The Finance Class

Business and stocks, explained in simple words.

Author: Rohan Tamang

  • I Bond Rate Jumps to 5.51% — and Its Fixed Rate Is the Highest in 20 Years

    I Bond Rate Jumps to 5.51% — and Its Fixed Rate Is the Highest in 20 Years

    Introduction

    The US Treasury has set a new interest rate for Series I savings bonds: 5.51% for the next six months. That is up sharply from the previous rate of 4.26%, and it is the highest I bond rate since November 2022. For savers, the more important number may be hiding underneath it.

    What Happened

    The Treasury announced the new combined rate of 5.51% on Friday, October 30. It applies to I bonds bought from November 1, 2026 through April 30, 2027, and the rate is locked in for six months from the date of purchase.

    The combined rate has two parts. The first is a fixed rate, which stays with the bond for its entire life of up to 30 years. The second is an inflation rate, which resets every six months based on actual inflation. For this round, the fixed rate is 1.4% and the inflation part works out to 4.08% on an annualised basis. Combined using the Treasury’s formula, that gives 5.51%.

    The 1.4% fixed rate is the real headline. It is the highest fixed rate on I bonds since November 2006 — nearly 20 years. The previous fixed rate was 0.90%.

    Why It Happened

    The jump comes mostly from inflation. Over the six months from April to September, consumer prices rose 2.04%, which translates into the 4.08% annualised inflation part of the rate. Consumer prices overall rose 3.7% in September 2026 from a year earlier, up from 3.4% in August.

    The fixed rate is different: the Treasury sets it based on market conditions, and it chose to raise it to 1.4%. That decision matters far more than a single six-month rate, because the fixed rate never changes for as long as you hold that bond.

    Why It Matters

    Think of an I bond as two promises stacked together. The fixed rate is a guaranteed return above inflation, for up to 30 years. The inflation part makes sure your money keeps its purchasing power. Put together, you get a return that rises when inflation rises — something regular savings accounts and most bonds do not offer.

    At 5.51%, the starting rate is also higher than what short-term government bills are paying right now, at around 4.11%. And I bond interest is exempt from state and local taxes, though federal tax still applies.

    There are limits, though. You can only buy $10,000 of I bonds per person per calendar year through TreasuryDirect, the government’s official site. You cannot sell for the first 12 months, and if you sell before five years, you lose the last three months of interest as a penalty.

    What Happens Next

    Anyone who already used up their $10,000 limit for 2026 will have to wait until January to buy more — but they will still be in time, because the 5.51% rate runs until the end of April 2027. Buying later in the window still earns a full six months at that rate, and the 1.4% fixed rate stays for the life of the bond.

    One practical tip that experts repeat: if you buy in November, you earn a full month of interest no matter which day of the month you buy. So there is no rush to buy on day one.

    The next reset comes on May 1, 2027. At that point, the inflation part will change again, but the 1.4% fixed rate on bonds bought now will not.

    Final Thoughts

    The 5.51% rate will grab attention, but the 1.4% fixed rate is the part that could matter for decades. A bond bought in this window keeps that fixed rate above inflation for up to 30 years. For a saver who wants a safe, inflation-protected place for money they will not need for at least a year, this is one of the strongest I bond deals in 20 years. Just remember the limits: $10,000 a year, one year locked in, and a penalty for early exit before five years.

    Key figures

    • New combined rate: 5.51% (was 4.26%)
    • Fixed rate: 1.4% (was 0.90%; highest since November 2006)
    • Inflation part: 4.08% annualised
    • Applies to: bonds bought November 1, 2026 – April 30, 2027
    • Annual purchase limit: $10,000 per person
    • Lock-in: 12 months; 3-month interest penalty if sold before 5 years

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC — https://www.cnbc.com/2026/10/30/treasury-i-bond-rate-through-april-2027.html — and Money coverage of the new rate; TreasuryDirect rate information.

  • FedEx Beats Earnings Expectations and Raises Its 2026 Outlook

    FedEx Beats Earnings Expectations and Raises Its 2026 Outlook

    Introduction

    FedEx delivered a stronger quarter than Wall Street expected. The delivery giant reported higher revenue and profit for the three months ended September 30, 2026, and then raised its outlook for the full year. But the headline profit number tells a more complicated story, because a big one-time loss dragged reported earnings down sharply.

    What Happened

    FedEx reported revenue of $22.86 billion for the quarter, up about 12% from $20.4 billion a year earlier. That beat the $22.42 billion analysts had expected. Adjusted earnings per share came in at $3.74, well above the $3.36 Wall Street forecast and up from $2.93 a year ago. Adjusted operating income rose to $1.20 billion from $1.03 billion. Shares fell slightly in extended trading after the report.

    Reported profit looked very different. Net income fell to $290 million, or $1.21 per share, from $650 million, or $2.73 per share, a year earlier. The reason was a $1.2 billion loss on FedEx’s retained investment in FedEx Freight, the trucking business it spun off in June. That single item cut reported earnings by $5.18 per share.

    This was also FedEx’s first report under its new calendar. The company moved its year-end from May 31 to December 31, putting it on the same reporting rhythm as rival UPS. That makes this period its third quarter, even though it covers the summer months.

    Why It Happened

    FedEx said three things drove the better operating result: higher package volumes, better prices on each package, and continued cost savings from reshaping its network. In plain terms, it shipped more parcels, earned more per parcel, and spent less running the operation.

    At the same time, costs pushed the other way. Higher wages, purchased transportation costs, and variable pay weighed on results, and changing US trade policies added pressure. The company also bought back about 6.3 million of its own shares for roughly $2 billion during the quarter, with $4.3 billion still left in its buyback programme.

