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DE has spent two years in one of the deepest agriculture-equipment downturns of the past decade.

Equipment Operations net sales fell from a fiscal 2023 peak of $55.6B to $38.9B in FY25, a 30% decline in two years. Diluted EPS fell from $34.63 in FY23 to $18.50 in FY25, a 47% drop. When Deere reported Q1 FY26 in February, CEO John May said the company believes “2026 represents the bottom of the current cycle.”

Management raised the FY26 net income guide from $4.0-4.75B to $4.5-5.0B at the same time. When Deere reports Q2 FY26 next Thursday morning, the question will be whether the Q1 evidence holds up across a second quarter of data, or whether the floor is still moving.

Deere operates four reportable segments.

Production & Precision Agriculture (PPA) ($17.3B in FY25, 45% of equipment net sales) sells row-crop tractors, combines, and the precision-ag stack to large grain and cotton growers.

Small Agriculture & Turf (SAT) ($10.2B in FY25) sells utility tractors, hay and forage equipment, and turf machinery to smaller producers and commercial landscapers.

Construction & Forestry (CF) ($11.4B in FY25) sells earthmoving, forestry, and roadbuilding equipment, including the Wirtgen Group.

Financial Services (FS) ($890M of net income in FY25, up 28% YoY) finances retail sales, dealer inventory, and leases for the equipment segments.

The cyclical reset hit all three equipment segments hard. PPA operating profit fell from $7.00B in FY23 to $2.67B in FY25, a 62% decline. SAT operating profit fell from $2.47B to $1.21B over the same period, and CF operating profit fell from $2.70B to $1.03 B. Management has held R&D spending at $2.31B in FY25, up from $2.18B at the FY23 peak, signaling that the precision-ag, autonomy, and “Solutions as a Service” strategy is being funded through the cycle rather than cut.

The FY26 outlook frames a divergent recovery: large-ag industry demand in the U.S. and Canada is guided down another 15-20%, but SAT and CF segment net sales are guided up roughly 15% each as construction activity, infrastructure spending, and small-ag replacement demand turn.

So heading into Thursday, here’s what we’re watching:

• CF Backlog and Volume. CF backlog grew from $2.2B at FY24 year-end to $3.8B at FY25 year-end, up 73%, the cleanest leading indicator that the cycle has turned. Q1 FY26 CF net sales were $2.67B, up 34% YoY. We’re watching for Q2 CF net sales above $3.2B and segment op margin of 10% or better.

• PPA Margin. Q1 FY26 PPA net sales were $3.29B, up 3% from Q1 FY25, but segment operating profit fell to $139M from $338M a year ago, an op margin of 4.2% down from 10.6%. The FY26 outlook is for PPA net sales down 5-10% with margin still under pressure. We’re watching for Q2 PPA op margin at 12% or better, which would suggest the margin trough is in even as volumes stay weak.

• SAT Recovery. Q1 FY26 SAT net sales were $2.17B, up 24% YoY, and operating profit was $196M, up 58%. The FY26 guide is for SAT net sales up 15%. We’re watching for Q2 SAT net sales growth of 15% or better, with op margin holding above 10%.

• Financial Services Net Income. FS net income hit $890M in FY25, up 28% from $696M in FY24, the highest annual result since FY21 and a meaningful offset to the equipment downturn. Provision for credit losses was $278M, roughly flat with FY24’s . We’re watching for Q2 FS net income above $220M with provision under $80M, which would suggest the captive finance arm is staying healthy even as dealers carry elevated used inventory.

• FY26 Guide Update. Deere raised the FY26 net income guide from $4.0-4.75B

  to $4.5-5.0B at Q1. We’re watching for another raise, with the bull case mid-point moving toward $5.25-5.50B if Q2 SAT and CF print at or above guide.

Q2 FY26 consensus is roughly $5.71 in EPS, and the stock sits about 15% below its all-time high heading into the report. The number to watch is the FY26 guide. If Deere raises to $4.75-5.25B or higher, and Q2 segment data confirms that CF and SAT are recovering while PPA margin stabilizes, the “bottom of the cycle” call gets validated.

All data via Revelata’s deeepKPI from Deere’s fiscal 2025 10-K, Q1 FY26 10-Q, and quarterly press releases.

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WMT has spent three years telling investors that operating income will grow faster than sales. Their argument is that higher-margin businesses like advertising, paid memberships, and third-party marketplace fees will scale much faster than the low-margin retail base. As the revenue mix shifts, the overall operating margin should expand.

But, in fiscal 2026, on a full-year basis, that didn’t happen.

Consolidated gross margin expanded just 8 bps, operating expenses deleveraged 20 bps, and consolidated operating margin contracted 13 bps. The margin expansion showed up only in Q4, when operating income grew 10.8% on sales of 5.6%. When Walmart reports Q1 FY27 next Thursday morning, the question is whether that Q4 result was the machine finally kicking into gear, or whether the full-year shape is the true read.

Walmart generates revenue across three reportable segments: Walmart U.S. ($483B in FY26, supercenters, neighborhood markets, and Walmart.com), Walmart International ($132B in FY26, 18 countries including Flipkart and PhonePe in India), and Sam’s Club U.S. ($93B in FY26, membership warehouse clubs). Underneath the retail layer, three higher-margin businesses have indeed scaled fast: consolidated membership fee revenue hit $4.4B in FY26 (+15.8%), Sam’s Club membership and other income hit $2.5B (+8.7%), and global advertising hit $6.4B (+46%), now anchored by the VIZIO acquisition that closed in late FY25 for $1.9B.

Management has leaned harder on these levers, and their FY27 guide reflects continued confidence in them. The expect net sales +3.5-4.5% (cc), adjusted operating income +6.0-8.0% (cc), adjusted EPS $2.75-$2.85, capex ~3.5% of sales, and a fresh $30B share repurchase authorization announced with Q4 results.

So heading into next Thursday, here’s what we’re watching:

• Walmart U.S. Comp Mix. Walmart U.S. comp sales grew 4.3% in FY26, of which eCommerce contributed 4.3 points, meaning physical-store comp contribution rounded to zero for the year. Wall Street consensus is +3.9% comp in Q1. We’re watching for the eCommerce share of comp to hold above 60%, with any positive contribution from brick-and-mortar as upside.

• Global Advertising. Global advertising grew 46% to $6.4B in FY26. Walmart Connect (U.S.) grew 41% in Q4 ex-VIZIO, meaning the underlying business is growing nearly as fast as the consolidated number. We’re watching for global advertising at +25% or better and Walmart Connect U.S. (ex-VIZIO) at +30% or above, since Q1 FY27 is the first quarter where VIZIO is partially in the prior-year base.

• Membership Fee Revenue. Consolidated membership fee revenue grew 15.8% to $4.4B in FY26, the recurring-revenue floor that anchors the Walmart+ and Sam’s Club Plus subscriber bases. We’re watching for membership fee growth above +12% and any disclosure of Walmart+ subscriber count or attach rate.

• The Operating-Leverage Wedge. Q4 FY26 produced operating income +10.8% on sales +5.6%, but the full-year FY26 produced a 13 bps margin contraction.

