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Uber is laying off 10% of its community operations team, citing AI. Bloomberg/Getty Images Uber is cutting customer service roles — and it says artificial intelligence is the reason.
The ride-hailing company is laying off about 10% of its community operations team and asking remote employees to relocate to a city with an Uber office and work there three days a week, it said in a statement on Thursday. Bloomberg earlier reported the news.
AI presents "a massive opportunity for us to accelerate output, improve quality, and scale customer solutions at pace," Megha Yethadka, Uber's vice president of global community operations, wrote in a memo to the team on Wednesday.
"We've made some strides, but to unlock this potential, we need an effective organization to layer AI on," Yethadka wrote. "We cannot scale frontier technology on top of fragmented processes."
An Uber spokesperson said the company informed the team on Wednesday about the "structural changes we are making to simplify operations, strengthen in-person collaboration, and continue to embrace AI."
The layoffs add Uber to the list of companies that have cut jobs in the name of AI. Others this year include Block, IBM, and Snap.
Last month, Uber laid off a quarter of its human resources and recruitment staff. The cuts affected less than 1% of the company's 34,000-person global workforce and weren't connected to AI, Uber said at the time.
CEO Dara Khosrowshahi has said that Uber is slowing down hiring as it invests more in AI.
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Alex Bitter You're currently following this author! Want to unfollow? Unsubscribe via the link in your email.
Alex Bitter is a senior retail reporter covering the gig economy, food, and retail. His work focuses major gig delivery and ride-hailing apps, including Uber, Lyft, DoorDash, Instacart, and Walmart's Spark. He is interested in everything from what it's like to work on the apps to the companies' business strategies.Some of his recent stories feature gig workers who have been deactivated on the apps, DoorDash hiring traditional employees to make deliveries, gig workers' use of bots, and gig work expanding into new professions, such as nursing.Alex has also written about Aldi's US expansion, Starbucks' turnaround efforts, and the fallout from Kraft-Heinz's budget cutting. Convenience store chain Sheetz ended its "smile policy" after his reporting.Before joining Insider in September 2020, he wrote about consumer and retail companies for S&P Global Market Intelligence. He's a graduate of the University of Hawai'i at Mānoa and grew up on the Big Island.Alex lives in the Washington, DC, area, where you can find him studying ancient coins or searching for Civil War artifacts with his metal detector in his free time.Got a tip? Reach out at [email protected] or via encrypted messaging app Signal at +1 (808) 854-4501.
Uber ride-hailing Layoffs More Artificial Intelligence AI Artifical Intelligence Careers
CNBC’s MacKenzie Sigalos framed the tension bluntly, noting that “Alphabet shares are now in correction territory down 13% from their May all-time highs. Investors questioned the returns on its enormous AI build-out.” The math behind that skepticism is the story. Alphabet (NASDAQ: GOOGL | GOOGL Price Prediction) is spending at a pace that would have looked implausible a year ago, and the market is asking whether returns can keep up.
The Capex Curve Is Bending Upward Sigalos flagged the pace: “Alphabet is already on pace to spend nearly $200 billion this year, with Q2 capex expected to double from a year ago. Bank of America sees spending approaching $300 billion in 2027.” Alphabet’s numbers back that up. Q2 capex hit $44.924 billion, up 100.14% year over year, following $35.67 billion in Q1. Full-year 2026 guidance sits in the $175 billion to $185 billion range, roughly double FY2025’s $91.45 billion.
Sigalos added the uncomfortable wrinkle on efficiency: “As rising component costs absorb more of that increase, each additional dollar buys less capacity.” That is the argument reshaping how the Street looks at hyperscaler ROI. Nominal capex is climbing faster than the compute it actually buys.
Funding the Build The financing side is where the correction gets its teeth. Sigalos noted, “Alphabet has raised more than $140 billion in debt and equity since October. With some analysts now modeling free cash flow to turn negative next year.” Alphabet has already crossed that line. Q2 free cash flow came in at -$5.9 billion, and long-term debt nearly doubled from $46.5 billion to $98.2 billion.
The company raised roughly $70 billion in combined equity and debt in Q2 alone, established an at-the-market program for up to $40 billion of Class A and Class C stock, and suspended its share repurchase program. Interest expense rose nearly 5× year over year. That combination—suspending buybacks, issuing dilutive equity, and taking on sharply higher interest expense—represents a structural change from the Alphabet investors owned two years ago. Details are available in the company’s Q2 2026 SEC filing.
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What the Cash Is Buying The bull case rests on whether the spend converts to durable revenue. Q2 gave Sundar Pichai plenty to work with. Google Cloud revenue reached $24.77 billion, up 82% year over year. Total revenue climbed to $119.8 billion, up 24.23%, the 12th consecutive quarter of double-digit growth. Operating income rose 30.38% to $40.77 billion with a 34% operating margin.
Pichai told investors, “Q2 was an amazing quarter, with Alphabet revenues growing 24% year-over-year and Google Cloud revenues accelerating to 82% growth, driven by demand for AI infrastructure and AI solutions. It’s great to see wide adoption of Gemini Enterprise, with nearly 90% of the Fortune 100 using it.” Gemini models are processing 22 billion API tokens per minute, up from 7 billion in Q3 2025, and the Gemini App reached 950 million monthly active users.
Sigalos added: “Alphabet still has advantages that few others can match. One of tech’s strongest balance sheets, stakes in both space and Anthropic, and a highly profitable search franchise that continues to fund the build-out with no clear signs of AI cannibalization.” Search & other revenue rose 17% to $63.27 billion, evidence that the legacy cash engine is still expanding while the capex bill compounds.
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Analyst’s Disclosure: I/we have a beneficial long position in the shares of GOOG, AMZN, MSFT, ORCL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
ToplineGoogle on Thursday introduced a new way to sign in or recover locked Google Accounts, putting biometric identity verification directly in the hands of its users by allowing them to record directed via selfie videos and submit them in lieu of a traditional password or security question.
Sign with logos for Google and YouTube.
Getty Images
Key FactsGoogle’s new selfie video sign-in feature lets users record a short clip of themselves with head movement guidelines to verify their identity and, next time they need access to their account, they can take another selfie to get back in.
The new software compares the new selfie to the original video—requiring users to perform simple movements to prove it's a live video—to confirm the user’s identity.
The recorded video is stored in encrypted form with the option to delete it at any time, Google says, promising advanced checks are built in to block deepfake videos and impersonation attempts.
Key backgroundThe feature arrives amid a broader account-security push from Google that has so far included fake-call detection against AI scams in June and the suing of a Chinese cybercrime operation that used AI to defraud hundreds of thousands of victims, according to TechCrunch. It’s also a major expansion of biometric account recovery, which has been a contested space: Apple has offered Face ID-based authentication since 2017, while Microsoft expanded Windows Hello facial recognition to account recovery workflows years ago. While it can be used as a regular sign-in, Google is largely positioning the selfie as a backup option specifically for lockout scenarios—the gap where users lose their phone or can't access their usual device.
TANGENTThe timing of the new feature is notable: Google’s parent company Alphabet just reported second-quarter Google Cloud revenue of $24.77 billion, up 82% year-over-year, with CEO Sundar Pichai noting that nearly 90% of the Fortune 100 now use Gemini Enterprise, Google’s AI suites for businesses. The company on Wednesday said its Gemini app now has 950 million monthly active users.
further readingForbes950 Million People Now Use Gemini Each Month As Alphabet Posts Earnings BeatBy Ty Roush
ForbesAlphabet Rally Boosts Google Cofounder Fortunes By $15 Billion—Here’s Why Shares Are UpBy Ty Roush
SummaryAlphabet Inc. reported a massive EPS beat driven by mark-to-market gains, not core business growth.Q2 net income surged 298%, primarily from $99B in "other income" tied to SpaceX and Anthropic valuation gains.Core operations grew 30% YoY, but true cloud growth is obscured by related-party deals and artificial valuation uplifts.I find GOOGL stock uninvestable due to opaque financial engineering and heightened risk of a sharp correction in hyperscaler stocks. Getty Images
Introduction The whole market is focused on Alphabet Inc.'s (GOOG, GOOGL) Q2 earnings, with the enormous beat on profitability, which exceeded analysts' expectations threefold. EPS came in at $9.11, while the predictions were south of $3, giving this company
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Google's cloud chief Thomas Kurian said the company's existing customers are shelling out "roughly 50% more" than they've already committed to spend on its products, which helped drive its red-hot cloud growth during the second quarter.
"Our existing customers have increased their spend when they make a commitment to us," Kurian told CNBC's Jim Cramer on Thursday. "They're spending roughly 50% more than the commitment, and so it comes down to the differentiation in our product portfolio, the strength we have in our go-to-market execution, and you see that in both top line and operating income growth."
Kurian's comments come after Google parent Alphabet posted better-than-expected revenue for the second quarter on Wednesday, helped by growth of 82% year-on-year in its cloud business.
Demand for its cloud services is strong enough that the company plans to call on third-party providers to fill in extra capacity. That drove shares of neocloud providers CoreWeave and Nebius higher.
Read more CNBC tech newsMoonshot AI accessed Nvidia's chips despite Chinese export ban, White House official saysAlphabet and Tesla test Wall Street's patience as AI spending overshadows growthAlphabet earnings takeaways: Q2 revenue beats, GOOGL stock sinks on 2026 capex hikeTesla misses on earnings, as free cash flow turns negative and margins slideKurian said the move is necessary, even though it will hurt margins, because it allows Google to capture that demand and those customers tend to spend more on its other services.
"So for us, when we look at the short term, we're going to rent some capacity for you know a few quarters," Kurian said. "It allows us to bring customers in, bridge them over to when we have sufficient capacity available, and then that will compound over time, and the return on investment makes sense for us."
Alphabet shares plunged more than 7% on Thursday after the company boosted its capital spending forecast to as much as $205 billion this year, worrying investors who are jittery about ballooning artificial intelligence budgets.
The company said it now expects to spend between $195 billion and $205 billion in 2026, up from the $180 billion to $190 billion forecast provided last quarter. Its capex reached $44.9 billion during the second quarter, with most of the spending going toward AI infrastructure.
Tech companies are burning through cash to bankroll spending on AI infrastructure, while trying to reassure Wall Street that those investments will yield returns.
Before Alphabet's second-quarter report, tech's megacaps were expected to spend roughly $725 billion this year on AI initiatives. That total will likely rise as more of Alphabet's peers post quarterly earnings in the coming days. Amazon, Microsoft and Meta will all report results next week.
Kurian defended the company's "very, very disciplined" capex spending and said companies are seeing real returns on utilizing Google's AI solutions.
"Macy's, for example, has found as they deployed our AI system, it's improved the size of the shopping basket that they see," he said. "We've seen Macquarie Bank save a lot of processing time by automating many of the workflows in their organization."
Key Takeaways Alphabet says AI demand exceeds supply, lifting 2026 CapEx guidance to $195B-$205B.Cloud revenues surged 82% to $24.8B, as backlog hit $514B, and margin reached 35.6%.AI features boosted Search usage, while Gemini expanded monetization across ads and advertiser tools. Alphabet Inc. (GOOGL - Free Report) used its second-quarter call to make one point clear: demand is not the problem. Capacity is. Management framed the quarter as proof that its full-stack AI strategy is driving growth across Search, Cloud and YouTube.
The bigger investor question was how far Alphabet will lean into that opportunity. Executives answered with a higher capital spending outlook and a firmer defense of Gemini and TPUs.
GOOGL Search Keeps AI at the CenterCEO Sundar Pichai said Alphabet’s momentum still starts with Search. He said AI Overviews and AI Mode are being combined into one experience.
Pichai added that AI Mode has topped 1 billion monthly active users and is driving incremental query growth. He also said Google is now sending billions of clicks to websites each week through AI features in Search.
That backdrop helped Google Search and other revenues rise 17% year over year to $63.3 billion. Philipp Schindler, senior vice president and chief business officer, said retail and finance led the gains.
Alphabet Cloud Shows the Biggest ShiftCloud remained the clearest expression of Alphabet’s AI demand story. Revenues rose 82% to $24.8 billion, while operating income jumped to $8.8 billion, and margin reached 35.6%.
Pichai pointed to uptake across chips, models, data, security and agent platforms. He said nearly 90% of Fortune 100 companies now use Gemini Enterprise.
Chief financial officer Anat Ashkenazi said Cloud backlog climbed to $514 billion, up by more than $50 billion sequentially. She said just more than 50% should convert to revenues over the next 24 months.
GOOGL Raises the AI Spending BarAshkenazi raised full-year 2026 capital spending guidance to $195-$205 billion from $180-$190 billion. She tied the increase to faster capacity delivery as AI demand continues to outpace supply.
That spending is already showing up in the numbers. Second-quarter CapEx was $44.9 billion, free cash flow was negative $5.9 billion, and management said higher depreciation and data center operating costs will keep pressuring results.
Alphabet still reported revenues of $103.62 billion and adjusted EPS of $9.11 for the second quarter of 2026. EPS beat the Zacks Consensus Estimate of $2.88, while revenues topped the consensus mark of $101.28 billion.
Alphabet Defends Gemini and TPUsThe analyst Q&A focused on whether Alphabet can stay at the model frontier while scaling fast enough to meet demand. Pichai said the company wants strong models across the full price-performance curve, from Flash-Lite to larger frontier systems.
He was also more explicit on execution. Pichai said coding remains an area that needs improvement, but added that Gemini 3.6 Flash improved by more than 10 points on DeepSWE versus 3.5 Flash.
On infrastructure, Pichai said TPUs are first allocated to frontier model development, then to core products such as Search, YouTube and Cloud. Ashkenazi said TPU system sales are now part of Cloud revenues and should ramp up further into 2027.
GOOGL Sees More Ways to Monetize AISchindler argued that Gemini is strengthening monetization rather than diluting it. He said Google is using the models across ad quality, advertiser tools and new AI experiences.
That mattered because Search and YouTube still fund the company’s AI buildout. YouTube ads rose 13% to $11.1 billion, and Google Services revenues increased 15% to $94.5 billion.
Asked about the next leg of YouTube growth, Schindler pointed to connected TV, Demand Gen, Shorts and more shoppable formats. He also highlighted Buy with Google Pay on TVs and affiliate tools as new commerce levers.
Alphabet’s Tone Turns More AssertiveWhat stood out on the call was not caution about demand, but confidence in return profiles. Pichai repeatedly described AI adoption as still early across consumer and enterprise markets.
Ashkenazi said Alphabet will keep investing as long as returns remain attractive. She also said third-party capacity can bridge near-term shortages, even if it creates modest margin pressure.
Together, those comments left a clear message. Alphabet is willing to accept near-term cost pressure to secure multiyear AI and Cloud opportunities.
GOOGL Zacks Rank and Style Score ViewGOOGL sports a Zacks Rank #1 (Strong Buy). Under the Zacks framework, that points to favorable earnings estimate revision trends and remains the first signal investors are meant to evaluate. You can see the complete list of today’s Zacks #1 Rank stocks here.