    Why It Matters

    FedEx is often treated as a read on the wider economy. When businesses and shoppers ship more, it usually means trade and spending are holding up. A 12% revenue jump, driven by volumes rather than just price rises, is a healthy sign on that front.

    The gap between the adjusted and reported numbers matters too. Adjusted profit strips out one-time items like the Freight investment loss, so it shows how the core delivery business is doing. Reported profit shows what actually hit the bottom line. Both are real — they just answer different questions. Investors who only looked at the reported profit would think FedEx had a bad quarter. The operating business actually had a good one.

    What Happens Next

    FedEx raised its full-year guidance. It now expects 2026 adjusted earnings of $18.00 to $18.60 per share, up from $16.90 to $18.10 before, and revenue growth of about 12%, up from about 11%. It also expects about $4 billion of adjusted free cash flow for the year.

    One more change is coming for customers: FedEx plans an average 5.9% increase in parcel shipping rates from January 4, 2027. That should support revenue, but it could also push some shippers to look elsewhere if they feel squeezed.

    Chief executive Raj Subramaniam said the results show FedEx is winning in higher-value parts of the market while it reshapes its network. The next test will be the holiday quarter — the busiest shipping season of the year.

    Final Thoughts

    Strip out the one-time Freight loss and this was a strong quarter: more packages, better prices, higher profit, and a raised outlook. The question now is whether that momentum survives the holiday season and the higher shipping rates coming in January.

    Key figures

    • Revenue: $22.86 billion, up ~12% year over year (expected: $22.42 billion)
    • Adjusted EPS: $3.74 (expected: $3.36; last year: $2.93)
    • Reported net income: $290 million, down from $650 million
    • Freight investment loss: $1.2 billion
    • New 2026 adjusted EPS outlook: $18.00–$18.60 (was $16.90–$18.10)
    • New 2026 revenue growth outlook: ~12% (was ~11%)

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC — https://www.cnbc.com/2026/10/28/fedex-fdx-sept-2026-earnings.html — and Reuters coverage of the FedEx results.

  • Norwegian Cruise Shares Jump 13% After Earnings Beat and Raised Outlook

    Norwegian Cruise Shares Jump 13% After Earnings Beat and Raised Outlook

    Norwegian Cruise Line Holdings had one of the best days on the stock market on October 29. Its shares jumped about 13% after the cruise operator reported third-quarter results that beat expectations and raised its outlook for the full year.

    What Happened

    Norwegian reported third-quarter revenue of $2.95 billion, above analyst expectations of about $2.88 billion. Net income was $491 million, or $1.07 per share, up from $419 million a year earlier. On an adjusted basis, earnings were $1.12 per share, beating both the company’s own guidance of 90 cents and analyst estimates of about 94 cents.

    Adjusted EBITDA — a measure of operating profit before interest, tax, depreciation and amortisation — was $937 million, above the company’s guidance of $874 million. Shares closed at $18.22, up 13.45%, on very heavy trading volume of 63 million shares, about 241% above the three-month average.

    Management then raised its full-year outlook: adjusted EBITDA of about $2.55 billion and adjusted earnings of about $1.70 per share, up from a previous forecast of $1.50 per share. Adjusted net income for the year is now projected at $789 million, up from $700 million.

    Why It Happened

    Two things drove the beat: late bookings and onboard spending. More people booked cruises closer to departure, and passengers spent more once on board. Occupancy reached 106.5%, above the company’s 104% expectation — cruise ships can report occupancy above 100% because some cabins hold more than two guests.

    Costs also helped. Adjusted net cruise cost, excluding fuel, per capacity day improved by 2.2% to $152. CEO John Chidsey said the company delivered results above guidance while improving efficiency and the guest experience.

    There is a nuance worth noting: revenue was up less than 1% from a year earlier, and net yield — a measure of revenue per available cabin day — fell 6.7% in constant currency. That was still better than the 8.9% decline management had forecast, but it shows ticket prices were lower even as more cabins were filled.

    Why It Matters

    Norwegian’s stock had been under pressure. Even after Thursday’s 13% jump, shares were still down more than 18% for the year. A beat like this matters because it suggests the company’s turnaround plan — cutting costs, filling ships, and improving onboard revenue — is working, even if pricing remains soft.

    It also matters for the travel sector: cruises are a good test of consumer spending on experiences, and strong late bookings suggest people are still willing to spend on holidays, at least when the price is right.

    Norwegian also announced a leadership change: Chief Strategy Officer Meghan Montana will become chief financial officer on January 1, 2027, succeeding Mark Kempa.

    Key Figures

    FigureQ3 2026
    Revenue$2.95 billion, vs about $2.88 billion expected
    Net income$491 million, or $1.07 per share
    Adjusted EPS$1.12, vs about $0.94 expected
    Adjusted EBITDA$937 million, vs $874 million guided
    Share move (Oct 29)Up 13.45% to $18.22
    Full-year adjusted EPS outlookAbout $1.70, up from $1.50
    Full-year adjusted EBITDA outlookAbout $2.55 billion

    What Happens Next

    Management expects net yield to fall about 4.4% for the full year in constant currency, and to decline about 6.5% in the fourth quarter, partly because of a delayed new ship and cancelled sailings through the Suez Canal. But it expects net yield growth of 1% to 2% in 2027, picking up in the second half.

    The key test for 2027 is pricing: Norwegian needs ticket prices to stop falling and start rising again, while keeping ships full. First-half 2027 bookings still lag last year, so that recovery is not guaranteed yet.

