Microsoft announced on Monday it is laying off 4,800 employees, or 2.1% of its workforce—with more to come—as part of a massive cost-cutting restructuring effort. The layoffs include major cuts from its Xbox division.
In a memo to staffers, Xbox CEO Asha Sharma said Microsoft was “resetting Xbox” and would be cutting a total of 3,200 employees, or 20% of that division, throughout fiscal 2027—including spinning off four gaming studios. Compulsion Games and Double Fine Productions will become independent studios, while Ninja Theory and Undead Labs will be spun off.
This amounts to eliminating 1,600 roles now and another 1,600 in the coming year, as the company focuses on artificial intelligence (AI) and away from its lagging gaming sector.
This is just the latest round of layoffs for the tech giant, coming a year after the company eliminated 9,000 jobs.
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“Our business today is not healthy,” Sharma said. “We are operating at margins that are 3-10x lower than comparable platform and publishing businesses.”
So, what happened?
According to Sharma, “[Microsoft’s] core business weakened, and [they] added more teams, more investment, and more time, hoping for a better outcome. And now the industry is facing the most severe hardware crisis in its history.”
It's been a challenging year for some of the world's leading tech stocks. While some stocks have thrived, namely those that are involved in selling memory and storage products, many others have struggled.
A couple of tech giants within the "Magnificent Seven" that have been doing particularly poorly are Microsoft (MSFT 1.18%) and Meta Platforms (META +3.02%). They're both down double digits as investors have been pivoting to other names in tech instead. But with both of these businesses still generating terrific results recently, they may still have a lot to offer investors. Which one is the better buy for the second half?
Image source: Getty Images.
As of the end of June, Microsoft's stock was down an incredible 23%, making it the worst-performing stock in the Magnificent Seven. That's bad for current shareholders, but for people looking to buy the stock, it could make for an intriguing opportunity.
That's because Microsoft remains a top tech company. Its Windows operating system and Office software are staples in businesses all over the world. Artificial intelligence (AI) and chatbots aren't likely to make them obsolete. In fact, AI should enhance its products and make them more useful. But amid the panic due to AI fears, the market has dumped Microsoft along with many other software stocks.
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The company's AI business grew at a rate of 123% in its most recent quarter, and the overall business generated 18% growth. Those are terrific numbers, with many of Microsoft's products and services delivering double-digit growth. For a top tech stock with a varied business model, Microsoft has a lot of upside given its attractive valuation; it trades at 23 times its trailing earnings, which is less than the S&P 500 average of 25.
The case for Meta Platforms Social media giant Meta Platforms has been investing heavily in AI, but that hasn't been enough to stop it from going on a sizable downturn this year. At the halfway point of the year, it was down 15%.
Meta has many top social media applications in its portfolio, including Facebook and Instagram. And the company is looking to AI to drive even more opportunities for its business, with Meta AI now being available in its apps. The company has rolled out paid AI plans for its applications, which may drive more revenue growth for its already strong business. With 33% revenue growth during the first three months of the year, Meta is doing well as its apps continue to be attractive options for marketers and advertisers to reach their target markets.
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The company's strong profits enable it to spend heavily on the metaverse and AI, potentially unlocking more growth in the long run. At a price-to-earnings multiple of 21, the stock is an even cheaper option than Microsoft.
Which stock looks better right now? Although it's a bit more expensive, Microsoft's stock may generate better returns for investors in the long run. Its software is crucial for businesses, and that isn't likely to change anytime soon. AI may prove to be more of an opportunity than a threat to its operations. Meta, meanwhile, faces a bit more uncertainty given the increased spotlight on social media and the harms it poses to children. Its tendency to spend aggressively as it chases the latest trends (as is the case now with AI) is also why I'd tread a bit more cautiously with the stock.
Microsoft looks to be the safer, more reliable investment to consider when looking at the long run. It may just be a matter of when it starts to rally, but this is definitely a stock with a lot of potential upside given its reduced valuation.
Microsoft Corp. (NASDAQ:MSFT) is starting its new fiscal year with a substantial personnel cut.
The tech behemoth announced Monday it will cut about 4,800 jobs. That’s around 2.1% of its worldwide staff. According to Benzinga’s findings, most of the cutbacks are in the company’s sales, consultancy, and Xbox gaming units.
Microsoft Layoffs Happen Again: Why? So why is the most profitable tech giant firing thousands of workers?
The short answer is the jaw-dropping price tag of artificial intelligence. Microsoft is investing record amounts into AI infrastructure. The corporation is creating enormous data centers, buying high-end CPUs, and expanding cloud capacity.
These large expenditures, therefore, are feeding major anxieties on Wall Street. Investors are worried that heavy expenditure on AI will squeeze profit margins badly.
“Decisions like these are never easy, and you have my commitment that we are always investigating how to reduce the need for job eliminations,” Amy Coleman, EVP and Chief People Officer at Microsoft, explained.
There is also a growing fear that AI might disrupt existing enterprise software models. Microsoft is trying to cut back on non-core corporate employment to offset these capital costs and protect its bottom line.
However, this is not the first time Microsoft has laid off people this year. The company’s first significant workforce reduction of 2026 began on April 23.
During that period, Microsoft introduced its inaugural voluntary retirement buyout program, offering early-retirement incentives to about 8,750 eligible U.S. employees.
Wall Street Reacts: No More Rally for MSFT? Investors initially liked the significant cost cuts. Microsoft shares were up more than 3% when the first rumors of the layoffs arose, breaking a severe multi-week downward trend.
The stock finished last week at $390.49, bouncing back from a new 52-week low of $349.20.
But the IT giant still faces an uphill struggle on the charts. The restructure follows a difficult month for stockholders. Microsoft shares dropped nearly 19% over the last six months.
At the time of writing, the Microsoft layoffs have forced the MSFT stock down to $383.48.
In June, the share price declined by 10.39%. As a result, some market watchers called it the worst single-month performance by the corporation since the dot-com era.
Xbox Business Goes RedBesides that, Microsoft’s gaming industry has faced severe difficulties in addition to AI pressures.
About 1,600 of the initial job cutbacks are with the Xbox division. It comes after years of aggressive purchases, including the $69 billion acquisition of Activision Blizzard.
But, despite all these significant efforts, Xbox has yet to find its foothold. Internal memos show that hardware sales fell 33% last quarter.
In an email to the affected employees, Xbox CEO Asha Sharma told staff that the business couldn’t continue on its present course, noting that the business is not currently healthy.
However, she noted that Xbox will prioritize growth and could be open to hiring again sometime in the future.
On the weekly chart, the Microsoft layoffs seem to have affected the stock structure. As shown below, MSFT is forming a potential head-and-shoulders pattern, with the right shoulder near $450-$455 after the rally failed to set a new high.
This rejection suggests sellers remain in control. Furthermore, the stock is now trading around the 50% Fibonacci retracement at $384.11, a key support level.
If this level fails, Microsoft could slide toward the 38.2% Fibonacci retracement at $343.94, where stronger demand may emerge.
However, a weekly close back above $450 would invalidate the bearish setup and improve the outlook.
Meanwhile, the MACD remains below both the zero line and the signal line, indicating that bearish momentum is still stronger than bullish momentum, even as selling pressure shows signs of easing.
Microsoft Layoffs: The Metrics Investors Need to WatchMicrosoft does budget resets on July 1, the start of its new fiscal year, regularly. A prior voluntary buyout scheme helped soften this year’s forced departures, leading to over a third of the 8,750 U.S. employees eligible for early retirement.
However, the fact that 4,800 jobs are still being eliminated speaks to a deeper issue.
Now the big question for investors is how these cuts would protect Microsoft’s bottom line. The company is currently treading a fine line, sustaining outstanding operating margins (46.3% in Q3) while absorbing a staggering $190 billion annual capital expenditure driven by AI technology.
Management has the financial flexibility to support this infrastructure boom by cutting non-core areas such as legacy sales and underperforming locations within Xbox.
Going forward, investors will need to watch key metrics in the upcoming Q4 earnings release to see if these aggressive internal efficiencies can help gross margins hold steady against rising data center costs.
It might also be important to see if Azure can continue to grow at 39% to 40% to justify the heavy CapEx outlays.
Ultimately, these layoffs show that Microsoft is ready to sacrifice legacy personnel to win the next generation of enterprise AI. Time will tell if the company will win.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
Market News and Data brought to you by Benzinga APIs
Microsoft is eliminating 4,800 positions, representing approximately 2.1% of its global workforce, as the software giant navigates a broader shift toward artificial intelligence (AI) and seeks to stabilize underperforming hardware and gaming segments, CNBC reported Monday (July 6).
The restructuring hits the company’s Xbox division particularly hard. According to an internal memo from Xbox CEO Asha Sharma, the unit will shed 3,200 roles through fiscal year 2027. Half of those reductions—1,600 positions—were finalized Monday, accounting for roughly one-fifth of the division’s total staff. Sharma characterized the multi-year downsizing as a difficult but necessary step, stating that it is “not possible to make all the necessary changes in a single day.”
As part of the consolidation, Microsoft is spinning off several game development studios. Compulsion Games and Double Fine Productions, both acquired in the 2010s, will return to independent status. Ninja Theory and Undead Labs have reportedly entered terms to join new ownership, while Microsoft is exploring “strategic options” for France-based Arkane Studios.
The workforce reductions come amid a period of market volatility for Microsoft. The company has been the worst-performing megacap tech stock in 2026, declining 19% as of Friday’s (July 3) close. While cloud services and LinkedIn have shown growth, the company is grappling with shrinking revenue in Windows licenses, Surface devices and Xbox. Furthermore, investors remain concerned that generative AI could displace traditional enterprise software before Microsoft’s own AI services become major contributors to the bottom line.
Amy Coleman, Microsoft’s chief people officer, noted in the memo that while AI is not directly replacing laid-off workers, it is fundamentally “changing how work gets done” through the automation of daily tasks. To mitigate the impact of the cuts, Microsoft in April utilized a voluntary retirement program for U.S. employees at the senior director level and below, an offer accepted by more than one-third of those eligible, CNBC reported.
These layoffs reflect a failure of the subscription-focused model Microsoft had previously employed for its gaming division under former CEO Phil Spencer. In 2023, Xbox announced a $1 billion investment in Game Pass, its subscription service where users could enjoy unlimited games, including new releases, for a flat monthly fee. Although the program saw initial success, price hikes over the years led to millions of users unsubscribing.
NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) is the stock everyone points at, a $4.75 trillion monument to the AI buildout that just posted 85.23% revenue growth last quarter and guided to $91 billion for the next one. But the more interesting setup right now is elsewhere. Advanced Micro Devices (NASDAQ:AMD) closed Thursday around $517.82 and ripped roughly 7% higher intraday today, and it is doing something NVIDIA structurally cannot do at its current size, which is compound off a smaller base while the largest AI buyers on earth publicly commit to its next-generation silicon.
Why the crowded NVIDIA trade is getting harder from here NVIDIA is a great company that increasingly has a valuation problem. Its Q2 revenue guide of $91 billion explicitly excludes China Data Center compute, a bucket that contributed $4.6 billion a year earlier and is now effectively zero. Total supply-related commitments have ballooned to $119 billion, up from $50.3 billion two quarters back, and that kind of forward inventory positioning creates real downside if hyperscaler capex takes even a modest breath.
Data Center is now 92.3% of total revenue. That is one door for a $4.75 trillion company, and it opens onto a handful of hyperscale customers who now have public partnerships with AMD as well.
Polymarket traders already sense the ceiling. The most probable July close on NVIDIA sits at $192, and the probability of finishing this week above $200 is only 4.5%. Consensus is priced for consolidation, so any incremental dollar chasing NVIDIA is buying a stock the crowd already expects to stall.
AMD’s data center is inflecting while NVIDIA laps a huge base Look at what the AMD segment has done in four quarters. Data Center revenue grew 14% in Q2 2025, then 22%, then 39%, and hit 57% year over year in Q1 2026 at $5.78 billion. Free cash flow jumped 252.96% year over year to $2.57 billion, non-GAAP gross margin expanded to 55%, and management guided Q2 to roughly $11.2 billion, up about 46% year over year with gross margin stepping to 56%. Net income grew 95.06% on a business roughly one-fifth the size of the incumbent, with a debt-to-equity ratio of 0.07.
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Trailing P/E sits near 181x, forward P/E near 76x, and shares are up 148% year to date. So yes, you are paying up. You are paying up for a business whose Data Center growth rate is still accelerating while the incumbent laps ever-tougher comparisons, and for Client, Gaming, and Embedded segments that add a stability cushion NVIDIA no longer has.
The customer list that quietly closes the gap Then there is the question of who is actually writing checks. Meta committed to 6 GW of AMD Instinct GPU deployment, with the first gigawatt powered by MI450. OpenAI selected AMD as a core preferred partner with another 6 GW planned. Oracle is deploying 50,000 GPUs on AMD’s Helios rack design.
AWS, Google Cloud, Microsoft Azure, and Tencent are all expanding 5th Gen EPYC-powered cloud instances. On the Q1 call, Lisa Su said customer engagement around MI450 and Helios is strengthening with “leading customer forecasts exceeding our initial expectations”. When the two largest AI capex spenders on the planet independently sign multi-gigawatt commitments for silicon that hasn’t fully shipped, a credible duopoly is forming in real time.
Retirement portfolios tend to compound by owning businesses the crowd is still catching up to, and on the numbers above AMD’s data center trajectory and customer commitments are what to keep an eye on next to NVIDIA’s tougher comps.
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) shares continue to slide for one primary reason which the Zacks Rank has warned investors about for the past two years: persistent downward EPS estimate revisions by Wall Street analysts.In just the past few months the consensus EPS estimate for FY 2027 (ends May) has declined by 20% from $2.00 to $1.80. And even next fiscal year is seeing the same revision trend, dropping over 10% from $2.70 to $2.40.
The profit collapse persists as revenues also fall flat. The current fiscal year Zacks consensus estimate for Nike's top line now sits at $46.32 billion among 13 analysts. This would represent slight negative growth from the prior year's sales of $46.4B.
The Picture Worth Billions of Dollars
Revenues are certainly vital to a business. But the Zacks Rank focuses on bottom line profits -- and more specifically, their change in direction and magnitude -- to evaluate which companies have the strongest and weakest relative growth traction.
