Alright my friends, once again thanks for letting me share my thoughts and musings in the Diary and a big salute the editors who help make it look easy. 

Your regular ringmaster, Dougie Kass, is back tomorrow and I suspect that following developments in the last 24 hours, he’ll have a lot to say and ample wisdom to share. 

See you around these parts down the road. 

CV

Position: None

Following its mid-September warning that rising fuel and driver-related costs would pressure near-term profitability, I’ll be very interested in what JB Hunt (JBHT) has to say about those pressures as it issues its guidance for the current quarter. 

While diesel prices have ebbed lower from their September 22 high of $6.5276 per gallon per data from AAA, the current average price of $6.3173 is still up significantly compared to $3.65 this time last year. 

I’ll also be interested in what JB Hunt has to say about capex spending for its truck fleet, especially given the forthcoming EPA emission mandate that will increase the cost per truck. 

Position: None

TheStreet Pro Portfolio picked up more shares of Applied Materials (AMAT) and then a short while ago we did the same with Axon (AXON). We also cleaned up the Portfolio’s Bullpen, adding three new positions and kicked four to the curb. 

Position: TheStreet Pro Portfolio is long AMAT and AXON

The National Retail Federation (NRF) now sees U.S. holiday sales growth accelerating to 4.2% this year. Sales during November and December are projected to rise 4.2% to $1.013 trillion, compared with a 3.1% increase to $972 billion last year. 

NRF expects retailers to hire between 325,000 and 375,000 seasonal workers, in line with last year’s estimated 356,000 seasonal jobs.

Position: None

Time Magazine, yes that Time, which as I know first hand still has some very relevant articles given the Signals alerts we share over at the Pro Portfolio, is running a very long piece today on new Apple (AAPL) CEO John Ternus. 

Whether you love it, hate it, own it, or don’t, you have to recognize Apple’s place in the technology landscape and its weighting in the S&P 500. For those reasons alone, you may want to more than skim this: 

John Ternus Is Engineering a New Era for Apple

Position: The Pro Portfolio is long AAPL

Reuters is reporting that in a letter to CEO Dario Amodei, New York City Comptroller Mark Levine urged Anthropic to delay its U.S. IPO until it addresses concerns about safety, governance and the pace of development.

As for why the NYC Comptroller speaking up is something to pay attention to… how about because the position oversees the city’s finances, manages its pension funds and acts as a watchdog over public spending and financial practices. That means it oversees ~ $325 billion in assets.

So far, Anthropic has yet to respond but as it gets ready for its IPO roadshow in less than month, no doubt the comptroller’s letter will come up during Q&A sessions, if not sooner. 

For us over at the Pro Portfolio, our position in Morgan Stanely (MS), lead underwriter of the offering, means we will be tracking the timing and ultimate size of the offering very closely. We’ll also be watching to see if others follow in the NYC comptroller’s footsteps. 

Position: The Pro Portfolio is long MS 

It’s being reported that Apple (AAPL) and Meta (META) are collaborating to let developers run Meta’s Muse Spark Open AI model locally on high-end Mac computers. This is, if I have the data right, their first public partnership in nearly 10 years. 

For now it appears the relationship is centered on Apple’s Mac Studio computers, but it’s likely to spur questions as to whether the two may be talking about Meta’s Muse helping power Apple’s Apple Intelligence and Siri AI.

Such a happening would go a long way in helping folks overcome privacy concerns when it comes to Meta. 

Position: The Pro Portfolio is long AAPL, META.

It is that time of the day where one refuels for the back half of the trading day. Here’s a short list for some of the reading I’ll be doing as put my nosh on:

CoreWeave Credit Risk Hits Record, Pricing 60% Odds of Default

Nvidia CEO Says There’s No Need to Backstop Troubled CoreWeave

Amazon introduces 2 new AI products from Bee: Bee Frontier and Bee Eclipse

Google’s Universal Cart shopping tool launches in the US

Homeownership Drifts Further Out of Reach as Mortgage Rates Rise

OpenAI’s AI agent platform is used by twice as many companies as Anthropic’s, new VentureBeat survey finds

Position: The Pro Portfolio is long AMZN, GOOGL, NVDA.

As we approach the halfway mark for today’s trading, let’s take another look at those S&P 500 and Nasdaq 100 heat maps courtesy of our sister site, TheFly:

Position: None

Some interesting thoughts and context on the AI and data center build out from Capital Current:

In Q2 2026, the Bureau of Economic Analysis recorded $752 billion in annualized investment in information-processing equipment and data centers. Residential investment came in at $748 billion. Adam Shapiro, vice president at the San Francisco Fed, posted the chart and called it simply: “The AI investment boom is massive.”

