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Weekly Newsletter
🚀 NVIDIA Beats On Every Metric
🧠 Complex Software With Proprietary Data Is Winning
📈 Earnings Tracker - Breadth Is Improving
💡 Key Takeaways From This Week’s Earnings
🏦 Kevin Warsh Delivers Debut Jackson Hole Speech
QUOTE OF THE WEEK:
“If every company is saying the biggest problem we've got is capacity, Nvidia investing in capacity, whether it's Corning or Lumentum or Coherent or investing in NeoClouds, trying to help them have a lower cost of capital so they can go out and get power and get land and things. It kind of makes sense that they could put their balance sheet, which is growing so fast, and the hundreds of billions of dollars in extra free cash flow expected over the next year or so, put some of that money to work to make sure that this thing doesn't have to slow down any time.” - Cory Johnson, Epistrophy Capital Research Chief Market Strategist
KEY US ECONOMIC EVENTS NEXT WEEK:
MARKET CLOSE:
WEEKLY MARKET WRAP:
Good Afternoon. Positive week for the markets after two consecutive red weeks. Nasdaq led at +0.85%, Dow +0.53%, S&P +0.49%. NVDA reported Wednesday and Warsh delivered his Jackson Hole keynote Friday. NVDA beat on every metric. Warsh went hawkish and said inflation is still too high, which market interpreted as rates may need to move higher. Both catalysts drove intraday drama but the weekly numbers ended up modestly green.
YTD, Nasdaq is up 13.60%, S&P 12.66%, and Dow 11.44%. With PCE methodology changes expected to lower the headline numbers from 20 to 50bp, inflation story is expected to get better and hence I think rate hike later this is unlikely.
Below are the key things to note this week:Jackson Hole:
In his debut as Fed Chair Friday, Warsh warned inflation's "underlying trends have not meaningfully improved" despite softer summer prints. He explicitly reset earlier positions — AI is no longer a reason to ease, and the balance sheet stays put. He rejected forward guidance outright, saying he is "committed to a discipline, not to a decision," and criticized markets for looking to the Fed for their next trade. He committed to no path in either direction. 30Y yield had touched 5.31% on Aug 17, its highest since 2007, setting the backdrop.For the week:
CNN's Fear & Greed Index now stands at 54 (Neutral) out of 100, down 1 points from last week. Details here
The top five trending stocks on Reddit are NVIDIA, SPY, Iris Energy, Micron, and DTE Energy. Read More
Liquidity:
Banking Reserves + ON RRP: Banking reserves remain at approximately $2.9 trillion. ON RRP balance remains immaterial.
Standing Repo Operations: The New York Fed’s standing repo operation (primarily reflecting SRF take-up) is $0.
Here is a summary of this week’s key economic releases:
Target Rate Probabilities for Sept. 16th FOMC Meeting:
CURATED INSIGHTS & ANALYSIS:
Key takeaways from this week’s earnings:
Memory costs are now squeezing even NVIDIA
NVIDIA’s gross margin was 75% and it guided next quarter down to 74% on memory and wafer costs. In the same release it announced a multi-year memory deal with SK hynix, which is what a company does when it expects the shortage to last. Cisco reported the same squeeze two weeks ago, HP is living it in PCs. The most profitable company in AI now pays the memory tax too.
AI is making enterprise software more valuable, not less
Salesforce rose 23%, CrowdStrike 21%, Veeva 15% and Synopsys 13%, all on beats tied to AI products. Three weeks ago Datadog beat and fell 17% on fears that AI would replace software. This week the market decided the opposite for software that owns its customers’ data. The fear was too broad; the sorting has started.
The cheap end of software is where AI actually bites
Intuit beat on the quarter and still fell, because it guided fiscal 2027 revenue about $1.2 billion below what analysts expected. Its products serve consumers and small businesses doing routine tasks, which is exactly the work AI does cheaply. The split is now clear: complex software with proprietary data is winning, simple software is not.
