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🦉 The Night Owl Newsletter for February 17th
Medtronic’s “Textbook” Reversal: How High Can It Really Go in 2026?
Written by Thomas Hughes
Medtronic’s (NYSE: MDT) stock price is amid a textbook reversal, having formed a Head & Shoulders Pattern and broken to fresh highs, confirming the baseline as a critical pivot point. The question now is how high the stock might rise. The reversal is driven by an improving growth outlook, profitability, capital return, and market sentiment, which provides a solid support base in 2026.
Institutions and Analysts Buy Into Medtronic’s Growth Outlook
Institutions, representing the largest body of investment capital, own more than 80% of this stock and have been accumulating it for several quarters. MarketBeat data reveals a bullish balance for five consecutive quarters, a $2-to-$1 bias in favor of buyers, and buying activity ramping at year’s end 2025 and in early 2026, aligning with the stock price action. Assuming the bullish bias persists, MDT’s stock price has nowhere to go but up.
Analysts, representing private capital and, to a degree, retail market sentiment, rate this stock as a Moderate Buy. Analyst coverage has been increasing alongside an improving outlook, and the price target trend was bullish ahead of the fiscal Q3 (FQ3) release. (Note that Medtronic’s fiscal reporting period is behind the calendar year.)
Forecasting a 10% upside at the consensus and another 10% at the high end, the revision trends also align with the stock price action. While the FQ3 release and guidance update failed to catalyze a rally, the data aligned with expectations, which were driving an uptrend to begin with. The likely outcome is that analyst trends remain solid through the next quarter, underpinning price action.
The technical targets provide another convergence in the outlook. The price targets, now that the reversal pattern is confirmed, assume a movement equal to the range’s dollar magnitude as the base case and a percentage movement as the bull case. These targets put MDT stock in the range of $118-$124, nicely bracketing the high-end analyst target of $120. The only question is timing, and the charts suggest this move can happen before mid-year.
Medtronic Affirms Long-Term Growth Targets: Outperforms in FQ3
Medtronic had a solid quarter, with revenue of $9 billion outpacing consensus estimates by a slim margin. Strength was seen across the enterprise, with 6% organic growth compounded by foreign exchange tailwinds. Cardio was the strongest segment, up nearly 14% and 10.6% organically, followed by 8.3% organic growth in Diabetes, 2.7% in Medical Surgical, and 2.5% in Neurosciences.
Medtronic experienced margin pressures, especially from tariffs, but none were worse than expected. The net result was an adjusted operating margin of 24.1% and adjusted earnings per share (EPS) of $1.36. The adjusted EPS outpaced estimates by 150 basis points, suggesting forward guidance could be cautious. Medtronic’s guidance was reaffirmed, expecting revenue growth in the range of 5.5% and full-year adjusted EPS of $5.64 at the midpoint. The sticking point is that this guidance falls short of the consensus, but is easy to overlook given the slim, 1-cent miss.
More pertinent details include the long-term outlook, which is maintained, and the cash flow, which is sufficient to sustain the capital return. The capital return outlook includes dividendsand share repurchases, with the dividend yielding approximately 2.8% as of mid-February and repurchases reducing the count annually. Incentives for investors include a payout ratio of about 50% and a history of distribution increases, which has the company on track for Dividend King status this decade.
Medtronic: Many Catalysts in 2026
Medtronic stock has several catalysts that could drive it higher in 2026. Not only are critical segments, including Cardiovascular, experiencing accelerated growth, but new products and expanding approvals, such as the Symplicity Spyral RDN system and the Hugo robotic systems, are also driving business. Meanwhile, activists are pushing for operational changes.
The combined impact could result in outperformance in the company’s fiscal Q4, full-year 2025, and 2026, with expanding margins and improved capital returns.
Elliott Investment Management, which emerged as a major shareholder in 2025, seeks to improve efficiency, accelerate growth, and boost the stock valuation. Trading at 17X earnings, MDT stock is a bargain relative to average S&P 500 companies and med tech peers. Assuming an advance to align with averages, MDT stock could rise as many as five handles to trade near 22X earnings, a valuation suggesting a price point near $125. READ THIS STORY ONLINE
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ServiceNow Insiders Buy as Wall Street Panics Over an AI SaaSpocalypse
Written by Jeffrey Neal Johnson
The “SaaSpocalypse” narrative has gripped Wall Street, dragging the software and tech sector down roughly 22% this year. The fear driving this sell-off is singular, terrifying, and easy to understand: artificial intelligence (AI) agents will automate white-collar work so effectively that businesses will no longer need to buy software licenses for human employees.