A four-billion-dollar gap. Thin. But the lines crossed. And they’re moving apart.

Data center construction spending hit a record annualized rate of $75.2 billion in July. That is 57% higher than a year ago. Year-to-date starts through June reached $81.5 billion, already topping the full-year 2025 total. Housing, meanwhile, sits 18% below its 2021 peak.

Rystad expects 2026 to go further. Data center investment is on pace to match the entire oil and gas value chain this year. A sector that barely appeared in BEA data five years ago now moves more capital than the industry that powered the twentieth century.

Where is Capital Current going with this? 

Because every server rack draws power. A house needs 1.2 kilowatts on average. A high-density AI rack needs 100. The capital goes into chips. The chips need a grid. And the grid takes a decade to build.

That final comment keeps us bullish on the Pro Portfolio’s position in Eaton (ETN), and it also explains some of the nuclear power deals being inked by some of the hyperscalers and others. With the VanEck Uranium and Nuclear ETF (NLR) knocking on an oversold condition like it did back in mid-July, it may be time to put it back in the Pro Portfolio’s Bullpen. 

Position: TheStreet Pro Portfolio was long ETN 

Diary #12

Today’s meaningful downgrades courtesy of TheFly:

BofA downgraded PayPal (PYPL) to Underperform from Neutral with a $53 price target. The firm sees a “weak” Q3 setup and argues that “every transformation lever is a 2027+ story.”

StoneX downgraded Spotify (SPOT) to Hold from Buy and removed the firm’s previous price target. While the firm remains “strongly convinced” of Spotify’s long-term network effects and subsequent product and services scale advantages, it is downgrading the shares on what it views as difficult “financial optics” in the next twelve months.

JPMorgan downgraded Albertsons (ACI) to Neutral from Overweight with an unchanged price target of $14 following the fiscal Q2 report. While the shares trade at a sizable discount to other U.S. food retailers, this could be warranted given Albertsons’ ongoing operational challenges and its acknowledgement this week that its self-help initiatives have not been as effective as it planned, the firm tells investors in a research note. Goldman Sachs also downgraded Albertsons to Neutral from Buy with a price target of $13, down from $16.

KeyBanc downgraded Cirrus Logic (CRUS) to Sector Weight from Overweight without a price target. Apple (APPL) supplier cuts indicate iPhone units are likely to decline in 2027 and 80% of Cirrus Logic’s revenues are tied to Apple, the firm tells investors in a research note.

Goldman Sachs downgraded Par Pacific (PARR) to Neutral from Buy with a price target of $94, up from $90. The firm sees downside risk to 2027 consensus estimates from elevated freight rates.

Position: None

Bloomberg: Signet Jewelers (SIG) may join consortium to purchase De Beers with Richemont, owner of Cartier

Position: None

TD analyst Derrick Wood said the following on MSFT today: 

Datacenter capacity growth supports our estimated 35% Azure revenue CAGR through FY31. We model capacity rising from ~11.5 GW in FY26 to ~36.6 GW in FY31, adding about 16 GW of GPU capacity and 9 GW of CPU capacity. 

We think Azure revenue reaches $461B as AI becomes most of the business. We forecast Azure revenue increasing from $102B in FY26 to $461B in FY31. AI revenue is expected to grow at a 60% CAGR to $284B, lifting its share of Azure revenue from 27% to 62%. 

Our GPU monetization assumptions leave room for upside. Annualized revenue per new GPU GW rises in our model from about $14B to $22.5B.

We expect Capex rises but free cash flow remains positive. Capex increases from $145B in FY26 to $333B in FY31. Our model shows FCF margin troughing at 7% in FY27 and recovering to ~25% in FY31 as growth outpaces incremental spending. Execution and compute allocation remain key risks. Power and hardware constraints, permitting delays, changes to the OpenAI partnership, and greater investment in frontier models could affect capacity timing, Azure growth, and capex. The model assumes about 70% of GPU capacity serves Azure.” TD Cowen reiterates Buy with a $625 price target.

Position: TheStreet Pro is long MSFT

Folks, in case you might miss it, today’s 8 Key Items Shaping the Stock Market is out and you can find it here.