    Final Thoughts

    Norwegian’s quarter was a genuine beat, and the market rewarded it with a 13% jump. The company filled its ships, controlled costs, and raised its outlook. But the softer pricing underneath is a reminder that the turnaround is still in progress. If 2027 brings the yield growth management expects, this quarter may be remembered as a turning point.

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC, “Norwegian shares surge 13% on earnings beat, guidance raise” (https://www.cnbc.com/2026/10/29/norwegian-earnings-guidance-shares.html); The Motley Fool, “Why Norwegian Cruise Line Stock Jumped Today” (https://www.fool.com/investing/2026/10/29/why-norwegian-cruise-line-stock-jumped-today/)

    Related consumer earnings — Starbucks’ US store recovery: https://thefinanceclass.wordpress.com/2026/10/30/starbucks-profit-beat-revenue-miss-us-recovery/

  • Merck Beats Earnings Expectations as Keytruda and Gardasil Lead the Way

    Merck Beats Earnings Expectations as Keytruda and Gardasil Lead the Way

    Merck reported a stronger-than-expected third quarter on October 29, helped by its cancer drug Keytruda and its HPV vaccine Gardasil. The drugmaker also raised its profit outlook for the full year.

    What Happened

    Merck reported third-quarter revenue of $18.1 billion, above the average analyst estimate of $17.3 billion. Adjusted earnings were $2.49 per share, well ahead of the $2.08 analysts expected.

    Keytruda sales rose 6% from a year earlier to $8.6 billion, beating the $7.73 billion estimate. That total included $830 million from Keytruda QLEX, a newer injectable form of the drug. Gardasil sales rose 14% to just under $2 billion, helped by early purchases from the US Centers for Disease Control and Prevention. Winrevair, a drug for pulmonary arterial hypertension, saw sales jump 93% to $694 million.

    Merck raised the low end of its full-year revenue forecast to $66.8 billion, from $66.3 billion, keeping the top end at $67.3 billion. It also lifted its adjusted profit forecast to $2.77 to $2.82 per share, up from $2.66 to $2.76. That new profit outlook includes a one-time charge of $400 million, or 12 cents per share, linked to a licensing deal with Chinese drugmaker SciBrunch.

    Why It Happened

    Keytruda is still the engine of Merck. It is one of the world’s best-selling drugs, used to treat many types of cancer. The new injectable version, Keytruda QLEX, is making the drug easier to give to patients, and it had its strongest quarter since launch.

    Gardasil also helped. The vaccine prevents cancers linked to the human papillomavirus. Sales had been hurt by weak demand in China in recent quarters, but early US government purchases gave this quarter a lift.

    About $550 million of quarterly sales came from favorable purchase and inventory timing in the US for Keytruda, Gardasil and Winrevair. Merck expects much of that to reverse in the fourth quarter and in 2027, so not all of this quarter’s strength will repeat.

    Why It Matters

    Merck faces a well-known challenge: Keytruda will start losing key patent protection in 2028. When a drug loses patent protection, cheaper generic versions can enter the market and sales usually fall sharply. That is why Merck is working hard to build up other products before that happens.

    This quarter matters because it shows the rest of the portfolio is starting to carry more weight. Winrevair nearly doubled. Gardasil bounced back. And the company said it plans to raise its revenue forecast for new products over the next decade, above the $70 billion by the mid-2030s it projected in January, thanks to recent clinical trial results and deals such as its Terns Pharma agreement.

    For investors, the message is mixed but positive: the core business is still strong, and management is more confident about what comes after Keytruda.

    Key Figures

    FigureQ3 2026
    Revenue$18.09 billion, vs $17.31 billion expected
    Adjusted EPS$2.49, vs $2.08 expected
    Keytruda sales$8.6 billion, up 6%
    Keytruda QLEX sales$830 million
    Gardasil salesJust under $2 billion, up 14%
    Winrevair sales$694 million, up 93%
    Full-year revenue outlook$66.8–$67.3 billion
    Full-year adjusted EPS outlook$2.77–$2.82

    What Happens Next

    Looking to 2027, Merck expects only moderate revenue growth. Gains from newer drugs and animal health should be partly offset by a hit of more than $2 billion from generic competition and patent expirations on older products. Keytruda’s growth is also expected to slow as it nears peak sales in some uses.

    The key things to watch are whether Winrevair and other newer drugs keep growing fast, whether Gardasil demand in China recovers, and how the new-product pipeline develops ahead of the 2028 patent cliff.

    Final Thoughts

    Merck’s quarter was a clear beat, and the raised outlook backs that up. But the real story is longer term: can Merck replace Keytruda’s sales before patents expire? This quarter gave investors a reason to believe it can — but the next two years will be the real test.

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC, “Merck tops estimates, hikes profit outlook on strength of injectable Keytruda” (https://www.cnbc.com/2026/10/29/merck-mrk-earnings-q3-2026.html); Reuters via 94.7 The Beast, “Merck tops third-quarter estimates as Keytruda, Gardasil outperform” (https://947thebeast.com/2026/10/29/merck-tops-third-quarter-estimates-as-keytruda-gardasil-outperform/)

    Related healthcare earnings — Eli Lilly’s outlook raise on weight-loss drug demand: https://thefinanceclass.wordpress.com/2026/10/30/eli-lilly-raises-outlook-weight-loss-demand/

  • Rivian Beats Earnings Expectations as Its Cheaper R2 SUV Takes the Lead

    Rivian Beats Earnings Expectations as Its Cheaper R2 SUV Takes the Lead

    Rivian had a good quarter, and the market noticed. The electric vehicle maker reported third-quarter results on October 29 that beat what analysts expected, helped by its newer, cheaper SUV and growing software revenue. The next day, Jefferies upgraded the stock from Hold to Buy.

