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Key Takeaways C's card delinquency rate rose to 1.32% in July, but remained below the year-ago level.C's net charge-off rate fell to 1.90% in July from 2.25% in June.Card receivables declined to $19.1 billion, reflecting moderation in consumer borrowing activity. Citigroup Inc. (C - Free Report) continues to navigate credit-quality challenges amid an uncertain economic environment. Per the latest SEC filing, its subsidiary, Citibank N.A., reported mixed credit card performance for July 2026, while lending activity declined during the month.

For the period ending July 2026, the Citibank Credit Card Master Trust delinquency rate rose to 1.32% from 1.30% in June 2026 but declined from 1.42% in July 2025. The latest figure also remained below the 1.53% level recorded in July 2019, before the COVID-19 pandemic. Meanwhile, the Credit Card Issuance Trust’s net charge-off rate declined to 1.90% in July from 2.25% in June and 2.07% a year ago. The figure was also considerably below the 2.91% recorded in July 2019.

The credit trends were accompanied by a decline in card receivables. Principal receivables stood at $19.1 billion in July, down from $19.2 billion at the beginning of the previous month and $20.9 billion a year ago, indicating moderation in consumer borrowing activity. The decline comes amid tighter lending standards across the industry. According to the Federal Reserve’s Senior Loan Officer Opinion Survey on Lending Practices, banks tightened standards for consumer credit card lending during July, while demand for such lending remained unchanged. Tighter standards could limit the pace of credit card loan growth going forward.

Although the latest card metrics remain favorable compared with prior-year levels, Citigroup’s broader asset-quality picture remains a concern. While the company’s provisions for credit losses declined year over year in the first half of 2026, the metric increased at a compound annual growth rate (CAGR) of 24.5% from 2022 to 2025. Management expects the U.S. card net credit loss rate to be 4-4.5% in 2026, highlighting continued pressure on the card portfolio.

The credit environment remains challenging, with persistent inflation potentially affecting borrowers’ repayment capacity. With interest rates expected to remain unchanged through the remainder of 2026, borrowing costs could remain elevated, adding pressure on consumer finances. Any deterioration in borrowers’ credit profiles could lead to higher delinquencies and credit losses, keeping Citigroup’s asset quality under pressure in the near term.

How Citigroup Stacks Up Against Peers in Card DelinquencyU.S. credit card metrics were mixed in July 2026, with delinquencies and net charge-offs moving in different directions across major issuers. Following the broader trend, Bank of America (BAC - Free Report) and JPMorgan Chase & Co. (JPM - Free Report) reported lower delinquency rates compared with the prior-year levels, while net charge-off trends differed.

Bank of America’s BA Master Credit Card Trust II delinquency rate declined to 1.26% in July 2026 from 1.37% a year ago. BAC’s net charge-off rate also fell to 2.13% from 2.25% in July 2025.

JPMorgan’s Chase Issuance Trust delinquency rate decreased to 0.81% in July 2026 from 0.86% in July 2025. However, JPM’s net charge-off rate increased to 1.58% from 1.54% in the prior year, indicating modest pressure in loss trends.

Citigroup’s Price Performance & Zacks RankShares of Citigroup have gained 18.6% over the past six months compared with the industry’s growth of 15%.

Image Source: Zacks Investment Research

Currently, C carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways McDonald's U.S. comparable sales rose just 0.8% as value and marketing execution weighed on traffic.McDonald's is boosting digital offers, simplifying operations and expanding beverages to revive U.S. traffic.MCD trades below the industry P/E average, while international growth and its strategy support recovery. McDonald’s Corporation’s (MCD - Free Report) shares have declined 18.9% in the past six months, underperforming the industry’s 10.1% decline and the S&P 500’s 11.7% gain. The decline reflects concerns about weak U.S. traffic, inconsistent execution of value offerings and marketing missteps. The company acknowledged that U.S. comparable sales slowed sharply in the second quarter, rising just 0.8%, below its expectations.

The pressure continued into the early part of the third quarter. Management said U.S. comparable sales were slightly negative in July, indicating that the company’s corrective measures will take time to produce results. Against this backdrop, investors may wonder whether the stock’s decline has created an attractive entry point or whether more weakness could lie ahead.

On the other hand, MCD has also underperformed compared with industry peers such as Starbucks Corporation (SBUX - Free Report) and Yum! Brands, Inc. (YUM - Free Report) , as shown in the chart below.

Price Performance
Image Source: Zacks Investment Research

U.S. Execution Remains a Key ConcernMcDonald’s biggest near-term challenge is getting its U.S. business back on track. Management said the company’s value proposition has improved considerably, with base menu prices now below those of nearby competitors and the $5 Meal Deal and Extra Value Meals performing well. However, execution of the new Every Day Affordable Price menu was inconsistent.

Only about 60% to 65% of the U.S. system was executing the recommended pricing architecture for the under-$3 menu. The company also reduced the number of digital offers and removed its Buy One, Add One for $1 promotion, which hurt visits from loyal customers. Management estimated that these value-related decisions accounted for roughly two-thirds of the U.S. customer traffic shortfall compared with expectations in the quarter.

Restaurant operations also suffered because employees had to manage too many simultaneous product launches, promotions and marketing campaigns. This increased complexity, hurt service times and weighed on customer satisfaction. McDonald’s plans to simplify restaurant operations and reduce noncustomer-facing activities to allow employees to focus more on service.

McDonald’s Has Several Levers for RecoveryDespite the U.S. weakness, the latest results were not uniformly negative. Global comparable sales increased 1.3% in the second quarter, while systemwide sales rose 4% on a constant-currency basis. International markets continued to perform better, with comparable sales increasing 1.5% in International Operated Markets and 1.9% in International Developmental Licensed Markets.

The company is already taking steps to revive U.S. traffic. It plans to increase national digital flash offers, personalize promotions for frequent customers and redirect marketing spending toward proven-value offerings. Management also expects restaurant execution to improve relatively quickly because many of the operational changes are within its control. Marketing improvements are expected to take longer, with management targeting stronger execution in 2027.

Another encouraging area is beverages. McDonald’s new beverage platform is performing ahead of initial expectations in the United States, Canada and Germany. Management said more than half of beverage traffic is occurring after lunch, suggesting the platform is creating incremental occasions. Beverage orders are also benefiting from strong food attachment and higher average checks.

Long-Term Growth Strategy Offers UpsideMcDonald’s is also preparing to roll out its McDonald’s > NEXT strategy, focused on improving food taste and quality, strengthening hospitality and simplifying restaurant operations. The company expects productivity opportunities to help fund the investments associated with the strategy. More details are expected at its Investor Day in September.

The company continues to expand the restaurant base, although it pushed the target of reaching 50,000 restaurants globally to 2028 from 2027 because of inflationary development costs and a pressured consumer environment. It remains on track to open about 2,600 gross restaurants in 2026.

Financially, McDonald’s remains resilient. Second-quarter adjusted EPS was $3.38, representing a 5% increase year over year on a constant-currency basis. The company generated more than $4 billion in restaurant margins during the quarter, while its year-to-date adjusted operating margin stood at 46.9%.

McDonald's Growth ProjectionAnalysts have slightly raised their 2026 earnings expectations for McDonald’s over the past 30 days, with the Zacks Consensus Estimate increasing 2 cents to $12.88 per share. In contrast, the 2027 estimate has been lowered 10 cents to $13.93 per share. Despite these revisions, the consensus estimates point to earnings growth, with 2026 and 2027 EPS expected to increase 5.7% and 8.1% year over year, respectively.

Image Source: Zacks Investment Research

Revenue growth is also expected to remain steady. The Zacks Consensus Estimate projects revenues of $28.18 billion for 2026 and $29.61 billion for 2027, representing year-over-year growth of 4.8% and 5.1%, respectively.

MCD Stock Trades at a DiscountMcDonald’s currently trades at a discount to its industry based on the forward 12-month price-to-earnings (P/E) ratio. The stock’s multiple stands at 19.71X, below the industry average of 21.65X. By comparison, Starbucks and Yum! Brands trade at higher forward P/E multiples of 34.61X and 21.14X, respectively.

P/E (F12M)
Image Source: Zacks Investment Research

Wrapping UpOverall, McDonald’s remains a fundamentally strong business, but its near-term outlook is clouded by weak U.S. traffic, execution issues, softer marketing performance and a challenging consumer environment. Existing investors may prefer to hold as management is actively addressing these issues, while the company’s strong brand, resilient margins, international performance, beverage growth and long-term strategy provide a solid foundation for recovery.

However, the recent weakness in U.S. comparable sales and continued pressure early in the current quarter suggest that the turnaround is still in its early stages. Therefore, new investors may want to wait for clearer signs of sustained improvement in U.S. traffic and execution before initiating a fresh position, even though the stock’s relatively attractive valuation could limit downside once the business begins to regain momentum.

MCD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways NCLH expects Q3 net yield to fall 8.9% despite 104% occupancy, highlighting continued pricing pressure. NCLH remains below its optimal booked position as geopolitical challenges weigh on demand.NCLH's $525 million-plus savings run rate may cushion margins, but weaker yields remain a near-term hurdle. Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) posted a better-than-expected second quarter, but its latest guidance points to a steeper near-term revenue challenge. Constant-currency net yield is expected to fall 8.9% in the third quarter, while management projects a decline of about 5% for 2026.

That puts more weight on the company's commercial reset and its ability to rebuild demand and pricing as the booking curve moves into 2027.

NCLH's Q3 Yield Outlook Signals a Sharper ResetSecond-quarter constant-currency net yield declined 2.6%, better than management's prior expectation for a 3.6% decrease. Revenues of $2.64 billion and adjusted earnings of 48 cents per share also topped their respective consensus marks.

The third-quarter outlook is much weaker. NCLH expects roughly 104% occupancy and 6.8 million Capacity Days, yet constant-currency net yield is projected to decline 8.9% year over year. That suggests higher utilization alone will not resolve the pricing and revenue pressure.

Norwegian Cruise Booking Gaps Raise Execution RiskNCLH remains below its optimal booked position for the next 12 months. Management cited softer demand at the Norwegian Cruise Line brand tied to company-specific execution challenges and the continuing conflict in the Middle East.

Peer results highlight the contrast. Carnival Corporation (CCL - Free Report) said its booked position for the remainder of 2026 was ahead of the prior year at historically high prices. Royal Caribbean Group (RCL - Free Report) said it remained booked at record prices, with booking volumes above last year's levels despite some geopolitical pressure.

NCLH Cost Cuts Cushion but Cannot Offset Weak YieldsCost discipline is providing some support. NCLH expects adjusted net cruise costs excluding fuel per Capacity Day to decline 0.9% in the third quarter and about 0.25% for 2026 on a constant-currency basis.

Management announced $225 million of annualized savings during the first two quarters of 2026 and said run-rate savings exceeded $525 million as of July. Still, weaker revenue generation means those efficiencies are not expected to fully offset the yield reset in the near term.

Norwegian Cruise's 2027 Recovery Starts With PricingNorwegian Cruise is rolling out baseloading revenue management, which establishes more competitive price points earlier in the booking window. It is also launching marketing campaigns aimed at premium families and seasoned travelers to improve demand generation before late-cycle discounting becomes necessary.

The timing remains important because cruise bookings have long lead times. Management expects net yield to remain negative in the first half of 2027, mainly because of the first quarter, before improving sequentially. That makes early pricing discipline and stronger demand creation central to the recovery path.

NCLH's Mixed Style Scores Reinforce Near-Term CautionThe bottom line is that NCLH's reset has identifiable levers, but the revenue outlook still leaves limited room for execution errors. The stock currently carries a Zacks Rank #5 (Strong Sell), and the current-year earnings estimate has declined 6.8% over the past four weeks.

NCLH has a Value Score of A, indicating more favorable value characteristics, but its Growth Score of D and Momentum Score of C are less supportive. Its VGM Score of C combines those mixed signals. Because the Zacks Rank is driven by earnings estimate revisions, the #5 ranking remains the more important near-term caution signal while investors wait for evidence that the 2027 pricing reset is gaining traction.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways UnitedHealth's medical care ratio improved, easing pressure from elevated healthcare utilization.EPS estimates for 2026 and 2027 rose five times in the past month, with no downward revisions.UNH's capital returns remain strong, with dividend yield above the industry level. UnitedHealth Group Incorporated (UNH - Free Report) , one of the nation’s leading healthcare plan providers, is currently trading at 18.39X forward 12-month earnings, below its five-year median P/E of 19.14X. While this suggests a modest discount to its historical valuation, the stock still trades above the Zacks Medical – HMOs industry average of 16X, indicating that investors continue to pay a premium for UnitedHealth’s scale, diversified operations and earnings potential. The stock currently carries a Value Score of B.

That raises an important question: Does UNH deserve that premium as it works through medical costs, regulatory pressure and shifting market conditions? Humana Inc. (HUM - Free Report) and Elevance Health, Inc. (ELV - Free Report) trade at 29.59X and 13.97X forward earnings, respectively, highlighting the wide valuation gap within the managed care group.

