Apple Price Target Cuts, Palantir Earnings Reaction: 8 Key Items Shaping the Stock Market Tuesday
These are the early headlines and other items poised to influence the market at the start of trading Tuesday. As we share this collection of market drivers, U.S. equity futures point to a mixed market open.
1. With polls set to open Tuesday morning for the US midterm elections and tens of millions of early ballots already cast, voters say they are frustrated by the high cost of living, fuel prices that spiked after the launch of the Iran war and uncertainty over where their jobs and the world’s largest economy are headed in the age of AI. (Bloomberg) Investors are moving cautiously as US polls open in a vote that will determine control of Congress. The election is adding another layer of risk for traders already navigating geopolitical crosswinds at a time when the once-dominant artificial intelligence trade is experiencing a sharp pullback. (Bloomberg)
We’ll remind readers that we are policy focused, not politically driven at the Pro Portfolio, and that means while we are interested in the outcome of today’s midterms, subsequent policy moves will be of greater interest.
In terms of investor mood, even though the Volatility Index isn’t flashing extreme levels, at a reading of 19, the CNN Fear & Greed Index is flashing Extreme Fear down from Fear last week. As we navigate today, the question many will be asking is if the S&P 500 can recover its 100-day moving average near 7618. Similarly, with the Nasdaq Composite on a path to its 200-day moving average near 25,064, many eyes will be looking to see if a positive test of that support level is in the cards.
2. Iran and the United States remain far from a deal to end the war, a senior Iranian official told Reuters on Tuesday, despite intensified diplomatic efforts to avert a return to major conflict after the US midterm elections. Overnight, the US carried out “defensive” strikes on Iran’s Qeshm island, with a US official saying the strikes targeted surface-to-air missiles used against US assets. Another official said the strikes appeared to be limited and did not signal a resumption of major combat operations. (Reuters) America’s Gulf allies are preparing for the possibility of a broader U.S. military campaign against Iran that could trigger retaliation against economic and civilian infrastructure across the region… (WSJ)
With oil prices dropping around 7% yesterday, that report is bring some risk premium back into the energy market just when it was starting to price in a more diplomatic path. Whether President Trump will lean toward a larger attack after the midterm elections or double down on a diplomatic solution, will determine that the next move in energy prices and most likely that aspect of inflation pressures.
3. Apple warned on Monday that the cost of memory chips would continue to rise, pressuring gross margin for the crucial holiday quarter, but said it had taken steps to lock in supplies… Chief Financial Officer Kevan Parekh said Apple expects memory costs to keep rising into next year. Asked whether Apple had signed a long-term supply agreement, Chief Operating Officer Sabih Khan did not directly confirm a deal but said Apple is working closely with memory suppliers and that its purchasing commitments increased by $33 billion during the quarter. (Reuters)
While Apple ($AAPL) delivered better-than-expected September-quarter results, which we’ll review in a more detailed note later, the focus is on the impact higher memory costs will have on gross margins. As we discussed last week when Intel ($INTC) reported, rising memory costs has been a known issue for months, especially if you’ve paid attention to comments from Micron ($MU) and others in the memory space. To us, that makes the market reaction to Apple’s gross margin guidance for the current quarter somewhat surprising.
In response, we are seeing modest price target trims across Wall Street with JPMorgan lowering its AAPL target to $355 from $360, and Morgan Stanley making a similar change down to $350. We will be revisiting our $375 price target, most likely lowering it by at least a few dollars, and maintaining our Two rating. With ramping iPhone Duo production and Apple’s ability to flex its supplier ecosystem, the real tell for Apple shares will be tracking comments from key suppliers. Skyworks ($SWKS) reports next week, and monthly revenue reports from Taiwan Semi ($TSM) and Foxconn ($FXCOF) should be arriving soon.
4. Total quarterly revenue [for Palantir Technologies] jumped about 96% to $2.31 billion, the second straight quarter of 90% growth. Analysts had estimated revenue of $2.18 billion… In the third quarter, revenue from commercial clients surpassed government revenue in the US for the first time, driven by the rapid adoption of AI software to improve operations and safeguard sensitive data… Palantir Technologies forecast revenue above estimates for the last three months of the year after topping third-quarter expectations, banking on sustained demand for its data-analytics software from the US government and commercial clients. The company expects fourth-quarter revenue to be between $2.649 billion and $2.653 billion, it said on Monday, above LSEG-compiled analysts’ average estimate of $2.46 billion… The growth in US commercial total contract value – the potential lifetime value of signed contracts – slowed to 11% year-over-year in the third quarter, from more than 153% in the previous quarter. (Reuters)
Wall Street’s reaction to Palantir’s ($PLTR) results is rather different than what we are seeing in premarket trading of the shares. Citi is taking its PLTR price target to $265 from $250, Morgan Stanley to $233, and Piper Sandler to $235.