Nike 12-month trailing Net Income slid from $5.7B at the end of the May quarter in 2024 to $2.25B at the end of the Feb quarter this year.
And how could an investor see this trend developing in real time and know if it was persistent over several quarters?
By studying the Zacks Price, Consensus, and EPS time series which shows annual earnings estimate revision trends as a single moving line...
If chart does not appear, just click here.
This data view comes from tracking analyst EPS revisions, which is exactly what the Zacks Rank does every day. It's a vital visual tool that is the simplest way to quickly grasp the Zacks Rank in action for any stock, and its the very first graphic you see on every company quote page.
Under the Hood: How the Zacks Rank Works
I call the Zacks Rank a "bell curve cage match" because we take all the Wall Street analyst EPS revisions on any given day and throw them into a calculation engine that sorts and "ranks" them by various weights, including magnitude and agreement (what percentage of analysts providing estimates agreed on the change in direction, up or down).
So we end up with over 4,000 stocks ranked by their relative earnings momentum, up and down. We call the top 5% and bottom 5% Zacks #1 Rank Strong Buys and Zacks #5 Rank Strong Sells, respectively.
The next 15% in from the "tails of the bell" are Zacks #2 Rank Buys and Zacks #4 Rank Sells. And the middle 60% of stocks are those with no meaningful revision trends to compete for either the penthouse or the cellar.
The way that founder and MIT quant Len Zacks makes sure the Zacks Rank is relevant before and after company earnings reports is by only running the data on the last 60 days of estimate revisions. Think of it as a rolling 60-day window, where older revisions drop out as less important information before the next company report card.
In the 1970s, Zacks studied the correlation between stock price returns and company earnings and published his findings in 1979 in the Financial Analysts Journal with the title "EPS Forecasts -- Accuracy Is Not Enough."
His thesis was that earnings estimate revisions were the predominant driver of near-term stock returns -- thus more important than what the company said about their growth.
The "Magnificent Seven" stocks are among the most valuable and popular stocks in the world: Apple (AAPL +1.55%), Alphabet (GOOG +2.06%)(GOOGL +1.71%), Amazon, Meta Platforms, Microsoft, Nvidia (NVDA +0.86%), and Tesla. Over the years, they've generated some fantastic returns for investors, perhaps even life-changing gains.
But this year, their gains have been lackluster, and only one of them has even outperformed the S&P 500 (it's up around 9%). Here's a look at the top three stocks in this group as of the halfway point of 2026, and whether they are good buys right now.
Image source: Getty Images.
Apple: up 6% Although a modest single-digit gain may seem modest for this group of stocks, that's enough for a stock like Apple to be among the top three. It was up around 6% as of the end of June, and it's been a better buy than the rest. Investors may have been underwhelmed with its artificial intelligence (AI) strategy, but with its results still looking solid, it remains a popular tech stock to own.
The company has been battling higher costs due to soaring memory and storage prices, but with a customer base that doesn't often balk at paying a premium for products, it may be in better shape than most if it ends up having to raise the prices of its iPhones this year. It has already raised prices on other products, including MacBooks and iPads.
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Although the stock is doing reasonably well this year, its valuation is high, which could limit its gains from here on out. It trades at 37 times its trailing earnings, which can be problematic if its growth rate slows due to higher prices. While it remains an attractive option for the long haul, it could be a challenging road ahead for Apple in the near term.
Nvidia: up 7% The days of chipmaking giant Nvidia delivering massive returns for its shareholders may be over. Up just 7% as of the end of June, Nvidia's gains have been relatively light, even though they've been solid compared to other stocks in the Magnificent Seven.
Nvidia is already the most valuable company in the world with a market cap of $4.7 trillion, so it's not an easy task for it to rise higher. Although its earnings multiple of 30 is lower than Apple's, investors may remain concerned about the market cap and the future expectations that are effectively priced into Nvidia's current valuation.
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However, with the company generating impressive growth of 85% in its most recent quarter (which ended on April 26), its results continue to look stellar. Nvidia's market cap may seem high, but given its high level of growth and strong earnings, it may have more room to rise higher not only in the second half of the year but in the long run.
Alphabet: up 13% The top-performing stock in the Magnificent Seven as of the end of June was Alphabet. At around 13%, its gains weren't huge, but they were enough to make it the best stock in the group and the only one to beat the S&P 500, which was up less than 10%.
The company has proven that it can thrive due to artificial intelligence (AI), as opposed to it proving to be an existential threat to its business. The company's Gemini chatbot is not only proving to be a significant threat to OpenAI's ChatGPT, but may also be in the best position to succeed given the company's deep pockets. Alphabet's business continues to do well, with its advertising and search segments remaining strong despite investors' initial concerns about AI. The company's top line rose by 22% during the first three months of 2026, totaling nearly $110 billion.
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Trading at 27 times its trailing earnings, Alphabet's stock is the cheapest one on this list. It offers good value for investors and could still have more upside this year, given its solid growth and AI opportunities.
NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) owns the AI compute market, but every major customer is spending billions to buy less of what it sells.
NVIDIA carries a $4.75 trillion market cap and sits between a 52-week low of $158.18 and a high of $236.26. Q1 FY27 revenue came in at $81.61 billion, up 85.2% year over year, with data center revenue of $75.25 billion.
About 50% of that data center number comes from hyperscalers, the same companies bankrolling Amazon Trainium, Google TPU, Microsoft Maia and Meta MTIA.
The bull case Growth accelerates at NVIDIA’s scale. Management guided Q2 FY27 revenue to $91.0 billion with non-GAAP gross margin holding at 75%. Networking revenue grew 199% year over year to $14.8 billion, evidence the moat extends past GPUs into InfiniBand, Spectrum-X and NVLink.
Blackwell Ultra is ramping, Rubin was announced, and Jensen Huang called the AI factory buildout “the largest infrastructure expansion in human history.” The dividend raised to $0.25 quarterly and an additional $80 billion buyback was authorized.
All of this says NVDA stock is set to keep delivering, as long as the broader market remains bullish.
The bear case The customer list is the threat. Amazon has disclosed Trainium is now a multi-billion-dollar business, and every hyperscaler funding NVIDIA’s data center segment also funds an alternative. Custom silicon “not only gives you a differentiation factor where you can be cheaper than competitors, but it also allows you to have some leverage over NVIDIA in negotiations.”
China data center compute revenue is effectively zero, and Colette Kress (Nvidia’s CFO) said losing that market, which NVIDIA sizes at “close to about $50 billion in the future,” would be material. Supply commitments of $119 billion compound demand risk if hyperscaler orders slow, and insiders have logged 16 recent transactions, net selling.
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What’s actually happening Neither thesis has resolved. Blackwell ramps while Trainium and TPU volumes rise in parallel. NVIDIA’s NVLink Fusion strategy lets hyperscalers bolt custom accelerators onto NVIDIA’s fabric so the interconnect stays sticky even when compute does not.
Watch hyperscaler capex mix, whether networking growth stays vertical, and any China SKU announcement over the next two quarters. Any one breaking hard could tip the call.
The market view NVIDIA trades at $196 against an analyst consensus target of ~$301.62 as of this writing, implying 53% upside. Coverage skews heavily positive with 10 Strong Buy, 48 Buy, 2 Hold, 1 Sell ratings. Forward P/E sits at 22x, trailing P/E at 29x.
Performance is mixed. NVDA is up 4.59% year to date and 24.06% over the trailing year, but down 12.46% over the past month. The S&P 500 delivered a smaller trailing-year gain, so NVDA outperformed with more turbulence.
The verdict At $196, NVIDIA remains a buy.
The numbers do not argue for selling. A company compounding data center revenue at 92% with 75% gross margins and $48.55 billion of quarterly free cash flow is a durable franchise. The numbers also do not argue for aggressively adding. Roughly half of that data center revenue comes from six companies actively engineering their way off NVIDIA’s price list, and management’s NVLink Fusion pivot is an implicit acknowledgment that fighting custom silicon head-on loses.
Buy conviction requires durable evidence that networking and software capture margin even when compute goes custom, plus a China resolution. Sell conviction requires a hyperscaler capex reset or a Trainium/TPU disclosure that reframes NVIDIA as a supplier rather than the platform. Prediction markets show 80.5% conviction NVDA touches $192 in July and only 7% for a week close above $210, a range consistent with the fundamentals.
Owning NVIDIA at this price is defensible. Buying it aggressively requires believing the customer base will keep writing checks it is openly trying to stop writing.
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Nvidia Corporation remains a Strong Buy, as recent stock weakness is disconnected from operational performance and driven by external sentiment factors. NVDA's Q1 revenue surged 85% YoY to $81.6B, with Data Center revenue up 92% and gross margins holding near 75% despite rapid scaling. Management guides for $91B Q2 revenue, excluding China Data Center compute, and expects stable margins through the next chip transition.
Four years ago, Amazon (AMZN +1.22%) started using its own Trainium AI chips in its cloud infrastructure platform, Amazon Web Services (AWS). Those first-party chips became even more powerful with the launches of the Trainium2 in 2024 and Trainium3 in 2025. That expansion indicated that Amazon wanted to reduce its dependence on Nvidia (NVDA +0.86%), which still provides the majority of its data center GPUs.
Several of Nvidia's other top customers -- including Microsoft (MSFT 1.13%), Alphabet's (GOOG +2.19%) (GOOGL +1.71%) Google, and Meta -- also produced their own AI chips for the same reason. Google and Microsoft even plan to sell their own chips to third-party customers that want to break free from Nvidia's sticky ecosystem.
Image source: Getty Images.
That's why it wasn't surprising when recent reports suggested that Amazon would hop aboard the bandwagon and start selling its Trainium chips to external customers. Could this seismic shift shake up Nvidia's booming data center business?
Nvidia faces long-term threats Amazon's Trainium3 chips can't compete against Nvidia's top-tier Blackwell GPUs on their own. But by densely stacking 144 Trainium3 chips into its UltraServers, Amazon can actually match the rack-scale performance of Nvidia's Blackwell systems at a much lower cost. Microsoft and Google are utilizing that same "system-level stacking" strategy to challenge Nvidia's chips.
Many privacy-oriented markets, such as Europe, want to expand their cloud infrastructure without storing their data on servers operated by American hyperscalers. To solve that, they'll likely purchase more third-party chips from Amazon, Microsoft, and Google to build their own cloud platforms. Other large companies that don't want to rely on those tech giants or become too dependent on Nvidia's chips will likely follow the same playbook.
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But Nvidia still has a wide moat Amazon's sales of third-party AI chips would certainly represent a long-term challenge for Nvidia, but it probably won't meaningfully impact its near-term sales.
Nvidia still locks in its customers with its proprietary software ecosystem, CUDA, and most AI models, libraries, and frameworks are natively optimized to run on its industry-standard GPUs. Many companies that have already invested in Nvidia's ecosystem won't eagerly sever those ties to buy new chips from Amazon, Microsoft, or Google.
For now, Nvidia's investors shouldn't worry too much because the demand for its data center GPUs is still easily outstripping its supply. However, they should still keep a close eye on how its biggest customers are gradually evolving into formidable competitors.
Leo Sun has positions in Amazon and Meta Platforms. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
SK Hynix, the world’s second-largest memory-chip maker, is coming to the NASDAQ on Friday with the largest stock sale anyone has priced in years, and the chip complex is already pricing it in. CNBC’s Kristina Partsinevelos reported Monday that “SK Hynix plans to raise roughly $28 billion through an American depositary receipts, or ADR, on the Nasdaq, and this target was down from earlier numbers.”
She added that “it’s still the second biggest share sale in history behind only SpaceX’s record IPO, which was just last month here at the Nasdaq as well.” The semiconductor index rose more than 4% on the news, and the chip trade retail has been crowded into for a year got another shot of adrenaline.
What the raise funds Partsinevelos noted the proceeds “are going to go towards expanding chip facilities, specifically in South Korea, all to meet soaring AI demand. They’re going to be buying ASML EUV machines as well.” When a memory duopolist raises $28 billion and immediately hands a chunk of it to a single Dutch equipment vendor, the equipment vendor’s backlog stops being an abstraction.
ASML (NASDAQ:ASML | ASML Price Prediction) already reported $15.28 billion in Q4 2025 net bookings, a record, and CEO Christophe Fouquet said “demand for chips is outpacing supply” in Q1 2026 results. ASML is up 65.97% year to date and popped another 5.39% Monday.
The scaled-back size is the tell. Shares wobbled in Seoul, so bankers trimmed the deal. A memory maker still walked away with $28 billion of fresh cash to build fabs. That flow of cash from a memory duopolist to a Dutch lithography monopolist, mid-pullback in Seoul, is the AI capex cycle working as designed.
The equipment chain is the cleanest read Applied Materials (NASDAQ:AMAT) CEO Gary Dickerson raised his outlook on the May 14 call, saying “we now expect our semiconductor equipment business to grow more than 30 percent in calendar 2026.” That was a bump from the 20%-plus he’d guided one quarter earlier.
Applied has EPIC Center partnerships with TSMC, SK hynix, Micron, and Samsung, meaning every memory expansion announced this quarter feeds directly into next year’s tool orders. AMAT is up 212% over the past year.
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Memory, and whether SK Hynix’s raise is a threat to Micron Micron Technology (NASDAQ:MU) just posted $41.46 billion in Q3 FY26 revenue, up 345.72% year over year, with GAAP gross margin at 84.6%. CEO Sanjay Mehrotra guided Q4 to $50 billion in revenue and roughly 86% gross margin (see the Q3 filing).
Retail is interpreting the SK Hynix news as validation rather than threat. The top r/stockmarket post Monday was titled “This isn’t a memory cycle anymore, and SK Hynix hitting US markets is the next leg,” and MU’s Reddit sentiment score sits at 63 (bullish). Micron rose 3.27% Monday to $1,007.49, up 241.97% YTD.
Where NVIDIA and Broadcom sit in all this NVIDIA (NASDAQ:NVDA) is the customer buying HBM from Hynix and Micron, and it’s the reason the whole cycle exists. Q1 FY27 revenue was $81.61 billion, up 85.2%, with data center revenue at $75.25 billion.