  WMT’s recent announcement that they will lay off or relocate roughly 1,000 corporate workers is a small operational signal but still too small at 0.05% of total headcount to move the FY27 margin math on its own. The Q1 FY27 guide is for op income +4-6% on sales +3.5-4.5%. We’re watching for actual Q1 op income at the high end or above, with commentary on the structural sources of leverage (ad-tech mix, fulfillment economics, membership recurring).

• Walmart International Reversal. Walmart International operating margin fell from 4.5% to 3.9% in FY26, and segment op income declined to $5.10B from . This structural twist muddied the consolidated picture. We’re watching for management commentary on what drove this decline and whether it is bouncing back.

Consensus for Q1 FY27 is roughly $165-167B in net sales and adjusted EPS in the $0.63-$0.65 range, in line with company guidance. The number to watch is operating income growth versus sales growth. The Q1 guide is sales +3.5-4.5% and op income +4-6%, a gap of 50 to 150 basis points. If op income lands at the high end and International margin starts to recover, the FY27 +6-8% adjusted operating income guide stays on track. If op income lands at the low end and International margin stays compressed, the FY27 guide is at risk.

All data via Revelata’s deepKPI, which gives you one-click auditing on every datapoint and integration into Excel, Claude, ChatGPT, OpenClaw, or your agent via API. Sign up for the free tier. No credit card necessary.

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YETI’s story has been one of growth. At least, until 2025.

After a decade of expansion from $424M (FY18) to a $1,094M peak (FY24), it was then that its Drinkware business flattened and fell 0.8% to $1,086M. When YETI reports Thursday morning, the question will be whether international and category diversification can keep carrying the business, especially in the face of tariff headwinds.

Yeti generates revenue through Drinkware, Coolers & Equipment ($748M, 40% of FY25 sales, covering hard coolers, soft coolers, bags, cargo, and outdoor-living gear), and a small Other category ($34M, 2%) of apparel and ice substitutes. The Rambler tumbler scaled the company past $1B in revenue, with Drinkware mix peaking at 62% of sales in FY23 before stepping back to 58% in FY25.

Management’s response has been to diversify across three axes: 1) Manufacturing, from China Reliance to sourcing from Thailand, Malaysia, Vietnam, the Philippines, Mexico, and Poland; 2) Geographic expansion into Australia, Europe, and Japan (launched Q2 FY25); and 3) Category extension through acquired brands like Mystery Ranch in technical bags, Butter Pat in cookware, Helimix in shaker bottles, Powered Cooling in active cooling.

So heading into Thursday, here’s what we’re watching:

• Drinkware Growth. Q4 FY25 Drinkware grew 6%, the best result in over a year, with US Drinkware flat and international carrying it. Q1 FY26 is a clean 13-week comparable (Q4 had 14 weeks). We’re watching for total Drinkware at mid-single digits or better, with US Drinkware specifically returning to growth.

• International. International grew +25% in Q4 FY25, +16% on the year, now 19% of full-year sales up from 4% in FY19. Japan sits in the prior-year comparison base for the first time. We’re watching for international growth holding above +15%.

• The Tariff Margin Math. Q4 FY25 adjusted operating margin compressed 250 bps on tariff costs. Full-year gross margin went from 58.1% to 57.4%, a 70 bps step-down. The FY26 guide assumes another 200 bps of incremental tariff drag and still expects flat operating margin, requiring about 200 bps of underlying expansion from supply chain and selective pricing.

• US Performance. US sales fell to $1,474M from $1,490M in FY24, the first US decline on record. Wholesale sell-through outpaced sales into the channel in Q4. We’re watching for US back to positive growth and commentary on Drinkware promotional pressure.

• Capital Return. FY25 generated $212M of free cash flow against $297.6M of buybacks, drawing down cash. FY26 plans $100M of buybacks against

  $200M+ FCF, leaving room for M&A.

Consensus is $374M of revenue (+6.6%) and $0.17 adjusted EPS (down 45% on tariffs); the stock sits near $41.50. For FY26 management guides 6-8% revenue growth, 14.4% adjusted operating margin (flat YoY), $200M+ free cash flow, and $100M of buybacks against the $297.6M returned in 2025. The most important sentence Thursday will be whatever management says about US Drinkware. The EPS may look ugly on tariffs; the structural read is in everything else.

All data via Revelata’s deepKPI are from YETI’s fiscal 2025 10-K and quarterly 8-K press releases.

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UA reports Q4 and full-year fiscal 2026 tomorrow at 6:55 a.m. ET. Consensus is for revenue of about $1.17B (down ~1% YoY) and a loss of two cents per share. The stock trades around $6.43 against an average analyst price target of $7.73, with Truist, Barclays, and BofA all raising targets to $8 after the Q3 print and UBS the most aggressive at Buy with an $11 PT.

Kevin Plank returned as CEO in April 2024, five years after stepping aside, and immediately announced a turnaround predicated on moving upscale: shrink the top line on purpose in exchange for higher gross margins. This would involve exit wholesale, killing DTC discounting, selling MapMyFitness, separating the Curry Brand, and narrowing strategic focus to North America. To do this, he hired Eric Liedtke from Adidas to run brand and Yassine Saidi from PUMA to run product. The goal was to be smaller, but richer.

He’s not running it alone. Prem Watsa’s Fairfax Financial disclosed a 22.2% stake in early January, making Fairfax the largest shareholder. The position is roughly 42 million shares of non-voting Class A stock, which means Watsa has put chips on Plank without seeking governance influence. Plank’s also brought in a new CFO, Reza Taleghani (formerly Samsonite CFO, who led that company’s profitability transformation), who joined in February. Dave Bergman stays through 2027 for the handoff.

For FY25 (year ended March 31, 2025) the math worked. Though revenue fell 9.4%, gross margin climbed 180 bps to 47.9%, the second-highest annual print in the company’s history.

But then Q3 FY26 broke the story. Revenue fell another 5.2%, and this time gross margin fell 310 bps with it to 44.4%, the lowest quarterly print in two years. Tariffs took 200 bps, North America discounting took the rest. The thesis only works if margins hold.

So heading into tomorrow, here’s what we’re watching:

• Gross Margin. Full-year FY26 guidance is for gross margin to decline ~190 bps, which after a 9-month YTD of 46.6% implies Q4 lands around 44%. The Street already expects Q3 wasn’t a one-quarter blip. If management frames Q3 as a tariff-driven trough with margin re-accelerating from here, the premium reset thesis may still have life. If they recalibrate the long-term margin algorithm down, “premium reset” will start to look like “managed decline”

• North America. Plank narrowed his strategic focus to NA in the FY25 10-K. Q3 NA fell 10.3% to $757 M. Full-year guidance now calls for NA to be down ~8%, which means Q4 needs to be down mid-to-high singles to make the math work. The real read, though, is wholesale-vs-DTC mix: in Q3, wholesale shrank faster (-6.4%) than DTC (-3.9%), with DTC e-commerce down 7% but DTC stores only down 2%. That means full-price store traffic was holding up better than discount-driven channels. If Q4 keeps that pattern, the brand-elevation thesis has legs. Instead, if wholesale stabilizes while DTC accelerates downward, then the consumer is voting against full-price product.

