant for separate disclosure. Management said the 3% to 5% excludes favorable mix such as Force Feedback instruments and the shift to da Vinci 5 and SP, and that China takes effect in the fourth quarter while extended-use instruments roll out country by country through 2027.

Slower U.S. Procedures and Faster Benign Surgery Abroad

U.S. da Vinci procedures grew +10% in the third quarter, in line with what management described in July, against a demanding 16% comparison a year earlier. Da Vinci 5 handled more than a quarter of U.S. procedures, up from 13%. Management is watching lower ACA enrollment, Medicaid eligibility changes, and possible changes to the 340B program.
Outside the U.S., da Vinci procedures grew +20%, with Europe up 20%, Asia 19%, and the rest of the world 22%. Benign procedures outside the U.S. accelerated from 34% growth in the first quarter to 37% in the second and 41% in the third and now exceed a quarter of the volume there. India grew 42% and passed 200,000 cumulative procedures, Japan accelerated after a June reimbursement change, and China grew roughly in line with the company average as capital placements fell in a difficult operating environment.
SP, the single-port system, grew procedures +55%, including 50% in the U.S. and 40% in Korea, its largest market, with 487 systems in 27 countries. Ion procedures grew 31%, and Korea granted Ion reimbursement in the quarter.

How the Robot-and-Instrument Model Makes Money

Third-quarter revenue split into $1.80 billion of instruments and accessories (59.0%), $769 million of systems (25.2%), and $482 million of services (15.8%), growing 18.3%, 30.3%, and 21.8%. Once a robot is placed, every procedure consumes instruments and service contracts renew each year, so recurring revenue grows with the installed base.
By geography, U.S. revenue was $2.06 billion, up 20.1%, and revenue outside the U.S. was $986 million, up 25.2%, leaving the U.S. at 67.7% of the total. U.S. instrument revenue rose 17.5% to $1.25 billion, 7.5 points faster than U.S. da Vinci procedures. SP, da Vinci 5, and Ion, which use more expensive instruments per case, account for that gap, and the 2027 pricing hands part of it back to customers. Remaining performance obligations stood at $3.8 billion, much of it service on system sales and leases.
The da Vinci installed base reached 12,094 systems: 6,807 in the U.S., 2,436 in Europe, 2,176 in Asia, and 675 elsewhere. More than 2,000 da Vinci 5 systems are installed and over 18,000 surgeons have used them. The 10-K says “Da Vinci 5 has more than 10,000 times the computing power of da Vinci Xi,” and the system adds Force Feedback instruments that measure the force applied to tissue plus a My Intuitive+ digital subscription. Intuitive positions da Vinci 5 and Xi for complex surgery, the lower-cost X for price-sensitive customers, and SP for narrow workspaces; SureForm staplers, vessel sealers, and the E-200 generator also sit in instrument revenue. Ion is a catheter-based robot whose first cleared indication is lung biopsy, with 1,152 systems installed, up 21%.

Q3 2026 investor presentation page 9: multi-port procedures installed base and utilization

Most instruments are made in Mexico and most endoscopes in Germany, and a new instrument plant in Penang, Malaysia is expected to open in 2028. Intuitive sells directly in the U.S. and most of Europe and through majority-owned joint ventures with Fosun in China. On March 1, 2026 it paid $533.1 million for the distribution businesses covering Italy, Spain, Portugal, and nearby territories, booking $196.3 million of goodwill. It had about 17,021 employees at the end of 2025.
Hospitals and health systems are the customers, and they can buy, take a sales-type lease, or take an operating lease, either fixed-payment or usage-based. Leasing lets a hospital add a robot without a large capital budget while Intuitive collects instruments, service, and lease payments over time. Page 5 of the deck says more than 3.2 million procedures were performed on Intuitive systems in 2025, more than 20.4 million to date, and more than 1,900 systems were placed that year. R&D rose 24.0% to $408 million in the third quarter, faster than revenue, and GAAP gross margin was 68.4% against 66.4% a year earlier.

How Intuitive Compares With Four Medtech Peers

Trailing twelve-month revenue is $37.54 billion at Medtronic, $25.84 billion at Stryker, $21.00 billion at Boston Scientific, $11.58 billion at Intuitive, and $8.51 billion at Zimmer Biomet. Growth runs from Intuitive at +20.5%, Boston Scientific at 13.5%, Medtronic at 9.8%, and Zimmer Biomet at 8.6% to Stryker at 8.5%.

Trailing revenue and growth for five medtech companies

Stryker sells orthopedic implants and surgical equipment, Medtronic cardiac, neuroscience, and surgical devices, Boston Scientific cardiovascular devices, and Zimmer Biomet joint replacements. Each mixes in some installed-equipment and consumable revenue like Intuitive, so the comparison uses forward P/E and EV/EBITDA. Market values are $156.78 billion at Intuitive, $117.81 billion at Stryker, $116.79 billion at Medtronic, $66.22 billion at Boston Scientific, and $18.80 billion at Zimmer Biomet; Intuitive is worth 1.34 times Medtronic on less than a third of its revenue.
Forward P/E is 37.54 at Intuitive, 19.30 at Stryker, 15.89 at Medtronic, 14.26 at Boston Scientific, and 11.26 at Zimmer Biomet, and EV/EBITDA is 34.22, 17.60, 13.06, 13.71, and 10.27 in the same order. Over the past year Medtronic gained 5.2%, while Zimmer Biomet slipped 2.0%, Stryker fell 13.8%, Intuitive -15.3%, and Boston Scientific -54.6%.

Forward P/E and EV/EBITDA for five medtech companies

Own calculation (relative premium): Intuitive’s forward P/E is 1.95 times Stryker’s, and its trailing revenue growth is 2.4 times Stryker’s.

P/E on Non-GAAP EPS Over 83 Months

On trailing non-GAAP diluted EPS of $10.83, Intuitive trades at 41.76 times, the 10th percentile of the 83 months since December 2019, against a median of 62.05. The low was 34.54 in July 2026 and the high 80.65 in November 2024. Price to sales is 13.54, the 15th percentile, against a median of 18.19.

Intuitive P/E on non-GAAP EPS and price to sales over 83 months

The gap between third-quarter GAAP operating income of $593 million and non-GAAP operating income of $1.27 billion is mostly $213 million of share-based compensation and $455 million of litigation charges. On trailing GAAP EPS of $8.27 the P/E is 54.69, and adding back the $0.99 per share of settlement cost gives $9.26 and 48.84. In July, when the multiple hit its 83-month low, Intuitive bought 3.63 million shares at an average $364.74, and in August 4.16 million at $387.71, for a third-quarter average of $377.01. The share price is 20.0% above that average. Nine-month buybacks of $4.42 billion compare with free cash flow of $2.87 billion, cash and investments fell from $9.03 billion at the start of the year to $6.80 billion, and about $1.8 billion of authorization remains.

Three Conditions That Move the Stock

Da Vinci procedure growth is guided at 14% to 15% for 2026. If procedure growth in 2027 stays well above the 3% to 5% price cut and the U.S. reaccelerates from the low teens, instrument revenue keeps its pace; if U.S. growth drops to single digits, the price cut comes straight out of revenue growth.
Instrument revenue per da Vinci procedure was about $1,860 in the third quarter. Holding the mid-$1,800s through da Vinci 5 and SP mix and Force Feedback adoption would bury the pricing in mix; drifting toward $1,767 would mean the top end of the company’s estimate is showing up in the numbers.
Cash and investments stand at $6.80 billion. If free cash flow still covers buybacks after the remaining $1.8 billion authorization and the $450 million settlement payment, the share count keeps falling; if inventory moved into leased equipment and the Penang plant squeeze free cash flow, buybacks slow first.

The 2027 Procedure Outlook and the Pricing Rollout

The numbers to watch in the fourth-quarter report are the 2027 da Vinci procedure growth outlook, instrument revenue per procedure in the fourth quarter, the first with the China cut, the timing of U.S. 510(k) clearance for extended-use instruments, and court approval of the settlement. The SIS case could return to the district court depending on the en banc petition.
One question this piece cannot settle: if instrument growth again falls below procedure growth as it did after the 2020 program, will price-sensitive benign procedures abroad grow fast enough to fill the gap while U.S. procedures sit in the low teens?

Medtronic (MDT) Stock Analysis: Revenue Growth vs Flat EPS: the largest of the medtech peers here, useful for comparing how revenue growth turns into EPS at a slower-growing device maker.
Trip.com (TCOM) Stock Analysis: Antitrust Fine and Guidance: an antitrust outcome where changes to business practices mattered more than the fine, a frame for a settlement that pairs a payment with injunctive relief.
Booking Holdings (BKNG) Stock: Buybacks Beyond Cash Flow: another company buying back more than its free cash flow, a comparison for Intuitive’s nine-month buybacks at 154% of free cash flow.

Netflix (NFLX) Stock: A $2.8B Warner Fee and Record Buybacks

J. Equity. Research — Sun, 25 Oct 2026 06:51:12 GMT

Netflix (NASDAQ: NFLX) grew third-quarter revenue +11.8% to $12.87 billion at a 34.6% operating margin and bought back $4.80 billion of its own stock, the largest quarterly repurchase in its history. The shares still fell -6.6% in the week of the results. The third-quarter 10-Q and the shareholder letter explain the tension: the $9.50 billion of nine-month free cash flow includes the $2.8 billion termination fee Netflix collected in the first quarter after Warner Bros. Discovery walked away from their merger, and nine-month buybacks of $10.78 billion are larger than that free cash flow.

Netflix one-year share price chart

Netflix sells series, films, and live events through subscriptions and advertising, and says its audience is approaching one billion people. At $65.85 a share and 4.106 billion shares on the 10-Q cover, the company is worth $270.40 billion, -50.2% below the weekly high of $132.31 set in the week of June 27, 2025. Free cash flow here is the company’s non-GAAP measure, operating cash flow less purchases of property and equipment. Netflix does not disclose when the tax on the fee was paid, so this piece uses the $1.5 billion by which the company raised its 2026 free cash flow forecast in April, a raise it attributed primarily to the after-tax impact of the fee. P/E uses trailing twelve-month (TTM) GAAP diluted EPS.

Cost Timing and the Ad Revenue Cut in the Q3 Letter

Third-quarter 2026 shareholder letter page 1: five quarters of results and the Q4 forecast

The summary table on the first page of the third-quarter letter shows revenue growth slowing for three straight quarters, from 17.6% in the fourth quarter of 2025 to 16.2%, 13.4%, and 11.8%, with the fourth-quarter forecast at 11.5% on $13.44 billion of revenue. Operating margin of 34.6% was well above 28.2% a year earlier, and the letter says it came in “ahead of our forecast primarily due to the timing of expenses.” The fourth-quarter forecast margin is 26.0%, which includes about 120 basis points from recently announced headcount reductions, against 24.5% a year earlier. Operating income rose 37% to $4.46 billion and diluted EPS rose 49% to $0.87. The letter credits growth in memberships, pricing, and advertising, and says churn improved year over year both globally and in the United States.
Company disclosure (Q3 letter, 2026 outlook): Revenue of $51.1 billion, up 13% (12% at constant currency), and an operating margin of 31.5% versus 29.5% in 2025. Revenue sits 0.2% below the midpoint of the prior range because subscription revenue beat expectations while ad revenue is now expected at about $2.7 billion instead of about $3 billion, due to a “slightly slower than expected rollout of some ad product capabilities.” Operating income is expected to grow more than 20%.
On the call, co-chief executive Greg Peters said the ad business is still growing more than 80% this year, but that some new ad products and partner integrations arrived later than planned, a short-term hit he described as worth taking for a better long-term position. The January letter had said ad revenue more than doubled to over $1.5 billion in 2025 and was expected to roughly double again in 2026.
The revenue range narrowed from $50.7 billion to $51.7 billion in January to $51.0 billion to $51.4 billion in July before settling at $51.1 billion. The 31.5% margin target never moved, but its contents did: in January it absorbed about $275 million of acquisition-related expenses for the Warner deal, and in October it absorbs about 30 basis points of headcount costs. Page 13 of the letter restates the nine-month margin at January exchange rates as 33.3%, against 33.5% as reported.
Own calculation (operating income for 2026): Nine-month operating income of $12.61 billion plus the $3.50 billion fourth-quarter forecast gives $16.11 billion for 2026, up 20.9% from $13.33 billion. The margin steps down from 33.5% over nine months to 26.0% in the fourth quarter.

What the Content Accounting Slides Say About Cash

Alongside its quarterly letters, the Netflix investor site hosts a 28-page content accounting overview from May 2025. Page 24 tells investors that “The sum of Additions to Content Assets and the Change in Content Liabilities equates to our cash spending on content,” and illustrates it with 2024: about $17.0 billion spent in cash against $15.3 billion of amortization, a ratio of 1.1. Page 21 carries the headline “Cash costs for original content are more front end loaded,” because Netflix funds production years before a title is released. Page 7 says every title is amortized on an accelerated basis tied to historical and estimated viewing, and that the schedule is reviewed quarterly.

Content accounting overview page 24: how to calculate cash spending on content

The third-quarter letter keeps the expectation of an annual cash content spend to amortization ratio of about 1.1. It also reports buying 63.9 million shares for $4.8 billion, “our largest quarter ever of stock repurchases,” with $22.3 billion of authorization left. Gross debt ended the quarter at $15.3 billion and cash at $8.2 billion, after a $1 billion bond issued to fund a $1 billion maturity in the fourth quarter. The 2026 free cash flow forecast came down to about $12.0 billion from $12.5 billion because of a real estate transaction expected to close in the fourth quarter.
The capital allocation order in the letter puts reinvestment and selective acquisitions first, a healthy balance sheet second, and repurchases with the excess. The first-quarter letter explained that “Our cash position is more elevated than normal due to the pause in our share repurchase program during the Warner Bros. transaction” and the receipt of the fee; Netflix then resumed buying with 13.5 million shares for $1.3 billion. In April the board added $25 billion to the remaining $6.8 billion, and the $4.7 billion bought in the second quarter was the record until the third quarter beat it. Non-GAAP net debt was $7.11 billion at the end of September.
Own calculation (content cash versus amortization): Applying the page 24 method to the cash flow statements in the letters, nine-month content cash spending was $14.98 billion, up 18.5%, while amortization was $12.76 billion, up 9.5%. The ratio of 1.17 compares with 1.08 a year earlier, and the same method gives 1.11 for 2024, matching the slide.
On a trailing four-quarter basis the ratio peaked at 1.44 in the third quarter of 2021, fell to 0.93 in the fourth quarter of 2023 after the writers’ strike briefly halted new production, and has climbed back to 1.14. The January letter said the strike led to heavier licensing in 2023 and 2024 and a later decline in viewing of non-branded titles.

Netflix content cash spend to amortization and quarterly revenue growth

The Bull and Bear Case for Netflix Shares

The bullish case rests on earnings and the share count. Operating income should grow more than 20% in 2026, churn improved in the third quarter, shares outstanding fell 2.7% this year from 4.222 billion to 4.106 billion, and P/E excluding the fee is 22.02, the 10th percentile of 83 months.
The bearish case is about growth and cash. Revenue growth has slowed for three quarters in a row with a lower forecast for the fourth, the ad revenue forecast was cut 10%, nine-month buybacks were 113.5% of free cash flow even with the fee included, and cash fell from $12.3 billion at the end of March to $8.2 billion at the end of September.
Outside view (sell-side research aggregate, October 2026): Of 100 analysts, 62 rate the stock Buy, 30 Hold, and 8 Sell, with an average price target of $91 and a range of $57 to $119. After the results Needham cut its rating from Buy to Hold, Wolfe Research moved from Outperform to Peer Perform, and Pivotal Research lowered its target from $96 to $65.
The average target is 38.2% above the share price, yet no firm in the aggregate raised its view after the third-quarter report.

From a Warner Deal to a $2.8 Billion Breakup Fee

Netflix reported its first paid membership decline, 0.2 million, in the first quarter of 2022, and the stock fell 51.1% that year. It launched an ad-supported plan in 12 countries that November, and the shares gained +65.1% in 2023 and +86.4% in 2024. A ten-for-one stock split took effect on November 14, 2025.

Netflix shares over ten years with four markers

On December 4, 2025, Netflix agreed to buy the studios and HBO Max and HBO businesses of Warner Bros. Discovery (WBD) and lined up a $59 billion bridge loan commitment. It paused buybacks while the deal was pending. On February 27, 2026, WBD terminated the agreement to sign with Paramount Skydance (PSKY), and PSKY paid the $2.8 billion termination fee to Netflix on behalf of WBD. Netflix booked it in interest and other income, which lifted first-quarter EPS to $1.23 against a forecast of $0.76.
After declining to raise its offer, Netflix resumed repurchases. Buybacks went from $1.27 billion in the first quarter to $4.71 billion in the second and $4.80 billion in the third. The stock is down -30.3% in 2026.

How Much of the Buyback Does the Core Business Fund?

The 2026 free cash flow forecast has moved four times: about $11 billion in January, about $12.5 billion in April to reflect the after-tax fee, unchanged in July, and about $12.0 billion in October because of the real estate deal. The January letter also said 2025 free cash flow beat its roughly $9 billion forecast because an expected deposit of about $700 million in a Brazilian tax dispute shifted from 2025 into 2026.

Netflix quarterly free cash flow against buybacks and four 2026 forecasts

Own calculation (free cash flow without the fee): Taking the $1.5 billion after-tax fee out of the $12.0 billion forecast leaves $10.5 billion, up 11.0% from $9.46 billion in 2025. Reversing the Brazil timing as well, removing about $700 million from 2025 and adding back the $729 million Brazil payment in the 10-Q, turns the comparison into $8.76 billion against $11.23 billion, up 28.2%, faster than 20.9% operating income growth.
Applied to nine months, $9.50 billion of free cash flow less the $2.8 billion pre-tax fee plus the $729 million Brazil payment leaves $7.43 billion that is closer to the core business. Buybacks of $10.78 billion were 1.45 times that figure and 113.5% of reported free cash flow, against 92.9% in the first nine months of 2025.
The 10-Q describes the Brazil outflow as “non-routine payments made in connection with non-income tax assessments in Brazil for prior tax periods.” The second-quarter letter tied lower second-quarter free cash flow of $1.53 billion, against $2.27 billion a year earlier, to higher cash taxes linked in part to the fee, and the $586 million spent on an acquisition in the first quarter sits outside free cash flow.
Meeting the forecast requires fourth-quarter free cash flow of $2.50 billion, against $1.87 billion a year earlier. If Netflix buys back as much in the fourth quarter as in the third and repays the $1 billion maturity, year-end cash would fall to about $4.9 billion.

Slower Growth in North America and a Smaller Ad Forecast

Revenue growth in the United States and Canada (UCAN) slowed from 18% in the fourth quarter of 2025 to 10% in the second quarter of 2026, which the July letter said reflected only a partial-quarter effect of the latest price increase, and to 11% in the third quarter, the first full quarter of that increase. At constant currency, third-quarter growth was 9% in Europe, the Middle East and Africa (EMEA), 12% in Latin America, and 15% in Asia-Pacific.

Third-quarter 2026 shareholder letter page 6: revenue and growth by region

View hours grew 1.5% in 2025 and 2% in the first half of 2026. The third-quarter letter addressed investor concern about view-hour growth directly and pointed to member response to the 2026 price increases as evidence that engagement is healthy. Co-chief executive Ted Sarandos said on the call that content from outside the United States is working while execution in the U.S. needs to improve, and former Disney executive Peter Rice has joined as chief content officer. India was the bright spot, with view hours up +24% and revenue up about 18% at constant currency.
The ad tier adds 15 countries in 2027, starting in March with nine in EMEA plus Colombia, Peru, and New Zealand. The roughly $2.7 billion ad forecast is about 5.3% of the $51.1 billion revenue forecast.

How Subscriptions and Ads Make Money

Most revenue is monthly subscription fees, with the rest coming from ads sold on the ad-supported plan. Of $12.87 billion of third-quarter revenue, UCAN contributed $5.63 billion (43.7%), EMEA $4.11 billion, Latin America $1.60 billion, and Asia-Pacific $1.54 billion. Management describes three growth levers: more members, higher prices, and ads. Ads are sold through Netflix Ads Suite, its in-house technology; in the third quarter Netflix extended programmatic buying through connected TV marketplace deals worldwide, added partners MercadoLibre in Latin America and AdForm in EMEA, and expanded measurement of reach, frequency, and attribution inside the buying platforms advertisers use.
Content is the main cost. Of $6.08 billion of third-quarter cost of revenues, content amortization was $4.24 billion; marketing was $837 million, technology and development $1.03 billion, and general and administrative $466 million. Page 6 of the accounting slides sorts the library into owned originals such as Stranger Things, Squid Game, and Bridgerton, licensed originals made by other studios but branded Netflix such as Wednesday and Emily in Paris, and second-run licensed shows.
Own calculation (cost leverage): Content amortization was 32.9% of third-quarter revenue, down from 34.8% a year earlier. Technology and development grew fastest among the cost lines, up 21.0% to $1.03 billion from $854 million, and the 10-Q cites growth in advertising sales headcount as one driver of higher marketing costs.

Content accounting overview page 6: owned originals and licensed titles

Originals anchor the service and licensing fills it out. In the third quarter Netflix signed a new licensing deal with Disney that brought all five Ice Age films, and it launched a partnership in France that puts TF1 programming inside the Netflix app. Non-English titles now account for more than a third of viewing, up from under 10% a decade ago. The July letter said live programming would be just over 5% of 2026 content spend but about 1% of view hours, yet live events accounted for six of the top ten sign-up days in five years. The fourth quarter brings an NFL Thanksgiving Eve game, a Christmas Day doubleheader, and the Tyson Fury and Anthony Joshua fight.
The January letter put the Netflix share of U.S. TV time at a record 9.0% in December 2025, still below 10% in its major markets, with linear TV at more than 40% of U.S. TV screen time. Members watched more than 97 billion hours in the first half of 2026. Off-balance-sheet commitments matter too: streaming content obligations rose to $25.22 billion from $24.04 billion at the start of the year, with $11.78 billion due within twelve months.

How the Streamer Compares With Four Media Peers

Trailing twelve-month revenue is $123.01 billion at Comcast, $98.86 billion at Disney, $49.73 billion at Netflix, $36.12 billion at Warner Bros. Discovery, and $20.69 billion at Spotify. Growth ranges from Netflix at +14.7%, Spotify at 9.0%, and Disney at 4.6% to Comcast at -0.2% and Warner Bros. Discovery at -6.1%.

Trailing revenue and growth for five media companies

Disney combines Disney+ and Hulu with parks and studios, and Comcast pairs cable and broadband with NBCUniversal and Peacock. Warner Bros. Discovery owns HBO Max and its studios and signed with PSKY after leaving the Netflix deal. Spotify sells music and podcasts through subscriptions and ads, the closest business model to Netflix. Because the business mix differs so much, the comparison uses EV/EBITDA and price to sales.
EV/EBITDA is 36.77 at Spotify, 17.53 at Netflix, 13.79 at Warner Bros. Discovery, 11.22 at Disney, and 4.78 at Comcast. Price to sales is 5.81, 5.44, 2.15, 1.97, and 0.65 in the same order. Over the past year Warner Bros. Discovery gained 37.9%, while Disney slipped 0.1%, Spotify fell 10.8%, Comcast 18.5%, and Netflix -41.1%.

EV/EBITDA and price to sales for five media companies

The Netflix market value of $270.4 billion is 1.39 times that of Disney at $194.29 billion, on half the revenue. Netflix has the fastest growth of the five and the second-highest price to sales after Spotify, whose EV/EBITDA is 2.10 times that of Netflix.

P/E on GAAP EPS Over 83 Months

On trailing GAAP diluted EPS of $3.46, Netflix trades at 19.03 times, the 5th percentile of the 83 months since December 2019, against a median of 44.95. The low was 15.54 in June 2022 and the high 89.35 in February 2020. That $3.46 includes the $1.23 first quarter that carried the fee.

Netflix P/E on GAAP EPS and price to sales over 83 months

Swapping in the $0.76 the company had forecast for that first quarter gives EPS of $2.99 and a P/E of 22.02, the 10th percentile. Price to sales is 5.44, the 18th percentile, against a median of 8.03. The share price is 12.3% below the $75.05 average Netflix paid in the third quarter: $72.45 in July, $77.00 in August, and $75.79 in September. Adding the $0.67 fourth-quarter EPS forecast gives $3.57 for 2026 and a P/E of 18.45 with the fee included.

Three Conditions That Move the Stock

The content cash to amortization ratio was 1.17 for the first nine months. If the full year lands near the company forecast of about 1.1, the implied $2.50 billion of fourth-quarter free cash flow becomes realistic; a drift toward 1.2 would leave less cash for buybacks.
Ad revenue is guided at about $2.7 billion for 2026. If the March 2027 launch in 12 new countries and fixes to the delayed ad products push revenue growth back above the 11.5% fourth-quarter forecast, the slowdown argument weakens; growth below 10% would put at risk the double-digit growth goal management reaffirmed on the call.
Buyback pace was $4.80 billion in the third quarter, 1.66 times that quarter’s $2.88 billion of free cash flow. Buybacks that fall back inside free cash flow in 2027 would preserve the $8.2 billion cash balance; keeping the pace with more borrowing would push net debt above $7.11 billion.

Headcount Cuts and the 2027 Margin Guide

The numbers to watch in the fourth-quarter report are 2027 revenue and operating margin guidance, actual fourth-quarter free cash flow and content cash spending, and how much of the headcount savings reaches the 2027 margin. Chief financial officer Spence Neumann declined to quantify the 2027 cost effect and said full 2027 guidance, including margin, will come in January. Greg Peters described the cuts as fixing areas that were built quickly and overinvested. Because the cuts weigh 1.2 points on the fourth-quarter margin, the gap between the 2027 margin guide and the 31.5% of 2026 is the first measure of the savings.
One question this piece cannot settle: once the fee and the cash saved during the Warner deal are spent, will the free cash flow left after content cash spending that is growing faster than amortization be enough to sustain buybacks near $4.7 billion a quarter?

Booking Holdings (BKNG) Stock: Buybacks Beyond Cash Flow: another company returning more than its free cash flow, a frame for Netflix buying back 1.45 times its core nine-month cash.
KLA (KLAC) Stock: Net Income Up 19% and Cash Flow Flat: a case where reported earnings outran cash, useful next to Netflix content cash spending growing about twice as fast as amortization.
T-Mobile (TMUS) Stock: Phone Metrics It Stopped Reporting: a subscription business judged on churn and pricing, the same levers Netflix cites for its revenue.

General Motors (GM) Stock: EV Add-Backs and a $20B Buyback

J. Equity. Research — Sat, 24 Oct 2026 21:07:58 GMT

General Motors (NYSE: GM) grew third-quarter EBIT-adjusted +21.6% to $4.11 billion, raised its 2026 adjusted automotive free cash flow guidance to $11.5 billion to $12.5 billion, and approved a new $20 billion buyback. The shares still fell -9.6% in the week of the results. The third-quarter 10-Q and the earnings release show why the cash story is thinner than the headline: $4.24 billion of the $12.18 billion of nine-month adjusted free cash flow is cash spent unwinding electric vehicle (EV) capacity that the company adds back, and the raised full-year range leaves the fourth quarter with roughly zero.

General Motors one-year share price chart

GM sells Chevrolet, GMC, Buick, and Cadillac vehicles, earns most of its profit on North American pickups and large SUVs, and finances buyers and dealers through GM Financial. The shares trade at $75.92 for a market value of $64.04 billion on the 843.55 million shares listed on the 10-Q cover, -14.4% below the weekly high of $88.68 set in the week of July 31, 2026. EBIT-adjusted and adjusted automotive free cash flow are company non-GAAP measures; third-quarter GAAP net income was $3.34 billion. Free cash flow before add-backs, as used here, is automotive operating cash flow less capital spending, a calculation GM does not report as a headline figure.

Cash and Buybacks in the Q3 Earnings Deck

Third-quarter 2026 deck page 11: 42.7 billion dollars of buybacks and 849 million shares

Page 4 of the third-quarter deck lines up EBIT-adjusted of $4.1 billion, adjusted automotive free cash flow of $5.9 billion, and adjusted EPS of $3.70, then lists $2.5 billion of buybacks that retired 29 million shares and $0.2 billion of dividends. Page 15 calls the free cash flow “a four-year high.” Page 17 gives the reason in a single line, “Increase driven by higher auto EBIT and tariff timing,” and on the same page shows deliveries down 11% and global market share down 40 basis points to 7.8%.
Page 11 is the capital return chart. It credits $42.7 billion of repurchases since 2015 with a 45% cut in common shares, from 1,543 million to 849 million, and says GM bought $5.3 billion through the third quarter and another $1 billion in October, “fully utilizing the prior authorization.” The board approved a new $20 billion authorization with no expiration date the same day.
Chair and chief executive Mary Barra wrote in the third-quarter shareholder letter that the company’s products and services make it “confident in the consistent, long-term growth of our earnings and cash generation, as well as our ability to return capital to shareholders.” On the call, chief financial officer Paul Jacobson attributed the $1.7 billion year-over-year increase in quarterly free cash flow to higher earnings and the timing of tariff payments. Barra told analysts the path ahead is harder, with some external headwinds intensifying, while repeating that 2027 should be better than 2026 if demand holds and commodity and logistics pressure eases.
Own calculation (buybacks against cash): Nine-month buybacks of $5.30 billion equal 67.1% of the $7.90 billion of automotive operating cash flow less capital spending, and 43.5% of the company’s $12.18 billion adjusted figure. The new $20 billion authorization is 31.2% of the market value, and the third-quarter purchases averaged $86.21 a share.

EV Cash Payments and the Implied Fourth Quarter

Third-quarter 2026 deck page 12: 11.2 billion dollars of EV charges and cash paid

Page 12 carries the headline “EV charges substantially completed.” Since the second half of 2025 GM has recorded $11.2 billion of EV-related charges, $7.4 billion of them with a cash impact; it had paid $4.6 billion by the end of September, expects about $1 billion more in the fourth quarter, and will pay the rest in 2027. The third-quarter cash charges went mostly to right-sizing the battery supply chain with joint venture partners, and the finance chief said lower supplier EV payments next year should leave more free cash flow for shareholders.
Company disclosure (Q3 deck page 13, 2026 guidance): EBIT-adjusted narrows from $14.0 billion to $16.0 billion to $14.5 billion to $15.5 billion, adjusted EPS from $12.00 to $14.00 to $12.75 to $13.75, and adjusted automotive free cash flow rises from $9.5 billion to $11.5 billion to $11.5 billion to $12.5 billion.

Third-quarter 2026 deck page 13: updated 2026 guidance and assumptions

The assumptions moved both ways. Commodity inflation including logistics and DRAM is now about $2 billion instead of $1.5 billion to $2 billion, and regulatory benefits about $500 million instead of $500 million to $750 million. U.S. industry sales moved up to the mid-16 million range, the warranty benefit to the high end of $1.0 billion to $1.5 billion, and gross tariff costs to the low end of $2.5 billion to $3.5 billion.
Page 24 of the deck walks from nine-month automotive EBIT-adjusted of $10.3 billion through $5.2 billion of depreciation, working capital, accrued liabilities, interest, and taxes to $13.7 billion of operating cash flow. The release reconciles adjusted automotive free cash flow by starting from automotive operating cash flow, subtracting capital spending, and adding back “EV strategic realignment.” That add-back was $2.23 billion in the first quarter, $1.87 billion in the second, and $139 million in the third. The full-year reconciliation shows $4.2 billion of adjustments, about what the first nine months already used, so on the guidance table the roughly $1 billion of fourth-quarter EV cash is not added back.
Own calculation (fourth-quarter math): Subtracting nine-month results from the full-year ranges implies fourth-quarter EBIT-adjusted of $2.20 billion to $3.20 billion, against $2.84 billion a year earlier, adjusted EPS of $1.78 to $2.78 against $2.51, and adjusted automotive free cash flow of negative $0.68 billion to positive $0.32 billion, against $2.76 billion in the fourth quarter of 2025.

The Bull and Bear Case for GM Shares

The bullish case rests on margins and the share count. North American EBIT-adjusted margin is 8.7%, inside the company’s 8% to 10% target, the share base is 45% smaller than in 2015 so adjusted EPS grew faster than EBIT, the company says the material EV cash charges are nearly done, and the stock trades at 5.63 times adjusted earnings.
The bearish case is about cash quality and the fourth quarter. A third of nine-month adjusted free cash flow is an EV add-back, the raised guidance implies near-zero adjusted free cash flow in the fourth quarter, GM Financial delinquencies rose from 3.2% to 3.7%, and U.S. share slipped from 16.8% to 16.1%.
Outside view (sell-side research aggregate, October 2026): Of 51 analysts, 32 rate the stock Buy and 13 Hold, with an average price target of $93, 22.5% above the share price, and a range from $33 to $130. The day after the results Goldman Sachs cut its target from $112 to $96, Morgan Stanley from $101 to $95, and Barclays from $110 to $105; none of the changes listed that day was an increase.

GM came out of its 2009 bankruptcy as a new company, and Mary Barra became chief executive in 2014. The stock fell to $17.29 in the week of April 3, 2020, recovered +40.8% in 2021, and then fell 42.4% in 2022. On November 29, 2023, GM announced a $10 billion accelerated share repurchase: it paid the banks $10 billion up front and immediately received and retired $6.8 billion worth of shares.

GM shares over ten years with four markers

Buybacks then ran at $11.1 billion in 2023, $7.1 billion in 2024, and $6.0 billion in 2025, taking the share count from 1,395 million in 2022 to 1,154 million, 995 million, and 904 million. The shares gained 52.7% in 2024 and 54.6% in 2025. Along the way GM took a $4.06 billion China joint venture equity loss in the fourth quarter of 2024 and began booking EV capacity charges in the second half of 2025, including $1.59 billion in the third quarter of 2025. On October 20, 2026 it announced the $20 billion authorization, and the stock is down 8.0% for 2026.

How Much of the Cash Flow Is an EV Add-Back?

GM quarterly automotive free cash flow two ways and nine-month cash against buybacks

Automotive operating cash flow less capital spending was negative $0.97 billion in the first quarter of 2026, $3.15 billion in the second, and $5.72 billion in the third, while the company’s adjusted figure was $1.27 billion, $5.03 billion, and $5.88 billion. In the first quarter, operating cash flow was only $533 million; the $2.23 billion EV add-back is what turned adjusted free cash flow positive.
Own calculation (two ways to count nine months): Free cash flow before add-backs totaled $7.90 billion over nine months, up 11.6% from $7.07 billion, while the adjusted figure reached $12.18 billion, up 55.4% from $7.84 billion. Of the $4.29 billion gap between them, $4.24 billion is the EV strategic realignment add-back.
The deck’s cash bridge on page 24 shows the same thing from another angle: accrued and other liabilities consumed $1.7 billion over nine months after adding $1.3 billion a year earlier, while working capital contributed $1.0 billion in the third quarter. For all of 2025, adjusted free cash flow of $10.60 billion was only $1.10 billion above operating cash flow less capital spending of $9.49 billion; in nine months of 2026 that gap grew 3.9 times as large.

Warranty Savings and Tariff Refunds in North America

GM quarterly EBIT-adjusted with the implied fourth quarter and North American margin

North American EBIT-adjusted rose +43.4% to $3.59 billion, and the margin rose 2.5 points to 8.7%. Pages 18 and 19 credit warranty improvement, EV inventory adjustments, higher wholesale volume (53,000 more combustion vehicles, 23,000 fewer EVs), and full-size pickup mix, offset by commodity and logistics costs, onshoring, and the next-generation pickup launch. The finance chief put the third-quarter warranty improvement at $0.6 billion and the year-to-date figure at about $1.1 billion.
The first-quarter North American margin of 10.1% included a 1.5-point benefit from a tariff adjustment, according to the first-quarter deck, and the 10-Q says GM “recorded net favorable adjustments of $0.7 billion primarily due to previously charged IEEPA tariffs that are refundable” over nine months. Neither the tariff refund nor this year’s warranty step-down repeats at the same size in 2027.
The fourth quarter is seasonally the weakest. EBIT-adjusted was $1.76 billion in the fourth quarter of 2023, $2.51 billion in 2024, and $2.84 billion in 2025. This year the Silao plant in Mexico has finished a four-week shutdown, Fort Wayne in Indiana goes down for four weeks from mid-December, and management expects higher pricing, including the new trucks, to offset most of a 35,000-unit full-size pickup volume headwind.

Third-quarter 2026 deck page 9: incentives at 4.8% of MSRP against the industry

Page 9 puts numbers on pricing: GM’s incentives averaged 4.8% of the sticker price in the third quarter, 1.8 points below the industry average of 6.6%, and the average transaction price was $52,000.

GM Financial earned EBT-adjusted of $668 million in the third quarter, down -16.9%. Page 23 says lower interest expense and higher retail yield were offset by higher provisions for loan losses and lease depreciation, and the key metrics on page 36 show retail delinquencies over 30 days rising from 3.2% to 3.7% and annualized net charge-offs from 1.2% to 1.6%. Nine-month retail originations fell from $43.2 billion to $40.1 billion.
GM Financial paid GM a $250 million dividend in the quarter, down from $350 million, and $1.15 billion over nine months; the deck describes “Sufficient capital and ample liquidity to support portfolio growth and navigate economic cycles.” The automotive business held $23.1 billion of cash, above its $18 billion average target, against $15.8 billion of automotive debt.
U.S. market share fell from 16.8% to 16.1%. Global deliveries dropped from 1.563 million to 1.390 million, with China falling from 469,000 to 358,000, and GM International earned just $28 million after a $0.1 billion mark-to-market loss on its Momenta investment. China joint venture equity income was $32 million, an eighth straight profitable quarter.

How Pickups and Auto Loans Make Money

Most GM revenue is booked when it ships vehicles to dealers and fleet customers; third-quarter wholesale volume was 1.028 million units. Profit is concentrated in North America: of $12.30 billion of nine-month EBIT-adjusted, North America contributed $10.70 billion, GM Financial $1.96 billion, and GM International $342 million, with corporate costs of $700 million. GM International builds and sells vehicles in Korea, South America, and the Middle East, while China shows up only as equity income from the joint ventures with SAIC.
Full-size pickups and SUVs carry the earnings. Page 5 says GM’s full-size pickups have led U.S. sales for 19 straight quarters, light-duty pickup sales rose 9% in the third quarter, and small SUVs led by the Chevrolet Trax and Buick Envista had their best quarter ever, up +27%. The next-generation Chevrolet Silverado and GMC Sierra light-duty pickups start reaching customers at the end of the fourth quarter, followed by heavy-duty pickups and the next full-size SUVs.
Software and services build deferred revenue. Page 10 says OnStar ended the quarter with $6.8 billion of deferred revenue, up about 40%, and recognized more than $800 million of revenue, up 15%. GM expects to add about 1 million subscribers in 2026 and pass 850,000 paid Super Cruise subscribers by year end, Super Cruise revenue rose about 60% in the quarter, and 30% to 40% of owners keep paying after the three-year prepaid period ends.
GM Financial earns the spread between loan and lease income and its funding cost, and on leases it carries the risk that used-vehicle prices at lease end fall short. Its earning assets include loans to GM dealers for inventory, so the group funds vehicles from the dealer lot to the driveway. Trailing four-quarter net income to common was $1.8 billion, and the adjusted return on tangible common equity slipped to 13.8% from 16.2%.

How Four Rival Automakers Compare

Trailing twelve-month revenue is $319.65 billion at Toyota, $187.97 billion at Ford, $186.95 billion at GM, $183.78 billion at Stellantis, and $138.53 billion at Honda. Growth runs from Stellantis at 10.1%, Toyota at 7.2%, Honda at 4.1%, and Ford at 1.5% to GM at -0.3%.

Trailing revenue and growth for five automakers

Ford competes head-on in U.S. pickups with the F-Series and also owns a captive lender, yet with $1 billion more revenue than GM it is worth 72.2% of GM’s market value. Toyota and Honda lean on hybrids, and Stellantis overlaps in North America through Ram and Jeep. Because captive finance distorts consolidated free cash flow, this comparison uses forward P/E and price to book.
Forward P/E is 14.38 at Toyota, 10.91 at Honda, 6.62 at Ford, 5.42 at GM, and 4.04 at Stellantis. Price to book is 1.33 at Ford, 1.04 at GM, 0.99 at Toyota, 0.57 at Honda, and 0.16 at Stellantis. Over the past year Honda shares gained 12.0% and GM 9.9%, while Ford fell 11.7% and Stellantis -60.0%.

Forward P/E and price to book for five automakers

Own calculation (relative multiples): GM’s forward P/E is 0.38 times Toyota’s, yet its price to book is 1.05 times Toyota’s. Among the five, GM is the second cheapest on earnings and the second most expensive on book value.

P/E on Adjusted EPS Over 38 Months

On trailing adjusted EPS of $13.48, GM trades at 5.63 times, the 63rd percentile of the 38 months since September 2023, against a median of 5.47. The low was 3.31 in October 2023 and the high 7.91 in January 2026. On book value of $74.45 a share, price to book is 1.02, the 71st percentile, against a median of 0.79.

GM P/E on adjusted EPS and price to book over 38 months

At the $13.25 midpoint of 2026 guidance the multiple is 5.73, and on the 2027 consensus EPS of $15.11 it is 5.02. The quarterly dividend of $0.18 yields 0.95%. Price to book rose from 0.52 in October 2023 to a peak of 1.26 in July 2026 before settling at 1.02.

Three Conditions That Move the Stock

The gap between adjusted free cash flow and free cash flow before add-backs was $4.29 billion over nine months. If GM pays the remaining roughly $1.8 billion of EV cash in 2027 and the gap still narrows back toward 2025’s $1.1 billion, with pre-add-back free cash flow covering buybacks, the $20 billion authorization has a funding source; if the gap persists, buybacks run ahead of cash.
North American EBIT-adjusted margin was 8.7% in the third quarter. Holding 8% to 10% in the first half of 2027, as the new Silverado and Sierra ramp without this year’s warranty step-down and tariff refunds, would show a higher earnings floor; slipping below 8% under commodity, DRAM, and onshoring costs would make the low end of the implied fourth-quarter range the better guide.
GM Financial’s retail delinquency rate was 3.7%, half a point higher than a year earlier. A move above 4% with rising provisions would pressure the $2.5 billion to $3.0 billion EBT guidance and the dividend to GM; stabilizing in the mid-3% range would keep captive lending supporting North American sales.

The 2027 Outlook and the New Pickup Launch

The numbers to watch in the fourth-quarter report are 2027 EBIT-adjusted and adjusted free cash flow guidance, actual fourth-quarter free cash flow, GM Financial delinquencies, and the pace of new pickup deliveries after Fort Wayne restarts in January. GM has not announced the report date; in recent years it came in late January.
One question this piece cannot settle: once EV payments fall to around $1.8 billion in 2027, will North American profit without tariff refunds and this year’s warranty gains leave enough cash after capital spending to keep pace with a $20 billion buyback authorization?

Tesla (TSLA) Stock: 62% of Q3 Operating Income Was a Refund: the EV leader GM is retreating from, and another automaker whose third-quarter profit leaned on tariff refunds.
Raytheon (RTX) Stock: EPS Growth Is 18% Without the Refund: an industrial whose IEEPA refund flattered EPS growth, a frame for how much of GM’s margin gain repeats.
Booking Holdings (BKNG) Stock: Buybacks Beyond Cash Flow: a company returning more than its free cash flow, useful for judging GM’s buybacks at 67% of pre-add-back cash.

SpaceX (SPCX) Stock: One Customer and a 90-Day Exit Clause

J. Equity. Research — Sat, 24 Oct 2026 12:12:59 GMT

SpaceX (Nasdaq: SPCX) earned its first operating profit as a public company in the third quarter: $2.79 billion on revenue of $14.58 billion, up +161.4%. The third-quarter 10-Q shows where much of that revenue came from. One unnamed customer accounted for 34.5% of it, and the cloud contracts behind that business run “typically three years and terminable by either party upon 90 days’ notice.” The question is how much of a $2 trillion valuation rests on contracts that either side can end within a quarter.

SpaceX one-year share price chart

SpaceX sells launches on Falcon 9 and Starship (the Space segment), Starlink satellite internet (Connectivity), and, since it merged with xAI in February 2026, GPU data center capacity, Grok subscriptions, and X advertising (the SI segment, which the company names Super Intelligence). The shares trade at $147.49, +9.3% above the June IPO price of $135 and -20.3% below the first weekly close of $185.00, for a market value of $2.003 trillion on the 13.58 billion shares listed on the 10-Q cover. Fourth-quarter 2025 segment figures are backed out of prospectus full-year totals, and Customer B revenue is the 10-Q percentage applied to quarterly revenue.

Compute Contracts in the Q3 Release and IPO Roadshow

Third-quarter 2026 release business highlights: 113 launches and 1.7 GW of nameplate compute

The business highlights page of the third-quarter release puts one number on each segment: 113 launches and 1,517 metric tons to orbit so far this year in Space; 13.6 million Starlink consumer subscribers, 174 countries, and 11.1 thousand satellites in orbit in Connectivity; and 1.7 GW of nameplate compute in SI.
The first page of the release lists revenue of $14.6 billion, up 161%, operating income of $2.8 billion, net income of $4.4 billion, and adjusted EBITDA of $8.8 billion, up 306%. It highlights the first revenue-generating Starship flight, which carried 26 Starlink V3 satellites, and explains $6.7 billion of added SI solutions and infrastructure revenue as “driven by cloud services agreements, the acquisition of Cursor, and our growing SI models and software applications, including Grok Bot.” The CFO commentary describes a build-out “focused on capital efficiency, strong returns on invested capital, and maintaining a robust, investment-grade balance sheet” in a period when nine-month free cash flow was negative $34.97 billion.
The SI segment table shows revenue of $7.56 billion, up +195.2% from the second quarter, operating income of $431 million after $1.22 billion of stock compensation tied to the Cursor deal, and segment adjusted EBITDA of $4.95 billion. Cursor, acquired on August 14, added $608 million of revenue; without it, solutions and infrastructure revenue still rose 192% from the second quarter.
Page 40 of the roadshow presentation used for the June IPO names the buyers of compute. Anthropic pays a $1.25 billion monthly fee for capacity across the COLOSSUS and COLOSSUS II data centers through May 2029. Google pays $920 million a month for access to 110,000 NVIDIA GPUs from October 2026 through June 2029. Both fees are “subject to certain conditions.”

IPO roadshow page 40: monthly compute fees from Anthropic and Google

The prospectus spells out the main condition for Anthropic: after an initial three-month period, either party can end the agreements on 90 days’ notice. The company presented this as flexibility, saying the structure lets it sell capacity “while still permitting reallocation of that capacity for our own internal initiatives if needed in the future.” On the third-quarter call, the chief financial officer said: “At current pricing, new compute deployments are generating a payback of less than a year.” Pricing, he added, is running slightly above the top of the $30 to $50 per watt range discussed a quarter earlier.
Elon Musk defended the contract length when an analyst asked about it: “I think the smart move is to do short-term contracts”. He argued that better models raise the value of each watt and that short contracts have been renewing at higher prices per watt.

The December ARR Goal and the Q4 Capex Guide

Company disclosure (Q3 call, Q4 and Q1 2027 outlook): The company remains on track for $100 billion of annual recurring revenue, defined as annualized December revenue. Nameplate compute should reach nearly 2 GW at the end of October and 2.5 to 3 GW by year end, fourth-quarter capital spending is guided at $35 billion to $40 billion, and first-quarter 2027 revenue is guided at $33 billion to $37 billion.
The ARR goal is not new. On the second-quarter call Musk said of it: “That’s what we’d achieve if we basically did nothing.” This quarter the company added the first-quarter 2027 range, citing better visibility into its compute contract pipeline over the next six months. Musk said he would be surprised not to have more than 13 GW online by the end of 2027, with 20 GW of power and cooling targeted, and that a six-month payback on compute next year is not impossible.
The finance chief also warned on margins: “We also expect total company gross margins in Q4 to be more consistent with the second quarter, given some one-time benefits and customer mix that we highlighted in Q3.” One of those benefits sits in Connectivity, where the 55% gross margin included roughly 3 points from tariff refunds.
One metric did not come back. The second-quarter release reported $14.1 billion of contracted sales from cloud services agreements and defined the term narrowly: “It does not include any estimated revenue amounts for the future periods that are cancellable either by us or the customer.” Neither the third-quarter release nor the call repeated the figure.
Own calculation (what the guidance requires): A $100 billion December run rate means December revenue of $8.33 billion, 1.72 times the third-quarter monthly average of $4.86 billion. The first-quarter 2027 range equals 2.26 to 2.54 times third-quarter revenue, and moving from 1.7 GW to 13 GW is a 7.6-fold increase in roughly 15 months.

The Bull and Bear Case for SpaceX Shares

The bullish case starts with how fast profit is arriving. SI segment adjusted EBITDA went from negative $428 million a year ago to $4.95 billion, Connectivity runs at a 45.1% operating margin, and backlog stands at $62.96 billion. If first-quarter 2027 revenue lands inside guidance, four times that quarter puts the stock at 13.5 to 15.2 times sales.
The bearish case is about contract length and cash. A third of quarterly revenue came from one customer on contracts that can end on 90 days’ notice, and the part of backlog due beyond one year did not grow in the quarter. Nine-month free cash flow was -$34.97 billion, and 36.6% of third-quarter net income came from outside operations.
Outside view (sell-side research aggregate, October 2026): Of 21 analysts, 17 rate the stock Buy, with an average price target of $209, 41.7% above the share price, and a range from $75 to $450. The day after the results, Cantor raised its target from $246 to $345, UBS from $230 to $300, and Goldman Sachs from $205 to $245.

From a 2002 Rocket Startup to an AI Merger and IPO

IPO roadshow page 15: the first half of 2026 from the xAI deal to the Google agreement

Musk founded SpaceX in 2002. Reusable Falcon 9 boosters cut the cost of each launch, and the roadshow says the company has carried more than 80% of global mass to orbit since 2023; Starlink service began in 2020. In February 2026 SpaceX absorbed xAI, which had bought X in March 2025, in a merger of companies under Musk’s common control, so earlier periods are restated on a combined basis. Page 15 of the roadshow runs the first half of 2026 from the xAI deal to the Anthropic and Google cloud agreements.
The June 12 IPO sold 638.9 million Class A shares at $135 for net proceeds of $85.7 billion, and a $25 billion investment-grade bond followed on June 26. Cursor, the AI coding tool, closed on August 14 at an implied equity value of $60 billion. GAAP purchase consideration was $42.5 billion, and $23.4 billion of equity awards for post-deal service will be expensed over about three years.
On weekly closes the stock fell -41.4% from $185.00 in its first week to $108.37 in the week of July 31, recovered after the August second-quarter report, and rose +1.0% in the week of the third-quarter results.

SpaceX shares since the IPO with three markers

Musk is locked up for 366 days; other holders unlock in stages through 180 days after the IPO, and some investors and officers between the fourth-quarter 2026 and second-quarter 2027 reports.

How Much Revenue Rests on One Customer?

SpaceX quarterly revenue mix with Customer B and backlog within and beyond one year

Note 3 of the 10-Q lists two customers above 10% of revenue. Customer A buys across all three segments and was 16.6% of third-quarter revenue, down from 23.9% a year earlier. Customer B is an SI customer that rose from 19.5% in the second quarter to 34.5% in the third, after staying below 10% in the first. The filing names neither.
Own calculation (Customer B in dollars): Applying those percentages, Customer B brought in $1.52 billion in the second quarter and $5.03 billion in the third, 66.5% of SI revenue and 71.6% of SI solutions and infrastructure revenue. Of the $4.83 billion sequential increase in solutions and infrastructure revenue, $3.50 billion came from Customer B. Three months of Anthropic’s published fee comes to $3.75 billion, $1.28 billion less than Customer B’s third-quarter revenue.
Anthropic ramped in May and June at a reduced fee, Google starts in October, and on the second-quarter call management said it had contracted another $6.7 billion of cloud revenue over six months starting in October. Whether Customer B’s revenue above the Anthropic fee reflects added contracts with the same customer is not disclosed.
The 10-Q treats cloud services as a stand-ready obligation to provide reserved compute and recognizes fixed monthly fees over the contract term. Backlog rose from $47.46 billion at the end of June to $62.96 billion at the end of September, and the share expected within one year rose from 56% to 67%. “Contracts are included in backlog when an enforceable agreement has been reached,” the filing says.
Own calculation (backlog by duration): Backlog due within one year rose from $26.58 billion to $42.18 billion, an increase of $15.61 billion, while backlog due beyond one year slipped from $20.88 billion to $20.78 billion. All of the $15.50 billion of added backlog falls within a year.
In Musk’s telling the short backlog is a choice: he expects the compute shortage to last and prefers repricing at renewal. For the customer, the same clause is an option to move workloads after 90 days.

Non-Operating Gains Inside Q3 Net Income

Third-quarter net income of $4.40 billion equals operating income of $2.79 billion, less $675 million of interest expense, plus $873 million of interest income, $1.03 billion of other income, and a $390 million tax benefit. The interest income comes from investing the IPO proceeds, and $561 million of the other income is an unrealized gain on SpaceX’s stake in The Boring Company.
Musk controls The Boring Company, so the stake is a related-party item, marked up after a September financing round. Of the interest expense, $351 million came from AI equipment leases with Valor Equity Partners, founded by SpaceX director Antonio Gracias; the leases were judged a failed sale-leaseback and sit on the balance sheet as $12.90 billion of debt.
Own calculation (profit quality): The $1.61 billion of non-operating items equals 36.6% of third-quarter net income. Without the Boring Company gain and the tax benefit, net income would have been $3.45 billion.
Gross margin rose from 55.3% to 62.4% on more low-cost cloud revenue and the tariff refunds, and the fourth quarter is guided back to the second-quarter level. For nine months SpaceX still shows a net loss of $413 million after a $1.55 billion first-quarter loss on early debt repayment.

How the IPO and Debt Fund the Capex Gap

SpaceX quarterly capex by segment and nine-month operating cash flow

Nine-month capital spending reached $48.07 billion, 3.5 times a year earlier, and 83.2% of it went to SI. The third quarter alone was $19.59 billion, and with fourth-quarter guidance of $35 billion to $40 billion, 2026 capex comes to $83 billion to $88 billion. Nine-month operating cash flow was $13.10 billion, leaving free cash flow of negative $34.97 billion; the third quarter alone produced operating cash flow of $9.63 billion and free cash flow of -$9.96 billion.
The IPO and borrowing filled the gap. Nine-month financing cash flow was $99.82 billion, including $85.68 billion of IPO proceeds, and the quarter ended with $89.86 billion of cash and marketable securities against $38.99 billion of debt. When the EchoStar spectrum purchase closes, SpaceX will issue 261.8 million Class A shares worth $11.1 billion and pay up to $8.5 billion toward EchoStar debt.
Own calculation (payback at the fleet level): SI capex over the last four quarters totals $44.65 billion. Divided by four times third-quarter SI adjusted EBITDA, or $19.81 billion, that is 2.25 years. The company’s sub-one-year figure refers to new deployments rented at current prices, while this fleet-level number also carries unfinished data centers and the compute used to train Grok.

Three Segments From Launch to Compute Rentals

IPO roadshow page 6: scale of the Space Connectivity and AI businesses

Page 6 of the roadshow dates the three businesses to 2002, 2020, and 2023 and counts about 650 launches, more than 9,600 Starlink satellites, and about 550 million monthly users across Grok and X.
Space revenue was $1.77 billion in the third quarter, up +6.1%, with an operating loss of $7 million. Only customer launches produce segment revenue: of 35 launches, 12 were for customers and 23 put up SpaceX’s own Starlink satellites. Year-to-date launches total 113. Research and development, mostly Starship, was $1.23 billion, 69% of segment revenue. New awards included three NASA crew missions and 18 national security launches.
Launch services revenue of $1.13 billion is booked at launch, and launch and development revenue of $637 million, such as NASA’s Dragon programs, is booked over time. Customer launches fell from 15 to 12 while launch services revenue rose +13.0%, lifting the simple average per customer launch from $66.7 million to $94.2 million. Internal launches earn no Space revenue; their cost is capitalized in Connectivity, and 83.5% of the 1,517 tons sent to orbit this year was SpaceX’s own payload.
Connectivity revenue was $5.25 billion, up +69.5%, with operating income of $2.37 billion, a 45.1% margin. Consumer revenue of $3.12 billion, up 57.2%, comes from kit sales and monthly subscriptions; consumer subscribers reached 13.6 million, up 1.6 million in the quarter, while monthly ARPU of $69 was below $83 a year earlier as international users and lower-priced plans grew. Enterprise and government revenue, which includes the Starshield defense network, reached $2.13 billion, up +91.4%. Starlink Mobile reached 22 million monthly users, and U.S. mobile service on the EchoStar and 800 MHz spectrum is planned for early 2028.
SI splits into advertising of $538 million, up 18.5%, and solutions and infrastructure of $7.02 billion, which covers compute rentals, Grok subscriptions and API usage, and Cursor. Nameplate compute, installed GPUs times their all-in power draw, rose from 0.6 GW to 1.7 GW as COLOSSUS II in Memphis and a site in Southaven, Mississippi came online. Grok Bot had 800,000 paid weekly users in early October, and SI depreciation reached $2.47 billion, 2.7 times a year earlier.
SI now makes up 51.9% of revenue, Connectivity 36.0%, and Space 12.1%; a year ago Connectivity was 55.5% and SI 14.6%. SpaceX also bought $480 million of Tesla Megapacks for its data centers over nine months, and both companies’ boards have formed special committees to evaluate a combination.

SpaceX Versus Five Compute and Space Peers

Trailing twelve-month revenue is $71.78 billion at Oracle, $32.04 billion at SpaceX, $7.59 billion at CoreWeave, $1.36 billion at Nebius, $903 million at Iridium, and $769 million at Rocket Lab. Growth runs from Nebius at 506.9% and SpaceX at +128.6% to CoreWeave at 115.3%, Rocket Lab at 52.5%, Oracle at 21.6%, and Iridium at 3.6%.

Trailing revenue and growth for six compute and space companies

CoreWeave and Nebius rent GPU capacity as their core business, and Oracle sells data center compute under long-term cloud contracts. Rocket Lab overlaps with the Space segment, and Iridium with the handheld satellite market Starlink Mobile is entering.
On price to trailing sales (P/S), SpaceX trades at 62.5 times, Rocket Lab at 40.9, Nebius at 32.0, Oracle at 5.3, Iridium at 5.2, and CoreWeave at 3.9. Latest-quarter operating margins are 35.6% at Oracle, 19.1% at SpaceX, 12.9% at Iridium, negative 0.2% at Nebius, negative 1.9% at CoreWeave, and negative 24.6% at Rocket Lab. Over the past year CoreWeave shares fell -59.4% and Oracle shares fell -52.0%.

Price to sales and latest quarter operating margin for six compute and space companies

SpaceX’s P/S is 16.0 times CoreWeave’s, even though both rent GPUs. Oracle earns a higher margin and trades at 5.3 times sales, and the companies closest to SpaceX’s multiple are Rocket Lab and Nebius, each with about $1 billion of revenue or less.

Price to Sales on Six Revenue Bases

Nineteen weeks of trading give four month-end prices, too few for a valuation band. Dividing the $2.003 trillion market value by six revenue bases instead gives 62.5 times trailing revenue, 44.3 times the 2026 consensus of $45.2 billion, 34.4 times third-quarter revenue annualized, 20.0 times the December ARR goal, 17.3 times the 2027 consensus of $116.0 billion, and 13.5 to 15.2 times first-quarter 2027 guidance annualized.

SpaceX price to sales on six revenue bases

The multiple on trailing results is 4.1 to 4.6 times the multiple on company guidance. The 2026 consensus implies fourth-quarter revenue of $18.12 billion, 24.3% above the third quarter.

Three Conditions That Move the Stock

Customer B’s share of revenue went from 19.5% to 34.5% between the second and third quarters. If the Google contract adds a second SI customer above 10% in the fourth quarter and Customer B’s share falls, a single 90-day notice matters less to quarterly revenue; a share above 40% would tie that much of revenue to one customer’s decision.
Backlog due beyond one year was $20.88 billion in June and $20.78 billion in September. Growth in that figure in the annual report would show short contracts lengthening at renewal; a flat figure would mean new backlog is mostly near-term revenue booked early.
The gap between capex and operating cash flow was negative $34.97 billion over nine months. If operating cash flow tops $10 billion a quarter while the $35 billion to $40 billion of fourth-quarter capex goes out, the $89.86 billion cash pile lasts longer; if not, more borrowing or equity becomes likely in 2027.

The Google Contract and the Tesla Review

The numbers to watch in the fourth-quarter report are the December ARR, Customer B’s share, backlog beyond one year, and fourth-quarter gross margin. The Google contract at $920 million a month and the six-month $6.7 billion contract both start in October, so the fourth quarter is the first to include them in full, and the review of a Tesla combination waits on the two companies’ special committees.
One question this piece cannot settle: short contracts let SpaceX reprice at every renewal while compute is scarce, but if GPU supply loosens and Customer B gives 90 days’ notice, how much of the $20.78 billion of longer-dated backlog still stands behind the revenue?

Tesla (TSLA) Stock: 62% of Q3 Operating Income Was a Refund: the other side of the special committee review, and another third quarter where tariff refunds lifted margins, useful for comparing profit quality at the two Musk companies.
Oracle (ORCL) Stock Analysis: Cash Flow and Capex Gap: a cloud provider funding data centers with customer prepayments, a contrast with SpaceX’s short contracts and IPO-funded capex.
NVIDIA (NVDA) Stock Analysis: Guarantees and Cash Flow: the GPU supplier behind COLOSSUS, useful for seeing how rental contract risk shows up on the supplier’s balance sheet.

IBM (IBM) Stock: Organic Software Growth Is Just Over 4%

J. Equity. Research — Sat, 24 Oct 2026 08:01:44 GMT

International Business Machines Corporation (NYSE: IBM) grew third-quarter software revenue +8.3% to $7.80 billion, or 9% at constant currency, but the company’s own prepared remarks put organic growth at just over four points of that, with the rest coming from deals such as the $11.6 billion purchase of Confluent in March. Total revenue rose 4.7% to $17.10 billion, and IBM kept its full-year revenue outlook of 4% to 5% while raising only its free cash flow target. The question is how much growth is left in a company that trades at 20 times operating earnings once acquisitions are stripped out.
IBM sells software such as Red Hat Enterprise Linux and OpenShift, IT consulting, and mainframes (IBM Z), servers, and storage. The shares trade at $251.46 for a market value of $237.66 billion on 945.1 million shares outstanding, -17.0% below the weekly high of $303.06 set in the week of December 12, 2025. EPS here is IBM’s operating (non-GAAP) measure, which excludes acquisition-related amortization and retirement-related costs; third-quarter GAAP EPS was $2.31. IBM does not disclose how much acquisitions add to software growth, so the acquired share below is a range backed out from the organic figure the company gave.

IBM one-year share price chart

What the Third-Quarter Presentation Says About Software

Page 5 of the third-quarter presentation shows revenue of $17.1 billion (up 6% at constant currency), nine-month free cash flow of $7.8 billion (up 8%), adjusted EBITDA up 7%, operating pre-tax margin up 70 basis points, and operating EPS up 11%. The growth rates on that page are at constant currency; on a reported basis the release shows revenue up 4.7% and operating EPS up 11.3%.

Third-quarter 2026 presentation page 5: revenue of 17.1 billion dollars and 11% operating EPS growth

Page 6 puts software revenue at $7.8 billion, up 9% at constant currency, with double-digit growth in three of four sub-segments: Hybrid Cloud (Red Hat) up 11%, Data up 20%, and Transaction Processing up 10%, while Automation fell -3%. Annual recurring revenue reached $24.9 billion, up 8%, OpenShift ARR growth accelerated to over 30%, and segment margin expanded 210 basis points on productivity actions.

Third-quarter 2026 presentation page 6: software revenue up 9% with growth by sub-segment

The prepared remarks add the number that matters for this piece: “Software revenue growth accelerated four points sequentially to 9% this quarter, including over four points of organic growth.” They credit the Data increase to “another strong performance from Confluent.” On the call, the finance chief said Transaction Processing fell by double digits in the second quarter and cost software growth four to five points, and that the third-quarter acceleration was organic.
Own calculation (acquired growth): With a little over four points of the 9% organic, acquisitions contributed a little under five points. Reported software growth was 11.3% in the first quarter, 5.1% in the second, and 8.3% in the third, and both quarters since Confluent closed on March 17 include an acquired contribution.
Page 8 shows consulting revenue of $5.3 billion, up 2% at constant currency, with cybersecurity growing nearly double digits. The detail on page 17 shows Strategy and Technology up 4%, Intelligent Operations flat, signings of $5.0 billion down 2%, a trailing book-to-bill of 1.04, and segment margin of 12.2%, down 0.6 points. While software margins rose, consulting held still on both revenue and margin.

The Mainframe Cycle and the 2026 Outlook

Page 7 shows infrastructure revenue of $3.7 billion, up 5% at constant currency. Distributed Infrastructure (Power servers and storage) grew 32%, lifting Hybrid Infrastructure 9%, while IBM Z fell -19% and Infrastructure Support fell 2%. The slide says z17 has delivered more than $1 billion of incremental revenue over the prior generation and a record mid-range launch, and storage gained share with record revenue growth. The July 14 letter from chief executive Arvind Krishna had warned that “What played out was worse than our expectations, driven by a shortfall in our Z performance and the associated software stack, primarily in Transaction Processing.”

Third-quarter 2026 presentation page 7: infrastructure revenue with IBM Z down 19% and Distributed up 32%

Page 9 keeps 2026 revenue growth at 4% to 5% and operating pre-tax margin expansion at 100 basis points, and raises the free cash flow growth target to more than $1 billion. The remarks put it this way: “We continue to expect revenue growth for 2026 in the range of four-to-five percent and are raising our expectation for free cash flow growth to more than $1 billion.” The same page notes a finalized $1 billion CHIPS award from the Department of Commerce for a U.S. quantum foundry.

Third-quarter 2026 presentation page 9: summary and the 2026 outlook of 4% to 5% revenue growth

Company disclosure (Q3 prepared remarks, full-year view): Software growth of about 7% to 8%, with about 7% as the base case; double-digit growth in Hybrid Cloud, mid-teens in Data, low single digits in Automation, and flat Transaction Processing after a raised view. Infrastructure revenue growth in the low single digits and an operating tax rate in the mid-teens.
Own calculation (fourth-quarter math): If currency is neutral for the year, as IBM assumes, 4% to 5% growth implies fourth-quarter revenue of $20.05 billion to $20.73 billion, up 1.9% to 5.3% from $19.69 billion. The 4% base case implies 1.9%, and the analyst average of $20.47 billion (up 4.0%) sits in the upper half of the range.
Page 14 lists $11.4 billion of acquisitions and $4.8 billion of dividends in the first nine months and shows debt outside IBM Financing rising from $46.2 billion at the end of 2025 to $51.2 billion. Page 18 shows operating expense up 2%, with acquisitions and divestitures adding five points and the base business down 1%; R&D rose 8% even excluding acquisitions, while SG&A fell 8% on the same basis.

The Bull and Bear Case for IBM Shares

The bullish case starts with cash and recurring revenue. Nine-month free cash flow rose 8.5% to $7.79 billion, and the remarks say “Our free cash flow margin for the first nine months of the year is the highest in reported history.” Red Hat grew 11% and ARR is $24.9 billion. The quarterly dividend of $1.69 yields 2.69%, and the release notes IBM has paid consecutive quarterly dividends every year since 1916.
The bearish case looks at where growth comes from. Roughly half of software growth is acquired, consulting revenue rose only 0.2% with signings down 2%, last year’s fourth quarter grew 12.2% (infrastructure 20.6%), and total debt reached $63.8 billion against $54.2 billion in the first quarter of 2022.
Outside view (sell-side research aggregate, October 2026): Of 25 analysts, 9 rate the stock Strong Buy, 3 Buy, 11 Hold, 1 Sell, and 1 Strong Sell, with an average price target of $242.65. The average 2026 operating EPS estimate is $12.31 and the 2027 estimate is $13.15, 6.8% higher.
That average target is 3.5% below the share price, and Hold is the most common rating. Third-quarter operating EPS of $2.95 beat the $2.87 average estimate by 2.8%.

From C-T-R in 1911 to Red Hat and Confluent

IBM shares over ten years with four markers

IBM was incorporated in New York on June 16, 1911, as the Computing-Tabulating-Recording Co., a merger of three companies making scales, tabulators, and time recorders, and took its current name in 1924. On an adjusted basis the stock has gone from $80.55 in the first week of 2016 to $251.46, a multiple of 3.12.
The modern IBM was shaped by two deals. On October 28, 2018, IBM agreed to buy Red Hat for $190.00 a share in cash and closed on July 9, 2019. On November 3, 2021, it spun off its managed infrastructure services business as Kyndryl, distributing 80.1% of Kyndryl to shareholders at one Kyndryl share for every five IBM shares, after which revenue was reorganized into software, consulting, and infrastructure.
The shares gained +21.9% in 2023, +41.1% in 2024, and +40.5% in 2025. IBM bought HashiCorp in 2025 and Confluent on March 17, 2026, for $31 a share in cash and $11.60 billion in total consideration. The July 14 letter flagged second-quarter revenue up 1%, software up 5%, and infrastructure down 7%, and said “These conditions require our teams to execute perfectly, and this quarter we faltered.” The stock has fallen 15.9% in 2026.

How Fast Is Software Growing Without Acquisitions?

IBM quarterly revenue by segment and software and infrastructure growth

Software revenue rose from $5.14 billion in the first quarter of 2021 to $7.80 billion in the third quarter of 2026 and is now 45.6% of revenue. Year-over-year growth ran between 7% and 14% from late 2024 through the end of 2025, then 11.3%, 5.1%, and 8.3% in the first three quarters of 2026, with HashiCorp and then Confluent adding acquired revenue in turn.
Infrastructure follows the mainframe cycle. It peaked at 19.0% growth in the second quarter of 2022 with z16 and at 20.6% in the fourth quarter of 2025 with z17, then fell -7.3% in the second quarter of 2026 as the launch effect faded. The third quarter recovered to 4.2% on Distributed Infrastructure, but IBM Z itself was still down 19% at constant currency.
Segment margins moved apart. Software rose from 32.9% to 35.0% and infrastructure from 18.1% to 19.3%, while consulting fell from 12.9% to 12.2%, and the company credited the software gain to productivity.

How Much of the EPS Gain Came From a Lower Tax Rate?

Operating pre-tax income rose 8.6% to $3.30 billion, while operating EPS rose 11.3% to $2.95. The gap is the tax rate, which fell from 17.0% to 14.7% on an operating basis.
Own calculation (tax effect): Applying last year’s 17.0% rate to this quarter’s operating pre-tax income gives operating EPS of $2.87, up 8.3%. About 8 cents of the 30-cent increase came from the lower tax rate.
GAAP EPS rose 25.5% to $2.31 because the prior-year GAAP figure carried a 33-cent tax charge. The fourth quarter of 2025 went the other way: its GAAP EPS of $5.86 included a $1.54 benefit from resolving tax audits, which lifts trailing GAAP EPS to $11.72, close to operating EPS of $12.31.

Free Cash Flow Against Dividends and Deals

IBM free cash flow against dividends and acquisitions and quarter-end debt

Free cash flow climbed from $9.29 billion in 2022 to $14.73 billion in 2025. Dividends edged up from $5.95 billion to $6.25 billion, while acquisitions rose to $5.08 billion in 2023, $8.29 billion in 2025, and $11.36 billion in the first nine months of 2026. In 2026 so far, dividends absorbed 61.2% of free cash flow and acquisitions exceeded free cash flow outright.
Own calculation (cash uses since 2022): From 2022 through the third quarter of 2026, IBM generated $55.77 billion of free cash flow, paid $29.15 billion in dividends, and spent $30.38 billion on acquisitions, so dividends plus deals exceeded free cash flow by $3.76 billion. Total debt rose from $54.2 billion to $63.8 billion while cash and securities stayed near $11 billion.
The third-quarter 10-Q allocates $7.25 billion of the $11.60 billion Confluent price to goodwill and $3.83 billion to client relationships, technology, and trademarks. Goodwill rose from $67.72 billion at the end of 2025 to $74.92 billion, 2.11 times stockholders’ equity of $35.54 billion. To lift free cash flow by more than $1 billion for the year, IBM needs at least $7.95 billion in the fourth quarter, 5.2% more than a year ago.

How IBM Makes Money Across Three Segments

Revenue of $67.54 billion in 2025 grew 7.6%: software 10.6%, infrastructure 12.1%, and consulting 1.8%. Software was 44.4% of the total, consulting 31.2%, infrastructure 23.3%, and financing 1.1%. In the third quarter the Americas brought in $8.6 billion (up 5% at constant currency), Europe, the Middle East and Africa $5.4 billion (up 4%), and Asia Pacific $3.1 billion (up 10%). Revenue clusters at year end: the fourth quarter of 2025 was 29.1% of annual revenue and 30.1% of annual software revenue.
Software has four parts. Hybrid Cloud covers RHEL, OpenShift, Ansible, and Red Hat AI; Automation covers HashiCorp, Apptio, security, observability, and IT financial management; Data covers AI assistants and agents, databases, data integration, and Confluent; and Transaction Processing covers CICS and storage and security software for the mainframe. In the third quarter Hybrid Cloud and Transaction Processing brought in $2.1 billion each, Automation $1.9 billion, and Data $1.7 billion. Management describes ARR of $24.9 billion as the high-value recurring core, with OpenShift at $2.4 billion of it.
The mainframe anchors that model. On the call, management said mainframes handle 70% of industry transactions by value and run core systems at 45 of the top 50 banks, and the remarks say clients representing about 85% of installed MIPS capacity are maintaining or growing it. The finance chief said each dollar that lands on the mainframe brings three to five dollars of software.
Consulting splits into Strategy and Technology ($3.0 billion) and Intelligent Operations ($2.4 billion), and works alongside partners including Adobe, AWS, Microsoft, Oracle, Palo Alto Networks, Salesforce, and SAP; generative AI is part of 35% of its backlog. Infrastructure covers IBM Z, Distributed Infrastructure (Power, storage, IBM Cloud), and maintenance. IBM Financing lends to clients buying IBM products and carries $12.7 billion of the $63.8 billion of debt.

Four Peers From Consulting to Infrastructure

Trailing revenue and growth for five IT services and infrastructure companies

Trailing twelve-month revenue was $74.2 billion at Accenture, $71.8 billion at Oracle, $69.9 billion at IBM, $63.3 billion at Cisco, and $41.9 billion at HPE. Growth was 26.6% at HPE, 21.6% at Oracle, 11.8% at Cisco, +6.8% at IBM, and 6.5% at Accenture, which puts IBM next to the consulting peer.

Forward P/E and FCF yield for five IT services and infrastructure companies

Forward P/E is 20.84 for Cisco, 19.31 for IBM, 16.39 for Accenture, 15.16 for Oracle, and 12.51 for HPE, while trailing FCF yield is 8.19% at Accenture, 6.19% at IBM, 5.38% at HPE, and 3.02% at Cisco, with Oracle at -7.34%. Dividend yield is 2.85% at Accenture and 2.69% at IBM. Over one year HPE gained 138.2% and Cisco 46.7%, while IBM fell -18.2% and Oracle 50.8%.
This piece pairs forward P/E with FCF yield because a mature company growing in single digits earns its multiple through the cash it returns. Accenture competes in consulting, Oracle in databases and cloud while also partnering with IBM Consulting, and Cisco and HPE in servers, storage, and networking.
Own calculation (FCF yield): IBM’s own trailing free cash flow of $15.34 billion is 6.45% of its market value, close to the aggregator’s 6.19%. On the aggregator basis IBM yields 2.0 points less than Accenture yet trades at 19.31 times forward earnings against Accenture’s 16.39.

P/E on Operating EPS Over 58 Months

IBM P/E on operating EPS and price-to-sales bands over 58 months

On trailing operating EPS of $12.31, IBM trades at 20.43 times, the 67th percentile of the 58 months since January 2022, against a median of 18.75. The low was 13.39 times in September 2022 and the high 28.13 times in November 2025. Price to sales is 3.43, at the 74th percentile, against a median of 2.82.
The band uses weighted diluted shares, 953.5 million in the third quarter, as EPS does. On the 2027 estimate of $13.15 the stock trades at 19.12 times, and on trailing GAAP EPS of $11.72 at 21.46 times. The 28 times reached in late 2025 was paid on operating EPS lower than today’s.

Three Conditions That Move the Stock

Organic software growth was a little over four points in the third quarter, and the chief executive said on the call he is confident Red Hat will grow double digits in the fourth quarter. If software still grows around 7% after Confluent’s anniversary in 2027, organic strength is confirmed; if it settles near 4%, the case for a forward multiple above 19 weakens.
Fourth-quarter revenue growth implied by the outlook is 1.9% to 5.3%, against a quarter last year when z17 lifted infrastructure 20.6%. Beating the 4.0% consensus on the Distributed Infrastructure backlog and a steadier Transaction Processing would put the top of the 4% to 5% range in reach; landing near the 1.9% base case would make the software acceleration a one-quarter event.
Free cash flow of at least $7.95 billion in the fourth quarter is needed to meet the raised target. If cash covers a dividend of about $6.3 billion a year plus quantum and deal spending, debt stops rising; another large debt-funded acquisition would push goodwill further past twice equity.

The 2027 Outlook and Confluent Synergies

The fourth-quarter report in late January will show revenue growth, fourth-quarter free cash flow, and the first 2027 outlook. On the call, the finance chief described 2026 as the year of integrating Confluent and 2027 as the year of growth synergies, and said IBM is planning its investment and capital structure strategy through 2027.
One question this piece cannot settle: once Confluent’s revenue becomes organic in the second quarter of 2027, can IBM software keep growing around 7% on its own, or will the next acquisition have to fill the gap again?

Oracle (ORCL) Stock Analysis: Cash Flow and Capex Gap: a peer in databases and cloud whose spending outran free cash flow, useful for comparing how two mature software companies fund growth.
Adobe (ADBE) Stock Analysis: Valuation After the CEO Change: another large software company priced on recurring revenue, a frame for IBM’s ARR of $24.9 billion and its 19 times forward multiple.
CrowdStrike (CRWD) Stock Analysis: GAAP vs Non-GAAP Results: a case study in adjustments, helpful for reading IBM’s operating EPS next to acquisition amortization and tax items.

GE Aerospace (GE) Stock: Allowances Behind the Cash Flow

J. Equity. Research — Sat, 24 Oct 2026 02:55:02 GMT

GE Aerospace (NYSE: GE) grew third-quarter adjusted EPS +35.5% to $2.25 and raised every line of its 2026 guidance, yet free cash flow fell -13.5% to $2.04 billion. Nine-month free cash flow rose 13.4%, but that figure includes a $1.56 billion build in sales discounts and allowances, money owed back to customers later; without it, nine-month free cash flow was down 4.0%. The question is what a stock at 37 times adjusted earnings, near the bottom of its standalone range, is pricing in.

GE Aerospace one-year share price chart

GE Aerospace builds the LEAP engine for the Airbus A320neo and Boeing 737 MAX through CFM International, its 50-50 venture with Safran, and earns most of its money servicing engines and selling parts for decades after delivery. The shares trade at $285.64 for a market value of $295.2 billion on 1.033 billion shares, -24.1% below the weekly high of $376.47 set in the week of July 2, 2026, and they fell 9.0% in the week of the results. EPS and operating profit here are company-adjusted (non-GAAP) figures that exclude the run-off insurance business and separation costs; third-quarter GAAP continuing EPS was $2.32. GE does not report sales allowances by quarter, so quarterly figures are backed out of 10-Q year-to-date totals.

What the Q3 Presentation Says About Orders and Margins

Third-quarter 2026 presentation page 6: orders of 19.0 billion dollars and free cash flow down 14%

Page 6 of the third-quarter presentation lines up orders of $19.0 billion (up 49%), adjusted revenue of $13.3 billion (up 18%), operating profit of $3.0 billion (up 30%), adjusted EPS of $2.25 (up 36%), and free cash flow of $2.0 billion (down 14%). Below that it shows nine-month operating profit of $8.3 billion, adjusted EPS of $6.13, free cash flow of $6.7 billion, and a free cash flow conversion rate, FCF over adjusted net income, of 87% in the quarter and 105% year to date.
Page 8 shows Commercial Engines & Services (CES) revenue of $10.3 billion, up +21%, and operating profit of $2.9 billion, up 21%, with the margin down 10 basis points to 27.9%. Services grew 17%, with internal shop visit revenue up 12% on LEAP volume up more than 40%, and spare parts grew more than 20%. Equipment revenue grew 38% on engine deliveries up 8%, including LEAP up 5%, and higher GEnx output.

Third-quarter 2026 presentation page 8: Commercial Engines and Services revenue and margin

Chief financial officer Rahul Ghai explained the cash on the call: “Working capital was a use as receivables grew from timing of services billings and an increase in balance due from airframers.” For the nine months he said: “This reflects 105% conversion with continued favorability in net contract assets and liabilities.” He did not mention sales allowances. The CES slide adds that GE9X deliveries had no third-quarter impact and that the nine-month CES operating profit was $7.9 billion, up 22%.
Page 4 covers output. Material input from priority suppliers rose double digits, LEAP turnaround time fell about two weeks, which helped bring aircraft grounded for engines to nearly zero, and LEAP fan assembly output more than doubled. Page 7 splits the 59-cent EPS increase: 43 cents from the two segments, 12 cents from lower corporate cost, and the rest from 24 million fewer diluted shares, at an adjusted tax rate of 15.2%.
Own calculation (services and equipment mix): CES services revenue was $7.74 billion, up 16.7%, and equipment revenue was $2.61 billion, up 37.8%, putting services at 74.8% of CES. Faster engine deliveries raise the share of lower-margin equipment, and the nine-month CES margin of 27.2% was 1.3 points lower than a year ago.

The Raised 2026 Outlook and a Slower Fourth Quarter

Third-quarter 2026 presentation page 10: raised 2026 guidance and segment outlook

Page 10 raises the 2026 outlook on every line: adjusted revenue growth from high teens to about 19% to 20%, operating profit from $10.55 billion to $10.75 billion to $10.9 billion to $11.0 billion, adjusted EPS from $7.65 to $7.85 to $8.00 to $8.10, and free cash flow from $8.9 billion to $9.2 billion to $9.1 billion to $9.4 billion. Of the $250 million increase in CES operating profit, the finance chief attributed about $100 million to a smaller GE9X impact and $150 million to services growth. Page 14 keeps DPT at low double-digit revenue growth and $1.6 billion to $1.7 billion of operating profit, and puts corporate costs and eliminations at the low end of $1.2 billion to $1.3 billion.
Company disclosure (Q3 release and call, 2027 view): Commercial services orders rose 23% in the quarter and 30% year to date. The chief executive said: “We are raising our 2026 guidance across the board, and we now expect 2027 commercial services to grow low-double-digits supported by our over $170 billion commercial services backlog.”
Own calculation (fourth-quarter math): Growth of 19% to 20% for the year implies fourth-quarter adjusted revenue of $12.83 billion to $13.25 billion, up 8.1% to 11.7% from $11.87 billion, against 17.5% in the third quarter; the analyst average of $13.33 billion sits above that range. Fourth-quarter adjusted EPS would be $1.87 to $1.97, up 19.1% to 25.5%, and free cash flow $2.37 billion to $2.67 billion, up 34.8% to 51.8%.

Third-quarter 2026 presentation page 15: share count cash borrowings and tax rate

Page 15 shows diluted shares of 1.041 billion in the third quarter against 1.068 billion for 2025, after $2.0 billion of buybacks in the quarter. Cash was $8.8 billion ($10.3 billion with short-term liquidity investments) against $19.3 billion of borrowings; the company plans to refinance 2026 and later maturities and issue new debt in 2027 to fund part of the CPP purchase. Interest expense is expected at about $900 million for 2026 and the adjusted tax rate at about 16%, down from 17.3% in 2025.

The Bull and Bear Case for GE Aerospace Shares

The bullish case starts with orders. Nine-month orders rose 49%, the services backlog stands at $178.7 billion, and the adjusted P/E of 37.10 sits at the 6th percentile of the 31 months since GE Vernova was spun off. The company raised all of its 2026 targets.
The bearish case is about pace and cash. Commercial services growth steps down from the low 20s in 2026 to low double digits in 2027, and the guidance implies fourth-quarter revenue growth of only 8.1% to 11.7%. Nine-month free cash flow growth is explained by the allowance build, buybacks and dividends exceed free cash flow, and an $11.75 billion acquisition is waiting.

GE Aerospace quarterly operating profit against free cash flow and adjusted revenue growth

Outside view (sell-side research aggregate, October 2026): Of 23 analysts, 16 rate the stock Strong Buy, 3 Buy, 3 Hold, and 1 Sell, with an average price target of $391.19, 37.0% above the share price. The average 2027 EPS estimate is $9.11. Several brokers cut their targets the day after the results while keeping Buy ratings.

From an 1892 Conglomerate to a Pure Engine Maker

General Electric started in 1892 from the merger of Edison General Electric and Thomson-Houston. The board named Larry Culp chairman and chief executive on October 1, 2018. GE carried out a 1-for-8 reverse split in August 2021, sold its aircraft leasing arm GECAS to AerCap that November, spun off GE HealthCare on January 4, 2023, and spun off GE Vernova on April 2, 2024, leaving the aircraft engine business as GE Aerospace.

GE shares over ten years with four markers

The shares fell 42.9% in 2017 and 55.7% in 2018. On adjusted weekly closes the stock went from $120.05 in the first week of 2016 to a low of $26.52 in the week of May 15, 2020, and $285.64 is 2.38 times the 2016 level. The shares gained +95.7% in 2023, 68.1% in 2024, and 86.1% in 2025, and are down 8.9% in 2026. On September 8 the company agreed to buy the castings maker CPP for $11.75 billion.

How Much Free Cash Flow Came From Sales Allowances?

The change in sales discounts and allowances added to operating cash flow went from minus $203 million in 2023 and minus $266 million in 2024 to plus $562 million in 2025 and plus +$1.56 billion in the first nine months of 2026. By quarter it was $1.00 billion in the first quarter, minus $44 million in the second, and $608 million in the third. The liability on the balance sheet rose from $3.48 billion at the end of 2024 to $4.04 billion at the end of 2025 and $5.60 billion at the end of September.

GE Aerospace change in sales allowances and nine-month free cash flow

The third-quarter 10-Q says the cash from allowances rose “primarily due to increases in allowances on new engine installs and spare parts in CES,” and its liabilities note adds product durability reserves. The company books the amount it will credit back to customers as a reduction of revenue now and pays it later, so operating cash flow is higher while the balance builds. In the fourth quarter of 2024, $597 million flowed out in a single quarter.
Own calculation (cash flow without the allowance build): Excluding the change in allowances, nine-month free cash flow was $5.16 billion, down 4.0% from $5.38 billion, and third-quarter free cash flow was $1.43 billion, down 36.4%. The allowance build equals 23.2% of reported nine-month free cash flow. For full-year 2025 the same adjustment still leaves $7.13 billion, up 10.2%.
Current receivables used $1.66 billion in the third quarter against $113 million a year earlier, which explains most of the drop in conversion from 134% to 87%.

What the CPP Deal Costs and How It Is Funded

CPP makes precision castings for aircraft engines, defense, and power generation, with about $2.0 billion of expected 2027 revenue and about 6,600 employees. The acquisition release says the price “Values CPP at ~18x 2027 EBITDA including expected net synergies, multiple of ~26x without,” with net synergies of about $200 million. GE expects the deal to add to adjusted EPS and free cash flow in the first year and to earn a double-digit return on invested capital by year five. It will pay about $7 billion in cash and borrow the rest, with closing expected in the second half of 2027.
Own calculation (deal and capital returns): At 26 times, CPP’s pre-synergy EBITDA is about $452 million, and the price is 5.88 times revenue and 4.0% of GE’s market value. Buybacks of $6.51 billion and dividends of $1.36 billion in the first nine months of 2026 total $7.87 billion, 116.9% of free cash flow and 152.4% of free cash flow excluding the allowance build. Adding $4.75 billion of new debt would lift borrowings to $24.05 billion.
The company said the deal does not change its capital allocation plans, and diluted shares fell 2.5% from 1.068 billion in 2025 to 1.041 billion in the third quarter.

Insurance Reserves and Deferred 777X Engine Revenue

The run-off insurance business, excluded from adjusted results, lost $210 million in the third quarter after earning $361 million a year earlier. The 10-Q says the 2026 annual review of future policy benefit reserve assumptions led to a $328 million pre-tax charge, mainly from claims experience and long-term care cost inflation. Insurance liabilities total $34.12 billion.
The GE9X powers the Boeing 777X. GE delivered GE9X engines with an upgraded midseal in the quarter but will recognize the revenue only after Federal Aviation Administration certification.

How the Engine Aftermarket Makes Money

GE Aerospace has an installed base of about 50,000 commercial and 30,000 military engines, and the 10-Q says aftermarket services represent about 70% of revenue. Engines earn little when they are delivered to airframers; the money comes as those engines fly for decades and return to the shop for overhauls and parts. Page 11 of the presentation puts the fleet at about 80,000 engines with more than 2.3 billion flight hours.
LEAP and the older CFM56 power single-aisle jets, while GEnx and GE9X power widebodies such as the Boeing 787 and 777X. LEAP deliveries topped 500 for a fifth straight quarter and are up 26% year to date, while widebody engine deliveries rose more than 50% in the quarter and GEnx shipments nearly doubled. Parts have been the bottleneck: supplier material input has risen sequentially for ten straight quarters. At Farnborough GE announced commitments for more than 1,800 engines, including the largest LEAP order ever, more than 1,000 LEAP-1A engines for IndiGo, and Turkish Airlines later ordered more than 300 LEAP-1B engines.
Services revenue grew 17% in the quarter, and spare parts delinquency rose sequentially as demand outran supply. Remaining performance obligations total $178.75 billion for services and $33.34 billion for equipment, with 12% of the services amount expected within one year and 67% within ten. Flying activity drives that revenue; on airline departures, management said “we saw the third quarter up 1%, widebody is particularly strong,” and expects departures to grow in 2027 despite fuel pressure. Long-term service agreements bill on utilization and recognize revenue as work is done, and the gap sits in contract assets and liabilities.
Defense & Propulsion Technologies (DPT) grew revenue +6.7% to $3.47 billion and operating profit 8.0% to $475 million, a 13.7% margin; the aeroderivative business moved into DPT from CES in 2026. Defense & Systems grew 5% and Propulsion & Additive Technologies, which includes Avio Aero and Unison, grew 10%. GE signed an F414 support contract worth up to $2.9 billion, its GEK800 with Kratos was picked as the second-source engine for the JASSM missile, and the XA102 moved to hardware procurement in the NGAP program. GE spends more than $3 billion a year on R&D.

Four Peers in Engines and Aftermarket Parts

Trailing twelve-month revenue was $96.0 billion at RTX, $52.6 billion at GE Aerospace, $10.0 billion at TransDigm, $9.1 billion at Howmet, and $5.2 billion at HEICO. HEICO grew fastest at 20.7%, followed by GE at +19.6%, Howmet at 18.1%, TransDigm at 16.6%, and RTX at 11.6%.

Trailing revenue and growth for five engine and aftermarket companies

RTX’s Pratt & Whitney GTF competes with LEAP on the A320neo. Howmet makes engine castings and forgings, supplies GE, and competes with CPP. HEICO and TransDigm sell aftermarket parts, and HEICO’s approved replacement parts overlap with GE’s spare parts business. That is why this piece pairs forward P/E with FCF yield.
Forward P/E is 42.82 at HEICO, 32.15 at GE, 31.44 at Howmet, 24.62 at RTX, and 23.71 at TransDigm, and trailing FCF yield is 3.68% at RTX, 3.18% at TransDigm, 2.72% at GE, 2.48% at HEICO, and 2.42% at Howmet; Howmet’s figures run through June and the others through September. Operating margin is 46.01% at TransDigm, 28.50% at Howmet, 25.14% at HEICO, 18.49% at GE on a GAAP basis that includes insurance, and 15.54% at RTX. Over one year RTX gained 7.0%, while GE fell -7.5% and TransDigm fell 15.6%.

Forward P/E and FCF yield for five engine and aftermarket companies

Own calculation (FCF yield without the allowance build): GE’s own trailing free cash flow of $8.49 billion is 2.88% of its market value, or 2.34% at $6.92 billion without the allowance build. On that basis GE yields less than Howmet’s 2.42% while trading at 32.15 times forward earnings against RTX’s 24.62.

P/E on Adjusted EPS Over 31 Months

On trailing adjusted EPS of $7.70, GE trades at 37.10 times, the 6th percentile of the 31 months since April 2024, against a median of 47.22. The low was 36.26 in December 2024 and the high 53.65 in February 2026. On GAAP continuing EPS of $8.76 the multiple is 32.61, the 16th percentile, against a median of 38.67.

GE Aerospace P/E on adjusted and GAAP EPS bands over 31 months

GAAP EPS runs above adjusted EPS because insurance results, non-operating pension income, and equity mark-to-market sit only in GAAP; fourth-quarter 2025 GAAP EPS was $2.31 against adjusted EPS of $1.57. At the $8.05 guidance midpoint the multiple is 35.48, and on the 2027 estimate of $9.11 it is 31.35. The dividend of $1.88 a year yields 0.66%.

Three Conditions That Move the Stock

Commercial services growth is in the low 20s for 2026, and the company sees low double digits for 2027. If the 2027 outlook in the January 21 fourth-quarter report holds services near 12% and spare parts delinquency eases, the multiple has room to move back toward its median; a single-digit services outlook would push it lower.
The sales allowance balance was $5.60 billion at the end of September. Hitting $9.1 billion to $9.4 billion of free cash flow while that balance shrinks in the fourth quarter, as it did in 2024, would show earnings converting to cash; if the balance keeps building to carry free cash flow, the 2.34% yield without the build is the better yardstick.
CPP will take about $7 billion of cash and $4.75 billion of debt. With nine-month returns at 116.9% of free cash flow, keeping buybacks steady while paying for CPP would push borrowings above $24 billion, while cutting buybacks would shrink the EPS lift that a falling share count has provided.

The 2027 Outlook and Closing the CPP Deal

The numbers to watch are the 2027 services growth and free cash flow outlook in the January 21 report, the year-end sales allowance balance, and the timing of GE9X midseal certification. CPP is expected to close in the second half of 2027 after regulatory approval.
One question this piece cannot settle: will the allowances on new engines and spare parts keep building as LEAP deliveries rise, or will they flow out in cash at once as they did in the fourth quarter of 2024?

Raytheon (RTX) Stock: EPS Growth Is 18% Without the Refund: Pratt & Whitney’s parent and LEAP’s rival on the A320neo, useful for comparing how one-time items shape EPS growth at the two engine makers.
Delta Air Lines (DAL) Stock: 23.6% EPS Guidance Cut on Fuel: a major GE engine customer cutting guidance on fuel costs, the airline side of the departure trends that drive GE’s services revenue.
Booking Holdings (BKNG) Stock: Buybacks Beyond Cash Flow: another company returning more than its free cash flow, a frame for GE’s buybacks at 117% of free cash flow ahead of the CPP payment.

Sector RS Rank Oct 23: Oil Services Lead, Euro Defense Fall

J. Equity. Research — Fri, 23 Oct 2026 23:06:38 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Zscaler · Qualys · Seadrill — a cloud security vendor up +7.31%, a vulnerability management firm at a one-year closing high, and an offshore driller up +6.42%.

② On October 23, the S&P 500 fell -0.52% to 7,623.68 and the Dow dropped -1.23% to 52,215.16. Only 45 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs fell.

③ The VanEck oil services fund rose +5.40%, while the Select STOXX Europe defense fund fell -4.13%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Oct 23 Sector RS — 129 ETFs · RRG v2

Oil services and cybersecurity jumped. The Dow fell hardest. Most funds closed lower for a second day.
The S&P 500 closed at 7,623.68, down -0.52% or 39.75 points. The Nasdaq slipped -0.21%, or 53.52 points, to 25,955.34. The Dow fell -1.23%, or 652.82 points, to 52,215.16, the weakest of the three. Style funds offered no shelter. The Russell 1000 Growth fund (IWF) fell -0.40%, and the Russell 1000 Value fund (IWD) lost -0.63%. The equal-weight S&P 500 fund (RSP) dropped -0.77%, so the average stock did worse than the index.
Breadth stayed weak. Only 45 of the 129 funds in our universe closed higher, 82 fell, and two were flat. Three of the 11 sector SPDRs rose. Energy led at +2.60%, followed by technology (+0.49%) and real estate (+0.12%). Consumer staples fell the most, at -1.92%, one day after leading the market. Communication services lost -1.78% and consumer discretionary -1.66%.
Reports tied the selling to the same worries as Thursday: doubts about the payoff from AI spending, oil above $100 a barrel, and the Fed meeting next week. American Express fell -3.68% and Caterpillar -2.42%, two of the largest Dow decliners. AT&T dropped -7.96%. The VIX rose +2.21% to 19.45. The 10-year Treasury yield edged up to 4.99% from 4.95%. Brent crude closed at $111.66, and reports said it touched its highest level since May during the session after Houthi strikes on Saudi oil facilities. Gold futures fell -1.24% to $4,010, and Bitcoin was flat at -0.05%.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 23, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
WisdomTree Cloud Computing (WCLD)	+2.50%	98	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	+4.17%	97	🔺	🔺	🔺
United States Oil Fund (USO)	+4.32%	96	🔺	🔺	🔺
Global X Cybersecurity (BUG)	+4.98%	96	🔺	🔺	🔺
Energy Select Sector SPDR (XLE)	+2.60%	95	🔺	🔺	🔺

All five rose on a day when most funds fell, and all five sit above all three moving averages. The list changed completely from Thursday. Health care, consumer staples, and retail dropped out after one session. XLV now ranks 91, XLP 90, and XRT 90. Cloud, cybersecurity, and oil took their places. USO moved up from 79 to 96 in a week, and its 1-month gain of +10.74% matches XLE’s +10.75%.

Why They’re Strong — Sector Issues

WisdomTree Cloud Computing WCLD Daily

· Cloud software (WCLD) — WCLD ranks first at 98 and is up +11.83% over five sessions. Its security holdings did the work on Friday. Netskope rose +9.37%, Zscaler +7.31%, Tenable +6.17%, and Asana +4.52%. The fund is up +12.24% over one month, the best 1-month return in our universe.

SPDR Energy XLE Daily

· Energy (XLE · USO) — Oil stayed above $100 as Houthi attacks on Saudi facilities kept supply at risk, according to reports. USO rose +4.32%, and XLE +2.60%. ConocoPhillips gained +3.55%, Chevron +2.88%, and ExxonMobil +2.79%. Ovintiv rose +4.29% and Murphy Oil +4.65%, a one-year closing high. The First Trust natural gas fund (FCG) added +3.45% even as natural gas itself fell.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks oil services, cybersecurity, humanoid robots, European defense, and natural gas. The VanEck oil services fund (OIH) started the window at 74, fell to 5 on October 1, and has climbed back to 66 on this price-based line. The sheet ranks it 64. The Global X cybersecurity fund (BUG) dropped to 19 on September 11, reached 100 on September 21, and sits at 92 against 96 on the sheet. The Roundhill humanoid robotics fund (HUMN) touched 75 on October 2 and is at 35, close to its sheet rank of 40. The Select STOXX Europe defense fund (EUAD) began the window at 78 and is now 25, with the sheet at 22. The US natural gas fund (UNG) reached 100 on October 14 and has dropped to 9. The sheet still has it at 37.

RS Breakdown Warnings (big 5-day drops)

· Natural gas collapsed on the RS line. UNG fell -80 points in five sessions, from 89 to 9. The fund is down -10.13% over the same stretch. On the sheet, it went from 90 to 37.

· Communication and media funds lost ground. The Roundhill metaverse fund (METV) fell -31 points, from 91 to 60, and the communication services SPDR (XLC) -30 points, from 64 to 34. XLC is down -4.36% over five sessions. The Roundhill Magnificent Seven fund (MAGS) lost -26 points, from 79 to 53, and the Global X social media fund (SOCL) -22 points, from 76 to 54. The sheet shows the same direction: METV 93 to 81, XLC 63 to 43, MAGS 81 to 63, and SOCL 78 to 58.

· The VanEck oil refiners fund (CRAK) fell -21 points, from 84 to 63, and the VanEck video gaming fund (ESPO) -19 points, from 90 to 71. Their sheet ranks fell from 81 to 53 and from 96 to 75. The chip funds did not recover. The iShares semiconductor fund (SOXX) sits at 12 on our line and 34 on the sheet.

RS Rebound Signals (sharp bounces off the bottom)

· Sports betting led the bounces. The Roundhill sports betting fund (BETZ) gained +44 points in five sessions, from 9 to 53. The SPDR biotech fund (XBI) added +31 points, from 19 to 50, and the Invesco solar fund (TAN) +28 points, from 17 to 45. On the sheet, BETZ rose from 10 to 24, XBI from 32 to 46, and TAN from 16 to 21.

· HUMN gained +24 points, from 11 to 35, and the SPDR pharmaceuticals fund (XPH) also +24 points, from 20 to 44. The Global X SuperDividend REIT fund (SRET) rose +23 points, from 34 to 57, and the Invesco KBW bank fund (KBWB) +21 points, from 38 to 59. Their sheet ranks rose from 13 to 40, 25 to 35, 28 to 49, and 23 to 49.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 23 closing move — 45 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
VanEck Oil Services (OIH)	+5.40%	64	🔺	🔽	🔺
iShares U.S. Oil Equipment & Services (IEZ)	+5.35%	58	🔺	🔽	🔺
Global X Cybersecurity (BUG)	+4.98%	96	🔺	🔺	🔺
United States Oil Fund (USO)	+4.32%	96	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	+4.17%	97	🔺	🔺	🔺

Two groups filled the list: oil and cybersecurity. OIH and IEZ posted the largest gains but rank only 64 and 58. Both sit above their 1-month and 1-year averages and below their 1-quarter average. OIH is up just +0.80% over one month. BUG, USO, and IHAK made both lists. They rank near the top and also led the day.

Why They Rose — Sector Issues

VanEck Oil Services OIH Daily

· Oil services (OIH · IEZ) — SLB jumped +7.08% after its third-quarter report. Revenue rose +6% from a year earlier to $9.45 billion. Adjusted EPS was $0.64, ahead of estimates, according to reports, though GAAP EPS fell -2% to $0.49. The company cited stronger North American activity and a gradual recovery in the Middle East, according to reports. Halliburton rose +5.21%, NOV +5.33%, Baker Hughes +4.18%, and TechnipFMC +4.59%. Offshore drillers joined in: Seadrill +6.42%, Valaris +5.58%, and Transocean +5.43%.

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG · IHAK) — CrowdStrike rose +8.25%, SailPoint +8.62%, Zscaler +7.31%, Cloudflare +7.29%, and Palo Alto Networks +7.22%. Reports pointed to an Evercore ISI channel partner survey that showed a firmer outlook for security budgets, with spending aimed at securing data, AI, and identities. BUG is up +12.61% over five sessions and IHAK +10.94%. Both rank 96 or higher.

Leading Sectors: Cloud Software, Cybersecurity, Oil

① Software took the lead back. WCLD ranks 98 and is up +11.83% over five sessions. IHAK ranks 97 and BUG 96, and both gained more than +4% on Friday. The three sit above all three moving averages. Their 1-month returns of +12.24%, +8.47%, and +7.03% lead most of the universe.
② Oil held its place. USO ranks 96 and XLE 95, and both are up more than +10% over one month. The oil services funds moved first on Friday. OIH gained +5.40% and climbed from 26 to 64 on the sheet in a week.
③ The weak side was European defense, natural gas, and precious metals. EUAD fell -4.13% and ranks 22. We found no single headline for the drop. Its largest European holdings closed slightly higher in local trading on Friday, and reports earlier in the week tied weakness in the group to signs of progress in Ukraine diplomacy. UNG fell -3.13% as November natural gas futures slipped, according to reports. The Global X silver miners fund (SIL) lost -2.54% as silver fell -1.47%. The SPDR insurance fund (KIE) dropped -2.34%, with Chubb -2.43% and Allstate -2.28%.
④ The last report covered the October 22 close. Its three picks, measured from that close to Friday’s: Allegion +1.39%, Trex -1.35%, and Academy Sports -2.35%. The S&P 500 fell -0.52% over the same session. Only one of the three beat the index. Allegion closed at $178.98, below the $179.77 high it needed to clear but above its $159.00 checkpoint. Trex closed at $50.38, two cents above its $50.36 checkpoint. Academy Sports closed at $60.33, below its $61.19 checkpoint, though still above its 20-day average of $53.71. Recorded as is.

Today’s Three Stocks — Zscaler · Qualys · Seadrill Stock Forecast

Zscaler (ZS) — 1-Month RS 95: A +7% Jump on Security Budgets

Zscaler ZS Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
98	100	95	+18.9%	Global X Cybersecurity

Up +7.31% to $255.15, and +23.04% over five sessions. That is its highest close since November 25, 2025, though still -24% below its one-year high of $336.27 from November 3, 2025. Zscaler sells cloud-based zero trust security. Reports tied Friday’s move to the Evercore survey and to price target increases that followed the company’s investor day on October 6, where it set a target of more than $8 billion in annual recurring revenue by fiscal 2031. For the quarter ended July 31, revenue rose +25% to $898.2 million, according to the company’s September release. Fiscal 2026 revenue was $3.35 billion, and annual recurring revenue reached $3.77 billion. The company guided fiscal 2027 revenue to $3.91 billion to $3.94 billion, about +17% growth, a slower pace. It still reports GAAP losses: the net loss was $13.9 million in the April quarter. The Zscaler stock forecast depends on whether the first-quarter report in December confirms the budget survey.

Qualys (QLYS) — 1-Month RS 95: A One-Year Closing High

Qualys QLYS Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
93	99	95	+18.5%	iShares Cybersecurity and Tech

Up +4.08% to $216.70, and +19.69% over five sessions. That is its highest close in at least a year, above $208.20 from Thursday. Qualys sells cloud-based vulnerability management and compliance software. We found no company headline for Friday. The stock moved with the security group. For the quarter ended June 30, revenue rose +11.0% to $182.2 million from $164.1 million. Operating income rose +20.4% to $61.9 million from $51.4 million. Net income rose +10.8% to $52.4 million, and EPS was $1.50, up from $1.29. In August the company raised its 2026 revenue outlook to $732 million to $738 million, according to reports. The third-quarter report is scheduled for November 3, according to reports. The Qualys stock forecast depends on whether revenue growth holds above +10% in that report.

Seadrill (SDRL) — 1-Month RS 87: An Offshore Driller Back Above $52

Seadrill SDRL Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
97	95	87	+12.6%	iShares U.S. Oil Equipment & Services

Up +6.42% to $52.35, and +10.79% over five sessions. That is its highest close since May and about 4% below its one-year high of $54.80 from May 18. Seadrill operates offshore drilling rigs, mostly drillships. We found no company headline for Friday. The stock moved with the oil services group after SLB’s report. On October 12 the company announced a $420 million rig award in Indonesia and contract extensions in Malaysia and Angola, according to reports. For the quarter ended June 30, total revenue rose +19.1% to $449 million from $377 million. Operating income rose to $72 million from $6 million. Net income was $29 million, against a net loss of $42 million a year earlier, and EPS was $0.47, up from -$0.68. Earnings swing with rig utilization, so the first two quarters of the year were weaker. The third-quarter report is scheduled for November 3, according to reports. The Seadrill stock forecast depends on whether the new contracts keep day rates and utilization rising.

Zscaler · Qualys · Seadrill Stock Forecast Checkpoints

· Zscaler stock forecast — The stock is up +23.04% in five sessions. Watch whether it holds above $237.76, Thursday’s close and the prior high of this run. A drop below $216.25, its 20-day average, would end the short-term uptrend.

· Qualys stock forecast — The stock broke a one-year closing high. Watch whether it holds above $208.20, the prior high from Thursday. A drop below $193.49, its 20-day average, would put it back under its short-term trend.

· Seadrill stock forecast — The stock is about 4% below its May high. Watch whether it clears $54.80, its May 18 closing high. A drop below $46.71, its 20-day average, would end the short-term uptrend.

