Earnings Scoreboard - Perfection priced, one print to prove it

To be crystal clear, we have much more work to do and we're early in our journey, and we're encouraged to see proof points that are compounding, with each investment building on the last to create a whole that is greater than the sum of its parts.

Michael J. Fiddelke, CEO of Target, on Q2 earnings call, on 19 August.

Who’s scoring highest and why

From 18 August to 24 August, 14 S&P 500 companies, including 2 Dow Jones components (Home Depot and Walmart) reported earnings. According to LSEG I/B/E/S data, the blended Q2 earnings growth rate for the S&P 500 now stands at 51.9% as of 21 August, up from 51.6% a week earlier and the 18.8% pace anticipated at quarter-end. 

Q2 earnings season remains extraordinary on a blended basis. Excluding Alphabet and Amazon, the S&P 500's blended y/o/y earnings growth rate is projected to be 33.5%, a rate that would mark the strongest since Q2 2021's 91.6%. This would also mark the second consecutive quarter above 25% and the seventh consecutive quarter of double-digit earnings growth for the index.

Some weeks are defined by a single event, and this is one of them. Nvidia reports Q2 results after the close on Wednesday, placing the season’s most systemically important earnings release at the centre of a week already carrying unusual macro significance. Two days later, on Friday morning, Fed Chair Kevin Warsh delivers his first keynote at the Fed’s annual Jackson Hole symposium, marking his most consequential policy communication since taking office in May. The July PCE inflation report and the second estimate of Q2 GDP arrive in between, adding further weight to a late-August period that is usually among the market’s quietest stretches.

Last week's slate, by contrast, delivered a comprehensive and largely reassuring read on the American consumer and the industrial CapEx cycle. Home Depot, Target, Walmart, Analog Devices and Deere & Co. all beat consensus estimates, but the market's reaction to each varied sharply based on the composition and durability of the beat. This was particularly the case for Walmart's disappointing US same store sales figure and the outsized role tariff refunds played in inflating margins across the retail cohort.

One print to move the tape, custom silicon against the merchant standard, the software-AI stress test and a consumer-electronics cycle under cost pressure — themes that define this week

Nvidia’s print sits at the centre of the ‘perfection priced in’ narrative that has defined AI supply-chain reactions throughout August. Cisco’s beat-and-raise still failed to prevent pre-market weakness, while Coherent sold off roughly 6% after earnings despite record revenue and an accelerated three-billion-dollar revenue target. Both reactions show that AI valuations already embed an exceptionally demanding execution threshold. If Nvidia delivers only an in-line beat without a materially stronger Q3 outlook, the read-through risk would extend well beyond its own shares to the broader space of AI-infrastructure beneficiaries that reported strong results over the preceding fortnight. The market is increasingly treating Nvidia’s guidance as the clearest single proxy for aggregate hyperscaler CapEx intentions through the remainder of calendar 2026 and into 2027.

Marvell’s results, read alongside Nvidia’s, should clarify the extent to which the AI-infrastructure buildout is diversifying across silicon architectures. A broader spread of hyperscaler spending would strengthen the durability of the overall CapEx cycle by reducing dependence on a single vendor’s execution. Continued concentration in Nvidia’s merchant GPU franchise, by contrast, would reinforce the winner-take-most structure that has dominated the current phase of the AI theme. The outcome matters for the broader semiconductor supply chain, including Analog Devices’ Communications segment and the optical-networking companies that reported last week, as both can benefit from AI infrastructure investment across multiple silicon architectures.

Salesforce brings a complementary test of the AI cycle: the capacity of AI spending to move beyond infrastructure, semiconductors and hyperscaler CapEx into application-layer software monetisation. Sustained triple-digit annual-recurring-revenue growth at Agentforce, combined with evidence of the promised H2 organic revenue reacceleration, would give investors a clearer framework for identifying enterprise-software incumbents that are capturing AI-driven demand instead of being impaired by it. That distinction has remained difficult for markets to draw cleanly throughout 2026.