Jensen Huang described the moment as “the buildout of AI factories, the largest infrastructure expansion in human history.” Broadcom (NASDAQ:AVGO) guided Q3 AI semi revenue to $16.0 billion, up over 200% year over year, per CEO Hock Tan on the June 3 call. Broadcom ripped 3.71% Monday.
Is it frothy? NVIDIA is down 6% over the past month and Broadcom is down 5%, so calling the group euphoric misses that the leaders have already coughed up gains. A top r/wallstreetbets post flagged that “leverage in South Korean chip stocks is out of control,” which is worth holding in mind. Goldman Sachs’ 2026 outlook notes concerns are rising over signs of froth, including some headline-grabbing deals and announcements of huge capex plans.
A $28 billion memory raise funding ASML tools that Applied Materials integrates, to feed HBM to NVIDIA and Broadcom, is exactly the kind of headline that makes both bulls and skeptics feel vindicated. Watch Friday’s open. What SK Hynix prices at, and whether the aftermarket holds, is the tell for how deep the capex conviction actually runs.
Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and ASML didn't make the cut. Grab the names FREE today.
Key Takeaways AT&T expanded 400G connectivity, added Lumen fiber assets and reaffirmed its 2026 outlook.T added 294,000 postpaid phone users as its wireless and fiber convergence strategy gained traction.T faces elevated debt and intense competition, while AI network monetization remains a long-term prospect. AT&T, Inc. (T - Free Report) stock plunged 27.5% over the past year compared with the Wireless National industry’s decline of 21.7%. The stock has underperformed compared to the Zacks Computer & Technology sector and the S&P 500’s growth during this period.
Image Source: Zacks Investment Research
The company has underperformed its peers like Verizon Communications Inc. (VZ - Free Report) and T-Mobile US, Inc. (TMUS - Free Report) over the past year. Shares of Verizon have dipped 0.5%, while TMUS stock has plummeted 25.3% during the same period.
Key Growth DriversAT&T expanded 400G wavelength connectivity to 40+ U.S. metros, enabling AI-ready, high-capacity enterprise networking. T’s 400G capability now covers 440,000 properties serving more than 2.3 million business tenants. The expansion has significantly boosted AT&T’s capability in the AI and enterprise networking space.
The company is benefiting from solid traction in the wireless vertical. It has added 294,000 postpaid phone subscribers during the quarter. Postpaid phone churn was 0.89%. The company is focused on increasing the number of households that subscribe to both AT&T wireless and broadband services, including AT&T Fiber and AT&T Internet Air. Its convergence strategy is paying off well, as evidenced by recent quarterly results. Around 42% of AT&T’s advanced home Internet users also subscribe to its wireless services. T recently introduced AT&T OneConnect. The product combines fiber and wireless into a single subscription. Growing adoption of such plans will deepen customer relationships and increase convergence.
AT&T continued to execute on its long-term connectivity strategy by strengthening its fiber footprint. During the first quarter, the company completed the Lumen fiber acquisition ahead of schedule. The buyout has added 1.1 million fiber customers and more than 4 million fiber locations. Along with these developments, AT&T continues to execute on its transformation initiatives, including AI-driven automation and digitalization, to support its target of $4 billion in annual cost savings by 2028.
The company has reaffirmed its guidance for 2026. It is targeting 3-4% adjusted EBITDA growth in 2026. Free cash flow is targeted at more than $18 billion in 2026, in excess of $19 billion in 2027 and in excess of $21 billion in 2028, alongside an adjusted earnings outlook of $2.25 to $2.35 per share for 2026. Given the highly competitive nature of the industry, this is a positive outlook.
Major Challenges for TThe U.S. wireless market remains highly saturated. The company faces strong competition from other players such as Verizon and T-Mobile. Verizon is also aggressively expanding its fiber footprint. It is also offering wireless and fiber bundled solutions to increase customer retention. Such initiatives could hinder AT&T’s fiber expansion and convergence strategy to some extent.
Amid intense competition, AT&T expects to invest $23-$24 billion annually through 2028 to expand fiber and maintain its wireless network. Sustaining such high capex for a few years may impact free cash flow growth and put pressure on margin at least in the near term. The company is also expanding its AI networking infrastructure, but AI monetization remains a long-term growth prospect, not an immediate revenue generator.
Net debt increased sequentially following the Lumen fiber acquisition. AT&T ended the first quarter with $11.96 billion of cash and cash equivalents and total debt of $138.41 billion. The time interest earned ratio has decreased to 4.8 from 5 in the fourth quarter of 2025. At the end of the first quarter, the company had a current ratio of 0.92 and a cash ratio of 0.24. It indicates the company may face challenges in meeting short-term debt obligations.
Estimate Revision Trend of TEarnings estimates for AT&T for 2026 and 2027 have remained unchanged over the past 60 days.
Image Source: Zacks Investment Research
Key Valuation Metric of TFrom a valuation standpoint, AT&T appears to be trading relatively cheaper compared to the industry and trading below its mean. Going by the price/earnings ratio, the company shares currently trade at 8.52 forward earnings, lower than 60.11 for the industry and the stock’s mean of 11.49.
Image Source: Zacks Investment Research
End NoteStrong fiber momentum and wireless customer additions are major growth catalysts. The convergence strategy is boosting customer retention. AI-ready network expansion supporting enterprise demand is a positive. However, stiff competition and elevated debt levels are major concerns for investors. Monetization of AI-ready infrastructure remains a long-term prospect. High capital investment to support infrastructure expansion may impact free cash flow growth to some extent. With a Zacks Rank #3 (Hold), AT&T appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of AT&T (T +0.07%) have been under pressure this year, down 17%. The stock is trading near its 52-week low despite the company's recent financial performance being strong. Concerns about Space Exploration Technologies (also known as Spacex) taking market share and luring away customers with Starlink appear to be weighing on the telecom stock of late.
Earnings are on deck for AT&T, with the company's second-quarter numbers due to come out on July 22, which could calm investors' fears. Could it be a good time to buy the stock before then, while its valuation is low and its yield is high, at around 5.4%?
Image source: Getty Images.
Could a strong earnings report fix what ails AT&T's stock? AT&T is a slow-growing business. It isn't likely to generate double-digit growth in a quarter unless it's due to an acquisition or some surprise development. In the first quarter, which covered the first three months of the year, its revenue was up just under 3% year over year. And that's the kind of growth the company is forecasting for its service revenue this year: low single-digits.
That doesn't, however, mean that the stock can't surge if it delivers strong results, as it did back in January when it posted an earnings beat.
T data by YCharts
Big moves, however, aren't the norm for AT&T, for what's typically a fairly stable, low-volatility stock to own. What is encouraging is that there also haven't typically been large declines after earnings, either. And with plenty of bearishness seemingly priced in due to SpaceX and to how its Starlink business may impact AT&T's growth, expectations may already be low -- and that could work to the advantage of investors who buy AT&T stock today.
Is AT&T's stock a steal of a deal right now? Due to its sharp decline in price, AT&T's stock is now trading close to a multi-year low. Its price-to-earnings multiple of seven is also far below the S&P 500 average of 25. While slow-growing telecom stocks don't normally trade at high multiples, it's still a fairly low valuation for a quality stock.
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AT&T provides some attractive value for investors, plus, with a high-yielding dividend, the stock could be a great deal today, as the market may be overreacting to the risk from Starlink, which still could have a long way to go in taking enough subscribers from AT&T to truly put a dent in its business. For long-term investors, buying AT&T stock before earnings may prove to be a good, low-risk move to make right now.
Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report? Visa (V - Free Report) , which belongs to the Zacks Financial Transaction Services industry, could be a great candidate to consider.
This global payments processor has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. The average surprise for the last two quarters was 4.04%.
For the most recent quarter, Visa was expected to post earnings of $3.09 per share, but it reported $3.31 per share instead, representing a surprise of 7.12%. For the previous quarter, the consensus estimate was $3.14 per share, while it actually produced $3.17 per share, a surprise of 0.96%.
Price and EPS Surprise
For Visa, estimates have been trending higher, thanks in part to this earnings surprise history. And when you look at the stock's positive Zacks Earnings ESP (Expected Surprise Prediction), it's a great indicator of a future earnings beat, especially 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.
Visa currently has an Earnings ESP of +0.29%, which suggests that analysts have recently become bullish on the company's earnings prospects. This positive Earnings ESP when combined with the stock's Zacks Rank #2 (Buy) indicates that another beat is possibly around the corner.
With the Earnings ESP metric, it's important to note that a negative value reduces its predictive power; however, a negative Earnings ESP does not indicate an earnings miss.
Many companies end up beating the consensus EPS estimate, but that may not be the sole basis for their stocks moving higher. On the other hand, some stocks may hold their ground 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.
"Fundamentally, the company is fine" when it comes to Walmart (WMT), says Charles O'Shea. On the investor side, he argues "the P/E is way up there," making some question current valuations.
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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.
Headquartered in New Brunswick, Johnson & Johnson (JNJ - Free Report) is a Medical stock that has seen a price change of 27.1% so far this year. The world's biggest maker of health care products is paying out a dividend of $1.34 per share at the moment, with a dividend yield of 2.04% compared to the Large Cap Pharmaceuticals industry's yield of 2.1% and the S&P 500's yield of 1.38%.
Looking at dividend growth, the company's current annualized dividend of $5.36 is up 4.3% from last year. Over the last 5 years, Johnson & Johnson has increased its dividend 5 times on a year-over-year basis for an average annual increase of 5.37%. 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. Johnson & Johnson's current payout ratio is 48%, meaning it paid out 48% of its trailing 12-month EPS as dividend.
JNJ is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $11.57 per share, representing a year-over-year earnings growth rate of 7.23%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, JNJ is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of #3 (Hold).
As nicotine consumption shifts toward smoke-free alternatives, investors are weighing the domestic dominance of Altria Group (MO 1.38%) against the international reach of Philip Morris International (PM +0.58%) to determine which stock is better.
Altria maintains a fortress-like hold on the United States market through traditional combustibles and oral nicotine. Meanwhile, Philip Morris International spearheads global innovation in heated tobacco and pouches. While both companies transition toward reduced-risk products, their geographic footprints and growth profiles offer distinct paths for investors eyeing this industry for their portfolios.
The case for AltriaAltria generates the bulk of its revenue from traditional filtered cigarettes like Marlboro, supplemented by oral nicotine and e-vapor products. The company primarily sells to wholesalers and large retail organizations in the United States market. Since it serves adult nicotine consumers across roughly 300,000 retailers, its domestic distribution network remains its primary competitive advantage for maintaining market share among tobacco stocks.
In FY 2025, revenue reached nearly $20.1 billion, a slight decline of approximately 1.5% from the previous year. Despite this dip, the company reported a net income of close to $6.95 billion for the period, showing that the business remains highly profitable despite volume challenges in the traditional cigarette market.
As of its December 2025 balance sheet, the debt-to-equity ratio, which compares total debt to shareholder equity, was -7.3x. This negative value indicates that total liabilities exceed shareholders’ equity. Free cash flow for the fiscal year was nearly $9.1 billion, calculated by subtracting capital expenditures from operating cash flow.
Philip Morris International operates a global business model focused on smoke-free products such as IQOS and ZYN, alongside international cigarette sales. The company serves consumers across approximately 170 markets using a mix of direct sales and independent distributors. This geographic diversity helps insulate the business from regulatory or economic shifts in any single country while driving long-term expansion.
For FY 2025, revenue grew by roughly 7% to reach nearly $40.7 billion. The company reported a net income of approximately $11.4 billion during the same period, driven by the continued expansion of its smoke-free portfolio and favorable pricing across international markets.
Based on the December 2025 balance sheet, the debt-to-equity ratio was approximately -4.9x, indicating that total liabilities exceed shareholder equity. Free cash flow for the year was close to $13.5 billion, representing the cash remaining after the company pays for its capital expenditures.
Risk profile comparisonAltria faces significant legal exposure following the March 2026 certification of a class-action antitrust lawsuit over e-cigarette sales. Regulatory hurdles also persist, as import bans on NJOY ACE products have disrupted its e-vapor strategy and forced goodwill write-downs. Furthermore, the company must contend with adult consumers moving toward cheaper discount brands and competition from illicit, flavored disposable vapes.
Philip Morris International recognized a $500 million impairment in June 2026 related to its Canadian affiliate, leading to a reduction in its earnings estimates. Geopolitical instability in Russia and Ukraine continues to threaten supply chains and expose the firm to adverse currency fluctuations. The company also relies on third-party manufacturers for IQOS devices and faces risks if governments change tax laws to treat smoke-free products like traditional cigarettes.
Valuation comparisonAltria currently trades at a lower Forward P/E than its peer, suggesting it is the more value-oriented choice based on future earnings estimates.
MetricAltriaPhilip Morris InternationalSector BenchmarkForward P/E13x21.6x287.6xP/S ratio6x6.9xSector benchmark uses the SPDR XLP sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?Smoking as a habit is declining globally and has hit its lowest level in the U.S., at under 10% of all adults, down from a peak of about 46% in the mid-1960s.
But both Altria and Philip Morris International have been great for shareholders. Each has outperformed the S&P 500 over the past five years, with the S&P 500 returning about 70% from July 2021 to today, compared to about 125% for both MO and PMI.
Altria is facing significant headwinds in its main market, the U.S., due to declining smoking rates. It’s finding some difficulty replacing revenue from the loss of traditional smokers because of the number of e-cigarette competitors taking share in the grey market outside regulatory approval. Wall Street estimates it will take Altria about five years to grow its revenue just 5% from 2025 levels.
Philip Morris International, meanwhile, has cast its lot with planning to eventually exit traditional cigarettes altogether, focusing on e-cig versions that are seeing good uptake in the global marketplace. Still, combustibles (as traditional cigarettes are known) remain the largest segment of the business, accounting for about 58% of sales, and are doing well globally. The Marlboro brand, which Philip Morris owns outside the U.S., reached its highest market share ever, at 11%, in the first quarter of 2026. Smoking isn’t declining as fast in the rest of the world as it is in the U.S. That has Wall Street seeing 6.6% revenue growth in 2026.
One thing to keep in mind is that both stocks are excellent sources of income. Altria has a forward dividend yield close to 6%, while Philip Morris International’s is more than 3.8%. Those are excellent options for income-minded investors.
