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Luke Kawa

How the character of the AI trade has changed — for the worse — in 2026

A smattering of observations on how the character of the AI trade has changed this year — with, obviously, some of these trends not having waited for a full turn of the Earth around the sun to start to establishing themselves:

  • All the bullish oxygen is being sucked out of the room and squarely into the memory chip shortage, which is offering bumper profits for a handful of firms. On a related note, semicap equipment stocks have been an upstream beneficiary of this dynamic. The underlying message is that near-term scarcity is being rewarded by the market.

  • That the big capex spenders will generate a high return on investment from their outlays is not something traders are willing to take for granted. Big budgets are not necessarily getting applauded; even companies that seemingly earn the benefit of the doubt by posting accelerating revenue growth, à la Meta, aren’t able to maintain those gains for long.

  • The big “consumers” of memory chips are getting squeezed. This includes the hyperscalers, obviously, but even more so the likes of Qualcomm, which has to wait behind these giants in line for supplies, which played a role in the company’s underwhelming outlook.

  • For public markets, the theme is more of a net negative than a positive. Firms seen as the most likely to be disrupted by AI (basically, the entire software industry) are getting indiscriminately clobbered, regardless of how good their quarterly results and guidance are.

  • The facilitators of disruption, in many cases, have not yet arrived on public markets but plan to do so this year. That’s SpaceX/xAI, OpenAI, and Anthropic. So if the AI theme has seemed a little “negative sum” in this year, that might be about the room that investment firms know they’re going to need in their portfolios to add these stocks once they’re able to (or, in some cases, ahead of time).

  • And this isn’t really a 2026 dynamic, strictly speaking, but the two biggest chip companies have been dead money for months. Since the end of Q3, Nvidia and Broadcom are both negative, with the S&P 500 up about 2% over this span.

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Luke Kawa

Arm Holdings surges after reporting a doubling of demand for its AI CPUs since late March

Arm Holdings is jumping in postmarket trading despite posting a relatively ho-hum set of fiscal Q4 2026 results and Q1 2027 guidance.

The reason: a deluge of demand for its data center CPUs, which were launched in late March.

“We now have more than $2 billion of customer demand across fiscal 2027 and fiscal 2028, more than double what we stated at launch,” according to the press release. “Soon the data center will be Arm’s largest business.”

The company says it already has 50% market share for CPU compute among top hyperscalers.

AMD’s results showed just how central CPUs are to the AI boom, and Arm’s comments are underlining that message in bold.

markets
Matt Phillips

FanDuel parent Flutter rises after reporting better-than-expected Q1 sales and earnings

Flutter Entertainment rose in aftermarket trading Wednesday after reporting better-than-expected Q1 earnings and revenue. The rally recouped losses during regular trading hours that followed a CNBC report on the departure of Amy Howe, the CEO of Flutter’s FanDuel sports betting unit.

Flutter reported:

  • Q1 revenue of $4.30 billion vs. Wall Street expectations for $4.24 billion.

  • Adjusted earnings per share of $1.22 vs. the $1.09 forecast, per FactSet.

  • Adjusted EBITDA of $631 million vs. expectations for $610.9 million.

  • Full-year sales guidance of $18.31 billion at the midpoint vs. its previous estimate of $18.40 billion and analyst expectations for $18.35 billion.

  • Full-year adjusted EBITDA guidance of $2.865 billion vs. its previous midpoint estimate of $2.97 billion.

While FanDuel is the leader in the US online sports betting market, it’s considered something of a laggard in prediction markets, an area of fast growth for the industry, in part because it’s exposed to relatively lighter regulation.

(For instance, in most states, gaming commissions limit sports betting to those 21 and older, whereas sports-based events contracts typically have lower age restrictions, thus expanding their potential universe of customers.)