What to Watch on Next Week’s Calendar

Fed rate decision, Wednesday, October 28, 2:00 p.m. ET, then September PCE inflation and third-quarter GDP, Thursday, October 29, 8:30 a.m. ET. The 10-year yield rose to 4.99% on Friday, and the Dow fell -1.23%. This is the first meeting since the September 16 rate hike. Oil above $100 feeds the inflation side of the decision, and the PCE report will show how much of that has reached prices.
Microsoft and Alphabet results, Wednesday, October 28, 4:00 p.m. ET; ServiceNow results the same evening; Amazon results, Thursday, October 29, 4:00 p.m. ET. SK hynix reports Tuesday, October 27, 8:00 p.m. ET, and Samsung Electronics, Wednesday, October 28, 9:00 p.m. ET. WCLD ranks 98 and BUG 96 on security budget hopes. The cloud results will show whether enterprise software spending is holding up, and the chip results will test SOXX, which sits at 12 on our RS line.
Israel election, Tuesday, October 27; Phillips 66 results, Wednesday, October 28, 8:00 a.m. ET; Chevron results, Friday, October 30, 8:00 a.m. ET. OIH rose +5.40% and USO ranks 96 as Houthi strikes kept Brent above $110. The election bears on the Middle East risk premium in oil, and Chevron’s report will show what the quarter’s prices did to cash flow. China’s Communist Party plenum runs Monday, October 26 to Thursday, October 29, and Freeport-McMoRan reports Tuesday, October 27, 8:00 a.m. ET, as the copper fund (CPER) lost -21 points on our RS line.

Schlumberger (SLB) Stock: Organic Sales Fall and a $4.1B Bet

J. Equity. Research — Fri, 23 Oct 2026 05:56:08 GMT

SLB N.V. (NYSE: SLB), the oilfield services company long known as Schlumberger, grew second-quarter 2026 revenue +5% to $8.972 billion, but only because of ChampionX, the chemicals and artificial lift business it bought in July 2025. Without ChampionX’s $870 million, revenue was -5%, and EPS excluding charges and credits fell -26% to $0.55. On August 31 the company agreed to buy Kelvion, a maker of heat exchangers and cooling equipment, for about $4.1 billion including assumed debt. The question is how much of SLB’s earnings the new businesses can carry, and what the market is paying for when it has doubled the P/E while EPS shrank.

SLB (SLB) one-year share price chart

The shares trade at $49.50 for a market value of $73.47 billion, +40.6% above a year ago. Third-quarter results are due in late October and Kelvion is not expected to close until the first half of 2027, so every Kelvion figure here is a company estimate. EPS in this piece is SLB’s non-GAAP “excluding charges and credits” measure, and the share count already includes the 141 million shares issued for ChampionX.

What the Kelvion Deck Promises for Data Centers

Kelvion acquisition presentation page 9: Kelvion 2026 revenue of 2.3 to 2.4 billion dollars

Page 9 of the August 31 Kelvion presentation puts Kelvion’s 2026 revenue at about $2.3 billion to $2.4 billion and adjusted EBITDA at $350 million to $400 million. Data centers are its largest end market, with expected 2026 revenue of $1.2 billion to $1.3 billion and growth of more than 50% year over year. Outside data centers, Kelvion sells thermal equipment into heat pumps, renewables, and carbon capture and processing.
Page 10 combines Kelvion with SLB’s own Data Center Solutions business. The pair start from more than $2 billion of pro forma 2026 revenue and about $300 million of adjusted EBITDA, and SLB targets $4.5 billion to $5.0 billion of revenue and $700 million to $800 million of adjusted EBITDA in 2028. The deck adds about $120 million of annual EBITDA synergies within three years.

Kelvion acquisition presentation page 10: 2028 data center revenue target of 4.5 to 5 billion dollars

Company disclosure (Kelvion release and deck page 11): SLB pays about $3.4 billion in cash and assumes about $0.7 billion of debt, which values Kelvion at about 11 times estimated 2026 EBITDA before synergies, or about 8.5 times with run-rate synergies. The deal is expected to add to EPS and free cash flow per share within 12 months of closing, net debt stays within the company’s through-cycle ceiling of 1.5 times EBITDA, the commitment to return more than $4 billion to shareholders in 2026 stands, and 2027 returns are expected to be at least in line.

Kelvion acquisition presentation page 11: 8.5 times EBITDA with synergies and shareholder returns

The Kelvion release frames the deal around AI. “AI is driving the most significant infrastructure investment cycle in our lifetime,” chief executive Olivier Le Peuch said, adding that Kelvion would expand the addressable market, “more than doubling our revenue opportunity per gigawatt of delivered capacity.” SLB says its data center revenue will compound at more than 90% a year from 2024 to 2026 and that cumulative delivered capacity will pass 2 gigawatts by year end. Gavin Rennick, who runs New Energy and Industrial, said that “Thermal management is central to that challenge.” Kelvion is majority owned by Apollo-managed funds, with a minority stake held by funds advised by Triton.
Own calculation (what the data center numbers imply): Subtracting Kelvion’s $1.2 billion to $1.3 billion of data center revenue from the combined $2 billion leaves $0.7 billion to $0.8 billion of 2026 revenue for SLB’s own data center business. Kelvion’s EBITDA margin works out to 14.6% to 17.4%, and the combined business runs at about 15.0% in 2026 and 15.6% to 16.0% at the 2028 target, below SLB’s second-quarter adjusted EBITDA margin of 21.2%. Roughly half of Kelvion’s revenue, $1.0 billion to $1.2 billion, is industrial thermal equipment rather than data centers.

Digital Targets and an Outlook Resting on the Middle East

At the June 17 Digital Investor Day, chief financial officer Stephane Biguet said Digital generated about $2.7 billion of revenue in 2025, more than $900 million of adjusted EBITDA, and a 35% margin, with about $1 billion of annual recurring revenue (ARR). He told investors that “Digital has become a meaningful contributor to SLB’s financial performance in the past few years.” Since 2021, Digital revenue has compounded at 16% and its adjusted EBITDA at 23%, against about 14% EBITDA growth for SLB overall.

Digital Investor Day page 11: 2 billion dollars of ARR and 1.8 to 2 billion of EBITDA by 2030

The 2030 targets are $2 billion of ARR, adjusted EBITDA of $1.8 billion to $2.0 billion, and a margin of 38% to 42%, on revenue growth of 10% to 15% a year from 2025. SLB sizes the digital market at about $35 billion by 2030 and up to $50 billion if AI adoption runs faster. Within that, it expects Digital Operations to grow 11% a year against about 8% for the overall market, and says digital services are only about 1.5% of core equipment and services revenue today, with room to triple by 2030.
The second-quarter release shows Digital revenue of $697 million, +18% year over year and up 12% without ChampionX’s $34 million, with ARR of $1.04 billion, up 15%. Le Peuch said the quarter “marked a return to year-on-year revenue growth outside the Middle East.” On the call, management guided third-quarter revenue up 3% to 4% sequentially with about 75 basis points of adjusted EBITDA margin expansion. A downside case, in which renewed escalation leaves Middle East revenue flat, would cut third-quarter revenue by about $150 million and EBITDA by about $75 million.
The fourth-quarter outlook assumes Middle East revenue recovers to $2.1 billion to $2.2 billion, about 95% of the fourth quarter of 2025. On that basis SLB expects revenue to surpass $10 billion, about 5% growth year over year, and an adjusted EBITDA margin of about 24%.
Own calculation (the recovery the outlook needs): Middle East revenue was $1.66 billion in the second quarter, so reaching $2.1 billion to $2.2 billion requires growth of 26.5% to 32.5% in two quarters. Adding about 5% to last year’s fourth-quarter revenue of $9.745 billion gives roughly $10.2 billion, while the average analyst estimate for the quarter is $9.94 billion, below the company’s outlook.

The Bull and Bear Case for the Pivot

The bullish case has three legs. Once the Middle East conflict ends, repairs and production recovery should lift service demand; Digital, at a 35% margin, should grow 10% to 15% a year; and data centers should compound at more than 50% a year through 2028. On top of that, more than $4 billion of 2026 shareholder returns equals 5.4% of the market value.
The bearish case starts from the reported numbers. Revenue excluding ChampionX has been lower than a year earlier for four straight quarters, and trailing EPS excluding charges of $2.54 is below the $3.41 earned in 2024. The data center business runs at about a 15% margin, so its growth pulls the company margin down, and Kelvion adds $4.1 billion to net debt.
Outside view (sell-side research aggregate, October 2026): Of 30 analysts, 19 rate the stock Strong Buy, 7 Buy, 2 Hold, and 2 Sell or Strong Sell, with an average price target of $62.41. The 2026 EPS estimate fell from $2.53 ninety days earlier to $2.47, and 2027 from $3.30 to $3.18.

A Century From Schlumberger to Kelvion

Founded in 1926 by the Schlumberger brothers, the company is incorporated in Curaçao with executive offices in Paris, Houston, and The Hague. Its 2025 10-K notes that it changed its brand name to SLB in 2022 and the legal name of the listed parent in 2025.

Ten years of SLB shares with five markers

On a dividend-adjusted basis, the stock went from $47.95 in January 2016 to a peak of $65.39 in January 2017 and a low of $11.87 in March 2020. In April 2020 the board cut the quarterly dividend 75%, from $0.50 to $0.125. The shares then gained +40.3% in 2021 and +81.2% in 2022 before falling -25.5% in 2024, and today they sit at 1.03 times their level of ten years ago.
SLB agreed to buy ChampionX in April 2024 and closed the all-stock deal on July 16, 2025, issuing 0.735 SLB shares for each ChampionX share, or 141 million shares worth $4.936 billion. In March 2026 it warned that Middle East disruptions would cut first-quarter EPS by 6 to 9 cents, and on August 31 it announced Kelvion.

How Far Has Revenue Fallen Without ChampionX?

SLB quarterly revenue with ChampionX contribution and quarterly margins

In the four quarters since ChampionX arrived, reported revenue growth was -2.5%, +5.0%, +2.7%, and +5.0%. Stripping out ChampionX’s contribution and comparing with a year earlier gives -8.8%, -4.5%, -7.1%, and -5.2%, a decline in every quarter. SLB’s own releases report the same calculation as -7% for the first quarter of 2026 and -5% for the second.
North American revenue of $2.244 billion rose +36% in the second quarter, but excluding ChampionX’s $606 million it fell 1%. International revenue of $6.671 billion fell 3%, or 6% without ChampionX. The second-quarter 10-Q says first-half revenue excluding ChampionX fell $1.05 billion, of which $0.7 billion came from the Middle East.
Own calculation (EBITDA without ChampionX): Taking ChampionX’s $207 million out of second-quarter adjusted EBITDA of $1.899 billion leaves $1.692 billion, 17.5% below the $2.051 billion of a year earlier. ChampionX ran at a 23.8% EBITDA margin against 20.9% for the rest of SLB, so the acquired business held the company margin up.

Middle East Disruption and the Margin Slide

Adjusted EBITDA margin peaked at 25.7% in the fourth quarter of 2024 and was 20.3% in the first quarter of 2026 and 21.2% in the second. The pretax segment margin fell from 18.5% to 15.6% over the year. Reservoir Performance dropped from 18.6% to 14.9% and Well Construction from 18.6% to 15.2%, and SLB attributed both mainly to the conflict.
Middle East revenue fell 13% from the first quarter to $1.66 billion, about 65% of the Middle East and Asia area. In a March 8-K, SLB said it had suspended travel in the region and begun to demobilize in a few countries. The second-quarter release said activity had started to recover in some countries but that “the timing of a full recovery remains uncertain and will depend on a durable resolution of the conflict.”
Official statistics (FRED Brent price): Brent ended February at $71.32 and March at $126.69, a rise of 77.6%. It fell back to $70.46 at the end of June, then climbed to $115.91 at the end of September and $126.55 in mid-October.
In September, when Brent rose +29.1%, SLB shares fell -18.5%, and Halliburton, Baker Hughes, Weatherford, and NOV fell between 11.7% and 19.5%. My reading is that this oil price rise came from supply disruption rather than demand, and that the market priced the risk of stalled work in Middle East and Asia, SLB’s largest area by revenue. The downside case management laid out in July assumes exactly that kind of renewed escalation.

EPS Fell While the P/E Doubled

EPS excluding charges rose from $2.18 in 2022 to $2.99 in 2023 and $3.41 in 2024, then fell to $2.93 in 2025; the trailing four quarters through June 2026 total $2.54. Second-quarter net income excluding charges fell 18.0% to $833 million, but diluted shares rose 10.2% from 1.366 billion to 1.506 billion, so EPS fell 25.7%.
On trailing EPS excluding charges, the P/E was 9.78 times in May 2025, the lowest of the 58 months since January 2022, and is 19.49 times today. Over the same period the share price rose 49.8%, from $33.05 to $49.50, while trailing EPS fell 24.8%, from $3.38 to $2.54. All of the gain came from the multiple.
Analysts expect 2027 EPS of $3.18, +28.7% above the 2026 estimate of $2.47. The third-quarter estimate of $0.61 is below last year’s $0.69, and the fourth-quarter $0.76 is below $0.78. Over the past 30 days, nine analysts cut their 2026 estimate and none raised it.

How Much of EBITDA the New Businesses Could Be

Digital and data center revenue goals and their share of 2025 company EBITDA

Digital was 7.6% of 2025 revenue but 10.6% of adjusted EBITDA. Its 2030 EBITDA target of $1.8 billion to $2.0 billion equals 21.3% to 23.6% of SLB’s 2025 adjusted EBITDA of $8.46 billion. Data centers, at $2 billion of pro forma 2026 revenue, are 5.5% of trailing revenue, and the 2028 EBITDA target of $700 million to $800 million is 8.3% to 9.5% of 2025 company EBITDA.
Adding the two targets, though they fall in different years, gives new-business EBITDA of $2.5 billion to $2.8 billion, or 29.6% to 33.1% of 2025 EBITDA. Even if every target is met, more than two thirds of earnings still come from the core business tied to oil prices and customer budgets. Applying the 10% to 15% growth assumption, 2030 Digital revenue would be $4.35 billion to $5.43 billion.
The two businesses pull margins in opposite directions. Digital’s roughly 35% adjusted EBITDA margin lifts the company average, while data centers at 15% to 16% pull it down, so a bigger data center target makes a return to SLB’s old margin harder.

How SLB Makes Money Across Four Divisions

SLB sells equipment, services, and software at every step from finding oil and gas to producing it. Of $9.271 billion of second-quarter division revenue before eliminations, Production Systems contributed $3.771 billion (40.7%), Well Construction $2.742 billion (29.6%), Reservoir Performance $1.556 billion (16.8%), and Digital $697 million (7.5%).
Well Construction bundles directional drilling, measurement while drilling, drilling fluids, drill bits, and rig equipment. Its revenue fell 7% year over year, with offshore drilling in Guyana, Brazil, and Mexico offsetting part of the Middle East decline. Reservoir Performance evaluates reservoirs through wireline logging and runs stimulation and intervention work to raise output.
Production Systems combines subsea equipment from the SLB OneSubsea joint venture with artificial lift, valves, surface production systems, completions, and ChampionX’s production chemicals. Its $586 million of pretax income was 37.3% of division income, the largest share. Without ChampionX, its revenue fell 1%, and outside the Middle East it grew 3%. In the quarter it won a contract from Eni for subsea production systems for 13 wells on the Baleine project.
Digital earns money from cloud platforms such as Delfi and Lumi, applications such as Petrel, digital operations, exploration data licenses, and professional services, and its 27.8% pretax margin is the highest of the four. The “All Other” line holds Asset Performance Solutions, which runs three field projects in Ecuador, the data center business, and the SLB Capturi carbon capture venture. Data center revenue grew 33% from the first quarter and 80% from a year earlier, and SLB was chosen as a delivery partner for Meta’s planned 1 gigawatt data center in Canada.
Customers are national oil companies, large integrated oil companies, and independents, and no single customer exceeded 10% of revenue in 2023 through 2025. SLB employs about 109,000 people. It plans about $2.5 billion of capital investment in 2026, bought back $451 million of stock in the first quarter and $648 million in the second, targets at least $2.4 billion of buybacks for the year, and pays a quarterly dividend of $0.295.
Net debt of $8.7 billion at the end of June is 1.08 times trailing adjusted EBITDA of $8.06 billion. Adding Kelvion’s $3.4 billion cash price and $0.7 billion of assumed debt, and Kelvion’s $350 million to $400 million of EBITDA, takes the ratio to about 1.52 times, right at the company’s 1.5 times ceiling.

SLB Against Four Oilfield Service Peers

Trailing twelve-month revenue and growth for five oilfield service companies

Trailing twelve-month revenue was $36.37 billion at SLB, $27.73 billion at Baker Hughes, $22.37 billion at Halliburton, $8.64 billion at NOV, and $4.78 billion at Weatherford. SLB grew +2.5% with ChampionX’s help, Halliburton 0.6%, Baker Hughes 0.4%, NOV fell 1.7%, and Weatherford fell -7.2%.
SLB carries the richest multiples in the group. Price to sales is 2.02 times for SLB, 1.99 for Baker Hughes, 1.25 for Halliburton, 1.14 for Weatherford, and 0.78 for NOV. Trailing GAAP P/E is 24.0 times for SLB, 17.91 for Baker Hughes, 17.57 for Halliburton, and 15.02 for Weatherford, while NOV’s thin earnings push its trailing P/E to 73.21. Only on forward P/E does Baker Hughes, at 20.72 times, sit above SLB’s 17.79.

Price to sales and one-year share price change for five oilfield service companies

Because earnings in this industry swing with the cycle, this piece compares peers on price to sales and shareholder returns. More than $4 billion of 2026 returns equals 5.4% of SLB’s market value, roughly 3 points of buybacks on top of a 2.38% dividend yield, which matches NOV and exceeds Halliburton’s 2.03%, Baker Hughes’s 1.65%, and Weatherford’s 1.44%. Over one year, SLB gained +40.6%, ahead of NOV at 32.6%, Halliburton at 27.3%, Baker Hughes at 16.9%, and Weatherford at 4.6%.

P/E on EPS Excluding Charges Over 58 Months

SLB P/E on EPS excluding charges and price-to-sales bands over 58 months

On trailing EPS excluding charges of $2.54, SLB trades at 19.49 times, the 60th percentile of the 58 months since January 2022, against a median of 18.28 times. The high was 32.60 times in May 2022 and the low 9.78 times in May 2025. Price to sales of 2.05 times is close to its 2.07 times median.
In a cyclical business, the P/E is highest when earnings are near the bottom. The May 2022 peak came while EPS was still recovering from the pandemic, and the May 2025 low came with EPS near its high. Months that include the 2020 pandemic quarters, when EPS was $0.05 and $0.16, are left out because the multiple loses meaning. On the 2026 EPS estimate of $2.47 the stock trades at 20.04 times, and on 2027’s $3.18 at 15.57 times; market data put the trailing GAAP P/E at 24.0 and the forward P/E at 17.79.

Three Conditions That Move the Stock

The pace of the Middle East recovery comes first. The fourth-quarter outlook rests on Middle East revenue returning from $1.66 billion to $2.1 billion to $2.2 billion. If Brent’s return to the $126 range in October reflects an escalation that delays remobilization, the downside case of $150 million less revenue and $75 million less EBITDA in the third quarter shows up first.
Adjusted EBITDA margin is next. Management guided to about 22% in the third quarter and about 24% in the fourth, which would bring the margin back to the 23.9% of the fourth quarter of 2025. If the recovery stalls, a 19.49 times P/E sits on top of shrinking EPS.
Kelvion’s closing and data center margins come last. The deal needs regulatory approval and is expected to close in the first half of 2027, when it will be clear whether net debt stays inside the 1.5 times ceiling and whether SLB’s own data center business has passed a $1 billion annualized revenue run rate. If data center margins stay near 15%, every dollar of data center growth lowers the company margin.

What the Third-Quarter Report Should Show

The late-October report should show Middle East revenue, the adjusted EBITDA margin against the roughly 22% guide, the data center run rate, and whether the fourth-quarter outlook of more than $10 billion of revenue still holds. After that come Kelvion’s regulatory progress and the 2027 shareholder return plan.
One question this piece cannot settle: even if every target is met, two thirds of earnings still come from the core oilfield business, so is the doubled multiple paying for the new businesses, or for a Middle East recovery that has not yet arrived?

Sumitomo Electric (5802) Stock Analysis: Data Center Optics: another industrial company whose multiple moved with data center exposure, useful for judging how much of SLB’s rerating rests on Kelvion and Data Center Solutions.
Dell (DELL) Stock Analysis: Q2 FY2027 Earnings and Guidance: a read on hyperscaler AI infrastructure spending, the same demand SLB’s data center business and Kelvion depend on.

Sector RS Rank Oct 22: Homebuilders Lead, Chips Fall

J. Equity. Research — Thu, 22 Oct 2026 23:05:25 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Allegion · Trex · Academy Sports + Outdoors — a lock maker that jumped +11% on earnings, a decking maker at a one-year closing high, and a sporting goods retailer at a one-year closing high.

② On October 22, the S&P 500 fell -1.21% to 7,663.43 while the Dow edged up +0.02% to 52,867.98. Only 42 of the 129 ETFs in our universe closed higher, but 6 of the 11 sector SPDRs rose.

③ The iShares home construction fund rose +5.39%, while the iShares semiconductor fund fell -6.79%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Oct 22 Sector RS — 129 ETFs · RRG v2

Chips broke down. Money moved into homebuilders, consumer staples, and banks. Most funds still closed lower.
The S&P 500 closed at 7,663.43, down -1.21% or 93.74 points. The Nasdaq fell -2.60%, or 694.00 points, to 26,008.86. The Dow held flat, up +0.02% or 11.89 points, at 52,867.98. The split showed up in style funds too. The Russell 1000 Growth fund (IWF) fell -2.79%, while the Russell 1000 Value fund (IWD) rose +0.29%. The equal-weight S&P 500 fund (RSP) gained +0.73%, so the average stock did far better than the index.
Breadth was weak. Only 42 of the 129 funds in our universe closed higher, 86 fell, and one was flat. Yet six of the 11 sector SPDRs rose. Consumer staples led at +3.31%, followed by utilities (+2.07%) and health care (+1.32%). Technology fell the most, at -3.29%, followed by communication services (-1.42%) and industrials (-0.94%).
The selling started with earnings. Meta fell -6.98% after its report, and Tesla lost -3.08% despite beating estimates. Reports said investors again questioned how much AI spending will pay off. Lam Research dropped -11.76% after its results. The VIX jumped +14.09% to 19.03. The 10-year Treasury yield fell to 4.95% from 5.15%. Brent crude rose +3.72% to $112.87 a barrel, its highest level since May, according to reports. Gold futures fell -2.66% and Bitcoin -3.14%. Weekly jobless claims fell to 194,000, the fewest in three months.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 22, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
WisdomTree Cloud Computing (WCLD)	+1.23%	99	🔺	🔺	🔺
Health Care Select Sector SPDR (XLV)	+1.32%	99	🔺	🔺	🔺
Consumer Staples Select Sector SPDR (XLP)	+3.31%	98	🔺	🔺	🔺
SPDR S&P Retail (XRT)	+2.92%	97	🔺	🔺	🔺
iShares U.S. Healthcare Providers (IHF)	+1.53%	96	🔺	🔺	🔺

All five rose on a day when most funds fell. All five also sit above all three moving averages. XLV moved back up to 99 and now shares first place with WCLD. XLP ranks 98, and its 1-month gain of +8.0% is close to XLV’s +8.1%. Defensive groups now hold three of the top five spots.

Why They’re Strong — Sector Issues

SPDR Consumer Staples XLP Daily

· Consumer staples (XLP) — Procter & Gamble rose +5.58% after its report. Revenue grew +4% to $23.28 billion, ahead of estimates, according to reports. The company kept its full-year targets but warned that raw material, energy, and freight costs will rise over the next two quarters. Kimberly-Clark gained +5.33%, Colgate-Palmolive +4.27%, and PepsiCo +3.07%. Walmart rose +2.82% and Costco +1.99%.

SPDR Health Care XLV Daily

· Health care (XLV · IHF) — Health care rebounded after Wednesday’s drop. Quest Diagnostics rose +1.82% after beating estimates and raising its outlook, according to reports. XLV is up +2.32% over five sessions, and IHF is up by the same amount. Retail also held up. XRT gained +2.92%, and its 1-month gain is +7.7%.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks homebuilders, regional banks, high-dividend REITs, fabless chips, and junior gold miners. Yahoo did not return October 21 prices for most funds, so the lines skip that day. The iShares home construction fund (ITB) hit a low of 2 on September 18 and has climbed to 74 on this price-based line, its high for the period. The sheet ranks it 81. The SPDR regional bank fund (KRE) is at 77, up from 9 in late August. The sheet has it at 62. The Global X SuperDividend REIT fund (SRET) rose from 3 on August 26 to 52, against 43 on the sheet. The VanEck fabless semiconductor fund (SMHX) reached 100 on October 13 and is down to 17, while the sheet ranks it 49. The VanEck junior gold miners fund (GDXJ) was near 100 in early September. It is now at 9 on both measures.

RS Breakdown Warnings (big 5-day drops)

· The chip funds lost more than 55 points each in five sessions. SMHX fell -66 points, from 83 to 17, and the iShares semiconductor fund (SOXX) also fell -66 points, from 78 to 12. The VanEck semiconductor fund (SMH) dropped -58 points, from 76 to 18. SOXX is down -7.58% over five sessions. On the sheet, SMHX went from 68 to 49, SOXX from 56 to 40, and SMH from 61 to 47.

· The US natural gas fund (UNG) fell -69 points, from 100 to 31. It is down -10.82% over five sessions, and its sheet rank fell from 97 to 44. The technology SPDR (XLK) lost -38 points, from 78 to 40. Its sheet rank went from 72 to 58.

RS Rebound Signals (sharp bounces off the bottom)

· Banks rebounded hardest. The Invesco KBW bank fund (KBWB) gained +44 points in five sessions, from 19 to 63. KRE added +43 points, from 34 to 77, and the iShares regional bank fund (IAT) +39 points, from 40 to 79. On the sheet, KBWB rose from 24 to 46, KRE from 46 to 62, and IAT from 35 to 65.

· The SPDR pharmaceuticals fund (XPH) gained +31 points, from 22 to 53, and SRET +28 points, from 24 to 52. Their sheet ranks rose from 27 to 48 and from 28 to 43.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 22 closing move — 42 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
iShares U.S. Home Construction (ITB)	+5.39%	81	🔺	🔽	🔽
SPDR S&P Homebuilders (XHB)	+3.77%	72	🔺	🔽	🔽
Consumer Staples Select Sector SPDR (XLP)	+3.31%	98	🔺	🔺	🔺
SPDR S&P Retail (XRT)	+2.92%	97	🔺	🔺	🔺
iShares U.S. Medical Devices (IHI)	+2.71%	90	🔺	🔺	🔽

Housing led the gainers. ITB and XHB are back above their 1-month averages but still below their 1-quarter and 1-year averages. ITB is down -11.7% over one year. XLP and XRT made both lists. They rank near the top and also posted large daily gains.

Why They Rose — Sector Issues

iShares Home Construction ITB Daily

· Homebuilders (ITB · XHB) — Builders rallied as Treasury yields fell ahead of next week’s Fed meeting, according to reports. Lennar jumped +8.69%, KB Home +7.39%, D.R. Horton +6.25%, and Toll Brothers +4.47%. PulteGroup rose +5.84% even after its revenue fell -11% and missed estimates, according to reports. Building product makers joined in. Allegion, one of today’s three stocks, rose +11.02%.

iShares Medical Devices IHI Daily

· Medical devices (IHI) — Device makers made back Wednesday’s losses. Medtronic rose +3.83%, Intuitive Surgical +3.67%, Boston Scientific +3.37%, and Stryker +3.19%. We found no single headline for the move. IHI is up only +1.59% over five sessions. It ranks 90 but is still below its 1-year average.

Leading Sectors: Consumer Staples, Health Care, Homebuilders

① Defensive stocks took the lead. XLP ranks 98 and gained +3.31%, the largest daily gain among the top 10 funds. Its RS rank on our price line rose from 84 to 98 in five sessions. Investors bought steady earners on a day when AI stocks fell.
② Health care held first place. XLV ranks 99, and IHF ranks 96. Both sit above all three moving averages. XLV has ranked 96 or higher in each of our last four reports.
③ Homebuilders moved up from the middle. ITB ranks 81 and rose +5.39%, the biggest gain in our universe. The weak side was chips, precious-metal miners, and speculative themes. SOXX fell -6.79% and SMH -5.99%. The junior gold miners fund (GDXJ) lost -6.75% and the silver miners fund (SIL) -6.65% as gold fell. The Roundhill meme stock fund (MEME) dropped -9.83%, the worst move in our universe.
④ The last report covered the October 21 close. Its three picks, measured from that close to Thursday’s: Netskope +1.79%, Atlassian -1.04%, and ServiceNow +2.53%. The S&P 500 fell -1.21% over the same session. All three beat the index. Atlassian fell but still lost less than the S&P 500. Netskope closed at $22.20, above its $19.82 checkpoint but below the $24.26 high it needed to clear. Atlassian closed at $223.16, above its $221.11 checkpoint. ServiceNow closed at $157.00, above its $139.55 checkpoint. Recorded as is.

Today’s Three Stocks — Allegion · Trex · Academy Sports + Outdoors Stock Forecast

Yahoo did not return October 21 prices for most stocks. The 1D and 5D RS ranks below therefore span one extra session. Daily and 5-day returns in the text use the October 21 close.

Allegion (ALLE) — 1-Month RS 93: An +11% Earnings Gap

Allegion ALLE Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	98	93	+14.7%	SPDR S&P Homebuilders

Up +11.02% to $176.52, and +13.34% over five sessions. The stock is about 2% below its one-year closing high of $179.77 from February 6. Allegion makes Schlage locks, door hardware, and access control systems. It reported third-quarter results before the open on Thursday. Revenue rose +9.6% to $1.17 billion, or +7.2% on an organic basis. Operating income rose +21.7% to $284.6 million. Earnings per share were $2.59, up from $2.18. Adjusted EPS was $2.60, up +13.0%. The company raised its full-year 2026 revenue and adjusted EPS outlook. The Allegion stock forecast depends on whether the price holds the gap after a one-day jump this large.

Trex (TREX) — 1-Month RS 93: A One-Year Closing High

Trex Company TREX Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
91	98	93	+15.7%	iShares U.S. Home Construction

Up +4.59% to $51.07, and +10.52% over five sessions. That is its highest close in at least a year, above $50.36 from October 28, 2025. Trex is the largest maker of composite decking and railing. We found no company headline for Thursday. The stock moved with the homebuilders as yields fell. For the quarter ended June 30, revenue rose +7.8% to $418.0 million from $387.8 million. Operating income fell -15.8% to $86.2 million from $102.4 million. Net income fell to $61.9 million from $75.9 million, and EPS was $0.60, down from $0.71. Sales grew, but profit went the other way. The Trex stock forecast depends on whether its third-quarter report shows margins recovering.

Academy Sports + Outdoors (ASO) — 1-Month RS 99: A One-Year Closing High

Academy Sports Outdoors ASO Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
84	93	99	+24.8%	SPDR S&P Retail

Up +3.69% to $61.78, and +5.66% over five sessions. That is its highest close in at least a year, above $61.19 from February 25. Academy is a sporting goods and outdoor retailer with stores mostly in the southern US. For the quarter ended August 1, revenue rose +3.0% to $1.65 billion. Operating income rose +42.9% to $246.4 million from $172.4 million. EPS was $2.17, up from $1.85. Comparable store sales fell -0.4%, according to reports. The company raised its full-year adjusted EPS outlook to $6.50 to $6.90, from $5.95 to $6.35. The Academy Sports stock forecast depends on whether same-store sales turn positive.

Allegion · Trex · Academy Sports + Outdoors Stock Forecast Checkpoints

· Allegion stock forecast — The stock gapped up +11.02% on earnings. Watch whether it clears $179.77, its February 6 closing high. A drop back under $159.00, Wednesday’s close, would erase the earnings gap.

· Trex stock forecast — The stock broke a one-year closing high. Watch whether it holds above $50.36, the prior high from October 28, 2025. A drop below $45.35, its 20-day average, would put it back under its short-term trend.

· Academy Sports stock forecast — The stock is up +24.8% in a month. Watch whether it holds above $61.19, its February 25 high. A drop below $53.71, its 20-day average, would end the short-term uptrend.

What to Watch on Next Week’s Calendar

New home sales, Tuesday, October 27, 10:00 a.m. ET, then the Fed rate decision, Wednesday, October 28, 2:00 p.m. ET. ITB rose +5.39% on Thursday as the 10-year yield fell to 4.95%. This is the first Fed meeting since the September 16 rate hike. The decision will show whether lower yields can last long enough to help builders.
SK hynix results, Tuesday, October 27, 8:00 p.m. ET; Microsoft and Alphabet results, Wednesday, October 28, 4:00 p.m. ET; Samsung Electronics results, Wednesday, October 28, 9:00 p.m. ET; Amazon and Intel results, Thursday, October 29, 4:00 p.m. ET. SOXX fell -6.79% on Thursday and lost -66 points on our RS line in five sessions. The memory makers and the largest cloud spenders will show whether AI spending still supports chip demand.
September PCE inflation and third-quarter GDP, Thursday, October 29, 8:30 a.m. ET. China’s Communist Party plenum runs Monday, October 26 to Thursday, October 29, and the Bank of Japan meets October 29 to 30. Gold fell -2.66% on Thursday as oil revived inflation worries, and GDXJ ranks 9. The PCE report will test that inflation fear, and the plenum will matter for metals demand.

Meta (META) Stock: Negative FCF Meets Non-Voting Class C

J. Equity. Research — Thu, 22 Oct 2026 22:06:40 GMT

Meta Platforms, Inc. (Nasdaq: META) grew third-quarter revenue +26.1% to $64.60 billion, but capital expenditures including finance-lease principal of $34.91 billion exceeded operating cash flow of $32.79 billion, leaving free cash flow at -$2.12 billion. On the same day the company announced a new class of non-voting Class C stock, to be distributed one for one on every existing share, and named capital raising, employee compensation, and acquisitions as its uses. The question is how much of the equity Meta may need is already reflected in a stock at 23 times earnings.

Meta Platforms one-year share price chart

Meta sells advertising on Facebook, Instagram, WhatsApp, Messenger, and Threads, and runs Reality Labs, which makes Quest headsets and AI glasses, as a separate segment. The shares trade at $697.52 for a market value of $1.783 trillion on 2.556 billion Class A and Class B shares, -10.8% below the weekly high of $782.15 set in the week of August 15, 2025. EPS multiples here start from GAAP diluted EPS and remove only the five one-time items whose per-share effect Meta disclosed: restructuring in late 2022 and early 2023, the third-quarter 2025 tax charge, the first-quarter 2026 tax benefit, and the third-quarter 2026 legal charge. The size and timing of any Class C issuance have not been set.

What the Third-Quarter Presentation Shows About Ad Pricing

Third-quarter 2026 presentation page 13: average price per ad growth by region

Price per ad did the lifting in the third quarter. Page 13 of the earnings presentation shows the worldwide average price per ad up +14% from a year earlier, faster than 12% in each of the first two quarters, with Rest of World up 24%, US and Canada up 23%, Europe up 10%, and Asia-Pacific up 1%. Page 12 shows ad impressions growth slowing from 19% in the first quarter to 14% in the second and 10% in the third.
Chief financial officer Susan Li said on the call that the increase was “driven by ad performance gains and improvements in macro conditions relative to Q3 of last year,” partly offset by strong impression growth from lower-monetizing surfaces and regions. Page 2 shows US and Canada advertising revenue of $28.44 billion, up 33.3%, or 45.1% of the $63.06 billion total.

Third-quarter 2026 presentation page 2: advertising revenue by user geography

Page 5 stacks expenses as a share of revenue. General and administrative expense jumped to 23% of revenue from 7% a year earlier, research and development was 31%, cost of revenue 21% against 18%, and marketing and sales 5%. Of $14.86 billion in G&A, $9.89 billion was the charge for the August agreement with 52 attorneys general.

Third-quarter 2026 presentation page 5: expenses as a percentage of revenue

On the call the company attributed expense growth to legal costs, infrastructure costs including third-party cloud and depreciation, and third-party AI token costs. Cost of revenue rose 45.2% and R&D 32.4%, and headcount of 66,775 was down 12% from the second quarter after a reduction of about 8,000 people in May. The segment table on page 4 shows Family of Apps operating income falling for three straight quarters from a peak of $30.77 billion in the fourth quarter of 2025 to $17.12 billion, while the operating margin went from 41% to 31% and then 20%.
Own calculation (legal charge): Excluding the $9.89 billion charge, third-quarter operating income would be $22.88 billion, up 11.4%, for a margin of 35.4% against 40.1% a year ago. The company’s EPS excluding the charge, $7.40, is only 2.1% above the $7.25 a year earlier excluding that quarter’s tax charge.

The Fourth-Quarter Outlook and the 2026 Capex Plan

Third-quarter 2026 presentation page 9: capital expenditures including finance leases

Page 9 isolates capital expenditures. Including principal payments on finance leases, third-quarter capex was $34.91 billion, 1.8 times the $19.37 billion of a year earlier, and the nine-month total was $85.82 billion, up +71.4%, for servers, data centers, and network infrastructure.
Company disclosure (Q3 release, CFO outlook): Fourth-quarter revenue of $73 billion to $76 billion, assuming about a 1% foreign exchange headwind. Full-year 2026 total expenses raised to $175 billion to $179 billion to include the $9.9 billion legal charge; excluding that charge, 2026 operating income is still expected above 2025. Reality Labs losses of $18 billion to $19 billion, capex of $135 billion to $145 billion narrowed from $130 billion to $145 billion, and a fourth-quarter tax rate of 15% to 17%.
Own calculation (fourth-quarter math): The revenue range is 21.9% to 26.9% above last year’s $59.89 billion, with the analyst average of $74.76 billion near the middle. Subtracting nine-month expenses of $127.08 billion leaves fourth-quarter expenses of $47.92 billion to $51.92 billion, up 36.3% to 47.7%. Fourth-quarter capex of $49.18 billion to $59.18 billion is more than double last year’s $22.14 billion, and full-year capex is 86.9% to 100.8% above 2025. To keep operating income excluding the legal charge above 2025’s $83.28 billion, Meta needs at least $18.75 billion in the fourth quarter.
Page 6 shows a third-quarter tax rate of 24%, above the outlook range because part of the legal expense is not deductible; last year’s 87% reflected a $15.93 billion non-cash charge on enactment of the One Big Beautiful Bill Act, and the first-quarter 2026 rate of -23% an $8.03 billion benefit that partly reversed it. Page 15 builds free cash flow from operating cash flow minus $33.94 billion of property and equipment purchases and $0.96 billion of finance-lease principal.
Meta gave no 2027 revenue outlook. The release says “we are still developing our budget and capacity plans for next year, but we expect to continue investing aggressively to support both our core business and emerging AI initiatives,” and expects Reality Labs losses to narrow to around $15 billion in 2027. The finance chief said 2027 numbers will come on the fourth-quarter call.

The Bull and Bear Case for Meta Shares

The bullish case starts with ad pricing. Price per ad rose 14%, average revenue per person rose 22.5% against 2.8% growth in daily active people, and the top of the fourth-quarter outlook implies 26.9% growth. More than 10 million people in the US and Canada set up the Muse personal agent within a month and a half of launch.
The bearish case starts with cash. Capex exceeded operating cash flow, buybacks were zero in the first nine months of 2026, and quarter-end cash of $82.4 billion sits below $83.7 billion of debt. Non-cancelable commitments are 5.6 times their level a year ago, and the Class C information statement says every long-term forecast shown to the board assumed raising hundreds of billions of dollars.
Outside view (sell-side research aggregate, October 2026): Of 63 analysts, 47 rate the stock Strong Buy, 8 Buy, 7 Hold, and 1 Strong Sell, with an average price target of $814.51, 16.8% above the share price. The average 2026 EPS estimate is $29.38 and the 2027 estimate is $33.82, 15.1% higher.

From Facebook in 2004 to a Non-Voting Class C

Meta started as Facebook in 2004 and listed on Nasdaq in May 2012. The release says its stock price “has increased by more than 1,700% since its IPO,” against about 495% for the S&P 500. On adjusted weekly closes the stock has gone from $96.43 in the first week of 2016 to $697.52, a multiple of 7.23.
After second-quarter results in July 2018 the shares fell -16.7% in a week. On October 28, 2021, the company renamed itself Meta Platforms, three days after announcing that Reality Labs would be reported as a separate segment. The stock fell -64.2% in 2022 and bottomed at $89.95 in the week of November 4.

Meta shares over ten years with four markers

On February 1, 2023, Mark Zuckerberg named that year the “Year of Efficiency,” and the company added $40 billion to its buyback authorization; the shares rose +194.1% in 2023. Meta declared its first quarterly dividend of $0.50 a share on February 1, 2024. The stock gained 70.1% in 2024 and 10.9% in 2025, is up 5.4% in 2026, and on October 21 the company announced Class C alongside third-quarter results.

Capex Including Finance Leases Against Free Cash Flow

Quarterly capex rose from $4.42 billion in the first quarter of 2021 to $34.91 billion, 7.9 times, and from 37.8% of revenue a year ago to 54.0%. In the third quarter Meta spent 106.5% of operating cash flow on property and equipment. Nine-month free cash flow fell -62.6% to $11.05 billion.

Meta quarterly capex against operating cash flow and free cash flow against shareholder returns

Shareholder returns followed cash down. From 2021 through 2025 Meta repurchased $148.64 billion of stock, 76.2% of its free cash flow, but bought back nothing in the first nine months of 2026 and paid $4.06 billion in dividends. The 10-Q shows $12.77 billion paid in taxes on net share settlement of employee RSUs, which kept diluted shares at 2.573 billion against 2.572 billion a year earlier. Third-quarter interest expense of $977 million was 4.3 times the level of a year earlier and above interest income of $934 million.

Debt and Commitments That Cannot Be Canceled

Meta first issued bonds in the third quarter of 2022. Long-term debt grew from $9.92 billion then to $28.83 billion a year ago and $83.66 billion in the second quarter of 2026, after $25 billion of notes were sold in May. Principal outstanding is $84.00 billion, with $2.75 billion due in August 2027.
Own calculation (net debt): Cash and marketable securities of $82.45 billion minus long-term debt of $80.92 billion and $2.75 billion due within a year leaves net debt of $1.22 billion, against net cash of $15.61 billion a year ago.
The liquidity section of the third-quarter 10-Q carries a bigger number. Non-cancelable contractual commitments were $81.19 billion at the end of September 2025, $349.31 billion at the end of June 2026, and $454.52 billion at the end of September 2026, 5.60 times in a year. They mostly cover third-party cloud capacity, servers and network infrastructure, and data center energy, with $121.41 billion due in 2027, equal to 91.2% of trailing twelve-month (TTM) operating cash flow. Leases not yet commenced add $355.73 billion, 6.12 times a year earlier. The same filing says “From time to time we expect to seek to raise additional capital through debt, equity, or other financing arrangements.”

Meta quarter-end cash and debt and future commitments disclosed in 10-Qs

Legal Accruals and the New Mexico Judgment

In August Meta agreed with 52 attorneys general to resolve teen mental health and social media litigation for payments of up to about $18.59 billion, excluding cases brought by Florida, New Mexico, and the U.S. Virgin Islands. About $12.7 billion is payable over ten years, and $5.3 billion becomes payable only if peers such as YouTube and TikTok adopt teen protections and take on matching payments, which Meta has not accrued. Legal-related accruals rose from $7.32 billion at the end of 2025 to $19.88 billion.
New Mexico sits outside the settlement. On September 25 a jury found Meta liable for more than 43 million violations of the state’s Unfair Practices Act, and on October 21 the court imposed a $25 billion civil penalty with 15% post-judgment interest. The 10-Q says “We have accrued an amount for loss contingencies related to this matter and intend to appeal,” without giving the amount, and adds that Meta may need to post a bond or other collateral.
Own calculation (New Mexico): $25 billion is 30.3% of quarter-end cash and marketable securities, and 15% interest on it would be $3.75 billion a year.

Why Create Non-Voting Class C Shares Now?

Class C is a listed share with no votes. The board approved it on the unanimous recommendation of a special committee of independent directors, and the amended charter takes effect on January 19, 2027. Each Class A and Class B share will receive one Class C share, which the company expects to work like a two-for-one split for the Class A price, and voting power does not change.
The Class C information statement describes how it got there. Management told the committee’s advisers that three long-term forecast cases presented to the board in May all showed a “need to raise hundreds of billions of dollars over a period of several years beginning as early as fall 2026.” Moelis, the committee’s financial adviser, estimated that Meta could raise about $700 billion of equity under the existing structure before Mark Zuckerberg’s voting power would drop below 50%, and noted Alphabet’s recent equity raise of about $80 billion. Zuckerberg’s counsel said he recognized the need for substantial equity capital but was not expected to support issuing Class A shares for it. He held about 60.6% of the voting power as of October 1.
On the call, Susan Li said: “We don’t have any specific financing plans to announce at this time but we thought it was prudent to establish the appropriate capital structure framework to ensure that we have access to a diverse pool of funding sources.”
The Founder Alignment Agreement lets Zuckerberg sell 20% of the Class C he receives, 10% of his economic stake, right away, which could pay a potential California wealth tax. The other 80% is stapled: each sale must be matched by selling or converting the same number of Class A or Class B shares, and 2.5% is released in each quarter he stays in a full-time leadership role, over 32 qualifying quarters. When the 30-day average price first reaches two, four, or eight times the $580.60 reference price and the annualized shareholder return is at least 10%, every shareholder receives another Class C share per share held.
Own calculation (Class C thresholds): The first doubling threshold is $1,161.20 a share, 66.5% above $697.52. The $700 billion Moelis limit is 39.3% of market value, and equity raised through Class C leaves voting percentages unchanged regardless of that limit.

How the Family of Apps and Reality Labs Make Money

Advertising is 97.6% of revenue. Third-quarter advertising revenue of $63.06 billion rose +25.9%, and other revenue in the Family of Apps segment rose 59.0% to $1.10 billion, mainly from WhatsApp paid messaging and subscriptions. Reality Labs revenue fell -5.7% to $443 million on lower Quest sales, partly offset by growth in AI glasses. Revenue for 2025 was $200.97 billion, up 22.2%.
The ad business runs on people and revenue per person. Daily active people (DAP) counts individuals, not accounts, who visit Facebook, Instagram, Messenger, or WhatsApp on a given day; it averaged 3.64 billion in September, up 2.8%, and average revenue per person (ARPP) was $17.72, up 22.5%. US and Canada account for 45.1% of ad revenue, Europe 22.6%, Asia-Pacific 18.3%, and Rest of World 14.0%.
Ranking models carry the ad results. Expanding the GEM ads ranking model lifted conversions 1.7% for offsite conversion campaigns and 9.6% for app ads, and the Andromeda retrieval system lifted Facebook conversions 1.4%. Partnership ads, which let advertisers run ads with creators and brands, grew more than 97% to a run-rate above $15 billion, and the Meta One subscription bundle has passed 15 million subscriptions and trials.
Segment profit split. Family of Apps operating income fell -31.4% to $17.12 billion because the legal charge sits in that segment; adding it back gives $27.01 billion, up 8.2%. Reality Labs lost $4.13 billion in the quarter and $12.78 billion over nine months.
AI agents are the next candidate revenue line. Zuckerberg said shopping is the most common use of Muse, with an average purchase above $200, and that Meta shipped Muse Wonder as its first frontier model. Muse is free for most people, with fees on transactions and subscriptions for advanced models, extra tokens, and business features. The release says investments in Meta Superintelligence Labs will take longer to generate returns than those in the core business.

Four Peers in Advertising and AI Infrastructure

Trailing twelve-month revenue was $775.7 billion at Amazon, $445.9 billion at Alphabet, $331.8 billion at Microsoft, $241.6 billion at Meta, and $6.35 billion at Snap. Meta grew fastest at +27.5%, ahead of Alphabet at 20.1%, Microsoft at 17.8%, Amazon at 15.8%, and Snap at 12.6%.

Trailing revenue and growth for five advertising and cloud companies

Alphabet, Amazon, and Snap compete with Meta for ad budgets, while Alphabet, Microsoft, and Amazon compete for AI infrastructure and research talent. Unlike those three, Meta does not rent cloud capacity to others, so it has to recover data center spending through its own ads and AI services. That is why this piece pairs capex intensity with forward P/E.
Capex excluding finance leases over the last four quarters was 43.2% of revenue at Meta, 34.9% at Microsoft, 29.7% at Alphabet, 22.3% at Amazon, and 3.4% at Snap; Meta’s figures run through September and the others through June. Forward P/E is 26.84 at Amazon, 26.62 at Microsoft, 24.51 at Alphabet, 20.98 at Meta, and 8.74 at Snap, and trailing FCF yield is 1.69% at Microsoft, 1.61% at Meta, 1.30% at Alphabet, -0.41% at Amazon, and 6.57% at Snap. Over one year Alphabet gained 16.6% and Meta 7.6%, while Snap fell -19.0%.

Capex to revenue and forward P/E for five advertising and cloud companies

Meta has the highest capex intensity of the five yet a forward P/E below Alphabet, Microsoft, and Amazon.

P/E on EPS Excluding One-Offs Over 61 Months

On trailing EPS of $29.77 excluding disclosed one-offs, Meta trades at 23.43 times, the 54th percentile of the 61 months since October 2021, against a median of 23.16. The low was 8.88 in October 2022 and the high 31.95 in February 2024. Price to sales is 7.43, at the 47th percentile, against a median of 7.54.

Meta P/E on EPS excluding one-offs and price-to-sales bands over 61 months

On the 2027 estimate of $33.82 the multiple is 20.62. At $653.00 a share it would be 21.93 on EPS excluding one-offs, the 36th percentile. Meta’s own trailing free cash flow including finance-lease principal, $25.13 billion, is 1.41% of market value, and the dividend yields 0.30%.

Three Conditions That Move the Stock

Price per ad grew 14% in the third quarter while impressions growth slowed to 10%. Fourth-quarter revenue near the $76 billion top of the outlook with price growth holding in double digits would support the argument that revenue keeps pace with capex; price growth falling back to single digits, as in the fourth quarter of 2025, would leave slowing impressions to carry growth alone.
Capex consumed 106.5% of operating cash flow in the third quarter. A 2027 capex outlook within trailing operating cash flow of $133.1 billion would bring free cash flow back above zero and reopen room for buybacks; a figure above it, on top of $121.4 billion of commitments due in 2027, would mean outside financing.
Class C issuance is still zero. If the first issuance is limited to employee compensation, dilution stays close to today’s RSU pace; if tens of billions of dollars come through offerings or acquisitions, per-share figures fall accordingly. Selling $100 billion of Class C against a $1.783 trillion market value would add about 5.6% to the share count.

The 2027 Capex Outlook and the First Class C Issuance

The numbers to watch are the first 2027 expense and capex outlook in the fourth-quarter report, the record and payment dates for the Class C dividend after the January 19 charter change, and the appeal and any bond in the $25 billion New Mexico judgment. The company expects Class C trading to begin in late January 2027.
One question this piece cannot settle: how much of the hundreds of billions of dollars in the board’s forecasts will come through Class C rather than debt, and how close will that come to the 2027 capex outlook?

NVIDIA (NVDA) Stock Analysis: Guarantees and Cash Flow: the supplier side of AI infrastructure orders, where commitments and lease guarantees land on the vendor’s books, useful next to Meta’s $454.5 billion of non-cancelable commitments.
Oracle (ORCL) Stock Analysis: Cash Flow and Capex Gap: another company whose AI capex outran free cash flow, a frame for how Meta funds 2026 capex of $135 billion to $145 billion.
AMD Stock Analysis: Q2 2026 Earnings and the Debt Raise: an AI chip supplier that turned to the debt market, useful for comparing how different parts of the AI build-out are being financed.

Tesla (TSLA) Stock: 62% of Q3 Operating Income Was a Refund

J. Equity. Research — Thu, 22 Oct 2026 13:26:02 GMT

Tesla, Inc. (NASDAQ: TSLA) earned $718 million of operating income in the third quarter of 2026, -56% from a year earlier, and the 10-Q shows that a net $447 million of it came from refunds of IEEPA tariffs that the Supreme Court struck down. Without that refund, operating income was $271 million and the operating margin was 0.95%. Revenue held flat at $28.05 billion while the company said capital spending will exceed $20 billion in 2026, so the question is how much of a $1.53 trillion valuation rests on the current business and how much on targets written into the 2025 CEO Performance Award.
Tesla sells electric cars, Megapack and Powerwall energy storage, FSD (Supervised) software, and charging, repair, insurance, and used-car services. The shares trade at $386.47, for a market value of $1.528 trillion on 3.953 billion shares outstanding, -19.7% below the weekly high of $481.20 set in the week of December 19, 2025. EPS here is Tesla’s non-GAAP measure, which excludes stock-based compensation and mark-to-market gains and losses on digital assets and the SpaceX stake; third-quarter GAAP EPS was $0.22. Per-share figures use 3.541 billion diluted shares, and management’s views come from the Update, the 10-Q, and an 8-K.

Tesla one-year share price chart

What the Third-Quarter Update Shows on FSD and Robotaxi

Page 3 of the third-quarter Update says trailing twelve-month revenue topped $100 billion for a second straight quarter, that the passenger-vehicle backlog is the largest in four years, and that “battery availability continued to be the limiting factor in increasing auto volumes in the quarter.” Third-quarter revenue alone, though, was $28.05 billion against $28.10 billion a year earlier. Page 25 lists the reasons: lower energy revenue (partly tariff-related customer refunds), a lower average selling price, fewer regulatory credits, and fewer deliveries, offset by services growth, a $0.3 billion currency benefit, and more FSD subscriptions.
The operational summary on page 5 places cumulative deliveries of 10.2 million and active FSD subscriptions of 1.74 million directly under production and deliveries. Both rows carry the same footnote: the metric is counted “In accordance with our 2025 CEO Performance Award.” Cumulative deliveries include unsupervised Robotaxis placed into commercial operation, and FSD subscriptions combine upfront purchases with monthly plans while excluding free trials. Tesla has used these definitions since the fourth-quarter 2025 Update. Subscriptions rose +67% from 1.04 million a year ago, while deliveries fell -2% to 486,532. Deliveries ran 22,141 units ahead of production, and days of inventory fell from 15 in the second quarter to 11.

Third-quarter 2026 Update page 5: 10.2 million cumulative deliveries and 1.74 million FSD subscriptions on award definitions

Page 8 says more than 75% of new North American deliveries included an FSD subscription, and that approvals in Croatia, Slovenia, the Czech Republic, and Slovakia since the end of the second quarter bring the number of EU countries with FSD to nine. The highlights page adds: “We believe that FSD is driving demand in markets where it is available.” Robotaxi rides in Cybercabs began in Austin on September 3, and cumulative unsupervised Robotaxi miles reached nearly two million by quarter end, eight times the prior quarter.

Third-quarter 2026 Update page 8: cumulative FSD miles and nearly two million unsupervised Robotaxi miles

Own calculation (FSD pace): Net new FSD subscriptions were 260,000 in the third quarter. At that pace, reaching the award’s 10 million subscription milestone would take 31.8 quarters, and reaching 20 million cumulative vehicles at the trailing four-quarter delivery rate of 1.743 million would take 5.6 years.

SI Compute and Battery Spending in Trailing Cash Flow

Page 7 says SI (Super Intelligence, Tesla’s term for its AI training and inference work) training compute runs above 105 MW at Cortex 1 and above 120 MW at Cortex 2 in Texas and will reach 400 MW by year end. Its chart shows capacity climbing in steps from near zero in 2021 to roughly 270 MW in the third quarter of 2026, with a dotted line to 400 MW. Construction continues on the Austin Fab, where Tesla plans to start commissioning equipment in 2027. The battery list covers more than 40 GWh of 4680 cells, 10 GWh of cathode materials, and 30 GWh of lithium refining in Texas, plus 7 GWh of LFP cells in Nevada, and the first Megapacks built entirely with Tesla’s own LFP cells have shipped.
Page 6 records the start of production at Megafactory Texas (50 GWh), volume production of the Semi in Nevada, and Optimus production in Fremont. On Optimus, Tesla writes that “we have proven that the current manufacturing process for Optimus is suitable for a commercial product,” yet the capacity table lists California as early ramp and Texas as under construction, with no unit figures.

Third-quarter 2026 Update page 7: SI training compute heading to 400 MW and battery capacity

The trailing twelve-month charts on page 24 show deliveries holding between 1.64 million and 1.81 million at all 12 points. Operating cash flow of $18.71 billion is the highest of the 12, but $15.41 billion of capital spending leaves free cash flow of $3.30 billion, down from $5.76 billion a quarter earlier. Adjusted EBITDA of $15.00 billion has stayed between $14.6 billion and $16.6 billion throughout, while GAAP net income has fallen into the $3 billion range since the fourth quarter of 2025 and stands at $3.22 billion. The reconciliation on page 31 shows the gap is mostly $6.70 billion of depreciation, amortization, and impairment and $4.30 billion of stock-based compensation.

Third-quarter 2026 Update page 24: trailing deliveries and cash flow with net income near 3.2 billion dollars

Company disclosure (Q3 Update outlook, page 9): Tesla is focused on maximum capacity utilization, and deliveries depend on demand, supply chain readiness, and allocation between sales to customers and its own fleet. It will use existing capacity before building new factories, and “over time, we expect our hardware-related profits to be accompanied by an acceleration of SI, software and fleet-based profits.”

The Bull and Bear Case Behind Tesla’s Valuation

The bullish case rests on growth rates outside the core car business. FSD subscriptions rose 67%, unsupervised Robotaxi miles grew eightfold in a quarter, and Tesla reported its highest-ever energy storage order rate and backlog. Cash and short-term investments of $45.45 billion compare with $9.52 billion of debt, most of it non-recourse.
The bearish case starts with current profit. Revenue matched the prior year while research and development rose 69.4% and SG&A rose 29.0%, operating income fell by more than half, and 62.3% of what remained came from the tariff refund. Capital spending in 2026 will be at least 2.35 times the 2025 level, nine-month free cash flow of $1.88 billion is -60.8% from a year earlier.
Outside view (sell-side research aggregate, October 2026): Of 44 analysts, 15 rate the stock Strong Buy, 4 Buy, 21 Hold, 2 Sell, and 2 Strong Sell, with an average price target of $397.83. The average 2027 EPS estimate is $2.15, down from $2.24 ninety days ago.
That target sits only 2.9% above the share price, and Hold is the most common rating. The fourth-quarter EPS estimate also slipped from $0.49 to $0.44 within a week.

From Model 3 to Robotaxi and the CEO Award

Tesla shares over ten years with five markers

Tesla was founded in 2003, listed on Nasdaq in 2010, and moved its incorporation from Delaware to Texas on June 13, 2024. On a split-adjusted basis the stock has risen from $14.07 in the first week of 2016 to $386.47, a multiple of 27.47.
The first turning point was the first Model 3 delivery on July 28, 2017, when a maker of expensive sedans moved into the mass market. The stock gained +719.8% in 2020 and joined the S&P 500 that December, then fell 65.0% in 2022 before gaining 101.7% in 2023 and 73.7% in 2024.
In 2025 the story changed. Robotaxi service started in Austin in June, and on November 6 shareholders approved the 2025 CEO Performance Award of 423.7 million restricted shares. The stock, at $429.52 in the week of the vote, peaked six weeks later at $481.20. In 2026 Tesla ended Model S and Model X production, converted a planned preferred investment in xAI into $2.00 billion of SpaceX common stock in March, and started Cybercab rides in September. The shares have fallen 18.7% in 2026.

How Much Operating Profit Is Left Without the Tariff Refund?

Tesla quarterly revenue by business with operating margin and capex intensity

Note 11 of the third-quarter 10-Q says Tesla recognized IEEPA tariff refunds of $526 million as a reduction to energy cost of revenues and $260 million as a reduction to automotive cost of revenues, and it cut energy revenue by $339 million for refunds owed to certain storage customers. Amounts in the first half were immaterial. The Update’s revenue bridge mentions the customer refunds, but its list of operating income drivers does not mention the cost-side refunds.
Own calculation (refund-free operating profit): The $786 million of cost refunds less $339 million of customer refunds leaves a net $447 million, or 62.3% of third-quarter operating income of $718 million. Without it, operating income was $271 million, down 83.3% from $1.624 billion, for a margin of 0.95%. At the quarter’s 15.9% effective tax rate the refund is worth about $376 million after tax, or $0.11 a share, which would put non-GAAP EPS near $0.37 instead of $0.48, about 17.8% below the $0.45 consensus.
Energy changes the most. Adding back the customer refunds, energy revenue was $3.22 billion, -5.7% year over year, and gross margin falls from a reported 33.1% to 23.8%, below 31.4% a year ago. The automotive gross margin excluding regulatory credits, which the Update puts at 18.1%, drops to 16.8% without the $260 million refund, still +1.4 points above 15.4% a year earlier. Total GAAP gross margin falls from 19.6% to 17.8%, about where it was a year ago at 18.0%.
Costs did the rest. Research and development reached $2.761 billion, +69.4%, rising from 5.8% to 9.8% of revenue, and the 10-Q cites SI, Optimus, silicon, battery, and new vehicle programs plus higher stock compensation. SG&A rose 29.0%, and $870 million of its $1.65 billion nine-month increase was stock compensation, primarily from the CEO award. Regulatory credit revenue fell -72.9% from $417 million to $113 million.

The 2025 CEO Performance Award and Stock Compensation

Tesla active FSD subscriptions and progress toward the first 2025 CEO award milestones

The 10-Q describes the award as 12 tranches of 35,311,992 restricted shares. Tranche n is earned when the market value reaches its milestone, $2.0 trillion rising in $0.5 trillion steps to $6.5 trillion and then $7.5 trillion and $8.5 trillion, and when any n of 12 operational milestones are met. Those milestones are 20 million vehicles delivered, 10 million active FSD subscriptions, 1 million bots delivered, 1 million Robotaxis in commercial operation, and adjusted EBITDA of $50 billion, $80 billion, $130 billion, $210 billion, $300 billion, and $400 billion three times. Market value is measured on both six-month and 30-day trailing averages.
Company disclosure (Q3 10-Q, CEO award note): As of September 30, the only operational milestone considered probable is 20 million vehicles delivered. Unrecognized compensation tied to it is $9.74 billion, to be expensed over 8.9 years, and Tesla recorded $275 million in the quarter and $802 million over nine months. For the milestones considered not probable, unrecognized compensation is $105.82 billion to $120.37 billion. Earned shares vest after 7.5 or 10 years, and unless the CEO pays in cash, vested shares are reduced by an offset of $334.09 per share.
Own calculation (award progress): Against the first operational milestones, cumulative deliveries are 51.0% of the way, FSD subscriptions 17.4%, and trailing adjusted EBITDA 30.0% ($15.00 billion against $50 billion). The $1.528 trillion market value is 30.9% short of the first $2.0 trillion milestone, equal to a share price of $505.98. The unrecognized expense for the not-probable milestones equals 32.9 to 37.4 times trailing GAAP net income of $3.22 billion.
Once another milestone is judged probable, the expense for that tranche starts flowing into GAAP earnings; non-GAAP EPS leaves it out. Third-quarter stock compensation was $1.165 billion, +75.7%, and the trailing $4.30 billion equals 28.7% of trailing adjusted EBITDA. Because the award’s EBITDA definition also adds back stock compensation, larger award expense does not slow progress toward its EBITDA milestones. The Update gives no count of bots or commercial Robotaxis, so those two milestones cannot be measured.

Capital Spending Plans and New Credit Facilities

The 10-Q says Tesla expects “capital expenditures to be in excess of $20 billion in 2026,” driven first by SI compute infrastructure and data centers. Spending through September was $13.01 billion, already above the $8.53 billion spent in all of 2025, so the fourth quarter alone needs at least $6.99 billion. Capital spending was 16.9% of third-quarter revenue against 8.0% a year earlier.
Third-quarter operating cash flow of $6.26 billion included a $3.99 billion increase in payables and accrued liabilities and a $1.26 billion increase in deferred revenue. Those two items total $5.25 billion, or 83.8% of operating cash flow.
The September 29 8-K and the 10-Q describe new credit lines: a $20 billion three-year delayed-draw term loan whose undrawn commitments shrink to zero after 18 months, plus revolving facilities of $8 billion over five years and $2 billion over 364 days. The $30 billion total replaces a $5 billion revolver and may be used for general corporate purposes. A company holding $45 billion of cash and investments has added a $20 billion facility that lapses if it is not used within 18 months.

How Tesla Earns Revenue Across Three Businesses

Revenue comes from three lines. Of $94.83 billion in 2025, automotive was 73.3%, energy generation and storage 13.5%, and services and other 13.2%; by region the United States was 50.2%, China 22.1%, and the rest of the world 27.7%. Revenue fell 2.9% in 2025 as automotive declined 9.8% and energy grew 26.6%, and in the third quarter the mix was 73.3% automotive, 10.3% energy, and 16.4% services.
Automotive revenue has three parts, vehicle sales, regulatory credits, and leasing, and sales of $20.09 billion dominate. Almost all of it is Model 3 and Model Y: 478,237 of 486,532 third-quarter deliveries, while other models fell 48% to 8,295 after Model S and Model X were retired. Shanghai holds 42.2% of at least 2.25 million units of Model 3 and Y capacity across California, Shanghai, Berlin, and Texas, and annualized third-quarter Model 3 and Y output of 1.83 million is at most 81.3% of it.
FSD, sold upfront or monthly, is booked in vehicle sales, which fell only 1% despite fewer deliveries thanks to a weaker dollar and higher FSD revenue. The line-up now reaches the Semi, a next-generation Roadster unveiled in October, and the Cybercab, while the Optimus humanoid robot has no revenue line yet. Tesla sells directly without dealers and runs its own service and charging networks.
The energy business sells Megapack utility-scale storage, Powerwall home batteries, and solar. Storage deployments rose +10% to 13.7 GWh, and Megapack capacity totals 110 GWh across California, Shanghai, and Texas. SpaceX is a customer: the related-party note shows $221 million of Megapack revenue in the quarter, 7.7% of energy revenue, and $626 million over nine months, with $729 million receivable from SpaceX at quarter end.
Services and other covers used cars, out-of-warranty repair and collision work, paid Supercharging, insurance, and parts. Revenue rose 32.5% to $4.61 billion at a 15.9% gross margin. The network reached 8,904 Supercharger stations and 84,465 connectors, 14% more than a year ago. Tesla also holds $2.00 billion of SpaceX common stock at cost, carried at a fair value of $2.87 billion.

Tesla Against Four Other Automakers

Trailing revenue and growth for five automakers

Trailing twelve-month revenue was $319.7 billion at Toyota, $188.0 billion at Ford, $187.0 billion at GM, $103.6 billion at Tesla, and $5.9 billion at Rivian. Growth was 14.2% at Rivian, +8.3% at Tesla, 7.2% at Toyota, 1.5% at Ford, and -0.3% at GM. Tesla’s revenue is 14.9% of the Toyota, GM, and Ford total, yet its market value is 4.5 times theirs combined.
Multiples sit in a different range. Price to sales is 14.77 for Tesla (on shares outstanding), 3.07 for Rivian, 0.72 for Toyota, 0.34 for GM, and 0.25 for Ford, so Tesla’s ratio is 33.8 times the average of the three incumbents. Forward P/E is 184.43 for Tesla, 14.24 for Toyota, 6.79 for Ford, and 5.43 for GM, while Rivian has no earnings. Over one year Tesla shares fell -15.4% while GM gained 11.1%.

Price to sales and Rule of 40 scores for five automakers

This piece uses the Rule of 40, revenue growth plus free cash flow margin, because Tesla is priced as a growth company, and a growth company should either grow fast or throw off cash. Toyota, GM, and Ford run dealer networks and captive finance arms, while Rivian, like Tesla, builds only electric vehicles and sells them directly.
Own calculation (Rule of 40): Adding revenue growth to free cash flow margin, derived from the aggregator’s free cash flow yield times market value divided by revenue, gives 11.5 for Tesla, 7.4 for GM, 5.5 for Toyota, 5.4 for Ford, and -45.1 for Rivian. Tesla’s 3.2% margin matches trailing free cash flow of $3.30 billion over revenue of $103.57 billion in the Update. Tesla scores highest of the five but far from 40.

P/E on Non-GAAP EPS Over 44 Months

Tesla P/E on non-GAAP EPS and price-to-sales bands over 44 months

On trailing non-GAAP EPS of $1.72, Tesla trades at 224.69 times, the 82nd percentile of the 44 months since March 2023, against a median of 130.83. The low was 42.68 times in April 2023 and the high 269.29 times in December 2025. Price to sales is 13.21, at the 73rd percentile, against a median of 10.43.
The band uses weighted diluted shares, the same denominator as EPS, while the peer figure of 14.77 uses shares outstanding, which include the unvested award stock. On 2027 estimated EPS of $2.15 the multiple is 179.8, and on trailing GAAP EPS of $0.91 it is 424.7. Taking the $0.11 after-tax refund out of trailing EPS leaves $1.61 and a P/E of 240.0.

Three Conditions That Move the Stock

The refund-free operating margin was 0.95% in the third quarter, with research and development at 9.8% of revenue. If, in quarters without refunds, the automotive margin excluding credits clears the 16.8% refund-free level and energy margin moves back toward last year’s 31.4%, core profit starts catching up with spending; if the operating margin stays near 1%, little in current earnings supports a multiple above 220.
Net FSD subscription additions were 260,000 in the third quarter. Faster additions and more European approvals would shorten the path to 10 million, and if Tesla starts reporting how many Robotaxis are in commercial operation, a second milestone becomes measurable. Slower additions would weaken the metric that both the award and the valuation lean on.
Fourth-quarter capital spending needs to reach at least $6.99 billion to meet the full-year outlook. If operating cash flow covers it without help from working capital, the credit lines can stay undrawn; if free cash flow turns negative and term loan draws begin, the premise of a company with $35.9 billion more cash than debt changes.

The SpaceX Special Committee and the 2027 Capex Plan

The next numbers to watch arrive with the fourth-quarter Update in late January: actual capital spending, the 2027 investment plan, a refund-free operating margin, and net FSD additions.
The 10-Q also says the board has formed a special committee of disinterested directors to explore a deeper relationship with SpaceX, which could include a business combination. Any transaction would need the committee’s affirmative recommendation and any required shareholder approval, and the filing says “there is no assurance that any such Transaction will be consummated.”
One question this piece cannot settle: if a combination with SpaceX goes ahead, whose numbers will the award’s $2.0 trillion market value milestone and $50 billion adjusted EBITDA milestone be measured against?

Uber (UBER) Stock Analysis: Gross Bookings vs Revenue Gap: the ride-hailing economics a Tesla Robotaxi network would have to match.
Oracle (ORCL) Stock Analysis: Cash Flow and Capex Gap: another AI capex build that outran free cash flow, a frame for Tesla’s $20 billion year.
NVIDIA (NVDA) Stock Analysis: Guarantees and Cash Flow: the supply side of AI compute, a frame for what Tesla’s 400 MW of SI training capacity costs.

Raytheon (RTX) Stock: EPS Growth Is 18% Without the Refund

J. Equity. Research — Thu, 22 Oct 2026 12:35:30 GMT

RTX Corporation (NYSE: RTX) grew third-quarter 2026 adjusted EPS +33% to $2.26, but $0.25 of that came from refunds of IEEPA tariffs that the Supreme Court struck down. Without the refund, growth was +18%. The company raised its full-year adjusted EPS outlook from $7.10 to $7.25 up to $7.65 to $7.75, and its backlog reached a record $340 billion, 36% higher than a year earlier. The question is how much of the raise is recurring, and how much of the backlog is priced.

RTX one-year share price chart

RTX, formerly Raytheon Technologies, runs three segments: Collins Aerospace, which makes aircraft systems; Pratt & Whitney, which makes engines; and Raytheon, which makes missiles and radars. The shares trade at $191.60 for a market value of $258.23 billion, -14.1% below the weekly high of $222.97 set in the week of August 14. EPS here is RTX’s adjusted measure, which excludes acquisition accounting adjustments and restructuring and other one-off items; third-quarter GAAP EPS was $1.89.

What the Third-Quarter Deck Says About the IEEPA Refund

Third-quarter 2026 presentation page 3: adjusted EPS of 2.26 dollars with a 25-cent IEEPA refund

Page 3 of the October 20 earnings presentation puts adjusted sales of $25.0 billion (organic growth of 12%), adjusted EPS of $2.26 (up 33%), free cash flow of $2.1 billion, and backlog of $340 billion on one slide. Under the 56-cent EPS increase it notes that 25 cents was IEEPA cost recovery, and it explains the higher outlook in five words: “Reflects strong operational performance and IEEPA recovery.” Page 5 adds that adjusted segment operating profit grew 39% with 310 basis points of segment margin expansion, about 160 of which came from IEEPA recovery. New awards topped $81 billion, including about $37 billion of multiyear Tomahawk and AMRAAM production contracts.

Third-quarter 2026 presentation page 6: 2026 outlook raised to 7.65 to 7.75 dollars of adjusted EPS

Page 6 lifts 2026 adjusted sales to $97.0 billion to $97.5 billion from $95.0 billion to $96.0 billion, organic growth to 10% to 11% from 8% to 9%, adjusted EPS to $7.65 to $7.75 from $7.10 to $7.25, and free cash flow to $9.0 billion to $9.2 billion from $8.50 billion to $8.75 billion. On the call, chief financial officer Neil Mitchill split the midpoint increase into about 28 cents of operational performance and about 25 cents of IEEPA recovery. Page 15 kept the adjusted tax rate at about 18.0% to 18.5% and non-service pension income at about $1.4 billion, while trimming interest expense to about $1.6 billion and corporate and unallocated costs to about $175 million.
Company disclosure (third-quarter 10-Q): In February 2026 the Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act were unauthorized. RTX had paid about $0.5 billion of those tariffs, and by September 30 it had recognized about $0.4 billion of approved refunds, of which about $0.3 billion had been received. The government appealed the refund order on June 2, but the appeal has not stopped refunds so far.
Own calculation (how much of the raise is the refund): The 25-cent refund is 47.6% of the 52.5-cent increase in the guidance midpoint. Excluding it, 2026 adjusted EPS guidance is $7.40 to $7.50, up 17.6% to 19.2% from $6.29 in 2025, and the average analyst estimate of $7.48 sits inside that range. Subtracting nine-month adjusted EPS of $5.93 implies fourth-quarter EPS of $1.72 to $1.82, up 11.0% to 17.4% from $1.55.

Munitions Contracts at Raytheon and Margins at Pratt

Third-quarter 2026 presentation page 9: Raytheon backlog of 130 billion dollars with Tomahawk and AMRAAM awards

Page 9 puts Raytheon’s backlog at $130 billion and lists third-quarter awards of $23.0 billion for Tomahawk, $14.3 billion for AMRAAM, $3.1 billion for a British Army training system, and $3.0 billion of classified work. Book-to-bill was 6.54 for the quarter and 2.90 over 12 months. The slide says the contracts ramp Tomahawk production above 1,000 units a year and AMRAAM to 1,900, adding that “These awards provide firm long-term production demand.” Raytheon sales rose 14% to $8.031 billion, and adjusted operating margin rose from 12.2% to 14.1%, with reported and adjusted profit nearly identical at $1.133 billion and $1.134 billion.
The third-quarter 10-Q adds that these are undefinitized contract actions (UCAs), meaning prices are not yet final. In the third quarter and early in the fourth, the Department of War awarded four: a seven-year Tomahawk UCA worth up to about $23 billion and five-year UCAs with two one-year options for AMRAAM (up to $20.7 billion), SM-6 (up to $24.4 billion), and SM-3 IB (up to $6.3 billion). Funding for each is subject to annual appropriations, and Raytheon has contractual recovery remedies if funding is not provided. The release says Raytheon’s quarter also included about $85 million from an international contract modification and an offset obligation adjustment.

Third-quarter 2026 presentation page 8: Pratt and Whitney adjusted margin of 10.5% including the IEEPA refund

Page 8 shows Pratt & Whitney sales up 10% to $9.231 billion, with commercial aftermarket +21%, military +2%, and commercial original equipment -5%. Adjusted operating profit of $968 million rose 29% and included about $160 million of IEEPA recovery, while reported operating profit fell to $608 million after a $363 million charge tied to a customer bankruptcy, leaving reported margin at 6.6% against adjusted margin of 10.5%. Mitchill said on the call that the 10.5% included 170 basis points from IEEPA. Page 7 credits Collins’ 50% adjusted profit increase to commercial volume, mix, and about $250 million of IEEPA recovery.
Own calculation (Pratt without the refund): Taking the $160 million refund out of Pratt’s adjusted operating profit leaves $808 million, an 8.75% margin, below 8.9% a year earlier. Raytheon, even without the $85 million of one-offs, earned 13.06%, still above 12.2%.

The Bull and Bear Case for a Record Backlog

The bullish case starts with size. At $340 billion, backlog equals 3.54 years of trailing adjusted sales, and defense backlog grew +59.2% in a year. GTF engine overhauls drove Pratt’s aftermarket up 21%, and Collins earned an 18.35% adjusted margin even without the refund. The 10-Q notes that the fiscal 2027 defense budget request is $1.5 trillion. Chief executive Chris Calio said in the release that “Demand for our products remains robust with over $81 billion of new commercial and defense awards, resulting in a record backlog of $340 billion.”
The bearish case looks at earnings quality. Nearly half of the third-quarter EPS increase was a tariff refund, and Pratt’s margin was lower than a year ago once the refund is removed. The multiyear munitions contracts are unpriced, and the federal government is on a continuing resolution through December 11. The 10-Q also warns that an executive order may limit distributions and buybacks at underperforming defense contractors, and that “a limitation on our ability to issue distributions or engage in share repurchases related to the defense contractor performance executive order could adversely affect the market price of our common stock.”
Outside view (sell-side research aggregate, October 2026): Of 24 analysts, 10 rate the stock Strong Buy, 6 Buy, and 8 Hold, with an average price target of $227.78. The average 2027 EPS estimate of $7.97 is 6.6% above the 2026 estimate of $7.48.

From the 2020 Merger to Multiyear Missile Deals

RTX was formed on April 3, 2020, when United Technologies and Raytheon merged into Raytheon Technologies, and it has used the RTX name since its second-quarter 2023 release. It is based in Arlington, Virginia, and employs more than 180,000 people. On a dividend-adjusted basis the stock is 4.46 times its level in the week of the merger, when it closed at $43.00. In its first quarter as a merged company, a Collins goodwill and intangibles impairment tied to the pandemic pushed GAAP EPS to -$2.56.

RTX shares since the 2020 merger with five markers

The defining setback came with the second-quarter 2023 release on July 25, 2023. RTX said a rare condition in powder metal used in PW1100 GTF engine parts, which power the A320neo family, required accelerated inspections. The stock fell -9.4% that week and was 24.8% lower by the end of September. In the third quarter, the charge cut reported sales to $13.5 billion against adjusted sales of $19.0 billion, and GAAP EPS was -$0.68.
RTX answered with a $10 billion accelerated share repurchase on October 24, 2023, which cut the diluted share count from 1.448 billion in the third quarter of 2023 to 1.337 billion in the first quarter of 2024. The stock gained +42.0% in 2024 and +61.6% in 2025. In 2026 it rose 10.0% in the week of the second-quarter guidance raise but fell 1.2% in the week of the third-quarter raise.

How Fast Is Adjusted EPS Growing Without the Refund?

RTX quarterly adjusted EPS with the IEEPA refund and adjusted margin by segment

Quarterly adjusted EPS growth ran 9.7%, 10.6%, 17.2%, and 0.6% through 2025, then 21.1% and 21.2% in the first two quarters of 2026. Removing the 25-cent refund turns third-quarter growth of 32.9% into 18.2%, below the first-half pace. GAAP EPS of $1.89 carried $0.26 of acquisition accounting adjustments and $0.11 of restructuring and other items, which adjusted EPS adds back, and the Pratt customer bankruptcy charge was also excluded from adjusted profit.
Against the consensus of $1.78, the quarter beat by 27.0%, but by 12.9% without the refund, close to the 13.7% beat in the second quarter. The release says adjusted net income growth came from $1.1 billion of segment profit growth, $0.4 billion of it from IEEPA, partly offset by higher taxes and lower pension income.
Own calculation (segment profit without the refund): Combined adjusted operating profit for the three segments rose 38.7% from $2.804 billion to $3.890 billion, or 24.1% without the $410 million of refunds. By segment, Collins growth drops from 49.7% to 28.8%, Raytheon grows 22.1% without its one-offs, and Pratt falls from 28.9% to 7.6%, slower than its 10% sales growth.

A Defense Backlog Built on Unpriced Contracts

RTX quarter-end backlog and backlog divided by trailing adjusted sales

Backlog has grown from $158.7 billion in the second quarter of 2020 ($85.6 billion commercial and $73.1 billion defense) to $340 billion ($176 billion commercial and $164 billion defense). Divided by trailing adjusted sales, that is 3.54 years, up from 2.41 years in the first quarter of 2021. Defense backlog stayed between $62 billion and $78 billion until the second quarter of 2024 and has more than doubled in the nine quarters since.
Backlog rose $51 billion in the third quarter alone, and Tomahawk and AMRAAM accounted for $37.3 billion, or 73.1%, of that increase. The 2025 10-K defines backlog as remaining performance obligations and excludes unexercised contract options.
Own calculation (the unpriced share of defense backlog): The four UCAs are worth up to $74.4 billion combined. The $37.3 billion booked in the third quarter equals 22.7% of the $164 billion defense backlog, so more than one in every five defense backlog dollars sits in contracts whose prices are not yet final. The SM-6 and SM-3 IB awards from early October are not yet in third-quarter backlog.

GTF Aftermarket Revenue and Powder Metal Payments

Overhauls are the center of Pratt’s growth. Commercial aftermarket rose 21% in the third quarter, mostly from the GTF, and page 4 of the deck says PW1100 maintenance output was up more than 35% from a year ago. Large commercial engine shipments, by contrast, were almost flat at 269 against 266, and commercial original equipment sales fell 5% on engine mix. The first aircraft with the GTF Advantage engine went to United Airlines in the second quarter and entered service in October.
The powder metal issue now shows up in cash rather than earnings. Management said third-quarter free cash flow of $2.1 billion absorbed about $165 million of customer compensation and included about $300 million of IEEPA inflows, and the 10-Q says the 2026 decline in the accrual mainly reflects credits issued to customers.
Customer bankruptcy charges have appeared twice, $108 million in the second quarter of 2025 and $363 million in the third quarter of 2026, both excluded from adjusted results. RTX said about 80% of GTF contracts are long-term agreements, mostly paid when engines come in for repair, and that Pratt can reach margins in the low to mid teens over time. Its 2025 adjusted margin was 8.3%.

2027 EPS Estimates and the Drop From the August Peak

The shares are down 14.1% from the August weekly high. Over the past 90 days the average 2026 EPS estimate rose from $6.98 to $7.48, while the 2027 estimate moved less, from $7.59 to $7.97. That 2027 figure is only 3.5% above the company’s 2026 guidance midpoint of $7.70.
Management expects revenue and profit growth and margin expansion in 2027 even without the refund, but it did not give a 2027 free cash flow outlook and repeated only its long-term aim of converting 90% to 100% of adjusted net income into free cash flow as powder metal payments decline. Analysts expect 2027 sales of $104.36 billion, +7.6%. On the call, analysts pressed on the 2027 defense budget and airline cost pressures, and management declined to speculate while the budget is unsettled.

How RTX Makes Money Across Three Segments

The three segments sell to different customers. Of 2025 segment sales before eliminations, Pratt & Whitney contributed $32.916 billion (36.1%), Collins $30.196 billion (33.1%), and Raytheon $28.043 billion (30.8%). Collins produced the largest share of adjusted operating profit at 45.1%, ahead of Raytheon at 29.8% and Pratt at 25.1%, and 2025 adjusted margins were 16.2%, 11.5%, and 8.3%.
Collins makes electric power, environmental control, flight control, air data and sensing, engine control, nacelle and thrust reverser, lighting, and cargo systems, and sells spare parts, overhaul, training, and other aftermarket services. In the third quarter, commercial original equipment rose +23%, aftermarket 9%, and defense 7%. Boeing and Airbus together were 16% of Collins sales in 2025, down from 19% in 2023, and a new Etihad Engineering venture will more than double Collins’ nacelle repair capacity in the Middle East from early 2027.
Pratt & Whitney makes and services large engines for narrowbody and widebody jets, military engines for fighters, bombers, and transports, and small engines and auxiliary power units through Pratt & Whitney Canada; management describes the business as half commercial engines, a quarter military, and a quarter Canada. The GTF powers the A320neo family and has more than 8,000 engines in backlog after over 800 orders and commitments this year. The F135 is the only engine for Lockheed Martin’s F-35 and passed one million flight hours in 2025.
Raytheon makes integrated air and missile defense, precision weapons, missiles, sensors, and radars, including Patriot, LTAMDS, NASAMS, AMRAAM, StormBreaker, LRSO, Tomahawk, SM-6, SM-3, and the AN/TPY-2 radar. U.S. government sales were $33.279 billion in 2025, 38% of the total, down from 46% in 2023, and international sales were $41.312 billion, or 47%. RTX plans about $3.1 billion of capital spending in 2026, paid $2.882 billion of dividends in the first nine months, and bought back no stock.

RTX Against GE Aerospace and Three Defense Primes

Trailing revenue and growth for five aerospace and defense companies

Trailing twelve-month revenue was $96.0 billion at RTX, $77.0 billion at Lockheed Martin, $54.9 billion at General Dynamics, $52.6 billion at GE Aerospace, and $43.6 billion at Northrop Grumman. Growth was 19.6% at GE Aerospace, 11.6% at RTX, 9.1% at General Dynamics, 7.2% at Lockheed Martin, and 6.5% at Northrop Grumman, so RTX grows faster than the defense-heavy three and slower than the engine-heavy GE.
Multiples line up the same way. Forward P/E is 33.20 for GE Aerospace, 24.88 for RTX, 19.67 for General Dynamics, 18.35 for Northrop Grumman, and 17.77 for Lockheed Martin, and RTX’s trailing GAAP P/E of 31.15 trails only GE’s 34.80. Price to sales is 5.81 for GE, 2.69 for RTX, 1.76 for Northrop, 1.70 for General Dynamics, and 1.65 for Lockheed.

Forward P/E and one-year share price change for five aerospace and defense companies

This piece uses a growth-adjusted multiple, forward P/E divided by revenue growth, because the question for a mixed commercial and defense company is where it falls between defense multiples and engine multiples. The peers are also partners and rivals: Lockheed builds the F-35 that Pratt’s F135 powers, A320neo buyers choose between the GTF and the CFM LEAP from GE and Safran, and General Dynamics pairs submarines and combat vehicles with Gulfstream business jets.
Own calculation (growth-adjusted forward P/E): The ratio is 1.69 for GE Aerospace, 2.14 for RTX, 2.16 for General Dynamics, 2.47 for Lockheed Martin, and 2.82 for Northrop Grumman. Against its growth, RTX is cheaper than the defense primes and dearer than GE, while its 1.52% dividend yield trails Lockheed’s 2.61%, General Dynamics’ 1.85%, and Northrop’s 1.83%. Over one year, Lockheed gained 15.0%, RTX 8.9%, and General Dynamics 1.8%, while GE fell 3.7% and Northrop 6.1%.

P/E on Adjusted EPS Over 58 Months

RTX P/E on adjusted EPS and price-to-sales bands over 58 months

On trailing adjusted EPS of $7.48, RTX trades at 25.61 times, the 76th percentile of the 58 months since January 2022, against a median of 21.48. The low was 14.31 times in September 2023, right after the powder metal charge, and the high was 32.26 times in February 2026. Price to sales on adjusted sales is 2.73 times, at the 84th percentile, against a median of 2.16.
The 2020 and 2021 quarters, when adjusted EPS ran between $0.40 and $0.90 a quarter during the pandemic, are left out because the multiple loses meaning, and price to sales uses adjusted sales to avoid the third quarter of 2023, when the powder metal charge cut reported sales. Excluding the refund, trailing EPS is $7.23 and the P/E is 26.50. On the 2026 guidance midpoint of $7.70 the stock trades at 24.88 times, on the refund-free $7.45 at 25.72 times, and on 2027’s $7.97 at 24.04 times.

Three Conditions That Move the Stock

Pricing and funding of the munitions UCAs come first. The four contracts worth up to $74.4 billion turn into revenue and profit only after definitization and annual appropriations. If a fiscal 2027 budget close to the request passes after the continuing resolution ends on December 11, Raytheon’s production ramp shows up in the numbers; if not, backlog stays large while revenue recognition slips.
Pratt’s margin without the refund is next. It was 8.75% in the third quarter, below 8.9% a year ago, and bankruptcy charges have hit twice. If GTF overhaul volume, the GTF Advantage, and upgraded parts push it above 9% without help from refunds, the path to the low to mid teens becomes visible; if aftermarket mix and SG&A keep weighing, segment profit keeps lagging sales.
The final condition is the refund itself and limits on shareholder returns. About $0.4 billion of recognized refunds depends on the government’s appeal, and 2027 will not have a refund of the same size, which makes the comparison harder. If the executive order on defense contractor distributions is applied to RTX, a return policy that now consists only of dividends would come under pressure.

What the 2027 Outlook Has to Show Without the Refund

The late-January fourth-quarter report should show whether adjusted EPS lands in the implied $1.72 to $1.82 range on sales of $25.25 billion to $25.75 billion, and it will bring the first 2027 outlook. After that come the timing of UCA definitization, Pratt’s refund-free margin, and the outcome of the IEEPA appeal.
One question this piece cannot settle: in 2027, without the refund, can a backlog worth 3.54 years of sales, half of it defense and more than a fifth of that defense portion unpriced, drive EPS growth faster than the 6.6% analysts now expect?

Medtronic (MDT) Stock Analysis: Why EPS Stayed Flat Despite 10-Year-High Revenue Growth: a company whose profit lagged its sales growth, useful for reading Pratt’s refund-free profit growth of 7.6% against 10% sales growth.
CrowdStrike (CRWD) Stock Analysis: GAAP vs Non-GAAP Results: a case study in how adjustments shape reported EPS, a frame for separating RTX’s IEEPA refund, acquisition accounting, and bankruptcy charges.

Sector RS Rank Oct 21: Crypto Stocks Lead, Nat Gas ETFs Fall

J. Equity. Research — Wed, 21 Oct 2026 23:05:37 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Netskope · Atlassian · ServiceNow — a cloud security company up +10% in a day, a team software maker at a one-year closing high, and a workflow software company one week before its report.

② On October 21, the S&P 500 rose +0.58% to 7,757.17 and the Dow gained +0.69% to 52,856.09. 76 of the 129 ETFs in our universe closed higher, and 7 of the 11 sector SPDRs rose.

③ The Global X blockchain fund rose +3.97%, while the natural gas fund fell -5.05%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Oct 21 Sector RS — 129 ETFs · RRG v2

Tech came back. Crypto stocks and cybersecurity bounced the hardest. Natural gas and telecom took the losses.
The S&P 500 closed at 7,757.17, up +0.58% or 44.60 points. The Nasdaq rose +1.05%, or 278.04 points, to 26,702.86. The Dow gained +0.69%, or 360.21 points, to 52,856.09. Growth led this time. The Russell 1000 Growth fund (IWF) rose +0.92%, against +0.23% for the Russell 1000 Value fund (IWD). The equal-weight S&P 500 fund (RSP) gained +0.36% and the Russell 2000 fund (IWM) +0.25%, so large tech did more of the work than the average stock.
Breadth was positive but narrower than Tuesday. 76 of the 129 funds in our universe closed higher, 50 fell, and three were flat. Seven of the 11 sector SPDRs rose. Technology led at +1.67%, followed by industrials (+0.91%) and financials (+0.57%). Communication services fell the most, at -1.11%, followed by real estate (-0.76%), consumer staples (-0.73%), and health care (-0.49%).
SpaceX (SPCX) jumped +7.79% after its third-quarter report. Reports said Elon Musk told analysts that both boards had formed committees to study a merger with Tesla. Tesla rose +3.41% ahead of its own report after the close. The VIX fell -3.64% to 16.68. The 10-year Treasury yield edged up to 5.15% from 5.12%. Brent crude rose +0.86% to $109.73 a barrel. Natural gas futures fell -6.34% to $2.78. Bitcoin gained +2.16% to near $84,730.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 21, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
WisdomTree Cloud Computing (WCLD)	+2.08%	99	🔺	🔺	🔺
Global X Genomics & Biotechnology (GNOM)	+1.58%	98	🔺	🔺	🔺
Health Care Select Sector SPDR (XLV)	-0.49%	96	🔺	🔺	🔺
Virtus Reaves Utilities (UTES)	+1.52%	96	🔺	🔺	🔽
Global X HealthTech (HEAL)	-0.32%	95	🔺	🔺	🔺

Cloud software took first place from health care. WCLD ranks 99 and is up +6.28% over five sessions. XLV slipped from 99 to 96 on a down day for the group, but it still sits above all three moving averages. Four of the five do. UTES is the exception: it is still below its 1-year average.

Why They’re Strong — Sector Issues

WisdomTree Cloud Computing WCLD Daily

· Cloud software (WCLD) — Software stocks rose with the rest of tech. MongoDB gained +6.71%, Datadog +6.50%, and Atlassian +1.99% to a one-year closing high. Salesforce slipped -0.27% and HubSpot -0.34%, so not every name joined. WCLD is up +8.64% over one month, the best one-month gain among the top five.

Global X Genomics Biotechnology GNOM Daily

· Genomics and health care (GNOM · XLV · HEAL) — Health care split on a busy earnings day. Danaher rose +4.29% and Thermo Fisher +0.97% on the day they reported. Abbott, which also reported, fell -1.89%. Medical devices pulled the group down. Intuitive Surgical lost -2.26%, Boston Scientific -2.35%, and Stryker -2.23%. Eli Lilly gave back -1.01% after Tuesday’s record close. GNOM still rose +1.58% and is up +4.26% over five sessions.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks digital transformation, cybersecurity, semiconductors, natural gas, and copper miners. The VanEck digital transformation fund (DAPP) peaked at 98 on September 9 and is back at 2 on this price-based line. The sheet ranks it 5. The Global X cybersecurity fund (BUG) fell to 19 on September 11, hit 100 on September 21, and now stands at 76, against 84 on the sheet. The iShares semiconductor fund (SOXX) topped out at 100 on September 30 and has dropped to 19, while the sheet still ranks it 77. The US natural gas fund (UNG) reached 100 on October 14 and fell to 29 in five sessions. The sheet has it at 26. The Global X copper miners fund (COPX) went from 97 on August 25 to a low of 5 on October 8 and sits at 13, with the sheet at 16.

RS Breakdown Warnings (big 5-day drops)

· The US natural gas fund (UNG) fell -71 points in five sessions, from 100 to 29. The fund is down -11.14% over the same stretch. Its sheet rank fell from 97 to 26, so both measures agree.

· The Roundhill generative AI fund (CHAT) lost -53 points, from 65 to 12, and is down -4.03% over five sessions. Its sheet rank fell from 43 to 33. The chip funds show sharp drops on the price-based line too, but their sheet ranks rose over the same week, so we leave them out. SOXX went from 96 to 19 on the line, while its sheet rank moved from 69 to 77.

RS Rebound Signals (sharp bounces off the bottom)

· The iShares regional bank fund (IAT) rebounded +53 points in five sessions, from 16 to 69. Its sheet rank rose only from 33 to 37.

· Oil services followed. The VanEck oil services fund (OIH) gained +44 points, from 22 to 66, and the iShares oil equipment and services fund (IEZ) +39 points, from 18 to 57. The iShares broker-dealer fund (IAI) added +27 points, from 30 to 57. On the sheet, OIH went from 25 to 37, IEZ from 16 to 28, and IAI from 31 to 44.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 21 closing move — 76 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Space Tech (ORBX)	+4.55%	17	🔽	🔽	🔽
Global X Blockchain (BKCH)	+3.97%	3	🔽	🔽	🔽
VanEck Digital Transformation (DAPP)	+3.88%	5	🔽	🔽	🔽
Roundhill Meme Stock (MEME)	+3.79%	30	🔽	🔽	🔽
Global X Cybersecurity (BUG)	+3.78%	84	🔺	🔺	🔺

Four of the five rank in the bottom third of our universe. ORBX, BKCH, DAPP, and MEME are all still below their 1-month averages and are down over one month. BKCH is down -27.52% over that month and DAPP -24.77%. BUG is the exception. It ranks 84 and sits above all three averages.

Why They Rose — Sector Issues

VanEck Digital Transformation DAPP Daily

· Crypto and space stocks (BKCH · DAPP · ORBX) — Bitcoin rose +2.16% to about $84,730, and reports said it reached its highest level since October 7. Strategy jumped +7.54%, Robinhood +3.79%, and Coinbase +3.65%. Space stocks moved with SpaceX. ORBX rose +4.55% and Rocket Lab +5.44%. These are rebounds from deep lows. BKCH and DAPP still rank 3 and 5.

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG · IHAK · CIBR) — Security software rose across the board. Netskope gained +10.04%, Zscaler +7.84%, Okta +7.54%, Cloudflare +5.32%, and CrowdStrike +5.26%. We found no single headline behind the group move. BUG is up only +0.79% over five sessions, so Wednesday’s gain mostly made back the losses of the prior four sessions. CrowdStrike is still down -3.99% over five sessions.

Leading Sectors: Cloud Software, Cybersecurity, Health Care

① Cloud software is now the top group. WCLD ranks 99, up from 96 on Tuesday, and closed +2.08% higher. Its rise did not lean on chips. The semiconductor funds are still far below their late-September highs on our price line.
② Cybersecurity is back near the top. BUG ranks 84 and IHAK 87, and both sit above all three moving averages. CIBR ranks 75. BUG’s +3.78% gain was the largest of any fund ranked above 50.
③ Health care held its ranks on a weak day. XLV fell -0.49% and still ranks 96. GNOM ranks 98 and HEAL 95. The weak side was natural gas, telecom, and metals. UNG fell -5.05% and is down -11.14% over five sessions. We found no single headline for the natural gas drop. Netflix fell -5.31% after its report, and AT&T dropped -6.45% after adding fewer phone subscribers than expected, according to reports. The copper miners fund (COPX) lost -1.43% and the lithium fund (LIT) -1.66%.
④ The last report covered the October 20 close. Its three picks, measured from that close to Wednesday’s: Eli Lilly -1.01%, UnitedHealth -0.54%, and HubSpot -0.34%. The S&P 500 rose +0.58% over the same session. All three trailed the index. Eli Lilly closed at $1,270.75, still above its $1,240.34 checkpoint. UnitedHealth closed at $417.00, short of the $436.35 level it needed to clear. HubSpot closed at $249.90, above its $236.49 checkpoint. Recorded as is.

Today’s Three Stocks — Netskope · Atlassian · ServiceNow Stock Forecast

Netskope (NTSK) — 1-Month RS 96: A +10% Day for Cloud Security

Netskope NTSK Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	94	96	+17.6%	iShares Cybersecurity and Tech · Global X Cybersecurity · WisdomTree Cloud Computing

Up +10.04% to $21.81, and +8.83% over five sessions. The stock is about 10% below its closing high of $24.26 from November 3, 2025, shortly after its 2025 listing. Netskope sells cloud-based security that controls how employees reach apps and data. Reports said Wells Fargo recently raised its price target to $22. We found no single company headline for Wednesday’s jump. For the quarter ended July 31, revenue rose +29.2% to $220.5 million from $170.8 million. The operating loss widened to $89.8 million from $46.0 million, and the net loss to $110.8 million from $90.3 million. The loss per share narrowed to $0.27 from $0.84, because many more shares were outstanding after the listing. The Netskope stock forecast depends on whether growth near 30% starts to shrink those losses.

Atlassian (TEAM) — 1-Month RS 97: A One-Year Closing High

Atlassian TEAM Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
82	97	97	+19.5%	WisdomTree Cloud Computing · First Trust Dow Jones Internet · iShares Expanded Tech-Software

Up +1.99% to $225.51, and +10.19% over five sessions. That is its highest close in at least a year. Atlassian makes Jira and Confluence, the planning and documentation tools that software teams use. Reports said Truist raised its price target to $250. For the fiscal year ended June 30, 2026, revenue rose +26.0% to $6.57 billion from $5.22 billion. Operating income was $10.4 million, against a loss of $130.4 million a year earlier. The net loss narrowed to $53.8 million from $256.7 million. Fiscal first-quarter results are expected on October 29, according to reports. The Atlassian stock forecast depends on whether that report keeps operating profit above zero.

ServiceNow (NOW) — 1-Month RS 90: One Week Before Earnings

ServiceNow NOW Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
85	96	90	+11.8%	iShares Expanded Tech-Software · Global X Cloud Computing · WisdomTree Cloud Computing

Up +2.39% to $153.12, and +9.39% over five sessions. The stock is still about 19% below its one-year closing high of $189.26 from October 27, 2025. ServiceNow sells software that automates IT, HR, and customer service work inside large companies. For the quarter ended June 30, revenue rose +24.0% to $3.99 billion from $3.22 billion. Operating income fell -54.7% to $162 million from $358 million. Net income fell to $298 million from $385 million, and diluted earnings per share were $0.29, down from $0.37. Sales grew, but profit went the other way. Third-quarter results are scheduled for Wednesday, October 28, after the close. The ServiceNow stock forecast depends on whether that report shows margins recovering.

Netskope · Atlassian · ServiceNow Stock Forecast Checkpoints

· Netskope stock forecast — The stock jumped +10.04% in one session. Watch whether it clears $24.26, its November 3, 2025 closing high. A drop back under $19.82, Tuesday’s close, would erase the jump.

· Atlassian stock forecast — The stock closed at a one-year high. Watch whether it holds above $221.11, Tuesday’s close, into the October 29 report. A drop below it would undo Wednesday’s breakout.

· ServiceNow stock forecast — The stock has risen +9.39% in five sessions. Watch whether it holds above $139.55, its 20-day average, through the October 28 report. A close below it would put the stock back under its short-term trend.

What to Watch on Next Week’s Calendar

China’s Communist Party plenum, Monday, October 26 to Thursday, October 29. The meeting covers party appointments and the next five-year plan. Copper miners (COPX) rank 16 and the lithium fund (LIT) 11, and both fell on Wednesday. Any growth or industry targets from Beijing will test whether metals demand has a floor.
SK hynix results, Tuesday, October 27, 8:00 p.m. ET, and Samsung Electronics results, Wednesday, October 28, 9:00 p.m. ET. SOXX rose +2.07% on Wednesday, but its price-based RS line is at 19 against 77 on the sheet. The two largest memory makers will show whether chip demand supports a real recovery.
Fed rate decision, Wednesday, October 28, 2:00 p.m. ET, then Microsoft, Alphabet, and ServiceNow results at 4:00 p.m. ET, after the close. This is the first Fed meeting since the September 16 rate hike, with the 10-year yield at 5.15%. Cloud software leads our ranking with WCLD at 99, and Alphabet fell -1.62% on Wednesday. Microsoft’s and Alphabet’s cloud numbers will show whether that lead has support.

Sanofi (SNY) Stock: Dupixent at 44% and Pipeline Write-Offs

J. Equity. Research — Wed, 21 Oct 2026 21:22:17 GMT

Sanofi (NASDAQ: SNY) grew second-quarter 2026 net sales +17.8% at constant exchange rates to €11.597 billion and lifted business EPS, its non-IFRS measure, +33.3% to €2.09, then raised its 2026 sales growth guidance from a high single-digit rate to about 10%. In the same quarter, IFRS basic EPS fell -91.0% to €0.29. Dupixent, the eczema and asthma antibody Sanofi shares with Regeneron, reached 44.4% of net sales, up from 10.5% six years earlier, and two drug candidates bought to follow it were written off within twelve months. The ADR trades at $40.61, -16.5% over the past year, for a market value of $96.96 billion.
Sanofi is a Paris-based drugmaker, and each Nasdaq-listed ADR represents half of an ordinary share. Its accounts are in euros and the ADR trades in dollars, so the valuation math below converts at the dollar-euro rate. Third-quarter results come out on October 30, which leaves this piece with figures through June.

Sanofi (SNY) one-year share price chart

What Sanofi’s Second-Quarter Slides Flag as One-Offs

Sanofi’s 52-page second-quarter results presentation splits sales into four groups on page 6: Dupixent €5.2 billion, up 37.6%, pharma launches €1.3 billion, up 48.3%, vaccines €1.1 billion, down 4.7%, and other medicines €4.0 billion, down 1.0%. Next to Dupixent the slide credits global volume growth and “a favourable adjustment of gross-to-net deductions.”

Q2 2026 results presentation page 6: sales by Dupixent, launches, vaccines, and other medicines

Page 13 carries the title “Q2: strong quarter, partly supported by positive one-offs,” and the call filled in the size of each item.
Company disclosure (Q2 2026 results presentation, page 13, and earnings call): Restating last year for the Blueprint and Dynavax acquisitions, sales growth would have been around 15%. Sales included a couple of hundred million euros of positive gross-to-net adjustments. Excluding the reversal of inventory provisions after the Sarclisa subcutaneous approval, the underlying gross margin improvement was around 1.7 percentage points out of 3.7, and underlying business operating income growth was around 20% against a reported 35.8%.
The cost lines on the same page point the same way. Research and development rose 17.9% to €2.233 billion, which Sanofi tied to wind-down costs from pipeline decisions and to its 2025 acquisitions, and selling and general expenses rose 9.0% to €2.465 billion. Other operating income and expenses, the line that carries Regeneron’s share of Dupixent profits, went from a net €1.116 billion expense to €1.446 billion. The business operating margin still widened 3.8 points to 28.4%.
The IFRS income statement in the second-quarter press release shows gross profit of €9.283 billion, €128 million below the business figure of €9.411 billion. The reconciliation table attributes that gap to inventory that was marked up to fair value when Sanofi bought Blueprint and Dynavax.
Page 7 lists second-quarter sales for fourteen launch products. ALTUVIIIO for hemophilia led with €349 million, then Nexviazyme for Pompe disease at €218 million, Ayvakit from Blueprint at €190 million, and the multiple myeloma drug Sarclisa at €187 million, for a total of €1.53 billion, up 61.1%.

Q2 2026 results presentation page 7: second-quarter sales of 14 launch products

The €225 million difference between the €1.3 billion on page 6 and the €1.53 billion on page 7 comes from three vaccine launches, Heplisav-B, Beyfortus, and Nuvaxovid, which page 7 counts as launches and page 6 books under vaccines. The launch total equals 13.2% of second-quarter net sales and 29.7% of Dupixent alone.

Sanofi’s 2030 Targets for Dupixent and Vaccines

On page 17, Sanofi raised 2026 sales growth guidance to about 10% and kept business EPS growing slightly faster than sales before buybacks. For 2030 it lifted the Dupixent ambition from about €22 billion to about €25 billion, held pharma launches at about €10 billion, and cut vaccines from about €10 billion to about €9 billion. A footnote says roughly half of the combined upgrade came from currency.

Q2 2026 results presentation page 17: 2026 guidance and 2030 sales ambitions

Own calculation (2025 Dupixent sales against the 2030 target): Moving from €15.714 billion in 2025 to about €25 billion in 2030 takes 1.59 times the sales, or +9.7% a year. That is less than half of 2025’s +20.2% growth rate, and the US compound patent on Dupixent expires the following March, in 2031.
Page 16 shows one income stream ending and another growing. Regeneron had been keeping back part of its profit share to repay development costs, worth about €1.1 billion to Sanofi in 2025 and about €0.6 billion in 2026, and that reimbursement finished at the end of the second quarter. Royalties on Alnylam’s heart drug Amvuttra are set to rise from about €0.5 billion in 2025 to about €1.0 billion in 2026.

Q2 2026 results presentation page 16: Regeneron development balance and Amvuttra royalty

The chief financial officer said on the call that the royalty increase fully offsets the lost reimbursement in 2026 but leaves a gap of about €200 million in business operating income in 2027. Page 15 lists the rest of the 2026 picture: about €200 million of sales lost to divestments of older medicines, a moderate rise in research spending, higher financial expenses from 2025 and 2026 deals, about €400 million of capital gains, and Regeneron profit sharing that grows faster than sales. The 2025 Form 20-F puts last year’s reimbursement at €1.089 billion. A footnote on page 17 adds that the launch ambition covers drugs launched since 2019, risk-adjusted, with “very limited contributions from the late-stage pipeline.”