Image Source: Zacks Investment Research

UNH Is Having a Good YearUnitedHealth shares have gained 19.3% year to date, ahead of the S&P 500’s 12.6% advance but slightly behind the industry’s 20.3% increase. Performance among major peers has been mixed. Humana has surged 49.1%, while Elevance has gained 13.6%.

YTD Price Performance – UNH, HUM, ELV, Industry & S&P 500 Image Source: Zacks Investment Research

Despite the rally, Wall Street sees more room to run. The average analyst price target stands at $481.52, implying about a 21.7% upside from current levels. Targets range from $380 to $529, showing differing views on its recovery.

Lower MCR Offers a Key ReliefOne of the biggest reasons investors are warming to the stock is the improvement in medical costs. UnitedHealth’s adjusted medical care ratio improved to 86.7% in the second quarter of 2026 from 89.4% a year earlier. Medical costs also declined to $75.4 billion from $78.6 billion.

The improvement is important as elevated utilization, particularly among Medicare Advantage members, has pressured margins across the managed care industry over the last few years. Better pricing, disciplined benefit design and cost management suggest those pressures may be easing for UNH. Investors now want to see whether lower medical costs can be sustained and support earnings growth through 2027 and beyond.

Estimate Revisions Are Trending HigherThe Zacks Consensus Estimate for 2026 EPS is now pegged at $19.69, indicating 20.4% year-over-year growth. Analysts have raised the estimate five times over the past month, with no downward revisions. The consensus estimate for revenues is pegged at $446.85 billion, implying a 0.2% decline from a year ago.

For 2027, EPS is now projected to grow to $22.42, marking a 13.8% improvement. It has also seen five upward estimate revisions in the past month, against no downward movements. Revenues are pegged at $457.52 billion, indicating 2.4% growth from a year ago.

The company has also beaten earnings estimates in each of the past four quarters, delivering an average surprise of 12.1%.

Growth Drivers Remain IntactUnitedHealth still has several advantages working in its favor. Its scale, broad healthcare platform and large data resources give it a strong position across insurance, pharmacy services and healthcare delivery. An aging population, higher chronic disease rates and rising demand for healthcare should provide long-term support for the business.

Optum remains an important part of that story, helping diversify earnings beyond the insurance operation. The company is also changing its pharmacy benefit manager model toward a more transparent, fee-based structure. If executed well, the shift could strengthen Optum’s competitive position while addressing concerns about traditional PBM practices.

Capital Returns Add to the AppealUnitedHealth also continues to generate significant cash and return it to shareholders. The company returned more than $13 billion through dividends and share repurchases in 2025. Through mid-July 2026, it had repurchased $4 billion of stock and remained on track to buy back at least $5 billion for the year. It also paid $4.1 billion in dividends during the first half of 2026.

The stock’s 2.36% dividend yield is above the industry average of 2.02%, adding to its appeal as the recovery develops.

Risks to Keep an Eye OnThe turnaround is not without risks. Regulatory scrutiny remains a major concern, with investigations involving Medicare billing practices and parts of the Optum business potentially increasing compliance costs and headline pressure. Also, the Internal Revenue Service is scrutinizing UnitedHealth’s internal transactions involving UnitedHealthcare and Optum over potential tax savings, adding regulatory risk and uncertainty over possible additional taxes or penalties.

Although medical costs improved during the second quarter, it remains another key variable. If utilization, especially in Medicare Advantage, rises faster than pricing can offset it, margin improvement could stall.

Membership trends also deserve attention. UnitedHealth expects total medical membership to fall to 46.945-47.495 million in 2026 from nearly 49.760 million in 2025. Growth in commercial fee-based membership may offset some of that decline, but the shift remains an important part of the outlook.

The Bottom LineUnitedHealth’s improving medical care ratio, upward earnings estimate revisions and strong capital returns point to a healthier outlook after a challenging period. While regulatory scrutiny, membership declines and the risk of renewed medical cost pressure remain concerns, the company’s improving operations under CEO Stephen J. Hemsley and long-term growth drivers provide a solid foundation for recovery.

With shares trading below their five-year median P/E and Wall Street seeing further upside, the risk-reward profile remains favorable. UnitedHealth currently carries a Zacks Rank #2 (Buy), supporting a constructive view of the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In Brief

Posted:

Image Credits:Gabby Jones / Bloomberg / Getty Images New reporting from Bloomberg revealed how cybersecurity staff at U.S. phone provider T-Mobile identified and expelled Chinese hackers from its network in 2024 during a spate of industry-wide intrusions by Beijing aimed at stealing customer data.

The hacks were carried out by a Chinese government-backed hacking group called Salt Typhoon. The campaign compromised hundreds of phone companies, internet giants, and data center providers with the goal of collecting phone records and information about senior U.S. government officials, including then-presidential candidates. Hacked companies included AT&T, Verizon, satellite phone network Viasat, and network infrastructure giants Charter and Windstream.

By and large, T-Mobile escaped a widescale breach of its network by catching the activity early — and resorted to physically cutting the cable to a compromised system, per Bloomberg. 

The publication said T-Mobile’s cyber staff spent months looking for suspected hackers in its network without success. Eventually, the company found unusual behavior on one of its systems coming from another router belonging to a different telecom company, which T-Mobile did not name.

After identifying the breach, T-Mobile’s cybersecurity chief, Jeff Simon, told Bloomberg that he and three others drove to the nearby Bellevue, Washington, data center, found the compromised system, pulled out a set of scissors, and snipped the cable connecting the box to the outside world.

We’ve reached out to T-Mobile for more information, and we’ll update this story if we hear back.

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Key Takeaways A new alternative natural fiber program aims to boost product performance and reduce cost volatility.Kimberly-Clark delivers its 10th consecutive quarter of solid volume and mix performance.The company sees a strong innovation pipeline supported by greater discipline and faster execution. Kimberly-Clark Corporation (KMB - Free Report) highlighted the durability of the growth engine built through Powering Care. The company delivered its 10th consecutive quarter of solid volume and mix performance while maintaining global weighted share and achieving another quarter of industry-leading gross productivity. This performance came despite continued pressure on consumers and moderating category growth. The company also continued to invest for impact, while its teams maintained disciplined execution amid a challenging operating environment.

Kimberly-Clark continues to advance science-backed innovation and compelling value propositions through its proven, repeatable playbook. As the company moves into the next phase of its transformation, it is sharpening its focus on proprietary right-to-win spaces. The newly unveiled alternative natural fiber innovation program has the potential to reshape the future of the industry. The program represents the culmination of more than two decades of materials and plant science investment and development brought to life through Powering Care.

The program is expected to enhance product performance, strengthen the company’s long-term growth trajectory, reduce exposure to natural forest fiber cost volatility and advance its natural forest fiber-free ambition. The company also sees a strong pipeline ahead, with management expressing confidence in the company’s innovation pipeline over the next several years. This progress reflects greater organizational discipline and a faster, more agile approach that brings markets and functions together while placing greater focus on future pipeline development.

Overall, Kimberly-Clark’s Powering Care strategy continues to underpin a durable growth engine, supported by scientific innovation, differentiated product technologies and disciplined execution. Its focus on proprietary solutions and continued innovation could further strengthen its long-term growth trajectory.

The Zacks Rundown for KMBShares of this Zacks Rank #3 (Hold) company have gained 11.6% in the past three months compared with the industry’s growth of 3.6%.

Image Source: Zacks Investment Research

From a valuation standpoint, KMB trades at a forward price-to-earnings ratio of 14.44, lower than the industry’s average of 18.12.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for KMB’s current fiscal-year earnings implies a year-over-year decline of 1.3%, and the same for next fiscal year earnings implies growth of 1.7%.

Image Source: Zacks Investment Research

Stocks to ConsiderSome better-ranked stocks have been discussed below:

WD-40 Company (WDFC - Free Report) engages in the provision of maintenance products and homecare and cleaning products in North America, Central and South America, Asia, Australia, Europe, India, the Middle East, and Africa. At present, WDFC carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for WDFC’s current fiscal-year sales and earnings suggests growth of 9.9% and 7.2%, respectively, from the year-ago reported figures. WDFC reported a trailing four-quarter average earnings surprise of 18.3%.

BBB Foods Inc. (TBBB - Free Report) provides spot products comprising food and non-food products, such as clothing, electronics, household goods, and others. At present, TBBB carries a Zacks Rank of 2.

The Zacks Consensus Estimate for TBBB’s current fiscal-year sales and earnings implies growth of 44.6% and 52.7%, respectively, from the year-ago reported figures. TBBB delivered a trailing four-quarter negative earnings surprise of 44%, on average.

Purple Innovation, Inc. (PRPL - Free Report) designs, manufactures, and sells sleep and other products in the United States and internationally. PRPL currently carries a Zacks Rank #2.

The Zacks Consensus Estimate for PRPL's current fiscal-year sales and earnings implies growth of 0.4% and 17.1%, respectively, from the year-ago actuals. PRPL delivered a trailing four-quarter earnings surprise of 21.3%, on average.

FOP is an ultra-rare genetic disorder characterized by rogue bone formation that infiltrates muscles, tendons, ligaments and other connective tissues, resulting in significant disability 

Approval based on results from the OPTIMA trial demonstrating a 90% or greater reduction in new HO lesions at 56 weeks with a dramatic reduction in clinician-assessed flare-ups in adults with FOP

TARRYTOWN, N.Y., Aug. 19, 2026 (GLOBE NEWSWIRE) -- Regeneron Pharmaceuticals, Inc. (NASDAQ: REGN) today announced the U.S. Food and Drug Administration (FDA) has granted approval for Pasatru™ (garetosmab-grts) to reduce formation of new heterotopic ossification (HO) lesions and clinician-assessed flare-ups in adults with fibrodysplasia ossificans progressiva (FOP). Recognizing the significant mobility challenges faced by many people with FOP, Pasatru can be administered across a range of care settings, including home infusion where appropriate. The recommended starting dosage is based on weight at 10 mg/kg and is given intravenously over 60 minutes once monthly (every four weeks) but may be decreased to a 3 mg/kg infusion over 60 minutes once monthly if not tolerated. Pasatru is a VelocImmune®-derived, fully human monoclonal antibody that blocks Activin A, a protein that Regeneron scientists discovered to be critical in the development of HO lesions in people with FOP.

FOP is an ultra-rare genetic disorder in which muscles, tendons, ligaments and other connective tissues are progressively infiltrated by rogue bone formation, a process known as HO. HO of the jaw, spine, hip and rib cage can make basic actions such as speaking, eating, walking or breathing difficult, and the dysfunction of these structures can lead to escalating loss of mobility. Worldwide, approximately 900 people are diagnosed with FOP, and most patients are wheelchair-bound by age 30 with the median age of survival being 56.

“For people living with FOP, every irregular new bone formation is a step toward disability and potential loss of mobility,” said Dr. Kathryn Dahir, Professor in the Department of Internal Medicine, Division of Endocrinology, Diabetes, and Metabolism at Vanderbilt University, and a primary investigator for the OPTIMA trial. “With the ability to reduce the number of new bone lesions and flare-ups, we now have a new treatment that can positively affect patients.”

“FOP is a relentless, restrictive condition that severely impacts the lives of those diagnosed and their families,” said Michelle Davis, Executive Director of the International FOP Association. “This approval is monumental for our community, providing a vital new therapy that can have a significant impact on the life of someone with FOP."

Pasatru was granted approval based on efficacy and safety data from the positive Phase 3 OPTIMA trial evaluating Pasatru in adults with FOP. At 56 weeks, both doses of Pasatru, 10 mg/kg (n=23) and 3 mg/kg (n=19), met the primary endpoint and were highly efficacious in reducing the total number of new HO lesions as compared to placebo (n=21), demonstrating a 90% (2 lesions vs. 19 lesions) and 94% (1 lesion vs. 19 lesions) reduction, respectively, as assessed by computed tomography (CT) scan. The number of clinician-assessed flare-ups during this time, a key secondary endpoint, were 9 for Pasatru 10 mg/kg (88% reduction compared to placebo), 53 for Pasatru 3 mg/kg (15% reduction compared to placebo), and 66 for placebo. Changes in the proportion of patients with patient-reported flare-ups through week 56 were not significantly different between placebo and Pasatru treatment groups. At 56 weeks, among all 63 people who participated in the trial, serious treatment-emergent adverse events occurred in 2 patients treated with 10 mg/kg Pasatru, 1 patient treated with 3 mg/kg Pasatru, and 2 patients treated with placebo. The most common adverse reactions occurring in ≥10% of adults with FOP treated with Pasatru 10 mg/kg or 3 mg/kg were abscess, acne, increased hair growth, madarosis (loss of eyebrows), oral ulcers, epistaxis (nosebleeds), folliculitis, paronychia (nail infection), and rash.

