Hundreds of advocates for marijuana legalization rally and smoke pot outside the White House.

(Getty Images)

It seems like the US weed industry finally got what it wanted. Why did pot stocks plunge?

The DOJ’s order to reclassify marijuana could be a boon for US cannabis companies. But the devil is in the details.

The Department of Justice issued a rule on Thursday reclassifying marijuana as a less dangerous drug, paving the way for US cannabis companies to finally be taxed like normal business and — for some of them — get a whiff of profit for the first time.

Pot stocks tanked.

The AdvisorShares Pure US Cannabis ETF, the benchmark ETF for US cannabis companies, dropped 17%. Canadian cannabis companies Canopy Growth, Tilray, and SNDL Inc. fell as well. The stocks lost much of the gains they had made since Wednesday, when Axios reported that the move was imminent.

“This looks like a ‘sell the news’ reaction,” said Frederico Gomes, director of institutional research in life sciences at ATB Capital Markets.

The same thing happened in December when President Trump signed an executive order directing regulators to reclassify marijuana as a less dangerous drug. Pot stocks rose as the rumors began to circle around and then dropped when the news actually happened.

Cannabis buy rumor sell news — (Sherwood News)

But for publicly traded weed companies, the rule itself also left much to be desired.

The rule immediately reclassifies cannabis only from FDA-approved and state-licensed medical cannabis companies. Companies that sell cannabis for recreational use (most publicly traded pot companies) have to wait for an expedited hearing process, which is set to start in late June and conclude by mid-July.

“While that was somewhat unexpected, we view it as a net positive,” Gomes said. “It allows a meaningful part of the market to move forward immediately, avoids delays that could have pushed the full process into 2027, and reduces longer-term litigation risk.”

Marc Hauser, a cannabis industry adviser and attorney, said in his newsletter, Cannabis Musings, that he credits the federal government “for threading the needle, but the outcome ends up being a structural cacophony that will surely benefit lawyers and accountants.”

One of the biggest challenges for US cannabis companies is an unfriendly tax code. Under the current regulatory scheme, cannabis companies can generally expense only the cost of acquiring their product, but virtually no other business expenses. The result is that cannabis companies are paying an effective tax rate of upward of 50%, with some companies reporting paying more taxes than they earn in profit.

Medical cannabis providers immediately covered by the rule will get to claim normal business expenses, and the DOJ recommends the Treasury Department give them retroactive relief from taxes paid under the previous rules. But many medical cannabis providers also sell adult-use cannabis, making it unclear whether those dual-license manufacturers will benefit from the change without spinning off their medical units.

Also, to comply with the 1961 Single Convention on Narcotic Drugs, an international treaty that requires “a government agency serve as the exclusive purchaser of cannabis production,” the DOJ established a bizarre work-around where the Drug Enforcement Agency buys and resells pot to manufacturers. The DEA becoming a drug dealer for US cannabis firms opens a whole other can of worms, Hauser said.

“The lawyers and accountants are basically being granted a federally-sponsored pension plan by all of this,” he said.

The rule also does not immediately change the industry’s challenges when it comes to banking or lending. Adam Stettner, CEO of FundCanna, a cannabis industry lender, said the rule is a step in the right direction and signals to institutional capital “that parts of the cannabis market are becoming more standardized and financeable.”

“At the same time, the industry’s core challenges persist,” he said. “Operators will continue to face constrained access to capital, fragmented regulatory regimes, and ongoing cash flow pressure across the supply chain.”

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Luke Kawa22m

The chip rally is getting so intense, even Qualcomm gets to surge

If you’re a good host, even the last person who shows up to the party gets to have a good time.

On that note, beleaguered Qualcomm — the worst-performing member of the Philadelphia Semiconductor Index this year — is staging a furious rally on Friday, with the industry poised to deliver its 18th consecutive session of gains.

Intel’s earnings are buoying the semi space broadly on Friday, and Qualcomm isn’t being left out. Options activity is also elevated and tilted toward the bull side. As of 9:56 a.m. ET, more than 48,000 calls have changed hands, roughly double its full-day average for the past 20 sessions. Its put/call ratio of 0.17 is well below the 20-day average of 0.44.