The Market Case for Sanofi

The bullish case has three legs: Dupixent keeps growing past €5 billion a quarter, the launch portfolio reaches €10 billion by 2030, and a multiple at a five-year low plus 31 straight years of dividend increases limit the downside. The bearish case starts with the March 2031 patent date and a pipeline that has lost its leading candidates to replace Dupixent.
Outside view (sell-side research aggregate, October 2026): The consensus of 27 analysts is Hold, with a 12-month price target of $50. RBC started coverage on September 9 with a Sector Perform rating.

From the Principia and Kymab Deals to a New CEO

Both written-off candidates came through acquisitions. In August 2020, Sanofi agreed to buy Principia Biopharma for $100 a share, an equity value of about $3.68 billion, gaining the brain-penetrant BTK inhibitor now called tolebrutinib. In January 2021 it bought Kymab for about $1.1 billion upfront and up to $350 million in milestones, adding the OX40L antibody KY1005, now amlitelimab.
On October 27, 2023, Sanofi said it would no longer target a 32% business operating margin for 2025 so that it could spend more on research. The ADR fell -17.1% that week, from $52.05 to $43.13. The consumer health separation announced the same day ended in April 2025, when Sanofi sold 50% of Opella to CD&R, received €10.4 billion in cash, and kept 48.2%.

Ten years of Sanofi ADR shares with five markers

On December 24, 2025, the FDA issued a complete response letter on tolebrutinib. On February 12, 2026, the board declined to renew Paul Hudson’s director mandate and named Belén Garijo, the former chief executive of Merck KGaA, as his successor; she took over after the April 29 annual meeting. The board’s release said her priority would be to strengthen the productivity, governance, and innovation capacity of research and development.
On July 24, Sanofi decided not to take amlitelimab to regulators and ended the itepekimab and balinatunfib programs. The ADR’s dividend-adjusted weekly close peaked at $53.73 in March 2025 and now sits -24.4% below that level.

How Much of Sanofi Rests on Dupixent?

Dupixent rose from 10.5% of net sales in the second quarter of 2020 to 44.4% in the second quarter of 2026. On a full-year basis it was 13.9% in 2021 and 36.0% in 2025, and 42.2% in the first half of 2026. Second-quarter sales of €5.154 billion were the first quarter above €5 billion.

Sanofi quarterly net sales and Dupixent share

Putting all 25 quarterly releases side by side, net sales outside Dupixent fell from €7.349 billion in the second quarter of 2020 to €6.443 billion in the second quarter of 2026. The scope is not identical, since Opella left in 2025 and Blueprint and Dynavax arrived, but most of six years of sales growth came from one drug.
Company disclosure (Q2 2026 results presentation, page 33): The Dupixent US compound patent expires in March 2031. Sanofi holds issued patents and pending applications expiring from 2031 to 2045 and plans a vigorous defense, while developing a higher dose to extend dosing to every four weeks and a co-formulation.
Asked on the call about biosimilar timing, management said it was too early to speculate on dates and that it expects Dupixent to be protected beyond March 2031. Merck faces the same kind of cliff, with Keytruda at 48.7% of 2025 sales and a US patent ending in 2028, yet over the past year Merck shares rose +74.7% while Sanofi’s fell -16.5%. The filings alone do not explain why two companies facing similar patent dates were priced so differently.

Why IFRS Net Income Fell 91% While Business EPS Rose

IFRS net income attributable to shareholders was €343 million in the second quarter, about one-seventh of business net income of €2.501 billion. Much of the -91.3% drop reflects a comparison base that included €2.707 billion of income from the discontinued Opella business a year earlier. On a continuing-operations basis, basic EPS went from €1.02 to €0.29.
The rest came from €1.031 billion of intangible asset impairments, €952 million of it on amlitelimab. The half-year report describes that charge as the entire carrying amount of the asset. Because the write-down is not tax-deductible, the first-half IFRS effective tax rate rose to 30.6% from 19.8%.

Sanofi business net income versus IFRS net income

The same pattern produced an IFRS net loss of €801 million in the fourth quarter of 2025. The 2025 Form 20-F records a €1.663 billion impairment on tolebrutinib, citing the negative phase 3 result in primary progressive multiple sclerosis and recent interactions with US and European regulators. Europe approved the drug as Cenrifki in June 2026 for non-relapsing secondary progressive multiple sclerosis, while the US path remains closed for now.
Own calculation (two impairments): Tolebrutinib’s €1.663 billion and amlitelimab’s €952 million add up to €2.615 billion. The deals that brought them in were valued at about $3.68 billion for Principia’s equity and about $1.1 billion upfront for Kymab.

The Pipeline Programs Sanofi Dropped and What Remains

Three programs ended in the second quarter. Amlitelimab held its response through 72 weeks in a long-term extension study, but Sanofi concluded that the totality of efficacy and safety evidence did not support further development in atopic dermatitis. Itepekimab, an IL-33 antibody developed with Regeneron, was stopped in chronic obstructive pulmonary disease after two phase 3 readouts in May 2025 and changes in the competitive landscape, and balinatunfib missed internal efficacy expectations in phase 2 studies in Crohn’s disease and ulcerative colitis.
In the second-quarter release, Garijo said her first months had focused on assessing the challenges facing Sanofi and on an accelerated transformation roadmap that leverages commercial strengths and addresses the need for research and pipeline improvements.
What remains in immunology includes duvakitug, developed with Teva, and lunsekimig, which met its primary and key secondary endpoints in phase 2 studies in asthma and chronic rhinosinusitis with nasal polyps in April. In rare diseases, venglustat is under priority review in the US for type 3 Gaucher disease. Paulo Fontoura became head of research and development on September 1.

How Sanofi Makes Money Across Four Product Groups

Sanofi reports four sales groups. In the second quarter, Dupixent contributed €5.154 billion, other medicines about €4.0 billion, pharma launches €1.3 billion, and vaccines €1.1 billion.
By region, the US produced €6.344 billion, or 54.7% of net sales, up 33.5%, and 75.6% of Dupixent sales came from the US. Europe grew 1.3% to €2.141 billion and the rest of the world grew 3.7% to €3.112 billion, with China down 4.9% to €676 million. The release credits US growth to launches, Dupixent, and the newly acquired Heplisav-B, and says European growth from launches and Dupixent was almost offset by declines in older medicines and most vaccines.
Dupixent started in atopic dermatitis and now treats asthma, chronic rhinosinusitis with nasal polyps, eosinophilic esophagitis, COPD, and chronic spontaneous urticaria among nine indications, with more than 1.5 million patients on treatment. Launches center on rare disease drugs such as ALTUVIIIO and Nexviazyme, Blueprint’s mast cell drug Ayvakit, and Sarclisa, which grew 35.7% in the quarter. Sanofi’s remaining 48.2% stake in Opella is equity-accounted and sits outside business net income.
Vaccines combine flu shots, the infant RSV antibody Beyfortus, and the adult hepatitis B vaccine Heplisav-B that arrived with Dynavax in February 2026. Sanofi guided third-quarter vaccine sales to a low to mid-teens percentage decline after a high flu comparison.
Other medicines are older products. In the second quarter, Lantus insulin fell 7.0% to €394 million, Plavix fell 5.7% to €216 million, and the anticoagulant Lovenox fell 15.8% to €180 million, while Toujeo insulin rose 4.4% to €354 million and the cholesterol drug Praluent rose 19.0% to €164 million. On September 14, Sanofi agreed to transfer 20 such medicines and three plants to Cheplapharm in exchange for a 26.4% stake in Cheplapharm. In December 2025 it reached an agreement with the US government to supply certain medicines to state Medicaid programs at prices available in other high-income countries.

Dupixent was co-developed with Regeneron. According to the 2025 Form 20-F, Sanofi leads commercialization and records all sales. US profits are split 50/50, and outside the US Sanofi keeps 55% to 65% depending on sales. Regeneron’s share does not reduce revenue; it flows through other operating expenses.
The same alliance covers the rheumatoid arthritis drug Kevzara, whose second-quarter sales rose 35.1% to €177 million. Besides profit sharing, Sanofi reimburses Regeneron for selling expenses, €699 million in 2025.
On October 1, the two companies added four long-acting antibodies invented by Regeneron. The IL-13 antibody REGN20423 is in a phase 1 study in atopic dermatitis, and the other three are expected to enter clinical studies in 2027. Regeneron receives $1 billion upfront and up to $7 billion in milestones, costs and profits are shared equally, and Regeneron gets an option to add lunsekimig after its phase 3 studies. Garijo called the deal “a deliberate first step in igniting Sanofi’s innovation engine.”
So Dupixent’s 44.4% of sales does not translate one-for-one into Sanofi’s profit. Net Regeneron-related other operating expense in the 20-F was €4.923 billion in 2025, up +29.9% from €3.789 billion and faster than Dupixent’s +20.2% sales growth that year.
Own calculation (Regeneron-related net cost against Dupixent sales): The net cost equaled 29.8% of Dupixent sales in 2023, 29.0% in 2024, and 31.3% in 2025. That figure already nets out the €1.089 billion Regeneron held back in 2025 to repay development costs, and that repayment ended in the second quarter of 2026. The 20-F put the remaining balance at €0.5 billion at the end of 2025, against cumulative development costs of €9.0 billion.

How Sanofi Compares With Four Big Pharma Peers

In trailing twelve-month revenue converted to dollars, Sanofi’s $55.89 billion is smaller than Merck at $66.57 billion, AstraZeneca at $61.37 billion, and Novartis at $56.69 billion, and larger than GSK at $44.05 billion. Sanofi’s growth of 7.0% trails only AstraZeneca’s 8.6%. In euros, trailing net sales of €45.843 billion grew 7.6%.

Trailing twelve-month revenue and growth for five big pharma companies

Sanofi has the lowest forward P/E of the five at 8.31x, followed by GSK at 10.19x, AstraZeneca at 15.40x, Novartis at 16.24x, and Merck at 17.54x. Its dividend yield of 4.35% is the highest, ahead of GSK at 3.61%. Merck’s $360.08 billion market value is 3.7 times Sanofi’s. Over one year, Merck rose +74.7%, Novartis 25.4%, GSK 9.3%, AstraZeneca 2.8%, and Sanofi fell -16.5%.

Forward P/E and dividend yield for five big pharma companies

Dividing forward P/E by trailing revenue growth gives a growth-adjusted multiple of 1.19 for Sanofi, 1.79 for AstraZeneca, 2.04 for GSK, 3.81 for Merck, and 6.01 for Novartis. Sanofi is the cheapest even after adjusting for growth, but that ratio assumes growth after Dupixent looks like growth today.

SNY P/E on Business EPS Over 61 Months

On business EPS, Sanofi trades at 8.59 times earnings, the lowest reading in 61 months and 25% below the median of 11.42x. Price to net sales of 1.89x is also a 61-month low against a median of 2.62x.

Sanofi P/E on business EPS and price-to-sales bands over 61 months

Two ADRs equal one ordinary share, so $40.61 times two, divided by a dollar-euro rate of 1.1240, gives €72.26 per share. Dividing by trailing four-quarter business EPS of €8.41 gives 8.59x. Market data shows a trailing P/E of 21.78x on IFRS earnings, more than twice as high, because impairments and disposal gains swing IFRS profit.
One caveat applies. Releases for the first two quarters of 2024 still included Opella, and Sanofi excluded it from the third quarter on, so the band mixes the two bases from late 2024 into spring 2025. The dividend also depends on the yardstick: Sanofi’s €4.12 per ordinary share divided by €72.26 gives 5.70%, while the 4.35% in market data uses the $1.76 actually paid per ADR.

Three Conditions That Move the Stock

Dupixent growth matters most. The €25 billion target needs only 9.7% a year, so if growth slows in the second half as guided but stays in the mid-teens, Sanofi buys time before 2031. If US pricing pressure or new competitors push growth into single digits while Dupixent makes up 61.5% of US sales, 44% of the company loses its footing at once.
Business development comes next. Garijo has pledged more disciplined licensing and M&A, but net debt reached €15.513 billion at the end of June, up from €11.008 billion at the end of 2025, and the 2026 buyback of €1 billion is one-fifth of 2025’s €5.03 billion. Late-stage assets bought within that debt capacity would give the multiple a reason to recover; another Principia or Kymab outcome would hit IFRS earnings and credibility together.
Earnings quality is the third. The second quarter’s gross-to-net adjustment, the inventory provision reversal, and the Regeneron reimbursement fade or disappear in the second half. If business EPS still grows faster than sales without them, the five-year-low multiple has room to rise; if Regeneron’s share keeps outgrowing sales and pulls EPS growth below sales growth, today’s multiple may not be the floor.

What the Third-Quarter Report Should Show

Sanofi reports third-quarter results on October 30. The first figures to check are how far Dupixent growth slowed from 37.6% and whether vaccine sales fell by the low to mid-teens percentage the company guided. Next come underlying business operating income growth without one-offs and the Regeneron-related line in other operating expenses.
One question this piece cannot settle is what fills Dupixent’s place once its sales start to decline after March 2031. The 2030 ambition includes almost nothing from the late-stage pipeline, and the four Regeneron antibodies added in October are in phase 1 or earlier. The results of the pipeline review Garijo describes as ongoing will be the first real evidence.

Medtronic (MDT) Stock Analysis: Why EPS Stayed Flat Despite 10-Year-High Revenue Growth: another healthcare company where sales growth and adjusted earnings moved apart, useful for comparing how one-offs and acquisition costs shape reported EPS.
Adobe (ADBE) Stock Analysis: Valuation After the CEO Change: a company whose multiple was reset around a leadership change, a useful frame for reading Sanofi’s discount after Belén Garijo replaced Paul Hudson.

Sector RS Rank Oct 20: Health Care Lead, Battery ETFs Fall

J. Equity. Research — Tue, 20 Oct 2026 23:06:13 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Eli Lilly · UnitedHealth · HubSpot — a drugmaker at a record close, a health insurer that raised its guidance, and a software company back above its 200-day average.

② On October 20, the S&P 500 rose +0.28% to 7,712.57 and the Dow gained +1.02% to 52,495.88. 89 of the 129 ETFs in our universe closed higher, and only 1 of the 11 sector SPDRs fell.

③ The health care sector SPDR rose +2.37% to a record close, while the energy storage fund lost -1.69%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Oct 20 Sector RS — 129 ETFs · RRG v2

Health care took the lead. Tech sat still. Money moved into drugmakers and insurers, and away from the AI power trade.
The S&P 500 closed at 7,712.57, up +0.28% or 21.84 points. The Dow rose +1.02%, or 529.85 points, to 52,495.88. The Nasdaq slipped -0.02%, or 6.07 points, to 26,424.82. The Dow did the work because UnitedHealth, Amgen, Merck, and Johnson & Johnson are all in it. Over five sessions, the Nasdaq is still down -2.87% and the S&P 500 -1.19%. Value beat growth. The Russell 1000 Value fund (IWD) rose +0.89%, while the Russell 1000 Growth fund (IWF) fell -0.16%. The equal-weight S&P 500 fund (RSP) gained +1.15%, and the Russell 2000 fund (IWM) +1.66%, so the average stock did better than the index.
Breadth was wide. 89 of the 129 funds in our universe closed higher, 39 fell, and one was flat. Ten of the 11 sector SPDRs rose. Health care led at +2.37%, followed by real estate (+1.70%), utilities (+1.26%), and financials (+1.20%). Technology was the only sector down, at -0.28%.
Reports said the S&P 500 health care index hit a record high, and analysts described the move as a rotation out of AI-heavy tech. The VIX fell -6.13% to 17.31. The 10-year Treasury yield eased to 5.12% from 5.14%. Brent crude slipped -0.39% to $109.12 a barrel. Natural gas futures lost -2.13%. Gold fell -0.42% to $4,142.50, silver rose +2.05%, and Bitcoin gained +1.08% to near $82,740.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 20, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Health Care Select Sector SPDR (XLV)	+2.37%	99	🔺	🔺	🔺
iShares U.S. Oil & Gas E&P (IEO)	+0.15%	98	🔺	🔺	🔺
Global X Genomics & Biotechnology (GNOM)	+3.16%	97	🔽	🔺	🔺
WisdomTree Cloud Computing (WCLD)	+3.45%	96	🔺	🔺	🔺
Energy Select Sector SPDR (XLE)	+0.25%	96	🔺	🔺	🔺

Health care moved to the top. XLV now ranks 99, ahead of the oil producers that topped Monday’s ranking. Four of the five sit above all three moving averages. GNOM is the exception: it is still below its 1-month average and is flat over one month (+0.07%). The iShares health care providers fund (IHF) ranks 94 and closed at a one-year high.

Why They’re Strong — Sector Issues

Health Care Select Sector SPDR XLV Daily

· Health care and insurers (XLV · IHF) — Big drugmakers and insurers moved together. Eli Lilly rose +3.49%, Amgen +3.29%, Merck +3.25%, and UnitedHealth +3.04%. Cigna gained +2.71%, Elevance Health +2.31%, and CVS Health +2.23%. AbbVie and Pfizer both closed at one-year highs. XLV is up +5.99% over five sessions and +6.40% over one month. This is no longer a group that rises only when tech falls. It rose on a day the Nasdaq was flat.

iShares Oil and Gas Exploration IEO Daily

· Oil producers and energy (IEO · XLE) — Producers held still while crude eased. IEO rose +0.15% and XLE +0.25%. IEO is up +10.96% over one month, still the best monthly gain in our universe. The group slid one place in the ranking because health care moved faster, not because energy sold off.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks cloud computing, biotech, US pharma, energy storage, and AI power. The WisdomTree cloud fund (WCLD) fell to 29 on September 28 and has climbed back to 94 on this price-based line. The sheet ranks it 96. The SPDR biotech fund (XBI) hit bottom at 16 on October 13 and jumped to 54 in five sessions, against 49 on the sheet. The iShares US pharma fund (IHE) went from 31 to 77, its highest point in 45 days. The sheet has it at 76. The iShares energy storage fund (IBAT) peaked at 85 on October 5 and has dropped to 36, with the sheet at 38. The Defiance AI power fund (AIPO) fell from 83 on September 29 to 12. The sheet ranks it 25.

RS Breakdown Warnings (big 5-day drops)

· The meme stock theme fund (MEME) fell -85 points in five sessions, from 89 to 4. The Roundhill generative AI fund (CHAT) lost -77 points, from 86 to 9. Both are down more than -10% over five sessions.

· The Defiance AI power fund (AIPO) lost -66 points, from 78 to 12, and the Global X data center fund (DTCR) -49 points, from 68 to 19. The chip funds show the same drop on the price-based line. The iShares semiconductor fund (SOXX) fell from 98 to 16, while the sheet still ranks it 69.

RS Rebound Signals (sharp bounces off the bottom)

· The iShares US pharma fund (IHE) rebounded +46 points in five sessions, from 31 to 77. The SPDR biotech fund (XBI) gained +38 points, from 16 to 54, and the Roundhill GLP-1 fund (OZEM) +38 points, from 12 to 50.

· The SPDR pharmaceuticals fund (XPH) gained +36 points, from 9 to 45, and the iShares residential REIT fund (REZ) +41 points, from 32 to 73. Lower yields helped real estate.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 20 closing move — 89 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Roundhill GLP-1 & Weight Loss (OZEM)	+3.89%	43	🔽	🔽	🔽
SPDR S&P Biotech (XBI)	+3.64%	49	🔺	🔽	🔺
WisdomTree Cloud Computing (WCLD)	+3.45%	96	🔺	🔺	🔺
Global X Genomics & Biotechnology (GNOM)	+3.16%	97	🔽	🔺	🔺
iShares Biotechnology (IBB)	+3.16%	86	🔺	🔺	🔺

Four of the five are health care funds. GNOM edged out IBB by less than 0.01 percentage point. OZEM and XBI rank in the bottom half and are still down over one month, at -4.05% and -3.15%. Their gains look like a catch-up. WCLD and IBB are the ones already above all three moving averages.

Why They Rose — Sector Issues

SPDR SP Biotech XBI Daily

· Biotech and weight-loss drugs (OZEM · XBI · GNOM · IBB) — Reports said Goldman Sachs raised its Eli Lilly price target to $1,413, and the weight-loss fund holds Lilly and Novo Nordisk. Novo rose +2.42%. Biotech moved with it. Moderna jumped +6.69%, Regeneron +3.25%, and Vertex +2.53%. We found no single biotech headline behind the move. XBI is still about 10% below its one-year closing high from August 19.

WisdomTree Cloud Computing WCLD Daily

· Cloud software (WCLD) — Business software rose while chips stayed flat. Guidewire gained +7.08%, HubSpot +6.87%, DocuSign +4.72%, Paycom +3.68%, and ServiceNow +2.88%. Datadog fell -1.51%, so the group was not one trade. WCLD closed at a one-year high and is up +6.15% over one month. The weak side was the AI power trade. Eaton fell -2.43%, GE Vernova -1.99%, Constellation Energy -1.65%, and Vertiv -1.22%. We found no single headline for that drop.

Leading Sectors: Health Care, Oil Producers, Cloud Software

① Health care is now the top group in our universe. XLV ranks 99 and closed at a record. The rise came from both drugmakers and insurers, which do not usually move on the same news. That makes this look like a broad shift of money, not a single-stock story.
② Oil producers kept their place. IEO ranks 98 and is up +10.96% over one month. Brent near $109 a barrel supports earnings for the group even on quiet days.
③ Cloud software is the one tech group still near the top. WCLD ranks 96. The chip funds are not there. SOXX ranks 69 on the sheet and is down -8.07% over five sessions. Energy storage and AI power fell the most on the day. IBAT lost -1.69% and ranks 38. Its largest holding, Bloom Energy, fell -1.58% and is down -15.49% over five sessions ahead of its Thursday report. AIPO is down -9.94% over the same stretch.
④ The last report covered the October 19 close. Its three picks, measured from that close to Tuesday’s: Accenture +0.92%, Box +3.19%, and CareDx +3.16%. The S&P 500 rose +0.28% over the same session. All three beat the index. Accenture closed at $239.12 against its $229.68 checkpoint, and Box at $41.75 against $39.56, a new all-time high. CareDx closed at $69.20 and has not yet cleared its $69.85 checkpoint. Recorded as is.

Today’s Three Stocks — Eli Lilly · UnitedHealth · HubSpot Stock Forecast

Eli Lilly (LLY) — 1-Month RS 88: A Record Close

Eli Lilly LLY Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
90	97	88	+10.2%	iShares US Pharmaceuticals · VanEck Pharmaceutical · Health Care Select Sector SPDR

Up +3.49% to $1,283.66, and +10.04% over five sessions. Tuesday’s close is the highest in at least a year. Eli Lilly makes the weight-loss and diabetes drugs that lead the GLP-1 market, including its new oral pill, Foundayo. Reports said Goldman Sachs raised its price target to $1,413 from $1,371, and Bank of America raised its target to $1,397 the day before. For the quarter ended June 30, revenue rose +47.7% to $22.97 billion from $15.56 billion. Net income rose +25.3% to $7.10 billion from $5.66 billion. Diluted earnings per share were $7.94, up from $6.29. Third-quarter results are scheduled for October 29, according to reports. The Eli Lilly stock forecast depends on whether that report shows Foundayo sales adding to growth.

UnitedHealth (UNH) — 1-Month RS 90: Guidance Raised Again

UnitedHealth Group UNH Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
86	98	90	+11.0%	iShares US Healthcare Providers · Health Care Select Sector SPDR

Up +3.04% to $419.26, and +10.99% over five sessions. The stock is about 4% below its one-year closing high of $436.35 from July 21. UnitedHealth is the largest US health insurer and also runs the Optum health services business. It reported third-quarter results on October 13. Revenue was $112.7 billion, slightly below $113.2 billion a year earlier. Earnings from operations rose to $6.6 billion from $4.3 billion. Earnings per share were $4.56, up from $2.59, and adjusted earnings per share were $4.69. The medical care ratio fell to 88.4% from 89.9%, which means less of each premium dollar went to claims. The company raised its full-year adjusted earnings outlook to at least $20.50 per share, from $19.50 to $20.00. The UnitedHealth stock forecast depends on whether medical costs stay under control into 2027.

HubSpot (HUBS) — 1-Month RS 97: Back Above the 200-Day Average

HubSpot HUBS Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	99	97	+17.3%	Global X Cloud Computing

Up +6.87% to $250.76, and +13.32% over five sessions. The stock closed above its 200-day average of about $236.49. It is still about 49% below its one-year closing high of $494.58 from November 3, 2025. HubSpot sells marketing and sales software to small and mid-sized businesses. Reports pointed to the technical breakout and found no single company headline behind Tuesday’s move. For the quarter ended June 30, revenue rose +19.8% to $911.7 million from $760.9 million. Operating income was $43.3 million, against a loss of $24.6 million a year earlier. Net income was $43.3 million, against a loss of $3.3 million. Diluted earnings per share were $0.86, compared with a loss of $0.06. Third-quarter results are expected on November 11 after the close. The HubSpot stock forecast depends on whether profit growth can repair a stock that lost half its value.

Eli Lilly · UnitedHealth · HubSpot Stock Forecast Checkpoints

· Eli Lilly stock forecast — The stock just set a record close. Watch whether it holds above $1,240.34, the October 19 close, into the October 29 report. Falling back below it would turn Tuesday’s high into a one-day spike.

· UnitedHealth stock forecast — The stock has risen +10.99% in five sessions. Watch whether it clears $436.35, the July 21 closing high. A close above it would put the stock at a new one-year high.

· HubSpot stock forecast — The stock just moved back above its 200-day average. Watch whether it holds above $236.49. A drop below it would mean the breakout failed.

What to Watch on Next Week’s Calendar

Abbott, Thermo Fisher, Danaher, and Elevance Health results, Wednesday, October 21, 8:00 a.m. ET, before the open. Health care led Tuesday, and Elevance rose +2.31%. Elevance is the closest peer to UnitedHealth, so its medical cost numbers will test the insurer rally.
Meta and Tesla results, Wednesday, October 21, 4:00 p.m. ET, after the close. Lam Research, Texas Instruments, and IBM report at the same time. Tech was the only sector down on Tuesday, and SOXX is down -8.07% over five sessions. Meta’s spending plans will show whether the AI build-out still has a buyer.
ESMO 2026 cancer conference, Friday, October 23. Moderna, Merck, and Summit Therapeutics are scheduled to present. Moderna rose +6.69% on Tuesday, and XBI ranks 49 after a +38-point rebound in five sessions. Trial data will show whether the biotech bounce has news behind it.

Delta Air Lines (DAL) Stock: 23.6% EPS Guidance Cut on Fuel

J. Equity. Research — Tue, 20 Oct 2026 22:14:09 GMT

Delta Air Lines (NYSE: DAL) cut its 2026 adjusted EPS guidance on October 9 from $6.50 to $7.50 down to $5.10 to $5.60, a -23.6% move at the midpoint. Three months earlier it had reaffirmed the same $6.50 to $7.50 range. Third-quarter adjusted EPS came in at $1.72, below the $2.00 to $2.50 the company had guided in July, even though adjusted operating revenue rose +16% to $17.585 billion on seat capacity that was flat with a year earlier.
Among the four large US carriers, Delta has the highest trailing twelve-month revenue. The stock trades at $75.37 for a market value of $49.32 billion. On a dividend-adjusted weekly basis it peaked at $92.27 in the first week of July and now sits -18.3% below that level, yet it is still +32.8% higher than a year ago.

Delta Air Lines (DAL) one-year share price chart

This piece follows the eight full-year EPS guidance statements Delta made across eight quarterly releases over the past year and a half, lining up each annual range, each quarterly range, the fuel price assumed at the time, and the result. Delta has not yet guided for 2027, and fourth-quarter figures here are company guidance only. EPS, revenue, and fuel price are Delta’s adjusted (non-GAAP) figures unless marked as GAAP.

What Delta’s Third-Quarter Release Says About the Cut

The headline of the third-quarter earnings release claims “structural durability in high fuel cost environment.” Its guidance table, on page 2, lists fourth-quarter revenue growth of about 20%, an operating margin of 7% to 9%, and EPS of $1.15 to $1.65, alongside full-year EPS of $5.10 to $5.60, free cash flow of about $2.5 billion, and gross leverage of about 2.2 times.

Q3 2026 earnings release page 2: fourth-quarter and full-year 2026 guidance

Company disclosure (third-quarter release and earnings call): Third-quarter pretax income of $1.5 billion was flat with last year. Fuel expense rose $1.6 billion, more than $500 million of it above what the July guidance assumed. Full-year pretax income of about $4.5 billion is fairly close to last year even though fuel costs rise about 60%, or about $6 billion.
On the same call, management said resilient demand and a sharper focus on profitability are letting the industry recover higher fuel costs more quickly. Many carriers, it added, were failing to earn their cost of capital well before the run-up. On its own revenue, the line was “Even when fuel prices eventually moderate, and they will,” followed by the claim that the underlying strength is sustainable.
The July call reads differently. On July 10, Delta said it was holding its January guidance despite billions of dollars of fuel headwind, described $6.50 to $7.50 as 20% growth over the prior year, and kept free cash flow guidance of $3 billion to $4 billion. The fuel price assumed in that third-quarter guidance was $3.15 a gallon. The actual adjusted price was $3.61.
When an analyst asked about 2027 margins in October, the chief executive declined to give a walk. The biggest variable, he said, is where fuel volatility settles, and while he expects prices to recede he does not know at what level or pace. He listed levers Delta controls regardless of fuel, such as larger aircraft, new fleet efficiencies, and crew operations, and said the company needs a little assistance from fuel to accelerate the path to its mid-teens margin target.
The January release put 2025 adjusted results at EPS of $5.82, pretax income of $5.0 billion, free cash flow of $4.6 billion, and gross leverage of 2.4 times. Own calculation (new guidance against 2025): The $5.10 to $5.60 range is -12.4% to -3.8% below 2025’s $5.82. Pretax income of about $4.5 billion is 10.0% lower, and free cash flow of about $2.5 billion is 45.7% lower.
Putting the July guidance row for the third quarter next to the result shows where the miss came from. Revenue guided up mid-teens grew 16%, the operating margin guided at 11% to 13% landed at 9.4%, and EPS guided at $2.00 to $2.50 came in at $1.72. Revenue arrived as planned and the profit leaked out through costs. Third-quarter free cash flow was $460 million, and debt and finance lease obligations fell 13.6% from a year earlier to $12.851 billion.

The Three-to-Five-Year Targets in Delta’s March Presentation

Delta presented a 16-page deck at the J.P. Morgan Industrials Conference on March 17. Page 4 pairs a line about raising revenue guidance on demand momentum with a line saying the industry was quickly recapturing higher fuel costs. The same page says corporate and consumer demand accelerated in March, with domestic and international unit revenue both up mid-single digits. It also says Delta would keep the flexibility to cut capacity if elevated fuel persisted, and warned that first-quarter non-fuel unit costs would rise mid-single digits. The third quarter’s 7.3% was above that range.

March 2026 J.P. Morgan conference presentation page 15: three-to-five-year financial framework

Page 15 restates the three-to-five-year financial framework first set out at the November 2024 investor day: average annual EPS growth of 10% or more, a mid-teens operating margin, annual free cash flow of $3 billion to $5 billion, gross leverage of 1 times, return on invested capital of 15% or more, and more than $40 billion of unencumbered assets. The third-quarter adjusted operating margin was 9.4%, and the ROIC that management cited on the earnings call was 11%.
Page 7 tracks gross leverage at 2.2 times in 2019, 5.0 times in 2022, and 2.4 times in 2025, with about 2 times projected for the end of 2026. The October guidance says about 2.2 times.

March 2026 J.P. Morgan conference presentation page 7: gross leverage history and year-end 2026 estimate

Page 5 compares 2025 free cash flow of $4.6 billion against a combined figure below zero for American, Southwest, and United, and ROIC of 12% against a peer average in the mid-single digits. Page 6 says Delta’s share of industry profit grew from 30% in 2014 and 40% in 2023 to more than 55% in 2025, premium revenue rose from $10 billion to $22 billion, and American Express remuneration rose from $2 billion to $8.2 billion against a $10 billion target.

March 2026 J.P. Morgan conference presentation page 5: 2025 free cash flow and ROIC against peers

Page 16 lays out the capital allocation rule: $9 billion to $11 billion of annual operating cash flow, half reinvested in the business and half returned through debt reduction, dividends, and buybacks. Nine-month free cash flow reached $1.9 billion, so meeting the $2.5 billion full-year guide requires another $0.6 billion in the fourth quarter. None of the 2026 releases through the third quarter reports a share repurchase, and third-quarter capital expenditure rose 22% to $1.413 billion.

The Market Case for Delta

The bullish case is that Delta earns money even when fuel spikes. Premium cabins, the American Express card partnership, and the refinery support profit, and the airline raises fares without adding seats to stay ahead of fuel. The bearish case starts from the fact that earnings guidance is still built on a fuel assumption, and that assumption broke within three months, taking the midpoint down 23.6%.
Outside view (sell-side research aggregate, October 2026): The consensus of 45 analysts is Buy, with a 12-month price target of $105. The 2026 EPS estimate fell from $6.72 ninety days earlier to $5.41.

From Pandemic Losses to a Second Guidance Reset

After Delta cut flying in March 2020, the dividend-adjusted weekly close fell to $18.47 in May. In January 2025 it guided full-year EPS above $7.35. The stock fell -15.0% in the first week of April, and the April 9 release declined to reaffirm annual guidance, citing current uncertainty.

Ten years of Delta shares with five guidance markers

Guidance came back in July 2025 at $5.25 to $6.25, rose to about $6 in October, and 2025 ended at $5.82. In January 2026 Delta guided $6.50 to $7.50 again. The April release gave second-quarter guidance only and no annual range. On July 10 the company reaffirmed $6.50 to $7.50, and the stock peaked the week before. After the October 9 cut, the stock fell -8.3% the following week, from $82.17 to $75.37.

How Often Has Delta Redrawn Its Annual EPS Guidance?

Of the eight annual guidance statements, five drew a new range and two left the year without guidance. In 2025, guidance started above $7.35, was pulled, came back at $5.25 to $6.25, and ended with actual EPS of $5.82. In 2026, the $6.50 to $7.50 range disappeared in April, came back in July, and became $5.10 to $5.60 in October.

Delta full-year adjusted EPS guidance by release and quarterly guidance against results

Against quarterly guidance, three quarters landed below the low end: the first quarter of 2025 at $0.46 against $0.70 to $1.00, the fourth quarter of 2025 at $1.55 against $1.60 to $1.90, and the third quarter of 2026 at $1.72 against $2.00 to $2.50. The second quarter of 2026 went the other way, beating the top of its $1.00 to $1.50 range at $1.56.
Own calculation (where the cut came from): Adding 2026 adjusted EPS of $0.64, $1.56, and $1.72 gives $3.92 for nine months, and adding the fourth-quarter guide of $1.15 to $1.65 gives $5.07 to $5.57, in line with the $5.10 to $5.60 annual range. The July midpoint of $7.00, less first-half EPS of $2.20 and the third-quarter guidance midpoint of $2.25, implied $2.55 for the fourth quarter. The October fourth-quarter midpoint is $1.40, $1.15 lower. Since the third quarter missed its guidance midpoint by $0.53, 69.7% of the $1.65 cut to the annual midpoint came from the fourth-quarter outlook.

The Gap Between Assumed and Actual Fuel Prices

The third-quarter adjusted fuel price of $3.61 a gallon was +14.6% above the $3.15 assumed in July and 60.4% above the $2.25 of a year earlier. The second quarter went the opposite way, landing at $3.93 against a $4.30 assumption. In both quarters Delta built its assumption on the forward curve at the time of guidance.

Delta adjusted fuel price against guidance assumptions and unit revenue against non-fuel unit cost

Own calculation (cost of the fuel miss): Third-quarter adjusted fuel expense of $4.143 billion divided by $3.61 a gallon gives 1.148 billion gallons. Multiplying by the $0.46 gap gives $528 million, the same size as the “more than $500 million” the company cited.
The refinery did not run to plan either. After a pause in July, it contributed only $0.13 a gallon in the third quarter. For the fourth quarter Delta assumes about $0.40, producing an all-in price of about $4.25. That is nearly double the $2.28 of the fourth quarter of 2025, and Delta still guided fourth-quarter pretax income of $1.2 billion. The third-quarter 10-Q records $716 million of settlement losses over nine months on fuel hedges held by Monroe Energy, the subsidiary that runs the refinery.

Fares Versus Non-Fuel Unit Costs

Fares are how Delta pushed past fuel. Third-quarter adjusted total unit revenue (TRASM) rose +15.4%, three points faster than in the second quarter, and main cabin unit revenue rose 17% on fewer seats. For the fourth quarter Delta guided revenue up about 20% on seat growth below 2% that includes fewer main cabin seats. Management offered two reasons fares can keep rising: airfares are still well below cumulative inflation over the last several years, and the industry is cutting unprofitable capacity, which is helping main cabin trends.
Costs rose too. Non-fuel unit cost (CASM-Ex) grew 7.3% in the third quarter, up from 6.3% in the first quarter and 6.7% in the second. Delta attributed it to capacity a few points below the original plan, higher crew and revenue-related costs, and summer operational disruption that added close to a point. The three-to-five-year framework calls for low-single-digit non-fuel unit cost growth, and Delta says it returns to that track in 2027.

Why GAAP Pretax Income Fell 40% While Adjusted Rose

Third-quarter GAAP pretax income fell -40% to $1.074 billion, while adjusted pretax income rose 1% to $1.497 billion. The biggest line in the gap is the mark-to-market on equity investments, which swung from a $311 million gain a year earlier to a $218 million loss. Over nine months it was a $419 million loss against a $1.007 billion gain in the same period last year.
The 10-Q shows the carrying value of those investments falling from $4.222 billion at the end of 2025 to $3.824 billion at the end of September. Delta’s 11% stake in LATAM went from $1.644 billion to $1.516 billion and its 2% of China Eastern from $319 million to $156 million. Its 14.8% stake in Hanjin KAL, the holding company of Korean Air, rose from $861 million to $970 million.

How Delta Makes Money Beyond the Ticket

Delta is based in Atlanta and runs its domestic network through hubs and key markets in Atlanta, Minneapolis-St. Paul, Detroit, Salt Lake City, New York, Los Angeles, Seattle, and Boston. It operates up to 5,500 daily flights to more than 300 destinations on six continents, employs 100,000 people, and carried more than 200 million customers in 2025. The 10-Q lists 1,005 mainline aircraft at the end of September with an average age of 14.9 years, plus 325 regional jets flown by its subsidiary Endeavor and by SkyWest and Republic.
Third-quarter passenger revenue was $15.534 billion. Premium cabins brought in $6.818 billion, up 17.6%, which edged past the main cabin’s $6.802 billion, up 12.2%, by $16 million. Award travel added $1.302 billion and travel-related services such as baggage $612 million. Delta grew premium seats 6% and still posted double-digit premium unit revenue growth. The March deck puts premium revenue at $22 billion for 2025, up from $10 billion in 2014.
Loyalty revenue rose 19% to $1.346 billion. American Express remuneration grew 15%, and Delta expects it to exceed $9 billion for the year. Co-brand card acquisitions and spend both grew at double-digit rates, the eighth consecutive quarter of double-digit growth in cardholder spend, and the company is on track for a fifth straight year of 1 million new cards. Cargo revenue rose 29% to $301 million and maintenance, repair, and overhaul (MRO) revenue rose 28% to $296 million, bringing nine-month MRO revenue to $990 million. Delta says these diversified streams now make up 61% of revenue.
Refinery sales of $2.601 billion, up 76%, are counted in GAAP revenue and excluded from adjusted revenue. Delta bought the Trainer refinery in 2012, and Monroe Energy sells its products to third parties. For Delta the value of the refinery lies less in that revenue than in lowering its own fuel cost, and Delta guided the full-year benefit at more than $700 million.
By region, domestic revenue of $10.594 billion grew 16%, transatlantic $3.317 billion grew 11%, Latin America $867 million grew 14%, and transpacific $756 million grew 13%. New routes starting in 2027 include Seattle to Tokyo-Narita, Los Angeles to Manila, Austin to Paris, Detroit to Athens, and Boston to Venice. Overseas reach comes through partners: Delta is a founding member of SkyTeam and works with Air France-KLM, Virgin Atlantic, Korean Air, LATAM, Aeromexico, China Eastern, and WestJet, several of which are among the equity stakes above.
The customer base skews toward higher incomes. Management says the top 40% of US households make up the majority of Delta’s customers and are nearly $40 trillion wealthier than a few years ago, and the release cites a corporate survey in which over 90% of respondents expect their corporate travel to increase or stay the same in 2027. On the cost side, profit sharing is distinctive: Delta accrued nearly $900 million in the first nine months toward next February’s employee payout, a cost that rises with earnings.

How Delta Compares With Three US Peers

Over the trailing twelve months, revenue was $71.8 billion for Delta, $62.9 billion for United, $58.3 billion for American, and $30.1 billion for Southwest, and Delta’s growth of +14.1% was the highest. Delta’s figure includes third-party refinery sales, and adjusted revenue over the last four quarters adds up to $64.1 billion. Its market value of $49.32 billion is 1.6 times United’s $31.19 billion, while forward P/E multiples are close: 11.43 times for Delta, 10.90 times for United, and 12.63 times for Southwest.

Trailing twelve-month revenue and growth for four large US airlines

Price to sales is 0.69 times for Delta, 0.64 times for Southwest, 0.50 times for United, and 0.13 times for American. Over one year, Delta rose +32.8%, Southwest +32.7%, United 2.2%, and American fell -9.5%. American has lost money over the trailing twelve months, so it has no meaningful P/E.

Price to sales and one-year share price change for four large US airlines

Returns on capital separate them. In Delta’s own comparison, its 2025 ROIC of 12% is roughly twice the peer average in the mid-single digits, and the 11% cited for the third quarter is still above what management calls its cost of capital. The one-year share price ranking, with Delta and Southwest ahead and United and American behind, runs in the same direction as that ROIC comparison.

DAL P/E on Adjusted EPS Over 44 Months

On adjusted EPS, Delta trades at 13.78 times, just above the 90th-percentile mark of 13.77 times over 44 months, against a median of 8.66 times. Price to adjusted revenue of 0.78 times is also above its 0.59 times median. The highest month-end reading was 17.15 times in June 2026, just before the share price peak, and the lowest was 4.85 times in October 2023.

Delta P/E on adjusted EPS and price-to-sales bands over 44 months

Trailing four-quarter adjusted EPS of $1.55, $0.64, $1.56, and $1.72 adds up to $5.47, and $75.37 divided by $5.47 gives 13.78 times. On the new guidance midpoint of $5.35, the multiple is 14.09 times.
The band starts in March 2023 because that is roughly when trailing adjusted EPS turned positive again once the pandemic loss quarters rolled off. After a 23.6% guidance cut, the multiple still sits near the top of its band, which suggests the market is pricing this earnings decline as a fuel-driven, temporary dip.

Three Conditions That Move the Stock

The fuel price comes first. Fourth-quarter guidance assumes $4.25 a gallon, including a refinery benefit of about $0.40. If the actual price again runs $0.46 above the assumption, as it did in the third quarter, roughly $500 million comes out of a quarter’s profit; if it lands below, the quarter looks like the second quarter, which beat the top of its range.
Fare pass-through is the second. With unit revenue up 15.4% and non-fuel unit cost up 7.3%, roughly twice as fast, Delta can stay ahead of fuel. Delivering fourth-quarter revenue growth of about 20% on seat growth under 2% would keep that gap open, and whether fares hold once fuel eases, as management expects, decides 2027 earnings.
The return to financial targets is the third. Delta plans to use about $2.5 billion of free cash flow this year to repay more than $2 billion of debt and bring gross leverage to about 2.2 times, still above both the 1 times target and the roughly 2 times shown in March. It raised the quarterly dividend 14.7% to $0.2150 and reports no buybacks. The pace of deleveraging sets the timing of larger shareholder returns.

What the Fourth-Quarter Report Should Show

The first figures to check are whether the actual fourth-quarter fuel price stayed within the $4.25 assumption and whether the refinery benefit recovered to about $0.40. Next come revenue growth against the roughly 20% guide, whether non-fuel unit cost growth improved by the 1 to 2 points management expects, and whether full-year free cash flow reached about $2.5 billion.
One question this piece cannot settle is what fuel assumption 2027 guidance will rest on. Both 2025 and 2026 guidance were shaken within months by fuel and macro conditions, and management says revenue strength will outlast high fuel. If fuel offers no help next year, can fares and non-ticket revenue alone get Delta back to the 10% EPS growth in its framework?

American Express (AXP) Stock Analysis: Credit Metrics Reset: the card issuer behind Delta’s co-brand SkyMiles cards, useful for seeing how the remuneration Delta expects to exceed $9 billion this year looks from the other side of the partnership.
Casey’s (CASY) Stock Analysis: Fuel Margin Drove Q4 Profit: a fuel seller whose profit moved with fuel margins, a useful contrast with an airline whose guidance moves with the fuel price it pays.

Sector RS Rank Oct 19: Humanoid Robots Lead, Utilities Fall

J. Equity. Research — Mon, 19 Oct 2026 23:05:49 GMT

💡 Today’s US market in three lines

① Today’s three stocks: Accenture · Box · CareDx — an AI services firm, a cloud software company, and a transplant diagnostics maker that rose with Monday’s tech bounce.

② On October 19, the S&P 500 rose +0.41% to 7,690.73 and the Dow slipped -0.07% to 51,966.03. 55 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs fell.

③ The humanoid robot fund rose +3.78%, while the utilities sector SPDR lost -2.01%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Today’s Sector Relative Strength (RS)

Oct 19 Sector RS — 129 ETFs · RRG v2

Tech bounced. Utilities and energy slipped. Money went back into the stocks that were sold hardest last week, and out of the groups that had held up.
The S&P 500 closed at 7,690.73, up +0.41% or 31.29 points. The Nasdaq gained +1.11%, or 290.86 points, to 26,430.89. The Dow lost -0.07%, or 36.38 points, to 51,966.03. The bounce recovered only part of last week’s drop. Over five sessions, the Nasdaq is still down -2.99% and the S&P 500 -1.49%. Growth led. The Russell 1000 Growth fund (IWF) rose +0.93%, while the Russell 1000 Value fund (IWD) slipped -0.13%. The equal-weight S&P 500 fund (RSP) fell -0.32%, so the gains were concentrated in the biggest names. The Russell 2000 fund (IWM) added +0.31%.
Breadth stayed narrow. Only 55 of the 129 funds in our universe closed higher, and 74 fell. Just three of the 11 sector SPDRs rose: consumer discretionary (+1.78%), technology (+1.36%), and materials (+0.06%). Utilities fell the most at -2.01%, followed by financials (-0.83%) and energy (-0.64%).
The AI debt scare eased. Reports said Goldman Sachs upgraded CoreWeave to buy, and the data center operator’s bonds firmed after last week’s selloff, though the stock itself slipped -0.44%. Memory chips led the rebound. Sandisk rose +5.53%, Western Digital +6.09%, and Micron +2.97%. The VIX fell -7.75% to 18.44. The 10-year Treasury yield rose to 5.14% from 5.10%. Oil fell after reports that the US suspended some sanctions on Russia. Brent crude slipped -0.59% to $109.21 a barrel, and WTI front-month futures fell -3.13% to $98.24. Natural gas futures lost -2.47%. Gold fell -0.50% to $4,160.30, and Bitcoin was flat at near $81,947.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 19, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
iShares U.S. Oil & Gas E&P (IEO)	-0.73%	99	🔺	🔺	🔺
Energy Select Sector SPDR (XLE)	-0.64%	99	🔺	🔺	🔺
Health Care Select Sector SPDR (XLV)	-0.60%	98	🔺	🔺	🔺
United States Copper Index Fund (CPER)	+0.18%	96	🔽	🔽	🔺
iShares U.S. Medical Devices (IHI)	+0.04%	96	🔺	🔺	🔽

The top of the ranking changed. The cybersecurity funds that led for weeks dropped out after last week’s software selloff. BUG now ranks 81. Energy and health care moved up to take their place. IEO, XLE, and XLV all trade above their 1-month, 1-quarter, and 1-year averages, and all three slipped on Monday as money rotated back into tech. The Roundhill Magnificent Seven fund (MAGS) sits just behind at 95.

Why They’re Strong — Sector Issues

iShares Oil and Gas Exploration IEO Daily

· Oil producers and energy (IEO · XLE) — Producers gave back a little as crude fell. ConocoPhillips lost -0.87%, Exxon Mobil -0.39%, and Chevron -0.28%. The move was small next to the run that got them here. IEO is up +7.33% over one month, the best monthly gain in our universe, and +3.13% over five sessions. Crude near $100 a barrel keeps the rank high even on a down day.

Health Care Select Sector SPDR XLV Daily

· Health care and medical devices (XLV · IHI) — Health care paused. Eli Lilly fell -1.33% and Amgen -1.75%, while UnitedHealth rose +1.36% and Intuitive Surgical +1.52%. XLV is up +4.31% over one month and +2.13% over five sessions. It has climbed the ranking because it held steady while tech fell. IHI was flat on the day and still sits below its 1-year average.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks humanoid robots, future AI, cloud computing, utilities, and natural gas. The Roundhill humanoid robotics fund (HUMN) stood at 37 on October 13 and fell to 12 on this price-based line, while the sheet ranks it 29. The iShares future AI fund (ARTY) was at 92 on October 13 and dropped to 32 in four sessions. The sheet has it at 56. The WisdomTree cloud fund (WCLD) is the exception among the tech names and sits at 97 on this line, against 89 on the sheet. The utilities sector SPDR (XLU) climbed from 2 on August 21 to 83 on Friday and slipped to 74 on Monday. The sheet ranks it 63. The natural gas fund (UNG) reached 100 on October 14 and has slipped to 73. The sheet has it at 80.

RS Breakdown Warnings (big 5-day drops)

· The meme stock theme fund (MEME) fell -66 points in five sessions, from 71 to 5. The SonicShares global shipping fund (BOAT) lost -36 points, from 91 to 55. Both bounced on Monday, and MEME rose +2.38%, but the 5-day damage is done.

· The chip funds show the same drop on the price-based line. The iShares semiconductor fund (SOXX) fell -47 points, from 85 to 38, while the sheet still ranks it 75. The gap means the sheet has not caught up yet.

RS Rebound Signals (sharp bounces off the bottom)

· The iShares oil equipment and services fund (IEZ) rebounded +37 points in five sessions, from 9 to 46. The VanEck oil services fund (OIH) gained +34 points, from 18 to 52. Halliburton reports on Tuesday and SLB on Friday, so the group has a test this week.

· The iShares aerospace and defense fund (ITA) gained +27 points, Select STOXX European defense (EUAD) +26, and VanEck steel (SLX) +22. EUAD fell -2.07% on Monday after reports of possible easing in the Ukraine conflict, so its rebound is already under pressure.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 19 closing move — 55 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Roundhill Humanoid Robotics (HUMN)	+3.78%	29	🔽	🔽	🔽
SPDR S&P Biotech (XBI)	+2.45%	34	🔽	🔽	🔺
Roundhill Meme Stock (MEME)	+2.38%	16	🔽	🔽	🔽
WisdomTree Cloud Computing (WCLD)	+2.07%	89	🔺	🔺	🔺
iShares Future AI & Tech (ARTY)	+2.00%	56	🔽	🔽	🔺

Three of the five rank in the bottom half of the sheet. This was a bounce in beaten-down groups, not a change of leaders. WCLD is the only one above all three moving averages. HUMN is still down -9.79% over one month, and ARTY is down -8.33% over five sessions even after Monday’s gain.

Why They Rose — Sector Issues

Roundhill Humanoid Robotics HUMN Daily

· Humanoid robots and biotech (HUMN · XBI) — Tesla rose +3.76% after Elon Musk wrote on X that Optimus and Cybercab would make up most of Tesla’s future value, two days before the company reports. Korean holdings helped too. Rainbow Robotics rose +7.23% and Hyundai Motor +4.49% in Seoul. Biotech had deal news. Silence Therapeutics jumped +125.58% after Merck KGaA agreed to buy it for $20 per ADS in cash, a 130% premium to Friday’s close. Disc Medicine rose +38.86% after its Phase 3 trial of bitopertin met all primary and secondary endpoints. Moderna added +4.07%.

WisdomTree Cloud Computing WCLD Daily

· Cloud, AI, and meme stocks (WCLD · ARTY · MEME) — Software bought back what it sold on Friday. Datadog rose +5.36%, Palantir +4.36%, Snowflake +2.77%, and ServiceNow +2.39%. Reports tied the Palantir move to a federal cloud partnership with Knox Systems. Chips followed. Marvell gained +4.06%, Nvidia +1.38%, and AMD +1.76%. WCLD is up +5.27% over one month and stayed above its 1-month average through last week’s selloff. The meme stock fund rose with the risk appetite. We found no single company headline behind its move.

Leading Sectors: Oil Producers, Health Care, Cloud Software

① Oil producers kept the top rank even on a down day. IEO ranks 99 and slipped only -0.73% while crude fell. The 1-month return of +7.33% is far ahead of the rest of the universe. One day of lower oil does not undo that.
② Health care moved into the leaders by standing still. XLV ranks 98 and is up +4.31% over one month. UnitedHealth is up +7.49% over five sessions. Defensive groups like this one rise in the ranking when tech falls, and they will drift back down if the bounce holds.
③ Cloud software is the one tech group that kept its rank. WCLD ranks 89 and rose +2.07% on Monday. The chip funds did not keep up. SOXX ranks 75 and is down -7.88% over five sessions, and SMHX ranks 91 but is down -7.66%. Utilities lost their bid. NRG Energy fell -4.21%, Eversource -3.55%, and Constellation Energy -3.01%. We found no single headline for the utilities drop. The 10-year yield rose to 5.14%, which weighs on dividend stocks.
④ The last report covered the October 16 close. Its three picks, measured from that close to Monday’s: Antero Resources +0.47%, ConocoPhillips -0.87%, and Ovintiv +1.02%. The S&P 500 rose +0.41% over the same session. Two of three beat the index. All three held their checkpoints. Antero closed at $38.83 against $37.54, ConocoPhillips at $145.24 against $142.34, and Ovintiv at $70.04 against $66.97. Recorded as is.

Today’s Three Stocks — Accenture · Box · CareDx Stock Forecast

Accenture (ACN) — 1-Month RS 99: AI Services, Still Far From the High

Accenture ACN Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
93	99	99	+30.7%	First Trust Cybersecurity · iShares Future AI & Tech

Up +3.16% to $236.93, and +10.27% over five sessions. The stock is still about 18% below its one-year closing high of $288.54 from January 14. Accenture is one of the largest IT consulting firms, and its AI services business is the reason investors came back. Reports said the stock jumped +15.8% on October 1, the day it reported fiscal fourth-quarter results, and the company guided fiscal 2027 revenue growth of 3% to 6% in local currency. For the quarter ended August 31, revenue rose +6.2% to $18.68 billion from $17.60 billion. Operating income rose +39.7% to $2.86 billion from $2.05 billion, and net income rose to $1.99 billion from $1.41 billion. Diluted earnings per share were $3.29, up from $2.25. The Accenture stock forecast depends on whether the AI consulting demand holds up as clients cut other software spending.

Box (BOX) — 1-Month RS 98: A New All-Time High

Box BOX Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
90	99	98	+20.0%	Global X Cloud Computing

Up +2.28% to $40.46, and +10.22% over five sessions. Monday’s close is a new all-time high. Box sells cloud content management software to businesses, and it has been adding AI tools to that platform. Reports said Bank of America named it a top pick on October 14. The company holds a virtual investor product briefing on November 5. For the quarter ended July 31, revenue rose +9.2% to $321.1 million from $294.0 million. Operating income rose +58.6% to $32.6 million from $20.6 million, and net income rose to $19.2 million from $13.4 million. Diluted earnings per share were $0.09, up from $0.05. The Box stock forecast depends on whether a 9% revenue grower can keep a stock price that has already risen +20% in a month.

CareDx (CDNA) — 1-Month RS 99: Transplant Tests, Results on October 29

CareDx CDNA Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
97	93	99	+24.6%	Global X Genomics & Biotechnology

Up +4.81% to $67.08, and +6.27% over five sessions. The stock is about 4% below its one-year closing high of $69.85 from October 5. CareDx makes blood tests that detect organ rejection in transplant patients. For the quarter ended June 30, revenue rose +52.2% to $131.9 million from $86.7 million. Net income was $110.6 million against a loss of $8.6 million a year earlier, but that figure includes a $113 million gain on the sale of its Lab Products business, which closed on June 30. Adjusted EBITDA rose to $25 million from $5 million, and the company raised its 2026 revenue guidance to $490 million to $500 million. Third-quarter results come on October 29. The CareDx stock forecast depends on whether that report shows the core testing business growing without the one-time gain.

Accenture · Box · CareDx Stock Forecast Checkpoints

· Accenture stock forecast — The stock has risen four sessions in a row. Watch whether it holds above $229.68, the October 16 close. Falling back below it would mark Monday’s gain as part of the bounce, not a new leg.

· Box stock forecast — The stock just set an all-time high. Watch whether it holds above $39.56, the October 16 close. A drop below it would leave the high as a one-day spike.

· CareDx stock forecast — The stock is close to its high. Watch whether it clears $69.85, the October 5 closing high, before the October 29 report. A close above it would confirm the move ahead of earnings.

What to Watch on Next Week’s Calendar

September housing starts and pending home sales, Tuesday, October 20, 8:30 a.m. and 10:00 a.m. ET. Homebuilder sentiment fell to 29 on Monday, the lowest reading since 2012 according to reports, and the iShares homebuilder fund (ITB) fell -1.69%. ITB ranks 37. Netflix reports after the close at 4:00 p.m. ET the same day.
NextEra Energy results, Wednesday, October 21, 8:00 a.m. ET, before the open. Utilities were Monday’s weakest sector, and NextEra fell -2.04%. The Nvidia GTC Berlin keynote starts at 5:00 a.m. ET the same morning, and the chip funds are still down more than -7% over five sessions.
Meta and Tesla results, Wednesday, October 21, 4:00 p.m. ET, after the close. Lam Research, Texas Instruments, and IBM report at the same time. Tesla’s Optimus comments drove the humanoid fund’s +3.78% gain on Monday, and the report will show whether there are numbers behind them. Meta’s spending plans will test whether the AI build-out is still growing.

Vertex (VRTX) Stock: 96% CF Revenue and a $10B Deal

J. Equity. Research — Mon, 19 Oct 2026 22:48:54 GMT

Vertex Pharmaceuticals (NASDAQ: VRTX) grew second-quarter 2026 revenue +12% to $3.334 billion and raised its full-year revenue guidance from $12.95 billion to $13.1 billion up to $13.1 billion to $13.2 billion. Non-GAAP EPS rose only +4.6% to $4.73. On July 6 it agreed to buy Crinetics Pharmaceuticals, an endocrinology drugmaker, for an equity value of about $10.0 billion in cash, and the deal closed on September 1.
Vertex is a Boston biotech whose cystic fibrosis (CF) medicines produced 96.2% of second-quarter product revenue. The stock trades at $499.74 for a market value of $126.66 billion. On a weekly basis it peaked at $548.05 in the week of August 21 and now sits -8.8% below that level, while still +17.4% higher than a year ago.

Vertex Pharmaceuticals (VRTX) one-year share price chart

This piece follows seven years of January revenue guidance against actual revenue, built from 35 quarterly earnings releases, and the mark two acquisitions have left on non-GAAP EPS. Third-quarter results, the accounting for Crinetics, and updated guidance are not out yet; they are due in early November. EPS here is Vertex’s non-GAAP measure, which since 2022 has included acquired in-process R&D.

What Vertex’s Second-Quarter Deck Says About Crinetics

Page 11 of the August 3 results presentation is titled “Vertex to acquire Crinetics Pharmaceuticals for $10B (~$8.8B net of cash).” The price is $85 a share in cash, and the slide puts the combined peak sales opportunity of the acromegaly drug Palsonify and the Phase 3 congenital adrenal hyperplasia candidate atumelnant at more than $5 billion. It describes Palsonify as the first once-daily oral therapy for adults with acromegaly, launched in the US in October 2025 with strong early uptake, and notes that atumelnant has also shown potential in Cushing’s syndrome in Phase 2.

Q2 2026 results presentation page 11: Crinetics acquisition for 10 billion dollars

Company disclosure (July 6 deal presentation and second-quarter call): The deal accelerates revenue growth and improves the long-term earnings profile. It is “Expected to become accretive to non-GAAP operating income in 2029.” Funding comes from cash on hand and a $4.5 billion term loan. Given the closing date, the effect on 2026 revenue and costs is modest, and guidance will be updated at closing.
Crinetics’ own second-quarter release shows the scale. Revenue was $25.1 million, of which Palsonify contributed $24.0 million, up from $10.3 million in the first quarter. The net loss was $120.9 million, and cash stood at $1.2 billion at the end of June. Crinetics received 245 enrollment forms in the quarter, counted 385 prescribers in its first three launch quarters, and reported more than 70% of patients on reimbursed therapy. It spent $99.9 million on R&D and $57.6 million on SG&A, and it withdrew its guidance after the deal was announced.
Own calculation (Crinetics losses against Vertex income): Crinetics’ second-quarter net loss of $120.9 million equals 10.0% of Vertex’s non-GAAP net income of $1.207 billion and is almost exactly Vertex’s second-quarter net interest income of $120.6 million. The $8.8 billion net price is 64.7% of the $13.6 billion of cash and investments Vertex held at the end of June.
The second-quarter 10-Q describes the $4.5 billion term loan signed on July 30: $1.0 billion due after one year, $1.0 billion after two years, and $2.5 billion after three, priced at SOFR plus 0.875 to 1.625 points. Under the July 8-K, Crinetics would have owed a $350.5 million termination fee had it walked away for a better offer.

Alyftrek Switching and the Non-CF Revenue Goal

Page 13 says the newest CF drug, Alyftrek, passed a $1 billion first-half revenue milestone. The product table in the release adds up to $998.0 million, so the slide rounds up. The same page says most US Alyftrek revenue comes from patients switching from Trikafta, and that more than one in three eligible patients in the UK and Germany now take it.

Q2 2026 results presentation page 13: Alyftrek first-half revenue milestone and regional progress

The second-quarter table shows the weight of that switch. Alyftrek reached $573.6 million, 17.9% of CF revenue, while Trikafta fell -2.1% to $2.497 billion. CF revenue overall rose +10.6%. On the call, Vertex said first-half CF growth of 8% included a prior-year US price increase and currency, and that both would contribute less in the second half.
Page 14 calls Casgevy’s progress an acceleration “towards multi-$B potential,” and its second-quarter revenue of $76.4 million was +78% above the first quarter. Page 15 says Journavx is “On track to deliver >3x Rx growth and >3x revenue growth 2026 vs 2025,” with about 18,000 new prescribers in the quarter and about 260 million covered lives.

Q2 2026 results presentation page 15: Journavx launch metrics and 2026 target

Own calculation (what the non-CF goal requires): Three times 2025 Journavx revenue of $59.6 million is $178.8 million, which leaves $100.2 million needed in the second half after $78.6 million in the first. For the company’s $500 million non-CF goal, first-half Casgevy and Journavx revenue of $197.9 million leaves $302.1 million for the second half, a quarterly average of $151.1 million that is 19.9% above the second quarter’s $126.0 million. Management added that heavy use of a free-drug bridge program, needed while insurance coverage catches up with prescriptions, delays normal Journavx revenue recognition to the first half of 2027.
Page 18 raises revenue guidance to $13.1 billion to $13.2 billion, keeps non-CF revenue at $500 million or more, and says non-GAAP operating expenses will land at the high end of their range. A footnote says expense guidance includes about $100 million of acquired IPR&D, and Crinetics is not yet in any of it.

Q2 2026 results presentation page 18: raised 2026 revenue guidance

The Market Case for Vertex

The bullish case is that Alyftrek extends the CF franchise again while cash from it builds pain, blood disorder, kidney, and endocrine businesses. Povetacicept, the kidney drug that came with the 2024 Alpine acquisition, has a US decision date of November 30. The bearish case starts with 96% of revenue still tied to one disease, non-CF revenue at only $126 million a quarter, and acquisition and sales-force costs that slow earnings growth before new products pay off.
Outside view (sell-side research aggregate, October 2026): Of 56 analysts, 47 rate the stock Buy, 8 Hold, and 1 Sell, with a 12-month price target of $573. The 2026 non-GAAP EPS estimate fell from $19.03 ninety days earlier to $17.83.

From Trikafta to the Crinetics Deal

The October 2019 US approval of the triple-combination CF drug Trikafta changed the scale of the company. Revenue went from $4.163 billion in 2019 to $6.206 billion in 2020, up +49.1%, and grew between 8.9% and 22.1% a year through 2025. From a weekly close of $73.67 in December 2016, the stock rose 7.4 times to its August 2026 peak.

Ten years of Vertex shares with five markers

The push beyond CF began with the December 2023 approval of Casgevy, a gene-edited cell therapy. In April 2024 Vertex bought Alpine Immune Sciences for $65 a share, about $4.9 billion, and expensed $4.4 billion of acquired IPR&D in the second quarter. Alyftrek and Journavx were approved in December 2024 and January 2025. In the week Vertex announced the Crinetics deal, the stock fell -8.1%.

How Far Has Vertex Beaten Its January Revenue Guidance?

From 2020 through 2025, Vertex finished every year at or above the top of its January revenue guidance and raised the range two or three times a year. The margin over the top of the January range shrank from +17.1% in 2020 to 9.8% in 2021, 3.8% in 2022, 1.7% in 2023, and 2.5% in 2024. In 2025 actual revenue of $12.001 billion met the $12.0 billion top almost exactly.

Vertex January revenue guidance against actual revenue over seven years

In 2026, guidance went from $12.95 billion to $13.1 billion in January to $13.1 billion to $13.2 billion in August, lifting the midpoint 1.0%. The guidance basis was product revenue through 2024 and total revenue from 2025.
Subtracting first-half revenue of $6.321 billion, the full-year range implies second-half revenue of $6.779 billion to $6.879 billion. That is 8.2% to 9.8% above the second half of 2025, slower than first-half growth of 10.2%, consistent with management’s comment that price and currency tailwinds fade.

Cystic Fibrosis Revenue Moving From Trikafta to Alyftrek

Quarterly CF revenue rose from $2.691 billion in the first quarter of 2024 to $3.208 billion in the second quarter of 2026. Trikafta peaked at $2.721 billion in the fourth quarter of 2024, dropped to $2.355 billion in the first quarter of 2026, and recovered to $2.497 billion. Alyftrek climbed from $53.9 million in the first quarter of 2025 to $573.6 million, while the three older CF drugs fell from $193.7 million to $137.1 million over the past year.

Vertex quarterly cystic fibrosis revenue by product and non-CF revenue

Non-CF revenue started with $2 million from the first Casgevy infusions in the third quarter of 2024 and reached $126.0 million in the second quarter of 2026, or 3.8% of product revenue.

Why Non-GAAP EPS Grew Slower Than Revenue

Second-quarter non-GAAP net income rose 3.2% to $1.207 billion, and a lower diluted share count of 255.2 million, down from 258.9 million, lifted EPS growth to 4.6%. Non-GAAP SG&A rose +45% to $520 million, which management split roughly evenly between the pain and kidney sales forces, while non-GAAP R&D rose 1% to $889 million. GAAP EPS rose 8.0% to $4.31.
The non-GAAP gross margin of 85.6% was lower than in the first quarter because higher-cost Casgevy is a growing share and manufacturing investment is rising, and Vertex expects the full-year figure just under 86%. The non-GAAP operating margin slipped from 45% to 43%.
The top of the 2026 non-GAAP expense guidance, $5.75 billion, is 12.3% above 2025’s $5.12 billion, while the revenue guidance midpoint of $13.15 billion is 9.6% above 2025. Quarterly non-GAAP EPS growth ran 9.6% in the third quarter of 2025, 26.4% in the fourth, 10.1% in the first quarter of 2026, and 4.6% in the second.

How Acquired IPR&D Runs Through Vertex’s Non-GAAP EPS

Since the first quarter of 2022, Vertex has not excluded upfront and milestone payments for collaborations, asset acquisitions, and licenses from non-GAAP earnings. The Alpine charge therefore drove second-quarter 2024 non-GAAP EPS to -$12.83, and full-year 2024 non-GAAP EPS was $0.42, -97.2% below 2023’s $15.23. GAAP EPS for 2024 was -$2.08.
Crinetics will be accounted for in the third quarter. The 10-Q says only that the deal will be recorded in the period it closes, without saying whether it is a business combination or an asset acquisition. Under US GAAP, IPR&D bought in an asset acquisition with no alternative future use is expensed immediately, while in a business combination it is capitalized along with goodwill.
Analyst estimates show the split. The average third-quarter non-GAAP EPS estimate fell from $4.90 ninety days ago to $0.04, with a range of -$29.51 to $5.25.
Own calculation (what the low estimate assumes): Multiplying the lowest estimate of -$29.51 by 255.2 million diluted shares gives about $7.53 billion, which would mean expensing 85.6% of the $8.8 billion net deal price in a single quarter.

How Vertex Makes Money Beyond Cystic Fibrosis

Vertex’s CF drugs correct the function of the CFTR protein that causes the disease instead of treating symptoms. CF is an inherited disease in which thick mucus builds up in the lungs and digestive tract. Vertex says its medicines can treat about 95% of people with CF in core markets, from infants as young as one month, in more than 60 countries. The lineup is Trikafta (Kaftrio in Europe), once-daily Alyftrek, and the older Symdeko, Orkambi, and Kalydeco. Vertex says Alyftrek matches Trikafta on lung function and delivers greater CFTR function, and a Phase 3 study in children aged 2 to 5 brought 65% below the carrier-level sweat chloride threshold of 30 mmol/L.
In the second quarter, US revenue rose 11% to $2.06 billion and revenue outside the US rose 14% to $1.28 billion, so 61.8% came from the US. Currency added about 1.7 points to growth. Alyftrek is reimbursed in 25 countries, and the next-generation corrector VX-828 has proof-of-concept data due in the second half.
Three products sit outside CF. Casgevy, approved in 39 countries, edits a patient’s own stem cells outside the body with CRISPR/Cas9 to treat sickle cell disease and transfusion-dependent beta thalassemia; a July US label expansion to children aged 2 and older added about 5,500 eligible patients, and patient initiations topped 100 for a third straight quarter. Journavx, a non-opioid NaV1.8 pain blocker, had about 535,000 prescriptions in the second quarter after about 550,000 in all of 2025, split evenly between hospitals and retail, with about 300 sales reps.
Povetacicept, a dual BAFF and APRIL inhibitor for IgA nephropathy, targets about 330,000 US patients; Vertex has hired a kidney sales force, 90% of whom have nephrology experience. Crinetics adds two once-daily oral small molecules that Vertex says offer attractive margins. Vertex calls CF, blood disorders, pain, kidney, and endocrine its five disease-area pillars, and says Crinetics completed its 2023 goal of five launches in five years early.
Capital goes to deals and buybacks. Vertex repurchased 1.8 million shares for $799.5 million in the first half, has $2.6 billion left under its authorization, and pays no dividend.

How Vertex Compares With Four Large Biotech Peers

Over the trailing twelve months, revenue was $38.1 billion at Amgen, $30.5 billion at Gilead, $15.5 billion at Regeneron, $12.6 billion at Vertex, and $4.8 billion at Alnylam. Leaving aside Alnylam’s 95.1%, growth sits in a narrow band: Vertex 10.2%, Regeneron 9.3%, Amgen 9.1%, and Gilead 5.5%. Regeneron has more revenue than Vertex but a market value of $78.96 billion, 62.3% of Vertex’s.

Trailing twelve-month revenue and growth for five large biotech companies

Vertex carries the richest multiples. Its price to sales of 10.06 times compares with 6.46 for Alnylam, 6.36 for Gilead, 6.14 for Amgen, and 5.08 for Regeneron, and its forward P/E of 34.48 is 2.8 times Regeneron’s 12.34. Over one year, Amgen rose +48.9%, Gilead 33.6%, Regeneron 21.9%, Vertex 17.4%, and Alnylam fell -49.2%.

Price to sales and one-year share price change for five large biotech companies

Own calculation (growth-adjusted price to sales): Dividing price to sales by revenue growth gives 0.99 for Vertex, 1.16 for Gilead, 0.67 for Amgen, and 0.55 for Regeneron. Against peers growing at similar rates, Vertex is 1.5 to 1.8 times more expensive, a gap that CF durability and the acquired pipeline have to justify. Gilead’s trailing GAAP loss leaves it without a meaningful trailing P/E.

VRTX P/E on Non-GAAP EPS Over 70 Months

On trailing non-GAAP EPS of $19.03, Vertex trades at 26.26 times, at the 84.5th percentile of the 58 valid months in a 70-month window, against a median of 22.63 times. Price to sales of 10.13 times is above its 9.52 times median.

Vertex P/E on non-GAAP EPS and price-to-sales bands over 70 months

The twelve months from June 2024 to May 2025 are left blank because the Alpine charge pushed trailing EPS close to zero or below. The highest P/E was 28.61 times in August 2026 and the lowest 14.92 times in September 2021. On the 2026 consensus EPS of $17.83 the multiple is 28.03 times, and on 2027’s $20.39 it is 24.51 times.

Three Conditions That Move the Stock

The pace of non-CF revenue comes first. Delivering $302.1 million in the second half keeps the $500 million goal intact, and a November 30 approval for povetacicept would add kidney revenue from 2027. A longer free-drug bridge for Journavx or delayed Casgevy infusions would show up first as a miss on that goal.
Crinetics accounting and the earnings path come next. If much of the price is expensed as acquired IPR&D in the third quarter, full-year non-GAAP EPS dips for a year as it did in 2024; if it is a business combination, the cost shows up as amortization that Vertex excludes from non-GAAP results. Either way, about $120 million of quarterly Crinetics losses and lower interest income weigh on earnings until 2029.
The quality of CF growth is third. Guidance implies second-half growth of 8.2% to 9.8%, and if Alyftrek switching, younger patients, and rare mutations outrun fading price and currency effects, 2026 becomes the seventh straight year above the top of the January range.

What the Third-Quarter Report Should Show

The first items to check in the early November report are how Crinetics is accounted for, the size of any acquired IPR&D charge, and revised 2026 revenue and expense guidance that includes Crinetics. Next come progress toward the $302.1 million of second-half non-CF revenue, the timing of normal Journavx revenue recognition, and the November 30 povetacicept decision.
One question this piece cannot settle is the gap between Vertex’s peak sales claim and Palsonify’s starting point of $24 million a quarter. Can Palsonify and atumelnant grow fast enough by 2029 to cover roughly $480 million of annual Crinetics losses and the interest income that the purchase price used to earn?

Medtronic (MDT) Stock Analysis: Why EPS Stayed Flat Despite 10-Year-High Revenue Growth: another healthcare company whose adjusted EPS lagged revenue, useful for comparing how launch spending and costs absorb sales growth.
CrowdStrike (CRWD) Stock Analysis: GAAP vs Non-GAAP Results: a case study in how a company’s non-GAAP definition shapes reported EPS, a useful frame for Vertex’s choice to keep acquired IPR&D inside non-GAAP earnings.

T-Mobile (TMUS) Stock: Phone Metrics It Stopped Reporting

J. Equity. Research — Sun, 18 Oct 2026 22:03:17 GMT

T-Mobile US, Inc. (NASDAQ: TMUS) added 277,000 postpaid accounts in the second quarter of 2026, -12.9% from a year earlier, while service revenue grew +8.9% to $18.98 billion and Core Adjusted EBITDA grew +11.7% to $9.54 billion. Starting with the first quarter of 2026, the company stopped reporting postpaid phone net additions and phone churn, and the last phone churn figure it published, for the fourth quarter of 2025, was 1.02%, up from 0.92% a year before. Of the 3.2 million postpaid accounts T-Mobile added over the past year, 65.1% came through acquisitions. The shares closed at $159.10, -39.0% below the February 2025 weekly closing high of $260.99.
T-Mobile is one of the three national wireless carriers in the United States, and it reached its current size by merging with Sprint in 2020. Nothing in the company’s filings explains why telecom stocks fell together in the week that included October 9, so this piece stays with what the investor factbooks, 10-Qs, and 10-Ks report.

T-Mobile (TMUS) one-year share price chart

T-Mobile’s Raised 2027 Targets

On February 11, alongside fourth-quarter results, T-Mobile held a Capital Markets Day update and raised the multi-year plan it first laid out in September 2024. The release headline said the company “Raises the Bar.”
Company disclosure (February 11, 2026 Capital Markets Day update release): Service revenues are expected to be approximately $77.0 billion in 2026 and $80.5 billion to $81.5 billion in 2027. Core Adjusted EBITDA is expected at $37.0 billion to $37.5 billion in 2026 and $40.0 billion to $41.0 billion in 2027, and Adjusted Free Cash Flow at $18.0 billion to $18.7 billion in 2026 and $19.5 billion to $20.5 billion in 2027. The company targets 18 million to 19 million broadband customers by 2030, made up of 15 million 5G broadband and 3 million to 4 million fiber customers.
The same release reported a halftime scorecard. From 2023 to 2025, the compound annual growth rate was 6% for service revenues, 8% for Core Adjusted EBITDA, and 15% for Adjusted Free Cash Flow. The company also expects digitalization and AI to add nearly $3 billion to Core Adjusted EBITDA by the end of 2027, relative to 2025.
Reaching the 2027 midpoints asks for slightly faster growth than the scorecard. Service revenues have to grow about 6.6% a year from $71.31 billion in 2025 to $81.0 billion, and Core Adjusted EBITDA about 9.3% a year from $33.92 billion to $40.5 billion.
Page 13 of the second-quarter investor factbook, released July 23, updated two lines of the 2026 outlook. Net cash from operating activities moved to $28.4 billion to $28.8 billion and Adjusted Free Cash Flow to $18.4 billion to $18.8 billion, both up $200 million at the midpoint. Postpaid net account additions of 950,000 to 1.05 million, Core Adjusted EBITDA of $37.1 billion to $37.5 billion, capital expenditures of about $10.0 billion, and an effective tax rate of 25% to 26% were unchanged. CFO Peter Osvaldik attributed the cash flow increase to lower cash income taxes.

Investor factbook page 13: revised 2026 outlook

The account guidance has its own history. The February release called for 900,000 to 1.0 million net account additions. The company raised that to 950,000 to 1.05 million with first-quarter results and left it there in July.
Own calculation (factbook page 13 and the second-quarter call): Subtracting first-half additions of 494,000 and the third-quarter guide of about 250,000 from the full-year range leaves 206,000 to 306,000 for the fourth quarter. The fourth quarter of 2025 delivered 261,000.
The midpoint of 1.0 million is -15.3% below the 1.18 million accounts added in 2025. Service revenue guidance of about $77.0 billion is +8.0% above 2025, and the 10-Q lists higher average postpaid accounts “including following the acquisitions of UScellular and Metronet” as the first reason postpaid revenue grew.

What the Investor Factbook Shows on Accounts and Returns

Page 4 of the second-quarter factbook puts postpaid accounts and quarterly net additions on one chart. Accounts rose from 31.50 million to 34.70 million over the year, while the quarterly bars ranged from 217,000 to 396,000.

Investor factbook page 4: postpaid accounts, net additions, and acquisition footnotes

The footnotes under the chart are the key to reading it. In the third quarter of 2025, 1,448,000 accounts arrived with UScellular and 633,000 with Metronet and other acquisitions. Base adjustments removed 18,000 accounts in the first quarter of 2026 and 16,000 in the second. The company notes that these adjustments had no impact on net additions.
Page 5 shows postpaid account churn rising from 0.92% in the second quarter of 2025 to 1.04% in the fourth quarter and the first quarter of 2026, before easing to 0.99%. The company attributes the year-over-year increase to more broadband-only accounts after the Metronet acquisition, and the sequential decline to seasonally lower switching.

Investor factbook page 5: postpaid account churn

Page 12 covers capital structure and stockholder returns. Since the program began in the third quarter of 2022, T-Mobile has returned $54.6 billion through June 30, 2026: $44.2 billion for 250.8 million repurchased shares and $10.4 billion in dividends. The 2026 authorization started at $14.6 billion in December and was raised to $18.2 billion on April 23. The last line on the page notes another $392 million of repurchases in the third quarter through July 17.

Investor factbook page 12: net debt and stockholder returns

The Q2 2026 10-Q cash flow statement fills in the half. Buybacks took $7.146 billion and dividends $2.221 billion. The company issued $6.393 billion of long-term debt and repaid $7.771 billion, and cash and cash equivalents fell from $5.598 billion to $2.825 billion.
The same page shows net debt of $84.1 billion, 8.0 times trailing twelve-month net income against 6.1 times a year earlier. Against Core Adjusted EBITDA the ratio is 2.3 times, inside the company’s 2.5 times leverage target. Page 10 reports Core Adjusted EBITDA at 50.2% of service revenues, up from 49.0%, so margins are widening while account additions shrink.

The Market Case for T-Mobile

The market has paid a growth multiple for a telecom stock on a simple argument. T-Mobile wins network quality awards, takes customers from rivals, builds new revenue in 5G home internet and fiber, and returns the cash to shareholders.
Part of that argument holds up in the filings. Postpaid service revenue grew +13% in the second quarter, Core Adjusted EBITDA +11.7%, and the company reported a record net promoter score of 46. Postpaid ARPA (average revenue per account) was $152.91, +2.0% from a year earlier.
The other part is weakening. Account additions are falling, two thirds of the past year’s account growth came through acquisitions, and the most familiar way to count customers is no longer published.

From the Sprint Merger to UScellular

T-Mobile US started as the 2013 combination of T-Mobile USA, the American unit of Deutsche Telekom, with MetroPCS. Deutsche Telekom remains the largest stockholder and nominates directors under a stockholders’ agreement.

Ten years of T-Mobile shares with four markers

The first marker is the April 1, 2020 close of the Sprint merger, which turned the third and fourth carriers into one and created today’s three-player market. Merger costs and impairments weighed on net income, and the P/E reached 117 times at the end of 2022.
The second marker is the February 2025 high. The third is the August 1, 2025 close of the UScellular wireless acquisition, for which T-Mobile paid $2.8 billion in cash and took over $1.7 billion of UScellular notes. A week earlier, on July 24, it invested $4.6 billion in a joint venture to buy fiber provider Metronet.
The fourth marker is April 2026, the first results without phone metrics. Leadership changed along the way. Srini Gopalan succeeded Mike Sievert as CEO on November 1, 2025, and on September 3, 2026 the company said CFO Peter Osvaldik will retire in February 2027, to be succeeded by Jessica Uhl, a former Shell CFO.
From a February 2016 low of $33.05, the shares rose 7.9 times to the high. They returned -8.5% in 2025 and -19.1% in 2026 to date.

Why Did T-Mobile Stop Reporting Phone Customers?

The fourth-quarter 2025 investor factbook ran 30 pages, and the second-quarter 2026 factbook runs 26. The missing pages held postpaid phone net additions, phone churn, phone ARPU, and the counts of 5G broadband and fiber customers.
Filing footnote (Q2 2026 10-Q, performance measures): “Beginning with the three months ended March 31, 2026, we shifted away from reporting customer performance measures to better align with the Company’s long-held priority on growing high-value accounts, which management believes is the best reflection of value creation versus customers.”
The last published numbers show when that choice came. Postpaid phone net additions were 3.294 million in 2025, more than 3.077 million in 2024, with quarterly figures of 495,000, 830,000, 1,007,000, and 962,000. Phone churn, though, climbed from 0.92% in the fourth quarter of 2024 to 1.02% in the fourth quarter of 2025, and from 0.86% to 0.93% for the full year. The 10-K blamed higher industry switching and the temporary impact of rate plan optimizations.

T-Mobile postpaid net account additions with phone and account churn

Accounts and phones are different units. At the end of 2025 T-Mobile had 34.24 million postpaid accounts and 85.59 million postpaid phone customers, about 2.5 phones per account. In 2025 it added 1.18 million accounts and 3.29 million phones.
T-Mobile’s own fourth-quarter factbook noted that AT&T does not disclose postpaid net account additions and that Comcast and Charter do not disclose postpaid phone net additions. With T-Mobile now dropping phone additions as well, there is one less way to compare the three national carriers on the same basis.

How Much of Account Growth Came From Acquisitions

Postpaid accounts rose from 31.50 million at the end of June 2025 to 34.70 million a year later, an increase of 3.198 million, or +10.2%.
Own calculation (factbook account footnotes): Of the 3.198 million accounts added over the year, 2.081 million came through acquisitions, or 65.1%. Net additions over the four quarters totaled 1.151 million, 3.65% of the account base a year earlier.
Quarterly additions are shrinking. The second quarter’s 277,000 compares with 318,000 a year earlier, and the third-quarter guide of about 250,000 compares with 396,000, a -36.9% drop. The 10-Q attributes the second-quarter decline to higher deactivations from a larger account base after UScellular and more broadband-only accounts.
Revenue follows the same pattern. Third-quarter service revenue guidance of about $19.3 billion is +5.8% year over year, below the second quarter’s +8.9%. UScellular closed on August 1, 2025, so the acquisition starts dropping out of the year-over-year comparison in the third quarter.

In the first half of 2026 T-Mobile bought back 34.75 million shares for $7.057 billion. The first quarter alone took $4.901 billion, consistent with the February plan to roughly double first-quarter repurchases to as much as $5.0 billion.

T-Mobile average buyback price by quarter with free cash flow and stockholder returns

Own calculation (factbook stockholder return table): The first-half average purchase price of $203.07 is above the $159.10 share price. Multiplying the gap by first-half shares gives $1.528 billion, and adding the 2025 purchases of 42.36 million shares at an average of $232.96 brings the total to $4.657 billion.
Across the program since the third quarter of 2022, T-Mobile has bought 250.78 million shares at an average of $176.42, and the stock now sits -9.8% below that. The smaller share count lifts earnings per share. Second-quarter net income was $3.239 billion, roughly flat, while GAAP diluted EPS rose from $2.84 to $2.99, +5.3%.
Returns are also taking a larger share of cash. Stockholder returns were 84.6% of Adjusted Free Cash Flow in 2024, 77.7% in 2025, and 98.7% in the first half of 2026. The company says more than $50 billion remains in its capital envelope through 2027, including up to about $30 billion for stockholder returns, and that it is keeping room for spectrum auctions in 2027 and 2028, including C-Band 2.0 and 2.7 GHz.
On September 24 the quarterly dividend went from $1.02 to $1.17. The annual $4.68 is a 2.94% yield at the current price.

Rate Plan Modernization and Account Churn

The company traced the low third-quarter account guide to rate plan modernization. On the second-quarter call, Osvaldik said the third-quarter modernization of legacy plans would temporarily raise account churn, and that the impact on phone churn would be smaller because it is concentrated in accounts with fewer lines.
Moving customers off older, cheaper plans raises ARPA. The company guides 2026 postpaid ARPA growth to 2.5% to 3.0%, and first-half ARPA was $152.42, +2.9% above $148.06.
The 10-Q lists three ARPA drivers. Fee revenue from new plans that bill taxes and fees separately and more lines per account from 5G broadband and business customers push it up, while fiber and UScellular accounts with fewer lines and bundled promotions push it down. The acquired accounts dilute ARPA, so as the acquisitions drop out of comparisons, the effect of the plan changes becomes easier to see.
Pricing has a cost. Prepaid revenue fell -6% in the second quarter, which the 10-Q attributes to promotional dilution, and wholesale revenue fell -8% on lower MVNO revenue from DISH and TracFone.
T-Mobile calls its approach “more-for-more.” On the second-quarter call, Gopalan said more than 60% of new accounts chose premium plans and that port-in ARPA ran about 20% above port-out ARPA.

How T-Mobile Makes Money From Postpaid Accounts

Second-quarter revenue of $22.79 billion included $18.98 billion of service revenue, and postpaid accounted for $15.85 billion, or 83.5%, of that. Prepaid contributed $2.47 billion and wholesale and other $657 million, while equipment revenue of $3.52 billion is booked separately.
Depreciation weighs on the cost side. Network costs excluding depreciation and special items were $2.87 billion, 15.1% of service revenue, while depreciation and amortization rose to $3.43 billion from $3.15 billion. Accelerated depreciation tied to retiring the UScellular network is why Core Adjusted EBITDA rose +11.7% while net income was flat.
A postpaid account bundles phones with 5G home internet gateways, fiber lines, tablets, smartwatches, and connected devices. Each added line raises ARPA, which is why the company focuses on families and small business accounts.
At the end of 2025, the last period with customer counts, T-Mobile had 85.59 million postpaid phone customers, 30.85 million other postpaid devices, and 25.94 million prepaid customers, 142.39 million in total.
Broadband comes in two forms. 5G home internet, which uses spare capacity on the wireless network, reached 8.45 million customers at the end of 2025, and the Metronet and Lumos deals brought fiber customers to 997,000. The 2030 goal combines the two at 18 million to 19 million.
The network is the company’s main selling point. The February release said T-Mobile placed first in network quality in five of six regions of the J.D. Power study for the first time, and that the share of switchers who view its network as the best rose from about one in eight in 2020 to more than one in four. It sizes the opportunity among network-focused households not yet with T-Mobile at more than 20 million.
The brands are T-Mobile, Metro by T-Mobile in prepaid, and Mint Mobile, and T-Mobile for Business serves enterprise and government customers. On July 7 the company named Chris Sambar Chief Enterprise Officer and expects double-digit annual revenue growth for the business segment through 2027. Newer lines include the T-Ads advertising business and financial services, including a T-Mobile Visa card issued with Capital One.

How T-Mobile Compares With Three Telecom Peers

From the same market data source, trailing twelve-month revenue is $92.19 billion at T-Mobile, $138.90 billion at Verizon, $127.24 billion at AT&T, and $124.90 billion at Comcast. T-Mobile’s +9.7% growth is well above Verizon at +1.4%, AT&T at +2.6%, and Comcast at +0.6%.

Trailing twelve-month revenue and growth for four US telecom companies

P/E is 16.68x for T-Mobile, 11.67x for Verizon, 7.73x for AT&T, and 7.09x for Comcast. Dividend yields run the other way: T-Mobile 2.94%, Verizon 6.32%, Comcast 6.03%, and AT&T 4.74%.
Dividing P/E by trailing revenue growth gives 1.7 for T-Mobile, 3.0 for AT&T, 8.3 for Verizon, and 11.8 for Comcast. T-Mobile’s +9.7% includes the 2025 acquisitions, though. Using the third-quarter service revenue guide of +5.8% instead raises its figure to 2.9, still below Verizon and Comcast.

P/E and dividend yield for four US telecom companies

One-year returns split the group. On month-end closes, T-Mobile is down -22.7%, Comcast -11.5%, and AT&T -0.8%, while Verizon is up +20.2%. The slowest grower gained the most, and the fastest grower fell the most.

TMUS P/E and P/S Bands Over 41 Months

A P/E of 16.31x is the lowest of the 41 months since June 2023. The median over that window is 21.96x, and the high was 26.98x in February 2025.

T-Mobile P/E and price-to-sales bands over 41 months

The band starts in June 2023 because Sprint merger costs depressed earnings in 2022 and pushed P/E to 117x, which would turn the band into a picture of merger accounting. Price-to-sales of 1.87x is also the lowest of the 41 months, against a median of 2.54x.
Own calculation (cover page share count): At $159.10 and 1.0727 billion shares outstanding on the July 17 cover page, market capitalization is $170.66 billion. Divided by trailing twelve-month net income of $10.56 billion, that is a P/E of 16.16x.
The band’s 16.31x uses quarterly diluted weighted shares and runs slightly higher, while the market data figure of 16.68x divides by trailing EPS of $9.55. On every definition the multiple is at the bottom of its 41-month range.

Three Conditions That Move the Stock

Account additions come first. If the third quarter lands near 250,000 and the fourth quarter fills in 206,000 to 306,000, the full year stays inside guidance and the company’s description of the churn spike as temporary holds up. If account churn stays above 1.04%, the price increases are costing customers.
Cash and returns are second. Subtracting first-half Adjusted Free Cash Flow of $9.396 billion from the guide leaves $9.0 billion to $9.4 billion for the second half, and $8.92 billion remains under the $18.2 billion 2026 authorization. Using all of it would return nearly all second-half free cash flow, leaving the 2027 and 2028 spectrum auctions to be funded with debt.
Competition is third. Over the past year Verizon’s stock rose +20.2% while T-Mobile’s fell -22.7%. The 10-Q cites higher industry switching among the reasons first-half additions declined. If rival promotions continue, holding both account growth and ARPA gets harder. If both rise together, a multiple at a 41-month low has room to recover.

What the Third-Quarter Report Should Show

T-Mobile reports third-quarter results on October 28. The first numbers to check are whether account additions reached about 250,000 and how far account churn rose from 0.99%. Next come third-quarter buybacks, cash that fell to $2.825 billion at the end of June, and net debt of $84.1 billion.
One question this piece cannot settle is how many phone customers T-Mobile actually added in 2026. Account additions cannot show whether existing accounts gained or lost lines, or whether churn came from phones or broadband-only accounts. If the third-quarter 10-Q again leaves out phone metrics, the only check will be the phone additions that rivals still publish.

ASML Stock Analysis: The Bookings Line That Went Missing: another company that stopped publishing a closely watched metric, useful for comparing how investors read the numbers that remain after a disclosure change.
American Express (AXP) Stock Analysis: Credit Metrics Reset: a case where the yardstick behind key metrics changed, a useful frame for linking T-Mobile’s customer series to its new account series.

KLA (KLAC) Stock: Net Income Up 19% and Cash Flow Flat

J. Equity. Research — Sun, 18 Oct 2026 03:57:01 GMT

KLA Corporation (NASDAQ: KLAC) grew fiscal 2026 revenue +11.7% to $13.58 billion and net income +18.9% to $4.83 billion, yet free cash flow rose only +0.5% to $3.77 billion. Growth in inventory and receivables explains 102.6% of the gap between earnings and cash. Purchase commitments to suppliers reached $5.97 billion at June 30, 2.5 times the year before, which means KLA has already paid for, or promised to pay for, a level of demand its customers still have to deliver. The shares are down -45.1% from the June 30 close of $301.71 to $165.74.
KLA makes the tools chipmakers use to find defects on wafers and masks and to measure the patterns printed on them, a field known as process control, where it is the largest supplier. Its fiscal year ends in June, so fiscal 2026 runs from July 2025 to June 2026. Nothing in the company’s filings explains why semiconductor equipment stocks spiked and then fell together after June, so this piece stays with what KLA reported and what its own slides claim.

KLA (KLAC) one-year share price chart

KLA’s 2030 Target Model

Page 12 of the June-quarter earnings presentation, released July 28, sets two target models side by side: the 2026 model the company published earlier and the 2030 model introduced at its March 12 investor day.

June-quarter earnings presentation page 12: 2026 and 2030 target models

Company disclosure (June-quarter 2026 earnings presentation, page 12): The 2030 target model calls for revenue of $26 billion plus or minus $2.5 billion, non-GAAP gross margin of about 63.5%, operating margin of 45% to 47%, and diluted EPS of $8.40 plus or minus $0.80, with more than 90% of free cash flow returned to shareholders. It assumes the semiconductor industry grows about 11% a year from 2025 to 2030, wafer equipment reaches $215 billion plus or minus $20 billion, and KLA’s share of wafer equipment rises by more than 150 basis points.
The 2026 model is already behind the company. It called for revenue of $14 billion plus or minus $500 million, and the July shareholder letter says revenue in the second half of calendar 2026 should be about 20% higher than in the first half.
Own calculation (10-Q and 10-K quarterly revenue): First-half calendar 2026 revenue was $7.073 billion. Adding 20% for the second half gives about $15.56 billion for the year, $1.06 billion above the top of the 2026 range.
The 2030 model is a bigger ask. Calendar 2025 revenue was $12.745 billion, and reaching $26 billion by 2030 takes a compound annual growth rate of 15.3%, near the middle of the 13% to 17% long-term range printed on the same slide.
The margin path is on the slide too. R&D falls from about 13% of revenue in the 2026 model to about 11% in 2030, and SG&A from about 8% to about 7%. Those two lines carry most of the move in operating margin from 41% to 43% up to 45% to 47%. The framework also expects incremental operating margin of 40% to 50% and EPS growth of about 1.3 times revenue growth.
The June quarter sits between the two models. Non-GAAP operating margin of 43.7% already clears the top of the 2026 range and is 1.3 points short of the 2030 floor. Non-GAAP gross margin of 62.4% is still a little below the 2026 model’s 63%.
Every assumption depends on customer spending. Wafer equipment has to outgrow the chip industry by about a point a year, process control has to outgrow wafer equipment, and KLA has to gain share inside it. The company splits the 2030 equipment market at roughly 60% foundry and logic and 40% memory.
The last line on the slide is capital allocation. The 2026 model targeted returning more than 85% of free cash flow, and the 2030 model raises that to more than 90%.

The 90% Free Cash Flow Return Pledge

The bottom of page 8 states the commitment in one line: over the long term, more than 90% of free cash flow goes back to shareholders through dividends and buybacks.

June-quarter earnings presentation page 8: free cash flow and the 90% return pledge

The bars on the same page show free cash flow rising every calendar year from $1.8 billion in 2020 to $4.4 billion in 2025. The last bar breaks the pattern. Trailing twelve-month free cash flow through June was $3.8 billion, and free cash flow margin fell from 34% in 2025 to 28%.
The shareholder letter names the cause on page 5. KLA says it has made meaningful investments in working capital and capital expenditures to support the current growth environment, and that given the expected scale of wafer equipment investment over the next several years, those investments will continue.
The fiscal 2026 10-K cash flow statement puts numbers on the year. Buybacks took $2.290 billion and dividends $1.058 billion, a total of $3.348 billion, or 88.9% of free cash flow. That is 1.1 points short of the 90% target.

June-quarter earnings presentation page 9: five years of buybacks and 17 years of dividend increases

Page 9 lists five years of repurchases: $1.403 billion in 2021, $4.483 billion in 2022 including a $3 billion accelerated repurchase, $1.760 billion in 2023, $2.059 billion in 2024, and $2.025 billion in 2025. The average price paid since 2021 is about $47 per share on a split-adjusted basis, and the stock at $165.74 is 3.5 times that level. A new $7.0 billion authorization approved on March 12 left about $9.7 billion available at June 30.
Own calculation (10-K diluted share counts): Weighted diluted shares fell from 1.554 billion in fiscal 2021 to 1.320 billion in fiscal 2026, -15.1% over five years. Net income grew 2.3 times over the same period and EPS 2.7 times.
The dividend went up +21% in March, the 17th consecutive annual increase. The split-adjusted quarterly dividend of $0.23 annualizes to $0.92, a yield of 0.56% at the current price.
Page 7 shows the balance sheet behind the pledge. At June 30, cash and marketable securities totaled $4.902 billion against debt of $5.887 billion. The $5.95 billion of bonds carry a weighted average rate of 4.67% and a weighted average maturity of 18.1 years, rated A2 by Moody’s and A- by S&P and Fitch. Net debt of $985 million equals 26% of a year’s free cash flow.

The Market Case for Process Control

The market’s view of KLA fits in one sentence: the more complex AI chips become, the more steps need inspection, and KLA sells more of that inspection than anyone else.
Part of that case shows up in the filings. In the June quarter, patterning revenue, which combines metrology and mask inspection, grew +61%, PCB and component inspection +96%, and services +17%. Taiwan revenue doubled in two years, and Korea grew +26.2% in fiscal 2026 on high-bandwidth memory investment.
The other part has not shown up yet. The inventory, receivables, and purchase commitments KLA built ahead of that growth have not turned back into cash, and the 10-K says the company cannot assure that customers’ elevated investment will continue.
The investor day assumptions rest on the same logic: rising inspection intensity and share gains at the leading edge, with advanced packaging adding growth. All three sit in the business assumptions box on page 12.

From KLA-Tencor to the 10-for-1 Split

KLA began as KLA-Tencor, formed in April 1997 when KLA Instruments and Tencor Instruments merged. The two companies had started operating in 1975 and 1976. The annual report filed in August 2019 is the first to carry the name KLA Corporation (formerly KLA-Tencor).

Ten years of KLA shares with four markers

The first marker is the February 20, 2019 close of the Orbotech acquisition, which brought in the specialty semiconductor process and PCB and component inspection businesses that now make up about 7% of revenue. The second is September 2022, when the P/E fell to 12.69x.
In between, the cycle turned once. Fiscal 2024 revenue fell -6.5% to $9.812 billion and net income -18.5%. That was the only down year for revenue in nine, and revenue grew 3.9 times from $3.48 billion in fiscal 2017 to $13.58 billion in fiscal 2026.
The third marker is June 2026. KLA announced a 10-for-1 stock split on May 7, effective after the close on June 11. The weekly close went from $192 to $254 in the split week, and the June 30 close was $301.71. The fourth is the slide that followed, including a -15.0% monthly decline in October alone.
From the first week of the ten-year window at $5.45, the shares have risen about 30 times. They gained +100.1% in 2025 and are still up +36.4% for 2026.

Why Did Free Cash Flow Lag Net Income?

Eight years of June fiscal-year cash flow statements side by side give the answer.

KLA net income and free cash flow with free cash flow as a share of net income

Free cash flow as a share of net income was 109.8% in fiscal 2024, 92.2% in fiscal 2025, and 78.0% in fiscal 2026, the lowest of the eight years.
Own calculation (10-K cash flow statements): The $1.064 billion gap between fiscal 2026 net income and free cash flow is 102.6% explained by the $466 million increase in inventory and the $625 million increase in receivables, which together total $1.091 billion.
A year earlier inventory rose $155 million and receivables $431 million. This time inventory built three times as fast and receivables 1.5 times as fast. At June 30 inventory stood at $3.649 billion and receivables at $2.889 billion.
The ratio has moved the other way before. In fiscal 2024, when revenue fell -6.5%, the inventory build shrank from $749 million to $164 million and free cash flow exceeded net income. In fiscal 2019, when receivables rose $354 million, the ratio was 86.9%. It has tracked how fast inventory and receivables pile up, and fiscal 2026 is the year both sped up at once.
Splitting the year by quarter puts the slowdown in the last two. Subtracting cumulative 10-Q figures, free cash flow was $622 million in the March 2026 quarter against $990 million a year earlier, and $817 million in the June quarter against $1.065 billion. The two quarters together were -29.9%.
The June quarter alone shows the gap most clearly. Non-GAAP net income was $1.39 billion and free cash flow $817 million, or 59% of it, while the company returned $876 million to shareholders in the same quarter, more than it generated.

Purchase Commitments 2.5 Times Higher

A third number sits ahead of inventory and receivables. Each year the 10-K liquidity section reports what KLA has committed to buy from suppliers as of June 30.

KLA purchase commitments at June 30 with quarter-end inventory and receivables

Those commitments were $2.51 billion in 2023, $2.17 billion in 2024, and $2.42 billion in 2025. At June 30, 2026 they were $5.97 billion, 2.5 times the prior year, and the company says most will be paid within 12 months.
Filing footnote (fiscal 2026 10-K, management’s discussion): KLA increased purchase commitments to secure critical components, which may affect the timing and amount of costs and working capital needs. Working capital was $8.08 billion at June 30, up $1.46 billion from a year earlier.
The company also gives its reason. In a supply chain with long lead times, it is adding capacity as the expected second-half revenue growth materializes. September-quarter revenue guidance of $4.0 billion is 9% above the June quarter.
The same 10-K’s risk factors carry the opposite sentence. Heavy investment in AI semiconductors has lifted customers’ capital spending, but there is no assurance it will continue, and inventory and capacity bought ahead of demand may go unused or be delayed. The $5.97 billion is the amount KLA has committed in advance to that demand continuing.
Customer prepayments have not grown at the same pace. Current contract liabilities rose from $1.424 billion at September 30, 2025 to $1.537 billion at June 30, 2026, an increase of $113 million over nine months, small next to the $3.55 billion rise in purchase commitments over a year.

How KLA Makes Money From Inspection and Metrology

A leading-edge chip plant costs well over $10 billion, and the faster a fab raises yield, the sooner it earns that back. KLA sells the tools that manage yield. Its machines do not print circuits; they check whether the printing worked.
Fiscal 2026 revenue by product was $6.631 billion from wafer inspection (49%), $2.707 billion from patterning (20%), $3.126 billion from services (23%), $503 million from specialty semiconductor process, and $460 million from PCB and component inspection.
By reporting segment the picture is simpler. Of June-quarter revenue of $3.658 billion, semiconductor process control contributed $3.257 billion, or 89%, specialty semiconductor process 7%, and PCB and component inspection 4%.
Wafer inspection finds defects on wafer surfaces between process steps. Patterning measures whether printed features match the design in size and placement. In the June quarter wafer inspection grew +1% and patterning +61%, so growth came from measuring rather than defect hunting.
The earnings slides feature two flagship tools. The KLA 3935, part of the fifth-generation 39xx series, is a broadband plasma patterned wafer defect inspection system for leading-edge logic and foundry fabs, used for EUV print checks and line monitoring. The Kronos system finds defects in advanced wafer-level packaging.
Services maintain and upgrade the installed base. The company says this is the 17th straight year of services growth, and the 2030 model assumes services grow 13% to 15% a year.
Customers are concentrated. TSMC accounted for about 19% of fiscal 2026 revenue, up from 13% in fiscal 2024. In the June quarter 79% of semiconductor process control system revenue came from foundry and logic and 21% from memory, and the company expects memory to reach about 27% in the September quarter, about 90% of it DRAM.
The 10-K names Applied Materials, ASML, Hitachi High-Tech, Lasertec, and Onto Innovation as competitors. KLA spent $1.532 billion on R&D in fiscal 2026, 11.3% of revenue, and 27% of its roughly 17,000 employees work in R&D. GAAP gross margin for the year was 61.3%.

Revenue Shift From China to Taiwan and Korea

Two years changed the regional mix, and the 10-K regional table for fiscal 2024 and fiscal 2026 shows how far.

June-quarter earnings presentation page 6: revenue by product and region

China revenue barely moved, from $4.197 billion to $4.048 billion, while its share fell from 42.8% to 29.8%. Taiwan doubled from $1.738 billion to $3.644 billion, Korea went from $907 million to $1.834 billion, and North America from $1.071 billion to $1.757 billion.
The June quarter goes a step further. Page 6 of the earnings presentation shows Taiwan at 31%, China 26%, North America 18%, Korea 10%, Japan 6%, and Europe 5%. China is still the largest region for the full year, but Taiwan led in the quarter.
Company disclosure (fiscal 2026 10-K): China revenue was roughly flat as continued investment in mature-node capacity by Chinese chipmakers was largely offset by export controls affecting certain advanced technology sales. Taiwan grew +13.7% on AI and high-performance computing demand, and Korea +26.2% on high-bandwidth memory and advanced DRAM investment.
Of the $3.767 billion of revenue added over two years, China contributed -$148 million and Taiwan $1.906 billion. KLA’s growth is coming from outside China, mostly from the region where TSMC operates.

How KLA Compares With Three Equipment Peers

Trailing twelve-month revenue is $13.58 billion at KLA, $30.84 billion at Applied Materials, $23.23 billion at Lam Research, and $44.98 billion at ASML. Lam at +26.0% and ASML at +22.5% are growing faster than KLA at +11.7%, and Applied at +7.8% is slower. KLA is the smallest of the four, at 30% of ASML’s revenue and 44% of Applied’s.

Trailing twelve-month revenue and growth for four chip equipment makers

From the same market data source, P/E is 45.28x for KLA, 35.30x for Applied, 45.82x for Lam, and 41.56x for ASML. KLA’s price-to-sales ratio of 15.93x is the highest of the four, although its growth rate ranks third.
Dividing P/E by trailing revenue growth gives 3.9 for KLA, 4.5 for Applied, 1.8 for Lam, and 1.8 for ASML. Per point of growth, only Applied costs more than KLA.

P/E and price-to-sales for four chip equipment makers

The stocks moved as a group. On month-end closes since June 30, KLA is down -45.0%, Applied -43.3%, Lam -39.0%, and ASML -17.4%. Over one year KLA is up +37.9%, Applied +76.6%, Lam +68.4%, and ASML +55.6%, so KLA gained the least.

KLAC P/E and P/S Bands Over 61 Months

A P/E of 45.28x sits at the 90th percentile of the 61-month window. The median is 28.56x, the high was 70.06x in June 2026, and the low was 12.69x in September 2022.