If an AI can do the job of three analysts, why pay for three software seats? This logic has led investors to dump shares of companies ranging from Salesforce (NYSE: CRM) to Adobe (NASDAQ: ADBE), fearing their business models are evaporating.
But while the trading algorithms sell on fear, the insiders at ServiceNow (NYSE: NOW) are buying with conviction.
In a mid-February strategic move, ServiceNow CEO Bill McDermott executed a $3 million open-market purchase of his company’s stock. Even more significantly, key members of the executive team, including the CFO and Chief People Officer, simultaneously terminated their automated 10b5-1 trading plans.
While the market panics about an AI future without software, ServiceNow’s leadership is betting personal capital that the company is not the victim of AI, but its master.
Why Insiders Just Killed the Autopilot
To understand the weight of this move, investors must look past the headline purchase and focus on the legal mechanics. Most corporate executives use something called a 10b5-1 plan to sell stock. These are automated schedules set up months in advance, for example, sell 1,000 shares on the first of every month.
Executives use these plans for valid personal reasons: they are paid largely in stock, and they need to sell shares to diversify their personal wealth or pay taxes. These plans exist to protect executives from accusations of insider trading by putting their sales on autopilot, regardless of whether the company’s stock price is high or low.
Terminating these plans early is incredibly rare. It is a legally complex maneuver that often triggers cooling-off periods, preventing executives from setting up new sales plans for months. By cancelling these plans today, ServiceNow’s C-Suite has effectively removed the autopilot selling pressure from the market. They are signaling that they view the stock, currently trading near $105, down roughly 55% from its highs, as so severely undervalued that they refuse to sell even a single share.
This is a corporate put option. It suggests that management’s internal data contradicts the external market panic. Analysts at firms like Evercore ISI have already flagged this as a deliberate vote of confidence. When an entire management team stops selling and starts buying during a market crash, it usually marks a psychological and financial floor for the stock.
The AI Control Tower Defense Strategy
The market’s fear is rooted in seat compression. Investors worry that AI agents will shrink corporate headcounts, leading to fewer software subscriptions. ServiceNow’s counterargument is distinct: they are no longer just selling tools for humans; they are selling the governance layer for AI agents.
As enterprises deploy billions of autonomous agents, corporate IT environments will become chaotic. These digital workers need to be secured, audited, and managed. They need to be told what data they can access and what actions they are allowed to take. ServiceNow calls this strategy the AI Control Tower.
This strategy explains the company’s aggressive and controversial spending spree on mergers and acquisitions (M&A).
- Armis ($7.75 billion): This massive acquisition secures the Operational Technology (OT) segment. This refers to physical assets, such as factory robots, HVAC systems, and medical devices, that AI agents will increasingly interact with.
- Moveworks ($2.85 billion): This deal provides the sophisticated conversational interface that acts as the front door for employees to command these agents.
Critics have argued these acquisitions dilute shareholder value and add integration risk. However, the insider buying suggests that leadership views these assets as essential infrastructure. They are betting that as the business world grows more chaotic and automated, a centralized, secure platform like ServiceNow will become increasingly valuable. They aren’t buying a legacy software company; they are buying the regulatory infrastructure for the AI economy.
The Double Down: Buybacks and Margins
There is a stark gap between ServiceNow’s stock chart, which appears to show a crisis, and its financial statements, which appear to show a boom. While the share price has collapsed, the business is accelerating.
In the fourth quarter, subscription revenue grew 21% year over year to $3.47 billion. Even more impressive was the company’s efficiency; Free Cash Flow (FCF) margins hit a massive 57%. This paints a picture of a Rule of 50 company. In software investing, the Rule of 40 (Growth Rate + Profit Margin) is the gold standard for a healthy company. ServiceNow is exceeding the Rule of 50, meaning it is generating cash faster than it can spend it, even as it grows rapidly.
The Board of Directors has acknowledged this disconnect between price and performance by authorizing a new $5 billion share repurchase program. But they didn’t just authorize it; they triggered a $2 billion Accelerated Share Repurchase (ASR) immediately.
This is a critical distinction. An authorization is just a promise; an ASR is an immediate execution. The company is aggressively buying back its own stock at these discounted levels. This mechanically boosts earnings per share (EPS) because there are fewer shares in circulation to divide the profits among.