Best Buy and HP extend the consumer bifurcation theme that dominated last week’s retail earnings into the technology and consumer-electronics channel. Home Depot’s Pro-channel resilience stood in contrast with softer do-it-yourself demand. Walmart’s e-commerce and advertising strength contrasted with decelerating core US comparable sales. The technology-hardware sector is showing a similar split, with premium AI-enabled categories supporting higher average selling prices as systemwide unit volumes soften. The key issue is the durability of that mix. A structural shift toward value-added technology spending would support a more resilient earnings trajectory, while a demand pull-forward tied to the Windows 11 end-of-support cycle would leave the sector more exposed heading into the critical holiday-quarter reporting season this autumn.

This week’s preview: Marvell’s custom-silicon cross-check to Nvidia’s dominance, Salesforce’s agentic AI bet and the consumer-electronics channel

Major Earnings on the Docket

• Nvidia anchors the week on Wednesday after the close, with the earnings call scheduled for 5:00 pm EDT. Management guided for revenue of approximately $91 billion, plus or minus 2%, implying 94.7% y/o/y growth at the midpoint from the $46.743 billion reported a year earlier. Gross margin is guided at 75.0%, signalling a recovery toward the mid-70s as the Blackwell ramp matures. Consensus sits above the company’s midpoint, at $92.283 billion of revenue and EPS of $2.09, nearly double the year-ago $1.05. FCF is expected to rise 253.8% y/o/y to $47.659 billion.

Reports that Nvidia may raise prices for certain customers in response to higher input costs should put management’s commentary on memory costs, component availability, pricing discipline and margin sustainability under particular scrutiny.

Nvidia has previously indicated that system supply and capacity were sold out for the next twelve months, so any update on advanced packaging, memory procurement, system availability, or incremental supply additions will be important for assessing how much demand can be converted into revenue. With competition intensifying, investors will expect clearer detail on Nvidia’s GPU roadmap, efficiency gains, token-per-minute and token-cost advantages, production-cycle timing, ramp execution, and near-term competitive positioning.

The Data Centre platform remains the core of the investment case. Under the reporting framework introduced this year, the platform is divided into two sub-segments: Hyperscale and AI Clouds, Industrial & Enterprise. Professional Visualisation, Gaming, Automotive, OEM & Other and Tegra Mobile are now consolidated within the Edge Computing platform. For Q2, consensus estimates Hyperscale revenue of $43.632 billion and AI Clouds, Industrial & Enterprise revenue of $42.940 billion.

Data Centre revenue is expected to reach $86.331 billion, up 110.1% y/o/y, and the mix will matter as much as the headline growth rate. Investors will focus on the pace of Blackwell and Blackwell Ultra shipments, the gross-margin trajectory as the mix shifts toward higher-value rack-scale platforms, and the visibility management can offer into the Vera Rubin generation that follows. For Q2, consensus anticipates a gross margin of 75.0%, representing expansion of 240 bps y/o/y and 12 bps q/o/q. Operating income is projected to reach $61.001 billion, up 102.2% y/o/y, implying an operating margin of 66.1%, with expansion of 157 bps y/o/y and 20 bps q/o/q.

The demand backdrop is unusually well documented. The four largest hyperscalers lifted combined CapEx to $166 billion in Q2, underscoring the scale of infrastructure spending behind the AI cycle.

Two additional issues will shape the market reaction. The first is China. The critical point embedded in management’s guidance is that it assumes zero data-centre compute revenue from China, a significant detail given the rapidly evolving regulatory landscape.

In May, the Commerce Department closed a loophole that had allowed Chinese-headquartered entities to acquire Blackwell- and Rubin-family chips through subsidiaries in third countries such as Singapore, Malaysia and the UAE. That channel reportedly enabled hundreds of thousands of advanced chips to reach Chinese-controlled entities over roughly twelve months. CEO Jensen Huang has stated publicly that Nvidia’s market share in China has effectively fallen to near zero as restrictions have tightened, while domestic supplier Huawei is estimated to have captured 50% to 60% of the Chinese AI-chip market. Mid-August 2026 reports indicated that Chinese AI firms, including ByteDance, Alibaba, and Tencent, have accessed Nvidia compute remotely through data centres, in Southeast Asia. They have exploited a distinction in the export-control framework that restricts the physical transfer of chips, but does not yet cover remote access to computing power.