So which tobacco giant is better for your portfolio’s health? Altria’s strong dividend and moderate valuation ratios overcome its sluggish growth for investor portfolios in 2026.
Investors with an interest in Automotive - Domestic stocks have likely encountered both Ford Motor Company (F - Free Report) and Tesla (TSLA - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Ford Motor Company is sporting a Zacks Rank of #2 (Buy), while Tesla has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that F likely has seen a stronger improvement to its earnings outlook than TSLA has recently. But this is just one factor that value investors are interested in.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.
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.
F currently has a forward P/E ratio of 8.16, while TSLA has a forward P/E of 196.73. We also note that F has a PEG ratio of 0.29. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TSLA currently has a PEG ratio of 9.35.
Another notable valuation metric for F is its P/B ratio of 1.42. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, TSLA has a P/B of 17.44.
Based on these metrics and many more, F holds a Value grade of A, while TSLA has a Value grade of F.
F sticks out from TSLA in both our Zacks Rank and Style Scores models, so value investors will likely feel that F is the better option right now.
Ford Motor Company (F - Free Report) reported second-quarter U.S. sales of 549,200 vehicles, down 10% year over year, primarily due to discontinued models and a 69% decline in daily rental sales. The company is currently retooling its Louisville Assembly Plant to manufacture its new affordable four-door electric pickup based on the Universal Electric Vehicle platform, with production scheduled to begin next year.
During the first half of the year, F-Series sales totaled 357,801 units, retaining their position as America's best-selling truck and surpassing the second-place Chevrolet Silverado by more than 80,000 units. Despite strong customer demand, first-half F-Series sales were impacted by production timing following last year's aluminum supply shortages. Ford expects supply conditions to improve during the second half of 2026.
Ford increased its estimated U.S. retail market share by 0.2 percentage points to 12.3% in June, supported by strong demand for its high-margin SUVs and F-Series pickups. Sales of Expedition, Explorer and Bronco helped offset the planned phase-out of the Ford Escape and Lincoln Corsair, paving the way for the launch of the company's affordable electric pickup built on its Universal Electric Vehicle platform. From Jan. 1, 2026, through the end of June, Ford sold 1 million vehicles, representing a 9.6% decline from the 1.1 million units sold in the first half of 2025.
The Maverick, America's best-selling hybrid pickup, achieved a record second-quarter performance with sales rising 19.3% year over year to 29,457 units. Explorer sales climbed 21% year over year to 126,925 units during the first half, supported by a refreshed trim lineup. Combined sales of the Active and ST-Line trims increased 31% year over year in the first half, while Platinum and Tremor sales jumped 55.6%. Explorer Tremor also recorded its strongest monthly sales in June since its launch last October. Although total Expedition sales declined 9.8% year over year due to fleet order timing, retail sales increased 13.7% in the first half, with second-quarter retail sales advancing 15.2%.
Bronco posted record sales in both the second quarter and the first half, outselling the Jeep Wrangler during the quarter. Second-quarter Bronco sales rose 15.9% year over year, while first-half deliveries increased 6.8% to a record 76,936 units. Off-road-focused variants, including Bronco, Raptor, Tremor and FX4 models, represented 23.9% of Ford's first-half sales mix, up 3.6 percentage points year over year. Sales of these performance-oriented models increased 6.5% year over year to 240,634 vehicles. Raptor sales grew 21.4% in the second quarter and 10.6% in the first half, while Tremor series sales surged 118% from a year ago during the first six months.
Ford Pro's paid software subscriptions exceeded 900,000 in the first half, an increase of approximately 20%, while cumulative hands-free driving hours using BlueCruise surpassed 12 million. F currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Besides Ford, its top competitors, General Motors Company (GM - Free Report) and Stellantis N.V. (STLA - Free Report) , also reported second-quarter sales results.
General Motors reported second-quarter U.S. sales of 714,896 vehicles, down 4% year over year, as demand was affected by a smaller electric-vehicle market, discontinued models and inventory constraints. EV sales fell 33% from the same period last year. All four of General Motors’ brands posted lower sales in the quarter. Cadillac recorded the steepest decline of 19.2% year over year, followed by Buick at 7.5%, Chevrolet at 3.9% and GMC at 0.3%.
Stellantis reported U.S. sales of 328,284 vehicles in the second quarter of 2026, up 6% year over year, driven by higher demand for Ram pickups and the refreshed Chrysler Pacifica minivan. Ram sales increased 11% year over year, while Chrysler deliveries surged 80%. However, Jeep sales fell 5% year over year, Dodge declined 15%, and sales of Fiat and Alfa Romeo also dropped sharply. For the first half of 2026, Stellantis delivered 634,345 vehicles in the United States, representing a 5% increase from the prior-year period.
Ford Motor Company (F - Free Report) could be a solid choice for investors 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.
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.
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 Ford Motor 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, and the near-term price movement of its stock are proven to be strongly correlated. 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.
For Ford Motor, 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 Ford MotorFor the fiscal year ending December 2026, this company is expected to earn $1.64 per share, which is unchanged compared with the year-ago reported number.
Analysts have been steadily raising their estimates for Ford Motor. Over the past three months, the Zacks Consensus Estimate for the company has increased 7.6%.
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 Ford Motor 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.
Ford’s (NYSE: F | F Price Prediction) sales of its two flagship EVs dropped to nearly zero in May. Originally, each was to sell hundreds of thousands a year.
Sales of the Mustang Mach-E dropped to 2,467, down 44% from the year before. That is 82 per day nationwide. Ford thought that using the Mustang brand would help jump-start EV sales. The Mustang was launched in 1964 and is still on sale today. It is powered by a gas engine. The Mach-E was launched in 2020.
The Ford F-150 Lightning was named for the best-selling vehicle in America. The full sized pick up market is the most successful vehicle niche in the US. Ford sold 1,046 Lightnings last month, down 45% from the year before. That figure was 45 Lightnings sold per day.
Ironically, Ford CEO Jim Farley test-drove Chinese EVs. His comment after his early rides was “There’s no real competition from Tesla, GM, or Ford with what we’ve seen from China. They are completely dominating the EV landscape globally.” Earlier, he said Chinese EVs could be an existential threat to Ford. The barrier to EVs in the US is high tariffs, which Ford hopes will stay high every day.
The Ford EV folly has started to move forward after a remarkably poor past. “The best predictor of future performance is past performance. And I’ve seen your past performance,” or so the saying goes.
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For reasons that are impossible to explain, Ford’s most visible project for its sales future is its Universal EV Platform and Ford Universal EV Production System. It is to be the largest car-production revolution since the Henry Ford assembly line, introduced in 1913, Ford management said. The Ford investment in the new project is $5 billion.
At the time of the launch, Farley said, “We took a radical approach to a very hard challenge: Create affordable vehicles that delight customers in every way that matters – design, innovation, flexibility, space, driving pleasure, and cost of ownership – and do it with American workers.”
The first product of the project will be a midsize EV truck, which will be ready in 2027. Given the pace at which the EV segment is evolving, that is late. While Ford may have exited the EV segment, several EU car companies have stepped up EV plans, as has Ford’s crosstown rival GM (NYSE: GM). It is hard to say what Ford’s management is thinking.
It will need several EV models, to hopes it to be competitive.
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Starbucks stock is under selling pressure. Why is SBUX stock retreating? Critical Price Levels To Watch for SBUXFrom a longer-term trend view, the stock is still holding above its 200-day SMA ($92.83) and 100-day SMA ($99.09), but it’s slipping back under the 50-day SMA ($102.05) and sitting near the 20-day SMA ($101.15), which often signals a choppier, range-bound phase rather than a clean uptrend. The 20-day SMA being below the 50-day SMA is a bearish crossover that can keep rallies capped until price can reclaim those shorter averages.
RSI is the cleaner momentum read right now: at 49.04, it’s neutral, meaning the tape isn’t stretched enough to imply a forced snapback either way. In plain terms, RSI helps gauge whether recent buying or selling has become "too far, too fast," and this reading points to consolidation risk rather than an extreme.
Key Resistance: $103.50 — a nearby ceiling that lines up with the area above the 50-day SMA where rebounds can stall Key Support: $93.50 — a nearby floor closer to the 200-day trend zone where buyers have previously shown up What Makes Starbucks the Leading Coffee Brand?Starbucks stands out as the world’s biggest and most recognizable coffee brand, powered by ultracustomizable beverages in-store and a sweeping footprint of nearly 41,000 cafes in over 80 countries. About 52% are company-operated, with the balance run by licensees.
The company earns across its North America (74% of revenue as of the end of fiscal 2025), international (21%), and channel development (5%) segments, including royalties, product/equipment sales, ready-to-drink, and packaged coffee. That scale is why a localized controversy like the Starbucks Korea episode can still matter to the stock—investors tend to treat brand trust and risk controls as part of the long-term moat.
Starbucks Earnings Preview for July 2026Looking further out, the next major catalyst for the stock arrives with the July 28, 2026 (estimated) earnings report.
EPS Estimate: 65 cents (Up from 50 cents YoY) Revenue Estimate: $9.16 Billion (Down from $9.46 Billion YoY) Valuation: P/E of 79.6x (Indicates premium valuation relative to peers) Analyst Consensus & Recent Actions: The stock carries a Buy rating with an average price target of $106.62. Recent analyst moves include:
TD Cowen: Upgraded to Buy (Raises Target to $120.00) (May 14) Stifel: Buy (Raises Target to $117.00) (May 6) UBS: Neutral (Raises Target to $105.00) (April 29) Starbucks Benzinga Edge Rankings ExplainedBelow is the Benzinga Edge scorecard for Starbucks, highlighting its strengths and weaknesses compared to the broader market:
The Verdict: Starbucks’s Benzinga Edge signal reveals a momentum-leaning setup with weak value and growth scores, which can make the stock more sensitive to negative headlines. For longer-term bulls, the cleaner technical tell is whether price can reclaim the $103.50 area; otherwise, traders may keep focusing on downside levels like $93.50.
SBUX Stock Price Activity on MondaySBUX Stock Price Activity: Starbucks shares were down 2.94% at $101.20 at the time of publication on Monday, according to Benzinga Pro data.
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On a recent episode of Barron’s Streetwise, host Jack Hough answered a listener named William who was nervous about how much money he had made in AI-adjacent names like Dell (NYSE:DELL | DELL Price Prediction) and HPE (NYSE:HPE). Hough’s answer had a number in it that should probably make everyone else nervous too.
“You can look at the S&P 500 right now and you can say, okay, it trades at 22 times projected 2026 earnings. That’s kind of expensive. But it trades at 32 times projected free cash flow. That’s extraordinarily expensive.” The index is up 9.22% year to date, and the gap between what companies are earning on paper and what they are actually converting into cash is now the most important argument on Wall Street.
The accounting quirk hiding inside the AI boom Hough’s explanation is worth understanding because it is not complicated. When a hyperscaler spends billions on GPUs and data centers, that capex gets depreciated over years, so only a sliver hits the income statement each quarter. Meanwhile, the companies selling picks and shovels (servers, switches, generators) book the corresponding revenue immediately. So the whole ecosystem’s reported earnings look terrific, while the cash actually leaving the building tells a different story. Hough cited Google’s projected 2025 profit of $173 billion against free cash flow of only $19 billion, and Meta’s $84 billion in earnings against roughly $400 million in cash burn as the shape of the problem.
Those specific figures are directional, and the actual reports rhyme with them. Alphabet (NASDAQ:GOOGL) posted FY2025 free cash flow of $73.3 billion, up just 0.7% year over year, even as capex jumped 74% to $91.4 billion. In Q1 2026 it got worse. FCF collapsed 46.63% to $10.12 billion while capex more than doubled to $35.67 billion. Sundar Pichai then guided 2026 capex to $175 to $185 billion, which is a number that used to be a country’s defense budget. You can read the whole thing in the Q1 2026 8-K.
Meta is running the same experiment Meta Platforms (NASDAQ:META) reported full-year 2025 free cash flow of $43.6 billion, down 19.39%, even though revenue grew 22.17%. Then management raised 2026 capex guidance to $125 to $145 billion, from a prior range that was already historic.
The Q1 EPS beat of 56.79% looked enormous, but $3.13 of that came from an $8.03 billion tax benefit tied to R&D treatment. Meta shares are down 8.6% year to date, one of the few big names where the market has actually pushed back on the story. Alphabet, meanwhile, is up 15% YTD.
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The hard-hat side has already run Hough’s tactical suggestion was “less big tech, more hard hat and value stocks.” The problem is the market got there first. Dell Technologies reported quarterly revenue growth of 87.5% with AI-optimized server revenue of $16.13 billion, and the stock is up 217% year to date.
Hewlett Packard Enterprise is up 77% YTD on the Juniper networking integration and AI servers. Even Caterpillar (NYSE:CAT), which nobody would confuse with a growth stock, is up 62% YTD because its Power Generation segment rose 41% feeding data center reciprocating engines. Its trailing P/E is now 48x, which is not a value stock multiple.
What to actually do about it Hough cited a Bank of America mid-year note that kept its S&P 500 target at 7,100, representing roughly a 5% decline from publication, alongside rising odds of a “bear flattener” in rates, historically the second worst phase for stocks in 12-month returns going back to 1976.
For most people, though, his advice was less exciting. “My recommendation is to hurry up and do nothing” for long-term investors. The 32x cash flow multiple is a reminder that when reported earnings are being flattered by the capex of others, the margin for disappointment is thinner than the P/E ratio suggests.
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Throughout the artificial intelligence (AI) revolution, a number of companies have seen their valuations reach trillion-dollar status. In particular, several semiconductor stocks have gained the keys to the trillion-dollar club -- joining longtime members Apple, Microsoft, Alphabet, and Amazon.
Only one company has ever reached a $5 trillion market capitalization: Nvidia, whose meteoric growth has been fueled by the company's dominance in AI training accelerators. Wall Street analyst Trip Chowdhry of Global Equities Research thinks this is going to change. In a recent note, Chowdhry boldly suggests that Intel (INTC +1.68%) will join Nvidia and become a $5 trillion company.
Given Intel's market value of roughly $690 billion, Chowdhry's forecast assumes 625% upside in the stock. Intel's broad CPU portfolio and emerging foundry ambitions give the company a plausible path toward joining the trillion-dollar tier. The larger question, however, is whether these strengths are enough to support a valuation 5 times higher.
