Connecting Earnings Conference Call Dots Keeps Our Longer-Term Focus in Play

Over the last 20 hours or so, we’ve seen the number of companies reporting their quarterly results increase and, as we alluded to earlier on Thursday, that pace is only going to increases further in the next few weeks. That deluge brings a potential sea of data points and other signals that we can tap into to revisit our investing mosaic and re-test the underlying thesis for the Portfolio’s positions.

When we look at the reports from IBM (IBM), Texas Instruments (TXN), Lam Research (LRCX), SAP SE (SAP) and Nokia (NOK), the quick takeaway is that AI-related demand is no longer confined to a handful of data center suppliers. It is pulling through industrial chips, optical networks, mainframe and hybrid cloud software. Nine out of 10 of SAP’s 50 largest deals included AI, AI is 30% of IBM’s consulting revenue, Meta (META) has 10 million Muse users in six weeks and Lam cited a 250-fold rise in AI token usage.

Let’s roll up our sleeves and dig a bit deeper, sharing key highlights from those earnings calls.

SAP SE

Joule Work, the company’s AI workspace, now reaches 400 million SAP users with 40 assistants and 300 agents
Internally, more than 110,000 SAP employees use Joule Work Desktop, delivering 20% productivity gains in central functions. Per management, developer code contributions are up roughly 70% this year.
SAP targets up to €3 billion in AI-driven efficiency gains over the next two years

IBM

AI accounted for about 30% of consulting revenue and 35% of consulting backlog in the quarter
Internally, IBM is using AI and automation across software development, sales and G&A to drive its productivity gains. Company actions include deploying AI and automation at scale, reducing third-party spend, improving sales and marketing efficiency, using AI to drive more efficient software development, while optimizing supply chain and enhancing services delivery.
Management shared that demand for sovereign AI is picking up, and CEO Arvind Krishna said open-weight models now deliver about 90% of frontier-model effectiveness at 10% to 25% of the token cost
Management noted that when it analyzes customer spending priorities, customer spending priorities moving to leverage AI remain strong

Texas Instruments

Data center revenue grew 95% year over year and was up 20% quarter over quarter. Personal electronics was about flat year on year and grew by upper single digits sequentially. And lastly, communications equipment grew both year on year and sequentially.
Management also called out expected growth in robotics and automation as a positive tailwind for TI’s industrial business

Nokia

Sales to AI and cloud customers more than doubled year over year while orders from that group rose 118% to €1.5 billion. CEO Justin Hotard called AI connectivity demand “massive” and “insatiable.”
The biggest impact was on Nokia’s Optical and IP Networks segment, with demand exceeding supply as management called out AI and cloud as the fastest growing customer group.
Management also confirmed that the strength in AI and cloud is putting pressure on the supply chain, including the one for its Mobile Infrastructure business, calling it a broad-based constraint that includes leading-edge nodes, memory, source materials and printed circuit boards. It also shared those constraints are fueling cost increases as well as constraining production.
To help address those constraints, Nokia is adding €400 million of working capital to secure supply for 2027 growth.

Lam Research

Revenue hit a fifth straight record at $8.22 billion, up 54% year over year and 22% sequentially. Memory systems revenue more than doubled from a year ago
The December quarter guide of $8.6 billion would have been higher without near-term supply-chain constraints
Wafer fab equipment spending is forecast in the mid-$150 billion range for 2026 and above $200 billion in 2027, led by DRAM, then foundry/logic and NAND, with 10 new Tier 1 fabs coming online next year
Underpinning Lam’s outlook for WFE growth is the continued rapid adoption of AI by enterprises and consumers. Management noted that average weekly token usage is up roughly 250-fold in the past 18 months and that as AI moves increasingly towards autonomous agentic workflows, demand for compute, memory and storage solutions will continue to expand.
The performance needs of AI start to create a need for higher performance, low-latency devices
Supply-chain constraints for certain components continuing to limit chipmakers and equipment companies’ ability to fully meet end demand

Stepping Back a Bit

Stepping back, these reports add several new tiles to our investing mosaic, and by and large they reinforce the thesis behind a number of the Portfolio’s positions. Lam’s call for wafer fab equipment spending to top $200 billion in 2027 bodes well for Applied Materials (AMAT), while the surge in AI and cloud connectivity demand Nokia described speaks to the networking opportunity in front of Arista Networks (ANET), Broadcom (AVGO) and Marvell (MRVL).

The steep climb in token usage, along with Meta’s 10 million Muse users in just six weeks, points to sustained demand for compute and memory, which supports the case for continued AI spending at Alphabet (GOOGL), Amazon (AMZN), Microsoft (MSFT) and Meta and the flow-through to Nvidia (NVDA).

Meanwhile, the enterprise AI adoption on display at SAP and IBM is a positive read for Palantir (PLTR) and Microsoft, and Texas Instruments’ robotics and automation commentary supports our robotics and automation ETF position.

The flip side is that the supply constraints flagged by Nokia and Lam could slow how quickly that demand converts to revenue and push costs higher along the way. We’ll be listening for both as more companies, including ones in the Portfolio, report in the coming weeks.

Remember that during corporate earnings seasons from earlier this year, companies called out component and supply chain constraints as factors restraining revenue growth. At the time, we shared our suspicion that we were likely to see rolling bottlenecks as incremental capacity is added only to be overtaken by strengthening demand.

That appears to be what is unfolding. As we connect more dots collected as the current earnings season continues, we’ll have a clearer picture. If that is the case, we may see some disappointment compared to the robust market expectations that underpin consensus revenue figures. Again, we’ll have a better sense on this as we move a bit deeper into the Q3 2026 season.

As we collect and analyze those insights, we’ll also continue to track ones pertaining to AI adoption, usage, spending and other metrics. Provided that demand picture remains vibrant, and indications so far are that it is, we’ll navigate near-term bumps and focus on the longer-term benefit of the AI infrastructure build out.

More Pro Portfolio

At the time of publication, TheStreet Pro Portfolio was long AMAT, AMZN, ANET, AVGO, GOOGL, META, MRVL, MSFT and PLTR.