markets

8/6/25

Arista Networks soars after crushing earnings, boosting guidance, and getting Wall Street price target hikes

Cloud networking company and data center supplier Arista Networks is leading all S&P 500 stocks in premarket trading, up double digits after reporting knockout second-quarter results and boosting its full-year forecast.

Arista reported revenues of $2.2 billion, $100 million above what analysts anticipated, with adjusted earnings per share of $0.73, well north of the $0.65 estimate.

Its Q3 guidance for sales was modestly higher than expected at $2.25 billion, and the company raised annual revenue expectations to $8.75 billion from $8.2 billion.

“We’re looking to achieve $10 billion in revenue in 2026, two years ahead of schedule,” CEO Jayshree Ullal added. “I promised you guys that back in the last Analyst Day in 2028. So there you go. That’s the headline.”

Its outlook for near-term profitability was also impressive. Management called for an adjusted operating margin of about 47% in the current quarter, while the Street had been thinking that number would come in around 44.3%.

“The uptick in AI-infrastructure spending plans by key customers (Meta, Microsoft, Oracle) is an encouraging sign that it could deliver $900 million-$1 billion in AI back-end networking sales this year,” Bloomberg Intelligence senior industry analyst Woo Jin Ho wrote. “The company’s work with other AI accelerators could mean more AI sales.”

A host of analysts are hiking their price targets on the stock in the wake of the results, with UBS going to $155 from $115, KeyBanc up to $145 from $115, Melius Research raising to $160 from $137, and Piper Sandler up to $143 from $89, among others.

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19m

Pokémon trading cards skyrocketing in value and GameStop’s collectibles business taking off are two sides of the same coin

The Wall Street Journal’s fantastic piece “The Hot Investment With a 3,000% Return? Pokémon Cards” includes this vignette:

...the cards caught fire among amateur investors during the pandemic. As some investors banded together to spark the GameStop meme stock mania, a more fringe group of traders, also stuck at home and armed with cash from government stimulus, began scooping up Pokémon cards.

And the connection between Pokémon cards and the video game retailer is in fact even closer than that:

GameStop’s collectibles business played a big role in why it smashed Q2 revenue expectations! Sales in this segment exceeded $227 million, while the two analysts that provided forecasts had an average estimate of $170.4 million. Fiscal year-to-date, sales of collectibles make up 25.8% of its revenues, up from 16.4% at this time last year.

The company significantly expanded its footprint in the Pokémon trading card world in 2024 by launching in-store buying and selling of individual cards, and introduced “Power Packs,” which include one card graded at 8 or above by the Professional Sports Authenticator, in its most recent quarter.

As a 35-year-old man who still plays Pokémon (Nuzlockes are peak math + strategy entertainment!), thinks the release of Pokémon Go marked the peak for Western Civilization, and considers Christmas 1998 to be the second-best day of his life because it’s when he got Pokémon Red, I personally view the outperformance of Pokémon cards as being indicative of the power of nostalgia coupled with a drop-off in child-rearing by millennials that leaves more room for discretionary purchases/investments.

And the nostalgia business seems like a great place to be.

The Hot Investment With a 3,000% Return? Pokémon Cards

The Hot Investment With a 3,000% Return? Pokémon Cards

...the cards caught fire among amateur investors during the pandemic. As some investors banded together to spark the GameStop meme stock mania, a more fringe group of traders, also stuck at home and armed with cash from government stimulus, began scooping up Pokémon cards.

And the connection between Pokémon cards and the video game retailer is in fact even closer than that:

GameStop’s collectibles business played a big role in why it smashed Q2 revenue expectations! Sales in this segment exceeded $227 million, while the two analysts that provided forecasts had an average estimate of $170.4 million. Fiscal year-to-date, sales of collectibles make up 25.8% of its revenues, up from 16.4% at this time last year.

The company significantly expanded its footprint in the Pokémon trading card world in 2024 by launching in-store buying and selling of individual cards, and introduced “Power Packs,” which include one card graded at 8 or above by the Professional Sports Authenticator, in its most recent quarter.

As a 35-year-old man who still plays Pokémon (Nuzlockes are peak math + strategy entertainment!), thinks the release of Pokémon Go marked the peak for Western Civilization, and considers Christmas 1998 to be the second-best day of his life because it’s when he got Pokémon Red, I personally view the outperformance of Pokémon cards as being indicative of the power of nostalgia coupled with a drop-off in child-rearing by millennials that leaves more room for discretionary purchases/investments.

And the nostalgia business seems like a great place to be.

markets

1h

Oracle’s hyperscaler competitors lag after the cloud computing giant’s blowout revenue forecast

Oracle’s forecast for mind-blowing revenue growth through its fiscal 2030 is lifting most AI-adjacent stocks today.

However, the ones being left behind in this rising tide, falling or lagging well behind Morgan Stanley’s basket of AI tech beneficiaries (up 5.8% as of 12:22 p.m. ET), are its fellow hyperscalers.

Microsoft and Alphabet, which also have massive cloud divisions, are positive — but only just. Amazon, whose cloud revenue growth was deemed a disappointment relative to peers this quarter, is down 2.8%. Meta is down 1.2%.

This suggests, at the very least, that traders aren’t mapping Oracle’s outlook for Nvidia-like revenue growth onto the other major cloud players or one of their biggest customers.

markets

3h

Chewy sinks despite topping Q2 estimates, erasing much of its recent rally

Chewy dropped nearly 16% Wednesday, despite the online pet retailer fetching stronger-than-expected Q2 results and hiking its sales guidance for the year.

The move erased much of a recent blistering run-up for the stock, which had gained 23% off its recent August 5 low through Tuesday.

The company delivered adjusted earnings per share of $0.33 for the quarter, in line with analysts’ consensus forecast of $0.33. Sales jumped nearly 8.6% to $3.1 billion, also above forecasts, with sales to the company’s Autoship customers making up 83% of the total.

Looking ahead: Chewy boosted its full-year sales estimates to $12.5 billion to $12.6 billion, up from $12.3 billion to $12.45 billion. Wall Street was expecting sales of $12.49 billion for the year.

For the current quarter, Chewy guided adjusted EPS to $0.28 to $0.33, compared with the Street’s $0.30 estimate.

Chewy ended the quarter with nearly 21 million active customers, up 4.5% from last year. CEO Sumit Singh said the quarter showed “Chewy’s differentiated value proposition,” citing both customer growth and wallet share gains.

Still, headline net income fell to $62 million, with net margins slipping under cost pressures tied to share-based compensation.

Chewy shares were up 24% year to date going into the print.

Whitney Houston

Oracle is on pace for its best day in the stock market since 1992

Oracle shareholders are singing “I Will Always Love You” to the stock.

markets

4h

Joby takes off as Uber says it’ll add Blade helicopter trips to its app

Shares of air taxi maker Joby Aviation are up more than 7% in premarket trading Wednesday, following news that Uber will add the company’s Blade helicopter and seaplane services to its app as soon as next year.

Joby CEO JoeBen Bevirt said in a statement that the fresh partnership “will lay the foundation for the introduction of our quiet, zero-emissions aircraft in the years ahead.” A Joby air taxi completed its first test flight between US airports last month. The company has said it’s 70% complete with the fourth stage in the five-stage FAA certification process.

Uber, which was flat on the announcement, sold its air taxi business to Joby in 2020.

Joby announced its $125 million acquisition of Blade (minus the company’s primary organ transplant business) in early August. More than 50,000 passengers used Blade services last year, according to Joby’s press release.

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