The stock’s Style Scores are mixed, with a Momentum Score of A, Growth Score of B, Value Score of D and VGM Score of C. Zacks says the strongest setups usually pair a Rank #1 or #2 (Buy) with A or B Style Scores, while the rank itself can change as estimate revisions adjust after results.
Alphabet's second-quarter free cash flow turned negative for the first time as the Google parent ramps AI spending, leaving Wall Street divided over whether the investment will pay off.
Shares of Alphabet (GOOG -6.04%) (GOOGL -6.22%) fell 7% as of 10:50 a.m. ET on Wednesday, pushing the price back to mid-April levels. The reaction seems disconnected from the actual Q2 results the Google parent reported last night: revenue grew 24% to $119.8 billion, Google Cloud surged 82%, and the company beat estimates across the board.
Image source: Alphabet.
The results were excellent Alphabet's Q2 success was broad. Google Cloud revenue jumped 82% to $24.8 billion, with operating margins nearly doubling to 35.6%. Nearly 500 Gemini AI enterprise customers each processed over a trillion tokens in the past year. The backlog stands at $514 billion. And the "legacy" business is still thriving, too. Search revenue rose by 17%, defying bearish predictions that AI chatbots would eat Google's search-and-ads lunch.
I see why some shareholders are backing away from Alphabet's massive AI investments. Management raised the full-year capex guidance to $195-$205 billion, $15 billion above the previous range. 2027's data center construction bill will be even higher. The company is tapping into cash reserves and taking on new debt, as free cash flow turned negative in the second quarter.
The market is pricing in execution risk on those infrastructure investments. That's not unreasonable; $200 billion is a lot of concrete and silicon, even for a tech titan of Alphabet's stature.
Today's Change
(
-6.22
%) $
-21.28
Current Price
$
320.81
The opportunity Here's the thing: the spending isn't speculative. Customers are lining up faster than Alphabet can build data centers. Management is renting third-party compute capacity from Space Exploration Technologies (SPCX +0.82%) just to keep up with immediate capacity shortages. That's not a company guessing about future returns; it's a business pulling every available lever to fulfill existing orders.
Trailing P/E is distorted right now by $99 billion in paper gains from Alphabet's SpaceX stake, which began in 2015. But forward P/E sits at 21.3 times, modest for a Magnificent 7 company growing revenue at 24% with a half-trillion-dollar backlog.
For investors willing to look past near-term capex anxiety, this sell-off may represent an opportunity to buy a dominant AI infrastructure franchise at a reasonable valuation. The spending is chasing confirmed demand, not speculative bets.
Anders Bylund has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
Tesla (NASDAQ: TSLA | TSLA Price Prediction) and Alphabet (NASDAQ: GOOGL) both reported Q2 2026 results on July 22, 2026, and both printed negative free cash flow in the same window. One is spending from a position of strength. The other is spending while its core business bleeds margin.
One Cash Drain Is a Choice. The Other Is a Squeeze. Alphabet posted revenue of $119.796 billion, up 24.23%, with EPS of $9.11 against a $3.0427 estimate. Google Cloud grew 82% to $24.768 billion, and Sundar Pichai told investors that “nearly 90% of the Fortune 100” now use Gemini Enterprise. Operating margin expanded to 34%. This is a company being paid to spend.
Tesla’s story reads differently. Revenue came in at $28.236 billion, a 7.10% beat, but EPS of $0.33 missed by 38.51%. Operating margin cratered to 1.4% as operating expenses jumped 47% on AI compute, R&D, and stock-based comp tied to the 2025 CEO Performance Award. Regulatory credits collapsed to $146 million from $739 million a year ago.
Vertical Bet vs. Horizontal Bet Lens Tesla Alphabet Q2 FCF -$1.092 billion -$5.855 billion CapEx YoY +141.81% +100.14% Op Margin Direction Compressing Expanding Core Bet Robotaxi, Optimus, chips Cloud, Gemini, tokens Tesla is building vertically. Cybercab production started at Gigafactory Texas, the Semi factory in Nevada is commissioning, and an Austin semiconductor fab is progressing with SpaceX. Alphabet is building horizontally, funding data centers that rent AI back to enterprises. Pichai framed it plainly: “Our AI investments are redefining what’s possible across every part of our business.”
The balance sheets tell you how confident each management team feels. Tesla is self-funding with $43.524 billion in cash. Alphabet raised roughly $70 billion in combined equity and debt, pushed long-term debt from $46.5 billion to $98.2 billion, and suspended buybacks. That is aggression.
What Decides Who Wins This Cycle I will be watching whether Tesla’s 1.48 million active FSD subscriptions and the seven-metro Robotaxi footprint start feeding real software margin fast enough to offset the automotive ASP slide. For Alphabet, the tell is Cloud’s operating leverage. If 22 billion tokens per minute keeps compounding, the capex pays for itself.
Why I Lean Alphabet Today, With One Caveat Personally, Alphabet’s quarter looks like the safer version of the same bet. Margins are expanding while it spends, Cloud is accelerating, and the debt raise gives it optionality. The stock still fell 7.77% on the week, which tells me the market wants proof the capex will convert. Tesla is the higher-variance trade. If Optimus or Robotaxi hits in 2026, that 1.4% margin becomes a footnote. If they slip, the 16.83% year-to-date decline is not the bottom. The setup to watch is whether Tesla can deliver one clean quarter of margin recovery, and whether Alphabet’s Cloud growth stays above 50%.
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Image Credits:Jonathan Johnson/Bloomberg / Getty Images 9:01 AM PDT · July 23, 2026
Google is adding a selfie video option as a new way for users to log in to their accounts, the company announced on Thursday, joining a growing wave of tech companies betting that biometrics and not passwords are the future of identity verification online. The tech giant says selfie videos give users more options to sign in if they’re ever locked out or don’t have access to their usual phone or computer.
Users set up a selfie video by looking at their device’s camera and completing a few guided head movements — think turning right or left or nodding — to capture multiple angles of their face. If a user is having trouble signing in later, they can take another selfie video to get back into their account, and Google will then compare the new video to the one used at setup to confirm it’s the correct person.
The bigger challenge Google is trying to solve is proving a real human, not a bot or a doctored video, is on the other side of the camera. “When you use a selfie to sign in, we use multiple layers of security to help prevent impersonation attempts like fake photos and videos (i.e., deep fakes),” Google wrote in the blog post. “For example, we match your video against your saved selfie and require you to perform simple movements to prove it’s a live video. We also use our standard security practices to detect and help prevent suspicious sign-in attempts.”
This isn’t just about individual accounts, though. As AI-generated video gets more convincing, “liveness” checks are becoming a baseline requirement for any company handling logins, payments, or sensitive data.
Although the new option could help protect accounts against fraud and help users recover locked accounts, it also raises concerns around user privacy and biometric data collection, an area regulators have increasingly scrutinized as more companies build products around facial and voice data.
Google says selfie videos are stored securely using encryption and remain protected even when they’re not being used, and that users can choose to delete the videos from their Google account at any time.
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He also acknowledged that the company remains “supply constrained” as AI demand continues to outstrip available computing capacity.
Enter Frozen v2Those comments help explain reports that Alphabet is developing Frozen v2, a next-generation AI chip designed to run Gemini models more efficiently.
According to The Information, Frozen v2 integrates parts of Gemini’s architecture directly into the hardware. Engineers reportedly believe the chip could process six to 10 times more AI tokens per unit of power than Google’s latest custom AI chips, potentially allowing the company to serve far more AI requests without a proportional increase in infrastructure.
The broader takeaway is that Google’s AI hardware strategy is increasingly being driven by demand rather than technological ambition alone. As Gemini adoption accelerates across Search, Cloud and enterprise products, the company is racing to build infrastructure that can keep up.
For investors, Frozen v2 represents more than another AI chip. It is Google’s attempt to solve a problem created by its own success: processing tens of billions of AI tokens every minute while easing growing compute constraints.
Image via Shutterstock
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Alphabet Inc GOOGL is in focus on Thursday morning after Thomas Kurian, the chief executive of Google Cloud, said existing customer are pumping in about 50% more than their initial spending commitments.
Kurian’s remarks in an interview with the Mad Money host Jim Cramer follow GOOGL’s blowout second-quarter (Q2) earnings, featuring a whopping 82% year-over-year increase in cloud revenue.
To keep pace with overwhelming enterprise demand, the hyperscaler plans to temporarily rent third-party infrastructure from neocloud providers CoreWeave and Nebius, he confirmed.
Despite Kurian’s bullish comments and the firm’s solid Q2 print, Google shares are slipping at the time of writing, now down more than 20% versus their May high.
Kurian’s remarks on July 23rd reinforce that the company’s “aggressive” artificial intelligence (AI) investments are yielding immediate commercial returns rather than unnecessarily increasing costs.
“It comes down to differentiation in our product portfolio, strength of our go-to-market execution, and you see that in both top line and operating income growth,” he added.
Although renting third-party compute may temporarily hurt gross margin, Kurian emphasized that onboarding high-value enterprise clients now will create compounding long-term returns.
All in all, for investors concerned that hyperscalers are building speculative infrastructure without guaranteed buyers, Kurian’s transparency delivers tangible proof of real, unfulfilled commercial demand directly validating Google’s growth trajectory.
GOOGL stock is seeing pressure on Thursday primarily because management raised its full-year capex guidance to $195 billion at least, after deploying nearly $45 billion in Q2 alone.
However, viewing this capital allocation through Kurian’s operational commentary transforms a perceived spending risk into a bullish indicator.
Rather than overbuilding in a vacuum, something that would have resembled the dot-com bubble, Alphabet’s aggressive infrastructure spending is addressing customers' “over-consumption” and an expanding cloud backlog.
With cloud sales expanding to $24.8 billion in the second quarter – every dollar funneled into data centers and specialized silicon is generating top-line conversion.
As these AI investments mature and internal capacity replaces external rentals, operating leverage should expand, reinforcing Google’s competitive position in enterprise artificial intelligence.
Part of the weakness in GOOGL shares this morning reflects broader macroeconomic jitters amidst an escalating US-Iran conflict as well.
However, Alphabet’s core Search operations remain super cash-generative, and its cloud business is expanding margins and capturing market share.
For long-term investors, that warrants buying on the dip today. Note that Wall Street analysts also remain uber bullish on Google for the remainder of 2026.
Consensus rating on the multinational tech behemoth sits at Strong Buy currently – with the mean price target of nearly $435 indicating potential for another 35% upside from here.
This is a fair market value price provided by Massive. Learn more.
52-Week Range$187.82▼
$408.61Dividend Yield0.27%
P/E Ratio24.41
Price Target$415.65
Alphabet NASDAQ: GOOGL delivered its Q2 2026 results after the close on Wednesday, and by almost any measure, it was an exceptional quarter.
Revenue hit a record. Google Cloud growth accelerated to a pace nobody expected. Earnings per share nearly quadrupled.
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And yet the stock fell in after-hours trading and extended those losses before the next session, even as the report showed strength.
The disconnect between the headline numbers and the market's reaction is the story worth understanding here.
A Quarter of RecordsTotal revenue came in at $119.8 billion, up 24% year over year from $96.4 billion, comfortably ahead of the $116.93 billion consensus. That marked Alphabet's 12th consecutive quarter of double-digit revenue growth. Operating income reached $40.77 billion with an operating margin of 34%.
The standout was Google Cloud. Revenue surged 82% year over year to $24.8 billion, blowing past the roughly $22.3 billion analysts had modeled by about 11%. That is a dramatic acceleration from the 63% growth posted in Q1, and it extends Google Cloud's lead over both Microsoft's NASDAQ: MSFT Azure and Amazon's NASDAQ: AMZN AWS in growth terms for a second straight quarter. Cloud operating income more than tripled to $8.8 billion from $2.83 billion a year ago, a sign that scale is finally translating into serious profitability. The cloud backlog swelled to $514 billion, up from $462 billion last quarter.
Google Services held up well, too, growing 15% to $94.5 billion. Search and other revenue rose 17% to $63.3 billion, essentially in line with expectations and further evidence that AI is expanding rather than cannibalizing the core franchise. YouTube advertising grew 13% to $11.1 billion, and subscriptions, platforms, and devices climbed 15% to $12.9 billion. CEO Sundar Pichai noted that nearly 90% of the Fortune 100 are now using Gemini Enterprise.
The $99 Billion AsteriskThen there is the headline that requires context. Alphabet reported net income of $112.1 billion, up 298% year over year, and diluted earnings per share (EPS) of $9.11, up 294% and far above the roughly $2.89 analysts expected. Those numbers are real, but they are not operational. They were driven overwhelmingly by a $99 billion gain on equity securities, largely reflecting the mark-to-market revaluation of Alphabet's stake in SpaceX NASDAQ: SPCX and Anthropic as both valuations soared. Accounting rules require Alphabet to run those unrealized gains straight through the income statement, so the profit appears without a dollar changing hands. Strip it out, and operational EPS lands closer to the $2.87 analysts were actually looking for.
What Spooked the MarketThe selling pressure traces back to two words: capital expenditures. Alphabet spent $44.9 billion on capital expenditure in the quarter, up 100% year over year and up 26% sequentially. Free cash flow swung to negative $5.86 billion as a result. Management also signaled further spending increases ahead, and investors, already jumpy about how much capital the mega-caps are committing to AI, chose to focus there rather than on the cloud acceleration.
The Technical PictureFrom a technical perspective, the bulls might quietly be cheering this sell-off. Following such a stellar report, the pullback and broader market jitters could ultimately create an opportunity to own the stock at a far more reasonable valuation. On a higher timeframe, GOOGL remains in a clear uptrend. But zooming in, the stock has fallen almost 20% from its record high and is now approaching its 200-day Simple Moving Average, a key long-term trend indicator and one the bulls will want to see hold firm. If shares retrace toward that structural level and find support, with the forward price-to-earnings (P/E) compressing closer to 20 in the process, the setup could become increasingly attractive for long-term buyers.
Alphabet Inc. (GOOGL) Price Chart for Thursday, July, 23, 2026
Patience Is the VariableNothing in these numbers undercuts the long-term case. If anything, an 82% cloud growth rate, a $514 billion backlog, and tripling cloud operating income strengthen it considerably. What changed is the market's willingness to fund the buildout without complaint. Alphabet is telling investors it needs to spend aggressively because it cannot build capacity fast enough to serve the demand in front of it, a message consistent with the $80 billion capital raise in June and the reported development of its Frozen v2 inference chip.
The consensus among 55 analysts remains Moderate Buy with a price target of $415.98, implying roughly 22% upside from recent trading levels. At a forward P/E of 23.86, Alphabet still trades at one of the more reasonable multiples in mega-cap tech.
The question for the second half is simple: how long can the market remain patient as the spending curve steepens? For long-term investors, the underlying business just posted one of its strongest quarters ever, but the near-term tape may need more convincing.