    What Happened

    Rivian reported revenue of $2.16 billion for the third quarter of 2026, up about 38% from a year earlier and above the $1.99 billion analysts expected. Its adjusted loss was 48 cents per share, narrower than the expected loss of 62 cents per share.

    The company built 19,751 vehicles and delivered 19,248 in the quarter, both records for Rivian. Its new R2 SUV became its best-selling vehicle by volume in the quarter. Rivian also raised its full-year delivery outlook to 67,000 to 70,000 vehicles, up from 65,000 to 70,000.

    Rivian’s gross profit was $176 million, an 8% gross margin. Software and services revenue reached $605 million, with a strong margin of 42%. On Friday morning, Rivian shares rose more than 5% to above $12, after closing at $11.45 on Thursday.

    Jefferies analyst Philippe Houchois upgraded Rivian to Buy and kept a $17 price target. That target implies about 48% upside from Thursday’s close. The analyst pointed to stronger-than-expected conversion of preorders for the higher-end R2 launch version, and said the recent fall of roughly 30% over three months had created a better entry point.

    Why It Happened

    The main reason is simple: the R2 is selling. Rivian launched the R2 in March as a more affordable SUV and started delivering customer orders in June. In just one quarter, it became the company’s top-selling model by volume. A cheaper model opens the door to far more buyers than Rivian’s earlier, more expensive trucks and SUVs.

    Software is the second part of the story. Rivian earns money not only from selling vehicles but also from software and services. That revenue grew fast and carries a high margin, which helps the company lose less money on each vehicle it sells.

    Costs also helped. Rivian cut its capital spending plans by $300 million at the midpoint, and it still held $5.5 billion in cash at the end of September. That gives it room to keep building while it works toward profitability.

    Why It Matters

    For a long time, the big question about Rivian was simple: can it ever make money? This quarter does not answer that question fully. Rivian still expects an adjusted EBITDA loss of $1.75 billion to $1.85 billion for the full year. But it does show progress on the path that matters most: selling more vehicles, at better margins, with a product more people can afford.

    It also matters for the wider EV market. After a tough period for electric vehicle makers, a clean beat from Rivian — and an upgrade from a major bank — is a sign that demand for well-priced EVs is still there. Jefferies also argued that Rivian sits in a useful price gap, between cheaper Tesla models and Ford’s upcoming lower-cost EV, which may not ramp up until late 2027.

    Key Figures

    FigureQ3 2026
    Revenue$2.16 billion, up 38% year over year
    Adjusted loss per share$0.48, vs $0.62 expected
    Vehicles produced19,751
    Vehicles delivered19,248
    Gross profit$176 million, 8% margin
    Full-year delivery outlook67,000–70,000 vehicles
    Jefferies price target$17, vs $11.45 Thursday close

    What Happens Next

    The next test is whether Rivian can keep the R2 ramp going. CEO RJ Scaringe has said production needs to go well above current plans — he has pointed to more than 160,000 units — before the company as a whole can turn profitable. Watch the fourth quarter for delivery numbers, R2 margins, and any update on that production ramp.

    Investors should also watch cash. Rivian has $5.5 billion, but it is still losing money. How fast it burns through that cash while scaling up will decide how much time it has to prove the R2 story.

    Final Thoughts

    Rivian’s quarter was a step in the right direction: more vehicles, more revenue, smaller losses, and a higher delivery outlook. The Jefferies upgrade shows Wall Street is starting to notice. But Rivian is still a company in transition, not yet profitable. The R2 has given it momentum. Now it has to turn that momentum into scale.

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC, “Rivian earnings beat estimates as software revenue, R2 deliveries rise” (https://www.cnbc.com/2026/10/29/rivian-rivn-earnings-q3-2026.html); TipRanks, “Rivian Stock (RIVN) Jumps on Jefferies Buy Upgrade as R2 Demand Fuels Q3 Growth” (https://www.tipranks.com/news/rivian-stock-rivn-jumps-on-jefferies-buy-upgrade-as-r2-demand-fuels-q3-revenue-growth)

    See also our earnings coverage this week — Amazon’s earnings miss and cloud growth: https://thefinanceclass.wordpress.com/2026/10/30/amazon-shares-fall-earnings-miss-cloud-growth/

  • Reddit Shares Drop 20% as AI Search Eats Into Its Traffic

    Reddit Shares Drop 20% as AI Search Eats Into Its Traffic

    Reddit beat earnings expectations on Thursday, October 29, and its stock still fell hard. Shares dropped about 18% in after-hours trading and were down more than 20% in premarket trading on Friday, October 30.

    The reason was not the past quarter. It was a warning about the future, and about how artificial intelligence is changing the way people find information online.

    What Happened

    Reddit’s third-quarter revenue rose 53% from a year earlier to $895 million, above the roughly $878 million analysts expected. Adjusted earnings came in at $1.40 per share, also above expectations. Advertising revenue grew 54% to $847 million.

    Daily active users, the number of people who visit Reddit on an average day, grew 12% to 130.3 million, but that was below the roughly 134 million analysts expected. In the United States, daily users actually fell 2% to 50.7 million, the first decline since Reddit went public in 2024. International users grew 24%, which softened the blow.

    For the fourth quarter, Reddit expects revenue of $1.00 billion to $1.03 billion. The middle of that range, $1.015 billion, was below the $1.05 billion analysts had forecast.