The AI buildout is moving onto borrowed money
NVIDIA’s free cash flow fell to $21.3 billion from $48.6 billion as receivables and inventory swelled, and it raised about $24.9 billion of new debt. It has also lined up partners including Apollo, BlackRock and Blackstone to mobilize more than $500 billion so customers can finance compute instead of buying it. The buildout is starting to run on credit, which is a different kind of risk.
Shoppers keep splitting by income
Dollar General beat and rose as trade-down shoppers kept arriving, helped by about $0.25 a share of tariff refunds. PDD missed on revenue as Chinese spending stayed weak. Last week Walmart’s traffic slowed to its weakest in six years. Value chains are still gaining customers, but the customers themselves have less to spend.
Earnings tracker:
Breadth is improving, but large caps still lead.
At 97% reported, the S&P 500's median constituent grew earnings +15.0% on +14.3% revenue with an 86% beat rate. S&P 500 Growth leads everything at +27.1%, rebounding sharply this week as its final names filed. Both sit roughly a point behind their own Q1 pace — a marginal cooling from an exceptional quarter, not a deterioration, and both gaps have narrowed steadily through August.
The Russell 3000 is the one running ahead of its own Q1 base, by 5.0pp, with a +16.9% median. That reflects a weak Q1 comparison as much as Q2 strength: the typical small- and mid-cap company still earns less growth than the typical large-cap one, and materially less than the growth cohort. What has changed is the direction of travel. The broad market is improving against its own base while large caps consolidate at a higher level — the rally's earnings foundation is widening, not rotating.
FRONT PAGES:
Meta Pays $17B to Settle Landmark Teen Safety Case</u>: Meta agreed Wednesday to a $17B, 10-year settlement of the landmark suit by 51 state AGs alleging Facebook and Instagram were designed to addict teens. States had sought hundreds of billions; $17B works out to ~1% of Meta's 10-year revenue. Sets template pressuring TikTok, YouTube, and Snap. Read
Anthropic Signs $45B, 6-Year Compute Deal with Nscale: Anthropic agreed Wednesday to pay UK-based neocloud Nscale ~$45B over six years for 460 MW of computing power at Nscale's Monarch Compute Campus in West Virginia — powered by Nvidia's Vera Rubin chips coming online late 2027. Fifth major compute deal for Anthropic this year, alongside $50B Fluidstack, $10B Volta, $5B AMD, and the SpaceX arrangement. Anthropic is separately targeting a ~$2T IPO valuation this fall. Read
Salesforce and Anthropic Launch Claudeforce: Salesforce and Anthropic unveiled Claudeforce Wednesday — the deepest integration yet between a frontier AI lab and enterprise software. Claude becomes the default reasoning model across Agentforce, Slack, and Salesforce dev tools; Salesforce embeds inside Claude via a plugin with 37 prebuilt sales skills. Anthropic is the first LLM provider fully contained in Salesforce's VPC. First time Salesforce has appended "force" to another company's product. Benioff and Amodei took the stage together. Read
Nvidia-AWS Extends GPU Deal for 2M More Chips Through 2028: Nvidia and AWS confirmed Wednesday an expanded multi-year commitment covering an additional 2 million GPUs — Blackwell Ultra, Rubin, and Rubin Ultra — extending confirmed supply well into 2027 and 2028. Deal also embeds Nvidia's Vera CPUs and NVLink Fusion with custom memory directly into AWS Trainium racks, tying Nvidia's interconnect architecture into Amazon's own custom-silicon stack. Also includes 100,000 GPUs earmarked for US government AI factories. Read
OpenAI + Anthropic Sign Joint Cyber-Defense Letter With 100+ Firms: OpenAI and Anthropic — usually rivals — jointly signed a Wednesday open letter calling for coordinated industry action on AI cyber defense. Signatories include Microsoft, Google, AWS, Broadcom, Citadel, Cognition, Hugging Face, Lovable, Arena, AMD, Visa, and Mastercard. First joint action between the two after months of public sparring on IPO timing, valuation, pricing, and market share. Positions the AI incumbents as coordinated on infrastructure security ahead of anticipated federal regulation. Read
EARNINGS UPDATE:
NVIDIA. Revenue $96.2B, up 106% and a beat; EPS $2.22 versus $2.09. Next-quarter guidance of $108B tops the $104B expected and would be its first $100B quarter, and excludes any China data-center sales. But gross margin, 75% for a second straight quarter, was guided down to 74% on memory and wafer costs, and NVIDIA announced a multi-year memory deal with SK hynix in the same release. Free cash flow fell to $21.3B from $48.6B. Shares rose about 9%.
