UnitedHealth extends slump as 2026 guidance underwhelms

Qualcomm is in talks to acquire AI chip design firm Tenstorrent for $8 billion to $10 billion, according to The Information.

This transaction, if completed, would be another concrete signal of the San Diego-based chip company’s attempt to carve out a niche in the upstream AI space (data centers), rather than focusing on end-user devices.

Qualcomm’s key business of handset chips has fallen on hard times, particularly in China, due to the memory chip shortage.

Less than eight weeks ago, the chip company was the lowlight in the Philadelphia Semiconductor Index, down about 20% year-to-date.

Shares proceeded to surge over 60%, buoyed by optimism that the rising AI tide will lift all boats. With the release of Q2 earnings, CEO Cristiano Amon said that initial shipments of AI chips to a “leading hyperscaler” were on track for later this year, and to expect more on the company’s AI growth plans at its investor day on June 24 (next week). Last month, Bloomberg reported that Qualcomm is poised to sell "millions" of AI chips to TikTok parent ByteDance.

Established AI chip giants and hyperscalers alike have reached agreements with or gobbled up burgeoning AI chip companies as the boom rolls on. In December, Nvidia announced a major licensing deal with AI inference specialist Groq, while Meta bought AI chip startup Rivos in September.

A major theme of this year is that American companies are once again becoming major sellers of stocks.

For years, companies did the exact opposite: buying back trillions of dollars’ worth of shares, a practice that juiced earnings and was seen as a safe option for management teams that had run out of good-enough projects to allocate their capital to. Just look at Google, which is wiping out more than two years’ worth of buybacks with an $85 billion offering, while Meta reportedly mulls an equity raise of its own.

Now, the mantra is that investment opportunities in AI — particularly as suppliers to the arms race — are a source of future returns that are also key to sustaining higher growth. In short, capex is king, and buybacks are admitting that you don’t have enough investment opportunities that allow you to benefit from the AI boom. Raise debt, raise equity, raise anything — just make sure you’re spending, and the market will reward you. A Goldman Sachs basket of companies with elevated capex relative to peers is besting stocks with the strongest buyback yields by some 30% — the most ever.

This is leading to some major divergences in accrual-based profit measures, like net income and free cash flow (which takes capex into account), for companies like Oracle.

Of course, the rest of the AI complex doesn’t care whether the cash spent on the next data center was raised via debt or equity. More funding for the AI build-out is more funding for the AI build-out. Indeed, if we took capex to a bazillion dollars, that spending would still be accretive for aggregate earnings in the first year (assuming all the recipients of the capex binge were public stocks). Yes, eventually the depreciation on those assets starts to be felt and we’d normalize lower, but in the short term, it’s a boon to the stock market’s bottom line.

This is why Oracle’s chart is actually just a more extreme version of the wider market; free cash flow used to be about 90% of aggregate net income, and now it’s hovering around 75%, per estimates compiled by Bloomberg.

Fox said it struck a deal to buy Roku in a cash-and-stock transaction valued at about $22 billion.

The deal values Roku at $160 a share, a 34% premium to where the stock had closed before reports surfaced Friday that Roku was exploring a sale, sending shares 20% higher on Friday.

On Monday, the stock edged lower to around $140, as investors digested the risk profile and timeline of the deal. The unseasonably elevated cost of funding equity positions amid elevated issuance and growth of leveraged ETFs may also be dampening the appeal of merger arbitrage strategies.

Fox stock dropped 17%, putting it at down roughly 25% so far this year.

The deal, expected to close in the first half of calendar year 2027, will expand Fox’s digital footprint as traditional cable continues to shrink. The merger would give Fox direct access to more than 100 million streaming households globally. Once the transaction closes, existing Fox shareholders will hold a roughly 73% stake in the combined company, with Roku shareholders owning the remaining 27%.

Fox has spent the past several years building out its streaming strategy through Tubi and, more recently, FOX One, its direct-to-consumer sports and news product. Just last week, Roku added FOX One as a premium subscription inside its Roku Channel, expanding distribution ahead of the FIFA World Cup.

Roku, meanwhile, has been trying to prove it can turn its scale into consistent profits. Roku generated $613 million in ad revenue in its latest quarter, up 27% year over year.

Roku had surged during the pandemic as investors piled into streaming winners and Roku was one of the beneficiaries of the stay-at-home boom. But it has given back much of those gains.

Fox CEO Lachlan Murdoch called the acquisition “a defining moment” that combines Fox’s strength in live content with Roku’s streaming scale and platform reach. “This combination will transform the scope of our company into high-growth verticals and yield a step change in our overall growth profile,” he said in the announcement.

Roku CEO Anthony Wood said the deal would help accelerate Roku’s long-term growth while maintaining its position as an open platform.