A top U.S. trade official said on Tuesday that "very few" of Nvidia's H200 artificial intelligence chips have been shipped to China and Hong Kong.
"The bottom line is very few shipments against licenses for H200s and equivalents have taken place. It's a very small quantity of chips," Under Secretary of Commerce for Industry and Security Jeffery Kessler said at a congressional hearing.
The remark is a sign that H200 shipments to China have restarted, potentially boosting Nvidia's sales even higher. Since last year, Nvidia has excluded any potential Chinese AI chip revenue from its forecasts and CEO Jensen Huang said on CNBC in May that he told investors to "expect nothing" from Chinese sales.
An Nvidia representative declined to comment.
Nvidia has long sought to ship its AI chips to China, which is one of the largest markets for AI development, but has found itself caught up in a trade and technology war between Washington and Beijing, with most of the company's products under export restrictions to China.
Read more CNBC tech newsBurnout, frustration and heartbreak: Amazon layoffs take their toll in saturated job marketMeta's Louisiana data center investment to reach $50 billion, aided by generous tax incentivesEurope's Anduril rival Helsing raises $1.8 billion at $18 billion valuationElon Musk and Sam Altman spar on X after Apple files OpenAI lawsuitIn December, President Donald Trump said that the U.S. government would approve China sales of the H200 AI chip in exchange for a 25% cut. Licenses for the chips, which some in the administration say can be used for military purposes, were issued earlier this year.
The H200 is an older Nvidia chip in the Hopper generation, while American companies are currently using faster and more powerful Blackwell chips.
Kessler said that the U.S. government assessed companies that want the H200 chips on a case-by-case basis, with applicants needing to meet national security requirements and submit to inspections to make sure the chips are compliant.
"There are cases where we deny the license applications we receive," Kessler said.
But it remains unclear whether China will ultimately approve the import of large quantities of the chips. Without Nvidia chips, Chinese firms will be forced use domestic alternatives, which are considered inferior for AI training.
Nvidia (NVDA - Free Report) could be a solid choice for investors given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.
The sole determinant of the Zacks rating is a company's changing earnings picture. The Zacks Consensus Estimate -- the consensus of EPS estimates from the sell-side analysts covering the stock -- for the current and following years is tracked by the system.
Since a changing earnings picture is a powerful factor influencing near-term stock price movements, the Zacks rating system is very useful for individual investors. They may find it difficult to make decisions based on rating upgrades by Wall Street analysts, as these are mostly driven by subjective factors that are hard to see and measure in real time.
As such, the Zacks rating upgrade for Nvidia is essentially a positive comment on its earnings outlook that could have a favorable impact on its stock price.
Most Powerful Force Impacting Stock PricesThe change in a company's future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the near-term price movement of its stock. The influence of institutional investors has a partial contribution to this relationship, as these big professionals use earnings and earnings estimates to calculate the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their bulk investment action then leads to price movement for the stock.
Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for Nvidia imply an improvement in the company's underlying business. Investors should show their appreciation for this improving business trend by pushing the stock higher.
Harnessing the Power of Earnings Estimate RevisionsAs empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, tracking such revisions for making an investment decision could be truly rewarding. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .
Earnings Estimate Revisions for NvidiaFor the fiscal year ending January 2027, this maker of graphics chips for gaming and artificial intelligence is expected to earn $9.10 per share, which is unchanged compared with the year-ago reported number.
Analysts have been steadily raising their estimates for Nvidia. Over the past three months, the Zacks Consensus Estimate for the company has increased 13.7%.
Bottom LineUnlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
You can learn more about the Zacks Rank here >>>
The upgrade of Nvidia to a Zacks Rank #2 positions it in the top 20% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
Nvidia stock continued its recovery today, reaching its highest point since June 22 and up 10% from its low in June.
This rebound may continue as the stock forms a falling wedge pattern and its revenue and profit growth accelerate.
Nvidia NVDA stock has come under pressure in recent months and has lagged many of the market's biggest winners this year. The shares are up about 10% year-to-date, significantly underperforming the Nasdaq 100 Index, which has gained 15.7% over the same period.
This performance has made Nvidia stock a bargain, with its forward price-to-earnings ratio being 22.
Its multiple is slightly higher than that of the S&P 500 Index, which stands at 21. It is also much lower than its five-year multiple of 43.
A DCF valuation by Simply Wall St. places its fair price at $220, meaning that it is about 7.7% cheaper than its fair value. Similarly, the forward PEG ratio has dropped to 0.50, lower than the five-year average of 1.46.
These valuation numbers mean that the company may decide to boost its share repurchase program.
In its last earnings report, it boosted its share repurchases by $80 billion. It has been reducing its outstanding shares in the past few years, moving from 24.3 billion in 2023 to 24.2 billion.
Growth momentum continues, but risks remainsNvidia stock may benefit from the rising revenue and profitability growth. The most recent numbers revealed that its revenue jumped by 85% to $81.6 billion as companies continued their capital spending.
All indications are that the robust spending continued last quarter, as evidenced by the recent earnings reports by companies like Samsung and Micron. Also, most hyperscalers like Microsoft and Amazon have continued boosting their spending.
Analysts expect that its business will continue doing well. The average estimate is that its revenue would jump by 96.2% in the last quarter to $91.75 billion.
Nvidia has also moved to the CPU industry, which is expected to benefit from the boom in the AI agent sector. The company predicts that its CPU business will jump to over $20 billion this year.
Nvidia faces some major challenges, including the rising competition from its clients. OpenAI has already unveiled its chip, which is being made in a collaboration with Broadcom.
Google is ramping up the production of its TPUs, while Microsoft and Amazon are working on their chips.
Also, there is a likelihood that the data center industry will start slowing over time.
For example, New York has become the first state to impose a moratorium on data centers, and more states may follow.
Nvidia stock chart | Source: TradingView
The daily chart shows that the NVDA share price may rebound in the near term. It has formed a falling wedge pattern, and is now slightly above its upper side.
The stock also found substantial support at the 200-day Exponential Moving Average (EMA). At the same time, the stock is inside the Ichimoku cloud indicator.
Therefore, the stock will likely continue rising as bulls target the all-time high of $235. A surge above that level may push it to the next key resistance at $300.
NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) just posted the kind of quarter that makes bold price targets look reasonable. It delivered $81.615 billion in Q1 FY27 revenue, up 85.23% year over year, with Data Center Networking alone growing 199% YoY to $14.8 billion.
Yet shares sit at just $203.53, up only 9.26% YTD. The question I want to answer: can this stock actually double to $400 by 2031? Let me walk through the math.
What’s Holding Nvidia Back Right Now Nvidia’s fundamentals are accelerating while the stock has stalled. Shares are down 0.81% over the past month and trade 28% below the 52-week high of $236.26. The Reddit crowd has fixated on competitive threats, from DeepSeek’s rumored in-house chip to Meta’s $145B infrastructure budget aimed partly at custom silicon.
Guidance also excludes any Data Center compute revenue from China, a real overhang. And with a beta of 2.21, this stock swings hard when sentiment wobbles. Insider activity has skewed toward selling, which does not help. The setup is a fundamentals-versus-narrative standoff, and narrative is winning short term.
Wall Street Sees 48% Upside. Our Model Says 27% Analyst consensus sits at $301.62, with 10 Strong Buy, 48 Buy, 2 Hold, and 1 Sell ratings. That is 95% bullish sentiment from the sell side. Our base case is more measured at $259.23, roughly 27.36% upside, with an optimistic case of $269.41 and a bear case of $225.70. Confidence sits at 90%.
My take: analysts are actually not aggressive enough on the multi-year view. With quarterly earnings growth of 214.5% YoY and Q2 FY27 revenue guided to $91 billion, the 12-month models remain anchored to yesterday’s earnings power.
The Path to $400 Per Share Reaching $400 from today’s price of $203.53 would require a gain of 96.5%. With forward EPS of $8, the bold target sits well above our base case of $259.23 35x, implying the path depends on EPS growth that compresses the multiple as the price climbs rather than on multiple expansion alone.
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That is the whole game. If EPS scales from $8 toward $12 to $14 over five years (plausible given $96.58 billion FY26 free cash flow and $119 billion in supply commitments), a 30x multiple gets you there.
Jensen Huang framed the tailwind bluntly: “The buildout of AI factories, the largest infrastructure expansion in human history, is accelerating at extraordinary speed.” The $80 billion buyback authorization also shrinks the share count, doing part of the work. The primary risk is that hyperscaler capex normalizes before EPS catches up to the multiple.
Where Nvidia Trades Today vs Its Earnings Power At $203.53 against forward EPS of $8, Nvidia’s forward P/E 25x is not expensive for a company compounding revenue north of 85% YoY with 75% gross margins.
Shares sit between a 52-week low of $163.85 and high of $236.26, meaningfully off the highs. The 10-year return of 15,652.27% is the context that matters: doubling from here in five years would represent a deceleration of the historical trend.
Is $400 Realistic? Here’s My Take My verdict: $400 by 2031 is achievable but not automatic. It requires 96.5% appreciation, and three things need to break right.
Hyperscaler AI capex has to stay elevated. Blackwell and Vera Rubin have to hold pricing power against custom silicon. And the China overhang either resolves or stops mattering. Any one of a demand air pocket, a margin compression event, or a serious tariff escalation could derail the thesis. Returns at this level shouldn’t be expected every year, but we’ve outlined the blueprint for how NVIDIA could reach $400 in 2031.
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Nvidia remains well-positioned for AI data center growth, according to KeyBanc analyst John Vinh, who raised his price forecast despite some near-term ramp delays.
KeyBanc Raises Nvidia ForecastVinh maintained an Overweight rating on Nvidia and raised his price forecast to $330 from $310. He said his takeaways were mixed but mostly positive, with a slight delay in the Vera Rubin ramp tied to thermal lid issues and SK Hynix qualification delays on HBM4.
The analyst said he sees limited risk to estimates because Nvidia can ship more B300 GPUs in place of R200. He expects Nvidia to ship 5.5 million to 6 million Blackwell GPUs this year, along with 1 million Hopper GPUs.
CoWoS Supply Supports AI DemandVinh said Nvidia’s 2026 CoWoS supply outlook remains unchanged at 650,000 interposers, while 2027 supply has been revised significantly higher to 1.1 million interposers. He said that the increase reflects strong demand and a full-year Rubin ramp.
The analyst expects Nvidia to ship 70,000 to 80,000 total racks this year, including 5,000 to 6,000 Vera Rubin racks. He also expects fewer than 1,000 LPU racks this year due to a delayed ramp, though demand remains strong.
Vinh said Nvidia remains uniquely positioned to benefit from secular growth in data center AI and machine learning. He also pointed to Nvidia’s CUDA software stack as a major barrier to entry and said competitive risks remain limited.
Hedge funds rushed back into U.S. semiconductor stocks last week, buying the sector at the fastest pace in at least three-and-a-half years after two straight weeks of heavy selling.
Hedge Funds Buy The DipGoldman Sachs data shared by The Kobeissi Letter showed semiconductor stocks now make up about 10% of total hedge fund exposure, roughly double last year’s level but below the nearly 14% peak in May.
The renewed buying suggests hedge funds see the recent chip-stock pullback as largely over, while ETF inflows show broader investor demand for AI-related semiconductor names.
Technical AnalysisNvidia is trading above its 20-day SMA ($202.05), 100-day SMA ($198.10), and 200-day SMA ($191.95), which keeps the intermediate-to-long trend constructive even after recent chop. The catch is the stock is still trading slightly below its 50-day SMA ($209.27), and the 20-day SMA remains below the 50-day SMA—an early "cooling" signal that can cap rallies until price reclaims that zone cleanly.