“The approval of Pasatru is the culmination of decades of pioneering research that Regeneron has pursued alongside the FOP community, rooted in our discovery of the role that Activin A plays in driving this disease,” said George D. Yancopoulos, M.D., Ph.D., Board co-Chair, President and Chief Scientific Officer at Regeneron. “People living with FOP have needed a new treatment option for this devastating condition far too long, much like many others living with a rare disease. This unprecedented milestone embodies our broader mission to continue delivering new options for those who have long faced limited treatment options and our relentless commitment to bringing scientific breakthroughs to families, no matter the prevalence of the condition they manage.”

Regeneron is committed to supporting people living with rare diseases. Regeneron’s myRARE™ program offers resources to help patients and healthcare providers, including product information, insurance benefit verification, and information about potential financial support. To learn about myRARE, visit myRARE.com or call 1-833-4my-RARE (1-833-469-7273).

In the European Union, a regulatory submission for Pasatru is currently under review by the European Medicines Agency. Additional regulatory submissions are planned in countries around the world, including Japan. Pasatru previously received Fast Track designation and Orphan Drug Designation from the FDA, as well as Orphan Designation by the European Medicines Agency in the European Union and the Ministry of Health, Labour and Welfare in Japan.

About the OPTIMA Clinical Trial 
OPTIMA is a Phase 3, multi-center, multinational trial to assess the efficacy of Pasatru on the reduction of heterotopic bone formation and flares, as well as its safety, tolerability, and pharmacokinetics, in patients with active FOP. 

The trial enrolled 63 participants aged 18 years and older who have any FOP-causing variant of type I Activin A receptor (ACVR1), exhibited FOP disease activity or progression of HO lesions, and had a cumulative analogue joint involvement scale (CAJIS) score at screening of ≤19. CAJIS is a scoring tool used by clinicians to assess the degree of joint involvement, with higher scores representing a greater degree of disease severity (scale: 0 to 30). Eligible participants were randomized to receive intravenously administered Pasatru 10 mg/kg, Pasatru 3 mg/kg, or placebo once every four weeks for 56 weeks. Following this, participants could elect to then continue their originally assigned treatment in a double-blind extension phase for at least 84 weeks or discontinue treatment and enter an observation-only arm. 

During the treatment period, efficacy was evaluated through whole body CT scans for HO lesions, physician and patient assessment of flare-ups, utilization of CAJIS to rate joint functionality, and observances of change in disease severity. Safety assessment includes reports of adverse events, measurement of vital signs, physical examination, and coagulation testing. 

A Phase 3 trial of Pasatru in adolescents and children with FOP, OPTIMA 2, is planned to begin later this year. For more information, visit the Regeneron clinical trials website, contact [email protected] or call +1 844-734-6643. 

About Pasatru
Regeneron has been engaged in FOP research for decades and helped to provide fundamental insights into the biology and natural history of the disease. Regeneron scientists discovered that Activin A plays a key role in FOP by driving HO, the main pathology of FOP. Pasatru is a VelocImmune-derived, fully human monoclonal antibody that binds and neutralizes Activin A, which is involved in the development of heterotopic bone in people with FOP. 

IMPORTANT SAFETY INFORMATION

What is the most important information I should know about PASATRU?

PASATRU can cause serious side effects, including:

Harm to your unborn baby including serious birth defects if taken during pregnancy. Females who are pregnant must not take PASATRU. Females who can become pregnant: Your healthcare provider will ask you to take a pregnancy test to verify that you are not pregnant before starting treatment with PASATRU.Use effective birth control (contraception) during treatment with PASATRU and for 6 months after the last dose of PASATRU. Talk to your healthcare provider about birth control methods that may be right for you.If you become pregnant or think you may be pregnant during treatment with PASATRU, stop taking PASATRU immediately and call your healthcare provider right away. Infections of the skin and tissue under the skin requiring treatment or hospitalization, such as infected lumps (abscesses) and bacterial skin infections (cellulitis), may happen while you are taking PASATRU. Call your healthcare provider right away if you have signs or symptoms of skin infection, such as: rednessskin feels warm to the touchswelling pain or tendernessfeverfeeling generally unwell Nosebleeds (epistaxis) including serious nosebleeds that require medical care, can happen while taking PASATRU. Tell your healthcare provider right away if you have a nosebleed that: is severe or heavydoes not stop with basic first-aid measures, such as pinching your nose with continuous firm pressurelasts more than 20 minutes Do not receive PASATRU if you are pregnant.

Before you receive PASATRU, tell your healthcare provider about all your medical conditions, including if you:

are breastfeeding. It is not known whether PASATRU passes into your breastmilk. Breastfeeding is not recommended during treatment with PASATRU and for 6 months after the last dose of PASATRU. Talk to your healthcare provider about the best way to feed your baby during this time.are concerned about male fertility. PASATRU may affect your ability to father a child. Talk to your healthcare provider if this is concern for you. Tell your healthcare provider about all of the medicines you take, including prescription and over-the-counter medicines, vitamins, and herbal supplements.

The most common side effects of PASATRU include:

infected lumps (abscess)acneincreased hair growth hair loss of eyebrows or lashes (madarosis)
mouth sores (oral ulcers)nosebleeds (epistaxis) These are not all of the possible side effects of PASATRU. Call your doctor for medical advice about side effects. You may report side effects to FDA at 1-800-FDA-1088.

What is PASATRU?

PASATRU™ (garetosmab-grts) is a prescription medicine used to reduce the formation of new abnormal bone growth outside of the skeleton (heterotopic ossification) and flare-ups in adults with fibrodysplasia ossificans progressiva (FOP).

It is not known if PASATRU is safe and effective in children.

Please click here for full Prescribing Information, including Medication Guide.

About Regeneron’s VelocImmune Technology 
Regeneron's VelocImmune technology utilizes a proprietary genetically engineered mouse platform endowed with a genetically humanized immune system to produce fully optimized human antibodies. When Regeneron's Co-Founder, President and Chief Scientific Officer George D. Yancopoulos was a graduate student with his mentor Frederick W. Alt in 1985, they were the first to envision making such a genetically humanized mouse, and Regeneron has spent decades inventing and developing VelocImmune and related VelociSuite® technologies. Dr. Yancopoulos and his team have used VelocImmune technology to create a substantial proportion of all original, FDA-approved fully human monoclonal antibodies. This includes Dupixent® (dupilumab), Libtayo® (cemiplimab-rwlc), Praluent® (alirocumab), Kevzara® (sarilumab), Evkeeza® (evinacumab-dgnb), Inmazeb® (atoltivimab, maftivimab and odesivimab-ebgn), Veopoz® (pozelimab-bbfg) and Pasatru™ (garetosmab-grts). In addition, REGEN-COV® (casirivimab and imdevimab) had been authorized by the FDA during the COVID-19 pandemic until 2024. A total of 11 antibody and bispecific products have been approved or authorized worldwide that were invented or derived using VelocImmune technologies.

About Regeneron 
Regeneron (NASDAQ: REGN) is a leading biotechnology company that invents, develops and commercializes life-transforming medicines for people with serious diseases. Founded and led by physician-scientists, our unique ability to repeatedly and consistently translate science into medicine has led to numerous approved treatments and product candidates in development, most of which were homegrown in our laboratories. Our medicines and pipeline are designed to help patients with eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, neurological diseases, hematologic conditions, infectious diseases, and rare diseases. 

Regeneron pushes the boundaries of scientific discovery and accelerates drug development using our proprietary technologies, such as VelociSuite, which produces optimized fully human antibodies and new classes of bispecific antibodies. We are shaping the next frontier of medicine with data-powered insights from the Regeneron Genetics Center® and pioneering genetic medicine platforms, enabling us to identify innovative targets and complementary approaches to potentially treat or cure diseases.  

For more information, please visit www.Regeneron.com or follow Regeneron on LinkedIn, Instagram, Facebook or X. 

Forward-Looking Statements and Use of Digital Media 

This press release includes forward-looking statements that involve risks and uncertainties relating to future events and the future performance of Regeneron Pharmaceuticals, Inc. (“Regeneron” or the “Company”), and actual events or results may differ materially from these forward-looking statements. Words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” variations of such words, and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words. These statements concern, and these risks and uncertainties include, among others, the nature, timing, and possible success and therapeutic applications of products marketed or otherwise commercialized by Regeneron and/or its collaborators or licensees (collectively, “Regeneron’s Products”) and product candidates being developed by Regeneron and/or its collaborators or licensees (collectively, “Regeneron’s Product Candidates”) and research and clinical programs now underway or planned, including without limitation Pasatru™ (garetosmab-grts) to reduce the formation of new heterotopic ossification lesions and clinician-assessed flare-ups in adults with fibrodysplasia ossificans progressiva; uncertainty of the utilization, market acceptance, and/or commercial success of Regeneron’s Products (such as Pasatru) and Regeneron’s Product Candidates and the impact of studies (whether conducted by Regeneron or others and whether mandated or voluntary), including the studies discussed or referenced in this press release, on any of the foregoing; the likelihood, timing, and scope of possible regulatory approval and commercial launch of Regeneron’s Product Candidates and new indications for Regeneron’s Products; the ability of Regeneron’s collaborators, licensees, suppliers, or other third parties (as applicable) to perform manufacturing, filling, finishing, packaging, labeling, distribution, and other steps related to Regeneron’s Products and Regeneron’s Product Candidates; the ability of Regeneron to manage supply chains for multiple products and product candidates and risks associated with tariffs and other trade restrictions; safety issues resulting from the administration of Regeneron’s Products (such as Pasatru) and Regeneron’s Product Candidates in patients, including serious complications or side effects in connection with the use of Regeneron’s Products and Regeneron’s Product Candidates in clinical trials; determinations by regulatory and administrative governmental authorities which may delay or restrict Regeneron’s ability to continue to develop or commercialize Regeneron’s Products and Regeneron’s Product Candidates; ongoing regulatory obligations and oversight impacting Regeneron’s Products, research and clinical programs, and business, including those relating to patient privacy; the availability and extent of reimbursement or copay assistance for Regeneron’s Products from third-party payors and other third parties, including private payor healthcare and insurance programs, health maintenance organizations, pharmacy benefit management companies, and government programs such as Medicare and Medicaid; coverage and reimbursement determinations by such payors and other third parties and new policies and procedures adopted by such payors and other third parties; changes to drug pricing regulations and requirements and Regeneron’s pricing strategy, including in connection with Regeneron’s April 2026 agreements with the U.S. government; other changes in laws, regulations, and policies affecting the healthcare industry; competing products and product candidates (including biosimilar products) that may be superior to, or more cost effective than, Regeneron’s Products and Regeneron’s Product Candidates; the extent to which the results from the research and development programs conducted by Regeneron and/or its collaborators or licensees may be replicated in other studies and/or lead to advancement of product candidates to clinical trials, therapeutic applications, or regulatory approval; unanticipated expenses; the costs of developing, producing, and selling products; the ability of Regeneron to meet any of its financial projections or guidance and changes to the assumptions underlying those projections or guidance; the potential for any license, collaboration, or supply agreement, including Regeneron’s agreements with Sanofi and Bayer (or their respective affiliated companies, as applicable), to be cancelled or terminated; the impact of public health outbreaks, epidemics, or pandemics on Regeneron's business; and risks associated with litigation and other proceedings and government investigations relating to the Company and/or its operations (including the pending civil proceedings initiated or joined by the U.S. Department of Justice and the U.S. Attorney's Office for the District of Massachusetts), risks associated with intellectual property of other parties and pending or future litigation relating thereto (including without limitation the patent litigation and other related proceedings relating to EYLEA® (aflibercept) Injection), the ultimate outcome of any such proceedings and investigations, and the impact any of the foregoing may have on Regeneron’s business, prospects, operating results, and financial condition. A more complete description of these and other material risks can be found in Regeneron’s filings with the U.S. Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2025 and its Form 10-Q for the quarterly period ended June 30, 2026. Any forward-looking statements are made based on management’s current beliefs and judgment, and the reader is cautioned not to rely on any forward-looking statements made by Regeneron. Regeneron does not undertake any obligation to update (publicly or otherwise) any forward-looking statement, including without limitation any financial projection or guidance, whether as a result of new information, future events, or otherwise.

Regeneron uses its media and investor relations website and social media outlets to publish important information about the Company, including information that may be deemed material to investors. Financial and other information about Regeneron is routinely posted and is accessible on Regeneron's media and investor relations website (https://investor.regeneron.com) and its LinkedIn page (https://www.linkedin.com/company/regeneron-pharmaceuticals).

Key Takeaways BXP's second-quarter leasing gains lifted occupancy to 88.4%, with 1.3 million square feet yet to commence.BXP trades at 9.3X forward earnings, below its sub-industry, sector, S&P 500 and five-year median.BXP faces uneven rent economics, $3.2 billion in development investment and potential refinancing costs. BXP, Inc. (BXP - Free Report) is benefiting from better leasing and rising occupancy, while its valuation remains modest relative to broader benchmarks. Those positives improve the setup for the office REIT.