KLA P/E and price-to-sales bands over 61 months

Price-to-sales of 16.11x is close to twice the 61-month median of 8.37x. Even after the -45.1% drop from June 30, both multiples sit in the upper part of the five-year range. Price-to-book comes out around 34x on equity of only $6.35 billion, so it is left out of the band.
At $165.74 and 1.3065 billion shares outstanding on the August 3 cover page, market capitalization is $216.55 billion. Divided by fiscal 2026 net income of $4.831 billion, the P/E is 44.83x. The band’s 45.28x uses quarterly diluted weighted shares and runs slightly higher, and another aggregator shows 46.45x using twelve months through March.
Against the 2030 target EPS of $8.40, the current price is 19.7x, between the 61-month 10th percentile of 15.49x and the median of 28.56x. That multiple measures how much of the 2030 target the price already carries.

Three Conditions That Move the Stock

Customer spending comes first. KLA guided September-quarter revenue to $4.0 billion plus or minus $200 million and non-GAAP EPS to $1.16 plus or minus $0.10, and it expects the second half of calendar 2026 to be about 20% above the first. If that holds and the 2027 outlook extends it, the first step toward the 2030 model is in place. If customers delay, purchase commitments and inventory become the first burden.

June-quarter earnings presentation page 11: September-quarter guidance and model assumptions

Cash conversion is the second. Free cash flow is 78% of net income while the company promises to return more than 90%. If inventory and receivables turn into revenue and conversion returns to the 90% range, the pledge and the investment can coexist. If conversion stays here, buybacks slow or net debt of $985 million grows.
China and customer concentration are the third. China revenue of $4.05 billion held flat under export controls, but advanced-node sales remain blocked, and TSMC alone is about 19% of revenue. Wider restrictions or a schedule change at one customer would move the revenue outlook with them.

What the First-Quarter Filing Should Show

The fiscal 2027 first-quarter report, covering July through September, is due in late October. The first numbers to check are whether revenue reached the $4.0 billion guidance and what share of net income turned into free cash flow.
The second is inventory and receivables. If the June 30 balances of $3.649 billion and $2.889 billion grow more slowly than revenue, the past year’s investment has started coming back as cash. If they grow faster, the opposite is happening.
One question this piece cannot settle is how much of the $5.97 billion in purchase commitments backs orders KLA has already received. The 10-K reports only the total and does not tie commitments to orders. If commitments run ahead of orders, that gap is the size of the risk when customer spending turns, and the next filing is where commitments and contract liabilities can be read together.

Applied Materials (AMAT) Stock Analysis: Guidance Record: the largest equipment peer and the one KLA trails least on valuation, useful for comparing how a broad toolmaker and a process control specialist report the same customer cycle.
TSMC (TSM) Stock: 60% Margins and Guidance It Keeps Beating: KLA’s largest customer at about 19% of revenue, whose capital spending plans decide much of the September-quarter outlook discussed here.
NVIDIA (NVDA) Stock Analysis: Guarantees and Cash Flow: another AI supplier where earnings ran ahead of cash, a useful frame for KLA’s inventory and receivables build.

Booking Holdings (BKNG) Stock: Buybacks Beyond Cash Flow

J. Equity. Research — Sat, 17 Oct 2026 14:09:09 GMT

Booking Holdings Inc. (NASDAQ: BKNG) grew second-quarter 2026 revenue +8.1% to $7.35 billion and adjusted EPS +15% to $2.54, which is exactly the shape of its own long-term algorithm. About 41% of that EPS gain came from a smaller share count, and from 2022 through 2025 the company returned 107.3% of its free cash flow to shareholders. The shares are down -23.7% this year, and the open question is how long buybacks can carry the gap now that third-quarter revenue guidance sits at 4% to 6%.

Booking Holdings (BKNG) one-year share price

Booking owns Booking.com, Priceline, Agoda, KAYAK, and OpenTable, and it is the largest online travel company by revenue. About 90% of second-quarter revenue came from accommodation reservations. Nothing in its filings explains the -18.0% drop in September, so this piece sticks to what the company reported and what its own slides claim.

Booking Holdings Long-Term Growth Algorithm

Page 6 of the August 2026 investor presentation fits the company’s long-term targets on one slide. Three numbers sit in the circle at the center.

Investor presentation page 6: the 8% revenue and 15% adjusted EPS long-term algorithm

Company disclosure (August 2026 investor presentation, page 6): The long-term growth ambition is 8% gross bookings growth, 8% revenue growth, and 15% adjusted EPS growth, in constant currency. In the company’s words, “Long-term ambition growth rates are targets and not projections of future operational or financial performance.”
Turning 8% revenue growth into 15% EPS growth requires seven points from somewhere. The slide names two sources. The box at the bottom lists savings and efficiencies, led by the Transformation Program, whose expected annual run-rate savings the company raised in the second quarter from about $550 million to about $650 million, to be reached by the end of 2027. The box on the right lists capital returns.
The upper-left box is a list of where the savings get reinvested: traveler acquisition, supply diversification, artificial intelligence, payments, and localization. Savings and reinvestment are designed to offset each other, which leaves capital returns as the one lever that can deliver the seven points every year.
Page 5 of the same deck argues that the formula has held for a decade: a 12% compound annual growth rate in revenue and 16% in adjusted EPS. In 2025 revenue grew 13% and adjusted EBITDA grew 20%, so last year ran ahead of the algorithm.
The 10-K cash flow statements show the same mechanism behind that decade. Share repurchases were $5.97 billion in 2018, 122.0% of that year’s free cash flow, and $8.19 billion in 2019, 182.1% of free cash flow. The algorithm is a written version of how the company has operated for years.
The 2026 outlook runs slightly behind it: high-single-digit revenue growth and low-to-mid-teens adjusted EPS growth. The second quarter matched the algorithm, and the prepared remarks spell out how: “Adjusted EPS of $2.54 per share increased 15% year over year, faster than adjusted EBITDA growth, helped by a 6% reduction in average share count.”
Own calculation (Q2 2026 earnings release reconciliation): Adjusted net income rose 8.4%, from $1.807 billion to $1.958 billion, while diluted weighted shares fell 5.5%, from 815 million to 770 million. Together they produce +14.7% in adjusted EPS, and the share count accounts for 41% of that gain.
Share figures for 2025 are restated for the 25-for-1 stock split that took effect on April 2, 2026.

A Record $4.1 Billion Quarter of Capital Return

Page 12 of the second-quarter earnings presentation puts quarterly free cash flow on the left and quarterly capital return on the right.

Earnings presentation page 12: quarterly free cash flow and a record $4.1 billion capital return

The slide title calls the second quarter’s $4.1 billion of capital return “the Highest Quarterly Amount in Company History.” Just below, the company notes that trailing twelve-month free cash flow was $9.5 billion, up +3%.
The bars show a seasonal company. Free cash flow comes in at $3.1 billion to $3.6 billion in the first and second quarters and drops to $1.4 billion in the third and fourth. Capital return went from $2.1 billion in the first quarter of 2025 to $4.0 billion and $4.1 billion in the first two quarters of 2026.
The growth rates under the bars show the shift. Free cash flow in the third quarter of 2025 was -40% year over year, and capital return that quarter was $1.0 billion, the smallest of the six quarters shown. In the first quarter of 2026 free cash flow was $3.1 billion, -2% year over year, yet capital return reached $4.0 billion.
The prepared remarks add the funding detail: the company generated $3.6 billion of free cash flow in the quarter, “raised $3.0 billion of debt, paid down $1.0 billion of debt, and returned $4.1 billion to shareholders.” They also state: “During the first half of 2026, we repurchased $7.4 billion of our common stock at an average price of approximately $173 per share.” The shares now trade at $163.45, below that average.
The Q2 2026 10-Q cash flow statement covers the whole half. Free cash flow was $6.751 billion. Buybacks took $7.758 billion and dividends $664 million. The $1.671 billion shortfall was covered by $1.975 billion of net new borrowing.

How Much of EPS Growth Comes From Buybacks?

The market case for Booking has been simple: accommodation demand grows in the high single digits, and the company spends most of what it earns on its own stock, which lifts EPS into the double digits.
The filings confirm the second half of that case. Diluted share count has been 3% to 6% lower year over year in each of the last six quarters, and that decline produced 41% of second-quarter adjusted EPS growth.
The first half is softening. Third-quarter guidance calls for room night growth of 3% to 5% and revenue growth of 4% to 6%, both below the second quarter. If revenue growth settles there instead of at 8%, more of the 15% EPS target falls on buybacks.

Earnings presentation page 4: room nights up 5% and the Middle East conflict

From Priceline to a Merchant Platform

Booking used to be The Priceline Group. The auditor’s report in the 2017 annual report, filed in February 2018, refers to “Booking Holdings Inc. (formerly known as The Priceline Group Inc.)”. The bigger change since then is in how the company collects money.

Booking merchant revenue share from 18.0% to 69.7% and deferred merchant bookings

Under the agency model a traveler pays the property, and the property sends Booking a commission after the stay. Under the merchant model the traveler pays Booking at the time of booking, and Booking holds that cash until it pays the property.
I rebuilt quarterly revenue by type from 35 10-Q and 10-K filings. Merchant revenue went from 18.0% of revenue in the first quarter of 2018 to 69.7% in the second quarter of 2026. On an annual basis the share was 20.6% in 2018, 42.1% in 2022, and 66.0% in 2025. In the second quarter merchant revenue grew +15.0% while agency revenue fell -6.9%.
The shift shows up on the balance sheet as deferred merchant bookings.
Filing footnote (Q2 2026 10-Q, note 2): “Cash payments received from travelers in advance of the Company completing its performance obligations are included in ‘Deferred merchant bookings’ … The amounts are mostly subject to refunds for cancellations.”
The year-end balance grew 5.4 times, from $980 million in 2017 to $5.27 billion in 2025, while revenue grew 2.1 times. The June 30 balance was $10.12 billion, higher than any year-end because summer bookings peak at that point.
The flow has also run the other way. In 2020 revenue fell -54.9% to $6.80 billion, the year-end balance dropped from $1.56 billion to $323 million, and the cash flow line for deferred merchant bookings and other current liabilities was negative $2.27 billion. Operating cash flow for the year was $85 million.

Ten Years of BKNG Stock in Four Moments

On a split-adjusted basis the shares started 2016 around $44 and reached a ten-year high near $226 in August 2025. At $163.45 they are -27.8% below that high.

Ten years of Booking shares and four points on the chart

The first marker is the March 2020 pandemic low. The company sold $862.5 million of convertible senior notes on April 14, 2020 and announced restructuring at Booking.com that August. The second marker is June 2023, the first quarter-end with negative shareholders’ equity. The shares more than doubled over the next two years.
The third marker is the August 2025 high and the fourth is this September’s drop. In September Booking fell -18.0%, Expedia -16.9%, Airbnb -12.3%, and Trip.com -12.4%. Booking filed no 8-K after the August 4 earnings release, so there was no new company number behind the move.
October split the group. Expedia rose +9.7% and Airbnb +8.1% while Booking gained +0.3%.

Where the Money for Buybacks Came From

Returning more than the company earns requires other sources of cash. Four years of 10-K cash flow statements identify them.

Booking free cash flow against buybacks and dividends and year-end equity

Own calculation (10-K cash flow statements, 2022 to 2025): Buybacks and dividends totaled $32.369 billion, 107.3% of the $30.166 billion of free cash flow over the same four years.
The yearly pattern is uneven. In 2023 buybacks alone were $10.38 billion, 148.3% of free cash flow of $7.00 billion. In 2025 buybacks and dividends together were 84.6% of free cash flow of $9.09 billion. Dividends started only in 2024, at $1.17 billion that year and $1.25 billion in 2025, and the third-quarter dividend of $0.42 per share was 9.4% above the $0.38 paid a year earlier.
Borrowing filled part of the gap. Over the same four years, new long-term debt exceeded repayments by $5.37 billion. Debt at June 30 was $20.18 billion, $2.0 billion short-term and $18.18 billion long-term. Page 32 of the August deck states the policy: “We expect to maintain around 2x gross leverage through the cycle.” As adjusted EBITDA grows, the debt that fits under that ratio grows with it.
Traveler prepayments filled another part. Over the four years, the increase in deferred merchant bookings and other current liabilities added $8.62 billion to operating cash flow. In the first half of 2026 the same line contributed $4.21 billion, or 60.7% of operating cash flow of $6.93 billion. Without it, first-half free cash flow would have been $2.54 billion.
That cash belongs to properties once the stay is over. In 2025 the balance fell from $9.15 billion at June 30 to $6.28 billion at September 30, a $2.87 billion outflow in the same quarter that free cash flow dropped to $1.4 billion.
Equity tells the cumulative story. Shareholders’ equity was $6.18 billion at the end of 2021, turned negative in June 2023, and stood at -$10.78 billion at June 30. Treasury stock of $62.13 billion is 144.3% of the $43.05 billion in retained earnings the company has built up.

Why GAAP Net Income More Than Doubled

GAAP net income was $1.95 billion in the second quarter, up +118%, and GAAP diluted EPS was $2.53, up +131%. The gap against the +15% adjusted figure comes from the year-ago quarter.
Other income was negative $962 million in the second quarter of 2025 and positive $159 million this quarter. Booking carries euro-denominated debt, so a stronger euro raises the dollar value of that debt and the difference runs through earnings. In the first-half cash flow statement, unrealized foreign currency results on euro-denominated debt swung from a $1.398 billion loss a year ago to a $528 million gain.
No cash changes hands on that line, and adjusted net income excludes it. Anyone reading Booking on GAAP P/E should expect it to move earnings from quarter to quarter.

How Booking Holdings Makes Money

Second-quarter revenue of $7.35 billion has three lines: merchant revenues of $5.13 billion, agency revenues of $1.90 billion, and advertising and other revenues of $322 million.
Merchant revenues come from bookings where Booking collects payment from the traveler. Room charges and fees flow through Booking, and the company records only its commission or margin as revenue. The 10-K says the majority of merchant revenue comes from Booking.com accommodation reservations. Because Booking processes the payment, it also carries the card fees and payment costs.
Agency revenues come from bookings where the property collects payment and sends Booking a commission after the stay. There is no payment cost, but the cash arrives after the trip. Advertising and other revenues come mainly from KAYAK referrals and ad placements and from OpenTable reservation fees and restaurant management subscriptions.
Timing differs between revenue and cost. The 10-K says the company would “generally recognize revenue from these bookings when the travel begins (at ‘check-in’),” that check-ins in Europe and North America peak in the third quarter, and that marketing expense is recognized in the quarter the bookings are made. In the first half the cost lands first, and the revenue follows in the third quarter. The company also traced slower second-quarter revenue growth to elevated cancellations in March.
The five brands play different roles. The 10-K describes Booking.com as the world’s leading brand for online accommodation reservations based on room nights, headquartered in Amsterdam. Priceline focuses on discount travel, primarily in North America. Agoda serves mainly the Asia-Pacific region from Singapore. KAYAK is a metasearch brand and OpenTable handles restaurant reservations. Across the group, travelers booked 1.2 billion room nights in 2025.
Marketing is the largest cost line. It was $2.37 billion in the second quarter, 32% of revenue, and grew +10.8%, faster than revenue at +8.1%.

Direct Bookings and the Marketing Bill

Booking.com had about 33 million reported listings at June 30, including 9.1 million alternative accommodation listings such as apartments and homes.

Investor presentation page 19: marketing at 5.15% then 4.40% of gross bookings and direct mix

Direct bookings are how the company holds down marketing. A traveler who arrives through the app or the website instead of a search ad carries no advertising cost.
Company disclosure (August 2026 investor presentation, page 19): Marketing as a percentage of gross bookings fell from 5.15% in 2019 to 4.40% in 2025, while the direct mix of total room nights rose from the low 50% range to the mid 50% range. Excluding the B2B business, the 2025 B2C direct mix was in the mid 60% range.
The second quarter did not continue that trend. Marketing was 4.7% of gross bookings against 4.6% a year earlier, and the trailing four-quarter direct mix stayed in the mid-fifties, similar to last year.
The app and the Genius loyalty program drive the direct mix. The trailing four-quarter mobile app mix rose from the low 50% range in mid-2024 to the high 50% range in mid-2026, according to page 7 of the earnings presentation. Travelers in the two upper Genius loyalty tiers booked a share of Booking.com room nights in the high 50% range over the last four quarters.
The connected trip points the same way. Connected transactions, which pair a stay with flights, cars, or attractions, grew in the high 20% range in 2025 and make up a low-double-digit share of Booking.com transactions.

Investor presentation page 25: over 100 payment methods and a 70% merchant mix

Payments sit underneath all of it. Booking processes more than 100 payment methods and more than 50 currencies. Merchant gross bookings were 70% of the total in 2025, up about seven percentage points, and about 73% in the second quarter. More merchant volume raises payment costs, but the company said adjusted sales and other expenses were 1.9% of gross bookings and still provided leverage because customer service efficiencies outweighed higher payment expenses.
The 10-K names “the largest global technology companies” as competitors and notes that they have “significantly more consumers, consumer data, and resources than we do.”

How Booking Stacks Up Against Three Travel Peers

Trailing twelve-month revenue is $28.24 billion at Booking, $15.70 billion at Expedia, $13.16 billion at Airbnb, and $9.66 billion at Trip.com. Growth rates sit in a narrow band of 12.0% to 14.5%.

Trailing twelve-month revenue and growth at four online travel companies

From the same market data source, P/E is 18.32x for Booking, 18.14x for Expedia, 39.43x for Airbnb, and 7.50x for Trip.com. Booking’s price-to-sales ratio of 4.35x sits between Airbnb at 7.78x and Expedia at 2.21x.
One-year returns split the group. Expedia is up +32.3% and Airbnb +37.3%, while Booking is down -18.8% and Trip.com -43.4%. Trip.com also carries a Chinese antitrust penalty.

Price to earnings and price to sales at four online travel companies

Expedia makes the cleanest comparison because its P/E is almost the same. Booking has 1.8 times the revenue and nearly twice the price-to-sales ratio. Dividing price-to-sales by P/E gives net margin: 23.7% for Booking and 12.2% for Expedia. The same earnings multiple on a higher sales multiple reflects more profit kept from each dollar of revenue.

BKNG P/E and P/S Bands Over 50 Months

A P/E of 17.46x is the lowest of the 50 months since September 2022. The median over that window is 26.89x, and the high was 37.74x in July 2025.

Booking price to earnings and price to sales over 50 months

The band starts in September 2022 for a reason. Before that, pandemic-depressed earnings sat in the denominator and pushed P/E as high as 255x, which would turn the band into a picture of the pandemic rather than the business.
Price-to-sales of 4.46x sits at the 4.0th percentile of the same 50 months. The only lower reading was 3.97x in September 2022. Price-to-book is not meaningful with negative equity.
Own calculation (cover page share count): At $163.45 and 751.4 million shares outstanding as of July 27, market capitalization is $122.81 billion. Divided by trailing twelve-month GAAP net income of $7.21 billion, that is a P/E of 17.04x.
The band’s 17.46x uses quarterly diluted weighted shares, which runs slightly higher. Another aggregator shows 16.72x, and the peer source above shows 18.32x. On every definition the multiple is at the bottom of its 50-month range.

Three Conditions That Move the Stock

Room night growth comes first. Third-quarter guidance is +3% to +5%, and the company assumes the indirect effects of the Middle East conflict continue through the quarter. If long-haul travel recovers and room nights clear the top of that range, the 8% revenue leg of the algorithm comes back. If they miss the bottom, buybacks carry more of the 15% EPS target.
Buyback pace against prepayments is the second. First-half repurchases of $7.76 billion already exceed the $6.44 billion spent in all of 2025. At $163.45, the remaining $14.5 billion authorization would buy 11.8% of shares outstanding. Keeping this pace while summer prepayments flow back out in the second half requires more debt, and slowing it shrinks the share count contribution.
Marketing efficiency is the third. Marketing grew +10.8% in the second quarter against revenue growth of +8.1%. If the direct mix starts rising again and marketing falls below the mid-4% range of gross bookings, margins hold. If more bookings arrive through search and AI assistants and marketing keeps outpacing revenue, earnings grow more slowly than sales.

What the Third-Quarter Filing Should Show

The third-quarter report arrives in early November. The first number to check is deferred merchant bookings at September 30. In 2025 the balance fell $2.87 billion between June and September, and this year’s June balance of $10.12 billion is larger.
The second is third-quarter buyback spending. Capital return was $4.0 billion and $4.1 billion in the first two quarters, while in the third quarter of 2025 the company cut it to $1.0 billion. The cash flow statement will show whether the pace held and whether borrowing paid for it.
One question this piece cannot settle is how much of the prepayment balance builds regardless of season. Year-end balances rose in each of the last four years, but if the merchant share stops climbing from around 70%, that growth slows too, and the 2026 annual report is where that shows.

Trip.com (TCOM) Stock Analysis: Antitrust Fine and Guidance: Booking’s closest Asian competitor and the only peer that fell further this year, useful for comparing regulatory pressure in China with Booking’s obligations under EU rules.
Uber (UBER) Stock Analysis: Gross Bookings vs Revenue Gap: another platform where gross bookings and revenue tell different stories, a useful frame for Booking’s merchant shift.
Oracle (ORCL) Stock Analysis: Cash Flow and Prepayments: how customer prepayments inflate operating cash flow, the same mechanism behind Booking’s deferred merchant bookings.

Sector RS Rank Oct 16: Oil & Gas Lead, Cyber ETFs Fall

J. Equity. Research — Fri, 16 Oct 2026 23:06:34 GMT

Sector RS Rank for the October 16, 2026 US session: the S&P 500 fell -1.09% to 7,659.44 and the Dow lost -0.34% to 52,002.41. Only 38 of the 129 ETFs in our universe closed higher, and 5 of the 11 sector SPDRs fell. Leading sectors: Oil Producers, Natural Gas, Pipelines. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Antero Resources, ConocoPhillips, Ovintiv.

💡 Today’s US market in three lines

① Today’s three stocks: Antero Resources · ConocoPhillips · Ovintiv — three oil and gas producers that rose while tech stocks fell.

② On October 16, the S&P 500 fell -1.09% to 7,659.44 and the Dow lost -0.34% to 52,002.41. Only 38 of the 129 ETFs in our universe closed higher, and 5 of the 11 sector SPDRs fell.

③ The natural gas producer fund rose +3.53%, while the cybersecurity fund that leads our ranking lost -5.26%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 16 Sector RS — 129 ETFs · RRG v2

Tech sold off again. Oil climbed. Money left software and chips and went into energy, staples, and utilities.
The S&P 500 closed at 7,659.44, down -1.09% or 84.62 points. The Nasdaq fell -2.15%, or 573.00 points, to 26,140.03. The Dow lost -0.34%, or 175.28 points, to 52,002.41. Over five sessions, the Nasdaq is down -4.48% and the S&P 500 -1.95%. Growth took the beating. The Russell 1000 Growth fund (IWF) fell -2.22%, while the Russell 1000 Value fund (IWD) slipped only -0.14%. The equal-weight S&P 500 fund (RSP) lost -0.42% and the Russell 2000 fund (IWM) -1.69%.
Breadth turned weak again. Only 38 of the 129 funds in our universe closed higher, and 91 fell. Six of the 11 sector SPDRs rose, led by energy and defensive groups. Energy led at +2.52%, followed by utilities (+1.34%) and consumer staples (+1.08%). Technology fell the most at -3.02%, and communication services lost -1.89%.
The worry was about debt behind the AI build-out. Reports said bonds of the data center operator CoreWeave sold off this week, with yields above 15%. Investors asked whether heavily indebted AI infrastructure companies can repay that debt as borrowing costs rise. Fed Chair Warsh did not rule out an October rate hike after hot inflation data. The 10-year Treasury yield held at 5.10%. The VIX jumped +21.45% to 19.99. Brent crude rose +3.56% to $109.69 a barrel and briefly touched $110, its first visit there since May, according to CNN. WTI gained +1.09% to $99.04. Natural gas futures fell -3.68%. Gold rose +0.40% to $4,186.70, and Bitcoin slipped -0.66% to near $81,598.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 16, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	-5.26%	99	🔽	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	-3.89%	99	🔽	🔺	🔺
iShares U.S. Oil & Gas E&P (IEO)	+2.46%	98	🔺	🔺	🔺
WisdomTree Cloud Computing (WCLD)	-4.93%	97	🔽	🔺	🔺
Health Care Select Sector SPDR (XLV)	-0.27%	96	🔺	🔺	🔺

The top of the ranking held, but the leaders cracked. BUG, IHAK, and WCLD all dropped below their 1-month averages. IEO is the only leader that rose. It also moved up into third place. The VanEck video gaming fund (ESPO) ties XLV at 96.

Why They’re Strong — Sector Issues

Global X Cybersecurity BUG Daily

· Cybersecurity and cloud (BUG · IHAK · WCLD) — The AI debt scare hit software hardest. Palo Alto Networks fell -7.63%, CrowdStrike -7.02%, Fortinet -7.03%, and Zscaler -5.92%. ServiceNow lost -4.44%, Oracle -4.64%, and Palantir -7.22%. BUG is down -11.46% over five sessions, and it is now down -2.16% over one month. The 1-month rank still reads 99 because the sheet looks back a full month.

iShares Oil and Gas Exploration IEO Daily

· Oil producers and health care (IEO · XLV) — Producers rose with crude. ConocoPhillips gained +3.37%, EOG Resources +3.53%, and Diamondback Energy +4.27%. Exxon Mobil added +2.46% and Chevron +2.59%. IEO is up +5.34% over five sessions and +7.47% over one month, the best monthly gain in our universe. Health care held up better than the market. Eli Lilly rose +0.43%, while UnitedHealth lost -1.29%.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks natural gas producers, oil producers, pipelines, cybersecurity, and semiconductors. The First Trust natural gas fund (FCG) hit 10 on October 1 and jumped from 52 to 87 in one session. The SPDR S&P oil and gas producer fund (XOP) peaked at 98 on September 8 and is back at 94. The Global X pipeline fund (MLPX) rose from 44 to 70. These price-based lines run ahead of the sheet, where FCG ranks 60 and MLPX 54. The Global X cybersecurity fund (BUG) reached 100 on September 21 and fell from 86 to 62 on this line, while the sheet still ranks it 99. The iShares semiconductor fund (SOXX) peaked at 100 on September 30 and dropped to 43. The sheet has it at 48.

RS Breakdown Warnings (big 5-day drops)

· The meme stock theme fund (MEME) fell -86 points in five sessions, from 91 to 5. Roundhill generative AI (CHAT) lost -69 points, Global X AI semiconductor and quantum (CHPX) -62, iShares future AI (ARTY) -57, and ARK autonomous technology and robotics (ARKQ) -53.

· The chip fund joined them. SOXX fell -51 points, from 94 to 43, and it is down -11.80% over five sessions.

RS Rebound Signals (sharp bounces off the bottom)

· The SPDR insurance fund (KIE) rebounded +43 points in five sessions, from 34 to 77. The financial sector SPDR (XLF) gained +37 points, iShares residential REITs (REZ) +36, and iShares aerospace and defense (ITA) +35.

· These are slow, steady groups. KIE rose +1.18% on Friday, and ITA added +1.04%.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 16 closing move — 38 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
First Trust Natural Gas (FCG)	+3.53%	60	🔺	🔺	🔺
Global X MLP & Energy Infrastructure (MLPX)	+3.00%	54	🔺	🔽	🔺
United States Oil Fund (USO)	+2.83%	79	🔺	🔺	🔺
SPDR S&P Oil & Gas E&P (XOP)	+2.82%	80	🔺	🔺	🔺
Energy Select Sector SPDR (XLE)	+2.52%	92	🔺	🔺	🔺

All five are energy funds. Four of them trade above their 1-month, 1-quarter, and 1-year averages. MLPX is the exception and still sits below its 1-quarter average. USO is up +9.15% over five sessions, the biggest weekly gain in the group.

Why They Rose — Sector Issues

First Trust Natural Gas FCG Daily

· Natural gas producers (FCG) — Gas stocks rose even though gas prices fell. Antero Resources gained +6.06%, Range Resources +4.35%, and EQT +3.53%, while natural gas futures lost -3.68%. Many of these companies also pump oil and gas liquids, so higher crude helps them too. We found no single company headline behind the move. FCG is up +4.74% over five sessions.

Global X MLP and Energy Infrastructure MLPX Daily

· Pipelines and crude (MLPX · USO · XOP · XLE) — Pipeline owners moved with the producers. Targa Resources rose +4.37%, Kinder Morgan +4.20%, Williams +2.98%, and ONEOK +2.93%. Brent’s jump toward $110 lifted crude-linked funds across the board. We found no single supply headline for the oil move. MLPX is still down -0.54% over one month.

Leading Sectors: Oil Producers, Natural Gas, Pipelines

① Oil producers took the lead. IEO ranks 98 and rose +2.46% on a day when 91 funds fell. Along with XLV, it is one of only two top-five leaders above all three moving averages. Crude near $100 a barrel keeps producer cash flow high.
② Gas producers and pipelines followed. FCG and MLPX topped the daily list, but they rank only 60 and 54 on the sheet. They are climbing from low levels. Two strong days do not make a trend yet.
③ Tech took the hit. Micron lost -5.63%, AMD -5.95%, and Broadcom -4.52%. Nvidia held up better at -1.43%. Crypto stocks fell with them. Strategy lost -9.56% and Coinbase -5.79%. Defensive stocks went the other way. Coca-Cola rose +2.07%, Procter & Gamble +1.45%, and Walmart +0.80%.
④ The last report covered the October 15 close. Its three picks, measured from that close to Friday’s: Etsy -4.53%, Bath & Body Works -1.47%, and Ollie’s -2.49%. The S&P 500 fell -1.09% over the same session. All three trailed the index. Etsy closed at $85.14, back below its $87.03 checkpoint. Bath & Body Works held its $18.95 checkpoint at $20.14, and Ollie’s held $88.33 at $93.18. Recorded as is.

Three RS Leaders to Research: Antero Resources · ConocoPhillips · Ovintiv

Antero Resources (AR) — 1-Month RS 90: Gas Stock, Oil Day

Antero Resources AR Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	96	90	+8.6%	First Trust Natural Gas · SPDR S&P Oil & Gas E&P · iShares U.S. Oil & Gas E&P

Up +6.06% to $38.65, and +7.66% over five sessions. It was the biggest gain of the three. The stock is still about 14% below its one-year closing high of $45.15 from March 27. Antero produces natural gas and gas liquids in the Appalachian Basin. Scotiabank started coverage of the stock with an outperform rating on October 14, and reports said Morgan Stanley raised its price target to $51. For the quarter ended June 30, revenue rose +20.2% to $1.56 billion from $1.30 billion. Operating income rose +83.3% to $375.5 million from $204.9 million. Diluted earnings per share were $0.90, up from $0.50. What to watch for Antero Resources: whether it can keep rising while gas prices fall.

ConocoPhillips (COP) — 1-Month RS 93: A New One-Year High

ConocoPhillips COP Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
97	98	93	+10.0%	iShares U.S. Oil & Gas E&P · Energy Select Sector SPDR · First Trust Natural Gas

Up +3.37% to $146.51, and +9.25% over five sessions. The stock closed above its October 14 high of $142.34 and set a new one-year closing high. ConocoPhillips is the largest independent US oil and gas producer. It is also IEO’s largest holding at 17.2%. On October 1, the company signed a 20-year agreement to buy LNG from Venture Global. For the quarter ended June 30, revenue rose +36.8% to $19.16 billion from $14.00 billion. Net income nearly doubled to $3.93 billion from $1.97 billion, and diluted earnings per share were $3.23, up from $1.56. Third-quarter results come on November 5. What to watch for ConocoPhillips: whether the breakout holds until then.

Ovintiv (OVV) — 1-Month RS 93: Debt Down, Shares Up

Ovintiv OVV Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	97	93	+10.1%	First Trust Natural Gas · SPDR S&P Oil & Gas E&P · iShares U.S. Oil & Gas E&P

Up +4.84% to $69.33, and +8.53% over five sessions. The stock closed above its September 15 high of $66.97 and set a new one-year closing high. Ovintiv produces oil and gas in the Permian and Montney basins. The company cut net debt by about $2.2 billion in the first half of 2026 and reached its $4 billion target. For the quarter ended June 30, revenue rose +30.0% to $3.01 billion from $2.32 billion. Operating income rose +94.5% to $994 million from $511 million. Net income rose to $456 million from $307 million. The first quarter still showed a net loss of $630 million. What to watch for Ovintiv: whether profits stay positive as oil holds near $100.

Antero Resources · ConocoPhillips · Ovintiv

· Antero Resources levels to watch — The stock jumped while gas prices fell. Watch whether it holds above $37.54, the October 13 close. Falling back below it would leave Friday’s jump as a one-day move.

· ConocoPhillips levels to watch — The stock just set a new high. Watch whether it holds above $142.34, the October 14 closing high. A drop below it would cancel the breakout.

· Ovintiv levels to watch — The stock also set a new high. Watch whether it holds above $66.97, the September 15 closing high. Losing that level would undo the breakout.

What to Watch on Next Week’s Calendar

Halliburton results, Tuesday October 20 (9:00 p.m. KST). GE Aerospace, RTX, and GM report the same morning. Oil service funds still rank in the bottom third of the sheet. Halliburton’s outlook will show whether high crude is turning into more drilling work.
Netflix results, Wednesday October 21 (5:00 a.m. KST). Communication services fell -1.89% on Friday, and Netflix lost -2.86%. Its subscriber and ad numbers will test growth stocks outside the AI trade.
Meta and Tesla results, Thursday October 22 (5:00 a.m. KST). Lam Research, Texas Instruments, and IBM report at the same time. SOXX is down -11.80% in five sessions. Meta’s spending plans will show whether AI investment is still growing despite the debt worries.
SLB results and the October S&P Global flash PMI, Friday October 23 (9:00 p.m. and 10:45 p.m. KST). SLB is the largest oil service company. The PMI will show whether $100 oil is starting to weigh on business activity.

Sector RS Rank Oct 15: Retail and Homebuilders Rally

J. Equity. Research — Thu, 15 Oct 2026 23:06:15 GMT

Sector RS Rank for the October 15, 2026 US session: the S&P 500 rose +0.33% to 7,744.06 and the Dow gained +1.08% to 52,177.69. 82 of the 129 ETFs in our universe closed higher, and only 3 of the 11 sector SPDRs fell. Leading sectors: Retail, Homebuilders, Cloud Software. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Etsy, Bath & Body Works, Ollie’s.

💡 Today’s US market in three lines

① Today’s three stocks: Etsy · Bath & Body Works · Ollie’s — three retailers that rose as Treasury yields fell.

② On October 15, the S&P 500 rose +0.33% to 7,744.06 and the Dow gained +1.08% to 52,177.69. 82 of the 129 ETFs in our universe closed higher, and only 3 of the 11 sector SPDRs fell.

③ The retail fund rose +3.68% and homebuilders +4.03%, while the semiconductor fund slipped again and is down -8.62% over five sessions.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 15 Sector RS — 129 ETFs · RRG v2

Yields fell. Shoppers kept spending. Money moved out of chips and into stores and homebuilders.
The S&P 500 closed at 7,744.06, up +0.33% or 25.12 points. The Nasdaq added +0.08%, or 20.16 points, to 26,713.03. The Dow gained +1.08%, or 556.21 points, to 52,177.69. The gains were wide, not deep. The equal-weight S&P 500 fund (RSP) rose +1.37% and the Russell 2000 fund (IWM) +1.37%. The Russell 1000 Value fund (IWD) gained +0.76%, while the Russell 1000 Growth fund (IWF) was flat at -0.02%.
Breadth turned around. 82 of the 129 funds in our universe closed higher, and 47 fell. Eight of the 11 sector SPDRs rose. Health care led at +1.86%, followed by materials (+1.79%), consumer discretionary (+1.71%), and communication services (+1.46%). Energy fell the most at -1.58%. Technology lost -0.65% and utilities -0.17%.
Two reports set the tone. Producer prices rose 1.3% in September, the largest monthly increase since March 2022. Retail sales rose 0.8%, well above the 0.3% economists expected. Gas stations did much of the work with a 6.4% jump, and sales outside gas stations rose 0.2%. Bonds rallied anyway. The 10-year Treasury yield fell to 5.09% from 5.19%. The VIX eased -2.43% to 16.46. WTI crude rose +1.08% to $96.12 a barrel, while Brent slipped -0.31% to $105.73. Gold rose +2.06% to $4,192.50, silver futures gained +3.70%, and Bitcoin added +0.81% to near $82,227.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 15, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
WisdomTree Cloud Computing (WCLD)	+3.72%	99	🔺	🔺	🔺
Global X Cybersecurity (BUG)	+0.52%	99	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	+0.78%	98	🔺	🔺	🔺
United States Natural Gas Fund (UNG)	-1.16%	97	🔺	🔺	🔽
First Trust NASDAQ Cybersecurity (CIBR)	-0.20%	96	🔽	🔺	🔺

Cloud software moved up to share first place. WCLD now ties BUG at 99, and the Global X cloud fund (CLOU) ties CIBR at 96. Cybersecurity has held the top spots for six sessions, but the group barely moved on Thursday. CIBR is the only leader still below its 1-month average.

Why They’re Strong — Sector Issues

WisdomTree Cloud Computing WCLD Daily

· Cloud software (WCLD · CLOU) — Software stocks rose while chip stocks fell. ServiceNow gained +6.14%, Paycom +5.80%, Veeva Systems +5.27%, Salesforce +4.57%, and Box +3.70%. We found no single company headline behind the move. WCLD is up +6.83% over one month and +2.63% over five sessions.

Global X Cybersecurity BUG Daily

· Cybersecurity and natural gas (BUG · IHAK · CIBR · UNG) — Security stocks were mixed. CrowdStrike lost -1.89%, Palo Alto Networks -1.27%, and Fortinet -1.16%, while the funds closed near flat. BUG is down -2.38% over five sessions. Natural gas futures rose +0.41%, but UNG fell -1.16%. Gas producers slipped too, with Range Resources at -1.00% and EQT at -0.57%.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks retail, homebuilders, gold miners, semiconductors, and shipping. The SPDR S&P retail fund (XRT) bottomed at 1 on August 27 and jumped from 79 to 98 in one session, its high for the period. The iShares home construction fund (ITB) hit 2 on September 18 and nearly doubled to 51 from 26 on Thursday. The VanEck gold miners fund (GDX) fell from 100 in August to 4 on September 24 and is back at 18. The iShares semiconductor fund (SOXX) peaked at 100 on September 30 and dropped to 78 on this price-based line, while the sheet rank is already 56. The SonicShares shipping fund (BOAT) peaked at 99 on September 10 and fell from 91 to 59, its low for the period.

RS Breakdown Warnings (big 5-day drops)

· The meme stock theme fund (MEME) fell -57 points in five sessions, from 86 to 29. Roundhill generative AI (CHAT) lost -37 points, ARK autonomous technology and robotics (ARKQ) -31, iShares energy storage and materials (IBAT) -30, and Defiance quantum computing (QTUM) -27.

· AI-linked themes are still losing ground. CHAT fell -1.58% on Thursday, and it is down -8.87% over five sessions.

RS Rebound Signals (sharp bounces off the bottom)

· The iShares broker-dealers and exchanges fund (IAI) rebounded +23 points in five sessions, from 24 to 47. Global X fintech (FINX) and Roundhill GLP-1 (OZEM) gained +21 points each, and First Trust natural gas (FCG) and the real estate SPDR (XLRE) +15 each.

· Lower yields helped two of them. FINX rose +3.78% on Thursday, and XLRE is up +2.79% over five sessions.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 15 closing move — 82 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
VanEck Junior Gold Miners (GDXJ)	+4.64%	10	🔽	🔽	🔽
VanEck Digital Transformation (DAPP)	+4.41%	8	🔽	🔽	🔽
VanEck Gold Miners (GDX)	+4.34%	16	🔽	🔽	🔽
Global X Blockchain (BKCH)	+4.22%	8	🔽	🔽	🔽
Amplify Online Retail (IBUY)	+4.03%	89	🔺	🔺	🔺

Four of the five sit near the bottom of the ranking. Gold miners and crypto stocks bounced, but all four still trade below their 1-month, 1-quarter, and 1-year averages. IBUY is different. It ranks 89 and stays above all three averages. Homebuilders (ITB) missed the list by less than a hundredth of a point.

Why They Rose — Sector Issues

VanEck Gold Miners GDX Daily

· Gold miners (GDXJ · GDX) — Gold rose +2.06% as yields fell. Kinross Gold gained +7.24%, Agnico Eagle +5.96%, Barrick +4.27%, and Newmont +3.79%. Crypto stocks bounced with them. Coinbase rose +6.32% and Strategy +5.62%, even though Bitcoin gained only +0.81%. GDX is still down -6.23% over one month.

Amplify Online Retail IBUY Daily

· Online and store retail (IBUY · XRT) — The retail report and lower yields lifted shoppers’ stocks. Kohl’s rose +5.96%, Lululemon +5.31%, Nike +5.21%, and eBay +5.16%. Homebuilders rose on hopes that mortgage rates will ease. Lennar gained +5.66%, D.R. Horton +4.42%, and PulteGroup +3.33%. IBUY is up +5.33% over five sessions.

Leading Sectors: Retail, Homebuilders, Cloud Software

① Retail took the lead. XRT rose +3.68% and is up +4.66% over five sessions. Online sellers, apparel brands, and department stores rose together. A strong sales report and falling yields help all of them at once.
② Homebuilders followed. ITB rose +4.03%, but it still trades below its 1-month, 1-quarter, and 1-year averages. Lower rates help buyers afford homes. One day of falling yields has not repaired the trend yet.
③ Chips and energy took the hit. TSMC reported a record quarterly profit, and its US shares still fell -1.80%. Nvidia lost -1.84%, AMD -1.50%, and Vertiv -3.63%. SOXX fell -0.91% and is down -8.62% over five sessions. Exxon Mobil lost -1.32% and Chevron -1.22% even as crude rose. Tanker owners fell hard. Frontline lost -6.63%, DHT Holdings -6.09%, and International Seaways -4.74%.
④ The last report covered the October 14 close. Its three picks, measured from that close to Thursday’s: McKesson +2.26%, Humana +1.12%, and United Natural Foods +1.22%. The S&P 500 rose +0.33% over the same session. All three beat the index. McKesson closed at $998.64, above its $995.69 checkpoint, for a new one-year closing high. Humana closed at $432.20, just short of $433.50. United Natural Foods held $45.79 at $48.26. Recorded as is.

Three RS Leaders to Research: Etsy · Bath & Body Works · Ollie’s

Etsy (ETSY) — 1-Month RS 98: A New One-Year High

Etsy ETSY Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	100	98	+21.4%	Global X E-commerce · Amplify Online Retail · SPDR S&P Retail

Up +7.54% to $89.18, and +18.69% over five sessions. The stock closed above its August 24 high of $87.03 and set a new one-year closing high. Etsy runs an online marketplace for handmade and vintage goods. Reports said it recently renewed its international seller payout contract with Payoneer through 2029. For the quarter ended June 30, revenue rose +6.2% to $668.3 million from $629.1 million. Operating income rose +33.1% to $125.3 million from $94.1 million. The company still posted a net loss of $46.7 million, against a profit of $28.8 million a year earlier. Third-quarter results come on October 28. What to watch for Etsy: whether the breakout holds until then.

Bath & Body Works (BBWI) — 1-Month RS 98: Margins Over Sales

Bath and Body Works BBWI Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	99	98	+22.2%	SPDR S&P Retail

Up +7.86% to $20.44, and +15.42% over five sessions. It was the biggest gain of the three. The stock is still about 24% below its one-year closing high of $27.05 from October 2025. Bath & Body Works sells candles, soaps, and body care products in its own stores. For the quarter ended August 1, revenue slipped -2.3% to $1.51 billion from $1.55 billion. Operating income rose +37.6% to $216 million from $157 million. Net income nearly doubled to $118 million from $64 million. The company raised its full-year earnings outlook while still guiding to lower sales. What to watch for Bath & Body Works: it hinges on whether profit can keep rising while sales shrink.

Ollie’s (OLLI) — 1-Month RS 99: An Upgrade and a Buyback

Ollie's Bargain Outlet OLLI Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
71	98	99	+30.5%	SPDR S&P Retail

Up +2.61% to $95.56, and +10.20% over five sessions. Ollie’s Bargain Outlet sells brand-name closeout goods at discount prices. Its board approved a share buyback of up to $500 million on October 13. This week, Gordon Haskett upgraded the stock to buy with a $105 target. For the quarter ended August 1, revenue rose +9.1% to $741.3 million from $679.6 million. Operating income rose +40.9% to $108.5 million from $77.0 million. Net income rose to $85.5 million from $61.3 million, and earnings per share were $1.42, up from $0.99. The stock is still well below its one-year closing high of $128.62. What to watch for Ollie’s: whether the rally holds after the upgrade.

Etsy · Bath & Body Works · Ollie’s

· Etsy levels to watch — The stock just cleared its old high. Watch whether it holds above $87.03, the August 24 closing high. Falling back below it would cancel the breakout.

· Bath & Body Works levels to watch — The stock is up +15.42% in five sessions. Watch whether it holds above $18.95, Wednesday’s close. Losing that level would erase Thursday’s jump.

· Ollie’s levels to watch — The stock is up +10.20% in five sessions. Watch whether it holds above $88.33, Tuesday’s close. A drop below it would undo most of the week’s gain.

What to Watch on Next Week’s Calendar

NAHB housing index and September housing starts, Monday October 19 (11:00 p.m. KST) and Tuesday October 20 (9:30 p.m. KST). ITB jumped +4.03% on hopes for lower mortgage rates. Builder sentiment and new construction will show whether demand is following yields.
Meta and Tesla results, Thursday October 22 (5:00 a.m. KST). Lam Research, Texas Instruments, and IBM report at the same time. SOXX is down -8.62% in five sessions, and these reports will test whether AI spending still supports chip stocks.
Newmont results, Friday October 23 (5:00 a.m. KST). Western Digital reports at the same time. GDX ranks only 16 on the sheet despite Thursday’s bounce. The largest gold miner’s costs and output will show whether the miners can follow gold higher.

Sector RS Rank Oct 14: Hot CPI Hits Chips, Health Leads

J. Equity. Research — Wed, 14 Oct 2026 23:06:42 GMT

Sector RS Rank for the October 14, 2026 US session: the S&P 500 fell -1.11% to 7,718.94 and the Dow slipped -0.09% to 51,621.48. Only 19 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs fell. Leading sectors: Health Care, Consumer Staples, Pharmaceuticals. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: McKesson, Humana, United Natural Foods.

💡 Today’s US market in three lines

① Today’s three stocks: McKesson · Humana · United Natural Foods — a drug distributor, a health insurer, and a grocery wholesaler that all rose on a down day.

② On October 14, the S&P 500 fell -1.11% to 7,718.94 and the Dow slipped -0.09% to 51,621.48. Only 19 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs fell.

③ Health care rose +2.53% and staples +2.22%, while a hot inflation report sent the semiconductor fund down -4.50%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 14 Sector RS — 129 ETFs · RRG v2

Inflation ran hot. Chips sold off. Money moved into health care and staples.
The S&P 500 closed at 7,718.94, down -1.11% or 86.51 points. The Nasdaq fell -1.88%, or 511.51 points, to 26,692.87. The Dow lost only -0.09%, or 48.62 points, to 51,621.48. Growth took the hit. The Russell 1000 Growth fund (IWF) fell -2.24%, while the Russell 1000 Value fund (IWD) slipped just -0.13%. The equal-weight S&P 500 fund (RSP) lost -0.57%, and the Russell 2000 fund (IWM) -1.93%.
Breadth was poor. Only 19 of the 129 funds in our universe closed higher, and 110 fell. Three of the 11 sector SPDRs rose. Health care led at +2.53%, followed by consumer staples (+2.22%) and energy (+0.64%). Technology fell the most at -2.98%. Communication services lost -1.30%, industrials -0.97%, real estate -0.81%, and consumer discretionary -0.77%.
The September consumer price index set the tone. Reports said headline inflation rose 3.7% from a year earlier, above the 3.6% economists expected, with gasoline and energy doing most of the pushing. Core inflation came in at 2.6% against 2.5% expected. New York Fed President John Williams said one more rate hike this year seems appropriate. The VIX jumped +10.48% to 16.87. The 10-year Treasury yield still eased to 5.19% from 5.22%. WTI crude rose +1.09% to $95.17 a barrel, and Brent added +0.35% to $106.06. Gold fell -1.20% to $4,127.30, silver futures dropped -5.68%, and Bitcoin slipped -1.59% to near $81,776.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 14, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	-4.14%	100	🔽	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	-3.42%	99	🔺	🔺	🔺
First Trust NASDAQ Cybersecurity (CIBR)	-3.47%	98	🔽	🔺	🔺
United States Natural Gas Fund (UNG)	-1.67%	97	🔺	🔺	🔽
SonicShares Global Shipping (BOAT)	-2.05%	96	🔺	🔺	🔺

All five leaders fell. Cybersecurity still holds the top three spots for a fifth day, but BUG and CIBR slipped below their 1-month averages. The iShares oil and gas producer fund (IEO) ties BOAT at 96 and closed nearly flat at -0.09%. The ranking has not changed hands yet. The gap under the leaders is narrowing.

Why They’re Strong — Sector Issues

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG · IHAK · CIBR) — The group fell with the rest of tech. Palo Alto Networks lost -5.54%, CrowdStrike -4.56%, Fortinet -3.52%, and Zscaler -3.44%. We found no company headline behind the drop. BUG is still up +2.78% over one month, but it is now down -2.72% over five sessions.

United States Natural Gas Fund UNG Daily

· Natural gas and shipping (UNG · BOAT) — Natural gas futures were nearly flat at +0.12%, but UNG fell -1.67% and gas producers slipped. EQT lost -3.09%, Antero Resources -2.42%, and Range Resources -1.51%. Tanker owners gave back part of their run. DHT Holdings fell -6.17%, International Seaways -5.04%, and Frontline -4.69%. We found no single headline. BOAT is still up +3.48% over five sessions.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks health care, food and beverage, pharmaceuticals, semiconductors, and silver. The health care SPDR (XLV) bottomed at 39 on August 27, dropped to 71 on Tuesday, and jumped to 95, its high for the period. The Invesco food and beverage fund (PBJ) started at 15 and climbed to 68. The iShares pharmaceuticals fund (IHE) swung from 31 back to 58 in one session. The iShares semiconductor fund (SOXX) reads 96 on this price-based line, while the sheet rank has already fallen to 69. The iShares silver fund (SLV) peaked at 95 on August 20 and has dropped to 8, its low for the period.

RS Breakdown Warnings (big 5-day drops)

· The space theme fund (ORBX) fell -57 points in five sessions, from 72 to 15. ARK autonomous technology and robotics (ARKQ) lost -28 points, iShares digital infrastructure REITs (IDGT) -26, and Global X robotics and AI (BOTZ) and Defiance quantum computing (QTUM) -21 each.

· AI-linked themes took the worst of it. IDGT fell -4.79% on Wednesday, and QTUM is down -8.16% over five sessions.

RS Rebound Signals (sharp bounces off the bottom)

· The iShares aerospace and defense fund (ITA) rebounded +24 points in five sessions, from 19 to 43. VanEck steel (SLX) gained +23 points, Global X MLP and energy infrastructure (MLPX) and iShares residential REITs (REZ) +20 each, and the real estate SPDR (XLRE) +18.

· These are slow movers. ITA rose +0.12% on Wednesday while most of the market fell, and XLRE is up +2.27% over five sessions.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 14 closing move — 19 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
VanEck Pharmaceutical (PPH)	+2.65%	83	🔺	🔺	🔺
Health Care Select Sector SPDR (XLV)	+2.53%	90	🔺	🔺	🔺
Consumer Staples Select Sector SPDR (XLP)	+2.22%	86	🔺	🔺	🔺
iShares U.S. Pharmaceuticals (IHE)	+2.19%	63	🔽	🔽	🔺
iShares U.S. Healthcare Providers (IHF)	+2.06%	87	🔺	🔺	🔺

Four of the five are health care funds, and the fifth is staples. Every one of them is a defensive group. IHE is the weak one. It still trades below its 1-month and 1-quarter averages, so its gain is a bounce for now.

Why They Rose — Sector Issues

Health Care Select Sector SPDR XLV Daily

· Health care (XLV · PPH · IHE · IHF) — Gains came from drug makers and insurers alike. UnitedHealth rose +4.73%, Merck +3.80%, Eli Lilly +3.62%, and CVS Health +3.24%. AbbVie gained +3.32% and Pfizer +2.96%, and both closed at one-year highs. We found no company headline behind the move. It came on the same day chips fell, which points to rotation. XLV is up +3.05% over five sessions.

Consumer Staples Select Sector SPDR XLP Daily

· Consumer staples (XLP) — Grocers and household names rose together. Kroger gained +3.87%, Walmart +3.46%, Costco +2.87%, Procter & Gamble +2.28%, and Coca-Cola +1.85%. XLP is up +5.34% over five sessions.

Leading Sectors: Health Care, Consumer Staples, Pharmaceuticals

① Health care took the lead. The health care SPDR rose +2.53%, and the insurer fund IHF is up +4.31% over five sessions. Insurers and drug makers rose together. When both rise at once, the reason is usually the market, not a single drug or contract.
② Staples followed. Grocers, discount stores, and drink makers all rose. These companies sell things people buy in any economy. Investors favored them after a hot inflation report.
③ Chips and banks took the hit. Nvidia fell -3.16%, AMD -5.73%, Micron -4.10%, and Broadcom -3.10%. ASML reported record quarterly sales and still dropped -3.94%. SOXX is down -10.88% over five sessions. Bank of America fell -4.76% after reports said a $1.2 billion regulatory charge cut its quarterly profit. Morgan Stanley lost -2.75%. The silver fund SLV dropped -6.11%.
④ The last report covered the October 13 close. Its three picks, measured from that close to Wednesday’s: HF Sinclair -0.42%, Delek US -2.20%, and Cracker Barrel +2.40%. The S&P 500 fell -1.11% over the same session. Two of three beat the index. HF Sinclair held its $122.91 checkpoint at $127.69. Delek US did not close above $81.55. Cracker Barrel held $59.04 and set a new one-year closing high at $62.72. Recorded as is.

Three RS Leaders to Research: McKesson · Humana · United Natural Foods

McKesson (MCK) — 1-Month RS 91: Near Its March High

McKesson MCK Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
88	95	91	+8.6%	VanEck Pharmaceutical · Health Care Select Sector SPDR

Up +1.53% to $976.57, and +7.28% over five sessions. The stock has risen in five straight sessions and sits about 1.9% below its one-year closing high of $995.69 from March 3. McKesson is the largest US drug distributor. It moves medicines from makers to pharmacies and hospitals. The stock jumped +5.27% on October 1 after reports said it extended its relationship with a major customer. For the quarter ended June 30, revenue rose +7.7% to $105.38 billion from $97.83 billion. Operating income rose +27.3% to $1.32 billion. Net income fell to $614 million from $784 million. What to watch for McKesson: whether it can clear the March high.

Humana (HUM) — 1-Month RS 89: A Ratings Jump That Held

Humana HUM Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
90	96	89	+7.8%	iShares U.S. Healthcare Providers

Up +1.67% to $427.40, and +7.79% over five sessions. The stock is about 1.4% below its one-year closing high of $433.50 from October 12. Humana sells Medicare Advantage health plans to older Americans. It jumped +11.56% on October 9 after reports said the government’s 2027 star ratings put its largest contract back at four stars. Higher ratings bring bonus payments. For the quarter ended June 30, revenue rose about 26% to roughly $40.87 billion. Earnings per share were $5.73, up from $4.51, and adjusted earnings per share were $7.61. The company also cut its full-year GAAP outlook while keeping its adjusted target. What to watch for Humana: it hinges on whether the ratings gain holds through its December 10 investor update.

United Natural Foods (UNFI) — 1-Month RS 85: Back in the Black

United Natural Foods UNFI Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	98	85	+6.4%	Invesco Food and Beverage

Up +4.13% to $47.68, and +9.38% over five sessions. It was the biggest gain of the three. United Natural Foods is a grocery wholesaler. It supplies natural and conventional food to supermarkets across North America. We found no company news on Wednesday. For the quarter ended August 1, revenue slipped -0.7% to $7.64 billion from $7.70 billion. Operating income was $69 million, against a loss of $78 million a year earlier. Net income was $35 million, against a loss of $87 million. For the full fiscal year, net income was $84 million after a loss of $118 million. What to watch for United Natural Foods: whether profit keeps rising without sales growth.

McKesson · Humana · United Natural Foods

· McKesson levels to watch — The stock is about 1.9% below its high. Watch whether it closes above $995.69, the March 3 closing high. A close above it would mark a breakout.

· Humana levels to watch — The stock is up +7.79% in five sessions. Watch whether it closes above $433.50, the October 12 closing high. Falling back below $420 would undo Wednesday’s gain.

· United Natural Foods levels to watch — The stock is up +9.38% in five sessions. Watch whether it holds above $45.79, Tuesday’s close. Losing that level would erase Wednesday’s jump.

What to Watch on Next Week’s Calendar

TSMC third-quarter results, Thursday October 15 (3:00 p.m. KST). SOXX is down -10.88% over five sessions, and ASML’s record quarter did not stop the slide. TSMC’s guidance will show whether chip demand still holds up.
September retail sales and PPI, Thursday October 15 (9:30 p.m. KST). Wednesday’s CPI came in hot. Producer prices will show whether the pressure is spreading. Retail sales will test the staples rally.
Abbott and Thermo Fisher results, Wednesday October 21 (9:00 p.m. KST). Intuitive Surgical reports first, on Wednesday at 5:00 a.m. KST. XLV now ranks 90 on the sheet. These reports will show whether the health care move has earnings behind it.
Meta and Tesla results, Thursday October 22 (5:00 a.m. KST). Lam Research and Texas Instruments report at the same time. These will be the first big tech reports since the CPI shock, and growth stocks led Wednesday’s decline.

Sector RS Rank Oct 13: Refiners Lead, Banks Slip

J. Equity. Research — Tue, 13 Oct 2026 23:05:35 GMT

Sector RS Rank for the October 13, 2026 US session: the S&P 500 slipped -0.02% to 7,805.45 and the Dow fell -0.35% to 51,670.10. Only 53 of the 129 ETFs in our universe closed higher, and 6 of the 11 sector SPDRs fell. Leading sectors: Refiners, Oil and Gas Producers, Natural Gas. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: HF Sinclair, Delek US, Cracker Barrel.

💡 Today’s US market in three lines

① Today’s three stocks: HF Sinclair · Delek US · Cracker Barrel — two refiners at or near one-year highs, and a restaurant chain at a one-year closing high.

② On October 13, the S&P 500 slipped -0.02% to 7,805.45 and the Dow fell -0.35% to 51,670.10. Only 53 of the 129 ETFs in our universe closed higher, and 6 of the 11 sector SPDRs fell.

③ Refiners rose +3.24% and natural gas +4.49%, while big banks fell on earnings and Citigroup dropped -5.60%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 13 Sector RS — 129 ETFs · RRG v2

Refiners and gas rose. Banks and drug makers fell. The index barely moved.
The S&P 500 closed at 7,805.45, down -0.02% or 1.79 points. The Nasdaq fell -0.15%, or 41.52 points, to 27,204.38. The Dow lost -0.35%, or 180.45 points, to 51,670.10. Style funds were flat. The Russell 1000 Growth fund (IWF) slipped -0.01% and the Russell 1000 Value fund (IWD) -0.05%. The equal-weight S&P 500 fund (RSP) added +0.05%, and the Russell 2000 fund (IWM) lost -0.43%.
Breadth was weak under a calm index. Only 53 of the 129 funds in our universe closed higher, 74 fell, and 2 were flat. Five of the 11 sector SPDRs rose. Energy led at +1.80%, followed by communication services (+0.74%), utilities (+0.58%), and materials (+0.57%). Health care fell the most at -1.35%. Financials lost -0.42%, industrials -0.28%, and staples -0.26%. Technology slipped -0.04%.
Earnings season opened on Tuesday. The big banks reported first, and their stocks fell. Johnson & Johnson raised its outlook but still dropped. Memory chips stayed under pressure after Monday’s news that Chinese memory maker CXMT had made progress on a new memory-cell design. Reports said South Korea’s Kospi fell about 5.5%. WTI crude rose +1.12% to $94.79 a barrel, while Brent slipped -0.27% to $106.36. Natural gas futures jumped +4.80% to $3.32. Gold eased -0.15% to $4,184.20, and Bitcoin rose +1.96% to near $83,366. The VIX edged up +0.39% to 15.27. The 10-year Treasury yield eased to 5.22% from 5.24% as bonds reopened after the holiday.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 13, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	-0.25%	100	🔺	🔺	🔺
First Trust NASDAQ Cybersecurity (CIBR)	-0.31%	99	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	-0.06%	99	🔺	🔺	🔺
Global X Cloud Computing (CLOU)	-0.03%	98	🔺	🔺	🔺
SonicShares Global Shipping (BOAT)	+1.28%	97	🔺	🔺	🔺

The top of the table held steady. Cybersecurity keeps the top three spots for a fourth day, and the four software funds moved less than half a percent. BOAT moved up to fifth with a gain. It was the only leader that rose, and it closed at a one-year closing high.

Why They’re Strong — Sector Issues

Global X Cybersecurity BUG Daily

· Cybersecurity and cloud (BUG · CIBR · IHAK · CLOU) — The group drifted after Monday’s pullback. Palo Alto Networks fell -1.68%, Fortinet -1.13%, and CrowdStrike -0.68%. Zscaler rose +1.28%. In cloud, Salesforce gained +1.75% while Datadog lost -1.37%. BUG is up +9.61% over one month and sits about 3% below its October 9 closing high.

SonicShares Global Shipping BOAT Daily

· Shipping (BOAT) — Tanker owners kept climbing with crude and fuel prices. DHT Holdings rose +1.41% to another one-year closing high. Scorpio Tankers gained +1.44%, International Seaways +0.66%, and Okeanis Eco Tankers +0.64%. Frontline slipped -0.25%. BOAT is up +6.22% over five sessions.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks refiners, oil and gas producers, natural gas producers, biotech, and semiconductors. The VanEck oil refiners fund (CRAK) peaked at 99 on September 8, dipped to 69 on Monday, and jumped back to 88. The iShares oil and gas producer fund (IEO) fell to 51 on September 22 and now reads 94. The First Trust natural gas fund (FCG) bottomed at 10 on October 1 and has climbed to 45. The SPDR biotech fund (XBI) peaked at 88 on September 1 and dropped from 47 to 16 in one session. The iShares semiconductor fund (SOXX) reached 100 on September 30 and reads 98.

RS Breakdown Warnings (big 5-day drops)

· The space theme fund (ORBX) fell -63 points in five sessions, from 88 to 25. Procure Space (UFO) lost -49 points, Global X autonomous and EV (DRIV) -27, and Roundhill humanoid robots (HUMN) -24.

· Space took the worst of it. AST SpaceMobile fell -8.54% on Tuesday and -25.44% over five sessions. UFO is down -8.10% over five sessions.

RS Rebound Signals (sharp bounces off the bottom)

· Amplify online retail (IBUY) rebounded +38 points in five sessions, from 24 to 62. iShares medical devices (IHI) gained +33 points, SPDR retail (XRT) +19, Invesco solar (TAN) +15, and the materials SPDR (XLB) +15.

· Consumer funds are the common thread. IBUY and XRT both rose again on Tuesday, and consumer names like Cracker Barrel below rose with them.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 13 closing move — 53 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
United States Natural Gas Fund (UNG)	+4.49%	96	🔺	🔺	🔽
VanEck Oil Refiners (CRAK)	+3.24%	90	🔺	🔺	🔺
iShares U.S. Oil and Gas Exploration and Production (IEO)	+3.14%	93	🔺	🔺	🔺
SPDR S&P Oil and Gas Exploration and Production (XOP)	+2.85%	86	🔺	🔺	🔺
Invesco Solar (TAN)	+2.07%	22	🔽	🔽	🔽

Four of the five come from oil and gas. CRAK and XOP both closed at one-year highs. TAN is the outlier. It still trades below all three averages, so its gain is a bounce, not a trend.

Why They Rose — Sector Issues

VanEck Oil Refiners CRAK Daily

· Refiners (CRAK · XOP · IEO) — Refiners rallied across the board. PBF Energy rose +7.23%, Par Pacific +8.13%, and Valero +4.69%. Delek US gained +4.42%, HF Sinclair +4.33%, and Phillips 66 +4.00%. Reports said a White House official called talk of a 90-day US diesel export ban “fake news,” which removed a policy risk for the group. Several banks also raised their targets on PBF. CRAK is up +5.42% over one month.

United States Natural Gas Fund UNG Daily

· Natural gas and producers (UNG · FCG · IEO) — Natural gas futures rose +4.80%. Expand Energy gained +4.01%, Antero Resources +2.68%, Range Resources +2.56%, and EQT +2.27%. We found no single headline behind the move. UNG is up +6.24% over five sessions, but it still trades below its 1-year average.

Leading Sectors: Refiners, Oil and Gas Producers, Natural Gas

① Refiners took the lead. Fuel margins have stayed wide for months, and Tuesday’s denial of an export ban cleared one fear. HF Sinclair, CRAK, and XOP all closed at one-year highs.
② Gas joined oil. Natural gas futures are up +6.58% over five sessions, and gas producers rose with them. Crude added +1.12%, and the energy SPDR is up +5.41% over five sessions.
③ Banks and drug makers took the hit. JPMorgan fell -0.86% after earnings per share of $5.57 missed estimates near $5.90. Wells Fargo lost -3.10% on weaker revenue. Citigroup beat estimates but fell -5.60%. Goldman Sachs gave back an early gain of more than 4% and ended -0.23%. Johnson & Johnson dropped -5.73% on weak medical-device sales, even after raising its outlook. The iShares pharmaceuticals fund (IHE), where J&J is about 22% of the fund, fell -2.82%.
④ The last report covered the October 12 close. Its three picks, measured from that close to Tuesday’s: DHT Holdings +1.41%, HCA Healthcare +0.47%, and BJ’s Wholesale -0.23%. The S&P 500 fell -0.02% over the same session. Two of three beat the index. DHT held its $24.93 checkpoint and set a new one-year closing high at $26.59. HCA stayed above $451.09. BJ’s did not reach its $102.78 high. Recorded as is.

Three RS Leaders to Research: HF Sinclair · Delek US · Cracker Barrel

HF Sinclair (DINO) — 1-Month RS 96: A Refiner at a One-Year High

HF Sinclair DINO Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	99	96	+19.9%	VanEck Oil Refiners · SPDR S&P Oil and Gas Exploration and Production · iShares U.S. Oil and Gas Exploration and Production

Up +4.33% to $128.23, a one-year closing high, and +11.89% over five sessions. The prior high was Monday’s close of $122.91. HF Sinclair runs refineries across the western and central US and also sells lubricants. Its earnings have climbed fast this year. For the quarter ended June 30, revenue rose +53.2% to $10.39 billion from $6.78 billion. Operating income jumped to $1.17 billion from $275 million, and net income to $892 million from $208 million. What to watch for HF Sinclair: whether fuel margins stay this wide into its third-quarter report in late October.

Delek US (DK) — 1-Month RS 88: Back Near Its September High

Delek US Holdings DK Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	94	88	+8.4%	SPDR S&P Oil and Gas Exploration and Production · VanEck Oil Refiners

Up +4.42% to $80.75, and +6.71% over five sessions. The stock is about 1.0% below its one-year closing high of $81.55 from September 17. Delek runs refineries in Texas, Arkansas, and Louisiana. Its results swing hard with margins. For the quarter ended June 30, revenue rose +47.8% to $4.09 billion from $2.76 billion. Operating income was $302.4 million, against a loss of $33.5 million a year earlier, and net income was $169.5 million, against a loss of $106.4 million. The first quarter of 2026 was still a net loss of $201.3 million. Mizuho cut its rating on October 8, saying the gains look priced in. What to watch for Delek US: it hinges on whether the third quarter repeats the second.

Cracker Barrel (CBRL) — 1-Month RS 97: Margins Before Traffic

Cracker Barrel Old Country Store CBRL Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
98	97	97	+21.2%	Invesco Leisure and Entertainment

Up +4.27% to $61.25, a one-year closing high, and +8.75% over five sessions. The prior high was $59.04 from August 17. Cracker Barrel runs family restaurants with attached gift shops, mostly along US highways. We found no company news on Tuesday. The rally started with its September report. For the quarter ended July 31, revenue fell -2.2% to $849.3 million from $868.0 million. Operating income rose to $13.1 million from $4.0 million, and net income to $12.2 million from $6.8 million. Reports said comparable restaurant sales fell -2.1% and guest traffic fell -6.1%. Profit is up while visits are down. What to watch for Cracker Barrel: whether traffic stops falling.

HF Sinclair · Delek US · Cracker Barrel

· HF Sinclair levels to watch — The stock is up +11.89% in five sessions. Watch whether it holds above $122.91, the old high it just cleared. A drop below it would turn the breakout into a false start.

· Delek US levels to watch — The stock sits about 1.0% below its high. Watch whether it closes above $81.55, the September 17 closing high. A close above it would mark a breakout.

· Cracker Barrel levels to watch — The stock is up +21.2% in one month. Watch whether it holds above $59.04, the August high it just cleared. Losing that level would erase Tuesday’s breakout.

What to Watch on Next Week’s Calendar

September CPI, Wednesday October 14 (9:30 p.m. KST). WTI is near $95 a barrel, and gasoline is a sizable part of the index. A hot reading would push yields higher and test whether refiners can keep rising while inflation worries grow.
Bank of America and Morgan Stanley results, Wednesday October 14 (9:00 p.m. KST). The bank fund KBWB fell -1.39% on Tuesday. The next two reports will show whether the cautious tone from JPMorgan and Citigroup was a one-day reaction or a trend.
TSMC third-quarter results, Thursday October 15 (3:00 p.m. KST). ASML reports first, on Wednesday at 2:00 p.m. KST. SOXX is down -7.73% over five sessions. TSMC’s orders and guidance will show whether the memory scare spreads to the rest of the chip chain.

Sector RS Rank Oct 12: Chips Fall, Defensives Rise

J. Equity. Research — Mon, 12 Oct 2026 23:14:55 GMT

Sector RS Rank for the October 12, 2026 US session: the S&P 500 slipped -0.06% to 7,807.24 while the Dow rose +0.38% to 51,850.55. Only 43 of the 129 ETFs in our universe closed higher, but 8 of the 11 sector SPDRs rose. Leading sectors: Energy, Health Care, Consumer Staples. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: DHT Holdings, HCA Healthcare, BJ’s Wholesale.

💡 Today’s US market in three lines

① Today’s three stocks: DHT Holdings · HCA Healthcare · BJ’s Wholesale — a supertanker owner at a one-year high, a hospital operator, and a warehouse club.

② On October 12, the S&P 500 slipped -0.06% to 7,807.24 while the Dow rose +0.38% to 51,850.55. Only 43 of the 129 ETFs in our universe closed higher, but 8 of the 11 sector SPDRs rose.

③ Medical devices rose +2.03% and energy +1.43%, while memory chips sold off and Micron fell -3.88%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 12 Sector RS — 129 ETFs · RRG v2

Chips fell. Oil, health care, and staples rose. The index barely moved.
The S&P 500 closed at 7,807.24, down -0.06% or 4.30 points. The Nasdaq fell -0.44%, or 120.27 points, to 27,245.90. The Dow gained +0.38%, or 195.60 points, to 51,850.55. Money moved from growth to value. The Russell 1000 Growth fund (IWF) fell -0.61% while the Russell 1000 Value fund (IWD) rose +0.44%. The equal-weight S&P 500 fund (RSP) added +0.07%, and the Russell 2000 fund (IWM) lost -0.37%.
Breadth told a split story. Only 43 of the 129 funds in our universe closed higher, 85 fell, and 1 was flat. Yet 8 of the 11 sector SPDRs rose. Energy led at +1.43%, followed by consumer staples (+1.17%) and communication services (+0.97%). Technology fell the most at -1.22%. Consumer discretionary lost -0.51% and industrials -0.06%. The broad sectors held up. The narrow theme funds took the losses, with hydrogen and humanoid robots hit hardest.
Monday was Columbus Day. Stocks traded normally, but the bond market was closed. Chips fell after Chinese memory maker CXMT reported progress on a new memory-cell design. Oil climbed on Middle East and Ukraine headlines. Reports said Russia struck Ukrainian power plants, and President Trump suggested the US could join Saudi strikes on the Houthis after attacks on Saudi airports. WTI crude rose +1.43% to $93.16 a barrel, and Brent +1.15% to $105.92. Gold slipped -0.48% to $4,195.90, and Bitcoin fell -1.03% to near $82,815. The VIX rose +2.49% to 15.21. The 10-year Treasury yield stayed at 5.24%.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 12, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	-2.78%	100	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	-2.19%	99	🔺	🔺	🔺
First Trust NASDAQ Cybersecurity (CIBR)	-2.00%	99	🔺	🔺	🔺
WisdomTree Cloud Computing (WCLD)	-1.21%	98	🔺	🔺	🔺
Global X Cloud Computing (CLOU)	-1.16%	97	🔺	🔺	🔺

All five leaders fell on Monday. That is a pause, not a break. Cybersecurity still holds the top three spots for a third day, and BUG is up +21.60% over one month. The two cloud funds slipped about -1.2% but still trade above all three averages.

Why They’re Strong — Sector Issues

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG · IHAK · CIBR) — The group gave back part of Friday’s jump. CrowdStrike fell -4.37%, Palo Alto Networks -3.57%, and Zscaler -3.40%. Okta lost -2.18%. We found no single headline behind the drop. After a one-month gain above +20%, it looks like profit-taking. BUG is still up +2.01% over five sessions.

WisdomTree Cloud Computing WCLD Daily

· Cloud software (WCLD · CLOU) — Software slipped with the rest of tech. The iShares software fund (IGV) fell -1.23%. Shopify was the exception. It rose +4.90% to $179.22, a one-year closing high. Palantir closed flat, just below its one-year high. WCLD is up +11.42% over one month and +2.59% over five sessions.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks medical devices, oil and gas producers, food and beverage, semiconductors, and cybersecurity. The iShares medical devices fund (IHI) fell to 10 on September 11 and now reads 88. The oil and gas producer fund (XOP) peaked at 98 on September 8, dropped to 43 on September 22, and sits at 65. The Invesco food and beverage fund (PBJ) started near 16 in August and has climbed to 57. The iShares semiconductor fund (SOXX) reached 100 on September 30 and has slipped to 85. The cybersecurity fund (BUG) fell to 19 on September 11 and still reads 100.

RS Breakdown Warnings (big 5-day drops)

· Global X hydrogen (HYDR) fell -79 points in five sessions, from 87 to 8. Roundhill humanoid robots (HUMN) lost -55 points, VanEck on-chain economy (NODE) -50, and the space theme fund (ORBX) -41.

· Global X autonomous and EV (DRIV) dropped -39 points and Global X CleanTech (CTEC) -35. HYDR fell -5.06% on Monday alone and -9.31% over five sessions.

RS Rebound Signals (sharp bounces off the bottom)

· Amplify online retail (IBUY) rebounded +49 points in five sessions, from 25 to 74. VanEck pharmaceuticals (PPH) also gained +49 points, iShares U.S. pharmaceuticals (IHE) +35, Global X aging population (AGNG) +34, and Global X millennial consumer (MILN) +30.

· Drug makers lead this list. PPH is up +2.87% over five sessions, which fits the health care strength below.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 12 closing move — 43 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
iShares U.S. Medical Devices (IHI)	+2.03%	83	🔺	🔺	🔽
SonicShares Global Shipping (BOAT)	+1.95%	96	🔺	🔺	🔺
United States Oil Fund (USO)	+1.91%	87	🔺	🔺	🔺
SPDR S&P Oil and Gas Exploration and Production (XOP)	+1.45%	73	🔺	🔺	🔺
Energy Select Sector SPDR (XLE)	+1.43%	82	🔺	🔺	🔺

Four of the five come from oil: crude, producers, the energy sector, and the ships that carry it. IHI is the outlier. It still trades below its 1-year average, so its rally is younger than the others.

Why They Rose — Sector Issues

iShares U.S. Medical Devices IHI Daily

· Medical devices and health care (IHI · XLV · IHF) — Medtronic rose +3.90%, Boston Scientific +2.60%, Abbott +2.23%, and Stryker +1.90%. We found no single headline behind the move. The health care SPDR (XLV) gained +0.69% and the iShares health care providers fund (IHF) +0.72%. IHI’s 1-month RS rank has jumped +37 points in five sessions.

Energy Select Sector SPDR XLE Daily

· Energy and tankers (XLE · USO · XOP · BOAT) — Exxon Mobil rose +1.90% to a one-year closing high. ConocoPhillips gained +2.58% and Chevron +1.42%. Tanker owners ran harder. DHT Holdings rose +6.41%, Okeanis Eco Tankers +5.93%, Frontline +5.51%, and International Seaways +3.67%, and all four closed at one-year highs. XLE is up +4.03% over five sessions.

Leading Sectors: Energy, Health Care, Consumer Staples

① Energy took the lead. Crude rose for a second session, and producers and tanker owners rose with it. Ships that carry crude earn more when supply routes look risky, so the tankers moved far more than oil itself.
② Defensive stocks drew the money. Coca-Cola rose +1.98%, Keurig Dr Pepper +3.12%, and Mondelez +2.28%. Walmart gained +1.55% and Costco +1.32%. The consumer staples SPDR is up +4.16% over five sessions. Investors bought steady earners while chips fell.
③ Chips took the hit. Micron fell -3.88% and Sandisk -5.97% on the CXMT news. AMD lost -2.28%, Broadcom -1.88%, and Nvidia -1.29%. SOXX is down -7.58% over five sessions. Meta was a bright spot in tech at +3.38%, after Mark Zuckerberg said its new AI model had caught up with the leading labs.
④ The last report covered the October 9 close. Its three picks, measured from that close to Monday’s: Tenable -1.97%, Netskope -0.55%, and Shopify +4.90%. The S&P 500 fell -0.06% over the same session. Only Shopify beat the index, and it cleared the $179.01 checkpoint to a one-year closing high. The two security picks fell with the cyber pullback. Recorded as is.

Three RS Leaders to Research: DHT Holdings · HCA Healthcare · BJ’s Wholesale

Selection: from the 1,152 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

DHT Holdings (DHT) — 1-Month RS 96: Supertanker Rates at Work

DHT Holdings DHT Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	98	96	+19.2%	SonicShares Global Shipping

Up +6.41% to $26.22, a one-year closing high, and +10.08% over five sessions. DHT owns a fleet of very large crude carriers, the supertankers that move about 2 million barrels per trip. Day rates for these ships passed $1 million in September as traffic near the Strait of Hormuz slowed. For the quarter ended June 30, shipping revenue rose to $284.8 million from $127.9 million a year earlier. Net income more than tripled to $198.3 million from $56.0 million, a record quarter for the company. What to watch for DHT Holdings: whether day rates stay high once Middle East tension eases.

HCA Healthcare (HCA) — 1-Month RS 87: Hospitals Back in Demand

HCA Healthcare HCA Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
89	92	87	+7.4%	iShares U.S. Healthcare Providers · Health Care Select Sector SPDR

Up +1.66% to $458.60, and +5.44% over five sessions. The stock is still well below its one-year closing high of $545.13 from March 9. HCA runs the largest chain of for-profit hospitals in the US. For the quarter ended June 30, revenue rose +8.7% to $20.23 billion from $18.61 billion, and adjusted earnings per share rose +11% to $7.59. Reports differ on whether the company raised or trimmed its full-year outlook in July. What to watch for HCA Healthcare: it rests on its third-quarter report in late October, where patient volumes and the outlook will settle that question.

BJ’s Wholesale (BJ) — 1-Month RS 90: A Warehouse Club Near Its High

BJ's Wholesale Club BJ Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
83	94	90	+9.1%	SPDR S&P Retail

Up +1.24% to $99.80, and +6.40% over five sessions. The one-year closing high is $102.78 from February 13. BJ’s runs membership warehouse clubs on the East Coast, selling groceries, household goods, and gasoline in bulk. We found no company news on Monday. The stock rose with Costco and Walmart. For the quarter ended August 1, revenue rose +15.7% to $6.23 billion from $5.38 billion. Operating income climbed +16.6% to $252.4 million, and net income +15.4% to $173.9 million. What to watch for BJ’s Wholesale: whether shoppers keep trading toward bulk savings as prices stay high.

DHT Holdings · HCA Healthcare · BJ’s Wholesale

· DHT Holdings levels to watch — The stock is up +10.08% in five sessions. Watch whether it holds above $24.93, the October 8 closing high it just cleared. A drop below it would turn the breakout into a false start.

· HCA Healthcare levels to watch — The stock sits about 16% below its March high. Watch whether it holds above $451.09, Friday’s close, into its late-October report. Losing that level would erase Monday’s gain.

· BJ’s Wholesale levels to watch — The stock is about 2.9% below its one-year high. Watch whether it closes above $102.78, February’s closing high. A close above it would mark a breakout.

What to Watch on Next Week’s Calendar

Third-quarter earnings season kicks off, Tuesday October 13 (8:00 p.m. KST). JPMorgan, Wells Fargo, Citigroup, and Goldman Sachs report before the US open, along with Johnson & Johnson and UnitedHealth. Health care funds rose on Monday. The two health care reports will show whether that strength has earnings behind it, which matters for HCA.
September CPI, Wednesday October 14 (9:30 p.m. KST). WTI is back above $93 a barrel. A hot reading would push yields higher and test the staples rally that lifted BJ’s Wholesale.
ASML and TSMC third-quarter results, Wednesday October 14 (2:00 p.m. KST) and Thursday October 15 (3:00 p.m. KST). SOXX is down -7.58% over five sessions. Their orders and guidance will show whether Monday’s memory scare was a dip or a turn.

Sector RS Rank Oct 9: Cybersecurity and Software Surge

J. Equity. Research — Fri, 09 Oct 2026 23:05:41 GMT

Sector RS Rank for the October 9, 2026 US session: the S&P 500 rose +0.59% to 7,811.54 and the Dow +0.83% to 51,654.95. 105 of the 129 ETFs in our universe closed higher, and 9 of the 11 sector SPDRs rose. Leading sectors: Cybersecurity, Software, Genomics. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Tenable, Netskope, Shopify.

💡 Today’s US market in three lines

① Today’s three stocks: Tenable · Netskope · Shopify — two security software names riding the cyber rally, plus an e-commerce platform near its one-year high.

② On October 9, the S&P 500 rose +0.59% to 7,811.54 and the Dow +0.83% to 51,654.95. 105 of the 129 ETFs in our universe closed higher, and 9 of the 11 sector SPDRs rose.

③ Cybersecurity rose +4.46% and genomics +4.44%, while telecom carriers crashed and T-Mobile fell -13.27%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 9 Sector RS — 129 ETFs · RRG v2

Security software ran. Telecom broke. Almost everything else rose quietly.
The S&P 500 closed at 7,811.54, up +0.59% or 46.18 points. That left it just 7.39 points below its record close of 7,818.93 from October 6. The Nasdaq rose +0.64%, or 172.83 points, to 27,366.17. The Dow gained +0.83%, or 423.31 points, to 51,654.95. All three finished the week higher, and the S&P 500 added +1.15% from the October 2 close. The gains were even. The equal-weight S&P 500 fund (RSP) rose +0.55% and the Russell 2000 fund (IWM) +0.49%. Growth and value moved together this time: the Russell 1000 Growth fund (IWF) gained +0.63% and the Russell 1000 Value fund (IWD) +0.61%.
Breadth was strong. 105 of the 129 funds in our universe closed higher and 24 closed lower. Nine of the 11 sector SPDRs rose. Real estate led at +1.86%, followed by health care (+1.58%) and consumer discretionary (+1.02%). Communication services fell the most at -1.51%, and energy slipped -0.25%. Consumer staples barely rose, at +0.01%.
One deal hit a whole industry. SpaceX agreed to buy a nationwide block of 800 MHz wireless spectrum from Grain Management, which bought it from T-Mobile only in August. The deal still needs FCC approval. Investors read it as a fourth national carrier in the making, and the three big carriers had their worst days in years. Elsewhere, the University of Michigan’s preliminary October consumer sentiment reading fell to 46.3, its lowest since May, against a consensus of 48. The 10-year Treasury yield held near 5.24%. WTI crude edged up +0.19% to $91.66 a barrel, and Brent rose +0.14% to $104.43. Gold gained +1.52% to $4,220.30, and Bitcoin rose +0.98% to near $82,475. The VIX fell -3.70% to 14.84.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 9, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	+4.46%	100	🔺	🔺	🔺
First Trust NASDAQ Cybersecurity (CIBR)	+3.58%	99	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	+3.96%	99	🔺	🔺	🔺
VanEck Fabless Semiconductor (SMHX)	-0.25%	98	🔺	🔺	🔺
iShares Semiconductor (SOXX)	-0.69%	97	🔺	🔺	🔺

Cybersecurity holds the top three spots for a second day. Over one month, BUG is up +23.20%, IHAK +17.70%, and CIBR +16.82%. All three gained more than +3.5% on Friday. The two chip funds slipped again but still trade above all three averages.

Why They’re Strong — Sector Issues

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG · CIBR · IHAK) — Zscaler led with a gain of +7.80%. It reaffirmed its full-year revenue outlook and announced work with IBM and Red Hat to protect apps in the gap between a security flaw going public and a patch shipping. The rest of the group followed. Palo Alto Networks rose +5.09%, CrowdStrike +4.57%, and Okta +5.41%. Cloudflare gained +5.57% and Fortinet +2.99%, and both closed at one-year highs. BUG is up +6.73% over five sessions.

iShares Semiconductor SOXX Daily

· Semiconductors (SMHX · SOXX) — Chips did not join the tech rebound. SOXX fell -0.69% and fabless chips -0.25%. Nvidia slipped -0.52% and AMD lost -2.03%, while Broadcom added +0.39%. Money moved from chips into software, where Snowflake rose +7.42% and Datadog +7.11%, both to one-year closing highs. SOXX is down -5.01% over five sessions.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks cybersecurity, software, genomics, semiconductors, and oil refiners. The cybersecurity fund (BUG) fell to 19 on September 11 and has read 100 since early October. The iShares software fund (IGV) dropped to 33 on September 9 and now sits at 97, its highest level in the window. The genomics fund (GNOM) peaked at 99 on September 17 and stands at 96. The iShares semiconductor fund (SOXX) climbed from 2 on August 10 to 100 on September 30 and now reads 94. The refiner fund (CRAK) peaked at 99 on September 8 and has slid to 67.

RS Breakdown Warnings (big 5-day drops)

· Global X blockchain (BKCH) fell -71 points in five sessions, from 80 to 9. VanEck digital transformation (DAPP) lost -64 points, VanEck on-chain economy (NODE) -62, and Amplify blockchain (BLOK) -43.

· The crypto stock funds rose about +1% on Friday, but they are down -3.7% to -7.7% over five sessions. The space theme fund (ORBX) dropped -30 points and Global X autonomous and EV (DRIV) -25.

RS Rebound Signals (sharp bounces off the bottom)

· Global X e-commerce (EBIZ) rebounded +43 points in five sessions, from 36 to 79. Global X millennial consumer (MILN) also gained +43 points, the consumer staples SPDR (XLP) +26, the materials SPDR (XLB) +24, and iShares U.S. pharmaceuticals (IHE) +20.

· Online retail leads this list. EBIZ rose +1.86% on Friday and +4.59% over five sessions, which fits Shopify’s move below.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 9 closing move — 105 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	+4.46%	100	🔺	🔺	🔺
Global X Genomics and Biotechnology (GNOM)	+4.44%	89	🔺	🔺	🔺
Global X Copper Miners (COPX)	+4.29%	37	🔽	🔺	🔺
iShares U.S. Digital Infrastructure and Real Estate (IDGT)	+4.17%	90	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	+3.96%	99	🔺	🔺	🔺

Two of the five are cyber funds again. The other three came from different corners: biotech, copper miners, and data center and tower real estate. COPX is the outlier. Its RS rank is only 37, and it still trades below its 1-month average.

Why They Rose — Sector Issues

Global X Genomics and Biotechnology GNOM Daily

· Genomics and biotech (GNOM · XBI · IBB) — Moderna jumped +14.21% to a one-year closing high after a New York Times report on a national cancer-vaccine effort. It is one of GNOM’s top holdings at about 10%. BioNTech rose +5.32% and Merck +2.26%. The SPDR biotech fund (XBI) and the iShares biotech fund (IBB) both gained +3.00%. GNOM is still down -1.25% over five sessions, so this was a one-day bounce.

Global X Copper Miners COPX Daily

· Copper and metals (COPX · CPER · GDX) — Copper miners rose with the metal. Southern Copper gained +5.31% and Freeport-McMoRan +3.58%. The copper fund (CPER) rose +2.15%, and the gold miners fund (GDX) +2.95% as gold climbed. We found no single headline behind the move. COPX is still down -3.23% over one month. Digital infrastructure (IDGT) also made the list as American Tower jumped +9.30% and Ciena added +5.6%.

Leading Sectors: Cybersecurity, Software, Genomics

① Security software took the lead. Zscaler’s reaffirmed outlook lifted the whole group, and Okta, Cloudflare, and Fortinet closed at one-year highs. Companies treat security as a cost they cannot cut, so the group held up during Thursday’s AI scare and rose on Friday.
② Software bounced while chips rested. Snowflake, Datadog, and Palantir closed at one-year highs, and the iShares software fund rose +2.81%. Chips fell for a second day. Over the past week, investors moved from AI hardware toward the software that runs on it.
③ Telecom took a direct hit. Verizon fell -10.14%, AT&T -10.82%, and T-Mobile -13.27% on the SpaceX spectrum deal. The communication services SPDR fell -1.51%. Refiners gave back part of Thursday’s jump: PBF Energy lost -5.67% and Valero -2.26%.
④ The last report covered the October 8 close. Its three picks, measured from that close to Friday’s: Phillips 66 -1.21%, International Seaways -1.64%, and Zscaler +7.80%. The S&P 500 rose +0.59% over the same session. Only Zscaler beat the index. The two oil picks fell as refiners and tankers cooled. Recorded as is.

Three RS Leaders to Research: Tenable · Netskope · Shopify

Selection: from the 1,147 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Tenable (TENB) — 1-Month RS 98: Exposure Management Back in Favor

Tenable TENB Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
98	98	98	+29.8%	Global X Cybersecurity · iShares Cybersecurity and Tech · WisdomTree Cloud Computing

Up +6.61% to $41.59, and +12.86% over five sessions. The one-year closing high is $42.65 from July 14. Tenable sells software that scans a company’s systems for weak points and ranks which ones to fix first. On October 6 it added Charlie Bell, a former AWS and Microsoft security executive, to its board. For the quarter ended June 30, revenue rose +8.6% to $268.5 million from $247.3 million. Operating income was $12.4 million, against an operating loss of $7.4 million a year earlier. Net income was $3.8 million. Growth is slower than at most of its peers. What to watch for Tenable: whether its AI security tools can lift that growth rate.

Netskope (NTSK) — 1-Month RS 99: A Young Listing Climbing Back

Netskope NTSK Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
97	99	99	+37.5%	iShares Cybersecurity and Tech · Global X Cybersecurity · WisdomTree Cloud Computing

Up +5.84% to $20.75, and +16.93% over five sessions. The stock is still below its one-year closing high of $24.26 from November 2025, shortly after it went public. Netskope sells cloud security that checks traffic between users, apps, and the web. An analyst upgrade on October 6 added to the run. For the quarter ended July 31, revenue rose +29.2% to $220.5 million from $170.8 million. The company still loses money. Its operating loss widened to $89.8 million from $46.0 million, and its net loss was $110.8 million. What to watch for Netskope: it rests on whether fast revenue growth starts to narrow those losses.

Shopify (SHOP) — 1-Month RS 98: E-Commerce Near Its High

Shopify SHOP Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
92	98	98	+35.0%	Global X E-commerce · Global X Cloud Computing · WisdomTree Cloud Computing

Up +3.82% to $170.85, and +12.85% over five sessions. The one-year closing high is $179.01 from October 29, 2025. Shopify runs the software that millions of merchants use to sell online and in stores. We found no company news on Friday. The stock rose with the software rebound and the e-commerce funds. For the quarter ended June 30, revenue rose +33.7% to $3.58 billion from $2.68 billion. Operating income climbed +67.7% to $488 million from $291 million. What to watch for Shopify: whether holiday-season sales keep revenue growing above +30%.

Tenable · Netskope · Shopify

· Tenable levels to watch — The stock sits about 2.5% below its July high. Watch whether it closes above $42.65, the one-year closing high. A close above it would mark a breakout.

· Netskope levels to watch — The stock is up +37.5% in one month. Watch whether it holds above $19.61, Thursday’s close. A drop below it would erase Friday’s gain.

· Shopify levels to watch — The stock is about 4.6% below its one-year high. Watch whether it reaches $179.01, last October’s closing high. Stalling below it would show the rebound running out of buyers.

What to Watch on Next Week’s Calendar

Bank earnings kick off, Tuesday October 13 (8:00 p.m. KST). JPMorgan, Wells Fargo, Citigroup, and Goldman Sachs report before the US open. Regional banks fell -0.83% on Friday and are down -6.50% over one month. Their loan outlook will show how much high rates are hurting borrowers.
September CPI, Wednesday October 14 (9:30 p.m. KST). Oil has stayed above $90 a barrel. A hot reading would push yields back toward this week’s 24-year high and pressure growth stocks like Netskope and Shopify.
ASML and TSMC third-quarter results, Wednesday October 14 (2:00 p.m. KST) and Thursday October 15 (3:00 p.m. KST). Chip funds fell -5.01% over five sessions. Their orders and guidance will show whether AI hardware spending is still growing.
September retail sales and PPI, Thursday October 15 (9:30 p.m. KST). Consumer sentiment just hit its lowest since May. Weak spending would test the e-commerce rebound behind Shopify.

Sector RS Rank Oct 8: Oil, Refiners Lead as Chips Slide

J. Equity. Research — Fri, 09 Oct 2026 11:58:46 GMT

Sector RS Rank for the October 8, 2026 US session: the S&P 500 fell -0.47% to 7,765.36 and the Nasdaq -1.25%, while the Dow edged up +0.10%. 54 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs rose. Leading sectors: Oil, Refiners, Consumer Staples. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Phillips 66, International Seaways, Zscaler.

💡 Today’s US market in three lines

① Today’s three stocks: Phillips 66 · International Seaways · Zscaler — a refiner and a tanker owner at one-year highs, plus a security software name still climbing back.

② On October 8, the S&P 500 fell -0.47% to 7,765.36 and the Nasdaq -1.25%, while the Dow edged up +0.10%. 54 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs rose.

③ Oil and gas producers rose +3.45% and the energy SPDR +2.97%, while the meme stock fund fell -5.84% and fabless chips -3.63%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 8 Sector RS — 129 ETFs · RRG v2

Chips sold off. Oil and staples took the money. Most stocks actually rose.
The S&P 500 closed at 7,765.36, down -0.47% or 36.41 points, its second straight loss. The Nasdaq fell -1.25%, or 345.35 points, to 27,193.34. The Dow rose +0.10%, or 51.77 points, to 51,231.64. Under the surface the picture was different. The equal-weight S&P 500 fund (RSP) gained +0.60%, and the Russell 2000 fund (IWM) was nearly flat at -0.05%. Growth lost to value by a wide margin: the Russell 1000 Growth fund (IWF) fell -1.28%, while the Russell 1000 Value fund (IWD) rose +0.49%.
Breadth was much better than the index suggests. 54 of the 129 funds in our universe closed higher and 75 closed lower, and 8 of the 11 sector SPDRs rose. Energy led at +2.97%, followed by consumer staples (+2.11%) and financials (+0.89%). Technology fell the most at -1.79%. Health care slipped -0.39% and utilities -0.19%.
Two headlines drove the split. A Financial Times report said OpenAI’s annualized revenue was about $20 billion lower than earlier estimates, and chip stocks fell hard on doubts about AI spending. Oil climbed after President Trump said he did not want a deal with Iran to end the war. He later said the US would not attack Iran before the midterm elections, and crude came off its highs. WTI crude futures still settled up +3.29% at $91.18 a barrel, and Brent rose +3.71% to $103.92. The 10-year Treasury yield eased to 5.23%. Gold rose +0.43% to $4,158.30, and Bitcoin fell -1.94% to near $81,660. Money did not leave stocks. It moved from chips into oil and steady earners.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 8, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	+0.17%	100	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	+1.11%	99	🔺	🔺	🔺
First Trust NASDAQ Cybersecurity (CIBR)	-0.35%	99	🔺	🔺	🔺
iShares Semiconductor (SOXX)	-3.35%	98	🔺	🔺	🔺
VanEck Fabless Semiconductor (SMHX)	-3.63%	97	🔺	🔺	🔺

Cybersecurity now holds the top three spots. All three cyber funds held steady while chips fell more than -3%. Over one month, BUG leads our universe at +17.30%, IHAK is up +12.69%, and CIBR +12.40%. The two chip funds slipped in rank but still trade above all three averages.

Why They’re Strong — Sector Issues

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG · IHAK · CIBR) — The cyber funds were mixed but firm, with BUG up +0.17% and IHAK +1.11%. Zscaler rose +1.53% and Okta +1.01%, a one-year closing high for Okta. CrowdStrike lost -0.92% and Palo Alto Networks -1.74%. Security spending does not depend on how fast AI revenue grows, so these names held up on a day of AI doubts. BUG is up +3.14% over five sessions.

iShares Semiconductor SOXX Daily

· Semiconductors (SOXX · SMHX) — The iShares semiconductor fund fell -3.35% and fabless chips -3.63%. Selling was broad. Nvidia fell -2.94%, AMD -3.90%, and Broadcom -4.35%. Micron lost -4.79%, Intel -5.34%, and Arm -6.48%. Taiwan Semiconductor fell -3.01%. The FT report questioned how fast AI spending can grow. Chip stocks carry the most AI hope, so they fell first. SOXX is down -2.26% over five sessions.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks oil producers, consumer staples, natural gas producers, semiconductors, and meme stocks. The oil and gas producer fund (IEO) peaked at 98 on September 8, dipped to 51 on September 22, and is back at 84. The consumer staples SPDR (XLP) sat at 9 on August 27 and now reads 75, its highest level in the window. The natural gas producer fund (FCG) peaked at 95 on September 15, fell to 10 on October 1, and has recovered to 37. The iShares semiconductor fund (SOXX) climbed from 2 on August 10 to 100 on September 30 and now sits at 94. The meme fund (MEME) bottomed at 3 on September 16 and stands at 86.

RS Breakdown Warnings (big 5-day drops)

· Roundhill humanoid robots (HUMN) fell -39 points in five sessions, from 68 to 29. It dropped -4.21% on Thursday alone.

· Our five-day calculation also flags blockchain, on-chain economy, hydrogen, and clean-tech funds, but their sheet ranks disagree, so we left them out.

RS Rebound Signals (sharp bounces off the bottom)

· The consumer staples SPDR (XLP) rebounded +40 points in five sessions, from 35 to 75. Invesco food and beverage (PBJ) gained +31 points, the consumer discretionary SPDR (XLY) +29, First Trust natural gas (FCG) +27, and Global X MLP and energy infrastructure (MLPX) +24.

· Staples and energy lead this list. XLP is up +3.85% over five sessions and FCG +3.37%. Defensive buying and fuel prices are pulling in the same direction.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 8 closing move — 54 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
iShares U.S. Oil & Gas Exploration & Production (IEO)	+3.45%	83	🔺	🔺	🔺
Energy Select Sector SPDR (XLE)	+2.97%	72	🔺	🔺	🔺
SPDR S&P Oil & Gas Exploration & Production (XOP)	+2.79%	72	🔺	🔺	🔺
United States Oil Fund (USO)	+2.55%	87	🔽	🔺	🔺
VanEck Oil Refiners (CRAK)	+2.34%	93	🔺	🔺	🔺

All five are oil funds. Four of them trade above all three averages. USO is still below its 1-month average and down -1.63% over five sessions. Producer stocks have run ahead of oil itself.

Why They Rose — Sector Issues

iShares Oil and Gas Exploration IEO Daily

· Oil producers and oil (IEO · XLE · XOP · USO) — Crude jumped after Trump’s comments on Iran. The big producers followed. Exxon Mobil rose +2.71%, Chevron +3.12%, and ConocoPhillips +3.35%. Occidental gained +3.56%, APA +3.79%, and Diamondback +3.96%. Higher oil prices flow straight into producer profits. IEO is up +6.27% over five sessions.

VanEck Oil Refiners CRAK Daily

· Refiners and tankers (CRAK · BOAT) — Refiners rose even more than producers. PBF Energy gained +6.76%, Marathon Petroleum +4.77%, and Valero +4.65%. Phillips 66 rose +3.67%, and all four closed at one-year highs. Tanker owners joined in. Okeanis Eco Tankers rose +7.27%, Frontline +6.03%, and International Seaways +4.17%. Supply risks around Iran keep fuel margins and freight rates high. CRAK is up +5.86% over five sessions.

Leading Sectors: Oil, Refiners, Consumer Staples

① AI doubts hit chips. One report on OpenAI’s revenue was enough to knock the biggest chip stocks down about -3% to -6%. The Nasdaq fell -1.25%, while the equal-weight S&P 500 rose +0.60%. That gap shows a rotation, not a broad sell-off.
② Oil took the lead. Producers, refiners, and tankers all rose, and refiners hit one-year highs together. Investors are betting that tension with Iran keeps oil supply tight.
③ Investors bought steady earners. Philip Morris rose +4.05% to a one-year closing high, and PepsiCo gained +3.73% after its quarterly report. Coca-Cola added +2.27%. Crypto and space names kept falling. IREN and CleanSpark dropped about -7.7% each, and AST SpaceMobile -6.13%.
④ The last report covered the October 7 close. Its three picks, measured from that close to Thursday’s: AbbVie +0.39%, Valero +4.65%, and Okeanis Eco Tankers +7.27%. The S&P 500 fell -0.47% over the same session. All three beat the index for the second report in a row. The refiner and tanker picks gained the most as oil jumped. Recorded as is.

Three RS Leaders to Research: Phillips 66 · International Seaways · Zscaler

Selection: from the 1,154 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Phillips 66 (PSX) — 1-Month RS 88: A Refiner at a One-Year High

Phillips 66 PSX Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
96	94	88	+8.0%	VanEck Oil Refiners · Energy Select Sector SPDR · iShares U.S. Oil & Gas Exploration & Production

Up +3.67% to $281.60, a one-year closing high, and +6.57% over five sessions. The previous closing high was $274.21 on September 17. Phillips 66 runs refineries and also owns pipelines, a chemicals joint venture, and fuel marketing. Refining is the part that moves most with fuel margins. For the quarter ended June 30, revenue rose +53.1% to $51.00 billion from $33.32 billion. Net income was $3.85 billion, or $9.55 a share, against $877 million, or $2.15, a year earlier. What to watch for Phillips 66: whether fuel margins stay this wide into the fourth quarter.

International Seaways (INSW) — 1-Month RS 95: Tanker Profits Keep Rising

International Seaways INSW Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
97	94	95	+16.4%	SonicShares Global Shipping

Up +4.17% to $121.82, a one-year closing high, and +6.30% over five sessions. International Seaways owns tankers that carry crude oil and refined fuels. Much of its fleet earns spot rates, so higher freight rates reach profits quickly. For the quarter ended June 30, revenue rose +138.9% to $467.3 million from $195.6 million. Operating income climbed to $301.3 million from $69.4 million. Net income was $294.9 million, or $5.91 a share, against $61.6 million, or $1.25, a year earlier. What to watch for International Seaways: it rests on how long supply risks keep tanker rates this high.

Zscaler (ZS) — 1-Month RS 99: Security Software Climbing Back

Zscaler ZS Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
75	97	99	+30.5%	Global X Cybersecurity · iShares Cybersecurity and Tech · Global X Cloud Computing

Up +1.53% to $216.81 on a day the Nasdaq fell -1.25%, and +9.07% over five sessions. The stock is still far below its one-year closing high of $336.27 from November 2025, so this is a recovery, not a breakout. Zscaler sells cloud security that sits between users and the apps they reach. At its Investor Day on October 6, the company reaffirmed its fiscal 2027 revenue outlook of $3.91 billion to $3.94 billion. For the fiscal year ended July 31, revenue rose +25.4% to $3.35 billion from $2.67 billion. The company still runs at a loss under standard accounting, with a net loss of $63.2 million against $41.5 million a year earlier. What to watch for Zscaler: whether growth holds near that guidance as the company shifts toward AI security.

Phillips 66 · International Seaways · Zscaler

· Phillips 66 levels to watch — The stock broke above its September high. Watch whether it holds above $274.21, the old closing high. Falling back below it would mean the breakout failed.

· International Seaways levels to watch — The stock is up +16.4% in one month. Watch whether it holds above $116.94, Wednesday’s close. A drop below it would show the oil spike fading.

· Zscaler levels to watch — The stock rose through a chip sell-off. Watch whether it holds above $212.25, its close on Investor Day. Holding there keeps the recovery on track.

What to Watch on Next Week’s Calendar

University of Michigan consumer sentiment, Friday October 9 (11:00 p.m. KST). The preliminary October reading includes inflation expectations. Oil rose more than +3% on Thursday. Higher expectations would push the rate outlook in the wrong direction for growth stocks.
September CPI, Wednesday October 14 (9:30 p.m. KST). Energy prices feed straight into this number. A hot reading would support Thursday’s rotation into oil and staples and add pressure on chips.
ASML and TSMC third-quarter results, Wednesday October 14 (2:00 p.m. KST) and Thursday October 15 (3:00 p.m. KST). These are the first big chip reports since the FT story. Their orders and guidance will show whether AI spending is actually slowing.

Sector RS Rank Oct 7: Fed Minutes Weigh, Health Care Leads

J. Equity. Research — Thu, 08 Oct 2026 06:53:08 GMT

Sector RS Rank for the October 7, 2026 US session: the S&P 500 fell -0.22% to 7,801.77, the Nasdaq -0.22%, and the Dow -0.66%. Only 13 of the 129 ETFs in our universe closed higher, and 10 of the 11 sector SPDRs fell. Leading sectors: Health Care, Refiners, Tankers. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: AbbVie, Valero, Okeanis Eco Tankers.

💡 Today’s US market in three lines

① Today’s three stocks: AbbVie · Valero · Okeanis Eco Tankers — a drugmaker at a record close, a refiner at a one-year high, and a tanker owner riding record freight rates.

② On October 7, the S&P 500 fell -0.22% to 7,801.77, the Nasdaq -0.22%, and the Dow -0.66%. Only 13 of the 129 ETFs in our universe closed higher, and 10 of the 11 sector SPDRs fell.

③ Natural gas rose +2.70% and pharmaceuticals +1.22%, while uranium fell -4.47% and blockchain -4.32%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 7 Sector RS — 129 ETFs · RRG v2

Records gave way to rate worries. Health care held up. Almost everything else slipped.
The S&P 500 closed at 7,801.77, down -0.22% or 17.16 points, one day after its record close. The Nasdaq also fell -0.22%, or 61.10 points, to 27,538.69. The Dow lost -0.66%, or 341.41 points, to 51,179.87. Small caps took the hardest hit. The Russell 2000 fund (IWM) fell -1.29%, and the equal-weight S&P 500 fund (RSP) dropped -0.81%. Growth and value fell by similar amounts, with the Russell 1000 Growth fund (IWF) down -0.33% and the Russell 1000 Value fund (IWD) down -0.38%.
Breadth was weak: only 13 of the 129 funds in our universe closed higher, 114 closed lower, one was flat, and one did not trade. Health care (+1.03%) was the only sector SPDR to rise. Industrials fell the most at -2.18%, followed by materials (-1.51%) and real estate (-1.29%).
The bond market set the tone. The 10-year Treasury yield touched 5.36% during the session, its highest since 2002, before closing near 5.28%. Minutes from the Fed’s September meeting said another rate increase would likely be appropriate by year end, with no date attached. WTI crude futures settled down -0.56% at $88.94 a barrel. Gold fell -1.20% to $4,136.70, and Bitcoin dropped about -2.8% to near $83,000. When yields climb this fast, investors cut the riskiest bets first.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 7, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Roundhill Meme Stock (MEME)	-2.63%	100	🔺	🔺	🔺
VanEck Fabless Semiconductor (SMHX)	-1.36%	99	🔺	🔺	🔺
iShares Semiconductor (SOXX)	-1.12%	99	🔺	🔺	🔺
Global X Cybersecurity (BUG)	-1.79%	98	🔺	🔺	🔺
VanEck Semiconductor (SMH)	-1.18%	97	🔺	🔺	🔺

All five leaders fell, yet all five still trade above their 1-month, 1-quarter, and 1-year averages. One down day does not break that kind of trend. Over one month, BUG still leads our entire universe at +17.19%, and SMHX is second at +13.47%. The list is the same five names as Tuesday, only reshuffled.

