Market Snapshot

Get a Top Job Offer, Guaranteed (or tuition is free) | Apply Here

📉 Banana Bits

• Meta's raising up to $95B through stock sales to fund AI, with Nvidia, AMD and Broadcom considering a combined $5B investment.

• Microsoft offered buyouts to about 60,000 employees, roughly a quarter of its staff, right before Wednesday's earnings.

• Elon Musk warns that 200+ neoclouds face "guppy-level death" as financing tightens. He also says SpaceX secured $40B for GPUs.

• Brazil's stock market got wrecked after Lula's surprise runoff win, with the Bovespa down nearly 17% at its worst.

• Oil cooled off from a six-month high as officials from Saudi Arabia, Turkey and Pakistan flew to Tehran for talks.

Market News

One IPO Filing Snapped Tech Out of Its Funk

The S&P 500 and Nasdaq had just strung together two losing weeks. Then Anthropic dropped its IPO paperwork, and investors had a reason to get excited about AI again. The S&P rose 0.7% on Monday, the Nasdaq gained 0.8%, and the Dow added nearly 150 points, with tech doing most of the carrying.

Anthropic, the company behind Claude, made its S-1 IPO filing public and plans to list on the Nasdaq under ANT, its proposed stock ticker, potentially as early as November. The number everyone fixated on was revenue, which hit $16.3 billion in the first half of 2026, up from just $1.2 billion a year earlier. There's also an $80.7 billion net loss, although roughly $72.4 billion came from noncash accounting charges tied to convertible notes and other financing instruments. Reports put its potential valuation somewhere between $1.5 trillion and $2 trillion.

Traders took the filing as evidence that customers are actually paying for AI, and chip stocks ran with it. Nvidia, Micron, and AMD all had strong days. It wasn't a clean sweep for the AI crowd, though. Meta announced plans to raise as much as $95 billion through stock sales to fund its AI expansion, sending its shares lower. Meanwhile, Elon Musk spent part of Sunday warning that most of the 200-plus "neoclouds" renting out GPU capacity face "guppy-level death and consolidation" as financing dries up. AI demand looks strong, but funding all that infrastructure is getting complicated.

The ugliest chart of the day belonged to Brazil. President Lula came from behind to win Sunday's runoff, and investors who'd piled into bets on his opponent, Flávio Bolsonaro, rushed for the exits. Brazil's main stock index plunged 13.9%, its worst day since March 2020, after falling as much as 17.3% intraday. The Brazilian real took a beating too. Oil cooled off as officials from Saudi Arabia, Turkey, and Pakistan held talks in Tehran, while the 10-year Treasury yield hovered just below 5%.

This week is stacked. The Fed's two-day meeting starts today and wraps up Wednesday afternoon, with markets overwhelmingly expecting rates to stay put, although a December hike remains firmly in play. Alphabet and Microsoft report after the bell Wednesday, Amazon follows Thursday, and Thursday morning also brings third-quarter GDP and the Fed's preferred inflation gauge, the PCE price index. Coca-Cola and Boeing kick things off before the open today, with Visa and Robinhood reporting after the close. Oh, and the U.S. midterm elections are next Tuesday, November 3.

Peel Take: Those revenue numbers are wild, no argument here. But Anthropic isn't exactly coming cheap. At the valuations being floated, investors would be paying roughly 22 to 30 times annualized third-quarter revenue, while the founders would still control 50.1% of the voting power. SpaceX ripped after its June debut and has given back most of those gains since, a reminder that even blockbuster IPOs aren't immune to market volatility.

💼 Career Watch

Evercore allows students to submit only two applications per year and doesn't accept late submissions. If you're targeting its 2029 Summer Analyst program, make sure you're ready before applications open.

👉 Apply to WSO Academy

What's Ripe

Lumentum (LITE) 8.19% 

• StoneX started covering Lumentum with a Buy rating and a $1,200 price target, calling its lasers and optical gear choke points in the AI buildout. Management has said its AI capacity is basically spoken for into early 2029.

• It was the best performer in the S&P 500 on Monday, while other optical names like Coherent and Applied Optoelectronics also rallied. Not bad for a stock that dropped 8% last week.

• Peel Take: The GPUs inside an AI data center are constantly talking to each other, and more of that conversation runs on light every year. That's a major growth driver for Lumentum, and demand is stretching its production capacity years into the future. We love the business. The stock is a different animal at these prices, though, swinging 8% in either direction from one week to the next, so keep the position small enough that you can still sleep at night.

