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Weekly Newsletter
🤖 AI Buildout Is Booked Years Out
🏭 Best Manufacturing PMI Since May 2022
📊 Earnings Season Tracker
💡 Key Takeaways From This Week’s Earnings
QUOTE OF THE WEEK:
“An intern who just spent $200,000 in a week, burning through some Claude development. Right? So, I think that is a real concern, particularly for CFOs: how are we budgeting for these expenses? It used to be that everything was seat-based, making it easy to manage and budget based on headcount. Now that's evolving. There's a consumption component to it. And so I think there are lots of concerns around, do we have enough knowledge, and can we control so we can effectively budget and take advantage of what we want to, but not overspend.” - Jim Caci, CEO - AvePoint
KEY US ECONOMIC EVENTS NEXT WEEK:
MARKET CLOSE:
WEEKLY MARKET WRAP:
Good Afternoon. Great week for the market, especially tech stocks, as the Nasdaq posted a 5.19% gain. Strong results and favorable macro data powered all indices to record strong gains. The jobs report was weaker than expected, alleviating fears of a rate hike. As discussed at the start of earnings season, the prints are in line with expectations, or rather better than the initial estimates.
Below are the key things to note this week:AI build-out is booked years out:
The clearest evidence from Q2 is how far out the AI buildout is now booked. Amazon says its AI capacity is contracted on at least 5-year terms; Caterpillar's record $72 billion order backlog includes power customers placing orders as far out as 2030; Micron's high-bandwidth memory is sold out, with buyers locking 3- to 5-year supply agreements; and Arista has components secured with visibility well into 2027.
Microsoft and Alphabet sit beneath the timeline rather than on it for a reason: their disclosed figures are dollar backlogs — $627 billion and $514 billion in contracted-but-undelivered revenue — spread across thousands of contracts of varying lengths, with no stated end-year to plot. Different disclosures, same signal. Demand is not being ordered quarter to quarter; it is being reserved years in advance. That shifts the central risk of the trade from whether demand shows up to whether the grid, the fabs, and the supply chain can deliver on schedule.
Manufacturing Expansion:American manufacturing just posted its strongest month in over four years. The ISM Manufacturing PMI registered 55.6 in July, up 2.3 points and the highest reading since May 2022, marking a seventh straight month of expansion after ten months of contraction.
The internals were stronger than the headline: production hit 58.5, its best in almost five years; employment crossed into expansion for the first time in 33 months; and 15 of 18 industries grew. The driver is visible in the survey itself — respondents described the AI data-center buildout reaching "full procurement and manufacturing ramp-up," with electronic components and memory now in short supply for over a year. The soft spot is price: the Prices Index sits at 71.1 for steel, tariffs, and Middle East-linked energy costs, suggesting the factory recovery and the inflation problem are, for now, one and the same.For the week:
CNN's Fear & Greed Index now stands at 64 (Greed) out of 100, up 22 points from last week. Details here
The top five trending stocks on Reddit are Hertz, SpaceX, SPY, Micron, and Sandisk. 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) as of Feb 6th is zero.
Here is a summary of this week’s key economic releases:
Target Rate Probabilities for Sept 16th FOMC Meeting:
CURATED INSIGHTS & ANALYSIS:
Earnings Season Tracker:
Why our numbers differ from some other sources:Different Question: FactSet and LSEG measure aggregate index earnings. Our metric measures the median reported company—how the typical constituent is growing.
Mega-Cap Distortion: FactSet reports 50.4% S&P 500 earnings growth, but that falls to 32.0% after excluding Alphabet and Amazon’s investment-related gains. Our median measure is 13.9%.
Equal Company Influence: Every reporter contributes one observation to our earnings median. A large one-off gain cannot dominate the result.
Matched Reporting Pace: Revenue growth and beat rates use only reported companies. Comparisons with Q1 are made at the same percentage of the season completed.
Minor Differences Are Expected: Reporting cut-offs, fiscal-quarter mapping, and consensus feeds vary across FMP, FactSet, and LSEG.
The Takeaway: Public aggregates show how much the index earned; our figures show how broadly growth is distributed. The Russell 3000 result represents broader-market breadth—not a pure small-cap measure.
Key takeaways from this week’s earnings:
The supercycle’s binding constraint is now physical, not financial
The bottleneck has moved from capital to power and components. Caterpillar posted its first $20 billion quarter, power generation up 72%, on a $72 billion backlog into 2030; Arista’s new “scale-across” business exists because hyperscalers “cannot get the power in one location.” Arista also tripled purchase commitments to $9.7 billion and said the component shortage will not clear until 2028. Electrons, memory, and grid hardware — not funding — now set the pace.
