Good afternoon. QQQs +60bps trying to make up some gains after yesterday. Fed expects stayed steady with market pricing in 25bps worth of hikes through the rest of the year. It’s been a slow August week so far. The good news is everyone’s P&L has had fewer opportunities to hurt them. No major news or earnings as investors wait for the big events later this week (NVDA & Jackson Hole). We also have DB conference beginning tomorrow with ORCL CEO and INTEL CFO the main presentations tomorrow.
Post-close Earnings:
INTU -9%: FY27 top-line reset overwhelms better margins and growth worries should feed bears
The quarter itself was fine, but FY27 revenue, Tax and GBS growth all point to a meaningful slowdown vs prior expects. Cost cuts are supporting EBIT and underlying EPS, but investors are more likely to view the guide as evidence of ongoing business headwinds than a one-time reset. Good TMTB Slack Earnings thread here
Key KPIs vs. Street
F4Q revenue $4.35B vs. $4.27B; EPS $4.03 vs. $3.58
F1Q revenue guide ~$4.30B vs. $4.35B; EPS ~$2.46 vs. $4.04, with comparability affected by INTU’s new treatment of SBC
FY27 revenue growth 9–10% vs. Street just over 11%; Tax +2–3% vs. buyside at 5–6%; GBS +13–14%
FY27 GAAP EBIT $7.4B vs. $7.04B
ZM -5%: Ok quarter with better FCF, but not enough growth upside to change the core debate
Revenue upside was narrower than usual and Q3 guidance came in slightly light, while the full-year revenue raise was smaller than the quarterly upside. Enterprise growth improved to its best level in roughly three years and online churn declined, but NDER remains stuck below 100% and online growth is barely positive. FCF the clearest positive.
Key KPIs vs. Street
Q2 revenue $1.277B vs. $1.269B; EPS $1.53 vs. $1.47
FCF $472M vs. $453M
Q3 revenue guide $1.275B vs. $1.282B; EPS $1.47 vs. $1.50
Enterprise revenue +7.8% y/y; Online revenue +0.6%
Enterprise NDER 99%, flat q/q; Online churn 2.9% vs. 3.0% in Q1
FY revenue outlook raised only $5M, while FCF increased $80M
SMTC +3%: Very strong print and guide, with the portfolio cleanup delivering materially better growth and margins
Cleanest print of afternoon with Q3 revenue, margins and EPS all substantially above expectations and commentary pointing to accelerating demand. The held-for-sale business makes the margin presentation somewhat confusing, but its disposal is key to bulls, which like the faster-growing core portfolio & upper-50s margin potential
Key KPIs vs. Street
Q2 revenue $342M vs. $329M
Gross margin 54.5% vs. 54.0%
EPS $0.71 vs. $0.61
Q3 revenue guide $410M vs. $360M
Gross-margin guide 58.3% vs. 54.6%, or 63.9% excluding the held-for-sale business
EPS guide $1.05 vs. $0.73
Let’s get to the good stuff…
AI/SEMIS
BE +6.5% following through on Pelosi’s buy yesterday
NVDA +2% ahead of earnings tomorrow as Clev was out positive saying they see CY27 ASPs ~+30%+ and potl’l for higher shipments given memory/BOM changes. Semianalysis also had a note talking up Open AI’s Jalapeno’s performance, saying it’s already highly competitive with B200/B300/GB300 across multiple models, delivering ~1.5–1.9x better peak perf/watt and materially better latency/interactivity They called out AVGO -50bps as clear winner with with Jalapeño validating its networking, physical-design, packaging and supply-chain capabilities and potentially creating a meaningful new ASIC revenue stream. For NVDA, SA said the read-through is incrementally negative: OpenAI is no longer clearly GPU-locked, the CUDA moat looks weaker, and even getting close to Nvidia shifts negotiating leverage and could pressure long-term margins, though Rubin remains the real benchmark. Expectations have crept up into the print but consensus seems to be that the three debates holding the multiple back aren’t going to change as they are 2027 issues rather than 2026: share loss to TPU and AMD, circular financing, and the gross margin trajectory beyond this year. Lots of debate on that latter point given headwinds from memory and recent de-spec’ing. In terms of timing on Rubin, checks have pointed to the first sample out about three weeks before the call with yields not that high yet & the sampling schedule held to late last month, and module mass production remains unchanged for the next months. At rack level, standard version should be out around October. Bogeys here ~$4bn beat on the $91bn guide to ~$95bn, then another $10-12bn of sequential growth guided into October, so $105-107bn. After the print, we can all do the traditional NVDA EPS ritual: take an absurdly large number and complain it isn’t larger.
Optical strong: LITE +7% (CEO at DB on Thursday); COHR +5%; CIEN +4%. Mizuho flagged upside to CRDO +1.7% and LITE as AI rack connectivity scales. They see stronger 2027 AEC copper demand, accelerating NPO/SiPho/InP adoption, and noted potential 800V delays could extend the 400V architecture cycle, supporting near-term connectivity content.
SNDK -1% underperforming MU +2.5% and SKHY +2.5% in memory. Only thing I heard was the mixed HBF presentation at Hot Chips Sunday night (we recapped it here). I’m hearing Q3 DRAM/NAND pricing finishing about +20% blended with server leading and mobile holding it back. Q4 tracking +5-10% q/q which for all your rate of change lovers is low triple digits (~200%) vs. 700%+ y/y in Q3.
