Market Snapshot

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📉 Banana Bits

• Uber and Pony.ai expand their partnership to deploy more than 2,000 robotaxis across Europe.

• Reddit will join the S&P 500 next week, sending shares up 11% after the announcement.

• OpenAI’s annualized revenue run rate tops $40 billion as AI demand stays strong.

• Trump imposes 100% tariffs on certain security-sensitive drones and 25% on smaller imports.

• Global stocks hover near record highs as cooler U.S. inflation dims Fed hike bets.

Market News

US stocks climbed to new highs as softer inflation data strengthened expectations that the Federal Reserve will keep interest rates unchanged in September. The S&P 500 hit another record, while the Nasdaq 100 gained 1.15% and Treasury yields declined. July producer prices rose 4.7% YoY, down sharply from 5.5% in June, while prices were unchanged month over month as food and energy costs eased. Combined with last week’s weaker jobs report, the data pushed the market-implied probability of a September Fed hike below 40%. WTI crude settled 2.4% lower at $81.25 a barrel on Thursday, although prices were rebounding Friday morning.

However, longer-term borrowing costs remain a concern. A $25 billion 30-year Treasury auction cleared at 5.216%, the highest yield since 2001, underscoring elevated U.S. government funding costs. Separately, the AI investment boom continues to fuel corporate borrowing, with AMD pricing $4.75 billion of senior notes across four tranches. Corporate moves were mixed: Workday surged nearly 18% on reports that Silver Lake is in talks to acquire the company, while Hertz fell after Pershing Square disclosed it had exited its stake. Cisco dropped despite strong results and an upbeat revenue outlook as investors focused on margin pressure and lofty AI expectations, while Cerebras sank after mixed results raised concerns over margins and hardware sales despite the company raising its full-year outlook.

Peel Take: Wall Street finally got the combination it wanted: cooler inflation, softer employment and an economy that hasn’t fallen apart. That gives the Fed more room to sit tight and keeps the equity rally alive. But there’s a catch, long-term yields remain stubbornly high as Washington and the AI boom compete for enormous amounts of capital, meaning the market may have escaped the September rate-hike scare without escaping the higher-for-longer cost of money.

What's Ripe

Sandisk Corp. (SNDK) 13.67% 

• Surged 14%, ranking among the S&P 500’s top performers, after management unveiled an upbeat long-term outlook at its investor day. The memory supplier expects mid-to-high-teen annual revenue growth from fiscal 2028 through 2030, while targeting adjusted gross margins of around 80% and free-cash-flow margins near 50%.

• Peel Take: Investors liked the combination of strong growth and exceptionally high margin targets. If Sandisk can deliver, it suggests the AI-driven memory boom could translate into durable cash generation rather than just another cyclical upswing, though such ambitious margins also leave little room for execution misses.

Netflix Inc. (NFLX) 5.43% 

• Gained 5.4% after billionaire investor Bill Ackman added the streaming giant to his portfolio. The purchase is one of six new holdings Ackman unveiled as part of his biggest portfolio overhaul in years.

• Peel Take: Ackman’s entry provides a fresh vote of confidence in Netflix’s long-term earnings and cash-flow story. The market reaction also shows the power of a high-profile investor endorsement sometimes who’s buying matters almost as much as what they’re buying.

What's Rotten

Tapestry Inc. (TPR) 16.49%

• Sank 16%, making it the worst-performing stock in the S&P 500, despite posting slightly better-than-expected earnings. Investors instead focused on the Coach parent’s weaker fiscal 2027 revenue outlook, raising concerns about the durability of future growth.

• Peel Take: This is another reminder that markets trade the future, not the quarter that just ended. Tapestry’s earnings beat wasn’t enough to offset softer guidance, with investors questioning whether its recent momentum can continue as luxury and discretionary spending face a tougher backdrop. 

Cerebras Systems Inc. (CBRS) 11.85%

• CBRS fell 11.85% after a mixed Q2 report. Revenue rose 74% to $180.1 million but missed the $194.2 million LSEG consensus, while adjusted gross margin fell to 40.6% from 46.5% in the prior quarter. Hardware sales declined to $54.1 million even as cloud revenue roughly quadrupled to $126 million. Cerebras still raised its full-year revenue and gross-margin outlook.

• Peel Take: Cerebras is still growing fast, but AI-chip valuations leave little room for execution misses. The raised full-year outlook wasn’t enough to offset weaker hardware sales and margin pressure, showing that investors want proof AI demand can translate into scalable, profitable growth

🧠 Technical Trip

Interview Q&A from Barclays

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🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• Thoma Bravo agrees to take Accelerant private in an all-cash deal worth more than $4 billion.

• Databricks raises $5 billion at a $190 billion valuation in its latest AI funding round.

• Robinhood Ventures Fund II raises $225.5 million and begins trading on the NYSE.

• Candle Lake launches a mandatory $13.8 billion offer for Evolution after crossing Sweden’s 30% ownership threshold.

Student Success Corner

Banana Brain Teaser

Previous

A company has $120 million of EBITDA and trades at 8.0x EV/EBITDA. It has $300 million of debt and $60 million of cash. What is the implied equity value?

Answer: $720 million

Today

An investor buys 100 shares at $40 and another 100 shares at $60. At what price must the stock trade for the investor to break even?

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

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