• International. EMEA in Q3 was $316M, up 6%, with EMEA operating income up 17% to $49 M. Latin America revenue was up nearly 20%, though LATAM operating income actually fell 44% in the quarter on higher product input costs, marketing, and bad debt expense. This means the LATAM growth comes at a temporary cost. EMEA is now guided to ~9% growth for the year, and APAC’s full-year decline guide just improved from high-singles to ~6%. There’s a real business here that doesn’t show up in the North America narrative, and the long-run mix shift toward international changes the comp set entirely. On Holding, Hoka, and Asics all trade at premium multiples on international-heavy mixes. UA still trades like a struggling US wholesale brand.

• The restructuring math. Plank’s 2025 Restructuring Plan started at $70-90M in May 2024, was raised to $140-160M that September, then raised to $255M on November 13, 2025. The last increase included separating the Curry Brand ($69.7M of non-cash contract termination cost in Q3 alone). $224M of the $255M has been incurred through Q3; the rest is supposed to land in Q4. The questions tomorrow: is it actually done? And does management finally quantify the run-rate savings the restructuring is supposed to generate?

• Marketing spend. Q3 marketing spend was down 12.6% YoY, and it’s running at 10.5% of revenue versus 11.4% a year ago. Plank is pulling marketing dollars while pulling revenue dollars. The bullish read is that brand health is strong enough to coast, and Plank told the Q2 call that brand awareness among 18-34 year-olds went from “the mid-sixties just six months ago to over eighty percent today,” crediting the “We Are Football” campaign. The bearish read is they’re protecting EBIT because the business can’t absorb restructuring charges AND maintained brand investment. We’ll look to tomorrow’s FY27 marketing posture will tell us which it is.

The single most important sentence in the call will be whatever management says about the FY27 gross margin trajectory and the FY27 EPS number. UBS's Jay Sole expects guidance of $0.25-$0.30 per share with the high end implying low-single-digit revenue growth. If they signal margin reaccelerates and EPS lands in that range or better, the reset thesis is intact and Fairfax's 22% bet starts looking smart. But if they don't, one might read performance as Plank spending eighteen months selling a managed decline.

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TL;DR -- The IPO essentially prices in fully successful execution. The lock-up calendar and the natural earnings cycle commit Cerebras to a read-out on execution within just two earnings cycles. The bet is narrow and time-bounded.

Cerebras Systems filed its Form S-1/A on May 4, 2026, and is expected to price its IPO around May 13 at $115-125 per share. At the top of the range, the offering implies an equity value of $26.6B on 213M post-IPO shares, raising $3.5B in gross proceeds before the underwriters’ over-allotment option.

The headline numbers in the prospectus are striking. Revenue grew from $24.6M (2022) to $510M (2025), more than 20x increase in three years. Q4 2025 alone produced $171M of revenue, up 110% YoY. First full year of GAAP net income at $237.8M. The S-1 also announces a multi-year deal with OpenAI valued at more than $20B and a term sheet with Amazon to deploy Cerebras systems in AWS data centers.

But read the disclosure more carefully and a more complicated picture emerges:

• A reported “first profitable year” driven entirely by a non-recurring non-cash gain.

• High customer concentration: 86% of 2025 revenue from two UAE-government-linked related parties.

• A wafer-scale moat that depends on TSMC capacity Cerebras has no contractual right to.

• Material weaknesses in the GAAP areas central to the offering, plus an auditor change three months before pricing.

• A 50x P/S multiple, more than four times the closest comparable IPO.

• A staircase lock-up that releases roughly 80% of the float in six months.

The goal of this report is not to recommend or oppose the offering, only to surface what the S-1 actually says and what an informed investor should weigh before participating (see our General Disclaimer).

Behind the headline numbers

What jumps out when looking at the S-1 financials: the reported GAAP net income of $237.8M is almost entirely a $363M non-cash gain on extinguishment of a forward contract liability tied to the Series F preferred stock purchase agreement. Non-GAAP net income is a $75.7M loss, wider than the $21.8M loss in 2024. Operating cash flow swung from $452M in 2024 (driven by $640M of customer-deposit increases from G42 and MBZUAI prepayments) to a $10M outflow in 2025 as those prepayments were earned out. The GAAP operating loss widened from $101M to $146M and the non-GAAP operating loss more than doubled from $43M to $96M. Revenue grew rapidly in 2025 due to a one-time event; the underlying operational economics did not.

Significant customer concentration

For the year ended December 31, 2025, Cerebras derived 24.0% of revenue from G42 Holding Ltd, an Abu Dhabi-based technology group, and 62.0% from Mohamed bin Zayed University of Artificial Intelligence (MBZUAI). The combined 86% of revenue from two customers, both of which the company designates as related parties under ASC 850, warrants close attention.

This concentration is an outlier among public peers. NVIDIA’s largest direct customer accounted for 21% of fiscal 2026 revenue. Broadcom’s largest customer in its semiconductor solutions segment was 32%. AMD’s last separately disclosed top customer was 18% in 2023. Intel’s largest customer was 19% in 2025, with the top three combining for 43%. Super Micro Computer’s two named customers combined for 32% (20.9% Customer A plus 11.1% Customer D). Cerebras’s top-two concentration of 86% is roughly 2.5x to 4x the concentration of any peer in the operational comp set.

Two further issues complicate these relationships. First, both UAE customers operate under US BIS export licenses for Cerebras’s CS-2, CS-3, and CS-4 systems, and the prospectus notes that BIS plans to issue new rules. Tightening or revocation would directly affect Cerebras’s largest revenue streams. Second, Cerebras issued G42 warrants for 3.5M Class N shares at $0.01 per share, fully exercised; at the $120 IPO midpoint, those shares are worth approximately $422M against $35,000 of total cash consideration. That warrant value amortizes as non-cash contra-revenue against future G42 revenue beginning Q1 2026, meaning reported related-party concentration in 2026 will appear lower than the underlying cash-economic concentration even if G42 purchases hold steady. None of this resembles a standard customer relationship.

The OpenAI relationship, signed in December 2025, has been positioned as the catalyst that diversifies Cerebras away from UAE concentration. The Master Reseller Agreement (MRA) commits OpenAI to deploy 750 megawatts of Cerebras compute capacity in tranches from 2026 through 2028, with an option for additional capacity through the end of 2030, valued in aggregate at more than $20B. This structure includes terms that also go beyond a standard customer relationship.

OpenAI advanced Cerebras a $1.0B Working Capital Loan with account-control rights on material breach, effectively a soft lien on operating cash. OpenAI also received a warrant for ~33.4M Class N shares at $0.00001 per share, vesting as compute capacity is delivered up to 2 gigawatts and worth up to ~$4B at the $120 IPO midpoint. That value amortizes as non-cash contra-revenue against future OpenAI revenue, mirroring the G42 dynamic at roughly 10x the scale. The MRA also bars Cerebras from selling to certain unnamed OpenAI competitors, narrowing the addressable market in a way the headline TAM figures don’t reflect.