AMD +5% on RJ’s upgrade saying they see server CPU market reaching ~$201B by CY30, including ~$85B of agentic CPUs and ~$83B of AI head-end CPUs, with AMD offering the best combination of direct earnings leverage, datacenter positioning and potential share gains.
STX/WDC +3% finally getting a little love.
NBIS +5% continues to act a lot better than CRWV +2% post-earnings. The latter has filled its earnings gap completely while NBIS still way above it.
CLS +4% nice follow through from UBS upgrade yesterday
SPCX +2% as bulls hope for the most important KPI tomorrow: a complimentary Jensen reference ♡♡♡ to Elon .
INTERNET
META +2% outperforming other hypers as TheInformation reported META reportedly setting up to launch consumer AI agent called Hatch (similar to GrokBot & OpenClaw, with its next major AI frontier model Watermelon now coming out in October.
Hatch is part of Meta Chief Executive Mark Zuckerberg’s ambitions to monetize the company’s enormous AI investments and diversify its revenue streams beyond advertising. Meta has considered a tiered pricing system, as The Information previously reported, including charging up to $199.99 for a premium monthly subscription for the product that would include higher usage limits.
Next Catalyst here is Meta Connect on Sept 23-24. About the 5th or 6th time META has bounced of $550 and even the bears I talk to have to concede r/r pretty skewed to upside there as you’re getting META at 16x street numbers and <15x buyside’s $35-36, before factoring in any contribution from selling compute. On that note, ISI had a note out today saying they think Meta could generate ~$11B of annualized revenue for every 0.5GW of AI capacity sold externally, adding roughly $1.44–2.16 of EPS, or ~4–6% versus 2027 consensus, with a potential ~$11–22B annual opportunity if Meta leans in, but Mahaney doesn’t view this as a new neocloud-style business, arguing today’s premium compute pricing should fade as capacity expands and management remains focused on monetizing higher-margin “intelligence” rather than selling raw compute. The other piece of optionality is bulls think META has a $15B+ durable incremental revenue opportunity from business agents and subscriptions alone, with WhatsApp paid penetration still only ~2.5% & Cloud/API monetization would be additional upside.
AMZN/GOOGL -35bps continue to lag. Nowak at MS had a note out on TPUs raising its first-party TPU pricing assumption to ~$27B/GW from $20B and now sees ~$84B/$108B of TPU-related Cloud revenue in 2027/28, lifting total Google Cloud revenue estimates by ~6%/~7%. Nowak now expects Cloud to reach ~48% of company EBIT by 2028, although lower-margin TPU sales keep Cloud margins around ~37–40%. On AMZN, Trn checks continue to sound strong - hearing original expectation around 1M for 2H which is being revised up and Trn 2 + Trn 3 now around close to 2.7M.
RDDT +6% as TI called it out as part of a broader group Hatch is trained to access, including DASH, ETSY, & YELP. Jefferies was out saying RDDT data mixed: app growth is accelerating, but web DAUs slowed to +5% as AI Overview/referral headwinds persist, which is fodder for the bears. Some interesting back and forth on YELP and RDDT in TMTB Slack:
SHOP +2.5%: Liked this quote from Sam Altman yesterday on Tobi:
One of the things that struck me the most about Toby is in the very early days of AI, and then at every moment along the curve [as] it’s developed, he has been the most forward-leaning CEO. He’s in there, like writing the software himself. He is experimenting with it. He, like, sends us extremely detailed feedback on the product offering, on the capabilities of the models. He was before anybody else [was] saying this, he was like, we are not an NPC company, and thus we are going to adopt agents. Otherwise, you know, we’re totally screwed. We’re going to build it ourselves. Every time I talk to him, he is at the edge of what anyone, CEO or not, is doing. He builds himself, he understands, he has like a great deep feel, and he is always six, eight months ahead of like any other CEO.
NFLX +3% as Wolfe said Q weakness was largely driven by a light release slate rather than deteriorating underlying demand, with 3Q content looking materially stronger and supporting better 2H engagement/subscriber trends (they raised PT to $95 from $84)
SOFTWARE
DT +2% as MS upgraded saying they are next in line to reaccelerate in a much healthier observability market, with a FY27 renewal cohort ~50% larger than FY26 and ~70% weighted to 2H, while underlying usage is already growing >20%. MS thinks this can push net-new ARR and total ARR back above 20% growth, with platform expansion across logs, AI and autonomous operations adding wallet-share upside.
SNOW -2%: more positive checks from sell side as expectations creeping up into earnings on possibly most loved stock in sw. Early bogies of roughly 36–37% for the July quarter, ~38% for October and 40% exiting in the January quarter.
U -2.5% doing a little digest around $45 Intra q checks still look good and should get a better read near beginning of Sept.
Cyber weaker PANW -3%/ CRWD -3% as have heard some investors express concern Anthropic will be on the road promoting its own cybersecurity products given the security talent Anthropic has hired both to build products and to sell into cyber peer plays.
MSFT +1% hanging in there better than the other hyperscalers