From a valuation perspective, the math is compelling. The stock is trading in the $100-$107 range, while the median analyst price target sits at $192.This implies a potential upside of nearly 80% if market sentiment normalizes. Investors are currently pricing ServiceNow as if its growth were about to evaporate, even though the company’s guidance calls for continued ~20% revenue growth in 2026.
The Binary Bet
Investors today face a binary choice. One path is to believe the SaaSpocalypse narrative: that AI will render enterprise software obsolete faster than these companies can adapt, turning industry giants into value traps. The other path relies on hard financial data: accelerating revenue, massive cash-flow margins, and aggressive buying by the people who know the business best.
Bill McDermott, the former CEO of SAP and now the leader of ServiceNow, has a history of making bold calls that pay off. Betting against him when he puts his own money on the table has historically been a losing trade. The simultaneous termination of executive sales plans and the $3 million insider purchase suggest that the bottom is likely in. For investors willing to look past the panic headlines, ServiceNow offers a rare opportunity to buy a market leader at a crisis discount. The insiders have placed their bets; now the market must decide if it will follow. READ THIS STORY ONLINE
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On September 14th, 2023, something big happened that didn’t make the news. The price gap between London gold and Shanghai gold blew out to $120 an ounce. For years, that gap was a few dollars, maybe $5 or $10. A 20x jump in seconds isn’t a glitch, it’s the system breaking. Traders tried to buy gold in London to sell in Shanghai, but hit a wall. The London vaults were empty. Since that day, gold has hit 53 all-time highs. One stock is positioned to capture the bulk of this wealth transfer.SEE THE FULL STORY ON THIS OPPORTUNITY NOW.
3 Under-the-Radar Earnings Surprises Could Signal a New Trend
Written by Dan Schmidt
Earnings season is winding down, and more than three-quarters of the companies in the S&P 500 have reported their latest results. According to FactSet, roughly 74% of firms reporting so far have beaten analysts’ EPS estimates, and 73% have beaten revenue estimates.
While these overall numbers are within the five- and ten-year averages, the dispersion between winners and losers kept the aggregate earnings growth rate flat for the period. Many of last year’s success stories have underperformed in 2026, while some laggards have posted parabolic gains. Three companies whose earnings reports don’t typically garner headlines still warrant attention for the numbers in their most recent reports. Are these one-time standouts or the sign of a larger trend?
Applied Materials: Semiconductor Demand and Guidance Boost Power Double-Digit Gains
Applied Materials Inc. (NASDAQ: AMAT) is probably the most “on-the-radar” stock here, with its $280 billion market cap and $28 billion in annual sales. But as a picks-and-shovels play in the semiconductor space, Applied Materials usually reports in the background while NVIDIA Corp. (NASDAQ: NVDA) or Alphabet Inc. (NASDAQ: GOOGL) steal the headlines. However, this most recent report warrants attention as AMAT shares soared 12% following the release, driven by strong guidance and equipment demand.
The company reported its fiscal Q1 2026 results on Feb. 12 and surpassed analysts’ estimates on both EPS and revenue, with earnings beating expectations by 7%. But the news that really excited investors came on the conference call when CEO Gary Dickerson projected 20% sales growth in calendar year 2026, a figure that exceeded even the most optimistic analyst projections. Most of the company’s revenue comes from its Semiconductor Systems division, which sells flash memory, logic manufacturing equipment, transistors, DRAM, and more. Dickerson projects Q2 revenue of approximately $7.65 billion, with continued rapid growth in the Applied Global Services division.
The target price increases came in fast and furious following the optimistic report, and it received two upgrades from Hold to Buy from Summit Insights and KGI Securities. The average price target of the 17 analysts who raised the stock is now $435, representing nearly 20% upside from current levels.
AMAT shares have been in an uptrend since September, when the price crossed over the 50-day and 200-day simple moving averages (SMAs). The 50-day SMA has been a strong support level for the stock ever since, providing a bumper whenever shares dip. The Relative Strength Index (RSI) is still under the Overbought threshold of 70 despite the big earnings bump, so this rally could have staying power.