Image source: The Motley Fool.
Intel is in the early stages of a turnaround Right off the bat, it's important to note that Intel is in the midst of restoring its technological and manufacturing leadership in the chip industry. Meaningful investments have gone into reviving the company's foundry business as well as advancing its process technology roadmap -- particularly with its 18A node and related architectures.
Early customer wins for next-generation server processors and client CPUs demonstrate that Intel is regaining design wins in core segments. While these developments are encouraging and signal that Intel can compete with larger chip manufacturers, the company's turnaround is far from complete. Smart investors understand that Intel's ongoing capital expenditures (capex) will weigh on consistent, high-margin profitability across the business for the time being.
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The AI chip space is crowded The AI semiconductor industry is defined by intense rivalries across multiple fronts. While Nvidia continues to set the pace in GPUs, Advanced Micro Devices has established itself as a formidable alternative. Meanwhile, specialized application-specific integrated circuits (ASICs) from Broadcom and Marvell Technology are increasingly capturing important niches in networking, storage, and custom inference.
Intel's most obvious opportunity lies in leveraging its CPU strengths and process advances to serve the expanding inference and edge AI needs of hyperscalers. However, neither of these pockets of the AI ecosystem is guaranteed to favor any single chip architecture. This puts Intel in a tough spot, because the company must not only match but exceed its competition in cost, power, and software support to gain durable market share.
Can Intel become a $5 trillion company? Chowdhry is forecasting Intel's earnings per share (EPS) to reach $10 by 2030. This implies roughly a tenfold increase in earnings over the next five years. Should Intel achieve this aggressive target and maintain its current forward price-to-earnings (P/E) multiple of 113, the company would reach a market cap of roughly $1.3 trillion.
INTC EPS Estimates for Current Fiscal Year data by YCharts
In my eyes, this outcome is attainable if Intel continues to execute on its process road map, secures additional foundry customers, and capitalizes on accelerating CPU demand. Nevertheless, maintaining a forward earnings multiple at that level will be no easy feat.
This makes the prospects of reaching a $5 trillion valuation a bit overzealous. Assuming Intel reaches and sustains Nvidia-like dominance across a vast and still-evolving portion of the AI chip economy seems unrealistic. That level of influence would require Intel to capture a disproportionate share of new AI workloads while simultaneously fending off well-capitalized competitors across both general-purpose and specialized silicon.
Given the breadth of the competitive landscape, the capital intensity required to build leading-edge manufacturing, and the uncertainty around how AI workloads will be distributed, such an outcome looks improbable -- even by next decade. While Intel stock still has upside, investors need to be realistic about the magnitude of gains they can expect from a company that faces numerous execution and competitive headwinds.
Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Broadcom, Intel, Marvell Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
Analysts Rajesh Kumar and Dylan Whitfield downgraded to Hold from Buy and lowered their target forecast to $28 from $32, citing increased uncertainty around key pipeline assets and recent executive leadership changes.
The original bullish thesis centered on Pfizer’s increased R&D focus, a dividend yield of roughly 6%, and management’s goal of delivering high single-digit revenue growth between 2028 and 2032.
However, HSBC analysts now believe those growth expectations are unlikely to be validated in the near term.
Oncology Pipeline Delay Weighs On Growth OutlookA key factor behind the downgrade was a reduction in the probability of success for sigvotatug vedotin (SV) to 40% following its Phase 3 setback in non-small cell lung cancer (NSCLC).
The analysts also raised the stock’s beta to 0.85 from 0.78, contributing to the lower price target.
According to the note, Pfizer’s long-term growth outlook depends heavily on the success of SV, atirmociclib, a VEGF-bispecific oncology program, and, to a lesser extent, its obesity portfolio.
However, analysts said meaningful catalysts for these programs are expected closer to 2027 rather than in the second half of 2026, leaving investors with few near-term events that could resolve the ongoing growth debate.
In the meantime, analysts expect the effects of MFN pricing, IRA-related changes, and loss-of-exclusivity pressures to become increasingly visible.
Management Changes Add Another Layer Of UncertaintyThe report also highlighted recent executive leadership changes as another reason for caution.
With a new chief financial officer and chief strategy officer joining the leadership team under the current CEO, analysts believe investors may wait for greater clarity on the company’s approach to capital allocation and dividend discipline.
While analysts said Pfizer’s valuation appears attractive relative to its medium-term earnings potential, they cautioned that the stock could remain inexpensive unless the company delivers successful pipeline outcomes.
They also warned that the NSCLC setback for sigvotatug vedotin increases uncertainty around future catalysts and could negatively affect investor perception of management’s capital allocation if impairments related to Seagen’s intangible assets emerge.
PFE Stock Price Activity: Pfizer shares were down 2.06% at $23.82 at the time of publication on Monday, according to Benzinga Pro data.
Photo: Molly Woodward / Shutterstock
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Key Takeaways CSCO's networking business is benefiting from AI infrastructure demand and modernization.Networking product orders jumped more than 50%, marking seven straight quarters of double-digit growth.CSCO raised fiscal 2026 revenue and earnings outlooks as AI and cloud demand accelerate. Cisco Systems’ (CSCO - Free Report) networking business is emerging as one of its strongest growth engines, supported by accelerating AI infrastructure investments, enterprise network modernization and rising bandwidth requirements. Management believes that the industry is entering a "networking super cycle," driven by hyperscaler AI deployments, enterprise AI adoption, sovereign cloud investments and public-sector infrastructure upgrades. As AI workloads become more distributed and bandwidth-intensive, networking is becoming the foundation of AI infrastructure rather than just a connectivity layer.
The improving demand environment offers an excellent growth opportunity for CSCO. In third-quarter fiscal 2026, networking product orders jumped more than 50% year over year, marking the seventh consecutive quarter of double-digit growth. Product revenues from networking increased 25%, driven by AI infrastructure, campus refresh projects, data center switching, wireless and service-provider routing.
Campus networking orders climbed more than 25%, while data center switching orders rose more than 40%, reflecting growing enterprise investments to prepare networks for AI-driven traffic growth. Cisco expects a multi-year, multi-billion-dollar campus refresh cycle as enterprises replace aging infrastructure with AI-ready networking platforms.
Cisco is also strengthening its competitive position through differentiated networking technologies. Silicon One has become a strategic advantage, enabling the company to provide custom silicon, systems and software tailored to hyperscaler requirements while reducing dependence on merchant silicon. Management noted that Silicon One is central to its AI networking strategy, with new hyperscaler design wins across scale-up and scale-out AI deployments.
At the same time, Acacia optics continues to benefit from the rapid expansion of AI clusters, generating more than $1 billion in quarterly orders as demand for coherent optical interconnects accelerates.
Cisco Offers Positive GuidanceCisco appears well-positioned to capitalize on sustained networking demand. Management expects AI infrastructure orders from hyperscalers to reach $9 billion in fiscal 2026, while growing enterprise, sovereign cloud and neocloud deployments should provide an additional long-term growth avenue.
For fiscal 2026, Cisco raised its outlook to revenues of $62.8 billion to $63 billion, and non-GAAP earnings of $4.27-$4.29 per share. The company also announced a restructuring plan to reallocate resources toward silicon, optics, security and AI, and expects up to $1 billion of pretax charges, including roughly $450 million in the fourth quarter of fiscal 2026, with the remainder in fiscal 2027.
CSCO Faces Tough CompetitionCisco is facing stiff competition from Arista Networks (ANET - Free Report) and Hewlett Packard Enterprise (HPE - Free Report) . Both Arista Networks and HPE are expanding their footprint in the networking domain.
Arista is a leader in high-speed Ethernet switching, particularly 100G, and is benefiting from rising demand for 800G and faster networking. Growth is driven by large data center expansions supporting distributed computing and cloud infrastructure. Arista’s software stack, including EOS, CloudVision and AVD, simplifies network management. Customers include cloud providers, enterprises and telecom companies expanding across industries like manufacturing, insurance and telecom.
Hewlett Packard Enterprise focuses on AI, industrial IoT and distributed computing as the next major growth markets. The company sees these areas as key drivers of future infrastructure demand. The acquisition of Juniper Networks has strengthened Hewlett Packard Enterprise’s position in networking, expanding its capabilities across AI, cloud and hybrid environments. This has helped improve its competitive position in large-scale modern infrastructure deployments.
CSCO’s Share Price Performance, Valuation & EstimatesCisco shares have appreciated 46.3% year to date, outperforming the broader Zacks Computer and Technology sector’s rise of 14.6%.
CSCO Stock Outperforms Sector
Image Source: Zacks Investment Research
The Cisco stock is trading at a premium, with a forward 12-month price/earnings of 23.77X compared with the broader sector’s 22.73X. CSCO has a Value Score of F.
CSCO’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2026 earnings is currently pegged at $4.28 per share, up 2.6% over the past 30 days, suggesting 12.3% growth from the fiscal 2025 reported figure.
Cisco currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
As the housing market continues to evolve in 2026, investors are weighing two retail titans. Both Home Depot (HD 1.88%) and Lowe's Companies (LOW 1.57%) offer unique paths for growth, but which is the better buy?
Home Depot leads the market with a massive footprint and a sophisticated ecosystem designed for professional contractors. Lowe's has historically focused on do-it-yourself homeowners but is now aggressively expanding its reach into the professional segment. These companies are frequent comparisons because they dominate the home improvement landscape while employing slightly different growth strategies.
The case for Home DepotHome Depot sells a wide range of building materials and home improvement products to both do-it-yourselfers and professional contractors. The company has focused heavily on its "Pro" ecosystem, acquiring specialty businesses such as SRS and GMS to better serve trade professionals. These efforts aim to make the company a one-stop shop for large-scale renovation and roofing projects among retail stocks. This professional focus helps the business capture more predictable, high-value spending compared to individual DIY projects.
In FY 2025, sales touched $164.7 billion, representing approximately 3.2% growth over the prior year. The company reported net income of $14.8 billion for the same period.
As of its February 2026 balance sheet, the debt-to-equity ratio was nearly 5.1x. This means the company's total debt is 5.1 times its shareholders’ equity. Free cash flow, which is cash from operations minus capital expenditures, was nearly $12.7 billion for the year.
The case for Lowe's Lowe's serves individual homeowners and renters while also making a concerted push to capture more of the professional market. Through the 2025 acquisitions of Foundation Building Materials and Artisan Design Group, the company expanded its branch network to better distribute building supplies. Its strategy balances the needs of homeowners seeking design services with the requirements of property managers and commercial professionals who demand high-volume availability.
For FY 2025, revenue was about $86.3 billion, an increase of 3.1% year over year. The company generated net income of nearly $6.7 billion during this fiscal period.
As of the January 2026 balance sheet, the debt-to-equity ratio was nearly -4.5x. This negative figure indicates that the company's total liabilities exceed its shareholder equity. Free cash flow was $7.7 billion, representing the actual cash a business generates after accounting for the costs of maintaining its physical assets.
Risk profile comparisonHome Depot faces significant risks from cybersecurity breaches and regulatory scrutiny regarding data privacy. Recent legal challenges have targeted its use of AI surveillance technologies, such as facial recognition in stores, which may pose reputational risks. It also faces intense competition from traditional retailers and digital-first platforms like Amazon.com Inc (AMZN +1.22%).
Sales at Lowe’s are sensitive to macroeconomic factors, such as interest rates and inflation, that affect the housing market. A downturn in housing turnover or consumer discretionary spending could lead to decreased demand for home improvement projects. The company also faces operational risks as it integrates large acquisitions and undergoes a multi-year technology transformation to update its information systems.
Valuation comparisonLowe's appears to be the more affordable option, given its lower earnings and sales multiples relative to Home Depot and the broader sector. The Forward P/E ratio measures the current stock price against future earnings estimates to show how much you pay for every dollar of expected profit. The P/S ratio compares the company’s total market value to its annual sales.
MetricHome DepotLowe's CompaniesSector BenchmarkForward P/E24x18.1x93.7xP/S ratio2.1x1.4xSector benchmark uses the SPDR XLY sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Which stock would I buy in 2026?Both big-box stores have essentially created a duopoly in home improvement sales, although regional and local specialists in lumber, kitchen, bath, and outdoor continue to occupy a sizable niche in the marketplace. Home Depot and Lowe’s are constantly looking for an edge to both grow sales and expand profits, given how much of their offerings are commoditized by the other.
For Home Depot, growth is sought in two ways. The business recently acquired Mingledorff’s, a leading wholesale distributor of HVAC products, giving Home Depot a larger foothold in HVAC. At the store level, Home Depot is granting stores greater authority to offer more customization to better engage customers and build loyalty. Is it working? A bit: analysts see the chain increasing sales by close to 4% and net income a little over 1% in fiscal 2026.
Lowe’s, meanwhile, is seen as growing its sales by about 8% and net income by around 2.5% in 2026. Lowe’s is also pushing to improve the customer experience, noting that first-quarter 2026 sales rose 10% on the strength of initiatives to bring in more contractor customers. With that, the company is rolling out an AI-assisted tool that allows a contractor to bring in any form of input — a PDF, a photo, a handwritten note — and it will identify their needs. Management says it will shift the fulfillment of pro orders from days to hours.
So which is the better buy? Both are businesses of scale. Lowe’s has a smaller revenue base, so it should naturally be able to grow faster than Home Depot. It is also cheaper on a price-to-sales and forward price-to-earnings basis. Lowe’s enduring reputation as the higher-quality outlet for DIY homeowners should give it an edge, too, if the economy remains mixed for most American consumers.
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 Caterpillar (CAT - Free Report) . This company, which is in the Zacks Manufacturing - Construction and Mining industry, shows potential for another earnings beat.
This construction equipment company has an established record of topping earnings estimates, especially when looking at the previous two reports. The company boasts an average surprise for the past two quarters of 16.13%.
For the last reported quarter, Caterpillar came out with earnings of $5.54 per share versus the Zacks Consensus Estimate of $4.55 per share, representing a surprise of 21.76%. For the previous quarter, the company was expected to post earnings of $4.67 per share and it actually produced earnings of $5.16 per share, delivering a surprise of 10.49%.
Price and EPS Surprise
With this earnings history in mind, recent estimates have been moving higher for Caterpillar. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the company is positive, which is a great sign of an earnings beat, especially when you combine this metric with its nice 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.