Should You Invest $1,000 in Alphabet Right Now?Before you consider Alphabet, you'll want to hear this.
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Tesla, Nvidia, and Google helped shape the last era of market growth, but the next wave could come from a new group of companies. Inside this report, you’ll find 7 stocks that could play a major role in the next tech-driven market boom.
You don't need a lot of money to get invested in the market. I'm probably not the first person to tell you that. I won't be the last. Widespread access to commission-free trading platforms, decades of moving away from round-lot purchases, and the growing reach of brokers that allow buying fractional shares make it easy to put even $500 to work in a meaningful way.
Where should you go with the next $500 you have to invest? I have a couple of ideas. Amazon (AMZN -4.17%) and Celsius Holdings (CELH -3.76%) could be the best stocks to buy right now. Let's take a closer look at these two very different market opportunities.
Image source: Getty Images.
1. Amazon Amazon stock reports fresh financials a week from today. Circle your calendar, but this gives you five trading days to decide if you want to get into the country's largest company -- by trailing revenue -- ahead of its second-quarter numbers.
Amazon doesn't need much of an introduction. There are just four companies with larger market caps. There's a good chance that you're a current customer of the e-commerce and digital services provider. Growth has slowed at Amazon as its business matures, but it has started to pick up the pace lately. Its 17% top-line increase for its previous quarter was its strongest increase in net sales in four years.
You would think that Amazon would be rocking with momentum on its side, but the stock is up less than 8% over the past year. That is less than half of the market's return in that time. Amazon? A laggard? That's not likely to last long.
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A big reason for Amazon's acceleration is that Amazon Web Services (AWS) -- a top dog among cloud hosting services -- is consistently becoming a larger slice of the overall pie. The segment's net sales rose 28% in the first quarter, now accounting for 21% of Amazon's top line. More importantly, AWS delivered 59% of Amazon's operating profit for the quarter.
Great things happen when your biggest-growing business also happens to be pushing margins higher, current stock chart notwithstanding. Analysts see another quarter of 17% top-line growth when it reports after the market close next Thursday. They see earnings per share rising at half that clip -- up a mere 8% -- as Amazon ramps up its capital expenditures like the rest of the consumer tech giants.
A nine-figure budget this year to boost its AI profile may seem daunting, but Amazon's AWS is also a major beneficiary of the revolution. Even the online store that started it all is getting better and more productive as a result of its AI-first mindset. With double-digit percentage earnings beats in three of its last four quarters, another positive surprise next week could be the start of turning this recent laggard into a leader again.
2. Celsius Holdings Growth investors have a love-hate relationship with Celsius Holdings. They loved the sparkling beverage maker when sales more than doubled for three consecutive years through the end of 2023, as its namesake functional energy drink became a workout, retail, and social staple. They hated Celsius when growth slowed dramatically in the first half of 2024, going on to post year-over-year declines for three consecutive quarters until it acquired Alani Nu in early 2025.
Alani Nu gave Celsius a non-organic boost, but investors initially bid the shares higher because organic growth also started to turn positive. The combined company was gaining market share in the energy drink space on a pro forma basis, but that initial attraction faded quickly. Celsius has lost more than a third of its value over the past year, even as the introduction of Alani Nu has delivered triple-digit revenue growth in the last three quarters (and an 84% jump in the period before that).
How great was that game-changing acquisition? Celsius paid a net price of $1.65 billion in cash and stock for Alani Nu last year, compared to the acquirer's market cap of roughly $6 billion at the time. In the first quarter of this year, the Alani Nu brand contributed $368 million of the $783 million in revenue it posted. All of Celsius a year earlier -- before Alani Nu -- generated just $329 million in revenue. Can you believe Celsius scored this deal for a little more than a quarter of its market cap at the time?
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This is where the value investors have a chance to tap in. With the Alani Nu deal closing on April 1 of last year, Celsius has now lapped the transaction. Celsius did acquire the much smaller Rockstar Energy from its distributor last summer, but it's not really moving the needle. When the beverage stock reports second-quarter results in early August, it will be the first period since the first quarter of last year to be driven largely by organic growth. The market might like what it sees.
Growth will naturally slow now that we're on an apples-to-apples -- or carbonated orange water-to-carbonated orange water -- basis. Analysts see revenue growing 18% on a dip in earnings when it reports, but the bottom-line retreat should prove temporary. Those same Wall Street pros see revenue slowing to 9% next year, but on a 17% jump in net income.
Here is why I really like Celsius heading into its next financial update in two weeks: Celsius has routinely trounced market earnings expectations over the past year. In the last four quarters, the energy drink powerhouse has landed 93%, 52%, 37%, and 40% above Wall Street's profit targets. If it can land another beat, even just below the lowest of its past four performances, it would surprise the market with earnings growth as it works through the recovery in its operations. With Celsius now trading for just 14 times next year's earnings forecast, it could be too cheap to ignore. Put another way, this sparkling beverage company might be anything but flat in August.
Amazon announced on Thursday that it’s bringing games to Prime Video by integrating its Luna cloud gaming service into the streaming platform. Games including “Hogwarts Legacy,” “EA Sports FC 26,” “Indiana Jones and the Great Circle,” “Clue,” and “Taboo” will be available starting today on Fire TVs in the U.S. and U.K.
With this move, Amazon is hoping games can turn Prime Video into a one-stop entertainment destination, borrowing a strategy from Netflix, which has increasingly embraced party games over the past several years. Since Amazon already operates a gaming service, it makes sense for the tech giant to integrate it into its streaming platform.
Alongside third-party titles and cult classics like “Taboo,” the games library will also feature titles developed by Amazon’s own gaming division, including its “Courtroom Chaos” games and the co-op card battler “Masters of the Universe: Legends Unite.”
Until now, games on Luna were only accessible through the cloud gaming platform’s standalone app available to Prime members. Now, they’ll be available alongside Prime Video’s movies and TV shows.
Image Credits:Amazon Amazon says its vision is to remove the barriers to gaming and make it accessible to anyone regardless of their experience or budget. The tech giant says Luna is designed to bring gaming to a much broader audience by removing the need for expensive consoles or gaming PCs and making games as easy to access as movies or TV shows.
Prime members can now access the new “Games” tab on Prime Video and start playing on their TV using a controller or their phone.
“For a lot of people, games have been harder to find than they should be,” Jeff Gattis, general manager of gaming at Amazon, said in a press release. “Bringing Luna inside Prime Video allows Prime members to discover games more naturally, and if they see one they like, they click it and they’re in. That’s less time searching and more time playing great games included with their Prime membership.”
Amazon says it will add new games every month. The tech giant also plans to bring games to additional devices and countries in the coming months.
When you purchase through links in our articles, we may earn a small commission. This doesn’t affect our editorial independence.
Aisha is a consumer news reporter at TechCrunch. Prior to joining the publication in 2021, she was a telecom reporter at MobileSyrup. Aisha holds an honours bachelor’s degree from University of Toronto and a master’s degree in journalism from Western University.
You can contact or verify outreach from Aisha by emailing [email protected] or via encrypted message at aisha_malik.01 on Signal.
Wall Street expects a year-over-year increase in earnings on higher revenues when Amazon (AMZN - Free Report) reports results for the quarter ended June 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.
The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on July 30. On the other hand, if they miss, the stock may move lower.
While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.
Zacks Consensus EstimateThis online retailer is expected to post quarterly earnings of $1.82 per share in its upcoming report, which represents a year-over-year change of +8.3%.
Revenues are expected to be $196.85 billion, up 17.4% from the year-ago quarter.
Estimate Revisions TrendThe consensus EPS estimate for the quarter has been revised 0.92% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.
Price, Consensus and EPS Surprise
Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction) -- has this insight at its core.
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.
Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.
A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.
Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).
How Have the Numbers Shaped Up for Amazon?For Amazon, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +0.16%.
On the other hand, the stock currently carries a Zacks Rank of #3.
So, this combination indicates that Amazon will most likely beat the consensus EPS estimate.
Does Earnings Surprise History Hold Any Clue?While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.
For the last reported quarter, it was expected that Amazon would post earnings of $1.6 per share when it actually produced earnings of $1.56, delivering a surprise of -2.50%.
Over the last four quarters, the company has beaten consensus EPS estimates two times.
Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.
That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
Amazon appears a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.
Expected Results of an Industry PlayerCarvana (CVNA - Free Report) , another stock in the Zacks Internet - Commerce industry, is expected to report earnings per share of $0.42 for the quarter ended June 2026. This estimate points to a year-over-year change of +61.5%. Revenues for the quarter are expected to be $6.96 billion, up 43.8% from the year-ago quarter.
The consensus EPS estimate for Carvana has been revised 0.1% higher over the last 30 days to the current level. However, a lower Most Accurate Estimate has resulted in an Earnings ESP of -0.17%.
When combined with a Zacks Rank of #3 (Hold), this Earnings ESP makes it difficult to conclusively predict that Carvana will beat the consensus EPS estimate. Over the last four quarters, the company surpassed consensus EPS estimates three times.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Amazon’s founder reportedly sees Prime Video as the place to tout the company’s AI efforts.
Jeff Bezos has urged Prime Video boss Mike Hopkins to revamp the streaming service to make artificial intelligence (AI) a starring role, Reuters reported Thursday (July 23), citing four sources with direct knowledge of the matter.
That led to an in-house project called Lighthouse, which would give the more than 200 million people who use Prime Video a better glimpse at Amazon’s AI capabilities, which the company has spent hundreds of billions of dollars developing.
PYMNTS has contacted Amazon for comment but has not yet gotten a reply.
Reuters sources said Lighthouse is seen as a key part of Amazon’s efforts to boost its standing in the AI space amid competition from the likes of OpenAI and Anthropic. Other projects, like the long-running upgrade of Amazon’s Alexa voice assistant to offer more conversational responses, have produced mixed results, with that division still losing money, sources have told Reuters.
According to Reuters’ sources, the Prime Video project came after a presentation the streaming service’s executives made to Bezos last fall turned “contentious,” with Bezos unhappy that plans for an updated Prime Video did not effectively spotlight the service’s AI/personalization capabilities. This led the company to jettison its original plans and launch Lighthouse.
In other Amazon news, PYMNTS wrote last week about new PYMNTS Intelligence research showing that while Walmart continues to dominate when it comes to routine shopping trips — especially for groceries — Amazon is gaining in purchases consumers research, plan and have delivered.
“The findings point to a broader change in consumer behavior: Shoppers are more often choosing the retailer that best fits each purchase rather than just making purchases where it is most convenient,” the report said.
“That creates fresh opportunities for merchants that can connect physical stores, digital experiences and flexible payment options into one seamless journey.”
The research also found an “inversion of traditional retail logic,” PYMNTS wrote. Retailers have long seen the weekly shopping trip as the foundation for bigger purchases, though new data indicates that relationship has softened. Customers still turn to Walmart for day-to-day essentials, but are increasingly relying on Amazon for more deliberate, higher-value purchases.
“In other words, frequent store traffic no longer guarantees a larger share of discretionary spending,” the report added. “As shoppers become more comfortable moving between physical stores and digital channels, retailers have an opportunity to rethink how they connect in-store visits with online engagement, personalized offers and payment experiences that encourage customers to complete more of their shopping in one ecosystem.”
by Thomas Wilde on Jul 23, 2026 at 8:46 amJuly 23, 2026 at 8:46 am
Amazon will begin to fold its Luna cloud platform directly into the Prime Video app via the new Games tab, in an effort to get word about Luna to Prime members. (Amazon Luna promotional image) Amazon announced today that it has updated some versions of its Prime Video app to include direct access to its cloud-based Luna gaming platform.
The business goal is to solve Luna’s awareness problem and bring new users to the platform. Many Prime members don’t know the gaming service is included with their membership.
Consumers in the US and UK who have both a Prime subscription and a Fire TV can now launch Luna directly from the Prime Video app, where it can be found in its own dedicated tab in the UI. Prime subscribers who launch Luna in the app will get direct access to a library of both casual and mainstream “AAA” video games for no additional cost and without having to exit the app.
“Effectively, we relaunched last October, taking a bunch of the value of Luna that had been behind a paywall… We pushed it into the Prime membership, as a way of providing great value and trying to grow our business,” Jeff Gattis, GM of gaming at Amazon, told GeekWire.
Players on Luna can stream an assortment of games to their TV or browser via Amazon’s cloud servers, using a smartphone as a controller if they don’t have a compatible gamepad. Luna’s current library ranges from established mainstream hits like Indiana Jones and the Great Circle, Dispatch, and Fallout 4 to an assortment of casual-friendly exclusive titles like Amazon’s own Courtroom Chaos.
(Amazon Luna press image) Since that relaunch, Gattis said, the company has “basically 5x’d” its player base.
“The question for us is, how do you build upon that?” he said. “How do we let 200 million-plus Prime members worldwide know that they have this great benefit where you can play $70 games inside your Prime membership at no additional cost? One of our biggest challenges today remains that people don’t know the [Luna] benefit exists.”
While Luna was previously available to Prime subscribers via web browser and a couple of other types of smart TVs, it was a standalone service that required users to seek it out on its own. By shifting it into its own tab on the Prime Video app, Amazon’s hope is to drive up awareness that, well, Luna is there at all.
“It’ll start on Fire TV, but obviously our end state is to roll out to more countries and more devices, both first-party and third-party,” Gattis said. “Eventually we’ll be everywhere that Prime Video is.”
Dispatch, a viral indie hit from 2025 about office romance at a superhero agency, has been a big hit on Amazon Luna. (AdHoc Studio image) The integration of Luna with Prime could also potentially bring back the largely-abandoned practice of video game movie tie-ins. Fans of this summer’s Masters of the Universe reboot can watch the film on Prime Video, then switch to Luna to play Masters of the Universe: Legends Unite, a strategic deckbuilding game that’s currently exclusive to Luna. This kind of transmedia synergy used to be a part of every big summer action movie, but it’s largely fallen by the wayside since the 2010s.
Luna originally debuted in 2020 as a subscription-based cloud service. Subscribers could pay a monthly fee for access to over 100 video games, which they could play through their browser by streaming them from Amazon’s servers.
Back then, Luna was Amazon’s entry into what was shaping up to be a publisher-driven “battle for the cloud,” with companies like Google and Nvidia all launching their own game streaming services. Over time, however, the cloud’s impact on gaming hasn’t matched its early hype.
More recently, the component crunch has driven up the price of consoles and graphics cards, and that plays into Amazon’s bet on Luna.
Gattis said the cloud has been “technology ahead of its time,” in part because the industry aimed it at the wrong people, pitching it as a direct replacement for consoles and gaming PCs.
“That’s a heavy lift to ask somebody like myself,” he said. “I’ve invested both emotionally and financially in my Series X console and my 5090 graphics card. I’m happy.”
Amazon is catering to everyone else: players unlikely to buy a gaming PC or a current-generation console, let alone the next generation of gaming hardware at even higher prices. For the first time, Gattis said, there are “a lot more people who are going to think about the cloud as a viable alternative to $1,500 hardware.”