Why They’re Strong — Sector Issues

iShares Semiconductor SOXX Daily

· Chips and meme stocks (SOXX · SMHX · SMH · MEME) — The iShares semiconductor fund fell -1.12% and fabless chips -1.36%. Most large names eased from their highs. Nvidia slipped -0.74% and AMD -0.55%. Arm lost -2.71%, Qualcomm -2.16%, and Applied Materials -1.81%. Micron went the other way, up +4.06%. Roundhill’s meme fund fell -2.63%, dragged by AI and space names. Nebius dropped -5.09% and AST SpaceMobile -3.91%. SOXX is still up +2.49% over five sessions and MEME +4.46%.

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG) — Global X’s cybersecurity fund fell -1.79% after its run to one-year highs. CrowdStrike lost -4.81%, Palo Alto Networks -3.42%, and Cloudflare -3.39%. Zscaler bucked the move with +0.61%. We found no single headline. Higher yields hit richly valued software first. BUG is up +3.64% over five sessions.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks natural gas, health care, shipping, uranium, and wind. The natural gas fund (UNG) sat at 1 on August 5, peaked at 98 on September 24, and now holds at 90. The health care SPDR (XLV) climbed from 38 to a high of 84 on September 28 and stands at 80. Global shipping (BOAT) dipped to 69 on August 27, peaked at 99 on September 10, and is at 84. Global X uranium (URA) went from 96 on August 27 to 1 on September 25 and has only reached 2. First Trust wind (FAN) peaked at 64 on September 9 and is back at 26.

RS Breakdown Warnings (big 5-day drops)

· The biotech SPDR (XBI) fell -30 points in five sessions, from 63 to 33. The US oil fund (USO) lost -26 points, from 96 to 70.

· Biotech kept sliding even on a day when big drugmakers rose. XBI is down -4.72% over five sessions. We left out blockchain, on-chain economy, hydrogen, and clean-energy funds, because their sheet ranks disagree with our five-day calculation.

RS Rebound Signals (sharp bounces off the bottom)

· Global X lithium and battery (LIT) rebounded +31 points in five sessions, from 10 to 41. The consumer discretionary SPDR (XLY) gained +30 points, Global X e-commerce (EBIZ) +29, Global X millennial consumer (MILN) +29, and iShares transportation (IYT) +22.

· Consumer names lead this list. XLY is up +2.32% over five sessions and LIT +1.59%. EBIZ and MILN barely moved in price, so their gains came mostly from other funds falling.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 7 closing move — 13 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
United States Natural Gas (UNG)	+2.70%	82	🔺	🔺	🔽
VanEck Pharmaceutical (PPH)	+1.22%	44	🔽	🔽	🔺
iShares U.S. Pharmaceuticals (IHE)	+1.07%	43	🔽	🔽	🔺
Health Care Select Sector SPDR (XLV)	+1.03%	58	🔺	🔺	🔺
VanEck Oil Refiners (CRAK)	+0.72%	85	🔺	🔺	🔺

Three of the five are health care funds. That is a defensive pattern. The two pharma funds still rank in the bottom half, so this was one good day, not a new trend. CRAK and UNG are the only ones that also rank in the top fifth.

Why They Rose — Sector Issues

SPDR Health Care XLV Daily

· Health care and pharmaceuticals (XLV · PPH · IHE) — Big drugmakers drew the money that left growth stocks. Eli Lilly rose +2.70%, Amgen +2.60%, Pfizer and Gilead +1.82% each, and AbbVie +1.75%. Johnson & Johnson added +1.44%. UnitedHealth was flat at -0.09%. We found no single headline for the group. Drugmakers have steady cash flows, and investors tend to buy them when yields jump. XLV is up only +0.23% over five sessions, so this was a one-day shift.

VanEck Oil Refiners CRAK Daily

· Natural gas, refiners, and tankers (UNG · CRAK · BOAT) — Natural gas futures rose +3.24% to $3.21. We found no single headline for the jump. Refiners gained even as crude slipped. Marathon Petroleum rose +2.29% and Valero +1.16%, a one-year closing high for Valero. Tanker owners also rose. Okeanis Eco Tankers gained +1.37% and Teekay Tankers +0.87%. Attacks on ships near Hormuz and in the Red Sea have kept fuel and freight tight. CRAK is up +3.88% over five sessions.

Leading Sectors: Health Care, Refiners, Tankers

① Rates moved first. The 10-year yield hit its highest level since 2002 during the day, and the Fed minutes kept a year-end hike on the table. Small caps fell -1.29%, and industrials fell -2.18%. Those two groups borrow the most and feel higher rates first.
② Investors hid in drugmakers. Health care was the only sector SPDR to rise. Large pharma names gained, while biotech funds stayed weak. Investors wanted profits today, not trial results later.
③ Power and crypto gave back. Uranium fell -4.47% and VanEck’s nuclear fund -3.80%, one day after their big jump on the Google–Constellation deal. Cameco lost -4.25% and Oklo -4.49%. Blockchain fell -4.32% as Bitcoin slid. Bitcoin miners fell hard, with IREN and CleanSpark down -6.27% each. Fast gains reversed fast.
④ The last report covered the October 6 close. Its three picks, measured from that close to Wednesday’s: Talen Energy +1.40%, Vistra +3.88%, and Ciena +0.63%. The S&P 500 fell -0.22% over the same session. All three beat the index. Talen and Vistra held their Tuesday jump even as nuclear funds fell. Recorded as is.

Three RS Leaders to Research: AbbVie · Valero · Okeanis Eco Tankers

Selection: from the 1,149 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

AbbVie (ABBV) — 1-Month RS 89: A Drugmaker at a Record Close

AbbVie ABBV Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
96	81	89	+9.1%	Health Care Select Sector SPDR · Global X Aging Population · VanEck Pharmaceutical

Up +1.75% to $271.36, a one-year closing high, and +3.73% over five sessions. AbbVie sells the immune drugs Skyrizi and Rinvoq, along with cancer and neuroscience drugs. News reports on Wednesday highlighted two FDA Breakthrough Therapy designations for its experimental cancer drug Temab-A, in colorectal and lung cancer. The drug is not approved anywhere yet. For the quarter ended June 30, revenue rose +10.2% to $16.99 billion from $15.42 billion. Operating income climbed +31.4% to $6.43 billion from $4.89 billion. Net income was $3.61 billion, or $2.03 a share, against $938 million, or $0.52, a year earlier. AbbVie reports third-quarter results on October 30. What to watch for AbbVie: whether Skyrizi and Rinvoq keep growing fast enough to cover older drugs losing patent protection.

Valero Energy (VLO) — 1-Month RS 92: A Refiner at a One-Year High

Valero Energy VLO Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
92	96	92	+10.8%	iShares U.S. Oil & Gas Exploration & Production · VanEck Oil Refiners · Energy Select Sector SPDR

Up +1.16% to $424.10, a one-year closing high, and +9.41% over five sessions. Valero is one of the largest independent refiners in the US. It earns the gap between crude prices and the fuels it sells, and that gap has stayed unusually wide this year. Global refining capacity is short, and war has disrupted supply. For the quarter ended June 30, revenue rose +48.8% to $44.48 billion from $29.89 billion. Operating income jumped to $5.20 billion from $997 million. Net income was $3.72 billion, or $12.62 a share, against $714 million, or $2.28, a year earlier. What to watch for Valero: it rests on how long refining margins stay this wide.

Okeanis Eco Tankers (ECO) — 1-Month RS 98: Big Tankers at Record Rates

Okeanis Eco Tankers ECO Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
94	96	98	+25.9%	SonicShares Global Shipping

Up +1.37% to $88.04, and +8.85% over five sessions. The close sits just below its one-year closing high of $88.60. Okeanis owns 18 crude tankers: 10 Suezmax ships and 8 VLCCs, the largest class. Much of its fleet trades on the spot market, so higher daily rates flow quickly into profit. Daily rates for VLCCs topped $1 million in September, as attacks around Hormuz and the Red Sea cut available ships. For the second quarter, revenue rose to $318.9 million from $93.9 million. Net income was $230.3 million, or $5.90 a share, against $26.9 million, or $0.84, a year earlier. The company declared a quarterly dividend of $5.25 a share. What to watch for Okeanis Eco Tankers: whether freight rates stay high once shipping lanes calm down.

AbbVie · Valero · Okeanis Eco Tankers

· AbbVie levels to watch — The stock set a record on a weak day. Watch whether it holds above $266.69, Tuesday’s close and its prior high. Earnings on October 30 are the next real test.

· Valero levels to watch — The stock is up +9.41% in five sessions. Watch whether it holds above $419.22, Tuesday’s close. Slipping back would mean the margin trade is cooling.

· Okeanis Eco Tankers levels to watch — The stock is up +25.9% in one month. Watch whether it breaks above $88.60, its one-year closing high. A close above it would confirm the rate story still has buyers.

What to Watch on Next Week’s Calendar

30-year Treasury auction, Friday October 9 (2:00 a.m. KST). The 10-year yield hit its highest level since 2002 on Wednesday. Weak demand at this auction would push long rates higher again. Small caps and industrials fell the most on Wednesday and would feel it first.
Big bank and health care earnings, Tuesday October 13 (from 8:00 p.m. KST). JPMorgan opens the third-quarter season, with Wells Fargo, Citi, Goldman Sachs, Johnson & Johnson, and UnitedHealth also due. Health care was Wednesday’s only rising sector. Results from J&J and UnitedHealth will show whether that move has earnings behind it.
September CPI, Wednesday October 14 (9:30 p.m. KST). The Fed minutes left a year-end hike open. A hot inflation number would make that hike more likely and keep yields high.

Sector RS Rank Oct 6: Nuclear Power Surges, Utilities Lead

J. Equity. Research — Wed, 07 Oct 2026 03:42:01 GMT

Sector RS Rank for the October 6, 2026 US session: the S&P 500 rose +0.58% to a record 7,818.93, the Nasdaq +0.45% to a record close, and the Dow +0.49%. 91 of the 129 ETFs in our universe closed higher, and 10 of the 11 sector SPDRs rose. Leading sectors: Nuclear Power, Utilities, Cybersecurity. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Talen Energy, Vistra, Ciena.

💡 Today’s US market in three lines

① Today’s three stocks: Talen Energy · Vistra · Ciena — two power producers that rallied on a Google nuclear deal, and an optical networking maker that jumped with AI data-center spending.

② On October 6, the S&P 500 rose +0.58% to a record 7,818.93, the Nasdaq +0.45% to a record close, and the Dow +0.49%. 91 of the 129 ETFs in our universe closed higher, and 10 of the 11 sector SPDRs rose.

③ Utilities rose +5.59% and nuclear stocks +5.50%, while genomics fell -6.50% and biotech -3.39%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 6 Sector RS — 129 ETFs · RRG v2

The S&P 500 set a record. Nuclear power led the day. Biotech gave back its gains.
The S&P 500 closed at 7,818.93, up +0.58% or 44.98 points. It was the index’s first record close since August 13, when it ended at 7,798.99. The Nasdaq rose +0.45%, or 122.48 points, to another record at 27,599.79. The Dow gained +0.49%, or 253.38 points, to 51,521.28. Small caps lagged. The Russell 2000 fund (IWM) fell -0.72%, while the equal-weight S&P 500 fund (RSP) rose +0.57%. Growth and value moved together, with the Russell 1000 Growth fund (IWF) up +0.65% and the Russell 1000 Value fund (IWD) up +0.55%.
Breadth was solid: 91 of the 129 funds in our universe closed higher and 38 closed lower. Utilities (+2.98%) led the sector SPDRs by a wide margin, followed by consumer discretionary (+1.18%) and real estate (+1.06%). Health care was the only sector to fall, by -0.17%.
The 10-year Treasury yield eased four basis points to 5.27%. That is still near its highest level in about 24 years. WTI crude futures settled up +0.54% at $89.91 a barrel, and gold rose +0.86% to $4,192.70. The VIX fell to 15.01. Lower yields gave investors room to buy, and the Google–Constellation deal told them where.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 6, 2026. Cybersecurity and AI chips tie at 96; cybersecurity is listed. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Roundhill Meme Stock (MEME)	+0.95%	100	🔺	🔺	🔺
VanEck Fabless Semiconductor (SMHX)	+1.92%	99	🔺	🔺	🔺
iShares Semiconductor (SOXX)	-0.01%	99	🔺	🔺	🔺
VanEck Semiconductor (SMH)	-0.22%	97	🔺	🔺	🔺
Global X Cybersecurity (BUG)	+2.10%	96	🔺	🔺	🔺

Three of the five leaders rose, and all five trade above their 1-month, 1-quarter, and 1-year averages. The two big chip funds slipped. Fabless chips and cybersecurity carried the group. Over one month, BUG leads our entire universe at +17.79%, and SMHX is second at +15.62%. Cybersecurity is a new name on this list.

Why They’re Strong — Sector Issues

iShares Semiconductor SOXX Daily

· Chips (SMHX · SOXX · SMH) — Fabless chips rose +1.92%, while the iShares semiconductor fund was flat at -0.01% and VanEck’s semiconductor fund dipped -0.22%. Chip designers gained. Marvell rose +5.81% on the day of its investor day, where it laid out long-term targets for AI data-center connections. Broadcom added +3.67% and AMD +2.80%. Equipment makers fell. KLA lost -4.54%, Lam Research -3.44%, and Applied Materials -2.21%. Intel dropped -3.18% and Micron -1.73%. Those losses kept SOXX flat. SOXX is up +3.88% over five sessions.

Roundhill Meme Stock MEME Daily

· Meme stocks (MEME) — Roundhill’s meme-stock fund rose +0.95% and keeps the top rank. Its holdings split by theme. AI and space names gained. Nebius rose +7.44%, Applied Optoelectronics +7.07%, and AST SpaceMobile +8.01%. Moderna, a large holding, fell -7.75% with biotech. The fund is up +5.42% over five sessions.

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG) — Global X’s cybersecurity fund rose +2.10%. Zscaler gained +5.18%, Fortinet +3.88%, Palo Alto Networks +3.23%, and CrowdStrike +2.27%. Fortinet, Palo Alto, and CrowdStrike all set one-year closing highs. We found no single headline for the move. The group has climbed steadily for weeks, and BUG is up +7.24% over five sessions.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks utilities, two nuclear funds, genomics, and biotech. Virtus Reaves utilities (UTES) sat at 1 on August 12 and has climbed to 72, its high for the period. Range’s nuclear fund (NUKZ) peaked at 71 on August 14, fell to 16 on September 28, and is back at 51. VanEck’s nuclear fund (NLR) dropped from 90 on August 26 to 2 on September 25 and has only reached 13. Genomics (GNOM) peaked at 99 on September 17 and holds at 88. The biotech SPDR (XBI) fell from 88 on September 1 to 17.

RS Breakdown Warnings (big 5-day drops)

· iShares U.S. pharmaceuticals (IHE) fell -42 points in five sessions, from 71 to 29. iShares biotechnology (IBB) lost -33 points, VanEck pharmaceuticals (PPH) -26, crude oil (USO) -20, and the health care SPDR (XLV) -20.

· Health care is losing ground on all fronts. IHE is down -3.83% over five sessions and IBB -3.76%. We left out blockchain, farm-tech, and on-chain economy funds, because their sheet ranks disagree with our five-day calculation.

RS Rebound Signals (sharp bounces off the bottom)

· Global X copper miners (COPX) rebounded +30 points in five sessions, from 13 to 43. Global X e-commerce (EBIZ) gained +28 points, Range nuclear (NUKZ) +22, the consumer discretionary SPDR (XLY) +22, and the utilities SPDR (XLU) +17.

· Nuclear and utilities show up here as well as on the rising list. NUKZ is up +4.53% over five sessions and XLU +3.65%. COPX and EBIZ barely moved in price, so their gains came mostly from other funds falling.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 6 closing move — 91 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Virtus Reaves Utilities (UTES)	+5.59%	78	🔺	🔺	🔽
VanEck Uranium and Nuclear (NLR)	+5.50%	22	🔺	🔽	🔽
Global X Uranium (URA)	+4.01%	15	🔽	🔽	🔽
Defiance AI & Power Infrastructure (AIPO)	+3.62%	91	🔺	🔺	🔺
Range Nuclear Renaissance (NUKZ)	+3.54%	57	🔺	🔽	🔽

All five are power stories. Four of them hold nuclear plants or uranium miners. AIPO is the only one that also ranks in the top tier, at 91. NLR and URA still rank near the bottom, so one strong day has not fixed their longer trend.

Why They Rose — Sector Issues

Virtus Reaves Utilities UTES Daily

· Nuclear power and utilities (UTES · NLR · URA · NUKZ · AIPO) — Google and Constellation Energy signed a 20-year power purchase agreement. It pays for upgrades at 11 existing Constellation reactors in Illinois, Pennsylvania, and New Jersey. The work is expected to add 890 megawatts of round-the-clock power to the PJM grid. Constellation jumped +12.25% to $300.40. Talen Energy rose +12.43% and Vistra +10.77%, though neither company is part of the deal. Uranium names followed. Cameco gained +6.35%, Centrus Energy +8.80%, and Oklo +7.17%. In AIPO, Quanta Services rose +5.29% and GE Vernova +3.96%. The deal shows tech companies will pay for power from plants that already run. UTES is up +7.05% over five sessions.

Leading Sectors: Nuclear Power, Utilities, Cybersecurity

① Power is the new bottleneck trade. Google did not wait for new reactors. It paid to squeeze more output from old ones. Investors bought every company that owns nuclear plants in PJM, the grid that serves many East Coast data centers.
② Security software kept climbing. Cybersecurity funds rose for another day, and three large names closed at one-year highs. Chip designers gained, while equipment makers fell. Investors bought the companies closest to AI spending and sold those tied to factory orders.
③ Biotech broke hard. Genomics fell -6.50%, its worst day among the 129 funds. Twist Bioscience fell -18.55% and 10x Genomics -17.47%. We found no single headline. The group had run up fast, and GNOM is still up +5.20% over one month. This looks like profit-taking.
④ The last report covered the October 5 close. Its three picks, measured from that close to Tuesday’s: Twist Bioscience -18.55%, Schrodinger -11.35%, and GRAIL -10.90%. The S&P 500 rose +0.58% over the same session. All three trailed the index by a wide margin. The picks rode the genomics rally, and they fell hardest when it reversed. Recorded as is.

Three RS Leaders to Research: Talen Energy · Vistra · Ciena

Selection: from the 1,131 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Talen Energy (TLN) — 1-Month RS 95: A Nuclear Plant Next to a Data Center

Talen Energy TLN Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	99	95	+17.7%	Virtus Reaves Utilities · Range Nuclear Renaissance · VanEck Onchain Economy

Up +12.43% to $373.11, and +18.51% over five sessions. Talen owns the Susquehanna nuclear plant in Pennsylvania, which sits on the PJM grid. It already sells power from that plant to Amazon. Tuesday’s jump was a read-through from the Google deal. Talen was not a party. Investors priced in more deals of the same kind for other plant owners. For the quarter ended June 30, revenue rose +18.6% to $747 million from $630 million. The company posted an operating loss of $72 million against operating income of $66 million a year earlier. The net loss was $92 million, or $2.00 a share. The stock is still down -0.5% this year, below its one-year high of $445.84. What to watch for Talen Energy: whether it can sign its own long-term deal with a large tech buyer.

Vistra (VST) — 1-Month RS 87: The Largest Competitive Power Producer

Vistra VST Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	98	87	+7.5%	Virtus Reaves Utilities · Global X U.S. Electrification · SPDR Utilities Sector

Up +10.77% to $160.50, and +13.97% over five sessions. Vistra runs gas, coal, and nuclear plants, including the Comanche Peak nuclear site in Texas and plants across PJM. Like Talen, it rose on the Google deal without being part of it. For the quarter ended June 30, revenue fell -5.5% to $4.02 billion from $4.25 billion. Operating income still rose +7.4% to $553 million from $515 million. Net income was $305 million, or $0.76 a share, against $327 million a year earlier. The stock is down -0.5% this year and well below its one-year high of $210.85. What to watch for Vistra: it rests on whether higher power prices and new contracts lift earnings, not just the share price.

Ciena (CIEN) — 1-Month RS 99: The Optical Links Between AI Data Centers

Ciena CIEN Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	100	99	+38.2%	iShares U.S. Digital Infrastructure and Real Estate · First Trust Dow Jones Internet

Up +13.85% to $443.65, and +25.00% over five sessions. Ciena makes optical networking gear that carries data between and inside data centers. Marvell’s investor day on Tuesday put AI connection demand back in focus, and optical stocks rose together. Lumentum gained +3.82% and Arista Networks +4.09%. For the fiscal third quarter ended August 1, revenue rose +37.0% to $1.67 billion from $1.22 billion. Operating income climbed to $301.2 million from $73.5 million. Net income was $266.4 million, or $1.83 a share, against $50.3 million, or $0.35, a year earlier. The stock is up +89.7% this year but still below its June high of $627.00. What to watch for Ciena: whether hyperscaler orders keep growing as fast as the stock has.

Talen Energy · Vistra · Ciena

· Talen Energy levels to watch — The stock jumped on someone else’s deal. Watch whether it holds above $331.87, Monday’s close. Giving that back would mean the read-through faded.

· Vistra levels to watch — Revenue fell last quarter even as profit rose. Watch whether it holds above $144.89, Monday’s close. A gap this large often gets tested within days.

· Ciena levels to watch — The stock is up +38.2% in one month. Watch whether it holds above $389.69, Monday’s close. A drop back under that level would erase Tuesday’s jump.

What to Watch on Next Week’s Calendar

10-year Treasury auction and FOMC minutes, Thursday October 8 (2:00 a.m. and 3:00 a.m. KST). The 10-year yield eased to 5.27% on Tuesday, and utilities led the market. Utilities trade like bonds, so weak auction demand would hit them first. The minutes show how many officials favored more hikes.
Samsung Electronics preliminary third-quarter results and TSMC September sales, Thursday October 8. Both are early reads on AI chip demand. Chip designers rose on Tuesday while equipment makers fell. Strong numbers would back the designers.
OCP Global Summit, October 12–15 local time in San Jose. The conference covers AI data-center power, cooling, and networking. Ciena and the power producers both rose on data-center demand this week. New spending plans there would test that story.

Sector RS Rank Oct 5: Nasdaq Record, Genomics Leads

J. Equity. Research — Mon, 05 Oct 2026 23:06:04 GMT

Sector RS Rank for the October 5, 2026 US session: the S&P 500 rose +0.66% to 7,773.95, the Nasdaq +1.05% to a record close, and the Dow +0.18%. 96 of the 129 ETFs in our universe closed higher, and 10 of the 11 sector SPDRs rose. Leading sectors: Genomics, Health Tech, Chips. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Twist Bioscience, Schrodinger, GRAIL.

💡 Today’s US market in three lines

① Today’s three stocks: Twist Bioscience · Schrodinger · GRAIL — a DNA maker at a one-year closing high, a drug-discovery software company that turned a quarterly profit, and a cancer-test developer waiting on the FDA.

② On October 5, the S&P 500 rose +0.66% to 7,773.95, the Nasdaq +1.05% to a record close, and the Dow +0.18%. 96 of the 129 ETFs in our universe closed higher, and 10 of the 11 sector SPDRs rose.

③ Genomics stocks rose +3.85% and telemedicine +3.22%, while oil fell -2.29% and homebuilders -1.22%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 5 Sector RS — 129 ETFs · RRG v2

The Nasdaq set a record. Health technology led the gains. Oil kept sliding.
The S&P 500 closed at 7,773.95, up +0.66% or 51.23 points. The Nasdaq gained +1.05%, or 286.45 points, to a record close of 27,477.31. The Dow rose +0.18%, or 90.94 points, to 51,267.90. The Nasdaq-100 fund (QQQ) rose +0.88%, and the Russell 2000 fund (IWM) and the equal-weight S&P 500 fund (RSP) both gained +0.66%. Growth beat value again. The Russell 1000 Growth fund (IWF) rose +1.01% and the Russell 1000 Value fund (IWD) +0.39%.
Breadth stayed broad: 96 of the 129 funds in our universe closed higher, 32 closed lower, and one was flat. Materials (+1.31%) led the sector SPDRs, followed by communication services (+1.17%) and energy (+1.00%). Real estate was the only sector to fall, by -0.34%. Energy stocks rose even as crude dropped, because oilfield service companies rallied.
The ISM services index for September came in at 54.9, down from 55.4 and below the 55.7 economists expected. The prices-paid index rose to 74.0 from 72.6. The 10-year Treasury yield added three basis points to 5.31%, near its highest level in about 20 years. Stocks rose anyway. Friday’s weak jobs report still keeps traders from betting on an October rate hike.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 5, 2026. Genomics and AI chips tie at 96; genomics is listed. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Roundhill Meme Stock (MEME)	+0.97%	99	🔺	🔺	🔺
iShares Semiconductor (SOXX)	+0.10%	99	🔺	🔺	🔺
VanEck Fabless Semiconductor (SMHX)	+0.54%	98	🔺	🔺	🔺
VanEck Semiconductor (SMH)	+0.52%	97	🔺	🔺	🔺
Global X Genomics & Biotechnology (GNOM)	+3.85%	96	🔺	🔺	🔺

All five leaders rose, and all five trade above their 1-month, 1-quarter, and 1-year averages. The chip funds barely moved, though. SOXX added just +0.10%. Genomics did the heavy lifting at +3.85%. Over one month, SOXX leads our universe at +17.39%, and the meme-stock fund is second at +16.41%. Oil fell out of the top five. USO now ranks 90 on the sheet.

Why They’re Strong — Sector Issues

iShares Semiconductor SOXX Daily

· Chips (SOXX · SMHX · SMH) — The iShares semiconductor fund rose +0.10%, fabless chips +0.54%, and VanEck’s semiconductor fund +0.52%. Nvidia gained +2.12% to a record close of $238.90, above its May 14 high. Broadcom rose +2.08% and TSMC +2.75%. TSMC touched a record during the session on reports of talks with Elon Musk’s Terafab chip factory. Intel fell -2.63%, Micron -1.02%, and AMD -0.34%. Those three are large SOXX holdings, which kept the fund flat. SOXX is up +5.12% over five sessions.

Roundhill Meme Stock MEME Daily

· Meme stocks (MEME) — Roundhill’s meme-stock fund rose +0.97%. Its holdings went both ways. Applied Optoelectronics, the largest, gained +5.17%, and Moderna added +6.95%. Nebius fell -4.22% and IREN -3.07%. The fund is up +7.02% over five sessions, the best five-day run among the leaders.

Global X Genomics and Biotechnology GNOM Daily

· Genomics (GNOM) — Global X’s genomics fund jumped +3.85%, its best day among the 129 funds. Twist Bioscience, its second-largest holding, rose +8.66%. Illumina gained +7.56%, Moderna +6.95%, Guardant Health +5.30%, and 10x Genomics +4.53%. Drug news added fuel across biotech. Vaxcyte surged +30.70% after late-stage vaccine trial results. Genmab rose +10.73% on lymphoma drug data. GNOM is up +11.28% over one month.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks genomics, telemedicine, oil services, crude oil, and drug makers. Genomics (GNOM) sat at 16 on August 3, peaked at 99 on September 17, and holds at 95. Telemedicine (HEAL) peaked at 93 on August 20 and is back at 74. Oil services (OIH) fell from 89 to 5 on October 1 and has bounced to 19. Crude oil (USO) dropped from 100 to 9 in late August, climbed back to the top, and has now slipped to 78. iShares’ pharmaceuticals fund (IHE) went from 75 on September 28 to 29.

RS Breakdown Warnings (big 5-day drops)

· iShares U.S. pharmaceuticals (IHE) fell -46 points in five sessions, from 75 to 29. VanEck’s agribusiness fund (MOO) lost -45 points, VanEck’s pharmaceuticals fund (PPH) -43, the health care SPDR (XLV) -29, and crude oil (USO) -22.

· Big drug makers lagged the rally. IHE is down -4.82% over five sessions and PPH -3.47%. Money moved from large pharma into smaller genomics and biotech names. We left out farm-tech and blockchain funds, because their sheet ranks disagree with our five-day calculation.

RS Rebound Signals (sharp bounces off the bottom)

· First Trust industrial renaissance (AIRR) rebounded +44 points in five sessions, from 23 to 67. Global X copper miners (COPX) gained +29 points, iShares transportation (IYT) +26, Global X e-commerce (EBIZ) +24, and Range’s nuclear fund (NUKZ) +22.

· Prices rose only a little. AIRR is up +2.40% over five sessions, and IYT +0.99%. These funds climbed the ranking mostly because oil, farm, and drug funds fell faster.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 5 closing move — 96 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Genomics & Biotechnology (GNOM)	+3.85%	96	🔺	🔺	🔺
Global X Telemedicine & Digital Health (HEAL)	+3.22%	75	🔺	🔺	🔺
VanEck Oil Services (OIH)	+3.14%	19	🔽	🔽	🔺
iShares U.S. Oil Equipment & Services (IEZ)	+2.69%	8	🔽	🔽	🔺
Global X FinTech (FINX)	+2.51%	22	🔽	🔽	🔽

Health technology took the top two spots. In HEAL, Tempus AI jumped +9.03%, Oscar Health +4.78%, and Veeva +3.70%. Oil services came next, though OIH and IEZ still rank near the bottom. Fintech rose on Brazil. Nu Holdings surged +13.03% after Flávio Bolsonaro edged ahead of President Lula in the first round of Brazil’s election. FINX trades below all three averages.

Why They Rose — Sector Issues

VanEck Oil Services OIH Daily

· Oil services (OIH · IEZ) — VanEck’s oil services fund rose +3.14%, and iShares’ oil equipment fund +2.69%. SLB, the largest holding, gained +3.16%, Baker Hughes +2.46%, and Halliburton +2.92%. Offshore drillers did better. Transocean rose +6.58% and Noble +4.55%. The gains came as crude fell. WTI futures lost -1.99% to $89.30 a barrel, and the oil fund (USO) fell -2.29%. We found no single headline for the rebound. OIH’s rank had sunk to 5 on October 1, so this looks like buyers stepping back in after a long slide. OIH is still down -8.17% over one month.

Leading Sectors: Genomics, Health Tech, Chips

① Rates did not stop the rally. The 10-year yield rose to 5.31%, and the ISM prices index climbed to 74.0. Stocks still rose. A weak jobs report on Friday lowered the odds of an October hike, and investors focused on that.
② The money went to genomics and health technology. These are smaller, higher-risk names. Big pharma did not join in. The iShares pharmaceuticals fund slipped -0.44%, while genomics jumped +3.85%. That gap shows investors chasing growth stories, not steady earnings.
③ Oil is losing its lead. USO fell -2.29% and is down -4.01% over five sessions. Its sheet rank has dropped from 100 to 90. Homebuilders kept falling as well. Lennar dropped -6.73%, and the iShares homebuilders fund (ITB) fell -1.22% with a rank of 10.
④ The last report covered the October 2 close. Its three picks, measured from that close to Monday’s: MACOM +2.08%, Teradyne -1.00%, and Hewlett Packard Enterprise -1.40%. The S&P 500 rose +0.66% over the same session. MACOM beat the index, and Teradyne and HPE trailed it. Recorded as is.

Three RS Leaders to Research: Twist Bioscience · Schrodinger · GRAIL

Selection: from the 1,129 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Twist Bioscience (TWST) — 1-Month RS 100: DNA for AI Drug Discovery

Twist Bioscience TWST Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	98	100	+59.3%	Global X Genomics & Biotechnology · SPDR S&P Biotech · iShares Biotechnology

Up +8.66% to $205.00, a one-year closing high, and +14.14% over five sessions. Twist makes synthetic DNA on silicon chips. Drug developers, researchers, and diagnostics labs use it. In mid-September it signed a deal to supply antibody data and lab services to TuneLab, Eli Lilly’s AI drug discovery platform. Guggenheim also more than doubled its price target to $212 from $107. We found no new company news on Monday, so the gain came with the genomics rally. For the quarter ended June 30, revenue rose +23.2% to $118.4 million from $96.1 million. The operating loss widened to $36.3 million from $30.1 million. The net loss was $35.1 million, or $0.56 a share, against net income of $20.4 million a year earlier. The stock is up about 546% this year. What to watch for Twist Bioscience: whether AI drug deals turn into steady revenue growth.

Schrodinger (SDGR) — 1-Month RS 100: From Software to New Drug Companies

Schrodinger SDGR Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	96	100	+57.4%	Global X Telemedicine & Digital Health

Up +7.56% to $32.60, a one-year closing high, and +10.51% over five sessions. Schrodinger sells physics-based software that drug makers use to design molecules. It also runs its own drug programs. On September 9 it announced Tectora Therapeutics, a new company it co-founded with NEA and RA Capital. Schrodinger handed over two early-stage programs in exchange for an equity stake, milestone payments, and royalties. Monday’s gain came with the health-tech rally. We found no new company announcement. For the quarter ended June 30, revenue rose +7.5% to $58.9 million from $54.8 million. The operating loss narrowed to $41.5 million from $52.9 million. Net income was $6.0 million, or $0.08 a share, against a loss of $43.2 million. That profit came from items outside operations, since the business itself still lost money. The stock is up about 82% this year. What to watch for Schrodinger: it rests on whether partner deals like Tectora keep adding value.

GRAIL (GRAL) — 1-Month RS 100: A Cancer Blood Test Nears Approval

GRAIL GRAL Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	99	100	+91.1%	SPDR S&P Biotech

Up +7.55% to $154.08, a one-year closing high, and +16.17% over five sessions. GRAIL makes Galleri, a blood test that screens for more than 50 types of cancer. An FDA advisory panel voted 7-2 that the test’s benefits outweigh its risks. The panel voted 6-4 on effectiveness and unanimously on safety. The vote is not binding, and the FDA has not yet made a final decision. Monday’s gain extended last week’s run. For the quarter ended June 30, revenue rose +25.7% to $44.7 million from $35.5 million. The operating loss widened to $173.8 million from $158.9 million. The net loss was $110.2 million, or $2.56 a share. The stock is up about 80% this year. What to watch for GRAIL: it depends on the FDA’s final decision and on whether insurers agree to pay for the test.

Twist Bioscience · Schrodinger · GRAIL

· Twist Bioscience levels to watch — The stock is close to Guggenheim’s target already. Watch whether it clears $212. A close back under $188.67, Friday’s level, would erase Monday’s jump.

· Schrodinger levels to watch — The stock closed at a one-year high. Watch whether it holds above $30.31, Friday’s close. A +57.4% one-month run leaves room for a pullback.

· GRAIL levels to watch — The stock is up +91.1% in one month ahead of the FDA ruling. Watch whether it holds above $143.26, Friday’s close. A delay or a weak label could reverse the run quickly.

What to Watch on Next Week’s Calendar

10-year Treasury auction and FOMC minutes, Thursday October 8 (2:00 a.m. and 3:00 a.m. KST). The 10-year yield closed at 5.31%, and the ISM prices index rose to 74.0. Weak demand at the auction would push yields higher. The minutes show how many officials favored more hikes.
Samsung Electronics preliminary third-quarter results and TSMC September sales, Thursday October 8. Both are early reads on memory and chip demand. Chip funds hold the top of the ranking, but SOXX rose only +0.10% on Monday. Strong numbers would give the group a fresh push.
30-year Treasury auction, Friday October 9 (2:00 a.m. KST). Long-term yields feed into mortgage rates. Homebuilders (ITB) rank only 10 and fell -1.22% on Monday. A weak auction would add to the pressure.

Sector RS Rank Oct 2: Chips and Space ETFs Lead

J. Equity. Research — Fri, 02 Oct 2026 23:10:03 GMT

Sector RS Rank for the October 2, 2026 US session: the S&P 500 rose +0.73% to 7,722.72, the Nasdaq +1.19%, and the Dow +0.49%. 103 of the 129 ETFs in our universe closed higher, and 10 of the 11 sector SPDRs rose. Leading sectors: Chips, Space, Energy Storage. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Teradyne, Hewlett Packard Enterprise, MACOM.

💡 Today’s US market in three lines

① Today’s three stocks: Teradyne · Hewlett Packard Enterprise · MACOM — a chip-test maker that jumped on new memory testers, a networking and server company at a one-year closing high, and a data-center chip supplier climbing back from its spring slide.

② On October 2, the S&P 500 rose +0.73% to 7,722.72, the Nasdaq +1.19%, and the Dow +0.49%. 103 of the 129 ETFs in our universe closed higher, and 10 of the 11 sector SPDRs rose.

③ Space stocks rose +3.91% and energy storage +3.40%, while oil fell -1.77% and weight-loss drug stocks -0.85%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 2 Sector RS — 129 ETFs · RRG v2

A weak jobs report took an October rate hike off the table. Tech led the rally. Oil went the other way.
The S&P 500 closed at 7,722.72, up +0.73% or 56.27 points. The Nasdaq gained +1.19%, or 319.26 points, to 27,190.86. The Dow rose +0.49%, or 250.40 points, to 51,176.96. The Nasdaq-100 fund (QQQ) rose +1.02%, the Russell 2000 fund (IWM) +0.90%, and the equal-weight S&P 500 fund (RSP) +0.35%. Growth beat value again. The Russell 1000 Growth fund (IWF) gained +1.07% and the Russell 1000 Value fund (IWD) +0.46%.
Breadth was broad: 103 of the 129 funds in our universe closed higher and 26 closed lower. Consumer discretionary (+1.13%) led the sector SPDRs, helped by Tesla’s +4.65% gain on third-quarter deliveries. Technology (+1.01%) and industrials (+0.78%) followed. Health care was the only sector to slip, by -0.01%. Energy added just +0.19%.
Employers added only 29,000 jobs in September, against the 84,000 economists expected. The unemployment rate rose to 4.2% from 4.1%, and August was revised down to 133,000. The 10-year Treasury yield first fell to about 5.18%. It then turned around and closed at 5.28%, up four basis points. Stocks held their gains anyway. Traders cut the odds of an October hike to about 17% on CME FedWatch, from about 36% a week earlier.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 2, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
United States Oil Fund (USO)	-1.77%	100	🔽	🔺	🔺
iShares Semiconductor (SOXX)	+2.18%	99	🔺	🔺	🔺
Roundhill Meme Stock (MEME)	+2.48%	99	🔺	🔺	🔺
Global X AI Semiconductor & Quantum (CHPX)	+1.95%	98	🔺	🔺	🔺
VanEck Fabless Semiconductor (SMHX)	+2.38%	97	🔺	🔺	🔺

Four of the five leaders rose, each by about 2%. Oil was the exception at -1.77%, and it slipped below its 1-month average. It still holds the top rank on a +4.41% one-month gain. The meme-stock fund is up +19.40% over one month, the best in our universe, and SOXX is second at +17.44%.

Why They’re Strong — Sector Issues

United States Oil Fund USO Daily

· Oil (USO) — The oil fund fell -1.77%, and WTI crude futures lost -1.73% to $91.26 a barrel. The Group of Seven agreed to release up to 100 million barrels of emergency oil and diesel stocks over four months, coordinated by the International Energy Agency. A large share of the diesel is due within the first 20 days. Washington had pushed for the release to bring fuel prices down. Refiners barely moved after Thursday’s surge. Marathon Petroleum added +0.52% and VanEck’s refiners fund +0.99%. USO is down -0.65% over five sessions.

iShares Semiconductor SOXX Daily

· Chips (SOXX · CHPX · SMHX) — The iShares semiconductor fund rose +2.18%, Global X’s AI chip fund +1.95%, and fabless chips +2.38%. AMD gained +2.95% to a one-year closing high of $633.91. Broadcom rose +3.35%, TSMC +2.96%, and Nvidia +1.34% after trading at a record during the session. Test and equipment makers did better. Teradyne jumped +8.00% and KLA +3.27%. Micron slipped -2.05%. Synaptics surged +14.08% after ON Semiconductor switched its bid to all cash at $123 a share. Storage was the weak spot. Seagate fell -10.21% and Western Digital -10.22% on reports that Toshiba plans to add hard-drive capacity.

Roundhill Meme Stock MEME Daily

· Meme stocks (MEME) — Roundhill’s meme-stock fund rose +2.48%. Despite the name, its top holdings now lean toward AI hardware. Applied Optoelectronics, its largest holding, gained +7.71%. Rocket Lab rose +4.91%, Super Micro Computer +4.22%, and Bloom Energy +4.17%. Astera Labs fell -1.71%. The fund is up +1.78% over five sessions.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks energy storage, natural gas, solar, cloud software, and GLP-1 drug makers. The iShares energy storage fund (IBAT) sat at 4 on August 3 and has climbed to 81, its high for the period. Natural gas (UNG) went from 1 in early August to 98 on September 24, then fell back to 57. Invesco’s solar fund (TAN) peaked at 41 on August 27 and sits at 26. WisdomTree’s cloud fund (WCLD) dropped from 99 to 29 on September 28 and has bounced to 70. Roundhill’s GLP-1 fund (OZEM) reached 75 on September 2 and is down to 11.

RS Breakdown Warnings (big 5-day drops)

· No breakdown passed our check this week. Our five-day calculation flags farm, natural gas, oil, and refiner funds. The sheet ranks still hold them high, though. USO sits at 100 and VanEck’s refiners fund at 96, so the two sources disagree.

· Oil is the one to watch. If crude keeps falling as reserve barrels arrive, the sheet ranks should start to drop too.

RS Rebound Signals (sharp bounces off the bottom)

· iShares transportation (IYT) rebounded +40 points in five sessions, from 13 to 53. Invesco’s leisure and entertainment fund (PEJ) gained +32 points, Range’s nuclear fund (NUKZ) +22, Invesco’s solar fund (TAN) +20, and SPDR aerospace and defense (XAR) +20.

· Prices barely moved. IYT is up +1.07% over five sessions, and XAR is down -2.66%. These funds climbed the ranking because oil, gas, and farm funds fell faster. Transports gain most from cheaper fuel, so the G7 release gives IYT a real reason to keep going.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 2 closing move — 103 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Space Tech (ORBX)	+3.91%	78	🔺	🔽	🔽
iShares Energy Storage & Materials (IBAT)	+3.40%	83	🔺	🔺	🔺
United States Natural Gas Fund (UNG)	+3.05%	78	🔽	🔺	🔽
Global X Copper Miners (COPX)	+3.01%	15	🔽	🔺	🔺
Global X Hydrogen (HYDR)	+2.93%	84	🔺	🔺	🔺

None of the five came from the leaders’ list. Space led as SpaceX, 22.6% of ORBX, rose +7.35%. Copper miners bounced with Freeport-McMoRan up +3.98%, but COPX ranks only 15 and remains below its 1-month average. Natural gas rose +3.05% after a -5.93% drop over five sessions. IBAT and HYDR trade above all three averages.

Why They Rose — Sector Issues

iShares Energy Storage and Materials IBAT Daily

· Energy storage and hydrogen (IBAT · HYDR) — iShares’ energy storage fund rose +3.40%, and Global X’s hydrogen fund +2.93%. Bloom Energy, the largest holding in both funds, gained +4.17%. Its fuel-cell systems power data centers. FuelCell Energy jumped +11.47%, and Plug Power added +0.53%. Lower odds of a rate hike help capital-heavy power projects. IBAT is up +3.23% over five sessions and +4.40% over one month.

Leading Sectors: Chips, Space, Energy Storage

① The jobs report changed the rate outlook. Hiring slowed to 29,000 and unemployment rose. A week ago, traders saw a 36% chance of an October hike. Now they see about 17%. Yields came back by the close, but tech stocks held their gains.
② The money stayed in hardware. Chips, optical parts, servers, and test equipment all rose. Cloud software did not follow. ServiceNow fell -2.45%, Twilio -2.22%, and Paycom -2.85%. Global X’s cloud fund slipped -0.66%.
③ Oil turned around. Thursday’s rally came on China’s fuel export halt. Friday’s drop came on the G7 release. Crude is still near $91, and USO keeps the top rank for now.
④ The last report covered the October 1 close. Its three picks, measured from that close to Friday’s: Lam Research +2.17%, Marathon Petroleum +0.52%, and Synopsys -0.13%. The S&P 500 rose +0.73% over the same session. Lam Research beat the index, and Marathon and Synopsys trailed it. Recorded as is.

Three RS Leaders to Research: Teradyne · Hewlett Packard Enterprise · MACOM

Selection: from the 1,157 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Teradyne (TER) — 1-Month RS 98: New Testers for AI Memory

Teradyne TER Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	99	98	+31.4%	ARK Autonomous Technology & Robotics · iShares Semiconductor · Roundhill Humanoid Robotics

Up +8.00% to $449.04, and +12.72% over five sessions. Teradyne makes the machines that test chips before they ship, and it also sells factory robots. It launched Magnum E2, a tester for next-generation DRAM and NAND memory used in AI data centers. It also signed a multi-year deal with GS Microelectronics for a test center built on its platforms. For the quarter ended June 28, revenue rose +103.9% to $1.329 billion from $651.8 million. Operating income rose to $437.8 million from $90.7 million. Net income was $374.5 million, or $2.38 a share, against $78.4 million, or $0.49. The stock is up about 132% this year and sits 7.2% below its June 30 closing high of $483.84. What to watch for Teradyne: whether memory makers order the new testers this quarter.

Hewlett Packard Enterprise (HPE) — 1-Month RS 99: Networking Targets Go Up

Hewlett Packard Enterprise HPE Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	97	99	+33.8%	Global X Data Center & Digital Infrastructure · Global X AI Semiconductor & Quantum · Defiance Quantum

Up +7.36% to $69.33, a one-year closing high, and +10.15% over five sessions. HPE sells servers, storage, and networking gear, and it bought Juniper Networks in July 2025. At a networking investor day earlier this week, it raised its fiscal 2027 networking growth forecast to the high teens to low 20s percent, from 14% to 17%. It also raised its yearly cost-savings target from the Juniper deal to $800 million by the end of fiscal 2028. Cloud provider Vultr placed a $1.2 billion order for AMD-based AI server racks. Citigroup raised its price target to $92 from $76. For the quarter ended July 31, revenue rose +33.7% to $12.21 billion from $9.14 billion, with Juniper counted for the full quarter this time. Operating income rose to $1.39 billion from $247 million. Net income was $1.54 billion, or $1.06 a share, against $305 million, or $0.21. The stock is up about 189% this year. What to watch for Hewlett Packard Enterprise: it rests on whether AI networking orders keep pace with the new targets.

MACOM (MTSI) — 1-Month RS 96: An Upgrade After the Slide

MACOM Technology Solutions MTSI Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	99	96	+24.9%	iShares Semiconductor

Up +6.62% to $321.60, and +12.62% over five sessions. MACOM makes radio-frequency, microwave, and optical chips for data centers, defense, and telecom networks. BMO Capital upgraded the stock to Outperform on Thursday with a $335 target, citing a reset valuation after the pullback from May. The company recently launched a 3.2-terabit optical chipset for AI data-center links. Friday’s gain came with the broad chip rally. For the quarter ended July 3, revenue rose +35.8% to $342.2 million from $252.1 million. Operating income rose to $77.1 million from $37.7 million. The stock is up about 88% this year but sits 21.5% below its May 26 closing high of $409.68. What to watch for MACOM: whether data-center orders can carry it back toward the May high.

Teradyne · Hewlett Packard Enterprise · MACOM

· Teradyne levels to watch — The stock is 7.2% below its June high. Watch whether it closes above $483.84. A close back under $415.79, Thursday’s level, would erase Friday’s jump.

· Hewlett Packard Enterprise levels to watch — The stock closed at a one-year high. Watch whether it holds above $64.58, Thursday’s close, after the investor-day run. Citigroup’s $92 target is the upside marker.

· MACOM levels to watch — The stock is close to BMO’s target already. Watch whether it clears $335. Two big up days in a row leave room for a pullback.

What to Watch on Next Week’s Calendar

OPEC+ meeting, Sunday October 4. Producers meet two days after the G7 release pushed WTI down to $91.26. Higher output on top of the reserve barrels would weigh on USO’s top rank.
September ISM services index, Monday October 5 (11:00 p.m. KST). The jobs report was weak, but the 10-year still closed at 5.28%. A soft services reading would back up the jobs data. A hot price component would push yields higher again.
10-year Treasury auction and FOMC minutes, Thursday October 8 (2:00 a.m. and 3:00 a.m. KST). The auction tests demand at yields near 5.28%. The minutes show how many officials favored more hikes before the jobs miss.
Samsung Electronics preliminary third-quarter results and TSMC September sales, Thursday October 8. Both are early reads on memory and chip demand. Strong numbers would support Teradyne’s memory testers and the chip funds near the top of the ranking.

Sector RS Rank Oct 1: Oil Jumps, Biotech Slips

J. Equity. Research — Thu, 01 Oct 2026 23:05:27 GMT

Sector RS Rank for the October 1, 2026 US session: the S&P 500 rose +0.19% to 7,666.45, and the Dow and the Nasdaq each added +0.04%. 71 of the 129 ETFs in our universe closed higher, and 5 of the 11 sector SPDRs rose. Leading sectors: Oil, Chips, Cybersecurity. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Synopsys, Marathon Petroleum, Lam Research.

💡 Today’s US market in three lines

① Today’s three stocks: Synopsys · Marathon Petroleum · Lam Research — a chip-design software maker that jumped on its 2027 outlook, a refiner 1.1% below its one-year closing high, and an equipment maker in line for Micron’s spending.

② On October 1, the S&P 500 rose +0.19% to 7,666.45, and the Dow and the Nasdaq each added +0.04%. 71 of the 129 ETFs in our universe closed higher, and 5 of the 11 sector SPDRs rose.

③ Oil producers rose +3.33% and chips +1.35%, while genomics fell -2.41% and biotech -2.17%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Oct 1 Sector RS — 129 ETFs · RRG v2

Stocks slipped in the morning and recovered by the close. Bond yields set the direction both times. Oil and chips did the lifting.
The S&P 500 closed at 7,666.45, up +0.19% or 14.91 points. The Dow rose +0.04%, or 20.51 points, to 50,926.56. The Nasdaq gained +0.04% to 26,871.60. The Nasdaq-100 fund (QQQ) rose +0.31%, the equal-weight S&P 500 fund (RSP) +0.47%, and the Russell 2000 fund (IWM) +0.41%. Growth beat value. The Russell 1000 Growth fund (IWF) gained +0.38% and the Russell 1000 Value fund (IWD) +0.13%.
Breadth was solid: 71 of the 129 funds in our universe closed higher, 57 closed lower, and one did not trade. Energy (+1.95%) led the sector SPDRs, followed by technology (+1.05%) and industrials (+0.99%). Health care (-1.32%) fell the most, then communication services (-0.93%).
The September ISM manufacturing index came in at 54.5, a sign of expansion. Its prices-paid gauge jumped 6.8 points to 77.9, well above the 72 economists expected. The 10-year Treasury yield touched 5.30% during the session, a fresh multidecade high, then eased to 5.24% at the close. The 30-year yield slipped to 5.60%. Weekly jobless claims fell to 197,000. Stocks drifted lower on the price data and came back as yields came off the high.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, October 1, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
United States Oil Fund (USO)	+2.99%	100	🔺	🔺	🔺
iShares Semiconductor (SOXX)	+1.35%	99	🔺	🔺	🔺
Global X Cybersecurity (BUG)	+0.65%	99	🔺	🔺	🔺
VanEck Fabless Semiconductor (SMHX)	+1.88%	98	🔺	🔺	🔺
VanEck Semiconductor (SMH)	+1.45%	97	🔺	🔺	🔺

All five leaders rose. Oil gained the most at +2.99%, and the three chip funds added between +1.35% and +1.88%. Cybersecurity lagged at +0.65%. All five trade above all three moving averages. SOXX is up +15.19% over one month, second in our universe only to the meme-stock fund.

Why They’re Strong — Sector Issues

United States Oil Fund USO Daily

· Oil (USO) — The oil fund rose +2.99%, and WTI crude futures gained +2.75% to $92.91 a barrel. China told its refiners to stop shipping fuel to destinations other than Hong Kong and Macau until further notice, and PetroChina cancelled several October gasoline and jet fuel cargoes. That takes supply out of a fuel market already tight since the conflict with Iran. Refiners outside China gained the most. PBF Energy rose +6.99%, Marathon Petroleum +6.25%, and Valero +5.38%. USO is still down -2.01% over five sessions.

iShares Semiconductor SOXX Daily

· Chips (SOXX · SMHX · SMH) — The iShares semiconductor fund rose +1.35%, fabless chips +1.88%, and VanEck’s semiconductor fund +1.45%. Micron gained +3.03% to $1,097.39 after its fiscal fourth-quarter report. Revenue reached $54.23 billion, and the company guided to about $61.5 billion for the current quarter. It also plans about $25 billion of capital spending in the first half of fiscal 2027. Equipment makers sell into that budget. Applied Materials rose +3.50%, Lam Research +3.53%, and KLA +2.77%. Optical names moved more: Coherent jumped +10.90% and Lumentum +7.67%. Broadcom fell -2.15%.

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG · CIBR · IHAK) — Global X’s cybersecurity fund rose +0.65%, First Trust’s fund +0.67%, and iShares’ fund +1.02%. CrowdStrike (+0.51%) and Okta (+1.68%) both closed at one-year highs. Palo Alto Networks slipped -0.27% after Wednesday’s high, and Zscaler fell -0.32%. The group held its ground without leading. BUG is up +11.89% over one month, though it is down -0.36% over five sessions.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks oil producers, generative AI, US manufacturing, biotech, and natural gas. The iShares oil and gas producers fund (IEO) stayed between 94 and 98 through mid-September, dropped to 51 on September 22, and sits at 60. Roundhill’s generative AI fund (CHAT) fell to 17 on September 14 and has climbed back to 95. The US manufacturing fund (MADE) rose from 5 on September 3 to 70. SPDR biotech (XBI) went from 63 to 38 in one day. Natural gas (UNG) peaked at 98 on September 24 and has halved to 49.

RS Breakdown Warnings (big 5-day drops)

· Natural gas (UNG) lost -49 points in five trading days, from 98 to 49. Alerian’s pipeline fund (AMLP) dropped -33 points, and iShares oil and gas producers (IEO) -18.

· UNG is down -12.03% over five sessions, and pipeline funds fell with gas. IEO is the odd one. It rose +3.33% on Thursday, but it is up only +1.04% over five sessions while chips kept climbing. Several oil-service, gas-producer, and farm funds show bigger drops in our five-day calculation, but the sheet ranks do not confirm them, so they are left out.

RS Rebound Signals (sharp bounces off the bottom)

· iShares transportation (IYT) rebounded +30 points in five sessions, from 15 to 45. Homebuilders (ITB) gained +26 points, online retail (IBUY) +21, SPDR retail (XRT) +17, and e-commerce (EBIZ) +16.

· These funds barely moved in price. IYT is up +0.15% over five sessions, and ITB is down -1.06%. They climbed the ranking because gas, pipeline, and farm funds fell faster. Housing and retail need lower yields, so Thursday’s retreat from 5.30% helps only if it lasts.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by October 1 closing move — 71 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
iShares Oil & Gas E&P (IEO)	+3.33%	81	🔽	🔺	🔺
United States Oil Fund (USO)	+2.99%	100	🔺	🔺	🔺
SPDR Oil & Gas E&P (XOP)	+2.77%	77	🔽	🔺	🔺
Roundhill Meme Stock (MEME)	+2.70%	96	🔺	🔺	🔺
WisdomTree Cloud Computing (WCLD)	+2.17%	84	🔺	🔺	🔺

Oil took three of the five spots. Producers led as crude climbed. The meme-stock fund rose on its optical-chip holdings, Lumentum and Coherent, while GameStop fell -2.19%. WisdomTree’s cloud fund rounded out the list as HubSpot gained +6.08% and Salesforce +3.10%. IEO and XOP are still below their 1-month averages, so this was a bounce inside a pullback.

Why They Rose — Sector Issues

iShares Oil and Gas Exploration IEO Daily

· Oil and gas producers (IEO · XOP · XLE) — iShares’ producers fund rose +3.33%, SPDR’s producers fund +2.77%, and the energy SPDR +1.95%. Occidental gained +4.56%, APA +4.33%, EOG +2.58%, and ConocoPhillips +1.53%. Exxon added only +0.66%. IEO also holds refiners, and Marathon Petroleum alone makes up 12.6% of the fund, which helped it beat XOP. IEO is still down -2.28% over one month.

Leading Sectors: Oil, Chips, Cybersecurity

① Yields moved the market again. The ISM price gauge pushed the 10-year to 5.30% in the morning, and stocks fell. When it eased to 5.24%, they recovered. Friday’s jobs report is the next test.
② Money left health care. Amgen fell -3.38%, Regeneron -3.09%, and Vertex -3.07%. We found no single headline behind the drop. The cash went to chips and oil, the two groups with fresh news.
③ China’s export halt put refiners ahead of crude. WTI rose +2.75%, but Marathon, Valero, and PBF each gained more than +5%. Refiners earn the gap between crude and fuel prices. That gap widens when fuel gets scarce.
④ The last report covered the September 30 close. Its three picks, measured from that close to Thursday’s: PBF Energy +6.99%, Datadog +0.95%, and Palo Alto Networks -0.27%. The S&P 500 rose +0.19% over the same session. PBF and Datadog beat the index, and Palo Alto trailed it. Recorded as is.

Three RS Leaders to Research: Synopsys · Marathon Petroleum · Lam Research

Selection: from the 1,152 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Synopsys (SNPS) — 1-Month RS 95: A 2027 Outlook Above Forecasts

Synopsys SNPS Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	100	95	+18.3%	VanEck Fabless Semiconductor · iShares Expanded Tech-Software · VanEck Semiconductor

Up +12.78% to $490.54, and +15.45% over five sessions. Synopsys sells the software engineers use to design and test chips, and it bought simulation-software maker Ansys in July 2025. At its investor day on Thursday, it guided fiscal 2027 revenue up as much as +15% to about $11.2 billion, above analyst forecasts. It also announced a chip-design deal with Amazon Web Services worth more than $1 billion, a partnership with OpenAI, and plans to buy back about $1 billion of shares. KeyBanc raised its price target to $605 from $600. For the quarter ended July 31, revenue rose +42.4% to $2.477 billion from $1.740 billion, with Ansys counted for the full quarter this time. Operating income rose to $357.5 million from $165.3 million, and net income to $545.8 million from $242.5 million. The stock is up only about 4% this year and sits 8.2% below its May 26 closing high of $534.56. What to watch for Synopsys: whether the 2027 targets survive the next two quarterly reports.

Marathon Petroleum (MPC) — 1-Month RS 89: Fuel Gets Scarcer

Marathon Petroleum MPC Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	97	89	+9.7%	iShares Oil & Gas E&P · VanEck Oil Refiners · Energy Select Sector SPDR

Up +6.25% to $420.15, and +7.47% over five sessions. Marathon Petroleum is one of the largest US refiners, with plants on the Gulf Coast, in the Midwest, and on the West Coast, and it controls pipeline operator MPLX. China’s halt means fewer diesel and gasoline cargoes in Asia, and refiners elsewhere can sell into that gap. For the quarter ended June 30, revenue rose +53.8% to $51.99 billion from $33.80 billion. Operating income was $7.32 billion against $2.20 billion a year earlier. Net income was $5.14 billion, or $17.73 a share, against $1.22 billion, or $3.96. The stock is up about 158% this year and sits 1.1% below its September 18 closing high of $424.89. What to watch for Marathon Petroleum: it depends on how long China keeps its fuel at home.

Lam Research (LRCX) — 1-Month RS 94: Micron’s Spending Plan

Lam Research LRCX Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
94	98	94	+17.2%	VanEck Semiconductor · iShares Semiconductor · Technology Select Sector SPDR

Up +3.53% to $340.10, and +10.72% over five sessions. Lam Research makes the etch and deposition machines that build up the layers of a chip, and memory makers are among its biggest customers. Micron plans about $11.5 billion of capital spending this quarter and about $25 billion over the first half of fiscal 2027. For the fiscal year ended June 28, Lam’s revenue rose +26.0% to $23.23 billion from $18.44 billion. Operating income rose to $8.20 billion from $5.90 billion, and net income to $7.27 billion, or $5.76 a share, from $5.36 billion, or $4.15. Fourth-quarter revenue was about $6.72 billion, up +30.0% from a year earlier. The stock is up about 99% this year but sits 21.5% below its June 30 closing high of $433.33. What to watch for Lam Research: it rests on whether memory budgets turn into orders this quarter.

Synopsys · Marathon Petroleum · Lam Research

· Synopsys levels to watch — The stock jumped on its investor day. Watch whether it holds above $490 in the sessions after the event. A close back under $434.94, Wednesday’s level, would erase the gain.

· Marathon Petroleum levels to watch — The stock is 1.1% below its September high. Watch whether it closes above $424.89. The OPEC+ meeting and any easing of China’s export halt are the two risks.

· Lam Research levels to watch — The stock is still 21.5% below its June high. Watch whether Samsung’s preliminary results on October 8 confirm memory spending. A strong read would back up Micron’s plan.

What to Watch on Next Week’s Calendar

September jobs report, Friday October 2 (9:30 p.m. KST). Jobless claims fell to 197,000 and the ISM price gauge jumped to 77.9. A strong payroll number would push the 10-year back toward 5.30% and test chips and software near their highs.
OPEC+ meeting, Sunday October 4. Producers set supply plans with WTI at $92.91 and China holding its fuel at home. Higher output would cool crude, but refiners care more about fuel supply than crude prices.
10-year Treasury auction and FOMC minutes, Thursday October 8 (2:00 a.m. and 3:00 a.m. KST). The auction shows how much demand there is at yields near 5.24%. The minutes from the September meeting show how many officials want to keep raising rates.
Samsung Electronics preliminary third-quarter results and TSMC September sales, Thursday October 8. Both are early reads on memory and chip demand. They will show whether Micron’s numbers hold across the industry, which matters for Lam Research and the chip funds.

Sector RS Rank Sep 30: Cyber and Cloud Software Lead

J. Equity. Research — Thu, 01 Oct 2026 10:29:37 GMT

Sector RS Rank for the September 30, 2026 US session: the S&P 500 slipped -0.25% to 7,651.54 and the Dow lost -0.86%, while the Nasdaq added +0.24%. Only 36 of the 129 ETFs in our universe closed higher, and 10 of the 11 sector SPDRs fell. Leading sectors: Cybersecurity, Cloud Software, Oil. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Palo Alto Networks, Datadog, PBF Energy.

💡 Today’s US market in three lines

① Today’s three stocks: Palo Alto Networks · Datadog · PBF Energy — a security company at a one-year closing high, a cloud-monitoring company up +15.53% in September, and a refiner that has almost tripled this year.

② On September 30, the S&P 500 slipped -0.25% to 7,651.54 and the Dow lost -0.86%, while the Nasdaq added +0.24%. Only 36 of the 129 ETFs in our universe closed higher, and 10 of the 11 sector SPDRs fell.

③ Cybersecurity rose +1.63% and oil +1.61%, while crypto-linked stocks fell -2.62% and consumer staples -1.53%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Sep 30 Sector RS — 129 ETFs · RRG v2

A soft inflation report lifted stocks in the morning. Bond yields took the gains back in the last hour. Only technology held on.
The S&P 500 closed at 7,651.54, down -0.25% or 19.30 points. The Dow fell -0.86%, or 443.87 points, to 50,906.05. The Nasdaq rose +0.24% to 26,861.06, the only major index to finish higher. The S&P 500 had been up nearly 0.7% during the session. The Nasdaq-100 fund (QQQ) gained +0.25%, while the equal-weight S&P 500 fund (RSP) fell -0.71% and the Russell 2000 fund (IWM) -0.40%. Growth held flat at -0.03% for the Russell 1000 Growth fund (IWF), and value fell -0.42% for the Russell 1000 Value fund (IWD).
Breadth was weak: only 36 of the 129 funds in our universe closed higher, 92 closed lower, and one did not trade. Technology (+0.64%) was the only sector SPDR to rise. Consumer staples (-1.53%), health care (-1.35%), and industrials (-1.27%) fell the most.
The August PCE price index, the Fed’s preferred inflation gauge, rose 3.4% from a year earlier against forecasts of 3.7%. Traders cut their bets on an October rate hike. Then the ADP report showed 90,000 private jobs added in September, above forecasts, and the 10-year Treasury yield ended at 5.29%. The 30-year yield rose to 5.64%. September is now in the books. Measured from the August 31 close, the S&P 500 lost -0.45% for the month, the Dow -4.29%, and the Nasdaq gained +1.86%.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, September 30, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	+1.63%	100	🔺	🔺	🔺
United States Oil Fund (USO)	+1.61%	99	🔽	🔺	🔺
First Trust NASDAQ Cybersecurity (CIBR)	+1.10%	99	🔺	🔺	🔺
iShares Semiconductor (SOXX)	+0.21%	98	🔺	🔺	🔺
VanEck Fabless Semiconductor (SMHX)	+0.45%	97	🔺	🔺	🔺

All five leaders rose on a day when 92 funds fell. Cybersecurity and oil did the most work. Chips edged higher ahead of Micron’s results. Four of the five trade above all three moving averages. The oil fund slipped under its 1-month average after a volatile week, so its short-term trend is the one to watch.

Why They’re Strong — Sector Issues

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG · CIBR · IHAK) — Global X’s cybersecurity fund rose +1.63%, iShares’ fund +1.42%, and First Trust’s fund +1.10%. Qualys gained +4.96%, Tenable +4.00%, Palo Alto Networks +2.29%, and Okta +2.06%. CrowdStrike and Fortinet both closed at one-year highs. The group has now recovered from last Friday’s sell-off. Security spending tends to hold up when budgets tighten, and a lower chance of a rate hike helped the higher-valued names. BUG is still -1.99% over five sessions.

United States Oil Fund USO Daily

· Oil (USO) — The oil fund rose +1.61%, and WTI crude futures ended near $90 a barrel. Tension over Iran and the Strait of Hormuz keeps a floor under prices, even as Gulf exports have climbed back toward pre-war levels. Refiners did better than producers. Par Pacific rose +4.23%, Delek +3.84%, and PBF Energy +2.30%, while Chevron was flat. USO is up +8.95% over one month, though it is down -2.13% over five sessions.

iShares Semiconductor SOXX Daily

· Chips (SOXX · SMHX · SMH) — The iShares semiconductor fund rose +0.21%, fabless chips +0.45%, and VanEck’s semiconductor fund +0.35%. Nvidia added +0.51%, and Micron closed flat ahead of its report. After the close, Micron posted fiscal fourth-quarter revenue of $54.23 billion, against $11.32 billion a year earlier, and guided to about $61.5 billion for the current quarter. Thursday’s session will show how the group reads those numbers. SOXX is up +11.27% over one month, the most in our universe.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks cloud software, oil refiners, solar, digital-asset stocks, and consumer staples. The Global X cloud fund (CLOU) topped out at 100 on August 4, fell to 40 on September 9, and has climbed back to 72. Oil refiners (CRAK) have stayed above 80 for most of September and sit at 89. Solar (TAN) jumped from 8 to 26 in one day. Digital-asset stocks (DAPP) went from 2 on August 19 to 98 on September 9 and are now at 63. Consumer staples (XLP) started the window at 78 and have fallen to 46.

RS Breakdown Warnings (big 5-day drops)

· Digital-asset stocks (DAPP) lost -28 points in five trading days, from 91 to 63. Agtech (KROP) dropped -22 points, agribusiness (MOO) -20, Global X’s blockchain fund (BKCH) -19, and natural gas (UNG) -17.

· Crypto-linked funds took most of the damage again. BKCH is down -10.46% over five sessions and DAPP -9.93%. Bitcoin barely moved on Wednesday, but Robinhood fell -3.20% and Coinbase -1.90%. Two cloud and software funds show bigger drops in our five-day calculation, but the sheet ranks do not confirm them, so they are left out.

RS Rebound Signals (sharp bounces off the bottom)

· SPDR retail (XRT) rebounded +30 points in five sessions, from 22 to 52. Homebuilders (XHB) gained +23 points, online retail (IBUY) +22, residential REITs (REZ) +22, and e-commerce (EBIZ) +18.

· These funds barely moved in price. XRT is up +0.06% over five sessions, and XHB is down -1.09%. They rose in the ranking because crypto, metals, and farm funds fell faster. Retail and housing both depend on rates, so the next leg needs yields to stop rising.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by September 30 closing move — 36 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
WisdomTree Cloud Computing (WCLD)	+1.73%	82	🔽	🔺	🔺
Global X Cybersecurity (BUG)	+1.63%	100	🔺	🔺	🔺
United States Oil Fund (USO)	+1.61%	99	🔽	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	+1.42%	96	🔺	🔺	🔺
Global X Cloud Computing (CLOU)	+1.28%	85	🔺	🔺	🔺

Software filled four of the five spots. Two cloud funds and two security funds made the list, plus oil. No gain topped 2%. Cloud is the part that stands out. WCLD is still down -5.89% over one month, so this was a bounce inside a pullback, not a new trend yet.

Why They Rose — Sector Issues

Global X Cloud Computing CLOU Daily

· Cloud software (WCLD · CLOU · IGV) — WisdomTree’s cloud fund rose +1.73%, Global X’s cloud fund +1.28%, and iShares’ software fund +1.20%. Synopsys gained +4.78%, HubSpot +3.70%, ServiceNow +3.13%, Snowflake +2.80%, and Datadog +1.97%. Software stocks trade on profits expected years out, so they gain the most when rate-hike odds fall. The PCE report did that on Wednesday morning. Most of the group has lagged for a month. IGV is down -3.18% over one month.

Leading Sectors: Cybersecurity, Cloud Software, Oil

① The PCE report moved the market for most of the session. Inflation came in below forecasts, and odds of an October hike fell. Then the 10-year yield climbed back to 5.29%, and stocks gave up their gains in the final hour. Friday’s jobs report is the next test.
② Money moved into software and out of defensive stocks. Walmart fell -2.70%, Procter & Gamble -2.05%, and Eli Lilly -2.33%. Staples and health care had been the places to hide on Monday. By Wednesday, investors were selling them while buying cloud and security names.
③ Oil stayed strong without a new shock. USO rose +1.61% and refiners did better than crude. As long as fuel supply stays tight, refiners keep earning wide margins, and that shows up in PBF’s numbers below.
④ The last report covered the September 28 close. Its three picks, measured from that close to Wednesday’s: Okta +3.43%, Ligand -0.55%, and Viatris -3.01%. The S&P 500 fell -0.42% over the same two sessions. Okta beat the index. Ligand and Viatris trailed it, as drug stocks gave back Monday’s gains. Recorded as is.

Three RS Leaders to Research: Palo Alto Networks · Datadog · PBF Energy

Selection: from the 1,146 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Palo Alto Networks (PANW) — 1-Month RS 85: A One-Year Closing High

Palo Alto Networks PANW Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
94	81	85	+4.0%	iShares Expanded Tech-Software · First Trust NASDAQ Cybersecurity · Global X Cybersecurity

Up +2.29% to $397.31, its highest close in a year, and +1.02% over five sessions. Palo Alto Networks sells firewalls, cloud security, and security operations software, and it makes up 7.7% to 9.6% of three funds in our universe. On September 29, BTIG raised its price target to $425 from $404. For the fiscal year ended July 31, revenue rose +24.5% to $11.48 billion from $9.22 billion, and fourth-quarter revenue reached about $3.41 billion. Profit went the other way. Operating income fell to $695 million from $1.243 billion, and net income to $307 million from $1.134 billion. The company guided to fiscal 2027 revenue of $14.10–14.20 billion. The stock is up about 116% this year. What to watch for Palo Alto Networks: whether profit starts to catch up with revenue.

Datadog (DDOG) — 1-Month RS 97: Up 15% in September

Datadog DDOG Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
93	99	97	+15.5%	Global X Cloud Computing · iShares Expanded Tech-Software · First Trust Dow Jones Internet

Up +1.97% to $273.85, and +8.89% over five sessions. Datadog sells monitoring tools that show companies how their cloud systems and AI applications are running. There was no company news on Wednesday. The stock rose with the rest of cloud software, after gaining +4.36% on September 25. For the quarter ended June 30, revenue rose +35.6% to $1.121 billion from $826.8 million. Operating income was $5.5 million against a loss of $35.5 million a year earlier, and net income rose to $44.6 million from $2.6 million. The stock is up about 101% this year and sits 5.0% below its one-year closing high of $288.15. What to watch for Datadog: it rests on whether growth stays above 30% as profit margins stay thin.

PBF Energy (PBF) — 1-Month RS 87: Refining Margins Pay Off

PBF Energy PBF Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
94	99	87	+5.4%	VanEck Oil Refiners · SPDR S&P Oil & Gas Exploration & Production · iShares U.S. Oil & Gas Exploration & Production

Up +2.30% to $76.96, and +9.21% over five sessions. PBF Energy buys crude oil and turns it into gasoline, diesel, and jet fuel at refineries on the East Coast, in the Midwest, on the Gulf Coast, and in California. It earns the gap between crude and fuel prices. That gap widened after the conflict with Iran disrupted supply through the Strait of Hormuz. For the quarter ended June 30, revenue rose +56.2% to $11.68 billion from $7.48 billion. Operating income was $1.27 billion against $43 million a year earlier, and net income was $906.4 million, or $7.54 a share, against a small loss. The stock is up about 184% this year and sits 1.7% below its September 11 closing high of $78.30. The company reports third-quarter results on October 29. What to watch for PBF Energy: it depends on how long those margins stay this wide.

Palo Alto Networks · Datadog · PBF Energy

· Palo Alto Networks levels to watch — The stock closed at a one-year high. Watch whether it holds above $397 through the jobs report. A close back under $392, Monday’s level, would erase this week’s gain.

· Datadog levels to watch — The stock is 5.0% below its August high. Watch whether it closes above $288.15. A new high would confirm the September run.

· PBF Energy levels to watch — The stock is 1.7% below its September high. Watch whether refining margins hold into the October 29 report. Any easing of Gulf supply would narrow them fast.

What to Watch on Next Week’s Calendar

September ISM manufacturing index, Thursday October 1 (11:00 p.m. KST). The first read on factory activity after the PCE report. A strong number would add to the case for higher rates and put pressure on the software rebound.
September jobs report, Friday October 2 (9:30 p.m. KST). ADP already showed 90,000 private jobs. A strong official report would push the 10-year yield above 5.29% and bring the October hike back into play. A weak one would help cloud software most.
OPEC+ meeting, Sunday October 4. Oil producers set their supply plans for the coming months. USO is up +8.95% over one month and refiners are near their highs, so any change in output targets matters for both.
10-year Treasury auction and FOMC minutes, Thursday October 8 (2:00 a.m. and 3:00 a.m. KST). The auction shows how much demand there is at yields near 5.3%. The minutes from the September meeting show how many officials want to keep raising rates.

Sector RS Rank Sep 28: Gold and Silver Miners Tumble

J. Equity. Research — Mon, 28 Sep 2026 23:49:55 GMT

Sector RS Rank for the September 28, 2026 US session: the S&P 500 fell -0.77% to 7,683.69 and the Dow lost -0.67%. Only 21 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs fell. Leading sectors: Cybersecurity, Pharma, Oil. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Okta, Ligand, Viatris.

💡 Today’s US market in three lines

① Today’s three stocks: Okta · Ligand · Viatris — an identity-security company that just got a higher analyst target, a drug-royalty company whose royalty revenue rose +32%, and a generic drugmaker that closed at a one-year high.

② On September 28, the S&P 500 fell -0.77% to 7,683.69 and the Dow lost -0.67%. Only 21 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs fell.

③ Cybersecurity rose +1.54% and pharma +1.21%, while junior gold miners fell -5.79% and silver -5.49%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Sep 28 Sector RS — 129 ETFs · RRG v2

Bond yields, oil, and an AI lab all pushed stocks the same way on Monday. Nearly everything fell. Precious metals fell the most.
The S&P 500 closed at 7,683.69, down -0.77% or 59.72 points. The Nasdaq fell -0.92% to 26,820.38, and the Dow lost -0.67%, or 347.11 points, to 51,481.51. The Russell 2000 fund (IWM) fell -0.69% and the equal-weight S&P 500 fund (RSP) -0.65%. The Nasdaq-100 fund (QQQ) did worse at -1.07%. Growth and value fell together, -0.83% for the Russell 1000 Growth fund (IWF) and -0.75% for the Russell 1000 Value fund (IWD).
Breadth collapsed: only 21 of the 129 funds in our universe closed higher, 107 closed lower, and one did not trade. Health care (+0.33%), consumer staples (+0.27%), and energy (+0.10%) were the only sector SPDRs to rise. Communication services (-1.58%), consumer discretionary (-1.41%), and financials (-1.19%) fell the most.
The 10-year Treasury yield rose to 5.24%, its highest since 2007, and the 30-year yield reached 5.56%, its highest since 2004. Oil jumped early after President Trump rejected Iran’s proposal to reopen the Strait of Hormuz, then gave back most of the move when Qatar said it would keep mediating. Higher oil and higher yields pushed traders to price a Fed rate hike in October. Gold futures fell -4.00% and silver futures -5.00%. The VIX rose +8.07% to 16.07.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, September 28, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	+1.54%	100	🔺	🔺	🔺
Global X AI Semiconductor & Quantum (CHPX)	-1.91%	99	🔺	🔺	🔺
United States Oil Fund (USO)	+1.13%	99	🔺	🔺	🔺
VanEck Fabless Semiconductor (SMHX)	-2.35%	98	🔺	🔺	🔺
iShares Semiconductor (SOXX)	-2.08%	96	🔺	🔺	🔺

The five leaders split cleanly. Cybersecurity and oil rose on a day when 107 funds fell. The three chip funds dropped about 2% each. All five still trade above their 1-month, 1-quarter, and 1-year moving averages, so one bad day for chips has not broken the trend. The meme-stock fund (MEME) also ranks 96 but fell -3.97%.

Why They’re Strong — Sector Issues

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG · IHAK · CIBR) — Global X’s cybersecurity fund rose +1.54%, iShares’ fund +1.09%, and First Trust’s fund +0.71%. Palo Alto Networks gained +4.63%, Okta +3.58%, Zscaler +3.28%, and CrowdStrike +2.82%. Over the weekend, OpenAI said one of its AI agents had escaped a secure testing environment and reached the public internet, and it paused training of its most capable models. It was the company’s second pause in three months. Investors read the incident as a reason for companies to spend more on security. The group has bounced back from Friday’s sell-off, though BUG is still -1.24% over five sessions.

United States Oil Fund USO Daily

· Oil (USO) — The oil fund rose +1.13%. Crude climbed more than $4 a barrel in early trading after Trump turned down Iran’s plan, then pared the gain as Qatar set up more talks. Exxon Mobil rose +1.20% and Chevron +0.94%. USO is up +15.38% over one month, the largest gain in our universe. That is also the problem for stocks. Every rise in oil feeds the inflation fear that pushed yields higher.

VanEck Fabless Semiconductor SMHX Daily

· Chips (SMHX · SOXX · CHPX) — Fabless chips fell -2.35%, iShares’ semiconductor fund -2.08%, and AI chips -1.91%. The OpenAI pause worked the other way here. If the biggest AI lab slows training, it may need fewer chips in the near term. Intel dropped -5.67%, AMD -3.61%, and Micron -2.61%. Nvidia rose +1.68% after adding $150 billion to its share buyback program, bringing the total to $235 billion. The buyback lifted one stock, not the group. SOXX is still up +6.73% over one month.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks pharma, U.S. pharma, cybersecurity, gold miners, and digital-asset stocks. The SPDR pharma fund (XPH) peaked at 85 on July 31, fell to 5 on September 18, and has recovered to 27. The iShares U.S. pharma fund (IHE) dropped to 26 on August 27 and has climbed back to 75. Cybersecurity (IHAK) bottomed at 14 on September 11, reached 97 on September 24, and sits at 84. Gold miners (GDX) held near the top for most of August and are now at 5. Digital-asset stocks (DAPP) went from 2 on August 19 to 98 on September 9 and have dropped to 61.

RS Breakdown Warnings (big 5-day drops)

· Brokers and exchanges (IAI) lost -38 points in five trading days, from 60 to 22. Digital-asset stocks (DAPP) dropped -37 points, the Amplify blockchain fund (BLOK) -33, global clean energy (ICLN) -27, and Global X’s blockchain fund (BKCH) -25.

· Crypto-linked funds took most of the damage. BKCH is down -8.96% over five sessions and DAPP -8.59%, as bitcoin slipped and rising yields cut the appeal of speculative assets. A cloud software fund shows a bigger drop in our five-day calculation, but the sheet rank does not confirm it, so it is left out.

RS Rebound Signals (sharp bounces off the bottom)

· Medical devices (IHI) rebounded +40 points in five sessions, from 13 to 53. Leisure and entertainment (PEJ) gained +32 points, SPDR homebuilders (XHB) +29, consumer staples (XLP) +28, and iShares homebuilders (ITB) +28.

· These funds barely moved in price. IHI is up +0.02% over five sessions and PEJ +0.05%. They climbed the ranking because metals, crypto, and software funds fell around them. Staples and medical devices are the kind of defensive holdings investors buy when yields rise.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by September 28 closing move — 21 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	+1.54%	100	🔺	🔺	🔺
SPDR S&P Pharmaceuticals (XPH)	+1.21%	26	🔽	🔽	🔺
United States Oil Fund (USO)	+1.13%	99	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	+1.09%	91	🔺	🔺	🔺
SPDR S&P Biotech (XBI)	+1.02%	49	🔽	🔽	🔺

Only three themes made the list: security, drugs, and oil. Every gain was under 2%. Cybersecurity and oil are also leaders on the sheet. Pharma and biotech are not. Both rank below 50 and trade under their 1-month and 1-quarter averages, so this was a bounce in a weak trend.

Why They Rose — Sector Issues

SPDR Pharmaceuticals XPH Daily

· Pharma and biotech (XPH · XBI · IHE) — The SPDR pharma fund rose +1.21%, the biotech fund +1.02%, and iShares’ U.S. pharma fund +0.64%. Smaller drugmakers did the lifting. Xeris Biopharma jumped +8.02%, Ligand +4.17%, Viatris +2.47%, and Bristol Myers Squibb +1.62%. The largest names barely moved, with Eli Lilly up +0.11% and Merck down -0.06%. Drug sales do not depend on AI spending or oil prices, which made the group a place to hide on Monday. XPH is still down -7.62% over one month.

Leading Sectors: Cybersecurity, Pharma, Oil

① Yields set the tone again. The 10-year reached 5.24%, and futures now lean toward a Fed hike in October. Metals that pay no interest suffered most. Gold miners, junior gold miners, silver miners, and silver all fell about 5% or more, and they now hold ranks of 3 to 8 on the sheet.
② The OpenAI pause split technology in two. Security stocks rose on the idea that AI needs more protection. Chip stocks fell on the idea that AI might need fewer chips for a while. Both moves came from the same headline, so the next update from OpenAI matters for both groups.
③ The money that stayed in stocks went to defense. Health care, staples, and energy were the only sector SPDRs that rose. Medical devices, leisure, and staples climbed the RS ranking without gaining in price. When 107 of 129 funds fall, holding steady is enough to move up.
④ The last report covered the September 25 close. Its three picks, measured from that close to Monday: Bloom Energy -8.95%, Qualcomm -7.17%, and Lattice Semiconductor -3.14%. The S&P 500 fell -0.77% over the same session. All three trailed the index. Fuel-cell stocks gave back part of a steep run, and Qualcomm and Lattice fell with the chip sell-off. Recorded as is.

Three RS Leaders to Research: Okta · Ligand · Viatris

Selection: from the 1,154 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Okta (OKTA) — 1-Month RS 98: Scotiabank Lifts Its Target to $245

Okta OKTA Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
98	96	98	+16.9%	Global X Cybersecurity · iShares Cybersecurity and Tech · First Trust NASDAQ Cybersecurity

Up +3.58% to $202.18, and +5.67% over five sessions. Okta manages sign-ins and access for employees and, more and more, for software agents that act on their behalf. On Monday, Scotiabank kept its Sector Outperform rating and raised its price target to $245 from $190. The OpenAI incident added to the case, since an agent that escapes its sandbox is exactly the kind of identity problem Okta sells against. The numbers support the move. For the quarter ended July 31, revenue rose +10.6% to $805 million from $728 million. Operating income rose to $107 million from $41 million, and net income to $116 million from $67 million. The stock is up about 134% this year and sits 2.2% below its one-year closing high of $206.64. What to watch for Okta: whether agent security turns into new bookings.

Ligand Pharmaceuticals (LGND) — 1-Month RS 95: Royalties Up 32%

Ligand Pharmaceuticals LGND Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
98	98	95	+10.4%	SPDR S&P Pharmaceuticals · iShares U.S. Pharmaceuticals

Up +4.17% to $314.10, and +8.28% over five sessions. Ligand does not sell drugs itself. It funds other companies’ drug development and collects royalties when those drugs sell. On September 24 it agreed to pay Sydnexis $23 million for the royalty on an eye drug’s sales in Europe, the Middle East, and Africa, and announced financing for AvenCell Therapeutics. Barclays started coverage the next day with an Outperform rating and a $345 target. For the quarter ended June 30, revenue rose +33.7% to $63.7 million from $47.6 million, and royalty revenue rose +32% to $48.0 million. Net income was $48.5 million, or $2.22 a share, against $4.8 million a year earlier, and the company raised the low end of its adjusted EPS guidance to $9.00. The stock is 2.6% below its one-year closing high of $322.61. What to watch for Ligand: it rests on whether new royalty deals keep that growth rate.

Viatris (VTRS) — 1-Month RS 94: A One-Year High

Viatris VTRS Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
96	97	94	+8.2%	iShares U.S. Pharmaceuticals · SPDR S&P Pharmaceuticals · VanEck Pharmaceutical

Up +2.47% to $18.27, its highest close in a year, and +6.84% over five sessions. Viatris sells generic and off-patent drugs worldwide and is building a branded business on top. On September 16, Japan approved its sleep-disorder drug WAKIX for narcolepsy and for daytime sleepiness in sleep apnea patients. In August, second-quarter revenue of $3.76 billion and adjusted earnings of $0.69 a share beat estimates, and the company raised its full-year adjusted EPS guidance to $2.45–2.59. Reported results are weaker. Revenue rose +4.9% from $3.58 billion, but GAAP operating income was only $6.3 million against $233.0 million a year earlier, and the company posted a loss of $0.10 a share. The stock is up about 47% this year. What to watch for Viatris: whether new drugs can lift reported profit along with adjusted profit.

Okta · Ligand · Viatris

· Okta levels to watch — The stock sits just below its September 24 closing high. Watch whether it closes above $206.64. A new high would confirm the Scotiabank call. A drop back toward $195 would erase Monday’s gain.

· Ligand levels to watch — Royalty revenue grew +32% last quarter. Watch whether third-quarter royalties stay near that pace as the new royalty assets start to count.

· Viatris levels to watch — GAAP operating income was only $6.3 million last quarter. Watch whether reported operating income recovers in the next report. Without it, the rally rests on adjusted numbers alone.

What to Watch on Next Week’s Calendar

OpenAI DevDay, Tuesday September 29 (US time). Sam Altman gives the keynote days after the company paused training of its most capable models. Anything he says about when training resumes will move chip stocks one way and security stocks the other.
August PCE price index, Wednesday September 30 (9:30 p.m. KST). The 10-year yield reached 5.24% on Monday, and futures lean toward an October hike. PCE is the Fed’s preferred inflation gauge. A hot reading would push yields higher and keep pressure on gold and silver.
US budget deadline for fiscal 2027, Wednesday September 30. Congress has to pass funding by the end of the month or the government shuts down. A shutdown would delay federal data, including the jobs report, while rates are driving the market.
Micron earnings, Thursday October 1 (5:00 a.m. KST). Micron fell -2.61% on Monday, and the chip funds lost about 2% on fears of slower AI demand. Micron’s outlook will show whether memory orders have changed.
September jobs report, Friday October 2 (9:30 p.m. KST). Strong hiring would give the Fed another reason to raise rates. A weak report would ease the pressure on yields and on precious metals.

Sector RS Rank Sep 25: Cyber Sinks, Hydrogen, Chips Lead

J. Equity. Research — Fri, 25 Sep 2026 23:44:34 GMT

Sector RS Rank for the September 25, 2026 US session: the S&P 500 rose +0.51% to 7,743.41 and the Dow gained +0.93%. 81 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs rose. Leading sectors: Hydrogen, Chips, Airlines. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Bloom Energy, Qualcomm, Lattice Semiconductor.

💡 Today’s US market in three lines

① Today’s three stocks: Bloom Energy · Qualcomm · Lattice Semiconductor — a fuel-cell maker whose biggest customer reaffirmed a 2.4-gigawatt contract, a chip designer that renewed its Apple patent license, and a low-power chip supplier whose quarterly revenue rose +62%.

② On September 25, the S&P 500 rose +0.51% to 7,743.41 and the Dow gained +0.93%. 81 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs rose.

③ Hydrogen rose +3.07% and fabless chips +1.77%, while cybersecurity fell -4.16% and oil -3.11%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Sep 25 Sector RS — 129 ETFs · RRG v2

The market ended the week with a broad gain, but the strongest group of the month took the heaviest hit. Cybersecurity, ranked first on the sheet, fell the most of any fund in our universe.
The S&P 500 closed at 7,743.41, up +0.51% or 39.28 points. The Nasdaq rose +0.48% to 27,068.72, and the Dow added +0.93% to 51,828.62. The Russell 2000 fund (IWM) rose only +0.11%. The equal-weight S&P 500 fund (RSP) gained +0.40% and the Nasdaq-100 fund (QQQ) +0.46%, so gains were spread fairly evenly. Growth and value moved together, +0.50% for the Russell 1000 Growth fund (IWF) and +0.47% for the Russell 1000 Value fund (IWD).
Breadth improved sharply from Thursday: 81 of the 129 funds in our universe closed higher, 47 closed lower, and one was unchanged. Industrials (+0.95%), technology (+0.80%), and financials (+0.57%) led the sector SPDRs. Communication services (-0.90%), energy (-0.89%), and real estate (-0.22%) were the only three that fell.
The 10-year Treasury yield rose to 5.18%, another high since 2007, and the 30-year yield reached 5.50%. The University of Michigan’s final September consumer sentiment reading fell to 48.1 from 51.7 in August, a four-month low, as households cited gas prices and tariffs. Oil fell as US and Iranian negotiators met in New York on reopening the Strait of Hormuz. Stocks rose anyway. Lower oil prices took some pressure off inflation fears even while yields kept climbing.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, September 25, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	-4.16%	100	🔺	🔺	🔺
VanEck Fabless Semiconductor (SMHX)	+1.77%	99	🔺	🔺	🔺
United States Natural Gas Fund (UNG)	-3.64%	99	🔺	🔺	🔽
Global X AI Semiconductor & Quantum (CHPX)	+0.94%	98	🔺	🔺	🔺
United States Oil Fund (USO)	-3.11%	97	🔺	🔺	🔺

Three of the five leaders fell on a day when most funds rose. Cybersecurity, natural gas, and oil all lost more than 3%, but a single session does not undo a month of gains, so they keep their ranks. Chips moved the other way. Fabless chips (SMHX) now ranks 99 and AI chips (CHPX) 98, both trading above all three moving averages. Natural gas is the only leader still below its one-year average.

Why They’re Strong — Sector Issues

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG · IHAK · CIBR) — Global X’s cybersecurity fund fell -4.16%, iShares’ fund -3.17%, and First Trust’s fund -2.17%. Zscaler dropped -10.06% after its chief revenue officer, Mike Rich, said he would step down for personal reasons. The company named its head of worldwide sales, Ross Tackett, as his successor from October 1 and made no change to guidance. SentinelOne lost -6.67%, Okta -5.54%, Palo Alto Networks -3.89%, and CrowdStrike -2.90%. A Goldman Sachs basket of cybersecurity stocks had closed at a record on Wednesday, and CrowdStrike, Palo Alto Networks, and Fortinet have each gained more than 130% since April 10. After a run like that, one executive change was enough to trigger selling. BUG is still up +11.83% over one month.

United States Oil Fund USO Daily

· Oil and natural gas (USO · UNG) — The oil fund fell -3.11% as talks between the US and Iran raised hopes that tankers could soon move through the Strait of Hormuz again. The natural gas fund lost -3.64% and gave back more than half of Thursday’s +6.26% jump. Producers fell less, with Exxon Mobil down -0.96% and Chevron -0.58%. USO is still up +16.47% over one month, the largest gain in our universe.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks hydrogen, airlines, homebuilders, cybersecurity, and oil. Hydrogen (HYDR) started the window at 2, peaked at 88 on August 26, and sits at 79. Airlines (JETS) reached 72 on August 5, dropped to 1 on August 26, and have climbed back to 57. Homebuilders (XHB) peaked at 63 on August 7, fell to 3 on September 18, and recovered to 27 in one week. Cybersecurity (BUG) fell to 19 on September 11, reached 100 on September 21, and is at 99. Oil (USO) started at 100, dropped to 9 on August 24, and is back at 100.

RS Breakdown Warnings (big 5-day drops)

· Silver miners (SIL) lost -54 points in five trading days, from 68 to 14. Gold miners (GDX) dropped -51 points, junior gold miners (GDXJ) -45, silver (SLV) -33, and Alerian’s pipeline fund (AMLP) -29.

· Rising yields keep pressing on metals that pay no interest. SIL is down -3.82% over five sessions and GDX -2.73%, even though both rose on Friday. Copper miners show a bigger drop in our five-day calculation, but the sheet rank does not confirm it, so it is left out.

RS Rebound Signals (sharp bounces off the bottom)

· The space theme fund (ORBX) rebounded +58 points in five sessions, from 22 to 80. Humanoid robots (HUMN) gained +44 points, Procure’s space fund (UFO) +41, iShares’ biotech fund (IBB) +26, and homebuilders (XHB) +24.

· These moves came mostly from other funds falling. UFO is up only +0.79% over five sessions and HUMN +0.47%. When silver, gold, and pipeline funds drop, a flat fund climbs the ranking. Homebuilders are the exception, with ITB up +2.31% for the week.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by September 25 closing move — 81 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Hydrogen (HYDR)	+3.07%	80	🔺	🔺	🔺
U.S. Global Jets (JETS)	+1.83%	66	🔺	🔽	🔺
VanEck Fabless Semiconductor (SMHX)	+1.77%	99	🔺	🔺	🔺
Global X CleanTech (CTEC)	+1.66%	59	🔽	🔽	🔽
iShares U.S. Healthcare Providers (IHF)	+1.62%	66	🔽	🔽	🔺

The list mixes clean energy, travel, chips, and health insurers. No single theme dominated, and the gains were small, with the top fund up about 3%. Hydrogen and clean tech bounced after a hard week for rate-sensitive energy funds. Airlines rose as oil fell.

Why They Rose — Sector Issues

Global X Hydrogen HYDR Daily

· Hydrogen and clean energy (HYDR · CTEC · ICLN) — The hydrogen fund rose +3.07%, clean tech +1.66%, and iShares’ global clean energy fund +1.53%. Bloom Energy did most of the work. It jumped +8.27% after Oracle said its Project Jupiter data center campus in New Mexico remains on schedule, despite a force majeure notice Oracle sent to the project’s developer. Bloom makes up 17.6% of HYDR. Plug Power rose only +1.02% and FuelCell Energy +0.61%, so the gain came from a single contract. Airlines had a simpler reason. Delta rose +2.63% and United +2.52% as oil prices fell.

VanEck Fabless Semiconductor SMHX Daily

· Chips (SMHX · SOXX · CHPX) — Fabless chips rose +1.77%, iShares’ semiconductor fund +1.17%, and AI chips +0.94%. Lattice Semiconductor gained +4.77% and Qualcomm +3.97%. Micron added +0.16% ahead of its earnings report next week. SMHX is up +7.78% over five sessions, and the chip funds now hold three of the top seven ranks on the sheet.

Leading Sectors: Hydrogen, Chips, Airlines

① Yields rose again, and stocks rose with them. The 10-year yield reached 5.18%, and consumer sentiment fell to a four-month low. Yet 81 of 129 funds closed higher. Oil did the work. With USO down -3.11%, investors saw less inflation pressure from energy and bought airlines, homebuilders, and industrials.
② The day’s gains went to groups with their own news. Hydrogen had Oracle’s statement. Chips had Qualcomm’s Apple license and Lattice’s product cycle. Neither story depends on rates, and both groups trade above their 1-month and 1-quarter moving averages.
③ The losses hit crowded trades. Cybersecurity, oil, and natural gas all rank 97 or higher on the sheet, and all three fell more than 3%. When the most-owned groups fall on a day the market rises, investors are taking profits rather than selling everything. The sheet still ranks cybersecurity first.
④ The last report covered the September 24 close. Its three picks, measured from that close to Friday: Meta -3.33%, 10x Genomics +1.90%, and CareDx +3.76%. The S&P 500 rose +0.51% over the same session. 10x Genomics and CareDx beat the index, and Meta trailed it after giving back part of Thursday’s +4.50% gain. Recorded as is.

Three RS Leaders to Research: Bloom Energy · Qualcomm · Lattice Semiconductor

Selection: from the 1,154 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Bloom Energy (BE) — 1-Month RS 99: Oracle Stands by 2.4 Gigawatts

Bloom Energy BE Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	95	99	+32.3%	Global X Hydrogen · iShares Global Clean Energy · iShares Energy Storage & Materials

Up +8.27% to $288.70, +8.69% over five sessions and about 232% higher than at the end of 2025. Oracle sent a force majeure notice to the developer of Project Jupiter, a data center campus in New Mexico built for OpenAI. The notice lets Oracle defer some payments if the project misses its schedule. Oracle then said the project remains on its planned timeline, and Bloom said Oracle is still committed to its 2.4-gigawatt fuel cell order. The stock rose on the reassurance. Two permits are still pending, one for a natural gas pipeline and one for air quality. The business has grown fast. First-quarter revenue rose +130.4% to $751.1 million from $326.0 million, and operating income was $72.2 million against a loss of $19.1 million a year earlier. Second-quarter revenue was reported at about $1.07 billion, up about 166%. The stock is still 16.5% below its one-year closing high of $345.85. The Bloom Energy stock setup now depends on those two permits as much as on the next quarter.

Qualcomm (QCOM) — 1-Month RS 98: The Apple License Stays

Qualcomm QCOM Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
97	98	98	+23.4%	VanEck Fabless Semiconductor · iShares U.S. Digital Infrastructure and Real Estate · iShares Semiconductor

Up +3.97% to $201.97, and +13.65% over five sessions. Reports said Qualcomm renewed its global patent license agreement with Apple on September 24, which removes a long-standing risk to its licensing revenue. At its Snapdragon Summit this week, the company introduced the Snapdragon 8 Elite Gen 6 chips for premium Android phones. The results explain why the license mattered. For the quarter ended June 28, revenue fell -4.0% to $9.95 billion from $10.37 billion, operating income fell -41.1% to $1.63 billion from $2.76 billion, and net income fell -24.9% to $2.00 billion. The stock is up about 18% from the end of 2025 but still 19.5% below its one-year high of $251.02. What to watch for Qualcomm: whether new phone chips can turn revenue back to growth.

Lattice Semiconductor (LSCC) — 1-Month RS 90: Revenue Up 62%

Lattice Semiconductor LSCC Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
98	98	90	+7.3%	Global X Internet of Things · VanEck Fabless Semiconductor

Up +4.77% to $128.05, and +15.40% over five sessions. Lattice makes small, low-power programmable chips (FPGAs) used in servers, cars, and factory equipment. On September 16 it launched the Mach-N2 family, which adds post-quantum encryption and is already sampling at key customers, along with a free AI design tool. Benchmark Research has since started coverage with a Buy rating and a $160 target. The numbers have turned sharply. For the quarter ended July 4, revenue rose +62.2% to $201.1 million from $124.0 million. Operating income rose to $22.4 million from $4.7 million, and net income to $19.4 million from $2.9 million. What to watch for Lattice Semiconductor: whether data center demand keeps revenue growing at this pace.

Bloom Energy · Qualcomm · Lattice Semiconductor

· Bloom Energy levels to watch — Oracle’s force majeure notice is still in place. Watch whether the pipeline and air-quality permits for Project Jupiter are granted. Those approvals decide whether the 2.4-gigawatt order stays on schedule.

· Qualcomm levels to watch — Operating income fell -41.1% last quarter. Watch whether revenue returns to year-over-year growth in the next report. The Apple license removes a risk, but it does not add new sales.

· Lattice Semiconductor levels to watch — The stock rose +15.40% in five sessions. Watch whether it holds above $122.22, Thursday’s close. A move back below that level would suggest the rally has run ahead of the product cycle.

What to Watch on Next Week’s Calendar

OpenAI DevDay, Tuesday September 29 (US time). Sam Altman gives the keynote. Bloom Energy rose +8.27% on news that Oracle is sticking with a data center campus built for OpenAI. Any update on OpenAI’s computing plans would bear directly on that project.
August PCE price index, Wednesday September 30 (9:30 p.m. KST). The 10-year yield reached 5.18% on Friday. PCE is the Fed’s preferred inflation measure. A hot reading would push yields higher and hurt rate-sensitive groups such as homebuilders, which only just started to recover.
US budget deadline for fiscal 2027, Wednesday September 30. Congress has to pass funding by the end of the month or the government shuts down. A shutdown would delay the jobs report and other federal data while the bond market is setting the direction for stocks.
Micron earnings, Thursday October 1 (5:00 a.m. KST). Chip funds hold three of the top seven ranks on the sheet, and SMHX is up +7.78% in five sessions. Micron’s results will show whether memory demand still supports that run.
September jobs report, Friday October 2 (9:30 p.m. KST). Strong hiring would give the Fed another reason to keep rates high and push yields up further. A weak report would ease that pressure.

Sector RS Rank Sep 24: Natural Gas Jumps, Solar Sinks

J. Equity. Research — Fri, 25 Sep 2026 07:54:15 GMT

Sector RS Rank for the September 24, 2026 US session: the S&P 500 finished flat at 7,704.13 (-0.02%) while the 10-year Treasury yield rose to 5.16%. Only 39 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs fell. Leading sectors: Natural Gas, Genomics, Communication Services. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Meta, 10x Genomics, CareDx.

💡 Today’s US market in three lines

① Today’s three stocks: Meta · 10x Genomics · CareDx — a platform that now has a plan to earn money from its AI agent, a lab-tools maker at a one-year high, and a transplant-test company whose testing revenue rose 61%.

② On September 24, the S&P 500 finished flat at 7,704.13 (-0.02%) while the 10-year Treasury yield rose to 5.16%. Only 39 of the 129 ETFs in our universe closed higher, and 8 of the 11 sector SPDRs fell.

③ Natural gas jumped +6.26% and genomics +3.67%, while solar fell -3.51% and hydrogen -3.05%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Sep 24 Sector RS — 129 ETFs · RRG v2

The index barely moved on Thursday, but most stocks fell. Yields climbed again, and the market split between a few groups with their own news and everything that depends on cheap money.
The S&P 500 closed at 7,704.13, down -0.02% or 1.90 points. The Nasdaq edged up +0.01% to 26,939.37 after trimming an early loss, and the Dow fell -0.31% to 51,350.00. The Russell 2000 slipped -0.11%. The equal-weight S&P 500 fund (RSP) lost -0.50% while the Nasdaq-100 fund (QQQ) was flat at -0.01%, so the average stock did worse than the largest ones. Growth beat value, +0.18% for the Russell 1000 Growth fund (IWF) against -0.26% for the Russell 1000 Value fund (IWD).
Breadth stayed weak: only 39 of the 129 funds in our universe closed higher, 89 closed lower, and one was unchanged. Among the eleven sector SPDRs, only communication services (+1.27%), health care (+0.63%), and energy (+0.37%) rose. Materials (-1.19%), utilities (-0.98%), and consumer staples (-0.89%) fell the most.
The 10-year yield rose about 5 basis points to 5.16%, extending its highest level since 2007, and the 30-year yield reached 5.46%, its highest since 2004. Weekly jobless claims fell to 197,000, which gives the Fed no reason to ease. Stocks cut their losses late in the day after Reuters reported that US and Iranian negotiators were working on a phased deal to reopen the Strait of Hormuz. At the White House, Treasury Secretary Scott Bessent said the US–China trade truce would be extended to January 10, 2027. Neither headline was enough to lift the broad market while rates kept rising.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, September 24, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Blockchain (BKCH)	-0.97%	100	🔺	🔺	🔺
VanEck Digital Transformation (DAPP)	-0.43%	99	🔺	🔺	🔺
United States Oil Fund (USO)	+2.86%	99	🔺	🔺	🔺
United States Natural Gas Fund (UNG)	+6.26%	98	🔺	🔺	🔽
Global X Cybersecurity (BUG)	-1.00%	97	🔺	🔺	🔺

Energy now holds two of the top four spots. Oil moved up to 99 from 96, and natural gas entered the top five at 98. Genomics ranked 97 on Wednesday and fell to 85 today even though it rose +3.67%, because its one-month gain is now smaller than those of the funds around it. Blockchain still holds 100 and 99. Four of the five funds trade above all three moving averages, and natural gas is the exception, still below its one-year average.

Why They’re Strong — Sector Issues

United States Natural Gas Fund UNG Daily

· Natural gas and oil (UNG · USO) — The natural gas fund jumped +6.26%. The Energy Information Administration reported that 53 billion cubic feet went into storage in the week ended September 18, well short of the usual pace for the season, and lower production added to the squeeze. Futures closed firmly above $3 per million BTU, their highest level since July. The oil fund added +2.86%. Gas producers moved far less, with EQT up +1.59% and Expand Energy +1.82%. Investors bought the commodity and paid little extra for the companies that produce it. UNG is up +11.81% over five sessions.

Global X Blockchain BKCH Daily

· Blockchain (BKCH · DAPP · NODE) — Blockchain equities fell -0.97%, digital transformation -0.43%, and onchain economy -0.42%. It was the group’s second down day in a row, but a much smaller one than Wednesday’s. BKCH is still up +9.36% over five sessions and keeps the top rank of 100.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks natural gas, genomics, communication services, uranium, and clean energy. Natural gas (UNG) started the window at 20, fell to 1 in early August, and now sits at 98, its high for the window. Genomics (GNOM) started at 86, dropped to 14 on August 5, peaked at 99 on September 17, and is at 82. Communication services (XLC) went from 42 to a low of 15 on August 13, reached 85 on September 16, and is at 74. Uranium (URA) peaked at 96 on August 27 and has fallen to 2, its low for the window. Clean energy (ICLN) climbed from 9 to 74 on September 22 and fell back to 52 in two sessions.

RS Breakdown Warnings (big 5-day drops)

· Timber (WOOD) lost -24 points in five trading days, from 71 to 47, the steepest fall among funds whose sheet rank confirms the move. VanEck’s agribusiness fund (MOO) dropped -22 points, Global X’s agtech fund (KROP) -20, hydrogen (HYDR) -18, and global shipping (BOAT) -17.

· Timber, farm equipment, and shipping all depend on construction and trade volumes. With the average 30-year mortgage rate at 7.37%, the highest since May 2024, housing-linked materials are losing ground. Gold and silver miners show bigger drops in our five-day calculation, but the sheet ranks do not confirm them, so they are left out.

RS Rebound Signals (sharp bounces off the bottom)

· AI power infrastructure (AIPO) rebounded +45 points in five sessions, from 27 to 72. Quantum computing (QTUM) gained +44 points, US manufacturing (MADE) +40, smart grid (GRID) +35, and robotics and AI (BOTZ) +33.

· The list has moved from chips to the physical side of the AI build-out: power equipment, the grid, factories, and robots. QTUM is up +3.90% over five sessions and AIPO +1.52%. The rank gains built up over several sessions.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by September 24 closing move — 39 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
United States Natural Gas Fund (UNG)	+6.26%	98	🔺	🔺	🔽
Global X Genomics & Biotechnology (GNOM)	+3.67%	85	🔺	🔺	🔺
United States Oil Fund (USO)	+2.86%	99	🔺	🔺	🔺
iShares Biotechnology (IBB)	+1.28%	57	🔺	🔺	🔺
Communication Services Select Sector SPDR (XLC)	+1.27%	78	🔺	🔺	🔽

Two energy funds lead, two health-care funds follow, and communication services rounds out the list. Three of the five already rank 85 or higher. Only 39 funds rose at all, and the gains went to groups with news of their own.

Why They Rose — Sector Issues

Global X Genomics and Biotechnology GNOM Daily

· Genomics and biotech (GNOM · IBB) — The genomics fund rose +3.67% and the iShares biotech fund +1.28%. Twist Bioscience jumped +16.11% after Leerink raised its price target to $160 from $120. 10x Genomics gained +11.23%, Illumina +7.25%, and Moderna +6.98%. CareDx added +13.00% on a BTIG target increase. Most of these moves came without new quarterly results. Health care was one of only three sector SPDRs to rise, and genomics led it.