Caterpillar currently has an Earnings ESP of +2.11%, which suggests that analysts have recently become bullish on the company's earnings prospects. This positive Earnings ESP when combined with the stock's Zacks Rank #1 (Strong Buy) indicates that another beat is possibly around the corner.
With the Earnings ESP metric, it's important to note that a negative value reduces its predictive power; however, a negative Earnings ESP does not indicate an 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.
SummaryGeneral Mills remains a buy, with recent results suggesting potential for a durable rally despite ongoing headwinds from private label competition.GIS faces margin pressure as it prioritizes value and lower prices to retain price-sensitive consumers while exploring innovation and health-focused products for differentiation.Valuation is attractive, with a non-GAAP P/E of 10.58 and a 6.5% dividend yield, though dividend safety is a concern amid a tough economic environment.Execution of cost reduction and turnaround strategies is critical, as persistent headwinds and potential dividend cuts could impact share price performance. jetcityimage/iStock Editorial via Getty Images
I rated General Mills (GIS) a buy back in late March, and then immediately after, GIS stumbled into a long but not especially deep slide. The stock has recovered since then and is up about 1%. Still
1.29K Followers
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in GIS over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Hyliion stock dropped 13–17% in a single session after a short-seller report challenged the credibility of a $133 million deal
, /PRNewswire/ -- Investors in Hyliion Holdings (NYSE: HYLN) lost up to 17% of their position value in a single trading session after Pelican Way Research published a report questioning the credibility of HYLN's $133 million VFG Holdings Letter of Intent. Shareholders who lost money on their HYLN investment are encouraged to submit their information to discuss their legal rights. You may also contact Joseph E. Levi, Esq. via email at [email protected] or by telephone at (212) 363-7500.
The VFG LOI represented approximately one-third of HYLN's disclosed 400 million pipeline. On the Q4 2024 earnings call, CEO Thomas Healy described the deal as a signed commitment "to supply prime power on site for data centers, an opportunity for up to an additional 70 megawatts or 350 of our KARNO 4-shaft systems." The short-seller report alleged that VFG appeared to lack the necessary resources to support the approximately133 million opportunity. HYLN shares fell 13–17% the same day the report was published.
Prior to the drop, the VFG LOI had been a central driver of HYLN's share price appreciation. The single-session reversal erased a significant portion of those gains.
If you purchased Hyliion shares and suffered a loss, click here to discuss your legal rights with Levi & Korsinsky. You may also contact Joseph E. Levi, Esq. via email at [email protected] or by telephone at (212) 363-7500.
Levi & Korsinsky, LLP | Top 50 Securities Firm | (212) 363-7500 | www.zlk.com
Frequently Asked Questions About the HYLN Investigation
Q: Who is eligible to participate in the HYLN investigation?A: Investors who purchased HYLN stock or securities and suffered financial losses may be eligible. Eligibility is based on purchase date and documented losses -- not on whether you still hold the shares.
Q: Which statements are being investigated as potentially misleading?A: The investigation concerns whether Hyliion Holdings made materially false or misleading statements regarding the credibility of its 133 million VFG Holdings Letter of Intent and the strength of its 400 million pipeline. When a short-seller report challenged these representations, the stock price declined sharply.
Q: How much did HYLN stock drop?A: Shares fell approximately 13–17% in a single trading session after the Pelican Way Research report was published, reversing a significant portion of the 150%+ rally that followed the initial VFG LOI disclosure.
Q: What do HYLN investors need to do right now?A: Gather brokerage records including purchase dates, share quantities, and prices paid. Contact Levi & Korsinsky for a free, no-obligation evaluation at [email protected] or (212) 363-7500. No immediate action is required to remain eligible to participate in the investigation.
Q: What happens after I contact Levi & Korsinsky?A: An attorney will review your trading history at no cost and provide an initial assessment of your potential recovery.
Q: What if I already sold my HYLN shares -- can I still recover losses?A: Yes. Eligibility is based on when you purchased, not whether you still hold the shares. Investors who bought HYLN and sold at a loss may still participate in the investigation.
Q: Do I need to go to court or give testimony?A: No. Participating in the investigation does not require court appearances or depositions. If legal action is later pursued, the overwhelming majority of affected investors never appear in court either.
Q: What does it cost me to participate?A: Nothing. Securities investigations and any resulting actions are handled on a pure contingency basis. No upfront fees, no retainer, no out-of-pocket costs.
While everyone knows that July 4 is a federal holiday, this year the holiday is officially being observed today, Friday, July 3. That's because the Fourth of July falls on a Saturday, when most federal offices are closed anyway.
Retail stocks can make for attractive long-term investments due to their stability and continued growth over the years. These businesses may not be high-growth machines, but many of them can be counted on for consistent single-digit growth and are relatively safe options to hang on to even amid market turmoil.
Two of the best retail stocks may be Costco Wholesale (COST 0.40%) and Walmart (WMT 0.97%). Not only are they big, established businesses, but they also have some enticing long-term growth opportunities and much more room for global expansion. Which one is the better-looking stock to buy today?
Image source: Getty Images.
Costco's treasure hunt experience seems to never go out of style Costco is a business that investors may have expected to struggle under more challenging economic conditions. It's a place where shoppers typically overspend and break their budgets rather than save. While shoppers can save when buying in bulk, they often end up buying more than they expected due to the treasure-hunt experience that Costco lures them in with. One warehouse can vary significantly from the next based on product offerings, so there's always an incentive to just take a quick glance at those particularly enticing middle aisles to see what's there.
The company's stellar results confirm that demand remains strong, even though there are reports of consumer sentiment being at record lows. When it last reported earnings in May, the company's comparable sales growth rate for the trailing 36 weeks was convincingly positive, up over 6% in the U.S., Canada, and international markets. And that's without factoring in the impact of higher gas prices and changes in foreign exchange; the raw growth rate was even higher.
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With a strong and robust business, Costco makes for an appealing investment to simply buy and hold for the long haul.
Walmart's expanding business may have some intriguing growth potential Walmart's stores are much more predictable than Costco warehouses, and that isn't hurting its business at all. That consistency makes it a practical one-stop shop for consumers, whether they're loading up on essentials or making big shopping trips. There's less chance of overspending. And with dollar store chains raising prices in recent years to combat inflation, there's even more of a reason for shoppers to simply go to their local Walmart to save money.
When it last reported earnings, for the quarter ending April 30, Walmart's comparable revenue growth rate in the U.S. was up around 4% when excluding fuel. In addition to increasing its store count as a way to grow its operations, the company is also looking to ramp up its ad business as its 2024 acquisition of Vizio has opened up some enticing new opportunities, which can strengthen its margins in the process.
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This year, Walmart's stock has declined by about 2%, making its valuation more attractive. At a price-to-earnings multiple of 39, it's a much cheaper stock to own than Costco, which investors are paying 47 times earnings for. At a lower valuation, Walmart's stock could have more upside in the long run.
Which stock is the better buy today? While both of these stocks are doing well and are big names in retail, Walmart's stock may be the more compelling option today. Its business is better equipped to serve the needs of more value-oriented shoppers. And although Costco's growth suggests its business is still growing well, that may change if there is more pressure on higher-income shoppers due to adverse economic conditions.
Plus, a lower valuation tips the scales even further into Walmart's favor, as paying too much for a stock can result in limited returns, or worse, losses for investors who buy at elevated prices.
There's a difference between a company and its stock. Costco (COST 0.40%) is a great example of the dichotomy. It is a well-run company, but the stock is very expensive. Paying too much for a great company can turn it into a bad investment. I just can't see owning Costco for the next decade.
However, McCormick (MKC 2.98%) is a well-run company with an attractive valuation. In fact, I recently initiated a position in the stock. Here's why I think McCormick is a better investment opportunity over the next 10 years than Costco.
Image source: Getty Images.
Costco is a great company There's nothing wrong with Costco as a business. It is one of the world's largest retailers. It operates under a club store model, meaning customers pay an annual fee to shop at Costco stores. That membership fee creates an annuity-like income stream that allows Costco to keep its prices low and service levels high.
As a business, I absolutely love Costco. If someone wanted to buy it, I would be hard-pressed to dissuade them. However, I'm a dividend investor with a value bias. Costco's yield is 0.6%, which is even lower than the 1% yield on offer from the S&P 500 index (^GSPC +0.79%). That's not enough income to meet my needs.
Meanwhile, the price-to-sales ratio is 1.4x compared to a five-year average of 1.2x. The price-to-earnings ratio is 47x compared to a longer-term average of 45x. And the price-to-book ratio is 12.6x, which is only slightly below its 12.7x five-year average. All in, Costco's stock looks expensive to me. I think growth investors will probably make out well with Costco if they buy and hold for the long term, but that's just not how I invest.
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McCormick is right up my alley McCormick is one of the world's largest producers of spices and flavorings. It has a global reach and a solid history of business growth. Compared to Costco, it looks like a slow-and-steady tortoise, but that's not a problem for me. In fact, I like companies that are boring and sell relatively low-cost products that consumers buy regularly. Consumer staples makers like McCormick tend to be resilient in the face of bear markets and recessions.
Right now, however, McCormick is out of favor. Earnings have been pressured by inflation. Sales haven't been as robust as Wall Street hoped. That's OK, given McCormick's long and successful history as a business, I'm confident the company will muddle through this weak spot and thrive again. Especially when I look out over the next decade.
That said, Wall Street's short-term focus has opened up a buying opportunity. The stock's yield is historically high at roughly 3.6%. The 2x P/S ratio is below its five-year average of 3x. The 9x P/E is below its five-year average of 25x. And the 2x P/B ratio is below its five-year average of 3.8x. A good company trading at a historically high yield and an attractive valuation is hard for me to resist.
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There's one big caveat with McCormick. It is about to buy Unilever's (UL 1.75%) food business. It is a big deal for McCormick, noting that Unilever's food business is bigger than McCormick's. McCormick is taking a big risk and will have to add leverage to get the deal done. However, McCormick has successfully integrated other food businesses in recent years. And Unilever's food business, which largely consists of Hellmann's and Knorr, is very well run. This isn't a fixer-upper situation, is a good food company merging with another good food company. I think the risk/reward balance is weighted to reward.
Now is the time to act on McCormick I've watched McCormick for years, but it has always been too expensive for me to buy. Good companies don't go on sale very often. And when they do, there's usually a reason. With a long-term horizon, I'm jumping on McCormick while I can, even though there's some uncertainty around the business today. Costco is a great company, but the stock is probably best left on the wishlist if you are, like me, a dividend investor with a value bias.
Investors looking for stocks in the Banks - Major Regional sector might want to consider either M&T Bank Corporation (MTB) or Northern Trust Corporation (NTRS). But which of these two stocks offers value investors a better bang for their buck right now?
LOS ANGELES, July 06, 2026 (GLOBE NEWSWIRE) -- Glancy Prongay Wolke & Rotter LLP reminds investors of the upcoming August 24, 2026 deadline to file a lead plaintiff motion in the class action filed on behalf of investors who purchased or otherwise acquired First Solar, Inc. (“First Solar” or the “Company”) (NASDAQ: FSLR) securities between February 26, 2025 and February 24, 2026, inclusive (the “Class Period”).
IF YOU SUFFERED A LOSS ON YOUR FIRST SOLAR INVESTMENTS, CLICK HERE TO INQUIRE ABOUT POTENTIALLY PURSUING CLAIMS TO RECOVER YOUR LOSS UNDER THE FEDERAL SECURITIES LAWS.
What Happened?
On January 7, 2026, Jefferies downgraded First Solar from Buy to Hold, stating that during 2025, the Company had lowered guidance, faced significant de-bookings, and experienced margin compression. Additionally, Jefferies claimed that “[international] facilities remain a pain point while tariffs exist” and “underutilization at [international] facilities remains a concern.”
On this news, First Solar’s stock price fell $27.67, or 10.3%, to close at $241.11 per share on January 7, 2026, thereby injuring investors.
Then, on February 24, 2026, First Solar released its fourth quarter and full year 2025 financial results, revealing that earnings had significantly missed expectations. The Company also issued lower-than-expected revenue guidance for 2026 citing customer headwinds.
On this news, First Solar’s stock price fell $33.09, or 13.6%, to close at $210.12 per share on February 25, 2026, thereby injuring investors further.
What Is The Lawsuit About?
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (1) Defendants had overstated First Solar’s capacity to manage the impact of U.S. tariff policy on the Company’s business; (2) Defendants understated the extent to which its responses to U.S. tariff policy, including the intentional underutilization of production facilities in Malaysia and Vietnam, and attempted relocation of production to the U.S., were likely to negatively impact First Solar’s projected performance in the 2026 fiscal year; and (3) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
If you purchased or otherwise acquired First Solar securities during the Class Period, you may move the Court no later than August 24, 2026 to request appointment as lead plaintiff in this putative class action lawsuit.
Contact Us To Participate or Learn More:
If you wish to learn more about this action, or if you have any questions concerning this announcement or your rights or interests with respect to these matters, please contact us:
Charles Linehan, Esq.,
Glancy Prongay Wolke & Rotter LLP,
1925 Century Park East, Suite 2100,
Los Angeles California 90067
Email: [email protected]
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To be a member of the class action you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the class action.
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Contact Us:
Glancy Prongay Wolke & Rotter LLP,
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HSBC upgraded Gilead Sciences Inc. (NASDAQ:GILD) on Monday, citing that the consensus is ‘too pessimistic’ in its assumptions of continued decline once dolutegravir faces generics.
Analysts Rajesh Kumar and Dylan Whitfield upgraded the stock to Buy from Hold, and raised the price forecast to $155 from $133, citing the potential of long-acting HIV therapies, growth in HIV prevention, and multiple oncology catalysts to support.
HSBC wrote that consensus estimates assume a steeper decline in Gilead’s HIV franchise than is likely once dolutegravir loses exclusivity. Instead, long-acting HIV therapies could help improve patient adherence and offset much of the anticipated pressure on sales.
Long-Acting HIV Therapies Could Improve AdherenceAccording to the analyst, HIV treatment remains a unique market where better compliance can translate into stronger long-term demand.
Around 60% of patients are estimated to have suboptimal adherence, while more than 40% take fewer than 80% of their prescribed doses.
