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Matt Phillips & Luke Kawa2/11/26

AI infrastructure company Vertiv soars after Q4 earnings beat, 2026 outlook crushes expectations

AI infrastructure company Vertiv Holdings is spiking after posting sunny guidance and Q4 earnings that beat estimates.

For Q4, the major provider of power and cooling solutions for data centers reported:

Adjusted earnings per share of $1.36, vs. the $1.29 consensus expectation from analysts surveyed by FactSet.
Sales of $2.88 billion, in line with estimates.

For Q1, management said adjusted earnings would come in between $0.95 and $1.01; even the lower end of that range is higher than the $0.93 consensus estimate. Q1 guidance for net sales of $2.5 billion to $2.7 billion also outstripped Wall Street’s call for $2.54 billion.

For the full year, the lower end of Vertiv’s range of guidance for net sales ($13.25 billion to $13.75 billion) and adjusted earnings per share ($5.97 to $6.07) were both above the highest estimates from analysts polled by Bloomberg.

Vertiv has to be one of the more successful examples of SPAC-era financial engineering.

The company came out of the combination of GS Acquisition Holdings Corp., a so-called blank check company, and Vertiv Holdings — then owned by private equity company Platinum Equity — as part of a roughly $1.9 billion deal, including debt, first announced in late 2019.

The stock pretty much went nowhere for years after it listed as Vertiv on February 10, 2020. But as the AI data center boom began to roll, the shares exploded. Since the end of 2022, they’re up more than 1,300% and Vertiv has created roughly $70 billion in market value.

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Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

EPS of $1.69 vs. the $1.68 expected.
Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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