Position: None

As the trading day gets underway, there’s a snapshot of what’s moving in the S&P 500 and the Nasdaq 100 courtesy of our sister site, TheFly:

Positions: None.

Apologies for briefly stepping away but I had to get to today’s 8 Things Moving the Market Today, which should be out shortly. 

In response to the hotter-than-the-market-expected September producer price index (and thanks to Neil “the Facts” Sethi for covering it in more detail in the Comment section below), I will share a “as I suspected” moment:

From yesterday:

Here’s the thing: If we follow the September PMI data from ISM and S&P Global, odds are it means we will see another step up in the September Producer Price Index data due on Thursday. Walking into Wednesday’s September CPI data, the market consensus called for flat to down figures headline and core PPI for September:

September PPI: 5.3% year over year versus 5.4% in August

September core PPI: 4.4% versus 4.6% in August

As we pointed out in our opening comments on Thursday morning, core PPI has been running over 4% on a year-over-year basis since April. With that trend at least continuing in September and likely heating up further during the month, barring any collapse in oil and related energy prices, inflation pressures will continue to ripple through the economy, especially as companies look to protect margins where they can.

On that September retail sales report, which saw spending accelerate across multiple categories even after we strip out that 28% year over year jump in gasoline station retail sales, it provides a very nice yardstick by which to measure upcoming retail facing earnings with its 5.4% year over year increase for Retail only sales in Q3 2026. 

And yes, in my view sizing up the September retail sales report and factoring in the lessons in the September consumer price index and PPI reports, I continue to see Costco (COST) taking consumer wallet share as we head into the year-end holiday season. 

Position: TheStreet Pro is long COST. 

A snapshot of this morning’s economic reports courtesy of Trading Economics:

Positions: None.

Upgrades:

ArcelorMittal (MT) upgraded to Overweight from Neutral at JPMorgan

Array Technologies (ARRY) upgraded to Outperform from Neutral at Mizuho, Target: $5

Bank of America (BAC) upgraded to Outperform from Neutral at Baird, Target: $62

BorgWarner (BWA) upgraded to Buy from Neutral at BofA, Target: $85

Brighthouse Financial (BHF) upgraded to Neutral from Underweight at JPMorgan, Target: $55

CarMax (KMX) upgraded to Buy from Underperform at BofA, Target: $65

Casey’s General Stores (CASY) upgraded to Outperform from Sector Perform at RBC Capital, Target: $825

Cemex (CX) upgraded to Buy from Neutral at Citi, Target: $12

Crocs (CROX) upgraded to Overweight from Equal Weight at Barclays, Target: $139

Fortrea (FTRE) upgraded to Buy from Hold at Deutsche Bank, Target: $25

Lithium Americas (LAC) upgraded to Speculative Buy from Hold at Canaccord

Quantinuum (QNT) upgraded to Overweight from Equal Weight at Morgan Stanley, Target: $62

Scotts Miracle-Gro (SMG) upgraded to Buy from Neutral at UBS, Target: $70

Walmart (WMT) upgraded to Buy from Hold at Deutsche Bank, Target: $136

Zions Bancorp (ZION) upgraded to Outperform from Neutral at Baird, Target: $75

Downgrades:

Albertsons (ACI) downgraded to Neutral from Overweight at JPMorgan, Target: $14

Albertsons (ACI) downgraded to Neutral from Buy at Goldman Sachs, Target: $13

Align Technology (ALGN) downgraded to Neutral from Outperform at Baird, Target: $162

Cirrus Logic (CRUS) downgraded to Sector Weight from Overweight at KeyBanc

Dauch (DCH) downgraded to Underperform from Buy at BofA, Target: $5

Envista (NVST) downgraded to Neutral from Outperform at Baird, Target: $26

Par Pacific (PARR) downgraded to Neutral from Buy at Goldman Sachs, Target: $94

Spotify (SPOT) downgraded to Hold from Buy at StoneX

ZTO Express (ZTO) downgraded to Neutral from Buy at Goldman Sachs, Target: $22

New research coverage

AngloGold Ashanti (AU) initiated with a Buy at Goldman Sachs, Target: $104

Antero Resources (AR) initiated with a Sector Outperform at Scotiabank, Target: $46

APA Corp. (APA) initiated with a Sector Perform at Scotiabank, Target: $44

Black Hills (BKH) initiated with a Buy at Jefferies, Target: $87

Bright Minds Biosciences (DRUG) initiated with an Outperform at Wolfe Research, Target: $150