Capital has stopped funding AI on faith and started pricing the return
AMD doubled data-center revenue, raised guidance, and still fell about 9%; Palantir’s 30% pop round-tripped within the week. On its own call, Palantir conceded “the market has created far more intelligence than it has converted into value.” After a year of paying for the buildout on promise, investors are discriminating on realized return for the first time — the earliest sign of discipline entering the cycle.
The AI threat to software is no longer theoretical
Palantir grew 93% while arguing the per-token model is breaking enterprise budgets, and that owning proprietary data and model weights — not renting intelligence — is the emerging moat. Datadog beat and fell 17% the same week on the mirror-image fear: AI agents shrinking the need for software seats. Value is migrating from selling tools and tokens toward controlling the data underlying them, and software multiples are repricing accordingly.
The consumer is splitting in two
The low end is retrenching while the top keeps spending. McDonald’s returned to U.S. same-store growth only by leaning on value promotions, with traffic still soft; Disney’s Experiences held up, and obesity demand rose 60% among the insured. Discretionary strength is concentrating at the high end, and the value-seeking consumer — the economy’s marginal dollar — is pulling back.
The obesity trade is repricing from a growth story to a pricing-and-supply story
Lilly’s volume rose 60%, up 113% abroad, while realized prices fell 13%; Novo won the pill race with 5 million prescriptions, yet fell as injectable revenue dropped 22% and a pipeline trial failed. The “most favored nation” framework is a trading price for access. The premium is shifting from who grows fastest to who can manufacture at scale and refill the pipeline.
Reported earnings are decoupling from operating reality across sectors
Acquisition and R&D charges pushed Merck and Gilead to GAAP losses and cost Lilly $3.03 a share; a quarter earlier, equity stake marks on SpaceX and Anthropic inflated EPS at Alphabet, Microsoft, and Amazon. Whether from serial M&A or venture portfolios, GAAP earnings increasingly need an adjustment to read — quietly eroding the market’s valuation anchors.
FRONT PAGES:
Amazon Hits $3T on $496B AWS Backlog: Amazon crossed $3T market cap Monday — 5th company to reach the milestone, taking just two years from $2T. AWS revenue hit $42.2B in Q2, +37% YoY (fastest in 18 quarters). Contracted backlog reached $496B (+$132B QoQ). Jassy raised the 2026 capex to $220B and said supply won't meet demand through 2028. Amazon separately marked up its Anthropic stake by $53B in Q2 — market validation of the ~$1T private valuation. Read
Musk Names Nvidia SpaceX's "Exclusive" AI Partner: On SpaceX's first post-IPO earnings call Tuesday, Musk said: "We've decided to build exclusively on Nvidia because we think the Vera Rubin architecture is the best architecture." NVIDIA closed the week +10% on the exclusivity win. Reverses July's narrative that AMD (via the Anthropic $5B deal) and OpenAI (via the Broadcom Jalapeño chip) were cutting Nvidia out of the hyperscaler race. Read
AstraZeneca-Bristol Myers Discuss $400B Megadeal: FT reported Sunday that AstraZeneca and Bristol Myers Squibb held merger talks over a potential $400B tie-up — the largest pharma deal ever if consummated, and would rank as the 4th most valuable drugmaker globally by market cap. Analysts called it "surprising" for AstraZeneca, given its best-in-class pipeline; heavy antitrust scrutiny expected on overlapping oncology franchises (both market anti-CTLA-4 agents). Neither confirmed. Read
SpaceX Lockup Expires; 911.5M Shares Unlock: First staggered lockup expired Thursday, unlocking 911.5M shares (~$100B at current prices, ~7% of shares outstanding) and lifting the total float from 639M to 1.55B. Stock is down ~50% from the June peak and 20% below the $135 IPO price. Short interest hit 36% of float, with shorts sitting on ~$9B in paper profits. Another 319M shares unlock Aug 20; ~700M in September; ~700M in October. Musk's ~6B-share stake is locked until June 2027. Read
Aschenbrenner Restarts With $400M Private Bet: Situational Awareness made a $400M investment Tuesday in an undisclosed private company — the fund's first significant deal since its near-collapse last week, when fund AUM crashed from $45B to ~$10B. Adds to a $100M stake taken the prior month. Aschenbrenner's Friday investor letter pledged to overhaul risk management (fund used up to 400% leverage). Backers include Neil Mehta, Feroz Dewan, Dan Sundheim, and the Collison brothers. Read
EARNINGS UPDATE:
Eli Lilly. Revenue $23.0B, up 48% and a beat; non-GAAP EPS $8.38 versus $6.40, even after $3.03 a share of acquisition charges. Volume rose 60%, led by Mounjaro and Zepbound, as realized prices fell 13%. Lilly raised full-year guidance and now holds 60.9% of the U.S. obesity-diabetes market. Shares rose about 5%. Widening the lead.
