A record week for retail buying

Great quarter, y’all (unless you are a bond, in which case, please seek medical treatment).

S&P 500 and Nasdaq 100 futures are rallying after the August PCE inflation report showed core inflation came in below expectations, up just 0.2% month-on-month. This release included revisions to past data that had the effect of dampening recent readings of price pressures compared with the old methodology.

On Tuesday, Robinhood traders went bananas for Fair Isaac Corp. as the stock suffered its biggest-ever decline after FHFA director Bill Pulte said the agency would move forward with one pricing grid, with VantageScore joining Freddie and Fannie.

The buys in those names and others spurred net five-day single stock purchases by Robinhood traders to their highest level ever.

Over this span, Robinhood traders stepped up to buy during last Wednesday’s and this Monday’s stock selloffs in particular, though neither session saw net purchases surpass their June 12 all-time high (that is, when SpaceX IPO’d).

As a subsidiary of Robinhood, Sherwood Media is restricted from writing about any company in which Robinhood is or was a selling group member of the IPO during the regulatory "quiet period" for that company.

Proving this time is different takes time

The neverending earnings season continues with Micron’s fiscal Q4 results after the close today — less than two weeks before JPMorgan Chase unofficially gets the ball rolling on the next reporting period.

Wall Street’s looking for the memory giant to report adjusted EPS of $31.83 on sales of $51.5 billion in this release, with those figures swelling to $36.02 and $56.8 billion, respectively, for the current quarter (its fiscal Q1 2027).

As for potential pause points amid the knee-jerk reaction to earnings, let’s look at open interest for Friday’s expiry. The stock is coming into Wednesday’s session trading about midway a fairly large call wall at $1100 and a smaller pile of puts at $1000.

JPMorgan analyst Harlan Sur thinks management will affirm that supply-demand conditions in this new fiscal year will be even tighter than the last, which “supports an upward bias to pricing (relative to current levels)” as well as margin strength.

“The universal belief from our industry contacts is that supply demand becomes tighter in both 2027 and 2028 than currently,” agreed Morgan Stanley’s Joseph Moore.

For both Micron and other memory stocks, however, the investment debate is about how long the cycle lasts, not if growth is intensifying. In fact, the two S&P 500 stocks with the biggest loss of sales revision momentum from Q2 to Q3 are Sandisk and Micron.

A double digit quarterly boost to expected 12-month forward sales is nothing to sneeze at…but it’s quite a drop-off compared to the prior parabolic revenue revisions. So while the AI bottleneck momo breakdown at the start of Q3 was more of a technical rubber band snapping moment than anything else, it did coincide with a perceived turn in fundamental momentum.

“Memory stocks have continued to derate despite rising strategic customer agreement/long-term pricing agreement adoption, suggesting investors are more concerned about the memory cycle peaking, potentially as incremental capacity arrives in 2H27E,” writes BofA analyst Vivek Arya. “Consistent with this view, consensus expects memory revenue growth to trail compute peers in both CY27E and CY28E.”

Higher visibility into sales isn’t stopping some analysts from worrying about cyclicality rearing its ugly head. Proving that this time is different could take…time.

“We believe the investment opportunity is more compelling in fabless chip stocks than in memory stocks,” wrote Goldman Sachs analyst Ryan Hammond. “Memory stock prices imply earnings will decline in coming years, but the degree of pessimism does not appear particularly extreme relative to past cycles.”

All that disappearing free cash flow from the hyperscalers? That’s been going into the pockets of Micron and other AI hardware companies. Management’s ability to balance a commitment to growth to support this demand along with shareholder returns will also be in focus this quarter.

Every earnings preview we could get our hands on flagged how a big buyback could be on tap after December 9, when restrictions agreed to as part of CHIPS Act awards dissipate.

I think we need a re-reinvention

Accenture releases its quarterly results tomorrow ahead of the open. The company is outside the top 100 S&P 500 firms by market capitalization, but is the third-largest employer in the benchmark index.

The professional services giant trails only Amazon and Walmart, which have the highest trailing 12-month revenues in the esteemed group, while Accenture ranks outside the top 50.

Put the two together, and, when it comes to revenues per employee, Accenture is among the worst performers in the S&P 500:

Amid the emergence of AI, the company has stylized itself as being in the business of helping businesses “reinvent” themselves — and is also in that process itself because of how the emergent technology has weighed on the consulting industry. That effort seems like it could be going better: management reported that new bookings fell year-on-year in its Q3 earnings report back in June, contributing to a record one-day decline in the stock.

I don’t know, all this seems a bit like getting advice from Joey Chestnut on how to eat in moderation while he’s suffering from gastrointestinal distress.

On the other hand, thoughts like this from someone who only mildly follows the name could be a sign of how much sentiment is in the toilet.