From our perspective, with more to come later this morning, U.S. commercial remaining deal value (RDV) reached $6.517 billion, up 79% year over year and 4% sequentially, while total RDV reached $13.4 billion existing the September quarter, up 55% year over year. During the earnings call, CFO Dave Glazer noted several eight-figure deals were shorter in duration than usual as customers adopted initial Sovereign AI capabilities, which are expected to lengthen and grow over time.
We’ve seen initial contract wins morph into larger deals over time, and that means winning new customers is a key metric to track. For Q3 2026, U.S. commercial customers rose 29% year over year and 5% sequentially to 686. Total commercial customers reached 904, up 22% year over year and more than 7% sequentially. We see those figures as proof positive of rising AI adoption and we’ll monitor deal contract bucket sizes in the coming quarters to assess initial wins becoming larger ones.
Subject to where we see PLTR shares land, a review of our Two rating may be called for.
5. Eaton’s earnings are a relief for nervous AI investors… The electrical equipment provider, on Tuesday morning, reported third-quarter earnings per share of $3.68, up 20% year over year, from sales of $8.9 billion, up 28% year over year. Wall Street was looking for earnings per share of $3.54 from sales of $8.5 billion. For the fourth quarter, Eaton expects organic sales growth of 13% to 15% and earnings per share of about $4.10. Wall Street currently projects organic sales growth of about 11% and earnings per share of $4.09… Total business backlog in the Electrical Americas segment grew 33% year over year. Over the past 12 months, orders exceeded revenues by roughly 30%. Orders in the company’s aerospace business exceeded revenues by about 20%. (Barron’s)
Those figures have Eaton ($ETN) shares moving up in premarket trading, and while we expect upbeat comments on this morning’s earnings call, the topic of supply constraints may emerge. Backing the medium-to longer-term outlook for Eaton’s core electrical business are robust electric utility capital spending plans like the $41.7 billion one at Exelon Corp. ($EXC), the 5-year $100 billion capital plan at American Electric Power ($AEP) and others. We’ll have more after today’s earnings call, but rising backlog at Eaton and those multi-year electric utility capital plans keep us bullish on ETN.
6. Oracle Corp. raised $9.9 billion from a share sale priced at an 11% discount after the company’s stock price was dinged in a choppy session to start the week… The company said also sold $10 billion of bonds on Monday in five tranches, with maturities ranging from three to 20 years… (Bloomberg) Meta is eyeing at least $20 billion from a potential cross-border bond offering, Bloomberg News reported on Monday, with the tech giant tapping debt markets again to raise funds for its AI infrastructure build-out. (Reuters) Alphabet Inc. raised €6 billion ($6.7 billion) in its second euro bond sale this year, offering considerably higher yields than in its transaction in May after concerns over the pace of AI spending drove a credit-market selloff. (Bloomberg)
More indications of tech companies lining up financing for their forthcoming capex plans, which should translate into investment banking fees. OpenAI’s latest funding round is expected to close later this week, and that leaves Anthropic’s pending IPO as the next high-profile capital raise. Recent market chatter points to that IPO coming in between $1.5 trillion-$1.6 trillion, down from $2 trillion a few months ago. Given the level at which recent offerings from Microsoft ($MSFT) and Meta ($META) have been oversubscribed, we’ll be very interested to see where the Anthropic deal prices given the Portfolio’s two financial holdings.
7. Economic data today per TipRanks: LMI Logistics Managers Index (October), RCM/TIPP Economic Optimism Index (November), JOLTS Job Openings & Quits (September), Factory Orders (September), Durable Orders (September).
8. Companies reporting today per TipRanks: AM – AMD ($AMD), ADT ($ADT), Apollo Global Management ($APO), DuPont ($DD), Eaton ($ETN), Ferrari ($RACE), Henry Schein ($HSCI), Keurig Dr Pepper ($KDP), LGI Homes ($LHIH), Phillips ($PHG), Shopify ($SHOP), Sysco ($SYY), Yum China ($YUM), Yum! Brands ($YUM). PM – Amgen ($AMGN), Arista Networks ($ANET), Avis Budget ($CAR), International Flavors & Fragrances ($IFF), Mosaic ($MOS), Omega Health ($OHI), Skyworks ($SWKS), Super Micro Computer ($SMCI), Toast ($TOST).
More Pro Portfolio:
- Adding to 2 Holdings After Earnings, PMI Updates
- Tracking 49 Signals Across 11 Portfolio Investment Themes
- October Monthly Roundup: Navigating the Tech Pullback. What We Bought and Our Shopping List.
At the time of publication, TheStreet Pro Portfolio was long AAPL, ANET, ETN, META, MSFT, MU, and PLTR.
