The beauty industry is undergoing a shift as digital and physical retail merge into a single consumer experience. This leaves many investors wondering whether they should favor Ulta Beauty (ULTA 1.82%) or The Estée Lauder Companies (EL +1.89%).
The beauty sector remains a resilient corner of the consumer market, yet these two companies approach the opportunity from opposite ends of the supply chain. One thrives as a massive retail platform while the other operates as a global brand manufacturer. Understanding their different business models is essential for any investor weighing a position in the beauty space.
The case for Ulta BeautyUlta Beauty operates as a premier destination for beauty enthusiasts, combining luxury and mass-market products under one roof. The company maintains more than 1,500 store locations and offers everything from cosmetics and fragrance to professional salon services. By catering to diverse price points and offering a popular loyalty program, it has established itself as a leading player among U.S. retail stocks.
In FY 2025, the company reported revenue of nearly $12.4 billion, which represented a growth of approximately 9.7% over the previous year. This expansion helped generate net income of roughly $1.2 billion for the period. While the net margin decreased slightly to about 9.3% from 10.6% in the prior year, the business remained consistently profitable despite a more cautious consumer environment.
As of its January 2026 balance sheet, the debt-to-equity ratio was roughly 0.8x, a measure of total debt relative to what shareholders own in the company. The current ratio, which compares short-term assets to liabilities, stood at approximately 1.4x, indicating a healthy liquidity position. The company also generated free cash flow of nearly $1.1 billion during the fiscal year, providing capital for further store expansions and technological upgrades.
The Estée Lauder Companies is a global powerhouse that manufactures and markets prestige skin care, makeup, and fragrances. Its portfolio includes world-renowned brands sold across 150 countries, with a heavy presence in department stores and international travel retail hubs. The company relies on its high-end brand equity and long-standing history to maintain a dominant position in the global beauty market.
For the income period of FY 2025, revenue reached nearly $14.3 billion, a decline of roughly 8.5% compared to the prior year. This drop contributed to a net loss of approximately $1.1 billion, compared to a net income of $390.0 million in the previous year. The net margin for this period was roughly negative 7.9%, highlighting the significant challenges the company faced in key markets like Mainland China.
According to its June 2025 balance sheet, the company carries a debt-to-equity ratio of nearly 2.4x, which compares its total debt to its total shareholder equity. Its current ratio, indicating the ability to cover short-term obligations with current assets, is roughly 1.3x. Free cash flow for the year was approximately $670.0 million, though stock-based compensation accounted for roughly 23.9% of operating cash flow, which inflates reported cash generation because SBC is a non-cash expense added back in the cash flow statement.
Risk profile comparisonUlta Beauty faces vigorous competition from mass merchandisers like Target and online marketplaces such as Amazon. The company also deals with significant vendor concentration, as products from its top 10 partners accounted for roughly 51% of net sales in FY 2025. Any disruption in supply chain infrastructure or a failure to adapt to emerging artificial intelligence technologies could further impact its competitive standing.
The Estée Lauder Companies is sensitive to the ongoing decline in foot traffic at department stores, which has increased its dependence on a shrinking number of key retailers. It competes globally against large firms like L'Oreal as well as emerging indie brands that often capture younger consumers more effectively. Furthermore, the company faces risks related to international operations and the complexities of managing data privacy within its digital infrastructure.
Valuation comparisonUlta Beauty appears to offer a more conservative valuation based on its Forward P/E and P/S ratio, while Estée Lauder carries a higher premium.
MetricUlta BeautyThe Estée Lauder CompaniesSector BenchmarkForward P/E17.6x36.7x31.2xP/S ratio1.8x2.3xSector benchmark uses the SPDR XLY sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?Ulta Beauty and Estée Lauder both operate in the beauty industry, but they offer investors very different opportunities. One operates a popular retail business while the other sells its products in other companies’ retail locations. Which stock will beautify your portfolio this year?
Ulta shops are standalone retail locations, often in strip malls, that sell a wide range of products from inexpensive mass-market brands to luxury cosmetics. It has a popular loyalty program and also sells online. By selling products at a range of price points, it remains resilient even during economic downturns because shoppers often continue buying beauty products.
Estée Lauder owns a portfolio of luxury beauty brands. But it sells in other companies’ retail locations, including department stores, which have fallen out of favor in recent years. Weaker international markets have resulted in stock price declines. Its management is making plans to restructure and improve efficiency, and if they succeed, the stock could see substantial growth.
I would choose Ulta Beauty because its retail model seems much more resilient than Estée Lauder’s. It has strong customer engagement across a wide variety of products at every price point, from a $2 lip gloss to a $200 bottle of perfume, for example. By contrast, Estée Lauder -- while very well known and respected -- depends on a narrower customer base and distribution channels. While Estée Lauder could generate higher returns if its turnaround strategy succeeds, Ulta appears to offer a better balance of stability, growth, and risk.
An Estee Lauder cosmetics counter is seen in Los Angeles, California, U.S., August 19, 2019. REUTERS/Lucy Nicholson/File Photo Purchase Licensing Rights, opens new tab
CompaniesJune 2 (Reuters) - An Estee Lauder (EL.N), opens new tab merger with Jean Paul Gaultier-owner Puig (PUIGb.MC), opens new tab failed to go through because of the price tag, Stephane de La Faverie, President and CEO of the U.S. cosmetics maker said on Tuesday, but added the company was still open to acquisitions if they made financial sense.
Estée Lauder and Puig ended negotiations late last month that would have created a premium beauty giant better positioned to compete with industry leader L'Oreal (OREP.PA), opens new tab.
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Leaks, disagreements between the powerful controlling families, and demands, including from make-up magnate Charlotte Tilbury, led the talks to collapse, five people with direct knowledge of the deal told Reuters.
Speaking at a Deutsche Bank consumer conference in Paris, de La Faverie said it was a matter of price.
"If we cannot reach the growth and the profitability at the right price point, then that is not an option. And this is why, obviously, this deal didn't go through, because it was not at the right price," he said, adding that the company would continue to look at opportunities.
The Clinique and M.A.C owner in May said it would cut 9,000 to 10,000 jobs globally as it accelerates its "Beauty Reimagined" strategy, aiming to save as much as $1.2 billion in annual costs.
Reporting by Alessandro Parodi in Gdansk, editing by Dominique Patton
Our Standards: The Thomson Reuters Trust Principles., opens new tab
Investors looking for stocks in the Cosmetics sector might want to consider either Shiseido Co. (SSDOY - Free Report) or Estee Lauder (EL - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, both Shiseido Co. and Estee Lauder are holding a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
SSDOY currently has a forward P/E ratio of 21.07, while EL has a forward P/E of 34.07. We also note that SSDOY has a PEG ratio of 0.66. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. EL currently has a PEG ratio of 0.84.
Another notable valuation metric for SSDOY is its P/B ratio of 1.54. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, EL has a P/B of 7.43.
These are just a few of the metrics contributing to SSDOY's Value grade of B and EL's Value grade of D.
Both SSDOY and EL are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SSDOY is the superior value option right now.
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, /PRNewswire/ -- Halper Sadeh LLC, an investor rights law firm, is investigating whether certain officers and directors of The Estee Lauder Companies, Inc. (NYSE: EL) breached their fiduciary duties to shareholders.
If you currently own Estee Lauder stock and are a long-term shareholder, you may be able to seek corporate governance reforms, the return of funds back to the company, a court-approved financial incentive award, or other relief and benefits. Please click here to learn more about your legal rights and options or contact Daniel Sadeh or Zachary Halper at (212) 763-0060 or [email protected] or [email protected]. Our firm would handle the action on a contingent fee basis, whereby you would not be responsible for out-of-pocket payment of our legal fees or expenses.
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Did The Estee Lauder Companies, Inc. Insiders Breach their Fiduciary Duties to Shareholders? PR Newswire
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Shareholders are encouraged to contact the firm to discuss their rights and options at no cost or obligation. We would handle any matter on a contingent fee basis, whereby you would not be responsible for out-of-pocket payment of our legal fees or expenses.
Shareholders should contact the firm immediately as there may be limited time to enforce your rights.
, /PRNewswire/ -- Halper Sadeh LLC, an investor rights law firm, is investigating whether certain officers and directors of The Estee Lauder Companies, Inc. (NYSE: EL) breached their fiduciary duties to shareholders.
If you currently own Estee Lauder stock and are a long-term shareholder, you may be able to seek corporate governance reforms, the return of funds back to the company, a court-approved financial incentive award, or other relief and benefits. Please click here to learn more about your legal rights and options or contact Daniel Sadeh or Zachary Halper at (212) 763-0060 or [email protected] or [email protected]. Our firm would handle the action on a contingent fee basis, whereby you would not be responsible for out-of-pocket payment of our legal fees or expenses.
Why Your Participation Matters:
Shareholder involvement can help improve a company's policies, practices, and oversight mechanisms to create a more transparent, accountable, and effectively managed organization, which can enhance shareholder value.
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PETERSFIELD, England--(BUSINESS WIRE)--As The Estée Lauder Companies’ (NYSE: EL) Whitman manufacturing facility celebrates its 60th anniversary, the company today announced a strategic investment that will strengthen its UK manufacturing network, further reinforcing its long-standing commitment to British craftsmanship, innovation, and growth in prestige fragrance.
Established in 1966, Whitman is a strategic part of The Estée Lauder Companies’ global manufacturing network, producing skin care and fragrance products for brands including Jo Malone London, Estée Lauder, Clinique, and La Mer. Today, the site produces more than 90 million units annually for distribution across the UK, Europe, and other select markets worldwide.
“For sixty years, Whitman has reflected the craftsmanship, quality, and innovation that have defined The Estée Lauder Companies since my grandparents founded the business,” said William P. Lauder, Chair of the Board of Directors, The Estée Lauder Companies. “When my family established our manufacturing footprint here in 1966, we recognized the remarkable depth of British artisanal skill, and we are proud to continue investing in that legacy today.”
As The Estée Lauder Companies continues to invest in Whitman’s future, the company will integrate select luxury candle and home fragrance capabilities from long-standing partner and creator of luxury candles and scent diffusers, Contract Candles, into its UK manufacturing operations. This includes assuming the lease of one of Contract Candles’ two UK facilities, welcoming approximately 50 employees into the organization over time, and adding new research and development and quality capabilities.
Following the integration, the UK will serve as the primary manufacturing base for candles across The Estée Lauder Companies’ prestige brand portfolio worldwide, including the Jo Malone London, TOM FORD and AERIN brands. The investment enhances operational control and long-term resilience in a strategically important category while reinforcing the UK as a center of excellence for fragrance craftsmanship and manufacturing.
Speaking during Whitman’s 60th anniversary celebration, Roberto Canevari, Executive Vice President, Chief Value Chain Officer, The Estée Lauder Companies, said: “The UK plays a significant role in our global manufacturing network, and this investment in candle and home fragrance manufacturing reflects our continued commitment to British craftsmanship and innovation. Bringing these activities more closely into our manufacturing network will strengthen resilience and support our ability to continue delivering the exceptional quality and artistry that define our brands."
Home fragrance continues to represent a growth opportunity across The Estée Lauder Companies’ portfolio of fragrance brands, driven by expanding consumer interest in premium scent experiences and elevated home environments. This is particularly notable for Jo Malone London, a quintessentially British brand and the number-one luxury home fragrance brand in the UK across home scents and fragrance ancillaries. Six of the UK’s top 10 home fragrance franchises also belong to Jo Malone London.* The brand’s iconic candles are expertly crafted in the UK — reflecting a longstanding commitment to British craftsmanship and artisanal expertise.
The integration of these activities further strengthens The Estée Lauder Companies’ manufacturing ecosystem and reinforces the company’s commitment to resilient, high-quality UK manufacturing within its broader global manufacturing network.
Since fiscal 2020, The Estée Lauder Companies has invested $72 million in its Whitman facility across automation, quality systems, sustainability initiatives, and advanced manufacturing capabilities, alongside apprenticeship and STEM outreach programs in partnership with local universities.
About The Estée Lauder Companies Inc.
The Estée Lauder Companies Inc. is one of the world’s leading manufacturers, marketers, and sellers of quality skin care, makeup, fragrance, and hair care products, and is a steward of luxury and prestige brands globally. The Company’s products are sold in approximately 150 countries and territories under brand names including: Estée Lauder, Aramis, Clinique, Lab Series, Origins, M·A·C, La Mer, Bobbi Brown Cosmetics, Aveda, Jo Malone London, Bumble and bumble, Darphin Paris, TOM FORD, Smashbox, AERIN Beauty, Le Labo, Editions de Parfums Frédéric Malle, GLAMGLOW, KILIAN PARIS, Too Faced, Dr.Jart+, the DECIEM family of brands, including The Ordinary and NIOD, and BALMAIN Beauty.
*Source: Circana, LLC, UK Prestige Beauty, Fragrance Category, Fragrance Home Scents and Fragranced Ancillaries Combined, (Excluding Non-Branded Home Scents) Parent Brand, ELC Luxury Definition 2026, Sterling Sales, April 2025 – March 2026.
The fallout from a weaker-than-expected earnings report published by Tencent Music Entertainment (TME 0.43%) continued on Wednesday. For the second day in a row, the China-based company was hit with analyst price target cuts, as well as two recommendation downgrades. This pushed the stock down by over 9%.
Earnings fallout One of the downgrades came from Benchmark's Fawne Jiang, who lowered her rating on Tencent Music to hold from the previous buy. No price target was provided.
Image source: Getty Images.
According to reports, Jiang had been bullish on Tencent Music, chiefly because of its impressive growth in the online music market. This provided a foundation for high-margin subscription revenue from users eager to consumer the content.
The pundit wrote that while fourth-quarter results -- published before market open Tuesday -- were strong, the immediate future looks more murky. She expressed concern that rising competition will threaten growth in those ever-important subscriptions. Jiang also sees threats in new ways of creating and consuming content, exacerbated by the eager take-up of artificial intelligence (AI).
Several of Jiang's peers also became less bullish on Tencent Music, lowering their price targets for the stock. Goldman Sachs analyst Lincoln Kong cut his target to $17.60 per share from $20, while maintaining his buy recommendation. Alex Yao from JPMorgan Chase unit JPMorgan chopped his down to $12 from $30, yet kept his neutral rating intact.
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Unimpressed users? Yes, Tencent Music is still posting double-digit growth in key metrics (like revenue), but its audience is lately going in the opposite direction -- its earnings report revealed that the company's monthly average user (MAU) count declined by 5%.
Such a metric is crucial to any company with a heavy social media dimension; any sign that the user base is eroding understandably raises investor concerns. While Tencent Music is still a viable business, I'd be quite worried about that MAU slide, and eager to know how management intends to reverse it.
JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group and JPMorgan Chase. The Motley Fool has a disclosure policy.
Tencent Music Entertainment Group Sponsored ADR (NYSE: TME - Get Free Report) was the target of unusually large options trading activity on Wednesday. Traders bought 2,335 call options on the company. This is an increase of 23% compared to the typical daily volume of 1,906 call options. Tencent Music Entertainment Group Stock Down 9.5% Shares of
SHENZHEN, China, March 19, 2026 /PRNewswire/ -- Millions of music fans are eagerly awaiting another historic moment for Mandopop. After three years and eight months, iconic Mandopop artist Jay Chou is set to release his 16th studio album, "Children of the Sun.
Shares of Tencent Music Entertainment (TME 0.43%) fell 28.8% this week through 3:30 p.m. Friday, according to data from S&P Global Market Intelligence.
Tencent Music is sometimes regarded as the "Spotify (SPOT 1.07%) of China," since it's the leading streaming music subscription service in the country. However, Tencent Music's business is a bit different, as it also generates revenue from social music interactions, such as karaoke tipping and other interactive services.
This week, Tencent Music held its fourth-quarter earnings. While the headline numbers themselves weren't bad, some concerns emerged over certain KPIs (key performance indicators). Management also said it would no longer disclose certain KPIs going forward, fueling more investor skepticism.
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Subscriber deceleration overshadows a revenue beat In the fourth quarter, Tencent Music grew revenue 15.9% to $1.24 billion, which beat expectations, while adjusted (non-GAAP) earnings per American Depositary Share (ADS) were up a lower 8.8%, just meeting expectations.
Whenever a company grows profits at a lower rate than revenues, it could suggest that it's feeling competitive pressure. Moreover, investors appeared concerned about the slowdown in the subscription business, which grew just 13.2%, down from roughly 17% in the prior quarter. In general, investors like to see more revenue from subscriptions, which are perceived as "recurring" and higher quality, rather than advertising or other services that may be cyclical or more fleeting.
Adding to the anxiety was Tencent Music saying that it would no longer disclose quarterly online music monthly active users (MAUs), the number of paying users, or average revenue per user (ARPU). Instead, Tencent Music will only disclose total paying users at the end of each year.
As justification, management wrote:
... our business model has significantly evolved in recent years. As advertising and other IP-related offerings scale, and as we offer multi-tiered membership for online music subscriptions, the business impact of each paid membership varies. As a result, we are increasingly focused on revenue and profit as our primary performance indicators.
Investors never tend to like it when management discloses less about a business, so it's no surprise the stock sold off.
Image source: Getty Images.
Has TME gotten too cheap? After the sell-off, Tencent Music's stock trades at just 11.5 times trailing adjusted earnings per ADS.
That seems too cheap for the stock, which, even though revenue and earnings are slowing, did manage to grow adjusted earnings by close to 22% for the full year in 2025.
In short, the sell-off sparked by the removal of certain disclosures may create an opportunity for value investors to buy Tencent Music stock at a very cheap price today -- that is, for those comfortable owning Chinese stocks in their portfolio.
SG Americas Securities LLC boosted its position in Tencent Music Entertainment Group Sponsored ADR (NYSE:TME – Free Report) by 85.7% during the 4th quarter, according to its most recent 13F filing with the Securities and Exchange Commission (SEC). The institutional investor owned 542,198 shares of the company’s stock after purchasing an additional 250,261 shares during the quarter. SG Americas Securities LLC’s holdings in Tencent Music Entertainment Group were worth $9,505,000 as of its most recent filing with the Securities and Exchange Commission (SEC).
Several other large investors have also recently bought and sold shares of the company. Norges Bank purchased a new position in shares of Tencent Music Entertainment Group during the 2nd quarter valued at $110,813,000. Krane Funds Advisors LLC raised its position in shares of Tencent Music Entertainment Group by 25.4% in the third quarter. Krane Funds Advisors LLC now owns 19,020,641 shares of the company’s stock worth $421,593,000 after buying an additional 3,856,410 shares in the last quarter. William Blair Investment Management LLC bought a new stake in Tencent Music Entertainment Group during the third quarter valued at $88,175,000. Robeco Institutional Asset Management B.V. boosted its stake in Tencent Music Entertainment Group by 174.9% during the third quarter. Robeco Institutional Asset Management B.V. now owns 5,319,631 shares of the company’s stock valued at $124,160,000 after buying an additional 3,384,583 shares during the period. Finally, Fullerton Fund Management Co Ltd. purchased a new position in Tencent Music Entertainment Group during the second quarter worth about $28,061,000. 24.32% of the stock is owned by institutional investors.
Tencent Music Entertainment Group Trading Up 0.1% Shares of TME stock opened at $9.44 on Monday. The business has a 50-day moving average price of $14.48 and a two-hundred day moving average price of $18.39. Tencent Music Entertainment Group Sponsored ADR has a 12-month low of $9.36 and a 12-month high of $26.70. The company has a quick ratio of 2.22, a current ratio of 2.22 and a debt-to-equity ratio of 0.04. The firm has a market cap of $14.62 billion, a P/E ratio of 9.53, a price-to-earnings-growth ratio of 0.62 and a beta of 0.56.
Tencent Music Entertainment Group Increases Dividend The company also recently announced an annual dividend, which will be paid on Thursday, April 23rd. Investors of record on Thursday, April 2nd will be given a $0.24 dividend. This represents a yield of 238.0%. The ex-dividend date is Thursday, April 2nd. This is a positive change from Tencent Music Entertainment Group’s previous annual dividend of $0.18. Tencent Music Entertainment Group’s dividend payout ratio is presently 23.23%.
Wall Street Analysts Forecast Growth Several analysts have weighed in on TME shares. Benchmark reaffirmed a “hold” rating on shares of Tencent Music Entertainment Group in a report on Wednesday, March 18th. JPMorgan Chase & Co. reissued a “neutral” rating and set a $12.00 price objective on shares of Tencent Music Entertainment Group in a report on Wednesday, March 18th. Morgan Stanley restated an “equal weight” rating on shares of Tencent Music Entertainment Group in a research report on Thursday, March 19th. UBS Group reaffirmed a “neutral” rating and issued a $13.00 target price (down from $26.00) on shares of Tencent Music Entertainment Group in a research note on Wednesday, March 18th. Finally, Mizuho dropped their target price on shares of Tencent Music Entertainment Group from $28.00 to $23.00 and set an “outperform” rating for the company in a research report on Wednesday, March 18th. One analyst has rated the stock with a Strong Buy rating, six have issued a Buy rating and eight have issued a Hold rating to the company’s stock. According to MarketBeat.com, the company currently has an average rating of “Moderate Buy” and a consensus target price of $22.03.