I keep hitting the buy button on Amazon (NASDAQ:AMZN | AMZN Price Prediction), and Alphabet (NASDAQ:GOOGL) just handed me another reason to keep going. When a Mag 7 peer posts Google Cloud growth of 82% with nearly 90% of the Fortune 100 running Gemini Enterprise, that lights up the entire cloud category. The market leader in cloud is still AWS, and AWS reports next Thursday.
The Three Engines I Cannot Stop Buying My thesis is plain. Amazon is three compounding businesses stapled together: a retail and logistics rail that would take a decade to rebuild, a cloud franchise that just posted its fastest growth in 15 quarters, and an advertising business now clearing more than $70 billion in trailing revenue. Any one of them would earn a top-quartile slot in my portfolio.
Start with AWS. Last quarter it grew 28% year over year to $37.59 billion at a 37.7% operating margin, and Andy Jassy called it “our fastest growth in 15 quarters.” The customer sheet is filling up: OpenAI committed roughly 2 GW of Trainium capacity from 2027, and Anthropic committed up to 5 GW. Amazon’s disclosed AI and cloud backlog now sits at $364 billion, which is contracted revenue standing behind the capex bill everyone loves to worry about.
Second, custom silicon. The Trainium, Graviton, and Nitro chip business is at a $20 billion annual run rate, growing triple digits year over year. Every workload Amazon runs on its own silicon instead of buying merchant GPUs is a permanent boost to that 37.7% AWS operating margin. Alphabet is racing to match with TPU. Amazon is already there.
Third, Bedrock and ads monetize the same customer base twice. Advertising grew 24% year over year on top of a $70 billion run rate, while Bedrock lets Amazon charge enterprises for AI inference on the AWS bill they already pay. That is compounding revenue with almost no incremental sales cost.
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Why My Next Dollar Skips Alphabet I own some Alphabet, and Sundar Pichai’s EPS of $9.11 against a $3.0427 estimate was real. Here is what pushes my next dollar to Amazon anyway: Google’s buyback program was suspended in Q2 2026, its long-term debt jumped from $46.5 billion to $98.2 billion, and Search still carries the revenue mix. Amazon has three engines, no paused buyback conversation, and Google Cloud remains the #3 vendor chasing AWS.
The Risk I Own With Eyes Open Trailing free cash flow collapsed 95% to $1.2 billion because capex more than doubled, and long-term debt climbed from $65.6 billion to $119.1 billion with 2026 capex heading toward $200 billion. If AI monetization stalls, returns compress. Two facts keep my finger on the button: interest coverage of 35.17 and debt-to-equity of 0.37 mean this balance sheet can carry the bet, and the $364 billion backlog is already contracted against the spend.
The people running the company agree. On May 21, Andy Jassy bought 50,000 shares, AWS CEO Matt Garman added 18,196, and CFO Brian Olsavsky added 15,450. Polymarket now prices a 95% probability that Amazon beats Q2 earnings on July 30, with analyst consensus at $312.87 against a $244.85 close.
My money is going to the one company that owns the retail rail, the cloud rail, the ad rail, and now the silicon rail. My buy button stays warm through July 30 and long after.
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Amazon (NASDAQ:AMZN | AMZN Price Prediction) stock is down 4% to $234.81 Thursday afternoon, cutting through what had been a relatively steady July trading range for the e-commerce and cloud giant. The move lands inside a broader tech pullback, with the NASDAQ 100 down nearly 2% on the day. Amazon shares now sit well below their 50-day moving average of $251.16.
The drop comes a week ahead of the company’s Q2 2026 earnings release on July 30, sharpening focus on AI infrastructure spending, AWS growth, and any hint of regulatory drag. Today’s slide reflects a confluence of catalysts.
AI Capex Jitters and a Senate Overhang The dominant driver is a sector-wide rotation out of mega-cap AI names after Alphabet‘s (NASDAQ:GOOGL) capex guidance hike this week. Alphabet stock is down 6%, and Meta Platforms (NASDAQ:META) shares are down 4%, as investors question whether AI returns will outpace ballooning infrastructure costs.
Layered on top are two Amazon-specific overhangs. Per a Bloomberg report roughly 17 hours old, the U.S. Senate Small Business Committee is investigating allegations Amazon allowed Chinese influence on its online marketplace. Republican committee staff said they found “compelling evidence” of Amazon “negligence related to Chinese influence,” though the cited committee email “didn’t cite any specific evidence.”
The probe stems from an earlier Bloomberg story about an alleged bribery market involving Amazon employees in China selling favors to merchants. Amazon declined to comment, and these remain allegations under investigation, not established facts. Separately, CNBC reported layoffs in Amazon’s artificial general intelligence (AGI) unit, framed by the company as a strategic realignment toward higher-impact projects.
Peers and Valuation Context The e-commerce peer group is trading softer but not dramatically so. eBay (NASDAQ:EBAY) stock is down 3%, and Etsy shares are down 2%, suggesting today’s Amazon move is more tech-and-regulatory driven than a broad consumer discretionary problem.
The valuation picture keeps Amazon roughly in line with its e-commerce peers. Amazon stock trades at a trailing-twelve-month P/E ratio of 28x, sitting between eBay stock at 25x and Etsy stock at 30x. For diversified exposure to Amazon, some traders use the State Street Consumer Discretionary Select Sector SPDR Fund (NYSE ARCA:XLY), though the fund is top-heavy. Amazon and Tesla (NASDAQ:TSLA) sit as outsized weights, so the ETF doesn’t provide extremely broad diversification.
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Bull Case Still Intact Into Earnings Despite the pullback, Wall Street remains constructive on Amazon stock into next Thursday’s earnings release. Bank of America reiterated a Buy rating on AMZN stock with a $310 price target, citing AI-driven AWS acceleration and expected Q2 revenue of $198.8 billion. The consensus analyst target sits near $313, with a Moderate Buy rating overall.
Amazon’s Q1 2026 setup supports that view. AWS grew 28% to $37.6 billion, the fastest pace in 15 quarters, and advertising crossed $70 billion in trailing revenue. Prediction markets currently price a 95% probability Amazon beats Q2 estimates.
Still, the bearish overlay shouldn’t be overlooked. Amazon’s Q1 2026 capital expenditures hit $44.2 billion, and the company’s TTM free cash flow fell to $1.2 billion, a reminder of how much cash the AI buildout is consuming. Regulatory noise from the Senate probe adds another wild card.
What to Watch Investors can watch for whether Amazon stock holds the 200-day moving average of $234.35 into the close, and whether AWS growth, operating income guidance, and any capex commentary on the July 30 call reset the narrative. Maintaining modest position sizing into the earnings release may be the reasonable path here, given the regulatory tail risk sitting alongside a fundamentally strong quarter.
The key tension is straightforward: a strong fundamental setup (accelerating AWS, expanding advertising, and a Q1 beat) is running headlong into an AI-capex debate that just claimed Alphabet and Meta Platforms as collateral damage. Whether Amazon’s Q2 print reframes the spending narrative or reinforces it will likely dictate direction into August.
The takeaway for investors: today’s AMZN stock pullback looks more like sentiment and headline risk than a fundamental break. Traders comfortable with volatility may find the setup attractive, while longer-term holders should focus on AWS growth, operating margin trajectory, and management’s tone on the roughly $200 billion 2026 capex plan when Amazon reports next week.
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Hayete Gallot, now executive vice president of Microsoft Security, speaks at a Microsoft event in France in 2024. (Microsoft Photo) GeekWire is profiling over the next few weeks some of the people and teams that are shaping the evolution of Microsoft in what we’re calling its “Microsoft 2.5” era.
AI has had an impact on just about every tech-product category, but especially security. Attackers are using AI; customers are looking to defend with AI. The goalposts keep shifting. “Agentic security” is now the holy grail, and Hayete Gallot, the newly minted executive vice president of Microsoft Security, is leading the charge toward it.
Gallot, a 16-plus-year Microsoft veteran who rejoined the company in February after a 1.5-year Google detour, replaced Charlie Bell, who came to Microsoft from AWS in 2021 and continues at the company as an individual contributor focused on engineering quality.
“Customers care about two things: solving for security and being able to afford it,” Gallot said when I asked during our interview this week why she came back to Microsoft.
“I am a problem solver. And an engineer at heart (and by training). Security is the most important problem right now — and Microsoft is the only place with all of the puzzle pieces to help our customers.”
Since her return, Gallot hasn’t been shy about shaking things up. As noted recently by The Information, at least nine corporate vice presidents who previously reported to Bell have left the company this year.
“We’re making changes to ensure we’re in the best formation to go after this opportunity,” she acknowledged.
“I’m motivated by doing the right thing for our customers, my teams, and tech outcomes,” she said. “I like to move quickly: days and weeks, not months and years, learning through execution, iterating rapidly, and adjusting based on real customer signals.”
The company isn’t starting from scratch. As of 2021, Microsoft claimed security was a $10 billion business for the company. By 2023, security had reached a $20 billion annual revenue rate, officials said.
Those claims haven’t been without controversy. Microsoft has built a huge business in finding and fixing security problems which some customers felt were of the company’s own making.
Microsoft has a wide-ranging and rather unwieldy security portfolio, encompassing identity management (Entra), endpoint protection (Defender), endpoint management (Intune), security information and event management (Sentinel), and compliance (Purview), among others.
In 2023, Microsoft introduced its Security Copilot set of AI analysis services that integrated with some of its existing security offerings. But a portal-based solution like Security Copilot doesn’t offer the kind of end-to-end coverage that an agentic security platform can, Gallot said.
The problem is that attackers are using agents, too. Customers need real-time insight into what’s happening in their environment, and the ability to act just as quickly, Gallot said.
Agentic security is about “taking the signals and turning them into a graph that is useful,” Gallot said. “If you’re trying to reason about 100 trillion signals, it’s not really effective.” The graph, she said, lets agents pick the right model for each threat and close the loop.
In practice, that means the system can quarantine a device or revoke access on its own, for example, rather than waiting for a human.
Microsoft’s core existing security products will continue to play a role as the landscape evolves, both spotting the problems and acting on them. Security Copilot isn’t going away in the process: “You’ll have Copilot and you’ll have agentic security,” she said.
The company’s new Agent 365 “control plane” — a central console for tracking every AI agent a company runs — fits in by letting customers see the “blast radius” of an agent, meaning everything a hijacked agent could reach, Gallot said. It’s similar in concept to Zero Trust, the “never trust, always verify” security model that limited how far an attacker could get with a stolen employee login, but applied now to agents rather than people.
So what exactly is this ‘agentic security’ thing? Microsoft has a whole website dedicated to the very topic.
Traditional AI security and agentic AI security are fundamentally different, Microsoft says. Agentic security doesn’t just protect models and training data; it also can protect tools, workflows, memory, connected systems and more. Because agents can take action, the potential positive and negative stakes are higher.
While AI has helped businesses make strides in finding and fixing vulnerabilities, it hasn’t gone much beyond that. Microsoft introduced its multi-model agentic scanning harness (MDASH) as its first step into the agentic security space, Gallot said.
The company used MDASH internally to boost finding and fixing Windows security issues, and it is now making it available to select customers in an expanded preview. MDASH will allow customers to use the best model for the right task to secure all different types of code bases, she said.
Microsoft is rumored to be readying a more comprehensive agentic security offering, of which MDASH is likely just one piece.
Microsoft is far from the only one doing this. AWS, Anthropic, and OpenAI are offering security tools on their platforms, and dedicated security vendors are building their own agentic platforms.
Microsoft has the advantage of scale in the enterprise. The question is whether Gallot and her new leadership team can turn that scale and emerging AI tools into both a bigger business for the company and better protection for its customers.
The Databricks logo in this illustration taken June 11, 2026. REUTERS/Dado Ruvic/Illustration/File Photo Purchase Licensing Rights, opens new tab
July 23 (Reuters) - Databricks said on Thursday it would expand its partnership with Microsoft (MSFT.O), opens new tab through the 2030s, a deal under which it will increase its use of the Azure platform and Microsoft's custom chips.
Databricks offers a platform that helps users ingest, analyze and build AI applications using complex data from various sources.
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One of the most valuable private companies, the San Francisco-based firm's move marks a sizeable win for Microsoft's Azure cloud business and comes as enterprise AI adoption accelerates.
Databricks said it would increase Azure usage to run its own core business operations and analytics, and also boost its usage of Azure Cobalt, Microsoft's Arm-based (O9Ty.F), opens new tab custom processors, for data-intensive and agentic AI workloads.
Under the partnership, Microsoft will also continue integrating Databricks' AI capabilities across its products, including Databricks' conversational analytics tool Genie, to strengthen enterprise AI offerings.
"With Databricks deepening its investment in Azure Databricks and Azure Cobalt-powered infrastructure, customers will benefit from greater performance, efficiency, and scale for their most demanding workloads," said Judson Althoff, CEO of Microsoft's Commercial Business.
Databricks said last week it had signed off on a funding round that values the firm at $188 billion, with the round expected to close later this summer. The company's platform is used by over 20,000 organizations globally, including 70% of the Fortune 500 companies.
Reporting by Deborah Sophia in Bengaluru; Editing by Tasim Zahid
Our Standards: The Thomson Reuters Trust Principles., opens new tab
SAN FRANCISCO--(BUSINESS WIRE)--F9Analytics, in Partnership with Microsoft, introduces RealAccretive, the advanced Multifamily Profit Management solution now available on Microsoft Marketplace and Microsoft Azure. As a US Certified Enterprise Profit Management solution, RealAccretive is engineered to help the multifamily sector increase Net Operating Income (NOI) and Net Cash Flow (NCF) from operations through automated profit management at scale. “As companies learn that the cost and performan.
I keep buying Microsoft because it is the only hyperscaler I trust to own both ends of the AI supply chain: the software everyone already pays for, and the electrons that will decide who actually gets to run the models. That combination is why my finger keeps hitting the buy button, and it is why the recent drawdown feels like a gift rather than a warning.
Here is the setup. Microsoft (NASDAQ:MSFT | MSFT Price Prediction) is down 17.39% year to date and 21.39% over the past year, yet the business underneath it just posted its fourth consecutive EPS beat with $4.27 against a $4.07 estimate. Revenue climbed 18.3% year over year to $82.89 billion. The market is punishing capex. I am accumulating.
The Three Data Points That Keep Me Buying First, the demand signal. Commercial remaining performance obligations reached $627 billion, up 99%. That is contracted, signed, non-cancellable future revenue that nearly doubled in a year. Azure grew 40%, and the AI business alone crossed a $37 billion annual run rate, up 123% year over year. Satya Nadella framed it plainly on the call: “Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.”
Second, the quality of the compounding. Return on equity sits at 33.28%, operating margin at 45.62%, gross margin at 68.82%. Debt to equity is 0.176 and interest coverage runs 53.89x. This is a fortress funding a build-out. Shareholders got $12.7 billion returned in a single quarter, up 32% year over year.
