Cybersecurity Names Won’t Stay Down for Long: 8 Key Items Shaping the Stock Market Thursday
These are the early headlines and other items poised to influence the market at the start of the trading day. As we share this collection of market drivers, U.S. equity futures point to a mixed market open with a softer one for the Nasdaq.
In terms of investor mood, the CNN Fear & Greed Index moved out of Extreme Fear and into Fear after Wednesday’s rally, with the VIX near 16.8.
1. Brent crude rose from a two-month low after tumbling almost 9% in the previous session as investors bet that a Democratic sweep in the US midterm elections could accelerate efforts to end the war in the Middle East… The prospect of easing tensions has pushed Brent down almost 20% this week. Yet uncertainty persists in a market that has swung wildly during the war. While crude exports from the Persian Gulf have rebounded near to pre-conflict levels, shipping in the region still faces constant risk of attack and US-Iran talks are yet to move toward a resolution. (Bloomberg)
The question yet to be answered is how the outcome of the midterm elections will shape President Trump’s next move with Iran. Remember, we have roughly two months until the new Democratic-controlled Congress takes office. Meanwhile, commercial oil inventories in major consuming countries are near their lowest in 15 years and U.S. diesel inventories are below 100 million barrels for the first time since 2003. That suggests energy prices will only improve so much in the near-term.
2. Goldman Sachs Group Inc. and Apollo Global Management Inc. are in talks with Wall Street investors to start selling portions of a roughly $40 billion chip financing deal for SpaceX, just as the AI boom braces for upheaval following a sweeping Democratic victory. The two firms have begun approaching potential buyers for the multi-tranche financing, according to people familiar with the matter. The deal, structured to keep the debt off SpaceX’s balance sheet, is the largest arrangement of its kind for GPUs on record, SpaceX has said. (Bloomberg)
On the one hand, another sign of off-balance sheet financing for AI compute demand, but also another positive one for AI chip demand, and in this case that means Nvidia ($NVDA), and networking with an eye toward known SpaceX ($SPCX) supplier, Arista Networks ($ANET).
3. Arm Holdings Plc gave a revenue forecast for the current period that left investors underwhelmed, a sign the chip designer hasn’t yet met the lofty hopes for its push into the AI data center market. Sales will be about $1.54 billion in the fiscal third quarter, which runs through December, the company said Wednesday in a statement. Though analysts estimated $1.53 billion on average, some projections neared $1.7 billion, according to data compiled by Bloomberg. (Bloomberg)
While that illustrates the issue of Wall Street “whisper numbers” and sky-high expectations, in our view the more telling comment was made during the Arm’s ($ARM) earnings call on Wednesday night from CEO Rene Hass:
Demand is stronger today than we talked about when we did the Arm Everywhere event in March. And subsequently, demand for multiple customers, Meta being the chief customer has also been beyond what we’ve expected. That being said, we’ve been working very hard over the last few quarters on securing what’s necessary in the supply chain to address that demand. There’s multiple components to it. There is wafer supply, there are substrates, there are testers, there’s memory, et cetera.
4. The Qualcomm CDMA Technologies segment, which includes sales of the company’s chips, reported an 8% revenue decline to $9.02 billion. Within the segment, revenue from handsets fell 26% to $5.14 billion, while automotive revenue was up 89% at $1.99 billion. Internet of things revenue grew 4% to $1.89 billion. (WSJ)
Falling demand is one thing and given smartphone industry data the drop should not have been a major surprise, especially as once key customer Apple ($AAPL) accelerates moving to its in-house, Apple Silicon modems. But Qualcomm is also seeing its margins get squeezed due to higher input costs, including memory. Like other companies faced with rising input costs, Qualcomm is raising prices. Odds are it won’t be the only chip company, and it reaffirms that memory capacity outside of AI and data center remains extremely tight.
5. Motorola Solutions raised its full-year outlook after logging higher sales in the latest quarter. The video technology company said it expects annual sales of $13.05 billion, up from its prior guidance of $12.98 billion. It also raised its outlook for adjusted earnings per share to $17.94 to $17.99, up from $17.62 to $17.72. In the third quarter, Motorola recorded a 12% increase in sales to $3.38 billion. (WSJ)
In our view, the far more telling figures are the sequential rise in Motorola Solutions’ ($MSI) backlog level to $16.6 billion and the 20% year over gain in orders during the quarter. The demand driving those figures higher set up quarterly results tonight from Axon ($AXON), with the market calling for a 31% year over year increase in its top line and EPS of $1.89, up from $1.17 in the year-ago quarter. Annual recurring revenue figures and future contracted bookings for the quarter and how they stack up against prior quarters will be on our punch list.
6. From hacked supermarket fridges and a record cryptocurrency theft at Binance to an emergency over flaws in widely used web software, companies worldwide are facing a wave of cyber threats executives say AI is accelerating and making more sophisticated. The surge is straining IT departments, with staff working overnight to patch software vulnerabilities, prompting some companies to turn to and increase investment in AI-powered security tools to help manage the workload. (Reuters)
Cybersecurity stocks look to open lower on Thursday morning but that’s measured against the ongoing string of data points like the one above that we’ve shared over the last few weeks. We may see a step up in M&A activity following CrowdStrike’s ($CRWD) pick up of two artificial intelligence security startups, Fiddler AI and Dreadnode, as cybersecurity companies look to include specialized tools for AI security, data integration, and cloud infrastructure.
7. Economic data today per TipRanks: Initial & Continuing Jobless Claims (Weekly), Unit Labor Costs (Q3 2026), EIA Natural Gas Inventories (Weekly), Challenger Job Cuts (October), Nonfarm Productivity (Q3 2026).
8. Companies reporting today per TipRanks: AM – Advanced Drainage ($WMS), Air Products ($APD), Canada Goose ($GOOS), Cardinal Health ($CAH), ConocoPhillips ($COP), Cummins ($CMI), Duke Energy ($DUK), Hertz Global ($HTZ), Kimberly Clark ($KMB), Molson Coors ($TAP), Papa Johns’ ($PZZA), Parker-Hannifin ($PH), Peloton ($PTON), Rockwell Automation ($ROK), Tapestry ($TPR), Wendy’s ($WEN). PM – Affirm ($AFRM), Airbnb ($ABNB), AMN Healthcare ($AMN), Axon ($AXON), Cloudflare ($NET), Con Edison ($ED), DraftKings ($DKNG), James Hardie ($JHX), Lyft ($LYFT), Simon Properties ($SPG), Sweetgreen ($SG), Texas Roadhouse ($TXRH), Wynn Resorts ($WYNN).
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At the time of publication, TheStreet Pro Portfolio was long AAPL, ANET, AXON and NVDA.