Advance Auto Parts: Turnaround Efforts Starting to Show Results
Advance Auto Parts Inc. (NYSE: AAP) may finally be returning to investablity after losing more than 50% over the last five years. The last 12 months have been particularly tumultuous for the company (and the automotive sector as a whole), as it lost more than $10 per share in Q4 2024 and then faced a wave of tariff headwinds following the Trump administration’s transition. But CEO Shane O’Kelly has become relentlessly focused on cutting costs and getting “back to basics”, and these efforts are finally paying dividends.
Advance Auto Parts Q4 2025 resultsdefied even the most generous estimates. Revenue slightly beat analyst projections ($1.97 billion vs. $1.95 billion expected), but EPS of 86 cents per share was more than double the projected figure. Same-store sales actually grew 1% over the full year, and 17 underperforming locations were closed. The 2026 guidance also boosted the stock as management projects 1-2% comps, 45% gross margins, EPS between $2.40 and $3.10, and approximately $100 million in free cash flow generation.
Some profit-taking occurred following the earnings release since the stock had already risen nearly 50% since the start of the year. However, once the dust settles, the uptrend is likely to remain in place now that the share price has burst above the 50-day and 200-day SMAs. The Moving Average Convergence Divergence (MACD) also indicates bullish activity, with the MACD line crossing above the signal line and then rising above the histogram during the breakout.
Rivian: Narrowing Losses Lead 2026 Catalysts
Friday the 13th was anything but scary for Rivian Automotive Inc. (NASDAQ: RIVN) as the company exceeded top- and bottom-line estimates in its Q4 2025 report. YOY revenue growth actually declined 25% due to the expiration of the EV tax credits, but sales figures still beat expectations, and the company’s loss narrowed to 66 cents per share.
The smaller losses were driven by a $5,500 increase in average vehicle selling price, while the cost of vehicles sold dropped by $9,500 on average. It marked the firm’s first year of gross profit, and the affordable midsize R2 model is expected to begin deliveries in Q2 2026. The company expects to sell between 62,000 and 67,000 vehicles in 2026, the low end representing a 47% increase over 2025’s total.
RIVN shares gained 20% in a volatile session following the report, although it was down from the open. The stock now sits directly at the 50-day SMA, which had previously served as a support level when shares rallied at the end of 2025. A bullish MACD cross also indicates a favorable trend, but the company will likely need a successful R2 rollout to sustain this momentum. READ THIS STORY ONLINE
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Medtronic’s “Textbook” Reversal: How High Can It Really Go in 2026?
Written by Thomas Hughes
Medtronic’s (NYSE: MDT) stock price is amid a textbook reversal, having formed a Head & Shoulders Pattern and broken to fresh highs, confirming the baseline as a critical pivot point. The question now is how high the stock might rise. The reversal is driven by an improving growth outlook, profitability, capital return, and market sentiment, which provides a solid support base in 2026.
Institutions and Analysts Buy Into Medtronic’s Growth Outlook
Institutions, representing the largest body of investment capital, own more than 80% of this stock and have been accumulating it for several quarters. MarketBeat data reveals a bullish balance for five consecutive quarters, a $2-to-$1 bias in favor of buyers, and buying activity ramping at year’s end 2025 and in early 2026, aligning with the stock price action. Assuming the bullish bias persists, MDT’s stock price has nowhere to go but up.
Analysts, representing private capital and, to a degree, retail market sentiment, rate this stock as a Moderate Buy. Analyst coverage has been increasing alongside an improving outlook, and the price target trend was bullish ahead of the fiscal Q3 (FQ3) release. (Note that Medtronic’s fiscal reporting period is behind the calendar year.)
Forecasting a 10% upside at the consensus and another 10% at the high end, the revision trends also align with the stock price action. While the FQ3 release and guidance update failed to catalyze a rally, the data aligned with expectations, which were driving an uptrend to begin with. The likely outcome is that analyst trends remain solid through the next quarter, underpinning price action.
The technical targets provide another convergence in the outlook. The price targets, now that the reversal pattern is confirmed, assume a movement equal to the range’s dollar magnitude as the base case and a percentage movement as the bull case. These targets put MDT stock in the range of $118-$124, nicely bracketing the high-end analyst target of $120. The only question is timing, and the charts suggest this move can happen before mid-year.
Medtronic Affirms Long-Term Growth Targets: Outperforms in FQ3
Medtronic had a solid quarter, with revenue of $9 billion outpacing consensus estimates by a slim margin. Strength was seen across the enterprise, with 6% organic growth compounded by foreign exchange tailwinds. Cardio was the strongest segment, up nearly 14% and 10.6% organically, followed by 8.3% organic growth in Diabetes, 2.7% in Medical Surgical, and 2.5% in Neurosciences.