Earnings OutlookLooking further out, the next major catalyst for the stock arrives with the August 26, 2026 (estimated) earnings report.
EPS Estimate: $2.07 (Up from $1.04 YoY) Revenue Estimate: $91.70 Billion (Up from $46.74 Billion YoY) Valuation: P/E of 31.2x (Indicates premium valuation relative to peers) Top ETF ExposureSignificance: Because NVDA carries such a heavy weight in these funds, any significant inflows or outflows will likely trigger automatic buying or selling of the stock.
Price ActionNVDA Stock Price Activity: Nvidia shares were up 2.65% at $208.93 at the time of publication on Tuesday, according to Benzinga Pro data.
Image via Shutterstock
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NVIDIA (NASDAQ: NVDA | NVDA Price Prediction) and SanDisk (NASDAQ: SNDK) both delivered blowout AI infrastructure quarters. NVIDIA sells the compute and networking silicon that trains frontier models. SanDisk sells the NAND flash that feeds those models data.
One is the diversified platform king. The other is a freshly independent memory pure play riding a shortage cycle.
Data Center Compute Carries One. NAND Pricing Carries the Other. NVIDIA’s Q1 FY2027 print was a Data Center story. Revenue hit $81.615 billion, up 85.23% YoY, with Data Center alone contributing $75.246 billion (+92% YoY). Networking was the sleeper hit at $14.8 billion (+199% YoY), driven by InfiniBand, Spectrum-X, and NVLink.
Jensen Huang framed the moment bluntly: “The buildout of AI factories, the largest infrastructure expansion in human history, is accelerating at extraordinary speed.” Non-GAAP EPS of $1.87 beat expectations.
SanDisk’s Q3 FY2026 was a different shock. Revenue of $5.95 billion came in 251% higher YoY, and EPS of $23.41 handily beat the $14.66 consensus. Gross margin swung from 22.5% to 78.4% in a year, largely on NAND pricing.
Datacenter revenue rocketed 645% YoY to $1.47 billion. CEO David Goeckeler called it “a fundamental inflection point” for the company’s mix shift toward Datacenter.
Platform Empire vs. Memory Cycle Bet NVIDIA is spending like a company that already won, with $119 billion in supply commitments, an $80 billion buyback authorization, and a dividend hike from $0.01 to $0.25 per share. Its next act (Vera Rubin, Blackwell 300, DRIVE Hyperion with Hyundai, Kia, and Uber) reads like a diversified portfolio.
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Lens NVIDIA SanDisk Core Bet AI compute and networking platform Datacenter NAND mix shift Forward P/E 24 29 Key Vulnerability No H20 shipments to China NAND price cyclicality, Kioxia dependence SanDisk is playing a narrower hand. Goeckeler is anchoring the business to multi-year customer engagements backed by firm financial commitments, with five NBM agreements signed between Q3 and Q4. The zero long-term debt balance sheet after retiring $650 million is impressive, but the model leans on Kioxia manufacturing and structural NAND tightness.
The Next Test Is Whether Storage Keeps Up With Compute NVIDIA guided Q2 to $91 billion in revenue, which assumes zero China Data Center compute. I will watch whether hyperscaler backlog absorbs that gap cleanly.
SanDisk’s Q4 guide of $7.75 to $8.25 billion in revenue and $30 to $33 EPS is aggressive; the question is how many more NBM contracts close before pricing normalizes. Reddit chatter has flagged put option gains and pullback anxiety around SanDisk after its parabolic run.
Why I Lean NVIDIA for Durability, SanDisk for Torque For a three-year holding period, NVIDIA looks like the more durable option. The $5.1 trillion market cap and 63% profit margin feel unusual for a company still compounding revenue at 85%, and the platform lock-in across cloud, sovereign AI, and autonomy is hard to disrupt.
SanDisk is the more interesting risk trade. Shares are up 605.19% year to date, and analysts see a target around $2,035, but the thesis rides on a memory shortage analysts do not expect to ease before 2028. For a turnaround-hungry investor, that torque is the appeal. The platform durability argument favors NVIDIA, while SanDisk’s next two quarters warrant close attention before the thesis firms up.
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American Airlines (AAL - Free Report) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.
A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.
The power of a changing earnings picture in determining near-term stock price movements makes the Zacks rating system highly useful for individual investors, since it can be difficult to make decisions based on rating upgrades by Wall Street analysts. These are mostly driven by subjective factors that are hard to see and measure in real time.
Therefore, the Zacks rating upgrade for American Airlines basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
Most Powerful Force Impacting Stock PricesThe change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their bulk investment action then leads to price movement for the stock.
For American Airlines, rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher.
Harnessing the Power of Earnings Estimate RevisionsEmpirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions are tracked for making an investment decision. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .
Earnings Estimate Revisions for American AirlinesThis world's largest airline is expected to earn $0.49 per share for the fiscal year ending December 2026, which represents no year-over-year change.
Analysts have been steadily raising their estimates for American Airlines. Over the past three months, the Zacks Consensus Estimate for the company has increased 138.1%.
Bottom LineUnlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
You can learn more about the Zacks Rank here >>>
The upgrade of American Airlines to a Zacks Rank #2 positions it in the top 20% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
American Airlines (AAL - Free Report) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.
The upward trend in estimate revisions for this world's largest airline reflects growing optimism of analysts on its earnings prospects, 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. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.
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 American Airlines, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates 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 RevisionsThe earnings estimate of $0.05 per share for the current quarter represents a change of -94.7% from the number reported a year ago.
Over the last 30 days, two estimates have moved higher for American Airlines while one has gone lower. As a result, the Zacks Consensus Estimate has increased 386.49%.
Current-Year Estimate RevisionsFor the full year, the earnings estimate of $0.49 per share represents a change of +36.1% from the year-ago number.
The revisions trend for the current year also appears quite promising for American Airlines, with seven estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 792.54%.
Favorable Zacks RankThe promising estimate revisions have helped American Airlines earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom LineAmerican Airlines shares have added 5.5% 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.
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Bank of America’s second-quarter earnings call Tuesday (July 14) was dominated by a simple message: Consumers in the United States are spending, companies are borrowing, capital markets are open, and the economy is proving stronger than expected.
That backdrop helped the bank cruise past its earnings targets. Beneath the victory lap, however, CEO Brian Moynihan and Chief Financial Officer Alastair Borthwick also offered signals on artificial intelligence, private credit, consumer risk and the bank’s increasingly digital operating model.
For Bank of America, AI is becoming both a revenue engine and a productivity tool. Borthwick said the bank is benefiting from financing the “massive capital investment and infrastructure build” around AI, particularly through investment banking and Global Markets. Internally, Bank of America employees are generating more than 400,000 AI prompts a day. The bank has approved more than 300 AI use cases, including 114 live generative AI applications and 34 that are fully implemented.
The payoff should extend beyond cutting costs, management said.
“Here’s what’s going to come out of that, we believe: growth, efficiency, risk management and resiliency,” Borthwick said.
Moynihan added that AI is already making software development more productive, so the same technology budget should produce more code over time. Still, the technology needs controls.
“It has great utility,” Moynihan said. “It has to be carefully managed. You have to have your data perfect. You have to have your rules base, so it doesn’t make mistakes.”
Private credit also came up, although management used the broader phrase “private capital lending.” Moynihan said some highly leveraged activity had moved outside the banking system, but parts of it are returning on terms banks can accept. More broadly, he said feared credit problems have not materialized.
“The issues of the moment, whether it’s real estate four or five years ago or whether it was private capital lending and all this stuff, just aren’t surfacing the way people thought they would,” Moynihan said.
The consumer picture was similarly steady. Card charge-offs and delinquencies improved from both the prior quarter and a year earlier, Borthwick said. Bank of America’s credit card charge-off rate fell to 3.55%, from 3.82% a year ago, while early- and late-stage delinquencies improved for a fifth consecutive quarter. At the same time, combined credit and debit card spending rose 9% to $266 billion, and management said broader consumer spending was running more than 6% above last year during the second quarter.
Digital Banking Stars in Q2 Digital banking is increasingly tied to the bank’s funding advantage. Bank of America reported roughly 50 million active digital banking users, 24.6 million active Erica (AI assistant) users and 4.4 billion digital logins during the quarter. Seventy percent of consumer sales were digitally enabled.
Digital tools, security and rewards help the bank win operating accounts and maintain a favorable deposit mix, Borthwick said. It’s a reminder that digital engagement is not just a service channel, but a core part of deposit economics.
On the economy, the bank’s research team raised its 2026 U.S. growth forecast to 2.2%, Moynihan said, calling the economy “more durable than expected,” supported by consumer spending, AI-driven investment and lower energy costs. He also identified inflation and tight monetary policy as the main risks.
Commercial loan growth was broader than the AI buildout, with business banking, commercial banking and corporate banking all contributing, Borthwick said.
Cryptocurrency and stablecoins were not discussed in either the prepared remarks or the analyst Q&A. On the call, Bank of America’s digital story remained centered on Erica, Zelle, CashPro and AI-enabled banking rather than crypto or stablecoins.
As for the headline numbers, Bank of America reported net income of $9.1 billion, up 27% year over year, on revenue of $31.6 billion, up 15%. Diluted earnings per share rose 34% to $1.21. Net interest income increased 9% to $16 billion, investment banking fees jumped 50% to $2.1 billion, and the bank delivered 6.6% operating leverage with a 17% return on tangible common equity.
Bank of America Corporation delivered a strong Q2 '26, beating top and bottom line expectations with robust net interest income and loan growth. BAC's net interest income rose to $16.2 billion, up $300 million sequentially, supported by favorable deposit and loan mix changes and a shift towards higher-yielding loans. BAC shares trade at 1.5x P/B, above the 3-year average, with potential for further revaluation if the Federal Reserve either keeps rates steady or raises interest rates in 2026.
On Tuesday, July 14, Bank of America (NYSE:BAC) blew past Wall Street's expectations and delivered results for one of its strongest quarters in years.
Second-quarter revenue grew about $4.2 billion since last year (from $27.4 billion to $31.6 billion), a roughly 15% surge that beat Wall Street's estimate of $30.8 billion. Earnings, likewise, rose 34% to $1.21, a comfortable beat on analysts' estimate of about $1.13. Just as important was the bank's 17% return on average tangible common equity -- a key measure of the bank's profitability -- which is well within its target range of 16% to 18%.
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Indeed, every one of Bank of America's business segments reported double-digit net income growth, with total net income growing 27% to $9.1 billion. But does that strong performance make the bank stock a long-term buy today? Let's take a look.
Image source: Bank of America.
Bank of America's underlying business is getting stronger. Most people will recognize Bank of America as a big bank. But beyond brand recognition, the nature of its business might not be as easy to put into words.
In a nutshell, Bank of America operates several financial businesses under one brand. Its most familiar business -- the banking side -- takes deposits from consumers and companies, then uses that money to fund credit cards, mortgages, and other loans. The difference between the interest Bank of America collects from borrowers and the interest it pays to depositors is a huge factor in its profitability.
In that regard, Bank of America's latest quarter was very encouraging. Net interest income rose 9% to roughly $16 billion, while average loans and leases also grew 8% to about $1.2 trillion. Put differently, Bank of America lent more money and made earned more from these interest-bearing assets -- a healthy sign, so long as borrowers keep paying.