The counterweight is a still-demanding risk profile. Uneven rent spreads, sizable development commitments and potentially higher refinancing costs could limit the near-term payoff from stronger occupancy.

BXP's Leasing Gains Improve the Fundamental SetupBXP executed 106 leases covering about 1.8 million square feet in the second quarter, equal to 129% of its 10-year second-quarter average. Portfolio occupancy rose to 88.4%, while the leased rate reached 91.3%.

The 290-basis-point gap between leased and occupied space represented about 1.3 million square feet of signed leases yet to commence. Management expects year-end 2026 occupancy to finish closer to 90% and continues to target 91% by year-end 2027.

BXP's Valuation Offers a Discounted Entry PointBXP trades at 9.3X forward 12-month earnings per share, below 16.4X for its sub-industry, 17.0X for the broader sector and 20.5X for the S&P 500. Its multiple also sits below its five-year median of 9.8X, providing some valuation support.

Investors comparing office REITs may also consider SL Green Realty Corp. (SLG - Free Report) , which focuses primarily on Manhattan commercial properties. Kilroy Realty Corporation (KRC - Free Report) owns and operates Class A office and life science properties across major West Coast markets and Austin, providing another reference point for office-sector conditions.

Shares of BXP have risen 13.4% over the past three months, which underperformed SLG, but outperformed KRC.

Image Source: Zacks Investment Research

BXP Still Faces Uneven Rent EconomicsSecond-generation net rents increased 1.6% portfolio-wide in the second quarter. The picture was weaker in several markets, with net rents down 17.8% in San Francisco, 20.1% in Seattle and 10.2% in Washington, DC.

New leases generally include six to 12 months of free rent. That concession delays part of the cash net operating income benefit from improving occupancy into 2027, leaving near-term cash-flow gains uneven.

BXP's Development Upside Comes With Execution RiskBXP's active development and redevelopment pipeline spans about 3.5 million square feet and represents $3.2 billion of company investment, with $2.1 billion still to be spent. The office portion was 65% leased.

The pipeline and recently delivered assets are projected to contribute about $310 million of BXP's share of cash net operating income upon stabilization. The potential is meaningful, but construction, funding and lease-up milestones still have to be met.

BXP's Debt Reset Could Temper FFO GrowthBXP's share of net debt to annualized EBITDAre, a REIT leverage measure, improved to 7.94X from 8.50X sequentially, while fixed-charge coverage rose to 2.62X from 2.40X. Those changes point to better balance-sheet metrics.

Still, a $1 billion unsecured bond carrying a 3.5% GAAP interest rate matures in October 2026. Management said replacement debt could price around 6% under then-current conditions, so refinancing may absorb part of the benefit from occupancy and development gains and temper funds from operations growth.

BXP's Mixed Scores Support PatienceBXP's operating trends are improving and its valuation is modest, but the risk-reward picture remains balanced. For investors deciding whether to buy now, the combination of better leasing, uneven rent economics, development spending and refinancing exposure supports a patient stance.

The stock currently carries a Zacks Rank #3 (Hold). It also has a VGM Score of B, Value Score of B and Momentum Score of B, while its Growth Score is D. The B scores are favorable within those styles, but the #3 Rank and weaker Growth Score stop short of the stronger combination generally associated with a more aggressive buy case. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

HP Inc (NYSE:HPQ) is expected to hold its full-year guidance steady when it reports fiscal third-quarter results on August 26, even as mounting memory chip costs squeeze margins in its Personal Systems business, according to Bank of America.

The bank's analysts see Personal Systems revenue coming in slightly ahead of HP's own guidance, driven by pricing actions and residual demand pull-in, but expect operating margin pressure in the segment to keep building through the back half of the fiscal year.

Bank of America flagged the durability of Personal Systems demand, the supply of memory chips, and the pace of actions to offset memory cost headwinds as the main points of investor debate heading into the print.

For the fiscal fourth quarter, HP has guided Personal Systems margins to their "trough" due to pricing dynamics and a seasonally higher mix of consumer sales, with margins expected to normalize in the first half of fiscal 2027 as pricing actions take hold and easier revenue and margin comparisons kick in.

Bank of America expects HP to guide fourth-quarter revenue down low-single-digit percent due to pull-ins, with Personal Systems margins slightly below 4%, Print margins near the midpoint of the long-term range at roughly 17.5%, and earnings per share of $0.65 to $0.75. The bank said it does not expect a material update on HP's ongoing CEO search.

Bank of America reiterated its Underperform rating on HP, citing slower PC unit growth, margin pressure from memory costs, and uncertainty stemming from the company's leadership transition. Its price objective remains $18, based on 6 times its calendar 2027 EPS estimate of $3.06.

Bank of America expects Personal Systems revenue to rise 8% year-over-year in the fiscal third quarter, better than HP's guidance, before falling low-to-mid-single-digit percent in the fourth quarter on demand pull-in and consumer exposure. It modeled margins at 4.3% and 3.9% for the two quarters, the trough on consumer mix and lagging pricing. Print margins should stay near the low end of HP's 16%-19% range this quarter, improving to 17.5% in the fourth, leaving full-year margins at 17.6%.

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Key Takeaways Cigna benefits from strong Specialty and Care Services and employer business growth.Cigna's pharmacy strategy, AI initiatives and buybacks support its growth and shareholder value.Rising expenses, a higher medical cost ratio and significant debt pose risks to margin growth. The Cigna Group (CI - Free Report) continues to drive growth on the back of strong segmental performance, improving operating efficiency and shareholder-friendly moves. Its forward P/E of 8.61X is lower than the industry average of 16X.

Cigna — with a market capitalization of $73.6 billion — offers a variety of health solutions and insurance products. It operates through two main divisions: Cigna Healthcare and Evernorth Health Services. The company’s shares have gained 1.2% in the year-to-date period compared with the industry average of a 20.3% rise.

Courtesy of solid prospects, Cigna currently carries a Zacks Rank #3 (Hold) and Value Score of A.

Where Do Estimates for CI Stand?The Zacks Consensus Estimate for Cigna’s 2026 earnings is pegged at $30.50 per share, indicating a 2.2% year-over-year rise. In the past month, it has witnessed eight upward estimate revisions against none in the opposite direction. Furthermore, the consensus mark for revenues is pegged at $288.8 billion for 2026.

It beat earnings estimates in each of the past four quarters, with the average surprise being 2.3%.

CI’s Growth DriversCigna is benefiting from strong growth in its Specialty and Care Services business, supported by rising specialty-drug utilization and faster adoption of biosimilars and specialty generics. Evernorth’s Specialty and Care Services delivered 22% year-over-year growth in pretax adjusted earnings to $1.1 billion in the second quarter of 2026. Higher generic penetration, operating efficiencies and contributions from Shields Health Solutions, which expands Cigna’s reach across hospitals and health systems, also supported the performance. In the second quarter of 2026, Evernorth Health Services’ adjusted revenues increased 6.3% year over year.

Cigna Healthcare is another key growth driver, with the U.S. employer business benefiting from strong client relationships, disciplined pricing and effective care coordination. Second-quarter adjusted revenues increased 9.1% year over year to $11.7 billion, while pretax adjusted earnings rose 17%, supported by favorable medical cost trends and continued membership growth in the employer market.

CI is also reshaping its pharmacy benefits business to create a more sustainable growth platform. Its new Signature rebate-free pharmacy model has generated early interest from health plans and employers and is expected to be introduced to Cigna Healthcare’s fully insured plans next year before a broader market launch in 2028. Pharmacy Benefit Services also achieved more than 97% client retention for 2026, while new business secured for 2027 already exceeds the combined level of the previous two selling seasons.

Technology and AI are emerging as additional levers for improving care, affordability and efficiency. Cigna’s Pharmacy Forward program is expected to halve the average time to therapy for specialty medications and reduce clinician documentation time by up to 50%. Meanwhile, expanded AI-enabled care coordination is expected to reach 20% more customers with emerging complex health needs. Customers participating in these programs have seen approximately $2,000 in annual medical-cost savings and a 42% reduction in avoidable inpatient stays.

Cigna continues to demonstrate a strong commitment to enhancing shareholder value. During the second quarter of 2026, it repurchased approximately 0.9 million shares for about $250 million. Its current dividend yield of 2.24% is higher than the industry average of 2.02%.

CI: Risks to WatchHowever, there are some factors that investors should keep a careful eye on.

The company’s total benefits and expenses escalated over the last several years due to higher pharmacy and other service costs, medical costs and other benefit expenses. Total benefits and expenses witnessed a year-over-year increase of 6% in the second quarter of 2026. The persistent escalation of expenses might weigh on its margin growth. In the second quarter of 2026, the medical cost ratio deteriorated 130 bps year over year to 84.5%.

Cigna has been grappling with a significant debt level over the past several years. As of June 30, 2026, it had a long-term debt of $29.1 billion, significantly higher than the cash balance of $6.3 billion. This is likely to put pressure on the company’s interest expenses. Its net debt to capital is 32.9%, higher than the industry’s average of 18.4%.

Stocks to ConsiderSome better-ranked stocks in the Medical space are BrightSpring Health Services, Inc. (BTSG - Free Report) , Globus Medical, Inc. (GMED - Free Report) and Centene Corporation (CNC - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for BrightSpring Health Services’ current-year earnings of $1.78 per share has witnessed five upward revisions in the past 30 days against no movement in the opposite direction. BTSG beat earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 16.1%. The consensus estimate for current-year revenues is pegged at $15.2 billion, suggesting 18.1% year-over-year growth.

The Zacks Consensus Estimate for Globus Medical’s current-year earnings of $4.93 per share has witnessed three upward revisions in the past 30 days, against no movement in the opposite direction. GMED Pharmaceuticals beat earnings estimates in each of the trailing four quarters, with the average surprise being 27.9%. The consensus estimate for current-year revenues is pegged at $3.2 billion, suggesting 8.8% year-over-year growth.

The Zacks Consensus Estimate for Centene’s current-year earnings of $4.89 per share has witnessed one upward revision in the past seven days, against no movement in the opposite direction. CNC beat earnings estimates in each of the trailing four quarters, with an average surprise of 151.3%. The consensus estimate for current-year revenues is pegged at $196.3 billion, suggesting 0.8% year-over-year growth.

Key Takeaways Lumentum's revenues surged 109% as AI workloads drove demand for faster optical data-center links. AAOI's growth is strong, but capacity and supply constraints are limiting its ability to meet demand. Lumentum's 2026 earnings estimate rose 3.02%, while AAOI's estimate remained unchanged. Applied Optoelectronics (AAOI - Free Report) and Lumentum (LITE - Free Report) are key suppliers in the optical networking market. While Applied Optoelectronics specializes in high-speed optical transceivers, laser components, and other fiber-optic networking products that enable AI data center connectivity, Lumentum offers optical and photonic components that support similar high-speed data-center and telecommunications applications.

Applied Optoelectronics or Lumentum — Which of these Optical Networking stocks has the greater upside potential? Let’s find out.

The Case for AAOI StockApplied Optoelectronics is benefiting from the strong momentum in the optical networking market, driven by surging demand for next-generation data center and CATV (cable TV) solutions. In the second quarter of 2026, Datacenter revenues reached $107.66 million, up 140.4% year over year and 32.3% sequentially. The business accounted for 56% of total revenues, supported by stronger shipments of high-speed optical transceivers used in AI-focused infrastructure.

The surge in AI infrastructure deployments that require high-speed optical transceivers has been a major growth driver. This demand is particularly strong for next-generation products such as 400G, 800G, and 1.6T transceivers, which are essential for hyperscale data centers supporting AI workloads.  In the second quarter of 2026, 800G revenues were $12.8 million, representing 11.9% of datacenter revenues, and more than doubled sequentially. Meanwhile, 400G revenues totaled $48.4 million, rising more than fourfold year over year and 27.4% sequentially.

In the CATV segment, AAOI achieved record revenues of $80.6 million in the second quarter of 2026, up 43.8% year over year, and secured major wins such as being selected by Mediacom for DOCSIS 4.0 network upgrades. The company’s QuantumLink software and next-generation amplifiers are gaining traction with multiple system operators, providing a diversified revenue base and reducing reliance on any single market segment. AAOI expects CATV revenues to be between $100 million and $110 million in the third quarter of 2026 and expects to generate over $325 million annually in this segment.

The Case for LITE StockLumentum is benefiting from strong demand for its optical components and systems, driven by the industry shift to AI workloads and increased data center connectivity. In the fourth quarter of fiscal 2026, the company reported a 109% year-over-year revenue surge to $1.01 billion, marking its eighth consecutive quarter of top-line growth. This momentum is driven by the accelerating adoption of optical links in data centers, fueled by the rise of AI workloads that demand higher speed and bandwidth.