    But the number that scared investors most was about traffic. Reddit said search referrals, the visitors who arrive by clicking a link in a search engine, fell by more than 1 million per week on average in October. If that pace continues, the company warned, daily users could fall by a low double-digit percentage in the fourth quarter, from the current base of about 130 million.

    Why It Happened

    Reddit’s chief executive, Steve Huffman, blamed Google’s shift to AI-powered search. When people search for something today, they often get an AI-generated answer at the top of the page, and they never click through to the website. That means fewer visitors for sites like Reddit, even though their content is often used to build those AI answers.

    Related reading: Why Google Stock Crashed 12.6%: What Investors Need to Know

    Huffman said search referral traffic was down meaningfully in the third quarter, and the decline sped up later in the quarter. He argued that AI search “does not drive traffic, not for us and not to anybody,” and that AI answers cannot replace real communities of people.

    Reddit is also changing how its site works. The company plans to test requiring users to log in to see most content, starting in selected markets outside the United States in the fourth quarter. The idea is to reduce data scraping, where other companies collect Reddit’s posts without permission, and to focus on logged-in users, who bring in more than 80% of its advertising money. But a login wall could also put off casual visitors, which is a risk the company will be testing carefully.

    Think of it like a public noticeboard in a town square. For years, anyone walking past could read it. Now, the town has built a wall with a gate, and an AI assistant outside summarises the notices for passers-by. Fewer people walk in, even though the notices inside are just as useful.

    Key Figures

    • Q3 revenue: $895 million, up 53% (expected: about $878 million)
    • Q3 adjusted earnings per share: $1.40 (expected: about $1.35)
    • Advertising revenue: $847 million, up 54%
    • Daily active users: 130.3 million, up 12% (expected: about 134 million)
    • US daily users: 50.7 million, down 2%
    • Q4 revenue forecast: $1.00 billion to $1.03 billion (expected: about $1.05 billion)
    • Search referrals in October: down more than 1 million per week on average
    • Possible Q4 user impact: a low double-digit percentage decline if the trend continues

    Why It Matters

    Reddit’s warning matters far beyond Reddit. If AI search answers keep people from clicking through to websites, every site that depends on search traffic faces the same problem: news publishers, forums, blogs and small businesses. It raises a big question about the internet’s business model. If AI companies use content created by others but send fewer visitors back, how do those creators earn money?

    It also matters for Reddit itself. Advertising is its main source of income, and advertisers pay for attention. Fewer visitors, especially in the United States, could mean slower advertising growth, even if revenue is still rising fast today.

    What Happens Next

    Investors will watch the login test closely. If it protects Reddit’s content without driving users away, it could become a model for other platforms. If it shrinks the audience, the company may need to rethink it. The fourth-quarter user numbers, due early in 2027, will show whether the warning came true.

    Reddit also has content licensing deals with Google and OpenAI, which pay for the right to use its posts to train AI systems. Those deals are up for renewal, and the company gave no update on them in this report. How those talks go could matter as much as the traffic numbers.

    Final Thoughts

    Reddit’s quarter shows a strange new reality: a company can grow revenue by 53% and still lose a fifth of its value in a day, because investors are worried about where its visitors will come from next year. The AI search shift is not just a technology story. It is a business story, and Reddit is one of the first big companies to put a number on what it costs.

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC, “Stocks making the biggest moves premarket: Intel, Amazon, Reddit, Chevron & more” (https://www.cnbc.com/2026/10/30/stocks-making-the-biggest-moves-premarket-intc-amzn-rddt-cvx.html); Reuters, “Reddit puts logged in experience first as Google AI hits traffic” (https://mymixfm.com/2026/10/29/reddit-posts-search-traffic-declines-will-push-visitor-sign-ins-to-curb-data-scraping/)

  • Starbucks Beats Profit Expectations as US Stores Recover, but Revenue Falls Short

    Starbucks Beats Profit Expectations as US Stores Recover, but Revenue Falls Short

    Starbucks reported mixed results on Thursday, October 29, and the market’s reaction was muted. The coffee chain beat profit expectations and its US stores performed better than expected, but total revenue fell short. Shares slipped nearly 2% in after-hours trading.

    It is a good example of a turnaround that is working in one place but not yet everywhere.

    What Happened

    For its fiscal fourth quarter, which ended September 27, 2026, Starbucks reported adjusted earnings of $0.80 per share, beating the $0.72 analysts expected. Reported net income rose to $677.2 million, or $0.59 per share, from $133.1 million a year earlier, when restructuring costs weighed on profits.

    Revenue, however, fell 4% to $9.14 billion, below the $9.23 billion analysts expected. The main reason for the drop is not weak demand. Starbucks converted its China retail business into a licensed joint venture earlier in the year, which means those sales no longer count in the same way in its reported revenue.

    The most encouraging number was same-store sales, which measure sales at stores open for at least a year. Global same-store sales rose 7.2%, beating the 6% analysts expected. US same-store sales rose 7.7%, above the 6.5% forecast. That was the company’s fifth straight quarter of better-than-expected same-store sales growth.

    International stores were the weak spot. Same-store sales outside North America rose only 0.9%, well below the 3.2% analysts expected, as fewer customers visited, even though those who came spent more per visit.

    For the full fiscal year, revenue rose 2% to $37.9 billion, and adjusted earnings rose 28% to $2.72 per share.