The strongest part of the quarter warrants a closer look Bank of America also saw strong growth across its wealth management, trading revenue, and investment banking services. But it's this growth, more than anywhere else, that gets my spidey senses tingling.
To set the stage properly, here's what Bank of America reported: sales and trading revenue rose from $5.3 billion to $7.1 billion, contributing about $1.8 billion of additional revenue. Likewise, investment banking fees grew to $2.1 billion from $1.4 billion, an increase of about $700 million.
Together, these businesses generated roughly $2.5 billion in additional revenue, nearly 60% of the company's total year-over-year revenue growth of $4.2 billion.
This is phenomenal growth, but I don't think investors should treat it as a "new normal." Indeed, much of the second-quarter growth on this side of the business likely was benefited from unusual circumstances: the Iran conflict whipped up big waves of market volatility, whereas blockbuster offerings like SpaceX probably helped lift the company's investment-banking fees.
That's not to say the company's wealth management and Wall Street operations are weak; clearly, the contrary is true. But we shouldn't assume that this quarter's growth will repeat, since much of it seems driven by a hot market rather than a fundamental change in the business.
Yes, I would call Bank of America a buy right now. Although I'd caution against expecting this quarter's trading-fueled growth to repeat, it's encouraging to see growth in its core banking operation. Adding to this, Bank of America's recent stress test results -- which showed it can hypothetically withstand a severe economic downturn -- and the long-term investment case look solid.
Bank of America Corporation (BAC) Q2 2026 Earnings Call July 14, 2026 8:30 AM EDT
Company Participants
Lee McEntire - Head of Investor Relations & Local Markets Organization
Brian Moynihan - Chairman & CEO
Alastair Borthwick - Executive VP & CFO
Conference Call Participants
Christopher McGratty - Keefe, Bruyette, & Woods, Inc., Research Division
Kenneth Usdin - Bernstein Autonomous LLP
Manan Gosalia - Morgan Stanley, Research Division
Benjamin Gerlinger - Citigroup Inc., Research Division
L. Erika Penala - UBS Investment Bank, Research Division
Michael Mayo - Wells Fargo Securities, LLC, Research Division
Gerard Cassidy - RBC Capital Markets, Research Division
Matthew O'Connor - Deutsche Bank AG, Research Division
Presentation
Operator
Hello, and welcome, everyone, joining today's Bank of America earnings announcement.
[Operator Instructions] Please note this call is being recorded. [Operator Instructions]
It is now my pleasure to turn the meeting over to Lee McEntire, Bank of America. Please go ahead.
Lee McEntire
Head of Investor Relations & Local Markets Organization
Thank you. Good morning, everyone, and thank you for joining us to talk through our second quarter results and what is a busy bank earnings day. As always, the earnings release and presentation are posted on the Investor Relations section of bankofamerica.com, and we'll reference those materials during the call.
Before we begin, a quick reminder that during the call, we may make forward-looking statements and refer to non-GAAP financial measures. These measures reflect management's current views and are subject to risks and uncertainties, which are outlined along with the relevant GAAP reconciliations in our earnings materials and our SEC filings on our website.
With that, I'll turn the call over to Brian Moynihan, our CEO.
Brian Moynihan
Chairman & CEO
Good morning, and thank you for joining us. Once again, our team delivered strong second quarter results, extending our momentum of the past several quarters. Our revenue grew 15% year-over-year to $31.6
JPMorgan Chase & Co.’s NYSE: JPM Q2 results and, more specifically, comments from CEO Jamie Dimon, indicate an all-clear condition for stocks. While Dimon's quarterly statement contained the usual misgivings and noted risks, the message was as bullish as it's been in many years.
JPMorgan Chase & Co. Today
JPM
JPMorgan Chase & Co.
$340.94 +6.42 (+1.92%)
As of 02:49 PM Eastern
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52-Week Range$279.10▼
$344.73Dividend Yield1.76%
P/E Ratio16.33
Price Target$345.33
In his view, the firm benefited from a particularly favorable environment characterized by elevated market activity, notable economic resilience, business investment, and hiring. Hiring is especially important for the broader market, as it supports consumer spending and overall consumer health.
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Evidence supporting Dimon’s views can be found in the weekly jobless claims figures, which reflect historically healthy labor market conditions and improvement versus the prior year. Strength is coming from the AI capital expenditure cycle, fiscal stimulus, and regulations. These factors are likely to continue to underpin economic strength and JPMorgan's results moving forward, with potential for activity to accelerate. Inflation and higher oil prices remain the biggest hurdles, but with oil prices off their highs and June CPI cooler than expected, investors can expect the FOMC to lean toward rate reductions, a catalyst for market activity.
JPMorgan Outperforms in Q2: Cash Flow Flywheel Spins FasterJPMorgan had a stellar Q2, with strengths across product lines and business segments. Revenue grew to $58 billion, above analyst expectations, while earnings per share reached $6.14. Loans grew by 10% systemwide, while deposits grew by 3%.
Segmentally, Commercial and Investment Banking was the strongest, up 27.2%, supported by strength in investments such as Visa. Asset and Wealth Management grew by nearly 19% while Consumer and Community Banking grew by 7.6%. Within the Consumer segment, Banking revenue grew by 5%, Home Loans by 2.8%, and Automotive by 12.5%.
Credit costs remained manageable, leaving cash flow unimpeded as top-line strength carried through to the bottom line. Revenue gains across several major business lines supported profitability and reinforced the strength of JPMorgan’s second-quarter performance.
Updated guidance presents a headwind, but the impact is expected to be minimal. Management increased its expense target by approximately 1%, suggesting profitability is in decline. Even so, JPMorgan is in a healthy position, firing on all cylinders and producing historically high margins. Business strength is likely to persist, offsetting the increase through improved revenue leverage. As it stands, analysts forecast growth to slow in the upcoming quarters, but earnings to remain strong, with a reduction in share count aiding year-over-year growth.
JPMorgan Is on Track for a Robust Dividend IncreaseJPMorgan is a capital-returning machine, paying more than $10 billion to investors in Q2 and on track to lift its distribution payments in September. History, Q2 results, and the 14.1% Tier 1 credit ratio suggest another double-digit increase is coming. Importantly, the payout is reliable at less than 30% of the earnings forecast, the distribution is growing, and share count reduction is also in play. Q2 activity aided in a 4% reduction in the trailing 12 months, and the pace is expected to continue. Buybacks could slow in upcoming years, but there is no indication of that as of mid-2026.
Overall MarketRank™90th Percentile
Analyst RatingHold
Upside/Downside1.4% Upside
Short Interest LevelHealthy
Dividend StrengthStrong
News Sentiment0.89 Insider TradingSelling Shares
Proj. Earnings Growth4.86%
See Full Analysis
Analysts are responding favorably to the news, indicating the trends in place will continue. They include increasing coverage, a consensus Hold rating with 48% Buy-side bias among 29 analysts, and an uptrend in the price targets. Consensus targets assume fair value at mid-July trading levels, but the trend is the operational factor, leading to the high-end above $400, approximately 20% upside relative to the pre-release close. Sentiment and price targets are likely to firm as the year progresses, keeping the stock price action trending higher.
Institutional trends reflect the strength of a JPM investment, as institutions own more than 70% of the bank's nearly $900 billion market cap. They’ve been buying on balance over the trailing 12 months at a semi-aggressive pace, but reverted to selling in early Q3. If this persists, share prices will struggle to advance and may even revert to lower levels. For bears, however, a price pullback could create a value opportunity, potentially prompting institutions to resume accumulation, given the long-term outlook for dividends, dividend growth, and share buybacks.
Geopolitical instability is this year's biggest risk. Dimon says tensions are shifting under the surface like tectonic plates, hinting at potential earthquakes that can disrupt financial markets and roil asset classes. Investors may be better served focusing on the bank's financial health and asset base, which reveals the strongest JPM in company history.
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JPMorgan Chase CEO Jamie Dimon described the ideal candidate to succeed him as CEO of JPMorgan Chase — and he said it’s about “grit” and “soul,” not just minting money.
The legendary, 70-year-old banker — who last month shocked Wall Street with news that his would-be successor Marianne Lake was leaving the financial giant — ticked off a decidedly lengthy list of attributes for the candidate who becomes the bank’s next boss on Tuesday.
“You want to be good at management, you want to be good at people, you want to be analytical, you want to be detailed,” Dimon told analysts on a call after JPMorgan released its blowout second-quarter earnings.
JPMorgan Chase CEO Jamie Dimon told analysts Tuesday that he plans to remain at the helm for a “few years” longer while laying out a grueling checklist of qualifications for his eventual successor. Bloomberg via Getty Images “You want to be a culture carrier. You want to be curious. You want to have heart. You want to have grit. You want to have soul. You want to have work ethic,” he continued. “You want to be able to travel. You want to be able to walk in operating centers and deal with CEOs and prime ministers. It’s all of that.”
Dimon, who has steered the Wall Street giant for more than two decades, also reaffirmed his plan to retain the chief executive title for a “few years” longer. Last month, he threw his weight behind newly appointed co-presidents Troy Rohrbaugh and Doug Petno following Lake’s abrupt exit.
Dimon expressed absolute confidence in the two men on Tuesday.
“We have two exceptional co-presidents,” Dimon told analysts. “I’m wholly confident that if I was hit by a truck, which is not my preference, we would be fine.”
That’s after Lake spent years cultivating a resume that many industry observers believed primed her for the top job. Most recently JPMorgan Chase’s consumer banking chief, she also reportedly walked away from $50 million in unvested stock.
JPMorgan’s board has now tasked Rohrbaugh and Petno with overseeing the vast majority of the bank’s revenue-generating operations.
Marianne Lake, JPMorgan’s consumer banking chief and a longtime frontrunner to succeed Dimon, abruptly exited the Wall Street powerhouse last month Getty Images for City Harvest Rohrbaugh brings a focus on global markets to the executive suite. Having previously led the bank’s sprawling trading division, he generated massive revenue windfalls during periods of extreme economic volatility and geopolitical unrest.
Wall Street insiders view his elevation as an acknowledgment of the outsized role trading and risk management play in fortifying the bank’s balance sheet.
Petno provides a complementary skill set rooted in corporate relationships. A JPMorgan veteran of more than three decades, Petno spent years commanding the commercial banking sector.
Newly minted JPMorgan co-presidents Troy Rohrbaugh (left) and Doug Petno are now the clear heirs apparent to lead the nation’s largest bank following a major executive shakeup. JPMorganChase He cultivated deep ties with mid-sized and large corporations, driving steady, reliable loan growth that balanced the high-stakes, rapid-fire swings of the trading floor.
Over Dimon’s tenure, a long list of highly regarded Wall Street executives departed JPMorgan for top jobs elsewhere after realizing the boss was not stepping down anytime soon.
JPMorgan Chase has radically narrowed its highly watched CEO succession race, elevating two veteran executives to co-presidents following the sudden departure of consumer chief Marianne Lake. REUTERS Dimon remains the longest-serving chief executive among major US banks. Investors and analysts treat his shareholder letters and earnings calls as barometers for the global economy.
Dimon also transformed JPMorgan into an undisputed financial behemoth, steering the firm through the 2008 financial crisis, the pandemic recession, and recent regional banking turmoil.
Under his watch, the bank swelled to hold more than $4 trillion in assets.
“The eventual retirement of CEO Jamie Dimon could introduce uncertainty around strategic continuity and execution.” Jefferies analyst David Chiaverini warned in a note to clients on Tuesday morning.
Tower Semiconductor (NASDAQ:TSEM) shares rose 13% on Tuesday after the company announced a strategic expansion of its silicon photonics, silicon germanium (SiGe), and advanced packaging capabilities in Japan with support from the Japanese government.