Key growth drivers include record shipments of 800G cloud transceivers and the launch of next-generation 1.6T modules, as well as strong demand for both EML and CW laser chips. LITE’s pump laser shipments surged more than 80% year over year in the fourth quarter of fiscal 2026, and the company remains effectively sold out despite rapid capacity expansion. Strategic long-term agreements with major customers further secure future demand and support ongoing capital investments.

The market’s shift toward near-packaged optics (NPO) and co-packaged optics (CPO) is also playing directly to LITE’s strengths. Customers are increasingly adopting these architectures as intermediate steps to full CPO deployment, significantly expanding the total addressable market for optical solutions. The company is already seeing strong NPO momentum across multiple high-velocity engagements, leveraging its industry-leading laser chip technology. Lumentum expects a fourfold increase in pump laser shipments over the next several quarters and is expanding capacity at its wafer fabs to capture the coming 200-gig and 300-gig lane speed opportunities.

Price Performance and Valuation of AAOI and LITEIn the trailing 12-month period, AAOI shares have gained 499.3%, underperforming LITE shares, which have risen 653.6%. Lumentum is benefiting from the rapid expansion of AI and cloud infrastructure, which is increasing bandwidth requirements within data centers and accelerating the shift from electrical to optical connectivity.

Despite its expanding portfolio, AAOI is suffering from production capacity and key component supply constraints, which have limited its ability to meet surging customer demand for next-generation AI infrastructure products. The company also faced temporary setbacks in its 100G product line in the second quarter of 2026 due to a memory shortage affecting customers’ ability to source switches. This is likely to result in a $20–25 million revenue shortfall in the third quarter of 2026. Operating expenses were also higher than expected, due to increased shipping costs and elevated R&D spending to qualify new products.

AAOI and LITE Stock Performance
Image Source: Zacks Investment Research

Both AAOI and LITE shares are currently overvalued, as suggested by a Value Score of F.

In terms of forward 12-month Price/Sales, AAOI shares are trading at 5.97X, lower than LITE’s 10.26X.

AAOI and LITE Valuation
Image Source: Zacks Investment Research

How Do Earnings Estimates Compare for AAOI & LITE?The Zacks Consensus Estimate for AAOI’s 2026 earnings is pegged at 95 cents per share, which has been unchanged over the past 30 days. This indicates a 465.38% increase year over year.

The Zacks Consensus Estimate for LITE’s 2026 earnings is pegged at $18.71 per share, which has increased 3.02% over the past 30 days. This indicates a 115.80% increase year over year.

ConclusionWhile both AAOI and LITE stand to benefit from robust AI-driven optical networking demand, Lumentum appears better positioned, backed by stronger earnings growth, rising estimates and accelerating demand for next-generation optical solutions.

Despite AAOI’s expanding portfolio intensifying competition from larger rivals, production capacity constraints and supply chain challenges remain headwinds that could hurt the company’s financial performance.

Currently, Lumentum has a Zacks Rank #2 (Buy), making the stock a stronger pick than Applied Optoelectronics, which has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Another quarter has come and gone, and investors may still be waiting for the quantum computing industry's breakthrough moment. Although many likely assume this will come via artificial intelligence applications, cryptographic advancements, or even something like pharmaceutical research, it's possible that aerospace may get there first in the end.

IonQ Today

$43.22 -0.91 (-2.05%)

As of 02:19 PM Eastern

This is a fair market value price provided by Massive. Learn more.

$25.89▼

$84.64$69.92

IonQ NYSE: IONQ recently announced a promising government contract that suggests as much, although many investors may have missed it in the hype surrounding the company's noteworthy Q2 2026 earnings.

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In early August 2026, IonQ announced that its Space Division—formerly Capella—had been awarded a contract with the U.S. National Reconnaissance Office (NRO). The contract supports the NRO's Radar Commercial Augmentation (RCA) program. At first glance, this contract seems to be a satellite imaging award rather than a typical quantum computing contract. However, this may be exactly why IonQ's announcement could signal that the company is on the verge of a much larger commercial breakthrough.

A Closer Look at IonQ's Space AwardIonQ's agreement with the NRO provides that the company will offer commercial synthetic aperture radar imagery and related data services in support of various U.S. national security missions. This seems to be a far cry from IonQ's quantum tech and an unusual avenue for the firm to pursue, given its recent sales success and expanding commercial traction in that area. IonQ did not share the financial terms of the agreement.

Investors expecting a quantum computing deployment may be disappointed at first, but the contract suggests that IonQ may be transitioning from a firm focused entirely on quantum hardware to one building exposure to multiple industries and finding creative approaches to commercialize its tools. Given that the government is willing to agree to pay IonQ for these services, this contract is evidence of the company's success in making that pivot.

IonQ's Acquisitions Are Paying OffAll of this is possible thanks to IonQ's $311-million acquisition of Capella Space last year, one of a series of major purchases, including the recent high-profile deal involving SkyWater Technology. Although D-Wave NASDAQ: QBTS made headlines early in the year with its major acquisition of Quantum Circuits, this was, in some respects, a straightforward quantum play rather than a lateral move to dramatically expand its reach beyond the industry.

Despite paying substantial sums for several companies in recent years, IonQ's financials continue to stand out. Its latest earnings saw 287% year over year (YOY) growth in revenue to a record $80 million, plus a notable full-year revenue guidance raise to a range of $280 million to $290 million. What's more, the company still has about $3 billion in cash and investments, not including the SkyWater acquisition, which gives it tremendous financial flexibility compared to many rivals.

Why Space Makes Sense for IonQLike quantum computing, space is an industry undergoing rapid transformation, with many opportunities for growth that are likely yet untapped. Quantum technology applications in aerospace are becoming increasingly clear and may include securing satellite communications, developing and improving ultra-precise atomic clocks, managing observation and data collection, optimizing satellite constellations, providing GPS-independent navigation, and more.

IonQ Stock Forecast Today12-Month Stock Price Forecast:
$69.92
63.62% Upside

Moderate Buy
Based on 14 Analyst Ratings

Current Price$42.73High Forecast$100.00Average Forecast$69.92Low Forecast$35.00IonQ Stock Forecast Details

The radar application related to IonQ's NRO contract is especially important because it offers a real commercial benefit that is immediately available. These radar systems collect imagery regardless of time of day, cloud cover, and adverse weather, making them especially helpful for not only military intelligence but also disaster response, insurance use, and more. IonQ's commercial synthetic aperture radar platform gathers data that could be invaluable for monitoring pipeline movement or bridge stresses, for example.

The NRO award shows that IonQ's space projects—including prior defense work under both IonQ and Capella Space before the acquisition—are attracting government funding. Perhaps the surest sign that this has financial potential is the fact that competitors like IBM Corp. NYSE: IBM are also exploring collaborations with NASA on quantum tech.

It's unlikely that IonQ's NRO contract will have a material impact on the company's near-term financial results, particularly given that the firm has not disclosed the contract value. Rather, this award is more important as a potential strategic signal, suggesting that IonQ is putting into practice what many other quantum tech companies are still only hoping to do: finding revenue-generating real-world uses for quantum tools that can draw customer interest. If aerospace becomes increasingly important in the quantum computing industry, IonQ is particularly well-prepared to be able to meet that demand. What's more, the company's breadth outside of the pure quantum space suggests it may be able to achieve similar results elsewhere as well.

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Key Takeaways RHI expects Q3 revenues of $1.31B-$1.41B and adjusted EPS of 43-53 cents.Robert Half sees adjusted Talent Solutions revenues growing 1%-5% in Q3.RHI expects Protiviti revenues to fall about 6% at the midpoint as regulatory shifts pressure activity. Robert Half Inc. (RHI - Free Report) enters the third quarter with guidance that puts its staffing rebound in focus. Management expects revenues of $1.31 billion to $1.41 billion and adjusted earnings of 43 cents to 53 cents per share.

Our Zacks Consensus Estimate for revenue for the third quarter is $1.36 billion, up marginally year over year. For EPS, the consensus estimate is pinned at 47 cents, increasing 9.3% year over year.

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At the midpoint, adjusted Talent Solutions revenues are expected to grow about 3% year over year, while Protiviti revenues are projected to decline about 6%. The quarter will test whether improving hiring activity can offset continued consulting softness.

Robert Half's Q3 Guidance Puts Talent in FocusTalent Solutions generated $865.4 million in second-quarter revenues, down 1% year over year on a reported basis. Management's third-quarter midpoint assumes a return to year-over-year growth for the business.

The company expects adjusted Talent Solutions revenue growth of 1% to 5% in the third quarter. Midpoint total revenues of $1.36 billion would be flat year over year on an adjusted basis, putting Talent Solutions at the center of the expected improvement.

RHI's Talent Solutions Recovery Is BroadeningPermanent Placement Talent Solutions revenues increased 2.9% to $118 million in the second quarter. Talent Solutions also delivered its third consecutive quarter of sequential revenue growth on an adjusted basis, while Technology was the strongest contract practice with adjusted growth of 2.3%.

ManpowerGroup Inc. (MAN - Free Report) reported improving demand and trends across parts of its portfolio in the second quarter. Kelly Services, Inc. (KELYA - Free Report) , a specialty talent solutions provider, said its second-quarter year-over-year revenue decline improved from the first quarter, adding context to the staffing recovery.

Robert Half's Protiviti Weakness Remains a DragProtiviti revenues declined 4.9% to $471 million in the second quarter. Management expects about a 6% decline at the midpoint of third-quarter guidance as shifts in the U.S. financial services regulatory environment pressure activity.

The engagement mix is changing, with fewer large regulatory remediation projects and more work tied to efficiency, productivity and advanced technologies. Protiviti recorded $7 million of severance costs in the second quarter, with restructuring actions expected to generate $45 million in annualized savings.

RHI's Margin Mix Makes Execution CriticalTalent Solutions gross margin improved to 47.4% from 47.1% a year earlier, while Contract Talent Solutions held its gross margin at 39.1%. Contract bill rates increased 2.3% year over year, helping preserve spreads despite lower volumes.

Protiviti's adjusted gross margin fell to 18.5% from 22.3%. Third-quarter guidance calls for adjusted gross margin of 23% to 25% and adjusted operating margin of 6% to 8% at Protiviti, making execution important as the segment absorbs a different project mix.

Robert Half's July Trends Offer an Early ReadAdjusted Contract Talent Solutions revenues were down 1% in the first two weeks of July, compared with a 2% decline in June. Permanent Placement revenues increased 4% during the first three weeks of July, matching June's growth rate.

Management cautioned that these are very brief periods. Even so, they provide an early benchmark for whether improving client activity can persist long enough to support the third-quarter Talent Solutions growth outlook.

RHI's Signals Keep the Outlook BalancedThe third quarter is a test of operating mix. Talent Solutions needs to sustain its recovery while Protiviti works through regulatory-driven pressure and rebuilds margins.

RHI currently carries a Zacks Rank #4 (Sell), a Value Score of B, Growth Score of C, Momentum Score of F and VGM Score of C.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Value Score is a relative positive, but the weak Momentum Score and middle-range Growth and VGM Scores temper the picture. The Zacks Style Scores complement rather than override the Zacks Rank, which points to an unfavorable near-term earnings-estimate revision trend.

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Shares of Wendy’s (NASDAQ:WEN | WEN Price Prediction) are up 5% to $8.88 in midday trading Wednesday after reports that Nelson Peltz’s Trian Fund Management is assembling a consortium to take the company private. Adding to the catalyst, the burger chain confirmed it is reviving its chief operating officer role as part of a broader management reset.

Wendy’s stock was up 5% year to date through Tuesday’s close, an unusual gain given deteriorating same-restaurant sales and a withdrawn 2026 outlook. The rally reflects deal speculation rather than a change in the operating story, with investors treating this as a special situation.

Peltz Consortium Report Fuels the Rally According to reports from the Financial Times and Reuters, Trian has assembled a group that could submit an offer for Wendy’s in the coming weeks. The consortium is expected to include Abu Dhabi-based BlueFive Capital and Flynn Group, one of the world’s largest restaurant franchise operators.

Flynn Group operates about 309 Wendy’s restaurants in the United States plus additional locations in Australia and New Zealand. Peltz personally owns a 16.2% stake in Wendy’s, and Trian holds 7.9%, which combined make the pair the company’s largest shareholder.

Trian disclosed in a February regulatory filing that it believed Wendy’s stock was “undervalued” and that it was reaching out to co-investors about strategic options, including taking the company private. Morgan Stanley cut its price target on Wendy’s stock to $5.5 from $7 two days before the Financial Times report, and Wendy’s shares jumped 12% following that report.

COO Role Revival and Management Reset Wendy’s will revive its chief operating officer role upon the August 31 departure of Pete Suerken, currently its U.S. president. Suerken will return as president and CEO of Quality Supply Chain Co-op, an independent purchasing cooperative in the Wendy’s system.

The COO position was eliminated more than six years ago and was last held by current CEO Bob Wright, who left Wendy’s in 2019. Wright later led Potbelly through a turnaround that culminated in its 2025 acquisition by RaceTrac. The filing said Wendy’s “is evaluating restructuring and reorganization efforts.”