The San Diego-based firm has been negative in 2026 since the seventh session of the year, and even with today’s advance, remains mired in the red year to date. The stock cratered after reporting Q1 earnings in early February because its poor Q2 guidance seemingly confirmed fears that smartphone sales would come under pressure from rising memory chip prices and limited availability. Smartphone chips are still Qualcomm’s primary business, accounting for nearly two-thirds of revenues in its most recent quarter, and memory chip sellers appear to be incentivized to meet demand from major AI customers first.

Qualcomm reports Q2 earnings next Wednesday, but that release will likely be overshadowed by the four Magnificent 7 hyperscalers releasing results after the close.

Matt Phillips2h

Analysts applaud Intel’s massive Q1

Intel’s massive Q1 numbers and mega Q2 guidance shocked Wall Street and sent shares across the semiconductor industry higher Friday morning.

Here’s how Wall Street analysts are characterizing the far better-than-expected results:

DA Davidson (rating: “neutral,” price target: $77): “Strong 1Q26 earnings that were highlighted by a significant beat on top and bottom-line expectations. Results in the quarter reflect the growing importance of CPUs and advanced packing. We view the recent Terafab announcement as a proof point that Intel is likely to see continued customer acquisition as the United States demands more domestic semiconductor manufacturing.”

Barclays (rating: “equal weight,” price target: $65): “The sizable top-line and gross margin beat caught us by surprise as our expectation was for tight supply in Q1. Mgmt expects the supply situation to improve through the year and for yields to improve, which should support growth in server.”

HSBC (rating: “buy,” price target: $100): “The market has been
underestimating Intel’s CPU average selling price upside as well as its ability to re-allocate its own foundry capacity to unlock further CPU unit growth, considering a CPU shortage environment that we expect to persist until 2027e.”

Bernstein: (rating: “market perform,” price target: $65): “Server strength seems demonstrably real, client seems to be holding up for now, commentary around 18A/14A was positive, and there remains hopes for forthcoming packaging announcements. That being said, there were quite a few nuggets for the bears as well; namely while 18A yields are seemingly running better than expected they apparently remain underwhelming, and ASP increases are being met by cost inflation.”

JPMorgan (rating: “underweight,” price target: $45): “EPS quality issues, 2H gross margin headwinds, structural OpEx creep, and a Foundry breakeven timeline that is likely to push beyond YE CY27 keep us at UW even as we raise estimates.”

Intel crushes Q1 earnings expectations, forecasts strong Q2 revenue, shares soar

DA Davidson (rating: “neutral,” price target: $77): “Strong 1Q26 earnings that were highlighted by a significant beat on top and bottom-line expectations. Results in the quarter reflect the growing importance of CPUs and advanced packing. We view the recent Terafab announcement as a proof point that Intel is likely to see continued customer acquisition as the United States demands more domestic semiconductor manufacturing.”

Barclays (rating: “equal weight,” price target: $65): “The sizable top-line and gross margin beat caught us by surprise as our expectation was for tight supply in Q1. Mgmt expects the supply situation to improve through the year and for yields to improve, which should support growth in server.”

HSBC (rating: “buy,” price target: $100): “The market has been
underestimating Intel’s CPU average selling price upside as well as its ability to re-allocate its own foundry capacity to unlock further CPU unit growth, considering a CPU shortage environment that we expect to persist until 2027e.”

Bernstein: (rating: “market perform,” price target: $65): “Server strength seems demonstrably real, client seems to be holding up for now, commentary around 18A/14A was positive, and there remains hopes for forthcoming packaging announcements. That being said, there were quite a few nuggets for the bears as well; namely while 18A yields are seemingly running better than expected they apparently remain underwhelming, and ASP increases are being met by cost inflation.”

JPMorgan (rating: “underweight,” price target: $45): “EPS quality issues, 2H gross margin headwinds, structural OpEx creep, and a Foundry breakeven timeline that is likely to push beyond YE CY27 keep us at UW even as we raise estimates.”