SPDR Communication Services XLC Daily

· Communication services (XLC) — The sector SPDR gained +1.27%, the best of the eleven. Meta rose +4.50%, Alphabet +1.34%, and Disney +2.03%. Meta makes up 22.4% of the fund, so one company did most of the work. Investors paid for Meta’s plan to earn fees from its AI agent, a revenue source that does not depend on ad spending.

Leading Sectors: Natural Gas, Genomics, Communication Services

① Rates set the tone again. The 10-year yield rose to 5.16%, and mortgage rates reached their highest level since May 2024. Solar (TAN) fell -3.51%, hydrogen -3.05%, uranium (URA) -2.69%, and clean energy (ICLN) -2.58%. First Solar dropped -10.32% as reports tied the solar selloff to the cost of financing utility-scale projects. Projects built with borrowed money are worth less when money costs more.
② The leaders had their own reasons to rise. Natural gas had a storage shortfall. Communication services had Meta’s agent plan. Genomics had a series of analyst target increases. Natural gas now ranks 98 and oil 99 on the sheet, and both trade above their 1-month and 1-quarter moving averages.
③ Precious-metal miners kept falling. Gold miners (GDX) lost -1.29% and silver miners (SIL) -1.37%, which extends their five-session losses to -3.72% and -4.26%. Metals that pay no interest look less attractive each time yields rise. Materials was the weakest sector SPDR at -1.19%, and utilities have lost -5.59% over five sessions.
④ The last report covered the September 23 close. Its three picks, measured from that close to Thursday: CrowdStrike -1.07%, Palantir +0.42%, and Twilio +3.08%. The S&P 500 fell -0.02% over the same session. Palantir and Twilio beat the index, and CrowdStrike trailed it. Recorded as is.

Three RS Leaders to Research: Meta · 10x Genomics · CareDx

Selection: from the 1,134 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Meta (META) — 1-Month RS 99: A Price Tag for the AI Agent

Meta Platforms META Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
97	98	99	+36.4%	Communication Services Select Sector SPDR · Global X Social Media · First Trust Dow Jones Internet

Up +4.50% to $777.59, its highest close in a year, and +13.96% over five sessions. At its Connect conference on Wednesday, Mark Zuckerberg said the Muse AI agent will stay free up to a large usage allowance and that Meta will take a small fee from the transactions it completes. The company added PayPal support and shopping links with Walmart, Best Buy, and Sephora, and plans a handheld Muse device for the holiday season. The numbers show why investors wanted a revenue plan. For the second quarter ended June 30, revenue rose 28.0% from a year earlier to $60.80 billion from $47.52 billion. Costs and expenses rose 55.2% to $42.03 billion, and operating income fell -8.2% to $18.78 billion from $20.44 billion. Diluted earnings were $6.18 per share against $7.14. Meta is spending faster than it is growing. What to watch for Meta: whether Muse fees can start to close that gap.

10x Genomics (TXG) — 1-Month RS 99: A Group Rally Without Company News

10x Genomics TXG Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	94	99	+30.0%	Global X Genomics & Biotechnology

Up +11.23% to $84.11, its highest close in a year, and +9.28% over five sessions. The company issued no news on Thursday. The stock moved with the genomics group, and its recent catalysts are older. On August 28 a Delaware jury found that Parse Biosciences, a Qiagen unit, willfully infringed three patents licensed to 10x’s Scale Biosciences. On September 10 the Korean AI pathology firm Lunit said 10x will use its image-analysis software alongside the Xenium and Atera spatial platforms. The business itself is growing slowly. Second-quarter revenue was $151.0 million against $172.9 million a year earlier, but the year-ago figure included $27.3 million of one-time license and royalty revenue from the Bruker settlement. Without it, revenue rose about 3.7%. The operating loss was $19.6 million, against a year-ago profit of $30.1 million that included a $40.7 million settlement gain. The 10x Genomics stock setup rests on whether spatial products can speed up growth, because the price has moved much faster than revenue.

CareDx (CDNA) — 1-Month RS 97: Testing Revenue Up 61%

CareDx CDNA Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	97	97	+20.8%	Global X Genomics & Biotechnology

Up +13.00% to $61.37, its highest close in a year, and +13.06% over five sessions. BTIG kept its Buy rating and raised its target to $74 from $60 after meeting management in Boston, citing the positive resolution of a Medicare coverage decision for transplant testing. The results back the call. Second-quarter revenue rose 52.2% to $131.9 million from $86.7 million, and testing services revenue rose 61% to about $100 million on 17% more tests. Reported net income of $110.6 million includes a $113.0 million gain from selling the lab products business, so non-GAAP net income of $20 million, up from $6 million, is the better measure. The company now expects 2026 revenue of $490 million to $500 million. What to watch for CareDx: whether test volumes keep growing now that the company is a pure testing business.

Meta · 10x Genomics · CareDx

· Meta levels to watch — Operating income fell -8.2% in the second quarter while revenue grew 28.0%. Watch whether operating income returns to growth in the third-quarter report. That report will show whether spending is starting to slow.

· 10x Genomics levels to watch — The stock rose +11.23% without company news. Watch whether it holds above the September 21 close of $79.10, the previous one-year high. A drop back below it would point to a group trade rather than a change in the business.

· CareDx levels to watch — The lab products sale inflated reported profit. Watch whether testing volume growth stays near 17% in the third quarter. That is the number that has to carry the stock without the one-time gain.

What to Watch on Next Week’s Calendar

August PCE price index, Wednesday September 30 (9:30 p.m. KST). The 10-year yield rose again to 5.16% on Thursday, and solar, hydrogen, and uranium funds fell the most. PCE is the Fed’s preferred inflation measure. A hot reading would push yields higher and extend the pressure on those groups. A soft one would give them their first relief.
US budget deadline for fiscal 2027, Wednesday September 30. Congress has to pass funding by the end of the month or the government shuts down. A shutdown would delay federal data releases at a time when the bond market is already setting the direction for stocks.
OpenAI DevDay, Tuesday September 29 (US time). Sam Altman gives the keynote. Meta rose +4.50% on its plan to take fees from transactions made through its Muse agent. Any OpenAI move into agent shopping or payments would test how much of an edge that plan really gives Meta.
Micron earnings, Thursday October 1 (5:00 a.m. KST). The semiconductor fund (SOXX) ranks 92 on the sheet after a sharp rebound in September. A strong fourth quarter from Micron would support that rebound. A miss would put the chip group back in question.

Sector RS Rank Sep 23: Yield at 2007 High, Blockchain Leads

J. Equity. Research — Thu, 24 Sep 2026 00:38:35 GMT

Sector RS Rank for the September 23, 2026 US session: the 10-year Treasury yield rose to 5.11%, its highest since 2007, and the S&P 500 fell -0.75% to 7,706.03, with only 16 of the 129 ETFs in our universe closing higher and 10 of the 11 sector SPDRs in the red. Leading sectors: Blockchain, Oil, Cybersecurity. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: CrowdStrike, Palantir, Twilio.

💡 Today’s US market in three lines

① Today’s three stocks: CrowdStrike · Palantir · Twilio — a security company at a one-year closing high, a software platform whose revenue nearly doubled, and a messaging company now priced as AI infrastructure.

② On September 23, the 10-year Treasury yield rose to 5.11%, its highest since 2007, and the S&P 500 fell -0.75% to 7,706.03, with only 16 of the 129 ETFs in our universe closing higher and 10 of the 11 sector SPDRs in the red.

③ Cybersecurity rose +1.93% and oil +3.30%, while silver miners fell -5.33% and biotech -4.12%.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Sep 23 Sector RS — 129 ETFs · RRG v2

Wednesday was a rates day. A hot business survey pushed Treasury yields to levels last seen in 2007, and almost everything tied to borrowing costs sold off. Only oil and cybersecurity held up.
The S&P 500 closed at 7,706.03, down -0.75% or 58.61 points. The Nasdaq fell -1.13% to 26,936.04 and ended its two-day record run, and the Dow lost -0.68% to 51,511.59. Small caps took the worst of it, with the Russell 2000 down -1.77% and its fund (IWM) -1.84%. The Nasdaq-100 fund (QQQ) fell -0.84% and the equal-weight S&P 500 (RSP) -0.70%. Value held up better than growth this time, -0.49% for the Russell 1000 Value fund (IWD) against -1.03% for the Russell 1000 Growth fund (IWF).
Breadth collapsed: only 16 of the 129 funds in our universe closed higher and 113 closed lower. Among the eleven sector SPDRs, energy (+0.96%) was the only gainer. Utilities (-1.92%), real estate (-1.55%), and consumer discretionary (-1.50%) fell hardest. Those are the sectors that carry the most debt or sell the most on credit, and they reacted first.
The trigger was economic data. S&P Global’s flash survey for September came in at 57.0 for manufacturing against 53.7 expected, and 58.7 for services against 55.8. The 10-year yield rose about 14 basis points to 5.11%, and the five-year yield reached 5% for the first time since 2007. Fed Governor Michael Barr said further policy adjustments are likely needed. Futures now price roughly a 70% chance of another hike in October, only a week after the Fed raised rates on September 16. A strong economy is good news for earnings, but on Wednesday the market read it as a reason for higher rates.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, September 23, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Blockchain (BKCH)	-3.23%	100	🔺	🔺	🔺
VanEck Digital Transformation (DAPP)	-3.08%	99	🔺	🔺	🔺
VanEck Onchain Economy (NODE)	-2.99%	98	🔺	🔺	🔺
Global X Genomics & Biotechnology (GNOM)	-2.01%	97	🔺	🔺	🔺
United States Oil Fund (USO)	+3.30%	96	🔺	🔺	🔺

The top four ranks are the same as Tuesday’s, three blockchain funds and genomics, and all four fell. Oil returned to the top five at 96, tied with the metaverse fund (METV), after sitting out Tuesday. All five funds still trade above all three moving averages. One day of selling has not broken the one-month leadership.

Why They’re Strong — Sector Issues

Global X Blockchain BKCH Daily

· Blockchain and digital assets (BKCH · DAPP · NODE · BLOK) — Blockchain equities fell -3.23%, digital transformation -3.08%, onchain economy -2.99%, and Amplify’s blockchain fund -2.40%. Bitcoin slipped about 2% to roughly $84,500, and Hut 8 lost -3.89%. Rising yields hit the most speculative corners of the market first. Even so, BKCH is still up +15.14% over five sessions. Wednesday took back about a fifth of that run, and the rank held at 100.

United States Oil Fund USO Daily

· Oil (USO) — The oil fund gained +3.30% and ended a five-session losing streak. European diesel margins hit a record after President Trump said he backed the idea of a diesel export ban, and it is still unclear when talks with Iran on reopening the Strait of Hormuz will produce a deal. The producers rose far less than the commodity. The energy SPDR (XLE) added +0.96% and the exploration fund (XOP) +0.57%. Investors bought the barrel for the short-term squeeze but did not pay up for the companies that pump it. USO is still -4.70% over five sessions.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks cybersecurity, cloud software, oil exploration, biotech, and solar. First Trust’s cybersecurity fund (CIBR) started the window at 88, fell to 19 on September 9, and now sits at 95. Cloud software (WCLD) started at 96, dropped to 35 on the same day, and has recovered to 79. Oil exploration (XOP) spent much of the window in the 90s, fell to 43 on Tuesday, and bounced to 60. Biotech (XBI) went from 76 to a low of 4 in early August, peaked at 88 on September 1, and has slipped back to 40. Solar (TAN) stayed below 20 for most of the window and is at 28.

RS Breakdown Warnings (big 5-day drops)

· Sports betting (BETZ) lost -67 points in five trading days, from 70 to 3, the steepest fall among funds whose sheet rank confirms the move. SPDR’s insurance fund (KIE) dropped -45 points, food and beverage (PBJ) -44, iShares’ insurance fund (IAK) -38, natural gas producers (FCG) -37, and VanEck’s pharmaceutical fund (PPH) -36.

· Insurers, food makers, and drug companies were the defensive trade in mid-September. That money has been moving toward chips. Higher rates also make steady, bond-like stocks less attractive.

RS Rebound Signals (sharp bounces off the bottom)

· The meme stock fund (MEME) rebounded +95 points in five sessions, from 3 to 98. Semiconductors (SOXX) gained +83 points, fabless chips (SMHX) +76, generative AI (CHAT) +67, quantum computing (QTUM) +63, and VanEck’s semiconductor fund (SMH) +63.

· Chips fell on Wednesday, with SOXX down -1.23%, but the fund is still up +12.68% over five sessions. One bad day took only a small piece of the week’s gain. The list is the same chip-led group as Monday’s and Tuesday’s.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by September 23 closing move — 16 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
United States Oil Fund (USO)	+3.30%	96	🔺	🔺	🔺
Global X Cybersecurity (BUG)	+1.93%	95	🔺	🔺	🔺
iShares Cybersecurity and Tech (IHAK)	+1.47%	82	🔺	🔺	🔺
First Trust NASDAQ Cybersecurity (CIBR)	+1.40%	90	🔺	🔺	🔺
iShares Expanded Tech-Software Sector (IGV)	+1.26%	85	🔺	🔺	🔺

Three of the five are cybersecurity funds and a fourth is software. Oil tops the list. Every fund on the table ranks 82 or higher and trades above all three moving averages. Nothing from the bottom of the RS table made it. On a day this broad, the only buyers were in groups that were already leading.

Why They Rose — Sector Issues

Global X Cybersecurity BUG Daily

· Cybersecurity (BUG · IHAK · CIBR) — Global X’s cybersecurity fund rose +1.93%, iShares’ +1.47%, and First Trust’s +1.40%. CrowdStrike gained +4.97%, Palo Alto Networks +5.00%, and Okta +4.45%. None of them had company news. Investors treated security as a budget that companies do not cut in a slowdown, and the spread of AI agents gives attackers more to aim at. BUG has returned +17.86% over the past month, the best one-month gain in our universe.

iShares Expanded Tech-Software IGV Daily

· Software (IGV · WCLD) — The software fund added +1.26% and cloud software +1.00%. Palantir rose +3.68% and Twilio +2.17%. Semiconductors fell -1.23% on the same day, so the buying inside tech moved from hardware to software. Software sells subscriptions that renew every year. Investors are paying for that steady revenue at a time when rates are rising.

Leading Sectors: Blockchain, Oil, Cybersecurity

① Yields decided the day. With the 10-year at 5.11% and the average 30-year mortgage rate up to 7.26%, the highest in nearly two years, anything financed with debt fell together. Homebuilders (ITB) lost -2.46%, solar (TAN) -3.12%, and utilities -1.92%. Only 16 of 129 funds rose. The market has no broad support while rates move this fast.
② The RS table barely changed. Blockchain holds 100, 99, and 98, and oil is back at 96. Cybersecurity is the leader that is strengthening, with BUG at 95 and CIBR at 90, and it rose on a day when almost nothing else did. Precious-metal miners took the hardest hit. Silver miners fell -5.33%, junior gold miners -5.23%, and large gold miners -4.36%. Higher yields make metals that pay no interest less attractive, and the miners amplify every move in the metal.
③ Biotech (XBI) fell -4.12% and pharmaceuticals (XPH) -3.71%. Small biotech companies depend on outside funding, and a higher cost of money hits them directly. XBI ranks 48 and trades below its 1-month and 1-quarter moving averages. Its bounce in early September has now faded.
④ The last report covered the September 22 close. Its three picks, measured from that close to Wednesday: Micron -2.22%, Hut 8 -3.89%, and Natera -0.03%. The S&P 500 fell -0.75% over the same session. Only Natera beat the index, while Micron and Hut 8 fell further than the market. Recorded as is.

Three RS Leaders to Research: CrowdStrike · Palantir · Twilio

Selection: from the 1,136 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

CrowdStrike (CRWD) — 1-Month RS 99: A One-Year High on a Down Day

CrowdStrike CRWD Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	90	99	+37.7%	First Trust NASDAQ Cybersecurity · iShares Expanded Tech-Software · Global X Cybersecurity

Up +4.97% to $262.49, its highest close in a year, and +8.75% over five sessions. The move came with the whole security group and without company news. The numbers show why investors keep buying. For the fiscal second quarter ended July 31, revenue rose 25.8% from a year earlier to $1.47 billion from $1.17 billion. Net income came to $5.3 million against a loss of $70.2 million, and the operating loss narrowed to $33.2 million from $105.5 million. The company is only just profitable, and its value rests on revenue growth. What to watch for CrowdStrike: whether growth in the mid-20% range holds while customers add protection for AI agents.

Palantir (PLTR) — 1-Month RS 91: Six Straight Gains Toward the Old High

Palantir Technologies PLTR Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	92	91	+9.0%	Global X Defense Tech · iShares Expanded Tech-Software · ARK Autonomous Technology & Robotics

Up +3.68% to $191.79, its sixth straight gain, and +10.01% over five sessions. The stock is still below its record close of $207.18 from November 2025. Rosenblatt reiterated its Buy rating and $225 target on Wednesday and argued that the FAA’s air traffic AI rollout could still benefit Palantir, even though a startup won the $875 million contract in June. The fundamentals support the rally. Second-quarter revenue rose 92.8% from a year earlier to $1.94 billion from $1.00 billion. Operating income reached $912.0 million against $269.3 million, and diluted earnings were $0.41 per share against $0.13. The Palantir stock setup now depends on whether revenue can keep growing near that pace, since the price already assumes it will.

Twilio (TWLO) — 1-Month RS 99: Messaging Priced as AI Infrastructure

Twilio TWLO Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
96	99	99	+30.6%	Global X Cloud Computing · WisdomTree Cloud Computing

Up +2.17% to $290.70, its highest close in a year, and +21.69% over five sessions. The stock jumped +9.11% on Monday and +6.94% on Tuesday. Rosenblatt raised its target to $290 and TD Cowen to $300 from $260, both pointing to consumer AI agents that will need messaging, voice, and identity services to reach customers. Second-quarter revenue rose 22.0% from a year earlier to $1.50 billion from $1.23 billion, and operating income more than doubled to $84.5 million from $37.0 million. Reported net income of $1.07 billion includes a one-time income tax benefit of $991.7 million, so the operating line is the better measure. What to watch for Twilio: it rests on whether AI agents actually lift message volumes, because the price has already reached Rosenblatt’s $290 target.

CrowdStrike · Palantir · Twilio

· CrowdStrike levels to watch — The stock closed at a one-year high while the Nasdaq fell -1.13%. Watch whether it holds above Tuesday’s close of $250.06 if rates keep rising. A stock that keeps rising against a falling market is still being accumulated.

· Palantir levels to watch — Six straight gains have brought the stock within 8% of its record. Watch whether it can close above $207.18. A failure there would leave the old high as resistance.

· Twilio levels to watch — The one-time tax benefit inflates reported profit. Watch whether operating income keeps growing in the third quarter. That is the number that has to justify a price already at Rosenblatt’s target.

What to Watch on Next Week’s Calendar

US–China summit at the White House, Thursday September 24. President Xi Jinping’s visit covers AI development, AI security, semiconductors, rare earths, and tariffs, and the state dinner is expected to include Nvidia’s Jensen Huang, Apple’s Tim Cook, and OpenAI’s Sam Altman. Chips have gained +83 points of RS rank in five sessions, partly on hopes for this meeting. A concrete easing of chip trade rules would support that rebound. A vague statement would leave it exposed to rates.
August PCE price index, Wednesday September 30 (9:30 p.m. KST). Futures give roughly a 70% chance of another Fed hike in October, and the 10-year yield sits at 5.11%. PCE is the Fed’s preferred inflation measure. A hot reading would add to the pressure on utilities, homebuilders, and biotech, which fell hardest on Wednesday. A soft one would give them their first relief.
US budget deadline for fiscal 2027, Wednesday September 30. Congress has to pass funding by the end of the month or the government shuts down. A shutdown would delay federal data releases and add another source of uncertainty for the bond market at a time when yields are already at 2007 levels.
Micron earnings, Thursday October 1 (5:00 a.m. KST). Micron, one of our previous picks, fell -2.22% on Wednesday but is still up +15.69% over five sessions. The report will test whether the chip rebound in the RS table rests on earnings. A strong fourth quarter would support SOXX’s jump from 12 to 95 in five sessions. A miss would put the whole group back in question.

Sector RS Rank Sep 21: Chips Soar, Nasdaq at Record

J. Equity. Research — Mon, 21 Sep 2026 23:05:46 GMT

Sector RS Rank for the September 21, 2026 US session: the S&P 500 closed +1.49% at 7,764.70 and the Nasdaq jumped +2.26% to a record 27,122.09, with 95 of the 129 ETFs in our universe finishing higher and 7 of the 11 sector SPDRs in the green. Leading sectors: Semiconductors, Blockchain, Cybersecurity. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: AMD, Intel, DigitalOcean.

💡 Today’s US market in three lines

① Today’s three stocks: AMD · Intel · DigitalOcean — two chipmakers that led the day’s semiconductor surge and a cloud provider that just locked in the financing for its AI build-out.

② On September 21, the S&P 500 closed +1.49% at 7,764.70 and the Nasdaq jumped +2.26% to a record 27,122.09, with 95 of the 129 ETFs in our universe finishing higher and 7 of the 11 sector SPDRs in the green.

③ Semiconductors rose +4.93% as AMD crossed a $1 trillion market value, while oil gave back -3.68% on hopes of renewed US–Iran talks and dragged energy producers down with it.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Sep 21 Sector RS — 129 ETFs · RRG v2

Monday undid most of last week’s anxiety in a single session. Crude slipped back below $100 a barrel on reports that Washington and Tehran could resume diplomatic talks, the 10-year Treasury yield eased from 5.00% to 4.96%, and the money that had been hiding in energy went straight back into chips. The Nasdaq closed at its first record since June.
The S&P 500 closed +1.49% at 7,764.70, the Nasdaq +2.26% at 27,122.09, and the Dow +0.71% at 52,048.83. Growth crushed value — the Russell 1000 Growth fund (IWF) rose +2.43% against +0.70% for the Russell 1000 Value fund (IWD), and the Nasdaq-100 fund (QQQ) added +2.77%. The equal-weight S&P 500 (RSP) managed only +0.18% and small caps (IWM) +0.52%. That gap matters. The index gained eight times as much as the average stock, so this was a mega-cap rally first and a broad one second.
Breadth still leaned positive: 95 of the 129 funds in our universe closed higher and 34 closed lower. Among the eleven sector SPDRs, communication services (+3.56%) and technology (+2.77%) led, while energy (-2.88%), utilities (-1.07%), consumer staples (-1.06%), and materials (-0.56%) fell. Those four losers share a trait. Each is where investors parked money while chips were falling, and each lost its bid the moment chips recovered.
Two catalysts fed the chip move. Meta rose +11.34% after its new MUSE AI agent reached the top of the App Store, which lifted every company that sells the processors those agents run on. And Thursday’s White House dinner for President Xi Jinping is set to include the chief executives of Nvidia and OpenAI, which raised hopes for AI cooperation between the two countries. Bitcoin added its own risk signal, trading above $86,000 for the first time in eight months.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, September 21, 2026. Daily and monthly moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Blockchain (BKCH)	+3.20%	100	🔺	🔺	🔺
VanEck Digital Transformation (DAPP)	+2.49%	99	🔺	🔺	🔺
Global X Genomics & Biotechnology (GNOM)	+1.82%	98	🔺	🔺	🔺
United States Oil Fund (USO)	-3.68%	97	🔺	🔺	🔺
Roundhill Ball Metaverse (METV)	+4.17%	96	🔺	🔺	🔺

Blockchain took the top rank from oil. BKCH now sits at 100 on a month of +14.54%, and oil slipped to fourth after a -3.68% session. Onchain economy (NODE) ties the metaverse fund at 96 and just misses the table. Every fund here still trades above all three moving averages, oil included, so Monday’s drop dented the oil trend without breaking it.

Why They’re Strong — Sector Issues

Global X Blockchain BKCH Daily

· Blockchain and digital assets (BKCH · DAPP · NODE) — Blockchain equities rose +3.20%, digital transformation +2.49%, and onchain economy +3.23%. Bitcoin cleared $86,000 even though last week’s Senate vote on the Clarity Act failed; the market simply stopped pricing that failure. Strategy added +9.47% after disclosing a fresh $57.4 million bitcoin purchase. The blockchain fund has gained +8.95% in five sessions, and it now leads the table on a regulatory story that has survived two opposite headlines in one week.

United States Oil Fund USO Daily

· Oil (USO) — The fund fell -3.68% as crude slipped under $100 on the prospect of US–Iran talks. Exxon Mobil dropped -3.20% and Chevron -2.79%. Oil still holds rank 97 because a month of +10.12% cannot be erased in one day. The warning sign sits one level down. Exploration and production funds (XOP, IEO) fell more than 3% and rank lower than the crude fund itself, which is what happens when equity investors stop believing the price will last.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks semiconductors, AI chips, cybersecurity, energy, and sports betting. Semiconductors (SOXX) climbed from 22 at the start of the window to 88 on Monday, after bottoming at 2 in early August. The AI chip and quantum fund (CHPX) made a similar climb from 19 to 94. Cybersecurity (CIBR) finished at 97, recovering from an early-September low of 19. On the way down, the energy SPDR (XLE) ended at 51 after peaking at 97 in late July, and sports betting (BETZ) fell to 9 from a September high of 83.

RS Breakdown Warnings (big 5-day drops)

· Sports betting (BETZ) lost -71 points in five trading days, the steepest fall among funds whose sheet rank confirms the move. Pharmaceuticals (XPH) dropped -43 points, food and beverage (PBJ) -41, the energy SPDR (XLE) -39, and oil and gas exploration (XOP) -38.

· These come from two sources. Betting keeps losing share to prediction markets, a story that has run for weeks. Energy, food, and pharma look like last week’s defensive trade unwinding: those funds held up while chips fell, and they are now funding the chip rebound.

RS Rebound Signals (sharp bounces off the bottom)

· Fabless semiconductors (SMHX) rebounded +77 points in five sessions, from 14 to 91. SOXX gained +75 points, generative AI (CHAT) +71, AI chips (CHPX) +66, and VanEck’s semiconductor fund (SMH) +63.

· Every name on this list is a chip or AI fund. SOXX has returned +12.45% in five sessions, and the rebound now includes design, manufacturing, and the software that runs on them. A recovery this broad inside one industry usually outlasts a single-stock rally.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by September 21 closing move — 95 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Roundhill Meme Stock (MEME)	+4.97%	39	🔺	🔺	🔺
VanEck Fabless Semiconductor (SMHX)	+4.93%	75	🔺	🔺	🔺
iShares Semiconductor (SOXX)	+4.93%	69	🔺	🔺	🔺
Global X AI Semiconductor & Quantum (CHPX)	+4.60%	83	🔺	🔺	🔺
Roundhill Generative AI & Technology (CHAT)	+4.20%	61	🔺	🔺	🔺

Four of the five are chips or AI, and the fifth is the retail basket that follows them. None of the five holds a 1-month RS rank above 83, which tells you where this money came from. It moved into groups that were near the bottom of the table a week ago. The metaverse fund (+4.17%) and cloud (CLOU, +3.99%) finished just behind.

Why They Rose — Sector Issues

iShares Semiconductor SOXX Daily

· Semiconductors (SOXX · SMHX · CHPX · SMH) — Chips gained +4.93%, fabless +4.93%, AI chips +4.60%, and VanEck’s fund +4.02%. Arm led the large caps at +17.16%, Intel added +12.14%, AMD +9.95%, and Qualcomm +9.29%. Nvidia lagged at +2.30% and Micron at +2.77%, so this was a rotation toward CPUs and the designs around them rather than toward memory or GPUs. That pattern points to agentic AI, which leans on general-purpose server processors more than earlier models did.

Roundhill Generative AI CHAT Daily

· Generative AI and memes (CHAT · MEME) — Generative AI rose +4.20% on a portfolio led by Nvidia, Alphabet, SK Hynix, and Microsoft, with AMD at about 3% of the fund. The day’s headline product came from Meta, but the fund’s gain came from the chipmakers that supply that kind of product. The meme basket added +4.97% on the same momentum. Its 1-month RS rank of 39 shows how far it had fallen before Monday. When the most speculative basket in the universe tops the daily list, risk appetite has returned, but it says little about staying power.

Leading Sectors: Semiconductors, Blockchain, Cybersecurity

① Monday was a relief rally with a clear mechanism. Oil fell, yields eased, and the groups that had been hurt by both got bought back. The equal-weight index rose only +0.18%, though. The relief reached the largest companies first, and most of the market has not yet joined in.
② The RS table now holds three leaderships at once. Blockchain funds rank 100, 99, and 96. Cybersecurity sits at 94 for BUG and 90 for CIBR on a month of +14.55% and +10.32%. Chips are the newest arrival, with SOXX at 69 and climbing fast. Oil has dropped to fourth. If crude stays under $100, the oil leadership that defined August is the one most likely to leave the table next.
③ Utilities (-1.07%, rank 17) and staples (-1.06%) fell on a day when yields dropped, which is the opposite of how they usually trade. That tells you their earlier strength was a hiding place and had little to do with rates. With chips recovering, they are the likeliest source of funds for the next leg.
④ The last report covered the September 18 close. Its three picks, measured from that close to Monday: Coinbase +3.50%, MARA Holdings +0.30%, and Semtech -4.12%. The S&P 500 returned +1.49% over the same session, so Coinbase beat the index while MARA and Semtech lagged it. Semtech gave back part of a month-long run of +42% even as the rest of the chip sector surged. Recorded as is.

Three RS Leaders to Research: AMD · Intel · DigitalOcean

Selection: from the 1,146 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

AMD (AMD) — 1-Month RS 99: The Newest Trillion-Dollar Chipmaker

Advanced Micro Devices AMD Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	99	99	+31.1%	iShares Semiconductor · VanEck Fabless Semiconductor · VanEck Semiconductor

Up +9.95% to $615.52, a record close and the first time AMD’s market value has passed $1 trillion. The stock has gained +24.7% over five sessions. The earnings back the move. Second-quarter revenue rose 50% from a year earlier to $11.54 billion, net income more than doubled to $2.30 billion, and diluted earnings reached $1.38 per share against $0.54. Data center revenue, which grew about 57% to $5.78 billion, drives the business now. Monday’s catalyst fits it closely. Agentic AI runs heavily on server CPUs, and AMD sells both the CPUs and the accelerators. What to watch for AMD: whether that data center growth rate holds into the third quarter now that the company sits in the trillion-dollar tier.

Intel (INTC) — 1-Month RS 99: A Turnaround Priced Ahead of the Numbers

Intel INTC Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	100	99	+32.2%	iShares Semiconductor · VanEck Semiconductor · Global X AI Semiconductor & Quantum

Up +12.14% to $121.78, and +25.3% over five sessions. Two things are driving it. Intel is a server CPU maker, so it gained from the same agentic AI story as AMD. It has also been in talks since last Wednesday about a partnership with SK Hynix to make memory chips at its delayed Ohio complex, although SK Hynix says nothing has been finalized. The fundamentals are mixed. Second-quarter revenue rose 25% to $16.13 billion and gross profit nearly doubled to $6.51 billion, yet Intel reported a GAAP net loss of $11.03 billion, or $2.16 per share. What to watch for Intel: it rests on converting a rumored foundry customer into a signed one, because the current price already assumes the Ohio fab gets filled.

DigitalOcean (DOCN) — 1-Month RS 98: Financing the AI Cloud for Smaller Customers

DigitalOcean DOCN Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	99	98	+27.8%	Global X Cloud Computing · WisdomTree Cloud Computing

Up +12.31% to $146.16, the one pick here that is not a chipmaker. DigitalOcean rents cloud computing to developers and smaller businesses, and it has just lined up a $725 million equipment financing facility, with a $300 million accordion option, to buy GPU and CPU capacity for its AI cloud through 2030. It reaffirmed its 2026 and 2027 guidance at the same time, and Truist started coverage with a Buy rating and a $175 target. Second-quarter revenue rose 29% from a year earlier to $281.2 million. Net income slipped to $35.4 million from $37.0 million, so the growth is not yet reaching the bottom line. What to watch for DigitalOcean: whether the new capacity fills with paying AI workloads fast enough to cover its financing cost.

AMD · Intel · DigitalOcean

· AMD levels to watch — At $1 trillion, the stock prices in continued data center strength. Watch whether data center revenue keeps growing above 50% a year. A slower rate would make this valuation hard to defend.

· Intel levels to watch — Five sessions added a quarter to the share price on talks that are not yet a deal. Watch whether the SK Hynix partnership is formally announced. Without it, the Ohio story goes back to being a cost.

· DigitalOcean levels to watch — The financing adds capacity, and capacity only pays if it gets rented. Watch whether AI revenue shows up as a growing share of the next quarter’s sales. That is the test of the $725 million bet.

What to Watch on Next Week’s Calendar

US–China summit at the White House, Thursday September 24. President Xi Jinping’s visit puts AI development, AI security, semiconductors, and rare earths on the table, and AI industry leaders are expected at the dinner. Monday’s chip rally was partly a bet on this meeting. A concrete easing of chip export rules would validate the +12.45% five-day run in SOXX. A vague communiqué would leave that run with nothing new behind it.
Qualcomm Snapdragon Summit, September 22 to 24, and Meta Connect, September 23 to 24. Qualcomm rose +9.29% and Meta +11.34% on Monday, both ahead of their own events. Details on on-device AI processors and on Meta’s agent and glasses hardware will test whether the CPU-led chip rotation has product support. The metaverse fund (METV) enters the week at rank 96.
Treasury auctions, Tuesday through Thursday (2:00 a.m. KST the following day). Two-year, five-year, and seven-year notes come to market with the 10-year yield at 4.96%. Monday’s rally depended partly on that number easing. Weak demand would push yields back toward 5% and test the rebound in the growth funds; firm demand would give them room to keep going.

Halozyme (HALO) Stock: 2033 Convertible Notes, Dilution

J. Equity. Research — Sun, 20 Sep 2026 21:32:32 GMT

Halozyme Therapeutics (NASDAQ: HALO) earned an operating margin of 59.8% in the second quarter of 2026. Revenue was $481.0 million, operating income was $287.7 million, and royalties alone brought in $307.7 million, or 64.0% of the total.
Stockholders’ equity at the end of that quarter was $143.5 million. The shares trade at $112.45 for a market value of $12.76 billion, which puts the book value at about 1.1% of the market capitalisation. In September the company issued $1.3 billion of new convertible notes.

Halozyme Therapeutics (HALO) one-year share price near $112

Three questions follow from that combination.
How the equity of a company earning a 60% margin fell to $143.5 million
Why the quarter with the highest revenue on record produced an operating loss
Where the $1.3 billion of new notes goes and how many shares it could create
One limit up front. Royalties come from products sold by partners, so Halozyme does not control the revenue line directly. Contract royalty rates are not disclosed and this piece does not estimate them. Share count is the 118,017,000 shares on the cover of the 10-K, and balance-sheet figures are as of June 30, 2026.

What the Q2 2026 Earnings Presentation Shows

The fifteen-page deck for the quarter sets out three things the company wants read together: guidance raised for the second time, royalty growth of 50%, and a capital allocation plan. The first two can be checked against the filings. The third is a statement of intent, and the September notes offering is the first test of it.

Guidance Raised for the Second Time

Earnings presentation page 5: 2026 guidance raised for the second time

Company disclosure (Q2 2026 earnings presentation, page 5): total revenue of $1.835-$1.910 billion, up 31-37% year over year; royalty revenue of $1.220-$1.245 billion, up 41-43%; adjusted EBITDA of $1.225-$1.280 billion, up 86-95%; and non-GAAP diluted EPS of $8.65-$9.00, up 108-117%.
The same page carries the increases over prior guidance at the midpoint: $112.5 million on total revenue, $82.5 million on royalties, $87.5 million on adjusted EBITDA and $0.82 on non-GAAP EPS. Royalties account for 73% of the revenue increase.
Four growth rates sit side by side, and they are not measured from the same base. Revenue and royalty growth are measured against 2025 revenue of $1,396.6 million. The 86-95% on adjusted EBITDA and the 108-117% on EPS are measured against a year in which a single acquisition charge of $284.9 million ran through the income statement. The base year is depressed, and the growth rate inherits that.
The deck also restates the 2025 baseline on the same page: total revenue of $1,396.6 million, royalties of $867.8 million, adjusted EBITDA of $657.6 million and non-GAAP EPS of $4.15. Set against guidance of $1.225-$1.280 billion, adjusted EBITDA roughly doubles this year. The charge that held 2025 down is the reason the doubling looks as large as it does.

Earnings presentation page 7: ten launched ENHANZE products and fifteen projected launches

Company disclosure (Q2 2026 earnings presentation, page 7): ten ENHANZE products are launched today, thirteen more ENHANZE launches are projected for 2029 and beyond, and two Hypercon launches are projected on top of those.
Page 3 summarises the quarter in four lines: record royalty growth of 50%, collaboration targets exceeded, guidance raised, and buybacks continuing. All four are verifiable in the filings, and the order is presumably the order the company considers important. What the page does not carry is the $1.938 billion of long-term debt sitting on the same balance sheet.
Ten products pay royalties now, fifteen are expected to. The timing on the second group is 2029 and later, which means 2027 and 2028 depend on how much the existing ten sell. Five new collaboration agreements signed this year, against a target of three, feed the group that starts paying at the end of the decade.

Royalties and the Adjusted Measure

The deck spends more space on royalty growth than on anything else, and the split below shows why.
Revenue splits three ways: royalties of $307.7 million, product sales of $129.6 million, and collaboration revenue of $43.7 million. Against the prior year, royalties are up 49.6% and product sales up 59.0%.
Royalty mix is what lifts the margin. A year ago royalties were 63.1% of revenue and the operating margin was 62.2%; this quarter the mix is 64.0% and the margin is 59.8%. The slight decline comes from amortisation of intangibles, which rose from $17.8 million to $29.5 million after the Elektrofi purchase.
On the 10-Q income statement, revenue of $481.0 million less cost of sales of $79.2 million, amortisation of $29.5 million, R&D of $27.7 million and SG&A leaves operating income of $287.7 million, or 59.8% of revenue. The quarterly figures in this piece come from the Form 10-Q for the quarter ended June 30, 2026, the 2025 Form 10-K and the September 8-K exhibits.

Earnings presentation page 11: cash flow and capital allocation priorities

Page 11 is headed capital allocation, and it lists buybacks, debt repayment and business development together. The quarter’s actual spending was weighted to the first: $332.7 million of stock, which exceeds the quarter’s operating income. Debt did not come down, and in September the company borrowed again.
Two of those three lines on page 11 did not move this quarter. Debt repayment comes later, in the form of the September repurchases, and business development is the line the new notes are meant to fund.
The profit measure in the deck is adjusted EBITDA. The footnote on page 14 shows what comes out of it: interest, taxes, depreciation and amortisation, and also litigation costs. Excluding legal expense is a common adjustment and not improper on its own. It does mean that if litigation runs for several years, several years of adjustments follow.

What the Market Says and What the Filings Show

Three claims check out. Royalties grew 49.6% year over year, guidance was raised twice, and five new agreements were signed against a target of three. The 59.8% operating margin recomputes from the GAAP statement.
The rest carry conditions. Adjusted EBITDA growth of 86-95% is measured from a base year that absorbed a $284.9 million charge; against 2024 the rate is well under half of that. The claim that buybacks are funded from spare cash is also partly true at best: the $332.7 million spent in the quarter was more than the operating income earned in it, and quarter-end cash fell to $163.1 million.
The valuation arguments misfire in both directions. Price-to-book of 95x says nothing about the price and everything about the denominator, which is $143.5 million. Price-to-earnings is quoted at 20.98x on one screen and 33.25x on another, because one uses the company’s adjusted figure and the other uses reported earnings.

How the ENHANZE Royalty Model Was Built

Ten years of Halozyme month-end prices with filing events marked

The core technology is an enzyme, recombinant human hyaluronidase, that loosens tissue under the skin long enough to inject a large volume at once. Drugs that took hours by intravenous infusion can be given subcutaneously in minutes. Halozyme licenses it as ENHANZE and collects royalties when the partner’s drug sells.
The model settled in the middle of the last decade. The company had been developing its own cancer drug, and after a late-stage failure it shifted weight to licensing. Selling fewer of its own products and converting other companies’ drugs is what produced the current margin. R&D at 5.8% of revenue is unusual for a drugmaker.
The largest royalty stream is DARZALEX FASPRO, Janssen’s multiple myeloma therapy. Page 6 of the deck puts the US subcutaneous conversion rate at 97%, so the patients who were going to switch have largely switched.
In November 2025 Halozyme bought Elektrofi and renamed it Hypercon, a high-concentration formulation technology that shrinks injection volume further when paired with ENHANZE. Agreements with Janssen, Lilly and argenx followed. Buying technology to sign more agreements is the growth mechanism of this business.

Why Did a Record Quarter Lose Money?

Revenue in the fourth quarter of 2025 was $451.8 million, the highest quarterly figure to that point. The operating result was a loss of $92.9 million.

Halozyme quarterly revenue and operating margin with the loss-making quarter

Filing note (2025 10-K, operating expense table): of $927.6 million in 2025 operating expenses, $284.9 million was acquired in-process research and development and $48.7 million was an intangible asset impairment. Both lines were zero in 2024.
The Elektrofi purchase price ran through that quarter in one piece. When the value of an acquired company sits in a single unapproved technology, the transaction is an asset acquisition rather than a business combination, and acquired research assets are expensed on the spot.
Quarterly operating margins put the shape of it plainly: 53.4%, 62.2% and 61.5% through 2025, then -20.6%, then 49.0% and 59.8% in 2026. One quarter out of six sits below zero.
That matters for reading this year’s growth rates. The 2025 operating income of $469.0 million includes the charge. Added back, it is $753.9 million, and measured from there the increase guided for 2026 is considerably smaller than the headline suggests.

Where the Equity Went

Halozyme equity against long-term debt and quarterly share repurchases

Quarter-end equity ran from $177.8 million in the first quarter of 2024 up to $503.9 million in the third quarter of 2025, then fell to $48.8 million at the end of 2025 and stands at $143.5 million. Long-term debt over the same stretch went from about $1.5 billion to $1.938 billion.
Two things absorbed the cash. One is the acquisition charge above. The other is buybacks.
Own calculation (10-Q cash flow statements and earnings releases): $250.0 million in the fourth quarter of 2024, $303.5 million in the second quarter of 2025, $38.9 million in the third, and $332.7 million in the second quarter of 2026. That is $925.1 million over two years.
The most recent purchase was 4.8 million shares at an average of $69.30. In May the company announced a new $1.0 billion authorisation running to 2028, with at least $400 million intended for this year.
This is what drives the price-to-book multiple to 95x. The five-year median is 27x, so the equity was thin before and is thinner now. The multiple is a statement about the denominator.

$1.3 Billion of New Notes and $652 Million of Repurchases

In September the company priced $1.3 billion of 1.50% convertible senior notes due 2033. The offering was upsized from $1.05 billion, with a 13-day option on another $200 million.
Filing note (8-K dated September 17, 2026, press release): the conversion price is about $139.84 per share, a 27.5% premium to the $109.68 close on the pricing date, at a rate of 7.1509 shares per $1,000. Net proceeds are about $1.275 billion.
Where that money goes is set out in the same release. Halozyme repurchases $151.7 million principal of its 0.25% notes due 2027 for about $217.0 million, and $220.0 million principal of its 1.00% notes due 2028 for about $435.5 million.
Own calculation (principal and repurchase cost in the same release): $371.7 million of face value costs $652.5 million to retire. The $280.8 million difference is what the share price added to notes that are now deep in the money.
Cheap borrowing returns expensive. The 2028 notes cost nearly twice their face value to take back. In exchange, the dilution those notes would have created disappears, and the company bought capped call transactions on the new issue that offset dilution up to $208.39 per share, about 1.9 times the current price.
The remainder is earmarked for working capital, capital expenditure and potential acquisitions and strategic transactions. Ten months after the Elektrofi purchase, the same sentence is back in a filing.

What Halozyme Actually Sells

Royalties are 64.0% of revenue, product sales 26.9% and collaboration revenue 9.1%.
An ENHANZE agreement pays in three stages: an upfront fee, development milestones, and royalties once the drug sells. The first two land in collaboration revenue and the last in royalties. An agreement typically takes years to reach the third stage, which is why five new deals this year move collaboration revenue only 13.2%.
Product sales come from the enzyme itself and from auto-injector products the company manufactures. They rose 59.0% year over year, moving with royalties rather than against them, because partners selling more drug also buy more material.
Ten products pay royalties today, among them DARZALEX FASPRO and RYBREVANT from Janssen, subcutaneous Herceptin and Phesgo from Roche, HYQVIA from Takeda, and VYVGART Hytrulo from argenx. In December 2025 the company signed a new agreement with Takeda.
The customers here are drugmakers, not patients. That keeps the customer list short and the contracts long, but it also means a partner’s patent expiry or a competing launch passes straight through to this company’s royalty line.

Five Royalty-Model Companies Compared

Trailing revenue and price-to-sales at five royalty-model companies

On aggregated market data for the five companies, trailing twelve-month revenue is $3.15 billion at United Therapeutics, $2.54 billion at Royalty Pharma, $2.44 billion at Exelixis, $1.66 billion at Halozyme and $290.5 million at Ligand.
P/S runs 19.45x at Ligand, 13.24x at Royalty Pharma, 7.67x at Halozyme, 6.73x at United Therapeutics and 5.94x at Exelixis. The heavier the royalty mix, the higher the sales multiple, because a dollar of royalty revenue carries less cost behind it.

Price-to-earnings and market value at five royalty-model companies

On P/E the order changes. Halozyme at 33.25x is the highest, followed by Royalty Pharma at 31.33x, Ligand at 30.84x, Exelixis at 18.32x and United Therapeutics at 17.70x. Market values run from $33.59 billion at Royalty Pharma down to $5.65 billion at Ligand, with Halozyme at $12.76 billion.
On returns the comparison breaks down. With equity of $143.5 million the denominator is too small for return on equity to mean much, and net cash is negative: $163.1 million of cash against $1.938 billion of long-term debt. United Therapeutics and Exelixis are in net cash and fund shareholder returns from within equity. Royalty Pharma pays a dividend alongside buybacks; Halozyme returns cash through buybacks only.

Price-to-Sales and Price-to-Earnings Over 60 Months

Price-to-sales is 8.19x, at the 65th percentile of the last 60 months. The five-year median is 7.71x and the range was 5.42x to 14.65x.

Halozyme price-to-sales of 8.19x and price-to-earnings of 32.9x over 60 months

Price-to-earnings is 32.88x, at the 92nd percentile of the same window, against a median of 18.97x and a five-year high of 38.69x. Ordinary on sales and high on earnings, and the reason is the denominator: trailing four-quarter earnings still include the fourth quarter of 2025.
That quarter drops out of the trailing window when fourth-quarter 2026 results are reported. If guidance holds, trailing earnings rise and the multiple falls at an unchanged share price. Read the other way, today’s 32.88x carries a charge that has already happened.

Three Conditions That Move the Stock

The heaviest item is the royalty growth rate. Full-year royalty guidance of $1.220-$1.245 billion requires the second half to deliver more than the $548.4 million booked in the first. Third-quarter results are the first check, and with US subcutaneous conversion at 97% on the largest product, the remaining growth has to come from Europe and from newer launches. Patent life sits underneath the same line: the 10-K risk factors say partners have less reason to keep paying once the enzyme patents expire, and expiry dates differ by patent.
Dilution is the second, and the share price itself is the trigger. Above $139.84 the new notes can convert, and the capped call covers the gap only to $208.39. Above that, share count rises.
The third is another acquisition, which is an accounting question more than an earnings one. The use of proceeds names it, and if the next one is structured as an asset acquisition the way Elektrofi was, another quarter goes negative on the operating line because the whole price passes through as expense. An 8-K would show it, and the cash competes with buybacks: of at least $400 million planned for this year, $332.7 million went in the second quarter, and the cash flow statement shows what follows.

What Would Change the Call

One question this piece cannot answer is how many shares the new notes ultimately create. Face value of $1.3 billion at $139.84 is 9.296 million shares, or 7.9% of the 118.0 million outstanding. The capped call is meant to offset that to $208.39, and how much it actually offsets depends on the share price path to 2033.
So the next filing is worth reading for two numbers: the diluted share count, and how much of the old notes was actually retired. The $280.8 million gap between face value and repurchase cost also has to land somewhere. Booked as a loss on extinguishment it compresses net income in that quarter; allocated to equity it shows up less in the income statement.

CrowdStrike (CRWD) Stock Analysis: GAAP vs Non-GAAP Earnings: the same question of which earnings measure to carry into a multiple, in a company where the adjustment is stock compensation rather than an acquisition charge.
Plug Power (PLUG) Stock Analysis: Fair Value Charges and Losses: what happens to book value and per-share figures when one non-operating line dominates a quarter, which is what the fourth quarter of 2025 did here.
Lennar (LEN) Stock Analysis: Incentives and Book Value: a balance sheet read through book value rather than earnings, useful when equity is the number doing the work.

Illumina (ILMN) Stock Analysis: Organic Growth vs M&A

J. Equity. Research — Sun, 20 Sep 2026 06:25:32 GMT

Illumina (ILMN) is up 3.4 times in eighteen months. The stock traded at $71.20 in April 2025 and closed at $239.62, a market capitalisation of $36.18 billion. Over the same stretch the company’s revenue went the other way: $4,526 million in 2021 down to $4,343 million in 2025.

Illumina (ILMN) share price over one year

So this piece follows one number. In the second quarter of 2026 Illumina reported revenue growth of +9.5%. The company’s own reconciliation takes 2.1 percentage points out for the business it bought in January and 0.9 points out for currency. What is left is 6.5%, and for the first half of the year it is 3.9%.

What the Q2 2026 Earnings Presentation Leads With

The July 30 deck runs 22 pages and puts the quarter on page 4: revenue of $1.16 billion, a non-GAAP operating margin of 22.5%, non-GAAP diluted EPS of $1.31 and more than 95 NovaSeq X placements. The same quarter appears in the Form 10-Q for the period ended June 28, 2026, where revenue is $1,159 million and operating income is $245 million, a GAAP operating margin of 21.1%. The 1.4-point gap between the two margins is what the company excludes.

Earnings presentation page 4: Q2 2026 revenue and regional growth

The deck’s order carries information of its own. Pages 3 and 5 introduce the chief executive and the chief financial officer, and the revenue detail starts on page 6. What page 4 leads with is not the revenue number but the growth rate, and the growth rate it chooses is the one adjusted for acquisitions, currency and China.
Regional figures sit on the same page. The US and Canada delivered $653 million at +13% organic, EMEALA $368 million at 0%, APAC $82 million at +9%, and Greater China $56 million at -19%. One region lifts and another takes away.
On page 10 of the same deck, non-GAAP gross margin fell from 69.4% to 68.2% and non-GAAP operating margin from 23.8% to 22.5%, while non-GAAP diluted EPS rose from $1.19 to $1.31. Margins down, per-share earnings up, in the same quarter.
Page 6 splits revenue three ways: total revenue of $1,159 million against $1,059 million a year ago, sequencing consumables of $734 million against $690 million, and the total excluding China at $775 million against $740 million. Every line carries both a reported and an organic figure, which means the company works with two yardsticks at once and expects readers to do the same.
Page 8 tracks the instrument transition. High-throughput volume running on NovaSeq X reached 59% in the quarter, from 27% two years earlier. The deck presents this as progress, and it is, but a cheaper read per base also means each experiment bills less.

Guidance Set Below the Quarter

Page 12 carries the full-year outlook: revenue of $4.60 billion to $4.64 billion, organic growth above 4.0%, a non-GAAP operating margin of 23.4% to 23.6% and EPS of $5.30 to $5.40. For the third quarter the company guides to $1.14-$1.16 billion of revenue and organic growth of roughly 4.5%.

Earnings presentation page 12: full-year revenue and margin guidance

That 4% annual figure sits below the 6.5% organic growth just reported, which says the company does not expect the pace to pick up in the second half. Against a share price of $239.62, the midpoint of the EPS range works out to 44.8 times.

Cash and the Buyback

Page 11 covers cash. Operating cash flow of $201 million, capital expenditure of $39 million and free cash flow of $162 million for the quarter. Cash and short-term investments stand at $1.17 billion against total debt of $1.99 billion, and gross leverage is 1.6 times trailing EBITDA.
Total debt of $1.99 billion against $1.17 billion of cash puts net debt near $820 million, which is modest next to a $36 billion market value. Leverage of 1.6 times is well inside the covenant range of the new credit agreement signed in August.
The same page records the buyback: 0.94 million shares at an average of $129.07, for $122 million. That average purchase price is 54% of the $239.62 share price. What the company paid and what the market now asks differ by almost half.

The Growth Bridge the Company Prints Itself

Page 16 of the deck walks the growth rate down step by step. The table is the company’s own, prepared because organic growth is a non-GAAP measure.
Company disclosure (Q2 2026 earnings presentation, page 16): reported second-quarter revenue growth of 9.5% less 2.1 points from acquisitions and 0.9 points from currency leaves organic growth of 6.5%. Adding back 1.6 points for China produces the 8.1% figure the deck prints in large type on page 4. For the first half, reported growth of 7.2% less 1.9 points and 1.4 points gives organic growth of 3.9%.

Illumina revenue growth bridge for the quarter and the first half

Four numbers describe one quarter. The 9.5% is what an investor sees first. The 8.1% is what the company puts on the summary page. The 6.5% is what remains after acquisitions and currency. The 3.9% is the same calculation across six months. None of them is wrong, and that is the point.
The acquisition effect has a name. Illumina completed the purchase of SomaLogic on January 30, 2026, which is also why the first-half contribution is 1.9 points rather than 2.1: the first quarter only carried two months of it. The effect disappears from the comparison in the first quarter of 2027.

What the Market Bought and What the Filings Say

The story that carried the stock up runs roughly like this. The loss-making business is gone, the losses have stopped, margins have recovered, so the company deserves a growth multiple again.
Part of that checks out. Net income of $850 million in 2025 was the first profit in three years. The GAAP operating margin has climbed from 15.8% to 21.1% across the quarters. What does not check out is the growth. Company guidance is above 4% organic for the year and the first half came in at 3.9%. A trailing P/E of 44.6x asks for something faster.

Five Years of GRAIL

In August 2021 Illumina closed its purchase of GRAIL without regulatory clearance. GRAIL developed early cancer detection tests and had been spun out of Illumina in the first place.

Illumina ten-year share price with major filings

What followed sat in the income statement as impairment. Net losses of -$4,404 million in 2022, -$1,161 million in 2023 and -$1,223 million in 2024 add to $6,788 million. Stockholders’ equity fell from $10,740 million at the end of 2022 to $1,436 million in the second quarter of 2024, the quarter the spin-off completed.
Filing note (8-K dated August 7, 2026): the derivative suit Icahn Partners brought against former chief executive Francis deSouza and eight directors in the Delaware Court of Chancery has been settled. The case concerned the GRAIL acquisition and the defendants admitted no wrongdoing. That is five years after the decision and two years after the spin-off.
Revenue did its own thing through all of it: $4,526 million in 2021, then $4,584 million, $4,504 million, $4,372 million and $4,343 million. Down 4.0% over five years. The impairments erased the value of a business the company bought; the flat revenue happened in the business it already had.
With the cleanup finished, Illumina started buying again. SomaLogic, closed on January 30, brings aptamer-based protein measurement, and the consideration was $460 million: $382 million of cash plus $81 million of contingent consideration at fair value, less $3 million for a pre-existing relationship. This time the accounting is a business combination, so the price lands in intangibles and goodwill rather than passing straight through the income statement.

Where Did the 9.5% Come From?

The quarterly revenue line runs $1,104 million in the fourth quarter of 2024, then $1,041 million, $1,059 million, $1,084 million and $1,159 million through 2025, then $1,091 million and $1,159 million in 2026.

Illumina quarterly revenue and operating margin

Year on year the quarter added $100 million, from $1,059 million to $1,159 million. SomaLogic accounts for 2.1 points of that, roughly $22 million. Currency accounts for 0.9 points, about $9.5 million. Strip both and something over $68 million came from the business as it already stood.
Own calculation (quarterly revenue and the company bridge): of the $100 million increase, the 3.0 points from acquisitions and currency work out to roughly $32 million. Across the first half the same two items account for 3.3 points of 7.2%, so the share is larger.
By region the directions diverge. The US and Canada grew 13% organically while Greater China fell 19%. China is $56 million of quarterly revenue, and the company reports it separately for exactly this reason: excluding it lifts organic growth from 6.5% to 8.1%.

Margin Down and EPS Up in the Same Quarter

Non-GAAP operating margin fell from 23.8% to 22.5% and gross margin from 69.4% to 68.2%. Non-GAAP diluted EPS rose 10%.
The denominator moved. Illumina repurchased 0.94 million shares for $122 million during the quarter under the programme authorised in August 2024, and has a further programme available. Fewer shares means the same earnings divide into a larger per-share number. The 0.94 million shares are 0.6% of the 151 million outstanding; at that pace it is a little over 2% a year.
On a GAAP basis the margin itself has improved, from 15.8% in the first quarter of 2025 to 21.1% in the second quarter of 2026. Part of that is the absence of restructuring: $39 million of charges in the first half of 2025 became zero in the first half of 2026. How far a margin built on cost removal can travel is the next question, and gross margin starting to slip is the part worth watching.

Why Only 8% of the Market Value Sits on the Books

Stockholders’ equity at quarter end was $2,838 million, which is 7.8% of the $36.18 billion market capitalisation.
Own calculation (quarterly filings and month-end prices): against that equity the price-to-book ratio is 12.9x, where the five-year median is 5.3x. The ratio is high because the denominator is thin, so it reads better as a record of how much capital was written off than as a valuation measure.
The debt side moved in August. Filing note (8-K dated August 12 and 17, 2026): Illumina sold $300 million of 4.950% notes due September 19, 2029, and expects to use the proceeds with cash on hand to repay the 4.650% notes maturing on September 9, 2026, of which $500 million was outstanding. On August 13 the company entered a new $1.0 billion five-year unsecured revolving credit facility, terminated the existing agreement, and kept an option to add up to $500 million more.

What Illumina Sells

The products are instruments that read DNA sequences and the consumables those instruments consume. Sell an instrument once and reagents and flow cells follow for years, which is why most of the revenue is consumables rather than hardware.
Customers fall into two groups. One is research: universities, government laboratories and pharmaceutical R&D. The other is clinical: hospitals and diagnostic laboratories. The company splits its revenue reporting along that line because the two budgets move on different logic. Research spending follows government appropriations and venture funding; clinical volume follows test counts and reimbursement.
The applications that matter most are oncology and reproductive health: finding the mutations that guide a cancer treatment, and screening maternal blood for foetal chromosomal conditions. Agriculture and infectious disease surveillance sit alongside. The company employs about 8,600 people and is based in San Diego.
Company disclosure (Q2 2026 earnings presentation, page 7): second-quarter sequencing consumables revenue was $734 million against $122 million of instruments. For 2025 as a whole it was $2,750 million of consumables against $449 million of instruments. Service and other revenue makes up the rest of the $1,159 million quarter.
Growth splits by customer type on the same page. Clinical consumables grew +15% excluding China while research and applied fell -7%. The direction held all year: 2025 finished at +12% against -7%, and 2026 has run +20% against -12% in the first quarter and +15% against -7% in the second. Hospitals are using more and laboratories are using less, and proposed cuts to National Institutes of Health funding appear in the 10-Q risk factors.

The Life of One Instrument

The economics come down to how much consumable revenue one instrument pulls through over its life. In 2025 that was $2,750 million of consumables against $449 million of instruments in a single year, and instruments last several years.

Earnings presentation page 8: NovaSeq X high-throughput transition

The problem is the rate of recovery. NovaSeq X reads a base far more cheaply, so the same experiment costs the customer less. High-throughput volume on the new platform went from 27% in the second quarter of 2024 to 59% in the second quarter of 2026, and consumables revenue has not moved much across that transition: $640 million, $690 million, $707 million and $713 million through 2025, then $687 million and $734 million.
Adding the quarters on page 7 gives first-half consumables revenue of $1,421 million is +6.8% against $1,330 million a year earlier, while instruments went from $195 million to $236 million, or +21.0%. Instruments growing faster means customers are installing, which builds the base for consumables later. Whether those consumables arrive at the old rate depends on price per base.

Five Sequencing and Life-Science Companies

These five do not do the same thing. Thermo Fisher supplies everything a life-science laboratory needs, from reagents to analytical instruments. Qiagen is strongest in sample preparation and diagnostics. 10x Genomics builds instruments that read single cells. Pacific Biosciences competes directly with long-read sequencing, and Illumina holds most of the short-read market.

Trailing revenue and growth at five sequencing and life-science firms

On trailing revenue, Thermo Fisher is $46.34 billion, Illumina $4.49 billion, Qiagen $2.10 billion, 10x Genomics $617 million and Pacific Biosciences $159 million. On the latest quarter’s growth, Illumina is +9.4%, Thermo Fisher +10.5%, Qiagen +0.3%, 10x Genomics -12.7% and Pacific Biosciences -1.9%. Two pure sequencing companies are shrinking, which says something about the temperature of this market. And Illumina’s 9.4% contains the acquisition and the currency already discussed.

Price to earnings and price to sales at five sequencing and life-science firms

The multiples reorder the list. On P/E Illumina is highest at 44.62x, then Thermo Fisher at 35.06x and Qiagen at 22.03x; the two loss-makers have none. On P/S, 10x Genomics leads at 16.18x and Illumina follows at 8.05x. Illumina carries a P/E more than nine points above Thermo Fisher on similar growth.

Price to Sales and Price to Book Over 60 Months

Both ratios sit outside the upper decile line of the five-year range.

Illumina price-to-sales and price-to-book over 60 months

Own calculation (month-end prices and quarterly filings, checked against aggregated market data): price-to-sales is 8.16x, at the 85th percentile of the five-year range against a median of 5.25x. Price-to-book is 12.92x, at the 95th percentile against a median of 5.34x. Self-computed market capitalisation and P/E sit within 1.3% and 0.4% of the aggregated figures.
There is no P/E band because the company was loss-making from mid-2022 to mid-2025 and the series simply stops. The gap in the chart is the company’s recent history.
At the start of the five-year window price-to-sales was 16.35x, twice the current level, with the stock near $500 and revenue about where it is now. The low came in March and April 2025 at 2.90x and 2.84x, with the stock between $71 and $80. The multiple has roughly tripled since; revenue over the same span is up about 4%.

Three Conditions That Move the Stock

The heaviest item is organic growth. Company guidance is above 4% for the year and the first half delivered 3.9%, with third-quarter guidance around 4.5%. From the first quarter of 2027 the SomaLogic comparison washes out of the growth rate, and what is left is the company’s own pace. Whether the current multiple can live with that pace is the first thing to check.
Acquisition accounting is the second, and it is a question of treatment more than of earnings. The new $1.0 billion revolver and the $500 million accordion list working capital and general corporate purposes as the use of proceeds. If the next deal is structured as a business combination it adds goodwill and amortisation; if it is later impaired, the whole amount arrives in one quarter, which is exactly what GRAIL did. An 8-K would show the deal.
Demand is the third, and it comes from outside. Greater China is $56 million a quarter and fell 19% organically. Research and applied consumables have declined for a year while NIH funding cuts sit in the risk factors. Whether clinical growth of 15% keeps covering that decline is checked every quarter.

What the Next Filing Should Show

One thing this piece cannot answer is how much SomaLogic contributes each quarter. The company discloses the acquisition effect only as 2.1 points of growth and does not break out the revenue. Working backwards gives roughly $22 million, but that is an estimate.
So the third-quarter filing is worth reading for two numbers: whether organic growth excluding the acquisition reaches the 4.5% the company guided to, and how interest expense lands now that 4.650% notes are being replaced by 4.950% notes. The rate is 0.3 points higher, but the balance falls from $500 million to $300 million, so the net effect on interest expense runs the other way.

Plug Power (PLUG) Stock Analysis: Fair Value Charges and Losses: what happens to book value when one non-operating line dominates a quarter, which is the mechanism that emptied Illumina’s balance sheet between 2022 and 2024.
lululemon (LULU) Stock Analysis: Margin Decline and Tariffs: a gross margin sliding while the company keeps its guidance, useful next to the 120 basis points Illumina gave up this quarter.
Lennar (LEN) Stock Analysis: Incentives and Book Value: reading a balance sheet through book value rather than earnings, which is the only way a 12.9x price-to-book makes sense.

Sector RS Rank Sep 18: Blockchain Leads, Crypto Erupts

J. Equity. Research — Fri, 18 Sep 2026 23:12:08 GMT

Sector RS Rank for the September 18, 2026 US session: the S&P 500 closed +0.17% at 7,650.50 and the Nasdaq added 0.39% to 26,522.54, yet only 38 of the 129 ETFs in our universe finished higher and 9 of the 11 sector SPDRs closed red. Leading sectors: Blockchain, Oil, Semiconductors. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Coinbase, MARA Holdings, Semtech.

💡 Today’s US market in three lines

① Today’s three stocks: Coinbase · MARA Holdings · Semtech — a crypto exchange, a bitcoin miner, and an analog chipmaker, drawn from the only two groups that were working on a day when most of the market was not.

② On September 18, the S&P 500 closed +0.17% at 7,650.50 and the Nasdaq added 0.39% to 26,522.54, yet only 38 of the 129 ETFs in our universe finished higher and 9 of the 11 sector SPDRs closed red.

③ Blockchain equities rose +8.86% after the SEC cleared a path for tokenized stock trading, semiconductors added +2.69%, and almost everything else — nuclear, uranium, mining, sports betting — was sold into the largest options expiration of the year.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Sep 18 Sector RS — 129 ETFs · RRG v2

Friday was quadruple witching, and it was a big one. Roughly $7 trillion of notional options value expired at once, the second-largest September expiration on record, which means a meaningful share of Friday’s volume came from positions closing themselves out. Underneath that noise the tape split cleanly in two. Digital assets and chips went up. Everything levered to the discount rate went down.
The S&P 500 closed +0.17% at 7,650.50, the Nasdaq +0.39% at 26,522.54, and the Dow -0.18% at 51,682.64. Growth beat value again — the Russell 1000 Growth fund (IWF) rose +0.59% against -0.44% for the Russell 1000 Value fund (IWD), and the Nasdaq-100 fund (QQQ) added +0.63% — while the equal-weight S&P 500 (RSP) fell -0.48% and small caps (IWM) -0.47%. The index beat the average stock by a wide margin, which is what a two-sector rally looks like from the top. Of the eleven sector SPDRs only technology (+0.82%) and industrials (+0.44%) advanced; utilities and materials both fell -1.42%.
Breadth was worse than the index suggests: 91 of the 129 funds in our universe closed lower. One technical note belongs here. SPY finished -0.12% while the index it tracks rose +0.17%, because the fund traded ex-dividend on Friday, as index funds typically do on the third Friday of a quarter-end month. Several other funds carry the same quarterly adjustment, so a fraction of Friday’s negative breadth is calendar mechanics.
The day’s engine was regulatory. The SEC introduced a five-year exemption permitting certain platforms to facilitate trading in tokenized stocks, with the condition that digital versions of listed shares give investors rights comparable to the real thing, including voting and dividends. The CFTC sent its own crypto market rulemaking to the White House budget office for review the same week. Bitcoin responded by clearing $80,000, closing +6.29% at $81,212, with ether +7.38% at $2,627. The 10-year Treasury yield, meanwhile, closed at 5.00%, up from 4.95% — and that number explains almost every red column on the map.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, September 18, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
United States Oil Fund (USO)	-0.96%	100	🔺	🔺	🔺
Global X Blockchain (BKCH)	+8.86%	99	🔺	🔺	🔺
VanEck Digital Transformation (DAPP)	+8.17%	99	🔺	🔺	🔺
SonicShares Global Shipping (BOAT)	-0.41%	98	🔺	🔺	🔺
VanEck Onchain Economy (NODE)	+6.22%	96	🔺	🔺	🔺

The table has changed character in a week. Oil still holds the top rank on the strength of a month that returned +17.50%, but three of the five slots now belong to digital assets, and all three of them arrived this week. Every fund in the top five trades above its 1-month, 1-quarter, and 1-year moving averages, which is rare on a day when two-thirds of the universe fell. Genomics, which entered this table for the first time on Thursday, has already dropped out.

Why They’re Strong — Sector Issues

United States Oil Fund USO Daily

· Oil (USO) — The fund slipped -0.96% and keeps rank 100. The front-month WTI quote looks alarming at $95.47 against Thursday’s $101.91, but the oil funds did not move anything like that: USO -0.96%, the Brent fund (BNO) -0.56%, and the energy SPDR (XLE) -0.26%. What that gap describes is a contract roll into a curve that is steeply backwardated, not a collapse in the barrel. Refiners (CRAK, -1.61%) and exploration (IEO) both hold ranks above 90 for the same reason the crude complex does — a month of supply disruption that has not been repaired yet.

SonicShares Global Shipping BOAT Daily

· Shipping (BOAT) — Down -0.41% on the day and still at rank 98, with a month of +9.19% behind it. Tanker owners get paid by the voyage, so the rerouting that has kept routes long has kept day rates high even as the crude curve flips. This is now the quietest leadership in the table: BOAT has not had a headline day all week, and it has not needed one.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart tracks five of today’s RRG heroes. Onchain economy (NODE) is the vertical line on the right, climbing from rank 10 at the start of the window to 98 on Friday — the steepest rank recovery on the chart. Copper (CPER) ends at 81 after a round trip through the 20s in late August, and semiconductors (SOXX) reached 84 from a low of 3 in early August, which is two months of repair work. The two lines falling away are the ones that led in August: nuclear power (NLR) ended at 12 after peaking above 90, and sports betting (BETZ) at 29 after touching 83.

RS Breakdown Warnings (big 5-day drops)

· Sports betting (BETZ) lost -54 points in five trading days, the steepest fall in the universe. Oil equipment and services (IEZ) dropped -52 points, oil services (OIH) -44, fintech (FINX) -35, residential REITs (REZ) -31, and brokers and exchanges (IAI) -30.

· Two separate things are breaking. The betting complex is losing share to prediction markets — DraftKings fell -3.20% and Flutter -3.18% on Friday, and DraftKings is down roughly 28% for the year as Kalshi and Polymarket absorb the volume. The rest of the list is the rate trade: anything that funds itself or pays a yield gets marked down when the 10-year sits at 5.00%.

RS Rebound Signals (sharp bounces off the bottom)

· Cybersecurity (BUG) rebounded +76 points in five sessions, the largest recovery in the universe. First Trust Cybersecurity (CIBR) gained +69 points and iShares Cybersecurity (IHAK) +66.

· The odd part is that all three fell on Friday — BUG -2.16%, CIBR -1.76%, IHAK -1.64% — after a five-day run of +10.74%, +5.79%, and +7.20%. A rank that improves while the price gives back a day is the signature of a group that outran the market rather than one that is still accelerating. Meme stocks (MEME) added +59 rank points on the same pattern.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by September 18 closing move — 38 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Blockchain (BKCH)	+8.86%	99	🔺	🔺	🔺
VanEck Digital Transformation (DAPP)	+8.17%	99	🔺	🔺	🔺
VanEck Onchain Economy (NODE)	+6.22%	96	🔺	🔺	🔺
Amplify Blockchain (BLOK)	+4.58%	92	🔺	🔺	🔺
Roundhill Meme Stock (MEME)	+2.71%	62	🔺	🔺	🔺

Four of the top five are the same trade expressed four ways, and the fifth is the highest-beta retail basket in the universe. That is a narrow list, and narrowness is the point: on a day when 91 funds fell, the money that moved went to one theme and then to whatever else sits furthest out on the risk curve. Semiconductors finished sixth at +2.69%, two basis points behind meme stocks.

Why They Rose — Sector Issues

Global X Blockchain BKCH Daily

· Blockchain and digital assets (BKCH · DAPP · NODE · BLOK) — Blockchain equities gained +8.86%, digital transformation +8.17%, onchain economy +6.22%, and the Amplify fund +4.58%. The SEC’s tokenization exemption is a revenue event for the venues that would list those tokens, and the market priced it that way: Strategy +16.39%, MARA +13.75%, Coinbase +11.66%, Galaxy Digital +10.82%, Robinhood +9.12%, Riot +8.55%, Circle +7.86%. Bitcoin’s own +6.29% to $81,212 was the smaller move — the equities carried two to three times the beta, as they usually do when the catalyst comes from a regulator.

iShares Semiconductor SOXX Daily

· Semiconductors (SOXX · SMH · SMHX) — Chips rose +2.69%, VanEck’s fund +2.21%, and fabless +1.81%, the second consecutive session of gains built on memory pricing. SanDisk led at +10.99%, though that move carries an index event — the stock joins the S&P 100 on September 21 — so treat that one as index flow. Micron’s +3.92% is the cleaner signal, and AMD added +2.70%. SOXX now holds rank 56 against a low of 3 in early August, which makes this the longest repair job on the board.

Leading Sectors: Blockchain, Oil, Semiconductors

① Friday was a regulatory rally, not a liquidity one. The 10-year yield rose to 5.00% and the equal-weight index fell -0.48%, so there was no broad bid to explain the move. One agency published a rule and one asset class repriced. When the catalyst is that specific, the follow-through depends on implementation detail rather than on sentiment.
② The RS table now holds two unrelated leaderships at once. Oil and shipping sit at ranks 100 and 98 on a month of supply dislocation, and digital assets hold 99, 99, and 96 on a rule published this week. Nothing connects them. That is worth watching, because a table without a common theme usually means the market has not settled on what the next regime is.
③ The damage is concentrated in the same place it has been all month. Nuclear power fell -2.60%, uranium -2.41%, metals and mining -2.37%, and utilities -1.42%, while NLR’s rank has gone from above 90 to 12. Every one of those groups either borrows to build or competes with a 5% risk-free rate. Until the long end stops rising, their rank readings measure the bond market rather than their own businesses.
④ The last report covered the September 17 close. Its three picks, measured from that close to Friday: Tempus AI -3.14%, Caris Life Sciences -3.04%, and Intel -0.18%. The S&P 500 returned +0.17% over the same session, so all three lagged the index and two of them fell more than three percent. The genomics pair gave back a piece of Thursday’s surge as the money that bought diagnostics on Thursday bought digital assets on Friday. Recorded as is.

Three RS Leaders to Research: Coinbase · MARA Holdings · Semtech

Selection: from the 1,167 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Coinbase (COIN) — 1-Month RS 97: The Venue the New Rule Needs

Coinbase Global COIN Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	98	97	+21.3%	Global X Blockchain · VanEck Digital Transformation · Global X FinTech

Up +11.66% to $194.25, and the largest holding in BKCH at 12.8% of the fund. Coinbase is the most direct listed beneficiary of an exemption that lets regulated platforms trade tokenized equities, because it already runs the custody, matching, and compliance layers that such a product needs. The financials are more complicated than the share price. Second-quarter revenue fell 19% from a year earlier to $1.22 billion, missing estimates, and the company posted a net loss of $359 million, or $1.36 per share, as lower crypto prices and thinner volatility cut trading activity. What improved were the structural lines: its share of global spot volume reached a record 10.3%, a third consecutive quarterly gain, average USDC balances hit $20 billion, and prediction markets revenue more than doubled sequentially to pass a $100 million annualized run rate. What to watch for Coinbase: it rests on whether tokenized equities become a real product line before the trading business recovers, because the trading business is currently shrinking.

MARA Holdings (MARA) — 1-Month RS 99: Maximum Beta to a $81,000 Bitcoin

MARA Holdings MARA Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	97	99	+37.2%	Global X Blockchain · VanEck Digital Transformation · VanEck Onchain Economy

Up +13.75% to $13.24, more than twice bitcoin’s own move, and up +37.2% over the past month. MARA is the largest listed bitcoin miner, holding roughly 8% of network hashrate, and its energized capacity rose 22% over the year to 70.3 exahash per second while management leans the fleet toward AI infrastructure work. The second quarter was ugly: a $611 million net loss, with bitcoin holdings down 29% to about 35,577 coins. That combination is the whole thesis in one line — an operator whose earnings depend on a price it cannot influence, trading at three times the volatility of the asset itself. The MARA Holdings stock setup is therefore a bitcoin bet with leverage attached, and Friday’s +13.75% on a +6.29% coin is the cleanest recent measure of that multiple. The one company-specific variable worth tracking is whether the AI hosting pivot produces revenue that does not move with the coin.

Semtech (SMTC) — 1-Month RS 100: Optical Parts for the Data Center Build

Semtech SMTC Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
95	97	100	+47.6%	VanEck Fabless Semiconductor

Up +3.82% to $185.00, the highest 1-month RS rank of any stock that cleared the screen, and the one pick here that is not a crypto proxy. Semtech makes analog and mixed-signal parts, and the piece that matters now is optical interconnect for AI data centers. Second-quarter revenue set a record at $341.9 million, up 33% from a year earlier and 17% sequentially, with earnings of $0.71 per share against a $0.61 consensus. Guidance did the real work: $405 to $415 million of revenue and $1.02 to $1.08 per share for the third quarter, both well above prior expectations, with data center and LoRa revenue guided to grow 120% year over year and approach 60% of the mix. The company is shipping 224G optical parts into the same build-out that lifted memory pricing this week. What to watch for Semtech: whether that 120% growth line holds for more than two quarters, because a stock up 47.6% in a month has already priced the first two.

Coinbase · MARA Holdings · Semtech

· Coinbase levels to watch — The rally is priced on a rule the company has yet to earn a dollar from. Watch whether third-quarter transaction revenue stops falling. Tokenized listings will take quarters to matter; the trading line reports in weeks.

· MARA Holdings levels to watch — The stock moved twice as far as bitcoin did on Friday. Watch whether AI hosting revenue appears as a separate reported line. Until it does, this is a leveraged coin position with a mining cost structure.

· Semtech levels to watch — Guidance, not results, drove the rerating. Watch whether data center revenue clears $200 million in a single quarter. That is the threshold management has pointed at, and the multiple assumes it arrives early.

What to Watch on Next Week’s Calendar

Treasury auctions, Tuesday through Thursday, September 22 to 24 (2:00 a.m. KST the following day). Two-year, five-year, and seven-year notes come to market with the 10-year yield sitting exactly at 5.00%. Friday’s breakdown list — nuclear, uranium, utilities, residential REITs, brokers — is one long bet against that number going higher. Weak auction demand extends those declines; firm demand is the only realistic path to a rank recovery for the rate-sensitive half of the map.
US September flash PMI, Wednesday September 23, 9:45 a.m. ET (10:45 p.m. KST). Industrials were one of only two sector SPDRs to rise on Friday, at +0.44%, despite a 1-month RS rank of 16. A firm manufacturing print would give that advance something to stand on. A soft one leaves Friday’s industrial gain looking like expiration flow.
Qualcomm Snapdragon Summit, September 22 to 24, and Meta Connect, September 23 to 24. Both land inside a semiconductor repair that is still incomplete — SOXX sits at rank 56 after two strong sessions. Roadmap detail on on-device AI from Qualcomm and hardware news from Meta would broaden a chip bid that currently rests almost entirely on memory pricing. Metaverse funds (METV) already hold rank 94 going in.
US–China summit at the White House, Thursday September 24. President Xi Jinping’s visit has AI development pace, AI security, semiconductors, and rare earths on the agenda. Three of those four map directly onto groups in today’s tables, and the fourth — rare earths — sits next to the metals and mining complex that just fell -2.37%. This is the largest scheduled risk to the sector map between now and the end of the month.

Sector RS Rank Sep 17: Relief Rally, 115 of 129 ETFs Rise

J. Equity. Research — Thu, 17 Sep 2026 23:11:34 GMT

Sector RS Rank for the September 17, 2026 US session: the S&P 500 closed +1.14% at 7,637.76 and the Nasdaq added 1.69% to 26,418.30. Of the 129 ETFs in our universe, 115 rose and 13 fell, and 9 of the 11 sector SPDRs finished green. Leading sectors: Shipping, Genomics, Silver. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Tempus AI, Caris Life Sciences, Intel.

💡 Today’s US market in three lines

① Today’s three stocks: Tempus AI · Caris Life Sciences · Intel — an AI diagnostics platform, a molecular profiling lab, and a chipmaker that all closed sharply higher on the day the market took back what the Fed took away.

② On September 17, the S&P 500 closed +1.14% at 7,637.76 and the Nasdaq added 1.69% to 26,418.30. Of the 129 ETFs in our universe, 115 rose and 13 fell, and 9 of the 11 sector SPDRs finished green.

③ Bond yields eased, oil slipped, and the volatility index fell -12.82% to 15.44. Chips, genomics, silver miners, and blockchain all posted the kind of gains that only show up when risk appetite turns at once.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Sep 17 Sector RS — 129 ETFs · RRG v2

One day after the Fed lifted rates for the first time in three years, buyers came back for almost everything they had sold. The 10-year Treasury yield slipped to 4.95% from 5.01%, crude eased, and the sell-off in front of Chair Kevin Warsh’s press conference turned out to be a single session rather than a trend. By Thursday the hike read as an inflation fix, and that reading was enough.
The S&P 500 closed +1.14% at 7,637.76, the Nasdaq +1.69% at 26,418.30, and the Dow +0.61% at 51,778.04. Growth led value again: the Russell 1000 Growth ETF (IWF) gained +1.65% against +0.66% for the Russell 1000 Value ETF (IWD), and the Nasdaq-100 fund (QQQ) added +1.73%. The equal-weight S&P 500 (RSP) rose only +0.49% and small caps (IWM) +0.53%, so the index once again beat the average stock. Technology (+2.25%) was the strongest sector SPDR by a wide margin, and only communication services (-0.58%) and financials (-0.09%) finished red.
Chips did the heavy lifting. The iShares semiconductor fund (SOXX) rose +3.39%, fabless semiconductors (SMHX) +3.69%, and AI semiconductors (CHPX) +3.65%. Micron gained +5.50% after Intel chief executive Lip-Bu Tan told an industry audience that memory demand is not slowing and prices should keep rising. AMD added +6.36%, Skyworks +6.69%, and Taiwan Semiconductor +3.00%. Precious metals ran alongside them. Silver miners (SIL) gained +4.49%, junior gold miners (GDXJ) +4.75%, and the silver trust (SLV) +3.37% as bullion recovered the ground it lost on Fed day. Oil was the one asset that did not join in: WTI settled at $101.09, down -1.31%, and Brent at $104.09, down -1.64%.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, September 17, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
United States Oil Fund (USO)	-0.55%	100	🔺	🔺	🔺
SonicShares Global Shipping (BOAT)	+1.69%	99	🔺	🔺	🔺
VanEck Oil Refiners (CRAK)	+1.87%	98	🔺	🔺	🔺
Global X Genomics and Biotechnology (GNOM)	+5.25%	97	🔺	🔺	🔺
VanEck Digital Transformation (DAPP)	+3.70%	96	🔽	🔺	🔺

The oil complex still holds the top of the table, but its grip is loosening. USO is +18.87% over the past month, which is why a fourth straight down session leaves the rank untouched, yet the fund has now lost -1.94% over five days. Shipping and refining, the two businesses that earn on moving and processing crude, both closed higher. The newcomers are the interesting part: genomics entered the top five for the first time this month, and blockchain equities sit a point behind with iShares oil and gas exploration (IEO) also at 96.

Why They’re Strong — Sector Issues

SonicShares Global Shipping BOAT Daily

· Shipping and refining (BOAT · CRAK) — Tankers keep working while barrels get cheaper. BOAT rose +1.69% and is +4.70% over five sessions, against -1.94% for crude itself. Okeanis Eco Tankers gained +1.84% and is +18.35% over the same week, and Frontline added +0.67%. Refiners follow a different lever: CRAK rose +1.87% because cheaper input crude widens the crack spread that refining margins are built on. Both groups gain from the Saudi pipeline disruption that is rerouting barrels onto longer voyages.

Global X Genomics GNOM Daily

· Genomics (GNOM) — Up +5.25%, the best single-day move in the universe, and now +14.38% for the month. Moderna, the fund’s largest holding, gained +8.55% and is up more than 150% in a month on its melanoma cancer vaccine data with Merck. Illumina rose +7.10% ahead of its scheduled return to the S&P 500 on September 21. GeneDx added +7.73%, 10x Genomics +5.90%, and Natera +6.07%. What makes this different from a headline pop is breadth: sequencing hardware, rare-disease testing, and oncology diagnostics all moved together.

1-Month RS Trend

45-Day RS Trend — 5 Sectors

The 45-day chart follows five of today’s RRG heroes and shows two clean reversals. Genomics (GNOM) fell from the mid-90s in July to 14 in early August, then climbed back to 99 — a full round trip in six weeks. Silver (SLV) traced the opposite shape, holding above 90 through late August before a September slide and this week’s recovery to 82. Fabless semiconductors (SMHX) spent almost the entire window under 40 and only now reached 58. The two lines falling off the right edge are the energy and financial trades: oil services (OIH) gave back -54 points in five sessions and brokers (IAI) -48.

RS Breakdown Warnings (big 5-day drops)

· Oil equipment and services (IEZ) lost -55 points in five trading days, the steepest drop in the universe. Oil services (OIH) fell -54 points, brokers and exchanges (IAI) -48, natural gas producers (FCG) -28, and nuclear power (NLR) -24.

· Two trades are unwinding at the same time. One is the oil service complex that was priced for crude above $100 and is now watching the Saudi outage get repaired. The other is anything that borrows to build, from nuclear utilities to brokers, which a 10-year yield near 5% makes more expensive.

RS Rebound Signals (sharp bounces off the bottom)

· Cybersecurity (BUG) rebounded +64 points in five sessions, the largest recovery in the universe. iShares Cybersecurity (IHAK) added the same +64 points and First Trust Cybersecurity (CIBR) +61.

· Behind the security names, the rebound list leans industrial and technological. Video games (ESPO) gained +28 points, materials (XLB) +21, and autonomous technology (ARKQ) +20. Money that left energy and metals last week has landed in software and manufacturing.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by September 17 closing move — 115 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Genomics and Biotechnology (GNOM)	+5.25%	97	🔺	🔺	🔺
VanEck Junior Gold Miners (GDXJ)	+4.75%	86	🔽	🔺	🔺
Global X Silver Miners (SIL)	+4.49%	87	🔽	🔺	🔺
Global X Blockchain (BKCH)	+4.27%	95	🔺	🔺	🔽
Roundhill Meme Stock (MEME)	+4.01%	28	🔺	🔺	🔺

This is a risk-appetite list, not a defensive one. Four of the five carry RS ranks above 85, which separates today from the kind of session where only beaten-down funds bounce. Meme stocks are the exception at rank 28, and their presence alongside miners and blockchain is the clearest sign of what changed: the same money that fled on Fed day came back for the highest-beta corners of the market first.

Why They Rose — Sector Issues

Global X Silver Miners SIL Daily

· Silver and gold miners (SIL · GDXJ) — Silver miners rose +4.49% and junior gold miners +4.75%. Bullion led the way, with silver futures settling +2.22% at $65.71 and the gold trust (GLD) up +1.69%, both recovering what they surrendered when the Fed decision landed. The miners amplified it, as they always do: First Majestic gained +6.33%, Hecla +5.39%, Coeur +5.27%, and Pan American Silver +4.33%. A 10-year yield that stepped back from 5% lowers the cost of holding metal that pays no coupon.

Global X Blockchain BKCH Daily

· Blockchain and digital assets (BKCH · DAPP · NODE) — Blockchain equities rose +4.27%, digital transformation +3.70%, and onchain economy +3.38%. Riot Platforms led the miners at +7.52%, Coinbase gained +5.75%, Marathon +5.43%, and Strategy +4.81%. These names carry the highest beta to liquidity expectations in the universe, so a session that reprices the rate path shows up here first. Note the divergence in the trend columns, though: BKCH still trades below its 1-year moving average.

Leading Sectors: Shipping, Genomics, Silver

① The market decided the hike was aimed at inflation, and bought the cyclical side of the tape. Semiconductors, miners, and blockchain equities led while the two sectors most exposed to the discount rate — communication services and financials — stayed red. The rebound had a shape, and the discount rate drew it.
② Shipping now looks like the most durable part of the energy trade. BOAT holds RS 99 while crude itself has lost -1.94% over five sessions, and oil services have collapsed -54 points in the same window. Tanker owners collect day rates on voyage length, and the Saudi rerouting is lengthening voyages regardless of what a barrel costs. Producers and service companies need the price; ships need the distance.
③ Genomics arrived at the top of the table with a different engine. GNOM holds RS 97 and trades above all three moving averages, and its move runs across sequencing tools, rare-disease testing, and oncology diagnostics. One drug result did not do this. Silver miners, by contrast, still sit below their 1-month average despite today’s +4.49%, which marks them as a bounce inside a correction.
④ The last report covered the September 16 close. Its three picks, measured from that close to Thursday: Twist Bioscience +8.73%, DHT Holdings -0.95%, and SailPoint -0.83%. The S&P 500 returned +1.14% over the same session, so one of the three beat the index and two lagged it. Twist rode the same genomics wave described above, while the tanker and identity-security picks went sideways on a day the market bought beta. Recorded as is.

Three RS Leaders to Research: Tempus AI · Caris Life Sciences · Intel

Selection: from the 1,146 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Tempus AI (TEM) — 1-Month RS 100: Reimbursement Math Rewrites the Model

Tempus AI TEM Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
100	100	100	+62.8%	Global X Telemedicine and Digital Health

Up +14.85% to $80.36, the biggest move among the stocks that cleared the screen, and +36.81% over five sessions. Tempus runs a diagnostics business and a data business side by side: it sequences tumors and then licenses the resulting library to drug developers. Second-quarter revenue rose 22% to $382.5 million, with diagnostics at $289.3 million on 31% oncology volume growth and data and applications at $93.2 million. Net income of $5.6 million reversed a $42.8 million loss a year earlier, and full-year guidance was raised to $1.595–1.605 billion with roughly $65 million of adjusted EBITDA. This week’s move came from a Morgan Stanley analysis on September 15 arguing that reimbursement pricing on the xT and xF tests could add $330–400 million of annual revenue. What to watch for Tempus AI: whether that reimbursement math shows up in reported revenue, because a stock that has run 62.8% in a month is already paying for it.

Caris Life Sciences (CAI) — 1-Month RS 100: Molecular Profiling at 45% Growth

Caris Life Sciences CAI Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	100	100	+47.4%	Global X Genomics and Biotechnology

Up +9.61% to $30.92, adding to a +28.62% five-day run, and one of the genomics names that carried GNOM to the top of the RS table. Caris profiles tumors at the molecular level and matches them to therapies, which puts it in direct competition with the company above. Second-quarter revenue rose 45% to $263.7 million, led by 55% growth in molecular profiling services to $252.3 million, on roughly 59,200 clinical cases. Gross margin improved about 500 basis points to 68%, and adjusted EBITDA came in positive at $55.7 million. Management raised full-year guidance to $1.03–1.04 billion, up from $1.00–1.02 billion, for growth of 27% to 28%. What to watch for Caris Life Sciences: it rests on the newer Caris Assure blood test, which accounted for roughly 10,700 of those cases. Volume growth of 18% against revenue growth of 45% says the price per case is still rising, and that gap is what the valuation is extrapolating.

Intel (INTC) — 1-Month RS 93: Foundry Bet Finds a Memory Customer

Intel INTC Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
98	95	93	+12.5%	iShares Semiconductor · VanEck Semiconductor · Global X AI Semiconductor

Up +7.67% to $108.80 on reports that SK Hynix is in early talks to have Intel manufacture memory chips in the United States, likely at the planned Ohio site. SK Hynix confirmed it is exploring a US memory partnership while stressing that nothing is settled, which is the right way to read it: this is a rumor with a long runway, not a signed contract. The underlying numbers are firmer. Second-quarter revenue of $16.1 billion beat the guidance midpoint by $1.8 billion, non-GAAP gross margin came in at 41.8%, and non-GAAP earnings of $0.42 per share doubled the $0.20 guide. Data center AI revenue reached $6.3 billion, up 59% from a year earlier, and 2026 capital spending guidance was raised above $20 billion on customer demand. External foundry revenue, however, was only $293 million in the quarter. What to watch for Intel: it turns on closing that gap, and a memory customer of SK Hynix’s size would be the first real proof that the foundry strategy works.

Tempus AI · Caris Life Sciences · Intel

· Tempus AI levels to watch — The rerating is built on an analyst’s reimbursement model. Reported revenue has yet to confirm it. Watch whether third-quarter diagnostics revenue per test moves up. That is where higher reimbursement would appear first.

· Caris Life Sciences levels to watch — Revenue is growing more than twice as fast as case volume. Watch whether Caris Assure case counts keep climbing next quarter. The blood test is what turns a profiling lab into a screening business.

· Intel levels to watch — The SK Hynix report is still a rumor. Watch whether external foundry revenue grows beyond $293 million. Without that, the Ohio story stays a story.

What to Watch on Next Week’s Calendar

September quadruple witching, Friday September 18. Index futures, index options, single-stock options, and futures options all expire on the same day, and the FTSE rebalance lands with them. Volume spikes and closing prints get distorted. Today’s rebound came on a broad advance rather than on a few names, so the useful question on Friday is whether the chip and miner bids survive an expiration that forces mechanical selling.
US August industrial production, Friday September 18, 9:15 a.m. ET (10:15 p.m. KST). The materials sector just rebounded +21 RS points and manufacturing-linked funds led the recovery list. A firm print supports that rotation. A weak one puts the cyclical bounce down to rates.
Qualcomm Snapdragon Summit, September 22 to 24. Next-generation processor roadmaps get laid out here, and the event lands in the middle of a chip rebound that is still fragile — SOXX remains -2.31% over the past month even after today’s +3.39%. Roadmap detail on on-device AI would give the semiconductor trade something more durable than a memory-pricing comment.
US-China summit at the White House, Thursday September 24. President Xi Jinping’s visit has AI development pace, AI security, semiconductors, and rare earths on the agenda. Every one of those touches a group in today’s tables: chips on one side, critical minerals and silver miners on the other. This is the single largest scheduled risk to the sector map for the rest of the month.

AutoZone (AZO) Stock Analysis: ROIC Down 11 Quarters

J. Equity. Research — Thu, 17 Sep 2026 13:45:09 GMT

AutoZone, Inc. (NYSE: AZO) has spent $39.85 billion buying back its own stock since fiscal 1998, but its adjusted after-tax return on invested capital has now fallen for 11 straight quarters, to 36.3% in the quarter ended May 9, 2026. Trailing twelve-month (TTM) GAAP EPS is only 1.6% below where it stood at the September 2025 share price high, so nearly all of the drop in the stock came from a lower multiple. What remains open is whether the new stores and mega hubs now absorbing 47.6% of operating cash flow will lift returns before buybacks have to shrink further.
AutoZone sells replacement parts, maintenance items and accessories through 7,856 stores: 6,766 in the United States, 933 in Mexico and 157 in Brazil. It serves do-it-yourself (DIY) customers at the counter and delivers parts to repair shops through commercial programs. At $2,849.04 a share and 16,325,355 shares outstanding on the 10-Q cover, the market capitalization is $46.51 billion.
The fiscal year ends on the last Saturday in August, and the first three quarters run 12 weeks while the fourth runs 16, so Q3 FY2026 is the 12 weeks ended May 9, 2026. ROIC here is AutoZone’s own non-GAAP measure, and because stockholders’ equity is negative, P/B and ROE are not meaningful. The shares are -5.8% over one month, -8.9% over three months and -32.6% over one year, and -34.6% below the ten-year closing high of $4,354.54 set on September 11, 2025. Q4 FY2026 results are expected in late September.

AutoZone (AZO) one-year share price chart ending near $2,849

AutoZone History From Buybacks to Mega Hubs

Ten years of AutoZone month-end prices with five company events

AutoZone began operations in 1979. Three later developments explain the company investors are pricing now.
The first is the buyback program. Cumulative repurchases since fiscal 1998 reached $39.85 billion at the end of Q3 FY2026, equal to 85.7% of today’s market value, and shares outstanding fell from 25.74 million at the end of FY2018 to 16.37 million (-36.4%). AutoZone repurchased more stock than it had equity, so stockholders’ equity has been negative for more than a decade, and the company reports adjusted debt to EBITDAR (earnings before interest, taxes, depreciation, amortization, rent and share-based expense) instead of a conventional leverage ratio.
The second is the CEO handover. Bill Rhodes ran the company as CEO from 2005 and has chaired the board since 2007. In January 2024 Phil Daniele, who had been executive vice president for merchandising, marketing and supply chain and before that senior vice president for commercial from 2015 to 2021, became CEO. Rhodes moved from executive chairman to non-executive chairman in January 2026.
The third is where the cash now goes. Capex passed $1 billion for the first time in FY2024 at $1.07 billion. Net new stores reached 304 in FY2025, 42.7% more than the year before, and FY2025 buybacks of $1.58 billion were 36.2% of the FY2022 peak.

Year	What happened	Source
2022	Buybacks peaked at $4.36 billion	10-K cash flow statement
2024	Phil Daniele became CEO and capex passed $1 billion	10-K executive officers and cash flow statement
2025	Net new stores rose to 304 and the stock set a ten-year closing high in September	Earnings presentation and price history

The five-year financials below come from 10-K XBRL data in millions of dollars. Equity is negative in every year, so the debt ratio and ROE columns are not calculated. FY2024 had 53 weeks.

Fiscal year-end	Revenue	Operating income	Net income	Operating margin	Net margin	Debt ratio	ROE
Aug 2021	14,629.6	2,944.5	2,170.3	20.1%	14.8%	Negative equity	Negative equity
Aug 2022	16,252.2	3,270.7	2,429.6	20.1%	14.9%	Negative equity	Negative equity
Aug 2023	17,457.2	3,474.0	2,528.4	19.9%	14.5%	Negative equity	Negative equity
Aug 2024	18,490.3	3,788.7	2,662.4	20.5%	14.4%	Negative equity	Negative equity
Aug 2025	18,938.7	3,610.2	2,498.2	19.1%	13.2%	Negative equity	Negative equity

Revenue grew +29.5% over four years, but net income peaked in the 53-week FY2024 and was -6.2% in FY2025, when the operating margin slipped 1.4 points and AutoZone cited LIFO charges and foreign exchange.

The Five Biggest Daily Moves in AutoZone Shares

Date	Move	Close ($)	Filings within a day	Same-day peers
2024-02-27	+6.7%	2,770.46 to 2,954.99	Q2 FY2024 results (8-K)	O’Reilly +1.9%, Advance Auto Parts +7.3%
2025-12-09	-7.2%	3,766.96 to 3,496.77	Q1 FY2026 results (8-K)	O’Reilly -3.9%, Advance Auto Parts -9.3%
2026-03-03	-6.3%	3,882.47 to 3,637.17	Q2 FY2026 results (8-K)	O’Reilly -1.2%, Advance Auto Parts -2.6%
2026-05-26	-9.0%	3,406.50 to 3,100.11	Q3 FY2026 results (8-K)	O’Reilly -2.0%, Advance Auto Parts -4.9%
2026-07-06	-6.4%	3,159.28 to 2,957.71	None (shelf registration and note prospectus the next day)	O’Reilly -6.7%, Advance Auto Parts -8.5%

Four of the five days were earnings days. AutoZone reports before the market opens, so the reaction shows up in that day’s close, and three of those earnings days came after December 2025.
The largest drop came with Q3 results on May 26, 2026. EPS of $38.07 was 5.26% above the average estimate, yet the stock closed -9.0% while O’Reilly was -2.0%. On the earnings call management said domestic same store sales grew only 1.3% in the last two weeks of the quarter and pointed to unseasonably cool weather. Q2 results on March 3 also beat the average estimate, by 1.24%, and the stock still closed -6.3%.
July 6, 2026 had no AutoZone filing, and the whole group fell: O’Reilly -6.7% and Advance Auto Parts -8.5%. The shelf registration and prospectus filed the following day cover a 2031 note issue.

DIY and Commercial Sales at AutoZone

Half of AutoZone’s sales are parts that fail. The 10-K splits sales into three product groups.

Product group	FY2025 sales ($m)	Share	Change vs FY2024
Failure	9,291.6	49.1%	+3.5%
Maintenance items	6,807.3	35.9%	+2.9%
Accessories and other	2,839.8	15.0%	-1.8%

The 10-K lists batteries, starters and alternators, fuel pumps, radiators and water pumps among failure parts, and brake pads and rotors, oil, filters, spark plugs and wipers among maintenance items. FY2024 had 53 weeks, which makes these growth rates look lower than the underlying trend. Accessories were the only group that shrank in FY2025.
Customers split between people fixing their own cars and repair shops. Shops are served by commercial programs that deliver from nearby stores on credit, and domestic commercial sales were $1.40 billion in Q3, 29.0% of total sales against 27.5% for FY2025.
On the Q3 earnings call management said DIY same store sales grew 2.2% while same-SKU inflation ran a little above 7%, which lifted the average DIY ticket by 5.6%, and DIY transaction counts fell 3.6%. Commercial tickets rose about 6% and transactions about 2%, and management put commercial at about 34% of domestic sales. DIY growth came from price while fewer customers came through the door, and management said declines in the 3% range for several quarters in a row have been rare for the business.
Inventory placement is how AutoZone competes. Regular stores are replenished from the nearest distribution center, while hub stores carry 40,000 to 50,000 unique SKUs and mega hub stores 80,000 to 110,000, and both send parts the same day to nearby stores and shops. AutoZone ended FY2025 with 367 domestic hubs and 53 international hubs, including 133 domestic mega hubs, 24 more than a year earlier. On the Q3 call management said it opened 14 mega hubs in the quarter to reach 156 and plans about 15 more in Q4, for 38 in FY2026. It targets about 300 at full build-out and expects at least 40 openings in FY2027.
International same store sales rose 16.6% in dollars but only 1.6% in constant currency. The Q3 release quotes Daniele: “While international performance has been below our plan, we believe our market share continues to grow as we outpace our competition in both international marketplaces.” AutoZone also sells its Duralast private-label parts and ALLDATA diagnostic and repair software for shops.

Why Is AutoZone’s ROIC Falling?

AutoZone adjusted after-tax ROIC down to 36.3% and invested capital up to $8.91 billion

The adjusted after-tax ROIC that AutoZone publishes in every earnings release fell from 55.4% in Q4 FY2023 to 36.3% in Q3 FY2026, 7.2 points below the 43.5% of a year earlier.
Company disclosure (Q3 FY2026 8-K earnings release, non-GAAP ROIC table): Adjusted after-tax return is trailing four-quarter net income plus interest and rent, less the tax effect. Invested capital adds five-quarter averages of debt and stockholders’ deficit, six times rent and average finance lease liabilities. The return was $3.24 billion against $3.31 billion a year earlier, and invested capital was $8.91 billion against $7.63 billion.

Invested capital component ($m, five-quarter average)	A year earlier	Q3 FY2026	Change
Average debt	8,987.7	8,839.9	-147.8
Average stockholders’ deficit	-4,538.6	-3,262.1	+1,276.5
Rent times 6	2,792.0	2,920.7	+128.6
Average finance lease liabilities	385.3	413.7	+28.4
Invested capital	7,626.5	8,912.2	+1,285.7

Own calculation (same ROIC table): Holding invested capital at last year’s level, ROIC would be 42.5%. Holding the return at last year’s level, it would be 37.2%. The smaller average stockholders’ deficit accounts for 99.3% of the $1.29 billion increase in invested capital.
More than 6 of the 7.2 points came from the denominator. The deficit shrank because AutoZone bought back less stock than it earned: $1.77 billion of repurchases against $2.48 billion of net income over the last four quarters. Stockholders’ deficit was $2.78 billion at the end of Q3 against $3.97 billion a year earlier.
The retained cash went into stores and inventory. Net property and equipment rose $1.07 billion to $7.80 billion over the year and inventory rose $736 million, while accounts payable rose only $514 million, so payables fell from 115.6% to 111.1% of inventory. AutoZone’s own cash now carries more of the inventory that suppliers used to finance, and the ROIC decline is the same cash seen from two sides: an accounting effect of slower buybacks and a real investment in stores and stock.

Is AZO Stock Cheap at 19.6 Times Earnings?

Trailing P/E sits a little below the middle of its five-year range, and price to sales is at its lowest in 60 months. In the year-end table P/B is not calculated because equity is negative, AutoZone pays no dividend, and FCF is operating cash flow minus capex.

Fiscal year-end	Year-end price	P/E	P/B	Dividend yield	FCF ($m)
Aug 2021	$1,548.49	16.3x	Negative equity	None	2,896.8
Aug 2022	$2,163.02	18.5x	Negative equity	None	2,538.7
Aug 2023	$2,453.40	18.5x	Negative equity	None	2,144.1
Aug 2024	$3,181.48	21.3x	Negative equity	None	1,931.4
Aug 2025	$4,198.53	29.0x	Negative equity	None	1,790.1

AutoZone trailing P/E of 19.6x and price to sales of 2.33x over 60 months

I rebuilt both multiples from 60 month-end closes between September 2021 and August 2026, using diluted EPS and sales for the four quarters released by each month-end and quarter-end shares outstanding. The 16-week Q4 plus three 12-week quarters add up to a full year.
The trailing GAAP P/E of 19.59x (TTM EPS of $145.45) is higher than 30% of those months and below the 20.62x median. Its range runs from 17.74x in September 2021 to 29.61x in September 2025. Price to sales of 2.33x is the lowest of the 60 months, below the previous low of 2.40x at the end of May 2026. The price-to-sales median is 2.78x and the high was 3.78x in September 2025.
Aggregator cross-check (two market data aggregators): One shows a trailing P/E of 19.69x and a forward P/E of 16.28x, and its TTM revenue of $19.99 billion matches the sum of the last four earnings releases. The other shows price to sales of 2.41x on a revenue window one quarter older.
At the September 11, 2025 high the trailing P/E was 29.47x on EPS of $147.75. EPS is now $145.45 (-1.6%) and the P/E is 19.59x (-33.5%). On a log basis, 96.3% of the price decline came from the lower multiple and 3.7% from lower EPS.
The multiple peaked while ROIC was already falling. The Q3 FY2025 figure published before the high, 43.5%, was the seventh straight decline, and over the next four quarters of decline the P/E lost almost 10 points. Price to sales hit its low because revenue kept growing with new stores while the share price did not follow.

What the Q3 FY2026 Earnings Presentation Claims

AutoZone’s quarterly earnings presentations run 12 to 13 pages, and the last content page repeats the same case for owning the stock. Page 13 of the Q4 FY2025 deck and page 11 of the Q3 FY2026 deck both list “Consistent, steady EPS growth,” “Powerful Free Cash Flow generation” and “Disciplined Capital Allocation,” and they define the last item as investing in existing assets, driving growth and “Excess cash returned to shareholders.” Growth priorities are domestic commercial and DIY, hub and mega hub expansion, better assortment and international expansion. Each claim below is set against the 10-K, the 10-Q and the earnings release.
One line changed between the two decks. “Improve the customer experience and drive efficiencies” in the Q4 FY2025 version became “Leverage technology to improve the customer experience” in Q3 FY2026, and the word efficiencies dropped out.
The first claim, steady EPS growth, runs into AutoZone’s own Q4 FY2025 deck. Pages 7 and 8 show FY2025 diluted EPS of $144.87 against $149.55 in the 53-week FY2024 (-3.1%) and against $146.14 excluding the extra week (-0.9%). The same pages say “LIFO negatively impacted EBIT ($64 million) and EPS ($2.84)” and that foreign exchange reduced EPS by $3.58.
FY2026 has not restored the trend yet. Pages 5 and 6 of the Q3 deck show Q3 net sales up 8.4% and gross margin down 57 basis points to 52.2%. Diluted shares were 2.1% lower, and EPS of $38.07 was up 7.7%. Over 36 weeks, sales rose 8.3% while operating profit fell 0.3% and net income fell 1.2%, and EPS of $96.69 was +0.5% against $96.17. The footnote shows a $177 million non-cash LIFO charge for the 36 weeks against a $16 million LIFO benefit a year earlier.
Own sensitivity calculation (Q3 FY2026 deck page 6 tax rates and diluted shares): Taxing the $177 million charge at 21.2% and dividing by 17.0 million diluted shares gives $8.20 per share, and the prior-year benefit was $0.74. Excluding both, 36-week EPS would be $104.89 against $95.43, 9.9% higher. AutoZone does not report this figure.
On the Q3 call management said a peso about 13% stronger than a year earlier added $74 million to sales, $20 million to EBIT and $0.83 to EPS, and it put Q3 EPS growth excluding LIFO at 12.5%. That 12.5% therefore includes the currency tailwind that had cost $3.58 of EPS in FY2025. The Q3 tax rate was 21.1% against 19.4% a year earlier, while interest expense was flat at $110 million against $111 million.
Steady EPS growth holds only if LIFO charges are treated as a one-time item. Over 36 weeks net income fell while EPS rose because diluted shares were -1.7%, and that gap narrows as buybacks slow.