Medtronic experienced margin pressures, especially from tariffs, but none were worse than expected. The net result was an adjusted operating margin of 24.1% and adjusted earnings per share (EPS) of $1.36. The adjusted EPS outpaced estimates by 150 basis points, suggesting forward guidance could be cautious. Medtronic’s guidance was reaffirmed, expecting revenue growth in the range of 5.5% and full-year adjusted EPS of $5.64 at the midpoint. The sticking point is that this guidance falls short of the consensus, but is easy to overlook given the slim, 1-cent miss.
More pertinent details include the long-term outlook, which is maintained, and the cash flow, which is sufficient to sustain the capital return. The capital return outlook includes dividendsand share repurchases, with the dividend yielding approximately 2.8% as of mid-February and repurchases reducing the count annually. Incentives for investors include a payout ratio of about 50% and a history of distribution increases, which has the company on track for Dividend King status this decade.
Medtronic: Many Catalysts in 2026
Medtronic stock has several catalysts that could drive it higher in 2026. Not only are critical segments, including Cardiovascular, experiencing accelerated growth, but new products and expanding approvals, such as the Symplicity Spyral RDN system and the Hugo robotic systems, are also driving business. Meanwhile, activists are pushing for operational changes.
The combined impact could result in outperformance in the company’s fiscal Q4, full-year 2025, and 2026, with expanding margins and improved capital returns.
Elliott Investment Management, which emerged as a major shareholder in 2025, seeks to improve efficiency, accelerate growth, and boost the stock valuation. Trading at 17X earnings, MDT stock is a bargain relative to average S&P 500 companies and med tech peers. Assuming an advance to align with averages, MDT stock could rise as many as five handles to trade near 22X earnings, a valuation suggesting a price point near $125. READ THIS STORY ONLINE
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ServiceNow Insiders Buy as Wall Street Panics Over an AI SaaSpocalypse
Written by Jeffrey Neal Johnson
The “SaaSpocalypse” narrative has gripped Wall Street, dragging the software and tech sector down roughly 22% this year. The fear driving this sell-off is singular, terrifying, and easy to understand: artificial intelligence (AI) agents will automate white-collar work so effectively that businesses will no longer need to buy software licenses for human employees.
If an AI can do the job of three analysts, why pay for three software seats? This logic has led investors to dump shares of companies ranging from Salesforce (NYSE: CRM) to Adobe (NASDAQ: ADBE), fearing their business models are evaporating.
But while the trading algorithms sell on fear, the insiders at ServiceNow (NYSE: NOW) are buying with conviction.
In a mid-February strategic move, ServiceNow CEO Bill McDermott executed a $3 million open-market purchase of his company’s stock. Even more significantly, key members of the executive team, including the CFO and Chief People Officer, simultaneously terminated their automated 10b5-1 trading plans.
While the market panics about an AI future without software, ServiceNow’s leadership is betting personal capital that the company is not the victim of AI, but its master.
Why Insiders Just Killed the Autopilot
To understand the weight of this move, investors must look past the headline purchase and focus on the legal mechanics. Most corporate executives use something called a 10b5-1 plan to sell stock. These are automated schedules set up months in advance, for example, sell 1,000 shares on the first of every month.
Executives use these plans for valid personal reasons: they are paid largely in stock, and they need to sell shares to diversify their personal wealth or pay taxes. These plans exist to protect executives from accusations of insider trading by putting their sales on autopilot, regardless of whether the company’s stock price is high or low.
Terminating these plans early is incredibly rare. It is a legally complex maneuver that often triggers cooling-off periods, preventing executives from setting up new sales plans for months. By cancelling these plans today, ServiceNow’s C-Suite has effectively removed the autopilot selling pressure from the market. They are signaling that they view the stock, currently trading near $105, down roughly 55% from its highs, as so severely undervalued that they refuse to sell even a single share.
This is a corporate put option. It suggests that management’s internal data contradicts the external market panic. Analysts at firms like Evercore ISI have already flagged this as a deliberate vote of confidence. When an entire management team stops selling and starts buying during a market crash, it usually marks a psychological and financial floor for the stock.