Third, and this is the part that turns a good business into a moat: energy. By aggressively funding nuclear restarts, SMRs, and grid-permitting AI, Microsoft turns energy from an external existential risk into a proprietary moat, ensuring its data centers stay powered while turning the energy transition into a software-driven profit center. The LBNL projection has data centers consuming between 6.7% and 12% of U.S. electricity by 2028. Power is the bottleneck now. Microsoft is buying its way to the front of that line.
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Why Not Amazon, Alphabet, or NVIDIA Amazon and Alphabet run capable clouds. Neither owns a roughly 27% stake in OpenAI worth about $135 billion, with IP rights extended through 2032 and a $250 billion incremental Azure services commitment from the counterparty. That is a structural revenue lock the other hyperscalers cannot replicate by writing a check. NVIDIA is the pick-and-shovel play, and I own picks and shovels elsewhere. I would rather own the landlord collecting the rent under a contracted backlog than the supplier selling into a replacement cycle.
The Real Risk Capex is the real concern. It hit $30.88 billion in a single quarter, up 84.39% year over year. A widely shared r/investing post argues AI infrastructure depreciates faster than railroads or fiber, with chips obsolete in about two years, and it landed hard because it is partly true. My answer: the $627 billion RPO is contracted revenue against those assets. If the backlog stops growing, I will reassess. It is still doubling.
Why I Keep Buying From Here Over ten years, Microsoft returned 695.26%. Long-term compounders tend to reward holders who look past single-quarter noise. I keep buying Microsoft because it is quietly building the one thing the AI era cannot manufacture on demand: guaranteed power under a signed contract.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Microsoft didn't make the cut. Grab the names FREE today.
Amazon and Microsoft have devised new ways to get people playing video games in the cloud.
Microsoft's Xbox division said Thursday that it will test an advertising-supported way of letting people stream video games.
Amazon, meanwhile, announced plans to add the Luna cloud gaming service to its Prime Video streaming platform. Amazon includes Prime Video in Prime subscriptions, which cost $14.99 per month. Amazon's adjustment will give Luna more front-and-center promotion on its website. Previously, Luna was only accessible through a dedicated website.
The two companies have succeeded in cloud computing but have stumbled as they have tried to get people hooked on games over sometimes unreliable internet connections, which can result in latency.
"Our goal is simple. Give more people more affordable ways to play," Xbox wrote in a blog post.
Microsoft started selling its inaugural Xbox console in 2001. Today, Xbox trails Nintendo and Sony in console sales. The subsidiary is trying to return to growth and widen margins after spending $75.4 billion on Call of Duty publisher Activision Blizzard in 2023.
Since Meta executive Asha Sharma replaced Phil Spencer in February as Xbox CEO, she has appointed new leaders, touted a forthcoming console, pushed for exclusive games and dropped subscription prices. This month, she announced a 20% reduction in force and said Xbox will spin out four development studios.
Xbox has pursued advertising in the past, and customers haven't always been fans. In 2024, one person complained about a McDonald's ad appearing on a screen for selecting games. Publishers Electronic Arts and Take-Two Interactive have experimented with ads and quickly backpedaled in response to criticism.
"Advertising has existed in gaming for decades, from in-game placements to free-to-play models," Xbox said in the post. "But it hasn't always been built with the player in mind. When done well, advertising can help lower the cost of access."
Read more CNBC tech newsMoonshot AI accessed Nvidia's chips despite Chinese export ban, White House official saysAlphabet and Tesla test Wall Street's patience as AI spending overshadows growthAlphabet earnings takeaways: Q2 revenue beats, GOOGL stock sinks on 2026 capex hikeTesla misses on earnings, as free cash flow turns negative and margins slideGamers participating in the Xbox Insider Program can join the test with a one-hour session limit. It applies to games that are already in a user's library.
Xbox has not created a tier of its Game Pass subscription service that contains advertising, but consumers have shown interest in such offerings. Netflix's ad-supported service tier has picked up tens of millions of users, CNBC reported in 2024.
Amazon entered the cloud gaming market during the Covid pandemic, as gaming was gaining popularity, with people spending more time at home. The digital commerce company debuted Luna in 2020, three years after Microsoft had introduced Game Pass, and one year after cloud challenger Google revealed its own cloud streaming option, Stadia.
Google discontinued Stadia in 2023. With Luna, users can play on smartphones and standard computers without purchasing consoles or dedicated gaming PCs.
By integrating Luna into Prime Video, the digital commerce company is doubling down on its push to attract casual players with party games and recognizable intellectual property like "Harry Potter" and "Tomb Raider." Amazon's gaming head, Jeff Gattis, told CNBC in an interview that the company doesn't aim to lure hardcore gamers or compete with console makers.
The unit, which Amazon recently reorganized to unify Luna and its game studios, has struggled to produce big hits, faced executive turnover and undergone several rounds of layoffs. Amazon has recently shut down or offloaded several of its titles, including its massively multiplayer online games "New World" and a planned "Lord of the Rings" project.
Luna has "millions" of users across the U.S. and 13 other countries, with the goal of reaching 10 million to 20 million "as quickly as we can," Gattis said.
In a market where PlayStation, Xbox, Epic Games and Steam are "fighting it out with each other," Gattis said gamers are "well-served, if not overserved." He said there's a robust segment of consumers who want to play games but don't want to invest in increasingly expensive hardware and software.
Amazon is working to fix an awareness gap among consumers who may not know about or understand its gaming strategy, Gattis said.
"I always say people don't have to like our strategy or agree with it, but it is important," he said. "Hopefully, they understand it."
The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price. Do they really matter, though?
Let's take a look at what these Wall Street heavyweights have to say about Advanced Micro Devices (AMD - Free Report) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.
Advanced Micro currently has an average brokerage recommendation (ABR) of 1.43, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 46 brokerage firms. An ABR of 1.43 approximates between Strong Buy and Buy.
Of the 46 recommendations that derive the current ABR, 35 are Strong Buy and two are Buy. Strong Buy and Buy respectively account for 76.1% and 4.4% of all recommendations.
Brokerage Recommendation Trends for AMD
Check price target & stock forecast for Advanced Micro here>>>
While the ABR calls for buying Advanced Micro, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.
In other words, their interests aren't always aligned with retail investors, rarely indicating where the price of a stock could actually be heading. Therefore, the best use of this information could be validating your own research or an indicator that has proven to be highly successful in predicting a stock's price movement.
Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.
Zacks Rank Should Not Be Confused With ABRIn spite of the fact that Zacks Rank and ABR both appear on a scale from 1 to 5, they are two completely different measures.
The ABR is calculated solely based on brokerage recommendations and is typically displayed with decimals (example: 1.28). In contrast, the Zacks Rank is a quantitative model allowing investors to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.
On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
In addition, the different Zacks Rank grades are applied proportionately to all stocks for which brokerage analysts provide current-year earnings estimates. In other words, this tool always maintains a balance among its five ranks.
There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.
Is AMD a Good Investment?In terms of earnings estimate revisions for Advanced Micro, the Zacks Consensus Estimate for the current year has increased 0.8% over the past month to $7.28.
Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Advanced Micro. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Therefore, the Buy-equivalent ABR for Advanced Micro may serve as a useful guide for investors.
Advanced Micro Devices NASDAQ: AMD is shifting away from piecemeal silicon sales toward a full-stack hardware offensive. Punctuated by a $5 billion equity stake in Anthropic and the immediate rollout of the Helios rack-scale architecture,
Advanced Micro Devices Today
AMD
Advanced Micro Devices
$545.23 -7.10 (-1.29%)
As of 12:36 PM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$149.22▼
$584.73P/E Ratio178.76
Price Target$474.05
Advanced Micro Devices is securing 2027 capacity commitments from a premier frontier model developer. By executing this agreement without diluting shareholders through warrants, management demonstrates that Advanced Micro Devices can definitively capture structural market share in artificial intelligence (AI) infrastructure from entrenched incumbents.
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For institutional and retail investors mapping out the next five years of data center capital expenditures, the hardware landscape is visibly fracturing. Frontier model developers and hyperscalers are actively deploying multi-chip strategies to diversify supply chains and reduce the total cost of ownership. The newly formalized Anthropic partnership serves as definitive proof of concept for the broader market, signaling that alternative computing ecosystems are ready for enterprise-scale deployment.
Electrifying Balance Sheets: The No-Warrant WinThe structure of the $5 billion capital injection into Anthropic reveals deep confidence from Advanced Micro Devices management. Structured as direct equity tied to specific deployment milestones, the agreement notably lacks warrants.
In previous capacity agreements negotiated between hyperscalers and frontier artificial intelligence laboratories, warrants were frequently utilized, eventually leading to equity dilution for the hardware providers' shareholders. Avoiding that structure maintains balance sheet integrity and indicates that both entities view the underlying Anthropic valuation as highly defensible.
Anthropic will integrate up to two gigawatts of Advanced Micro Devices Instinct MI450 Series GPUs, specifically the MI455X, utilizing the new Helios rack-scale architecture. The initial one-gigawatt capacity is slated for deployment in the first half of 2027.
Building a one-gigawatt data center requires billions in upfront capital, stringent site readiness, and extensive power-delivery planning. Procuring enough electricity to run a one-gigawatt site is equivalent to powering a mid-sized city, often requiring dedicated nuclear or substantial renewable energy infrastructure. Converting a single customer commitment into a multi-year hardware pipeline anchors Advanced Micro Devices' forward earnings projections.
The partnership also addresses the most persistent friction point in the semiconductor sector: software integration. Historically, NVIDIA NASDAQ: NVDA maintained an iron grip on developers through its proprietary CUDA software platform.
To dismantle that moat, Anthropic is explicitly integrating Claude models to accelerate the development of the open-source ROCm software ecosystem. Using advanced natural language processing to debug, optimize, and write hardware-level code essentially automates the software catch-up process, making alternative hardware far more accessible to enterprise engineering teams seeking to avoid vendor lock-in.
31 TB of Compute Power UnleashedLive data from the Advancing AI 2026 event in San Francisco provides the technical foundation for these financial commitments. The broader technology market is shifting away from buying individual chips toward procuring fully integrated rack-scale solutions. The newly unveiled Helios architecture directly challenges competing server racks, packing 72 Instinct MI455X GPUs per rack alongside 6th Gen EPYC Venice CPUs and Pensando networking infrastructure.
Memory capacity dictates the efficiency of frontier artificial intelligence models. The Helios system delivers up to 31 TB of HBM4 memory, granting a roughly 50% memory capacity advantage over competing hardware systems. For frontier model inference, memory bandwidth is the primary operational bottleneck. High Bandwidth Memory represents one of the most expensive components on the server bill of materials. A higher memory capacity allows operators to process larger model parameters on fewer racks, drastically lowering the total cost of ownership and reducing facility power constraints. Optimizing this data transfer rate also drives higher gross margins over time.
Hyperscalers are taking notice of this efficiency gap. Microsoft Corporation NASDAQ: MSFT is committed to deploying the Helios Rackscale Solution across Azure data centers beginning in the second half of 2026. By utilizing open-standard networking and avoiding proprietary interconnect lock-ins, data center operators maintain infrastructure flexibility. This dynamic forces a highly competitive pricing environment, ensuring that broad enterprise demand remains elevated even as individual chip performance plateaus.
Amping Up Forward Estimates and Valuation ModelsThe fundamentals support the aggressive 158% year-to-date run, bringing Advanced Micro Devices' shares near $548 and a market capitalization nearing $900 billion. The trailing price-to-earnings ratio is lofty at 181.09, but aggressive forward earnings expectations compress the forward price-to-earnings ratio to a more digestible 88.37. A price-to-earnings growth ratio of 1.58 balances the steep multiple against anticipated profitability trajectories. Securing a 1.58 PEG ratio on a capital-intensive hardware company is relatively rare, suggesting the market expects software-like revenue durability over the coming quarters.
Advanced Micro Devices, Inc. (AMD) Price Chart for Thursday, July, 23, 2026
Wall Street is actively adjusting financial models ahead of the upcoming Aug. 4 earnings report. Management previously guided for $11.2 billion in second-quarter revenue, representing a 46% year-over-year increase. Upward analyst revisions continue flowing in, with institutional desks bumping second-quarter earnings per share forecasts to $1.47. Heavy momentum relies on expanding data center margins to offset the cyclical volatility inherent in legacy consumer personal computing markets.
Geopolitical variables and execution risks remain real threats to multiple expansion. Securing longer-term central processing unit deals in China provides a baseline of revenue stability, offering a necessary buffer against potential tightening of export controls. The board of directors also authorized a $6 billion share repurchase program in May 2025, enabling the reacquisition of up to 3.1% of the outstanding float. Deploying capital for buybacks during a heavy infrastructure build-out signals that Advanced Micro Devices generates enough free cash flow to reward shareholders while simultaneously funding robust research and development.
Grounding Your Portfolio Before the Next SparkValuations approaching a $1 trillion market capitalization require flawless execution. Any delays in site readiness, power delivery, or Helios production milestones heading into the 2027 deployment targets could trigger severe multiple compression.
Investors eyeing the semiconductor sector face a rapidly evolving landscape in which Intel NASDAQ: INTC continues to attempt a volatile recovery, while the dominant incumbent maintains premium pricing. The strategic alignment with Anthropic, paired with multi-gigawatt hardware commitments, establishes a durable secondary ecosystem in the artificial intelligence infrastructure space. Those seeking exposure to the physical build-out of frontier compute capacity may want to monitor institutional inflows and margin expansion metrics following the upcoming August earnings release.
Should You Invest $1,000 in Advanced Micro Devices Right Now?Before you consider Advanced Micro Devices, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Advanced Micro Devices wasn't on the list.
While Advanced Micro Devices currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Discover the next wave of investment opportunities with our report, 7 Stocks That Will Be Magnificent in 2026. Explore companies poised to replicate the growth, innovation, and value creation of the tech giants dominating today's markets.
For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.
The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.
It also includes access to the Zacks Style Scores.
What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.
Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.
The Style Scores are broken down into four categories:
Value ScoreValue investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.
Growth ScoreGrowth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.
Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreIf you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.
It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +23.94% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.
That's where the Style Scores come in.
You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.
The direction of a stock's earnings estimate revisions should always be a key factor when choosing which stocks to buy, since the Scores were created to work together with the Zacks Rank.
For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Advanced Micro Devices (AMD - Free Report) Advanced Micro Devices has strengthened its position in the semiconductor market on the back of its strong product portfolio. Santa Clara, CA-based AMD generated revenues of $34.64 billion in 2025. The company reports operations under three segments – Data Center, Client and Gaming, and Embedded – which accounted for 48%, 42%, and 10% of revenues, respectively.
AMD is a #2 (Buy) on the Zacks Rank, with a VGM Score of B.
Momentum investors should take note of this Computer and Technology stock. AMD has a Momentum Style Score of B, and shares are up 6.3% over the past four weeks.