    Why It Happened

    Starbucks has been working on a turnaround plan called “Back to Starbucks,” focused on faster service, better stores and popular seasonal products. In the United States, that plan appears to be working. Customers are visiting more often, and average spending per visit rose, helped by seasonal drinks and menu changes.

    Outside the United States, the recovery is slower. International traffic fell, which offset higher spending per visit. The company also closed about 250 company-owned stores in North America in September as part of a review of its store network, and it opened 303 net new stores overall in the quarter, ending with 41,607 locations worldwide.

    Think of it like a chain of shops where the home stores are busy again, but the overseas shops are still quiet. The overall picture looks mixed because the two parts are moving in different directions.

    Key Figures

    • Q4 revenue: $9.14 billion, down 4% (expected: $9.23 billion)
    • Q4 adjusted earnings per share: $0.80 (expected: $0.72)
    • Q4 reported net income: $677.2 million, or $0.59 per share
    • Global same-store sales: up 7.2% (expected: 6%)
    • US same-store sales: up 7.7% (expected: 6.5%)
    • International same-store sales: up 0.9% (expected: 3.2%)
    • Full-year revenue: $37.9 billion, up 2%
    • Fiscal 2027 adjusted earnings forecast: $3.15 to $3.25 per share

    Why It Matters

    Starbucks is one of the most watched consumer brands in the world, and its results say something about everyday spending. When US same-store sales grow 7.7%, it suggests American consumers are still willing to pay for a daily coffee, even at higher prices. But weak international traffic is a reminder that the recovery is not global yet.

    The results also show why revenue alone can mislead. Starbucks’ revenue fell mainly because of the China accounting change, not because customers stopped buying coffee. Same-store sales, which compare like with like, tell a healthier story.

    What Happens Next

    For fiscal 2027, Starbucks expects adjusted earnings of $3.15 to $3.25 per share, slightly above the $3.14 analysts expected. But it also expects total revenue to fall about 1%, below the 1.4% growth analysts had forecast, again largely because of the China change. The company expects North American same-store sales to grow about 4%.

    Chief executive Brian Niccol said Starbucks enters the new fiscal year with momentum and is ahead of schedule on its targets for fiscal 2028. The test will be whether international stores start to recover the way US stores have.

    Final Thoughts

    Starbucks’ quarter was neither a clear win nor a clear loss. The US turnaround is gaining steam, profits beat expectations, and the company raised its ambitions. But revenue missed, and international stores lagged. For investors, the question is simple: can the US recovery spread to the rest of the world?

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC, “Starbucks sales miss expectations, but its U.S. turnaround is gaining steam” (https://www.cnbc.com/2026/10/29/starbucks-sbux-q4-2026-earnings.html); Seeking Alpha earnings recap (https://seekingalpha.com/news/4660702-starbucks-revenue-miss-overshadows-solid-fq4-results-upbeat-profit-guidance).

  • Eli Lilly Raises Sales Outlook to $92 Billion as Weight-Loss Drug Demand Soars

    Eli Lilly Raises Sales Outlook to $92 Billion as Weight-Loss Drug Demand Soars

    While many big stocks were falling this week, Eli Lilly went the other way. The drugmaker reported a very strong third quarter on Thursday, October 29, raised its full-year sales outlook, and saw its shares rise about 7% on the day.

    The reason is no mystery. Demand for its diabetes and weight-loss medicines, Mounjaro and Zepbound, keeps growing, in the United States and around the world.

    What Happened

    Eli Lilly’s revenue rose 39% from a year earlier to $24.4 billion in the third quarter of 2026. That was well above the $22.61 billion analysts expected. Adjusted earnings per share came in at $7.48, up 7% from a year earlier. Reported net income rose to $6.5 billion, or $7.22 per share, from $5.6 billion a year earlier.

    Mounjaro, the company’s diabetes medicine that is also widely used for weight loss, brought in $10.7 billion, up 65% from a year earlier. Sales outside the United States nearly doubled, and US sales rose 41%. Zepbound, the company’s weight-loss medicine, brought in $5.35 billion, up about 49%.

    Together, Mounjaro and Zepbound generated more than $16 billion in the quarter, about $6 billion more than a year earlier.

    The company also raised its full-year 2026 revenue forecast to $91 billion to $92 billion, up from $85 billion to $87 billion. That is a $5.5 billion increase at the midpoint. Its full-year adjusted earnings forecast moved to $35 to $36 per share, from $35.50 to $36.50 before. The company said its underlying profit outlook actually rose, but $4.57 per share in charges from research deals it acquired in the quarter more than offset that gain.

    Why It Happened

    The main driver is simple: more people are using these medicines, and more countries are covering them. In the United States, a Medicare programme that helps people access weight-loss medicines has seen strong early uptake, with more than 500,000 prescriptions filled since July 1. In China, Mounjaro passed $1 billion in revenue in its first full year after being added to the national reimbursement list, which means the government helps pay for it.

    About $900 million of the quarter’s revenue came from one-time benefits, including $410 million in milestone payments linked to the diabetes medicine Jardiance. The company said no further Jardiance milestones remain, so that boost will not repeat.

    Eli Lilly also reported progress on new products. Its new weight-loss pill, Foundayo, launched in the United States in April, brought in $184 million in the quarter, below the roughly $229 million analysts expected. But the company also won US regulatory approvals for new uses of its medicines, including Mounjaro for reducing cardiovascular risk in adults with type 2 diabetes, and a once-weekly insulin called Onswik.