The Operating Reality Behind the Bid U.S. same-restaurant sales at Wendy’s fell 7% in the second quarter, the sixth consecutive quarterly decline, while traffic dropped 12.5%. The company withdrew its 2026 financial outlook and cut its quarterly dividend to $0.07 a share.

Wendy’s closed 289 restaurants in the United States during the first half of 2026. Wright told analysts, “Traffic is down, our value proposition has slipped, and franchisee economics are under pressure. We can’t just do what we’ve always done better. We do have to innovate.” CFO Steve Cirulis added that “the real challenge for us has been that underlying traffic trend.”

Peer Restaurant Stocks in 2026 McDonald’s (NYSE:MCD) stock trades at $269.26 and is down 12% year to date through Tuesday’s close. The pullback reflects softer traffic across the fast-food burger category and gives McDonald’s a chance to reset expectations heading into the back half.

Restaurant Brands International (NYSE:QSR) stock trades at $77.52 and is up 14% year to date. Restaurant Brands is the only one of the three major listed burger operators in positive territory for the year, reflecting stronger execution at Burger King relative to peers.

Jack in the Box (NASDAQ:JACK) stock trades at $17.39 and is down 12% year to date. Jack in the Box remains in turnaround mode with an interim CEO and suspended capital returns, a reminder that Wendy’s is far from alone in the QSR reset cycle.

Sector ETF Context The Invesco Food & Beverage ETF (NYSEARCA:PBJ) trades at $48.76 and is up 8% year to date. It is a broad food and beverage fund rather than a restaurant-specific vehicle, so single-restaurant catalysts like the Wendy’s bid report get diluted.

Position sizing on PBJ should reflect the diluted exposure to any single name. A WEN takeover would move only a sliver of the basket.

What to Watch Shareholders can watch for a formal Trian consortium offer, which reporting suggests could arrive in the coming weeks. Any follow-up 8-K filing on the COO search or additional restructuring at Wendy’s could shape the next leg for the stock.

Commentary from Wright at the next quarterly update may set the tone for how quickly the operational turnaround catches up with the takeover narrative currently driving Wendy’s shares. A cautious approach and moderate position sizing make sense for anyone playing this as a special situation.

Contact [email protected] for any questions or corrections.

Key Takeaways ANET is benefiting from AI infrastructure growth, with cumulative Etherlink customers now topping 100.Diverse accelerators and AI architectures are expanding ANET's addressable networking opportunity.ANET sees Scale-Across switching and routing TAM reaching $15-20B by 2030, expanding its AI opportunity. Arista Networks, Inc. (ANET - Free Report) is benefiting from the rapid expansion of AI data-center infrastructure. AI workloads require very large numbers of GPUs to communicate with each other at high speed. As AI clusters are becoming larger to cater to surging AI workloads, the networking infrastructure connecting these processors also needs to become faster and more reliable.

Arista’s comprehensive Etherlink AI fabric portfolio is gaining from these evolving trends. The company recently disclosed that the number of cumulative Etherlink customers has grown to more than 100 compared with only four or five customers in 2024. As AI infrastructure becomes more complex, customers increasingly need networking capabilities such as traffic engineering, low latency, reliability and security. These factors are driving demand for Arista’s EOS operating system.

ANET is expanding beyond a single accelerator ecosystem. The company currently uses a high percentage of NVIDIA GPUs. However, the company is exploring other options such as AMD's MI-series accelerators, Google's TPUs and various inference accelerators. Different accelerators and AI architectures can require different networking configurations. The growing diversity of AI accelerators and AI architectures is expanding Arista's addressable networking opportunity.

AI infrastructure is increasingly being distributed across multiple locations. Customers are facing constraints related to power, physical space and compute capacity. Arista’s 7800 platform is designed to support such distributed AI environments by providing high-capacity switching and routing capabilities. The company is expanding its portfolio to address issues at scale across networking architecture. The company estimates the Scale-Across switching and routing market could reach $15-$20 billion by 2030. The use case is expected to represent roughly 30% of its overall AI target of at least $3.6 billion in 2026.

How Are Competitors Faring?Arista faces competition from Cisco Systems (CSCO - Free Report) and Hewlett Packard Enterprise (HPE - Free Report) in the AI networking space. Cisco closed fiscal 2026 with $9.3 billion in hyperscaler AI infrastructure orders, about 4.5 times fiscal 2025, and roughly $4 billion in related revenues. Management expects hyperscaler AI revenues to reach $7.5 billion in fiscal 2027. Cisco continues to expand AI data center offerings, including Nexus innovations to capture greater market share.

The acquisition of Juniper Networks is reshaping HPE’s mix by expanding its portfolio across campus and branch, data center switching, routing and security. In the second quarter of fiscal 2026, management highlighted that Juniper integration milestones and committed synergies are running ahead of schedule, and the combined go-to-market is already improving share of wallet with enterprise and service provider customers. HPE also launched new autonomous, agentic AI operations capabilities and raised its cumulative Networks for AI order target to at least $2 billion by the end of fiscal 2026, reflecting confidence in AI-driven demand for high-performance networking.

ANET’s Price Performance, Valuation & EstimatesShares of Arista have gained 43.4% over the past year against the industry’s decline of 13.9%.

Image Source: Zacks Investment Research

From a valuation standpoint, Arista trades at a forward price-to-sales ratio of 16.93, above the industry average of 8.75.

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Earnings estimates for 2026 have increased 11.29% to $4.04 over the past 60 days, while the same for 2027 has also increased 13.7% to $4.98.

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Arista currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Key Takeaways Credo Technology sees scale-up AI connectivity revenues starting in fiscal 2027, with more upside in 2028.PCIe Gen6 AECs, retimers, Blue Heron and OmniConnect broaden Credo Technology's portfolio.Fiscal 2028 could bring DustPhotonics CPO/NPO revenues, ALCs and OmniConnect production ramps. Credo Technology (CRDO - Free Report) is expanding its presence in the AI connectivity space, with scale-up networks emerging as another potential growth opportunity. While fiscal 2027 is expected to mark the beginning of scale-up revenues, management sees fiscal 2028 as a more substantial opportunity.

Credo further added that it expects the scale-up opportunity to evolve across different architectures, with hyperscalers and Neo Clouds pursuing individual strategies to address bandwidth requirements. It is taking a customer-by-customer approach as operators pursue different strategies.

The company's expanding product portfolio could support this opportunity. Credo remains on track for PCIe Gen6 AEC solutions and is witnessing strengthening customer engagement and design activity. Retimer momentum is also improving across 100G and 200G per lane, alongside customer traction for PCIe Gen6 retimers.

Blue Heron supports Ethernet, UALink and ESUN for emerging scale-out and scale-up networks. Management expects initial CPO and NPO revenues from DustPhotonics in fiscal 2028. It also expects production ramps for active LED cables (ALCs) and OmniConnect in fiscal 2028. OmniConnect gearboxes are designed to optimize XPU connectivity. The first OmniConnect product, called Weaver, allows up to a tenfold improvement in memory I/O density.

However, the scale-up opportunity remains at an early stage. Customer architectures and deployment strategies will determine how quickly revenues ramp. For now, fiscal 2027 appears to be a foundation year, while fiscal 2028 could provide a clearer test of whether Credo can turn its expanding scale-up portfolio into a meaningful revenue contributor.

Credo also needs to watch out for serious competition from bigwigs like Broadcom (AVGO - Free Report) and Marvell Technology (MRVL - Free Report) , as well as upcoming players like Astera Labs.

Taking a Look at CompetitorsMarvell is also accelerating investments in the emerging scale-up networking market. On the last earnings call, management noted that it expects a “massive expansion” of scale-up networks as AI domains grow, which will require high-radix, low-latency switches and high-bandwidth optical interconnects.

Marvell expects its scale-up optics business to ramp significantly in fiscal 2028, with revenues forecast to more than double its prior outlook of roughly $150 million. The company added that it is well-placed to support scale-up protocols with its in-house-developed UAL and ESUN switches and support for NVLink through its partnership with NVIDIA. It also has several Tier-1 customer engagements that management believes each represent multibillion-dollar lifetime revenue opportunities.

Broadcom’s Networking business accounted for nearly 40% of its AI revenues in the fiscal second quarter. The company is enabling direct-attached copper using its 200G and 400G SerDes, alongside co-packaged copper with Ethernet and PCIe switches for scale-up networks.

Management expects networking to typically represent closer to 30% of AI revenues as its XPU business expands. Broadcom is building custom silicon platforms and enabling compute deployments for leading hyperscalers such as Meta, as well as AI companies like Anthropic and OpenAI. AI semiconductor revenues are expected to reach $16 billion in the third quarter of fiscal 2026, up more than 200% year over year.

CRDO Price Performance, Valuation and EstimatesShares of CRDO gained 16% in the past month compared with the Electronics-Semiconductors industry’s growth of 1.1%.

Image Source: Zacks Investment Research

In terms of the forward 12-month price/sales ratio, CRDO is trading at 17.09, higher than the Electronic-Semiconductors sector’s multiple of 5.12.

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The Zacks Consensus Estimate for CRDO earnings for fiscal 2027 has seen a marginal upward revision over the past 60 days.

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CRDO currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways Deckers' international sales climbed 8.4%, making overseas markets a key growth driver in fiscal 2027.HOKA posted strong EMEA sell-through and record reorders. DTC grew across Europe, China and Japan.UGG's overseas growth, led by Asia, is expanding adoption through broader, year-round product offerings. Deckers Outdoor Corporation (DECK - Free Report) international business emerged as a key growth driver in the first quarter of fiscal 2027. International net sales increased 8.4% year over year to $502.1 million, outpacing 3.2% domestic growth. International revenues accounted for nearly half of total company sales, highlighting the growing importance of overseas markets.

HOKA was a major contributor to international momentum. Although reported international wholesale revenues were affected by shipments occurring later this year compared with unusually early shipments in the prior-year period, underlying demand remained strong. Europe, the Middle East and Africa (EMEA) posted robust wholesale sell-through and a quarterly record for reorders, while international DTC delivered exceptional growth across Europe, China and Japan.

UGG strengthened its international presence, with growth led by overseas markets, particularly Asia. Its mono-brand retail presence has been effective in driving consumer adoption of versatile UGG products across new categories. Investments in fashion casual footwear, sneakers, sandals and apparel are broadening the brand’s appeal across international consumer segments.

Deckers’ international opportunity is supported by continued product innovation and consumer engagement. HOKA’s differentiated performance and lifestyle offerings are helping expand its reach, while UGG’s broader assortment and year-round positioning are reducing reliance on seasonal demand. Management highlighted resilient demand across international markets despite a more pressured consumer environment in Europe.

International wholesale and distributor operations are expected to be a significant driver of growth in the second half of fiscal 2027, as planned shipment timing normalizes. Management expects consolidated revenues to be in the range of $5.86-$5.91 billion, with HOKA growing at a low-double-digit rate and UGG at a mid-single-digit rate. Continued international DTC strength provides Deckers with a solid platform for global share gains. We anticipate international net sales to increase 12.6% year over year in fiscal 2027.

DECK’s International Performance Compared With TPR & WWWTapestry, Inc. (TPR - Free Report) and Wolverine World Wide, Inc. (WWW - Free Report) are the key footwear companies competing with Deckers in the global arena.

Tapestry posted strong international growth in the fourth quarter of fiscal 2026, with Europe revenues rising 19% year over year and Greater China sales increasing 28% on a constant-currency basis. Growth was supported by robust direct business, broad-based channel momentum, new customer acquisition and market share gains, while Other Asia revenues increased 22%, led by South Korea and Australia. Japan sales declined 4% as the company intentionally pulled back on promotions. Tapestry expects international markets to contribute an increasing share of growth, with fiscal 2027 guidance calling for mid-teens growth in both Europe and Greater China, high single-digit growth in Other Asia and a return to growth in Japan.

Wolverine posted strong international growth in the second quarter of fiscal 2026, with international revenues rising 10.9% year over year to $277.2 million, or 9.6% on a constant-currency basis. Merrell and Saucony led the momentum, with international markets driving strong wholesale performance, while Merrell benefited from its key city strategy and Saucony continued to see particularly strong demand in Europe. Wolverine's global distribution network, spanning approximately 170 countries and territories, along with expanding partnerships and targeted activations across key international markets, continues to support brand momentum and global growth.

DECK’s Price Performance, Valuation & EstimatesShares of Deckers have lost 8.9% over the past three months compared with the industry’s 2.2% decline.

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From a valuation standpoint, DECK trades at a trailing price-to-sales ratio of 2.24X, up from the industry’s average of 1.39X. It has a Value Score of B.

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The Zacks Consensus Estimate for Deckers’ fiscal 2027 earnings implies year-over-year growth of 6.8%, whereas the same for fiscal 2028 indicates an uptick of 10.7%. The estimates for fiscal 2027 and 2028 have been revised upward by 5 cents and 6 cents, respectively, over the past 30 days.

