Market Snapshot

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📉 Banana Bits

• Nasdaq closes at another record as AI stocks extend their latest rally

• Fed’s Barkin says inflation remains broad even as the economy shows fresh strength

• Trump says U.S.-Iran talks continue and expects an eventual settlement

• Bond investors grow more selective on AI debt as borrowing surges

• Meta’s Muse draws bullish analyst calls after its rapid early adoption

Market News

AI Keeps Tech Rally Going as Oil Gives Wall Street Some Relief

Wall Street split Tuesday as AI stocks kept the tech rally alive. The Nasdaq gained 0.45% to a record 27,244.28, its second straight record close, while the S&P 500 finished essentially flat at 7,764.64 and the Dow fell 185 points, or 0.36%, to 51,863.69. Micron gained 5% and Sandisk rose nearly 7% as investors continued piling into AI-linked chip and memory stocks.

Shopify jumped about 7% after partnering with Meta to bring Shop Pay into Muse, Meta’s new AI assistant. The move added to renewed enthusiasm around AI after Muse’s rapid early adoption, while chip and memory stocks also stayed strong as investors continued betting on heavier AI infrastructure demand.

Oil gave Wall Street some relief too. Brent briefly fell below $98 a barrel as improving Saudi crude flows eased supply concerns. Prices later pared some of those losses, with Brent settling at $99.25, down 1.1%. Lower crude is welcome for markets after the recent energy spike added another layer of inflation pressure.

The broader market was less enthusiastic. Financials were among Tuesday’s weakest sectors, with JPMorgan down 3.4% as investors continued digesting last week’s Fed hike and a relatively narrow gap between short- and long-term Treasury yields, which can pressure bank profitability. The 10-year Treasury yield remained near 5%.

Rate concerns are not disappearing either. Fed officials continued sounding cautious on inflation, with Richmond Fed President Tom Barkin saying price pressures are no longer limited to energy and tariffs and that the economy may actually be firming. Traders also continued weighing the possibility of another rate hike in October.

Overall, Tuesday showed a market still willing to chase AI winners, but not a broad risk-on rally. Tech kept pushing higher and softer oil eased some inflation concerns, while elevated rates and weakness in financials kept the S&P 500 and Dow from joining the Nasdaq at new highs.

Peel Take: The AI trade is clearly alive, but Tuesday showed that not every part of the market is celebrating. Shopify jumping on the Muse partnership shows how quickly investors are willing to reward companies tied to the next wave of AI products. Oil slipping below $100 is also exactly what Wall Street wants because cheaper energy takes some pressure off inflation. The problem is that the 10-year Treasury yield is still hovering near 5% and the Fed remains focused on stubborn price pressures. For now, AI is doing enough to keep tech moving, but cheaper oil and eventually lower yields would make the broader rally a lot easier to sustain.

What's Ripe

Shopify (SHOP) 7.12% 

• Shopify jumped another 7.12% Tuesday, extending Monday’s rally after announcing a partnership with Meta that will bring Shop Pay checkout into its Muse AI assistant.

• The integration allows Muse users to shop from Shopify merchants and complete purchases through Shop Pay, positioning Shopify to benefit from the growth of AI-powered shopping.

• Peel Take: Shopify saw the AI shopping wave coming and decided to ride it instead of fight it. If consumers actually start letting AI assistants shop for them, Shopify gets another way to put its checkout infrastructure in front of customers. Wall Street clearly likes the idea.

Sandisk (SNDK) 6.82% 

• Sandisk surged 6.82% after Rosenblatt initiated coverage with a Buy rating and a massive $2,400 price target.

• The firm argued that AI workloads are turning NAND flash from commodity storage into a more critical piece of AI infrastructure, boosting demand for performance, density and supply reliability.

• Peel Take: AI needs more than just fancy processors. It needs somewhere to store all that data. Sandisk is benefiting from investors realizing memory could be another major winner from the AI boom. A $2,400 price target certainly didn't hurt either.

What's Rotten

Cisco (CSCO) 4.50%

• Cisco fell 4.50% after Piper Sandler cut its price target to $125 from $132 while maintaining a Neutral rating.

• The firm cited lower valuation multiples across networking stocks and concerns that industry growth could be approaching a peak, even as Cisco continues to see strong hardware demand.

• Peel Take: Cisco got a reminder that even AI exposure doesn’t make valuation concerns disappear. Hardware demand is still strong, but after a big run in the stock, investors didn’t love hearing that networking growth could be nearing a peak.

Quest Diagnostics (DGX) 4.13%

• Quest fell 4.13% after CMS released preliminary 2027 Medicare laboratory payment rates, raising concerns about lower reimbursement for diagnostic tests.

• Under the current framework, payment reductions for affected tests can reach up to 15% annually, and Labcorp also sold off as investors priced in pressure across the laboratory-testing industry.

• Peel Take: Nothing ruins a healthcare stock’s day faster than the government proposing to pay you less. Quest didn’t suddenly lose customers, but lower Medicare reimbursement could pressure future revenue and margins, and Wall Street wasted no time pricing that risk in.

🧠 Technical Trip

Interview Q&A from Morgan Stanley

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🦈 Deal Dispatch

M&A, IPOs, And Other Notable Transactions

• Cognex agrees to acquire RealSense for about $500 million in cash

• Butterfly Equity agrees to acquire Sabert, a global food-packaging manufacturer

• Accelevation targets a $5.4 billion valuation in its upcoming U.S. IPO

• Binance buys a $100 million stake in Circle alongside an expanded USDC partnership

Student Success Corner

Banana Brain Teaser

Previous

A bank earns a 3.0% net interest margin on $20 billion of average earning assets. If NIM rises by 25 bps with assets unchanged, how much additional annual net interest income does it generate?

Answer: $50 million

Today

A company has $120 million of EBITDA, trades at 9.0× EV/EBITDA, and has $300 million of net debt. EBITDA grows by 15%, the valuation multiple falls to 8.0×, and the company pays down $50 million of debt. What is the percentage change in equity value?

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

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