The AWS relationship, announced in March 2026, is described as a binding term sheet. The definitive agreement is “subject to negotiation and execution” and the disclosure notes that the parties may not reach final terms. AWS received a warrant for 2.7M Class N shares at $100 per share, vesting tied to product purchase volumes substantially beyond the initial lease.

Customer concentration will factor heavily into the read-out for the next two earnings cycles. Q1 2026 will show the first revenue mix data after the OpenAI MRA was installed. Q2 2026 will be the first full quarter of OpenAI capacity deliveries and will reveal whether AWS converted into a definitive agreement. If G42 and MBZUAI remain at 75-85% of revenue through Q2 2026, the diversification thesis embedded in the IPO valuation has not yet materialized at the moment that the largest single lock-up release (~36M shares) is hitting the float. That alignment puts concentrated insider supply onto the market exactly when the bull-case narrative is most exposed, the kind of setup that typically produces sharp price declines for new IPO investors.

The wafer-scale moat depends on TSMC

Cerebras’s central technical claim is that it has commercialized wafer-scale integration: an AI processor built across an entire silicon wafer, with 4 trillion transistors and 46,225 square millimeters of silicon, marketed as 58 times larger than an NVIDIA B200 chip. This is a genuine technical achievement. It is also achievement that depends on a foundry partner.

The S-1 is direct on this point. Cerebras is fabless and depends on TSMC to manufacture all of its wafers. The processes that make wafer-scale possible -- multi-die interconnect at the wafer level, fault-tolerant architecture that routes around defects -- were co-developed with TSMC and depend on TSMC fabrication equipment and techniques. Cerebras has no formalized long-term supply or allocation commitments from TSMC, and TSMC also fabricates wafers for Cerebras’s competitors, heavyweights including NVIDIA and AMD, who are significantly larger TSMC customers. The disclosure notes that TSMC could reduce or eliminate deliveries to Cerebras on short notice or raise prices, with material consequences.

Cerebras runs roughly two years behind NVIDIA on node. WSE-1 (TSMC 16nm) shipped in 2019, WSE-2 (7nm) in 2021, WSE-3 (5nm) in 2024. NVIDIA’s H100 reached TSMC 4N, a customized 4nm-class node, in late 2022, roughly two years before Cerebras reached 5nm. By 2024, NVIDIA Blackwell was already shipping on TSMC 4NP, an enhanced 4nm node, putting NVIDIA roughly a full generation ahead even on parallel-year timing. NVIDIA’s next platform (Rubin, expected on TSMC 3nm in 2026) will widen the gap. The S-1 contains no commitment around WSE-4 node selection, foundry capacity, or timing relative to that roadmap.

Internal controls and the auditor change

The S-1 discloses material weaknesses in internal control over financial reporting for FY2024 and FY2025 that remain uncured at filing, including “inadequate or missing resources” to apply GAAP across four areas: revenue recognition, inventory management and costing, data center assets accounting, and equity administration. These are exactly the line items most material to the IPO narrative, covering the $510M top-line, the asset base supporting $668M of 2025 capex, and the warrant accounting, forward contract liability, and founder PRSU stock-based compensation that together produce the headline GAAP net income.

On November 10, 2025 Cerebras dismissed BDO USA, P.C. as its independent auditor and engaged KPMG LLP to audit the consolidated financial statements for the year ended December 31, 2025. Audit firm upgrades during IPO processes certainly have precedence, but they typically occur well before the S-1 process begins, not three months before pricing. KPMG’s first audit of the company is the same audit that supports the offering, with material weaknesses still in remediation. Cerebras is exempt from the Sarbanes-Oxley Section 404(b) auditor attestation requirement on internal controls for up to five years, so the auditor is unlikely to issue a public opinion on the company’s internal controls until well past the IPO. For new IPO investors, this concentrates accounting risk in the same two earnings cycles when the rest of the IPO thesis is being tested.

Operational comp set

The closest public peers, screened for businesses doing comparable work for comparable buyers, fall into three tiers: (1) direct AI-accelerator competitors (NVIDIA, AMD), (2) custom AI silicon for hyperscalers, with hyperscaler-concentration analog (Broadcom), and (3) AI server systems integration (Super Micro). Intel is included separately as a cautionary case: an incumbent that has tried for years to take AI-accelerator share from NVIDIA with poor results.

Cerebras’s gross margin sits between the chip designers (NVDA at 71%, AVGO at 68%, AMD at 50%) and the systems integrator (SMCI at 11%). Intel, the most operationally analogous comp on margin profile, runs at 34.8%, slightly below Cerebras.

Intel is a relevant cautionary tale. Despite a $50B-plus revenue base, established hyperscaler relationships, and a continuous silicon roadmap, Gaudi 3 missed Intel’s $500M revenue target, the Gaudi line was wound down, and Intel canceled its planned successor Falcon Shores in January 2025. Intel’s overall revenue was essentially flat from $53.1B in FY24 to $52.9B in FY25 at 34.8% gross margin. The Q1 2026 stock pop reflected CPU strength, foundry deals (Google), and AI inference partnerships (SambaNova), not a successful AI-accelerator product of Intel’s own. Intel’s strategic conclusion was to stop competing head-on with NVIDIA in accelerators and instead position CPUs as complements and pursue custom-silicon work. The bull case for Cerebras has to explain why Cerebras, with vastly less scale and a single dominant customer relationship, succeeds in growing AI-accelerator share where Intel essentially gave up.

Valuation multiples

At the $120 IPO midpoint, Cerebras’s implied value is approximately $25.6B on 213M post-IPO shares; at the top of the range it reaches $26.6B. Against $510M of trailing revenue, that prices the company at roughly 50x to 52x trailing P/S.

Peer figures from Yahoo Finance key-statistics pages, current as of early May 2026 and subject to update as Yahoo’s live data refreshes. Cerebras values are computed from the S-1/A: implied equity value = 212,965,381 post-IPO shares × IPO price; P/S = implied equity value / $510M FY25 revenue.

CoreWeave’s ~11x trailing P/S is the most relevant valuation reference, though the businesses differ structurally: CoreWeave is a specialist AI cloud (GPU-as-a-service) that buys NVIDIA chips, not a silicon designer that competes with them. Even with that caveat, CoreWeave’s growth (~140% guided for 2026), gross margin (71.7%), and $5.1B FY2025 revenue base are stronger than Cerebras’s, yet the public market is paying just ~11x P/S. Cerebras is offering at roughly 4.7x that multiple.

NVIDIA at roughly 23 times P/S is the most-richly valued mega-cap chip name and Broadcom trades at roughly 28 times P/S on the strength of its AI custom-silicon segment growth. Cerebras is being priced at roughly 2.2x NVIDIA’s multiple and 1.8x Broadcom’s, while delivering a fraction of either company’s profitability or ecosystem depth. The bull case requires Cerebras to grow into NVIDIA-like or Broadcom-like margins at much larger scale, which means hitting essentially the full OpenAI ramp, plus AWS conversion, plus customer base diversification, in roughly two to three years.

