💔 Breakup season?

Bankers love to put companies together, helping executives piece together acquisitions in pursuit of scale, synergies, and seriously huge advisory fees. And they also don’t mind doing the opposite. 

Indeed, corporate America’s hottest new trend in dealmaking is breaking up. Spin offs among S&P 500 companies are running at their fastest pace since 2016.

• So far this year, plenty of household names opted to split themselves apart: industrial giant HoneywellH is dividing into three, while Warner Bros. Discovery said in June it would separate its TV networks from streaming and studios. 

• Keurig Dr Pepper plans to separate its soda and coffee businesses after completing its $18 billion acquisition of JDE Peet’s. 

• And Kraft Heinz will spin off its grocery arm, shedding Kraft-branded staples like boxed mac and cheese and frozen meals.

What’s fueling this corporate uncoupling? According to the WSJ, a big driver is activists pushing back against bloated empires. Their argument? Fast-growing divisions get dragged down by sluggish ones, and those much-hyped “synergies” from megamergers hardly show up. That logic has led to some past megamergers being undone. 

But whether these corporate divorces actually pay off is another story. 

The Takeaway

In the first 18-24 months following the split, companies spun off do tend to outperform the S&P 500 by ~10%, according to Trivariate Research — but those early gains might not hold up over longer time horizons. Since its 2015 launch, the S&P US Spin-Off Index — which tracks $1 billion+ S&P 500 companies spun off in the last four years — has lagged behind the main S&P 500 Index.

As Broadcom enjoys a rush of new orders from a major new customer (reported to be OpenAI), it’s also reveling in a flood of traffic into the stock. On Monday, traders continue to bid up shares in response to the brighter outlook for 2026 revenues, which sent the stock up 9.4% on Friday.

• The chip designer is basking in a flood of price target hikes from Wall Street, with Bank of America, JPMorgan, Argus Research, Citigroup, Bernstein, Deutsche Bank, Morgan Stanley, Barclays, Piper Sandler, Rosenblatt Securities, Wells Fargo, and Susquehanna upping their view on how high shares can go since the company reported earnings last week.

• Separately, Taiwanese industry outlet DigiTimes is reporting that orders from several other leading tech companies for custom-made Broadcom chips (or ASICs) are “already in the pipeline,” though that report has not been corroborated by our own or any other publication’s reporting to date.

• One weird thing, though: When Broadcom announced it booked that big client, shares of their major AI chip rivals tanked. The judgement of the Invisible Hand was that this was nearly a zero-sum outcome: $130 billion of market cap erased from Nvidia and Advanced Micro Devices, and a $135 billion increase in Broadcom’s market value.

But looking at this from the perspective of near-term cash flows, the market’s view seems off.

The Takeaway

Assuming the reporting around OpenAI and Broadcom is accurate, these orders for ASICs don’t look to be displacing what the ChatGPT creator was going to spend on Nvidia’s GPUs, but are just in addition to it!  The money’s not coming out of Jensen Huang’s pockets, it’s coming out of OpenAI’s coffers. Their spending budget is just getting bigger, and Broadcom’s the big winner.

Solana getting “new heart” in biggest upgrade ever

The Alpenglow upgrade revamps solana’s consensus engine to decrease transaction finality from 12.8 seconds to 150 milliseconds, bringing the blockchain network closer to its goal of being an on-chain Nasdaq.

Why it matters ➡️

• Echostar skyrocketed after SpaceX purchased a pair of spectrum licenses in a $17 billion deal

• Meanwhile, would-be rivals like AST SpaceMobile, Crown Castle, American Tower, and T-Mobile traded lower 

• AppLovin and Robinhood* rallied on their S&P 500 inclusion

• Volkswagen jumped about 4% higher after reportedly closing in on its own, separate tariff deal with the US