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Market Snapshot

📉 Banana Bits

• Micron surges after reporting blockbuster earnings and issuing a stronger-than-expected outlook.

• Wendy’s rallies on a surprise CFO hire and a wave of meme-stock buying.

• Semiconductor stocks remain under pressure as concerns over AI spending linger.

• Gold breaks above $4,000 while silver and B*tcoin tumble as a stronger dollar fuels expectations of a Fed rate hike.

• Oil prices fall as tanker traffic through the Strait of Hormuz resumes and supply concerns ease.

Market News

Memory Serves

After Tuesday's sharp selloff, the semiconductor sector entered Wednesday on shaky ground. The SOX index had fallen 7.9%, the Nasdaq was down 2.2%, and investor sentiment remained cautious.

Stocks chopped around the flatline all day and finished mixed:

• The Dow rose about 0.4%.

• The S&P 500 slipped about 0.1%.

• The Nasdaq fell about 0.4%.

• The Russell 2000 rose about 0.4%.

So, breadth was actually better than the headline tech indexes looked. The attempted bounce was fragile heading into Micron's after-the-bell earnings.

Micron delivered, and then some:

• Fiscal Q3 revenue more than quadrupled year-over-year to $41.5 billion, blowing past the ~$35.8 billion Street estimate.

• EPS landed at $25.11 versus roughly $20.5–$20.9 expected.

• Net income jumped to $28.2 billion from less than $2 billion a year earlier.

• The company also issued a stronger-than-expected outlook, forecasting roughly $50 billion in revenue next quarter (analysts wanted ~$43.6 billion) at an ~86% gross margin.

• Shares rose ~10% after hours.

The engine here is HBM (High-Bandwidth Memory), a specialized stacked chip that feeds data to AI accelerators. Once considered one of the most cyclical parts of the semiconductor industry, memory has become one of its fastest-growing segments thanks to AI demand.

Micron's data-center revenue grew 415% year over year to about $25 billion, making up roughly 61% of total revenue. After recent concerns that AI spending was slowing, the results reassured investors that demand for AI infrastructure remains strong.

The bigger question now is the Federal Reserve. Under the new Chair, Kevin Warsh, expectations have shifted dramatically. Investors started 2026 expecting several interest rate cuts, but markets are now pricing in a strong chance of at least one rate hike before the end of the year.

The probability of a September rate hike is estimated at around 70%, and some analysts, including Bank of America, expect the Fed to raise rates three times by 25 basis points this year if inflation remains stubbornly high.

That's a major shift from what investors expected at the start of the year. Higher interest rates for longer tend to weigh on technology stocks because they reduce the present value of future earnings. They also make income-producing assets, such as bonds, relatively more attractive than companies that are expected to generate most of their profits further into the future.

That's exactly why the rest of the risk complex got taken to the woodshed:

• Gold cratered by roughly 3%, breaking below $4,000.

• Silver plunged closer to 9%.

• B*tcoin slipped below $60K.

• The dollar surged to a 13-month high.

• Oil was the odd one out, sliding toward four-month lows as Strait of Hormuz tanker traffic resumed and temporary U.S. sanctions relief on Iranian oil drained the geopolitical risk premium.

Peel Take: Micron's results reinforced the view that AI spending remains strong, but investors are also facing a very different interest-rate outlook. Strong demand for AI infrastructure is supporting companies like Micron, while expectations of higher interest rates continue to pressure valuations across the broader technology sector. Micron showed that businesses with strong fundamentals can still outperform, but in a higher-rate environment, investors are likely to be more selective, and high valuations will face greater scrutiny.

What's Ripe

Wendy's Co (WEN) 25.7%

• Wendy's shares jumped 25.7% after rising as much as 42% during the session, triggering a Nasdaq volatility halt. It marked the stock's biggest rally in years.

• The move was driven by the appointment of former Potbelly executive Steve Cirulis as Chief Financial Officer and Chief Strategy Officer. At the same time, the stock gained momentum on social media, becoming one of the most-discussed names on WallStreetBets as retail traders piled in.

• Peel Take: The rally was driven more by investor enthusiasm than by any major change in Wendy's business. While the new leadership appointment may help in the long term, a one-day jump of more than 25% reflects strong speculative trading rather than a sudden improvement in the company's fundamentals. Investors should keep that distinction in mind.