View Our Latest Stock Analysis on Tencent Music Entertainment Group
Tencent Music Entertainment Group Profile (Free Report)
Tencent Music Entertainment Group (NYSE: TME) is a China-based digital music and audio entertainment platform that operates a portfolio of leading music streaming and social entertainment services. Its core consumer-facing products include streaming apps, online karaoke (KTV) services and live music and entertainment broadcasts. The company monetizes its content through a mix of subscriptions, digital music sales, in-app purchases, virtual gifting, advertising and licensing arrangements with rights holders.
The company traces its roots to the consolidation of Tencent’s music assets and was established in the mid-2010s to unify several prominent music properties under a single operating entity.
Further Reading Five stocks we like better than Tencent Music Entertainment Group Want to see what other hedge funds are holding TME? Visit HoldingsChannel.com to get the latest 13F filings and insider trades for Tencent Music Entertainment Group Sponsored ADR (NYSE:TME – Free Report).
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Tencent Music Entertainment Group NYSE: TME is China’s music streaming leader, amassing a huge market share. The entertainment company boasts approximately 528 million monthly active users (MAUs) and generated $1 billion in revenue from online music services in its latest quarter.
Tencent Music Entertainment Group Today
TME
Tencent Music Entertainment Group
$9.22 -0.05 (-0.49%)
As of 03:59 PM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$8.44▼
$26.70Dividend Yield2.50%
P/E Ratio11.52
Price Target$21.44
Meanwhile, the company’s top competitor, NetEase NASDAQ: NTES, brought in just $282 million in music revenue. With such a wide lead in revenue share, the “Spotify of China” is a fitting moniker for Tencent Music Entertainment.
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However, unlike Spotify Technology NYSE: SPOT, an emerging competitor is taking serious swings at TME’s dominance, frightening investors. This has been one of the key factors that have caused the stock to fall more than 60% from its 52-week high. However, given this name’s precipitous decline, there is reason to believe markets are overly pessimistic about TME’s future. At current levels, the stock may be able to stage a significant recovery.
Is Bytedance Sinking Its Teeth Into TME’s Users? In its latest quarter, TME put up solid results. Revenues rose by just under 16% year over year (YOY) to $1.24 billion, exceeding estimates near $1.23 billion. Adjusted earnings per depository share rose by 9% to 23 cents per share, in line with estimates. Despite these figures being well within expectations, shares fell 32% in the two days following the results. Investors seem to be worrying about a threat bubbling under the surface.
Bytedance is one of the largest privately owned companies in the world, recently valued at $550 billion. For reference, this figure is around $100 billion higher than the market capitalization of Costco Wholesale NASDAQ: COST. The company rose to prominence by creating TikTok.
Bytedance subsidiary Douyin (the Chinese version of TikTok) has been scaling its Soda Music platform at a breakneck clip. Its MAUs reached 120 million in September 2025, good for YOY growth of 90%. Six months later, that figure reportedly has increased to 140 million.
Especially when considering the trajectory of TME’s user base, it makes some sense why market participants are running for the hills. Although revenues rose strongly, Tencent saw a 5% YOY decrease in its MAUs in Q4 2025. This marks a continued acceleration in MAU decline, with the figure dropping by 4.3% in Q3 2025 and 3.2% in Q2 2025.
Many investors are likely worried that these users are defecting to Soda Music and that this decline will gain more momentum. As user count declines, TME’s monetizable base also falls, leading to concerns around the company’s future growth.
However, several factors suggest the reaction to these fears is overblown.
TME’S High Value Strategy Is Translating into Financial Gains Although Tencent's total MAUs are falling, the company's paying users are on the rise. Paying users increased during the quarter by 5.3% YOY to 127 million. Paying users are also increasing how much they spend. The company’s monthly average revenue per paying user increased by 7.2% YOY to approximately $1.70.
This shows that although low-value, non-paying users are falling, high-value paying users continue to increase. This dynamic is generating growth and greater profits at Tencent, despite what is happening at Soda Music. This comes as Soda specifically targets free and low-tier users, and the company has a “far inferior” content library compared to Tencent.
Rather than licensing large amounts of full-scale albums and rights, the firm leverages Douyin for much of its content. When Douyin creators release short-form videos featuring songs, users can seamlessly transition to Soda Music to listen to the whole track. In contrast, TME invests heavily in relationships with top-tier music labels and artists.
TME is offering a premium service, while Soda Music is attracting users further down the value chain. As the companies are targeting two fundamentally different types of listeners, it stands to reason that both firms can continue to grow in their niches. This is especially true for TME, considering that although total users are falling, they still far exceed paying users. At 528 million total users versus 127 million paying users, the firm still has a very large pool of more than 400 million non-paying users it can convert.
Still, there is a threat that Soda Music could look to target high-value users over time by expanding its offerings.
TME: Further Growth Could Lead to Significant Gains Overall, TME’s ability to continue growing is key when considering its valuation. Shares have fallen so far that they suggest the firm will see negative free cash flow growth over a multi-year period. Meanwhile, free cash flow has grown at a compound annual rate of around 11% over the past few years. However, growth did slow to 7.3% in 2025.
Tencent Music Entertainment Group Sponsored ADR (TME) Price Chart for Friday, June, 12, 2026
Still, markets seem to be pricing in a situation that is more bearish than the evidence suggests. With TME continuing to grow revenue and profits through high-value users, there is a significant chance that free cash flow can continue expanding as well. Should this play out, substantial long-term upside could be in store.
Notably, Wall Street analysts disagree on TME’s outlook. The MarketBeat consensus price target near $22 implies huge upside near 140%. However, targets updated after the company’s earnings report range from $12 to $23. The average of these targets is above $17, still implying more than 80% upside.
Should You Invest $1,000 in Tencent Music Entertainment Group Right Now?Before you consider Tencent Music Entertainment Group, 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 Tencent Music Entertainment Group wasn't on the list.
While Tencent Music Entertainment Group currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.
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For income investors, few things are as rewarding as receiving quarterly dividend payouts. But the next best thing very well might be learning that the stocks in their yield-focused portfolio are increasing those payouts.
And for shareholders of three high-profile stocks, that is precisely the case, with one announcing a big-time dividend increase of 33%.
While dividend boosts aren't uncommon, stock price performance and dividend yield shifts are two distinctly different storylines. The following semiconductor lynchpin, Chinese streaming behemoth, and premium home goods retailer each tell different tales.
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Micron Boosts Its Dividend Following +300% Surge Micron Technology Today
MU
Micron Technology
$981.61 -14.26 (-1.43%)
As of 04:00 PM Eastern
52-Week Range$103.38▼
$1,089.29Dividend Yield0.06%
P/E Ratio46.35
Price Target$737.63
After putting up blistering gains over the past year, Micron Technology NASDAQ: MU is getting back to dividend increases. Shares are up around 25% year-to-date (YTD) and have gained more than 300% over the past 12 months, driven by the ongoing shortage of high-bandwidth memory chips that are critical to artificial intelligence's growth trajectory.
That demand has served as an incredible tailwind for this stock. In its Q2 2026 earnings report, Micron reported revenue of $23.9 billion, surpassing estimates by almost $4 billion. The company’s guidance for next quarter was even more impressive. At the midpoint, Micron expects to generate revenue of $33.5 billion, which would exceed analyst expectations by more than $9 billion.
To go along with the firm’s fantastic performance, Micron announced a huge 30% increase to its quarterly dividend. The company plans to pay its next dividend on April 15 to shareholders of record on March 30.
On the surface, Micron’s indicated dividend yield—which sits at less than 0.2%—is not impressive. But it is noteworthy considering that this is the first time in nearly four years that the company raised its dividend, last doing so in mid-2022 with a 15% increase.
Micron's return to dividend increases—and the much larger size of its latest boost—highlights just how well things are going for this firm, which has rewarded shareholders with a 450% gain since last April's tariff tantrum.
Williams Sonoma Boosts Dividend 15% Despite Weakening Housing Outlook Williams-Sonoma Today
WSM
Williams-Sonoma
$223.18 +4.45 (+2.03%)
As of 03:59 PM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$152.20▼
$224.33Dividend Yield1.36%
P/E Ratio24.99
Price Target$211.47
Shares of Williams Sonoma NYSE: WSM—the owner and operator of home goods and furniture stores, including Williams Sonoma, Pottery Barn, and West Elm—had seen a YTD gain of more than 17% through early February before tumbling down 21% from its 2026 high.
With waning housing demand amid still-elevated interest rates and home prices near record levels, Williams Sonoma has been punished. The company relies on housing transactions as a key demand driver for its premium products, as people tend to buy new and big-ticket home items alongside home purchases. Unfortunately, over the past several months, investors have seen a notable shift in tone among WSM executives regarding a potential 2026 housing market recovery.
In November during the company's Q3 2025 earnings calls, CEO Laura Alber said she was "very optimistic about housing next year." But in March during the company's Q4 earnings call, Alber noted that "We are not building into our assumptions a meaningful housing recovery." This change is to a degree attributable to the rapid rise in oil prices, driven by the conflict in Iran, and the subsequent economic fallout both stateside and around the globe (Williams Sonoma operates brick-and-mortar locations in the United States, Canada, Australia, and the United Kingdom, but its products are available to ship to over 60 countries).
Rising oil prices, which affect large swaths of the economy, can put upward pressure on overall inflation. This makes it less likely that the Federal Reserve will lower interest rates in the near term. In turn, mortgages may carry higher interest rates than they otherwise would, depressing housing turnover and, subsequently, demand for Williams Sonoma's products.
Still, shares are up nearly 11% over the past year and the company is making good on its commitment to return more capital to shareholders. Williams Sonoma recently announced a significant 15% dividend increase, which will move its quarterly dividend distribution up to 76 cents per share. The firm expects to make its next payment on May 22 to shareholders of record as of April 17. Now, the stock’s indicated dividend yield sits at 1.5%, its highest level in almost a year.
Tencent: Profits and Dividends Soar as Shares Tank Tencent Music Entertainment Group Today
TME
Tencent Music Entertainment Group
$9.22 -0.05 (-0.49%)
As of 03:59 PM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$8.44▼
$26.70Dividend Yield2.50%
P/E Ratio11.52
Price Target$21.44
Last up is Chinese music streaming stock Tencent Music Entertainment Group NYSE: TME. With approximately 528 million monthly active users (MAUs), it is by far the leader in China’s music streaming market.
However, investors have hit shares very hard in 2026, causing them to fall more than 45% YTD. Much of that is due to increasing competition. Bytedance, the owner of Douyin (the Chinese version of TikTok), has rapidly expanded its Soda Music platform. Its MAUs reached 120 million in September 2025, good for year-over-year (YOY) growth of 90%.
Reports indicate that this figure grew to 140 million by March 2026. Meanwhile, Tencent saw a 5% decrease in its MAUs from Q4 2024 to Q4 2025. Still, the company’s revenues rose by around 16% YOY, and total operating profit increased by a whopping 53.4% YOY.
That growth comes despite Tencent's total MAUs declining, with the company's paying users increasing 5.3% YOY, helping offset overall user declines. But the fact that TME’s growth funnel of total MAUs is shrinking, its ceiling for future paid user growth is ultimately lower. Tencent now trades at a forward price-to-earnings (P/E) ratio of around 10x, tied for its lowest level over the past five years.
However, a silver lining amid TME’s decline is that its indicated dividend yield is now near its highest level ever. The figure sits near 2.5%, aided by the 33% dividend increase TME recently announced. The company’s dividend, which it pays annually, moves up to 24 cents per American Depository Share. TME plans to pay this dividend “on or around” April 23 to shareholders of record on April 2.
MU’s Forward P/E Plummets as the Stock Takes Off MU, WSM, and TME are three stocks seeing wildly different performances, but they are all working to deliver more capital to owners.
Micron is among the most interesting stocks in the market going forward. Even after an incredible rise, the stock’s forward P/E ratio is just 16.87, as earnings expectations have risen even faster than shares.
Still, whether the stock will see a large correction if the memory shortage eases is a key question going forward. For now, analysts see nearly 35% potential upside over the next 12 months.
Should You Invest $1,000 in Micron Technology Right Now?Before you consider Micron Technology, 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 Micron Technology wasn't on the list.
While Micron Technology currently has a Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
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Investors in Tencent Music Entertainment Group (TME - Free Report) need to pay close attention to the stock based on moves in the options market lately. That is because the Apr 17, 2026 $33 Call had some of the highest implied volatility of all equity options today.
What is Implied Volatility?Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?Clearly, options traders are pricing in a big move for Tencent Music Entertainment shares, but what is the fundamental picture for the company? Currently, Tencent Music Entertainment is a Zacks Rank #4 (Sell) in the Media Conglomerates industry that ranks in the Top 26% of our Zacks Industry Rank. Over the last 30 days, no analysts have increased their earnings estimates for the current quarter, while two analysts have revised their estimates downward. The net effect has taken our Zacks Consensus Estimate for the current quarter from 23 cents per share to 21 cents in that period.
Given the way analysts feel about Tencent Music Entertainment right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
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Factory Mutual Insurance Co. acquired a new position in shares of Tencent Music Entertainment Group Sponsored ADR (NYSE:TME – Free Report) during the 4th quarter, according to its most recent 13F filing with the SEC. The firm acquired 68,937 shares of the company’s stock, valued at approximately $1,208,000.
Other institutional investors also recently bought and sold shares of the company. Smartleaf Asset Management LLC purchased a new position in Tencent Music Entertainment Group during the 3rd quarter worth $31,000. Allworth Financial LP increased its holdings in Tencent Music Entertainment Group by 63.2% during the 3rd quarter. Allworth Financial LP now owns 1,480 shares of the company’s stock worth $35,000 after purchasing an additional 573 shares during the period. Global Retirement Partners LLC increased its holdings in Tencent Music Entertainment Group by 1,326.5% during the 3rd quarter. Global Retirement Partners LLC now owns 1,883 shares of the company’s stock worth $44,000 after purchasing an additional 1,751 shares during the period. Jones Financial Companies Lllp increased its holdings in Tencent Music Entertainment Group by 137.4% during the 3rd quarter. Jones Financial Companies Lllp now owns 2,414 shares of the company’s stock worth $57,000 after purchasing an additional 1,397 shares during the period. Finally, EverSource Wealth Advisors LLC increased its holdings in Tencent Music Entertainment Group by 83.0% during the 2nd quarter. EverSource Wealth Advisors LLC now owns 3,005 shares of the company’s stock worth $59,000 after purchasing an additional 1,363 shares during the period. 24.32% of the stock is currently owned by hedge funds and other institutional investors.
Tencent Music Entertainment Group Trading Up 0.6% Shares of NYSE:TME opened at $9.35 on Friday. Tencent Music Entertainment Group Sponsored ADR has a 12-month low of $8.78 and a 12-month high of $26.70. The business’s fifty day simple moving average is $12.99 and its 200-day simple moving average is $17.32. The company has a market capitalization of $14.48 billion, a PE ratio of 9.44, a P/E/G ratio of 0.61 and a beta of 0.80. The company has a current ratio of 2.22, a quick ratio of 2.22 and a debt-to-equity ratio of 0.04.
Tencent Music Entertainment Group Increases Dividend The firm also recently disclosed an annual dividend, which will be paid on Thursday, April 23rd. Stockholders of record on Thursday, April 2nd will be given a $0.24 dividend. This represents a dividend yield of 262.0%. The ex-dividend date of this dividend is Thursday, April 2nd. This is a positive change from Tencent Music Entertainment Group’s previous annual dividend of $0.18. Tencent Music Entertainment Group’s payout ratio is 23.23%.
Analysts Set New Price Targets Several research firms have commented on TME. Mizuho reduced their price objective on Tencent Music Entertainment Group from $28.00 to $23.00 and set an “outperform” rating on the stock in a report on Wednesday, March 18th. Weiss Ratings reiterated a “hold (c+)” rating on shares of Tencent Music Entertainment Group in a report on Monday, December 29th. Barclays cut their price target on Tencent Music Entertainment Group from $28.00 to $20.00 and set an “overweight” rating on the stock in a report on Thursday, March 19th. Daiwa Securities Group reiterated a “hold” rating and issued a $12.00 price target on shares of Tencent Music Entertainment Group in a report on Wednesday, March 18th. Finally, Benchmark reiterated a “hold” rating on shares of Tencent Music Entertainment Group in a report on Wednesday, March 18th. Six equities research analysts have rated the stock with a Buy rating and eight have assigned a Hold rating to the company. According to MarketBeat.com, Tencent Music Entertainment Group currently has an average rating of “Hold” and a consensus price target of $22.03.
Get Our Latest Report on TME
Tencent Music Entertainment Group Profile (Free Report)
Tencent Music Entertainment Group (NYSE: TME) is a China-based digital music and audio entertainment platform that operates a portfolio of leading music streaming and social entertainment services. Its core consumer-facing products include streaming apps, online karaoke (KTV) services and live music and entertainment broadcasts. The company monetizes its content through a mix of subscriptions, digital music sales, in-app purchases, virtual gifting, advertising and licensing arrangements with rights holders.
The company traces its roots to the consolidation of Tencent’s music assets and was established in the mid-2010s to unify several prominent music properties under a single operating entity.
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, /PRNewswire/ -- Tencent Music Entertainment Group ("TME", or the "Company") (NYSE: TME and HKEX: 1698), the leading online music and audio entertainment platform in China, today announced that it has filed its annual report on Form 20-F that includes its audited financial statements for the fiscal year ended December 31, 2025 with the Securities and Exchange Commission (the "SEC") on April 17, 2026, U. S. Eastern Time.
The annual report can be accessed on TME's investor relations website at ir.tencentmusic.com and on the SEC's website at www.sec.gov. The Company will also provide a hard copy of the annual report containing its audited consolidated financial statements, free of charge, to its shareholders and American Depositary Share holders upon request.
About Tencent Music Entertainment
Tencent Music Entertainment Group (NYSE: TME and HKEX: 1698) is the leading online music and audio entertainment platform in China, operating the country's highly popular and innovative music apps: QQ Music, Kugou Music, Kuwo Music and WeSing. TME's mission is to create endless possibilities with music and technology. TME's platform comprises online music, online audio, online karaoke, music-centric live streaming and online concert services, enabling music fans to discover, listen, sing, watch, perform and socialize around music. For more information, please visit ir.tencentmusic.com.
Investor Relations Contact
Tencent Music Entertainment Group
[email protected]
+86 (755) 8601-3388 ext. 885034
, /PRNewswire/ -- Tencent Music Entertainment Group ("TME", or the "Company") (NYSE: TME and HKEX: 1698), the leading online music and audio entertainment platform in China, today released its 2025 Environmental, Social and Governance ("ESG") Report, detailing the strategic actions taken to drive its sustainability agenda.
Mr. Cussion Pang, Executive Chairman of TME, commented, "The solid execution of our dual content-and-platform strategy has pushed the boundaries of value creation for users, artists, and partners across the music ecosystem, charting new pathways for industry advancement. Looking ahead, we will continue to harness the power of music and technology to create lasting positive impact, fostering a sustainable future for the music industry and society at large."
To access the Company's 2025 ESG Report, please visit: https://ir.tencentmusic.com/ESG-Reports.
About Tencent Music Entertainment
Tencent Music Entertainment Group (NYSE: TME and HKEX: 1698) is the leading online music and audio entertainment platform in China, operating the country's highly popular and innovative music apps: QQ Music, Kugou Music, Kuwo Music and WeSing. TME's mission is to create endless possibilities with music and technology. TME's platform comprises online music, online audio, online karaoke, music-centric live streaming and online concert services, enabling music fans to discover, listen, sing, watch, perform and socialize around music. For more information, please visit ir.tencentmusic.com.
Safe Harbor Statement
This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the SEC and the HKEX. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.
Investor Relations Contact
Tencent Music Entertainment Group
[email protected]
+86 (755) 8601-3388 ext. 885034
Shares of Tencent Music Entertainment Group Sponsored ADR (NYSE:TME – Get Free Report) have received an average recommendation of “Hold” from the fourteen brokerages that are currently covering the stock, Marketbeat reports. One research analyst has rated the stock with a sell recommendation, seven have issued a hold recommendation and six have given a buy recommendation to the company. The average 12 month price target among brokers that have issued a report on the stock in the last year is $22.0250.