Image Source: Zacks Investment Research

DECK currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways FTI Consulting's Q2 revenues rose 5.3%, led by growth across Corporate Finance, Technology & other practices.FCN's adjusted EBITDA fell 6.4% as higher direct costs and SG&A expenses outweighed revenue growth.FCN trades at 14.6X forward consensus EPS, well below its five-year median of 21.8X. FTI Consulting, Inc. (FCN - Free Report) is growing across several practices, but that momentum is not flowing cleanly to profitability. Second-quarter 2026 revenues rose 5.3% year over year while adjusted EBITDA declined 6.4%.

That split defines the investment case. A valuation below FCN's historical norm and a favorable earnings outlook offer support, but higher costs and uneven event-driven demand leave limited room for execution missteps.

FCN's Growth Base Is BroadeningCorporate Finance revenues increased 8.5% year over year in the second quarter, Technology advanced 18.4% and Forensic and Litigation Consulting rose 4.1%. Strategic Communications revenues also increased 5.4% excluding pass-through revenues.

The breadth matters because FCN is not relying on one practice for growth. Corporate Finance also grew 13.6% in the first half of 2026, while Technology advanced 11.4%, reinforcing the case for a diversified revenue base.

FTI Consulting's Margins Face a Cost TestAdjusted EBITDA fell to $104.5 million in the second quarter from $111.6 million a year earlier. The adjusted EBITDA margin contracted to 10.5% from 11.8% as higher direct costs and selling, general and administrative expenses outweighed revenue growth.

Selling, general and administrative expenses increased to $230.7 million from $202.2 million, reflecting higher compensation, travel and entertainment and legal expenses. Management now expects 2026 expenses in this category to be roughly $70 million above 2025, versus its earlier expectation of a $60 million increase.

FCN's Valuation Looks Reasonable, Not CheapFCN trades at 14.6X forward 12-month consensus EPS estimate, in line with 14.6X for the Zacks sub-industry. The stock's five-year median is 21.8X, so the current valuation is well below its own historical norm.

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That discount offers some support, but the near-peer valuation leaves less protection if margins disappoint. Huron Consulting Group Inc. (HURN - Free Report) , another consulting peer, reported 15.7% second-quarter growth in revenues before reimbursable expenses and raised its 2026 guidance.

FTI Consulting's Event-Driven Demand Adds RiskManagement described the restructuring market as softer in the first half of 2026 and said global regulatory scrutiny felt less intense than before. Gaps between major cases in the U.K. and geopolitical disruption in the Middle East added further variability.

CRA International Inc. (CRAI - Free Report) , which operates as Charles River Associates, reported 12.8% fiscal second-quarter revenue growth and raised full-year revenue guidance. That peer strength provides another reference point for consulting demand while FCN continues to manage engagement timing and mix.

FCN's Earnings Outlook Still Has UpsideManagement reaffirmed 2026 revenue guidance of $3.94-$4.10 billion. The Zacks Consensus Estimate for 2026 revenues is $3.98 billion, implying about 5% growth from 2025 despite the softer demand pockets and elevated expense base.

The consensus estimate calls for earnings of $9.25 per share in 2026 and $11.05 in 2027. That trajectory points to stronger earnings growth next year if utilization improves and cost pressure moderates.

FCN's Signals Favor Patience Over ChasingThe current setup favors patience. FCN has broad revenue growth and a valuation well below its historical median, but margin compression, higher selling, general and administrative expenses and event-driven demand make the near-term risk-reward less decisive.

The stock carries a Zacks Rank #3 (Hold), which supports a wait-and-see stance rather than an aggressive new position. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FTI Consulting’s VGM Score of A and Value Score of A, along with a Growth Score of B and Momentum Score of B, indicate favorable underlying style characteristics even as the Zacks Rank remains #3.

Key Takeaways H&R Block shares gained 22% in a month, outpacing its industry and the S&P 500.AI Tax Assist handled 4.1 million client messages in FY26, up 88% y/y.HRB held $958.7M in cash, had no current debt and increased the operating cash flow 23% y/y. H&R Block, Inc. (HRB - Free Report) stock has gained 22.1% in a month, outperforming the industry’s 7.1% uptick and the Zacks S&P 500 Composite's 3.6% return.

1-Month Share Price Performance                                                                  Image Source: Zacks Investment Research

Let us delve deeper into the factors that have contributed to the company’s outperformance.

AI-backed ScalabilityH&R Block integrated AI Tax Assist, a GenAI-powered technology, into DIY tax preparation to improve revenues. This technology strengthened the customer experience by assisting clients who prepare a paid DIY online return without extra charges.

In fiscal 2025, HRB generated $383.7 million in DIY tax preparation (accounting for nearly 10% of the top line), increasing 10.2% from the preceding year. Notably, AI Tax Assist addressed 4.1 million client messages and responses, representing an 88% year-over-year upsurge during the fiscal 2026 tax season.

Robust Liquidity ProfileAs of June 30, 2026, HRB held $958.7 million in cash and cash equivalents against no current debt. This solid cash position, which is further enhanced by 23% year-over-year growth in operating cash flow, provides HRB sufficient flexibility to invest in its scalability without hampering its short-term debt position.

The company’s current ratio of 1.13, which stands above the industry benchmark of 1.03, bolsters investor morale as it highlights heightened efficacy in paying off short-term obligations easily.

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Shareholder-Friendly StrategyIn fiscal 2023, 2024 and 2025, the company distributed $177.9 million, $179.8 million and $197.3 million in dividends, respectively. It also returned $569 million, $379.6 million and $437.1 million through share repurchases in fiscal 2023, 2024 and 2025, respectively. These actions reflect HRB’s dedication to enhancing shareholder value and its confidence in the business's long-term potential.

Zacks Rank & Stocks to ConsiderHRB currently carries a Zacks Rank #3 (Hold).

Some higher-ranked stocks in the broader Zacks Consumer Discretionary sector are Lifetime Brands (LCUT - Free Report) and TAL Education Group (TAL - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lifetime Brandshas a long-term earnings growth expectation of 14%. LCUT delivered a trailing four-quarter earnings surprise of 271.1%, on average.

TAL Education has a long-term earnings growth expectation of 13.6%. TAL delivered a trailing four-quarter earnings surprise of 210%, on average.

Key Takeaways Intuitive Machines posted record Q2 revenues of $206.2M as backlog surged to $1.8B.Commercial bookings and awards are accelerating, including a $600M-plus contract for three GEO satellites.National security revenues rose to 30% of Q2 revenues, with an 18-spacecraft award boosting growth prospects. Intuitive Machines, Inc. (LUNR - Free Report) is increasingly positioning itself as a broader space infrastructure company rather than a mere lunar-lander developer. The company generated record second-quarter revenues of $206.2 million, driven by spacecraft manufacturing, NASA’s Commercial Lunar Payload Services (“CLPS”), National Security Space and other space programs. Backlog reached $1.8 billion, up approximately $1.5 billion from year-end 2025, providing a substantial foundation for future revenue growth.

Commercial demand is becoming an important growth driver. Intuitive Machines signed a contract worth more than $600 million for three commercial GEO satellites, while second-quarter bookings totaled $920 million. The company also received an additional $300 million in awards in the third quarter to date, demonstrating continued momentum across commercial, civil, and national security customers.

National security is another increasingly important opportunity. National security revenues grew from just 3% of revenues in second-quarter 2025 to 30% in second-quarter 2026. The company expects further growth following an award for 18 spacecraft to support the AMDT3 Golden Dome constellation. Intuitive Machines also secured a U.S. Space Force Andromeda IDIQ contract with a $6.24 billion ceiling, expanding its potential addressable market.

LUNR is developing the capabilities needed to support a more persistent lunar economy, including lunar data relay and navigation services. Its broader strategy is to build an integrated space infrastructure platform that can serve NASA, defense customers and commercial operators. If these capabilities gain wider adoption, Intuitive Machines could generate more recurring and diversified revenues beyond individual lunar missions, potentially strengthening the long-term value of its growing backlog.

Companies Benefiting From the Space Infrastructure TrendThe broader space-infrastructure opportunity also benefits companies such as Rocket Lab Corporation (RKLB - Free Report) and Redwire Corporation (RDW - Free Report) , each of which is positioned across different parts of the growing space ecosystem.

Rocket Lab provides launch services as well as satellites, spacecraft components and other space systems, giving it exposure to rising demand for both commercial and government missions. Redwire focuses on space infrastructure and technologies used for satellites, in-space manufacturing and national security applications.

LUNR Stock’s Earnings EstimatesThe Zacks Consensus Estimate for 2026 earnings per share (EPS) implies a decrease of 57.14% year over year, while that for 2027 EPS suggests an increase of 52.19%.

Image Source: Zacks Investment Research

LUNR Stock Trades at a PremiumIn terms of valuation, LUNR’s forward 12-month price-to-sales (P/S) is 4.14X, a premium to the industry’s average of 2.65X.

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LUNR Stock’s Price PerformanceIn the past six months, the company’s shares have risen 10% against the industry’s 6.3% decline.

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LUNR’s Zacks RankThe company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Takeaways Pagaya's 1H26 network volume rose 22% y/y to a record $6.16B, lifting total revenues 14.4%.Auto volumes surged about 140% in Q2, supported by nearly 30,000 dealerships and better decisioning tools.Pagaya expects 2026 network volume of $12.5-$13.25B, signaling continued 2H26 momentum. Pagaya Technologies Ltd.’s (PGY - Free Report) network volume, a key driver of its top line, has maintained strong momentum in the first half of 2026. Supported by strength in its Auto and Personal Loan businesses, along with a focus on prudent underwriting, PGY’s network volume increased 22% year over year to a record $6.16 billion in the first six months of this year. Fee revenue less production costs (FRLPC) rose 10.9% to $268.4 million while total revenues and other income increased 14.4% to $705 million, underscoring the positive impact of higher transaction volumes on Pagaya’s revenue base.

Auto has become a key growth driver for Pagaya. In the second quarter of this year, Auto volumes surged about 140% year over year, reaching a $4.8-billion annualized run rate. The company’s connections with nearly 30,000 dealerships, along with better pricing and decisioning tools, are helping lending partners make more competitive offers and improve conversion rates. Higher conversions, in turn, encourage dealers to send more applications through Pagaya’s network, supporting further volume growth.

Beyond Auto, Pagaya’s product-led strategy is broadening the sources of network volume. Its Affiliate Optimizer Engine generated more than $1 billion in second-quarter volume, while Direct Marketing Engine programs are expected to reach $500 million by the year-end. The company is also expanding in point-of-sale (POS) financing and adding new lending partners, which should further broaden its volume base.

Strong access to capital markets is another positive. Pagaya raised a record $3.7 billion through six asset-backed securities (ABS) transactions in the second quarter, while its institutional investor base grew to 174 investors. This funding support, combined with disciplined underwriting and stable credit performance, should help the company handle higher transaction volumes without materially relaxing credit standards.

Looking ahead, FRLPC growth may remain somewhat tempered in the near term by the mix of newer partners and products. Nonetheless, continued expansion in Auto, a healthy partner onboarding pipeline and strong funding availability should keep network volume on an upward trajectory and support top-line growth. Pagaya expects third-quarter 2026 network volume of $3.43-$3.63 billion and full-year volume of $12.5-$13.25 billion, pointing to continued momentum in the second half. Third-quarter and full-year total revenues and other income are projected at $370-$390 million and $1.43-$1.53 billion, respectively.

Comparing PGY’s Business Model With PeersLike PGY, Upstart Holdings, Inc. (UPST - Free Report) is an AI-based lending platform that aspires to become capital-light but often holds loans on its balance sheet temporarily. Its core business model involves finding financing for loans after its network of bank and institutional partners originates them.

Upstart partner banks can finance the loan by keeping it on their balance sheet. The bank can sell the whole loan on Upstart’s platform or use forward flow agreements from institutions that commit to buying a specific volume or type of loan originated on the Upstart platform in the future.

Upstart also uses securitization, wherein pools of loans are bundled together and sold as ABS to institutional investors. However, the firm frequently reverts to a balance-sheet-heavy model, especially in tight liquidity markets, making it more volatile and exposed to macro cycles.

Another close competitor of PGY is LendingTree (TREE - Free Report) . But unlike PGY, LendingTree is a marketplace platform, not a lender. It matches consumers with financial product providers like mortgages, personal loans, credit cards and insurance.

LendingTree does not underwrite, originate or hold loans. Hence, its balance sheet is not credit-heavy. TREE’s balance sheet is detached from revenue generation. The company is primarily structured to support a fee-based digital marketplace, not balance sheet lending.

PGY’s Price Performance, Valuation & Estimate AnalysisInvestors have been bullish on the PGY stock, which has appreciated 70.9% in the past six months against the industry’s 0.5% decline.

Image Source: Zacks Investment Research

Pagaya stock is currently trading at a 12-month forward price-to-sales (P/S) of 1.05X, which is below the industry average of 2.58X over the last three years.