    Key Figures

    • Q3 revenue: $24.4 billion, up 39% (expected: $22.61 billion)
    • Q3 adjusted earnings per share: $7.48, up 7%
    • Q3 net income: $6.5 billion
    • Mounjaro revenue: $10.7 billion, up 65%
    • Zepbound revenue: $5.35 billion, up about 49%
    • New 2026 revenue forecast: $91 billion to $92 billion (from $85 billion to $87 billion)
    • New 2026 adjusted earnings forecast: $35 to $36 per share
    • Shares: rose about 7% on Thursday

    Why It Matters

    Eli Lilly’s results show that the weight-loss medicine market is still in its early stages. The company’s chief executive, Dave Ricks, said only an estimated 3% to 10% of eligible patients in the United States currently receive obesity care. If that number grows, the market could expand dramatically, but it also means the company’s growth depends on insurance coverage, government programmes and manufacturing capacity keeping up with demand.

    For investors, Lilly is also a contrast to the technology sell-off this week. While tech companies are being punished for heavy spending, Lilly is being rewarded for products people already buy in large numbers. It is a reminder that not all growth stories depend on the same thing.

    What Happens Next

    The company will keep investing in factories to make more of its medicines, since supply has been a limit in the past. Investors will watch whether Mounjaro and Zepbound keep growing at this pace, whether the new pill Foundayo picks up, and whether competition from rival drugmakers starts to slow Lilly’s momentum. The next big test will be the fourth-quarter results early in 2027, which will show whether the raised forecast was cautious or confident.

    Final Thoughts

    Eli Lilly’s quarter was strong because the underlying demand is real and still growing. The raised outlook tells investors the company expects that demand to continue. But even here, the details matter: one-time benefits helped this quarter, and deal charges trimmed the profit forecast. Good results are worth celebrating, but reading past the headline is always worth the extra minute.

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC, “Eli Lilly hikes sales outlook, as CEO says there’s room for ‘dramatic’ obesity market expansion” (https://www.cnbc.com/2026/10/29/eli-lilly-lly-earnings-q3-2026.html); Eli Lilly Q3 2026 results press release via PR Newswire (https://www.tradingview.com/news/prnewswire:9aa6dc6999d18:0-lilly-reports-third-quarter-2026-financial-results-raises-full-year-guidance-and-highlights-regulatory-progress-across-the-portfolio/).

  • Intel Stock Plunges 25% After Weak Forecast, Despite a Strong Quarter

    Intel Stock Plunges 25% After Weak Forecast, Despite a Strong Quarter

    Intel delivered a strong third quarter, and its stock still crashed. Shares fell about 25% in premarket trading on Friday, October 30, after the chipmaker gave a weak forecast for the final three months of the year.

    It is a strange situation: the company beat expectations, yet investors ran for the exit. The reason is simple. In the stock market, what a company says about the future often matters more than what it just did.

    What Happened

    Intel reported its third-quarter results on Thursday, October 29, after the market closed. Revenue rose 21% from a year earlier to $16.5 billion. Adjusted earnings per share came in at $0.52, well above the roughly $0.40 analysts expected. The company’s data centre and AI division was the star, with revenue jumping 78% to $7.3 billion, helped by strong demand for its Xeon server chips.

    But then came the forecast. For the fourth quarter, Intel expects revenue of only $15.0 billion to $16.0 billion, and adjusted earnings of $0.25 per share. Analysts had expected about $17.1 billion in revenue and $0.43 per share. That gap was enough to send the stock sharply lower, first in after-hours trading on Thursday and then again in premarket trading on Friday.

    Why It Happened

    Intel pointed to a weak personal computer market. Its PC chip business, called Client Computing, saw revenue fall 5% to $8.1 billion in the third quarter. Management said the PC slowdown is expected to continue at least through the first half of 2027. The company’s chief financial officer, David Zinsner, said global PC shipments could fall about 12% in 2026 and another 10% in 2027.

    Supply problems added to the trouble. Intel said it is struggling to make enough chips to meet demand for its Xeon server processors, and an incident at its factory in Israel in October disrupted production for about two weeks. The company estimated that incident would cut fourth-quarter revenue by about $300 million.

    Intel also expects its profit margin to shrink. Its adjusted gross margin, which measures how much profit it keeps from each dollar of sales after production costs, is forecast to fall to 38% in the fourth quarter, from 44.1% in the third quarter.

    Think of it like a restaurant that had a great month because a big event brought in crowds, but then tells customers that next month will be quiet and costs will be higher. Even if the past month was excellent, people will worry about the next one.

    Key Figures

    • Q3 revenue: $16.5 billion, up 21% year over year
    • Q3 adjusted earnings per share: $0.52 (expected: about $0.40)
    • Data centre and AI revenue: $7.3 billion, up 78%
    • PC chip revenue: $8.1 billion, down 5%
    • Q4 revenue forecast: $15.0 billion to $16.0 billion (expected: about $17.1 billion)
    • Q4 adjusted earnings forecast: $0.25 per share (expected: about $0.43)
    • Q4 adjusted gross margin forecast: 38%, down from 44.1% in Q3

    Why It Matters

    Intel’s fall dragged other chip stocks down with it. Shares of AMD, Nvidia and Broadcom all dropped in premarket trading on Friday. When a company as large as Intel warns about the PC market, investors worry the whole industry will feel it.

    The story also matters for Intel’s comeback. The company has been trying to rebuild its manufacturing business and win back ground it lost to rivals. A strong data centre quarter shows progress, but the weak forecast reminds investors that the recovery is not smooth, and that making chips is expensive. Intel plans about $20 billion in manufacturing investment in 2026, and even more in 2027, while warning that positive free cash flow may not return this year.