Several research firms recently commented on TME. Morgan Stanley reaffirmed an “equal weight” rating on shares of Tencent Music Entertainment Group in a research report on Thursday, March 19th. Zacks Research lowered shares of Tencent Music Entertainment Group from a “hold” rating to a “strong sell” rating in a research note on Friday, April 17th. Benchmark reiterated a “hold” rating on shares of Tencent Music Entertainment Group in a research note on Wednesday, March 18th. Barclays lowered their price target on shares of Tencent Music Entertainment Group from $28.00 to $20.00 and set an “overweight” rating on the stock in a research note on Thursday, March 19th. Finally, Mizuho lowered their price target on shares of Tencent Music Entertainment Group from $28.00 to $23.00 and set an “outperform” rating on the stock in a research note on Wednesday, March 18th.
View Our Latest Research Report on Tencent Music Entertainment Group
Tencent Music Entertainment Group Trading Down 0.0% TME opened at $9.34 on Monday. The stock has a market capitalization of $14.46 billion, a P/E ratio of 9.43, a P/E/G ratio of 0.61 and a beta of 0.80. Tencent Music Entertainment Group has a 12 month low of $8.78 and a 12 month high of $26.70. The firm’s fifty day simple moving average is $11.69 and its 200 day simple moving average is $16.33. The company has a current ratio of 2.22, a quick ratio of 2.22 and a debt-to-equity ratio of 0.04.
Tencent Music Entertainment Group Increases Dividend The firm also recently declared an annual dividend, which was paid on Thursday, April 23rd. Shareholders of record on Thursday, April 2nd were paid a $0.24 dividend. This represents a yield of 262.0%. The ex-dividend date was Thursday, April 2nd. This is an increase from Tencent Music Entertainment Group’s previous annual dividend of $0.18. Tencent Music Entertainment Group’s dividend payout ratio (DPR) is presently 23.23%.
Institutional Investors Weigh In On Tencent Music Entertainment Group Several hedge funds and other institutional investors have recently added to or reduced their stakes in TME. Robeco Institutional Asset Management B.V. increased its stake in shares of Tencent Music Entertainment Group by 7.3% during the 4th quarter. Robeco Institutional Asset Management B.V. now owns 5,706,740 shares of the company’s stock worth $100,039,000 after purchasing an additional 387,109 shares during the last quarter. SG Americas Securities LLC increased its stake in shares of Tencent Music Entertainment Group by 85.7% during the 4th quarter. SG Americas Securities LLC now owns 542,198 shares of the company’s stock worth $9,505,000 after purchasing an additional 250,261 shares during the last quarter. Green Court Capital Management Ltd increased its stake in shares of Tencent Music Entertainment Group by 93.1% during the 3rd quarter. Green Court Capital Management Ltd now owns 1,039,078 shares of the company’s stock worth $24,252,000 after purchasing an additional 501,078 shares during the last quarter. Campbell & CO Investment Adviser LLC acquired a new position in shares of Tencent Music Entertainment Group during the 3rd quarter worth about $4,257,000. Finally, Zurcher Kantonalbank Zurich Cantonalbank increased its stake in shares of Tencent Music Entertainment Group by 414.3% during the 4th quarter. Zurcher Kantonalbank Zurich Cantonalbank now owns 1,130,608 shares of the company’s stock worth $19,820,000 after purchasing an additional 910,767 shares during the last quarter. 24.32% of the stock is currently owned by institutional investors and hedge funds.
About Tencent Music Entertainment Group (Get Free Report)
Tencent Music Entertainment Group (NYSE: TME) is a China-based digital music and audio entertainment platform that operates a portfolio of leading music streaming and social entertainment services. Its core consumer-facing products include streaming apps, online karaoke (KTV) services and live music and entertainment broadcasts. The company monetizes its content through a mix of subscriptions, digital music sales, in-app purchases, virtual gifting, advertising and licensing arrangements with rights holders.
The company traces its roots to the consolidation of Tencent’s music assets and was established in the mid-2010s to unify several prominent music properties under a single operating entity.
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, /PRNewswire/ -- Tencent Music Entertainment Group ("TME," or the "Company") (NYSE: TME and HKEX: 1698), the leading online music and audio entertainment platform in China, today announced its unaudited financial results for the first quarter ended March 31, 2026.
First Quarter 2026 Financial Highlights
Total revenues were RMB7.90 billion (US$1.15 billion), representing a 7.3% year-over-year increase, primarily due to strong growth in revenues from music related services[1]. Revenues from music related services[1] were RMB6.51 billion (US$944 million), representing 12.2% year-over-year growth. Revenues from membership services[2] were RMB4.57 billion (US$662 million), representing 6.6% year-over-year growth. Revenues from music related services other than membership services were RMB1.94 billion (US$282 million), representing 28.0% year-over-year growth. On an IFRS basis: Net profit attributable to equity holders of the Company was RMB2.09 billion (US$303 million), compared with RMB4.29 billion in the same period of 2025, as the Company has recognized a gain of RMB2.37 billion on deemed disposal of an associate in the first quarter of 2025. Diluted earnings per ADS was RMB1.34 (US$0.19), compared with RMB2.77 in the same period of 2025. On a non-IFRS basis: Adjusted EBITDA[3] was RMB2.83 billion (US$410 million), representing 10.5% year-over-year growth. Non-IFRS net profit attributable to equity holders of the Company[3] was RMB2.27 billion (US$330 million), representing 7.0% year-over-year growth. Non-IFRS diluted earnings per ADS was RMB1.46 (US$0.21), up from RMB1.37 in the same period of 2025. Total cash, cash equivalents, term deposits and short-term investments as of March 31, 2026 were RMB41.00 billion (US$5.94 billion). Mr. Cussion Pang, Executive Chairman of TME, commented, "This quarter's steady results reflect the effectiveness of our holistic approach to the music ecosystem. By expanding how we serve and engage our audience, we have built a more diversified and resilient model, supported by continued strong growth beyond membership services in our music related business. While AI is broadening participation in content creation, it does not replace human creativity and, in many ways, reinforces the scarcity and intrinsic value of premium IP—which remains central to deeper engagement and greater wallet share. Rooted in strong copyright protection, we are committed to channeling this value to elevate the creative economy, unlock new opportunities across the music industry, and drive enduring long-term value."
Mr. Ross Liang, CEO of TME, continued, "As we operate in an increasingly competitive landscape, we remain focused on strengthening the resilience of our platform. Anchored by our content-and-platform dual engine, we continue to bolster differentiation, drive engagement, and expand user lifetime value. Leveraging Tencent's ecosystem, we are broadening user reach and deepening penetration, while advancing a tiered subscription strategy to better address diverse user needs. During the quarter, we delivered continued improvement in SVIP adoption and user engagement. Together, these initiatives position us to compete effectively while driving scalable growth and durable monetization over time."
First Quarter 2026 Operational Highlights
CONTENT – To unlock long-term value, we continued to invest in premium IP to drive differentiation and engagement, while leveraging AI to enrich content creation and improve efficiency.
Strengthened our premium evergreen catalog by renewing key label partnerships, including JVR Music, Linfair Records, and MOK-A-BYE BABY MUSIC LTD., securing access to iconic artists such as Jay Chou, Karen Mok, Harlem Yu, and Angela Zhang[4]. We also deepened our strategic partnership with TF Entertainment through 30-day early release windows and expanded physical collaboration, reinforcing our content leadership and competitive differentiation. Captured more user mindshare with our proprietary content. High-impact releases—including Zhou Shen's chart-topping theme song for Sony Pictures' Project Hail Mary—collectively drove incremental streams across our self-produced catalog and further enhanced its visibility. Harnessed AI to enhance production efficiency and revitalize classic IP. Our AI tools empower creators by lowering production barriers and accelerating workflows, effectively increasing content supply, with AI-generated songs accounting for a growing share of daily new releases. High-quality, authorized AI covers reintroduce classic works to new audiences and drive incremental engagement with original tracks. PLATFORM – Sustained our user base through a multi-pronged approach and advanced a multi-tiered monetization strategy, including new offerings to capture demand for super-premium music experiences.
Recently stepped up collaboration with the Tencent's Weixin Video Account to create a seamless funnel that converts casual background music (BGM) discovery into high-quality music streaming, enabling us to strengthen user base and drive incremental traffic. To better engage casual listeners, we diversified touchpoints across the platform. Combined with AI-driven recommendations with interactive features, these initiatives encourage users to favorite tracks and curate playlists, fostering the accumulation of personal music assets. SVIP membership continued to see solid adoption and engagement. To enhance its appeal, we appointed major artists such as Ryan Ding, Ju Jingyi, Liu Yuning, JC-T, and Karry Wang as ambassadors for a variety of collaborations. We also introduced tailored collections for leading K-pop artists such as BLACKPINK, EXO, and IVE, combining digital albums with physical collectibles including NFC cards. To meet demand for super-premium experiences, we launched our inaugural Fan Club membership with Silence Wang, integrating priority ticketing and exclusive merchandise to further enrich the fan experience. IP-VALUE – Adopted a holistic, pan-IP approach to amplify music influence, simultaneously boosting user reach, engagement, and wallet share.
Extended the IP value chain and unlocked commercial value through innovative virtual and physical offerings. A prime example is our strengthened partnership with Jay Chou for his digital album, Children of the Sun where combined digital and physical benefits drove strong engagement and generated over RMB100 million in sales. Achieved triple-digit year-over-year growth in revenues related to live performance while growing our IP's global footprint. We hosted flagship concerts with leading K-pop groups, including BABYMONSTER's concerts in Taiwan, China, and NCT WISH's concerts in Hong Kong, China, and elevated strategic artists such as Will Pan, Silence Wang, Tia Ray, Angela Zhang, Jane Zhang, Zhang Yuan, and GAI onto prominent domestic and international stages, enhancing their global reach and commercial value. First Quarter 2026 Financial Review
Total revenues increased by RMB539 million, or 7.3%, to RMB7.90 billion (US$1.15 billion) from RMB7.36 billion in the same period of 2025.
Revenues from music related services increased by 12.2% to RMB6.51 billion (US$944 million), compared with RMB5.80 billion in the same period of 2025. The increase was driven by solid growth in revenues from membership services and offline performances related services, supplemented by growth in revenues from advertising services. Revenues from membership services were RMB4.57 billion (US$662 million), representing 6.6% year-over-year growth, compared with RMB4.28 billion in the same period of 2025. The growth was mainly driven by our continuous expansion of SVIP membership privileges, such as early access to offline performances and artist-related merchandise, and the launch of other new membership programs, such as bubble, WeverseDM, and fan-club membership. Revenues from offline performances related services achieved robust year-over-year growth. We successfully staged several successful concerts for our strategically collaborated local and Korean artists across domestic and overseas markets. The year-over-year increase in revenues from advertising services was primarily due to our more diversified product portfolio and innovative ad formats, such as ad-supported mode. Revenues from social entertainment services and others decreased by 11.0% to RMB1.38 billion (US$200 million) from RMB1.55 billion in the same period of 2025. Cost of revenues increased by 5.7% year-over-year to RMB4.35 billion (US$630 million), mainly due to increased costs related to offline performances, advertising services and other IP related services. Meanwhile, revenue sharing fees decreased, resulting from declines in both revenue sharing ratio and revenues from social entertainment services.
Gross margin increased to 44.9% from 44.1% in the same period of 2025, primarily due to increase in revenues from membership services, along with decreased channel fee.
Total operating expenses increased by 5.9% year-over-year to RMB1.21 billion (US$176 million). Operating expenses as a percentage of total revenues decreased to 15.3% from 15.5% in the same period of 2025.
Selling and marketing expenses were RMB271 million (US$39 million), representing a 36.2% year-over-year increase. The increase was primarily due to higher channel spending and content promotion expenses. General and administrative expenses were RMB940 million (US$136 million), and remained relatively stable compared with the same period of 2025. On an IFRS basis, net profit and net profit attributable to equity holders of the Company for the first quarter of 2026 were RMB2.14 billion (US$310 million) and RMB2.09 billion (US$303 million), respectively. Basic and diluted earnings per American Depositary Shares ("ADS") for the first quarter of 2026 were RMB1.36 (US$0.20) and RMB1.34 (US$0.19), respectively. The Company had weighted averages of 1.54 billion basic and 1.56 billion diluted ADSs outstanding, respectively. Each ADS represents two of the Company's Class A ordinary shares.
On a non-IFRS basis, adjusted EBITDA for the first quarter of 2026 were RMB2.83 billion (US$410 million). Non-IFRS net profit was RMB2.33 billion (US$338 million) and non-IFRS net profit attributable to equity holders of the Company was RMB2.27 billion (US$330 million). Non-IFRS basic and diluted earnings per ADS were RMB1.48 (US$0.21) and RMB1.46 (US$0.21), respectively. Please refer to the section in this press release titled "Non-IFRS Financial Measures" for details.
As of March 31, 2026, the combined balance of the Company's cash, cash equivalents, term deposits and short-term investments amounted to RMB41.00 billion (US$5.94 billion), compared with RMB38.04 billion as of December 31, 2025.
Declaration and Payment of 2025 Dividend
On March 17, 2026, the Company's board of directors declared a cash dividend of US$0.12 per ordinary share, or US$0.24 per ADS, for the year ended December 31, 2025, to holders of record of ordinary shares and ADSs as of the close of business on April 2, 2026. The payment for the cash dividend of US$370 million was made in April 2026.
Environmental, Social, and Governance ("ESG")
On April 20, 2026, we released our 2025 ESG Report, detailing our progress in empowering creators, promoting digital inclusion, and driving sustainability across our value chain. These initiatives have strengthened our ecosystem's resilience, leading to improved ESG ratings and broader recognition from our stakeholders.
Exchange Rate
This announcement contains translations of certain RMB amounts into U.S. dollars ("USD") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.8980 to US$1.00, the noon buying rate in effect on March 31, 2026, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.
Non-IFRS Financial Measures
The Company uses non-IFRS financial measures for the period, including non-IFRS net profit, adjusted EBITDA(inc.SBC) and adjusted EBITDA, in evaluating its operating results and for financial and operational decision-making purposes. TME believes that non-IFRS financial measures help identify underlying trends in the Company's business that could otherwise be distorted by the effect of certain expenses that the Company includes in its profit for the period. TME believes that non-IFRS financial measures for the period provide useful information about its results of operations, enhances the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.
Non-IFRS financial measures for the period should not be considered in isolation or construed as an alternative to operating profit, net profit for the period or any other measure of performance or as an indicator of its operating performance. Investors are encouraged to review non-IFRS financial measures for the period and the reconciliation to its most directly comparable IFRS measure. Non-IFRS financial measures for the period presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data. TME encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.
Adjusted EBITDA(inc.SBC) for the period represents net profit for the period excluding income tax expense, finance cost, share of profit/loss of associates and joint ventures, other gains/losses, interest income, depreciation of property, plant and equipment and right-of-use assets, and amortization of intangible assets.
Adjusted EBITDA for the period represents net profit for the period excluding income tax expense, finance cost, share of profit/loss of associates and joint ventures, other gains/losses, interest income, depreciation of property, plant and equipment and right-of-use assets, amortization of intangible assets, and share-based compensation expenses.
Non-IFRS net profit for the period represents profit for the period excluding amortization of intangible and other assets arising from business acquisitions or combinations, share-based compensation expenses, net losses/gains from investments and related income tax effects.
Please see the "Unaudited Non-IFRS Financial Measures" included in this press release for a full reconciliation of adjusted EBITDA(inc.SBC), adjusted EBITDA and non-IFRS net profit for the period to its net profit for the period.
[1] Starting from the first quarter of 2026, "online music services" has been renamed to "music related services" to better reflect the nature of our businesses included in this business line. Such change does not affect the amounts of our historical revenue or its accounting treatment.
[2] As part of music related services, membership services primarily consist of membership fees paid for membership benefits and privileges, including access to music and audio content, and other benefits and privileges within music related services. Revenues from membership services for each quarter of 2025 were RMB4,284 million, RMB4,434 million, RMB4,564 million and RMB4,625 million, respectively.
[3] See the sections entitled "Non-IFRS Financial Measures" and "Unaudited Non-IFRS Financial Measures" for more information about the non-IFRS measures referred to within this announcement.
[4] Names grouped by artists and bands, sorted in alphabetical order by family names.
About Tencent Music Entertainment
Tencent Music Entertainment Group (NYSE: TME and HKEX: 1698) is the leading online music and audio entertainment platform in China, operating the country's highly popular and innovative music apps: QQ Music, Kugou Music, Kuwo Music and WeSing. TME's mission is to create endless possibilities with music and technology. TME's platform comprises online music, online audio, online karaoke, music-centric live streaming and online concert services, enabling music fans to discover, listen, sing, watch, perform and socialize around music. For more information, please visit ir.tencentmusic.com.
Safe Harbor Statement
This press release contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as "may," "will," "expect," "anticipate," "target," "aim," "estimate," "intend," "plan," "believe," "potential," "continue," "is/are likely to" or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the SEC and the HKEX. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.
Investor Relations Contact
Tencent Music Entertainment Group
[email protected]
+86 (755) 8601-3388 ext. 885034
TENCENT MUSIC ENTERTAINMENT GROUP
CONSOLIDATED INCOME STATEMENTS
Three Months Ended March 31
2025
2026
RMB
RMB
US$
Unaudited
Unaudited
Unaudited
(in millions, except per share data)
Revenues
Music related services*
5,804
6,514
944
Social entertainment services and others
1,552
1,381
200
7,356
7,895
1,145
Cost of revenues
(4,114)
(4,349)
(630)
Gross profit
3,242
3,546
514
Selling and marketing expenses
(199)
(271)
(39)
General and administrative expenses
(944)
(940)
(136)
Total operating expenses
(1,143)
(1,211)
(176)
Interest income
297
246
36
Other gains, net
2,440
66
10
Operating profit
4,836
2,647
384
Share of net profit/(loss) of investments accounted
for using equity method
23
(7)
(1)
Finance cost
(25)
(46)
(7)
Profit before income tax
4,834
2,594
376
Income tax expense
(446)
(457)
(66)
Profit for the period
4,388
2,137
310
Attributable to:
Equity holders of the Company
4,291
2,091
303
Non-controlling interests
97
46
7
Earnings per share for Class A and Class B
ordinary shares
Basic
1.40
0.68
0.10
Diluted
1.39
0.67
0.10
Earnings per ADS (2 Class A shares equal to 1 ADS)
Basic
2.81
1.36
0.20
Diluted
2.77
1.34
0.19
Shares used in earnings per Class A and Class B
ordinary share computation:
Basic
3,054,522,173
3,081,340,243
3,081,340,243
Diluted
3,093,008,542
3,111,369,968
3,111,369,968
ADS used in earnings per ADS computation
Basic
1,527,261,087
1,540,670,122
1,540,670,122
Diluted
1,546,504,271
1,555,684,984
1,555,684,984
* Starting from the first quarter of 2026, "online music services" has been renamed to "music related services" to better
reflect the nature of our businesses included in this business line. Such change does not affect the amounts of our historical
revenue or its accounting treatment.
TENCENT MUSIC ENTERTAINMENT GROUP
UNAUDITED NON-IFRS FINANCIAL MEASURES
Three Months Ended March 31
2025
2026
RMB
RMB
US$
Unaudited
Unaudited
Unaudited
(in millions, except per share data)
Profit for the period
4,388
2,137
310
Adjustments:
Income tax expense
446
457
66
Finance cost
25
46
7
Share of net (profit)/loss of investments accounted for
using equity method
(23)
7
1
Operating profit
4,836
2,647
384
Other gains, net
(2,440)
(66)
(10)
Interest income
(297)
(246)
(36)
Depreciation of property, plant and equipment and
right-of-use assets
38
35
5
Amortisation of intangible assets
275
298
43
Adjusted EBITDA(inc. SBC)
2,412
2,668
387
Share-based compensation
150
163
24
Adjusted EBITDA
2,562
2,831
410
Profit for the period
4,388
2,137
310
Adjustments:
Amortization of intangible and other assets arising from
business acquisitions or combinations*
105
89
13
Share-based compensation
161
163
24
Gains from investments**
(2,375)
(2)
-
Income tax effects***
(53)
(54)
(8)
Non-IFRS Net Profit
2,226
2,333
338
Attributable to:
Equity holders of the Company
2,124
2,273
330
Non-controlling interests
102
60
9
Earnings per share for Class A and Class B
ordinary shares
Basic
0.70
0.74
0.11
Diluted
0.69
0.73
0.11
Earnings per ADS (2 Class A shares equal to 1 ADS)
Basic
1.39
1.48
0.21
Diluted
1.37
1.46
0.21
Shares used in earnings per Class A and Class B
ordinary share computation:
Basic
3,054,522,173
3,081,340,243
3,081,340,243
Diluted
3,093,008,542
3,111,369,968
3,111,369,968
ADS used in earnings per ADS computation
Basic
1,527,261,087
1,540,670,122
1,540,670,122
Diluted
1,546,504,271
1,555,684,984
1,555,684,984
* Represents the amortization of identifiable assets, including intangible assets such as domain name, trademark, copyrights,
supplier resources, corporate customer relationships and non-compete agreement etc., and fair value adjustment on music content
(i.e., signed contracts obtained for the rights to access to the music contents for which the amount was amortized over the
contract period), resulting from business acquisitions or combination.