Five analysts revised their earnings estimate upwards in the last 60 days for fiscal 2026. The Zacks Consensus Estimate has increased $0.07 to $7.28 per share. AMD boasts an average earnings surprise of +6.5%.
With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, AMD should be on investors' short list.
CANTON, Ohio--(BUSINESS WIRE)--Alignment Engine, a leading innovator in AI infrastructure and scalable machine learning solutions, today confirmed its commitment to deploy the AMD Helios rackscale solution, powered by AMD Instinct™ MI455X GPUs, at its Ohio data center beginning in 2027. The deployment was selected in large part for its engineered approach to power and cooling efficiency — a priority Alignment says is central to building AI infrastructure that is good for customers and good for.
Wall Street analysts forecast that Boeing (BA - Free Report) will report quarterly loss of -$0.34 per share in its upcoming release, pointing to a year-over-year increase of 72.6%. It is anticipated that revenues will amount to $24.05 billion, exhibiting an increase of 5.7% compared to the year-ago quarter.
The consensus EPS estimate for the quarter has undergone a downward revision of 457.3% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial estimates during this timeframe.
Prior to a company's earnings announcement, it is crucial to consider revisions to earnings estimates. This serves as a significant indicator for predicting potential investor actions regarding the stock. Empirical research has consistently demonstrated a robust correlation between trends in earnings estimate revision and the short-term price performance of a stock.
While investors typically rely on consensus earnings and revenue estimates to gauge how the business may have fared during the quarter, examining analysts' projections for some of the company's key metrics often helps gain a deeper insight.
Bearing this in mind, let's now explore the average estimates of specific Boeing metrics that are commonly monitored and projected by Wall Street analysts.
The collective assessment of analysts points to an estimated 'Revenues- Global Services' of $5.26 billion. The estimate points to a change of -0.4% from the year-ago quarter.
The average prediction of analysts places 'Revenues- Defense, Space & Security' at $7.01 billion. The estimate indicates a change of +6% from the prior-year quarter.
According to the collective judgment of analysts, 'Revenues- Commercial Airplanes' should come in at $11.66 billion. The estimate indicates a change of +7.2% from the prior-year quarter.
Based on the collective assessment of analysts, 'Deliveries - Total' should arrive at 171 . The estimate is in contrast to the year-ago figure of 150 .
Analysts forecast 'Deliveries - Commercial Airplanes - 737' to reach 129 . Compared to the present estimate, the company reported 104 in the same quarter last year.
Analysts' assessment points toward 'Deliveries - Commercial Airplanes - 787' reaching 25 . Compared to the current estimate, the company reported 24 in the same quarter of the previous year.
The combined assessment of analysts suggests that 'Deliveries - Commercial Airplanes - 777' will likely reach 7 . The estimate is in contrast to the year-ago figure of 13 .
The consensus estimate for 'Deliveries - Commercial Airplanes - 767' stands at 10 . Compared to the current estimate, the company reported 9 in the same quarter of the previous year.
Analysts predict that the 'Earnings/(loss) from operations- Global Services' will reach $963.04 million. Compared to the current estimate, the company reported $1.05 billion in the same quarter of the previous year.
It is projected by analysts that the 'Earnings/(loss) from operations- Defense, Space & Security' will reach $228.07 million. The estimate is in contrast to the year-ago figure of $110.00 million.
View all Key Company Metrics for Boeing here>>>
Over the past month, shares of Boeing have returned -5.3% versus the Zacks S&P 500 composite's +0.4% change. Currently, BA carries a Zacks Rank #3 (Hold), suggesting that its performance may align with the overall market in the near future. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
NVIDIA (NASDAQ: NVDA | NVDA Price Prediction) and AMD (NASDAQ: AMD) both posted blowout quarters that push back on the tired “one must lose for the other to win” framing. NVIDIA reported $81.615 billion in Q1 FY2027 revenue. AMD delivered $10.253 billion in Q1 2026. Both cited agentic AI as the demand engine. Both listed OpenAI and Meta as customers. The pie is expanding faster than either can slice it.
Blackwell Prints Cash. Instinct Wins Sockets. Jensen Huang framed the quarter around infrastructure scale, calling AI factories “the largest infrastructure expansion in human history.” The proof lives in the segment lines. NVIDIA’s Data Center pulled $75.246 billion, up 92%, with networking alone jumping 199% as InfiniBand and NVLink demand tripled. That networking business is the quiet moat most investors underweight.
Lisa Su hit a different note. AMD’s Data Center rose 57% to $5.775 billion on EPYC server CPUs and Instinct GPU shipments, and Client (Ryzen) added another 26%, a business NVIDIA does not touch. Su told investors “customer engagement around MI450 Series and Helios is strengthening, with leading customer forecasts exceeding our initial expectations.”
Two Very Different Businesses, Same Tailwind Lens NVIDIA AMD Gross margin 75.0% 55% Forward revenue guide $91.0B ~$11.2B Marquee AI deal OpenAI 10 GW, Meta millions of Blackwell/Rubin OpenAI 6 GW, Meta up to 6 GW MI450 Trailing P/E 31 164 The customer overlap matters. OpenAI and Meta signed with both vendors because no single supplier can meet the demand curve. NVIDIA has $119.0 billion in supply commitments locked up, yet still guides to excluding China Data Center revenue. AMD is scaling its own supply to keep pace. That is a capacity story, not a share-war story.
What Actually Decides the Next Year I will watch three things. First, whether NVIDIA’s networking growth holds its 199% pace as Vera Rubin ships. Second, whether AMD’s MI450 and Helios rack platform convert pipeline into recognized revenue in H2 2026. Third, hyperscaler capex. Meta’s spending plans and Google Cloud’s Vera Rubin instances tell me the buildout has not peaked. You should also track China. Both companies stripped it from guidance, so any thaw is upside.
Why I Would Own Both My read: this is a barbell trade. If I want durable free cash flow (NVIDIA generated $48.554 billion in one quarter) and shareholder returns like the $80.0 billion new buyback and 25x dividend hike, NVIDIA fits. If I want higher-variance upside tied to a credible second source with 252.96% free cash flow growth, AMD earns the slot, even at 68x forward earnings. AMD is up year to date; NVIDIA also green. Both green. Zero-sum theory keeps failing the market it tries to describe.
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After reaching an important support level, Nvidia (NVDA - Free Report) could be a good stock pick from a technical perspective. NVDA surpassed resistance at the 50-day moving average, suggesting a short-term bullish trend.
The 50-day simple moving average, which is one of three major moving averages, is widely used by traders and analysts to establish support and resistance levels for a range of securities. Because it's the first sign of an up or down trend, the 50-day is considered to be more important.
Over the past four weeks, NVDA has gained 6.6%. The company is currently ranked a Zacks Rank #1 (Strong Buy), another strong indication the stock could move even higher.
Once investors consider NVDA's positive earnings estimate revisions, the bullish case only solidifies. No estimate has gone lower in the past two months for the current fiscal year, compared to 6 higher, and the consensus estimate has increased as well.
With a winning combination of earnings estimate revisions and hitting a key technical level, investors should keep their eye on NVDA for more gains in the near future.
There’s been much concern about what could happen to the semiconductor trade if one of the hyperscalers were to suddenly hit the brakes on AI-related CapEx. With Alphabet (NASDAQ:GOOG | GOOG Price Prediction) reporting earnings and more heated quarterly CapEx numbers, it certainly seems like the firm’s pace of spending could run towards a $200 billion per year cadence. Of course, time will tell how long these hyperscalers will continue raising the bar on spending if it means getting a muted reception to strong results and some earlier signs that spending is actually translating to earnings growth.
Any way you look at it, it feels like the major tech titans have already passed the event horizon that was getting into the AI race to begin with.
Now, it’s spending furiously to maintain that competitive advantage and to get all that early infrastructure built before a rival, domestic or foreign, has a chance to gain a leg up. It feels like any given quarter that the hyperscalers post will see strong cloud growth alongside commentary about how constraints held back what could have been. Indeed, that seemed to be the case for Google as well when it clocked in results after the close on Wednesday.
While there are serious risks of overspending on AI, it certainly feels like the hyperscalers have large enough cash cushions to absorb the blow far better than most other firms spending heavily on the effort that are leaning heavily on cap raises or excessive amounts of debt. In a way, the hyperscalers are stepping into the ring with some robust headgear while most others might be going without.
Nvidia and Advanced Micro Devices are holding their ground well and for good reason Any way you look at it, it feels like we’re still a long way off from getting AI infrastructure to where it needs to be as firms scale aggressively. In due time, though, the chip wars and massive year-over-year efficiency gains could be the needle mover that helps get compute where it needs to be without breaking the bank. For Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD), the slate of next-generation hardware is delivering on those enormous efficiency gains, and the big spenders are buying.
With AI demand continuing to overwhelm, the blame for bottlenecks is shifting to the fabs, which themselves are constrained. In any case, the order backlog provides clarity into the future of earnings, but beyond that, it feels like investors expect substantial sales and margin decay, as some look for demand to wind down gradually.
Given the constraints standing in the way of the great AI data center buildout, though, it feels like that cyclical downturn might still be far off.
It’s hard to imagine that the biggest cyclical upswing isn’t yet in the cards, but when you look at the data center buildout and the compute needs to power next-generation AI applications at scale, only then does it become apparent that the latest sell-off in semiconductors might have more to do with investor nerves than anything that’s changed regarding the state of the buildout.
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In my view, bottlenecks across the board could stretch out the buildout over some number of years. Add Jevons Paradox into the equation, which cites more usage when efficiencies rise, and it’s hard to bet against semiconductors as their share prices take a big dive.
Betting on a hyperscaler CapEx drop might prove unwise For Advanced Micro Devices and Nvidia, the hyperscaler CapEx is in the books and there are high hopes for more business as the buildout accelerates.
The hundreds of billions of CapEx could evolve into over $1 trillion as bottlenecks alleviate across the board; perhaps there’s potential for a more vicious cyclical upswing. Until then, though, Advanced Micro Devices and Nvidia are not wasting time as they look to meet sky-high demand while raising the bar ever higher and expanding the slice of the pie.
As both GPU titans start selling massive numbers of racks to hyperscalers while doubling down on software innovations, it feels like there’s a fat cushion being put underneath the GPU titans. Of course, that’s not to say that a sound financial cushion will cushion the stock, especially when fear takes control of the market.
A cheap stock, like Nvidia at just over 23.0 times forward price-to-earnings (P/E), can always get cheaper. If everyone doubts the firm’s future earnings potential, perhaps a single-digit P/E is justifiable to some. In any case, until hyperscalers start posting quarterly spend that suggests a slowdown rather than a speedup, Advanced Micro Devices and Nvidia might have more support than most other players in the sea of semis.
In my view, the custom silicon threat might be what thins the cushion that supports the GPU titans. Not lower CapEx overall, but less that goes into the hands of the third-party chipmakers.
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Nebius Group (NBIS) shares climbed 4% on Thursday after the AI cloud company said it had brought online and begun validating its first full Nvidia Vera Rubin NV
A $1,000 investment in Nvidia (NASDAQ: NVDA) stock after the company was added to the Nasdaq-100 Index would now be worth a small fortune.
Nvidia’s split-adjusted price was about $0.33 at the end of May 2001 when the addition was made. At press time, July 23, 2026, the stock was trading at $209.52
Accordingly, our hypothetical $1,000 investment made following the index inclusion would now be worth about $634,909 – a gain of roughly 63,391% over the 25-year period.
NVDA share price YTD. Source: Finbold Nvidia stock dominates Nasdaq 100 after twenty five years While the initial impact on the share price was relatively modest when the chipmaker made it into the index, the membership in the Nasdaq-100 helped broaden its investor base and in some ways set the stage for subsequent rallies.
Now, the stock dominates the index, accounting for 12.78% of its total weight, surpassing Apple (NASDAQ: AAPL) 11.93% and Microsoft (NASDAQ: MSFT) 7.26%. The rally has, of course, been largely driven by the company’s leading position in the artificial intelligence (AI) sector following the technology’s boom over the past five years.
Indeed, Nvidia was at the center of attention in 2023 and 2024 thanks to its graphics processing units (GPUs) and other data center products. As a result, the stock more than tripled in 2023 alone as hyperscalers raced to expand AI infrastructure.
More recently, however, investor attention shifted to power infrastructure supplies and AI startup deals as well. As capital flowed into these emerging opportunities, Nvidia stock has largely traded sideways over the past three months.
Nonetheless, the company’s core business remains strong. Notably, management expects fiscal second-quarter revenue to rise about 12% sequentially – approximately 95% year-over-year growth if guidance is met. If all goes smoothly, long-time Nvidia backers could be up for even more sizable returns in the long run.
Featured image via Shutterstock
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Five of the Magnificent Seven have grown crowded, expensive, or exposed to narratives that no longer justify their premium. Two still screen as high-quality holdings on our framework. Below are our 24/7 Wall St. price targets for Apple (NASDAQ:AAPL | AAPL Price Prediction) and NVIDIA (NASDAQ:NVDA), the two Mag7 names our proprietary model rates as clear buys heading into the back half of 2026.
24/7 Wall St. Price Target Summary Metric Apple NVIDIA Current Price $325.89 $212.06 24/7 Wall St. Price Target $361.72 $260.73 Upside 11.0% 22.95% Recommendation BUY BUY Confidence 90% 90% How the Two Have Traded Into July Apple has been the momentum trade of 2026, gaining 20.1% year to date and 52.61% over the past year. On July 20, Apple briefly overtook NVIDIA as the world’s most valuable company, a symbolic moment driven by investor rotation toward capital-efficient AI strategies. The fundamentals back the move: fiscal Q2 revenue of $111.18 billion grew 16.6% and EPS of $2.01 topped estimates for the eighth straight quarter.
NVIDIA has consolidated, up 13.84% YTD and sitting 28% below its 52-week high of $236.26. Yet Q1 FY27 delivered revenue of $81.62 billion (+85% YoY) and Data Center revenue of $75.25 billion. CEO Jensen Huang called the AI factory buildout “the largest infrastructure expansion in human history.”
The Bull Case for Both Apple bulls point to the $30 billion+ Broadcom chip deal, the $100 billion new buyback, and 2.5 billion+ active devices that turn every Services release into recurring cash. If Siri’s AI refresh and China stabilization hit, our bull case takes AAPL to $378.01. Morgan Stanley raised the firm’s price target on Apple to $364 from $360 and keeps an Overweight rating on the shares.
NVIDIA bulls have 58 buy or strong-buy ratings against just one sell, a Street target of $302.31, and $119 billion in total supply commitments. Our NVDA bull case reaches $302.10.
What Could Go Wrong Apple trades at a forward P/E near 34x, and its OpenAI trade-secret lawsuit plus tariff exposure could compress the multiple. Our bear case: $307.39.