Tesla (TSLA) 5.21% 

• Barclays upgraded Tesla to Overweight and raised its price target to $450 from $370. The main argument is that a Tesla-SpaceX merger looks more and more likely, and Tesla holders would probably get paid a premium if it happens.

• The analyst also warmed up to the core business, pointing to recovering car sales and an energy storage business whose capacity is nearly booked for 2027. Musk called a merger a "good idea" last week, and both companies have set up committees to study it.

• Peel Take: Part of the bull case here is one Elon Musk company potentially paying a premium to acquire the other, which is not a sentence we expected to type this year. The energy business is legit to be fair. But nothing is signed, and a deal like this still has to get past both boards, regulators and a shareholder vote. Own Tesla because you believe in the business, not because you're betting on a merger that may or may not happen.

What's Rotten

XP Inc. (XP) 48.36%

• Lula won Brazil's presidential runoff on Sunday after losing the first round to Flávio Bolsonaro, catching investors who had bet on a Bolsonaro victory by surprise. Bolsonaro hasn't conceded and says he'll try to get the result thrown out.

• XP, one of Brazil's biggest brokerages, had soared after the first round on hopes that a Bolsonaro government would pursue policies that could help lower interest rates and push savers into stocks. That whole trade unwound in one day, and XP closed below where it started the year. Nu Holdings and StoneCo got dragged down with it.

• Peel Take: Anyone who bought XP after the first round made a parlay on a Brazilian election, and the house won. The stock rallied roughly 50% after the first-round result, only to lose all those gains and more in a single session. That's what happens when political expectations become a major driver of stock prices. We're still not catching this knife until the real stabilizes and the uncertainty surrounding the election starts to clear.

Fair Isaac (FICO) 13.15%

• Late Friday, FICO said mortgage lenders who join its new "Preferred Program" will keep paying $10 for a bundle of its Classic FICO Score and FICO Score 10T, the same as last year, as long as they commit to using FICO scores on all eligible mortgage credit checks. That limits the big yearly price hikes that made FICO a Wall Street darling, at least for participating lenders, while rival VantageScore remains significantly cheaper.

• Wells Fargo downgraded the stock, and JPMorgan and UBS cut their price targets. FICO was the worst-performing stock in the S&P 500 on Monday and has lost more than half its value this year.

• Peel Take: For years, FICO could raise prices because lenders didn't have much of a choice. Then regulators opened the door for VantageScore, Rocket Mortgage adopted it for eligible mortgages, and now FICO is freezing prices for participating lenders to stay competitive. That could help retain customers, but it also puts pressure on future revenue growth. If you're hoping to buy a house in the next few years, more competition here could eventually mean slightly cheaper closing costs.

🧠 Technical Trip

Interview Q&A from Barclays

👉 Want 1-on-1 recruiting help from Barclays bankers & 5,000+ top mentors? Apply to WSO Academy

🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• Anthropic filed for its IPO, it'll list on the Nasdaq as ANT, probably in November, at a valuation reportedly between $1.5 and $2 trillion.

• EQT is buying Range Resources in an all-stock deal worth about $13 billion, creating the biggest natural gas producer in the U.S.

• DoorDash is in advanced talks to buy Instacart for around $17 billion, per the WSJ. Your groceries and your 2 a.m. burrito may soon share a parent.

• Surgery Partners is going private in a $5.7 billion deal with an affiliate of the nonprofit hospital system Bon Secours Mercy Health.

• Japan's Umios is buying High Liner Foods, the company behind Van de Kamp's fish sticks, for about C$804 million.

Student Success Corner

Banana Brain Teaser

Previous

An acquirer earns $100 million annually with 50 million shares outstanding. It acquires a company earning $30 million, issues 10 million new shares, and generates $10 million in after-tax synergies. By what percentage does its EPS increase?

Answer: 16.67% EPS increase (accretive)

Today

Company A trades at 20x earnings, while Company B trades at 10x earnings. Company A acquires Company B entirely through newly issued shares at their respective market valuations. Assuming no synergies or transaction costs, will Company A's EPS increase or decrease?

How Would You Rate Today's Peel?

Happy Investing,
Elie, Mitchell, Fernanda, Nick, & Patrick

ADVERTISE // WSO ALPHA // ACADEMY // COURSES // LEGAL