CAMP4 Therapeutics (CAMP) initiated with a Buy at Needham, Target: $8

Chord Energy (CHRD) initiated with a Sector Outperform at Scotiabank, Target: $192

CNX Resources (CNX) initiated with a Sector Perform at Scotiabank, Target: $34

Crescent Energy (CRGY) initiated with a Sector Outperform at Scotiabank, Target: $18

CRISPR Therapeutics (CRSP) initiated with a Neutral at UBS, Target: $52

Devon Energy (DVN) initiated with a Sector Outperform at Scotiabank, Target: $61

Diamondback Energy (FANG) initiated with a Sector Outperform at Scotiabank, Target: $250

Digital Turbine (APPS) resumed with a Buy at Roth Capital, Target: $19

Eloxx Pharmaceuticals (ELOX) initiated with an Overweight at Cantor Fitzgerald

EOG Resources (EOG) initiated with a Sector Perform at Scotiabank, Target: $144

EQT Corporation (EQT) initiated with a Sector Perform at Scotiabank, Target: $54

Establishment Labs (ESTA) initiated with a Buy at Stifel, Target: $85

Fidelity National Information Services (FIS) resumed with a Buy at BofA, Target: $42

First Financial Bankshares (FFIN) initiated with a Market Perform at Raymond James

Fiserv (FISV) resumed with an Underperform at BofA, Target: $48

Global Payments (GPN) resumed with a Buy at BofA, Target: $114

Gold Fields (GFI) initiated with a Neutral at Goldman Sachs, Target: $38

Gulfport Energy (GPOR) initiated with a Sector Outperform at Scotiabank, Target: $217

HawkEye 360 (HAWK) initiated with an Overweight at Piper Sandler, Target: $22

Hemab Therapeutics (COAG) initiated with an Overweight at JPMorgan, Target: $70

Infinity Natural Resources (INR) initiated with a Sector Outperform at Scotiabank, Target: $17

Magnolia Oil & Gas (MGY) initiated with a Sector Outperform at Scotiabank, Target: $31

Matador Resources (MTDR) initiated with a Sector Perform at Scotiabank, Target: $59

MGE Energy (MGEE) initiated with a Neutral at JPMorgan, Target: $76

Murphy Oil (MUR) initiated with a Sector Perform at Scotiabank, Target: $41

Netflix (NFLX) assumed with a Buy at Jefferies, Target: $85

Northern Oil and Gas (NOG) initiated with a Sector Perform at Scotiabank, Target: $27

onsemi (ON) initiated with a Buy at StoneX, Target: $110

Ovid Therapeutics (OVID) initiated with an Outperform at Wolfe Research, Target: $5

Permian Resources (PR) initiated with a Sector Outperform at Scotiabank, Target: $29

Rapport Therapeutics (RAPP) initiated with an Outperform at Wolfe Research, Target: $50

Rapport Therapeutics (RAPP) initiated with a Buy at UBS, Target: $71

Redwire (RDW) initiated with a Neutral at Piper Sandler, Target: $11

Shift4 Payments (FOUR) resumed with a Neutral at BofA, Target: $42

Sight Sciences (SGHT) initiated with a Buy at H.C. Wainwright, Target: $14

SM Energy (SM) initiated with a Sector Perform at Scotiabank, Target: $39

Solid Biosciences (SLDB) initiated with a Buy at UBS, Target: $20

Spectrum Brands (SPB) resumed with a Buy at UBS, Target: $97

Suja Life (SUJA) initiated with a Hold at Needham

Ultragenyx (RARE) initiated with a Neutral at UBS, Target: $16

Vail Resorts (MTN) initiated with a Market Perform at Citizens

Versant Media (VSNT) initiated with an Equal Weight at Morgan Stanley, Target: $38

Viking Therapeutics (VKTX) initiated with a Buy at UBS, Target: $94

Viper Energy (VNOM) initiated with a Sector Outperform at Scotiabank, Target: $54

Warner Music Group (WMG) initiated with a Buy at StoneX

Wave Life Sciences (WVE) initiated with a Buy at UBS, Target: $11

York Space Systems (YSS) initiated with a Neutral at Piper Sandler, Target: $9

Position: TheStreet Pro Portfolio is long BAC, NFLX 

“Defeat is a state of mind. No one is ever defeated until defeat has been accepted as a reality.”

– Bruce Lee

Some top congressional Republicans have privately concluded that it is likely impossible for them to keep control of the House of Representatives in the midterm elections, and they are now focused on limiting the scale of the defeat and salvaging the party’s Senate majority.