What this means for an IPO investor is that the entry multiple already prices in fully successful execution. There is no valuation cushion to absorb a missed customer-concentration improvement, an AWS deal that does not close on favorable terms, or a slip in the OpenAI capacity ramp. Each of those outcomes will be visible within the next two earnings cycles.

Lock-up structure: A staircase, not a cliff

Cerebras has structured a staircase lock-up release tied to earnings dates and a price-trigger:

• Day 1: 7.5% of “Eligible Securities” held by non-executive employees (~2.6M shares) releases automatically.

• Day 2: another 7.5% releases if the stock closes above 133% of the IPO price on Day 1 ($159.60 at midpoint, $166.25 at top).

• After Q1 2026 earnings: 27-30M shares release, depending on whether the Day 2 price-trigger was satisfied.

• After Q2 2026 earnings: 36.4M shares release.

• Aug-Oct 2026: six biweekly tranches of 14-19M shares each.

• After Q3 2026 earnings or 180 days post-IPO, whichever first: the remainder.

Approximately 171M of the 213M post-IPO shares (roughly 80% of the float) release over the six months following the IPO.

Two features of the calendar shift risk toward the IPO buyer. First, the Day 2 price-trigger soft-caps any rally on the first day of trading: a close above $159.60 brings 2.6M additional shares (~$416M at $160) into the market the next morning, pulling forward supply that would otherwise wait until after Q1 earnings. Second, the largest single supply event (36.4M shares) is calendared two days after Q2 2026 earnings, when the founder PRSU stock-based compensation charge of $370.9M hits the income statement and the customer-concentration disclosure runs its first full-quarter test following the OpenAI MRA. Other recent staggered IPO lockups (CoreWeave, Astera Labs, Klaviyo, Rubrik) tie their largest releases to price triggers fired by stock appreciation or to fixed dates without company-specific catalysts; Cerebras uniquely concentrates a major supply event on a day when both reported earnings and the central bear-case disclosure are most likely to disappoint. The calendar is asymmetric for new IPO investors: upside is capped, downside concentrated by structural design.

Diligence questions

Three diligence questions worth asking the underwriters before pricing.

1. What is the contractual revenue commitment from G42 and MBZUAI for 2026 and beyond, and what are the cancellation terms? The 86% related-party concentration is the central operational risk, and the S-1 discloses what G42 and MBZUAI paid historically without disclosing whether they are contractually obligated to keep paying.

2. What is the quantified contra-revenue impact from customer warrants expected in 2026? The G42 and OpenAI warrants (~$4.4B of equity value at the IPO midpoint) start amortizing against reported revenue in Q1 2026, and without management’s quantification, 2026 reported revenue and concentration percentages will not be directly comparable to 2025.

3. Has Cerebras committed foundry capacity for WSE-4 at a node that will be competitive with NVIDIA’s Rubin Ultra in 2027, and what is the capital expenditure commitment? WSE-3 ships on TSMC 5nm, one node behind Blackwell and two years behind H100, and without a committed WSE-4 capacity reservation at a competitive node, the wafer-scale advantage has a 12-24 month half-life as Rubin ramps on 3nm.

A narrow path

The path to a successful IPO investment is narrow and the timeline is short. The valuation prices in successful execution across several dimensions in parallel: customer-concentration improvement, AWS conversion to a definitive agreement, OpenAI capacity ramp on schedule, and a credible foundry roadmap for the next-generation product. The disclosure structure pre-commits Cerebras to surfacing progress on each within two earnings cycles. So, by the end of October 2026, roughly 63% of the float will have released and the bull case will either have materialized visibly or slipped visibly. New investors are taking a defined, time-bounded bet. Whether to take it depends on conviction that several specific outcomes resolve favorably within six months, not on a multi-year horizon.

Compensation Disclosure: No part of the compensation of any Revelata personnel was, is, or will be directly or indirectly related to the specific views, conclusions, or recommendations expressed in this report, or to the coverage of any particular security or issuer herein.

General Disclosure: The information contained in this report is provided for informational purposes only and is not intended to constitute financial advice or a recommendation to buy, sell, or hold any securities. The opinions expressed herein are as of the date of publication and are subject to change without notice. This report does not take into account the investment objectives, financial situation, or specific needs of any individual investor.

We are not a licensed financial advisor, broker, or dealer, and this report is not intended to provide investment, legal, accounting, or tax advice. Any reliance on the information contained in this report is at the sole discretion and risk of the user.

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Coinbase reports Q1 2026 today, a few days after announcing a 14% workforce reduction. The print’s three central questions are:

1. Whether last year’s recording-breaking top line stats were actually growth or purely customer rotation?

2. If rotation, whether management is profitably adapting to the product mix customers have shifted to

3. Whether results will be soft (as management has guided) or terrible as when they have reduced headcount in the past.

For background, coinbase makes money two ways: transaction fees and subscription-and-services revenue tied to what customers do with their crypto once it’s on the platform. They take a fatter cut on “simple” transactions than institutional Prime trades or Deribit derivatives. Their subscription and services revenue comes from things like interest earned on USDC reserves (split with Circle), a slice of rewards on assets like ETH and SOL, interest on loans collateralized by crypto, and the Coinbase One $4.99/month subscription that gives zero-fee trading.

2025’s Total Trading Volume by Coinbase’s broadest definition grew 156% to $5.2 trillion in 2025. But on the structured comparable that excludes derivatives notional, total trading volume grew only $1,189B → $1,221B (+3% YoY). Said another way, the apparent hypergrowth year is mostly a definitional change from acquiring Deribit. The volume of customer activity that actually generates trading fees barely moved.

Meanwhile, Total Assets on Platform actually fell from $404B (FY24) to $376B (FY25), and the underlying number was $516B at Q3 2025 before Q4’s crypto price collapse took $140B off in three months. Total revenue grew $6.56B → $7.18B (+9%), transaction revenue grew only $3.99B → $4.06B (+1.7%), and Q4 closed with a $667 million GAAP net loss.

The story is that customers are rotating between Coinbase products, and that movement is undermining Coinbase’s revenue strategy. There are four reasons:

• Take-rate compression compounds with flat spot volume. Across the year, consumer transaction revenue fell from $3.43B (FY24) to $3.32B (FY25), down 3% YoY in a year management was telling investors was a record. This is because an increasing share of trades comes from Paid Coinbase One Subscribers paying $4.99 a month for zero-fee trades, and more volume is moving from higher-take-rate Simple into Advanced transactions, which are institutionally priced. Listen for the Q1 take rate; below 1.20% means the cannibalization is moving faster than the subscription LTV math.