** Including the net gains/losses on deemed disposals/disposals of investments, fair value changes arising from investments,
impairment provision of investments and other expenses in relation to equity transactions of investments.
*** Represents the income tax effects of Non-IFRS adjustments.
TENCENT MUSIC ENTERTAINMENT GROUP
CONSOLIDATED BALANCE SHEETS
As at December 31, 2025
As at March 31, 2026
RMB
RMB
US$
Audited
Unaudited
Unaudited
(in millions)
ASSETS
Non-current assets
Property, plant and equipment
1,201
1,301
189
Land use rights
2,290
2,272
329
Right-of-use assets
287
272
39
Intangible assets
2,899
2,770
402
Goodwill
20,521
20,528
2,976
Investments accounted for using equity method
1,659
2,593
376
Financial assets at fair value through other comprehensive income
26,231
19,866
2,880
Other investments
303
299
43
Prepayments, deposits and other assets
365
418
61
Deferred tax assets
498
535
78
Term deposits
13,810
14,330
2,077
70,064
65,184
9,450
Current assets
Inventories
41
48
7
Accounts receivable
3,903
3,825
555
Prepayments, deposits and other assets
4,183
4,036
585
Other investments
83
73
11
Term deposits
15,763
8,254
1,197
Restricted Cash
15
15
2
Cash and cash equivalents
8,470
18,416
2,670
32,458
34,667
5,026
Total assets
102,522
99,851
14,475
EQUITY
Equity attributable to equity holders of the Company
Share capital
2
2
0
Additional paid-in capital
29,919
30,020
4,352
Shares held for share award schemes
(801)
(821)
(119)
Treasury shares
(664)
(664)
(96)
Other reserves
22,450
17,156
2,487
Retained earnings
29,381
28,647
4,153
80,287
74,340
10,777
Non-controlling interests
2,763
2,790
404
Total equity
83,050
77,130
11,182
LIABILITIES
Non-current liabilities
Borrowings
-
1,100
159
Notes payables
3,497
3,443
499
Other payables and other liabilities
379
425
62
Deferred tax liabilities
504
588
85
Lease liabilities
200
188
27
Deferred revenue
303
356
52
4,883
6,100
884
Current liabilities
Accounts payable
6,284
6,176
895
Other payables and other liabilities
3,558
5,460
792
Current tax liabilities
1,092
1,059
154
Lease liabilities
116
111
16
Deferred revenue
3,539
3,815
553
14,589
16,621
2,410
Total liabilities
19,472
22,721
3,294
Total equity and liabilities
102,522
99,851
14,475
TENCENT MUSIC ENTERTAINMENT GROUP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31
2025
2026
RMB
RMB
US$
Unaudited
Unaudited
Unaudited
(in millions)
Net cash provided by operating activities
2,519
2,332
338
Net cash (used in)/provided by investing activities
(3,221)
6,650
964
Net cash (used in)/provided by financing activities
(456)
1,011
147
Net (decrease)/increase in cash and cash equivalents
(1,158)
9,993
1,449
Cash and cash equivalents at beginning of the period
• Tencent Music stock is trading at depressed levels. Where is TME stock headed?.
Analyst Flags Slowing Growth TrendsJiang noted on Wednesday that Tencent Music delivered largely in-line first-quarter 2026 results, with revenue rising 7% year-over-year to 7.9 billion Chinese yuan (~ $1,163,312,920).
Online music services revenue increased 12%, supported mainly by non-subscription businesses, while subscription growth slowed to 8% from 13% in the previous quarter.
She added that non-subscription music revenue climbed 23% year over year due to strong demand for live events, merchandise, and fan-focused offerings, while social entertainment revenue fell 11%.
Adjusted profit per ADS came in at 1.46 Chinese yuan (21 cents), matching consensus estimates.
Jiang Cuts Second-Quarter Revenue OutlookJiang lowered the second-quarter revenue growth forecast to 4% Y/Y from 9% previously, citing mounting industry headwinds and intensifying competition.
She also reduced her subscription growth projection to 3% from 6%, saying changing consumption trends are pressuring customer conversion and retention.
While Jiang remains positive on momentum in concerts and live events, she warned that advertising demand, fan monetization, and IP-related revenue could face near-term pressure.
Jiang added that rapid AI-driven changes in content creation and distribution, along with rising piracy risks, are creating additional uncertainty for Tencent Music's revenue outlook.
Ximalaya Deal Could Support FY26 OutlookJiang said the pending Ximalaya acquisition could help stabilize Tencent Music's 2026 outlook after receiving conditional approval from China's SAMR regulator.
She noted that the deal could add revenue and profit contributions that offset weaker organic growth trends, particularly in subscriptions and advertising.
However, Jiang said she wants clearer visibility into deal execution, financial impact and potential synergies before becoming more constructive on the stock.
TME Price Action: Tencent Music shares were down 1.38% at $8.94 at the time of publication on Wednesday. The stock is trading near its 52-week low of $8.74, according to Benzinga Pro data.
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, /PRNewswire/ -- As the world counts down to the 2026 FIFA World Cup, Coca-Cola ignites the excitement with its brand-new official anthem, "JUMP" – the 2026 FIFA World Cup Coca-Cola Anthem. The song is jointly produced by Tencent Music Entertainment Group (TME) and Coca-Cola. Alongside the global version, a specially adapted Chinese recording has been released, infusing the iconic melody with the soul of traditional Chinese music and unstoppable energy. Performed by Coca-Cola brand ambassador Liu Yuning and global superstar J. Balvin, "JUMP" launched on May 6th across Tencent Music Entertainment's QQ Music, Kugou Music, and Kuwo Music – as well as global streaming giants Spotify, Apple Music, and YouTube Music. This is more than a song: it is a musical tribute that proudly lets the world hear the power and passion of China's voice.
Making history as Coca-Cola's first Chinese-language World Cup anthem in 12 years, "JUMP" reimagines a rock classic by Van Halen. With a dream production team including Steve Vai and Travis Barker, the track shatters creative boundaries – rock solid at its core, yet richly layered with traditional Chinese instrumentation. The pipa dances, the guzheng sings, the Tang drum thunders, and the erhu whispers with ancient depth – all intertwined with blazing electric guitars and pounding drumbeats. Then comes Liu Yuning's fiery, signature rap, injecting a distinctly Chinese spirit of courage and joy into the anthem. The result is a breathtaking fusion where Chinese musical heritage and global rock energy collide in a moment of pure, jubilant celebration.
From a bold reimagining of a classic to a profound cultural fusion, "JUMP" is more than a World Cup anthem – it is a powerful declaration of Chinese voices embracing the world stage with confidence and pride. The FIFA World Cup is the ultimate arena for global connection, and "JUMP" lets fans everywhere feel the depth of Chinese culture and the warmth of China's open heart through every uplifting note. It is Coca-Cola's way of using music to unite the world, capturing the spirit of "cheering, raising a glass, and seizing the moment" – with Chinese voices shining brightly as an essential part of the global celebration.
Coca-Cola endorses cultural exchange and global unity through music. With "JUMP," the brand proudly champions the beauty of China's musical traditions and their place on the world's biggest stage. As stadiums roar and fans jump as one, this anthem – blending raw passion with the elegance of Chinese musical aesthetics – will echo through every unforgettable moment of the 2026 FIFA World Cup, connecting hearts across all borders.
Key Takeaways RS has completed 76 acquisitions since 1994, expanding products and value-added processing.RS repurchased $594.1M worth of shares in 2025, raised its dividend 4.2% and ended 2025 with $216.6M in cash.RS faces headwinds from soft semiconductor and aerospace demand and higher aluminum costs. Reliance, Inc. (RS - Free Report) benefits from growth led by strategic acquisitions, a diversified business and product portfolio, and strong liquidity amid headwinds from weakness in select markets and cost pressures caused by tariffs.
RS’ shares have gained 3.5% in the past year compared with the Zacks Mining – Miscellaneous industry’s 38.6% rise.
Image Source: Zacks Investment Research
Let’s find out why RS stock is worth retaining at the moment.
RS Stock Gains on Acquisitions & Strong LiquidityReliance benefits from a resilient business model serving diverse end markets, strong execution and a sustained push for growth through acquisitions. The company has long pursued an aggressive acquisition strategy as a core driver of operating performance, completing 76 deals since its 1994 IPO, expanding both its product mix and value-added processing capabilities.
The acquisitions of Rotax Metals, Admiral Metals and Nu-Tech Precision Metals align with its strategy of investing in high-quality businesses. The buyout of Southern Steel Supply also expanded the company’s reach in the Southern United States and boosted its value-added processing services.
The buyout of Cooksey Iron & Metal Co boosts Reliance's presence in the fast-growing Southeastern market. The acquisition of American Alloy has expanded Reliance's product portfolio with specialty carbon steel plates as well as new production capabilities. The integration of FerrouSouth’s tolling operations also enhanced its toll processing capabilities and expanded capacity for Feralloy’s existing operations in the Southeastern United States.
Meanwhile, demand for non-residential construction, including infrastructure, Reliance’s largest end market by volume, strengthened in the fourth quarter of 2025 compared with the prior-year quarter. The company expects demand in this sector to remain healthy through the first quarter of 2026, supported by ongoing investment in data centers, manufacturing facilities and public infrastructure projects.
The company’s strong liquidity position also allows it to drive shareholder value. Reliance repurchased approximately 716,000 shares of its common stock during the fourth quarter for $200.1 million. RS also bought back shares worth $594.1 million during 2025.
The company’s board, in February 2026, raised its quarterly dividend by 4.2% to $1.25 per share. RS ended 2025 with cash and cash equivalents of $216.6 million. It generated $831.4 million in cash flow from operations during 2025, aided by prudent working capital management and profitability. RS deployed $1.18 billion of capital toward stockholder returns and organic growth activities last year.
Demand and Cost Headwinds Ail RelianceWhile Reliance is experiencing growth across several key markets, the semiconductor segment remains a weak link. Demand stayed soft in the fourth quarter compared with the prior year, as elevated inventories across the supply chain continued to dampen activity. The company expects these headwinds to carry into the first quarter.
Demand in the commercial aerospace market also remains soft, weighed down by elevated inventory levels across the supply chain. While Reliance expects a gradual recovery in 2026 driven by higher build rates, weakness in this segment is likely to persist through the first quarter.
Reliance also faces challenges from aluminum cost inflation due to tariffs amid an elevated supply and soft demand environment. Higher-than-expected aluminum costs led to last-in, first-out (“LIFO”) expense of $114 million for 2025 compared with the company’s estimate of $100 million, weighing on margins. RS sees LIFO expense of $100 million in 2026, mainly from higher carbon and aluminum product costs.
RS’ Zacks Rank & Key PicksRS currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Basic Materials space include DuPont de Nemours, Inc. (DD - Free Report) , Compass Minerals International, Inc. (CMP - Free Report) and Balchem Corporation (BCPC - Free Report) .
While DD and CMP sport a Zacks Rank #1 (Strong Buy) each at present, BCPC carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for DD’s 2026 earnings is pegged at $2.28 per share, indicating an increase of 35.7% year over year. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise of 6.5%.
The Zacks Consensus Estimate for CMP’s current fiscal year earnings is pinned at 89 cents per share, indicating a 285.4% year-over-year increase. The Zacks Consensus Estimate for CMP’s current fiscal year earnings has been revised 27.1% upward over the past 60 days.
The Zacks Consensus Estimate for BCPC’s 2026 earnings is pinned at $5.47 per share, indicating a 6.2% year-over-year increase. The Zacks Consensus Estimate for BCPC’s 2026 earnings has been revised 1.1% upward over the past 60 days.
SG Americas Securities LLC lessened its holdings in shares of Reliance, Inc. (NYSE:RS – Free Report) by 73.2% during the fourth quarter, according to the company in its most recent filing with the Securities and Exchange Commission (SEC). The firm owned 5,010 shares of the industrial products company’s stock after selling 13,690 shares during the period. SG Americas Securities LLC’s holdings in Reliance were worth $1,447,000 at the end of the most recent reporting period.
A number of other hedge funds and other institutional investors have also bought and sold shares of RS. Elevation Wealth Partners LLC purchased a new position in shares of Reliance during the fourth quarter valued at approximately $28,000. Quarry LP bought a new position in shares of Reliance during the third quarter valued at approximately $32,000. Guerra Advisors Inc purchased a new stake in Reliance in the third quarter worth $34,000. Root Financial Partners LLC bought a new stake in Reliance in the third quarter valued at $38,000. Finally, Advisory Services Network LLC bought a new stake in Reliance in the third quarter valued at $39,000. Institutional investors own 79.26% of the company’s stock.
Insider Activity at Reliance In other news, COO Stephen Paul Koch sold 24,060 shares of Reliance stock in a transaction that occurred on Monday, February 23rd. The shares were sold at an average price of $321.62, for a total transaction of $7,738,177.20. Following the completion of the transaction, the chief operating officer directly owned 14,021 shares in the company, valued at approximately $4,509,434.02. This trade represents a 63.18% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through the SEC website. Also, SVP William A. Smith II sold 6,615 shares of the company’s stock in a transaction that occurred on Monday, March 9th. The stock was sold at an average price of $298.61, for a total value of $1,975,305.15. Following the completion of the sale, the senior vice president owned 21,747 shares in the company, valued at $6,493,871.67. The trade was a 23.32% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. 0.35% of the stock is currently owned by company insiders.
Reliance Stock Performance Shares of Reliance stock opened at $306.37 on Tuesday. Reliance, Inc. has a 12 month low of $250.07 and a 12 month high of $365.59. The firm has a market capitalization of $15.85 billion, a P/E ratio of 21.93, a P/E/G ratio of 1.15 and a beta of 0.88. The company has a current ratio of 4.88, a quick ratio of 2.30 and a debt-to-equity ratio of 0.20. The business has a fifty day simple moving average of $318.27 and a two-hundred day simple moving average of $298.24.
Reliance (NYSE:RS – Get Free Report) last issued its quarterly earnings results on Wednesday, February 18th. The industrial products company reported $2.40 earnings per share (EPS) for the quarter, missing the consensus estimate of $2.80 by ($0.40). Reliance had a return on equity of 10.45% and a net margin of 5.17%.The business had revenue of $3.50 billion during the quarter, compared to the consensus estimate of $3.45 billion. During the same quarter in the previous year, the business earned $2.22 earnings per share. The firm’s revenue was up 11.9% compared to the same quarter last year. Reliance has set its Q1 2026 guidance at 4.500-4.70 EPS. On average, equities analysts forecast that Reliance, Inc. will post 16.98 earnings per share for the current fiscal year.
Reliance Increases Dividend The firm also recently announced a quarterly dividend, which was paid on Friday, March 20th. Shareholders of record on Friday, March 6th were paid a dividend of $1.25 per share. This is a positive change from Reliance’s previous quarterly dividend of $1.20. This represents a $5.00 dividend on an annualized basis and a dividend yield of 1.6%. The ex-dividend date of this dividend was Friday, March 6th. Reliance’s payout ratio is 35.79%.
Analysts Set New Price Targets RS has been the subject of several research reports. Zacks Research upgraded shares of Reliance from a “strong sell” rating to a “hold” rating in a report on Tuesday, February 3rd. BMO Capital Markets lowered shares of Reliance from an “outperform” rating to a “market perform” rating and cut their target price for the company from $340.00 to $320.00 in a research note on Friday, February 20th. Wall Street Zen downgraded shares of Reliance from a “buy” rating to a “hold” rating in a research note on Sunday, March 1st. Wells Fargo & Company raised their price objective on shares of Reliance from $315.00 to $323.00 and gave the stock an “equal weight” rating in a report on Monday, March 2nd. Finally, KeyCorp assumed coverage on Reliance in a research report on Wednesday, March 25th. They set an “overweight” rating and a $341.00 price objective on the stock. One investment analyst has rated the stock with a Buy rating and six have issued a Hold rating to the stock. Based on data from MarketBeat, Reliance presently has a consensus rating of “Hold” and a consensus price target of $322.80.
Check Out Our Latest Report on Reliance
Reliance Profile (Free Report)
Reliance Steel & Aluminum Co (NYSE: RS) is a leading metals service center company that distributes and processes a broad array of metal products. The company offers cut-to-length, shearing, blanking, sawing, bending, machining and value-added services for carbon and alloy steel, stainless steel, aluminum, brass, titanium and specialty metal alloys. Its products serve diverse end markets, including energy, infrastructure, general manufacturing, transportation, aerospace and defense.
Founded in 1939 in Los Angeles, Reliance Steel & Aluminum has grown through a combination of organic expansion and strategic acquisitions.
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PHOENIX, April 08, 2026 (GLOBE NEWSWIRE) -- Reliance, Inc. (NYSE:RS) announced today that it will report first quarter 2026 financial results for the period ended March 31, 2026, on Wednesday, April 22, 2026, after the market closes. Reliance management will host a conference call on Thursday, April 23, 2026, at 11:00 a.m. Eastern Time. The call will be broadcast live over the Internet hosted on the Investors section of the Company's website at reliance.com.
Reliance, Inc. First Quarter 2026 Conference Call Details
DATE: Thursday, April 23, 2026 TIME: 8:00 a.m. Pacific Time
10:00 a.m. Central Time
11:00 a.m. Eastern Time DIAL-IN: (877) 407-0792 (U.S. and Canada)
(201) 689-8263 (International) CONFERENCE ID: 13759369 WEBCAST: https://viavid.webcasts.com/starthere.jsp?ei=1756570&tp_key=f18bbb31dc For those unable to participate during the live broadcast, a replay of the call will also be available beginning that same day at 2:00 p.m. Eastern Time until 11:59 p.m. Eastern Time on May 7, 2026, by dialing (844) 512-2921 (U.S. and Canada) or (412) 317-6671 (International) and entering the conference ID: 13759369. The webcast will remain posted on the Investors section of Reliance’s website at reliance.com for 90 days.
About Reliance, Inc.
Founded in 1939, Reliance, Inc. (NYSE: RS) is a leading global diversified metal solutions provider and the largest metals service center company in North America. Through a network of approximately 310 locations in 41 states and 10 countries outside of the United States, Reliance provides value-added metals processing services and distributes a full-line of over 100,000 metal products to more than 125,000 customers in a broad range of industries. Reliance focuses on small orders with quick turnaround and value-added processing services. In 2025, Reliance’s average order size was $3,120, approximately 49% of orders included value-added processing, and approximately 40% of orders were delivered within 24 hours. Reliance’s press releases and additional information are available on the Company’s website at reliance.com.
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Net sales of $4 billion, with record tons sold up 9.4% sequentially, exceeding expectations EPS of $5.10; non-GAAP EPS of $5.16, up 37% year-over-year also exceeding expectationsPretax income of $349.5 million, up 33% year-over-yearRepurchased $234.2 million of common stock PHOENIX, April 22, 2026 (GLOBE NEWSWIRE) -- Reliance, Inc. (NYSE: RS) (‘Reliance,’ the ‘Company,’ ‘we,' ‘our,' or ‘us’) today reported its financial results for the first quarter ended March 31, 2026.
(in millions, except tons sold in thousands, per ton and per share amounts)
Sequential Quarter Year-Over-Year Q1 2026
Q4 2025
% Change Q1 2025
% Change Income Statement Data: Net sales$4,026.0 $3,498.6 15.1% $3,484.7 15.5% Gross profit1$1,171.9 $954.7 22.8% $1,033.3 13.4% Gross profit margin1 29.1% 27.3% 1.8% 29.7% (0.6%)Non-GAAP gross profit margin1,2 29.1% 27.4% 1.7% 29.7% (0.6%)Non-GAAP gross profit margin – FIFO1,2 30.1% 28.5% 1.6% 30.4% (0.3%)LIFO expense$37.5 $38.7 $25.0 LIFO expense as a % of net sales 0.9% 1.1% (0.2%) 0.7% 0.2% LIFO expense per diluted share, net of tax$0.54 $0.56 $0.35 Non-GAAP pretax expense adjustments2$4.3 $12.1 $2.3 Pretax income$349.5 $154.8 125.8% $262.4 33.2% Non-GAAP pretax income2$353.8 $166.9 112.0% $264.7 33.7% Non-GAAP pretax income – FIFO2$391.3 $205.6 90.3% $289.7 35.1% Pretax income margin 8.7% 4.4% 4.3% 7.5% 1.2% Non-GAAP pretax income margin2 8.8% 4.8% 4.0% 7.6% 1.2% Non-GAAP pretax income margin – FIFO2 9.7% 5.9% 3.8% 8.3% 1.4% Net income – Reliance$264.9 $116.5 127.4% $199.7 32.6% Diluted EPS$5.10 $2.22 129.7% $3.74 36.4% Non-GAAP diluted EPS2$5.16 $2.40 115.0% $3.77 36.9% Non-GAAP diluted EPS – FIFO2$5.70 $2.96 92.6% $4.12 38.3% Balance Sheet and Cash Flow Data: Cash provided by operations$151.4 $276.1 (45.2%) $64.5 134.7% Free cash flow2$87.2 $202.9 (57.0%) $(22.4) Net debt-to-total capital2 16.9% 14.4% 14.4% Net debt-to-EBITDA2 1.0x 0.9x 0.9x Total debt-to-EBITDA2 1.2x 1.1x 1.1x Capital Allocation Data: Capital expenditures$64.2 $73.2 $86.9 Dividends$66.6 $63.5 $65.2 Share repurchases$234.2 $200.1 $253.2 Key Business Metrics: Tons sold 1,672.7 1,528.7 9.4% 1,628.9 2.7% Average selling price per ton sold$2,414 $2,292 5.3% $2,143 12.6% Please refer to the footnotes at the end of this press release for additional information.