The semiconductor foundry said the dual-track expansion plan is designed to significantly increase manufacturing capacity and support growing customer demand, particularly from artificial intelligence and data center applications requiring next-generation optical connectivity.
The first phase of the expansion will add new 300mm silicon photonics capacity by repurposing Tower’s Arai facility, formerly known as Fab 6, while maximizing output at its Fab 7 facility in Uozu. Tower expects the facility to be ready for full production in the fourth quarter of 2027.
As part of the first phase, Tower said it is updating its business model and is targeting revenue of $3.6 billion and net profit of $1.2 billion in 2028.
The second phase will involve the construction of an additional 300mm manufacturing facility adjacent to Fab 7, subject to the signing and closing of related agreements. The new facility is expected to provide a multi-fold increase in silicon photonics and silicon germanium production capacity and is expected to support customer demand growth over the coming years.
Tower said the expansion is expected to represent an investment of approximately $3 billion, net of $1 billion in grants from the Government of Japan. The company said the investment will strengthen Japan’s semiconductor manufacturing capabilities and supply chain resilience while expanding Tower’s production footprint.
Tower CEO Russell Ellwanger said that the company’s partnership with the Japanese government would support the creation of an advanced research and manufacturing center focused on silicon photonics, silicon germanium, and optical packaging.
“We are honored and appreciative that the Government of Japan has selected Tower to lead the expansion of these strategically important technologies,” Ellwanger said. “Together, we are building a globally differentiated center of excellence founded on technology leadership, manufacturing excellence, and exceptional product quality.”
Tower said the expansion builds on its ownership of TPSCo, the former Panasonic Semiconductor manufacturing operations, which it said has developed expertise in high-volume manufacturing.
The company expects the second phase of the project to become highly accretive beginning in 2029, supported by expanded customer engagements and technology developments through strategic partnerships.
Ellwanger said that the phased approach would allow Tower to add capacity while reducing timing risks associated with building a new facility and transferring production between fabs.
“The first track results in substantial increases in our updated 2028 business model,” Ellwanger said. “By quickly and efficiently adding capacity to an existing profitable operation, track two eliminates the timing concerns and impacts of multi cycles of learning for a greenfield qualification or a fab-to-fab product transfer, ensuring on schedule customer ramps and cash flow.”
Tower said the expansion will also include increased collaboration with Japanese suppliers, universities, and research institutions, as well as additional investment in engineering and manufacturing talent.
CleanSpark Inc (NASDAQ:CLSK) shares surged more than 12% after the company announced a 20-year lease agreement for its Sandersville, Georgia data center campus with a high-investment-grade global technology company, marking a major expansion of its data center business.
The agreement is expected to generate approximately $6.6 billion in contracted revenue over the initial 20-year term, with potential revenue increasing to $11.6 billion if two five-year extension options are exercised.
Under the triple-net lease agreement, the undisclosed technology company will deploy production-grade infrastructure at CleanSpark’s Sandersville campus for computing workloads. Deliveries are expected to begin in the fourth quarter of 2027, with the initial deployment covering 175 megawatts of critical IT load.
The Sandersville campus was selected due to its access to power infrastructure, available capacity for high-density computing and ability to support phased data center development, according to the company.
CleanSpark said the lease includes annual escalators and is expected to deliver a cumulative net operating income contribution margin of nearly 100%, with average annual NOI contribution estimated at approximately $330 million. The company expects landlord project costs to range between $10 million and $12 million per megawatt of critical IT load.
The company also announced that the tenant has entered into a letter of intent and exclusivity arrangement covering CleanSpark’s entire Texas portfolio, which includes 718 acres and up to 885 megawatts of secured and planned power capacity.
The Texas portfolio covered by the exclusivity arrangement includes CleanSpark’s Sealy and Brazoria campuses. The Sealy site consists of 271 acres with nearly 300 megawatts of planned capacity, while the Brazoria campus includes 447 acres with transmission-level infrastructure supporting an initial 300 megawatts of demand load and potential expansion to 600 megawatts.
CleanSpark CEO and chairman Matt Schultz wrote that the agreement represented a significant milestone as the company expands beyond its historical operations and begins monetizing its power assets through long-term infrastructure agreements.
“This lease is a transformational moment for CleanSpark as we complete our evolution into a diversified digital infrastructure platform and begin monetizing our power portfolio at institutional scale,” Schultz wrote.
Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction) has been one of 2026's quieter winners in large-cap healthcare, and our proprietary model sees room to run.
BURBANK, Calif.--(BUSINESS WIRE)--The Walt Disney Company (NYSE: DIS) will host a live webcast to discuss fiscal third quarter 2026 financial results beginning at 8:30 a.m. ET / 5:30 a.m. PT on Wednesday, August 5, 2026. Disney will release results before the opening of regular trading on August 5, 2026 and post earnings materials at www.disney.com/investors. To access the webcast, please visit www.disney.com/investors. The webcast will be archived. Materials and webcast may include forward-loo.
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Target (TGT - Free Report) is headquartered in Minneapolis, and is in the Retail-Wholesale sector. The stock has seen a price change of 37.87% since the start of the year. The retailer is paying out a dividend of $1.14 per share at the moment, with a dividend yield of 3.38% compared to the Retail - Discount Stores industry's yield of 0.71% and the S&P 500's yield of 1.33%.
Looking at dividend growth, the company's current annualized dividend of $4.56 is up 0.9% from last year. Over the last 5 years, Target has increased its dividend 5 times on a year-over-year basis for an average annual increase of 13.54%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Target's current payout ratio is 57%, meaning it paid out 57% of its trailing 12-month EPS as dividend.
TGT is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $8.35 per share, representing a year-over-year earnings growth rate of 10.30%.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that TGT is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
Key Takeaways ExxonMobil can keep producing in the Permian as WTI trades above $80 per barrel.Lightweight proppant technology can boost ExxonMobil's well recoveries by up to 20%.ExxonMobil plans to grow Permian output to 1.8 million oil-equivalent barrels this year. Exxon Mobil Corporation (XOM - Free Report) has a massive footprint in the Permian, the most prolific oil and gas play in the United States, and offshore Guyana. In the Permian, the integrated giant has been employing lightweight proppant technology and hence is capable of boosting its well recoveries by up to as much as 20%.
Let’s delve a little deeper into whether operating in the Permian is still profitable for the large integrated energy giant. According to the data from the Federal Reserve Bank of Dallas, the shut-in price for existing wells in the Midland, a sub-basin of the Permian, is $42 per barrel. For Delaware, another sub-basin, the Federal Reserve Bank of Dallas estimated the price at $34 per barrel.
With West Texas Intermediate (“WTI”) crude oil trading above the $80 per-barrel mark, significantly higher than the shut-in prices, it makes sense for XOM to continue production in the wells. On the first-quarter earnings call, XOM mentioned that it is staying aligned with its plan of growing its production in the most prolific basin to 1.8 million oil-equivalent barrels this year.
Will CVX & COP Also Gain From the Current Oil Price?Like XOM, Chevron Corporation (CVX - Free Report) and ConocoPhillips (COP - Free Report) will benefit from the current oil prices. Let’s delve a little deeper.
With COP generating a significant proportion of revenues from crude oil, the prevailing price of the commodity is favorable for the leading upstream player to continue producing, much like other energy giants, such as XOM and CVX.
The upstream energy giant also has low-cost drilling opportunities across the Permian, Eagle Ford and Bakken that could be successfully developed over two decades. Thus, the outlook for ConocoPhillips’ upstream operations looks bright.
Chevron, on the other hand, has been witnessing a growth in production volumes, thanks to its footprint in the Permian – the most prolific basin in the United States. CVX is thus well-poised to gain from prevailing oil prices as production makes sense in the Permian.
XOM’s Price Performance, Valuation & EstimatesShares of XOM have gained 28% over the past year compared with the 29.7% improvement of the industry.
Image Source: Zacks Investment Research
From a valuation standpoint, XOM trades at a trailing 12-month enterprise value to EBITDA of 9.58X. This is above the broader industry average of 6.32X.
The Zacks Consensus Estimate for XOM’s 2026 earnings has seen downward revisions over the past seven days.
Image Source: Zacks Investment Research
XOM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Greg Halter believes earnings from big banks like JPMorgan Chase (JPM), Goldman Sachs (GS), and Bank of America (BAC) show that the American consumer still has purchasing power. He explains how the IPO pipeline and loan growth add to his bullish outlook for the financial sector.
U.S. stocks were mixed, with the Dow Jones index falling around 100 points on Tuesday.
Shares of Goldman Sachs Group Inc (NYSE:GS) rose sharply following the release of quarterly results.
The firm reported earnings of $20.98 per share, well above the analyst consensus estimate of $14.40. Net revenue increased 39% year over year to $20.34 billion, beating the consensus estimate of $16.13 billion, driven by strength in its Global Banking & Markets business.
Goldman Sachs shares jumped 6.9% to $1,118.38 on Tuesday.
Here are some other big stocks recording gains in today’s session.
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Investors interested in Financial - Investment Management stocks are likely familiar with Affiliated Managers Group (AMG - Free Report) and BlackRock (BLK - 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Affiliated Managers Group has a Zacks Rank of #2 (Buy), while BlackRock has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that AMG is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
AMG currently has a forward P/E ratio of 10.17, while BLK has a forward P/E of 19.05. We also note that AMG has a PEG ratio of 0.58. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BLK currently has a PEG ratio of 1.24.
Another notable valuation metric for AMG is its P/B ratio of 2.4. 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, BLK has a P/B of 2.82.
Based on these metrics and many more, AMG holds a Value grade of A, while BLK has a Value grade of D.
AMG stands above BLK thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AMG is the superior value option right now.
If you are looking for a stock that has a solid history of beating earnings estimates and is in a good position to maintain the trend in its next quarterly report, you should consider Cincinnati Financial (CINF - Free Report) . This company, which is in the Zacks Insurance - Property and Casualty industry, shows potential for another earnings beat.
When looking at the last two reports, this insurer has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 13.32%, on average, in the last two quarters.
For the last reported quarter, Cincinnati Financial came out with earnings of $2.1 per share versus the Zacks Consensus Estimate of $1.93 per share, representing a surprise of 8.81%. For the previous quarter, the company was expected to post earnings of $2.86 per share and it actually produced earnings of $3.37 per share, delivering a surprise of 17.83%.
Price and EPS Surprise
Thanks in part to this history, there has been a favorable change in earnings estimates for Cincinnati Financial lately. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the stock is positive, which is a great indicator of an earnings beat, particularly when combined with its solid Zacks Rank.
Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.
The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.
Cincinnati Financial has an Earnings ESP of +8.84% at the moment, suggesting that analysts have grown bullish on its near-term earnings potential. When you combine this positive Earnings ESP with the stock's Zacks Rank #2 (Buy), it shows that another beat is possibly around the corner. The company's next earnings report is expected to be released on July 27, 2026.
When the Earnings ESP comes up negative, investors should note that this will reduce the predictive power of the metric. But, a negative value is not indicative of a stock's earnings miss.
Many companies end up beating the consensus EPS estimate, though this is not the only reason why their shares gain. Additionally, some stocks may remain stable even if they end up missing the consensus estimate.