• Subscription growth is real but it’s rotating into USDC and out of staking. Subscription and Services revenue went $2.31B → $2.83B (+23% YoY), and S&S share of net revenue stepped to roughly 41%. The biggest piece was stablecoin revenue, growing $910M → $1.35B (+48% YoY), powered by USDC Assets on Platform that grew $6.09B → $9.26B (+52% YoY). What’s not growing is the other half of subscription: blockchain rewards (staking) revenue went $705.8M → $677.4M (-4% YoY), and consumer staked assets collapsed from $15.2B (FY24) to $7.5B (FY25), down 51%. Consumers are rotating out of staking, partly into USDC and partly off-platform. Listen for Average USDC Held above $18B in Q1 and whether blockchain rewards revenue stops declining.

• Operating expenses were outrunning revenue. FY25 opex grew 35% against revenue +9%; technology and development alone went $1.47B → $1.67B (+14%) on a base that was already heavy. Headcount grew 3,772 → 4,951 (+31% YoY), with the largest absolute hires in customer support and product, and acquisition integration costs added on top from Deribit, Echo, Spindl, and the Iron Fish team. Coinbase’s layoff is their third workforce reduction in four years. The 18% cut in June 2022 and 21% in January 2023 were both reactive, forced by crypto cycle resets. This one is the first announced into a cycle that hadn’t yet broken the financials. Listen for whether Q1 comes in at or above management’s already-cautious guide. At or above means the cut was preemptive; below means the cycle is forcing it, and there’s likely another cut behind this one.

• Crypto and strategic-investment volatility. The Q4 letter discloses a Q4 net loss of $667M driven by $718M of unrealized losses on the crypto asset investment portfolio plus $395M of losses on strategic investments (the line includes the Circle/CRCL stake). On a full-year basis, losses on crypto assets held for investment swung from -$687M (gain) in FY24 to +$529M (loss) in FY25. This $1.2B headwind is entirely non-cash, non-operating, and reverses if prices recover. Adjusted Net Income for Q4 was $178M and Adjusted EBITDA was $566M.

Q1 will look soft, by management’s own guide. Subscription and Services of $550-630M is below Q4’s $727M because of October and December rate cuts on USDC reserves; transaction revenue through February 10 was $420M YTD, running below Q4’s $983M pace. The $50-60M restructuring cash cost from the May 5 layoff lands in Q2, not Q1.

What Thursday actually resolves is whether the rotation is profitable and whether the layoff was preemptive. The first opening question (growth vs rotation) is already answered by the data: it’s rotation. The remaining two questions live in three things to watch on the call: the Q1 consumer take rate (whether the per-trade-fee-to-Coinbase-One math is LTV-positive), the gap between Q1 results and management’s already-cautious guide (whether the May 5 cut was preemptive or reactive), and the Q2 expense run-rate (whether the cut actually flows through or just offsets ongoing growth-related hires). Lean those right and Coinbase is executing well and responding effectively to their operational and customer realities. Lean them wrong and they look like a company that hired ahead of revenue, watched the operational base shrink, and is now playing catch-up with a layoff that won’t be the last.

All numbers are from Revelata’s deepKPI, which gets you 1-click auditing on every data point and hooks into Excel, Claude, ChatGPT, OpenClaw, and your API. Each linked number above lands on the exact filing line where it lives — that’s what 1-click provenance actually means.

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Microsoft , Meta, and Alphabet Inc.‘s earnings calls yesterday were high drama, and their stock movement day-after shows it:

🟢 GOOGL: +10% 🔴 MSFT: -4% 🔴 META: -8%

The background is that all three are in the early stages of an absolutely massive multi year AI infrastructure bet; they’re nowhere near peak spend today, and investors are looking for clues about what things will look like a few years down the line. Our series this week on MSFT, META, and GOOGL showed that MSFT and META are running the engine much hotter than GOOGL. They’re aggressively pulling various levers (e.g. headcount, depreciation, debt) to fund their AI investment. Meanwhile, GOOGL’s investment is the largest and, compared to peers, they could afford to invest even more. Strategically, if there’s a gap among them, GOOGL has an opportunity to widen it.

The biggest questions going forward are whether (1) the core businesses that fuel these AI build-outs keep humming, and (2) whether costs stay in control over the long haul (said another way, will the core businesses hum fast enough for long enough?). Even if the math works today, with leases-not-yet-commenced of $196B at MSFT, $183B at META, $76B at GOOGL not on the P&L yet, the math needs to hold through 2028 at least.

Something like memory prices -- which Zuckerberg opened with -- mean something different at each company. For META and MSFT, supply constraints create worries of longer build timelines and higher costs. That means more risk of the profit engine hitting max capacity and the backup levers not providing enough juice to keep going towards AI dominance. At GOOGL, supply constraints paint a more optimistic picture. They explain why the investment isn’t even larger today and also why there’s an absolutely massive backlog for their cloud services. Should supply ease, GOOGL’s investment could skyrocket overnight and the profit engine would accelerate alongside it. All three live in the same world but are affected differently by it.

To get into the numbers:

GOOGL’s self-funded bet looked stable as ever. OCF grew $10B. Capex grew $19B. FCF dropped, but cash + securities ended at $127B, flat with year-end. Cloud op inc tripled to $6.6B while segment margin went 18% → 33%. Backlog nearly doubled in one quarter to $462B. And the biggest risk, that search might stall, not only didn’t materialize, but looked less likely: search reaccelerated with revenue +19% and paid clicks +13% after five years of deceleration, alongside evidence that “AI Mode” is growing their search business rather than hurting it.

MSFT showed evidence that its profit engine is holding together, but the consequences of its spending are already being felt. The good news was that the core (Azure +40%, M365 +19%) is fine. But the FY26 capex guidance was ~$190B, when consensus had been ~$155B, and there’s still another quarter left in the fiscal year. Depreciation +55% YoY. Q4’s op margin guidance was ~44%, down from Q3’s 46.3%. Intelligent Cloud’s cost of revenue was +47%, on revenue +30%. What we saw was that the cost of running the AI bet is now showing up inside the segments that fund it, and it’s still very early. This was a cause for concern.

META got hit hardest. The bull thesis was: “this engine is so profitable it can absorb the buildout.” Their ad engine accelerated with impressions +19%, price per ad +12%, total revenue +33%. This was the fastest growth quarter since 2021. But the Family of Apps segment margin still went from 52% → 48%. Costs grew +44% on revenue growth of +33%. The AI bet is now embedded inside FoA through AI talent comp and infrastructure depreciation, and it is dragging margin even as the engine screams.

Then three more things landed: Capex guide raised again ($115-135B → $125-145B), the second raise this year. Contractual commitments roughly doubled in a quarter to $238B, plus $24B added in April. The off-balance-sheet picture is bigger than reported. Hyperion was fully disclosed for the first time with $46B max exposure, lease commitments starting 2029. And this came with 8,000 layoffs announced pre-print, confirmed by Susan Li on the call “to offset the substantial investments we’re making.” The takeaway was that META is firing 10% of staff to fund the buildout, FoA margin is compressing, and they had to raise capex because supply costs mean they’re not fully in control.

To synthesize all this:

• The three companies have the same capex on three different P&Ls.

• The market priced them by which engines can carry the buildout to 2028.

• The gap between GOOGL and the other two just got wider. They have the strongest core business, the cleanest funding math, an excellent frontier model, and the ability to hit the gas even harder.