Management Commentary
“Reliance is off to a strong start to 2026, capitalizing on favorable market fundamentals with first quarter volumes, pricing and earnings exceeding our expectations. Strong pricing and demand momentum continued to build throughout the quarter across our diversified product and end market portfolio,” said Karla Lewis, President and Chief Executive Officer of Reliance. “Our teams executed exceptionally well, converting increased shipments and higher prices into outsized earnings contributions, driving year-over-year growth of 37% in non-GAAP earnings per share of $5.16 on a 15% increase in sales. These results demonstrate the strength of our opportunistic and flexible operating model and continued execution of our smart, profitable growth strategy.”
“As previously announced, we also secured two significant government contracts in the first quarter to supply the border wall and Joint Strike Fighter projects through our AMI Metals, Inc. (“AMI”) subsidiary, further reinforcing Reliance’s role as a trusted partner on critical U.S. infrastructure and defense programs. These wins illustrate our ability to support large and complex projects by leveraging the scale, logistics capabilities, processing expertise, deep supply‑chain relationships and existing operating infrastructure of the Reliance Family of Companies. Our diversified platform allows us to concurrently meet the needs of large program partners as well as small-order, quick-turn customers.”
Mrs. Lewis concluded, “Our strong balance sheet and liquidity position remain key competitive advantages, affording us the flexibility to continue to concurrently invest in our business, pursue strategic acquisitions, and return capital to our stockholders while maintaining our disciplined approach to capital deployment. We are encouraged by rising customer optimism and activity across our broad end market exposure, with continued strong and growing momentum in the infrastructure, data center, energy, and defense sectors. Extending lead times at our mill suppliers also bode well for a continued strong pricing environment, where access to metal becomes a strategic advantage. Reliance’s unique scale, diverse portfolio, financial strength, domestic mill relationships and expanding services to support our customers, along with our focus on execution, position us exceptionally well to further capitalize on the opportunities ahead in 2026.”
First Quarter 2026 Financial Highlights
Earnings per share were $5.10; non‑GAAP earnings per diluted share were $5.16, above management’s guidance of $4.50 to $4.70 and up 37% year-over-year. Results included approximately $0.54 per share of LIFO expense compared to management’s expectation of $0.36 per share, representing an incremental $0.18 impact, primarily due to higher-than-anticipated carbon steel and aluminum product cost increases.
Record quarterly tons sold increased 2.7% year-over-year and 9.4% sequentially, exceeding management’s expectation for a 5% to 7% increase. Reliance’s first quarter year-over-year growth in tons sold outperformed the industry-wide decrease of 5.1% reported by the Metals Service Center Institute (“MSCI”) by nearly 8 percentage points. Reliance has now outperformed the MSCI’s quarterly year-over-year shipment results for 13 consecutive quarters.
Average selling price per ton sold increased 5.3% sequentially, also surpassing management’s expectation of a 3% to 5% increase, supported by higher carbon steel, aluminum and stainless steel pricing.
Gross profit margin of 29.1% increased 180 basis points sequentially and decreased 60 basis points from 29.7% in the prior-year quarter. Non‑GAAP FIFO gross profit margin, which excludes LIFO adjustments and represents management’s ongoing assessment of operating performance, increased sequentially to 30.1% from 28.5% in the fourth quarter of 2025 and was slightly lower than 30.4% in the prior-year quarter, which benefited from rapid and significant price increases consequent to new Section 232 tariffs. While gross profit margins for certain products such as aluminum have been impacted by elevated tariffs, Reliance is realizing higher gross profit per ton across the majority of its product categories.
Growth in shipments and gross profit dollars per ton, supported by continued market share gains, provided operating leverage and improved earnings conversion, driving pretax income of $349.5 million, an increase of 33% year-over-year.
End Market Commentary
Non-residential construction demand (including infrastructure), representing Reliance’s largest end market by tons, improved from the first quarter of 2025. The Company expects non-residential construction demand to remain healthy in the second quarter of 2026, supported by strong activity across data centers, energy infrastructure, and public infrastructure.
Demand across the broader manufacturing end market Reliance serves improved compared to the first quarter of 2025, primarily due to growth in the industrial machinery, shipbuilding, military, consumer products and construction machinery sectors. Reliance anticipates that demand for its products across the broader manufacturing sector will remain healthy in the second quarter of 2026.
Demand in aerospace improved compared to the first quarter of 2025. Reliance anticipates commercial aerospace demand to remain steady in the second quarter of 2026 with build-rate increases supporting improvement throughout the year. Demand in the defense and space related portions of Reliance’s aerospace business is expected to remain robust in the second quarter of 2026.
Demand for the toll processing services Reliance provides to the automotive market was stable compared to the first quarter of 2025. The Company expects demand for automotive toll processing to remain relatively steady at healthy levels in the second quarter of 2026. Reliance’s toll processing operations remain flexible and able to quickly adapt to the variable demands of the automotive market.
Demand for certain products Reliance sells into the semiconductor market improved compared to the first quarter of 2025. The Company anticipates stable to improving demand for its semiconductor products in the second quarter of 2026.
Balance Sheet, Cash Flow and Stockholder Returns
As of March 31, 2026, Reliance had $249.7 million of cash and cash equivalents and total debt of $1.7 billion, including $550 million outstanding under its $1.5 billion revolving credit facility. The Company generated $151.4 million of cash flow from operations in the first quarter of 2026, reflecting a typical seasonal working capital increase related to strong shipment volume and higher metals pricing.
The Company returned approximately $301 million to stockholders in the first quarter of 2026 through dividend payments of $67 million and $234 million of share repurchases, at an average price of approximately $299 per share. Reliance’s share repurchase activity reduced outstanding common shares by 3% year-over-year. Since 2021, Reliance has repurchased $3.4 billion of its common stock at an average price of approximately $234 per share, reducing outstanding common shares by 22%.
On February 17, 2026, Reliance increased its regular quarterly dividend by 4.2% to $1.25 per share of common stock (annualized rate of $5.00 per share), marking the 33rd dividend increase since the Company’s 1994 IPO. On April 17, 2026, the Board of Directors declared a quarterly cash dividend of $1.25 per share of common stock, payable on June 5, 2026 to stockholders of record as of May 22, 2026.
Recent Government Contract Awards
As previously announced in March 2026, Reliance’s wholly owned subsidiary, AMI was awarded two significant U.S. government infrastructure and defense contracts that further strengthen the Company’s position as a trusted partner on large‑scale, complex government infrastructure and defense projects.
AMI was awarded a multi-year contract by the U.S. Department of Homeland Security (“DHS”) with a total maximum estimated value of up to $2.24 billion to provide steel and steel logistics support services for the construction of the border wall along the Southwest U.S. border. Phase 1 of the project, during which Reliance estimates sales of approximately $1.4 billion, commenced in April 2026 and is expected to continue through mid-2027.AMI also won a five‑year indefinite delivery/indefinite quantity (IDIQ) contract to supply processed aluminum plate in support of the Joint Strike Fighter defense platforms, including the F‑35 Lightning II. The contract, which is effective from January 2027 through December 2028, renews AMI’s existing contract and provides for up to three one-year renewal periods. The agreement has a maximum estimated value of $654 million and includes an approximate 10% increase in average volumes from previous targets. These awards highlight Reliance’s scale, logistics capabilities, and processing expertise across both carbon steel and aluminum, and reinforce the Company’s long‑standing relationships with domestic mills and major defense customers.
Business Outlook
Reliance anticipates both demand and pricing in the second quarter of 2026 will remain generally consistent at healthy levels across the key products and end markets it serves, despite ongoing domestic and international trade policy uncertainty and the conflict in the Middle East which could pose supply availability and macroeconomic risks. With underlying assumptions for ongoing activity in the second quarter generally consistent with the prior quarter and factoring in activity under the DHS border wall contract, the Company expects tons sold to increase 1.0% to 3.0% compared to the first quarter of 2026 and to increase 4.5% to 6.5% compared to the second quarter of 2025. Additionally, Reliance expects its average selling price per ton sold to be up 1.5% to 3.5% compared to the first quarter of 2026 supported by announced mill price increases given healthy underlying demand for those products. Based on these assumptions, the Company anticipates non‑GAAP earnings per diluted share in the range of $5.15 to $5.35 for the second quarter of 2026, representing year‑over‑year growth of approximately 16% to 21% and inclusive of LIFO expense of $37.5 million, or $0.54 per diluted share.
Our second quarter 2026 guidance includes an estimated 3.0% contribution to tons sold, a 1.0% lower consolidated average selling price and approximately $0.15 to $0.20 of earnings per share related to shipments associated with the border wall contract. Although the average selling price and gross profit margins under the border wall contract are below company-wide averages, these shipments are expected to contribute at above average earnings levels through efficient execution within Reliance’s existing operating network, providing significant operating leverage and supporting improved profitability on incremental project volumes. Shipments under this contract began in April 2026 and we anticipate that volumes will increase as we move throughout the year. Many variables may impact the timing of shipments so we will provide impact and earnings contribution guidance from the border wall contract on a quarterly basis.
Conference Call Details
A conference call and simultaneous webcast to discuss Reliance’s first quarter 2026 financial results and business outlook will be held on Thursday, April 23, 2026 at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time. To listen to the live call by telephone, please dial (877) 407-0792 (U.S. and Canada) or (201) 689-8263 (International) approximately 10 minutes prior to the start time and use conference ID: 13759369. The call will also be broadcast live over the Internet hosted on the Investors section of the Company's website at investor.reliance.com.
For those unable to participate during the live broadcast, a replay of the call will also be available beginning that same day at 2:00 p.m. Eastern Time until 11:59 p.m. Eastern Time on May 7, 2026, by dialing (844) 512-2921 (U.S. and Canada) or (412) 317-6671 (International) and entering the conference ID: 13759369. The webcast will remain posted on the Investors section of Reliance’s website at reliance.com for 90 days.
About Reliance, Inc.
Founded in 1939, Reliance, Inc. (NYSE: RS) is a leading global diversified metal solutions provider and the largest metals service center company in North America. Through a network of approximately 310 locations in 41 states and 10 countries outside of the United States, Reliance provides value-added metals processing services and distributes a full-line of over 100,000 metal products to more than 125,000 customers in a broad range of industries. Reliance focuses on small orders with quick turnaround and value-added processing services. In 2025, Reliance’s average order size was $3,120, approximately 49% of orders included value-added processing, and approximately 40% of orders were delivered within 24 hours. Reliance’s press releases and additional information are available on the Company’s website at reliance.com.
Forward-Looking Statements
This press release contains certain statements that are, or may be deemed to be, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, discussions of Reliance’s: industry and end markets; business strategies; acquisitions; expectations concerning the Company’s future growth and profitability; ability to generate industry leading returns for its stockholders; future demand and metals pricing; results of operations; margins; profitability; taxes; liquidity; cash flows; capital expenditures; expectations for macroeconomic conditions, including inflation and the possibility of an economic recession or slowdown; anticipated effects from regulatory changes, including taxation, tariffs and other trade barriers; litigation matters and capital resources. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “preliminary,” “range,” “intend” and “continue,” the negative of these terms, and similar expressions.
These forward-looking statements are based on management's estimates, projections and assumptions as of today’s date that may not prove to be accurate. Forward-looking statements involve known and unknown risks and uncertainties and are not guarantees of future performance. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements as a result of various important factors, including, but not limited to, actions taken by Reliance, as well as developments beyond its control, including, but not limited to: changes in domestic and worldwide political and economic conditions; changes in U.S. and foreign trade policies and programs, including tariffs and trade policies and programs specifically affecting metals product markets and pricing; slowing economic growth, inflation, rising unemployment or other macroeconomic factors that could materially impact Reliance, its customers and suppliers; metals pricing; demand for Reliance’s products and services; the possibility that the expected benefits of government contracts, acquisitions and capital expenditures may not materialize as expected; and the impacts of labor constraints and supply chain disruptions. Deteriorations in economic conditions, including as a result of tariffs or trade barriers, economic policies, inflation, economic recession, slowing growth, outbreaks of infectious disease, or geopolitical conflicts such as in Ukraine, Iran and the Middle East, could lead to a decline in demand for the Company’s products and services and negatively impact its business, and may also impact financial markets and corporate credit markets which could adversely impact the Company’s access to financing or the terms of any financing. The Company cannot at this time predict all of the impacts of domestic and foreign tariffs and trade policies, inflation, product price fluctuations, economic recession, outbreaks of infectious disease, or geopolitical conflicts and related economic effects, but these factors, individually or in any combination, could have a material adverse effect on the Company’s business, financial position, results of operations and cash flows.
The statements contained in this press release speak only as of the date hereof, and Reliance disclaims any and all obligations to publicly update or revise any forward-looking statements, whether as a result of new information, future events or for any other reason, except as may be required by law. Important risks and uncertainties about Reliance’s business can be found in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 and in other documents Reliance files or furnishes with the United States Securities and Exchange Commission.
First Quarter 2026 Major Commodity Metrics
Tons Sold (tons in thousands; % change) Average Selling Price per Ton Sold (% change) Q1 2026
Q4 2025
Sequential Quarter Change
Q1 2025
Year-Over-Year Change
Sequential Quarter Change
Year-Over-Year Change
Carbon steel 1,383.9 1,252.9 10.5% 1,344.4 2.9% 4.5% 13.2% Aluminum 85.1 77.1 10.4% 84.1 1.2% 9.5% 23.1% Stainless steel 78.2 69.8 12.0% 76.0 2.9% 2.9% 4.1% Alloy 33.0 27.9 18.3% 31.5 4.8% (1.8%) 8.8% Copper & brass 4.9 4.9 — 5.0 (2.0%) 8.1% 27.1% Sales ($'s in millions; % change) Q1 2026
Q4 2025
Sequential Quarter Change
Q1 2025
Year-Over-Year Change
Carbon steel$2,218.1 $1,922.3 15.4% $1,904.2 16.5% Aluminum$754.6 $624.5 20.8% $605.6 24.6% Stainless steel$539.0 $467.1 15.4% $503.2 7.1% Alloy$180.6 $155.5 16.1% $158.4 14.0% Copper & brass$101.9 $93.5 9.0% $81.7 24.7% Sales by Product ($'s as a % of total sales) Q1 2026
Q4 2025
Q1 2025
Carbon steel structurals 12% 13% 12% Carbon steel plate 11% 11% 12% Carbon steel tubing 9% 9% 9% Hot-rolled steel sheet & coil 9% 8% 8% Carbon steel bar 5% 5% 5% Galvanized steel sheet & coil 5% 5% 5% Cold-rolled steel sheet & coil 2% 2% 2% Carbon steel 53% 53% 53% Heat-treated aluminum plate 6% 5% 5% Aluminum bar & tube 5% 5% 5% Common alloy aluminum sheet & coil 5% 5% 5% Common alloy aluminum plate 1% 1% 1% Heat-treated aluminum sheet & coil 1% 1% 1% Aluminum 18% 17% 17% Stainless steel bar & tube 6% 6% 7% Stainless steel sheet & coil 5% 5% 5% Stainless steel plate 2% 2% 2% Stainless steel 13% 13% 14% Alloy 4% 4% 4% Copper & brass 3% 3% 2% Miscellaneous* 5% 6% 6% Toll processing & logistics 4% 4% 4% Other 9% 10% 10% Total 100% 100% 100% * Includes titanium, fabricated parts, PVC pipe and scrap. RELIANCE, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except shares in thousands and per share amounts)
Three Months Ended March 31,2026 2025 Net sales$4,026.0 $3,484.7 Costs and expenses: Cost of sales (exclusive of depreciation and amortization shown below) 2,854.1 2,451.4 Warehouse, delivery, selling, general and administrative ("SG&A") 734.8 690.2 Depreciation and amortization 69.2 68.7 3,658.1 3,210.3 Operating income 367.9 274.4 Other (income) expense: Interest expense 15.4 11.5 Other expense, net 3.0 0.5 Income before income taxes 349.5 262.4 Income tax provision 83.9 61.9 Net income 265.6 200.5 Less: net income – noncontrolling interests 0.7 0.8 Net income – Reliance$264.9 $199.7 Earnings per share: Basic$5.13 $3.76 Diluted$5.10 $3.74 Weighted average shares outstanding: Basic 51,633 53,075 Diluted 51,974 53,399 Cash dividends declared per common share$1.25 $1.20 RELIANCE, INC.UNAUDITED CONSOLIDATED BALANCE SHEETS(in millions, except shares in thousands and par value) March 31,
December 31,
2026 2025*
AssetsCurrent assets: Cash and cash equivalents$249.7 $216.6 Accounts receivable, less allowance for credit losses of $22.8 and $22.1 1,953.5 1,539.9 Inventories 2,234.9 2,187.8 Prepaid expenses and other current assets 135.2 165.6 Income taxes receivable — 31.2 Total current assets 4,573.3 4,141.1 Property, plant and equipment, net 2,630.8 2,633.3 Operating lease right-of-use assets 331.5 315.2 Goodwill 2,175.4 2,169.9 Intangible assets, net 953.0 960.1 Cash surrender value of life insurance policies, net 41.9 48.0 Other long-term assets 103.4 105.7 Total assets$10,809.3 $10,373.3 Liabilities and EquityCurrent liabilities: Accounts payable$552.1 $375.2 Accrued expenses 152.5 150.0 Accrued compensation and retirement benefits 171.5 198.1 Accrued insurance costs 56.4 56.4 Current maturities of long-term debt — 0.7 Current maturities of operating lease liabilities 69.2 67.7 Income taxes payable 41.1 — Total current liabilities 1,042.8 848.1 Long-term debt 1,693.5 1,420.2 Operating lease liabilities 266.3 250.9 Long-term retirement benefits 25.3 24.9 Other long-term liabilities 74.4 74.1 Deferred income taxes 574.9 575.6 Total liabilities 3,677.2 3,193.8 Commitments and contingencies Equity: Preferred stock, $0.001 par value: 5,000 shares authorized; none issued or outstanding — — Common stock and additional paid-in capital, $0.001 par value and 200,000 shares authorized Issued and outstanding shares—51,049 and 51,735 0.1 0.1 Retained earnings 7,218.5 7,257.6 Accumulated other comprehensive loss (95.7) (87.6)Total Reliance stockholders’ equity 7,122.9 7,170.1 Noncontrolling interests 9.2 9.4 Total equity 7,132.1 7,179.5 Total liabilities and equity$10,809.3 $10,373.3 * Derived from audited financial statements. RELIANCE, INC.UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS(in millions) Three Months Ended March 31,2026 2025 Operating activities: Net income$265.6 $200.5 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 69.2 68.7 Stock-based compensation 13.3 12.2 Other 7.6 6.5 Changes in operating assets and liabilities: Accounts receivable (416.2) (332.1)Inventories (47.7) (85.9)Prepaid expenses and other assets 83.1 80.8 Accounts payable and other liabilities 176.5 113.8 Net cash provided by operating activities 151.4 64.5 Investing activities: Purchases of property, plant and equipment (64.2) (86.9)Other (5.8) (0.7)Net cash used in investing activities (70.0) (87.6) Financing activities: Proceeds from long-term debt borrowings 925.0 788.0 Principal payments on long-term debt (652.7) (458.0)Cash dividends and dividend equivalents (66.6) (65.2)Share repurchases (234.2) (253.2)Taxes paid on net-settled restricted stock units (14.7) (11.5)Other (3.4) (18.7)Net cash used in financing activities (46.6) (18.6)Effect of exchange rate changes on cash and cash equivalents (1.7) 1.4 Increase (decrease) in cash and cash equivalents 33.1 (40.3)Cash and cash equivalents, beginning balance 216.6 318.1 Cash and cash equivalents, ending balance$249.7 $277.8 Supplemental cash flow information: Interest paid$13.2 $10.0 Income taxes paid, net$12.5 $13.9 RELIANCE, INC.NON-GAAP RECONCILIATION(in millions, except per share amounts) Net Income Diluted EPS March 31,
December 31,
March 31,
March 31,
December 31,
March 31,
Three Months Ended2026 2025 2025 2026 2025 2025 Net income – Reliance$264.9 $116.5 $199.7 $5.10 $2.22 $3.74 Impairment and restructuring charges 3.8 14.7 2.3 0.07 0.28 0.04 Non-recurring settlement charges (credits), net 0.5 (1.9) — 0.01 (0.04) — Gains related to sales of non-core assets — (0.7) — — (0.01) — Income tax benefit related to above items (1.1) (3.1) (0.6) (0.02) (0.05) (0.01)Non-GAAP net income – Reliance 268.1 125.5 201.4 5.16 2.40 3.77 LIFO expense, net of tax 28.1 29.0 18.8 0.54 0.56 0.35 Non-GAAP net income – Reliance – FIFO$296.2 $154.5 $220.2 $5.70 $2.96 $4.12 March 31,
December 31,
March 31,
Three Months Ended2026 2025 2025 Pretax income$349.5 $154.8 $262.4 Impairment and restructuring charges 3.8 14.7 2.3 Non-recurring settlement charges (credits), net 0.5 (1.9) — Gains related to sales of non-core assets — (0.7) — Non-GAAP pretax expense adjustments 4.3 12.1 2.3 Non-GAAP pretax income 353.8 166.9 264.7 LIFO expense 37.5 38.7 25.0 Non-GAAP pretax income – FIFO$391.3 $205.6 $289.7 March 31,
December 31,
March 31,
Three Months Ended2026 2025 2025 Gross profit – LIFO$1,171.9 $954.7 $1,033.3 Restructuring charges 1.0 3.0 1.8 Non-GAAP gross profit 1,172.9 957.7 1,035.1 LIFO expense 37.5 38.7 25.0 Non-GAAP gross profit – FIFO$1,210.4 $996.4 $1,060.1 Gross profit margin – LIFO 29.1% 27.3% 29.7% Restructuring charges as a % of sales — 0.1% — Non-GAAP gross profit margin 29.1% 27.4% 29.7% LIFO expense as a % of sales 0.9% 1.1% 0.7% Non-GAAP gross profit margin – FIFO 30.1% 28.5% 30.4% Certain percentages may not calculate due to rounding.
