Good morning. QQQs -1% to start September, wasting no time honoring the month’s bad reputation:
Oil +2% as two oil supertankers struck in SOH as Iran’s president said country was seill seeking a negotiated settlement to the war. US long end yields +3-4bps as global yields continue to rise as well.
In Tech, Semis/Software both down 1% and TMT Momentum roughly flat. Memory and Optical -2% weakest.
Overnight, Asia was mixed: TPX +0.62%, NKY -0.15%, Hang Seng -0.93%, HSCEI -0.59%, SHCOMP -0.16%, Shenzhen -0.67%, Taiwan TAIEX +1.78%, Korea KOSPI +0.23%.
Slow day so far but we get DELL, PANW, GTLB, CRDO, and MDB tonight on the earnings front and CIEN tomorrow morning,
Let’s get to it…
Anthropic/NVDA: Anthropic Signs $35 Billion Cloud Deal Backed by Nvidia - WSJ
WSJ says Anthropic signed a $35B cloud deal with Nvidia-backed Lambda, with Nvidia itself leasing the underlying Texas data-center capacity from Hut 8. The structure highlights Nvidia’s expanding role as a financier/credit backstop for AI infrastructure, helping non-investment-grade customers like Anthropic and neoclouds like Lambda secure enormous amounts of compute.
OpenAI: announced its new ad model had reached $1B in ARR after 200 days of launch (out yesterday)
AKAM: Piper Sandler upgrades to OW, PT to $125 on Compute inflection and improving unit economics
Piper Sandler says Akamai’s Compute business is approaching a material growth inflection, with ~$2.8B of commitments already signed and capacity potentially rising from ~47MW today to ~242MW over time. Piper estimates Compute cash gross margins near ~50% today expanding toward ~62% by 2028, supporting attractive long-term economics despite higher near-term capex. Piper also sees AppSec reaccelerating, pricing helping security/web delivery, and estimates conservative enough to support ~10%+ growth as Akamai shifts toward longer-duration Compute contracts.
HOOD: Morgan Stanley upgrades to OW, PT to $150 from $124 on broader platform and more durable growth
Morgan Stanley says HOOD’s expanding product set is improving customer economics, with assets per customer +23% y/y and Gold users holding ~4.2x the AUC of average users, reducing “graduation” risk as customers get wealthier. MS now sees revenue compounding ~23% through 2028 to ~$8B, ~6% above consensus, as prediction markets, retirement, banking, advisory and Rothera broaden monetization beyond trading. MS also sees operating leverage supporting ~28% EPS CAGR through 2028 and raises PT to $150, implying ~43% upside.
DUOL +6%: Evercore ISI upgrades to Outperform, PT to $210 from $105 on reaccelerating engagement and major estimate upside
Evercore ISI says proprietary survey work, product improvements and 3Q tracking all point to stronger engagement, with DAU growth accelerating toward ~24% y/y in 3Q and user satisfaction/daily frequency rising. ISI says its 2028 revenue/EPS estimates sit ~17%/~22% above Street, with the biggest upside coming from higher operating margins as DUOL approaches its 100M DAU target. ISI also argues ChatGPT is more complementary than disruptive, with >50% of ChatGPT language learners also using Duolingo.
DUOL: D.A. Davidson raises PT to $175 from $160 as August DAU growth finishes strong
D.A. Davidson says August DAUs increased ~1.3% m/m, with recent weekly trends accelerating and 3Q DAU growth now tracking around ~27% y/y. D.A. Davidson notes comparisons ease after mid-August and sees further upside if September momentum holds, with its base case implying ~25.6–27.6% y/y growth. D.A. Davidson reiterates Buy and raises PT to $175, citing stronger engagement trends and improving growth visibility.