Long-acting treatment options already on the market, along with candidates in development, are expected to improve adherence. While the exact combinations and launch timelines remain uncertain, the analyst believes these therapies could support stronger-than-expected HIV revenue over time.
Oncology Pipeline And PrEP Business Add UpsideBeyond HIV, the analyst highlighted Gilead’s exposure to the fast-growing pre-exposure prophylaxis (PrEP) market through Yeztugo, which is expected to become a market leader.
The report also pointed to anitocabtagene autoleucel (anito-cel), a CAR T-cell therapy for relapsed or refractory multiple myeloma being co-developed by Arcellx Inc and Kite, a Gilead company.
Gilead acquired Arcellx for $115 per share in cash, along with a contingent value right of $5 per share, totaling an implied equity value of $7.8 billion.
The therapy is currently under FDA review, with a decision expected by December 2026. Although the initial launch is expected in fourth-line treatment, Gilead is pursuing a second-line indication.
The analyst added that expectations for anito-cel remain modest despite its favorable efficacy and safety profile, largely because of limited long-term data compared with competing therapies.
Attractive Valuation Supports UpgradeThe analyst expects Gilead to deliver 5.8% revenue growth through the end of the decade, with additional upside possible as long-acting HIV therapies become less risky and gain broader adoption.
Trading at roughly 13 times next year’s expected earnings following its recent share-price decline, the analyst views the valuation as attractive, supporting the upgrade.
Stock Performance And Technical AnalysisGilead stock is trading lower on Monday as the stock underperforms a soft Healthcare tape and drifts against a risk-on backdrop. The Nasdaq is up 1.21% while the S&P 500 has gained 0.71%.
Gilead is attempting to stabilize after recent weakness, but key technical hurdles remain.
The stock is trading 2.4% above its 20-day simple moving average, suggesting short-term support. However, it remains 0.3% below its 50-day SMA, 5.4% below its 100-day SMA and 0.7% below its 200-day SMA, indicating the longer-term trend is still under pressure.
A bearish death cross formed in July, with the 50-day SMA falling below the 200-day SMA. That pattern often signals continued intermediate-term weakness unless the stock reclaims those longer-term averages.
Momentum also remains mixed. The relative strength index stands at 53.15, indicating neither overbought nor oversold conditions.
The next resistance level sits near $137.50, while initial support is around $128.00, close to the 200-day exponential moving average.
Earnings And Analyst OutlookThe company’s next earnings report is expected on Aug. 6, 2026.
Wall Street expects a loss of $7.14 per share, compared with earnings of $2.01 per share a year earlier, while revenue is projected to increase to $7.40 billion from $7.08 billion.
Gilead trades at about 17.9 times earnings.
Analysts maintain a Buy consensus rating with an average price forecast of $161.23, according to data from 23 analysts. Recent rating actions include:
Cantor Fitzgerald: Reiterated Overweight, maintained a $155 price forecast on July 6. HSBC: Upgraded the stock to Buy and raised its price forecast to $155 on July 6. Cantor Fitzgerald: Reiterated Overweight with a $155 price forecast on June 16. GILD Stock Price Activity: Gilead Sciences shares were down 1.55% at $129.23 at the time of publication on Monday, according to Benzinga Pro data.
Photo by Sundry Photography via Shutterstock
Market News and Data brought to you by Benzinga APIs
TEPKINLY ® (epcoritamab) plus lenalidomide and rituximab (R 2 ) is the first and only bispecific-based therapy approved in Europe for the treatment of relapsed or refractory follicular lymphoma in the second-line setting, offering a chemotherapy-free option In the Phase 3 EPCORE ® FL-1 trial, fixed-duration TEPKINLY + R 2 achieved statistically significant improvement of progression-free survival and overall response rates compared to R 2 , with approximately three out of four patients achieving a complete response NORTH CHICAGO, Ill., July 6, 2026 /PRNewswire/ -- AbbVie (NYSE: ABBV) today announced that the European Commission (EC) granted marketing authorization for TEPKINLY® (epcoritamab) in combination with lenalidomide and rituximab (TEPKINLY + R2) for the treatment of adult patients with relapsed or refractory (R/R) follicular lymphoma (FL).
The iShares Select Dividend ETF (NASDAQ:DVY) has quietly rewarded income investors with a 21.05% gain over the past year, all without owning a single share of Palantir Technologies (NASDAQ:PLTR | PLTR Price Prediction), the market’s flashiest momentum stock. That absence is baked into the fund’s design.
What DVY Actually Is DVY is a dividend-screened equity fund run by iShares that targets established U.S. companies with consistent payout histories. As of April 30, 2026, the fund held 104 positions and reported net assets of $22.86 billion. The current expense ratio was not disclosed in the fund’s latest NPORT snapshot.
Performance has been steady rather than spectacular. DVY is up 1.33% over the past week, 3.57% over the trailing month, and 14.48% year to date. Zoom out and the picture holds: 62.4% over five years and 166.59% over ten.
Why It’s Up The rally has been powered by unglamorous income stocks. The top ten holdings as of April 30, 2026 read like a dividend hall of fame:
Altria Group (MO): 2.291% Pfizer (PFE): 2.216% T. Rowe Price Group (TROW): 2.023% Verizon Communications (VZ): 1.847% Prudential Financial (PRU): 1.843% OneOK (OKE): 1.831% Edison International (EIX): 1.534% LyondellBasell Industries (LYB): 1.527% General Mills (GIS): 1.519% Kimberly-Clark (KMB): 1.513% The sector tilt tells the same story. DVY leans heavily into regulated utilities (Dominion, Exelon, NextEra, DTE, AEP, Xcel, WEC and more), regional banks (Huntington, Fifth Third, KeyCorp, U.S. Bancorp, Truist), energy pipelines and majors (OneOK, Chevron, EOG, Exxon), and consumer staples (Altria, Philip Morris, Kimberly-Clark, General Mills). Big utility and telecom weights, combined with a rotation back into value names, have carried the fund higher.
The Palantir Absence Palantir is confirmed absent from the portfolio. The NPORT filing dated April 30, 2026 shows zero shares of PLTR across DVY’s 104 positions.
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The reason is structural. DVY’s index screens for dividend-paying equities, and Palantir has never paid a dividend. Alpha Vantage lists Palantir’s dividend per share and dividend yield as None, with no dividend or ex-dividend date on record. A stock that pays nothing simply cannot enter a fund built around cash-return histories. This exclusion is definitional, and it will not flip on the next rebalance.
The valuation profile reinforces the point. Palantir trades at a trailing P/E of roughly 131 and a price-to-sales ratio of 53.54, well outside the value and yield territory DVY targets.
The Contrast in Returns Investors who assumed they needed Palantir to keep pace with the market may be surprised by the year’s scoreboard. Palantir shares are down 27.26% year to date and 2.13% over the past 12 months, even after a 20.54% weekly bounce. Over that same one-year window, DVY quietly delivered 21.05%.
Funds that do hold Palantir, especially tech-heavy or momentum ETFs, have taken a different ride. DVY’s concentration risk sits elsewhere: in rate-sensitive utilities, regional banks exposed to credit cycles, and tobacco and pharma names facing regulatory scrutiny. Investors get income and lower valuation, but they also give up exposure to whatever the next AI-fueled rally looks like.
The Takeaway DVY offers what it advertises: a diversified basket of established U.S. dividend payers, with the biggest single position, Altria, sitting at just 2.291% of net assets. That structure has produced a solid trailing-year return without any help from the market’s hottest ticker. Whether that trade-off fits depends on why an investor is buying. Income seekers get a durable mandate; growth chasers will need to look elsewhere.
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The slide in Palantir Technologies (PLTR +2.45%) stock might leave investors wondering whether its run has come to an end. The stock has fallen 27% since the beginning of the year and 38% from its all-time high last October.
Nonetheless, investors should also remember that it reached those record highs because of its tremendous success in the commercial sector and the productivity gains it has made for its customers. Knowing that, is now the time to sell the stock, or should investors stand pat or possibly even look for buying opportunities?
Image source: The Motley Fool.
The state of Palantir Indeed, the massive growth numbers might leave investors wondering what's wrong with Palantir stock and if it is worth buying at the current price. In the first quarter of 2026, its revenue exceeded $1.6 billion, up 85%. That exceeded its 56% revenue growth in 2025.
The company's Artificial Intelligence Platform (AIP), its generative AI engine, changed the stock's value proposition, bringing customers massive productivity gains.
Additionally, rather than relying on a sales force, Palantir brings corporate teams into "bootcamps," facilitating their ability to build functional workflows and deploy them quickly. Such activities also help customers aggregate disconnected data and improve operational efficiency, which often persuades these clients to sign larger deals with Palantir.
Thanks to these customer productivity gains, the stock began a run in late 2024 as the company's value proposition became apparent.
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Unfortunately, such gains made Palantir stock expensive, and even with the aforementioned pullback, it remains expensive. Palantir's P/E ratio is 146, which is high (but not outrageous) for a growth stock, but its forward P/E ratio of 88 confirms it is an expensive stock.
Indeed, much of that valuation premium likely stems from the aforementioned revenue increases. If it were to maintain 85% yearly revenue growth and a constant share price, its price-to-sales (P/S) ratio of 64 would drop to 36 in one year and 19 after two years. Still, that multiple could easily leave new investors with little near-term upside, especially if the stock's investment thesis falls apart.
Hence, while numerous tech stocks have shown they can maintain higher valuations for years, investors have no reliable way to tell whether a stock may recover or face further declines at such levels.
Moving forward with Palantir stock Given the company's state and its stock, investors are likely better off treating Palantir as a hold.
Although the productivity gains from AIP have benefited the company's customers and its shareholders, it has taken the stock's valuation metrics to arguably stratospheric levels. If an investor buys the stock at 64 times sales, it could leave them exposed to considerable downside if the investment thesis worsens.
However, even if investors are nervous about its valuation, they should remember how revenue growth can affect such numbers, making a sell case for the stock uncertain at best. Thus, instead of selling the tech stock at these levels, investors are probably best served by doing nothing.
For much of the past two years, investors have poured billions into the semiconductor businesses that are powering the artificial intelligence boom.
But after a spectacular rise that propelled many semiconductor stocks to stratospheric prices, institutional money is starting to migrate elsewhere.
Technology-focused funds saw $9.3 billion in outflows two weeks ago, one of the biggest weekly outflows from the sector this year, according to Deutsche Bank.
The shift comes as investors rethink pricey hardware stocks and gravitate toward companies with more pricing power, recurring revenues, and clearer avenues to monetize AI.
However, Benzinga’s recent report shows that over $14 billion flowed into the tech sector last week.
But the current rotation shows that rather than signaling the end of the AI boom, investors are being more careful about where they want exposure.
Apple Uses Pricing Power To Get Ahead Of AI CurveMany semiconductor businesses are struggling with decreasing momentum and mounting concerns over capital spending, but Apple is proving why it remains a favorite large-cap technology investment on Wall Street.
The company recently helped push the broader market higher as investors praised firms that can retain profits in the face of growing prices.
Apple has one of the major competitive advantages of passing more costs on to consumers.
CEO Tim Cook recently said the business wants to boost prices for parts of its product line to cover rising costs for components such as increasingly expensive sophisticated memory chips needed for AI-enabled gadgets.
For investors, the strategy validates a crucial investment thesis: Apple not only absorbs inflation but also exploits its brand strength and dedicated customer base to maintain profitability.
Meanwhile, stories of a possible manufacturing deal including Intel Corp. (NASDAQ:INTC) have further fueled anticipation. As a result, the Apple stock has surged again and is closing in on its all-time high.
Although no deal has been reached, a partnership of this kind would diversify Apple’s semiconductor manufacturing, lessen its dependence on overseas production, and increase its supply chain resilience in the long run against continuous geopolitical uncertainties.
Overall, these trends leave Apple as one of the few mega-cap firms that stand to benefit from AI without the same valuation risk that many chipmakers face.
Palantir Keeps on Turning AI Hype Into GrowthApple may be the consumer AI play, but Palantir has emerged as one of the more unambiguous enterprise AI winners in the market.
Palantir is already producing real income from enterprise usage, not like many companies still selling futuristic AI objectives.
Its Artificial Intelligence Platform (AIP) continues to create demand from both commercial and government customers.
Analysts recently noted, "Businesses are moving from experimenting with AI to deploying it at scale," and underscored their point by noting a 133% year-over-year increase in Palantir’s U.S. commercial revenue.
The company is also quickly gaining clients, with total customers up 42% from a year earlier. Following the move, the company’s stock is up nearly 15% over the past five days, while trading near $132.
New business partnerships, including a strategic relationship with Zeta Global, and continuous expansion inside government initiatives such as the U.S. Army’s Next Generation Command and Control modernization plan, have maintained momentum.
Interestingly, Wall Street took note.
D.A. Davidson recently raised Palantir to a Buy, while Wedbush analyst Dan Ives repeated one of the Street’s most bullish price targets, suggesting that AI adoption is still in its early innings.
Palantir still trades at a premium to traditional software businesses, but many investors believe that premium is justified by its accelerated revenue growth, increasing free cash flow, and leadership in enterprise AI.
Apple and Palantir: What Lies AheadLatest fund flows reveal that investors are not treating all AI-related companies the same.
For much of the generative AI boom, cash was pouring almost indiscriminately into chipmakers selling GPUs, enhanced memory, and data center infrastructure.
But today, the market seems to be moving its attention to companies that can commercialize AI regularly through software, services, and consumer ecosystems.
That doesn’t necessarily mean the surge in semiconductors is over. The chipmakers are the backbone of the AI economy, and the demand for advanced computing infrastructure will stay high for the long run.
But after a long run of outperformance, investors are becoming more rigorous on pricing and earnings visibility. Therefore, Apple and Palantir might continue to gain from this.
Apple has pricing power, ecosystem strength, and financial resiliency few tech businesses can match.
Meanwhile, Palantir continues to show how enterprise AI is transitioning from a speculative technology to one that is capable of meaningfully driving recurrent revenue.
The next chapter of the AI rally may be less about the companies developing the infrastructure and more about the ones effectively turning artificial intelligence into durable, lucrative businesses as institutional capital rotates through the technology sector.
Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.