• The other two are pulling levers to supplement the cash generated by their core businesses. The consequences underscore that management does not have as much control or room for error as anyone would like.

All numbers above were sourced via Revelata’s deepKPI, which gives you one-click auditing on every datapoint and integration into Excel, Claude, ChatGPT, OpenClaw, or your agent via API. The framework worked. Three theses backed by hard data that told you exactly how these companies work. You should try it yourself.

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Alphabet reports Q1 2026 today. The AI outlay is similar to Microsoft and Meta but the risk profile is very different. Differentiation comes because Alphabet generates enough new operating cash to cover the entire capex doubling: in FY25, operating cash flow grew by $39B and capex grew by $39B. Free cash flow held flat. This is a stark contrast to MSFT and META, who are burning cash, raising debt, and laying off staff, stretching contract durations, and changing equipment depreciation timing to fund their outlay.

The catch to listen for is whether this self-funding math is a FY25 result, not a forward promise. With FY26 capex guided to $175-185B, FCF is set to drop ~70% even with continued OCF growth. Today answers whether the engine is good enough to keep self-funding the bet or whether GOOGL starts looking more like its peers from here.

The questions for Wednesday: is Cloud’s profit acceleration sustainable, are AI Overviews biting Search enough to change the equation, and where in the $175-185B FY26 capex range does the guide actually land? Alphabet has room to absorb some wobbles, and absent that, should arguably be spending even more on AI to gain a competitive advantage.

A rundown of their recent data:

Search: AI Overviews are biting clicks, but pricing absorbs it. Paid clicks have decelerated five straight years (23% → 10% → 7% → 5% → 6%) — when AI summarizes the answer, fewer people click through. But CPC went +1% → +7%→ +7%. Search & other grew +13.4% to $224.5B for FY25, and the exit rate was stronger: +17% in 4Q25, ahead of expectations. AI Mode is the mechanism with longer conversational queries sustaining higher CPCs without degrading the experience. Listen for: paid clicks holding at +6%, CPC growth holding at +7%, AI Mode adoption beyond early users. Worth knowing on the side: Google Network ads are in structural decline ($31.7B → $29.8B over four years) on EU pressure and mix shift to owned-and-operated. YouTube ads have been quietly excellent (+11.7%), roughly at parity with Netflix’s entire revenue (e.g. FY25 at $40.4B).

Cloud is the AI ROI proof point. Operating income went $1.7B → $6.1B → $13.9B over three years. Revenue $43B → $58.7B (+36% in FY25), with 4Q25 accelerating to +48%. Segment margin moved from 14% to 24% in one year, 960 basis points of expansion. RPO (backlog) jumped from $93.2B to $242.8B, with 50% recognizable beyond 24 months, and that backlog is now roughly in line with AWS’s $244B despite GCP being half the revenue size. This is the same long-duration contract play MSFT runs, but with 36% revenue growth underneath it and a backlog that just caught the category leader. Listen for: Cloud opinc growth. The buy-side bar is +60-65% y/y; anything below that disappoints, anything above sustains the inflection thesis.

The bet: capex investment is bigger than Meta, and went from $52.5B → $91.4B. The off-balance-sheet picture is comparable in scale: property not yet in service $50.6B → $78.6B, leases not yet commenced $6.5B → $58.5B, total purchase commitments $55.4B → $149.1B. Plus Wiz at $32B (likely closing this quarter) and Intersect at $4.8B pending close.

Alphabet is funding it three ways, and the mix is what makes them different from peers:

1. Cash from operations, the dominant lever. OCF grew $39B in FY25, exactly matching the capex increase. They didn’t need the other levers in any survival sense for FY25.

2. Debt, opportunistically. Long-term debt quadrupled $10.9B → $46.5B. Big issuances were $5B in May (24-yr WAM), $17B in November (4.92%, 20-yr WAM), €6.5B in euros, all issued while still cash positive to lock in long-duration funding, not plug a hole. Cash + securities actually grew from $95.7B to $126.8B.

3. Accounting, the lever already pulled. Server useful life: 5 yrs → 3 yrs (2020) → 4 yrs → 6 yrs (2023+). They moved earliest and went furthest. Less juice left here than at META.

In terms of risks, keep an eye on the centralized Gemini training costs. Operating loss went -$10.5B → -$16.8B in one year. That’s the Gemini training/talent bill, comparable in scale to META’s $19B Reality Labs loss. Other Bets loss also accelerated -$4.4B → -$7.5B, and Waymo just took a $16B funding round in February to fund expansion. These are all much less concerning than META’s RL because Gemini and Waymo are actually generating commercial revenue.

One footnote that will trip up Q1 coverage: a $32B event in January 2026 — additional unrealized gains on non-marketable equities, almost certainly the Anthropic stake being marked up. This hits Q1 net income as a non-cash, non-operating gain. Anyone reading “Alphabet beats EPS by $X” without backing this out will be confused. Focus on the operating numbers.

In the end, Alphabet grew operating income 15% to $129B while doubling capex, quadrupling debt, absorbing a $3.5B EU fine, and growing the centralized AI training bill by $6B — and held operating margin flat at 32%. They did it without the layoffs, off-balance-sheet structures, or cash crunch that defined META’s year. The framing is whether Alphabet’s stability shows signals of looking more like its peers, and if not, whether they should be spending even more aggressively to widen the lead.

All numbers are from Revelata’s deepKPI, which gets you 1-click auditing on every data point and hooks into Excel, Claude, ChatGPT, OpenClaw, and your API. Your ability to get under the surface of any company has never been more potent: data and analysis tools like never before.

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Meta is -- obviously -- going big on AI. META’s AI capex differs from peers because it has the cleanest ROI math: it feeds right back into a 52% margin advertising business. Their AI capex must eventually turn into higher ad pricing through better targeting, more user time through better engagement, or lower cost per inference at scale. In contrast, Microsoft’s AI capex underwrites Azure capacity for OpenAI and Copilot attach that’s still proving itself, Google’s feeds Search which is being cannibalized by AI Overviews, and Amazon’s feeds AWS, which has been losing AI share to Azure and GCP.

The questions for Wednesday are whether Meta’s ad machine is still going strong enough to absorb a $145B infrastructure build, what’s left in the tank if it stalls, and most optimistically, are AI investments bearing fruit for the ad business already?

Start with the ad engine. It has been consistently accelerating, not slowing. In aggregate, daily users have continually marched upward from 2.82B (2020) → 3.58B (2025). ARPU more than doubled from $33.68 → $57.03. In FY25, ad volume was up 12% and price per ad up 9%. Revenue per employee is $2.55M (vs MSFT’s $1.24M). This is an extraordinarily profitable platform business, and it’s what makes the rest of the story even possible. Meanwhile, the drag on it has been Reality Labs, and that looks as if it is being systematically dismantled. It has lost $88B since 2019, but several rounds of layoffs and a shift in strategic mission are winding down its impact on the balance sheet. Listen for: ad price decel (4Q25 was +6%, BofA models +14% in 1Q26), any Family of Apps segment margin compression, or more aggressive cuts at Reality Labs.

