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Luke Kawa

AppLovin enjoys wave of price target hikes after posting better than expected quarterly results

AppLovin is rising in premarket trading, after the ad tech company yesterday reported top- and bottom-line results that modestly exceeded expectations and posted guidance for the current quarter that struck a similar chord.

Wall Street is reveling in the results with a boatload of price target hikes: UBS to $840 from $810, Piper Sandler to $800 from $740, Wedbush also to $800 from $745, Scotiabank to $750 from $575, Goldman Sachs to $720 from $630, BTIG to $705 from $693, and JPMorgan to $650 from $425.

The Q3 numbers:

  • Revenue: $1.41 billion (compared to an analyst consensus estimate of $1.34 billion and guidance for $1.33 billion)

  • Adjusted EBITDA: $1.16 billion (estimate: $1.09 billion, guidance: $1.08 billion)

Q4 guidance:

  • Revenue: $1.585 billion (estimate: $1.54 billion)

  • Adjusted EBITDA: $1.315 billion (estimate: $1.27 billion)

Shares are up more than 2% as of 9:45 a.m. ET.

After its Q2 report, CEO Adam Foroughi said that the real “fun” starts this quarter, as the company began to open its self-service ad portal on a referral basis on October 1. Bank of America analyst Omar Dessouky is especially bullish on this channel, expecting the company to book 4,000 large advertisers after the portal becomes fully available for onboards in the first half of 2026.

However, Q4 has not been fun for the ad tech company thus far. Shares are down about 15% since the end of September, with the bulk of the decline catalyzed by a report that the SEC is investigating its data collection practices, which was followed by another report indicating that multiple state regulators are also looking into the same matter.

“Legal risk lingers: AppLovin has denied short-seller claims about its Array product, which was later shut down amid possible probes by the SEC and some US state regulators,” Bloomberg Intelligence technology analyst Nathan Naidu wrote ahead of this report. “A related class-action suit filed in March could cost up to $750 million if it proceeds to trial.”

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Matt Phillips

Constellation tumbles after posting underwhelming guidance, failing to announce new data center deals

AI power trade Constellation Energy tumbled early Tuesday after issuing an investor day update the market seemed to find unsatisfactory.

The company introduced full-year 2026 operating earnings guidance of between $11 and $12 a share, the midpoint of which is shy of consensus expectations for $11.73, according to FactSet.

Over at Barron’s, Avi Salzman suggested that the company’s failure to unveil any new data center deals as part of the festivities is also adding the the sell-off. He wrote:

“Constellation CEO Joe Dominguez said at the event that he anticipates signing major new deals to provide power to tech companies, but doesn’t want to announce anything too early given the increasing spotlight on data centers today and some changing regulations.

‘I recognize that the last time we spoke, I indicated that we expected to be done with an important transaction by this call, but we’re not ready to announce anything today,’ Dominguez said.

‘There is clearly more scrutiny on data center development,’ he added.”

It’s clear that growing public pushback on data centers is becoming a limiting factor in the AI investment binge.

Constellation Stock Falls. Investors Didn’t Get What They Really Wanted.

Constellation Stock Falls. Investors Didn’t Get What They Really Wanted.

Over at Barron’s, Avi Salzman suggested that the company’s failure to unveil any new data center deals as part of the festivities is also adding the the sell-off. He wrote:

“Constellation CEO Joe Dominguez said at the event that he anticipates signing major new deals to provide power to tech companies, but doesn’t want to announce anything too early given the increasing spotlight on data centers today and some changing regulations.

‘I recognize that the last time we spoke, I indicated that we expected to be done with an important transaction by this call, but we’re not ready to announce anything today,’ Dominguez said.

‘There is clearly more scrutiny on data center development,’ he added.”

It’s clear that growing public pushback on data centers is becoming a limiting factor in the AI investment binge.

markets
Luke Kawa

CoreWeave jumps after closing unique financing deal to borrow $8.5 billion backed by its chips and Meta’s AI compute purchases

Shares of CoreWeave are spiking on Tuesday after the company announced that it closed an $8.5 billion loan backed by its chips and what Meta is willing to pay to use them.

Last September, the neocloud reached an agreement to provide $14.2 billion worth of AI compute to the social media giant.

CoreWeave said the loan agreement is “the first investment-grade rated financing secured by HPC infrastructure and an associated customer contract.”

These terms helped to reduce CoreWeave’s cost of borrowing: this facility includes a floating rate (SOFR plus 2.25%, or about 5.9%) as well as a fixed rate tranche (at 5.9%). Last July, CoreWeave raised fixed-rate debt with a coupon of 9%.

In a world where Oracle’s five-year credit default swap spreads recently exceeded their 2008 peak, it’s nice to get some positive debt-related news in the AI realm.

markets
Luke Kawa

Traders pay a premium for defense ETF that US Secretary of War Pete Hegseth’s broker reportedly attempted to buy before the war

The iShares Defense Industrials Active ETF is spiking this morning after the Financial Times reported that US Secretary of War Pete Hegseth’s broker attempted to make a multimillion-dollar purchase of the ETF ahead of US-Israeli attacks on Iran.

Per the FT, this purchase attempt did not go through after being flagged internally by BlackRock. (The chief Pentagon spokesperson has called this report false and fabricated.)

The actively managed ETF has actually performed poorly since the start of the war, down more than 12% since the end of February versus a less than 8% decline for the SPDR S&P 500 ETF.

But as of about 8:30 a.m. ET, it was up almost 4% in premarket trading. Even more curiously, as of 8:39 a.m. ET, only one of this actively managed ETF’s constituents (Rocket Lab) was up more than the ETF itself.

In other words, in what appears to be an amazing twist, traders are now seemingly willing to pay a premium for IDEF because it got a pseudo seal of approval from Pete Hegseth...

...except it didn’t, because the FT reports that the broker’s purchase order never went through after being flagged internally by BlackRock.

markets
J. Edward Moreno

Trump reportedly willing to end Iran war without reopening the Strait of Hormuz

President Trump told aides he’s willing to pull out of the war in Iran even if the Strait of Hormuz — through which roughly a fifth of global oil supply previously flowed — remains closed, The Wall Street Journal reported Tuesday morning.

Futures for the S&P 500 and Nasdaq 100 rose after the report. Over the past month, the closure of the strait to all but a minuscule amount of tanker traffic has sent oil prices skyrocketing and pushed major indexes down.

Analysts at Signum Global, an advisory firm, told clients in a note immediately following the news that they find it “extremely unlikely” that Trump would in fact end the war without at least trying to reopen the strait. Failing to reopen the strait, Signum noted, would negatively affect the US, as well as America’s Gulf allies, and would effectively cede the strait to US rivals such as China.

Rising energy prices may soon become a domestic political and economic liability as well, with US gasoline climbing to an average of $4 per gallon for the first time since August 2022.

Trump Tells Aides He’s Willing to End War Without Reopening Hormuz

Trump Tells Aides He’s Willing to End War Without Reopening Hormuz

Analysts at Signum Global, an advisory firm, told clients in a note immediately following the news that they find it “extremely unlikely” that Trump would in fact end the war without at least trying to reopen the strait. Failing to reopen the strait, Signum noted, would negatively affect the US, as well as America’s Gulf allies, and would effectively cede the strait to US rivals such as China.

Rising energy prices may soon become a domestic political and economic liability as well, with US gasoline climbing to an average of $4 per gallon for the first time since August 2022.

Luke Kawa
2h
Marvell spikes after Nvidia invests $2 billion in the custom chip maker

And YOU get $2 billion and YOU get $2 billion.

Jensen Huang of Nvidia

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