Market News and Data brought to you by Benzinga APIs
SummaryPalantir Technologies Inc. is upgraded to Strong Buy, driven by its dominant AI application-layer positioning and robust product-market fit.PLTR is expected to benefit from AI commoditization, capturing premium margins as the primary owner of business outcomes for clients.Analyst forecasts project aggressive revenue growth to $69B by 2030, with net margins approaching 50%, which could drive annualized returns of 26%–40%.Risks include intensifying competition from giants like Microsoft and potential brand-related challenges, but the current PLTR valuation offers compelling upside.Looking for option income ideas that focus on capital preservation? I offer this and much more at my exclusive investing ideas service, Option Income Builder. Learn More » hapabapa/iStock Editorial via Getty Images
Last week, I put out an article titled "Which Companies Will Actually Win From AI?"
The goal of the article was simple: to break down the AI value chain and determine where, if at all, companies would
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Analyst’s Disclosure: I/we have a beneficial long position in the shares of PLTR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
AstraZeneca PLC (LSE:AZN, NASDAQ:AZN) has been kept on a 'buy' rating by Citi, which pointed to a run of late-stage drug trial results in the second half of the year as the key driver for the shares.
The Wall Street bank was previewing second-quarter results from the Anglo-Swedish pharmaceuticals group, due on 27 July.
Citi forecasts earnings per share of $2.41 for the quarter, a rise of 11% at constant exchange rates, though around 3% below the market consensus on higher spending.
The bank expects the company to leave its full-year guidance unchanged, having pencilled in low double-digit growth in earnings per share.
Attention on the results call is likely to centre on a series of phase three trial readouts expected in the second half, the final testing stage before regulatory filing.
These include studies of the heart drug Wainua, the cancer treatment Datroway and the breast cancer therapy camizestrant.
Citi sees a favourable balance of risk and reward given investor caution, noting its downside valuation scenario on a trial failure sits about 15% above the current share price.
Its upside scenario on positive data points to a value roughly 40% higher.
The broker also flagged around 8% of combined further upside from two other pipeline prospects.
The first is detailed data on tozorakimab in chronic obstructive pulmonary disease, a lung condition, which could lift Citi's peak sales estimate to $7 billion against a risk-adjusted consensus of $4 billion.
The second is progress on efzimfotase alfa, a treatment for the rare bone disorder hypophosphatasia, where detailed trial data and any filing update could unlock value.
That drug accounts for $3 billion of the bank's $4.4 billion peak sales estimate.
Wayfair (W - Free Report) appears an attractive pick, as it has been recently upgraded 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.
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.
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.
Therefore, the Zacks rating upgrade for Wayfair 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.
Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for Wayfair 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 WayfairFor the fiscal year ending December 2026, this online home goods retailer is expected to earn $2.91 per share, which is unchanged compared with the year-ago reported number.
Analysts have been steadily raising their estimates for Wayfair. Over the past three months, the Zacks Consensus Estimate for the company has increased 47.4%.
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 Wayfair 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.
Players operating within the Zacks Computer – Integrated Systems industry, including Micron Technology (MU - Free Report) , Seagate Technology (STX - Free Report) , Hewlett Packard (HPE - Free Report) and Agilysys (AGYS - Free Report) , are reaping the benefits of several favorable industry trends like advancements in data management capabilities, a rapid shift away from traditional siloed systems toward more integrated deployment techniques and heightened demand for modern application development approaches. However, the industry is still recovering from significant headwinds stemming from persistent supply chain bottlenecks, a challenging macroeconomic climate characterized by rising inflation and higher interest rates, soaring prices for key inputs and delays in customer acceptance of new products and services. These factors have resulted in significant order backlogs across the industry, casting a shadow on its prospects.
Industry Description The Zacks Computer - Integrated Systems industry comprises companies that deliver advanced information technology solutions spanning computer systems, software platforms, data storage infrastructure and microelectronics. These industry players are ramping up investments in data modernization and analytics, cybersecurity and threat defense, remote work enablement, process automation, contactless service delivery models, enhanced customer and employee experience offerings and supply chain modernization initiatives, which are aimed at accelerating digital transformation services for enterprise customers.
Some players provide technological solutions (products and services) to help organizations connect, interact and transact with customers. Others develop and market information recognition, data entry software, systems and technologies.
4 Computer - Integrated Systems Industry Trends in Focus Integrated Solutions Driving Demand: The industry is experiencing a surge in demand for integrated solutions across enterprises of all scales, driven by increasing investments in cutting-edge software technologies, such as the Internet of Things (IoT), big data analytics, artificial intelligence (AI) and blockchain. Significant opportunities presented by business analytics, cloud computing, mobile technologies, security solutions and social business platforms are tailwinds. Additionally, industry players are anticipated to benefit from the recovering global IT spending, enabling them to capitalize on the rising demand for comprehensive and seamless integrated solutions that can streamline operations and enhance productivity across various sectors.
Solid Adoption of Multi-Cloud Model: The industry is witnessing the robust adoption of the multi-cloud model as enterprises seek to achieve better scalability and optimize resource utilization. This trend is expanding the scope of industry participants, enabling them to leverage the benefits of cloud and hardware/software virtual technologies, which are anticipated to favor the industry's growth. Moreover, as growth and investment opportunities in developed countries continue to slow down, emerging economies are poised to play a crucial role in driving the industry's future. The multi-cloud model's increasing popularity, coupled with the tailwinds from cloud and virtual technologies and the potential of emerging markets, presents a strong foundation for industry participants to capitalize on new opportunities and foster sustained growth.
Supply-Chain Bottlenecks and Backlogs: Industry participants are grappling with a multitude of challenges, including supply constraints, softening demand for servers and cognitive applications, as well as delays in customer acceptance. These factors have contributed to consistent backlog levels, particularly in the Compute, High-Performance Computing & Mass Storage Class and Storage segments. Furthermore, the industry's outlook is affected by the volatility in foreign exchange rates, primarily due to the prevailing macroeconomic scenario and headwinds in emerging markets.
Semiconductor Chip Shortage Mars Prospects: The industry is grappling with the ripple effects of the ongoing semiconductor chip shortage, which has posed significant challenges for participants. The time-consuming business model transition to cloud computing has compounded these difficulties, requiring companies to navigate complex operational shifts amid supply chain disruptions. Moreover, the prospects of industry players are further dampened by lower spending across datacenter systems, primarily due to component shortages, particularly in memory and CPUs, as well as a deceleration in hyperscale spending.
Zacks Industry Rank Indicates Bright Prospects The Zacks Computer – Integrated Systems industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #13, which places it in the top 5% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential. Since July 30, 2025, the industry’s earnings estimate for 2026 has moved north by 241.5%.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Beats Sector & S&P 500 The Zacks Computer – Integrated Systems industry has outperformed the broader Computer and Technology sector and the Zacks S&P 500 composite in the past year.
The industry has returned 125.8% over this period compared with the S&P 500 and the broader Computer and Technology sector’s respective growth of 22.6% and 33.8%.
One-Year Price Performance
Industry's Current Valuation On the basis of the forward 12-month P/S, which is a commonly used multiple for valuing computer-integrated systems stocks, we see that the industry is currently trading at 6.18X compared with the S&P 500’s 5.03X. It is also below the sector’s forward 12-month P/S of 6.88X.
Over the past five years, the industry has traded as high as 7.08X and as low as 1.94X, with the median being at 3.12X, as the chart below shows.
Forward 12-Month Price-to-Sales (P/S) Ratio
4 Computer-Integrated Systems Providers to Buy Micron Technology is well-positioned for near-term momentum, supported by compelling guidance and a flurry of strategic announcements. For fourth-quarter fiscal 2026, the company has guided revenues of $50.0 billion, with gross margins expanding to approximately 86% and non-GAAP EPS of $31. Executing on 16 multi-year Strategic Customer Agreements — including pacts with Anthropic (June 2026) and General Motors (July 2026) — strengthens revenue durability and visibility. On the product front, HBM4 on 1-beta DRAM technology is in high-volume shipments, while 256GB DDR5 RDIMMs built on 1-gamma technology shipped to key server ecosystem enablers in May 2026. The newly operational Manassas, VA, fab adds critical domestic manufacturing capacity, aligning supply with growing AI-driven demand across data center, automotive and mobile end-markets.
MU currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for its fiscal 2026 earnings has moved north by 26.3% to $73.86 per share in the past 60 days. MU shares have gained 187.4% in the past six-month period.
Price & Consensus: MU
Seagate Technology is favorably positioned for meaningful near-term growth, underpinned by strong fundamentals and management's clear guidance. Fourth-quarter fiscal 2026 revenues are guided at $3.45 billion with non-GAAP EPS of $5, reflecting meaningful sequential improvement over the fiscal third quarter’s $3.11 billion revenues and record 47% non-GAAP gross margin. AI-driven cloud storage demand, supported by Seagate's areal density-led product innovation, is expected to sustain growth into fiscal 2027. In June 2026, Seagate announced early redemption of its 3.50% Exchangeable Senior Notes due 2028, a clear signal of balance sheet confidence. A quarterly dividend of 74 cents, payable July 7, 2026, further underscores capital return discipline. Management targets continued sequential revenue and margin expansion through fiscal 2027, establishing STX as a well-positioned near-term opportunity.
The Zacks Consensus Estimate for this Zacks Rank #1 company’s fiscal 2026 earnings has moved north by 0.3% to $14.93 per share in the past 60 days. STX shares have gained 166.1% in the past six-month period.
Price & Consensus: STX
Hewlett Packard Enterprise presents a compelling near-term investment case. In May 2026, HPE completed the H3C divestiture, generating $1.357 billion in proceeds and sharpening strategic focus. Second-quarter fiscal 2026 results (June 1) showed record revenues of $10.7 billion, up 40% YoY, with non-GAAP EPS of 79 cents and free cash flow of $0.9 billion. HPE raised fiscal 2026 guidance to revenue growth of 29-33%, non-GAAP EPS of $3.35-$3.45, and free cash flow of at least $3.5 billion, each surpassing its fiscal 2028 targets. At HPE Discover Las Vegas (June 15-18), the company unveiled an agentic AI architecture and self-driving networking. Private Cloud AI's multi-node inference for 256 GPUs launches July 2026. Fiscal 2027 guidance projects 8-12% revenue growth and free cash flow exceeding $4.5 billion.
The Zacks Consensus Estimate for this Zacks Rank #1 company’s fiscal 2026 earnings has moved north by 41.5% to $3.41 per share in the past 60 days. HPE shares have returned 83.9% in the past six-month period.
Price & Consensus: HPE
Agilysys presents a compelling near-term investment case underpinned by three converging catalysts. First, the company's May 2026 INSPIRE conference unveiled over 30 AI-powered features built around four strategic pillars — Multi-Modal User Experiences, Hyper-Personalization, Agentic Process Automation and Revenue Intelligence — with early customer deployments expected within 90 days, accelerating product monetization. Second, management's fiscal 2027 guidance targets total revenues of $365-$370 million, subscription revenue growth of at least 30% and adjusted EBITDA margin expansion to 24% from 21.2% in fiscal 2026, reflecting meaningful operating leverage ahead. Third, the cloud-native SaaS model — supported by fiscal 2026 recurring revenues of $205.9 million and annual free cash flow of $68.1 million — ensures durable earnings visibility. Two AI-native modules, Revenue Intelligence and a next-generation CRS, add an incremental near-term upsell opportunity.
The Zacks Consensus Estimate for this Zacks Rank #1 company’s fiscal 2027 earnings has increased by 9.2% to $2.37 per share in the past 60 days. AGYS shares have lost 6.8% in the past six-month period.
Dan Russo takes us through today's Big 3, which includes the S&P 600, arguing it is under owned. He points to opportunity in the Roundhill Mag 7 ETF (MAGS) and Micron (MU), which Dan calls “the heartbeat of the semiconductor.
Micron's (MU +1.45%) stock surged more than 730% over the past 12 months. That rally was driven by its soaring DRAM and NAND memory chip sales for AI-oriented data centers. Micron was once considered a cyclical company that went through "boom and bust" cycles. That perception changed as the AI market expanded and it recently secured over $22 billion in uncancellable, multi-year, fixed-price contracts through 16 Strategic Customer Agreements (SCAs) with data center giants.
From fiscal 2025 (which ended last August) to fiscal 2028, analysts expect Micron's revenue to surge nearly sevenfold as its EPS increases more than 22 times. Those are incredible growth rates for a stock that trades at less than nine times this year's sales and 13 times this year's earnings, so it could still have plenty of upside potential.
Image source: Getty Images.
Micron is still a rock-solid investment, but it's not the only cyclical chipmaker that is evolving into a high-growth AI chipmaker. Another promising stock is Marvell (MRVL +3.22%), which has rallied more than 250% over the past 12 months and still has lots of room to run.
Why is Marvell becoming a high-growth AI chipmaker? In the past, Marvell mainly produced Wi-Fi, Internet of Things (IoT), and mobile chips for consumer devices. But over the past decade, it stopped producing those cyclical, lower-margin chips and expanded its data center with big acquisitions and new product launches.
Today, Marvell generates most of its revenue from its data center business, which produces high-speed optical connectivity chips, custom application-specific integrated circuits (ASICs) for hyperscalers, Ethernet switches, and data processing units (DPUs) that combine CPUs, networking interfaces, and programmable data acceleration engines.
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As the AI market expands, more companies are upgrading their data centers with Marvell's hardware to handle the latest AI applications. Nvidia (NVDA +0.66%) also invested $2 billion in Marvell earlier this year and more tightly integrated its own GPUs, CPUs, and DPUs with Marvell's custom AI accelerators and networking chips through its NVLink platform. It's also co-developing advanced optical interconnect and silicon photonics solutions with Nvidia to eliminate data-transfer bottlenecks in cloud and AI data centers.
How much higher can Marvell's stock soar? From fiscal 2026 (which ended this January) to fiscal 2029, analysts expect Marvell's revenue and adjusted EBITDA to grow at CAGRs of 41% and 43%, respectively. It might seem a bit pricey at 19 times this year's sales and 50 times its adjusted EBITDA, but its long-term growth potential justifies those higher valuations. So if you're looking for an oft-overlooked AI chipmaker that could replicate Micron's massive rally, Marvell might fit the bill.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Marvell Technology, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