Claire Yubin Oh4h

TSMC surges as Taiwan eases single-stock investment limits for funds

TSMC’s ADRs jumped 3% in premarket trading on Friday after the island’s financial regulator announced plans to ease limits on funds’ allocations to single funds.

Previously, active fund managers were limited to allocating up to a maximum of 10% of their net assets into any one company. Under the revised framework, local equity funds and active exchange-traded funds that solely invest in Taiwanese stocks can allocate up to 25% of their assets in any listed company if it has a weighting above 10% in the Taiwan Stock Exchange.

The new rule, announced Thursday, will come into effect after the regulator issues an order on Friday. Relaxing the long-standing rule will mean fewer restrictions on local money managers taking full advantage of TSMC’s skyrocketing share price. TSMC, now Asia’s largest company by market cap, has seen its share price surge 150% in the past year — adding more to its gains in the last few days after crushing estimates in its first-quarter results.

TSMC is currently the only company that meets that 10% criterion, holding some 44% weight in Taiwan’s benchmark index, though the latest change also moved other large-cap Taiwanese stocks higher on Friday.

Luke Kawa18h

Intel’s earnings send fellow CPU sellers Arm and AMD higher

A strong set of Q1 results and Q2 guidance from Intel is sending shares of fellow CPU sellers Arm Holdings and Advanced Micro Devices about 6% and 4% higher in postmarket trading, respectively.

Intel’s robust report is seemingly a rising tide that lifts all boats in the industry, not just a company-specific dynamic.

Arm recently pivoted to designing and selling CPUs for data center customers (like Meta!) in addition to its long-standing business of licensing out the design architecture.

And AMD, of course, has been a well-established giant in the space before it ever started offering GPUs.

It’s the latest reminder that the AI boom isn’t just juicing demand for the most advanced chips, but also memory, older-school units, and a wide array of hardware.

Matt Phillips18h

Intel crushes Q1 earnings expectations, forecasts strong Q2 revenue, shares soar

Intel shares surged in after-hours trading Thursday after the semiconductor giant reported much better-than-expected Q1 earnings and sales numbers, as well as robust guidance for Q2.

Intel reported:

Q1 revenue of $13.6 billion vs. a consensus expectation for $12.42 billion.
Adjusted earnings per share of $0.29 vs. the $0.02 consensus estimate from FactSet.
A forecast for Q2 sales of between $13.8 billion and $14.8 billion vs. analysts’ $13.11 billion expectation.
A forecast for adjusted Q2 EPS of $0.20 vs. Wall Street expectations for $0.10.

“The next wave of AI will bring intelligence closer to the end user, moving from foundational models to inference to agentic. This shift is significantly increasing the need for Intel’s CPUs and wafer and advanced packaging offerings,” Intel CEO Lip-Bu Tan said in the company’s earnings release.

The quarterly result was clearly a surprise to both analysts and investors. Shares were up 15% shortly after the report in after-hours trading — despite having risen roughly 50% already in the month of April before the results were released.

Intel’s results could not be more different from the previous quarter. In its Q4 report, Intel issued lackluster guidance for Q1, which it blamed on a dearth of available silicon wafers it could use to make finished chips. The stock plunged 17% the next day.

“Intel was explicit on the Q4 call that they were living hand-to-mouth on wafers,” Cody Acree, a senior semiconductor analyst at brokerage firm Benchmark/StoneX, said in a brief phone interview with Sherwood News Thursday. “If this kind of upside was possible, than why the ultraconservative guidance?”

The Q1 results are a significant coda to what has been one of the best periods of share price performance for the company in decades. The stock has more than tripled over the last 12 months.

That run-up, however, had seemed to far outpace Intel’s actual business results, resulting in a nosebleed-inducing forward price-to-earnings valuation nearly 100x expected earnings over the next 12 months, dwarfing even the valuations the company was receiving during the peak of the dot-com boom of the 1990s. But the Q1 numbers suggest the market was picking up good vibrations that seem to have been borne out.

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