Salesforce. Reported EPS $5.90 versus $3.27, but $2.53 a share came from marking up its Anthropic stake; on a core basis it was about $3.37 against $3.27. Revenue $11.35B, roughly in line. AI and data-cloud products drove the guidance raise. Shares jumped about 23%, their best day in years. The AI monetization proof the market had been waiting for.
CrowdStrike. EPS $0.31 versus $0.29; revenue $1.47B, up 21% and a beat, as AI-driven security demand accelerated. Shares jumped about 21%. Cybersecurity spending is not slowing.
Marvell. EPS $0.94 versus $0.93; revenue $2.74B, up 35% and a beat, with guidance ahead of consensus. Shares still fell about 10%. Custom AI silicon is growing fast, but delivery timing and margins now set the bar, not the top line.
Intuit. EPS $4.03 versus $3.58; revenue $4.35B, up 14% and a beat. But fiscal 2027 revenue guidance of $23.3–23.5B came in about $1.2B below the Street, and the EPS guide also fell short. Shares fell about 3%. A strong quarter undone by what management sees coming.
Synopsys. EPS $3.91 versus $3.67; revenue $2.48B, a beat, on chip-design demand tied to AI silicon. Shares rose about 13%. The design layer of the buildout is compounding.
Veeva Systems. EPS $2.35 versus $2.23; revenue $928M, up 12% and a beat, with strength across its life-sciences data platform. Shares jumped about 15%. Industry-specific software with proprietary data is being rewarded.
Workday. EPS $2.75 versus $2.61; revenue $2.65B, up 14% and a beat, on steady subscription growth. Shares rose about 2%, then added more. Quiet, dependable, and no longer assumed to be an AI casualty.
Autodesk. EPS $3.30 versus $3.12; revenue $2.05B, up 13% and a beat, and Autodesk raised its outlook. Shares rose about 6%. Design software joined the rally.
HP Inc. EPS $0.83 versus $0.66, including about $0.11 from tariff refunds; revenue $15.7B, up 9% and a beat. Memory costs are squeezing PC margins. Shares fell about 3%. The refund flattered a quarter the component market is squeezing.
Dollar General. EPS $2.48 versus $2.01, including about $0.25 from tariff refunds; revenue $11.3B, a beat, as trade-down shoppers kept coming. Shares rose about 3%. The value chain is still gaining customers.
PDD Holdings. EPS $2.85 versus $2.76, but revenue of $16.5B missed the $16.9B expected. Chinese consumer demand stayed soft, and subsidy competition continued. Shares slipped about 2%. China’s spending problem did not improve.
EARNINGS PREVIEW:
Date | Symbol | Name | Time |
1-Sep | MDT | Medtronic plc | Before Open |
1-Sep | PANW | Palo Alto Networks | After Close |
1-Sep | DELL | Dell Technologies | After Close |
1-Sep | CRDO | Credo Technology | After Close |
1-Sep | MDB | MongoDB Inc | After Close |
2-Sep | AVGO | Broadcom Inc | After Close |
2-Sep | SNOW | Snowflake Inc | After Close |
2-Sep | HPE | Hewlett Packard Enterprise | After Close |
2-Sep | NTAP | NetApp Inc | After Close |
3-Sep | ZS | Zscaler Inc | After Close |
3-Sep | GWRE | Guidewire Software | After Close |
3-Sep | LULU | Lululemon Athletica | After Close |
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This newsletter's content is for informational and educational purposes only and should not be considered trading or investment recommendations. All the opinions in this newsletter are personal and do not belong to any organization.