Sunrun Inc (RUN) 12.6%

• Sunrun jumped roughly 12% in regular trading after teaming up with Tesla and Renew Home to build what the companies billed as a massive distributed power network targeting more than 16 GW of flexible capacity.

• The pitch here is to use home batteries and smart devices as a grid shock absorber for AI data centers, utilities, and power-hungry loads, rather than waiting years for new plants and transmission lines.

• Peel Take: Sunrun's announcement gives investors a new reason to pay attention to its business beyond traditional solar. If virtual power plants become a larger part of the energy grid, the company could benefit from growing AI-driven demand and rising electricity needs. However, the opportunity will depend on execution, regulation, and customer adoption, so investors will likely want to see meaningful progress before becoming more optimistic.

What's Rotten

Cerebras Systems Inc (CBRS) 19.6%

• Cerebras fell roughly 20% in its first earnings report since IPO, revenue nearly doubled, and the market shrugged.

• Cerebras guided 2026 adjusted gross margin to just 38%–41% (down from 47% in Q1), and near-term margin guidance disappointed, too, as a data-center space crunch is forcing it to lease equipment back from its own customers.

• Add looming IPO lockup expirations that threaten fresh supply, plus the broader semis selloff, and not even a reported $20B OpenAI contract could stop the bleed.

• Peel Take: Strong revenue growth can grab investors' attention, but profitability still matters. While Cerebras continues to benefit from AI demand, its business model has raised concerns about margins and long-term earnings. When expectations are already very high, even small signs of weakness can lead to a sharp market reaction. For now, investors are likely to focus just as much on profitability as they do on growth.

Strategy Inc Class A (MSTR) 9.4%

• Michael Saylor's B*tcoin-vending-machine fell about 9% near the close and roughly 11% intraday while B*tcoin dropped below $60K. Investors flagged worries about Strategy's preferred-stock funding model, and a rare headline that the company actually sold some BTC unsettled a base raised on Michael Saylor's "never sell" gospel.

• The hawkish Fed swung the wrecking ball as rate-hike odds climbed and the dollar hit a 13-month high; every non-yielding asset (cr*pto and gold included) got tossed overboard.

• Peel Take: MicroStrategy's performance remains closely tied to B*tcoin, so when the cr*ptocurrency declines, the stock often drops even more. This week's decline was exacerbated by concerns about the company's funding strategy and reports questioning its B*tcoin holdings. Combined with a tougher interest rate outlook, investors had more reasons to reduce risk. The company's leverage can amplify gains when B*tcoin rises, but it can also increase losses when sentiment turns.

🧠 Technical Trip

Interview Q&A from JPMorgan

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📚 Lesson from the Library

🎥 DCF Modeling Course: Master the Gold Standard of Valuation

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🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• Prologis takes its all-share takeover offer for Segro directly to shareholders.

• Bain Capital reportedly moves to acquire control of Volkswagen’s marine-engine business.

• Paramount prepares to divest assets to help secure regulatory approval for its Warner Bros. Discovery deal.

• The European Union reviews the proposed Saudi-backed acquisition of Electronic Arts under foreign subsidy rules.

• CRH agrees to acquire Arcosa as part of an $8.5 billion expansion of its North American infrastructure business.

📊The Daily Poll

Previous Poll:

Wall Street is struggling to pick a direction. If you had to choose one for the next 6 months, you'd be:

Bullish: 13.2% // Cautiously bullish: 52.8% // Neutral: 20.8% // Bearish: 13.2%

Student Success Corner

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Banana Brain Teaser

Previous

If money is invested at r% interest, compounded annually, the amount of the investment will double in approximately 70/r years. If Pat’s parents invested $5,000 in a long-term bond that pays 8% interest, compounded annually, what will be the approximate total amount of the investment 18 years later, when Pat is ready for college?

Answer: $20,000

Today

At his regular hourly rate, Don had estimated the labor cost of a repair job as $336, and he was paid that amount. However, the job took 4 hours longer than he had estimated, and, consequently, he earned $2 per hour less than his regular hourly rate. What time did Don estimate for the job, in hours?

How Would You Rate Today's Peel?

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

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