An AI-induced margin squeeze is coming for hyperscalers

Oftentimes when you rent a car, you take it right back where you got it from.

Same thing for shares of Avis, apparently:

The rental car company’s stock is down about 20% this morning amid a mixed set of quarterly results thanks to the revelation that one of its biggest shareholders, Pentwater Capital Management, sold over 4.3 million shares on April 22 at very wide range of prices (from about $250 to $700).

That session, Avis traded up nearly 19% in the premarket (breaching $800) but closed down a whopping 37.8%. At its premarket lows, the stock had erased its entire monthly gain, which was 390% as of the close on April 21.

Somewhat inexplicably, not only did Avis fail to exhaust the 5 million-share at-the-market offering it launched in late March at the onset of this parabolic move, but it didn’t even sell a share!

“It is important to note that Avis has not bought or sold a share since 2024,” CEO Brian Choi said during the earnings call on Wednesday.

“We were in a quiet period,” he added, when asked about why the company didn’t take advantage of its lofty share price. “But I can tell you this much: we have no intention of issuing shares anywhere near these levels.”

The footnotes of Pentwater’s filings note that some of its sales run afoul of the mandate that insiders and over 10% holders can’t make money on trades within a six-month period, and that it has “agreed to voluntarily disgorge to the Issuer any short-swing profits realized from these matchable transactions in accordance with Section 16(b) of the Securities Exchange Act of 1934.”

Starbucks shares ticked up as much as 6% in premarket trading on Wednesday after the coffee chain raised its full-year outlook and reported its second consecutive quarter of traffic growth.

CEO Brian Niccol, who joined from Chipotle in a high-profile deal in 2024, commented that the latest quarter “marked the turn in our turnaround as our Back to Starbucks plan drove both top- and bottom-line growth.”

During his tenure, Niccol has focused on addressing a range of customer complaints to improve the chain’s performance, from long waits to a lack of seating. And in its first positive quarter of same-store sales since the start of 2024, same-store sales jumped 7.1% in North American stores and 2.6% internationally for the quarter that ended March 29, driven by higher customer traffic, per the company’s press release. In North America, that blew past consensus expectations for 4% growth.

Booking Holdings fell as much as 5% in early trading on Wednesday after it slashed its Q2 and full-year guidance as the war in Iran weighs on its business.

The company — which owns brands like Booking.com and Kayak — expects fewer people to book travel accommodations through its sites this year than it had previously forecast, as the war in Iran leaves travel plans uncertain and jet fuel prices remain elevated.

It now expects to report 2026 gross bookings growth in the “high single digits to low double digits,” compared to its previous guidance of “low double digits.” It also forecasts annual adjusted earnings-per-share growth in the “low to mid-teens,” rather than the “mid-teens.”

For the last quarter, Booking reported adjusted EPS of $1.14, ahead of Wall Street estimates for $1.07, with revenue 0.5% higher than forecast, too. However, the company also reported room nights — a critical measure of hotel occupancy — that came in below expectations. The company attributed that miss to more people canceling trips and fewer people booking new ones.

Booking also expects the current quarter to be even more impacted by the war than the last. It expects revenue growth of 4% to 6% in Q2, compared to the 11% analysts polled by FactSet were expecting.

“The thing we absolutely are very certain of is this will end,” Booking CEO Glen Fogel told analysts. “We don’t know when, but it will. We do know travel will normalize. Now, how quickly? That also an unknown thing.”

The report also brought down its competitor, Expedia, by about 2%.

NXP Semiconductors is up more than 15% in premarket trading on Wednesday after the chipmaker reported upbeat results for Q1, with strong guidance to match.

For its first fiscal quarter of the year, NXP Semiconductors reported:

• Revenue of $3.18 billion, up 12% year over year and above analyst estimates of $3.15 billion (compiled by Bloomberg).

• Adjusted earnings per share of $3.05, topping Wall Street expectations of $2.99.

With the company’s CEO noting in its press release that “the momentum we have built is expected to accelerate through the remainder of 2026, with progress increasingly extending across the core of our business,” management also released better-than-expected guidance for the second quarter. The company now expects revenue to be between $3.35 billion and $3.55 billion, with the lower end of the range ahead of the average analyst estimate of $3.27 billion.

The chipmaker derived most of its revenue from its automotive (its largest division) and industrial segments — markets that have been recovering from an industrywide slump as customers clear out excess inventory from pandemic times. Texas Instruments, which has similar end markets, also recently provided a strong forecast for the full year.

Enphase Energy fell in after-hours trading Tuesday as uninspiring Q2 guidance overshadowed better-than-expected numbers in its Q1 earnings report. The maker of solar power and battery equipment reported:

• Sales of $282.9 million vs. the $282.3 million FactSet expectation.

• Non-GAAP diluted earnings per share of $0.47 vs. the $0.43 consensus estimate.

• Q2 guidance for revenue between $280 million and $310 million ($295 million at the midpoint) vs. the $294.9 million forecast.

Enphase was a sometimes popular retail trade of the Covid era, when federal tax credits and low interest rates led to a burst of activity for rooftop solar installation. Between the end of 2019 and 2022, the shares rose more than 1,000%.

But as interest rates rose — driven, in part, by both Fed hikes and worries the increases wouldn’t be enough to quell price growth — and Republicans stripped out key tax credits and subsidies for the solar sector from the federal budget, the shares tanked. They’ve lost nearly 90% of their value since peaking in December 2022, and have emerged as a favorite of short sellers. Roughly 20% of the company’s public float is now in the hands of bearish traders.