NVIDIA faces the loudest bear thesis on Reddit right now, with a 4,220-upvote wallstreetbets thread warning that “34% of the S&P is 10 stocks making the same bet.” Add China Data Center exclusions and AI capex digestion, and NVDA’s bear case sits at $226.75. Counterfactual: NVIDIA’s PEG of 0.56 suggests earnings growth is outrunning valuation.
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How They Compare to Microsoft The natural Mag7 benchmark is Microsoft (NASDAQ:MSFT), which trades at a P/E near 28x with an AI run rate above $37 billion growing 123% YoY. Microsoft is cheaper than Apple on earnings and grows AI faster, but its Q3 revenue growth of 18.3% trails NVIDIA’s 85%.
On PEG, NVIDIA’s 0.56 makes both AAPL (PEG 2.63) and MSFT look expensive relative to growth. That contrast is exactly why our model gives NVDA the larger upside and still rates AAPL a buy on quality.
The Bottom Line: Model Favors NVIDIA on Higher Upside Our 24/7 Wall St. price target is $361.72 on Apple and $260.73 on NVIDIA, both buy, both 90% confidence. The model favors NVIDIA more heavily here. The setup pairs a 28% drawdown with 85% revenue growth, and PEG under 1 rarely stays that low.
The model frames Apple as attractive on pullbacks toward $300 and NVIDIA as compelling at current levels. The setup would weaken if AI capex commitments start slipping or if China exposure widens.
Apple and NVIDIA Price Prediction 2026-2030 Year AAPL Target NVDA Target 2026 $361.72 $260.73 2027 $390 $298 2028 $418 $335 2029 $446 $365 2030 $473 $393 These projections assume Apple continues Services acceleration and NVIDIA sustains Data Center growth. Major AI capex resets or China policy shocks would push both toward bear-case levels.
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Nvidia NVDA shares fell in trading on Thursday even after Alphabet raised its capital expenditure guidance for 2026, as investors appeared to rotate toward memory and semiconductor specialists instead of the largest technology stocks.
Nvidia stock declined 2.18% in trading, snapping a 3-day winning streak, while Micron Technology and SK Hynix rose 2.5% and 2.8%, respectively.
The moves followed Alphabet’s quarterly earnings, in which the Google parent increased its 2026 capital expenditure guidance to between $195 billion and $205 billion, up from its previous forecast of $180 billion to $190 billion.
The revised spending outlook eased concerns that investment in artificial intelligence infrastructure could slow.
Much of the additional spending is expected to go toward expanding AI infrastructure, including chips and memory, benefiting suppliers across the semiconductor industry.
However, Nvidia did not immediately participate in the rally.
Alphabet shares also came under pressure, falling almost 6.3% despite reporting stronger-than-expected earnings, as investors focused on the company's higher AI spending commitments.
The market reaction suggested investors may be shifting away from the largest technology companies and toward more specialized AI hardware providers.
A recent trend had seen investors sell semiconductor stocks in favor of large technology companies.
Alphabet’s latest spending guidance appears to have reversed part of that trade, prompting renewed buying interest in memory manufacturers such as Micron and SK Hynix while weighing on Nvidia.
Although Nvidia remains one of the world's leading AI chipmakers, its rapid rise to become one of the world's most valuable public companies has increasingly positioned it alongside Big Tech companies rather than smaller semiconductor names.
Other technology giants also traded lower on Thursday morning, with Amazon falling 4.9% and Meta Platforms declining 4.3%.
Analysts remain bullish while options signal cautionDespite Thursday's decline, longer-term sentiment toward Nvidia remains largely positive.
A Barchart analysis noted that the platform's Technical Opinion indicator rates Nvidia as an "80% Strong Buy," citing a strengthening short-term outlook.
Analysts also maintain an average price target of just over $304, supported by expectations for new semiconductor architectures and continued AI infrastructure spending.
However, the analysis also highlighted caution in the options market ahead of Nvidia's second-quarter earnings, scheduled for Aug. 26.
According to the analysis, options traders are paying elevated implied volatility premiums for out-of-the-money put options expiring shortly after earnings, suggesting increased demand for downside protection.
Separately, a Motley Fool report argued that Nvidia remains attractive despite concerns over the sustainability of AI spending.
The report noted that Nvidia's valuation metrics, including its price-to-earnings ratio and price-to-free-cash-flow ratio, are near five-year lows and below those of several other companies benefiting from AI spending.
It argued that Nvidia's products have applications beyond artificial intelligence, pointing to previous demand from cryptocurrency mining and suggesting future opportunities in areas such as quantum computing.
For the quarter ended June 2026, American Airlines (AAL - Free Report) reported revenue of $16.74 billion, up 16.3% over the same period last year. EPS came in at $0.15, compared to $0.95 in the year-ago quarter.
The reported revenue represents a surprise of +0.22% over the Zacks Consensus Estimate of $16.7 billion. With the consensus EPS estimate being $0.03, the EPS surprise was +400%.
While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectations to determine their next course of action, some key metrics always provide a better insight into a company's underlying performance.
Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance.
Here is how American Airlines performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:
Operating cost per ASM excluding net special items and fuel - Total: 13.93 cents versus the four-analyst average estimate of 13.99 cents.Operating cost per ASM excluding net special items - Total: 19.89 cents versus the four-analyst average estimate of 20.14 cents.Passenger load factor (percent) - Total: 83.2% versus 84.9% estimated by four analysts on average.Average aircraft fuel price including related taxes - Total: 4.05 $/gal versus 4.12 $/gal estimated by four analysts on average.Passenger revenue per ASM - Total: 18.59 cents versus 18.75 cents estimated by four analysts on average.Total revenue per ASM - Total: 20.45 cents compared to the 20.44 cents average estimate based on four analysts.Available seat miles - Total: 81.84 billion versus the four-analyst average estimate of 81.56 billion.Yield - Total: 22.33 cents versus 22.07 cents estimated by three analysts on average.Fuel consumption - Total: 1,204.00 MGal versus 1,223.11 MGal estimated by three analysts on average.Revenue- Passenger: $15.21 billion versus $15.29 billion estimated by five analysts on average. Compared to the year-ago quarter, this number represents a +15.9% change.Revenue- Other: $1.25 billion versus $1.2 billion estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +18% change.Revenue- Cargo: $273 million versus $219.72 million estimated by four analysts on average. Compared to the year-ago quarter, this number represents a +29.4% change.View all Key Company Metrics for American Airlines here>>>
Shares of American Airlines have returned -15.2% over the past month versus the Zacks S&P 500 composite's +0.4% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term.
American Airlines AAL stock opened in the red this morning as lowered profit estimates, volatile jet fuel prices, and lingering margins concerns tempered an otherwise market-beating Q2 release.
Investors are bailing on AAL also because its net income came in down sharply (88%) on a year-over-year basis even though revenue popped more than 16% versus last year.
Following the post-earnings dip, American Airlines shares are down some 25% versus their recent high.
American Airlines’ bottom-line weakness reflects the “structural headwinds” delaying its broader financial turnaround.
The company’s pretax margins – hovering around slim single-digit levels – continue to lag legacy rivals Delta and United Airlines.
Crucially, AAL’s quarterly print suggests the firm’s recent price hikes have been far from sufficient in offsetting the Iran-driven volatility in jet fuel prices.
Adding to pressure in the recently concluded quarter were severe summer weather disruptions that hit key hub operations, compounding labour and maintenance costs.
Meanwhile, rebuilding corporate share remains an uphill climb after previous distribution strategy shifts alienated corporate travel agencies, squeezing yields in high-margin cabin tiers.
Why CEO Robert Isom remains bullish for 2027?Despite near-term turbulence, chief executive Robert Isom remains resolute about the company’s trajectory, saying “we’re set up really well for 2027.”
In a post-earnings interview with CNBC, he emphasized that American Airlines leads the industry in ex-fuel cost efficiency and revenue execution across its core commercial pillars.
The carrier already has 60% of its Q3 revenue booked, supported by “strong demand” for premium seating and rising AAdvantage loyalty program engagement.
Financially, AAL has overhauled its balance sheet, achieving its healthiest debt profile since 2016 after paying down over $13 billion in total debt.
With upcoming fleet decisions for 2030s widebody replacements on the horizon, Isom is convinced that American Airlines shares have unmatched upside potential as macro pressures normalize.
From an investment perspective, AAL stock presents a classic high-risk, high-reward turnaround play.
Trading at low valuation multiples relative to historical averages and legacy peers – the firm offers a deep discount for value-seeking investors willing to tolerate near-term volatility.
However, conservative investors may prefer to wait on the sidelines until margins show consistent expansion toward Delta and United levels, particularly because American Airlines said its loss per share could come in at 65 cents this year.
Isom has now reduced future guidance twice already in 2026. And it’s now like AAL pays a solid dividend to incentivize ownership despite ongoing challenges, too.
That said, investors should note that Wall Street analysts remain bullish as ever on the airline stock for the remainder of 2026.
The consensus rating on American Airlines sits at “Moderate Buy” currently, with the mean price target of just under $20 signaling massive upside potential from here.
Key Takeaways T tied growth and operating leverage to fiber, wireless convergence and a shrinking copper footprint.Advanced Connectivity revenue rose 5.1% as T posted strong phone, fiber and fixed wireless additions.T kept 2026 EPS and cash flow targets intact while raising planned buybacks to about $10 billion. AT&T Inc. (T - Free Report) used its second-quarter call to argue that its investment cycle is starting to show up in both growth and operating leverage. Management’s main message was that fiber, wireless convergence and a shrinking copper footprint are now reinforcing one another.
That framing mattered more than the quarterly beat itself. T reported adjusted EPS of $0.65, ahead of the Zacks Consensus Estimate of $0.59, while revenue of $31.56 billion came in slightly below the $32.04 billion consensus.
AT&T Leans on ConvergenceChief executive officer John Stankey said the quarter validated AT&T’s push to build more high-value converged customers across fiber, fixed wireless and postpaid phones. He pointed to more than 1 million advanced connectivity subscriber additions and a record quarter for combined fiber and fixed wireless net adds.
The company said 42.5% of advanced home internet customers also take AT&T wireless, a figure management framed as evidence that the convergence model is improving lifetime value and churn.
That strategy is also shaping how T thinks about product economics. Stankey said management is less focused on maximizing stand-alone ARPU by product and more focused on total revenue per customer account.
T Sees Margin Upside in ScaleChief financial officer Pascal Desroches said second-quarter service revenue rose 2.7% year over year and adjusted EBITDA increased 5.2%, lifting adjusted EBITDA margin by 110 basis points to 39.1%. Management tied that improvement to scale in fiber and 5G, lower legacy costs and transformation savings.
Within Advanced Connectivity, service revenue rose 5.1% and EBITDA climbed 8.0%. The segment posted 432,000 postpaid phone net adds, 367,000 fiber net adds and 279,000 fixed wireless net adds.
T also said it remains on track to deliver $4 billion of consolidated annual cost savings by the end of 2028. That helped explain why management spent more time on operating leverage than on the headline revenue shortfall versus consensus.
AT&T Pushes Fiber Expansion HarderManagement repeatedly returned to fiber buildout as the core of the longer-term story. The company added more than 1 million total consumer and business locations reached with fiber in the quarter, ending at 38.6 million and reiterating its target to top 40 million by year-end 2026.
Stankey said 2026 will be AT&T’s largest year ever for fiber expansion, including more than 4 million acquired Lumen locations. In Q&A, he said the company is nearing the back end of market-by-market conversion work in the Lumen footprint and expects another step-up in volume as branding and systems conversion are completed.
Desroches added that advanced home internet revenue grew more than 27% year over year, though fiber ARPU was down 1.3% because Lumen subscribers came over at lower ARPUs. Excluding the acquired footprint, fiber ARPU was about flat.
T Keeps Full-Year Targets IntactAT&T reiterated its full-year 2026 outlook, including adjusted EPS of $2.25 to $2.35, free cash flow of at least $18 billion and capital investment of $23 billion to $24 billion. The company also maintained its multi-year targets through 2028.
Desroches said second-quarter free cash flow of $4.7 billion exceeded the company’s own guidance of $4.0 billion to $4.5 billion. He added that third-quarter free cash flow should be roughly stable year over year, with stronger growth expected in the fourth quarter.
On capital returns, management raised its planned 2026 repurchases to about $10 billion from $8 billion previously. That sharper buyback stance was one of the clearest changes in tone on the call.
AT&T Uses Q&A to Sharpen StrategyQuestions from Morgan Stanley, UBS and BNP Paribas pushed management on pricing, fiber monetization and the trade-off between broadband and wireless growth. Stankey’s answers were notably direct: he said T intends to be aggressive across the fiber price continuum, especially when fiber can be bundled with wireless to improve account economics.
A New Street Research analyst also asked whether management’s comments about solving broadband corner cases hinted at more M&A. Stankey rejected that reading and instead pointed to satellite-enabled coverage extensions, including work tied to AST SpaceMobile, as a way to cover the last portion of customer connectivity needs.
Another recurring theme in Q&A was the copper shutdown. Stankey said AT&T now has approval to discontinue legacy services in more than 30% of its wire centers by late 2026, reinforcing the view that legacy cost removal is becoming more tangible.
T Leaves Investors With a Clearer PostureThe overall tone was confident and more expansive than a standard quarterly update. Management argued that stronger growth, higher margins and faster buybacks are all emerging from the same strategic base: denser fiber, better wireless economics and a more deliberate retreat from legacy infrastructure.
That does not make the quarter a simple recap of subscriber gains. It leaves investors with a clearer picture of what T wants to optimize over the next several years: converged account growth, targeted network density and cash returns without backing away from fiber investment.
Zacks Signals Stay Mixed for TT currently carries a Zacks Rank #3 (Hold), alongside a Value Score of A, Growth Score of D, Momentum Score of A, and VGM Score of B. Under the Zacks framework, a Rank #3 can still be held, and stronger style grades are more favorable than weaker ones, but the most attractive combinations are typically Zacks Rank #1 (Strong Buy) or #2 (Buy) paired with A or B Style Scores. You can see the the complete list of today’s Zacks #1 Rank stocks here.
That leaves a mixed but not unfavorable signal set. The strong Value, Momentum and VGM grades compare well with the weak Growth Score, while the Zacks Rank #3 points to a more balanced near-term setup than a clear outperform call. As always, that rank can change as earnings estimate revisions adjust after the quarter.
Key Takeaways T beats second-quarter earnings estimates as profitability and free cash flow improved.Low valuation multiples and planned shareholder returns support AT&T's appeal to value investors.High debt, rising leverage and $23B-$24B in 2026 capital spending keep AT&T's thesis balanced. AT&T Inc. (T - Free Report) has a clearer investment case after its latest earnings beat, but the setup is not a simple value call. The company is generating cash, improving profitability and trading at low valuation multiples.
The question is whether that discount reflects upside potential or the market’s caution about leverage, capital spending and uneven growth.
T Earnings Beat Helps the Bull CaseAT&T reported second-quarter 2026 adjusted earnings of 65 cents per share, up 20.4% year over year and above the Zacks Consensus Estimate of 59 cents by 10.2%. Revenues rose 2.3% to $31.56 billion, but missed the consensus mark of $32.04 billion by 1.5%.