Because of this, it's really important to check a company's Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
Key Takeaways PayPal reaffirmed 2026 guidance after Q1 revenues rose 7% and TPV increased 11%. PayPal expects low revenue growth, lower TM$ and a high-single-digit non-GAAP EPS decline in Q2. PayPal targets $1.5B in gross run-rate savings through simplification and broader AI adoption. PayPal Holdings, Inc. (PYPL - Free Report) delivered a solid first-quarter 2026, but now the attention has shifted to whether management can meet its second-quarter targets. Revenues rose 7% to $8.35 billion or 5% on a currency-neutral basis, in the first quarter, while total payment volume (TPV) climbed 11% to $464 billion. This enabled the company to reaffirm its 2026 guidance despite a more challenging backdrop.
The second quarter, however, is expected to be much tougher. PayPal expects low-single-digit currency-neutral revenue growth, a low-single-digit decline in transaction margin dollars (TM$) and a high-single-digit fall in non-GAAP EPS. The comparison is difficult because last year's second quarter benefited from a partner renewal, stronger credit performance, lower operating expenses and a favorable tax rate.
Management had also pointed to slowing momentum in key areas. From the start of the second quarter through May 5, 2026, branded checkout trends were at the low end of its full-year guidance. For online branded checkout, its 2026 guidance continues to reflect slightly positive to low single-digit branded checkout TPV growth. Compared to the first quarter of 2026, management has seen slower growth in the travel vertical as well as more muted growth in Europe.
Management is also betting that operational changes will strengthen execution over time. The company plans at least $1.5 billion in gross run-rate savings over the next two to three years through organizational simplification and wider AI adoption.
While these savings are expected to fund future growth initiatives, investors will likely focus first on whether PayPal can deliver its demanding second-quarter guidance before giving management the benefit of the doubt.
What XYZ & INTU Expect?Block (XYZ - Free Report) raised its 2026 adjusted EPS outlook to $3.85 from $3.66 after strong first-quarter growth at Cash App and Square. For the second quarter, XYZ expects gross profit of about $3.04 billion and adjusted EPS of 86 cents, supported by lending growth, payment volumes, AI-driven efficiency and planned cost reductions.
Intuit (INTU - Free Report) raised its fiscal 2026 outlook after solid third-quarter results. The company now expects continued double-digit revenue growth, supported by TurboTax, Credit Karma, QuickBooks and AI-powered services. Management remains focused on operating leverage and margin expansion as INTU approaches its fourth-quarter results and the July 31 fiscal year-end period.
PYPL’s Price Performance, Valuation & EstimatesShares of PayPal have declined 3.9% in the past three months against the broader industry and the S&P 500 Index rise.
Image Source: Zacks Investment Research
From a valuation standpoint, PayPal’s shares are trading cheaply, as suggested by the Value Score of A. In terms of forward 12-month P/E, PYPL stock is trading at 8.59X, which is at a significant discount to the Zacks Financial Transaction Services industry’s 17.09X.
Image Source: Zacks Investment Research
PayPal’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 EPS has been revised upward to $5.32 in the past month. The consensus estimate for the metric indicates a year-over-year increase of 0.19%.
Image Source: Zacks Investment Research
PayPal currently carrier a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moderna Inc (NASDAQ:MRNA, XETRA:0QF) is expected to report second quarter results on July 31, with investors focused on the impact of seasonal COVID-19 vaccine demand and updates on the company’s late-stage pipeline, including anticipated Phase III melanoma data.
Jefferies analysts expect a largely uneventful earnings report after Moderna previously guided for second-quarter revenue of $50 million to $100 million, down from $389 million in the first quarter, reflecting the seasonal nature of COVID vaccine sales.
The analysts forecast a loss of $1.99 per share on revenue of about $100 million, compared with consensus expectations for a loss of $1.97 per share.
“COVID sales are mostly weighted to H2 2026,” Jefferies wrote, noting that lower vaccination rates year-over-year are also expected to weigh on near-term revenue.
The firm expects management could reiterate its 2026 revenue outlook for growth of up to 10% year over year, which would imply revenue of more than $2.1 billion.
Jefferies said potential upside to Moderna’s 2026 sales outlook could come from stabilization in US COVID revenue, which declined from approximately $1.2 billion in 2025. The firm expects international partnerships, including those in Canada, Australia and the UK, to contribute to growth and help create a more balanced revenue mix between US and ex-US markets.
Investors are also watching Moderna’s pipeline progress, particularly Phase III data for mRNA-4157, the company’s personalized cancer vaccine candidate being evaluated in combination with Merck & Co.’s Keytruda in melanoma. Jefferies highlighted the upcoming Phase III INTerpath-001 trial data as a major potential catalyst for the stock, with results expected in the second half of 2026.
The analysts pointed to recent five-year Phase IIb data as supportive of the ongoing Phase III study in high-risk adjuvant melanoma, which enrolled 1,089 patients. Jefferies wrote that management appears confident in the timing of the readout based on event accrual and said a statistically significant result could have a meaningful impact on investor sentiment.
Beyond oncology, Moderna has several additional potential catalysts in 2026, including regulatory action for its mFluSiva flu vaccine candidate, which Jefferies expects could receive US approval by August 5 following a positive advisory committee review. However, the analysts expect commercial sales to begin in 2027.
The firm also highlighted potential Phase III updates for Moderna’s norovirus vaccine candidate mRNA-1403 and pivotal data for mRNA-3927, an investigational treatment for propionic acidemia, as additional events to watch later this year.
Jefferies noted that Moderna’s shares have outperformed the broader biotechnology sector year to date, gaining 124% compared with a 30% rise in the XBI biotechnology ETF, with much of the recent momentum tied to expectations around the company’s oncology pipeline and the potential of its mRNA technology platform.
Shares of Moderna traded hands at $67 on Tuesday afternoon.
Moderna Inc (NASDAQ:MRNA, XETRA:0QF) is expected to report second quarter results on July 31, with investors focused on the impact of seasonal COVID-19 vaccine demand and updates on the company’s late-stage pipeline, including anticipated Phase III melanoma data.
Jefferies analysts expect a largely uneventful earnings report after Moderna previously guided for second-quarter revenue of $50 million to $100 million, down from $389 million in the first quarter, reflecting the seasonal nature of COVID vaccine sales.
The analysts forecast a loss of $1.99 per share on revenue of about $100 million, compared with consensus expectations for a loss of $1.97 per share.
“COVID sales are mostly weighted to H2 2026,” Jefferies wrote, noting that lower vaccination rates year-over-year are also expected to weigh on near-term revenue.
The firm expects management could reiterate its 2026 revenue outlook for growth of up to 10% year over year, which would imply revenue of more than $2.1 billion.
Jefferies said potential upside to Moderna’s 2026 sales outlook could come from stabilization in US COVID revenue, which declined from approximately $1.2 billion in 2025. The firm expects international partnerships, including those in Canada, Australia and the UK, to contribute to growth and help create a more balanced revenue mix between US and ex-US markets.
Investors are also watching Moderna’s pipeline progress, particularly Phase III data for mRNA-4157, the company’s personalized cancer vaccine candidate being evaluated in combination with Merck & Co.’s Keytruda in melanoma. Jefferies highlighted the upcoming Phase III INTerpath-001 trial data as a major potential catalyst for the stock, with results expected in the second half of 2026.
The analysts pointed to recent five-year Phase IIb data as supportive of the ongoing Phase III study in high-risk adjuvant melanoma, which enrolled 1,089 patients. Jefferies wrote that management appears confident in the timing of the readout based on event accrual and said a statistically significant result could have a meaningful impact on investor sentiment.
Beyond oncology, Moderna has several additional potential catalysts in 2026, including regulatory action for its mFluSiva flu vaccine candidate, which Jefferies expects could receive US approval by August 5 following a positive advisory committee review. However, the analysts expect commercial sales to begin in 2027.
The firm also highlighted potential Phase III updates for Moderna’s norovirus vaccine candidate mRNA-1403 and pivotal data for mRNA-3927, an investigational treatment for propionic acidemia, as additional events to watch later this year.
Jefferies noted that Moderna’s shares have outperformed the broader biotechnology sector year to date, gaining 124% compared with a 30% rise in the XBI biotechnology ETF, with much of the recent momentum tied to expectations around the company’s oncology pipeline and the potential of its mRNA technology platform.
Shares of Moderna traded hands at $67 on Tuesday afternoon.
CPU makers Advanced Micro Devices Inc (NASDAQ:AMD, XETRA:AMD), Intel Corp (NASDAQ:INTC, XETRA:INL), Arm Holdings PLC (NASDAQ:ARM) and Qualcomm Inc (NASDAQ:QCOM, XETRA:QCI) are all reporting earnings in the coming weeks, and Bank of America says the results will tell very different stories depending on the business.
PC and smartphone sales are still struggling, both down more than 10-15% year-over-year in 2026 estimates. But AI server chips are a different picture entirely. Demand keeps climbing as more companies adopt agentic AI and keep spending on data center buildout.
BofA flagged a few big questions investors should watch this earnings season: how big the server CPU market really is (estimates range from $120 billion to $200 billion or more), whether recent price increases will stick, how much CPU power each new AI system actually needs, whether supply can keep up with demand, and how market share will shake out as more chip options hit the market.
Speed or scale? There's also a real debate brewing over what makes a CPU good at AI. Some, including Nvidia, argue that faster individual cores matter most since they cut down latency on tool calls. AMD sees it differently, arguing that handling many tasks at once and overall rack performance matter more. BofA thinks both sides have a point, and either way, it points to stronger CPU demand ahead.
AMD: expect a beat and raise BofA expects AMD to beat expectations and raise guidance, driven by continued market share gains, strong cloud demand and solid visibility into supply. The firm thinks AMD's next quarterly outlook will include news of the first shipment of its MI455X "Helios" rack, setting up a bigger ramp by Q4 that could hit $6-7 billion a quarter or more. AMD's new Venice server chip is also launching around the same time.
Management last pegged the server CPU market at $120 billion back in May, and BofA thinks that number could climb higher. The firm raised its price target on AMD to $620 from $550, pointing to the company's July 23 "Advancing AI" event as a potential catalyst.
Intel: pricing should cushion the blow PC unit sales remain a drag for Intel, likely down 10-15% or more this year. But BofA expects better pricing on both PC and server chips, plus AI demand, to make up for it. Investors will likely be watching margins in Intel's Products segment, along with updates on its foundry business and next-gen 18A server chips. BofA currently sees Intel's server market share sliding to 24% by 2030, down from 41% last year.
ARM: phones are a drag, servers are the hope ARM's royalty revenue is still tied mostly to smartphones, where volumes are expected to keep falling through 2027. Big content gains from newer chip architectures are mostly already priced in. The bigger opportunity, server wins with Google and Microsoft, likely won't show up until the back half of 2026 or later. One wildcard: ARM's AI chip business could see demand outstrip supply by 2027-28, which BofA says could become a real swing factor.
Shopify (SHOP - Free Report) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.
The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.
The power of a changing earnings picture in determining near-term stock price movements makes the Zacks rating system highly useful for individual investors, since it can be difficult to make decisions based on rating upgrades by Wall Street analysts. These are mostly driven by subjective factors that are hard to see and measure in real time.
Therefore, the Zacks rating upgrade for Shopify basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
Most Powerful Force Impacting Stock PricesThe change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their bulk investment action then leads to price movement for the stock.
Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for Shopify imply an improvement in the company's underlying business. Investors should show their appreciation for this improving business trend by pushing the stock higher.
Harnessing the Power of Earnings Estimate RevisionsAs empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, tracking such revisions for making an investment decision could be truly rewarding. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .
Earnings Estimate Revisions for ShopifyFor the fiscal year ending December 2026, this cloud-based commerce company is expected to earn $1.84 per share, which is unchanged compared with the year-ago reported number.