Flutter’s inability to come up with a prediction markets product that investors find convincing has contributed to its falling share price, which is down roughly 50% since the start of the year. Rival DraftKings is down a relatively better 30% over that period.

markets
Paige Oamek

Axon beats Q1 revenue expectations, raises guidance

It might be a great time to be a surveillance company. Axon, a maker of police body cameras, Tasers, and AI intelligence tools, is ticking lower postmarket after the company reported revenue exceeding expectations in its Q1 earnings report and upbeat guidance for the year. 

Here are the numbers:

  • Revenue of $807.3 million (compared to analyst estimates of $779.2 million).

  • Adjusted EBITDA of $202 million (estimate: $183.8 million).

For the full year, Axon boosted its target for revenue growth to a range of 30% to 32%, up from a quarter ago, when it forecast 27% to 30% growth.

Previously, the stock had been sliding despite increasing revenue. It was trading down more than 32% since the beginning of the year, suffering the same fate as many software-as-a-service stocks thanks to AI-related anxieties. 

But for the year ahead, Axon says the company entered the year with “strong momentum, delivering record quarterly revenue,” marking its ninth consecutive quarter of more than 30% growth thanks to its suite of technologies, including artificial intelligence and counter-drone offensive products.

Axon told investors it’s targeting $6 billion in annual revenue by 2028, which would be more than double 2025’s results. The company plans to get there by growing globally (Axon says it’s currently “deployed” in 85 countries) and continuing to partner with federal agencies including the Department of Homeland Security, as well as reaching out to the business community.

The company also noted that the federal government’s Safer Skies Act, passed in December’s National Defense Authorization Act, earmarks $250 million in federal grants for local agencies to further “track and mitigate drone threats.” Again, more good news for Axon, which grew that segment of its business 300% year over year.

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Luke Kawa

Beyond Meat Q2 sales guidance falls short of estimates

Beyond Meat is slipping in postmarket trading after releasing Q1 sales that managed to come in short of low expectations and a Q2 revenue guide below Wall Street’s consensus estimate.

For Q1, the faux meat seller reported:

  • Net revenues of $58.2 million (compared to estimates of $58.5 million and guidance for $57 million to $59 million).

  • Adjusted EBITDA of -$27.8 million (estimate: -$23.8 million).

For Q2, management anticipates sales of $60 million to $65 million, while analysts had penciled in $66.7 million.

Ahead of this earnings report, Beyond bulls were extremely happy that it was taking place as scheduled, touting this as a positive sign. The company had been releasing unscheduled preliminary results and often delaying the formal release of its quarterly report in recent months.

After releasing an underwhelming Q1 sales outlook in March, CEO Ethan Brown blamed the “surround sound of pseudoscientific jargon and positioning and promotion” in American society for the company’s operational struggles.

Back in Q4, a finfluencer who said they owned 4% of Beyond kicked off a wave of retail interest in the name. But when all was said and done, the refinancing efforts that combined with retail optimism to spur a parabolic move in the shares ultimately resulted in the elimination of about $800 million in debt, but also a 60% decline in its stock price.

markets
Luke Kawa

AppLovin soars after Q1 results and Q2 guidance exceed estimates

AppLovin is soaring in postmarket trading after delivering better-than-expected Q1 results with a Q2 outlook to match.

For Q1, the ad tech company reported:

  • Revenue of $1.84 billion (compared to analyst estimates of $1.77 billion and guidance for $1.75 billion to $1.78 billion).

  • Adjusted EBITDA of $1.56 billion (estimate: $1.49 billion, guidance for $1.47 billion to $1.5 billion).

For Q2, management said to expect sales in a range of $1.92 billion to $1.95 billion (estimate: $1.89 billion) with adjusted EBITDA between $1.62 billion and $1.65 billion (estimate: $1.59 billion).

The rise of AI tools as a competitive threat has been overshadowed by AppLovin’s claims of being able to integrate the technology to the betterment of its business as well as the initial rollout of its self-service ad portal in Q4.

As a software company, it faces the existential AI overhang that is common to the space; as an ad tech company, it’s been plagued by fears of Meta taking market share on iOS.

AppLovin is well off its year-to-date lows, but was still down about 30% in 2026 heading into earnings.

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