The second issue is capital returns, following the additional $80 billion repurchase authorisation approved in May and a 25x increase in the quarterly dividend, with management targeting the return of roughly half of FCF.

As the most important print of the season, Nvidia’s guidance will affect not only its own shares, but will echo across the broader AI complex. Given the market’s reaction function this earnings season, in which investors have demanded acceleration and near-flawless execution rather than simply a clean beat, Q3 guidance is likely to matter more than the Q2 result itself. The Street already expects Q3 revenue of $104.190 billion and EPS of $2.37.

• Salesforce reports Q2 results on Wednesday, after market close at 4:01 pm EDT, with the earnings call scheduled for 5:00 pm EDT. Consensus calls for EPS of $3.27 and revenue of $11.330 billion, essentially in line with management's own guidance range of $3.25 to $3.27 per share. The print follows a Q1 record result in which revenue grew 13.3% y/o/y to $11.133 billion, Operating margin expanded 250 bps to 34.8% and current remaining performance obligation (RPO) grew 13.5% y/o/y to $33.6 billion.

The metric that matters most is current RPO, the contracted-but-unrecognised revenue that serves as the leading indicator of bookings. The company has guided to roughly 14% growth, and the market will read any acceleration as evidence that the reacceleration story management has promised for the back half of the year is materialising. Agentforce sits at the centre of that narrative. Combined Agentforce and Data 360 annualised recurring revenue reached nearly $3.4 billion in Q1, with the Agentforce component alone at $1.2 billion, up more than 3x y/o/y. It was the fastest-scaling AI product line any enterprise-software company has reported this cycle. 

The bull case holds that this is net-new revenue expanding the platform. The bear case holds that every Agentforce dollar risks cannibalising a Sales Cloud or Service Cloud seat. The market will scrutinise net-new bookings and the balance between the two. 

The Informatica acquisition, which has now closed and is contributing to the data-management portfolio, deepens the Data 360 foundation on which the agentic strategy rests. The Slack, MuleSoft and Tableau franchises remain the swing factors, with commerce and Tableau having shown recent softness. Margin discipline and the continued buyback frame the earnings algorithm. Salesforce is the clearest listed test of whether agentic AI is accretive or corrosive to enterprise software, and its bookings signal will read across the entire sector.

• HP also reports after the market close on Wednesday at 4:15 pm EDT, followed by its conference call at 5:30 pm EDT. Consensus expects EPS of $0.69 on revenue of $14.394 billion, compared with company guidance of $0.61 to $0.71 per share and full-year EPS guidance of $2.92 to $3.10. The consensus EPS estimate implies an 8.2% y/o/y decline, reflecting the margin pressure management has flagged from rising commodity and memory costs, even as revenue continues to grow.

The preceding Q1 results showed revenue of $14.408 billion, up 9.0% y/o/y, marking the eighth consecutive quarter of top-line growth. Personal Systems revenue rose 13.2% y/o/y to $10.213 billion. However, total PC unit volumes declined 7%, indicating that average selling price expansion, and not unit growth, was the primary driver of Personal Systems performance. That mix dynamic raises questions about the durability of growth as the current refresh cycle matures.

Management has explicitly warned that rising memory costs are likely to intensify further in Q3 and Q4, reflecting the same AI-driven memory-chip demand and component-scarcity pressures disrupting adjacent parts of the technology supply chain. The DRAM and NAND tightness that has benefited storage and semiconductor-equipment companies is now flowing directly into HP’s cost base. As a result, investors will focus on the depth of the margin trough and on any guidance management provides regarding the cost trajectory for the remainder of the year.

At Evercore’s TMT Global Conference on 2 June, CFO Karen Parkhill said industry-wide PC TAM units were expected to decline at a high-teens rate through the rest of 2026, while input costs, particularly memory and storage, were still rising, albeit more slowly than in Q2. She also noted that Middle East tensions and oil prices were creating temporary Q3 headwinds for Print margins, and that tariffs remained an approximately 10% headwind for Print.