Analysts have been steadily raising their estimates for Shopify. Over the past three months, the Zacks Consensus Estimate for the company has increased 3.1%.
Bottom LineUnlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
You can learn more about the Zacks Rank here >>>
The upgrade of Shopify to a Zacks Rank #1 positions it in the top 5% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
The Schall Law Firm, a national shareholder rights litigation firm, announces that it is investigating claims on behalf of investors of International Business Machines Corporation (“IBM” or “the Company”) (NYSE: IBM) for violations of the securities laws.
The investigation focuses on whether the Company issued false and/or misleading statements and/or failed to disclose information pertinent to investors. IBM reported it preliminary Q2 2026 financial results on July 14, 2026. The Company’s fell short of analyst expectations, with CEO Arvind Krishna blaming the shortfall on weakness in the software and infrastructure business, with customers shifting budgets to hardware like memory chips. Based on this news, shares of IBM fell by 24.6% in morning trading on the same day.
If you are a shareholder who suffered a loss, click here to participate.
We also encourage you to contact Brian Schall of the Schall Law Firm, 2049 Century Park East, Suite 2460, Los Angeles, CA 90067, at 310-301-3335, to discuss your rights free of charge. You can also reach us through the firm's website at www.schallfirm.com, or by email at [email protected].
The Schall Law Firm represents investors around the world and specializes in securities class action lawsuits and shareholder rights litigation.
This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and rules of ethics.
View source version on businesswire.com: https://www.businesswire.com/news/home/20260714697074/en/
IBM (IBM) shares have plummeted by 26% following the release of disappointing Q2 guidance, which missed both earnings per share (EPS) and revenue expectations.
As of noon today, the S&P 500 (^GSPC +0.41%) rose 0.26% to 7,535.12, the Nasdaq Composite (^IXIC +1.01%) climbed 0.81% to 26,083.42 on tech strength, and the Dow Jones Industrial Average (^DJI 0.05%) sank 0.19% to 52,401.14 thanks mostly to one name.
Market moversShares of IBM (IBM 24.43%) plunged after a profit warning, weighing on the Dow even as bank stocks like JPMorgan Chase (JPM +1.91%) and Goldman Sachs (GS +8.14%) surged after earnings. On the Nasdaq, Tower Semiconductor (TSEM +13.61%) and CleanSpark (CLSK +10.23%) jumped on upbeat company-specific news.
What this means for investorsBig bank results kicked off earnings season on a mostly positive note. Also, this morning, cooler inflation data helped ease bond yields and gave new Federal Reserve chairman Kevin Warsh more room to avoid or delay raising interest rates.
U.S. inflation eased more than expected in June, dropping to 3.5% annually. The Consumer Price Index (CPI) fell by 0.4% month-over-month, primarily driven by a 9.7% drop in gasoline prices.
IBM’s earnings warning negatively impacted the Dow, though. In its Q2 pre-announcement, the company said weakness in its software and infrastructure businesses has hurt results. IBM CEO Arvind Krishna said customers are diverting investments to hardware, including servers, storage, and memory.
While this might prompt investors to reset expectations for IBM’s stock, it also provides further evidence that chip and other hardware makers used in the artificial intelligence (AI) build-out may have more room to run.
JPMorgan Chase is an advertising partner of Motley Fool Money. Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group, International Business Machines, and JPMorgan Chase. The Motley Fool has a disclosure policy.
Shares in IBM plunged more than 25% on Tuesday after the US tech giant released disappointing preliminary second-quarter results. IBM’s stock was on track for an even steeper single-day decline than it suffered during the 1987 “Black Monday” crash.
IBM had issued a profit warning and blamed shifts in corporate customers’ spending. The company said revenue for the three months ending in June came in at $17.2bn, up just 1% year-over-year.
The company said it had “faltered” in keeping pace with a move in corporate spending from software towards datacentre infrastructure and cybersecurity, and forecast second-quarter revenue below estimates, in a sign of the impact of AI on the sector.
The warning triggered a slump of more than 25% in IBM’s shares and a selloff in the broader software sector on Tuesday. Microsoft, ServiceNow, Salesforce and Intuit fell between 3% and 5%.
A global rush by tech companies to build out artificial intelligence infrastructure has sent demand for servers, memory chips and storage soaring – driving up prices and creating supply shortages across the industry.
IBM said that toward the end of June, many of its big corporate customers rushed to buy that hardware to get ahead of expected price increases.
That rush pulled spending away from IBM’s higher-margin mainframe computers and related software, which process millions of daily transactions for industries such as banking and airlines – the products the company had been counting on. It also noted that businesses were prioritizing cybersecurity spending given recent breakthroughs in AI hacking abilities.
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Arvind Krishna, the IBM chief executive, said in a letter to investors, “In the last few weeks of June, we saw clients shift their quarterly capex [capital expenditure] spend toward servers, storage, and memory purchases to secure supply-constrained infrastructure ahead of expected price increases.”
He added that “numerous large deals” had failed to close as expected.
The company’s expected revenue of $17.2bn for the second quarter paled in comparison with $17.86bn forecast by analysts.
Adjusted earnings per share are expected to be $2.93, compared with analysts’ estimate of $3.02.
Chris Beauchamp, the chief market analyst at IG Group, said: “This is an ugly moment for IBM and software stocks ... the big question will be how long the shift to infrastructure and cybersecurity lasts.”
Software investors have long been on edge over fears that AI tools capable of automating routine work could pose an existential threat to the industry.
“A few more months might be bearable, but more than that and serious questions will be asked all over again about software stocks,” Beauchamp said.
International Business Machines (IBM) shares tumbled on Tuesday after the company disclosed preliminary second-quarter results that fell short of Wall Street ex
The stock market gained ground on Monday, with the S&P 500 and the Nasdaq Composite both rising. However, while some stocks raced higher, others plunged, as one technology company pre-announced results that pulled the market in different directions.
IT heavyweight International Business Machines (IBM 24.43%) provided an early glimpse into its second-quarter results, and what management had to say buoyed some segments of the market while tanking others.
Cybersecurity stocks CrowdStrike (CRWD +11.01%) and Okta (OKTA +9.59%) were both up more than 10% as of 1:45 p.m. ET., while artificial intelligence (AI) chip stocks Micron Technology (MU +4.81%) and Sandisk (SNDK +5.52%) were both up 5%. At the same time, however, enterprise software providers like ServiceNow (NOW 4.82%) and Microsoft (MSFT 1.12%) fell 4% and 1%, respectively.
Let's take a look at what IBM said and how it split the broader market.
Image source: Getty Images.
An ominous warning In a letter to shareholders released Tuesday morning, IBM issued a stark warning ahead of its Q2 financial release, scheduled for July 22. The company's preliminary results showed revenue grew just 1% to $17.2 billion, resulting in adjusted earnings per share (EPS) of $2.27, up 5%.
The results were well below Wall Street's consensus estimates, which called for revenue of $17.85 billion and EPS of $3.02.
The shortfall sent IBM stock plunging as much as 26% in early trading and put it on track for its worst trading day in the company's history.
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What the company had to say helps to explain the sweeping impact it had across a broad cross-section of the stock market. CEO Arvind Krishna noted that during the last few weeks of June, "We saw clients shift their quarterly capex spend toward servers, storage, and memory purchases to secure supply constrained infrastructure ahead of expected price increases."
While this was bad news for IBM, it served as a catalyst for flash memory and storage chipmakers, including Micron and Sandisk. Tight supply and soaring demand have fueled epic stock price runs for these companies. Even after a recent pullback, Micron stock has gained 694% over the past year (as of this writing), while Sandisk stock has soared a mind-boggling 3,750%. IBM's comments suggest that enterprise companies continue to shift spending to AI, which bodes well for Micron and Sandisk.
There's more. Krishna went on to say, "Clients were distracted with rapidly evolving, industrywide cybersecurity concerns in the quarter." In a subsequent interview, the chief executive expanded on his thinking, saying, "Mythos is making people pause to say, wait, how much do I need to spend on [cybersecurity]? They're pausing on new deals until they know."
When Anthropic unveiled its Mythos Preview earlier this year, the frontier AI model sent shockwaves through the cybersecurity industry, finding "thousands of zero-day vulnerabilities across critical infrastructure," including "every major operating system and web browser." These represented previously unidentified weaknesses that hackers could use to gain access to vulnerable software. CrowdStrike was one of only two cybersecurity companies initially tasked with helping to address these vulnerabilities.
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While that spending shift means fewer dollars spent on IBM, it boosts the fortunes of cybersecurity providers like CrowdStrike and Okta.
However, software stocks took it on the chin, as investors feared the aforementioned shift in capex spending would spill over into other areas of enterprise spending. That would likely be bad news for companies like ServiceNow and Microsoft, which derive a large portion of their revenue from software sales.
Worries about the impact of AI have already roiled the enterprise software sector, sending Microsoft and ServiceNow down 23% and 43%, respectively, over the past year. IBM's commentary seemed to add weight to these concerns, further pressuring the stocks.
Many AI stocks have been taking a breather as investors take a step back to survey the landscape. If IBM's missive is any indication, businesses are continuing to spend heavily on AI adoption while not losing sight of the implications of these next-generation algorithms for cybersecurity.
Danny Vena, CPA has positions in CrowdStrike, Micron Technology, Microsoft, Okta, and Sandisk. The Motley Fool has positions in and recommends CrowdStrike, International Business Machines, Micron Technology, Microsoft, Okta, and ServiceNow. The Motley Fool has a disclosure policy.
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CEO Arvind Krishna wrote a letter to shareholders eight days before the company was supposed to release its quarterly earnings. Mandel NGAN / AFP via Getty Images IBM is on pace to have its worst day ever on the stock market after saying it misread the AI spending boom.
On Tuesday, eight days before the company's scheduled earnings call, CEO Arvind Krishna released a letter to shareholders that detailed a quarterly "performance shortfall," including slimmer-than-expected revenue.
"While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization," he wrote. "In addition, clients were distracted with rapidly-evolving, industry-wide cybersecurity concerns in the quarter."
The warning quickly revived talk of a SaaSpocalypse — the fear that AI will erode the value of some traditional software companies. For months, investors have worried that businesses will need fewer software subscriptions as AI agents automate and build custom tools.
IBM is not a pure software-as-a-service company, and Krishna did not say AI had made its products obsolete. Instead, he said customers redirected spending toward increasingly expensive servers, storage, and memory — leaving less money available for some of IBM's software and consulting services.
The shortfall is still touching a nerve among industry bigwigs. Companies are pouring money into the infrastructure needed to power AI, while investors increasingly question how much of that spending will ultimately flow to established software providers.
Here is what smart voices in business and tech are saying about the early announcement's impact on the economy:
Chamath Palihapitiya — CEO at 8090 and Social Capital
8090 CEO Chamath Palihapitiya. Jesse Grant/The Hollywood Reporter via Getty Images Chamath Palihapitiya said IBM's stumble reflects a much bigger problem facing the AI industry: Companies selling intelligence are making enormous sums, but it's unclear whether their customers can turn those costs into profits of their own.
"The downstream ecosystem has to make money as well," Palihapitiya said Tuesday when asked about Krishna's letter on CNBC. "And then, the ultimate buyer of these tokens also has to make money."
He stopped short of blaming IBM's problems on its pivot to AI and cloud computing, and praised Krishna for repositioning the company.
Palihapitiya was less forgiving of IBM's suggestion that rapidly evolving cybersecurity concerns distracted some customers during the quarter.
