Markets
markets
Luke Kawa
8/15/25

Applied Materials tanks after ugly guidance

Applied Materials, the largest stock in the S&P 500 semiconductor equipment industry group, is down double digits after issuing fourth-quarter guidance that soundly disappointed investors.

For the three months ending October 31, management said net sales would come in between $6.2 billion and $7.2 billion, with adjusted diluted earnings per share from $1.91 to $2.31. Analysts had been looking for $7.32 billion on revenues and $2.38 for EPS, so the midpoint of those ranges are big misses.

Peers Lam Research and KLA Corp are also selling off in the wake of this news.

That gloomy outlook came in Applied Materials’ Q3 earnings report (that is, the three months ending July 27), where the results were solid: both revenues and adjusted diluted EPS were above expectations and hit records.

But “little went as planned” with the guidance, per Morgan Stanley analysts led by Shane Brett. While management attributed its less-than-stellar outlook to uncertainties surrounding its China business, Morgan Stanley says it’s a function of softness in its foundry logic business and the likelihood that its memory chip business “won’t quite reach a record year.”

The analysts conclude, “Two issues stand out: 1) The magnitude of the company’s reported quarterly beats has narrowed since AprQ 2024, as the company has set guides that leave little room for error, and 2) earnings call commentary has raised expectations to a level where there is no margin for error.”

On the conference call, CFO Brice Hill also offered detail on one near-term spot of bother for the company, saying, “We expected nearly $5 billion of gate-all-around [GAA] related purchases in 2025, and now we’re seeing that be lower, probably just over $4.5 billion.”

Charles Shi, an analyst at Needham, thinks that means the company has an Intel problem.

“Management refuses to call out specific GAA customers (because there are only four), but given the fact that leading-edge logic weakness was so far only called out by ASML (not covered), Tokyo Electron (8035-JP, not covered), and AMAT, and was not even mentioned by LRCX and KLAC, we suspect the shortfall is largely INTC driven, as among the top five WFE [wafer fab equipment] names, ASML, Tokyo Electron, and AMAT are the ones over-indexed to INTC,” he wrote.

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Why Apple usually falls on a new iPhone launch

You can only shock the world so many times, and a thinner phone with a better camera isn’t always going to cut it.

That, in short, is why Apple has tended to go down on days when it’s introduced a new iPhone to the world, as this great chart from Bespoke Investment Group shows:

Bespoke iPhone announcement Apple performance
Source: Bespoke Investment Group

On average, the tech giant falls 0.4% on the release date and is negative more than 70% of the time, perhaps a useful tidbit on this, the day of the iPhone 17 launch.

One more thing....

A potentially complicating factor to the aforementioned data is that Apple has often done quite well in the six months leading up to a new iPhone announcement, roughly 5 percentage points better than its typical six-month return, as shown above. That’s not the case this time, with Apple shares up about 5% over the past six months compared to a typical near 20% advance in the prelude to a new iPhone drop.

So it’s not like expectations about how big of a catalyst this can be for the company are sky-high and due for a sharp retrenchment, especially given Apple’s relatively lackluster progress in developing AI capabilities relative to its megacap tech peers. But a seemingly low bar to clear hasn’t necessarily been a boon for the company on the big day, either.

In any event, staring too closely at the minutiae of all this may be missing the forest for the trees.

“While this info may be helpful to traders, we doubt it’s something that long-term shareholders are too worried about given the huge compounding returns the stock has provided during the iPhone era,” Bespoke wrote.

Luke Kawa
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Negative US payroll revisions as bad as 2009 add to fears of consumer spending slowdown

Reconciling the spending versus jobs trends is the key question for US economic analysts.

Yellow traffic light against an office building
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Matt Phillips
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Planet Labs slips after big post-earnings gain

Smallish midcap satellite imagery and data company Planet Labs is giving back a chunk of the nearly 50% gain it racked up after posting earnings early Monday.

No tears, though: the shares, which seem to have a fairly robust retail following, are still up roughly 340% over the past 12 months.

Retail darling Planet Labs soars on earnings pop for second straight quarter

Retail darling Planet Labs soars on earnings pop for second straight quarter
markets
Luke Kawa
5h

CoreWeave soars as Microsoft’s deal with Nebius shows unrelenting demand for AI compute

CoreWeave is soaring as Microsoft’s $17.4 billion deal with Nebius shows the immense value and continued demand for all parts of the AI data center ecosystem.

One additional reason for CoreWeave’s jump may be that its pending acquisition of AI data center infrastructure company Core Scientific looks like a great deal compared to Microsoft’s renting of (more broad and advanced) AI data center capacity from Nebius.

CoreWeave’s all-stock deal to buy Core Scientific was initially valued at ~$9 billion, but with the subsequent decline in its shares, it’s worth about 40% less. And in purchasing Core Scientific, CoreWeave is saving $10 billion in what it would have paid the company to lease data center infrastructure over the next 12 years.

As it stands, Microsoft is getting about 300 megawatts in data center power capacity from Nebius, while Core Scientific boasts that its footprint is in excess of 1,300 megawatts. So, on the surface, it looks like an absolute steal for CoreWeave.

But again, this is not an apples-to-apples comparison; not all access to AI computing infrastructure is created equal.

There are differences in the type of AI infrastructure provided by the two: Nebius owns GPUs, while Core Scientific doesn’t, and what it provides in the software layer isn’t offered by Core Scientific as a stand-alone entity. This is the difference between the “full stack” approach (Nebius) and a “colocation” approach (Core Scientific).

That being said, CoreWeave’s acquisition of Core Scientific, once completed, will make the combined entity’s business model look more like Nebius’ model, which, as Microsoft just told us, is something that top hyperscalers are willing to pay a pretty penny for.

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