• Best Buy reports before the market open on Thursday, with the earnings call scheduled for 8:00 am EDT. Consensus expects EPS of $1.38 on revenue of $9.595 billion, implying 1.7% y/o/y revenue growth. Full-year guidance remains at $6.30 to $6.60 in EPS and $41.2 billion to $42.1 billion in revenue.

Q1 results established a constructive starting point, with comparable sales rising 2.0%, ahead of management’s 1.0% guidance. Growth was led by gaming, computing and mobile phones, while appliances remained the principal area of weakness.

Management indicated that comparable sales strengthened further into May, with month-to-date growth reaching the high-single-digit range. However, guidance for Q2 remains more measured at 1.0% comparable-sales growth, reflecting a difficult y/o/y comparison against last year’s successful June gaming-console launch cycle. Consensus currently projects same-store sales growth of 1.28%, compared with 1.60% a year earlier.

Two issues will frame the outlook. The first is tariffs, as Best Buy’s assortment remains heavily weighted toward imported electronics. This leaves both its cost base and consumer pricing exposed to the elevated tariff regime. Management’s commentary on pricing actions and the degree to which costs can be passed through without damaging demand will be scrutinised. The second is margin mix. Stronger growth in lower-margin computing and gaming categories is likely to pressure the gross rate, even as higher-margin services, membership revenue, Best Buy Ads and the developing Marketplace initiative provide partial offsets.

The release also comes during a leadership transition. Anne Bramman assumed the CFO role on 19 August, while a new CEO is scheduled to take over on 1 November, adding scrutiny around strategic continuity to the earnings call.

• Marvell Technology closes the week on Thursday at 4:05 pm EDT, followed by its earnings call at 4:45 pm EDT. Management has guided to revenue of $2.7 billion, plus or minus 5%, and EPS of $0.93, plus or minus $0.05. Consensus stands slightly above the revenue midpoint, at $2.717 billion, with EPS in line at $0.93, implying 35.4% y/o/y revenue growth and 39.1% y/o/y earnings growth versus the $0.67 reported in the comparable period last year.

The data centre segment remains the central driver of the investment case. At roughly three quarters of total revenue, it has repositioned Marvell from a diversified communications-chip supplier into one of the leading listed vehicles for the custom AI silicon theme within the Compute & Silicon layer of our Alpha Vibes AI taxonomy.

Management has guided to mid to high-teens sequential growth in data centre revenue. It is supported by two complementary franchises: custom accelerators and compute silicon developed with hyperscale cloud providers, alongside electro-optics and interconnect products that move data within and between AI clusters. Investors will focus on the pace of the custom-silicon ramp, the breadth of new design wins beyond the initial anchor customers and any commentary on the timing of next-generation programmes.

The company has reinforced this strategy through acquisitions, closing the purchases of Celestial AI and XConn earlier this year to deepen its optical and interconnect capabilities. It has also expanded a multi-billion-dollar collaboration with the leading merchant GPU supplier on custom accelerators and optics, underscoring that competition between merchant and custom silicon includes meaningful areas of cooperation.

The same AI optical-networking demand that drove the prior week’s strong results from Lumentum and Coherent should also support growth in Marvell’s data centre business. Full-year revenue guidance stands at $11.5 billion, implying 40.3% y/o/y growth. For Q2, consensus expects operating income of $992 million, up 42.0% y/o/y, with operating-margin expansion of 168 bps y/o/y. FCF is expected to rise 55.4% to $644 million, leaving investors focussed on the durability of Marvell’s FCF conversion.

A recently disclosed Google custom AI-chip deal has added incremental momentum ahead of the print, reinforcing Marvell’s position as the leading alternative to Nvidia’s merchant silicon for hyperscalers pursuing internally designed AI accelerators. That strategic distinction makes Marvell’s print a complement to Nvidia’s guidance and a useful read-through on aggregate AI infrastructure demand.

