Good afternoon. QQQs -1% led lower by semis -2.6% as negative headlines continue to come out of the middle east driving a +7% move in Crude. Yields spiked 7-14bps across the curve breaking out with 10year almost touching 5% and 30year almost at 5.4%, both near levels seen back in 2007. Fed expects shifted in a hawkish direction now pricing in 45bps worth of hikes this year and odds of a rate increase next week is now 75%. CPI comes tomorrow morning.
Day 3 at Citi and GS was busy. We’ll cover snippets below, among a few other items.
Post-close:
ORCL +2.5% solid print with IaaS accelerating and the $20B ATM overhang removed
IaaS growth of 121% Y/Y, or 120% cc, cleared the 116–118% buyside bar , with 850MW of capacity delivered showing actual backlog conversion.. Sw was soft, but stronger operating margins and substantially less cash burn made this a better-quality quarter than the headline revenue upside alone suggests. Biggest relief for investors: ATM is finished, the $90B revenue outlook is intact, and more than $30B of new AI contracts require no incremental change to capital-raising plans. Stock was up +7% but fading a bit on the call…
ORCL Key KPIs vs. Street: Revenue $19.35B vs. $19.14B; IaaS +121% Y/Y (+120% cc) vs. ~117% Street and 116–118% buyside bogey; Cloud rev $11.6B, +62% Y/Y vs. ~$11.5B; op margin 42.1% vs. 40.7%; EPS $1.92 vs. $1.74; FCF ~-$5B vs. ~-$10B. RPO reached $664B, +$26B Q/Q vs. Street modeling only ~$2B of net adds.
ORCL Guide vs. Street: FY27 rev at least $90B vs. $89.6B, with EPS $8.10 vs. $8.07. Q2 total rev growth 30–34% cc vs. 31.9%, Cloud growth 64–70% cc vs. 65.2%, and EPS $1.85–1.93 vs. $1.90.
ADBE -2.5% small headline upside, but still no convincing growth inflection. Unlikely to change bull vs bear debate.
Revenue and EPS came in modestly ahead, but ARR growth slowed to 11.2% from 12.5% last quarter, while 44% operating margins left little to get excited about on earnings leverage. AI-first ARR growth above 150% and Firefly app/credit-pack ARR up 40% Q/Q solid, but the 10.2% full-year ARR growth target still didn’t signal a broader reacceleration. FY rev guide actually moved slightly higher, rather than being cut, although the Q4 outlook offers little evidence of an imminent inflection.
ADBE Key KPIs vs. Street: Revenue $6.76B vs. $6.70B; EPS $6.13 vs. $6.09; ending ARR $27.5B, +11.2% Y/Y; op margin 44.0%, modestly softer than expected. AI-first ARR grew >150% Y/Y, while Firefly app/credit-pack ARR grew ~40% Q/Q.
ADBE Guide: Q4 rev $6.80–6.85B with EPS $6.30–6.35 and ~44% op margin. FY26 rev nudged to $26.576–26.626B and EPS to $24.45–24.50
Let’s get to the good stuff…
AI/SEMIS
Headline after the close: MICROSOFT PLANS TO TRIPLE DATA CENTER CAPACITY TO 38 GIGAWATTS BY 2032, UP FROM 12 GW NOW.
SWKS +10%: Hey a non-AI semi leads the way on positive read-through from AAPL Duo launch…
NVDA -2.4% as CEO Jensen Huang at Goldman opened with ‘I was right’ on the $3-4tn call, pitched NVIDIA as ‘the world’s first and only growth value stock,’ and reaffirmed 70% growth next year. New: per-system content of ~$18K in Hopper, $25K in Blackwell and ~$40K in Vera Rubin; GB NVLink72 rack shipments up 27% month over month; the Australia 2GW for 2027 sized at $80bn; per-gigawatt math of ~$60bn of cost against ~$50bn a year of rental revenue; and compute turned into an asset-backed, loan-securing asset.
LRCX -5.6% as CFO Doug Bettinger at Goldman, a day after Citi, again promised no new statements and called the industry ‘fundamentally sold out,’ with leadership ‘more concerned about missing the upside’ than a downturn and 2027 WFE still DRAM-led with foundry closing the gap. New: Lam is ‘deeply engaged already’ with SpaceX’s Terafab, sized as a ‘very high’ opportunity; a $3bn US lab and engineering investment including a new Oregon lab; China WFE ‘slightly up’ this year but shrinking as a share; a company-wide no-M&A stance beyond tuck-ins.
DELL -5.3% as CFO David Kennedy at Citi called the FY27 guide ‘realistic’ where 90 days ago it was ‘prudent,’ on ~$61bn of Q2 AI server orders and a $95bn non-cancelable backlog. New: customers now negotiate supply access for years two through four (’guarantee supply does not guarantee price’), next year looks tighter than this one with DRAM and NAND the big constraint, OpEx runs 8% of revenue versus 20% six years ago, storage adds $2.5bn this year, and the buyback stepped up from $1.6bn to $3.9bn.
SPCX +40bps as CFO Bret Johnsen at Goldman said SpaceX has ‘even more conviction’ in the $100bn ARR target for year-end after closing another hosting deal this month worth about $1.11bn a month from Dec 1, with 5-10GW deployed next year versus a little over 2GW at year-end. Hosting deals are 90-day commits with 90-day outs because the company expects its own Grok products to monetize above the $30-50 per-watt range; the first orbital compute satellites fly next year; direct-to-device 5G service turns on in 1H28.
ANET -2.0% as CFO Chantelle Breithaupt at Citi kept the $12.6bn, 40% guide and named the four signals to judge the model on (P&L growth, the deferred trend, purchase commitments, RPO), with commitments tripled to $9.6bn and already reaching into chips for 2H27. Scale-up carries ‘zero in our guidance and zero revenue’ for 2026 with revenue in 2028; XPO early deployments come 2H27 with CPO about 12 months behind; a third and possibly fourth 10% customer is expected, and the $105bn TAM gets revisited later this year.
STX -2.7% as CFO Gianluca Romano at Goldman replaced the old 50% incremental-margin frame: incremental gross margin has run ‘70+%’ and ‘for the next few quarters, that is a good way to look at the business.’ New: 80-90% of data-center volume on HAMR within a couple of years; edge pricing changed as high NAND prices let HDD-SSD overlap segments take price; storage is low-to-mid single digits of customer capex, leaving room to raise price ‘for a very, very long period’; a dividend increase is likely after an Oct-Nov review.