March 31,
December 31,
March 31,
2026 2025 2025 Total debt$1,700.0 $1,427.7 $1,481.1 Less: unamortized discounts and costs (6.5) (6.8) (8.1) Carrying amount of debt 1,693.5 1,420.9 1,473.0 Less: cash and cash equivalents (249.7) (216.6) (277.8) Net debt 1,443.8 1,204.3 1,195.2 Total Reliance stockholders' equity 7,122.9 7,170.1 7,101.8 Total capital$8,566.7 $8,374.4 $8,297.0 Net debt-to-total capital 16.9% 14.4% 14.4% March 31,
December 31,
March 31,
Twelve Months Ended2026 2025 2025 Net income$806.7 $741.6 $774.7 Depreciation and amortization 278.7 278.2 273.8 Impairment 9.9 9.9 11.7 Interest expense 59.6 55.7 42.1 Income taxes 249.6 227.6 231.4 EBITDA$1,404.5 $1,313.0 $1,333.7 Net debt-to-EBITDA 1.0x 0.9x 0.9x Total debt-to-EBITDA 1.2x 1.1x 1.1x March 31,
December 31,
March 31,
Three Months Ended2026 2025 2025 Cash provided by operations$151.4 $276.1 $64.5 Less: capital expenditures (64.2) (73.2) (86.9) Free cash flow$87.2 $202.9 $(22.4)
Reliance presents certain non‑GAAP measures, including non‑GAAP gross profit, pretax income, net income and earnings per share, to provide meaningful period-to-period comparisons of its operating performance. These non‑GAAP measures reflect adjustments for certain items, including impairment and restructuring charges related to the closure or reorganization of certain locations, non‑recurring settlement charges and credits, and gains on the sale of non‑core property, plant and equipment, which can reduce the comparability of GAAP results across periods. Reliance uses first‑in, first‑out (“FIFO”) gross profit, margin, and other FIFO-based performance measures to assess its ongoing performance and provide a basis for comparison with competitors that do not use the last-in, last-out (“LIFO”) inventory accounting method. See footnote 1 for additional information regarding the Company’s gross profit and gross profit margin. In addition, Reliance presents net debt‑to‑EBITDA and total debt‑to‑EBITDA as measures of leverage used by management to monitor debt levels relative to operating performance, for which EBITDA is used as a proxy. Free cash flow is presented as a measure of cash generated by operations that may be used to repay scheduled debt maturities, fund additional growth initiatives, or be returned to stockholders.
Footnotes
1 Gross profit (calculated as net sales less cost of sales) and gross profit margin (calculated as gross profit divided by net sales) are non-GAAP financial measures as they exclude depreciation and amortization expense associated with the corresponding sales. About half of Reliance's orders are basic distribution with no processing services performed. For the remainder of its sales orders, Reliance performs “first-stage” processing, which is generally not labor intensive as it is simply cutting the metal to size. Because of this, the amount of related labor and overhead, including depreciation and amortization, is not significant and is excluded from cost of sales. Therefore, Reliance’s cost of sales is substantially comprised of the cost of the material it sells. Reliance uses gross profit and gross profit margin, as shown, as measures of operating performance. Gross profit and gross profit margin are important operating and financial measures, as their fluctuations can have a significant impact on Reliance's earnings. Gross profit and gross profit margin, as presented, are not necessarily comparable with similarly titled measures for other companies.
2 See accompanying Non-GAAP Reconciliation.
Reliance (RS - Free Report) came out with quarterly earnings of $5.16 per share, beating the Zacks Consensus Estimate of $4.63 per share. This compares to earnings of $3.77 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +11.45%. A quarter ago, it was expected that this metals service-center company would post earnings of $2.8 per share when it actually produced earnings of $2.4, delivering a surprise of -14.29%.
Over the last four quarters, the company has surpassed consensus EPS estimates just once.
Reliance, which belongs to the Zacks Mining - Miscellaneous industry, posted revenues of $4.03 billion for the quarter ended March 2026, surpassing the Zacks Consensus Estimate by 4.97%. This compares to year-ago revenues of $3.48 billion. The company has topped consensus revenue estimates four times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Reliance shares have added about 16.3% since the beginning of the year versus the S&P 500's gain of 3.2%.
What's Next for Reliance?While Reliance has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Reliance was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $4.92 on $3.83 billion in revenues for the coming quarter and $17.65 on $15.03 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Mining - Miscellaneous is currently in the bottom 42% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Another stock from the same industry, Ivanhoe Mines Ltd. (IVPAF - Free Report) , has yet to report results for the quarter ended March 2026. The results are expected to be released on May 7.
This company is expected to post quarterly earnings of $0.07 per share in its upcoming report, which represents a year-over-year change of -30%. The consensus EPS estimate for the quarter has been revised 37.9% lower over the last 30 days to the current level.
Ivanhoe Mines Ltd.'s revenues are expected to be $218.07 million, up 183.1% from the year-ago quarter.
Reliance (RS - Free Report) reported $4.03 billion in revenue for the quarter ended March 2026, representing a year-over-year increase of 15.5%. EPS of $5.16 for the same period compares to $3.77 a year ago.
The reported revenue represents a surprise of +4.97% over the Zacks Consensus Estimate of $3.84 billion. With the consensus EPS estimate being $4.63, the EPS surprise was +11.45%.
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.
As these metrics influence top- and bottom-line performance, comparing them to the year-ago numbers and what analysts estimated helps investors project a stock's price performance more accurately.
Here is how Reliance performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts:
Average selling price per ton sold: $2,414.00 compared to the $2,386.05 average estimate based on three analysts.Shipments (Tons sold): 1.67 million compared to the 1.63 million average estimate based on three analysts.Tons Sold - Stainless steel: 78.2 thousand versus 76.88 thousand estimated by two analysts on average.Tons Sold - Aluminium: 85.1 thousand versus the two-analyst average estimate of 85.42 thousand.Tons Sold - Alloy: 33 thousand compared to the 30.97 thousand average estimate based on two analysts.Tons Sold - Carbon steel: 1.38 million compared to the 1.34 million average estimate based on two analysts.Net Sales- Carbon Steel: $2.22 billion compared to the $2.09 billion average estimate based on two analysts. The reported number represents a change of +16.5% year over year.Net Sales- Alloy: $180.6 million versus $162.37 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +14% change.Net Sales- Stainless Steel: $539 million versus $533.12 million estimated by two analysts on average. Compared to the year-ago quarter, this number represents a +7.1% change.Net Sales- Aluminium: $754.6 million versus the two-analyst average estimate of $667.76 million. The reported number represents a year-over-year change of +24.6%.View all Key Company Metrics for Reliance here>>>
Shares of Reliance have returned +11.9% over the past month versus the Zacks S&P 500 composite's +8.6% change. The stock currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term.
Key Takeaways Reliance reported Q1 EPS of $5.16, beating estimates, with net sales rising 15.5% year over year.RS saw higher shipments and a 12.6% jump in average selling price per ton, boosting results.Reliance expects steady demand across construction, manufacturing, and aerospace into Q2. Reliance, Inc. (RS - Free Report) posted profits of $264.9 million or $5.10 per share for the first quarter of 2026, up from $199.7 million or $3.74 per share in the year-ago quarter.
Barring one-time items, the company recorded earnings of $5.16 per share. It outpaced the Zacks Consensus Estimate of $4.63.
The company reported net sales of $4,026 million, representing a year-over-year increase of approximately 15.5%. The top line also beat the Zacks Consensus Estimate of $3,835.3 million.
Reliance’s Segment UpdateReliance reported a 2.7% year-over-year increase in shipments (thousand tons sold) to 1,672.7. The figure surpassed our estimate of 1,633.8. The average selling price per ton rose 12.6% year over year to $2,414. It was above our estimate of $2,362.2.
Demand for non-residential construction, including infrastructure, Reliance’s largest end market by volume, strengthened compared with the first quarter of 2025. The company expects demand in this sector to remain healthy through the second quarter of 2026, supported by strong activity across data centers, energy infrastructure and public infrastructure.
Demand within the broader manufacturing market improved year over year, driven by growth across the military, industrial machinery, consumer products, construction machinery sectors and shipbuilding. Reliance expects the demand to remain healthy in the second quarter.
Aerospace demand was higher compared with the prior-year quarter. Reliance expects commercial aerospace demand to remain consistent in the second quarter due to build-rate increases, while defense and space-related activity is expected to remain strong.
Demand for automotive toll processing services remained flat year over year. Reliance expects steady performance through the second quarter. The company’s toll processing operations remain agile and responsive to the automotive market’s demand fluctuations.
In the semiconductor market, demand improved relative to the first quarter of 2025. Reliance expects stable to improving demand conditions in the second quarter.
RS’ Financial PositionAs of March 31, 2026, Reliance held $249.7 million in cash and cash equivalents, with total outstanding debt amounting to $1.7 billion. This includes $550 million borrowings under the company’s $1.5 billion revolving credit facility.
In the first quarter, Reliance generated $151.4 million in operating cash flow. It reflects the typical increase in seasonal working capital caused by strong shipment volume and higher metals pricing.
Reliance repurchased its common stock during the first quarter, bringing down the outstanding common shares by 3% year over year, at an average price of $299 per share, for a total of $234 million.
Reliance’s Outlook Reliance expects demand in the first quarter to remain healthy across its diverse end markets, though ongoing domestic and international trade policy uncertainty and Middle East conflict could pose supply availability and macroeconomic risks, influencing performance. The company projects tons sold to increase 1% to 3% from the prior quarter and 4.5% to 6.5% from the year-ago quarter.
The average selling price per ton is anticipated to be up 1.5-3.5% sequentially. Based on these assumptions, the company forecasts adjusted earnings per share in the range of $5.15 to $5.35 for the second quarter, which includes an estimated LIFO expense of $37.5 million, or 54 cents per share.
RS’ Price PerformanceReliance’s shares have gained 21.3% in the past year compared with the 57% growth of the industry.
Image Source: Zacks Investment Research
RS’ Zacks Rank & Key PicksRS currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Aura Minerals Inc. (AUGO - Free Report) , Air Products and Chemicals, Inc. (APD - Free Report) and Albemarle Corporation (ALB - Free Report) .
Aura Minerals is slated to report first-quarter 2026 results on May 6. The Zacks Consensus Estimate for earnings is pegged at $1.84 per share, indicating 397.3% year-over-year growth. AUGO sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Air Products is scheduled to report second-quarter fiscal 2026 results on April 30. The Zacks Consensus Estimate for APD’s second-quarter earnings per share is pegged at $3.05, indicating 13.38% year-over-year growth. APD carries a Zacks Rank #2 (Buy) at present.
Albemarle is slated to report first-quarter 2026 results on May 6. The consensus estimate for ALB’s earnings per share is pegged at $1.07. ALB presently carries a Zacks Rank #2.
Reliance (RS - Free Report) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
Analysts' growing optimism on the earnings prospects of this metals service-center company is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Reliance, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate RevisionsFor the current quarter, the company is expected to earn $5.16 per share, which is a change of +16.5% from the year-ago reported number.
Over the last 30 days, two estimates have moved higher for Reliance compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 14.55%.
Current-Year Estimate RevisionsFor the full year, the company is expected to earn $18.70 per share, representing a year-over-year change of +31.1%.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, three estimates have moved up for Reliance versus no negative revisions. This has pushed the consensus estimate 8.85% higher.
Favorable Zacks RankOur research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom LineReliance shares have added 19.8% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.
Investors interested in stocks from the Mining - Miscellaneous sector have probably already heard of SSR Mining (SSRM) and Reliance (RS). But which of these two stocks presents investors with the better value opportunity right now?
May 22, 2026 09:45 ET | Source: Real Estate Split Corp.
TORONTO, May 22, 2026 (GLOBE NEWSWIRE) -- Real Estate Split Corp. (TSX: RS) (the “Fund”) is pleased to announce that a distribution for May 2026 will be payable to Class A shareholders of Real Estate Split Corp. as follows:
Record DatePayable DateDistribution Per
Equity ShareMay 31, 2026June 15, 2026$0.13
The equity shares trade on the Toronto Stock Exchange under the symbol RS.
For further information, please visit our website at www.middlefield.com or contact our Sales and Marketing Department at 1.888.890.1868.
This press release contains forward-looking information. The forward-looking information contained in this press release is based on historical information concerning distributions and dividends paid on the securities of issuers historically included in the portfolio of the Fund. Actual future results, including the amount of distributions paid by the Fund, may differ from the monthly distribution amount. Specifically, the income from which distributions are paid may vary significantly due to: changes in portfolio composition; changes in distributions and dividends paid by issuers of securities included in the Fund’s portfolio from time to time; there being no assurance that those issuers will pay distributions or dividends on their securities; the declaration of distributions and dividends by issuers of securities included in the portfolio will generally depend upon various factors, including the financial condition of each issuer and general economic and stock market conditions; the level of borrowing by the Fund; and the uncertainty of realizing capital gains. The risks, uncertainties and other factors that could influence actual results are described under “Risk Factors” in the Fund’s prospectus and other documents filed by the Fund with the Canadian securities regulatory authorities. The forward-looking information contained in this press release constitutes the Fund’s current estimate, as of the date of this press release, with respect to the matters covered hereby. Investors and others should not assume that any forward-looking statement contained in this press release represents the Fund's estimate as of any date other than the date of this press release.
It has been about a month since the last earnings report for Reliance (RS - Free Report) . Shares have added about 5.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Reliance due for a pullback? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent catalysts for Reliance, Inc. before we dive into how investors and analysts have reacted as of late.
Reliance’s Q1 Earnings and Sales Surpass Estimates on Higher PricesReliance posted profits of $264.9 million or $5.10 per share for the first quarter of 2026, up from $199.7 million or $3.74 per share in the year-ago quarter.
Barring one-time items, the company recorded earnings of $5.16 per share. It outpaced the Zacks Consensus Estimate of $4.63.
The company reported net sales of $4,026 million, representing a year-over-year increase of approximately 15.5%. The top line also beat the Zacks Consensus Estimate of $3,835.3 million.
Segment UpdateReliance reported a 2.7% year-over-year increase in shipments (thousand tons sold) to 1,672.7. The figure surpassed our estimate of 1,633.8. The average selling price per ton rose 12.6% year over year to $2,414. It was above our estimate of $2,362.2.
Demand for non-residential construction, including infrastructure, Reliance’s largest end market by volume, strengthened compared with the first quarter of 2025. The company expects demand in this sector to remain healthy through the second quarter of 2026, supported by strong activity across data centers, energy infrastructure and public infrastructure.
Demand within the broader manufacturing market improved year over year, driven by growth across the military, industrial machinery, consumer products, construction machinery sectors and shipbuilding. Reliance expects the demand to remain healthy in the second quarter.
Aerospace demand was higher compared with the prior-year quarter. Reliance expects commercial aerospace demand to remain consistent in the second quarter due to build-rate increases, while defense and space-related activity is expected to remain strong.
Demand for automotive toll processing services remained flat year over year. Reliance expects steady performance through the second quarter. The company’s toll processing operations remain agile and responsive to the automotive market’s demand fluctuations.
In the semiconductor market, demand improved relative to the first quarter of 2025. Reliance expects stable to improving demand conditions in the second quarter.
Financial PositionAs of March 31, 2026, Reliance held $249.7 million in cash and cash equivalents, with total outstanding debt amounting to $1.7 billion. This includes $550 million borrowings under the company’s $1.5 billion revolving credit facility.
In the first quarter, Reliance generated $151.4 million in operating cash flow. It reflects the typical increase in seasonal working capital caused by strong shipment volume and higher metals pricing.
Reliance repurchased its common stock during the first quarter, bringing down the outstanding common shares by 3% year over year, at an average price of $299 per share, for a total of $234 million.
OutlookReliance expects demand in the first quarter to remain healthy across its diverse end markets, though ongoing domestic and international trade policy uncertainty and Middle East conflict could pose supply availability and macroeconomic risks, influencing performance. The company projects tons sold to increase 1% to 3% from the prior quarter and 4.5% to 6.5% from the year-ago quarter.
The average selling price per ton is anticipated to be up 1.5-3.5% sequentially. Based on these assumptions, the company forecasts adjusted earnings per share in the range of $5.15 to $5.35 for the second quarter, which includes an estimated LIFO expense of $37.5 million, or 54 cents per share.
How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a upward trend in estimates revision.
The consensus estimate has shifted 7.35% due to these changes.
VGM ScoresAt this time, Reliance has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Reliance has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Key Takeaways RS reached a 52-week high of $394.62 on strong Q1 earnings and resilient demand. RS benefits from non-residential construction demand, including infrastructure and data centers. Reliance repurchased $234M in stock and raised its quarterly dividend 4.2% to $1.25 per share. . Shares of Reliance, Inc. (RS - Free Report) scaled a new 52-week high of $394.62 yesterday before retracing to close the session at $391.59.
The company’s shares have gained 26.9% in a year compared with the industry’s growth of 59.1%.
Image Source: Zacks Investment Research
RS currently has a market capitalization of roughly $20 billion and a Zacks Rank #2 (Buy).
Let’s take a look at the factors that are driving RS stock.
What’s Aiding RS Stock?RS recorded adjusted earnings of $5.16 per share for the first quarter of 2026. It outpaced the Zacks Consensus Estimate of $4.63.
The company is benefiting from strong demand in the non-residential construction market, its largest end market by volume. Demand improved in the first quarter of 2026, driven by public infrastructure projects, heavy civil construction, data centers, energy infrastructure and manufacturing activity.
Through its AMI Metals subsidiary, the company also secured major Department of Homeland Security border wall contracts that are expected to support revenue growth. In addition, demand for its toll processing services in the automotive sector has remained steady, supported by recent capacity investments and operational flexibility. The company is also seeing improving demand from semiconductor, defense, shipbuilding, industrial machinery and nuclear-related markets, particularly those linked to small modular reactor programs.
Reliance continues to strengthen its growth profile through acquisitions aimed at expanding its geographic reach, product offerings and value-added processing capabilities. Major acquisitions, including Metals USA, Tubular Steel, Best Manufacturing, Ferguson, All Metals, Fry Steel Company and Merfish United, have enhanced its service center network, diversified its end markets and broadened its exposure to higher-margin products.
More recent acquisitions such as Rotax, Admiral Metals, Nu-Tech Precision Metals, Southern Steel Supply, Cooksey Iron & Metal Co. and American Alloy further support the company’s strategy of investing in high-quality businesses, expanding its processing capabilities and increasing its presence in attractive growth markets across the United States.