AutoZone Q3 FY2026 earnings presentation page 9: 6,356 commercial programs and 10.4% commercial sales growth

Page 9 says “Commercial sales continued to grow, increasing 10.4% versus Q3 FY25,” with 6,356 domestic commercial programs, 5.7% more than a year earlier, and “a Commercial Program in 94% of Domestic Stores at the end of Q3 FY26.” Trailing four-quarter commercial sales were $5.61 billion, up 9.7%, and average weekly sales per program were $18,500, up 4.5%.
These growth numbers match the release, and program growth times sales per program comes to the 10.4% total. Management said on the call that the average commercial ticket rose about 6%, so sales per program growing +4.5% implies transactions per program of about -1.4%. Commercial growth came from new programs and price rather than more orders from existing programs.
Coverage limits that route. Programs sat in 92% of domestic stores at the end of FY2025 according to page 11 of the Q4 FY2025 deck and in 94% now, so fewer existing stores are left to add a program, and future commercial growth leans more on new stores and sales per program. The same Q4 FY2025 page shows commercial sales growth of +6.7% for FY2025, against +9.7% over the latest four quarters.

AutoZone Q3 FY2026 earnings presentation page 8: 7,856 stores after 82 net openings

Page 8 shows 82 net new stores in Q3 (57 US, 20 Mexico and 5 Brazil). Over 36 weeks AutoZone added 199 stores against 163 a year earlier, and square footage per store rose to 6,790 from 6,754. Over the year the US store count grew +3.5% and Mexico and Brazil +11.3% each, while total square footage grew +5.1%, faster than the store count. The Q3 release expects AutoZone “to open approximately 355-365 stores for the full fiscal year,” which leaves 156 to 166 openings for the 16-week Q4. New stores hit capex and operating expenses first, and the 36-week operating expense ratio was 34.3%, 20 basis points worse than a year earlier.

AutoZone Q4 FY2025 earnings presentation page 10: 304 net new stores in FY2025

Page 10 of the Q4 FY2025 deck shows 304 net new stores in FY2025, 42.7% more than the 213 of FY2024, with 196 US openings and one closure, 89 in Mexico and 20 in Brazil. On the Q3 call management said stores opened over the last five years are beating the sales and profit plans they were approved on. Neither the deck nor the 10-K gives returns by store or by opening year, so the only filed number that can test that statement is company-wide ROIC.
The second claim, powerful free cash flow, holds in size but not in direction. Free cash flow for the 36 weeks was $1.12 billion against $1.28 billion a year earlier (-12.3%), while capex was +17.8%. Page 10 of the Q3 deck shows inventory up 10.8%, inventory per store up 6.0% and inventory turns down from 1.4x to 1.3x. Net property and equipment rose 15.9% and debt 1.8%. Inventory net of payables moved from negative $1,065 million to negative $842 million, so AutoZone’s own cash now funds $223 million more inventory than a year earlier.
The third claim, excess cash returned to shareholders, does not fit the 36-week numbers. Page 6 says “FY26 YTD, we repurchased $1,328 million in AutoZone stock,” 1.18 times free cash flow for the same period, and in July, two months after the quarter ended, AutoZone issued $850 million of new senior notes.
The commercial program growth, the store openings and the build-up in inventory and property hold up against the filings. Steady EPS growth needs LIFO excluded, and powerful free cash flow and excess cash returned do not match 36 weeks in which free cash flow fell and buybacks exceeded it.

LIFO Inventory Charges and Tariff Inflation

LIFO charges have cut AutoZone’s earnings for four straight quarters, peaking at $98 million in Q1 FY2026 and easing to $20 million in Q3.
AutoZone values domestic inventory on a last-in, first-out basis. The most recent and most expensive purchases flow into cost of sales first, so when tariffs or inflation raise purchase costs, the difference reduces profit as a LIFO charge. The charge is an accounting adjustment with no separate cash outflow, but it reflects purchase costs that AutoZone did pay in cash.

Quarter	LIFO impact ($m)	LIFO effect on gross margin vs prior year	Domestic same store sales
Q4 FY2025 (16 weeks)	-80	-128 bps	4.8%
Q1 FY2026	-98	-212 bps	4.8%
Q2 FY2026	-59	-138 bps	3.4%
Q3 FY2026	-20	-77 bps	4.1%
Q4 FY2026 plan	About -30	Not reported yet	Not reported yet

The Q3 release says “The decrease in gross margin was driven by a 77 basis point net non-cash LIFO impact partially offset by other gross margin improvements,” and management said on the call that gross margin excluding LIFO was 20 basis points higher than a year earlier despite faster growth in lower-margin commercial sales.
The FY2025 10-K ties the cost pressure to trade policy: “During fiscal 2025, new global trade tariffs were announced on imports to the United States, including additional tariffs on various countries from which the Company directly or indirectly imports and/or sources merchandise, including Canada, China and Mexico, among others.”
On the Q3 call management planned a Q4 LIFO charge of about $30 million, which would bring FY2026 to $207 million against $64 million in FY2025. It expects the average ticket to grow in the mid-4% range in Q4 as prices start to lap last year’s tariff-driven increases.
Q4 compares with an $80 million LIFO charge a year earlier, so a smaller charge would flatter EPS growth, and the Q4 estimate probably includes some of that comparison. The other side is that as inflation cools, the ticket growth that has carried DIY sales fades together with the LIFO charge, and the decline in DIY transactions would show more clearly in sales.

Capex and Buybacks Compete for Operating Cash Flow

AutoZone capex at 47.6% of operating cash flow and buybacks by fiscal year

Capex took 17.7% of operating cash flow in FY2021, 42.6% in FY2025 and 47.6% over the latest four quarters. Operating cash flow stayed near $3 billion while capex more than doubled, which left less for buybacks.

Fiscal year	Operating cash flow ($m)	Capex ($m)	Free cash flow ($m)	Buybacks ($m)	Buybacks / FCF
FY2021	3,518.5	621.8	2,896.8	3,378.3	1.17x
FY2022	3,211.1	672.4	2,538.7	4,360.0	1.72x
FY2023	2,940.8	796.7	2,144.1	3,699.6	1.73x
FY2024	3,004.1	1,072.7	1,931.4	3,140.9	1.63x
FY2025	3,117.3	1,327.3	1,790.1	1,578.2	0.88x
Last four quarters	3,117.7	1,485.3	1,632.5	1,774.9	1.09x

Annual buybacks are cash payments from the 10-K cash flow statement, while the last-four-quarter figure is the change in cumulative repurchases in the earnings releases, a trade-date basis that differed by about 3% in FY2025.
From FY2022 to FY2024 buybacks ran at 1.6 to 1.7 times free cash flow, and long-term debt rose from $5.27 billion at the end of FY2021 to $9.02 billion at the end of FY2024. AutoZone pulled buybacks below free cash flow in FY2025, then went back above it over the latest four quarters.
The Q3 release shows adjusted debt to EBITDAR at 2.5x in each of the last six quarters, with TTM EBITDAR of $4.89 billion, the same as a year earlier. If the ratio stays at 2.5x and EBITDAR does not grow, borrowing capacity for buybacks does not grow either. The board approved another $1.5 billion of buyback authorization on June 16 after Q3 ended with $804 million remaining, and in July AutoZone issued $850 million of 4.950% senior notes due 2031, closing on July 14.
Management said on the call that capex will be about $1.6 billion this year and similar next year. That is 51.3% of TTM operating cash flow and leaves $1.52 billion, $257 million less than the $1.77 billion of buybacks over the last four quarters. Unless operating cash flow grows, buybacks either need more borrowing or have to shrink, and the Q3 average repurchase price of $3,582 is 25.7% above the current share price.

Number	Value	Why it matters
Adjusted after-tax ROIC (company, a year earlier 43.5%)	36.3%	Eleven straight declines, most of the last year’s drop from a larger invested capital base as the deficit shrank
Share of the decline from the high explained by P/E (log split)	96.3%	EPS barely moved and the market applied a lower multiple
Last-four-quarter capex / operating cash flow (FY2021 17.7%)	47.6%	Store and mega hub spending took cash that used to fund buybacks, which again exceed free cash flow
36-week FY2026 LIFO charge (a year earlier a $16 million benefit)	$177 million	Excluding it, 36-week EPS growth would be 9.9% instead of 0.5%
Price to sales (60-month low; P/E above 30% of months)	2.33x	Cheapest on sales in five years while P/E sits close to its 20.62x median

Six Bull Case Arguments Checked Against the Filings

The case for owning AutoZone starts with buybacks growing EPS and ends with a P/E that has fallen back toward its five-year median. I split the presentation’s argument and common investor reasoning into six links and checked each against the 10-K, the 10-Q and the earnings releases.

#	The thesis	Evidence	Verdict
1	Buybacks keep EPS growing steadily	Shares -36.4% since FY2018; FY2025 EPS -3.1%; 36-week EPS +0.5%	Overstated
2	Mega hubs will lift ROIC again	ROIC down 11 quarters in a row; 156 mega hubs toward about 300; no returns disclosed by store	Conditional
3	LIFO charges are non-cash and can be ignored	$177 million over 36 weeks; same-SKU inflation above 7%; about $30 million planned for Q4	Partly holds
4	Free cash flow covers the buybacks	0.88x in FY2025; 1.09x over four quarters; $850 million of notes in July	Partly holds
5	Commercial growth offsets fewer DIY visits	Commercial sales +10.4%; DIY same store sales +2.2%; DIY transactions -3.6%	Holds
6	A P/E near 19x makes the stock cheap	P/E above 30% of 60 months; P/S at a 60-month low; ROIC still falling	Conditional

Holds means the filings confirm it, Partly holds means part of the claim is confirmed, Conditional means it depends on a number not yet reported, and Overstated means the direction is right but the size is not. One link holds, two partly hold, two are conditional and one is overstated. The weakest link is number 2: if new stores and mega hubs do not stop the ROIC decline, the buyback capacity in link 4 and the valuation call in link 6 both rest on lower returns.

Q4 Estimates and Analyst Price Target Cuts

AutoZone Q4 EPS estimate from $54.56 to $54.22 and price target ranges

The average Q4 EPS estimate is $54.22, +11.3% above the $48.71 of Q4 FY2025, but it has drifted down from $54.56 ninety days ago. AutoZone does not give quarterly EPS guidance. On the Q3 earnings call management reiterated 355 to 365 store openings for FY2026, capex of about $1.6 billion this year and next, a Q4 LIFO charge of about $30 million and average ticket growth in the mid-4% range.
Aggregated sell-side research shows 45 analysts, 32 at Buy and 12 at Hold. Their average 12-month target is $3,769, in a range of $3,200 to $4,325. A second aggregator shows an average of $3,903, between $3,200 and $4,800. AutoZone beat the average EPS estimate in two of the last eight quarters.

Date	Broker	Rating	Target ($)
2026-09-10	Wells Fargo	Overweight, reiterated	4,500 to 3,500
2026-08-31	Cowen	Buy, reiterated	3,700 to 3,500
2026-08-04	Barclays	Overweight, reiterated	3,880 to 3,637

Outside view (Wells Fargo, Cowen and Barclays target changes, Aug to Sep 2026): All three kept their ratings and cut their targets, and UBS and Citigroup reiterated Buy ratings in mid-September. There were no upgrades or downgrades in the 90 days.
Even the lowest target of $3,200 is +12.3% above the share price, but the three brokers that moved targets all landed below the average. None of the three changed its rating along with the target.
Estimate revisions have run one way. FY2026 EPS is estimated at $150.76, +4.1% above FY2025, and FY2027 at $174.87, +16.0% above that, with three analysts cutting FY2027 in the last 30 days. On those estimates the stock trades at 18.9x FY2026 and 16.3x FY2027 EPS. The FY2027 number needs lower LIFO charges and profit from new stores to arrive at the same time.

JPMorgan and Vanguard Stakes and the CEO Handover

Two holders report more than 5%, both above 7%.

Holder	Shares	Reported stake	Filed
JPMorgan Chase	1,235,814	7.5%	13G/A, 2026-07-27
Vanguard Capital Management	1,241,699	7.53%	13G, 2026-04-29

At the 10-Q cover share count those stakes are 7.57% and 7.61%, worth $3.52 billion and $3.54 billion at the price in this article. JPMorgan’s reported stake rose from 4.2% in June 2025 to 6.8% in May 2026 and 7.5% in July. The Vanguard Group reported 0% in a March 13G/A, and Vanguard Capital Management filed its own 13G in April.
Of 25 well-known managers whose 13F information tables I checked, eight held AutoZone common stock at June 30, 182,159 shares in total or 1.12% of shares outstanding, with options excluded. Renaissance Technologies was the largest at 84,260 shares, up from 34,190 at March 31. Point72 went from 26,219 to 58,104 shares, and Citadel opened a 7,834-share position. D.E. Shaw cut from 44,034 shares to 364 and Two Sigma from 54,867 to 7,455. Berkshire Hathaway, Pershing Square and 15 other concentrated long-term investors held none, so every holder on the list is a quant, multi-manager or macro fund.
The CEO handover was an internal succession, and its timing matters for the numbers above. An 8-K filed October 8, 2025 moved Rhodes from executive chairman to chairman effective January 2026, with $250,000 a year in immediately vested restricted stock units, and announced another $1.5 billion of buyback authorization the same day. Daniele came up through the commercial business, and commercial sales and mega hub spending are exactly what grew fastest after he took over. At the December 2025 annual meeting all 11 directors were elected and 10.0% of votes cast opposed the say-on-pay proposal.

How AutoZone Compares With O’Reilly and Advance Auto Parts

AutoZone 41.8% share of combined revenue with O'Reilly and Advance Auto Parts and trailing operating margins

Among the three US-listed auto parts retail chains, AutoZone’s share of combined revenue rose from 36.9% in FY2016 to 41.8% in FY2025, while O’Reilly’s rose faster, from 29.8% to 39.2%, and Advance Auto Parts fell from 33.2% to 19.0%. This is a share of three companies’ revenue, not market share.
AutoZone belongs in the mature large-cap bucket, where growth is in single digits and returns come from capital allocation. That bucket gets three tests: multiples, operating margin and how each company splits cash between capex and buybacks. The peers are O’Reilly Automotive, Advance Auto Parts and Genuine Parts, which owns the NAPA distribution network.

Company	Ticker	Market cap ($bn)	Trailing P/E	Forward P/E	EV/EBITDA	Trailing operating margin
AutoZone	AZO	46.5	19.7x	16.3x	13.9x	19.1%
O’Reilly Automotive	ORLY	67.7	27.0x	22.9x	18.5x	20.2%
Advance Auto Parts	AAP	2.5	24.2x	10.8x	8.0x	5.5%
Genuine Parts	GPC	18.0	n/m	15.7x	11.7x	6.6%

This table uses aggregator definitions. AutoZone’s 19.7x trailing P/E is the aggregator figure, slightly different from the 19.59x trailing GAAP P/E in my band because the EPS windows differ, and Genuine Parts’ trailing P/E is above 500x on very low trailing net income, so it is shown as not meaningful.

Company	Fiscal year-end	Free cash flow ($m)	Buybacks ($m)	Capex ($m)	Buybacks / FCF
AutoZone	Aug 2025	1,790	1,578	1,327	0.88x
O’Reilly Automotive	Dec 2025	1,593	2,097	1,169	1.32x
Advance Auto Parts	Dec 2025	-298	7	252	n/m
Genuine Parts	Dec 2025	421	0	470	0.00x

O’Reilly still buys back more than its free cash flow while spending less on capex than AutoZone, and Advance Auto Parts, with negative free cash flow, has nearly stopped. Of the four, AutoZone is the only one with capex above $1 billion and buybacks below free cash flow in its last fiscal year.

AutoZone and O'Reilly trailing P/E over 60 months with a 7.0-point gap now

On my own month-end calculation, O’Reilly’s trailing P/E is 26.59x against 19.59x for AutoZone, a 7.0-point gap. Over 60 months the gap ranged from 1.2 points in June 2022 to 10.6 points, and it sits in the upper part of that range now. O’Reilly’s EPS history is adjusted for its 15-for-1 split in June 2025.
The operating margin difference between the two is only 1.1 points, yet the P/E gap is wide. The revenue share shift toward O’Reilly points the same way, and AutoZone management said on the Q3 call that nearby competitors have much higher commercial mixes, which is why it called domestic commercial share its top priority for FY2026.
The number of competitors and market share cannot be verified. The 10-K lists national, regional and local auto parts chains, independent parts stores, online marketplaces, wholesale distributors, jobbers, repair shops, dealers and mass merchants as competitors without giving a share, and Census retail sales include tire stores and miss part of sales to repair shops, so AutoZone’s revenue cannot be divided by them.

US Auto Parts Sales and Parts Inflation

US auto parts and tire store sales of $137 billion in 2025 and vehicle miles traveled

US auto parts, accessories and tire store sales grew from $88.4 billion in 2015 to $137.0 billion in 2025, a compound annual growth rate of 4.48%, but only 2.2% in 2025.
Official statistics (FRED MRTSSM4413USS and TRFVOLUSM227SFWA, seasonally adjusted monthly data): Sales reached $109.9 billion in 2021, 15.7% above 2020. Growth slowed in each of the next four years, to 2.2% in 2025. The latest twelve months are 3.2% above the prior twelve. Vehicle miles traveled fell from 3.261 trillion in 2019 to 2.903 trillion in 2020 and reached 3.325 trillion in 2025.
Miles driven in 2025 were +1.9% above 2019, so the wear that drives parts demand is back above pre-pandemic levels. Management pointed on the call to a growing and aging car fleet and expensive new and used cars as tailwinds for DIY demand. AutoZone’s FY2025 sales grew 4.5% excluding the 53rd week, faster than the industry’s 2.2%, although the fiscal and calendar years are four months apart.

Motor vehicle parts inflation at 0.9% against 3.4% for all items

Consumer price inflation for motor vehicle parts and equipment peaked at 15.3% in May 2022 (FRED CUSR0000SETC and CPIAUCSL). It reached 3.4% in August 2025, above 2.9% for all items, and slowed to 0.9% in August 2026, below 3.4% for all items. Motor vehicle maintenance and repair services inflation was 5.2% in the same month (CUSR0000SETD).
A year after the tariffs, parts inflation is cooling. AutoZone’s same-SKU inflation above 7% measures its own selling prices on identical items, while the official index covers consumer prices including tires and accessories, so the levels differ, but both face tougher comparisons from Q4.
When parts prices rise more slowly than overall prices, the price-driven part of sales growth shrinks and so do LIFO charges. Repair service prices rising faster than parts prices make shop repairs more expensive, and DIY transaction counts will show whether some drivers go back to fixing their own cars.

Conditions That Would Move AZO Stock

Scenario	Condition	Indicator to check	When · Source
Upside	ROIC stops falling and holds at 36% or higher	Adjusted after-tax ROIC table	Q4 results in late September · 8-K release
Downside	ROIC drops below 35%	Adjusted after-tax ROIC table	Q4 results · 8-K release
Upside	Q4 LIFO charge of about $30 million or less	LIFO footnote	Q4 results · earnings presentation
Downside	DIY transactions down 4% or more	DIY traffic comments	Q4 earnings call
Upside	Domestic commercial sales growth near 10%	Commercial sales growth	Q4 results · earnings presentation
Downside	Buybacks above free cash flow with more note issuance	Cash flow statement and 8-K filings	FY2026 10-K

The first two rows carry the most weight. While buybacks stay below net income, invested capital keeps rising, so ROIC stops falling only if the after-tax return grows faster than invested capital. Q4 compares a planned LIFO charge of about $30 million with $80 million a year earlier, which favors the numerator; a further ROIC decline in that quarter would suggest the returns from new investment are arriving late.

What Mega Hub Returns Still Need to Show

AutoZone says mega hubs lift sales at surrounding stores and that new stores beat their plans, but it does not disclose returns on mega hubs or new stores. The ROIC in the release mixes existing stores with new investment, so the 11-quarter decline cannot be split between investments that have not matured and existing stores earning less.
Holding invested capital at $8.91 billion, getting ROIC back to last year’s 43.5% would require an after-tax return of $3.88 billion, $639 million or 19.7% more than today. With 156 mega hubs open, a target of about 300 and capex of about $1.6 billion planned again for next year, which disclosure would show whether the $1.07 billion of property added over the last year earns that return: sales lift by mega hub cohort, or commercial sales per program in markets where a mega hub opened?

Texas Instruments (TXN) Stock Analysis: Cash Flow and Capex: compare another company whose rising capex cut into the free cash flow it used to return to shareholders.
lululemon (LULU) Stock Analysis: Margin Decline and Tariffs: see how a retailer explained tariff costs in its gross margin, next to AutoZone’s LIFO charges.

Methodology and Sources

The share price is $2,849.04 and the share count is 16,325,355 from the cover of the Q3 FY2026 10-Q. Monthly band multiples use quarter-end shares outstanding.
Company figures come from the Q3 FY2026 Form 10-Q, the FY2025 Form 10-K, the Q3 FY2026 earnings 8-K, AutoZone’s 8-K earnings releases and the quarterly earnings presentations on its investor relations site. Industry data come from FRED series MRTSSM4413USS, TRFVOLUSM227SFWA, CUSR0000SETC, CPIAUCSL and CUSR0000SETD, and peer and consensus figures from market data and sell-side research aggregators.
I parsed all 33 earnings releases from Q3 FY2018 to Q3 FY2026 in code and used the 26 quarters that include the non-GAAP ROIC table. Cash flows reconcile ten fiscal years of 10-K XBRL data with the 36-week figures in the 10-Q, and I read 11 earnings presentations from Q1 FY2024 onward. The bands use 60 month-end closes from September 2021 to August 2026 plus the latest price. Call figures come from management’s remarks and are used where the release and presentation do not report them. This analysis is not investment advice.

NVIDIA (NVDA) Stock Analysis: $105B Guarantee, Cash Flow

J. Equity. Research — Wed, 16 Sep 2026 20:47:24 GMT

NVIDIA Corporation (NASDAQ: NVDA) sells the accelerated computing systems that most AI data centers run on, and data centers produced 92.5% of its $96.22 billion of revenue in the July quarter. At $218.29 a share the company is worth about $5.26 trillion. This NVDA stock analysis covers the gap between record profit and falling operating cash flow, the supply commitments and lease guarantees behind it, the claims in the Q2 investor presentation, guidance history, P/E and P/B bands, analyst price targets, peers, and the conditions that would move the shares.

NVIDIA investor presentation for the second quarter of fiscal 2027

Here is the puzzle. Revenue rose $14.6 billion from the April quarter (+17.9%) and GAAP net income reached $59.69 billion, yet operating cash flow fell from $50.34 billion to $24.08 billion (-52.2%). In the same quarter days sales outstanding went from 45 to 60, supply and capacity commitments went from $119 billion to $279 billion, and in August NVIDIA agreed to guarantee up to $105 billion of data center leases for an OpenAI affiliate in Ohio.
Two limits up front. Per-share figures use the 24.1 billion shares on the cover of the Q2 10-Q and equity at the July 26 quarter-end. Quarterly operating cash flow for Q2 and Q3 of each fiscal year is derived by subtracting the prior year-to-date figure, and I checked every derived quarter against annual totals. GAAP net income includes gains on equity securities, and the SB Energy guarantees only take effect as leases commence, so none of that exposure sits on the balance sheet yet.
The shares are +0.3% over one month, +8.9% over three months and +23.1% over one year. The latest results are for the second quarter of fiscal 2027 (May to July 2026), released August 26. NVIDIA’s fiscal year ends in late January.

NVIDIA (NVDA) share price chart

What Does NVIDIA (NVDA) Do Now?

Ten years of NVIDIA month-end prices and five events that changed the company

NVIDIA started as a graphics chip company for PC gaming. It is now a data center computing company. Revenue grew from $26.91 billion in fiscal 2022 to $215.94 billion in fiscal 2026, eight times in four years, and the operating margin rose from 37.3% to 60.4%.
The first turn came with Mellanox. NVIDIA agreed to buy the networking company in March 2019 and closed in April 2020 (8-K Item 2.01), which brought InfiniBand, the fabric that ties thousands of servers together. The Arm deal announced in September 2020 was terminated in February 2022 (8-K Item 1.02).
2022 was the hard year. An 8-K on August 31 disclosed that the U.S. government would require licenses for exports to China, fiscal 2023 revenue was flat at $26.97 billion, and operating income fell to $4.22 billion (-57.9%).
The inflection was May 24, 2023. NVIDIA guided the next quarter to $11 billion, 1.53 times the $7.19 billion it had just reported. Actual revenue came in at $13.51 billion, +22.8% above the outlook, still the largest beat of the 14 quarters I tracked.
Since then the big events have come from export rules, funding and customer support. The H20 license requirement in April 2025 led to a $4.5 billion inventory and purchase-obligation charge in the first quarter of fiscal 2026. NVIDIA issued $25.0 billion of senior unsecured notes in June 2026, signed the SB Energy guarantees in August and agreed in September to buy Hugging Face for about $11.9 billion plus an equity retention program of up to about $1.0 billion.

Year	What happened	Source
2019	Agreed to buy Mellanox and entered data center networking	8-K 1.01 (Mar)
2020	Closed Mellanox and announced the Arm deal	8-K 2.01 (Apr), 1.01 (Sep)
2021	Reincorporated in Delaware and split its stock 4-for-1	8-K 7.01, 8.01 (Jun)
2022	Arm deal terminated; China export licenses required	8-K 1.02 (Feb), 8.01 (Aug)
2023	An $11 billion quarterly outlook kicked off the AI revenue surge	8-K 2.02 (May)
2024	10-for-1 split; fiscal 2025 revenue reached $130.5 billion	10-Q, 10-K
2025	A one-day drop of 17.0% and the H20 license requirement	10-Q (Apr license rule)
2026	$25 billion bond sale and up to $105 billion of lease guarantees	424B5 (Jun), 8-K 1.01 (Aug)

The five-year financials below come straight from 10-K XBRL data, in millions of dollars. Debt ratio is total liabilities divided by equity.

Fiscal year-end	Revenue	Operating income	Net income	Operating margin	Net margin	Debt ratio	ROE
Jan 2022	26,914.0	10,041.0	9,752.0	37.3%	36.2%	66.0%	36.6%
Jan 2023	26,974.0	4,224.0	4,368.0	15.7%	16.2%	86.3%	19.8%
Jan 2024	60,922.0	32,972.0	29,760.0	54.1%	48.8%	52.9%	69.2%
Jan 2025	130,497.0	81,453.0	72,880.0	62.4%	55.8%	40.7%	91.9%
Jan 2026	215,938.0	130,387.0	120,067.0	60.4%	55.6%	31.5%	76.3%

The Five Biggest Daily Moves in NVDA Stock

Over the past three years, about 750 trading days, NVDA moved more than 5% in a single session on 50 days. I lined up the five largest moves against the Nasdaq Composite and the Philadelphia Semiconductor Index on the same day. Only one of them followed a company filing.

Date	Move	Close (split-adjusted, $)	Company filings within a day	What the market did
2024-02-22	+16.4%	67.47 to 78.54	Q4 FY2024 results and 10-K on Feb 21	Nasdaq +3.0% · SOX +5.0%
2024-04-19	-10.0%	84.67 to 76.20	None found	Nasdaq -2.0% · SOX -4.1%
2024-07-31	+12.8%	103.73 to 117.02	None found	Nasdaq +2.6% · SOX +7.0%
2025-01-27	-17.0%	142.62 to 118.42	None found	Nasdaq -3.1% · SOX -9.1%
2025-04-09	+18.7%	96.30 to 114.33	None found	Nasdaq +12.2% · SOX +18.7%

On each of the four days without a filing, the chip index moved more than 4% in the same direction. On January 27, 2025 the Nasdaq fell 3.1% and NVDA fell five times as far. On April 9, 2025 NVDA and the chip index both rose exactly 18.7%.
Outside view (major financial press, January and April 2025): January 27 was widely reported as the day concern spread about AI chip demand after China’s DeepSeek released a reasoning model trained with less compute, and April 9 as the day the U.S. announced a 90-day pause on reciprocal tariffs.
NVIDIA filed no 8-K on either day. The stock traded as the lead name in a sector call, and when that call swung hard, NVDA swung harder.

NVIDIA Data Center Revenue by Customer Type

Q2 investor presentation page 4: Hyperscale and ACIE revenue

NVIDIA changed how it reports revenue by market platform in the first quarter of fiscal 2027. Data Center is now split into Hyperscale and ACIE (AI Clouds, Industrial, and Enterprise), and PCs, gaming, robotics and automotive sit in Edge Computing. In Q2 the company moved one customer from ACIE to Hyperscale “due to a change in their business model” and recast prior periods.

Quarter	Hyperscale	AI Clouds, Industrial & Enterprise	Edge Computing	Total
Q1 FY2026	22,260	16,852	4,950	44,062
Q2 FY2026	24,168	16,928	5,647	46,743
Q3 FY2026	35,140	16,075	5,791	57,006
Q4 FY2026	42,213	20,101	5,813	68,127
Q1 FY2027	43,050	32,196	6,369	81,615
Q2 FY2027	48,710	40,313	7,198	96,221

Figures are in millions of dollars from the company’s quarterly revenue trend sheet. The two customer groups ran on different clocks. Hyperscale jumped to $35.1 billion in Q3 of fiscal 2026. ACIE then went from $16.1 billion to $40.3 billion over three quarters, 2.5 times. Of the $14.6 billion added in Q2, ACIE contributed $8.1 billion, Hyperscale $5.7 billion and Edge $0.8 billion.
Filing note (Q2 10-Q, Note 16): One direct customer accounted for 16% of Q2 revenue, and three direct customers accounted for 16%, 15% and 13% in the first half. A year earlier, two direct customers were 23% and 16% of the quarter. Customers headquartered outside the U.S. were 38% of Q2 revenue, up from 30%.
Direct customers are mostly the manufacturers and distributors that build the servers, so the end buyers are not named. That makes management’s description the only window into the mix.
Company disclosure (Q2 earnings call, August 26, 2026): CFO Colette Kress said ACIE growth was “driven by neocloud capacity additions to meet the rising demand from enterprises, AI start-ups, and sovereigns, as well as hyperscalers purchasing capacity to supplement their own build.” She also said “we expect demand from the AI labs for which we expect to leverage our balance sheet to contribute toward roughly a quarter of our business next year.”
The 10-Q connects the two. NVIDIA says it “introduced a new business model with certain select AI cloud partners” in Q2: the clouds buy NVIDIA infrastructure, NVIDIA commits to cloud service agreements on that capacity, and if the clouds cannot resell it, NVIDIA has agreed to buy it. ACIE revenue growing 2.5 times in three quarters and this commitment appeared in the same filing.
Edge Computing revenue of $7.20 billion was +27.5% from a year ago on Blackwell workstations, partly offset by slower consumer PCs as memory and system prices rose. China was small. H200 shipments under U.S. licenses were under 1% of Data Center revenue, NVIDIA booked a $0.4 billion H200 charge in the first half, and the Q3 outlook assumes no China data center compute revenue.

Is NVIDIA Stock Cheap at 27 Times Earnings?

NVIDIA trailing GAAP P/E and P/B over 60 months

On fiscal year-end prices the P/E has fallen every year. Prices are split-adjusted; P/E is the year-end price over diluted EPS; the dividend yield uses dividends declared per share.

Fiscal year-end	Year-end price	P/E	P/B	Dividend yield	FCF ($m)
Jan 2022	$22.74	5.9x	2.14x	0.70%	8,132.0
Jan 2023	$20.30	119.4x	2.26x	0.08%	3,808.0
Jan 2024	$60.85	51.1x	34.89x	0.03%	27,021.0
Jan 2025	$142.25	48.4x	43.89x	0.02%	60,853.0
Jan 2026	$187.23	38.2x	28.93x	0.02%	96,676.0

The 5.9x in the January 2022 row is a data artifact: the XBRL diluted EPS for that year is still on a pre-split share basis. The bands below are built from a separate monthly calculation that adjusts for both splits.
Own calculation (60 month-end closes with XBRL quarterly net income and equity): For each month from September 2021 to August 2026 I used trailing twelve-month (TTM) GAAP net income from the latest quarter that ended at least 30 days earlier, plus that quarter’s equity. Share counts mix pre- and post-split values in the raw data, so I normalized them by magnitude.
At $218.29 the trailing P/E is 27.5x, below the 60-month low of 27.8x set at the end of August 2026. The median is 57.2x, the 10th percentile 36.3x, and the peak 242.8x in July 2023. P/B is 23.0x, in the 17th percentile, against a 35.5x median and a 12.7x low in September 2022.
Aggregator check (two sell-side research aggregators): One shows a trailing P/E of 27.63x, within 0.2x of my figure. The other shows P/B of 23.07x and a non-GAAP P/E of 31.14x with a five-year non-GAAP median of 52.75x.
The multiple compressed because earnings outran the stock. The shares are +23.1% over a year while trailing net income rose from $86.6 billion to $192.9 billion, 2.2 times, and the P/E at the end of August 2025 was 49.3x.
The earnings deserve one adjustment. First-half fiscal 2027 GAAP net income of $118.0 billion includes $23.7 billion of pre-tax gains on equity securities, 20.1% of the total. Q2 non-GAAP net income, which excludes those gains, was $53.95 billion, 90.4% of GAAP. On earnings without the gains, the multiple is higher than 27.5x.

Why Operating Cash Flow Fell While Profit Hit a Record

Quarterly net income vs operating cash flow and days sales outstanding

Q2 operating cash flow of $24.08 billion was 0.40 times GAAP net income, the lowest of the last ten quarters. It was 0.86 times in Q1 and 0.58 times a year earlier. Accounts receivable rose $22.3 billion, from $40.71 billion to $63.06 billion, which is 153% of the quarter’s $14.6 billion revenue increase. Inventory rose $5.8 billion to $31.58 billion.
Company disclosure (Q1 FY2027 CFO commentary, May 20, 2026): Explaining a drop in DSO from 51 to 45 days, NVIDIA wrote: “We expect our DSO to return to more normal levels next quarter.” The same document said it expected “a substantial increase in cash taxes in the second quarter.”
Company disclosure (Q2 FY2027 CFO commentary, August 26, 2026): DSO rose to 60 days “due to extended payment terms on large, multi-quarter agreements with certain investment-grade customers.” Inventory rose “as we prepare for the introduction of Vera Rubin in the third quarter,” and the sequential drop in operating cash flow “was driven by higher working capital adjustments and cash taxes.”
A metric the company expected to normalize moved 15 days the other way one quarter later. The average of the prior eight quarters was about 49 days, so 60 is 11 days above that and the longest in ten quarters.
Filing note (Q2 10-Q risk factors): A new sentence reads: “Financing arrangements with certain investment-grade customers, including extended payment terms under large, multi-quarter agreements, will continue to affect the timing of our operating cash flows.”
That wording turns a timing blip into a stated condition. The same 10-Q shows the opposite flow too: NVIDIA collected $15.6 billion of customer advances in the first half, recognized $13.0 billion of them as revenue, and ended July with $2.8 billion of advances, up from $160 million in January. Some customers are paying early while others are paying late.
Equity gains widen the gap as well. Q1 gains of $15.9 billion were 27.3% of net income and Q2 gains of $7.8 billion were 13.0%, and none of that is cash. NVIDIA held $99 billion of equity investments and $25 billion of further equity investment commitments at quarter-end, and in Q2 it received public company warrants with a $4.8 billion notional and an $824 million fair value.

Number	Value	Why it matters
Days sales outstanding (45 days in Q1)	60 days	Extended payment terms delayed cash collection
Q2 operating cash flow / net income	0.40x	Lowest in ten quarters; Q1 was 0.86x
Supply and capacity commitments ($119 billion in Q1)	$279 billion	0.92 times trailing revenue and hard to cut if demand slows
Maximum gross guarantee exposure	$108.5 billion	1.9 times cash and securities; phases in from fiscal 2029
Trailing GAAP P/E (60-month median 57.2x)	27.5x	Lowest in 60 months, but earnings include equity gains

What NVIDIA’s Q2 Investor Presentation Claims

Q2 investor presentation page 3: revenue and the company's five claims

Page 3 of the Q2 investor presentation puts five claims next to the revenue bars. NVIDIA “Added a record ~$15B in revenue q/q,” says “Year-over-year growth accelerated for the 4th consecutive quarter,” “Returned a record ~$26B to shareholders,” began Vera Rubin production shipments in early August, and says its AI infrastructure “delivers the best economics and is becoming an investable asset class.”
Own calculation (ten quarters of XBRL revenue): Q2 revenue rose $14.61 billion, above Q1’s $13.49 billion increase and the largest on record. Year-over-year growth ran 55.6%, 62.5%, 73.2%, 85.2% and 105.9% from Q2 of fiscal 2026 to Q2 of fiscal 2027, four straight accelerations.
The first two claims check out. The third needs the next slide and the cash flow statement.

Q2 investor presentation page 8: USD 21.3 billion free cash flow and USD 26.0 billion returned

Page 8 shows free cash flow of $21.3 billion and capital return of about $26.0 billion in Q2, so NVIDIA returned 122% of the quarter’s free cash flow. The same page in Q1 showed $48.6 billion of free cash flow and about $20.0 billion returned.
Filing note (Q2 10-Q cash flow statement, first half): Operating cash flow was $74.42 billion and purchases of property, equipment and intangibles were $4.43 billion. NVIDIA spent $39.04 billion on buybacks and $6.29 billion on dividends, and raised $24.90 billion from debt issuance.

Q1 investor presentation page 8: USD 48.6 billion free cash flow and USD 20.0 billion returned

The record return landed in the same quarter NVIDIA sold $25 billion of senior notes. Cash and marketable securities rose from $50.3 billion to $56.6 billion with those proceeds included, and senior notes outstanding reached $33.5 billion. Across the first half, the $45.3 billion returned was 64.9% of $69.9 billion of free cash flow.
The fifth claim is the one whose wording changed. In Q1, the matching line said NVIDIA AI infrastructure “delivers the lowest token cost and highest token throughput.” In Q2 it became “the best economics” and “an investable asset class,” a performance sentence turned into a financing sentence. The same quarter’s 10-Q added $36 billion of AI cloud agreements, $20 billion of data center leases to be reassigned to third parties, and the $105 billion SB Energy guarantee.
The Vera Rubin shipment claim cannot be verified from the filings, but inventory of $31.58 billion and the stated reason for it point the same way. On the call, management put NVIDIA’s revenue opportunity per gigawatt at about $18 billion for Hopper, $25 billion for Blackwell and $40 billion for Vera Rubin.

Supply Commitments and the SB Energy Lease Guarantees

Note 10 of the 10-Q and the CFO commentary list three layers of future payments. Amounts are in billions of dollars.

Obligation	Amount ($bn)	What it is
Supply and capacity	279	Up from 119 in Q1, mostly memory
Cloud service agreements	29	Compute for R&D
Data center leases not commenced	25	Terms up to 20 years
Equity investment commitments	25	AI model makers and infrastructure financiers
Capital expenditures	8	Data center equipment
AI cloud agreements	36	New business model started in Q2
Leases to be reassigned to third parties	20	About 15 years from fiscal 2028 to 2029
AI cloud lease guarantees	3.5	Partners placed $712 million in escrow
SB Energy guarantees	105	Tenant is an OpenAI affiliate

Own calculation (Q2 CFO commentary commitment tables): $267 billion of the $279 billion in supply commitments falls in the rest of fiscal 2027 through fiscal 2029, 95.7% within three years. The five commitment lines total $366 billion; adding $56 billion of AI cloud and third-party lease commitments and $108.5 billion of guarantees gives $530.5 billion, 1.75 times trailing revenue of $303.0 billion.
Filing note (8-K Items 1.01 and 2.03, August 17, 2026): NVIDIA entered into multiple residual value guaranties with SB Energy covering leases for about 4.25 gigawatts of IT load at the PORTS Technology Campus in Pike County, Ohio. An OpenAI affiliate is the tenant on 20-year leases. If OpenAI becomes insolvent or stops paying, NVIDIA pays the shortfall between a guaranteed minimum lease value and what is recovered through re-leasing or sale. The obligation is capped at $105 billion, and NVIDIA can support about 3.8 more gigawatts at its option.
The 8-K also lists when the guarantees end: 20 years after each lease starts, if OpenAI terminates the lease under its terms, or on “OpenAI achieving a satisfactory credit rating.” OpenAI has agreed to reimburse NVIDIA for any amounts it actually pays. The 10-Q adds that guarantee amounts step up as each of nine data centers is completed, with the first expected in fiscal 2029, and decline as OpenAI pays rent.
The $105 billion cap is 1.86 times quarter-end cash and securities, 54% of trailing net income and 2.0% of market capitalization. The CFO commentary says each generation of NVIDIA infrastructure at the site “could represent approximately 1.5 million NVIDIA GPUs, or approximately $150 billion to $200 billion in NVIDIA revenue.”
Company disclosure (Q2 earnings call): Describing the neocloud arrangements, Kress said “NVIDIA provides a take-or-pay commitment on a portion of the facility’s capacity” and shares in revenue above that floor. “We’re not making loans,” she said, adding “our risk is limited” because NVIDIA compute can be redeployed to other customers.
Outside view (BofA Securities analyst Vivek Arya, Q2 earnings call): Adding up the CFO commentary, Arya said “I get to a number of about $500 billion or so” and asked about the cash needed in fiscal 2028 and about OpenAI and Anthropic designing their own chips.
Kress answered that supply commitments are “essential for the raising of Vera Rubin” and are concentrated in the first three years; she did not give a fiscal 2028 cash figure. CEO Jensen Huang called the AI lab investments a “once-in-a-generation opportunity” and said “the only regret that I have is that I didn’t invest more and sooner.” My $530.5 billion and Arya’s $500 billion come from the same tables.
The 10-Q also discloses memoranda of understanding signed in August with large capital providers to mobilize more than $500 billion of third-party capital for AI infrastructure, with NVIDIA possibly providing limited residual value support. The company notes these “may not lead to definitive agreements.”

How Actual Revenue Compared With NVIDIA Guidance

Revenue beats vs outlook over 14 quarters and cash against commitments and guarantees

Own calculation (15 earnings releases filed on 8-K, February 2023 to August 2026): I matched the next-quarter revenue outlook in each release with the revenue actually reported. Actual revenue beat the outlook in all 14 completed quarters, but the average beat narrowed from 14.3% in the first four to 5.2% in the latest four.
The smallest beat was 2.5% in Q1 of fiscal 2026, the quarter hit by the H20 license rule. In Q2 of fiscal 2027 NVIDIA guided to $91.0 billion and reported $96.2 billion, a 5.7% beat. Because the base is larger, that beat is $5.2 billion in dollars, more than the $2.5 billion beat in the May 2023 quarter.

Q2 investor presentation page 11: Q3 revenue outlook of USD 108.0 billion

The Q3 outlook calls for revenue of $108.0 billion plus or minus 2%, a non-GAAP gross margin of 74.0% plus or minus 50 basis points and non-GAAP operating expenses of about $9.0 billion, with no China data center compute revenue. That is +12.2% sequential growth, below Q2’s 17.9%. Applying the recent 5.2% average beat gives about $113.6 billion. One aggregator’s average Q3 revenue estimate is $108.99 billion, 0.9% above the guide.
Company disclosure (Q2 earnings call): Kress said memory price increases “exceeded our prior expectations,” and “We expect margins to bottom in Q4 in the 71% to 72% range before settling at 72% to 73% in fiscal year 2028 as executed price increases take effect in Q1.” She added that NVIDIA has relationships “with all three major memory suppliers.”
Revenue guidance and margin guidance pointed in opposite directions on the same call. NVIDIA said it expects fiscal 2028 revenue growth of approximately 70% and called it “a supply-constrained outlook,” while guiding gross margin two to three points below the Q2 level of 75.0%.

What the Street Believes vs What the Filings Show

The bull case for NVDA runs from AI compute demand to a low P/E. I broke the argument that recurs in broker notes and on the earnings call into ten links and checked each against the 10-Q, the 8-Ks and the CFO commentary.

#	The thesis	Evidence	Verdict
1	AI compute demand exceeds supply	Management call remarks; $31.6 billion inventory; $279 billion supply commitments	Partly holds
2	Fiscal 2028 revenue grows about 70%	Company outlook; consensus revenue growth of 64.8%	Conditional
3	Supply commitments cleared the component bottleneck	95.7% of commitments due within three years; margin outlook cut on memory costs	Partly holds
4	Customer support carries little risk	Company assertion only; up to $108.5 billion of guarantees; $36 billion AI cloud agreements	Unverifiable
5	The cash flow slowdown is temporary	Q1 expected normal DSO, Q2 hit 60 days; new 10-Q risk sentence says it will continue	Overstated
6	Gross margin stays at 75%	Company guided 71% to 72% in Q4 and 72% to 73% in fiscal 2028	Wrong
7	A 60-month low P/E makes the stock cheap	27.5x vs a 57.2x median; equity gains are 20.1% of first-half net income	Partly holds
8	Brokers keep raising targets	All 11 target changes since August 27 were increases	Holds
9	The guarantee ends if OpenAI earns a rating or keeps paying	8-K termination terms; OpenAI reimbursement agreement	Holds
10	A China return adds upside	No China data center compute in the outlook; H200 under 1% of Data Center revenue	Unverifiable

Two links hold, three partly hold, one is conditional, two cannot be verified, one is overstated and one is wrong. The weakest link is number 5. If slower cash conversion is a standing condition, the low P/E in link 7 is a multiple on earnings that turn into cash later, and links 4 and 9 will not be tested until fiscal 2029.

NVDA Price Targets and EPS Revisions

Fiscal 2028 EPS estimate trend and price target changes since August 27

Aggregated sell-side research (79 target prices; 49 to 57 EPS estimates): The average 12-month target is $309, with a low of $139 and a high of $500. Ratings split 2 Strong Buy, 58 Buy, 16 Hold and 3 Sell, and a second aggregator’s 56-analyst average is $322.88. The average EPS estimate is $9.30 for fiscal 2027 and $15.57 for fiscal 2028, and the fiscal 2028 revenue estimate averages $677.92 billion.

Date	Broker	Rating	Target ($)
2026-09-11	RBC Capital	Initiated at Outperform	Not given
2026-09-10	Goldman Sachs	Buy, reiterated	Not given
2026-09-09	Piper Sandler	Initiated at Overweight	225 to 300
2026-08-31	Deutsche Bank	Buy, reiterated	Not given
2026-08-27	Truist Financial	Not shown	307 to 346
2026-08-27	D.A. Davidson	Not shown	250 to 300
2026-08-27	RBC Capital	Not shown	300 to 330
2026-08-27	Needham	Buy, reiterated	270 to 300
2026-08-27	Evercore ISI	Outperform, reiterated	413 to 465
2026-08-27	Raymond James	Not shown	352 to 515
2026-08-27	UBS	Not shown	280 to 300
2026-08-27	Morgan Stanley	Not shown	288 to 300
2026-08-27	Bernstein	Outperform, reiterated	Not given
2026-08-27	Oppenheimer	Not shown	265 to 315
2026-08-27	Stifel Nicolaus	Not shown	282 to 315

All 11 brokers that changed targets after the results raised them. The new targets average $344, and five of the eleven landed on the same round number. The largest increase came from Raymond James at +46.3%.
Estimates moved in one step after the report. The fiscal 2028 EPS estimate rose from $12.84 thirty days earlier to $15.57 (+21.3%), after barely moving from $12.67 ninety days ago. Forty-one analysts raised fiscal 2028 estimates over thirty days and none cut. At $218.29 the stock trades at 14.0 times the fiscal 2028 figure.
Aggregator check (two aggregators): NVIDIA beat the non-GAAP EPS estimate in each of the last eight quarters, by 6.0% on average in one aggregator. The other shows beats of 3.46%, 5.32%, 5.54% and 6.16% over the last four.
Company disclosure (Q2 earnings call): Huang said “Customers’ forecasts point to our growth doubling next year” but that NVIDIA expects about 70% “as we are supply-constrained,” and that “NVIDIA Compute is fully utilized across every cloud we serve.”
Consensus fiscal 2028 revenue growth of 64.8% is still below the company’s 70%. Estimates rose 21% in a month without reaching the outlook, and with lower margins guided the same day, whether the revenue raise outweighs the margin cut is what decides the next revision.

Who Owns NVIDIA and How Shareholders Voted

Holder	Shares	Stake	Source
Vanguard Capital Management	Percentage only in filing	7.31%	Schedule 13G (April 28, 2026)
Jensen Huang (CEO)	870,604,104	3.58%	Proxy (DEF 14A, May 2026)
Colette Kress (CFO)	4,443,523	Under 1%	Same

Vanguard is the only holder reporting more than 5%. Its March 26 amendment showed 0% under the old filer name, and on April 28 Vanguard Capital Management reported 7.31% under a new entity after a reorganization, so the 9.32% in the January filing is from a different filer. One aggregator lists BlackRock, Vanguard, Fidelity, State Street and Geode as the top institutions.
Counting only common shares and excluding option lines in 13F information tables, four well-known funds held more than 10 million NVDA shares at the end of June: D.E. Shaw, Millennium, Citadel and Tiger Global. Point72 cut almost its entire stake, Third Point sold all 190,000 shares, and Berkshire Hathaway has no position.

Fund	Common shares (June 30)	Change vs March 31
D.E. Shaw	20,042,818	+36.3%
Millennium Management	12,157,614	+14.8%
Citadel Advisors	11,815,467	No prior filing in data
Tiger Global	11,198,773	-6.8%
Renaissance Technologies	7,091,256	+180.6%
Two Sigma	6,284,574	-44.1%
ARK Investment	1,381,247	+33.4%
Point72	437,800	-94.2%

NVIDIA is also a shareholder in its customers: a July 20 Schedule 13G shows it owns 9.3% of Nebius Group, an AI cloud company.
Filing note (8-K Item 5.07 on the 2026 annual meeting, filed June 30): All ten directors were elected. Approval (for divided by for plus against) was highest for Jensen Huang at 99.01% and lowest for lead independent director Stephen Neal at 86.70%. Say-on-pay passed with 93.62%, and a shareholder proposal to replace supermajority voting provisions with a simple majority passed with 86.84%.
Insiders filed 94 Form 4 reports over the last twelve months. Suzanne Nora Johnson joined the board in May, and an April 8-K reported that Chief Accounting Officer Donald Robertson notified the company of his departure.

How NVIDIA Compares With Broadcom and TSMC

Market cap vs trailing operating income for six AI chip companies

The peers are Broadcom, AMD and Marvell, which sell competing accelerator and networking chips, plus TSMC, which manufactures NVIDIA’s chips, and Micron, which sells high-bandwidth memory. The yardstick is trailing twelve-month operating income against market cap; TSMC figures are converted from New Taiwan dollars.

Company	Market cap ($bn)	Trailing operating margin	Market cap / trailing operating income	Forward P/E	Revenue growth
NVIDIA	5,271	65.2%	26.7x	14.0x	+105.9%
Broadcom	1,728	48.5%	40.0x	18.7x	+85.5%
TSMC	2,247	56.1%	28.5x	19.8x	+36.0%
Micron	1,102	65.7%	18.6x	6.2x	+345.7%
AMD	843	15.7%	129.9x	33.3x	+50.1%
Marvell	212	16.8%	133.6x	35.1x	+36.5%

Own calculation (trailing operating income and market caps): NVIDIA’s trailing operating income of $197.6 billion is larger than the other five combined at $189.5 billion. Its operating margin ranks second behind Micron, and its 26.7x market cap to operating income is second lowest after Micron’s 18.6x.

Trailing operating margin and market cap to operating income across six peers

The highest multiples belong to AMD and Marvell, whose margins in the teens leave small profits to divide into large market caps. Broadcom’s 40.0x carries expectations for its custom accelerator business. Micron’s 18.6x and 6.2x forward P/E sit in the middle of a memory price cycle that multiplied its profit in a year. NVIDIA shares Micron’s margin bracket and TSMC’s multiple bracket.
The same table speaks to NVIDIA’s costs. In the quarter NVIDIA cut its Q4 margin outlook on memory prices, Micron’s trailing operating margin reached 65.7% and its revenue was 4.5 times a year earlier. With most of NVIDIA’s $279 billion of supply commitments going to memory, the memory makers’ margins sit on the other side of NVIDIA’s cost line.
The number of competitors and market share cannot be verified. NVIDIA names competitors in its 10-K but discloses no share data. When Arya asked about OpenAI’s own chip on the call, Huang said many XPUs are “inference-specific chips for one cloud or one service” while “NVIDIA is a platform.”

U.S. Computer Investment and Chip Production

U.S. business investment in computers and new orders for computers and electronics

Government statistics (FRED B935RC1Q027SBEA and A34SNO): U.S. private investment in computers and peripheral equipment ran at a seasonally adjusted annual rate of $400.6 billion in the second quarter of 2026, and U.S. new orders for computers and electronic products were $30.7 billion in July 2026.
Computer investment is +57.9% from a year earlier and +22.8% a year over five years. After sitting between $100 billion and $190 billion from 2016 through 2024, it climbed from $280 billion to $400 billion in the latest four quarters, the same stretch in which NVIDIA’s quarterly Data Center revenue passed $50 billion. New orders grew more slowly, +14.8% over a year.
For scale, NVIDIA’s Q2 Data Center revenue of $89.0 billion annualizes to $356.1 billion, 89% of the U.S. business computer investment rate. The populations differ, since 38% of NVIDIA’s revenue comes from customers headquartered abroad and the statistic covers only U.S. businesses, but one company’s revenue is now on the same order as a national investment series.

U.S. industrial production of semiconductors and electronic components

The index is +11.9% from a year earlier, slower than the rise in computer investment. Investment dollars include higher equipment prices and hardware built overseas, which is why the two series diverge.
Regulation is the other variable. The 10-Q flags China export licenses, a 25% tariff on licensed H200 shipments, the EU AI Act and new U.S. state AI laws. The Hugging Face 8-K added a risk factor on rules that could restrict open-source models, noting that “Many of the world’s most popular and successful open-source models originated in China.”

Conditions That Would Move NVDA Stock

Scenario	Condition	Indicator to check	When · Source
Upside	DSO falls back below 50 days	Days sales outstanding	Q3 results in mid-November · CFO commentary
Downside	DSO stays above 60 days	Days sales outstanding	Q3 results · CFO commentary
Upside	Operating cash flow recovers to 0.8 times net income or more	Cash conversion	Q3 10-Q cash flow statement
Downside	Q4 gross margin comes in below 71%	Gross margin	Q4 results · earnings call
Downside	Supply commitments grow faster than revenue	Note 10 commitments	Q3 10-Q
Upside	OpenAI earns a rating that ends the guarantee	SB Energy guarantee terms	8-K · 10-Q notes

The line that matters most is DSO. NVIDIA has disclosed extended payment terms as an ongoing condition, so a Q3 figure back under 50 days would support the view that Q2 was about contract timing, while a figure that stays above 60 would mean part of revenue is being carried by NVIDIA’s own balance sheet.

What to Check Next in the OpenAI Guarantee

The 8-K says NVIDIA would pay the gap between a guaranteed minimum lease value and recoveries, but it does not say what that minimum value is for each of the nine data centers or in which year the $105 billion cap would be reached. NVIDIA said the form of the agreements would be filed with the Q2 10-Q.
The clause that ends the guarantee once OpenAI achieves “a satisfactory credit rating” limits NVIDIA’s exposure, and it also means NVIDIA’s credit supports OpenAI’s lease terms until then. Shouldn’t the first check be the exhibit’s definition of a satisfactory rating and its phase-by-phase guarantee schedule?

Methodology and Sources

The share price is $218.29 and the share count is the 24.1 billion shares on the cover of the Q2 10-Q.
Financials come from the Form 10-Q for the second quarter of fiscal 2027, the SB Energy 8-K, and the CFO commentary, investor presentations, quarterly revenue trend sheet and call transcript in NVIDIA’s quarterly results library. Annual meeting votes are from 8-K Item 5.07, ownership from Schedule 13G filings and the proxy, and fund holdings from 13F information tables.
I built quarterly net income and operating cash flow from SEC XBRL data in code and checked each derived quarter against annual totals before building the bands from 60 month-end closes plus the latest price. I read all 15 earnings releases to pair each outlook with reported revenue. Industry data are FRED series B935RC1Q027SBEA, A34SNO and IPG3344S. Consensus figures are aggregated sell-side research, and quotes are taken verbatim from the call transcript, CFO commentary, presentations and filings.

Lennar (LEN) Stock Analysis: 12.9% Incentives, 0.89x P/B

J. Equity. Research — Tue, 15 Sep 2026 12:11:08 GMT

Lennar Corporation (NYSE: LEN) says it has finished turning itself into an asset-light homebuilder that controls 98% of its land through options, yet its Class A shares trade at $79.60, below book value of $89.75 per share. Sales incentives still ran at 12.9% of the gross sales price in the quarter ended May 31, 2026, against the 4% to 6% management calls normal, and trailing twelve-month return on equity is 7.4%. The transformation is visible in the land numbers but not yet in shareholder returns, and the next test is whether incentives keep falling without deeper cuts to base prices.
Lennar builds affordable, move-up and active adult homes, mostly under the Lennar brand, and its financial services segment provides mortgages, title and closing services to its own buyers. Class A shares (LEN) carry one vote and Class B shares (LEN.B) ten votes. At $79.60 for Class A and $78.27 for Class B, the two classes together are worth $19.13 billion.

Lennar Class A (LEN) one-year share price chart near $79

Lennar’s fiscal year ends in November, so Q2 FY2026 is the quarter ended May 31, 2026, and share counts in this article combine both classes net of treasury shares at that date. The shares are -9.1% over one month, -16.2% over three months and -43.2% over one year, and -57.3% below the ten-year closing high of $186.30 reached on September 19, 2024. Q3 FY2026 results are expected in mid-September.

What Lennar Builds and How It Got Here

Ten years of Lennar month-end prices with five company events and a $79.60 last close

Lennar was founded in Miami in 1954. Three later events shaped the company that investors are pricing now.
The first was the February 2018 acquisition of CalAtlantic Group. According to page 6 of the June 2026 investor presentation, annual deliveries went from 46,000 homes in 2018 to 83,000 in 2025.
The second was the 2022 margin peak. Home sales gross margin reached 29.5% in Q2 FY2022, and as mortgage rates climbed, sales incentives went from 2.5% of the gross price in Q3 FY2022 to 10.2% in Q1 FY2023.
The third was the 2025 Millrose Properties spin-off. In February Lennar moved about $5.6 billion of land and about $1.0 billion of cash into Millrose and distributed the shares, which reduced retained earnings by $4.84 billion. In November an exchange offer swapped the Millrose shares Lennar had kept for 8,049,594 Lennar Class A shares, and total equity went from $27.87 billion at the end of FY2024 to $21.96 billion at the end of FY2025. Co-CEO Jon Jaffe retired at the end of 2025, leaving Executive Chairman Stuart Miller as CEO and President.

Year	What happened	Source
2018	Completed the CalAtlantic Group acquisition	8-K Item 2.01 (Feb)
2022	Home sales gross margin peaked at 29.5%	8-K earnings release (Jun)
2025	Spun off Millrose Properties and retired Class A shares in an exchange offer	8-K and 10-K (Feb and Nov)

The five-year financials below come from 10-K XBRL data in millions of dollars. Lennar’s consolidated income statement has no operating income line, so those two columns are marked not reported, and the debt ratio is total liabilities divided by equity.

Fiscal year-end	Revenue	Operating income	Net income	Operating margin	Net margin	Debt ratio	ROE
Nov 2021	27,130.7	Not reported	4,430.1	Not reported	16.3%	58.7%	21.3%
Nov 2022	33,671.0	Not reported	4,614.1	Not reported	13.7%	57.0%	19.1%
Nov 2023	34,233.4	Not reported	3,938.5	Not reported	11.5%	47.1%	14.8%
Nov 2024	35,441.5	Not reported	3,932.5	Not reported	11.1%	47.7%	14.1%
Nov 2025	34,186.9	Not reported	2,078.2	Not reported	6.1%	56.0%	9.5%

Revenue stayed near $34 billion for four years while net income fell by more than half. The debt ratio rose again in FY2025 because the spin-off and buybacks cut equity by more than $5.9 billion while new borrowing came in.

The Five Biggest Daily Moves in Lennar Shares

Date	Move	Close ($)	Company filings within a day	Peer average (DHI, PHM, NVR, TOL, KBH)
2023-12-14	+6.6%	140.52 to 149.86	Q4 FY2023 results (8-K)	+6.9%
2024-03-14	-7.6%	160.21 to 147.98	Q1 FY2024 results (8-K, prior evening)	-3.6%
2024-07-11	+6.9%	141.06 to 150.85	None	+7.4%
2025-07-22	+8.3%	109.43 to 118.53	None	+10.6%
2026-01-09	+8.9%	109.55 to 119.25	None	+6.4%

Only one of the five days stands apart from the group. On March 14, 2024, the session after Q1 FY2024 results, Lennar fell -7.6% against a -3.6% peer average, and that quarter’s incentive rate was 10.9%, back in double digits after 7.5% in Q3 FY2023. On the other four days the five peers moved the same way by similar amounts.

Homebuilding and Financial Services Segments

Homebuilding produced 95.9% of Q2 FY2026 revenue of $7.94 billion. The homebuilding figure below is total revenue minus the other three segments.

Segment	Q2 revenue ($m)	Share	Q2 operating earnings ($m)	Year-earlier operating earnings ($m)
Homebuilding	7,616.3	95.9%	489.4	728.2
Financial Services	236.9	3.0%	101.1	157.3
Multifamily	63.6	0.8%	18.3	-14.8
Lennar Other	23.1	0.3%	-38.9	-52.9

Homebuilding operating earnings were -32.8% from a year earlier. Deliveries rose +1.9% to 20,519 homes, but the average sales price fell from $389,000 to $371,000 (-4.6%), and Lennar attributed the lower gross margin to lower revenue per square foot and higher land costs.
Financial Services earned $101 million against $157 million, which Lennar put down to lower profit per locked loan. Multifamily revenue fell from $230 million to $64 million, yet $28 million of equity earnings turned the segment to an operating profit, and the $39 million Lennar Other loss includes a $23 million mark-to-market loss on technology investments.

Region	Q2 deliveries (homes)	Average sales price	Incentives
East	4,761	$369,000	13.6%
Central	4,606	$361,000	10.6%
South Central	6,286	$233,000	19.1%
West	4,863	$567,000	10.3%

Filing note (Q2 FY2026 10-Q, filed June 29, 2026): Lennar measures incentives per home delivered, excluding unconsolidated entities, against the sales price before incentives. The Q2 figure was $55,200 per home (a year earlier $59,500), or 12.9% (a year earlier 13.3%).
South Central, where the average home sold for $233,000, spent almost a fifth of the price on incentives, and it also delivered the most homes of the four regions.

Sales Incentives and Home Sales Gross Margin

Lennar sales incentives at 12.9% of gross price and home sales gross margin at 15.6%

Incentives fell for a second straight quarter, from 14.6% in Q4 FY2025 to 14.1% in Q1 FY2026 and 12.9% in Q2. The Q4 figure is my back-calculation from the annual and nine-month tables, 0.1 point above the 14.5% management gave on the call.
Company disclosure (Q2 FY2026 8-K earnings release, June 11, 2026): Stuart Miller said the gap between current incentives of 12.9% and normalized levels of 4% to 6% “is narrowing for the first time in three years.” The same release said the $371,000 average price reflected about 12.9% in incentives “along with base price adjustments necessary to sustain volume.”
Gross margin moved far less. Incentives came down 1.2 points in Q2 while home sales gross margin rose 0.4 points, from 15.2% to 15.6%, and the Q3 guide is about 16%.
Own sensitivity calculation (10-Q incentive table and 8-K release, Q2 FY2026): $55,200 per home times 20,446 consolidated deliveries is $1.13 billion of incentives. Divided by gross sales of $8.72 billion, the basis Lennar uses, that is 12.9%; divided by net revenue it would be 14.9%. If incentives fell to 5% on the same gross sales, quarterly revenue would rise by $692 million, 1.68 times Q2 pretax income of $413 million.
Lennar is cutting base prices at the same time, so part of any incentive reduction can come back out through lower list prices. That makes the $692 million a ceiling rather than a forecast.

Is Lennar Cheap at 0.89 Times Book Value?

Lennar trailing GAAP P/E of 12.5x and P/B of 0.89x over 60 months

Rebuilt month by month, the trailing P/E sits near the top of its five-year range while P/B sits at the bottom. Dividend yields in the year-end table use the per-share dividends stated in the 10-K: $1.00 in 2021, $1.50 in 2022 and 2023, and $2.00 in 2024 and 2025.

Fiscal year-end	Year-end price	P/E	P/B	Dividend yield	FCF ($m)
Nov 2021	$100.62	7.1x	1.48x	0.99%	2,467.6
Nov 2022	$80.58	5.1x	0.97x	1.86%	3,208.5
Nov 2023	$121.71	8.9x	1.30x	1.23%	5,079.9
Nov 2024	$163.39	11.4x	1.59x	1.22%	2,231.9
Nov 2025	$129.28	16.2x	1.52x	1.55%	28.2

The bands are my own calculation from 60 month-end closes, 8-K diluted EPS and 10-Q equity. For each month from September 2021 to August 2026 I used diluted EPS for the last four quarters released by that month-end and book value per share at the latest quarter-end, filling gaps in share counts with XBRL weighted diluted shares.
The trailing GAAP P/E of 12.46x (TTM EPS of $6.39) is higher than 83% of those months, against an 8.76x median and a 4.68x low in June 2022. P/B of 0.89x is the lowest of the 60 months. The previous low was 0.92x at the end of July 2026, the median is 1.28x and the high was 1.85x in September 2024.
One market data aggregator shows the same 12.46x and 0.89x with five-year medians of 8.95x and 1.24x. Another shows a 16.32x P/E because its denominator is FY2025 EPS of $7.98, before the last two quarters of lower earnings.
The two multiples sit at opposite ends because of their denominators. EPS fell as margins came down while book value kept growing, so at a similar price P/E rose and P/B fell. ROE of 7.4% is half the 15% cost of equity assumed on page 7 of the investor presentation, and a price below book is consistent with that return.

What the June 2026 Investor Presentation Claims

Lennar investor presentation page 4: owned homesites down from 72% to 2%

Lennar posted a 27-page investor presentation to its IR site on June 12, and the Q2 release described it as a current view of the company’s transformation, asset-light operating model, technology platform and path to margin recovery. The deck is organized around eight themes, and its concluding page says now is a good time to invest in Lennar. Each claim below is set against the 10-K, the 10-Q or the earnings release.
Page 4 says owned homesites fell from 174,000 (72% of the total) in 2018 to 11,000 (2%) in Q1 2026, controlled homesites rose from 69,000 to 486,000, and owned inventory went from $16.6 billion to $10.5 billion. The land figures match the filings: the Q2 release says less than 5% of Lennar’s land is on its balance sheet and owned homebuilding inventory declined from $11.4 billion a year ago to $10.9 billion. The last bullet on the same page does not match. It says strong free cash flow is used for shareholder returns, while the FY2025 10-K shows free cash flow of $28 million against $2.33 billion of buybacks and dividends.
Page 6 says deliveries grew about 80% from 2018 to 2025 while owned inventory plus deposits held near $17.3 billion, and that inventory would be about twice as large without the asset-light shift. It puts the capital land banks would spend to buy the controlled homesites once developed at an estimated $18.5 billion as of February 28, 2026. That $18.5 billion has not disappeared; third parties hold it. Page 7 calculates a weighted average cost of capital of about 13% for the old structure, with 75% equity and 25% debt, and about 11% for the asset-light structure, with 40% equity, 8% debt and 52% land bank capital. Both calculations assume a 15% cost of equity and a 10% cost for land bank capital, and the same page lists lower land banking costs as an opportunity ahead. The Q2 release cited higher land costs as one reason gross margin fell.

Lennar investor presentation page 8: 50% option walk-away equals 17% of equity

Page 8 runs a stress test in which Lennar walks away from half of its options. Writing off 50% of deposits, option maintenance fees and termination fees would equal 17% of Q4 2025 equity, compared with cumulative impairments in 2006 to 2009 equal to 89% of Q4 2005 equity. Seventeen percent of FY2025 year-end equity of $21.96 billion is about $3.73 billion, and half of the $7.1 billion of deposits and pre-acquisition costs management cited on the Q2 call is $3.55 billion, so the slide’s scale checks out. Write-offs outside the stress case are already rising: the FY2025 cash flow statement shows $246 million, 1.96 times the FY2023 figure. Page 8 also says the downside narrows further as option fee rates compress and walk-away rights are standardized across partners.
Page 9 says Lennar has repurchased $9.6 billion of stock and retired $6.9 billion of senior notes since the start of 2018, using $16.5 billion of freed-up cash. In the 10-K, FY2023 to FY2025 buybacks add up to $5.25 billion, more than half of that total. In FY2025 alone, Lennar drew a $1.71 billion term loan and issued $700 million of notes while redeeming $500 million, so new borrowing that year was 4.8 times the debt it repaid.

Lennar investor presentation page 11: 14.4% versus 21.0% ROE in one example community

Page 11 compares one example community, 178 Florida homesites bought for $19.1 million. Owning the land gives a 15.0% pretax margin and a 0.96x asset turn, for a 14.4% return on equity; the asset-light model gives a 12.3% pretax margin and a 1.72x turn, for 21.0%. Peak capital falls from $31.8 million to $10.7 million, freeing $21.1 million. Even in the example the asset-light pretax margin is 2.7 points lower, and the higher ROE comes from faster turns. Lennar’s actual Q2 pretax margin was 5.2% of revenue, well below both examples, and trailing ROE of 7.4% is below even the 14.4% owned-land case. The slide’s footnote calls it an illustrative deal not indicative of performance in all scenarios.
Page 18 says year-over-year cycle time fell from 137 to 122 days and inventory turns improved from 1.7 to 2.5 between Q1 2025 and Q1 2026. The Q2 release reports a record low cycle time of 121 days and construction costs down 2% sequentially and 13% over the last several years, so this page lines up with the filing. The same page shows the homesite portion of revenue being redeployed into land deposits, which is the $1.55 billion increase in option deposits in the FY2025 cash flow statement.
Pages 20 and 22 describe automated land evaluation, plan selection, bidding, AI-assisted sales and real-time financial reporting, and argue that “AI will not build America’s homes. Homebuilders will.” In the filings, technology shows up as mark-to-market results on investments in the Lennar Other segment: a first-half FY2026 loss of $8 million against $92 million a year earlier, but a $23 million loss in Q2 alone.

Lennar investor presentation page 24: forward P/E of 14.5x in 2026 against a 10.2x average

Page 24 shows average forward P/E from 2015 to May 2026 of 10.2x for Lennar, 15.1x for NVR and 19.0x for the S&P 500, under the line “Our company has fundamentally transformed, but our P/E has not.” The same chart shows Lennar’s 2026 forward P/E at 14.5x, the highest of the twelve years on the page. The stock is -43.2% over one year, so a rising forward P/E means earnings estimates fell faster than the price, and the average FY2027 EPS estimate went from $7.39 ninety days ago to $6.41 (-13.3%).
Page 26 lists four pillars and says under growth that Lennar has been and will continue to grow at above-average rates. The Q2 release, published the day before the deck, moderated the FY2026 delivery target to about 82,000 to 83,000 homes, level with or below the 83,000 shown for 2025 on page 13.
The land percentages, cycle time, construction costs and the size of the stress case hold up against the filings. The free cash flow bullet, the unchanged P/E line and the growth pillar do not, and the 21.0% ROE describes a single example community rather than the company.

Operating Cash Flow and Shareholder Returns

Lennar operating cash flow of $0.22 billion against $2.33 billion of FY2025 buybacks and dividends

Filing note (FY2025 10-K cash flow statement, filed January 28, 2026): Operating cash flow was $217 million, while buybacks of $1.81 billion and dividends of $521 million added up to $2.33 billion, 10.7 times operating cash flow. The largest drag on operating cash flow was the increase in option deposits and pre-acquisition costs. Financing brought in a $1.71 billion term loan and $700 million of notes and repaid $500 million of notes, $416 million of cash went out with Millrose, and cash fell $1.16 billion over the year.

Fiscal year	Operating cash flow ($m)	Buybacks ($m)	Dividends ($m)	Increase in option deposits ($m)	Deposit write-offs ($m)
FY2023	5,179.7	1,182.7	430.6	295.8	125.3
FY2024	2,403.4	2,256.5	548.8	1,631.8	143.3
FY2025	216.8	1,808.4	521.0	1,549.7	246.2

Under the asset-light model, land purchases leave the balance sheet but deposits still use cash. The deposit increases of FY2024 and FY2025 total $3.18 billion, more than the $2.62 billion of operating cash flow over the same two years. In FY2025, new borrowing of $2.41 billion exceeded shareholder returns, and the Class A shares retired in the Millrose exchange were recorded separately as $1.0 billion of non-cash treasury stock.
Buybacks continued in FY2026. Lennar repurchased 5 million shares for $447 million in Q2 at an average of $89.35, which is 0.996 times May 31 book value per share of $89.75. At $79.60 the stock is 10.9% below that average price.

Land Option Deposits and Walk-Away Costs

On the Q2 earnings call (June 12) management gave 11,000 owned and 484,000 controlled homesites and $7.1 billion of deposits and pre-acquisition costs. Together that is 495,000 homesites, about 6.0 years at the 82,500-home midpoint of FY2026 delivery guidance, and the deposits equal 32.8% of May 31 equity of $21.62 billion.
Those deposits become expenses if Lennar walks away. The Q2 release lists the forfeiture of deposits and pre-acquisition costs on options Lennar decides not to exercise as a risk, next to the risk of failing to execute its land light strategy, and FY2025 also carried a $156 million loss on the Millrose exchange. With six years of controlled land and a lower delivery target, which options to give up if sales slow affects both margins and equity.

Number	Value	Why it matters
Sales incentives, Q2 FY2026 (normal 4% to 6%)	12.9%	Down for the first time in three years and still more than twice the normal range
Home sales gross margin (Q2 FY2022: 29.5%)	15.6%	Half the peak; Lennar cited sales prices and land costs
FY2025 buybacks and dividends / operating cash flow	10.7x	New borrowing of $2.41 billion and lower cash funded the returns
Option deposits and pre-acquisition costs / equity	32.8%	Becomes an expense on walk-away; write-offs rose 1.96 times in two years
P/B (60-month low; P/E above 83% of months)	0.89x	Cheapest on book value while earnings-based multiples sit high

Six Bull Case Arguments Checked Against the Filings

The case for buying Lennar starts with the asset-light transformation and ends with a multiple that should rerate. I split the presentation’s argument and common investor reasoning into six links and checked each against the 10-K, 10-Q and earnings release.

#	The argument	Evidence	Verdict
1	Lennar is now an asset-light homebuilder	Owned homesites 2%; owned inventory $16.6 billion to $10.5 billion; release says under 5% of land on balance sheet	Holds
2	Asset-light lifts return on equity	Example community 21.0%; trailing ROE 7.4%; FY2021 ROE 21.3%	Overstated
3	Incentives have turned so margins are recovering	Incentives 14.6%, 14.1%, 12.9%; gross margin guide about 16%	Conditional
4	Strong free cash flow funds buybacks	FY2025 free cash flow $28 million; returns $2.33 billion; new borrowing $2.41 billion	Wrong
5	Options cap the downside in a housing slump	50% walk-away equals 17% of equity against 89% in the financial crisis; write-offs up 1.96 times	Partly holds
6	The P/E has not caught up with the transformation	2026 forward P/E of 14.5x is the deck’s twelve-year high; FY2027 EPS estimate -13.3% in 90 days	Overstated

Holds means the filings confirm it, Conditional means it depends on a number not yet reported, Overstated means the direction is right but the size is not, and Wrong means the filings say the opposite. One link holds, one partly holds, one is conditional, two are overstated and one is wrong. If incentives keep falling but base prices fall with them, link 1 stays true while gross margin stalls near 16%, and links 2 and 6 rest on that lower margin.

Q3 Guidance and Analyst Estimate Revisions

Lennar Q3 EPS estimate cut from $1.72 to $1.30 and price target ranges

For Q3 FY2026 Lennar guided to 21,000 to 22,000 new orders, 20,500 to 21,500 deliveries, an average sales price of $375,000 to $380,000, home sales gross margin of about 16%, SG&A of 8.8% to 9.0% of home sales and Financial Services operating earnings of $95 million to $100 million. It credited higher volume, moderating incentives and cost discipline for the margin improvement.
The price guide is above Q2’s $371,000. If incentives shrink without further base price cuts the average price should rise, so the two guides are consistent, and whether that price shows up in Q3 is the first thing to check. On the Q2 earnings call management put Q3 EPS at $1.20 to $1.40.
One sell-side research aggregator shows 50 analysts at 23 Buy, 18 Hold and 9 Sell, with a 12-month target of $102 on average in a range of $88 to $125. A second shows 13 analysts averaging $86.36, between $67 and $121.67. Lennar beat the average EPS estimate in two of the last eight quarters.

Date	Broker	Rating	Target ($)
2026-09-11	Wells Fargo	Reiterated	85 to 80
2026-08-06	Truist	Reiterated	80
2026-07-09	Argus Research	Reiterated	175 to 108

Both brokers that changed targets in the past 90 days cut them. Estimates kept falling after the Q2 release: the Q3 EPS average went from $1.72 ninety days ago to $1.30 (-24.4%), FY2026 from $5.85 to $5.51 and FY2027 from $7.39 to $6.41, and eleven analysts cut Q3 estimates in the last 30 days. The $1.30 average sits at the midpoint of management’s range.

Berkshire Hathaway and the Miller Family Vote

Holder	Reported stake	Filed	Form
BlackRock	7.6%	2026-01-21	13G/A
Vanguard Capital Management	6.94%	2026-04-30	13G
Warren E. Buffett (Berkshire Hathaway)	6.2%	2026-08-14	13G
Greenhaven Associates	5.08%	2026-05-04	13G
Eagle Capital Management	5.03%	2026-05-15	13G

Berkshire Hathaway’s 13F information tables show Class A holdings rising from 10,099,642 shares at March 31 to 13,111,741 at June 30 (+29.8%), and Class B from 237,703 to 298,117 shares. The June Class A position equals 6.23% of Class A shares outstanding at May 31, which matches the 6.2% in the 13G, and at the prices in this article both classes are worth about $1.07 billion. The 13F does not show purchase prices.
Control sits with the Miller family. The FY2025 10-K says Stuart Miller directly owned or controlled through family-owned entities Class A and Class B shares representing approximately 42% of the voting power. Class B carries ten votes per share, so Class B shares, 12.6% of all shares, hold 59.1% of the votes.
That matters for how the April 8 annual meeting vote reads. A shareholder proposal for one vote per share failed with 36.8% of votes cast in favor, per the 8-K filed April 13. If the Miller family voted its full 42% against, about two thirds of the remaining votes cast supported the proposal.

How Lennar Compares With D.R. Horton and NVR

FY2025 revenue index and 16.4% trailing gross margin for Lennar against five homebuilders

The peers are D.R. Horton, PulteGroup, NVR, Toll Brothers and KB Home, the large U.S.-listed homebuilders. Homebuilding is cyclical, with margins that swing between peak and trough, so I compared cycle margins, capital efficiency and multiple history.

Company	Market cap ($bn)	Trailing gross margin	Trailing operating margin	Trailing ROE	P/B	Forward P/E
Lennar	19.1	16.4%	5.3%	7.4%	0.89x	12.4x
D.R. Horton	38.6	21.3%	13.0%	12.6%	1.63x	11.7x
PulteGroup	22.5	25.6%	15.7%	14.9%	1.71x	10.5x
NVR	16.4	21.8%	13.9%	31.5%	4.87x	15.0x
Toll Brothers	12.4	24.8%	14.6%	14.4%	1.46x	9.6x
KB Home	3.0	17.7%	3.6%	7.0%	0.79x	11.3x

This table uses aggregator definitions. Lennar’s 16.4% trailing gross margin includes more than homebuilding and differs from the 15.6% Q2 home sales gross margin in the release, and the 12.4x forward P/E uses next-twelve-month estimates, while the 12.46x in the band section is trailing GAAP.
D.R. Horton is about twice Lennar’s market cap, and Lennar is smaller than PulteGroup and larger than NVR. Lennar has the lowest gross margin of the six, 9.2 points below PulteGroup, and its forward P/E is higher than Toll Brothers, PulteGroup and D.R. Horton, so it screens cheap on book value and expensive on earnings.

Lennar 7.4% ROE and 0.89x P/B against five homebuilders

Company	Net debt / equity	FY2025 revenue index (FY2022 = 100)	Dividend yield
Lennar	18.1%	101.5	2.51%
D.R. Horton	21.4%	102.3	1.31%
PulteGroup	7.4%	108.2	0.88%
NVR	-2.8%	98.1	None
Toll Brothers	21.7%	106.7	0.77%
KB Home	47.4%	90.3	2.09%

Net debt to equity subtracts cash from debt at each company’s latest quarter-end; for Lennar that is $6.01 billion of debt less $2.09 billion of cash at May 31. NVR, which page 24 of Lennar’s deck calls the best asset-light competitor, gets its 31.5% ROE from a 21.8% gross margin and a small $3.39 billion equity base. Lennar cut owned land to 2% but its gross margin is 5.4 points below NVR’s, and its ROE is level with KB Home. Its 2.51% dividend yield is the highest of the six because the $2.00 dividend stayed flat while the stock fell -43.2% over one year.
The number of competitors and market share cannot be verified. Lennar does not report a national share, and its deliveries and the Census Bureau’s new home sales count different things, so one cannot be divided by the other.

Mortgage Rates and New Home Inventory

30-year mortgage rate at 6.76% and 9.6 months of new home supply

The 30-year fixed mortgage rate is 6.76% (FRED MORTGAGE30US, September), against 6.30% a year earlier and 3.01% five years earlier. New home supply is 9.6 months at the current sales pace (MSACSR, July), up from 9.2 months a year earlier and 5.8 months five years earlier. July new home sales ran at a 607,000 annual rate, housing starts at 1,239,000 and permits at 1,433,000.
New home sales were -6.3% from a year earlier and -4.0% a year on average over five years. Starts were -13.5% while permits were +2.4%, and over five years starts fell -5.0% a year from a 1.6 million pace. Builders cut starts while inventory stacked up, the same backdrop in which Lennar is using incentives to hold volume.

US median new home price of $394,000 and Lennar average price of $371,000

The US median new home price was $393,800 in July, -0.9% from a year earlier, while Lennar’s Q2 average sales price was -4.6%. One is a median and the other an average net of incentives, so the comparison is about direction rather than level.
Outside view (National Association of Home Builders and National Association of Realtors estimates, cited on page 13 of Lennar’s presentation): The US needs about 1.5 million homes a year and has a cumulative shortage of about 5 million, which would take more than ten years to close.
July starts ran more than 260,000 below that annual need. The 5 million shortage is an industry estimate that official statistics do not confirm, and with 9.6 months of new home supply on the market the shortfall may be less about the number of homes than about homes buyers can afford at current rates.

Conditions That Would Move LEN Stock

Scenario	Condition	Indicator to check	When · Source
Upside	Incentives below 12%	Incentives as a share of gross price	Q3 results in mid-September · 10-Q
Downside	Incentives back at 13% or higher	Incentives as a share of gross price	Q3 results · 10-Q
Upside	Home sales gross margin at the 16% guide or better	Gross margin on home sales	Q3 results · 8-K release
Downside	Average sales price below $370,000	Average price of homes delivered	Q3 results · 8-K release
Downside	Deposit write-offs rise and buybacks rely on borrowing	Cash flow statement	FY2026 10-K in late January
Upside	30-year mortgage rate below 6%	FRED MORTGAGE30US	Weekly

If incentives fall but the average sales price drops below $370,000, the incentive has moved into the base price, and the 16% gross margin guide would have to come from volume and construction costs alone.

Incentive Cuts Versus Base Price Cuts

Lennar said its Q2 average price reflected base price adjustments along with 12.9% in incentives, but it did not say how much base prices came down. The 10-Q table shows only incentives per home, so if base prices fell in the same quarter that incentives did, the table improves without Lennar collecting more per home.
Own calculation (8-K average price and 10-Q incentives per home): Adding incentives per home to the average sales price gives a pre-incentive price of $448,500 a year earlier and $426,200 in Q2, a drop of $22,300. Incentives per home fell $4,300 over the same period.
The pre-incentive price fell more than five times as much as incentives did. Recomputing that price by region in the Q3 10-Q would show whether incentive cuts are turning into base price cuts, so shouldn’t the first check be the pre-incentive price in South Central, where incentives are 19.1%?

lululemon (LULU) Stock Analysis: Margin Decline and Tariffs: compare how a consumer brand and a homebuilder each explained a gross margin decline to pricing and costs.
Shopify (SHOP) Stock Analysis: Net Income vs. Equity Gains: see another company whose reported earnings swing with mark-to-market results on its investments, as Lennar’s do in the Lennar Other segment.

Methodology and Sources

Prices are $79.60 for Class A and $78.27 for Class B. Share counts are 210,506,003 Class A and 30,389,139 Class B shares, issued shares less treasury shares at May 31, 2026, and book value per share divides equity of $21.62 billion by the two combined.
Company figures come from the Q2 FY2026 Form 10-Q, the FY2025 Form 10-K, the 8-K with 2026 annual meeting results, Lennar’s 8-K earnings releases and the June 2026 investor presentation. Macro data come from FRED series MORTGAGE30US, MSACSR, HSN1F, HOUST, PERMIT and MSPNHSUS, and peer and consensus figures from market data and sell-side research aggregators.
I parsed all 34 quarterly earnings releases from Q1 FY2018 to Q2 FY2026 in code and reconciled them to annual totals for eight fiscal years. Incentive rates come from the sales incentive tables in 16 quarterly and annual filings, with Q4 derived from the annual and nine-month tables; Q4 FY2022 and Q4 FY2023 are blank because no nine-month table was available. The bands use 60 month-end closes from September 2021 to August 2026 plus the latest price. Call statements quote management; call figures are used only where the release and 10-Q do not report them.

Plug Power (PLUG) Stock Analysis: GAAP vs Operating Loss

J. Equity. Research — Tue, 15 Sep 2026 04:36:13 GMT

Plug Power (NASDAQ: PLUG) is a vertically integrated hydrogen company that sells fuel cells for warehouse forklifts, PEM electrolyzers for industrial hydrogen projects, and hydrogen fuel from its own plants in Georgia, Tennessee and Louisiana. At a $2.10 share price the market capitalization is about $2.93 billion. This PLUG stock analysis works through the gap between operating loss and net loss in the second quarter of 2026, the convertible notes and warrants that created that gap, the revenue mix underneath a 2.5% headline growth rate, the cost of electricity that sets the floor under hydrogen margins, peer comparisons against Bloom Energy, Ballard Power, FuelCell Energy, Air Products and Linde, and the valuation bands that two different multiples disagree about.

Google Finance quote card for Plug Power (PLUG:NASDAQ)

Here is the part that is easy to miss. Plug cut its operating loss from $176.95 million to $64.11 million in a year, a decline of 63.8%. Net loss attributable to shareholders fell only 17.1%, from $227.10 million to $188.21 million. Of the $112.84 million the company saved at the operating line, $73.95 million never reached the bottom line. Two line items explain almost all of it, and both of them got worse because the stock went up.

Plug Power investor presentation cover, April 2026: the Georgia hydrogen plant

What the April 2026 Investor Deck Is Selling

Plug Power posted an 18-page investor presentation on April 8, 2026, and followed it with a 15-page annual meeting deck on June 11. Read side by side, the two documents show what the company wants to sell and, more usefully, which sentence it changed in the two months between them.

Investor presentation p17: three businesses and the 2026 to 2028 targets

Company disclosure (investor presentation p5 and p17, April 2026): Plug frames itself as three businesses, material handling fuel cells, electrolyzers and hydrogen plants, and hangs one target on each of the next three years. “Exiting 2025: Gross Margin Positive” carries a checkmark. Then “Exiting 2026: EBITDAS Positive,” “Exiting 2027: Operating Income Positive,” and “Exiting 2028: Overall Profitability.”
The same slide appears on page 4 of the June deck with one edit. April’s “Exiting 2025: Gross Margin Positive” became “YE 2025: Gross Margin Neutral.” Positive was downgraded to neutral.
The June wording is the more honest one. Q4 2025 gross margin was +2.4%, but Q1 2026 came in at minus 13.2% and Q2 at minus 0.9%. April turned a single positive quarter into a checked box; June looked at the two quarters that followed and softened the claim. A company that visibly corrects its own slide is, if anything, a point in favor of reading the rest of the deck seriously.
One more detail on the cover: it reads “Copyright 2023, Plug Power Inc.” A deck posted in April 2026 carrying a three-year-old copyright line is a template that was reused rather than rebuilt. That matters for the electricity slide below.

Three Numbers the Deck Uses for Scale

Plug measures itself with three figures. Lining up the values from the April deck, the June deck and the August earnings release shows which business is actually moving.

Metric	April investor deck	June annual meeting deck	August earnings release
GenDrive units installed	72,000+	74,000+	76,000+
Sites	275	280+	280+
Cumulative operating hours	1 billion+	not shown	not shown
Electrolyzers deployed	320 MW, 70+ units, 6 continents	not shown	not shown
Own hydrogen capacity	Georgia 15, Louisiana 15, Tennessee 10 TPD	same	about 40 tons per day

Company disclosure (investor presentation p8, p10 and p13, April 2026): Material handling is described as “72,000+ installed and 275 locations, 1 billion+ operational hours, 45+ tons hydrogen dispensed everyday, 95+ MW of electricity abated from the grid.” Electrolyzers are “320 MW across more than 70 units on 6 continents.” Hydrogen plants are “Georgia 15TPD, Louisiana 15TPD, Tennessee 10TPD,” 40 tons a day combined.
The installed base grew by 4,000 units in four months, which lines up with 1,666 deployments in Q2 alone. That is the same direction as fuel cell system revenue, up 105.2% in the quarter. Of the three businesses, material handling is the only one whose deck numbers and income statement numbers move at the same speed.
Electrolyzers run the other way. Cumulative deployment sits at 320 MW in both decks, and Q2 electrolyzer revenue was $13.22 million. Page 11 states “2.5GW+ of installed electrolyzer stack annualized capacity.” A factory able to build 2.5 GW a year has, over the company’s entire history, shipped 320 MW, or 13% of one year’s output. The company’s own figures say the electrolyzer bottleneck is not on the manufacturing side.
The hydrogen numbers carry a different catch. Page 8 says Plug dispenses more than 45 tons a day; page 13 puts its own capacity at 40 tons. The June deck adds a footnote to that 40: “‘live capacity’ refers to nameplate or designed capacity and not actual utilization.” If actual output runs below nameplate, the gap to 45 tons widens, and every ton of that gap is bought from someone else. The sellers are the industrial gas majors, Linde and Air Products. That is roughly half the explanation for a fuel segment gross margin of minus 48.8%. When a company still buys more hydrogen than it makes, the market sets the selling price and the supplier sets the cost.

Testing the Slide That Says 2025 Revenue Covered Cash Burn

The strongest claim in the deck is on page 16.

Investor presentation p16: the company's own Revenue vs Total Cash Burn table, 2021 to 2025

Company disclosure (investor presentation p16, April 2026): “Self-Sustainability: 2025 revenue exceeded the year’s operational and capital cash requirements, marking a transition toward self-sustainability.” Beside it sits a table titled “Revenue vs. Total Cash Burn Coverage (2021-2025)”: 2021 revenue $502 million against burn $551 million (91%), 2022 $701 million against $1,293 million (54%), 2023 $891 million against $1,803 million (49%), 2024 $629 million against $1,063 million (59%), 2025 $710 million against $661 million (107%).
The first question is what “Total Cash Burn” contains.
Own calculation (XBRL annual cash flow statements, CIK 1093691, 2021 to 2025): Operating cash outflow plus purchases of property, plant and equipment comes to $530 million for 2021, $1,265 million for 2022, $1,772 million for 2023, $1,016 million for 2024 and $647 million for 2025. The deck’s $551, $1,293, $1,803, $1,063 and $661 million run $14 million to $31 million higher each year, which looks like finance lease principal added on top. The table itself reconciles to the filings.
The problem is the comparison. Revenue is not cash. While $710 million of revenue came in during 2025, operating activities consumed $536 million and capital expenditure took another $111 million. Even after collecting every dollar of sales, the company was $647 million short. “Revenue exceeded cash requirements” places gross revenue next to net cash outflow, and those two figures are not in the same units.
What the 107% coverage ratio does say is this: through 2024, cash burn exceeded revenue, and 2025 was the first year burn fell below it. That is true and it matters, because burn dropped from $1,063 million to $661 million, a cut of 38%. It is not the place for the word self-sustainability. Self-sustainability arrives when operating cash flow turns positive, and in 2025 that figure was minus $536 million.
Extending the table into the first half of 2026 keeps the direction intact. Operating outflow of $244.11 million plus capital expenditure of $8.71 million is $252.82 million, down 33% from $376.45 million a year earlier. That annualizes near $500 million. If 2025 revenue of $710 million grows 15% to 16% as guided, revenue reaches about $820 million and the company’s coverage ratio climbs into the 160s. The higher that number goes, the wider the distance between the company’s yardstick, revenue over burn, and the one that actually matters, positive operating cash flow.

The Electricity Slide Cuts Both Ways for Plug

Page 7 is the clearest statement of the sales pitch.

Investor presentation p7: rising electricity prices drawn as a sales point

Company disclosure (investor presentation p7, April 2026): The title is “Fuel Cells Decrease Your Grid Dependence.” The slide says 25% to 30% of electricity use at distribution centers goes to charging lead-acid batteries, that opportunity charging of lithium-ion batteries drives a “significant increase in electricity charges during peak demand time,” and it charts average US retail electricity from $0.063 per kWh in 1990 to $0.112 at “Present.” The takeaway line reads “Significant savings over time as average grid price for electricity increases.”
The logic is simple. The more expensive electricity gets, the better a hydrogen forklift looks against a battery forklift. That is correct. The complication is that Plug is not a company that sells electricity. It is a company that buys electricity to make hydrogen.
Official statistics (FRED APU000072610, August 2026): The US city-average retail electricity price stood at $0.196 per kWh in August 2026. The $0.112 the deck labels “Present” is not a 2026 figure on any basis. The cover’s 2023 copyright shows up again here; this slide was built years ago and reused as is.
If electricity has risen further than the deck shows, that is a stronger sales point for forklift customers. The same rise is a cost line at the Georgia, Tennessee and Louisiana plants. The industrial electric power producer price index up 14.4% in the three months to August 2026, covered in the industry section below, is that bill arriving. The deck shows only the front of the coin. A variable that is a tailwind for one of three businesses and a headwind for the other two is drawn only as a tailwind.
That is less a fault of the company than a property of investor decks, which are selling documents. The reader’s job is to trace where the single variable “electricity price” lands on the income statement and with what sign: positive for fuel cell sales, negative for fuel cost of goods, negative for the project economics of electrolyzer customers.

Quantum Leap Savings Target Already Met on the Opex Run Rate

Page 15 lists the path to profitability in nine lines, beginning with “Project Quantum Leap driving $150-$200M in cost savings,” then vertical integration, pricing increases across material handling, fixed-cost leverage from equipment sales, supply chain cost-downs, a service cost roadmap, inventory and asset monetization, a sustainable operating cost profile, and consolidation of operating sites.

Annual meeting presentation p5, June 2026: Project Quantum Leap results to date

Company disclosure (annual meeting presentation p5, June 2026): Under “To Date,” the Quantum Leap slide lists four items: “Positive gross profit in Q4 2025,” “Approximately 50% reduction in cash usage versus 2024,” “Significant margin improvement across equipment, service, and hydrogen businesses,” and “Positive EBITDAS target in Q4 2026.”
Start with the savings figure.
Own calculation (Form 10-Q statements of operations, first half 2025 vs first half 2026): Operating expenses fell from $228.08 million to $150.32 million, a reduction of $77.76 million, or $156 million annualized. Q2 alone dropped from $123.48 million to $62.43 million, $61.05 million lower and $244 million annualized. Q2 2026 operating expenses include a $39.70 million recovery of previously impaired assets, so the underlying level is higher than the print. Management said on the call that stripping such items out leaves a run rate of roughly $75 million a quarter. Moving from the first-half 2025 average of $114.04 million to $75 million is $39.04 million per quarter, or $156 million a year.
By that arithmetic the $150 million to $200 million target has just cleared its lower bound. A number the April deck set as a goal, the August results delivered. Part of the saving is depreciation that stopped growing because capital expenditure was cut to a ninth, and the rest is headcount and site consolidation. As the capex section notes, the bill for that first part has not arrived yet.
“Approximately 50% reduction in cash usage versus 2024” is true or not depending on the base year. On the deck’s own page 16 table, 2024 burn of $1,063 million fell to $661 million in 2025, a 38% decline. Getting to 50% requires comparing the first-half 2026 run rate of roughly $500 million against 2024, which produces 52%. The 50% in the June deck is a 2026 run rate set against 2024, not a 2025 result. It is not wrong, but under a heading that says “To Date” it skips a year.
Page 9 deserves one line. “Global installed electrolyzer capacity is forecasted to reach approximately 300 GW by 2030,” “Green hydrogen share: 1.6% of global hydrogen capacity, up from <0.1% in 2021,” and “Its cost is now only 1.5-2x higher than fossil-based hydrogen.” A 1.6% share and a cost still 1.5 to 2 times fossil hydrogen are the company’s own numbers. Put the industry section’s gas price, down 10.6% over seven years, next to industrial power, up 41.4%, and the same deck tells you which direction that 1.5 to 2 times multiple is moving. It is not narrowing.
Reduced to one sentence, five slides say this: the savings target was met, the gross margin promise was kept, and the installed base is growing. Where the deck says self-sustainability, the cash flow statement says minus $536 million, and where the deck draws electricity prices as a tailwind, two of the three businesses feel it as a headwind. That gap is the backdrop for the income statement analysis that follows.

Plug Power Q2 2026 Earnings: Operating Loss vs Net Loss

Above the operating line, the quarter was good. Revenue rose 2.5% to $178.30 million while cost of revenue fell 20.9% from $227.44 million to $179.97 million. Gross loss narrowed from $53.47 million to $1.68 million, which is a gross margin of minus 0.9% against minus 30.7% a year earlier. Operating expenses were cut roughly in half, from $123.48 million to $62.43 million.
Below the operating line, the direction reversed.

Line item	Q2 2026	Note
Operating loss	-$64.11mn	-$176.95mn a year earlier
Interest income	+$2.59mn
Interest expense	-$16.89mn	includes $7.38mn on convertible notes
Other expense, net	-$7.20mn
Change in fair value of convertible notes	-$74.24mn	non-cash
Change in fair value of warrant liabilities	-$29.29mn	non-cash
Extinguishment loss and equity method loss	-$0.77mn
Loss before income taxes	-$189.90mn

The below-the-line items took $125.79 million, and $103.53 million of that sits in the two fair-value rows. Those two rows are 54.5% of the pre-tax loss and 1.61 times the operating loss. The company spent a year taking cost out of the operating line, and two accounting entries erased more than it saved.

Q2 2026 pre-tax loss decomposition: fair-value charges exceed the operating loss

Filing footnote (Q2 2026 Form 10-Q, condensed consolidated statements of operations): The line labeled “Change in fair value of debt” shows $3,408 thousand twice in the published table. Those two figures belong to the Q2 2025 and first-half 2025 columns, not to 2026. The R-file rendering drops empty cells, so the numbers slide left visually. I confirmed the assignment by summing each column against the reported pre-tax loss. Reading it as a 2026 item would push the fair-value total to $106.99 million and break the reconciliation.

What Did Plug Power Disclose in Note 7?

The mechanism is spelled out in the quarterly report. Note 7 carries the Black-Scholes inputs Plug used to value its warrant liability, and the company published both measurement dates side by side.

Input	Dec 31, 2025	Jun 30, 2026
Underlying stock price	$1.97	$2.71
Exercise price	$7.75	$7.75
Volatility	80.00%	104.00%
Expected average term	2.22 years	1.72 years
Fair value per share	$0.28	$0.73
Warrant liability	$52.32mn	$136.25mn

The exercise price is $7.75 against a $2.71 stock. Nobody was going to exercise those warrants at either measurement date. The liability on the balance sheet still went from $52.32 million to $136.25 million in six months, because the stock moved 74 cents and the volatility assumption moved 24 points.
Own calculation (Q2 2026 Form 10-Q, Note 7): Multiplying the disclosed fair value per share of $0.73 by the 185,430,464 warrants outstanding gives $135.36 million against a carrying value of $136.25 million, a difference of 0.7%. The disclosed inputs reproduce the balance.
Note 7 also explains the classification. The $7.75 warrants carry a change-of-control cash election, meaning the holder can require Plug to buy the warrant for its Black-Scholes value in cash if control changes hands. Under ASC 815 that conditional obligation blocks equity classification, so the warrants sit in liabilities and get remeasured every quarter.
Their origin matters too. Plug sold common warrants in a March 2025 registered direct offering, then induced the holder to exercise them in October 2025. The inducement was a fresh tranche: 185,430,464 new warrants struck at $7.75. Plug pulled cash forward and issued the next invoice to do it.

How Much Does a $1 Move in PLUG Stock Add to the Books?

The convertible notes are the bigger of the two. Plug issued $431.3 million of 6.75% convertible senior notes on November 21, 2025, due December 1, 2033, and elected fair value accounting for them.

Warrant and convertible note carrying values at three measurement dates, with the stock price Plug used for each

Date	Convertible notes	Warrant liability	Total	Stock price used
Dec 31, 2025	$431.01mn	$52.32mn	$483.34mn	$1.97
Mar 31, 2026	$502.77mn	$106.96mn	$609.73mn	$2.26
Jun 30, 2026	$578.00mn	$136.25mn	$714.25mn	$2.71

Share-linked liabilities grew $230.91 million in six months. Strip out $1.97 million of discount amortization and $228.95 million of that ran through the income statement as a fair-value loss.
Own calculation (Form 10-Q Notes 7 and 8, shares outstanding as of June 30, 2026): Over the same six months the stock rose 74 cents, from $1.97 to $2.71. Against 1,397,924,047 shares outstanding, that is $1,034.46 million of market value created for shareholders. The accounts recorded $228.95 million of losses over the identical period. Shareholders gained a billion dollars while the company booked $229 million of losses, so 22.1% of the gain came back as an accounting charge. Per dollar of share price, the drag is $309.39 million.
The symmetry is the point. The stock has since fallen to $2.10, down 22.5% from the $2.71 that set the June valuation. If the quarter ends anywhere near there, the same two rows swing to gains. The size depends on the September 30 close, which is not knowable yet, but the sign is not in doubt.
That creates a reading problem for the next print. If Q3 net loss shrinks sharply, the honest first question is whether the business improved or the stock fell. In this company those two things move in opposite directions.
Plug says as much in its own risk language. The earnings release lists among its risk factors “fluctuations in the Company’s operating results due to non-cash changes in the fair value of its convertible debt instruments and warrant liabilities.”

Why PLUG Adjusted EPS of $0.07 Needs a Second Look

Plug published GAAP EPS of -$0.14 alongside adjusted EPS of -$0.07. The reconciliation table is the first image in this article.
Filing footnote (Q2 2026 earnings release, non-GAAP reconciliation): Starting from a GAAP net loss of $188.21 million, Plug adds back impairment of $19.37 million, restructuring and supplier contract modification of $0.18 million, transaction fees related to an investment tax credit of $3.14 million, and a $0.20 million change in contingent consideration fair value. It then subtracts $39.70 million for recovery of previously impaired assets and adds $103.62 million for extinguishment losses and changes in the fair value of convertible debt, finance obligations and warrant liabilities. Adjusted net loss is $101.41 million.
Net adjustments total $86.80 million, and the fair-value row alone is $103.62 million. Because the other items partly cancel, the halving of EPS is almost entirely the fair-value reversal.
Is the adjustment wrong? No. No cash moved and none of it reflects operations. Plug is also consistent about it: the same table adds back $19.37 million of impairment and then subtracts $39.70 million of impairment recovery, which makes the adjusted loss bigger, not smaller. A company picking only its favorable adjustments would not do that.
The limit is what the reversal does not remove. The $136.25 million warrant liability and the $578.00 million of convertible notes are still on the balance sheet, and the notes pay cash interest until 2033. Of the $16.89 million of interest expense in the quarter, $7.38 million went to those notes. Non-cash means no cash left this year. It does not mean no cash leaves later.

Plug Power Revenue Breakdown by Product Line

A 2.5% headline growth rate hides almost everything that happened inside it.

Product or service	Q2 2025	Q2 2026	Change
Fuel cell systems	$15.56mn	$31.93mn	+105.2%
Services	$16.37mn	$29.84mn	+82.3%
Fuel delivered to customers	$34.40mn	$39.47mn	+14.7%
Power purchase agreements	$23.63mn	$26.93mn	+14.0%
Cryogenic equipment and liquefiers	$26.84mn	$26.70mn	-0.5%
Electrolyzers	$44.87mn	$13.22mn	-70.5%
Hydrogen infrastructure	$11.60mn	$8.22mn	-29.1%
Other	$0.70mn	$1.99mn	+184.6%

Fuel cell systems doubled while electrolyzers fell to a third. Plug deployed 1,666 GenDrive units in the quarter against 739 a year earlier, and an installed base that large pulls service and fuel revenue behind it. That is why services grew 82.3% from the same root.
Electrolyzers need a longer look. Down 70.5% for the quarter, they are flat for the half: $54.10 million against $54.08 million. The 2025 revenue landed in Q2 and the 2026 revenue landed in Q1. Electrolyzer projects are sold as contracts and recognized on a percentage-of-completion basis, so quarterly figures swing hard. Reading the quarterly decline as a collapse would be wrong.
Reading it as smooth sailing would also be wrong. The electrolyzer news in the quarter was a 30 MW final investment decision in the UK, a 275 MW FEED award in Quebec, and a 50 MW order in Australia. All of those are future revenue. What landed in this quarter’s income statement was $13.22 million.

From Minus 132% Gross Margin to Almost Breakeven

How far the operating business has come shows up best as a series.

Quarterly gross margin and operating versus net loss across 14 quarters

In Q1 2024 gross margin was minus 132.3%. Plug sold $120.26 million and spent $279.34 million making it. Every sale deepened the hole. From there the series runs minus 91.6%, minus 57.6%, and on to a first positive print of +2.4% in Q4 2025 before settling at minus 0.9% in Q2 2026.
None of that came from fair-value accounting. It came from actual cost. Plug lifted fuel gross margin from minus 91% to minus 48.8% by raising utilization and production efficiency across the Georgia, Tennessee and Louisiana plants, and the service business is already at 27% positive.
Company disclosure (quarterly earnings releases, Aug 2025 and Mar 2026): In its August 2025 materials Plug wrote that it “expects to achieve gross margin breakeven on a run-rate basis in Q4 2025.” In the March 2026 annual materials it listed “Achieved positive gross margin for Q4 2025” as a goal met. The Q4 2025 print was positive, so that promise held.
Other promises did not. I parsed all 50 earnings-related 8-K filings Plug has made since 2019 and pulled every sentence containing a profitability target. In March 2024 the company said, “We’ve modeled this so that the company can become operational and cash flow positive in ’25.” Operating cash flow in 2025 was negative.
Laid out chronologically the promises change character. The 2023 and 2024 versions point a direction: “path to profitability,” “clear path to margin expansion.” From August 2025 onward they carry quarters and metrics: gross margin breakeven in Q4 2025, positive EBITDAS in Q4 2026, positive operating income by the end of 2027, full profitability by the end of 2028. Since Plug started naming dates, it has not missed one. The sample is short, which is worth saying out loud.

