The Next AI Megatrend Investment

Good morning. It is September 10th, and we’ll take a look at Oracle’s upbeat earnings, HPE and Under Armour’s disappointing announcements, and the next AI megatrend investment.

Previous Close 📈

Stocks rebounded Monday after a tough week. Investors bought the dip, anticipating a possible Federal Reserve rate cut. The rebound followed a weak August payroll report, which had triggered recent selling.

Futures

U.S. stock futures are slightly lower today after Monday's recovery. S&P 500 futures are down 0.12%, Nasdaq 100 futures are falling 0.28%, and Dow futures are slipping 0.15%. Investors remain cautious of the Consumer and Producer Price Index reports scheduled to be released this week.

What to Watch

Academy Sports and Outdoors (NASDAQ: ASO), Bioceres Crop Solutions (NASDAQ: BIOX), and Cognyte Software (NASDAQ: CGNT) will report their quarterly earnings before the market opens today.

Post-market releases will come from GameStop (NYSE: GME), Dave & Buster's Entertainment (NASDAQ: PLAY), InnovAge Holding (NASDAQ: INNV), Petco Health and Wellness Company (NASDAQ: WOOF), Cantaloupe (NASDAQ: CTLP), Mama's Creations (NASDAQ: MAMA), and Evolution Petroleum Corporation (NYSE: EPM).

On the economic data front, the NFIB Optimism Index for August will be released at 6:00 a.m. ET.

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Technology

AI Demand Fuels Oracle's Stock Rally Following Upbeat Earnings Report

Oracle Corp.'s shares are rallying by nearly 9% before the opening bell today after the company reported better-than-expected quarterly earnings, driven by robust growth in its cloud computing segment amid strong AI demand.

The company posted earnings of $1.39 per share, excluding certain items, surpassing the forecast of $1.33. Revenue increased 7% to $13.3 billion, in line with estimates.

CEO Safra Catz highlighted that the growth in Oracle’s cloud services has accelerated earnings and operating income.

Oracle's cloud infrastructure business is expanding to compete with Amazon, Microsoft, and Google, gaining traction in generative AI workloads with customers like Reka and Elon Musk's xAI.

Oracle also announced a new deal to offer its database on Amazon Web Services, complementing existing partnerships with Microsoft and Google. Cloud revenue rose 21% to $5.6 billion, and the remaining performance obligation stood at $99 billion, boosted by major deals.

Oracle's stock, already up 33% this year, continues to benefit from its strong cloud focus and expanding AI capabilities.

Technology

HPE Shares Plummet Post-Announcement of Funding Plan for Juniper Networks Acquisition

Hewlett Packard Enterprise shares are dropping nearly 6% in premarket trading after the company announced a $1.35 billion mandatory convertible preferred stock offering to help finance its acquisition of Juniper Networks.

HPE had previously declared its intent to buy networking equipment maker Juniper Networks for $14 billion in an all-cash transaction aimed at bolstering HPE's AI product lineup. The proceeds from the convertible preferred stock offering will be used to cover costs and fees associated with this acquisition.

The convertible preferred stock offering allows investors to purchase preferred shares that typically pay higher dividends than common shares and convert them into common stock.

HPE’s preferred stock will automatically convert into common shares around September 1, 2027, unless redeemed or converted before that date.

Investment banks Citigroup, J.P. Morgan, and Mizuho are the joint book-running managers for this offering. The stock offering comes shortly after HPE raised its annual profit forecast last week, citing an increase in demand for AI servers as businesses continue to ramp up spending on AI infrastructure.

Apparel

Under Armour Shares Fall as Company Revises Restructuring Costs

Under Armour has raised its restructuring cost estimates, predicting significantly higher expenses than anticipated. This is causing its stock to drop 1.5% in premarket trade, continuing from a nearly 5% decline yesterday.

The sports apparel company is attempting to refocus on its core business areas under a restructuring plan first revealed in May. At that time, CEO Kevin Plank, who resumed his role earlier this year after stepping down in 2019, acknowledged that an overextended product strategy had led to inefficiencies.

Plank's strategy involves reducing promotions, reducing inventory, and laying off staff while concentrating on higher-margin products such as men's apparel.

As a result, the Baltimore-based company now expects pre-tax restructuring charges to range between $140 million and $160 million for fiscal years 2025 and 2026.

This is a significant increase from the initial estimate of $70 million to $90 million made last month. The upward cost revision is mainly due to the decision to close a distribution center in Rialto, California.

Year-to-date, Under Armour’s shares have declined 15%, in line with industry trends. Competitors Nike and Lululemon Athletica have also experienced declines of 27% and 50%, respectively, amid lower demand and increased competition.

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Silexion Therapeutics Corp [SLXN] - Last Close: $0.980

Silexion Therapeutics is up 60% in premarket trading.

The company is making exciting progress in developing new cancer treatments using cutting-edge technology called RNA interference (RNAi) to target difficult-to-treat KRAS-driven cancers such as pancreatic cancer.

Recent clinical trial results showed that their approach significantly improved survival rates in pancreatic cancer patients.

With plans to expand this technology to other cancer types, Silexion is gaining attention from investors.

Mission Produce, Inc. [AVO] - Last Close: $10.69

Mission Produce stock is up by 20% so far in premarket trade.

The company reported strong financial results for the third quarter of 2024. Revenue increased by 24% to $324 million, and net income more than doubled to $12.4 million.

Their earnings (adjusted EBITDA) also jumped by 49% to $31.5 million, driven by high avocado prices, which helped balance a drop in the number of avocados sold.

Additionally, the company’s cash flow improved significantly, showing it is managing its money well.

Actelis Networks, Inc. [ASNS] - Last Close: $1.49

Actelis Networks is jumping 28% before the opening bell today.

The company announced yesterday that it has received a major new order from a U.S. Department of Transportation agency.

Actelis specializes in advanced networking solutions for transportation, like traffic systems and airports, which are crucial for fast and secure data communication.

This new order expands their role in supporting key infrastructure projects.

Over the last few months, Actelis has secured several important contracts, including a $2.3 million deal for Washington, D.C.'s, Department of Transportation.

Quoin Pharmaceuticals, Ltd. [QNRX] - Last Close: $0.96

Quoin Pharmaceuticals is trading 37% higher than its previous close in premarket trading today.

The company's top leaders, CEO Michael Myers and COO Denise Carter, recently bought significant shares of the company's stock, signaling their strong belief in the company’s future growth and potential.

Quoin is focused on developing treatments for rare diseases, an area with many unmet medical needs, which could offer great growth potential.

The AI Boom’s Next Big Opportunity Is Here

AI stocks have been making waves, but the biggest opportunity is still under the radar.

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Everything Else

• Huawei and Apple go head-to-head with new smartphone launches.

• China’s exports have exceeded expectations, but sluggish imports raise demand concerns.

• Mainland China investors pushed Alibaba’s shares higher after its Stock Connect inclusion.

• Boeing pushed back its production ramp-up for the 737 MAX to 2025.

• Google lost its appeal in the $2.7-billion EU antitrust case.

• NEXTDC is planning a $500 million capital raise for its Asia expansion amid the AI boom.

• A new bill targeting Chinese biotech companies passed the U.S. House and moved to the Senate.

• An EU court upheld Apple’s 13-billion-euro tax bill to Ireland.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.

Best Regards,

— Adam Garcia
Elite Trade Club

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