Last week’s themes and the bigger picture

Home Depot’s resilient Pro channel offsets a frozen DIY market, a turnaround in motion at Target, Walmart’s beat that signalled caution and Deere’s construction strength beyond agriculture

Home Depot opened the week's retail slate on Tuesday, delivering EPS of $4.92 against a consensus of $4.73, on revenue of $47.861 billion versus the $47.243 billion Wall Street had modelled. Comparable sales rose 1.73% globally and 1.30% in the US, ahead of the 0.90% and 0.70% analysts had pencilled in respectively. Comparable average ticket climbed 2.8% even as comparable transactions fell 1.0%, as customers are visiting less frequently, but spending more per trip. Big-ticket comparable transactions (exceeding $1,000) turned positive at 2.4%, a signal that some of the debt-financed, rate-sensitive discretionary spending that last week’s Earnings Scoreboard flagged as the central risk to the print began to thaw during the quarter.

Gross margin expanded to 33.7%, up 26 bps y/o/y, aided by $685 million in IEEPA tariff refunds that reduced cost of goods sold and contributed 143 bps to the gross-margin line. Management explicitly stated these refunds are being used to offset unplanned fuel, energy and other product input costs throughout the year. Operating margin nonetheless contracted to 14.3% from 14.5% a year ago. Management reaffirmed full-year guidance of 2.5% to 4.5% total sales growth and 12.4% to 12.6% operating margin. SRS Distribution-driven professional-channel strength, less exposed to elevated mortgage rates than traditional do-it-yourself demand, remains a key driver differentiating Home Depot's results from the broader housing-sensitive retail complex.

Following the stronger-than-expected print, analysts adopted a more constructive view of Home Depot’s near-term setup, citing best-in-class execution, continued market-share gains and sequential comparable-sales improvement across core categories and international markets despite a still-sluggish industry backdrop. Although tariff refunds provided a meaningful quarterly benefit, they are expected to be broadly neutral for the fiscal year, potentially creating margin pressure as the company moves into 2027.

At the same time, elevated interest rates and affordability constraints continue to weigh on larger discretionary projects. Even so, resilient small-project demand and easier H2 comparisons should leave the company well positioned to achieve its guidance.

Target reported Wednesday, with results that on the surface appeared to be an overwhelming beat. EPS of $4.11 against a consensus of $2.33, and net sales of $26.539 billion versus $26.091 billion expected. The scale of the EPS beat, however, was driven substantially by a $994 million pre-tax benefit from International Emergency Economic Powers Act tariff refunds, which contributed $1.65 per share to the quarter. Excluding this one-time item, EPS still increased 20.0% y/o/y, confirming that the underlying turnaround under CEO Michael Fiddelke is gaining traction. Comparable sales grew 3.80%, comfortably ahead of the 2.43% consensus, driven by a 3.6% increase in comparable traffic with average ticket roughly flat.

Segment detail reinforced the turnaround narrative. All six core merchandise categories grew, and the higher-margin ancillary businesses (Roundel advertising, Target Circle 360 membership and the Target Plus marketplace) grew more than 20%. Digital comparable sales rose 8.7%, led by 25.1% growth in same-day delivery. Gross margin expanded 468 bps to 33.7% from 29.0% a year earlier, reflecting both the tariff refund and continued merchandising discipline. Operating income surged 94.4% to $2.560 billion, lifting operating margin to 9.6% from 5.2%. 

Management raised full-year guidance after two consecutive quarters of accelerating growth, while also acknowledging that apparel and home remain underperforming categories that will require meaningful additional work through 2027. For 2026, the company now expects net sales growth of 5%, representing a one percentage point increase from the prior outlook. Excluding tariff refunds, the full-year operating margin rate is expected to be approximately 0.5 percentage point above last year’s adjusted operating margin rate of 4.6%, while EPS guidance was raised to $9.90 to $10.90 from the previous range of $7.50 to $8.50.

The results validate the first full earnings cycle carrying Fiddelke's imprint, extending the encouraging trend recorded in Q1.