The earnings beat still helps the bullish case because profitability moved in the right direction. Consolidated operating income increased 8.3% year over year, adjusted EBITDA rose 5.2% and the adjusted EBITDA margin expanded to 39.1% from 38%.
Free cash flow also improved, rising 6.3% to $4.67 billion despite higher capital expenditures. That matters for a company that must fund network investment, dividends and buybacks while keeping leverage under control.
AT&T Valuation Looks Cheap but Not Clear-CutAT&T’s valuation is the strongest part of the investment debate. The stock trades at 7.5X trailing 12-month enterprise value to EBITDA, well below 22.0X for the Zacks sub-industry, 20.6X for the Zacks sector and 18.5X for the S&P 500.
The company’s 6- to 12-month price target stands at $26, compared with a stock price of $23.04 as of July 22, 2026. The shares also trade at 10.5X current fiscal-year earnings, which keeps the valuation case anchored in modest expectations rather than aggressive growth assumptions.
Low multiples can support a recovery if AT&T continues to convert fiber and wireless momentum into earnings and cash flow. They can also reflect skepticism about long-term growth quality, especially with legacy services declining and capital needs remaining high.
T-Mobile US Inc. (TMUS - Free Report) is a relevant comparison because it competes for the same U.S. wireless customers and gives investors another benchmark for subscriber growth. Verizon Communications Inc. (VZ - Free Report) is another natural reference point for income-oriented telecom investors, given its similar focus on wireless and broadband connectivity.
T Shareholder Returns Add AppealAT&T’s cash-return profile remains a key attraction. The company has an annualized dividend of $1.11 per share, with a dividend yield of 4.8%.
Management also reiterated plans to return more than $45 billion to shareholders during 2026 to 2028 through dividends and share repurchases. That framework gives income-focused investors a clearer line of sight than a valuation argument alone.
The board authorized an additional $10 billion of common stock repurchases in January 2026. AT&T expects to repurchase about $10 billion of stock in 2026 while maintaining its current dividend.
AT&T Debt and Spending Temper the ThesisThe counterargument starts with the balance sheet. AT&T ended the second quarter of 2026 with net debt-to-adjusted EBITDA of 2.68X, total debt of $144 billion and cash and equivalents of $17.6 billion.
Leverage is expected to rise to about 3.2X after the planned EchoStar spectrum acquisition, before returning to the 2.5X range within about three years. That path depends on steady execution, cash generation and disciplined spending.
The company also expects annual capital investment of $23 billion to $24 billion in 2026. Buybacks and dividends look more attractive when operating trends hold, but they can tighten financial flexibility if revenue growth softens or network spending remains elevated.
What T’s Mixed Signals Mean for InvestorsThe bottom line is that AT&T looks more attractive for value and income investors than for buyers seeking a clean growth story. Earnings execution, free cash flow and discounted valuation support the stock, while leverage, capital intensity and mixed growth trends keep the thesis balanced.
T currently carries a Zacks Rank #3 (Hold). That rank points to a more neutral near-term setup rather than a high-conviction buy signal.
The Style Scores sharpen the distinction. AT&T has a Value Score of A, Growth Score of D, Momentum Score of F and VGM Score of C. The Value Score supports the case for discounted valuation, but weaker Growth and Momentum scores suggest investors may want stronger expansion and estimate-revision trends before taking a more aggressive stance.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Takeaways T added 367,000 fiber customers as advanced home Internet connections rose 29.5% year over year.Converged households churn at roughly half the rate and deliver a high-single-digit revenue uplift.AT&T targets 70% of wireless traffic on open-capable platforms and $4 billion in annual savings. AT&T Inc. (T - Free Report) is trying to turn connectivity demand into a more durable growth model. Its strategy now leans on fiber, 5G and business network services rather than old media and video assets.
Execution matters. Fiber reach, wireless scale and edge demand can support revenues and margins, while capital intensity and competition remain checks.
AT&T Rides the Fiber Convergence TrendFiber is central to AT&T because it supports more than stand-alone broadband additions. In the second quarter of 2026, the company recorded more than 1 million advanced connectivity net additions, including 646,000 Internet net additions and 432,000 postpaid phone net additions.
AT&T added 367,000 fiber customers in the quarter, while advanced home Internet connections rose 29.5% year over year. The convergence rate reached 42.5%, meaning a growing share of those Internet customers also had an AT&T postpaid wireless plan.
That mix matters because management indicated that converged households churn at roughly half the rate of stand-alone accounts and carry a high-single-digit average revenue per account uplift. AT&T ended the quarter with 38.6 million consumer and business fiber locations reached.
T Uses 5G to Broaden Internet ReachAT&T’s 5G strategy supports the fiber push rather than replacing it. The company uses millimeter-wave spectrum in dense areas and mid- and low-band holdings elsewhere to balance capacity and coverage.
Management has tied fiber and 5G together in a converged network that reaches more than 90 million customer locations with advanced Internet services over either fiber or 5G. Fixed wireless is one sign of that broader reach, with AT&T adding 279,000 fixed wireless customers in the second quarter.
T-Mobile US, Inc. (TMUS - Free Report) remains a relevant benchmark in wireless and home broadband competition. Its presence keeps pressure on carriers to pair network quality with attractive customer offers.
AT&T Pushes Toward AI-Ready NetworksAT&T’s edge and artificial intelligence-related network strategy is an emerging growth angle, not an immediate earnings reset. Management expects AI-ready connectivity needs to grow as users require lower latency, stronger uplink capacity and reliable traffic management.
The building blocks are dense fiber, 5G backhaul, spectrum depth, mobile edge computing zones and private 5G deployments. AT&T has cited more than 20 metro mobile edge computing zones live and more than 150 active private 5G and edge trials.
The planned EchoStar 600 MHz spectrum acquisition is intended to strengthen low-band uplink capacity. That could become more useful if AI workloads gradually lift backbone traffic and demand more reliable two-way network performance.
T Seeks Efficiency Through Open RANGrowth alone is not enough for AT&T’s investment case. The company also needs to run its network more efficiently as fiber, spectrum and 5G spending remain high.
Open radio access network, or Open RAN, is part of that effort. AT&T plans to use Ericsson technology to deploy a commercial-scale Open RAN buildout and aims to move 70% of wireless network traffic across open-capable platforms by late 2026.
The broader transformation plan includes vendor rationalization, artificial intelligence enablement, digitalization and lower legacy operating support costs. Management is targeting $4 billion in annual cost savings by the end of 2028. Verizon Communications Inc. (VZ - Free Report) offers another large-scale network comparison for investors focused on network cost discipline.
How AT&T’s Ratings Frame the Trend TradeAT&T offers exposure to several important connectivity trends, but the stock is not a clean growth call. Fiber convergence, fixed wireless adoption, edge workloads and Open RAN efficiency give the company a credible roadmap, while legacy declines and promotional wireless competition still limit improvement.
The stock currently carries a Zacks Rank #3 (Hold). Its Value Score of A points to a favorable valuation profile, but the Growth Score of D and Momentum Score of F show weaker signals on earnings growth characteristics and near-term price trend.
The VGM Score of C places the combined style picture in the middle. Investors may see value in T’s connectivity exposure and income profile, but the market is still waiting for stronger growth and momentum signals.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Wall Street is worried about Netflix's new shows. Its old ones are its secret weapon.
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Chief Correspondent covering media and technology
Netflix gets lots of attention for new seasons of hit series like "Bridgerton." But those shows aren't what drives most viewing on the service. Liam Daniel/Netflix Wall Street worries that Netflix has an engagement problem. Netflix says it's doing fine, actually.
Wall Street worriers base their fears, in part, on the viewership data Netflix periodically releases — data Netflix says it's going to give out less frequently now. But you can also look at that same data and find reasons to be more optimistic about Netflix's prospects.
So here's a pro-Netflix story, expressed in chart form, courtesy of MoffettNathanson analyst Robert Fishman:
Robert Fishman/MoffettNathanson It also requires some explanation. What Fishman is pointing out is a basic-but-important idea to keep in mind about Netflix-created shows and movies: They get a ton of their viewership in the first few days and weeks they're released. But then they get a ton of viewership over time, too.
So this chart is showing you that in the first half of 2026, more than half of the viewership in Netflix originals was generated by stuff released before the summer of 2025.
That is: Yes, Netflix viewers watched a ton of the new "Bridgerton" season last spring. But they also watched, for instance, lots of old seasons of "Stranger Things" — a show that debuted in 2016. And a lot of "Gabby's Dollhouse," which debuted in 2021. They also spent meaningful time with a Jeffrey Epstein documentary that originally aired in 2020.
Equally important: While there has rightfully been a lot of recent attention on the performance of Netflix's highest-profile shows, Fishman also points out that those shows only account for a slice of Netflix viewing. In the first half of 2026, the top 20 Netflix series accounted for just 14% of total engagement — a ratio that's been pretty consistent for years. Which means that most people are spending most of their Netflix time watching something other than its biggest hits.
"Net-net, while hits remain important, it is really the longer tail titles that drive the vast majority of engagement on Netflix," Fishman writes.
The "long tail" is a very old concept that has taken some beatings over the years. But in Netflix's case, it is bearing out: In an on-demand internet world, lots of people will decide to consume the same movies, shows, songs, whatever. But at the same time, lots of people will seek out niche stuff. And if you add all those niches up, they amount to a very big number.
The long tail doesn't fully answer the problem Netflix bears are highlighting: If your most popular new stuff isn't performing as well as your most popular stuff used to perform, you can't simply dismiss that by saying it doesn't really matter since your old stuff is still popular.
And arguing that not all engagement is the same, anyway — something Netflix has been saying recently — won't make the concern go away, either.
What investors would like — as would Netflix — are numbers showing that Netflix's biggest shows are getting more popular.
Perhaps Netflix won't be able to figure out how to make that happen. The law of large numbers is a real thing, and Netflix now has an astonishing 325 million subscribers. Each new one will be harder to get, which is why the company is focused on extracting more value from each subscriber it does have, via tactics like price hikes and its newish ad business.
That size helps explain why Netflix made a swing-for-the-fences bid for (much of) Warner Bros. Discovery: If you're so big that growth is harder to generate organically, maybe you buy some.
The good news for Netflix is that while they figure that out, they have a good fallback position: A service so large that lots of people will find something to watch, and which keeps them subscribing month after month.
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Peter Kafka You're currently following this author! Want to unfollow? Unsubscribe via the link in your email.
Peter covers media and technology for Business Insider; previously he has worked at Vox, Recode, AllThingsD, and Forbes. He was also the first hire at Silicon Alley Insider, Business Insider's predecessor.
Wall Street expects a year-over-year increase in earnings on higher revenues when MasterCard (MA - Free Report) reports results for the quarter ended June 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.
The earnings report, which is expected to be released on July 30, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower.
While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise.
Zacks Consensus EstimateThis processor of debit and credit card payments is expected to post quarterly earnings of $4.77 per share in its upcoming report, which represents a year-over-year change of +14.9%.
Revenues are expected to be $9.06 billion, up 11.4% from the year-ago quarter.
Estimate Revisions TrendThe consensus EPS estimate for the quarter has been revised 0.05% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.
Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts.
Price, Consensus and EPS Surprise
Earnings WhisperEstimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction).
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.
Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.
A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.
Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).
How Have the Numbers Shaped Up for MasterCard?For MasterCard, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +0.56%.
On the other hand, the stock currently carries a Zacks Rank of #3.
So, this combination indicates that MasterCard will most likely beat the consensus EPS estimate.
Does Earnings Surprise History Hold Any Clue?While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.
For the last reported quarter, it was expected that MasterCard would post earnings of $4.4 per share when it actually produced earnings of $4.60, delivering a surprise of +4.55%.
Over the last four quarters, the company has beaten consensus EPS estimates four times.
Bottom LineAn earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.
That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
MasterCard appears a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Analysts on Wall Street project that Visa (V - Free Report) will announce quarterly earnings of $3.23 per share in its forthcoming report, representing an increase of 8.4% year over year. Revenues are projected to reach $11.37 billion, increasing 11.8% from the same quarter last year.
Over the past 30 days, the consensus EPS estimate for the quarter has been adjusted upward by 0.4% to its current level. This demonstrates the covering analysts' collective reassessment of their initial projections during this period.
Before a company reveals its earnings, it is vital to take into account any changes in earnings projections. These revisions play a pivotal role in predicting the possible reactions of investors toward the stock. Multiple empirical studies have consistently shown a strong association between trends in earnings estimates and the short-term price movements of a stock.
While investors typically rely on consensus earnings and revenue estimates to gauge how the business may have fared during the quarter, examining analysts' projections for some of the company's key metrics often helps gain a deeper insight.
That said, let's delve into the average estimates of some Visa metrics that Wall Street analysts commonly model and monitor.
It is projected by analysts that the 'Revenues- Service revenue' will reach $4.85 billion. The estimate indicates a year-over-year change of +12%.
The consensus among analysts is that 'Revenues- Data processing revenue' will reach $5.86 billion. The estimate indicates a year-over-year change of +13.6%.
Analysts forecast 'Revenues- Other revenue' to reach $1.31 billion. The estimate points to a change of +27.5% from the year-ago quarter.
The average prediction of analysts places 'Revenues- International transaction revenue' at $3.92 billion. The estimate suggests a change of +7.9% year over year.
The combined assessment of analysts suggests that 'End of Period Connections - Total transactions' will likely reach 71.46 billion. The estimate is in contrast to the year-ago figure of 65.44 billion.
Based on the collective assessment of analysts, 'Payments volume - Total' should arrive at $3934.73 billion. Compared to the current estimate, the company reported $3618.00 billion in the same quarter of the previous year.
Analysts predict that the 'Total volume' will reach $4557.96 billion. The estimate is in contrast to the year-ago figure of $4250.00 billion.
Analysts expect 'Payments volume - Asia pacific' to come in at $530.21 billion. The estimate compares to the year-ago value of $509.00 billion.
Analysts' assessment points toward 'Payments volume - Canada' reaching $116.57 billion. The estimate compares to the year-ago value of $110.00 billion.
According to the collective judgment of analysts, 'Payments volume - U.S.' should come in at $1895.31 billion. Compared to the present estimate, the company reported $1766.00 billion in the same quarter last year.
The consensus estimate for 'Payments volume - CEMEA' stands at $246.25 billion. The estimate is in contrast to the year-ago figure of $219.00 billion.
The collective assessment of analysts points to an estimated 'Payments volume - Europe' of $868.35 billion. The estimate compares to the year-ago value of $774.00 billion.
View all Key Company Metrics for Visa here>>>
Over the past month, shares of Visa have returned +6.4% versus the Zacks S&P 500 composite's +0.4% change. Currently, V carries a Zacks Rank #2 (Buy), suggesting that it may outperform. the overall market in the near future. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