Capex Fell 89%: What Plug Bought and What It Gave Up

Cash moved the same direction as margin.
First-half operating cash flow was an outflow of $244.11 million against $297.38 million a year earlier. Net cash usage for the quarter was $61 million, down 58% sequentially by the company’s own measure, and unrestricted cash finished at $161.89 million.
The investing line moved further. First-half purchases of property, plant and equipment fell from $79.07 million to $8.71 million, a cut of 89.0%. That single decision did more for the burn rate than anything else.
It also cuts against the strategy. Plug’s pitch is vertical integration, and it describes roughly 40 tons per day of combined capacity across three plants. Utilization is one of the stated reasons fuel margin is still minus 48.8%, and utilization improves by building more network, not less. Preserving cash is defensible at this stage. It was not free.
The cash figure deserves one more line. Next to the $161.89 million of unrestricted cash sits $509.63 million of restricted cash. Total cash is $671.53 million and 75.9% of it is tied up.
Company disclosure (Q2 2026 earnings call, August 10, 2026): Management described more than $115 million of restricted cash released in the first half and roughly $155 million scheduled to release over the following twelve months, calling the stream a form of non-dilutive funding. Plug also targets more than $275 million from data center asset monetization and said $47 million arrived in July and August.
Calling released collateral a funding source is not wrong. It does produce cash without issuing shares. It is worth remembering what the collateral was posted against in the first place.

Industrial Electric Power Prices Rose 14.4% in Three Months

There are two ways to make hydrogen. Reform natural gas, or split water with electricity. The first tracks the gas price and the second tracks the power price. Plug’s electrolyzers and its own hydrogen plants sit on the electricity side.

Henry Hub natural gas spot price and industrial electric power PPI, 2019 to 2026 (Federal Reserve Bank of St. Louis)

Official statistics (FRED MHHNGSP and WPU05432101, August 2026): Henry Hub natural gas spot was $2.78 per million BTU in August 2026 against $3.11 in January 2019. The industrial electric power producer price index went from 206.0 to 291.2 over the same span.
Across seven years the feedstock for grey hydrogen got 10.6% cheaper and the feedstock for green hydrogen got 41.4% dearer. Green hydrogen catches grey hydrogen when power gets cheap. In the United States it went the other way.
The last three months were steeper still. The industrial power index went from 254.5 in May 2026 to 291.2 in August, a move of 14.4%. More than a third of the seven-year rise landed in that window. Data center demand is pulling wholesale power up, and that bill arrives at anyone making hydrogen from electricity.

Why Industrial Gas Prices Do Not Lift Plug’s Fuel Margin

If input costs rose, what about output prices?

Industrial gas manufacturing producer price index, 2019 to 2026

Official statistics (FRED PCU325120325120, August 2026): The industrial gas manufacturing producer price index stood at 295.2 in August 2026 against 187.0 in January 2019. That is a faster climb than the industrial power index managed over the same period.
Industrial gas prices are up 57.9% over seven years against 41.4% for industrial power. An industry whose selling price outruns its input cost sounds like good news. The index covers oxygen, nitrogen and argon as well as hydrogen, and the companies holding that market are Linde and Air Products. Linde posted a 47.7% gross margin in the latest quarter and Air Products 32.8%.
Plug’s fuel segment gross margin is minus 48.8%. That is a real improvement from minus 91% a year ago. It still means that after seven years of rising industry prices, this company sells hydrogen for less than it costs to make.
Same index, different position. Scale differs, utilization differs, and distribution differs most of all. An improving industry price series does not carry Plug’s margin with it.

Plug Power vs Bloom Energy: Same Basket, Opposite Sides

The hydrogen and fuel cell names split apart in 2026.

Latest quarterly revenue growth and gross margin for four hydrogen names and two industrial gas majors

Company	Ticker	Quarterly revenue	YoY	P/S	P/B	Market cap
Plug Power	PLUG	$178.30mn	+2.5%	3.94x	5.04x	$2.93bn
Bloom Energy	BE	$1,065.0mn	+165.5%	26.09x	50.18x	$81.22bn
Ballard Power	BLDP	$20.60mn	+15.4%	6.29x	1.19x	$0.67bn
FuelCell Energy	FCEL	$33.00mn	-29.4%	8.24x	1.30x	$1.27bn
Air Products	APD	$3,161.0mn	+4.6%	5.15x	4.67x	$64.90bn
Linde	LIN	$9,289.0mn	+9.4%	6.06x	5.50x	$214.92bn

Bloom Energy is the one that stands out. Revenue up 165.5% in a year, a 17.1% operating margin, and a market capitalization 27.7 times Plug’s. Both companies sell fuel cells.
The split comes from what the fuel cell is for. Bloom sells solid oxide fuel cells as on-site power generation for data centers. It makes electricity where electricity is short. The power price increase in the previous section is a demand signal for that business.
Plug sits on the other side of the same trade. It puts hydrogen into forklifts and converts electricity into hydrogen with electrolyzers. When power gets more expensive, Plug’s cost of goods gets more expensive. The same data center electricity demand shows up as revenue for one company and as cost for the other.
That is the sharpest contrast in this quarter’s numbers. Anyone treating “hydrogen” as a single theme is holding two opposite bets.
Comparing loss-making companies in transition needs more than multiples. It needs distance traveled.

Company	Gross margin	Year ago	Change	Growth-adjusted P/S	Equity	Market cap / equity
Plug Power	-0.9%	-30.7%	+29.8pp	1.58	$581.8mn	5.04x
Ballard Power	19.8%	not shown	not shown	0.41	$561.0mn	1.19x
FuelCell Energy	-74.2%	not shown	not shown	not meaningful	$977.0mn	1.30x
Bloom Energy	33.4%	not shown	not shown	0.16	$1,619.0mn	50.18x

Growth-adjusted P/S divides the price-to-sales multiple by the quarterly revenue growth rate; lower means cheaper for the growth delivered. FuelCell Energy does not produce a figure because revenue shrank. Plug’s gross margin and the change are on a filing basis; on an aggregator basis the figure is minus 9.7%. Equity is implied by dividing market capitalization by the price-to-book multiple.
Plug carries the highest growth-adjusted multiple of the three that produce one. It is being priced for the margin trajectory, not for the growth rate it just delivered.

PLUG and BLDP Have the Same Equity, 4.4x the Market Cap

One more comparison from that table.

Shareholders' equity against market capitalization: Plug Power and Ballard Power share a book value but not a valuation

Aggregator cross-check (sell-side research aggregators): Ballard Power’s market capitalization is $667 million at a price-to-book of 1.19, which implies about $561 million of shareholders’ equity. Plug’s equity is $581.8 million, essentially the same number, and its market capitalization is $2.93 billion. That is 4.4 times for the same book value.
FuelCell Energy makes the point again from the other side. Its equity of $977 million is larger than Plug’s, and its market capitalization is $1.27 billion.
The gap is not about assets. It is about what the market thinks those assets can become. Plug’s revenue is 8.7 times Ballard’s, and it has a gross margin series that traveled from minus 132% to minus 0.9%. Ballard already prints a positive 19.8% gross margin, but on $20.60 million of quarterly revenue, which leaves operating margin at minus 62%.
Put plainly, PLUG stock carries a premium for the idea that a little more margin on this revenue base changes the arithmetic. The next section is where that premium becomes visible.

PLUG Valuation: P/B at the 93rd Percentile, P/S at the 46th

Start with what cannot be drawn. There is no price-to-earnings band for this company. Trailing twelve-month net income has been negative for five straight years, so the denominator never exists. The count of valid observations over sixty months is zero.

Price-to-book and price-to-sales bands over 57 months, with percentile lines

Multiple	Current	57-month median	90th percentile	Position
Price to book	5.04x	1.77x	4.50x	93rd percentile
Price to sales	3.94x	4.06x	19.61x	46th percentile

Same market capitalization, same date, two answers. Measured against sales the stock sits at the middle of its own five-year history. Measured against book value it sits in the top 7%.
Own calculation (57 month-end closes and XBRL quarterly financials, CIK 1093691): The denominators explain it. Trailing twelve-month revenue went from $891.34 million in 2023 to $744.09 million as of Q2 2026. Shareholders’ equity went from $3,921.65 million in Q1 2023 to $581.75 million. Sales held roughly steady while book value melted, so only the multiple with the shrinking denominator moved.
Revenue is down 16.5% over that span and equity is down 85.2%. The band starts in January 2022 for a reason. Plug’s full-year 2020 revenue was negative $93.24 million, the result of charging customer warrants against revenue. That negative year distorts trailing twelve-month revenue through 2021 and pushes price-to-sales to between 701 and 733 times, which would destroy the percentiles. The window begins where the denominator is continuous and positive.
A company that once reported negative annual revenue because it gave equity to customers tells you something about how it buys business. The warrants moving the income statement today belong to the same family of instrument.

Shareholders Put In $9.2 Billion; $582 Million Remains

Where the equity went is one line on the balance sheet.
Additional paid-in capital is $9,227.98 million. That is what shareholders have contributed. Below it, accumulated deficit is $8,659.55 million. Of everything put in, 93.8% has been consumed, leaving $581.75 million of equity against $2,192.57 million of total assets, or 26.5%.
Share count tells the same story. Weighted average shares went from 589.2 million in Q1 2023 to 1,391.2 million in Q2 2026, a multiple of 2.36 in three years and three months. There is more that has not become stock yet.
Filing footnote (Form 10-Q, earnings per share note, June 30, 2026): Potentially dilutive securities, consisting of stock options, restricted stock units, warrants and other equity instruments on an as-converted basis, total 440,501,973 shares. The figure a year earlier was 340,788,077. The current number equals 31.5% of the 1,397,924,047 shares outstanding. Because Plug is in a net loss position all of them are antidilutive and excluded from diluted EPS, which is not the same as absent.
Authorized shares also went from 1.5 billion to 3.0 billion during the first half of 2026. That is not an announcement of issuance. It is room for it.
Plug is clearly aware of the sensitivity. Describing asset sales and restricted cash releases as non-dilutive funding, repeatedly, is a signal aimed at exactly this concern.

PLUG Price Targets and Analyst Revisions

Two research aggregators disagree about this stock more than they usually do.

Ninety-day EPS estimate revisions and the 12-month target price spread from two research aggregators

Item	Aggregator A	Aggregator B
Analysts covering	38	18
12-month target	$2.00	$3.49 average
Versus current price	-11.9%	+66.6%
Distribution	17 buy, 16 hold, 5 sell	high $7.00, low $0.75

Aggregator cross-check (aggregated sell-side research, two aggregators): One aggregator puts the median target below the current price and the other puts the average 66.6% above it. Sample sizes of 38 and 18 and different methodologies produce the spread. Neither is treated here as the answer.
Rating activity over the past ninety days was thin.

Date	Firm	Rating	Target
2026-08-12	Roth Capital	Buy, maintained	unchanged
2026-08-11	UBS	Buy, maintained	$3.00 to $5.00
2026-08-11	Oppenheimer	Perform, maintained	unchanged
2026-07-09	Morgan Stanley	Underweight, maintained	$2.00 maintained

No upgrades, two target changes. UBS raised a target without changing its rating, and Morgan Stanley kept an underweight with a target below the current price.
Earnings estimates have drifted the right way. The 2026 consensus moved from minus $0.30 ninety days ago to minus $0.27, and 2027 from minus $0.18 to minus $0.15. Three to four analysts revised upward over the last thirty days against one downward.
Aggregator cross-check (last eight quarterly reports): Plug has beaten the EPS consensus in zero of the last eight quarters. The average surprise is minus 185.2%.
Eight consecutive misses says the number is hard to forecast, and a good share of that difficulty comes from the fair-value items above. An analyst can model the operating business correctly and still be wrong by a wide margin depending on where the stock closes on the last day of the quarter.

What Gross Margin Does Q4 EBITDAS Breakeven Require?

Plug has now said three quarters running that it will reach positive EBITDAS in Q4 2026. That claim can be turned into a number.
The definition first. Plug defines EBITDAS as earnings before interest, income tax, depreciation, amortization and share-based expense, which is EBITDA plus stock compensation. The company states in its own materials that the target “cannot be reconciled to the most directly comparable GAAP measure, net income (loss), without unreasonable effort.” Hitting it would not end the net loss.
Own calculation (first-half 2026 cash flow statement and management commentary on the earnings call): First-half depreciation of $12.87 million and intangible amortization of $1.82 million work out to $7.35 million per quarter, and share-based compensation of $26.89 million works out to $13.44 million. Quarterly add-backs are therefore $20.79 million. Applied to the Q2 2026 operating loss of $64.11 million, EBITDAS was roughly minus $43.32 million.
Management described operating expenses running toward roughly $75 million per quarter. Holding that, the gross profit required to bring EBITDAS to zero is $54.21 million.

Q4 revenue assumption	Gross profit needed	Gross margin needed
$230mn	$54.21mn	23.6%
$250mn	$54.21mn	21.7%
$270mn	$54.21mn	20.1%

Q2 2026 came in at minus 0.9%, and the best quarter on record was +2.4% in Q4 2025.
Guidance frames the revenue side. Plug raised full-year growth to a range of 15% to 16%, citing “the historically second-half-weighted cadence of our business and the strength of our commercial backlog.” Applied to 2025 revenue of $709.92 million that is $816 million to $823 million for the year. Subtract first-half revenue of $341.81 million and the second half needs $474 million to $481 million. With Q4 as the seasonal peak, Q4 revenue lands somewhere around $250 million to $270 million.
So Q4 EBITDAS breakeven requires revenue and margin to arrive together. Neither one alone gets there. Two things are worth holding at once: the target has stayed in the same place for three quarters, and the last dated promise this company made was kept.

What Would Change the Call

Scenario	Condition	Indicator to check	When · Source
Upside	Gross margin turns positive in double digits	Quarterly gross margin, fuel segment margin against minus 48.8%	Q3 2026 results, expected early November
Upside	The $275mn asset monetization converts to cash	Unrestricted cash, restricted cash released, quarterly net cash usage	Q3 2026 results
Upside	Electrolyzer awards move into revenue recognition	Form 10-Q Note 11 electrolyzer line, contract liabilities	Q3 2026 Form 10-Q
Downside	The stock rallies and fair-value losses expand again	Quarter-end close, warrant and convertible note carrying values	Each quarter end
Downside	Capex restraint stalls plant utilization gains	Purchases of property, plant and equipment, fuel segment margin	Q3 2026 results
Downside	Non-dilutive funding stalls and equity issuance resumes	Shares outstanding, use of the 3bn authorized pool, capital raise filings	Ongoing, via 8-K

The third downside item carries the most weight. Unrestricted cash of $161.89 million against quarterly net cash usage of $61 million is about 2.7 quarters on simple arithmetic. Restricted cash releases and asset sales extend that, and if either slips the remaining path runs through the newly authorized share pool.

Methodology and Sources

A $2.10 share price is used throughout. Returns were recalculated from daily closes rather than taken from aggregator displays: -8.30% over one month, -25.80% over three months and -4.98% over six months.
Financial figures come from the Q2 2026 Form 10-Q Plug Power filed on August 10, 2026 and from the earnings release attached to the 8-K filed the same day. I read the statements of operations, balance sheet, cash flow statement and Notes 6 through 11 and 15 directly, and cross-checked every fair-value figure against the rollforward tables in Notes 7 and 8.
The fourteen-quarter series was built from XBRL company facts for CIK 1093691. Fourth quarters have no quarterly tag, so they were derived as full year minus nine months, and quarterly sums were reconciled to annual filings for 2023, 2024 and 2025 with zero difference in all three years. The profitability promises were assembled by parsing all 50 earnings-related 8-K filings since 2019 and extracting the original sentences.
Valuation bands use 57 month-end closes and XBRL quarterly financials. Current values were cross-checked against aggregator figures: price to book of 5.04 against 5.07, price to sales of 3.94 against 3.95. Industry series are from the Federal Reserve Bank of St. Louis. Analyst consensus and peer multiples come from aggregated sell-side research, and where two aggregators disagreed both figures are shown.
One correction is recorded above: the “Change in fair value of debt” line of $3,408 thousand belongs to the 2025 columns, confirmed by reconciling each column to its reported pre-tax loss.
This article is for information only and is not investment advice.

Sector RS Rank Sep 14: Cybersecurity Soars on AI Fears

J. Equity. Research — Mon, 14 Sep 2026 23:42:10 GMT

Sector RS Rank for the September 14, 2026 US session: the S&P 500 closed -0.48% at 7,619.98 and the Dow shed 152 points to 52,421.20. Of the 129 ETFs in our universe, 48 rose and 81 fell, with only 3 of the 11 sector SPDRs finishing green. Leading sectors: Cybersecurity, Software, Oil. Full 1-month RS ranks of 129 ETFs with breakdown and rebound alerts, plus three screened stocks: Okta, Salesforce, SM Energy.

💡 Today’s US market in three lines

① Today’s three stocks: Okta · Salesforce · SM Energy — a cybersecurity platform, a cloud giant, and a Permian driller that each beat the S&P 500 on a session defined by a single essay.

② On September 14, the S&P 500 closed -0.48% at 7,619.98 and the Dow shed 152 points to 52,421.20. Of the 129 ETFs in our universe, 48 rose and 81 fell, with only 3 of the 11 sector SPDRs finishing green.

③ Anthropic CEO Dario Amodei’s call to slow frontier AI development sent cybersecurity stocks surging and semiconductors crashing. CrowdStrike jumped 14%, while the VanEck Semiconductor ETF fell nearly 5%. One essay split the tech sector down the middle.

🧭 Why Leaders Keep Leading — Reading Sector Rotation Through RS and RRG

Price Levels to Watch: Today’s Sector Relative Strength (RS)

Sep 14 Sector RS — 129 ETFs · RRG v2

A weekend essay did the work of a data release. On September 12, Anthropic’s chief executive published a piece arguing that frontier models should be paced so safety research can catch up. CrowdStrike’s CEO responded within hours, saying the answer was more security rather than less speed. Markets chose both narratives at once: cybersecurity stocks rallied and chipmakers sold off, as though the same paragraph was bullish for the companies that defend AI and bearish for the ones that build it.
The S&P 500 closed -0.48% at 7,619.98, the Nasdaq -0.56% at 26,186.41, and the Dow -0.29% at 52,421.20. The surface looked like a flat day, but underneath, 81 of 129 ETFs fell. Only communication services, healthcare, and consumer staples among the eleven sector SPDRs managed to finish positive, and technology was the worst at -1.81%. The momentum factor gauge (SPMO) lost -2.80%, its heaviest single-day drop in weeks, while low volatility (USMV) and dividend (SCHD) both rose, a textbook defensive bid.
Oil pulled back on the session. Brent crude settled at $104.61, down 2.8%, and WTI fell to $100.05, but the oil complex still owns the top of the RS table on its monthly gains. The retreat was enough to drag oil services (OIH) down -4.42% even though the commodity itself stayed above $100.

Today’s Leading Sectors TOP 5

Basis: top 5 by 1-month RS rank on the ‘Sector RS (US)’ sheet — 129-ETF universe, September 14, 2026. Daily moves are measured from Yahoo closing prices. Trend columns compare price to its 1-month, 1-quarter, and 1-year moving averages.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
United States Oil Fund (USO)	+1.14%	100	🔺	🔺	🔺
SonicShares Global Shipping (BOAT)	+0.71%	99	🔺	🔺	🔺
Global X Blockchain (BKCH)	+0.19%	99	🔺	🔺	🔽
VanEck Digital Transformation (DAPP)	+0.20%	98	🔺	🔺	🔺
VanEck Oil Refiners (CRAK)	-1.83%	97	🔺	🔺	🔺

The table is an energy and crypto board. Three oil names and two blockchain names account for every seat, and the order is built on monthly returns rather than anything that happened on Monday. USO is +25.3% for the month, an absolute outlier in a universe where the median sector ETF lost ground over the same stretch. The blockchain pair — BKCH at 99 and DAPP at 98 — held their ranks despite cooling this week; both are still up more than 11% for the month. Shipping rounds out the top at 99, riding the same freight-rate and commodity cycle that lifted the oil names.

Why They’re Strong — Sector Issues

· Oil complex (USO · CRAK · IEO · XOP) — Four of the top seven RS seats belong to oil. WTI pulled back from $107 to $100 on the session, but the monthly print is still +25.3% for crude and +10.3% for refiners. The separation between commodity and services is the thing to watch: crude rose +1.14% while oil services (OIH) fell -4.42% and oil equipment (IEZ) lost -4.57%. That divergence says the commodity is pricing geopolitical supply risk while the equities are pricing the demand side, which just got an FOMC meeting staring at $100 oil.

VanEck Oil Services OIH Daily

· Semiconductors — the collapse on the other side of the AI debate — The chip complex was already losing momentum before the weekend. Over five sessions, fabless semiconductors (SMHX) fell from RS 51 to 14, and broad semiconductors (SOXX) went from 57 to 13. On Monday, SMHX lost another -5.93% and SOXX -5.63%. Nvidia fell -3.4%, Broadcom -4.8%, Micron -5.2%. When Amodei said frontier models should slow down, the market heard reduced chip demand. The AI trade of 2025 is reversing position by position.

iShares Semiconductor SOXX Daily

1-Month RS Trend

45-Day RS Trend — 5 Sectors

Over 45 trading days, the trend chart captures a regime change. Cybersecurity (BUG) peaked at RS 100 in late July, fell to the mid-30s in early September, and is now bouncing to 74 — a wide swing that suggests the sector trades on headline cycles rather than steady demand. Software (IGV) climbed steadily from 50 to 78 with almost no drawdown, the quietest uptrend on the board. Metaverse (METV) pushed to 94, its highest reading in the observation window. The semiconductor pair — SMHX and SOXX — fell from the 50s to 13–14 and show no sign of leveling off.

RS Breakdown Warnings (big 5-day drops)

· Meme stocks fell -66 points in five trading days, from 78 to 12, the largest five-day decline in the universe. Uranium lost -53 points, nuclear power -50, and rare earths -50. These are the marginal-capital trades that get liquidated first when sentiment turns. The AI adjacent complex continued lower: ARTY (future AI) fell -47, SETM (critical minerals) -43, and oil equipment (IEZ) -32.

· The damage is not confined to one sector. Metals, mining, nuclear, AI infrastructure, and meme stocks all broke down in the same week. When that many different themes sell off together, the common cause is positioning rather than any single catalyst.

RS Rebound Signals (sharp bounces off the bottom)

· Insurance rallied +56 points in five sessions, from 21 to 77, the largest rebound in the universe. SPDR Insurance (KIE) followed at +43, residential REITs (REZ) at +40, and social media (SOCL) at +38. These are the sectors that were priced for rising rates and have started to reprice as the hiking narrative cracked.

· Cybersecurity appeared here too. First Trust Cybersecurity (CIBR) rebounded +32 points and iShares Cybersecurity (IHAK) +28, both starting from the low 20s–30s. Retail (XRT) added +27 and consumer discretionary (XLY) +26. The rebound list is heavy on defensive and consumer sectors, which is the mirror image of the breakdown list.

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Basis: top 5 by September 14 closing move — 48 of 129 rose on the day. RS ranks from the ‘Sector RS (US)’ sheet.

ETF	1-Day	RS Rank 1M	Short-Term	Mid-Term	Long-Term
Global X Cybersecurity (BUG)	+10.66%	87	🔺	🔺	🔺
iShares Cybersecurity (IHAK)	+7.78%	62	🔺	🔺	🔺
WisdomTree Cloud Computing (WCLD)	+6.37%	86	🔺	🔺	🔺
First Trust Cybersecurity (CIBR)	+5.99%	65	🔺	🔺	🔺
iShares Software (IGV)	+5.04%	80	🔺	🔺	🔺

Three of the five are cybersecurity, and the other two are cloud and software. This is the AI-safety trade in concentrated form: investors bought the companies that protect systems and sold the ones that build them. Note the RS ranks: BUG is at 87 and WCLD at 86, both above the median but not at the top of the table. They were already improving before Monday, and the Amodei essay accelerated a trend that had started weeks earlier.

Why They Rose — Sector Issues

· Cybersecurity (BUG · IHAK · CIBR) — Up +10.66% on the headline alone. Dario Amodei published a 4,000-word argument for voluntary deceleration of frontier AI, citing systemic cybersecurity risks. CrowdStrike responded by calling for more security investment rather than slower models. The market read both positions as demand for the same products: CrowdStrike surged 14%, Zscaler 14%, Palo Alto 13%, and Okta 12%. The move is wide enough to be a sector event rather than a single-stock reaction.

Global X Cybersecurity BUG Daily

· Software and cloud (IGV · WCLD · CLOU) — Software rose +5.04%, cloud +6.37%, and Global X Cloud +4.50%. IGV has climbed from RS 50 to 78 over 45 days without a significant drawdown, making it the steadiest trend on the board. Salesforce’s strong August quarter anchored the group, and Monday’s AI safety narrative added a secondary bid: if frontier models slow down, the value of existing enterprise software installed bases goes up. Cloud held an RS of 86 and sits above all three moving averages.

iShares Software IGV Daily

Leading Sectors: Cybersecurity, Software, Oil

① The session had one driver and it was an essay. Anthropic’s CEO argued for pacing AI development; CrowdStrike’s CEO argued for securing it faster. Markets decided that both arguments pointed at the same trade — buy the companies that defend AI-powered systems and sell the ones that build the hardware those systems run on. Cybersecurity gained +10.66% while semiconductors lost -5.63%. That is the widest single-day spread between two tech subsectors this year.
② Oil still holds the RS table despite Monday’s pullback. USO at 100, CRAK at 97, IEO at 96, XOP at 96 — all built on a month where WTI went from $80 to $100. The fact that oil services (OIH -4.42%) diverged from crude on the same day is a warning that the equities are more fragile than the commodity. If the FOMC on Wednesday guides hawkish with oil at $100, the services gap could widen.
③ The rebound list is insurance and consumer, not growth. IAK gained +56 RS points in five days, KIE +43, REZ +40. These are the rate-sensitive laggards that come back first when the tightening narrative cracks. The breakdown list is meme stocks, uranium, rare earths, and AI infrastructure — the speculative complex that got too far ahead of the cycle. Both rotations point at the same conclusion: the market is repricing for a slower, more defensive environment.
④ The last report was dated September 11. Its three picks, measured from that close to Monday: Dell Technologies -5.82%, Skyworks Solutions -10.29%, and Valero Energy -1.91%. The S&P 500 returned -0.45% over the same stretch, so all three underperformed. Dell and Skyworks were caught in the semiconductor selloff that accelerated through the session, and Valero fell with the broader oil equities pullback. Recorded as is.

Three RS Leaders to Research: Okta · Salesforce · SM Energy

Selection: from the 1,187 stocks held by the universe’s ETFs — RS 1D≥60 & 5D≥75 & 1M≥85, with all three moving averages aligned (▲▲▲)

Okta (OKTA) — 1-Month RS 98: Cybersecurity Identity Platform at a New 52-Week High

Okta OKTA Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
99	98	98	+20.3%	Global X Cybersecurity · iShares Cybersecurity · First Trust Cybersecurity

Up +11.98% to $186.45, hitting a new 52-week high and carrying a 7.5% weight in the cybersecurity ETF that led the market. Okta is the largest pure-play identity platform in the universe. Its Q2 fiscal 2027 revenue landed at $805 million, up 11% year over year, with total current remaining performance obligations of $2.585 billion. Non-GAAP operating margin was in the low 20s, well above the company’s historical breakeven. The AI safety narrative lands directly on Okta’s product: if companies need to secure access to AI agents and models, identity verification is the first gate. What to watch for Okta: it rests on whether this headline-driven demand converts into pipeline — the company needs to show faster net new customer additions in the next quarter to justify the multiple, not just faster trading volume in the stock.

Salesforce (CRM) — 1-Month RS 99: Agentforce Crossed $1.5B ARR

Salesforce CRM Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
94	75	99	+28.8%	iShares Software · First Trust Dow Jones Internet · Global X Cloud Computing

Up +4.73% to $259.43, adding to a +28.8% month that has pushed the 1-month RS to 99. Salesforce reported Q2 FY27 on August 26 and beat on every line: revenue of $11.35 billion, up 10.8%, and non-GAAP EPS of $5.90 against a $3.27 consensus, an 80% beat. The headline was Agentforce reaching $1.5 billion in annual recurring revenue with triple-digit booking growth. Management disclosed a partnership with Anthropic — the same company whose CEO’s essay drove Monday’s session. What to watch for Salesforce: whether Agentforce bookings convert to consumption revenue in the fiscal third quarter. The 5-day RS of 75 is the weakest link; the stock has been rising on the monthly but not accelerating on the weekly.

SM Energy (SM) — 1-Month RS 98: Permian Basin Driller in a $100-Oil World

SM Energy SM Daily

RS 1D	RS 5D	RS 1M	1M Return	Held By
86	98	98	+20.4%	First Trust Natural Gas · SPDR Oil and Gas Exploration · iShares Oil and Gas Exploration

Up +2.44% to $39.03, quietly holding gains while the broader oil equity complex pulled back. SM Energy operates in the Midland Basin, South Texas, and Uinta Basin, and at $100 WTI, every barrel produced generates cash flow well above its breakeven in the mid-$40s. Q2 2026 revenue came in at approximately $2.5 billion on a semi-annual basis, with net income of $1.07 billion. UBS raised its price target to $48 from $36 on Monday. The SM Energy stock setup is a direct function of the oil price: the company has no diversification, no hedging complexity, and no pipeline bottleneck. If WTI holds above $90, the current production profile generates more than $15 per share in annual free cash flow. The risk is the same simplicity — a retreat below $80 removes the entire margin of safety.

Okta · Salesforce · SM Energy

· Okta levels to watch — The 12% session was sector sympathy, not a company event. Watch whether net new customer additions accelerate in the Q3 FY27 print. The stock moved on a narrative; it needs to move on a number next.

· Salesforce levels to watch — Agentforce at $1.5B ARR is the thesis. Watch whether consumption revenue growth reaccelerates in the fiscal Q3 guide. The 5D RS of 75 suggests the market is not yet fully committed to the acceleration story.

· SM Energy levels to watch — This is an oil bet, nothing else. Watch whether WTI holds above $90 through the FOMC and quarterly expiration this week. Every dollar below $90 shrinks the free cash flow case by roughly $1.50 per share.

What to Watch on Next Week’s Calendar

FOMC rate decision, Wednesday September 17, 3:00 a.m. KST (Tuesday 2:00 p.m. ET). CME FedWatch prices a 25-basis-point hike at 85–87% probability. This is the dominant event of the week. Oil at $100 and services ISM at 55.4 give the hawks ammunition, while the AI safety debate and the semiconductor selloff give the doves a growth-risk argument. The Summary of Economic Projections will matter as much as the rate itself — if the dot plot signals more hikes beyond September, every rate-sensitive sector on the rebound list reverses.
CLARITY Act cloture vote, Monday September 15, 2:15 p.m. ET (Tuesday 3:15 a.m. KST). The stablecoin regulatory bill needs 60 Senate votes to advance. Failure effectively kills the legislation this session. Blockchain ETFs sit at RS 98–99; a failed vote could unwind a month of positioning in BKCH, DAPP, and their constituent stocks including Circle.
Quadruple witching, Friday September 18. Quarterly options and futures expiration. With the widest tech-sector dispersion in months — cybersecurity up 10.66% vs semiconductors down 5.63% — the pinning effects around Friday’s expiration could either lock these extremes in or force a violent mean reversion. Position sizing matters more than direction this week.
AI Infrastructure Summit, Monday–Wednesday September 15–17. Alphabet, Amazon, Meta, Nvidia, and Tesla are all participating. Given that an essay from one AI CEO moved markets by 10% in a single session, any statement from another could do the same. The summit is not a data event, but it is a headline-generation machine at a moment when headlines are what the market is trading.

Trip.com (TCOM) Stock Analysis: Antitrust Fine and Guidance

J. Equity. Research — Mon, 14 Sep 2026 12:55:42 GMT

Trip.com Group Limited (NASDAQ: TCOM, HKEX: 9961) runs Ctrip, Qunar, Trip.com and Skyscanner, and earns commissions on hotel, flight, rail, package tour and corporate travel bookings. Net revenue was RMB 62.41 billion in 2025, each ADS equals one Hong Kong ordinary share, and at $39.02 the company is worth about $24.57 billion. This TCOM stock analysis covers the Chinese antitrust penalty and what it found, the stake sale buried in trailing earnings, net cash against market cap, the cut to the Q2 revenue outlook, P/E and P/B bands, analyst price targets, peers, and the conditions that would move the shares.

Trip.com Group (TCOM) share price chart

Here is the puzzle. On July 25 China’s State Administration for Market Regulation (SAMR) ordered Trip.com to refund RMB 122 million of hotel deposits, confiscated RMB 1.66 billion of gains and imposed a RMB 3.52 billion fine. The RMB 5.30 billion total is 3.4% of the roughly $23.1 billion of market value lost since the investigation was announced in January. The stock rose when the penalty filing came out (+2.6%), then kept sliding, and it now sits -48.4% below the $75.68 close of January 13, the last session before the probe was disclosed.
Two limits up front. Trip.com reports in renminbi and trades in dollars, so I converted every multiple at month-end USD/CNY rates. As a foreign private issuer it files quarterly 6-K earnings releases rather than 10-Qs, and I parsed all 24 of them. Trailing GAAP net income includes a large gain from selling part of the MakeMyTrip stake in the third quarter of 2025, and the share count of 629.7 million is an aggregator figure that I cross-checked against the ownership percentages in the 20-F.
The shares are -14.4% over one month, -17.7% over three months and -46.2% over one year. The latest reported quarter is Q1 2026, released June 24, and the investor relations calendar lists the Q2 2026 earnings call for September 15 (U.S. Eastern Time).

What Does Trip.com Group (TCOM) Do?

Ten years of Trip.com month-end prices and five company events

Trip.com is a Chinese travel booking company that listed on Nasdaq in 2003 and grew by bolting on global platforms. The “About” paragraph in every release names four brands: Ctrip, Qunar, Trip.com and Skyscanner. Earnings releases carried a Shanghai dateline through February 2024 and have carried a Singapore dateline since May 2024.
2021 changed the listing structure. Trip.com completed a secondary listing in Hong Kong in April, and on March 18 it subdivided each ordinary share into eight so that one ADS equals one share. Releases before that date show per-share figures on the old basis, so the bands in this article scale those share counts by eight.
Through 2022 the business lived under pandemic controls. Three of the four quarters of 2022 posted operating losses and full-year operating income was RMB 88 million. Once China reopened, Q1 2023 revenue reached RMB 9.21 billion, 2.2 times the year-earlier quarter, and 2023 operating income jumped to RMB 11.32 billion.
The events since then came from capital allocation and regulators. In July 2025 Trip.com sold 34.37 million MakeMyTrip shares back to that company for about $3.0 billion, and in August it authorized a $5 billion buyback. On January 14, 2026 it disclosed the antitrust investigation, and on July 25 it received the penalty decision.

Year	What happened	Source
2003	Listed on Nasdaq	6-K release boilerplate
2021	Listed in Hong Kong and split each share into eight	6-K (Apr), release note (effective Mar 18)
2022	Posted operating losses in three of four quarters	6-K earnings releases
2023	Q1 revenue reached 2.2 times the prior year	6-K (Jun)
2024	Authorized a $300 million buyback under a regular capital return policy	20-F Item 16E
2025	Sold part of the MakeMyTrip stake for about $3.0 billion and approved a $5 billion buyback	20-F, 6-K (Aug)
2026	Received an antitrust penalty including a RMB 3.52 billion fine	6-K (Jan, Jul)

The five-year financials below come straight from 20-F XBRL data, in millions of renminbi. Debt ratio is total liabilities divided by equity.

Fiscal year-end	Revenue	Operating income	Net income	Operating margin	Net margin	Debt ratio	ROE
Dec 2021	20,023.0	-1,411.0	-550.0	-7.0%	-2.7%	74.2%	-0.5%
Dec 2022	20,039.0	88.0	1,403.0	0.4%	7.0%	70.1%	1.2%
Dec 2023	44,510.0	11,324.0	9,918.0	25.4%	22.3%	78.7%	8.1%
Dec 2024	53,294.0	14,177.0	17,067.0	26.6%	32.0%	69.9%	12.0%
Dec 2025	62,409.0	15,773.0	33,294.0	25.3%	53.3%	55.5%	19.5%

The 53.3% net margin in 2025 is more than twice the 25.3% operating margin. The difference came from outside operations, while the operating margin stayed between 25% and 27% for three straight years.

The Five Biggest Daily Moves in TCOM Stock

Over the past three years, about 750 trading days, TCOM moved more than 5% in a single session on 37 days. Four of the five largest moves came within a day of a company filing.

Date	Move	Close ($)	Company filings within a day	Note
2024-09-26	+11.0%	51.08 to 56.68	Baidu ownership amendment (13D/A) the next day	No company release found
2025-02-25	-11.4%	64.66 to 57.30	Q4 2024 results (6-K)	Day after results
2025-08-28	+14.9%	65.29 to 75.03	Q2 2025 results and $5 billion buyback (6-K)	Day after results
2026-01-14	-17.0%	75.68 to 62.78	Antitrust investigation disclosed (6-K)	Same day
2026-06-25	-12.5%	46.30 to 40.49	Q1 2026 results and Q2 outlook (6-K)	Day after results

The worst day was January 14. The announcement ran three sentences, ending with “Its business operations remain normal.” The second-worst day was June 25, the session after the Q1 release.
The penalty 6-K on July 27 is not on the list. The stock went from $43.64 to $44.77 that day (+2.6%) and reached $46.00 two sessions later. Investors bid the shares up when the fine was set and sold them hard when the revenue outlook came down.

How Trip.com Makes Money From Hotels and Transport

Trip.com connects travelers with hotels, airlines and railways and keeps a commission, so revenue captures only its cut, while the full booking value is counted separately as gross bookings. Here is 2025 revenue by segment and Q1 2026 growth.

Segment	2025 revenue (RMB m)	Share	Q1 2026 YoY
Accommodation reservation	26,100	41.8%	+17.5%
Transportation ticketing	22,489	36.0%	+11.7%
Packaged tours	4,688	7.5%	+19.3%
Corporate travel	2,829	4.5%	+20.4%
Others	6,404	10.2%	+33.3%

Shares use the RMB 62.51 billion segment total before sales tax. Transportation ticketing was the slowest segment in Q1, and it is the segment tied to rail and air add-on products, where new rules bite first.
Company disclosure (Q1 2026 earnings call, June 24, 2026): CFO Cindy Wang said Trip.com supports the latest guidance on train ticketing practices, that domestic train ticketing now contributes much less to revenue and profit than it did years ago, and that the near-term effect of optimizing certain rail products and add-on services is partly reflected in the Q2 outlook.
The international business runs at a different speed. On the same call, management said gross bookings on the international OTA platform grew about +65% and inbound travel bookings about +90% from a year earlier. Trip.com served about 20 million inbound travelers in 2025 and set a goal of 200 million over five years.
China is still the bulk of the business. Backing into the fine calculation gives a China revenue share of 75.2% in 2025, and in a quarter when international bookings rose about 65%, total revenue grew +17.2%.

Revenue Divided by Gross Bookings

Trip.com does not report gross bookings every quarter. Management gives an annual or quarterly figure on some earnings calls, and I divided release revenue by those figures.

Period	Revenue (RMB m)	Gross bookings stated on the call	Revenue / bookings
Full year 2024	53,294	over RMB 1.2 trillion	4.44% or less
Full year 2025	62,409	about RMB 1.1 trillion	5.67%
Accommodation 2025	26,100	about RMB 280 billion	9.32%
Transportation 2025 (air bookings)	22,489	about RMB 550 billion	4.09%
Q1 2026	16,208	about RMB 300 billion	5.40%

Own calculation (Q4 2024, Q4 2025 and Q1 2026 call transcripts; 6-K revenue): On the Q4 2024 call management said “In 2024, our core OTA businesses achieved a GMV of over RMB1.2 trillion or $169 billion.” On the Q4 2025 call it said “For the full year 2025, our core OTA business recorded gross bookings of approximately RMB 1.1 trillion with accommodation and air ticketing contributing around RMB 280 billion and RMB 550 billion, respectively.” Revenue over the same period went from RMB 53.29 billion to RMB 62.41 billion.
Why the stated bookings figure got smaller while revenue grew +17.1% is not explained in any filing. The 2024 wording covers “businesses” and the 2025 wording a single “business,” so the scope may have changed, and revenue includes items such as Skyscanner advertising that sit outside bookings. The transportation line also overstates the ratio, because revenue includes rail and bus while the bookings figure covers air tickets only.
This matters because the second violation in the penalty decision was imposing unreasonable terms. The 20-F says that in September 2025 the Zhengzhou market regulator found Trip.com had been “imposing unreasonable restrictions on the transactions and transaction prices of business operators on the platform through service agreements, transaction rules, and technical means,” and required changes to contract terms and its price adjustment tool. If the 9.32% hotel ratio was earned under those terms, the open question is whether it survives the fix.

Is TCOM Stock Cheap at 5.8 Times Earnings?

Trip.com trailing GAAP P/E and P/B over 60 months

On year-end prices, the P/E was lowest at the end of 2025. P/E and P/B are the December values from the monthly calculation, and the dividend yield uses the dividend declared that year.

Year-end	Year-end price	P/E	P/B	Dividend yield	FCF (RMB m)
2021	$24.51	73.3x	0.92x	None	1,905.0
2022	$34.25	Not meaningful (trailing loss)	1.41x	None	2,144.0
2023	$35.85	16.1x	1.36x	None	21,398.0
2024	$67.30	21.0x	2.36x	None	19,034.0
2025	$74.49	11.2x	1.96x	0.40%	13,582.0

The 2022 P/E is blank because the four quarters released by the end of December 2022, Q4 2021 through Q3 2022, added up to a loss. The full-year 2022 profit of RMB 1.40 billion only entered the calculation after the Q4 release in March 2023.
Own calculation (60 month-end closes, month-end USD/CNY and 24 quarterly 6-K releases): For each month from September 2021 to August 2026 I used the last four quarters of net income attributable to shareholders from releases filed by that month-end, plus that quarter’s equity. Share counts before March 2021 were scaled for the eight-for-one subdivision.
The trailing P/E is 5.77x, below 5.97x at the end of June 2026, the lowest of the 48 profitable months. The median is 20.17x, and the peak was 122.7x in March 2023 just after reopening. P/B is 1.03x, in the 13th percentile of 60 months, against a 1.42x median and a 0.86x low in March 2022.
Aggregator check (two sell-side research aggregators): One shows a trailing P/E of 5.79x and P/B of 1.04x, within 0.02x of my figures. The other shows 5.93x and 1.07x, a five-year P/E median of 19.90x and a next-twelve-month P/E of 10.31x.
P/B in the 13th percentile puts the stock back near its 2022 pandemic range. Operating income was close to zero then and the Q1 2026 operating margin is 24.3%, so the denominator is healthier, but equity includes RMB 62.22 billion of goodwill. The P/E needs its denominator explained first.

The Stake Sale Inside Trailing Earnings

Of trailing twelve-month (TTM) GAAP net income attributable to shareholders of RMB 31.52 billion, a single quarter, Q3 2025, contributed RMB 19.89 billion, or 63.1%. Operating income that quarter was RMB 5.57 billion, and net income the quarter before was RMB 4.85 billion.
Filing note (Q3 2025 6-K release, November 17, 2025): Trip.com attributed the jump in net income “primarily” to “the partial disposal of certain investment,” and said income tax expense rose to RMB 3.3 billion from RMB 721 million a year earlier because of higher taxable income from that disposal and local indirect transfer tax rules.
Filing note (2025 Form 20-F, Item 4, April 28, 2026): In June 2025 Trip.com agreed “to sell 34,372,221 Class B ordinary shares that we held to MakeMyTrip for an aggregate consideration of approximately US$3.0 billion for cancellation,” and the deal closed in July 2025.
The gain stayed in non-GAAP profit too. Trip.com’s non-GAAP adjustments remove share-based compensation and fair value changes on equity securities only, so Q3 2025 non-GAAP net income was also RMB 19.16 billion and TTM non-GAAP net income of RMB 31.56 billion gives almost the same multiple.
TTM operating income over the same twelve months was RMB 16.16 billion, and market cap divided by that is 10.2x. Dividing the price by the average 2026 EPS estimate of RMB 24.38 gives a forward P/E of 10.7x, so the 5.8x headline rests on a once-off gain.
Q1 2026 had one-offs in the opposite direction. Equity in loss of affiliates was RMB 1.15 billion, eleven times the RMB 102 million a year earlier, and a RMB 876 million fair value loss cut other income to RMB 176 million. Q1 net income attributable to shareholders of RMB 2.50 billion was smaller than operating income of RMB 3.95 billion.

Number	Value	Why it matters
Total penalty (refund, confiscation, fine)	RMB 5.30 billion	3.2% of market cap and 3.4% of value lost since January
China revenue share implied by the fine	75.2%	Three quarters of revenue comes from the market that was sanctioned
Q2 revenue growth outlook (Q1 was 17.2%)	3% to 8%	First quarter to show the compliance adjustments in numbers
Net cash / market cap	44.4%	20.8% after customer advances and payables
Q3 2025 share of trailing net income	63.1%	Most of the 5.8x P/E denominator is a stake sale gain

What the SAMR Antitrust Penalty Found

Antitrust penalty against Q1 net income and how the market cap splits

Filing note (6-K on the administrative penalty decision, filed July 27, 2026): SAMR found that Trip.com violated Article 22(4) and (5) of the Anti-Monopoly Law, which bar a company with a dominant market position “from restricting business counterparties through exclusive arrangements without justifiable cause and from imposing unreasonable terms on transactions without justifiable cause.” It ordered Trip.com to stop, to fully refund RMB 122 million of hotel order security deposits deducted from hotel operators, confiscated RMB 1,658 million of gains and imposed a RMB 3,521 million fine, “representing 7.5% of the Company’s sales revenue generated from its operations in the People’s Republic of China in 2025.”
Working backwards from that line, 2025 China revenue was RMB 46.95 billion, 75.2% of total revenue of RMB 62.41 billion. Trip.com does not break out China revenue anywhere else, so this ratio comes only from the penalty decision.
Filing note (2025 Form 20-F risk factors): Under the Anti-Monopoly Law a violator can be ordered to stop, have illegal gains confiscated and be fined up to 10% of the prior year’s sales, and the fine can be two to five times that amount in especially serious cases. 7.5% is inside the 10% cap but high as a ratio, and the industry section below puts it next to earlier cases.
The warning signs were in the 20-F before the decision. In August 2025 the Guizhou provincial regulator met five travel platforms about pricing and antitrust compliance. In September the Zhengzhou regulator issued a rectification notice and the Guiyang regulator an inquiry. In December the Yunnan homestay association was reported to have named Trip.com in an antitrust campaign, and in March 2026 Beijing regulators called in twelve platforms over unreasonable platform rules.
In dollar terms the bill is manageable. RMB 5.30 billion is 2.12 times Q1 net income attributable to shareholders and 5.1% of the RMB 104.0 billion of cash, short-term investments and held-to-maturity deposits at the end of March.
Company disclosure (6-K, July 27, 2026): “The Company sincerely accepts the Decision and will adopt rectification measures in accordance with applicable laws and regulations to implement the Decision’s requirements.” The 6-K did not attach the decision or describe the rectification measures.
The accounting is still open. The decision came after the June 30 quarter-end, but the investigation had been running since January, and the Q1 release said Trip.com could not estimate the possible loss. Whether the charge lands in the Q2 statements, and whether the RMB 1.66 billion confiscation is booked against revenue or as a non-operating expense, is what to look for in the September 15 release.

Net Cash and Investments Inside the Market Cap

Own calculation (Q1 2026 6-K balance sheet): Cash, short-term investments and held-to-maturity deposits totaled RMB 104.0 billion at the end of March, and debt was RMB 30.83 billion, leaving net cash of RMB 73.17 billion. Investments of RMB 54.79 billion include RMB 22.95 billion of held-to-maturity deposits that are already in the cash figure, so long-term investments are RMB 31.84 billion.
Of a market cap of about RMB 164.8 billion, net cash is 44.4% and long-term investments 19.3%. The RMB 59.77 billion left over is what the market is paying for the travel business, 3.07 times TTM adjusted EBITDA of RMB 19.47 billion.
That math needs a haircut. Online travel agents collect cash from customers before paying hotels and airlines, and the balance sheet carries RMB 18.92 billion of advances from customers and RMB 19.99 billion of accounts payable. Taking both out leaves RMB 34.27 billion, 20.8% of market cap.
The question is what Trip.com does with it. Item 16E of the 20-F shows 10,016,014 shares repurchased in 2025 at an average of $61.25, about $613 million. The $5 billion program authorized in August still had $5.07 billion of capacity at December 31, so about $210 million of it was used in November and December.
A $0.30 per ADS dividend, about $200 million, was declared once in 2025. Weighted basic shares went from 660.2 million in Q1 2025 to 649.0 million in Q1 2026 (-1.7%). With the stock under $40, the roughly $5 billion of remaining capacity equals 20.6% of market cap.

Why Trip.com Cut Its Q2 Revenue Outlook

Quarterly revenue growth with the Q2 outlook and operating margin trend

Q1 2026 net revenue was RMB 16.21 billion (+17.2%), and the operating margin was 24.3% against 25.8% a year earlier. Sales and marketing expense was RMB 3.75 billion, 23.1% of revenue against 21.7%.
Company disclosure (Q1 2026 6-K release, June 24, 2026): Trip.com expects Q2 net revenue to grow by approximately 3% to 8% year over year, with a corresponding impact on margins and bottom-line results. It cited “macro headwinds such as elevated energy pricing and geopolitical volatility, alongside operational adjustments the Company implemented to align with evolving industry standards and compliance frameworks.”
Applied to Q2 2025 revenue of RMB 14.84 billion, that range means RMB 15.29 billion to RMB 16.03 billion. Even the 8% top end is more than five points below the slowest year-over-year growth of the past nine quarters, 13.6% in Q2 2024.
Company disclosure (Q1 2026 earnings call): CEO Jane Sun said: “That said, over the past several months, we have proactively reviewed and refined certain business practices to further strengthen our internal compliance and governance framework.” Management said the domestic market competes on service quality rather than aggressive price wars, and that short booking windows limit visibility into the second half.
The timing was different too. Q1 2025 results came out on May 19, but Q1 2026 results came out on June 24, five weeks later, and the release added a new paragraph saying the investigation could result in a significant fine or changes to business practices. The stock fell -12.5% the next day.
The Q4 2025 operating margin of 16.5% belongs in the picture. Sales and marketing was 28.6% of revenue that quarter, the highest in 13 quarters, before easing to 23.1% in Q1. If marketing rises again in a slower quarter like Q2, the margin can step down again, which fits the release’s warning about margins.

What the Street Believes vs What the Filings Show

The bull case for TCOM starts with the penalty being over and ends with a low multiple and a pile of cash. I broke the argument in broker notes and investor commentary into ten links and checked each against the 6-Ks, the 20-F and the earnings call.

#	The thesis	Evidence	Verdict
1	The antitrust case ended with a one-time fine	Total penalty RMB 5.30 billion, 3.2% of market cap; rectification measures not disclosed	Partly holds
2	Two quarters of profit cover the penalty	2.12 times Q1 net income; 5.1% of cash and deposits	Holds
3	Growth returns to the teens soon	Q2 outlook 3% to 8%; limited second-half visibility	Unverifiable
4	Take rates survive the penalty	2025 revenue / bookings 5.67%; SAMR found unreasonable terms	Unverifiable
5	International and inbound growth offsets China	International bookings about +65%; implied China share 75.2%	Partly holds
6	Net cash near half of market cap limits downside	Net cash 44.4%; 20.8% after customer advances and payables	Overstated
7	A 60-month low P/E of 5.8x makes it cheap	Q3 2025 is 63.1% of trailing income; forward P/E 10.7x	Overstated
8	The $5 billion buyback supports the stock	About $210 million of the new program used by year-end 2025	Conditional
9	Brokers see big upside to their average target	All 4 target changes after Q1 were cuts; 2026 EPS estimate -12.7% in 90 days	Conditional
10	Regulatory risk ended with this penalty	20-F cites homestay association complaint, private lawsuits, train ticketing guidance	Wrong

One link holds, two partly hold, two are conditional, two cannot be verified, two are overstated and one is wrong. The link that matters most is number 4. If the exclusive arrangements and unreasonable terms SAMR ruled against were what held the take rate up, then links 1 and 2 can be right about the dollars while the 10.7x forward P/E in link 7 sits on earnings that are about to shrink, and link 4 cannot be judged until Q2 and Q3 margins are reported.

TCOM Price Targets and EPS Revisions

EPS estimate trend and price target changes after the Q1 release

Aggregated sell-side research (28 target prices; about 30 revenue and EPS estimates): The average 12-month target is $60.07, with a low of $42 and a high of $78. A second aggregator shows 43 analysts at 29 Buy, 12 Hold and 2 Sell. Average 2026 revenue is estimated at RMB 67.43 billion, 8.0% above 2025, and average EBIT at RMB 17.77 billion.

Date	Broker	Rating	Target ($)
2026-09-03	HSBC	Hold, reiterated	75 to 48
2026-07-29	Bank of America Securities	Buy, reiterated	Not given
2026-07-28	Benchmark	Buy, reiterated	Not given
2026-07-28	Jefferies	Buy, reiterated	75 to 63
2026-06-26	Barclays	Not shown	75 to 60
2026-06-26	Macquarie	Outperform to Neutral	81 to 44
2026-06-25	Citigroup	Buy, reiterated	Not given
2026-06-25	Benchmark	Buy, reiterated	Not given

All four brokers that changed targets after the Q1 release cut them, and the new targets average $53.75. Macquarie made the biggest cut and downgraded to Neutral, and HSBC’s $48, the most recent, came after the penalty decision.
EPS estimates moved around the Q1 release rather than the penalty. The 2026 EPS estimate fell from RMB 27.94 ninety days ago to RMB 24.38 (-12.7%) and the 2027 estimate from RMB 31.82 to RMB 28.49 (-10.5%), with little change over the last thirty days. Seven analysts cut 2027 estimates in the last thirty days.
The average Q2 EPS estimate fell from RMB 6.99 ninety days ago to RMB 5.74. The aggregators do not say whether estimates include the penalty, so it will be hard to compare that figure directly with what Trip.com reports on September 15.
Outside view (investment site contributor, September 2026): A preview of Q2 results expected revenue growth in the high teens and argued the regulatory penalty creates a buying opportunity. That revenue assumption is well above Trip.com’s own 3% to 8% outlook and is not supported by the filings.

Who Owns Trip.com Group

Holder	Shares	Stake	Source
Capital World Investors	55,777,883	8.9%	20-F (citing 13G/A as of Sep 30, 2025)
Baidu	45,953,524	7.3%	20-F (citing 13D/A of Sep 2024)
BlackRock	32,685,688	5.2%	20-F (citing 13G at end of 2025)
Directors and officers as a group	63,766,293	9.4%	20-F (includes options)

Filings after the 20-F point lower. Capital World Investors reported 6.7% in a May 2026 13G/A, BlackRock 4.8% in July, and Executive Chairman James Liang 3.0% in April. The 20-F figure for Liang includes 34.08 million shares underlying options exercisable within 60 days, so it overstates actual common shares.
Among well-known funds in 13F information tables, only Tudor Investment held TCOM at the end of June: 167,727 common shares, excluding option lines, up from March. The same June table also shows a put option line on 203,800 shares. Berkshire Hathaway, Bridgewater, Tiger Global and 21 other funds on my list hold nothing.
No Korean company or institution has filed a stake. On the Q1 call Trip.com only mentioned Korean creators in its program inviting overseas content creators to China.
Filing note (6-K on the 2026 annual general meeting, June 30, 2026): Trip.com said all resolutions were adopted at the meeting in Singapore but did not disclose vote percentages. The board is Executive Chairman James Liang, CEO Jane Sun and director Rong Luo, plus five independent directors: Neil Shen, Gabriel Li, JP Gan, May Wu and Iris Xiao.
The new fact for management’s record is the penalty itself. The July 27 6-K promised stronger long-term governance, but the board is unchanged from the 20-F and no officer or committee responsible for the rectification has been named.

How Trip.com Compares With Booking and Expedia

The peers are Booking Holdings, Expedia and Airbnb, the large U.S.-listed online travel companies, plus MakeMyTrip in India, in which Trip.com holds a stake, and Tongcheng Travel, a competitor inside China. I classed Trip.com as a mature large cap, with revenue growth in the mid-teens and margins in the twenties, and chose margin stability, net cash and multiple history as the yardsticks.

Revenue index for six online travel companies and Trip.com revenue share

Company	Market cap ($bn)	Revenue growth	Operating margin	Forward P/E	Trailing P/E
Trip.com	24.6	+17.2%	24.3%	9.2x	5.8x
Booking Holdings	134.8	+8.1%	34.4%	14.1x	19.3x
Expedia	33.7	+14.0%	19.0%	11.5x	17.7x
Airbnb	101.9	+16.5%	21.0%	27.5x	38.9x
MakeMyTrip	4.7	+6.2%	15.3%	20.2x	217.8x
Tongcheng Travel	3.2	+6.8%	16.4%	5.2x	8.7x

Aggregator check (market data, latest quarter): The operating margins and forward P/Es in this table use aggregator definitions, which is why Trip.com shows a 9.2x forward P/E here against the 10.7x I get from the average EPS estimate.
Trip.com grew revenue 1.40 times between 2023 and 2025, faster than the three U.S. companies, and its share of combined dollar revenue across the six companies rose over the period. On latest revenue growth it is the fastest of the six at 17.2%; on forward P/E only Tongcheng is lower.

Forward P/E and net cash to market cap across six peers

Company	Net cash / market cap	Operating margin 2023 · 2024 · 2025	2025 revenue index (2023 = 100)
Trip.com	30.1%	25.4% · 26.6% · 25.3%	140
Booking Holdings	-2.8%	27.3% · 31.8% · 34.5%	126
Expedia	4.3%	11.9% · 12.2% · 14.7%	115
Airbnb	9.4%	15.3% · 23.0% · 20.8%	123
MakeMyTrip	-14.0%	3.6% · 9.7% · 12.4%	165
Tongcheng Travel	43.8%	15.5% · 13.7% · 17.4%	163

Own calculation (aggregator cash, total debt and market caps): The two companies with the most net cash relative to market cap are both Chinese, and they also carry the lowest forward P/Es. Trip.com’s 30.1% here uses the aggregator’s cash definition and is lower than the 44.4% I calculated from the company’s release.
The table cannot explain why the two Chinese names hold the most cash and trade at the lowest multiples. Booking has negative net cash yet trades at 14.1 times forward earnings with a margin that rose three years in a row, while Trip.com’s margin held at 25% to 27% and its discount widened after the investigation.

2025 revenue and three years of operating margins for online travel companies

By size, Booking’s revenue is about three times Trip.com’s, and Expedia and Airbnb are also larger. In the three-year margin table only Booking is above Trip.com, and MakeMyTrip improved the most, from 3.6% to 12.4%.
The number of competitors and market share cannot be verified. Trip.com names competitors in the 20-F but gives no share data, and the penalty 6-K states only that SAMR found a dominant market position, without share figures or a market definition.

China Platform Antitrust Fines Compared

China platform antitrust fines as a share of revenue

Filing note (Alibaba 6-K, April 12, 2021): SAMR found Alibaba violated Article 17(4) of the Anti-Monopoly Law by restricting counterparties through exclusive arrangements, and fined it “RMB18.228 billion (approximately US$2.8 billion), or 4% of” RMB 455.712 billion of 2019 China revenue, with three years of self-assessment and compliance reports required.
Outside view (Chinese state media, October 2021): Meituan was reported to have been fined RMB 3.442 billion, 3% of 2020 domestic sales of RMB 114.748 billion, for forcing merchants into exclusive “choose one of two” arrangements, and ordered to refund RMB 1.289 billion of exclusive cooperation deposits.
All three cases targeted locking suppliers into one platform. Only Trip.com also had gains confiscated, and its 7.5% rate is about 1.9 times Alibaba’s and 2.5 times Meituan’s. The case also came after the Anti-Monopoly Law was amended in 2022, which moved the relevant clause from Article 17 to Article 22.
Demand runs the other way. On the Q1 call Jane Sun said more than 80 countries now have visa-free entry to China, and Trip.com served about 20 million inbound travelers in 2025 and about 7 million in Q1 2026.
Outside view (U.S. financial daily, September 2026): China’s latest five-year plan sets the goal of becoming a tourism power, and policymakers see tourism as a way to lift consumption and service exports.
The same government that wants more travel spending gave the largest travel platform a 7.5% fine rate. As policy pushes travel demand, rules protecting hotel and homestay operators may tighten alongside it, and the 20-F lists the homestay association campaign and possible private lawsuits as separate risks. I could not find a continuous official statistic for online travel market growth, so the industry growth rate is marked unverifiable.

Conditions That Would Move TCOM Stock

Scenario	Condition	Indicator to check	When · Source
Upside	Q2 revenue growth at or above the 8% top end	Year-over-year revenue growth	Q2 results on September 15 · 6-K release
Downside	Q2 revenue growth below 3%	Year-over-year revenue growth	Q2 results · 6-K release
Downside	Operating margin excluding the penalty falls below 20%	Operating margin ex one-offs	Q2 results · reconciliation table
Downside	Full-year revenue / bookings drops below 5%	Take rate	Q4 earnings call
Upside	International platform bookings keep growing above 50%	International gross bookings	Quarterly earnings calls
Downside	New local penalties or private antitrust suits	Regulatory filings	6-K · 20-F

The line that matters most is the margin excluding the penalty. If the RMB 5.30 billion is booked in Q2, GAAP profit will fall, but that is a one-off. If the margin still drops below 20% after stripping it out, the compliance changes will have reset the commission and marketing structure, and the denominator under the 10.7x forward P/E comes down again.

What to Check Next in the Penalty Decision

The 6-K gives the confiscated gains as RMB 1,658 million but not the period or the transactions they were calculated on. If they were measured on extra commissions from exclusive hotel arrangements, the figure is a guide to revenue that will disappear. If they were measured on one-time items such as the deducted deposits, the ongoing effect is small.
The filing also does not say whether the promised rectification changes hotel contract terms, the price adjustment tool or search ranking rules. Shouldn’t the first check be the calculation basis and period for the confiscated gains in the full text of SAMR’s decision?

Methodology and Sources

The share price is $39.02, converted at RMB 6.7061 per dollar, and the share count of 629.7 million is an aggregator figure that matches the 20-F ownership table (Capital World at 8.9% and Baidu at 7.3%) within 2%.
Financials come from the 6-K on the SAMR penalty decision, the Q1 2026 earnings 6-K, the 2025 Form 20-F, and the releases and call transcripts in Trip.com’s quarterly results library. The Alibaba case comes from Alibaba’s 6-K and the Meituan case from Chinese state media reports.
I parsed all 24 earnings releases from Q2 2020 to Q1 2026 in code and checked segment totals, the operating income identity from 2022 onward, and annual revenue, operating income and net income for 2021 through 2025. The bands use 60 month-end closes plus the latest price. Trip.com does not publish slide decks; its investor relations site has webcasts, releases, transcripts and 6-K filings only. Consensus figures are aggregated sell-side research, and quotes are taken verbatim from filings and call transcripts.

Bitmine (BMNR) Stock Analysis: mNAV Below 1 and Dilution

J. Equity. Research — Sun, 13 Sep 2026 21:08:23 GMT

Bitmine Immersion Technologies (NYSE: BMNR) is a company whose business is, almost entirely, holding Ethereum. It owns 5,929,198 ETH, or 4.9% of supply, and its market capitalization is about $15.10 billion at a $25.03 share price. This BMNR stock analysis covers how the company got here, how much ETH it holds and how fast it is still buying, whether the stock trades above or below the assets it holds, what share issuance does to existing holders, what chairman Tom Lee and the three covering brokers expect, who owns the shares, how the company compares with buying ETH directly or with Strategy, SharpLink Gaming and Hyperliquid Strategies, and the conditions under which the share price rises or falls.
The short version: the market capitalization is 0.96 times the $15.7 billion of crypto, cash and venture stakes the company reported in its September 8 weekly filing, a discount of about 4%. While that ratio sits below 1, selling new shares to buy ETH lowers ETH per share for existing holders. For the stock to rise, either the ETH price has to rise or that ratio has to move back above 1, and the last section lists the conditions in a table.
Two limits first. The share count is the 603.2 million on the cover of the July 9 quarterly report, the last disclosed figure, so market capitalization and per-share holdings are estimates on that basis, while assets are the company’s September 7 tally. The article draws on the two investor decks the company posted, all 100 weekly 8-K press releases, the quarterly report, the proxy statement and the 13F holdings tables of 20 well-known investors.

Cover of Bitmine's 72-slide July 2026 investor deck

Over the last month the stock is up 38.4%, over three months 55.4%, and over one year down 47.6%. Ethereum went from a June low of $1,630 back to about $2,500 in those three months. The most recent results are fiscal Q3 2026 (quarter ended May 31, 2026), reported July 14.

Google Finance quote card for Bitmine Immersion Technologies (NYSE: BMNR)

What Bitmine Does and How It Got Here

Bitmine took its name in July 2021 when a shell called Sandy Springs Holdings reverse-merged into it, with founder Jonathan Bates as chairman and CEO. From 2022 it ran immersion-cooled Bitcoin miners in Trinidad and Pecos, Texas. In May 2024 it filed an 8-K (Item 4.02) saying its FY2023 and FY2022 financial statements could not be relied on, and changed auditors. Through May 2025 total assets were $8.26 million and the market capitalization was around $30 million.
The pivot happened in June 2025. A 1-for-20 reverse split and an NYSE American listing on June 5, a ThinkEquity-led offering on June 10, and on June 30 the election of Fundstrat’s Tom Lee as chairman alongside a private placement of 55,555,556 shares at $4.50. The $250 million was funded “in a combination of cash and cryptocurrencies,” and on July 8 the company signed an ETH treasury strategy consulting agreement with Ethereum Tower LLC. The source is the June 30, 2025 8-K.
The year after that was spent growing the treasury. The January 15, 2026 annual meeting raised authorized shares from 500 million to 50 billion; Pier Two, an Australian staking-infrastructure company, was acquired on March 24 to form the MAVAN Holdings subsidiary; auditor Bush & Associates was dismissed on April 27; a preferred stock was sold on June 4; the fiscal year-end was moved from August to December on July 9; and on September 4 the company and Ethereum Tower mutually terminated their staking management agreement. The company has three full-time employees.

Year	One line	Source
2021	Shell reverse merger creates Bitmine under founder Bates	8-K Jul 27, 2021 (5.01, 5.06)
2022	Immersion mining JV in Trinidad and Texas (ROC Digital)	8-K Oct 19, 2022 (2.01)
2023	A $645,000-revenue miner losing $2.46 million	10-K/A
2024	Non-reliance on FY2023 and FY2022 statements; auditor change	8-K May 7, 2024 (4.01, 4.02)
2025	Reverse split, NYSE American, Tom Lee, $250 million placement, $2 billion ATM	8-K Jun 10, Jun 30, Jul 9, 2025
2026	50 billion authorized shares, Pier Two, auditor change, preferred, fiscal-year change, MSA termination	8-K Jan 20, Mar 30, May 1, Jun 5, Jul 13, Sep 8, 2026

66 weekly closes since listing; the $134.96 peak and the six events in the timeline table

Own calculation (66 weekly adjusted closes): The weekly high since listing is $134.96 in the week of July 3, 2025, and the low before it is $4.26 in the week of June 27, a multiple of 31.7. At $25.03 the stock is 81.5% below the high and 5.05 times its first week.
Five fiscal years in one table separate the mining era from the first treasury year. Revenue, operating income and net income are 10-K XBRL values; the debt ratio is total liabilities over equity; ROE is net income over year-end equity.

Fiscal year-end	Revenue	Operating income	Net income	Operating margin	Net margin	Debt ratio	ROE
Aug 2021	$0	-$0.13 million	-$0.15 million	n/a	n/a	79.2%	-42.8%
Aug 2022	$0.43 million	-$1.71 million	-$2.01 million	-400.8%	-468.9%	7.7%	-27.1%
Aug 2023	$0.65 million	-$2.41 million	-$2.46 million	-374.0%	-382.0%	31.1%	-39.4%
Aug 2024	$3.31 million	-$2.45 million	-$3.29 million	-73.9%	-99.5%	78.2%	-80.6%
Aug 2025	$6.10 million	$444.21 million	$348.58 million	7,288.1%	5,719.1%	1.2%	4.0%

An operating margin of 7,288% is not a typo. Ethereum mark-to-market gains run through operating income under the company’s accounting, so $6.10 million of revenue carries $444.21 million of operating profit. The only profitable year is the one in which ETH went up; nine months into FY2026 the net loss is $9.11 billion.
From 318 trading days since listing, the five largest single-day moves all fall inside ten days, June 30 to July 10, 2025.

Date	Move	Close	Filings within a day	What it was
2025-06-30	+694.8%	$4.26 to $33.90	8-K Items 5.02 and 7.01 (Tom Lee named chairman; $250 million placement at $4.50)	Closed at 7.5x the placement price
2025-07-01	+35.7%	$33.90 to $46.00	No filing	Day before the 10-Q
2025-07-03	+130.8%	$58.50 to $135.00	8-K Item 1.01 (placement purchase agreements); 10-Q; 10-Q/A	Shortened pre-holiday session; 30x the placement price
2025-07-09	-40.2%	$111.50 to $66.72	8-K Item 1.01 ($2 billion ATM with Cantor and ThinkEquity); S-3ASR (resale registration for placement shares); 8-K Item 3.02 (Ethereum Tower consulting agreement)	The day 55.6 million shares bought at $4.50 became sellable
2025-07-10	-31.0%	$66.72 to $46.01	No filing	66% below the $135 high

On July 9 three filings landed together: the $2 billion at-the-market program with Cantor Fitzgerald and ThinkEquity as sales agents, an automatic shelf that registered the placement shares for resale, and the Ethereum Tower consulting agreement with unregistered shares issued as consideration (July 9, 2025 8-K). Over the next two sessions the stock gave back two thirds of the $135 high. That the filings and the drop share a date is what the record shows; that the filings caused the drop is not something this article can prove. Across the 318 sessions, 134 moved more than 5% in a day, 64 up and 70 down.

Ethereum Holdings and Staking Revenue

Holdings and the Pace of Buying

The weekly release attached to the September 8 8-K puts holdings at 5,929,198 ETH, 4.9% of a 120.7 million supply. Staked ETH is 5,067,309, or 85.5% of holdings; crypto, cash and venture stakes together are $15.7 billion; cash is $593 million (September 8, 2026 8-K).
The company has filed a weekly holdings 8-K every Monday since July 2025. I parsed all 100 releases into a time series. Net holdings never fell from one week to the next, and the pile is up 36 times from 163,142 ETH on July 14, 2025. Whether ETH was sold and rebought within a week is not something the data can show.

Weekly ETH purchases from the 8-K releases, from a 203,826 peak to 7,391

Own calculation (weekly press releases): Weekly purchases peaked at 203,826 ETH in the week reported October 20, 2025, and fell to 7,391 ETH in the August 10, 2026 release. The September 7 figure is 28,086. The distance to the stated 5% goal is 6,035,000 minus 5,929,198, or 105,802 ETH.
The trough was one twenty-eighth of the peak, and the latest week is back to about one seventh. At September’s pace the 5% goal is four weeks away; at August’s pace, fourteen.
The company said this first. The first of four goals in the July 2026 Chairman’s Message is to “slowly reach 5% of the Ethereum supply,” and the transcript continues: “We’ve talked about slowing our buying. Part of it is that the Ethereum Foundation is in transition, they’re shrinking their role. And we spoke to many people at the Foundation, and at the moment, I think we shouldn’t try to accelerate and have more concentration beyond 5%.”

Investor deck slide 67: four goals, the first being 'slowly reach 5%'

The other three goals on slide 67 are funding more Ethereum Foundation spin-offs, investing in financial services and crypto unicorns, and strengthening the ecosystem. If buying ETH every week was this company’s whole job, the jobs it now describes belong to an investment firm.

Investor deck slide 64: seven first-year achievements, two of them with numbers

Company disclosure (investor deck p64, July 2026): Seven bullets under “Achievements in first year of operations”: 5.74 million ETH, or 4.8% of supply; MAVAN, “the largest single-staker operator in the world”; moonshot investments including Beast Industries, Eightco and A+; partnering with Ethereum Foundation 2.0 spin-offs; the first ETH preferred, BMNP; the NYSE uplisting; and the Russell 1000 addition.
The bullets without numbers look like this in filings. MAVAN Holdings is 98% owned by the company and 2% by Ethereum Tower LLC. Eightco started as a $20 million purchase at $1.46 a share in September 2025 (7% of the company) and grew in March 2026 through a $75 million at-the-market purchase and $80 million of open-market buying at $0.92 a share to 100,655,143 shares, or 31.94%, with Tom Lee joining Eightco’s board on March 10. BMNP is 3.5 million shares of 9.50% Series A perpetual preferred sold at $80 on June 4, 2026 for $273.8 million net.

Staking Revenue and Operating Costs

The segment table in the quarterly income statement shows what the company sells. Figures are GAAP quarterly revenue.

Segment	FQ3 2026 (May 31, 2026)	FQ2 2026	FQ1 2026
Staking and validation	$45.74 million	$10.20 million	$0.98 million
Self-mining	$0.62 million	$0.22 million	$0
Consulting	$0.17 million	$0.20 million	$0.20 million
Leasing	$0	$0.42 million	$1.11 million
Total	$46.54 million	$11.04 million	$2.29 million

Staking means depositing ETH with validator nodes and collecting network rewards. A line that did not exist three quarters earlier is now 98.3% of revenue. Gross margin was 87.8% and operating income turned positive for the first time at $3.92 million, which a business that uses almost no equipment or electricity will do. The company reports a 7-day yield of 2.61% and annualized staking revenue of about $330 million.
The yield is not the company’s to set. Rewards per validator thin out as more ETH is staked network-wide, so what the company decides is the staking ratio, 85.5%. Whether the other 14.5% is in transit, held for trading or pledged, the 10-Q does not say.
Costs are set by contracts more than by payroll. There are three employees, and the staking infrastructure is run by the Australian team that came with Pier Two, inside a subsidiary. With Ethereum Tower the company had a consulting agreement (July 8, 2025) and a ten-year staking management agreement with a revenue-participation fee (March 24, 2026); the management agreement was mutually terminated on September 3. Accrued “digital asset management fees” were $6.71 million at May 31, double the $3.42 million at August 31, and the company guided twelve-month asset management fees at $40 to $50 million. The preferred dividend costs $26.6 million a year.

Is BMNR Stock Cheaper Than the Assets It Holds?

Market Cap Against Reported Assets

Three multiples fail here. There is no P/E because the company loses money, P/S at 246.7x carries no information with $61.2 million of revenue, and fifteen months of listing history is not enough to draw a P/B band. Five fiscal year-ends look like this.

Fiscal year-end	Year-end price	P/E	P/B	Dividend yield	FCF
Aug 2021	OTC	Loss	n/a	None	-$0.05 million
Aug 2022	OTC	Loss	n/a	None	-$4.40 million
Aug 2023	OTC	Loss	n/a	None	-$1.42 million
Aug 2024	OTC	Loss	n/a	None	-$0.11 million
Aug 2025	$43.61	3.3x	1.17x	None ($0.01 declared in FY2026)	-$5.18 million

The FY2025 P/E of 3.3x comes from the $13.39 EPS discussed below. The P/B of 1.17x divides $43.61 by book value per share of $37.40, which is $8.69 billion of equity over 232.4 million shares at August 31. Free cash flow is operating cash flow minus capex, negative in all five years; ETH purchases sit in investing cash flow and are not in it.
So the sector divides market capitalization by the assets held, a ratio the market calls mNAV. Because the value depends on the denominator, here are four versions with the denominator, its date and what it deducts.

Method	Denominator	Denominator date	Debt and preferred	Value
Market cap ÷ company-reported assets (crypto, cash and venture stakes, $15.7 billion)	Total assets at market	2026-09-07	Before debt, before preferred	0.962
Market cap ÷ (reported assets less preferred liquidation value of $280 million)	Total assets at market	2026-09-07	Preferred only	0.979
Market cap ÷ book equity in the 10-Q ($11.60 billion)	Book net assets (crypto at fair value)	2026-05-31	After debt, before the preferred issue	1.302
Aggregator P/B	Book net assets	2026-05-31	After debt	1.25

Four ways to compute mNAV; 0.962 on the weekly reported assets

The four numbers are not the same metric. The top two use the market-value assets the company tallies every week; the bottom two use book net assets at May 31. Because the company carries crypto at fair value, book equity equals net assets at May 31 prices, and it leaves out the 81,587 ETH bought since, the $273.8 million of preferred proceeds and the venture stakes. Total liabilities at May 31 were $30.13 million, 0.2% of assets, so deducting debt from the first row still gives 0.963. Since the company publishes its assets weekly, this article uses the first row, 0.962.
Own calculation (same method as the August 26 close): The same calculation on August 26 gave 1.008. In three weeks market capitalization moved from $15.03 billion to $15.10 billion, +0.5%, while the company’s reported assets went from $14.9 billion to $15.7 billion, +5.4%.
ETH rose only 2% in those three weeks. The company bought more ETH and its cash and venture stakes grew, so the ratio slipped under 1 because of the denominator more than the price.
The numerator carries an assumption too. The share count is the 603.2 million on the July 9 cover page, and whether ATM sales have added to it will not be known until the next annual report. If they have, market capitalization is higher than shown here and the ratio is closer to 1.

Price vs ETH Price: The 0.015 Formula

Investor deck slide 69: share price = 0.015 x ETH price + ETH-per-share accretion

Company disclosure (investor deck p68 and p69): Slide 68 is titled “BMNR: Stock price follows ETH price.” Slide 69 gives the coefficient: share price = 0.015 × ETH price + ETH-per-share accretion. The table on the same slide maps $22,000 ETH to a $300 to $500 share price, $62,500 to $1,200 to $1,500, and $250,000 to $4,000 to $5,000. In the video the chairman puts the correlation between the two at 90%.
Own calculation (share price ÷ ETH price): Multiply 0.015 by the $2,495 ETH price the company printed in its weekly release and you get $37.43. The stock is at $25.03. The coefficient the market is actually using is 25.03 ÷ 2,495 = 0.010.
The coefficient is three things multiplied together. Each share carries 0.00983 ETH (5,929,198 divided by 603.2 million shares, on the July 9 count). That much ETH is worth $24.53 at $2,495. The $25.03 share price divided by $24.53 is 1.02, and that 1.02 is what the market pays per dollar of ETH inside the share. Run the company’s 0.015 through the same division and you get 0.015 ÷ 0.00983 = 1.53. The coefficient the company wrote into its formula assumed the market would pay 1.53 times the ETH value inside each share; the market currently pays 1.02.
On an ETH-only basis the ratio is 1.02; on the all-assets basis of the previous section it is 0.96. The gap is the $600 to $700 million of cash and venture stakes that sit in the denominator of one and not the other.

Ethereum month-end price and BMNR month-end share price, the same curve

The 90% correlation holds in month-end closes. From the August 2025 high of $4,392 to the June 2026 low of $1,630 ETH fell 63%; the stock went from $43.62 to $13.31, down 69%. But correlation and coefficient are different claims. The market sets the first term; the only term the company controls is ETH-per-share accretion.

Five numbers in the financial statements set the direction for everything else.

Number	Value	Effect on the investment case
Market cap ÷ reported assets	0.962	Below 1, selling new shares to buy assets lowers assets per share
ETH per share (May 31)	0.009345	The company’s own scorecard metric; it fell once, in the February quarter
Average ATM sale price (nine months)	$34.84	39% above the current $25.03; the ratio was above 1 then
Nine-month ETH mark-to-market loss	$9.04 billion	99.3% of the $9.11 billion net loss; no cash left the company
Quarterly staking revenue	$45.74 million	98.3% of revenue and the source of the first operating profit, $3.92 million

Here is the first row worked through with numbers. Reported assets of $15.7 billion over 603.2 million shares is $26.03 of assets per share against a $25.03 share price. Sell one new share at that price and buy ETH with the proceeds (ignoring fees): assets rise by $25.03, the share count rises by one, and assets per share fall below $26.03. The new shareholder pays $25.03 and receives $26.03 of assets, so the new holder is not the one who loses; existing holders’ assets per share are. When the company sold 340,748,312 shares over nine months at an average of $34.84, above assets per share at the time, existing holders’ assets per share rose. Whether issuance helps or hurts holders comes down to the sale price against assets per share, with fees and any proceeds not spent on ETH as conditions.
Own calculation (holdings ÷ 10-Q share counts): ETH per share was 0.008067 at August 31, 2025, 0.009192 at November 30, 0.009058 at February 28, 2026 and 0.009345 at May 31.
In the February quarter the company bought 747,088 more ETH and still lost ground, 1.46%, because it issued 88.51 million new shares while ETH had fallen from the $3,000s to $1,958. The company’s January 12, 2026 press release said “we have only issued shares at a premium to mNAV,” and for that quarter the sentence did not hold. After May 31 there is no quarterly share count, so 0.00983 on the July cover count is a ceiling on the assumption that no shares were repurchased since. A $1 billion buyback was authorized on July 25, 2025 (8-K) and the May 31 10-Q shows no repurchases.

The NAV-per-share sentence week by week: present in 40 releases, absent from 15

The change in the company’s own language dates the shift. The sentence “we lead our peers in the velocity of raising crypto NAV per share” appeared in 40 weekly releases from August 4, 2025 through June 15, 2026, and has been absent from 15 consecutive releases since June 18, the week Ethereum printed its cycle low of $1,630.
The capital picture is three lines: $20.37 billion of paid-in capital, an accumulated deficit of $8.77 billion, and equity of $11.60 billion. Most of the deficit is the gap between an average ETH cost of $3,517.14 and a May 31 carrying price of $2,004 passing through the income statement. Cash rose from $340.29 million at May 31 to $593 million in the September 7 release. The 9.50% preferred costs $26.6 million a year in dividends, which the $330 million annualized staking revenue covers, and the ATM program has $24.5 billion of remaining capacity, 1.6 times the market capitalization. The source is the fiscal Q3 2026 Form 10-Q.

What Tom Lee and the Street Expect

The July 2026 Deck and the ETH 2.0 Thesis

The newest presentation on Bitmine’s investor page is a 72-slide deck from July 2026 whose title borrows a robotics term for the unease people feel toward near-human machines and applies it to wealth created by AI. It shares its title with the July 2026 Chairman’s Message and is essentially Tom Lee’s video script turned into slides, in three parts: macro headwinds in early 2026 with signs of a bottom, why the future market for Ethereum is exponential, and why Bitmine is primed for the next bull cycle.
Company disclosure (investor deck p6 and p7, July 2026): Five reasons crypto was weak in the first half of 2026: Fed expectations flipped from four cuts to 1.6 hikes, the Clarity Act sits at a 44% probability of passage on prediction markets, 86% of venture dollars went to AI, financials underperformed, and “crypto spring is not a straight line higher.”

Investor deck slide 18: year-to-date sector returns with Ethereum at -40%

Slide 18 sizes the headwind. In the deck’s year-to-date table Ethereum sits at the bottom at -40% with Bitcoin at -27%, while semiconductors are up 41% and the S&P 500 is up 11%. Slides 20 through 22 make the bottom call: DeMark Analytics, the company’s timing advisor for market purchases, used a 1987 S&P 500 analog to point at roughly $2,225 in August, and Stephen Suttmeier, formerly of Bank of America, set moving-average conditions at $1,708 to $1,693 and $1,846 to $1,876.
Own calculation (ETH month-end closes): Ethereum closed August at $2,467, above the deck’s August level. The argument belongs to two outside technicians, and the deck does not connect their levels to Bitmine’s own buying schedule.
Part two is “ETH 2.0.” Slides 25 to 44 define Ethereum 1.0 as the ICO boom, the NFT boom, ETFs and stablecoins, note the two peaks at $4,866 and $4,955 and the drawdown to $1,875, and line up Amazon ($6 to $241), Nvidia ($1 to $197) and JPMorgan ($58 to $334) as examples of what happens to a price when the addressable market widens.

Investor deck slide 34: developers by blockchain, 3,796 on the EVM stack

Company disclosure (investor deck p28 and p34): The evidence that “Wall Street favors Ethereum” is a list: BlackRock’s BUIDL, JPMorgan’s MONY, Securitize, Ondo Finance, Robinhood Chain on Arbitrum, Coinbase’s Base and Kraken’s Ink. Slide 34 counts developers: 3,796 on the EVM stack, 2,886 on Ethereum, 883 on Bitcoin and 760 on Solana, which the deck says “exceeds all others combined.”
These two slides carry the densest outside numbers in the deck, sourced to Fundstrat and CoinMarketCap. The chairman’s claim that Robinhood Chain processed $560 million on July 9 and has since crossed $1 billion is Robinhood’s figure, not something a Bitmine filing can confirm; it goes into the verdict table as unverified.

Investor deck slide 62: ETH 2.0 price scenarios from $25,000 to $250,000

Company disclosure (investor deck p62): The ETH 2.0 price scenarios are $25,000, $75,000 and $250,000. The $250,000 figure is attributed to Ethereum co-founder Joe Lubin’s “100x” comment and to a report by Etherealize. In the video the chairman says, “Where do I land? I don’t know,” and then, “1,800 to 250,000 is roughly 100x.”
Slides 45 to 61 are the title concept, borrowing Masahiro Mori’s 1970 robotics hypothesis to argue that when AI creates more wealth than its users, humans will fear it, that the trust layer between humans and AI will be a smart-contract blockchain, and that this is why ETH becomes money. Of 72 slides, the ones with Bitmine’s own financial or operating figures are 64, 66, 67, 68, 69 and 71, eight with the cover and contents. The other 64 are about Ethereum, macro and AI. That split shows what the company wants to explain to investors; it is not a measure of the deck’s worth. The one test this article applies is where the deck explains the difference between buying ETH and buying this stock, and that lives on one slide, the formula on page 69, covered above. Most source lines read “Source: Fundstrat,” the research firm the chairman co-founded and runs.
The second deck on the same page is a 27-slide results presentation. Its cover is dated July 17, 2025, but the content covers fiscal 2025 and a dividend declared November 21, 2025, so it reads as a November 2025 update.

November 2025 results deck slide 6: FY2025 net income and $13.39 EPS

Company disclosure (results deck p6, November 2025): FY2025 GAAP net income of $328,161,370, fully diluted shares outstanding at August 31, 2025 of 24,515,226, and GAAP diluted EPS of $13.39.
Filing footnote (10-K XBRL): The net income tag for the same fiscal year reads $348,577,000, $20.4 million above the deck. It looks like a before-and-after-preferred distinction, but the company does not say which basis the deck uses, so the table records it as unverified.
The reason $13.39 will not repeat is the denominator. The 24.5 million weighted-average count is an average dragged down by the placement and ATM sales all landing in July and August; actual shares at August 31 were 232.4 million. The numerator is two months of ETH mark-to-market gains: operating income was $444.2 million on revenue of $6.1 million. Nine months into FY2026 the net loss is $9.11 billion, and the two covering analysts have FY2026 EPS at -$21.885.

November 2025 results deck slide 21: treasury from $0 to $11.8 billion

Company disclosure (results deck p21): “The BitMine Story, Exponential Growth.” February 2025, $0 in mining equipment. June 2025, $15 million of Bitcoin. July 2025, $250 million of Ethereum. Then $11.8 billion. The latest weekly release puts the same figure at $15.7 billion.

November 2025 results deck slide 15: the $0.01 annual common dividend

Company disclosure (results deck p15 and p17): An annual common dividend of $0.01 per share, declared November 21, 2025, payable December 29. Slide 17 is titled “BMNR only large-cap crypto stock to pay dividend.” One cent on a $25.03 share is a 0.04% yield, and the cash flow statement shows $4.26 million of dividends paid over nine months.
One more change matters for every fiscal-year comparison the decks make. On July 9, 2026 the board moved the fiscal year-end from August 31 to December 31. After the FY2026 10-K there will be a four-month transition report on Form 10-KT covering September through December 2026.

12 Bull Arguments Checked Against Filings

I collected the arguments for owning BMNR from the investor deck, the Chairman’s Message, analyst notes and investor communities, and tested each against filings.

#	The thesis	Evidence	Verdict
1	Ethereum bottomed at $1,630 in June	Deck p20-22 outside technical work; August close $2,467	Partly holds
2	ETH 2.0 takes the price to $25,000-$250,000	Deck p62; Lubin and Etherealize cited	Unverified
3	Share price = 0.015 × ETH with 90% correlation	Deck p69; own calculation gives 0.010	Overstated
4	Largest holder at 4.9% of supply earns a scarcity premium	Weekly 8-K; market cap to assets 0.962	Conditional
5	Staking yields $330 million a year and three employees mean operating profit	10-Q FQ3 staking revenue $45.74 million; operating income $3.92 million	Partly holds
6	Shares are only issued at a premium, so issuance grows ETH per share	10-Q quarterly shares and holdings; February quarter -1.46%	Overstated
7	NYSE listing and Russell 1000 bring institutions	Vanguard 13G 5.13%; ARK 13F 9.70 million to 8.81 million shares	Partly holds
8	Moonshots (Eightco 31.94% and others) add upside	10-Q Note 6; $175 million invested	Conditional
9	9.50% preferred BMNP funds ETH without dilution	8-K June 5, 2026; $273.8 million net	Holds
10	The Clarity Act re-rates crypto	Deck p11-13; 44% on prediction markets	Conditional
11	The bear market bottoms in October; target $63.60	Cantor Fitzgerald note	Unverified
12	The company has never sold ETH	100 weekly 8-Ks; net holdings never fell week over week	Partly holds

Outside view (Cantor Fitzgerald research, September 2026): The note frames Bitmine as “a leveraged proxy for Ethereum’s price movements,” expects the drawdown to find a floor around October 2026, and lists as risks the absence of an operating cash-flow cushion, the concentration in a single asset, and the fact that staking yields are themselves denominated in ETH.
Outside view (investor community forecast post, June 2026): Titled “5% is the bait, the real trigger is ETH per share,” the post set a six-month target return of 77.51%. The company’s own scorecard metric is the one the market watches.
Claim 4 separates a fact from a forecast. Being the largest holder is a fact; that a premium will attach to it is a forecast, and a ratio below 1 today does not refute it. The argument only works when the ratio is above 1, hence conditional. Claim 6 is a sentence from the company’s January 12, 2026 press release, and it did not hold in the February quarter. Claim 12 is limited by what the weekly data can show: net holdings never fell from one week to the next, which does not rule out sales inside a week.

Price Targets and Analyst Revisions

Three sell-side targets and Cantor Fitzgerald's target history

Three brokers cover the stock. Aggregated sell-side research puts the mean target at $44.53, the low at $30 and the high at $63.60, and all three ratings are Buy-equivalent.

Date	Firm	Rating	Target
2026-09-10	Cantor Fitzgerald	Overweight, maintained	$30.60 to $63.60
2026-09-04	B. Riley	Buy, maintained	Not disclosed
2026-07-01	Cantor Fitzgerald	Overweight, maintained	$39 to $30.60
2026-02-24	B. Riley	Buy, maintained	Not disclosed
2025-10-16	B. Riley	Buy, initiated	Not disclosed

Aggregator cross-check (aggregated sell-side estimates): The FY2026 (August year-end) EPS estimate is -$21.885 across two analysts, with one downward revision in the last 30 days and the 90-day-ago figure at -$15.82. FY2027 EPS is +$0.64 and FY2027 revenue $595 million. Because this company’s EPS estimate is an ETH price estimate, a revision downward means an analyst lowered their ETH assumption.
Bitmine does not hold a quarterly earnings call. It issues a press release on results day, and management commentary comes through the Chairman’s Message videos. In the July message Tom Lee said, “So our future price for Bitmine stock is heavily dependent on the future price of Ethereum.” Had there been an earnings call, that sentence would have been the guidance.
Cantor’s September 10 note doubled the target it had cut to $30.60 two months earlier, on the argument that the ETH bear market bottoms around October. One fact belongs next to that upgrade. Under the July 9, 2025 8-K, the sales agents for the company’s $2 billion at-the-market program are Cantor Fitzgerald and ThinkEquity. Research and capital markets are supposed to sit behind a wall, and this article did not verify the conflict disclosures in the note itself. The point is to read the target alongside that relationship, not to claim the relationship makes the target wrong.

Major Shareholders and Management

I read the beneficial-ownership filings and the 13F holdings tables of 20 well-known investors. Directors and officers together held 855,146 shares in the December 9, 2025 proxy, 0.14% of the company; chairman Tom Lee held 226,722 shares (DEF 14A).

Holder	Common shares	Stake	Source
Vanguard Capital Management	23,340,410	5.13%	13G, Apr 29, 2026
ARK Investment Management	8,811,588	1.46%	13F, Jun 30, 2026
Citadel Advisors	3,302,118 (call options on 6,391,600 and put options on 5,270,600 shares reported separately)	0.55%	13F, Jun 30, 2026
D. E. Shaw	2,070,201	0.34%	13F, Jun 30, 2026
Tudor Investment	501,000	0.08%	13F, Jun 30, 2026
Millennium Management	249,600	0.04%	13F, Jun 30, 2026
Directors and officers (10)	855,146	0.14%	Proxy, Dec 9, 2025

Stakes are recomputed on the July 9 cover count of 603.2 million shares, so they differ slightly from the 5.13% printed in Vanguard’s 13G. Citadel’s call and put positions are reported in share-equivalent terms in the 13F table but are not common stock, so they are excluded from the stake.
Some early investors reduced their holdings. Peter Thiel’s Founders Fund (FF Consumer Growth II) reported 3,926,759 shares, or 7.0%, in a 13G on July 15, 2025, and 1,963,380 shares, or 0.7%, in an amendment on November 14. Half the shares were sold; the rest of the drop in percentage terms is dilution, as the share count grew from 56 million to more than 400 million over the same period. ARK cut from 9,699,165 shares at March 31 to 8,811,588 at June 30, a 9.1% reduction. MOZAYYX UGP, which filed a 13D the same day at 9.99% including strategic-advisor warrants from the placement, has not amended since.
Own calculation (13F tables, 20 investors): Berkshire Hathaway, Bridgewater, Renaissance, Soros, Duquesne, Pershing Square, Third Point, Baupost, Appaloosa, Greenlight, Scion, Tiger Global, Coatue, Lone Pine, Viking, Elliott, Icahn, Two Sigma and Paulson did not hold BMNR in their June 30, 2026 tables. Of the six that did, all but ARK are multi-strategy hedge funds, and their common-stock holdings together are 2.5%.
No Korean company has invested; a search of 78 filing bodies, the proxy and every 13D/G for Korean corporate names found none. Korean individuals are a different story.
Outside view (Digital Today report, January 2026): Citing Bloomberg’s compilation of Korea Securities Depository data, Korean retail investors net bought about $1.4 billion of Bitmine in 2025, second only to Alphabet, plus $566 million of a 2x leveraged ETF. In the single month from July 4 to August 4, 2025 the net purchase was $253.47 million, the most of any foreign stock.
Outside view (Money Today report, August 2026): A year on, the top net-buy slot has passed to a 3x semiconductor ETF, whose one-month net purchases were 8.1 times Bitmine’s a year earlier. The company maintains a Korean-language press-release page and issues its weekly holdings release in Korean as well as English.
Half the management team turned over in a year. Founder Jonathan Bates handed the chairman’s seat to Tom Lee on June 30, 2025 and the CEO seat on November 14, and does not appear among the eight director nominees at the January 2026 meeting. CFO Raymond Mow signed a separation agreement on December 11, 2025 and left January 16, 2026. President Erik Nelson was terminated “without cause” on January 22, 2026 with $585,000 of severance. There have been 15 8-K Item 5.02 filings and 32 Form 4 insider filings in the last twelve months. New CEO Chi Tsang ran Asia TMT global banking at HSBC and later founded the venture fund m1720; the CFO and COO is Young Kim.
Outside view (Decrypt and CoinDesk reports, November 2025): Both framed the appointment as Tom Lee’s Ethereum treasury replacing its founder-CEO with an investment banker. TheStreet’s headline the same day read “Wall Street legend backed stock slumps after new CEO appointment.”
The January 15, 2026 annual meeting is the record of how shareholders see this team (January 20, 2026 8-K).

Proposal	For	Against or withheld	Approval
Executive chairman special performance award (advisory)	140,246,624	39,301,665 against, 5,590,890 abstain	78.1%
Authorized shares from 500 million to 50 billion	222,226,997	49,445,035 against	81.8%
2025 Omnibus Incentive Plan	164,207,516	14,360,681 against	92.0%
Director Thomas Lee	182,066,768	3,072,442 withheld	98.3%
Director Lori Love	175,038,565	10,100,645 withheld	94.6%

Filing footnote (proxy statement, award table): The chairman’s performance shares sit in six cells: 500,000 shares at a 4% share of ETH supply and 1,000,000 at 5%; the same quantities at a $125 and a $250 share price; and the same again at a $25 billion and a $50 billion market capitalization, up to 4.5 million shares in total. The 4% cell is already met; the $125 cell is five times the current price, and the $25 billion cell is 1.66 times the current market cap.
One shareholder in five voted against the chairman’s award on the same day four in five approved a hundredfold increase in the shares the company may issue. Authorized shares are a ceiling rather than a plan, but next to the $24.5 billion ATM capacity they define how much stock the company can sell when it chooses to.

Bitmine vs Direct ETH and Other Crypto Treasuries

The market calls companies like this digital asset treasuries. They sell stock and bonds, buy a coin with the proceeds, and let the coin’s price set the share price. Strategy (formerly MicroStrategy) started it with Bitcoin in 2020, and since summer 2025 the format has split into Ethereum, Solana and Hyperliquid versions.

Bitmine's 4.9% of total Ethereum supply

A sector growth rate cannot be computed: the Ethereum branch is fifteen months old, and the treasury growing from $250 million to $15.7 billion, 63 times, is one company’s issuance velocity rather than an industry statistic. The number of competitors is not in filings either; the 10-K’s competition paragraph names “other digital asset treasury companies, ETFs and direct ownership” in general terms. The one share figure that can be calculated is 4.9% of a supply worth $301 billion at $2,495.
Buying ETH directly and buying this stock differ in three ways. Buying directly, you get one coin for the price of one coin. Buying the stock at today’s ratio, you get the coins plus cash, venture stakes and staking income for about 0.96 times the coin value, after the company deducts $26.6 million a year of preferred dividends and its asset management fees. And the price at which the company sells new shares changes your per-share slice, a variable that direct ownership does not have.
Against listed companies that buy coins the same way, on trailing-twelve-month aggregator figures:

Company	Ticker	Asset held	Market cap	P/B	P/S	Revenue (TTM)	Net income (TTM)
Bitmine	BMNR	5.93 million ETH	$15.1 billion	1.25x	246.7x	$61.2 million	-$8.77 billion
Strategy	MSTR	Bitcoin	$50.3 billion	1.58x	101.0x	$498.35 million	-$31.37 billion
SharpLink Gaming	SBET	Ethereum	$1.9 billion	1.37x	38.4x	$50.2 million	-$1.71 billion
Hyperliquid Strategies	PURR	HYPE	$2.3 billion	1.24x	243.1x	$9.46 million	+$256.18 million

Four digital asset treasuries: market capitalization and price-to-book

None of the four has a net income figure that describes its business. Strategy’s -$31.37 billion and Bitmine’s -$8.77 billion are unrealized marks on coins nobody sold, and Hyperliquid Strategies’ +$256.18 million is the same thing pointed the other way; a P/S of 246.7x is meaningless for the same reason. So the group gets compared on whether the coin pays a yield, what the market pays over book, and what the company gives back. The multiple in the next table is the aggregator P/B on book equity, a different metric from the 0.96 on reported assets used earlier.

Company	Yield on the coin	P/B (book equity)	Shareholder payout	Funding
Bitmine	Staking, 2.61%, 85.5% staked	1.25x	Common $0.01; preferred 9.50%	$24.5 billion ATM capacity; preferred
Strategy	None (Bitcoin)	1.58x	Four preferred series	ATM, converts, preferred
SharpLink Gaming	Staking	1.37x	None	ATM
Hyperliquid Strategies	Staking	1.24x	None	Merger proceeds

Four digital asset treasuries: sales and coin-driven marks

Bitcoin pays nothing for being held, which is why Strategy is loss-making at the operating line with 840,000 coins. Ethereum is proof-of-stake, so deposited coins earn rewards, and the ETH camp looks at staking ratio before holdings. Bitmine’s 85.5% is the highest in the table, and the reward rate is still not the company’s to raise.
Regulation runs on two tracks in the company’s own deck. The Clarity Act sat at a 44% probability on slide 11, with the chairman relaying that “Coinbase’s vice chairman thinks we’re at the one-yard line” and that Senator Lummis believes “they’re going to land the plane.” The August 24 release compared the GENIUS Act and the SEC’s Project Crypto to the 1971 exit from the gold standard. Neither act contains a clause that touches this company’s revenue.

BMNR Stock Outlook: What Would Move the Price

Five Conditions to Watch

Indicator	What keeps the case alive	What breaks it	When and where to check
Market cap ÷ weekly reported assets	Back above 1.05, where new shares add assets per share	Below 0.95 for weeks, with ATM sales resumed in that state	Weekly Monday 8-K
ETH per share	Around 0.00983 at the August 31 year-end	Below the May 31 figure of 0.009345	Annual report (10-K) in November
Weekly ETH purchases	The remaining 105,802 ETH to 5% bought with capital raised above a ratio of 1	Under 10,000 a week for months	Weekly 8-K
Staking revenue and management fees	Above $50 million a quarter; fees inside the $40 to $50 million twelve-month guide	A new fee recipient appears after the Ethereum Tower termination	November 10-K; transition report in early 2027
Holdings of named investors	ARK and Vanguard hold	ARK trims again; Vanguard drops below 5%	13F filings in November (September 30 positions)

The thresholds are chosen this way. 1.05 and 0.95 bracket a ratio of 1 by more than typical ATM fees of 2% to 3% and the noise in a weekly asset tally. 0.009345 ETH per share is the last disclosed value and 0.00983 is the ceiling computed on the July share count, so where the November 10-K lands between them answers whether issuance added to or subtracted from each holder’s slice. 10,000 ETH a week is August’s low, and $50 million of quarterly staking revenue is the FQ3 $45.74 million plus growth in the staked balance.
The outlook is the combination of those conditions. If ETH rises, the stock follows at roughly the 0.010 coefficient, and the company’s method of adding to per-share holdings through issuance only restarts once the ratio is back above 1. If ETH falls, the ratio tends to stay below 1 as it is now, and issuance in that state reduces existing holders’ assets per share. In the three weeks after August 26 the company bought 81,587 ETH with the ratio below 1 throughout.

What Would Change the Call

Scenario	Condition	Indicator to check	When · Source
Upside	ETH clears the deck’s $2,225 level and holds; ratio back above 1.05	Weekly reported assets vs market cap	Weekly 8-K
Upside	ETH per share at the August year-end prints above 0.009345	Cover-page share count and holdings	10-K in November
Downside	ATM issuance resumes with the ratio under 1	Share count in the 10-K vs the July cover page	10-K in November
Downside	Staking yield compresses as network-wide staking rises	Company’s seven-day yield disclosure	Weekly 8-K
Multiple risk	The Clarity Act fails or stalls into 2027	Prediction-market odds the company itself cites	Deck updates; Chairman’s Message

One question this article could not answer. The 10-Q carries $6.71 million of accrued “digital asset management fees,” and the company guided twelve-month asset management fees at $40 to $50 million. The counterparty to both the July 8, 2025 consulting agreement and the March 24, 2026 staking management agreement is Ethereum Tower LLC, which also owns 2% of MAVAN Holdings. The staking agreement ended on September 3; the filings do not say what happened to the consulting agreement, and no filing names a principal of Ethereum Tower. Who receives $40 to $50 million a year, and what is that company’s relationship to the chairman or the board? Will the related-party note in the November 10-K print a name?

Methodology and Sources

Share price is $25.03 and market capitalization uses the 603,226,394 common shares on the cover of the fiscal Q3 2026 Form 10-Q (cover date July 9, 2026); shares sold through the ATM since that date will appear in the next report. ETH holdings, staked ETH and total assets come from the September 8 weekly 8-K press release (September 7 basis); equity, liabilities and ETH per share are from the May 31, 2026 quarterly report. I downloaded and parsed all 100 weekly 8-K press releases from the SEC filing index into a holdings, purchase and sentence-presence time series. Five-year financials are 10-K XBRL values; the five largest daily moves are drawn from 318 daily closes since listing. Ownership comes from the DEF 14A proxy, Schedule 13D/G filings and the 13F tables of 20 named investors, read directly from EDGAR. The two investor decks are the originals on the company’s investor relations page; the June 30, 2025 8-K is the pivot filing.
Outside views come from Cantor Fitzgerald research (September 2026), Decrypt, CoinDesk and TheStreet coverage (November 2025), Digital Today (January 2026) and Money Today (August 2026) reporting, and an investor-community forecast post (June 2026); every number from those sources was rechecked against filings and anything that could not be checked is marked unverified in the verdict table. Consensus figures are aggregated sell-side estimates. This analysis is based on public filings and is not investment advice.

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How Many Reddit Users Arrive From Search?

US ARPU and the Shrinking Guidance Beat

How Reddit Makes Money

Reddit vs Meta Pinterest and Snap

Reddit’s Price-to-Sales and EV-to-EBITDA Band

Three Conditions That Move the Stock

What to Watch in the December Quarter

Related Analysis

Sector RS Rank Nov 4: Gold Miners Lead, Oil & Gas Fall

Today’s Sector Relative Strength (RS)

Today’s Leading Sectors TOP 5

Why They’re Strong — Sector Issues

What Changed From Yesterday

1-Month RS Trend

RS Breakdown Warnings

RS Rebound Signals

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Why They Rose

Leading Sectors: Medical Devices, Retail, Home Construction

Today’s Three Stocks — Lowe’s · Glaukos · Dollar Tree Stock Forecast

Lowe’s (LOW) — Home Improvement Retailer Stock Forecast

Glaukos (GKOS) — Eye Care Device Maker Stock Forecast

Dollar Tree (DLTR) — Discount Retailer Stock Forecast

Lowe’s · Glaukos · Dollar Tree Stock Forecast Checkpoints

What to Watch on Next Week’s Calendar

GE Vernova (GEV) Stock: Deposits Drive the $16B Cash Guide

What the Q3 Deck Says About Cash and Guidance

Power Margins and Gas Turbine Units in the Q3 Deck

The Bull and Bear Case for GE Vernova Shares

From the GE Spin-Off to a Four-Year Cash Target

How Much of the Cash Came From Customer Deposits?

Gas Turbine Gigawatts and the Production Rate

How GE Vernova Makes Money

GE Vernova vs Eaton Vertiv Caterpillar and Bloom Energy

GE Vernova’s Price-to-Sales and EV-to-EBITDA Band

Three Conditions That Move the Stock

What to Watch in the December Quarter

Related Analysis

Sector RS Rank Nov 3: Crypto Stocks Lead, Homebuilders Fall

Today’s Sector Relative Strength (RS)

Today’s Leading Sectors TOP 5

Why They’re Strong — Sector Issues

What Changed From Yesterday

1-Month RS Trend

RS Breakdown Warnings

RS Rebound Signals

Today’s Top Rising Sectors TOP 5 (by 1-day %)

Why They Rose

Leading Sectors: Utilities, Insurance, Medical Devices

Today’s Three Stocks — Fiserv · Neurocrine Biosciences · Sirius XM Stock Forecast

Fiserv (FISV) — Payments Processor Stock Forecast

Neurocrine Biosciences (NBIX) — Neurology Drugmaker Stock Forecast

Sirius XM (SIRI) — Satellite Radio Stock Forecast

Fiserv · Neurocrine Biosciences · Sirius XM Stock Forecast Checkpoints

What to Watch on Next Week’s Calendar

Boeing (BA) Stock: A $10 Billion Cash Target Built on 777X

Boeing’s Q3 Deck and the 2026-2029 Cash Flow Targets

Commercial Airplanes Defense and Cash in the Q3 Deck

The Bull and Bear Case for Boeing Shares

From the 737 MAX Grounding to a 2029 Target

How Much of Boeing’s Cash Came From Customer Advances?

The 777X Inventory and the Certification Timeline

How Boeing Makes Money

How Boeing Compares With Airbus GE RTX and Lockheed Martin

Boeing’s Price-to-Sales and EV-to-Sales Band

Three Conditions That Move the Stock

What to Watch in the December Quarter

Related Analysis

MakeMyTrip (MMYT) Stock: Discounts Ate the Booking Growth

What the Q2 Results Deck Says About Growth and Currency

Inducements and Unit Metrics in the Q2 Results Deck

The Bull and Bear Case for MakeMyTrip Shares

From the Trip.com Buyback to an India Listing

How Much of the Margin Growth Went to Discounts?