Advanced Micro Devices. Record revenue $11.5B, up 50% and a beat; non-GAAP EPS $1.66 versus $1.62. Data-center revenue more than doubled to $6.7B, and AMD guided next quarter to about $13B, up 41%. Yet shares fell about 9%. A double beat and a raise, sold anyway on the bar, it now has to clear.
Caterpillar. Record revenue $20.5B, up 24% and its first $20B quarter; adjusted EPS $8.17, up 73% and well past $6.22. Power-generation sales rose 72% on data-center demand, lifting the backlog to a record $72B, with orders into 2030. Caterpillar raised its full-year outlook. Shares rose about 6%. The AI buildout, booked at an industrial.
Merck. Revenue $16.6B, a beat; Merck posted a GAAP loss of $0.13 on acquisition and in-process-R&D charges, ahead of the expected larger loss, with adjusted earnings positive. Keytruda and animal health carried the quarter. Shares were little changed. The charge masked an operating beat.
Palantir. Revenue $1.94B, up roughly 48% and a beat; adjusted EPS $0.41 versus $0.34. U.S. commercial revenue accelerated again, and Palantir raised full-year guidance. Shares jumped about 30% on the print, then surrendered most of the gain within the week. Extraordinary growth against an extraordinary multiple.
Arista Networks. EPS $1.02 versus $0.89; revenue $3.04B, a beat, on AI-driven data-center switching demand, and Arista lifted its outlook. Shares rose about 4%. The networking layer of the AI buildout keeps compounding.
Novo Nordisk. Adjusted operating profit rose 11%, well past consensus, and its oral Wegovy pill reached 5 million U.S. prescriptions, the strongest GLP-1 launch ever. But U.S. injectable Wegovy revenue fell 22% on pricing, and a key heart-disease trial failed. Shares fell about 6%. Winning the pill race, losing the tape.
Amgen. EPS $6.29 versus $5.62; revenue $10.1B, a beat, on strength in Repatha, Tepezza, and its biosimilars, and Amgen raised full-year guidance. Shares rose about 5%. A clean beat in a quarter full of asterisks.
McDonald's. EPS $3.38 versus $3.32; revenue $7.1B, a shade light. U.S. same-store sales returned to growth on the back of value promotions, though traffic remained soft. Shares rose about 1%. Pricing and value are key when doing the work, while the low-end consumer stays cautious.
Walt Disney. EPS $2.06 versus $1.86; revenue $25.2B, roughly in line. Streaming profitability improved and Experiences held up, but revenue landed a touch light. Shares rose about 3%. The turnaround keeps grinding forward.
Gilead Sciences. Revenue $7.8B, a beat; Gilead posted a GAAP loss of $6.75 on a large in-process-R&D charge, ahead of the expected loss, with adjusted earnings positive. HIV and its long-acting drug Yeztugo drove growth. Shares fell about 3%. Strong operations, buried under a write-off.
Shopify. EPS $0.42 versus $0.40; revenue $3.54B, up and a beat, on accelerating merchant sales and payments growth, and Shopify guided higher. Shares jumped about 17%. E-commerce is back in favor.
EARNINGS PREVIEW:
Date | Symbol | Name | Time |
10-Aug | ASTS | AST SpaceMobile | After Close |
11-Aug | SE | Sea Limited | Before Open |
11-Aug | CAH | Cardinal Health | Before Open |
11-Aug | TME | Tencent Music | Before Open |
11-Aug | ONON | On Holding AG | Before Open |
11-Aug | CRWV | CoreWeave Inc | After Close |
11-Aug | SMCI | Super Micro Computer | After Close |
12-Aug | CSCO | Cisco Systems | After Close |
12-Aug | COHR | Coherent Corp | After Close |
13-Aug | JD | JD.com Inc | Before Open |
13-Aug | AMAT | Applied Materials | After Close |
13-Aug | NU | Nu Holdings | After Close |
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