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1. Nvidia's $500B Problem: Paying Customers to Buy From You |
Nvidia posted just above $96 billion in quarterly revenue, more than double year over year, and guided to roughly $108 billion next quarter. Wall Street expected less. But the hyperscalers already paid for this quarter months ago. Amazon, Microsoft, Alphabet, and Meta have disclosed about $725 billion in combined capital spending this year. Fool analyst Emily Flippen puts it plainly: Nvidia is "a lagging indicator of the AI buildout, not a leading one." Nvidia has topped its own guidance for thirteen straight quarters, because management "sets a figure it feels awfully confident about, clears it, and then sets another one." The stock gained over 5% in pre-market trading.
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Broadcom is the sharper signal: Broadcom booked over $30 billion in AI orders last quarter for custom accelerators built for Nvidia's own hyperscale customers. That shows how fast those same buyers are designing around Nvidia entirely.
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Now bankrolling its own buyers: This month Nvidia lined up $500 billion in outside capital with Apollo, BlackRock, and Goldman Sachs. It funds customer data centers, plus a $100 billion OpenAI commitment. That's circular financing, and it can flatter demand more than economics justify.
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2. Okta and Veeva Show Profits Outrunning Growth
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Wednesday was a heavy day for earnings from companies recommended across Fool services. So today we’re dedicating Breakfast News to bring you what you need to know. These two are both recommended by Team Rule Breakers. |
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Okta, up over 20%. Q2 revenue rose 10.6% to $805 million, operating income jumped 161% to $107 million, and net income nearly doubled to $116 million. Management guided full-year revenue to $3.216 billion to $3.226 billion, suggesting the growth pace keeps going through year-end. That combination is what long-term holders wanted to see.
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Veeva Systems, up around 10%. The life sciences cloud software provider reported Q2 revenue up 17.6% to $928 million. Operating income grew faster, up 40.4% to $275 million. That gap matters: margins are expanding faster than revenue, a sign of durable pricing power. Management guided Q3 revenue to $932 million to $935 million. The next test is whether that margin strength holds as its agentic Vault CRM tool scales beyond early biopharma customers.
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3. Behind the Beats: CRM, SNPS, CRWD's Stories |
A further three of yesterday’s after-market results were from companies recommended by both Team Hidden Gems and Team Rule Breakers… |
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Salesforce, up over 10%. Q2 revenue lifted 10.8% to $11.3 billion and GAAP net income more than doubled to $3.5 billion. Agentforce and Data 360 annual recurring revenue grew over 210%, real proof of AI pricing power – especially as Salesforce announced the expansion of its tie-up with Anthropic. But operating margin dipped to 20.5%, so it's not yet clear that AI growth is durable profit.
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Synopsys, little changed. Q3 revenue jumped to $2.477 billion (from $1.740 billion). It beat EPS guidance on design strength and its Ansys deal. Management raised full-year guidance to $9.715 billion in revenue and $15.07 in EPS. Most of that growth is Ansys and AI demand, not organic strength in design revenue. Check if design IP's growth holds once the Ansys comparison normalizes.
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CrowdStrike, up over 10%. Q2 revenue rose 25.8% to $1.5 billion. Net new annual recurring revenue hit a record $333 million, up 51% year over year. Falcon Flex adoption pushed its own recurring revenue up 101% to over $2.29 billion. Bookings are growing far faster than revenue already recognized, a sign more growth is still to come.
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4. Workday, Ulta Beauty, and Autodesk: Watch More Than Revenue |
Three more recommendations report Q2 earnings after the close today. |
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Workday runs the cloud software companies use to manage HR and finance. Analysts expect $2.6 billion in revenue and non-GAAP EPS of $2.61, with subscription revenue near $2.5 billion. Last quarter, revenue rose 13% to $2.5 billion, its best first-quarter contract growth in five years, though sales cycles lengthened. Workday is recommended by both Team Rule Breakers and Team Hidden Gems.
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Ulta Beauty, recommended in SA by Team Hidden Gems, faces its hardest year-over-year comparison of the fiscal year. Analysts expect $6.20 per share on $2.99 billion in sales. In Q1, net sales rose 11.1% to $3.2 billion and gross margin expanded to 40.1%. Rising operating expenses weighed on results.
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Autodesk, an SA rec by Team Rule Breakers, beat Q1 guidance with revenue up 18% to $1.93 billion. Investors want updates on the FTC's antitrust probe, a sales-productivity recovery, and the $3.6 billion MaintainX acquisition. Analysts expect $2.01 billion in revenue and non-GAAP EPS of $3.12.
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5. Vertex Makes the Rules
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What happens when a Rule Breaker wins the war and starts setting the rules in the market it created? Do we declare victory and move on? Vertex Pharmaceuticals joined the Rule Breakers scorecard in January 2005. Shares are up more than 50-fold since, roughly 3,747 percentage points ahead of the S&P 500 over those 20-plus years. |
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The market it created is mature: Vertex's cystic fibrosis drugs address more than 90% of mutations, and most eligible patients in developed markets are already on a therapy. In this industry that usually starts investors worrying about patent expirations and the end of the party.
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Disruption is built into its DNA: Vertex turned the cash from those therapies into a war chest. It created a new class of non-opioid painkillers while opioid addiction ravages parts of the country. It helped deliver the first approved functional cure for sickle cell disease. Now it's pushing into kidney disease with the same focus that made it synonymous with cystic fibrosis.
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The thread running through Vertex isn't cystic fibrosis. It's excellence in drug design and business development. As the company straddles Rule Breaker and Rule Maker, its maturity becomes its strength.
Team Rule Breakers has a 5-year price prediction of $1,061. It trades around $550 today.
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What would have to happen for you to trim your Nvidia exposure, including index funds?
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