    What Happens Next

    Investors will watch two things. First, whether PC demand stabilises in early 2027, as Intel hopes, or keeps falling. Second, whether Intel can fix its supply problems and turn strong demand for its server chips into actual sales. The company’s next earnings report, early in 2027, will show whether the weak fourth quarter was a temporary dip or the start of a longer slump.

    Final Thoughts

    Intel’s quarter is a good example of why “beat expectations” does not always mean “stock goes up.” The past quarter was strong, but the forecast was weak, and the forecast won. For anyone learning about stocks, that is one of the most important lessons: the market is always looking forward.

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC, “Amazon falls 7%, Intel plunges 25% in premarket trading, as pressure mounts after earnings” (https://www.cnbc.com/2026/10/30/amazon-intel-earnings-big-tech-ai-spending-concerns.html); Intel Q3 2026 financial results press release (https://www.intc.com/news-events/press-releases/detail/1786/intel-reports-third-quarter-2026-financial-results).

  • Amazon Shares Fall 7% After Earnings Miss, Even as Cloud Growth Hits 39%

    Amazon Shares Fall 7% After Earnings Miss, Even as Cloud Growth Hits 39%

    Amazon reported its third-quarter results on Thursday, October 29, and investors did not like what they saw. The company’s shares fell about 7% in after-hours and premarket trading, even though its cloud business had one of its best quarters in years.

    That reaction tells you a lot about how the stock market works right now. Good news is not always enough. When a company is spending as much money as Amazon is, investors want everything to be perfect.

    What Happened

    Amazon’s total sales rose 12% to $201.9 billion in the three months ended September 30, 2026. That was slightly below the $202.31 billion analysts expected.

    Earnings per share came in at $1.89, also below the $1.96 that analysts had forecast. Net income fell slightly to $20.7 billion, from $21.2 billion a year earlier. Part of that drop is because last year’s quarter included a $9.5 billion one-time gain from Amazon’s investment in Anthropic, an AI company. Without that gain, the comparison would look better.

    The bright spot was Amazon Web Services, or AWS, the company’s cloud computing business. AWS sales jumped 39% to $46.0 billion, its fastest growth in nearly five years. AWS now runs at a $184 billion annual revenue pace. Its operating profit rose to $17.8 billion.

    Advertising revenue grew 11% to $19.6 billion, but that was also below expectations of $20.8 billion. Online store sales grew just 2% to $68.5 billion.

    For the holiday quarter, Amazon expects sales of $240 billion to $247 billion, growth of 12% to 16% from a year earlier. The middle of that range was a little below what analysts had hoped for.

    Why It Happened

    The main reason investors sold the stock is spending. Amazon spent $77.3 billion on property and equipment in the quarter alone, more than double the $35.1 billion it spent a year earlier. Most of that money goes to data centres and AI chips.

    For the full year, Amazon is keeping its capital spending plan at about $220 billion. That is a huge number. It is also why the company’s free cash flow, the cash left over after spending on things like data centres, turned negative. Over the past twelve months, free cash flow was negative $42.4 billion, compared with a positive $14.8 billion a year earlier.

    Think of it this way. Imagine a shop owner who is making more money than ever, but is also building ten new shops at the same time. The business looks great on paper, but the bank balance goes down because all the cash is going into construction. That is roughly what Amazon is doing, except the “shops” are data centres for artificial intelligence.

    Amazon’s chief executive, Andy Jassy, said the company expects AWS revenue to grow by more than 40% in both 2027 and 2028. The company says customers are using the new AI capacity almost as fast as it is built. But investors want proof that this spending will turn into steady profits, not just faster revenue growth.

    Key Figures

    • Total sales: $201.9 billion, up 12% (expected: $202.31 billion)
    • Earnings per share: $1.89 (expected: $1.96)
    • AWS sales: $46.0 billion, up 39%
    • AWS operating profit: $17.8 billion
    • Quarterly capital spending: $77.3 billion
    • Trailing twelve-month free cash flow: negative $42.4 billion
    • Fourth-quarter sales forecast: $240 billion to $247 billion
    • Full-year 2026 capital spending plan: about $220 billion

    Why It Matters

    Amazon is not alone. This week, several big technology companies reported strong revenue growth but negative free cash flow because of heavy AI spending, and their stocks fell. It is a sign that investors are starting to ask harder questions about the AI boom: how much will all this spending cost, and when will it pay off?

    Related reading: Why Google Stock Crashed 12.6%: What Investors Need to Know

    Amazon’s case is also a useful lesson for beginners. A company can grow fast and still see its stock fall. The stock market reacts to expectations, not just results. When expectations are very high, even a small miss can cause a big drop.

    What Happens Next

    All eyes will be on the holiday quarter. Amazon’s fourth quarter is its biggest of the year, and the $240 billion to $247 billion forecast will be tested against real holiday shopping. Investors will also watch whether AWS growth stays above 40% next year, as the company predicts, and whether free cash flow starts to improve as the new data centres fill up.

    Final Thoughts

    Amazon’s business is still growing, and its cloud division is performing very well. But the stock’s fall is a reminder that growth funded by massive spending comes with a question mark. Until the cash starts flowing back, investors will stay nervous, and that nervousness can hit even the strongest companies.

    Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.

    Sources: CNBC, “Amazon falls 7%, Intel plunges 25% in premarket trading, as pressure mounts after earnings” (https://www.cnbc.com/2026/10/30/amazon-intel-earnings-big-tech-ai-spending-concerns.html); Amazon Q3 2026 earnings release (https://www.aboutamazon.com/news/company-news/amazon-earnings-q3-2026-report).

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