I’ll spare you the politics and just say, more on this can be found here over at Politico.

Position: None

Another sign of an increasingly crowded energy drink market, and of a desperate company in Beyond Meat (BYND):

Beyond Meat entered the energy-drink category with Beyond Immerse Protein + Energy, a sparkling plant-based protein drink with 160mg of caffeine per serving.

The new product launches exclusively on BeyondPlantProtein.com in Cherry Berry and Watermelon Strawberry flavors.

More here

Position: None

Collecting data points is pretty much a full-time business, and this morning I’m reading an article in NRN (Nation’s Restaurant News) and it has some interest stats ahead of today’s September Retail Sales report and quarterly results from restaurant companies in the next few weeks:

Restaurant menu price inflation continues to increase at a rate well over that of grocery stores but even more when compared with the amount of money Americans are actually earning…

The gap in prices compared with wages helps explain weak consumer sentiment, which declined 13.6% year over year in October, according to the Survey of Consumers at the University of Michigan.

It is also putting more pressure on restaurant chains that are contending with ongoing declines in customer traffic.

Quick-service restaurant sales were up just 0.6% in the third quarter, according to the data firm Revenue Management Solutions. Traffic during the period declined 2.6%.

The full NRN article can be found here.

Position: None

One of the higher profile events from yesterday was Anthropic’s pre-IPO meeting with investors.

Here is some of what was shared and reflects articles from the FT and Blooomberg:

– Anthropic PBC told prospective investors its third-quarter revenue hit $16.8 billion. Revenues were up from $11.5 billion in the three months to June and about $4.8 billion in the first three months of the year. 

–  The firm behind Claude told investors it had achieved profitability in the quarter on an adjusted basis. 

–  Anthropic is generating positive free cash flow, had adjusted gross margin of 85% and an over 11% positive adjusted operating margin as of the third quarter.

–  Anthropic told investors that it was cash flow positive and banking $1.70 in revenue for every $1 spent on computing power in the third quarter.

What Wasn’t Shared?

Per the FT:

Anthropic did not share an update to its annualised revenue, which hit $65bn at the end of July. But SemiAnalysis, a research firm, projected sales grew to roughly $74bn on an annualised basis based on the new figures. Those estimates are lower than more bullish predictions during the summer, when a number of Anthropic’s investors told the FT the company would far surpass $100bn in annualised revenue by year-end.

What’s Next?

Anthropic is set to begin formally marketing its IPO as soon as the week of November 9, putting it in line to begin trading before the Thanksgiving holiday.

And with that we should look forward to the eventual S-1 filing and what it has to say, as well as comments collected from the IPO roadshow.

You can bet your sweet bippy we here at TheStreet Pro will be very interested in any updates to Anthropic’s plans to spend more than $500 billion on infrastructure and computing power over the next decade.

Position: None

With a few hours to go until the market open, S&P futures are in the red but not as much as the Nasdaq futures, thanks to renewed concerns over, you guessed it, AI spending. 

That comes even though Taiwan Semiconductor (TSM) bested top and bottom-line expectations for its September quarter and guided current quarter revenue to $52.3 billion-54.3 billion vs. $50.22 billion FactSet consensus. During its earnings call, we’ll look to see what Taiwan Semi says about capacity utilization and incremental capital spending to address it. 

We’ll also have more to say on Taiwan Semi’s revenue mix during the September quarter, but odds are it strongly favored AI and data center, and we say this following IDC’s findings that Q3 2026 smartphone shipments fell 22% year over year. IDC now expects any recovery in growth won’t come until 2028, at the earliest.

And here’s the standout comment from IDC as if a 22% shipment drop wasn’t enough: “Memory costs have surged approximately 350% since last year and are still rising, creating substantial pressure on vendor margins and shipments. The worst is yet to come.”

With that all as a setup, we’ve got a busy morning with quarterly results from: 

BNY Mellon (BNY)

Charles Schwab (SCHW)

Ericsson (ERIC)

First Horizon (FHB)

Manpower (MAN)

PNC (PNC)

U.S. Bancorp (USB)

In addition to the weekly jobless claims data, we also have September PPI and Retail Sales out at 8:30 AM ET as well as some regional Fed indices. 

It’s going to be a whirlwind of potential tailwinds and headwinds, but here at the Diary we’ll do our best to connect the dots and share insights along the way. 

Buckle up my friends, we’re going in!

Position: None