Walmart reported on Thursday with headline results that exceeded consensus, posting revenue of $187.937 billion versus the $186.641 billion expected and EPS of $0.81 versus the $0.74 consensus. Despite the beat, shares fell roughly 9% on the day, marking the sharpest post-earnings decline among the week’s retail cohort. The negative reaction centred on US comparable sales, which rose 2.60%, well below the 3.81% Wall Street had modelled and down from 4.10% growth in Q1. Management attributed approximately 125 bps of the shortfall to a pharmacy-deflation headwind tied to new drug-price caps. Store traffic increased 1.5% and transactions rose 1.1%. These positive, but slowing measures, raised investor concerns over whether the weakness reflected a temporary policy-driven distortion or the early stages of a broader deceleration in consumer spending power.

Segment detail underscored the continued divergence within the business. Walmart US sales increased 3.5% y/o/y to $125.189 billion from $120.911 billion, while operating income rose 20.8% y/o/y to $8.120 billion. Walmart International delivered stronger top-line growth, with net sales up 12.8% y/o/y to $35.198 billion. The more important structural story also remained intact: global e-commerce, advertising and membership-fee revenue each increased by more than10%, reinforcing the durability of Walmart’s higher-growth ancillary businesses. 

Consolidated operating income rose 17.4% y/o/y, although a meaningful portion of that improvement reflected $2.9 billion in tariff refunds, while gross income increased 9.8% y/o/y to $47.296 billion. Despite the softer US comparable-sales print, Walmart raised its full-year outlook, relying on continued momentum in e-commerce, advertising and membership to offset slower core comparable-sales growth. CFO John David Rainey struck a measured tone on the consumer, noting that shoppers remain ‘stretched thin, especially with higher gas prices,’ even as Walmart’s value proposition continues to attract higher-income households.

Deere & Co. closed the week’s earnings slate on Thursday with a stronger-than-expected print that drove the stock more than 8% higher in a single session, the most favourable market reaction of the week. EPS came in at $5.10, ahead of the $4.69 consensus, while revenue reached $12.608 billion versus expectations of $12.499 billion. Net income attributable to Deere increased 7.0% y/o/y to $1.379 billion, marking the company’s first annual profit gain in three years.

The segment divergence identified in the prior edition as the key driver to monitor was even more pronounced than expected. Construction and Forestry, increasingly tied to data-centre and infrastructure construction rather than traditional commercial or residential activity, posted an 18.3% increase in sales to $3.618 billion. Operating income rose 84.0% y/o/y to $436 million. Segment operating margin expanded 440 bps y/o/y to 12.1% from 7.7%. Small Agriculture and Turf also outperformed, with net sales up 11.8% to $3.383 billion and operating income rising 28.3% y/o/y to $622 million, lifting margin 240 bps y/o/y to 18.4% from 16.0%. By contrast, Production and Precision Agriculture remained under pressure, with net sales down 6.4% to $3.998 billion as weak commodity prices, elevated interest rates and dealer-inventory overhang continued to weigh on large farm-equipment demand. Management raised and narrowed full-year fiscal 2026 net-income guidance to $4.75 billion to $5.0 billion, compared with the prior $4.5 billion to $5.0 billion range.

Analyst commentary was broadly constructive, with the Q2 beat characterised as margin-driven and supported by stronger-than-expected equipment operating profit trends and resilient pricing. More cautious views continued to cite lacklustre performance in Brazil and Europe, as well as still-pressured farm economics, suggesting that current consensus expectations may remain too optimistic. Even so, the prevailing view was that 2026 is likely to mark the beginning of the next upcycle, as the Q2 print provided early evidence that recovery may be emerging after several years of downturn.

Taken together, the week’s results reinforced the season’s central theme: the consumer has not collapsed, but demand has become increasingly bifurcated. Retailers with scale, value positioning and durable traffic advantages are separating from those more exposed to discretionary categories. At the same time, tariff refunds flattered the reported profitability across the retail group, creating a one-time benefit that investors appear increasingly willing to normalise out of underlying earnings quality.