Once These Biotech Stocks Settle Down, I’m All Over Them
Second-quarter earnings reports continue to power the market higher. And there is no doubt that the headline earnings and revenue growth have been a sight to behold this quarter. Especially in light of an overall economy that has seen less than 2% gross domestic product growth over the past three quarters and with inflation being above the Fed’s official two percent target for nearly five and a half years now. Hopefully, we finally get a lasting resolution that fully reopens the Strait of Hormuz by the end of the month to help here.
As can be seen above, profit growth this quarter has been stellar. A large chunk of this growth has come from semi-conductor names like Intel ($INTC), Nvidia ($NVDA) and Micron ($MU), which are experiencing a massive demand surge from the hyperscalers. This has boosted margins in this historically cyclical industry to historical highs. Profit margins for the S&P 500 have also hit historical highs. And this metric always has had a historically strong reversion to the mean over time. It is one of fundamental pillars of Economics 101.
And the headline numbers from hyperscalers like Amazon ($AMZN) and Microsoft ($MSFT) beat expectations, even as free cash flow has plunged across the industry over the past year. Debt and equity issuance has surged this year to support burgeoning capital budgets. Total debt and off-balance sheet liabilities at the five major hyperscalers have hit $3 trillion according to a recent analysis by Nikkei. Alphabet ($GOOG) floated yet another $25 billion bond deal this week. This is in addition to the just over $50 billion the company raised in the first half of 2026 via debt with another $85 billion from an equity raise in June.
Credit default swap prices on Oracle’s ($ORCL) debt have hit new highs this week and surpassed the peak of the Great Financial Crisis. Half of this compute capacity is allocated to money-losing Anthropic and OpenAI, which are facing increasing competition by the week from fast-improving and much cheaper Chinese AI models.
To me, as far as second-quarter results go, my view is this is as good as it gets. So, with those caveats, I acknowledge the strong year-over-year growth from the S&P 500 this quarter. Inn today’s column, however, I will highlight two big Q2 earnings beats from two of the small and mid-cap biotech/biopharma names within my portfolio that got little attention in this AI driven market.
We will start with Corcept Therapeutics ($CORT), which is one of the few names within my portfolio that has seen a semiconductor like stock chart here in 2026. This is a name I last gave a shout out to in January. The company delivered blowout results on July 25 that easily beat top- and bottom-line expectations. Sales increased nearly 32% on a year-over-year basis. Management raised fiscal 2026 revenue guidance range to 15% above the consensus at its midpoint. This triggered several significant price target upward revisions from analyst firms.
Iovance Biotherapeutics ($IOVA) rose over 40% in trading on Thursday after the company posted its own stellar results. The stock is now up over 60% since I last revisited it in late February. Amtagvi, approved as a late-line treatment for melanoma in 2024, is gaining substantial traction in the market. Management kept its sales guidance for the full year in place but will likely raise it after Q3 results based on comments. Leadership did state that gross margins will increase in the quarters ahead. Not surprisingly, several analyst firms reaffirmed buy ratings and boosted their price targets after Q2 results posted.
I am not chasing the huge rallies in either of these stocks right now. But if we get a decline in the overall market that brings either equity down 10% to 15% from current levels, I will add to my positions via covered-call orders.
At the time of publication, Jensen was long AMZN, CORT, IOVA