Image Source: Zacks Investment Research

Over the past 30 days, the Zacks Consensus Estimate for PGY’s 2026 and 2027 earnings has moved higher to $3.72 and $4.13, respectively. The consensus estimates indicate 12.4% and 11% year-over-year growth for 2026 and 2027, respectively.

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Currently, Pagaya sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Circle Internet Group, Inc. (CRCL) Q2 2026 Earnings Call August 19, 2026 9:00 AM EDT

Company Participants

Jeremy Allaire - Co-Founder, Chairman & CEO

Presentation

Operator

During today's conversation, we may make forward-looking statements, which may vary materially from actual results. Any information shared concerning risks, uncertainties or other factors that could cause these results to differ is included in our SEC filings. We may also reference non-GAAP financial measures, definitions of those non-GAAP financial measures and reconciliations can be found in the earnings presentation on our Investor Relations website.

Jeremy Allaire
Co-Founder, Chairman & CEO

Good morning, good afternoon, good evening, wherever you're tuning in from. Welcome to this Circle Earnings AMA. I'm really thrilled to have this time to answer questions and engage with everyone out there about Circle, our strategy, what we're trying to execute. We obviously just came off of our Q2 earnings, shared a lot, but now we want to have an opportunity to open up and have more questions from the broader audience of folks that are interested in Circle. So I'm going to kick in and please, as we go, try and submit questions. We're trying to pull in as many as we can as we go through this.

Question-and-Answer Session

Jeremy Allaire
Co-Founder, Chairman & CEO

First question from, Lufei.

As Circle expands across payments, Arc, capital markets and financial infrastructure, what gives you the greatest confidence in the team's ability to execute ?and what capability do you most need to strengthen?

This is a great question. And I think as a CEO and really our whole board as well, but as a CEO, specifically, I'm always trying to think about the team, how we're executing, what needs to evolve from where we are. And I would really speak to a few things here.

Our 24/7 Wall St. price target for Amazon (NASDAQ:AMZN | AMZN Price Prediction) is $341.77, implying 31.73% upside from the current $259.45. Our recommendation is buy with a 90% confidence level, driven by AWS re-accelerating to its fastest growth in more than four years and an AI backlog that reshapes the multi-year earnings picture.

24/7 Wall St. Price Target Summary Metric Value Current Price $259.45 24/7 Wall St. Price Target $341.77 Upside 31.73% Recommendation BUY Confidence 90% The AWS Reacceleration That Changed the Narrative Amazon is up 12.4% year to date and 4.94% over the past month, though the stock has cooled 4.71% over the past week from a recent high. Shares trade roughly 14% below the 52-week high of $287.20.

The catalyst was Q2 fiscal 2026 results filed July 30, 2026. Revenue reached $200.6 billion, up 19.62%, with operating income up 43% to $27.46 billion. AWS grew 37% to $42.23 billion, its fastest pace in 18 quarters, and advertising climbed 26% to $19.8 billion. Shares jumped 17.98% within a day following the report.

The Case for $392 and Above Bulls point to an AI story that keeps compounding. Amazon’s AI and Chips businesses each cleared $25 billion annualized run rates in Q2 with triple-digit growth, and AWS backlog stood at $496 billion, growing triple digits year-over-year. Trainium2 is fully subscribed, and multi-gigawatt commitments now include Anthropic and OpenAI (the power, cooling, and networking suppliers behind that buildout are the subject of a free report we put together here).

Bedrock customers spent more in Q2 than in all prior quarters combined. CEO Andy Jassy told investors he now believes AWS can become a “trillion dollar annual revenue business” over time.

Advertising at a $70 billion-plus run rate and record delivery speeds strengthen the retail engine. Sell-side analysts echo the case, with 59 buy or strong buy ratings versus three holds and zero sells. If AWS margins hold near 39.4%, the bull case at $392.40 becomes realistic.

What Could Go Wrong The bear case starts with capex. Amazon spent $54.2 billion in a single quarter, up 68.44%, driving free cash flow to negative $7.6 billion on a trailing basis. Fiscal 2026 capex is guided near $200 billion. Long-term debt climbed to $119.1 billion from $65.6 billion, raising interest expense as tariffs, fuel inflation, and an 80 basis point FX headwind weigh on Q3.

Retail investor sentiment on Reddit has drifted into bearish territory around a $4 billion Bezos share disposition. Management has laid out data-center economics that break even in under three years on server outlay, with 30-plus years of subsequent monetization, and most AI capacity is already contracted for at least five-year terms. Our bear case still puts the stock at $292.16, a modest gain from here.

How Amazon Compares to Microsoft and Alphabet Microsoft (NASDAQ:MSFT) trades at a trailing P/E of 27 with Azure growth of 43% in its most recent quarter, still ahead of AWS but decelerating relative to Amazon’s reacceleration. Microsoft’s $678 billion commercial RPO exceeds AWS backlog, so a modest discount for Amazon’s slower cloud growth is warranted, though narrower than the current gap.

Alphabet (NASDAQ:GOOGL) grew Google Cloud 82% to $24.77 billion in Q2 2026, faster than AWS on a smaller base, and trades meaningfully cheaper than AMZN on earnings. Amazon carries the highest trailing multiple of the three, but AWS reacceleration plus a $19.8 billion ads business the others can only partially match justifies the premium implied by our target.

Amazon Price Prediction 2026-2030 Our 24/7 Wall St. price target of $341.77, buy rating, and 90% confidence reflect a rare setup: AWS growth is accelerating into a capex cycle already contracted well into 2028.

The thesis holds so long as AWS growth stays above 30% and operating margin holds near 39%. The thesis weakens if capex intensity forces further debt issuance without matching backlog growth. On today’s evidence, the risk/reward skews favorable in our model.

Year 24/7 Wall St. Price Target 2026 $288 2027 $342 2028 $410 2029 $485 2030 $570 These projections assume AWS continues executing on its AI infrastructure buildout and advertising sustains 20%-plus growth. Significant upside or downside could result from Trainium adoption at third-party data centers or a sharper capex overhang.

Contact [email protected] for any questions or corrections.

Key Takeaways Citigroup's new Custody platform adds faster settlement, FX, liquidity and planned digital asset custody.Services revenues rose 17%, while assets under custody or administration climbed 22% to $35 trillion.C is combining tokenized payments, custody and securities services to deepen institutional relationships. Citigroup Inc. (C - Free Report) has been steadily building its digital asset capabilities as institutional adoption of tokenized assets, blockchain-based payments and crypto-related services expands. Rather than focusing on a single product, the bank has been developing broader digital infrastructure across payments, custody, liquidity and securities servicing, which could strengthen its Services franchise over time.

The recent launch of new Custody platform, Custody+ adds another layer to this strategy. The platform brings together faster settlement, real-time asset servicing, foreign exchange, liquidity management, data capabilities and planned digital asset custody. Its significance goes beyond custody, as it fits into Citigroup’s wider effort to modernize infrastructure for institutional clients across traditional and digital markets.

Custody+ strengthens Citigroup’s broader digital-asset strategy alongside Citi Token Services, which enables 24/7 transfers of tokenized commercial-bank deposits in select markets. With digital-asset custody capabilities also under development and an initial Bitcoin offering expected later in 2026, C could combine tokenized payments, custody and traditional securities services to deepen institutional relationships and capture more transaction flows.

The opportunity is particularly relevant for the Services segment, which continues to show strong momentum. In the first half of 2026, Services revenues rose 17% year over year. Assets under custody and/or administration increased 22% to about $35 trillion, Securities Services average deposits climbed 15% to $165 billion, and cross-border transaction value in Treasury and Trade Solutions grew 13%. Citigroup’s scale and existing client base provide a solid foundation for further expansion of its digital-asset offerings.

The bank is also modernizing its traditional infrastructure through real-time processing, automation and AI. With more than $2 billion invested annually in its Services platform strategy, digital assets represent an extension of an already large institutional franchise.

While the near-term revenue contribution from digital assets push may remain modest and depend on institutional adoption and regulation, Citigroup’s expanding capabilities across tokenized payments, custody, liquidity and blockchain-based infrastructure could deepen client relationships, capture greater transaction activity, and create revenue opportunities for the company.

Other Firms Push Into Digital AssetsMorgan Stanley’s (MS - Free Report) launch of the Morgan Stanley Ethereum Trust and Morgan Stanley Solana Trust marks a meaningful expansion of its digital-asset product strategy. The push into crypto fits with Morgan Stanley’s broader effort to strengthen its wealth and asset management businesses, and reduce its dependence on more cyclical capital-markets activities. 

Likewise, Invesco (IVZ - Free Report) has expanded its digital-asset lineup through its partnership with Galaxy, including the Invesco Galaxy Solana ETF. Invesco’s broader digital-asset offering also includes Bitcoin and Ethereum products, reflecting how competition is increasingly moving toward a multi-asset crypto platform rather than individual cryptocurrency funds.

C’s Price Performance, Valuation & EstimatesShares of Citigroup have jumped 50.9% in the past year compared with the industry’s growth of 29.6%.

Price Performance

Image Source: Zacks Investment Research

From a valuation standpoint, C trades at a forward price-to-earnings (P/E) ratio of 11.19X, below the industry’s average of 14.17X.

Price-to-Earnings F12M

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for C’s 2026 and 2027 earnings implies year-over-year rallies of 40.5% and 15.5%, respectively. Estimates for both years have been revised upward over the past month.

Estimate Revision Trend

Image Source: Zacks Investment Research

Citigroup currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

For much of the AI boom, investors believed one thing: expensive AI meant booming demand for Nvidia Corp‘s (NASDAQ:NVDA) chips. Now the opposite may be becoming true.

As OpenAI cuts prices, Chinese challengers like DeepSeek and Kimi introduce lower-cost models, and enterprises gain access to cheaper AI than ever before, the economics of artificial intelligence are changing rapidly. While that may sound like bad news for companies building AI models, it could ultimately strengthen the investment case for Nvidia.

The AI Price War Is Driving Costs LowerAI usage has become dramatically cheaper over the past few months.

SoFi Technologies, Inc. (NASDAQ:SOFI) Chief Market Strategist Liz Thomas noted on X that average AI token costs have fallen from $2.07 per million tokens in late May to $1.02, citing OpenAI’s price reductions and the growing availability of lower-cost open-source models from companies including Kimi and DeepSeek.

The broader trend is becoming increasingly difficult to ignore.

OpenAI recently reduced prices for some of its frontier models by as much as 80%, while Anthropic has also introduced lower-cost offerings as competition intensifies. Chinese AI companies, including DeepSeek and Moonshot AI, have further accelerated the industry’s shift toward cheaper inference.

The competition is no longer just about building the smartest model. It’s increasingly about building the most affordable one.

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Cheaper AI Could Mean More Demand for NvidiaAt first glance, falling prices might appear negative for the AI ecosystem. Lower prices usually imply lower revenue per transaction. But technology markets often behave differently.

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Economists call it the Jevons Paradox—the idea that making a resource cheaper and more efficient often increases total consumption rather than reducing it.

Early evidence suggests AI may already be following that pattern. After OpenAI reduced prices for some of its models, usage surged sharply. Business Insider reported that usage of GPT-5.6 Luna increased roughly fourteenfold, while Terra usage rose fivefold, with revenue also increasing despite the lower prices.

For Nvidia, that’s an important distinction.

The company doesn’t earn money from the price customers pay per token. It benefits when AI developers, hyperscalers and enterprises deploy more computing infrastructure to serve growing demand.

If cheaper AI encourages businesses to automate more workflows, launch more AI agents and process more inference requests, the total amount of computing required could continue rising—even if each individual AI query costs less.

The AI Winners May Shift, but Nvidia Still Stands to BenefitThe AI price war is undoubtedly putting pressure on model developers.

OpenAI, Anthropic and others must balance lower pricing with the enormous cost of building and operating frontier AI models. At the same time, open-source alternatives are forcing proprietary model providers to compete more aggressively on both performance and economics.

Hardware companies occupy a different position in that ecosystem.

As long as total AI workloads continue expanding, demand for GPUs, networking equipment and AI infrastructure can grow even if software becomes increasingly commoditized. The Wall Street Journal recently argued that the rise of cheaper open-weight AI models is unlikely to reduce demand for the industry’s “picks and shovels,” because broader adoption ultimately requires more computing capacity.

That doesn’t mean Nvidia is insulated from every competitive threat. Efficiency gains, custom AI chips and evolving model architectures remain important variables.

But falling AI prices alone are not necessarily bearish.

What Nvidia Investors Should Watch NextThe more important metric may no longer be the price of AI, but its usage. If lower costs encourage enterprises to embed AI into more products, automate more workflows and serve millions of additional users, infrastructure demand could continue climbing even as token prices fall.

For Nvidia investors, the next phase of the AI boom may be driven less by increasingly expensive models—and more by making AI affordable enough to be used almost everywhere.

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