What size of investment do ads need to fund? Capex doubled in 2025 — $37.3B → $69.7B, but the off-balance-sheet picture is much bigger. Multi-year cloud commitments hit $40B as Meta, the company that built its own data centers for 20 years, is now signing big multi-year deals with CoreWeave, Nebius, and others. Leases not yet commenced are at $103.8B. And the Hyperion joint venture with Blue Owl Capital carries a $46B max exposure that Meta keeps off the balance sheet. Total contractual commitments went $33B → $131B in a single year.

That’s a 4x jump, too big for the ad engine alone, and so Meta is already drawing fuel from the tank in three ways:

1. Accounting. This follows the same playbook as peers like MSFT. Server useful life: 4 yrs (2021) → 4.5 → 5 → 5.5 (Jan 2025). The 2025 reassessment alone added $2.92B in depreciation savings, $2.59B in net income, and $1.00 to diluted EPS. But this is a temporary cushion: D&A is still set to ramp from $18.6B (FY25) to $46.7B (FY27E), so the lever gets overwhelmed by sheer asset base growth fast. Listen for any further useful-life extension as a sign they need more cushion, or, eventually, an impairment.

2. Debt, for the first time in a decade. Cash + marketable securities went $77.8B (FY24) → $44.5B (Q3 2025) — down $33B in 9 months. That’s why Meta issued $30B in senior notes in November. Long-term debt nearly doubled, and net debt-to-equity went from 3% to 22% in one year. This is a company that ran on essentially zero debt for the first 18 years of its public life. They couldn’t fund this build from cash flow alone, and they didn’t pretend they could. Listen for: cash position refilled, or another debt raise.

3. Headcount. Last Thursday’s layoff announcement is a strategic shift. Just last quarter they were guiding FY26 expenses up 38-44% y/y. Now 8,000 employees gone, 6,000 open roles eliminated, with the memo’s stated reason being to offset AI investments. Microsoft announced 7% buyouts the same day. Listen for: dollar value of FY26 opex savings, and any change to the FY26 expense guide of $162-$169B.

If you’re looking for risk to materialize, look to Hyperion first. Hyperion is the codename for Meta’s largest single data center project in Richland Parish, Louisiana. The off-balance-sheet treatment of the Blue Owl JV makes Meta’s reported leverage look better than it is, and if the SEC or Ernst & Young ever forces consolidation, $46B+ of liabilities flow onto the balance sheet. Meta’s own 10-K doesn’t even mention the transaction, per the auditor’s working notes.

One footnote that will trip up coverage: net margin “dropped” from 38% to 30% in FY25, but that’s because the OBBBA tax law triggered a $15.93B one-time charge to write down deferred tax assets, taking the effective tax rate from 12% to 30% in a single year. Cash taxes barely moved. We expect this to be pure accounting noise and the FY26 tax rate normalizes back to ~14% per BofA.

In the end, Meta has grown operating income while doubling capex, doubling debt, absorbing a $16B tax hit, and carrying a $19B/yr losing segment all in the same year. That doesn’t happen without an ad engine that is genuinely accelerating, and without aggressive use of every available financial lever. If the ad engine wobbles Wednesday — pricing decel, FoA margin compression, EU-related softness — none of the other levers can carry the build. If the engine holds and they show a credible RL or AI monetization milestone, the bet gets cheaper to defend by the quarter. Listen for ad price acceleration, capex 2026 guide (does it cross $100B?), RL loss trajectory, layoff opex savings, and whether cash gets refilled or they raise more debt.

All numbers are from Revelata’s deepKPI, which gets you 1-click auditing on every data point and hooks into Excel, Claude, ChatGPT, OpenClaw, and your API. Check it out -- deepKPI unlocks unbelievably powerful exploration and data for financial analysis.

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Microsoft earnings are Wednesday and there’s so much more to listen for than Azure growth and OpenAI. Here’s a quick analysis of their recent data and some things to listen for.

They’ve been running the engine hot using 3 levers:

1. They’ve amped margins by doubling server depreciation to 6 years - FY2020: 2-3 yrs → FY2023: 2-6 yrs. Every GPU dollar now hits the P&L at half the speed it did in 2020, meaning margins are higher by billions. All the major tech firms making big infrastructure investments did this, but also are GPUs suddenly relevant for 6 years when they used to go stale quickly? Listen for any further change to useful life. The charge coming due would be an impairment charge, but it’s way too early for this.

2. Brutal headcount discipline is subsidizing capex - The Wall Street Journal picked up on this this morning, but headcount has been frozen at FY24 levels as revenue grew $36B. Rev/employee shot from $959K → $1.24M. S&M as % of revenue dropped 460bps. This is what is funding $65B/yr capex. It’s not because of AI efficiency today, it’s because they’re feeding the beast.

3. MSFT is stretching contract durations as insurance against long-term data center build out - % of RPO recognized in next 12mo went from 45% in 2023 to 25% in 2Q26. Customers are pre-committing 2.5+ yrs, while MSFT investments in AI are still in early stages (land leases etc.). They’re starting down a long expensive road and can’t have customers bail half way. Listen for this ticking back up, that will signal the capex math getting shaky.

Microsoft can’t not make this bet -- AI is sure to have a huge role in the knowledge work they make their money on going forward -- and they can and must lead. But they need the cracks to hold and they need to show AI wins their customers will pay for to get through the transition.

Look for cracks at the segment level. Intelligent Cloud gross margin went from 67% in FY23 to 62% in FY25. COGS grew 36% last yr vs. 22% revenue. The upshot is that costs have been growing 65% faster than revenue inside the AI engine. Listen for IC GM below 60%, which would mean AI infra economics are tougher than consensus bets.

Also, the legacy engine that pays for everything has to speed back up. M365 Commercial seat growth has been decelerating: 20% (2020) → 6% (Q2 FY26). Future growth = Copilot ARPU at $30/seat. Listen for Copilot attach rates.

Lastly, the OpenAI deal has two interesting implications. First, Copilot is a major source of dollars for the capex build out. It’s an untenable drag to have OpenAI capture these dollars, so this agreement releases funding pressure on MSFT. Second, it positions their relationship more as a hedge than a profit sharing agreement. MSFT’s upside revenue share is capped, but the 27% equity loss share stays uncapped. Meanwhile, Copilot revenue sharing flows one way now — MSFT stopped paying OpenAI for Copilot, keeping 100% of every $30 seat. OpenAI’s fortunes and Copilot are decoupled.

In the end, MSFT operating margin went from 37% (2020) to 46% (2025) during $15B to $65B/yr capex. That doesn’t happen without working these 3 levers. If one cracks Wednesday, it’s a wobble. If two crack, the margin expansion thesis needs new insights and a clear adjustment plan. And if we see Copilot show strong attachment numbers and M365 growth is back up, then they look well positioned for this transition.

All numbers are from Revelata’s deepKPI, which gets you 1-click auditing on every data point and hooks into Excel, Claude, ChatGPT, OpenClaw, and your API. Check it out, it’ll change your workflow like crazy.