He said AI companies and their investors have repeatedly swung between extremes: describing the technology as an all-powerful breakthrough when raising money, then warning that it poses an existential threat when seeking regulation.
Jacob Bourne — Analyst at EMARKETERBourne told Business Insider in an email that IBM was hit with a "triple whammy."
He said the AI buildout is directing corporate spending toward hardware rather than software and services. At the same time, investors are punishing legacy companies that appear to be falling behind. Finally, AI-native challengers such as Anthropic are putting additional pressure on traditional software business models.
"We can expect more quarters like this one, but I think it's a disruption story, not necessarily an extinction one for legacy software companies," he wrote. "Spending patterns will shift from the present focus, and the vendors that adapt their products to the changing market will stay competitive."
Nicholas Mugalli — CEO and Principal at World Trade Securities
An IBM logo on a screen. NYSE Mugalli wrote on X that he believes IBM is the first major casualty of a broader shift in enterprise spending.
He argued that IBM's miss shows the limits of corporate budgets. As hardware became scarcer and more expensive, executives prioritized servers, storage, and memory over software deals that could be delayed.
"This is the SaaS reckoning arriving exactly the way it would," Mugalli wrote, "not with cancellations, but with deprioritization. "
Mugalli predicted IBM would not be the last enterprise software company to feel that pressure, pointing specifically to Palantir and ServiceNow.
Dan Niles — founder of Niles Investment ManagementNiles wrote on X that IBM's warning was an example of the AI "speed bump" he has been expecting.
He also said that customers redirected spending toward AI late in the quarter, cutting into IBM's mainframe and related software business. He said that much of that revenue is supposed to be recurring, making the shortfall more concerning.
"Given software is a back-end loaded business, I doubt this is the last casualty," he wrote.
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Ben Shimkus is a reporter for the Business News desk. He writes about cars, transportation, retail, and jobs. Ben's reporting has appeared in Rolling Stone, The Verge, Automotive News, USA Today, AutoBody News, LGBTQ Nation, TopSpeed, and Out Magazine. He's also held staff writing positions at The U.S. Sun and the Daily Mail. He graduated from NYU with a Master's in journalism in 2024. Email Ben at [email protected] or message him privately on Signal at bshimkus.41.
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A huge whirlpool near Oarai City, Ibaraki Prefecture, northeastern Japan Reuters IBM's pre-earnings warning to investors reveals a new reality in the AI spending boom: There's only so much money to go around, so some tech companies are winning at the expense of others.
The company said customers are shifting technology budgets in two important ways. First, they're spending heavily on memory chips, servers, and storage to build AI infrastructure before expected price increases. Second, they're diverting more money toward cybersecurity as companies race to defend against new AI-powered threats.
The result is what amounts to a giant sucking sound across corporate IT budgets. Money flowing into AI is leaving less available for other technology purchases, including IBM's latest mainframe computers and the software that runs on them.
IBM said customers spent the final weeks of June buying servers, storage, and memory to lock in supply before prices rose, a much bigger shift than it expected. That hurt sales of its new Z mainframes and related software.
The company also blamed "rapidly evolving" cybersecurity concerns for delaying numerous large deals. IBM didn't identify the cause, but Barclays analysts said the comments likely refer to Anthropic's recently launched Mythos AI model, which has heightened concerns that AI can rapidly uncover software vulnerabilities. The analysts said companies appear to be accelerating security spending, potentially at the expense of other technology projects.
The market reacted accordingly. Shares of memory companies rose, with SK Hynix surging more than 20% on Nasdaq on Tuesday. Shares of cybersecurity vendors, including CrowdStrike and Palo Alto Networks, also jumped.
The bigger question is whether IBM is experiencing a temporary budget shuffle or something more lasting. "There was no indication that this trend has yet abated," BNP Paribas analysts wrote in a note to investors on Tuesday. They expect IBM to share more on its outlook when the company reports results on July 22.
Barclays analysts argued the spending shift is probably temporary, with customers delaying mainframe purchases while they absorb higher infrastructure costs.
And this isn't likely the SaaSpocalypse: IBM's other software businesses, including Red Hat, continued to perform well, with revenue growth actually accelerating.
Let's call it the "Mainframe-alypse." Not sure that one will catch on.
Anyway, IBM's warning highlights a broader trend emerging across enterprise technology: AI is forcing companies to make difficult choices about how existing technology budgets are allocated, producing clear winners and losers.
There's only so much money to go around. When something as powerful as generative AI emerges, it shakes things up in dramatic ways.
Sign up for BI's Tech Memo newsletter here. Reach out to me via email at [email protected].
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Alistair Barr is the author of Business Insider's Tech Memo newsletter. Sign up here. Before that, he was BI's Global Tech Editor and the Big Tech team leader at Bloomberg, following a reporting career at The Wall Street Journal, USA Today, Reuters, and MarketWatch. Alistair won a Gerald Loeb Award in 2007 for coverage of short selling and was a finalist in 2013 for scoops on the Facebook IPO. More recently, he won a 2024 San Francisco Press Club award for commentary. Got a tip? Reach out using the secure messaging app Signal (+1 415-341-4927) or via email on [email protected] oversees all things Big Tech, along with startups and venture capital. He writes analysis and columns about topics including generative AI, large language models, cloud computing, semiconductors, online search, e-commerce, EVs, robotics, and autonomous vehicles.Popular StoriesArtificial Intelligence:It's getting harder to make big leaps at the frontier of AIOpenAI's AI-adjusted earnings numbers have echoes of Groupon and WeWorkDeath by LLM: Stack Overflow's decline, and its plan to survive, shows the future of free online data in an AI worldCloud computing:Amazon dominated the first cloud era. The AI boom has kicked off Cloud 2.0, and the company doesn't have a head start this time.In cloud, there's AI (which is hot) and everything else (which is not)Chips:Why Intel is still so important: Real countries have fabsApple's made-in-the-USA chips signal a turnaround for the US's big semiconductor betEVs and Tesla:Tesla's AI supercomputer has a Silicon Valley town rushing to meet surging electricity demandTesla's Cybertruck is outselling almost every other EV in the USOnline Search:Google is losing its status as a verbA simple way to fix search: Bright pink ads
IBM Anthropic Artificial Intelligence More Generative AI Cybersecurity Software AI
Credit: Unsplash/CC0 Public Domain Shares in IBM plunged 24% on Tuesday after the U.S. tech giant released disappointing preliminary second-quarter results, blaming a shift in customer spending due to expected higher prices for memory chips and other AI-related infrastructure.
"We did not adapt and move quickly enough," IBM CEO Arvind Krishna said in a letter to investors. The company said revenue for the three months ending in June came in at $17.2 billion, up just 1%.
A global rush by tech companies to build out artificial intelligence infrastructure has sent demand for servers, memory chips and storage soaring, driving up prices and creating supply shortages across the industry.
IBM said that toward the end of June, many of its big corporate customers rushed to buy that hardware to get ahead of expected price increases.
That rush pulled spending away from IBM's higher-margin mainframe computers and related software—the products the company had been counting on.
Cybersecurity concerns across the tech industry also distracted clients during the quarter, IBM said, and a number of large deals failed to close on time.
The company's infrastructure business—which includes its flagship mainframe line—saw revenue fall 7%.
Software revenue grew 5% but still came in below expectations.
On the positive side, IBM's Red Hat unit, which sells open-source software, posted 11% revenue growth.
The company's server and storage business outside of mainframes surged 37% as clients snapped up that equipment.
IBM also announced Lightwell, a $5 billion initiative to fix vulnerabilities in open-source software, with backing from major banks including Bank of America, JPMorgan Chase and Goldman Sachs.
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Cybersecurity stocks jumped on Tuesday after IBM CEO Arvind Krishna flagged cyber fears as a top priority for customers in the company's preliminary second-quarter results.
During the period, Krishna said customers shifted spending to servers and memory and that "rapidly-evolving, industry-wide cybersecurity concerns" distracted customers.
The rise of advanced artificial intelligence models such as Anthropic's Mythos has spurred mass anxiety on Wall Street and worries of quicker, more sophisticated cyberattacks.
Krishna told CNBC's Sara Eisen on Tuesday that some major deals were put on hold toward the end of the quarter as businesses rethink spending.
"Mythos is making people pause to say, wait, how much do I need to spend on cyber? They're pausing on new deals until they know," Krishna told Eisen Tuesday. "We don't see our software being disrupted by AI at all."
Okta, Netskope and CrowdStrike skyrocketed about 10% each, while SailPoint, Zscaler and SentinelOne surged about 8% each. Palo Alto Networks about 7%.
5-day stock chart of cybersecurity stocks: Okta, NetSkope, CorwdStrike, SailPoint, Zscaler, and SentinelOne.
Read more CNBC tech newsBurnout, frustration and heartbreak: Amazon layoffs take their toll in saturated job marketMeta's Louisiana data center investment to reach $50 billion, aided by generous tax incentivesEurope's Anduril rival Helsing raises $1.8 billion at $18 billion valuationElon Musk and Sam Altman spar on X after Apple files OpenAI lawsuitwatch now
Monday's market pain flipped into some modest Tuesday gains.
The Nasdaq Composite (^IXIC +1.12%) index rose 0.9% by 12:05 p.m. ET, extending its recovery from a volatile morning session. The S&P 500 (^GSPC +0.47%) gained 0.3%, while the Dow Jones Industrial Average (^DJI 0.02%) fell 0.2%.
^IXIC data by YCharts
SK Hynix (SKHY +23.59%) surged 18.5%, recovering Monday's 8.4% decline and then some. The memory chipmaker inspired a broad semiconductor rally that underpinned the Nasdaq Composite jump. The semiconductor sector led this recovery after yesterday's sell-off, which was triggered by a historic collapse in Korean markets.
IBM's "we didn't see this coming" moment The catalyst for Tuesday's chip rally came from an unexpected source: IBM (IBM 24.33%) admitting it misjudged a massive shift in corporate spending priorities.
In a premarket warning, CEO Arvind Krishna said "numerous large deals" failed to close in the final weeks of June because customers had decided they'd rather spend money on servers, storage, and memory chips than on IBM software and services.
"While we anticipated some supply chain related impact in our expectations, we did not anticipate the magnitude of the capex reprioritization," Krishna wrote in a preliminary Q2 report, adding that IBM had "faltered" in adapting quickly enough.
In other words, many companies are panic-buying hardware before prices go up, and IBM's sales team watched helplessly as the software portions of IT budgets got redirected to chipmakers.
IBM shares collapsed 24.9%, erasing 429 Dow points. It's Big Blue's worst market day since the Black Monday crash in 1987.
On the other hand, IBM's pain is the chip industry's gain. Most semiconductor stocks trended up on Tuesday, led by a 2.6% Nvidia (NVDA +4.28%) jump and a 5.1% gain for Micron Technology (MU +4.81%) shareholders.
Financial services giant Goldman Sachs (GS +7.92%) reported a quarter so strong it shielded the Dow from IBM's impact. Goldman smashed Wall Street's Q2 2026 targets across the board. The company benefits from broad market volatility and several gigantic public offerings. Goldman was a lead underwriter for the SK Hynix and Space Exploration Technologies (SPCX 0.15%) offerings, for instance.
Image source: The Motley Fool.
The investment bank jumped 7.4%, single-handedly adding 459 Dow points.
In other news, Federal Reserve Chairman Kevin Warsh told Congress that inflation is a "tax on the American people." Warsh promised "regime change" at the central bank.
