Market Snapshot

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📉 Banana Bits

• Japan’s yen surges as BOJ rate-hike and intervention bets build.

• EU joins U.S. Iran sanctions push as South Korea weighs Hormuz deployment.

• Early-stage AI startups face a shakeout as VCs scrutinize valuations more closely.

• ASML supplier Zeiss says China is 15 years behind in cutting-edge chipmaking tools.

• Microsoft reveals exact Azure sales after years of investor pressure.

Market News

U.S. stocks posted their biggest gain in a month Thursday, with the S&P 500 rising 1.1%, the Dow gaining 1.2%, and the Nasdaq climbing 1.4%, after Fed Governor Christopher Waller signaled he could support holding rates steady if inflation continues cooling. Markets cut the odds of a September hike to roughly 50% from around 70% earlier in the week, helping push short-term Treasury yields and the dollar lower while Bitcoin climbed above $80,000.

Attention now turns to today’s August jobs report, followed by next week’s inflation data, which could ultimately decide the Fed’s September move. Elsewhere, the yen surged on BOJ rate-hike bets and renewed intervention risk, WTI crude settled near $91 a barrel, while corporate headlines included Nvidia’s $12.9 billion agreement to buy Hugging Face, Adobe’s CEO change, and Snowflake’s raised product-revenue outlook.

Peel Take: Wall Street finally got a little relief from the Fed, but Waller didn’t take a hike off the table. The market is back in Goldilocks mode: investors want inflation and jobs soft enough to keep rates steady, but not weak enough to signal an economic slowdown. Next week’s inflation print could decide whether this rally has legs.

What's Ripe

Snowflake Inc. (SNOW) 16.55% 

• Surged nearly 17% after the cloud software company crushed Wall Street’s second-quarter expectations, fueling optimism around its growth and AI-driven demand. CEO Sridhar Ramaswamy also told Barron’s that Snowflake remains on track to break even next year.

• Peel Take: Snowflake is showing investors what they increasingly want from AI software: strong growth with a path to profits. The earnings blowout suggests AI is driving real demand for its data platform, while the break-even target helps answer concerns about profitability. AI hype gets attention, but AI revenue plus improving margins gets rewarded.

Hewlett Packard Enterprise Co. (HPE) 5.04% 

• Gained 5% after the hardware provider beat Wall Street’s third-quarter earnings expectations. The stock reversed earlier losses and extended its massive 125% year-to-date gain.

• Peel Take: HPE is increasingly riding the AI infrastructure boom, where demand for servers, networking and data-center hardware remains strong. But after a 125% run this year, expectations are getting much harder to beat meaning good earnings may need to become great earnings to keep the rally going.

What's Rotten

Ciena Corp. (CIEN) 10.36%

• Sank more than 10%, making it the S&P 500’s worst performer, despite beating quarterly earnings expectations and raising its full-year revenue guidance. The networking equipment maker said AI-related demand remains strong, but the solid results weren’t enough to satisfy elevated investor expectations.

• Peel Take: Ciena’s drop is another case of good results meeting even better expectations. AI is driving demand for the high-speed networking infrastructure connecting data centers, but after a strong run, investors were already pricing in plenty of growth. In the AI trade, beating estimates increasingly isn’t enough. Companies have to blow them away.

Broadcom Inc. (AVGO) 2.74%

• Fell 2.7% despite delivering solid third-quarter earnings, as investors remained concerned about AI data-center financing and growing competition. Adding to the pressure, major customer Google struck a chip-design deal with rival Marvell, raising questions about Broadcom’s future share of Google’s custom AI-chip business.

• Peel Take: Broadcom’s earnings were solid, but investors are looking beyond the quarter. Google’s Marvell deal highlights the risk that AI giants diversify their chip suppliers rather than rely on one partner, while questions around data-center financing add another uncertainty. For Broadcom, the AI boom is still powerful but competition for each dollar of AI spending is getting tougher.

🧠 Technical Trip

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🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• Diversified Energy Strikes a $1.8 Billion Deal to Acquire Permian Producer Birch.

• Proofpoint Is in Talks to Acquire Varonis in Its Latest Cybersecurity Expansion.

• ByteDance Secures a $29.6 Billion Loan After Strong Demand From Global Banks.

• PlusAI Agrees to Go Public in an $800 Million SPAC Deal With Yorkville-Backed Texas Ventures III.

Student Success Corner

Banana Brain Teaser

Previous

A portfolio is 70% invested in stocks returning 12% and 30% in bonds returning 4%. What is the portfolio return?

Answer: 9.6%

Today

A company has $120 million of revenue, a 40% gross margin, and $18 million of operating expenses. What is the company’s operating income?

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

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