The AI Control Tower Defense Strategy
The market’s fear is rooted in seat compression. Investors worry that AI agents will shrink corporate headcounts, leading to fewer software subscriptions. ServiceNow’s counterargument is distinct: they are no longer just selling tools for humans; they are selling the governance layer for AI agents.
As enterprises deploy billions of autonomous agents, corporate IT environments will become chaotic. These digital workers need to be secured, audited, and managed. They need to be told what data they can access and what actions they are allowed to take. ServiceNow calls this strategy the AI Control Tower.
This strategy explains the company’s aggressive and controversial spending spree on mergers and acquisitions (M&A).
- Armis ($7.75 billion): This massive acquisition secures the Operational Technology (OT) segment. This refers to physical assets, such as factory robots, HVAC systems, and medical devices, that AI agents will increasingly interact with.
- Moveworks ($2.85 billion): This deal provides the sophisticated conversational interface that acts as the front door for employees to command these agents.
Critics have argued these acquisitions dilute shareholder value and add integration risk. However, the insider buying suggests that leadership views these assets as essential infrastructure. They are betting that as the business world grows more chaotic and automated, a centralized, secure platform like ServiceNow will become increasingly valuable. They aren’t buying a legacy software company; they are buying the regulatory infrastructure for the AI economy.
The Double Down: Buybacks and Margins
There is a stark gap between ServiceNow’s stock chart, which appears to show a crisis, and its financial statements, which appear to show a boom. While the share price has collapsed, the business is accelerating.
In the fourth quarter, subscription revenue grew 21% year over year to $3.47 billion. Even more impressive was the company’s efficiency; Free Cash Flow (FCF) margins hit a massive 57%. This paints a picture of a Rule of 50 company. In software investing, the Rule of 40 (Growth Rate + Profit Margin) is the gold standard for a healthy company. ServiceNow is exceeding the Rule of 50, meaning it is generating cash faster than it can spend it, even as it grows rapidly.
The Board of Directors has acknowledged this disconnect between price and performance by authorizing a new $5 billion share repurchase program. But they didn’t just authorize it; they triggered a $2 billion Accelerated Share Repurchase (ASR) immediately.
This is a critical distinction. An authorization is just a promise; an ASR is an immediate execution. The company is aggressively buying back its own stock at these discounted levels. This mechanically boosts earnings per share (EPS) because there are fewer shares in circulation to divide the profits among.
From a valuation perspective, the math is compelling. The stock is trading in the $100-$107 range, while the median analyst price target sits at $192.This implies a potential upside of nearly 80% if market sentiment normalizes. Investors are currently pricing ServiceNow as if its growth were about to evaporate, even though the company’s guidance calls for continued ~20% revenue growth in 2026.
The Binary Bet
Investors today face a binary choice. One path is to believe the SaaSpocalypse narrative: that AI will render enterprise software obsolete faster than these companies can adapt, turning industry giants into value traps. The other path relies on hard financial data: accelerating revenue, massive cash-flow margins, and aggressive buying by the people who know the business best.
Bill McDermott, the former CEO of SAP and now the leader of ServiceNow, has a history of making bold calls that pay off. Betting against him when he puts his own money on the table has historically been a losing trade. The simultaneous termination of executive sales plans and the $3 million insider purchase suggest that the bottom is likely in. For investors willing to look past the panic headlines, ServiceNow offers a rare opportunity to buy a market leader at a crisis discount. The insiders have placed their bets; now the market must decide if it will follow. READ THIS STORY ONLINE
The day the gold market broke (Ad)
On September 14th, 2023, something big happened that didn’t make the news. The price gap between London gold and Shanghai gold blew out to $120 an ounce. For years, that gap was a few dollars, maybe $5 or $10. A 20x jump in seconds isn’t a glitch, it’s the system breaking. Traders tried to buy gold in London to sell in Shanghai, but hit a wall. The London vaults were empty. Since that day, gold has hit 53 all-time highs. One stock is positioned to capture the bulk of this wealth transfer.SEE THE FULL STORY ON THIS OPPORTUNITY NOW.
3 Under-the-Radar Earnings Surprises Could Signal a New Trend
Written by Dan Schmidt
Earnings season is winding down, and more than three-quarters of the companies in the S&P 500 have reported their latest results. According to FactSet, roughly 74% of firms reporting so far have beaten analysts’ EPS estimates, and 73% have beaten revenue estimates.