Reliance is dedicated to delivering value to its investors, backed by a strong liquidity position. It repurchased $234 million of stock at an average price of $299 per share in the first quarter. The company’s board has raised its quarterly dividend by 4.2% to $1.25 per share.
Reliance, Inc. Price and ConsensusOther Stocks to ConsiderOther top-ranked stocks in the basic materials space include Albemarle Corporation (ALB - Free Report) , Avino Silver and Gold Mines Ltd. (ASM - Free Report) and Carpenter Technology Corporation (CRS - Free Report) .
Albemarle currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
ALB beat the Zacks Consensus Estimate in three of the last four quarters while missing once, with the average earnings surprise being 74.5%. The company's shares have soared 220.3% in the past year.
Carpenter Technology currently carries a Zacks Rank #2. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 8.95%. The company's shares have soared 95.5% in the past year.
Avino Silver currently has a Zacks Rank #2. ASM beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 125%. The company's shares have soared 119.2% in the past year.
PHOENIX, June 04, 2026 (GLOBE NEWSWIRE) -- Reliance, Inc. (NYSE: RS) announced today that Karla Lewis, President and Chief Executive Officer, and Stephen Koch, Executive Vice President and Chief Operating Officer, will participate in the Wells Fargo 16th Annual Industrials & Materials Conference on Tuesday, June 9, 2026, in Chicago, Illinois. Reliance is scheduled to present on Tuesday, June 9th at 3:45 p.m. CT.
The presentation will be webcast live over the Internet, hosted on the Investors section of the Company's website at investor.reliance.com. In addition to the live webcast, a replay will be available on the Company’s website for 90 days following the event.
About Reliance, Inc.
Founded in 1939, Reliance, Inc. (NYSE: RS) is a leading global diversified metal solutions provider and the largest metals service center company in North America. Through a network of approximately 310 locations in 41 states and 10 countries outside of the United States, Reliance provides value-added metals processing services and distributes a full-line of over 100,000 metal products to more than 125,000 customers in a broad range of industries. Reliance focuses on small orders with quick turnaround and value-added processing services. In 2025, Reliance’s average order size was $3,120, approximately 49% of orders included value-added processing, and approximately 40% of orders were delivered within 24 hours. Reliance’s press releases and additional information are available on the Company’s website at reliance.com.
Key Takeaways Reliance shares rose 30.3% in the past 3 months, outperforming the industry's 0.4% rise. RS is benefiting from demand in infrastructure, data centers, energy and manufacturing markets. RS expanded processing capabilities through acquisitions and ended Q1 with $249.7M in cash. Reliance, Inc. (RS - Free Report) shares have rallied 30.3% in the past three months. The company has also outperformed the Zacks Mining - Miscellaneous industry’s 0.4% growth over the same time frame.
The rally was driven by record quarterly tons sold, strong earnings growth and continued market-share gains, with shipments outperforming industry trends.
Image Source: Zacks Investment Research
Let’s take a look at the factors that are driving RS stock.
Growth Investments Strengthen Market Position for RS
Reliance reported tons sold of 1.673 million tons in the first quarter of 2026, up 9.4% sequentially and 2.7% year over year. The company stated that it has now outperformed industry shipment trends for 13 consecutive quarters, underscoring the strength of its operating model and customer relationships.
Reliance is benefiting from strong demand in the non-residential construction market, its largest end market by volume. Demand improved in the first quarter of 2026, driven by public infrastructure projects, heavy civil construction, data centers, energy infrastructure and manufacturing activity.
Through its AMI Metals subsidiary, the company also secured major Department of Homeland Security border wall contracts that are expected to support revenue growth. In addition, demand for its toll processing services in the automotive sector has remained steady, supported by recent capacity investments and operational flexibility. The company is also seeing improving demand from semiconductor, defense, shipbuilding, industrial machinery and nuclear-related markets, particularly those linked to small modular reactor programs.
Reliance continues to strengthen its growth profile through acquisitions aimed at expanding its geographic reach, product offerings and value-added processing capabilities. Major acquisitions, including Metals USA, Tubular Steel, Best Manufacturing, Ferguson, All Metals, Fry Steel Company and Merfish United, have enhanced its service center network, diversified its end markets and broadened its exposure to higher-margin products.
More recent acquisitions such as Rotax, Admiral Metals, Nu-Tech Precision Metals, Southern Steel Supply, Cooksey Iron & Metal Co. and American Alloy further support the company’s strategy of investing in high-quality businesses, expanding its processing capabilities and increasing its presence in attractive growth markets across the United States.
RS ended the first quarter of 2026 with cash and cash equivalents of $249.7 million, up from $216.6 million sequentially. The increase was supported by record shipment volumes and healthy profitability during the quarter.
RS’s Zacks Rank & Other Key Picks
RS currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Basic Materials space are Nexa Resources S.A. (NEXA - Free Report) , DPM Metals Inc. (DPMLF - Free Report) and Avino Silver & Gold Mines Ltd. (ASM - Free Report) .
At present, NEXA sports a Zacks Rank #1 (Strong Buy), while DPMLF and ASM carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for NEXA’s current fiscal-year earnings is pinned at $2.67 per share, indicating a 214.1% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing once, with an average surprise of 59.9%. Its shares have surged 78.6% year to date.
The Zacks Consensus Estimate for DPMLF’s current-year earnings is pegged at $3.53 per share, indicating a year-over-year rise of 47.7%. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing once, with an average surprise of 8.8%. DPMLF shares have plunged 15.2% year to date.
The Zacks Consensus Estimate for ASM’s current-year earnings stands at 39 cents per share, reflecting a 34.5% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in all the trailing four quarters, with the average earnings surprise of 125%. ASM’s shares have rallied roughly 9.9% year to date.
Broadcom (AVGO 0.85%), a semiconductor and infrastructure software supplier, closed Wednesday at $372.1, down 5.12%. The stock fell as investors continued reacting to its recent fiscal Q2 2026 earnings (period ended May 3, 2026), cautious AI guidance, and mixed analyst commentary while watching how AI chip demand and margins evolve.
The company’s trading volume reached 37.4 million shares, which is about 48% above compared with its three-month average of 25.4 million shares. Broadcom went public in 2009 and has grown 22869% since its IPO.
How the markets moved todayThe broader markets weakened Wednesday, with the S&P 500 (^GSPC +0.50%) falling 1.61% to 7,266.99 and the Nasdaq Composite (^IXIC +0.31%) sliding 1.98% to 25,169.50. Within semiconductors, industry peers Texas Instruments (TXN +1.35%) closed at $282.01 (-2.29%) and Analog Devices (ADI +1.42%) finished at $392.67 (-2.95%), reflecting pressure across chipmakers.
What this means for investorsBroadcom shares declined as investors assessed a strong fiscal second quarter that did not fully meet expectations for its AI outlook. The company reported record Q2 revenue of $22.19 billion. AI semiconductor revenue rose 143% year over year to $10.8 billion, driven by demand for custom AI accelerators.
The new AI infrastructure platform from Broadcom, Apollo, and Blackstone indicates sustained demand, backed by $35 billion in financing for over 1 gigawatt of compute capacity and a goal of more than 20 gigawatts of global AI deployments by 2028. Investors will watch whether Broadcom can convert this demand into revenue growth and maintain margins to support its valuation, particularly as customer concentration among major custom-chip buyers remains a focus.
Eric Trie has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Broadcom and Texas Instruments. The Motley Fool has a disclosure policy.
Investors are curious if this is a buying opportunity.
*Stock prices used were the afternoon prices of June 8, 2026. The video was published on June 10, 2026.
Parkev Tatevosian, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Broadcom. The Motley Fool has a disclosure policy. Parkev Tatevosian is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
It's been a brutal stretch for semiconductor investors. Last week, a wave of selling swept through the artificial intelligence (AI) chip sector, erasing about $1.3 trillion of market value from chip stocks in Friday's session alone. Nvidia (NVDA +0.15%) fell about 6% that day, and Advanced Micro Devices (AMD +4.91%) dropped almost 11%. Broadcom (AVGO 0.85%), whose earnings report earlier in the week helped set off the slide, has lost about a fifth of its value in a week.
And now these stocks are having another bad week so far, building on last week's losses.
Sharp declines like these can be unnerving. But they can sometimes create opportunities for long-term investors -- especially when the underlying businesses are still posting accelerating growth. And that seems to be the case here.
Image source: Getty Images.
1. Nvidia Even after its pullback, Nvidia remains the most valuable company in the sector, with a market capitalization of about $4.9 trillion as of this writing. Shares of the AI chipmaker are down about 18% from their 52-week high.
Nvidia's latest results, reported last month, arguably gave investors little to worry about. In the company's fiscal first quarter of 2027 (the period ended April 26, 2026), revenue rose 85% year over year to $81.6 billion, driven by 92% growth in data center revenue. And management guided fiscal second-quarter revenue of about $91 billion, implying year-over-year growth of about 95% -- an outlook that assumes no data center compute revenue from China.
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"The buildout of AI factories -- the largest infrastructure expansion in human history -- is accelerating at extraordinary speed," said Nvidia founder and CEO Jensen Huang in the company's fiscal first-quarter earnings release.
Despite this momentum, the stock trades at a price-to-earnings ratio of about 31 as of this writing. For shares to recover, AI infrastructure spending may simply need to keep growing at similarly rapid rates -- and Nvidia's own guidance suggests it is.
2. Advanced Micro Devices AMD shares closed at a record $542.52 on June 3 -- hours before Broadcom's report hit -- and have since fallen to about $452 as of this writing, a decline of about 17%. Even so, the stock has more than doubled in 2026.
The chip designer's momentum may help explain that enthusiasm. AMD's first-quarter revenue rose 38% year over year to $10.3 billion, fueled by 57% growth in the data center segment -- a business AMD chair and CEO Lisa Su called "the primary driver of our revenue and earnings growth" in the company's first-quarter earnings release. Even better, management guided for second-quarter revenue of about $11.2 billion, representing year-over-year growth of about 46% -- a meaningful acceleration.
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Later this year, AMD also plans to ship Helios, its first full rack-scale AI system, with OpenAI and Meta Platforms already lined up as customers.
However, even after the sell-off, the stock trades at more than 100 times its earnings over the past year. A valuation like this leaves little room for execution missteps.
3. Broadcom But Broadcom stock has fallen particularly hard. And the slide interestingly followed a great quarter.
In its fiscal second quarter of 2026 (the period ended May 3, 2026), the custom chip specialist grew revenue 48% year over year to $22.2 billion. AI chip revenue jumped 143% to $10.8 billion, exceeding management's forecast. Management also guided to about $16 billion in AI chip revenue in the fiscal third quarter and $56 billion for the full fiscal year, and reiterated its more than $100 billion AI chip revenue target for fiscal 2027.
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Part of the market's concern seems to center on profitability, as the company's fastest-growing business changes the makeup of its sales. CEO Hock Tan addressed the issue directly.
"Semiconductor margins remain very stable and very solid. It's the mix, particularly the mix between software and non-AI to the very, very rapidly growing AI semiconductor that is just diluting gross margin," Tan said during the company's fiscal second-quarter earnings call.
But there may also have been disappointment that the company only reiterated its more than $100 billion AI chip revenue target for fiscal 2027, rather than raising it.
Are these stocks buys after the sell-off? Overall, this looks like a good entry point for these important AI chip companies.
But there are some significant risks to consider. Valuations across the group still assume years of strong growth, and AI infrastructure spending could decelerate. There's also competition to consider.
Ultimately, the businesses themselves don't seem to be the problem. Growth is accelerating at all three. So, I think investors with a long time horizon could find these beaten-down leaders worth a closer look. Given how quickly sentiment shifted this month, however, easing into a position rather than building it out all at once may make sense. After all, who's to say that this is the bottom of these stocks' pullbacks?
Listen to the audio version of this article (generated by AI).
On a warm day in mid-July, some 80 scientists comprised of Nobel laureates and nuclear security experts gathered in a 10th-floor conference room at the University of Chicago. They were then asked to imagine their own deaths…
A presenter guided the group’s attention out of the window, past the gothic spires of campus, and traced which neighborhoods could vanish from differently sized nuclear blasts. The exercise, recently chronicled in Popular Mechanics, is part of the process behind one of the most recognizable symbols on Earth: the Doomsday Clock.
When artist Martyl Langsdorf drew it for the Bulletin of the Atomic Scientists’ first magazine cover in 1947, she set the hand at seven minutes to midnight for no scientific reason at all… the placement simply “suited my eye.” The hand has always been a judgment call.
This past January, the Bulletin’s board moved it to 85 seconds to midnight, the closest in its history, citing nuclear arsenals, climate, and the unchecked rise of unregulated artificial intelligence.
Wall Street, it turns out, keeps a clock of its own for AI. And every selloff like the one we just lived through is the crowd grabbing the hand and winding it backward… a collective verdict that the technology’s world-changing promise sits further out than feared, that the disruption is overstated, that midnight is receding.
The stakes of the two clocks differ by orders of magnitude, of course. The mechanism, though, is the same. On the latest episode of Being Exponential with Luke Lango, we read the machinery, and find it running faster than ever.
Watch the full episode here. Also, be sure to subscribe to Being Exponential on X (formerly Twitter) for more exclusive content:
What the Selloff Got Wrong Some blamed Broadcom Inc. (AVGO) for kicking it off. However, we are not buying that story. Broadcom delivered nearly 50% revenue growth, nearly 80% semiconductor revenue growth, more than 140% AI semiconductor revenue growth, and a $30 billion backlog… records across the board. As we say in the episode, there is no fundamental weakness in that report.
And the spending headlines keep stacking up. China is reportedly committing nearly $300 billion over five years to a national network of AI data centers. Nebius Group N.V. (NBIS) is investing 1.7 billion euros to build capacity in the U.K. Advanced Micro Devices Inc. (AMD) just announced plans to invest up to 2 billion pounds there over the same stretch. SK Telecom is planning a gigawatt-scale AI cloud in South Korea. OpenAI just raised $122 billion and filed for its IPO. SpaceX is set to raise roughly $75 billion in its own offering.
So what actually spooked the market? We look at three real risks: escalation with Iran sending oil above $110 to $120 and reigniting inflation, political shifts that shouldn’t matter until 2028, and the creeping sense that the market has gotten too euphoric. In the full episode, we walk through why each one, examined closely, looks far more manageable than the tape suggests.
The Toy Every Corporation Wants Then there’s the viral story that Uber (UBER) blew through its Anthropic token budget… held up in some corners as proof AI isn’t paying off. Our read flips that on its head: buy a kid a new toy, and of course he plays with it every waking hour until you set some limits. The limits don’t mean the toy was a mistake.
Companies are moving from token-maxing to token-budgeting – and a budget line item is precisely what institutionalization looks like. Read the conference calls, and company after company reports AI improving operations across software, hardware, and consumer businesses alike.
The $5 Trillion Floodgate The episode’s centerpiece is the wave of “kilicorn” IPOs – SpaceX near $1.75 trillion, OpenAI and Anthropic each tracking toward roughly $1.5 trillion. Call it $5 trillion in new market cap hitting public markets in a single year. Many investors read that as a top signal.
History reads it differently…
The giant IPOs of the dot-com era came in 1998 and 1999, and the smaller companies trickled through the gates afterward. The big bulls open the gates first. There’s also one development in particular that could supercharge one corner of this trade: reports that the White House is weighing direct stakes in frontier AI labs, which we interpret as an OpenAI story… and a bullish one for pre-IPO vehicles like SuRo Capital Corp. (SSSS).
Where does all that fresh IPO capital go? Straight back into compute… which means more networking, more memory, more chips, more cooling, more power.
The Jobs Report Mirage One last contrarian call. Last week’s strong jobs report – more than 170,000 added – revived claims that the AI labor apocalypse was overhyped. We walk through the Challenger, Gray & Christmas data telling a different story: nearly 100,000 job cuts in May, the largest May figure since 2020, with AI cited in roughly 40% of them. AI-driven cuts have already passed 88,000 this year – about 60% more than all of 2025, just five months in.
In the full episode, we lay out the specific accumulation zone we’re watching on the VanEck Semiconductor ETF (SMH), why we believe the Summer of AI resumes once the SpaceX IPO clears, and the one scenario that would actually change our minds.
Watch the latest episode of Being Exponential With Luke Lango here. And be sure to subscribe to Being Exponential on X (formerly Twitter) for more exclusive content.
Broadcom (AVGO 0.85%) has had a solid 2026, but a rough couple of weeks recently. It's up more than 13% for the year, but it used to be up around 40% prior to its earnings announcement. Now, it's down around 20% from its all-time highs.
Prior to the sell-off, it was pretty clear that Nvidia (NVDA +0.15%) was a better buy than Broadcom, but now that there has been a significant price correction, is that still the case? Let's take a look and see which of these two artificial intelligence (AI) chip makers is the better buy now.
Image source: The Motley Fool.
Nvidia and Broadcom are competing in the same market Nvidia is the industry standard in the AI investing realm. Its GPUs are commonly used in data centers to train and run AI models, and nearly every AI company has a large chunk of its computing power from Nvidia. With how rapidly Nvidia is growing, this isn't likely to change.
Furthermore, many companies have their workloads designed to run on Nvidia infrastructure, and changing to a different computing provider would be painful. But Broadcom is looking to change their minds.
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GPUs are incredibly powerful and suited for a wide variety of workloads, but the reality is that some GPUs only see one type of workload occur throughout their lifespan. So, some of its capabilities are wasted, and could have been sold at a cheaper price point if those features weren't included. Additionally, the resulting computing unit could also be optimized to run just that workload. This idea is what drives Broadcom's custom AI chip business.
Broadcom partners with AI hyperscalers to design a custom AI chip that is tailored for their workload. In a wide-ranging test, it would fail and lose to a GPU. But these custom AI chips outperform GPUs at a lower price point when only that optimized workload type is tested.
There is a massive market for both of them, so a winner-take-all scenario isn't necessary or likely. But there is a big difference in the products that each is offering. So, which one is doing better now?
Nvidia's overall growth is faster Nvidia is entirely focused on GPUs, and a vast majority of Nvidia's revenue comes from data center products, making it a highly focused business. In the company's fiscal 2027 first quarter (ended April 26), revenue rose 85% year over year, powered by massive AI demand. At face value, Broadcom's overall revenue grew at a 48% year-over-year pace, clearly and significantly behind Nvidia. But that's not the full picture.
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Broadcom has several legacy divisions that aren't experiencing the same growth levels as its custom AI chips business. If you look at its AI semiconductor revenue, which makes up slightly less than Broadcom's overall total, it grew at a 143% pace and next quarter Broadcom projects 200% growth. By the end of 2027, the company expects this business to generate $100 billion or more in revenue. For reference, it generated $10.8 billion in Q2 (ended May 3).
So, Nvidia may be growing faster overall, but Broadcom's AI chip business is growing faster.
Nvidia looks far cheaper Finally, let's look at valuation. I'll be using the forward price-to-earnings (P/E) ratio to value these two, because their massive growth rates should be accounted for when valuing the stocks. Despite its deep sell-off, Broadcom still trades at a massive premium to Nvidia.
AVGO PE Ratio (Forward) data by YCharts
While I get the excitement around Broadcom's stock regarding its custom AI chip business, it still has to execute to gain the market share, and it isn't leading to an overall business that's better than Nvidia's. Nvidia is the faster-growing and cheaper stock. It has deep partnerships within the industry and will be a top AI pick for years to come.
Despite Broadcom's sell-off, I still believe that Nvidia is the better investment, but I'm far from bearish on Broadcom, as it's another solid AI play.
SummaryBroadcom is poised for an AI-driven inflection point in eFY27, underpinned by multi-year XPU agreements with major CSPs and AI developers.AI semiconductor and networking demand, alongside infrastructure software growth, supports durable operating margins despite near-term gross margin pressures.I reiterate a strong buy rating with a $665/share price target (26.82x eFY27 EV/aEBITDA), reflecting robust growth expectations and a recent share price pullback. Pali Rao/E+ via Getty Images
Broadcom (AVGO) is set to realize its AI semiconductor inflection point in eFY27 going forward as CSPs and AI developers leverage XPUs to build out AI training and inferencing capacity. With growing demand for
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Broadcom (AVGO 0.85%) is in the middle of a correction after reporting solid results for its fiscal 2026 second quarter. Investors wanted more from a growth stock that was up by roughly 40% year to date before the report, and particularly wanted management to boost its outlook for its custom chip business. The post-earnings slide has brought the stock down by more than 20% from its peak, but that presents a compelling opportunity for long-term investors.
Image source: Getty Images.
Broadcom is gaining market share in the AI chip space This correction looks out of line with the fundamentals that Broadcom reported. It delivered 48% year-over-year revenue growth in the quarter, which ended May 3. Profits almost doubled year over year as well, resulting in a 42% net profit margin.
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Tucked away in the earnings report was the fact that the company's artificial intelligence (AI) chip revenue grew by 143% year over year to $10.8 billion. This part of the business represented almost half of Broadcom's Q2 revenue, and investors can expect accelerated revenue growth rates in the future.
