Good afternoon. QQQs +20bps on another fairly low volume day in tech.
Busy day after the close with earnings so let’s get right to it…
SNOW +20%: Another 5% product-revenue beat plus an accelerating guide clears high bar for the most crowded name in sw
Product revenue grew 37%, ahead of both Street and buyside expectations, while the Q3 guide calls for further acceleration and FY27 growth was raised five points to 36%. With this q3 guide, you now very likely get 40%+ growth in q3 a quarter earlier than even bulls expected. This is an unusually clean print: core demand remains strong, AI revenue stepped up meaningfully, and management passed substantially more than the quarterly upside into the annual outlook. Bulls in full control here. This explaisn the CoCO + core magnitude of the beat well (from our weekly on Sunday):
Key KPIs vs. Street
F2Q product revenue: $1.49B, +37% y/y vs. $1.42B, +31% and bogeys at 36%
F3Q product-revenue guide: $1.591B, +37.5% vs. $1.50B, +29% and bogeys of 32-33%
FY27 product-revenue growth: 36% vs. 31% prior
HPE -1%: A large forward revenue guide, but DELL remains the cleaner enterprise-hardware play
HPE beat the July quarter, guided next-quarter revenue roughly 11% above Street and raised both its FY26 and FY27 outlooks, alongside an expanded Oracle networking partnership involving warrants. The standalone numbers are strong, especially revs and cash flow, but after HPE’s run and DELL’s stronger print, the bar had been set a bit higher, but otherwise solid q
Key KPIs vs. Street
July revenue: $12.2B vs. $11.95B
Gross margin: 40.4% vs. 36.0%
EPS: $1.11 vs. $0.93
Free cash flow: $1.60B vs. $0.93B
F4Q revenue guide: $14.35B vs. $12.88B
F4Q EPS guide: $1.17 vs. $1.07
FY26 EPS: $3.75–$3.85 vs. $3.35–$3.45 prior
FY27 revenue growth: 15% vs. 10% prior
FY27 EPS growth: 18% vs. 14% prior
AVGO -4%: AI revenue beat, but the next-quarter outlook is too close to consensus for the current semiconductor bar
AVGO delivered modest upside in F3Q, including better AI semiconductor revenue, but Q4 revenue and margins were roughly in line to slightly below Street and the $21.7B AI guide fell short of the >$22B buyside bar. The quarter is fine in absolute terms but underwhelming relative to NVDA and elevated AI expectations; the call now needs a materially stronger FY27 AI outlook, with investors looking for roughly $130B or more, and Hock will do his best to focus investors on FY28 as best he can. Doesn’t look thesis changing in any way so far and the 27 vs 28 debate will continue
Key KPIs vs. Street
F3Q revenue: $29.6B vs. Street around $29.3B
EPS: $3.32 vs. $3.22
Operating margin: 67.9% vs. 66.7%
AI semiconductor revenue: $16.7B vs. $15.9B
F4Q revenue guide: $34.8B vs. Street around $34.7B–$35.0B
F4Q operating-margin guide: 66.0% vs. roughly 66.5%–67.0%
F4Q AI semiconductor revenue: $21.7B vs. $21.3B Street and >$22B buyside expectations
AI/SEMIS
DELL +16% the standout showing the big beats can still be rewarded in AI semi land. CRDO -20% wasn’t so lucky on a roughly inline beat. NVDA +3% the other one where got lot of questions on, but no great answers. Otherwise fairly slow day here.
Since we didn’t get around to CRDO this morning, here is the bull vs. bear case: