From Wall Street to Main Street
Highlights from the past week
Market / Macro Economic Summary Markets took a pause this past week despite having the biggest AI company in the world, Nvidia, provide solid earnings. It was a much anticipated report as I thought it would be crucial to the idea that markets deserve to be at the levels that they are trading and should go higher. On the week, the Dow Jones and Nasdaq were down a mere .2% and the S&P was almost breakeven as it only list .1%. On the economic front, despite a slight rise in the core PCE to 2.9% (the Fed's preferred inflation gauge) their attention seems to remain focused on the labor market. The strong U.S. economy, confirmed by revised second-quarter GDP data showing a 3.3% annualized growth, suggests that the historical trend of Fed rate cuts being supportive for stocks outside of a recession may continue. The likelihood of a September Federal Reserve rate cut is very high and this should bode well for stocks. Company Specific / Micro Economic SummaryNvidia (NVDA) Shares fell roughly 2% despite the company beating expectations on the top and bottom lines and providing strong guidance. This decline was attributed to a few factors, including data center sales that slightly missed lofty estimates and a sales outlook that, while strong, failed to meet the market's extremely high expectations. This is mainly due to the strong year to date stock price performance leading into this report. On the quarter, Nvidia reported an adjusted earnings per share (EPS) of $1.05, surpassing the consensus analyst estimate of $1.01. The company's revenue also came in at a record-breaking $46.7 billion, beating the consensus estimate of around $46.1 billion. This robust performance was largely driven by the Data Center segment, which recorded $41.1 billion in revenue, a 56% increase year-over-year. Looking forward, management provided a strong outlook for the third quarter, projecting revenue of approximately $54 billion, plus or minus 2%. This guidance was ahead of the analyst consensus of $53.1 billion. The company's CFO, Colette Kress, noted that this guidance does not include any potential sales of H20 chips to China due to ongoing geopolitical uncertainties and export restrictions. Kress also stated that if the geopolitical environment were to allow it, the company could ship between $2 billion and $5 billion worth of H20 chips this quarter. The company remains optimistic about the long-term demand for its AI infrastructure, citing a multi-year growth runway. The company's board also approved an additional $60 billion in share buybacks, demonstrating a commitment to returning capital to shareholders. From my perspective, this was another great quarter and I remain firm that the company still has great days ahead of it. Mongo DB (MDB) Shares surged more than 30% on a single day as the cloud-based database company reported a top and bottom line beat on the quarter. The company significantly outperformed analyst expectations for its second quarter of fiscal year 2026, reporting an adjusted earnings per share (EPS) of $1.00, well above the consensus estimate of $0.66. Revenue also came in strong at $591.4 million, beating the $554 million estimate. The impressive results were largely driven by the company's cloud database service, MongoDB Atlas, which saw its revenue accelerate to 29% growth year-over-year and now accounts for 74% of total revenue. Management commentary highlighted a strong performance and meaningful margin outperformance, with CEO Dev Ittycheria noting that the results show customers are choosing MongoDB for their application modernization and AI needs. The company's confidence was reflected in its raised full-year fiscal 2026 guidance, with revenue now expected to be between $2.34 billion and $2.36 billion and adjusted EPS in the range of $3.64 to $3.73, both of which were a substantial increase from previous forecasts and ahead of analyst expectations. Snowflake (SNOW) Snowflake's latest earnings report was well-received by the market, with the stock surging more than 10% following the announcement. The company beat analyst expectations on both the top and bottom lines for the second quarter of fiscal year 2026, reporting an adjusted EPS of $0.35, well above the consensus of $0.27, and revenues of $1.14 billion, which exceeded the $1.09 billion estimate. This strong performance was driven by a 32% year-over-year increase in product revenue, which is a key metric for the company. Management commentary emphasized Snowflake's strong position in the AI data platform space, with CEO Sridhar Ramaswamy highlighting that AI influenced nearly half of new customer wins in the quarter. The company also raised its full-year fiscal 2026 product revenue guidance to $4.395 billion, up from a previous outlook of $4.325 billion, and provided a strong outlook for the third quarter with product revenue guidance of $1.125 billion to $1.130 billion, both of which were in line with or slightly ahead of analyst expectations. This positive guidance and commentary reinforced investor confidence in the company's ability to capitalize on the growing demand for data and AI-driven solutions. Crowdstrike (CRWD) Shares also jumped nearly 5% as the company exceeded analyst expectations on both the top and bottom lines, reporting an adjusted earnings per share (EPS) of $0.93 against an estimate of $0.83, and revenues of $1.17 billion, which beat the consensus by 1.73%. Management commentary highlighted an "exceptional" quarter, with reacceleration ahead of their expectations. CEO George Kurtz pointed to record net new Annual Recurring Revenue (ARR) of $221 million and strong momentum from its "Falcon Flex" platform, which is helping them gain a leading position in cybersecurity consolidation. For the upcoming third quarter, CrowdStrike provided guidance for revenues between $1.208 billion and $1.218 billion, and a non-GAAP diluted EPS of $0.93 to $0.95, both of which were in line with or slightly above analyst expectations, reinforcing confidence in the company's continued growth and strong execution. Parting Thoughts We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week! Regards, Erick J. Palacios, MBA Brent Buckmaster Wealth/Fiduciary Advisor Wealth/Fiduciary Advisor