While these overall numbers are within the five- and ten-year averages, the dispersion between winners and losers kept the aggregate earnings growth rate flat for the period. Many of last year’s success stories have underperformed in 2026, while some laggards have posted parabolic gains. Three companies whose earnings reports don’t typically garner headlines still warrant attention for the numbers in their most recent reports. Are these one-time standouts or the sign of a larger trend?
Applied Materials: Semiconductor Demand and Guidance Boost Power Double-Digit Gains
Applied Materials Inc. (NASDAQ: AMAT) is probably the most “on-the-radar” stock here, with its $280 billion market cap and $28 billion in annual sales. But as a picks-and-shovels play in the semiconductor space, Applied Materials usually reports in the background while NVIDIA Corp. (NASDAQ: NVDA) or Alphabet Inc. (NASDAQ: GOOGL) steal the headlines. However, this most recent report warrants attention as AMAT shares soared 12% following the release, driven by strong guidance and equipment demand.
The company reported its fiscal Q1 2026 results on Feb. 12 and surpassed analysts’ estimates on both EPS and revenue, with earnings beating expectations by 7%. But the news that really excited investors came on the conference call when CEO Gary Dickerson projected 20% sales growth in calendar year 2026, a figure that exceeded even the most optimistic analyst projections. Most of the company’s revenue comes from its Semiconductor Systems division, which sells flash memory, logic manufacturing equipment, transistors, DRAM, and more. Dickerson projects Q2 revenue of approximately $7.65 billion, with continued rapid growth in the Applied Global Services division.
The target price increases came in fast and furious following the optimistic report, and it received two upgrades from Hold to Buy from Summit Insights and KGI Securities. The average price target of the 17 analysts who raised the stock is now $435, representing nearly 20% upside from current levels.
AMAT shares have been in an uptrend since September, when the price crossed over the 50-day and 200-day simple moving averages (SMAs). The 50-day SMA has been a strong support level for the stock ever since, providing a bumper whenever shares dip. The Relative Strength Index (RSI) is still under the Overbought threshold of 70 despite the big earnings bump, so this rally could have staying power.
Advance Auto Parts: Turnaround Efforts Starting to Show Results
Advance Auto Parts Inc. (NYSE: AAP) may finally be returning to investablity after losing more than 50% over the last five years. The last 12 months have been particularly tumultuous for the company (and the automotive sector as a whole), as it lost more than $10 per share in Q4 2024 and then faced a wave of tariff headwinds following the Trump administration’s transition. But CEO Shane O’Kelly has become relentlessly focused on cutting costs and getting “back to basics”, and these efforts are finally paying dividends.
Advance Auto Parts Q4 2025 resultsdefied even the most generous estimates. Revenue slightly beat analyst projections ($1.97 billion vs. $1.95 billion expected), but EPS of 86 cents per share was more than double the projected figure. Same-store sales actually grew 1% over the full year, and 17 underperforming locations were closed. The 2026 guidance also boosted the stock as management projects 1-2% comps, 45% gross margins, EPS between $2.40 and $3.10, and approximately $100 million in free cash flow generation.
Some profit-taking occurred following the earnings release since the stock had already risen nearly 50% since the start of the year. However, once the dust settles, the uptrend is likely to remain in place now that the share price has burst above the 50-day and 200-day SMAs. The Moving Average Convergence Divergence (MACD) also indicates bullish activity, with the MACD line crossing above the signal line and then rising above the histogram during the breakout.
Rivian: Narrowing Losses Lead 2026 Catalysts
Friday the 13th was anything but scary for Rivian Automotive Inc. (NASDAQ: RIVN) as the company exceeded top- and bottom-line estimates in its Q4 2025 report. YOY revenue growth actually declined 25% due to the expiration of the EV tax credits, but sales figures still beat expectations, and the company’s loss narrowed to 66 cents per share.
The smaller losses were driven by a $5,500 increase in average vehicle selling price, while the cost of vehicles sold dropped by $9,500 on average. It marked the firm’s first year of gross profit, and the affordable midsize R2 model is expected to begin deliveries in Q2 2026. The company expects to sell between 62,000 and 67,000 vehicles in 2026, the low end representing a 47% increase over 2025’s total.
RIVN shares gained 20% in a volatile session following the report, although it was down from the open. The stock now sits directly at the 50-day SMA, which had previously served as a support level when shares rallied at the end of 2025. A bullish MACD cross also indicates a favorable trend, but the company will likely need a successful R2 rollout to sustain this momentum. READ THIS STORY ONLINE
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