Wall Street also enjoyed a mild inflation report. The June Consumer Price Index rose 3.5% year over year, below the 3.8% estimate but still well above the Fed's 2% long-term target. Markets were pricing in a 51.9% chance of a September rate hike before the data dropped.
Meanwhile, oil prices climbed 2%. The U.S. military conducted a third consecutive night of strikes against Iran, and the United Arab Emirates reported at least two tankers came under Iranian fire. President Trump said trade deals with Gulf states would replace the 20% Strait of Hormuz shipping fee he'd proposed on Monday. The renewed military strikes are undermining the diplomatic progress that lowered June's inflation figures.
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The bigger picture Tuesday's market action confirms the ongoing rotation into hardware and away from software. Technology and financial stocks are doing the heavy lifting, while industrials and consumer names are mostly treading water.
SK Hynix's 18.5% bounce one day after falling below its IPO price is either a sign that Monday's sell-off was overdone or proof that tech valuations have become fundamentally unpredictable.
Anders Bylund has positions in International Business Machines, Micron Technology, and Nvidia. The Motley Fool has positions in and recommends Goldman Sachs Group, International Business Machines, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
Wells Fargo & Co (NYSE:WFC, XETRA:NWT) reported second-quarter profit that topped Wall Street expectations on Tuesday, as strong fee income and improved credit performance offset pressure on the bank's net interest margin.
The bank posted earnings of $2 per share, well above analysts' estimate of $1.72, on revenue of $22.62 billion, compared with expectations of $21.87 billion. Net income rose to $6.41 billion from $5.49 billion a year earlier.
Net interest income came in at $12.32 billion, in line with estimates, while net loan charge-offs of $876 million came in better than the $1.1 billion analysts had forecast, marking a 10 basis point improvement from a year ago.
Average loans grew 12% year-over-year to $1.03 trillion, while average deposits rose 10% to $1.47 trillion.
"The biggest positive from the quarter was the combination of strong fee income and better credit performance, which drove core PPNR above our estimate and helped offset NIM pressure," analysts at Jefferies noted.
Corporate and investment banking revenue climbed 16% year-over-year to $5.43 billion, while wealth and investment management revenue rose 13% to $3.89 billion. Consumer banking and lending revenue increased 6% to $10.29 billion, and commercial banking revenue also grew 6% to $3.12 billion.
Wells Fargo repurchased 37.4 million shares for $3 billion during the quarter and said it expects to raise its third-quarter common dividend by 11% to $0.50 per share.
The bank reiterated its full-year guidance, projecting net interest income of roughly $50 billion and noninterest expense of about $55.7 billion.
"We view the quarter as positive and expect investors to focus primarily on whether WFC can sustain strong NII growth despite NIM pressure, particularly now that management has reaffirmed its 2026 NII outlook," Jefferies said.
Key Takeaways WFC posted Q2'26 adjusted EPS of $1.96, beating estimates, while shares rose nearly 1.5% in early trading.Higher NII, fee income and lower provisions aided WFC, while non-interest expenses increased year over year.WFC's average loans rose 3.1% and deposits 3.6% sequentially, while provisions declined year over year. Wells Fargo & Company (WFC - Free Report) reported second-quarter 2026 adjusted earnings per share of $1.96, which surpassed the Zacks Consensus Estimate of $1.73. In the prior-year quarter, the company reported earnings per share of $1.54.
Shares of the company rose nearly 1.5% in the early trading session. A full day’s trading session will depict a clearer picture.
Results benefited from an improvement in net interest income (NII), higher non-interest income, and lower provisions. Higher loan balances and improved deposits were other positives. However, increased non-interest expenses remained a headwind.
Results included 4 cents per share of discrete tax benefits related to the resolution of prior-period matters. After considering this, net income (GAAP basis) was $6.41 billion, representing a 16.6% increase from the prior-year quarter.
Wells Fargo’s Revenues Improve, Expenses RiseTotal revenues were $22.62 billion, surpassing the Zacks Consensus Estimate of $21.80 billion. Also, the top line increased 8.6% from the year-ago quarter.
NII was $12.32 billion, up 5.2% year over year. The increase was driven by lower deposit costs, higher loan and investment securities balances, balance sheet growth in the Markets business and higher interest-bearing commercial deposits, partially offset by the impact of lower interest rates on floating-rate assets and a modest decline in noninterest-bearing deposits.
The net interest margin (on a taxable-equivalent basis) contracted 25 basis points year over year to 2.43%.
Non-interest income grew 13.1% year over year to $10.31 billion. The increase was driven by strong performance from venture capital investments, higher investment advisory fees on improved market valuations, higher investment banking fees and increases in most other fee categories, partially offset by lower lease income related to the sale of the railcar leasing business.
Non-interest expenses of $13.66 billion increased 2.1% year over year. The increase was due to higher revenue-related and incentive compensation, increased technology and equipment expense and higher advertising expense, partly offset by lower lease expense and continued efficiency initiatives, including a 7% reduction in headcount.
Wells Fargo's efficiency ratio of 60% was lower than 64% in the year-ago quarter. A decline in the efficiency ratio indicates improvement in profitability.
WFC’s Loan Balance & Deposits ImproveAs of June 30, 2026, total average loans were $1.03 trillion, which increased 3.1% on a sequential basis. Total average deposits were $1.47 trillion, up 3.6% on a sequential basis.
Wells Fargo’s Credit Quality ImprovesThe provision for credit losses was $914 million, down 9.1% from the year-ago quarter.
Net loan charge-offs were 0.34% of average loans in the reported quarter, down from 0.44% in the year-ago quarter. Non-performing assets declined marginally year over year to $7.94 billion.
WFC’s Capital Ratios DeclineAs of June 30, 2026, the Common Equity Tier 1 ratio under the Standardized Approach was 10.3%, down from 11.1% in the prior-year quarter.
Wells Fargo’s Profitability Ratios ImproveReturn on assets was 1.15% compared with 1.14% in the prior-year quarter. Return on equity was 15.0%, up from 12.8% a year ago.
WFC’s Share Repurchase UpdateDuring the reported quarter, Wells Fargo repurchased 37.4 million shares, or $3 billion, of common stock.
Our View on Wells FargoWFC’s higher NII, strong fee income growth and improving loan and deposit balances continue to support revenue growth. Broad-based strength across Consumer Banking, Commercial Banking, Corporate & Investment Banking and Wealth & Investment Management is encouraging. Nevertheless, higher expenses remain a key concern.
Wells Fargo & Company Price, Consensus and EPS SurpriseCurrently, Wells Fargo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Dates & Expectations of Other BanksM&T Bank (MTB - Free Report) is slated to report second-quarter 2026 numbers on July 15.
Over the past week, the Zacks Consensus Estimate for M&T Bank’s quarterly earnings has remained unchanged at $4.66 per share. This indicates an 8.9% rise from the prior-year quarter’s reported figure.
U.S. Bancorp (USB - Free Report) is scheduled to release second-quarter 2026 earnings on July 16.
The Zacks Consensus Estimate for U.S. Bancorp’s quarterly earnings has been revised upward to $1.28 per share over the past seven days. This indicates a 15.3% rise from the prior-year quarter’s actual.
United Parcel Service (UPS - Free Report) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.
The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.
Individual investors often find it hard to make decisions based on rating upgrades by Wall Street analysts, since these are mostly driven by subjective factors that are hard to see and measure in real time. In these situations, the Zacks rating system comes in handy because of the power of a changing earnings picture in determining near-term stock price movements.
Therefore, the Zacks rating upgrade for UPS basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
Most Powerful Force Impacting Stock PricesThe change in a company's future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the near-term price movement of its stock. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock.
For UPS, rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher.
Harnessing the Power of Earnings Estimate RevisionsAs empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, tracking such revisions for making an investment decision could be truly rewarding. Here is where the tried-and-tested Zacks Rank stock-rating system plays an important role, as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock-rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here >>>> .
Earnings Estimate Revisions for UPSThis package delivery service is expected to earn $7.11 per share for the fiscal year ending December 2026, which represents no year-over-year change.
Analysts have been steadily raising their estimates for UPS. Over the past three months, the Zacks Consensus Estimate for the company has increased 0.4%.
Bottom LineUnlike the overly optimistic Wall Street analysts whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of "buy" and "sell" ratings for its entire universe of more than 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
You can learn more about the Zacks Rank here >>>
The upgrade of UPS to a Zacks Rank #2 positions it in the top 20% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
Jim Cramer used his Monday CNBC Stop Trading segment to flag a familiar play he’s seeing coming back into focus. Cramer noted that when the cost of living squeezes household budgets, capital rotates into discount retailers, and the hedge fund crowd tends to get there first. That’s why he says he’s keeping an eye on Dollar General (NYSE:DG | DG Price Prediction).
Why Rising Gas Prices Send Hedge Funds Into Dollar General Jim Cramer bluntly connected the dots he sees between rising oil prices and soaring discount retailer performance. “When things go up for the consumer, we go back to these stocks,” he said, before laying out his trade idea: “Dollar General just is a favorite of the hedge fund crowd. It’s kind of an algorithm that says, oh, oil goes up, gasoline therefore goes up, go buy Dollar General.”
He also pointed to Dollar Tree’s upgrade last week, which he said drove the stock from $85 to $130 in a couple of months, and flagged Walmart as the validation to watch: “I’m waiting for it to impact Walmart, which is a big winner.”
The Consumer Squeeze Is Reviving the Trade-Down Economy WTI crude sits at above $78 per barrel, well off the 12-month high of $114.58 on April 7, 2026, and the U.S. regular gasoline average has eased to $3.78 per gallon. But retail pump prices spent much of the spring above $4.50, and University of Michigan consumer sentiment collapsed to 44.8 in May 2026, approaching recessionary levels. Trade-down behavior into value shopping is exactly what that combination could produce.
Dollar General’s Q1 FY2027 report filed on June 2, mapped directly onto Cramer’s thesis. Diluted EPS came in at $2.00 versus $1.88 consensus, revenue was $10.79 billion, same-store sales rose 2.0%, and gross margin expanded 65 basis points to 31.6%.
CEO Todd Vasos said results “exceeded our expectations as strong operating margin expansion more than offset the impact of severe winter weather and higher fuel costs.” Management then raised FY2026 EPS guidance to $7.20-$7.45.
Dollar General has climbed 8.7% over the past month and was up 4.73% on the day of Cramer’s segment, trading at $124.55. Shares still carry a modest trailing P/E ratio of 17.
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Dollar Tree, Walmart, and Five Below As Other Potential Beneficiaries Dollar Tree (NASDAQ:DLTR) is up 13.23% over the past month. Q1 delivered adjusted EPS of $1.74 versus $1.55 consensus on revenue of $4.98 billion, and management raised the FY26 range to $6.70 to $7.10.
Walmart (NYSE:WMT) reported Q1 FY2027 results showing Walmart U.S. comps up 4.1% ex-fuel and global e-commerce up 26%, with share gains skewing towards upper-income demographics. Walmart trades at a P/E near 41, and shares are down 5.55% over the past month.
Five Below (NASDAQ:FIVE) reported Q1 net sales growth of 32.5% and comparable-store sales growth of 22.7%, with FY26 EPS guidance of $8.65 to $9.05. Shares are up 45.48% over the past year.
What to Watch Next Cramer’s broader argument is that rising household costs could push more consumers toward discount retailers, benefiting Dollar General, Dollar Tree, Walmart, and Five Below. Dollar General’s improving margins and raised earnings guidance suggest that shift may already be underway.
If Walmart’s upcoming results show stronger trade-down activity, the trend could be developing into a broader defensive investment theme rather than a short-term hedge fund trade.
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