To The Moon

If this week’s earnings season were a movie, the plot twist just stunned the audience. The script was supposed to be simple: AI companies print money, and their stocks go up. Instead, we witnessed a brutal reality check. The "A-Students" of the AI world ( $ServiceNow(NOW)$, $Celestica(CLS)$, $SAP SE(SAP)$ ) delivered record-breaking report cards, only to be punished for not being perfect enough. The market punished them for the "sin" of high expectations, fearing that the cost of growth (CapEx) is becoming too high.

Meanwhile, $Starbucks(SBUX)$ stumbled in with messy financials, but was welcomed with open arms simply for showing signs of life. The narrative has shifted violently: Wall Street is no longer paying for "Growth at Any Price"—it. It is now demanding "Perfection at This Price."

Here is the deep dive into the 5 stocks that defined this chaotic week:

1. $ServiceNow(NOW)$ : The "Acceleration" Trap(-9.94%)

CEO Bill McDermott remains the ultimate bull, declaring that "AI isn't replacing software; it's driving it." He has the numbers to back it up: AI-related Annual Contract Value (ACV) hit $600 million, marking the fastest product adoption in company history.

• The Conflict: Despite cRPO growing 21.5% and a new $5 billion buyback authorization, the stock suffered a massive 9.9% sell-off.

• The Verdict: Investors were betting on a massive "acceleration" fueled by the new Moveworks acquisition. When growth came in merely "steady" rather than "explosive," the valuation premium evaporated instantly. The market ignored the long-term AI agent story and fixated on short-term multiple compression.

2. $Celestica(CLS)$ : The $1 Billion "CapEx Shock"(-13.10%)

Celestica has successfully transformed from a low-margin assembler into a critical engine for AI infrastructure, delivering a stunning 70% YoY jump in EPS.

• The "Bold Bet": Management raised their 2026 revenue outlook to $17 billion but dropped a bombshell: they are accelerating CapEx to $1 billion to meet "unprecedented" demand for AI server racks and switches.

• The Verdict: The stock crashed 13.1%. Why? The market is terrified of a "cycle peak." Traders saw the $1 billion spend not as an investment, but as a risk factor, fearing that Celestica is ramping up spending just as hyperscaler demand might normalize. It is a classic tug-of-war between current growth and future macro fears.

3. $SAP SE(SAP)$ : No Mercy for "Phasing"(-15.20%)

SAP is executing a massive migration of global enterprises to the Cloud, with Cloud Revenue surging 26% and Business AI now embedded in two-thirds of its deals.

• The Miss: A tiny "glitch" in the matrix caused a 15.2% collapse. Current Cloud Backlog (CCB) grew 25%, missing the whisper number of 26%. Management blamed "deal phasing"—meaning big contracts were signed but revenue recognition was delayed.

• The Verdict: In this jittery market, "phasing" sounds like an excuse. Despite announcing a massive €10 billion buyback, investors punished the lack of immediate gratification. However, the drop brings the valuation back to reality for a company still targeting €10 billion in Free Cash Flow by 2026.

4. $Starbucks(SBUX)$ : Traffic Trumps Profit(-1.35%)

CEO Brian Niccol’s "Back to Starbucks" plan is painful but effective. He is simplifying menus and staffing up to fix the one thing that matters: speed.

• The Surprise: While profit margins shrank due to heavy investments, the top line told a different story. US Traffic grew 3% (the first positive print in two years) and China Comp Sales surprised with +7%.

• The Strategic Pivot: The decision to spin off the China business into a Joint Venture with Boyu Capital was the masterstroke. It de-risks geopolitical exposure while keeping a stake in growth.

• The Verdict: Shares gapped up ~7% to open at $102, only to surrender all gains and slide back to close at $95。 Down only 1.35% in a sea of red. The market is willing to forgive the profit miss because the customers are finally coming back. "Better than feared" is the new bullish.

5. $STMicroelectronics NV(STM)$ : Betting on the Cycle Bottom(-5.64%)

STM is fighting through the worst of the automotive inventory correction, but green shoots are emerging.

• The Pivot: While legacy auto demand remains soft, STM is aggressively pivoting to AI Data Centers, targeting $500 million in AI power revenue in 2026 alone.

• The Outlook: A Q1 2026 guidance beat suggests the inventory "bloodletting" is finally over.

• The Verdict: Down 5.6%, but the tone has shifted. Investors are starting to look past the current trough, positioning for cyclical recovery in the second half of the year as the AI power segment kicks in.

Conclusion: A Market in Recalibration⚖️

This week proved that stock prices are driven by expectations, not just results.

• 🤖For AI ( $ServiceNow(NOW)$, $Celestica(CLS)$, $SAP SE(SAP)$ ): The fundamental growth is intact, but the "AI Premium" is shrinking. Investors have entered a phase of valuation digestion, demanding immediate efficiency rather than blind CapEx spending.

• ☕For Traditional ( $Starbucks(SBUX)$, $STMicroelectronics NV(STM)$ ): The narrative has shifted from "Fear" to "Stabilization." As traffic and inventory normalize, these discounted sectors are re-emerging as attractive safety plays.

🎯The market's focus has officially shifted from "Who is growing the fastest?" to "Who is executing the most efficiently at a reasonable price?"

Happy investing this earnings season! 💰 As we navigate this short-term pullback, stay disciplined and keep risk management top of mind. 🛡️📉

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