Broadcom is gaining market share due to the growing popularity of its application-specific integrated circuits (ASICs), which are AI processors that are fundamentally different from the graphics processing units (GPUs) made by Nvidia (NVDA +0.15%) and others. While GPUs are flexible processors able to handle a wide range of computationally heavy tasks, Broadcom's ASICs are custom-designed in collaboration with each customer to handle only the narrow range of workloads those chips are expected to see. This makes them a more efficient and less costly option for those specific processing tasks.
Both companies work with the largest tech companies, but because of their differentiation, both can succeed in the AI chip space.
For instance, Advanced Micro Devices (AMD +4.91%) is another AI chipmaker that is doing well, but its GPUs compete directly with Nvidia's, and that's a hard battle to win. Broadcom caters to a different need among data center operators while benefiting from the broadly rising demand for AI chips.
Sequential growth is accelerating A key theme among many AI stocks has been strong quarter-over-quarter growth. As sequential growth compounds, it can result in sizable year-over-year improvements that translate into prolonged stock rallies.
Broadcom pointed toward continued sequential momentum when it set its fiscal Q3 revenue guidance at $29.4 billion. That would be a 32.5% sequential improvement. The AI chipmaker continues to growth its top line each quarter, and that growth has been accompanied by higher net profit margins in recent years.
It's also not uncommon for Broadcom to exceed its guidance. For instance, management had previously told investors to expect $22 billion in fiscal Q2 revenue. When it came time to share results, Broadcom actually reported $22.2 billion in revenue.
The guidance it offered does not indicate that the company's growth is slowing. Broadcom is still gaining market share, suggesting its growth will accelerate in future quarters.
Broadcom's optimistic guidance is based on soaring capital expenditures in AI Tech giants seem to be competing to spend the most on their AI infrastructure build-outs. Some Wall Street analysts believe that the total capital expenditures related to AI will exceed $1 trillion in 2027. A lot of that money will go toward buying AI chips and the necessary infrastructure to keep them running.
Broadcom's largest customers have been improving their fundamentals as well, and their AI expenditures are one reason why. For instance, in Alphabet's (GOOG +0.44%) (GOOGL +0.53%) first-quarter earnings release, CEO Sundar Pichai said that the company's AI investments have been "lighting up every part of the business." Google Cloud revenue surged by 63% year over year in the quarter, and the Tensor Processing Units it designed in partnership with Broadcom played a role in that momentum.
Alphabet isn't the only tech giant to have seen higher revenue and profits from its AI investments. Even Apple (AAPL 1.52%) is ramping up its AI investments after staying on the sidelines of the trend for a few years. Apple's higher R&D spending on AI will serve as another catalyst for Broadcom and other companies that are deeply integrated in AI infrastructure.
Tech companies are creating new businesses and optimizing their existing operations due to AI. As the tangible results of those efforts compound, demand for Broadcom's chips will increase further. With all that in mind, this month's short-term dip appears to ignore the long-term catalysts that set Broadcom up to continue outperforming the S&P 500.
Broadcom’s NASDAQ: AVGO latest earnings report was a blow to highly bullish investors who bid up shares drastically going into the release. In the seven days leading up to Broadcom's report, shares gained more than 15%, pushing them to never-before-seen levels exceeding $475.
Broadcom Today
$382.07 -3.50 (-0.91%)
As of 04:00 PM Eastern
52-Week Range$244.17▼
$495.00Dividend Yield0.68%
P/E Ratio63.68
Price Target$490.13
In contrast, Broadcom shares are down about 20% since the report, having dropped as low as $375. This came despite Broadcom posting beats on sales and adjusted earnings per share (EPS) and providing total guidance that was better than expected.
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However, artificial intelligence (AI) semiconductor sales guidance for Q3 fiscal 2026 (FY2026) and fiscal year 2027 (FY2027) fell short of very high expectations. (Note that Broadcom’s fiscal reporting period is slightly ahead of the standard reporting period used by many companies.)
Nonetheless, investors may be able to take solace in the fact that Broadcom’s report did little to deter the bullish sentiment among Wall Street analysts. In fact, analysts overwhelmingly moved their targets to the upside—a clear sign of confidence despite investor disappointment.
Analyst Price Targets Rise in Wake of Post-Earnings PlummetThe MarketBeat consensus price target on Broadcom sits near $490, a figure that implies solid upside of more than 20%. However, analysts by and large raised their price targets after the report. Overall, MarketBeat tracked just one analyst who lowered their target in response: Timothy Arcuri of UBS Group, whose target fell by just $5 to $485. In contrast, more than 10 analysts increased their target.
Current Price$381.16High Forecast$582.00Average Forecast$490.13Low Forecast$375.00Broadcom Stock Forecast Details
Among all targets updated after Broadcom’s report, the average was around $515—considerably more optimistic than the consensus forecast. This updated average implies upside in the range of 30% and signals an expectation that shares could move well beyond past all-time highs.
Updated price targets on Broadcom do have a somewhat wide range; the lowest updated targets come from both DA Davidson and Royal Bank of Canada at $400. Despite this, both firms increased their targets, doing so by 6.7% and 11.1%, respectively. Meanwhile, Harlan Sur at JPMorgan Chase & Co. increased his target by 16%, moving the figure up to $580, the most bullish among post-earnings updates.
When it comes to ratings, analysts are also overwhelmingly showing confidence in Broadcom. The stock now retains zero Sell ratings, three Hold ratings, and a whopping 30 Buy ratings.
JPMorgan’s Question Hits Shares While Its Price Target SoarsNotably, Harlan Sur asked a key question on Broadcom’s earnings call, seeking to get the semiconductor company to raise its FY2027 AI outlook. Interestingly, though the answer contributed to Broadcom’s sell-off, Sur himself drastically increased his price target.
After two quarters in FY2026, Broadcom generated $19 billion in AI revenue and is guiding for $56 billion for the full year. This implies $37 billion over the two final quarters of FY2026. For FY2027, Broadcom is guiding for full-year AI semiconductor revenue of over $100 billion. Together, this brings the company’s 18-month AI revenue guidance to $137 billion—with the $37 billion portion in the second half of FY2026 firmly solidified.
The goal of Sur’s question was to get Broadcom to raise the FY2027 portion. Sur said, “Just given the strength of all your programs… is it fair to assume that your 18-month AI backlog second half of this year to first half through all of fiscal '27 sits at $200 billion or better?”
Here, Sur is asking Broadcom if its 18-month AI revenue backlog actually sits at $200 billion or higher. If Broadcom said yes, it would be implicitly adding $63 billion in backlog to its 18-month $137 billion guidance ($137 billion + $63 billion = $200 billion). Given that the $37 billion figure for the rest of FY2026 is firmly in place, the $63 billion addition would have to be allocated to FY2027.
Ultimately, Hock Tan did not agree to Sur’s framing, holding the company’s FY2027 AI outlook at over $100 billion. Still, Tan did note that Broadcom “will exceed very easily $100 billion in 2027." Overall, Sur’s attempt to get Broadcom to concretely raise its FY2027 outlook failed—contributing to investor disappointment and the stock’s big drop.
Sur and Other Analysts Walk Away Feeling More Confident in BroadcomThe answer to Sur’s question was a key reason why Broadcom shares sold off, as investors wanted the company to increase its AI guidance. While this clearly disappointed the market, Sur’s own reaction to Broadcom’s report showed anything but disappointment. Sur issued a huge price target increase and now has one of the highest targets of any analyst covering the stock.
That is something worth taking notice of—the analyst scrutinizing this name closely walked away with a much greater level of confidence. Furthermore, general price target moves clearly showed that Wall Street analysts became more bullish after the report. Overall, these factors point to a continuation of Broadcom’s positive outlook, despite post-earnings volatility.
Should You Invest $1,000 in Broadcom Right Now?Before you consider Broadcom, you'll want to hear this.
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, /PRNewswire/ -- Broadcom Inc. (NASDAQ: AVGO) ("Broadcom") today announced that it has commenced cash tender offers (collectively, the "Offers") to purchase the outstanding notes described below, in each case upon the terms and subject to the conditions set forth in the Offer to Purchase dated June 11, 2026 (the "Offer to Purchase") and the accompanying notice of guaranteed delivery (the "Notice of Guaranteed Delivery").
The Notes offered to be purchased in the Offers, in the order of acceptance priority, are the 4.926% Senior Notes due 2037; 4.900% Senior Notes due 2038; 5.050% Senior Notes due 2030; 5.200% Senior Notes due 2032; 5.150% Senior Notes due 2031 and 4.900% Senior Notes due 2032 (collectively, the "Notes") for the consideration described below, up to an aggregate purchase price, excluding the Accrued Coupon Payment, of $2.5 billion (the "Consideration Cap Amount"). Broadcom may, but is under no obligation to, increase the Consideration Cap Amount. If a given Series of Notes is accepted for purchase pursuant to the Offers, all Notes of that Series that are validly tendered and not validly withdrawn will be accepted for purchase. If the Consideration Cap Condition is not satisfied for a Series of Notes, such Series of Notes may not be accepted for purchase even if one or more Series with a higher or lower Acceptance Priority Level are accepted for purchase. Capitalized terms used but not defined in this press release have the meanings given to them in the Offer to Purchase.
(1) No representation is made as to the correctness or accuracy of the CUSIP or ISIN numbers listed above.
The Total Consideration for each Series of Notes payable per each $1,000 principal amount of such Series of Notes validly tendered for purchase will be based on either the maturity date or par call date for the applicable Series and the applicable Fixed Spread for such Series of Notes, plus the Reference Yield based on the applicable Reference Security as quoted on the applicable Bloomberg Reference Page as of 11:00 a.m., New York City time, on June 17, 2026, unless extended by Broadcom with respect to the applicable Offer. Promptly after 11:00 a.m., New York City time, on June 17, 2026, the Price Determination Date, unless extended with respect to any Offer, Broadcom will announce in a press release, among other things, the Total Consideration applicable to each Series of Notes accepted for purchase. In addition to the applicable Total Consideration, Holders whose Notes are accepted for purchase pursuant to an Offer will receive an Accrued Coupon Payment.
The Offers are scheduled to expire on the Expiration Date, which is 5:00 p.m., New York City time, on June 17, 2026, unless extended or earlier terminated. Notes tendered for purchase may be validly withdrawn at any time at or prior to 5:00 p.m., New York City time, on June 17, 2026, unless extended by Broadcom.
The deadline to validly tender Notes using the guaranteed delivery procedures is 5:00 p.m., New York City time, on June 22, 2026, unless extended by Broadcom (the "Guaranteed Delivery Date").
The Initial Settlement Date will be the first business day after the Expiration Date and is expected to be June 18, 2026. The Guaranteed Delivery Settlement Date will be the first business day after the Guaranteed Delivery Date and is expected to be June 23, 2026.
The Offers are subject to certain conditions as described in the Offer to Purchase. If any condition is not satisfied, Broadcom is not obligated to accept for payment, purchase or pay for, and may delay the acceptance for payment of, any tendered Notes, in each case subject to applicable law, and may terminate or alter any or all of the Offers. The Offers are not conditioned on the tender of any aggregate minimum principal amount of Notes of any Series (subject to minimum denomination requirements as set forth in the Offer to Purchase), the Offers are not subject to a financing condition, and none of the Offers is conditioned on the consummation of any of the other Offers by Broadcom.
Broadcom has retained Barclays Capital Inc. and Citigroup Global Markets Inc. to act as dealer managers (the "Dealer Managers") for the Offers. D.F. King & Co., Inc. will act as the Tender and Information Agent for the Offers. For additional information, please contact: Barclays Capital Inc. at +1 (800) 438-3242 (toll-free) or +1 (212) 528-7581 (collect); or Citigroup Global Markets Inc. at +1 (800) 558-3745 (toll-free) or +1 (212) 723-6106 (collect). Requests for documents and questions regarding the tendering of Notes may be directed to D.F. King & Co., Inc. by telephone at +1 (212) 257-2468 (for banks and brokers only) and +1 (800) 967-7635 (for all others toll-free), by email at [email protected] or to the Dealer Managers at their respective telephone numbers. Copies of the Offer to Purchase and the Notice of Guaranteed Delivery are available at: www.dfking.com/avgo. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offers.
Holders of Notes are advised to check with each bank, securities broker or other intermediary through which they hold Notes as to when such intermediary would need to receive instructions from a beneficial owner in order for that Holder to be able to participate in, or withdraw their instruction to participate in the Offers before the deadlines specified herein and in the Offer to Purchase. The deadlines set by any such intermediary and DTC for the submission and withdrawal of tender instructions may be earlier than the relevant deadlines specified herein and in the Offer to Purchase.
This press release is neither an offer to purchase nor a solicitation of an offer to sell the Notes or any other securities. The Offers are made only by and pursuant to the terms of the Offer to Purchase and only to such persons and in such jurisdictions as is permitted under applicable law. The information in this press release is qualified by reference to the Offer to Purchase. None of Broadcom, the Dealer Managers or the Tender and Information Agent makes any recommendations as to whether Holders should tender their Notes pursuant to the Offers. Holders must make their own decisions as to whether to tender Notes, and, if so, the principal amount of Notes to tender.
Forward-Looking Statements
This press release contains forward-looking statements (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended). These forward-looking statements are based on current expectations and beliefs of Broadcom's management, current information available to Broadcom's management, and current market trends and market conditions, and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Accordingly, undue reliance should not be placed on such statements. All forward-looking statements are qualified in their entirety by reference to the risk factors discussed under the heading "Risk Factors" in Broadcom's Annual Report on Form 10-K for the year ended November 2, 2025, Quarterly Reports on Form 10-Q for the periods ended February 1, 2026 and May 3, 2026, and any subsequent reports that are filed with the Securities and Exchange Commission and include some important risk factors that may affect future results. Broadcom undertakes no intent or obligation to publicly update or revise the forward-looking statements made in this press release, except as required by law.
About Broadcom
Broadcom Inc. (NASDAQ: AVGO) is a technology leader that designs, develops, and supplies semiconductors and infrastructure software for global organizations' complex, mission-critical needs. Broadcom combines long-term R&D investment with superb execution to deliver the best technology, at scale. Broadcom is a Delaware corporation headquartered in Palo Alto, CA.
Contact
Ji Yoo
Investor Relations
[email protected]
650-427-6000
Wall Street’s verdict on Broadcom (NASDAQ:AVGO | AVGO Price Prediction) is unambiguously bullish, with the analyst consensus price target now sitting above the stock’s own 52-week high after a brutal post-earnings selloff. The smart money signal is clear: sell-side desks have leaned harder into the name precisely as retail capitulated, and institutional positioning hasn’t blinked.
Broadcom stock currently trades near $376, after a sharp post-earnings drawdown from $495 at the time of its Q2 FY2026 earnings filing. The pullback came despite a record quarter and a guidance bar that implies 84% year-over-year revenue growth for Q3 FY2026.
That dislocation is the headline story. Analysts haven’t followed retail out the door, and the consensus number now looks like a monster target rather than a modest one.
The Analyst Signal Is Loud The Wall Street consensus price target on Broadcom stock stands at $522.06, a level that sits above the stock’s 52-week high of $495. The coverage book is heavily skewed bullish: 7 Strong Buy, 37 Buy, 4 Hold, zero Sell, and zero Strong Sell ratings, or roughly 92% bullish.
Institutional positioning corroborates that conviction. 80% of Broadcom’s float sits in institutional hands, and there’s no visible exit by the funds that actually move the tape. Mizuho’s recent ASIC channel-check note flagged a large TPU shipment ramp and a sizable revenue opportunity tied to the Google relationship and the Apollo and Blackstone AI partnership, an example of the bullish framework on the sell side.
Crowd sentiment tells the opposite story. Reddit chatter on AVGO stock has been neutral with low activity, and a Polymarket contract on Broadcom becoming the second-largest company by market cap on June 30 sits at just less than 1% implied probability. In other words, the professional bid and the retail bid have decoupled.
The Gap Between Wall Street and the Tape The arithmetic gap between the $522.06 consensus and Broadcom’s current handle widened sharply this month after AVGO stock fell 12% over the past month, even as fiscal year results came in ahead of estimates on every line. Broadcom’s Q2 FY2026 non-GAAP EPS landed at $2.44, AI semiconductor revenue hit $10.8 billion, and management guided Q3 AI revenue to $16 billion, up over 200% year over year.
The bear case is real and worth weighing, though. Broadcom trades at a P/E ratio of 66x trailing and a forward earnings multiple of 34x, gross margin is set to compress to 74% in Q3 as TPU mix scales, and the customer base is concentrated among a handful of hyperscalers. Broadcom CFO Kirsten Spears acknowledged on the call that “as the TPUs continue to accelerate, there will be pressure overall on gross margin.”
The bull case rests on visibility. Broadcom CEO Hock Tan reiterated guidance for fiscal 2027 AI semiconductor revenue in excess of $100 billion, with Q2 AI bookings of over $30 billion against $10.8 billion shipped. That kind of book-to-bill is what the consensus target is leaning on.
Is the Smart Money Right? The honest read is that Wall Street’s $522 price target for Broadcom stock is probably still too cheap. Broadcom’s record AI revenue, 200%-plus guided growth, and a $30 billion bookings number are hard to dismiss. The risks (valuation, margin mix, customer concentration) shouldn’t be overlooked, however.
Investors weighing AVGO stock today have a clean setup to evaluate against their own time horizon and risk tolerance. Moderate position sizing and a willingness to add on further weakness is the framework most consistent with what the consensus target, the institutional book, and Broadcom’s own guidance are saying together.
SpaceX (SPCX +19.17%), the aerospace and AI company founded by Elon Musk, will go public on June 12. At its target valuation of $1.77 trillion, it will be the biggest IPO in history.
However, it will also be valued at 95 times its 2025 sales. It's also reportedly more than four times oversubscribed, which suggests it could start trading at well over 100 times sales. That's a frothy valuation for an unprofitable company that grew its revenue by 33% last year.
So instead of chasing SpaceX, which looks more like a meme stock with some glaring flaws, it's smarter to invest in some established growth stocks with clearer long-term catalysts. These two stocks fit that description: Broadcom (AVGO 0.85%) and ASML (ASML 1.70%).
Image source: Getty Images.
Broadcom Over the past decade, Broadcom has expanded through acquisitions of other chipmakers and infrastructure software companies. The bold strategy transformed it into a more diversified tech company than its peers in the semiconductor and software industries.
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Broadcom once mainly produced networking, wireless, mobile, and infrastructure chips. But over the past few years, most of its growth has been driven by sales of custom application-specific integrated circuits (ASICs) for the artificial intelligence (AI) market.
Unlike Nvidia (NVDA +0.15%), which produces general-purpose data center GPUs for AI tasks, Broadcom's AI accelerators are customized for hyperscalers. At scale, these custom chips can handle AI tasks more cost-efficiently than Nvidia's stand-alone GPUs. Broadcom also locked in its customers by bundling its AI chips with its non-AI chips and infrastructure software.
In fiscal 2025 (which ended last November), Broadcom's AI chip sales surged 65% to $20 billion, accounting for 31% of its top line. It expects its AI chip sales to soar fivefold to over $100 billion in fiscal 2027 (at least 58% of its projected $171.5 billion in revenue).
From fiscal 2025 to fiscal 2028, analysts expect Broadcom's revenue and EPS to grow at CAGRs of 53% and 66%, respectively, as the AI market expands. Yet its stock still looks surprisingly affordable at 23 times next year's earnings. So if you're looking for a simple way to profit from the ongoing AI boom, Broadcom checks all the right boxes.
ASML Broadcom, Nvidia, and the world's other top chipmakers couldn't produce their most advanced chips without the Dutch semiconductor equipment giant ASML. ASML is the world's largest producer of lithography systems, which are used to optically etch circuit patterns onto silicon wafers. It's also the only producer of extreme ultraviolet (EUV) lithography systems, which are required to manufacture the world's smallest, densest, and most power-efficient chips.
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ASML perfected its EUV technology over the past three decades, and its massive machines cost up to $400 million and require multiple planes to ship. All of the most advanced chip foundries -- including TSMC, Samsung, and Intel -- use those systems to manufacture chips for fabless chipmakers like Broadcom and Nvidia.
ASML's control of that crucial technology gives it tremendous pricing power and makes it a linchpin of the semiconductor market. It also makes it one of the easiest ways to profit from the insatiable demand for new chips without putting too much faith in individual chipmakers.
From 2025 to 2028, analysts expect ASML's revenue and EPS to grow at CAGRs of 17% and 26%, respectively. The soaring demand for new AI and memory chips will drive its near-term growth, while its newest high-NA EUV systems (which will enable its foundry customers to manufacture even smaller chips) will drive its longer-term growth. It might not seem like a bargain at 36 times next year's earnings, but its strengths justify that higher valuation.
