👉 Walmart's Advertising Business Is Up +38%

Let’s dive right in!

Analog Devices reported a record quarter, surpassing $4.0 billion in quarterly revenue for the first time in company history as accelerating AI infrastructure demand combined with continued strength across industrial, automotive, and defense markets. Revenue jumped 40% YoY while operating income nearly doubled and net income more than doubled.

Industrial remained the company's largest end market, generating $1.97 billion in revenue, up 53% YoY, led by semiconductor testing equipment, electronic test and measurement, aerospace and defense, and automation. Automotive revenue increased 16% to $998.2 million, while Consumer grew 6% to $397.2 million.

Communications was the standout, climbing 84% to $654.5 million as Data Center, which now represents roughly 80% of Communications revenue, posted more than 100% YoY growth across both optical and power products.

Management focused heavily on the growing amount of analog semiconductor content required to power and connect AI data centers. CEO Vincent Roche noted that ADI's estimated 2030 data center and energy addressable market has more than doubled from what the company envisioned just one year ago, driven by emerging architectures including 800-volt DC power distribution and increasingly complex optical connectivity. The executive team also noted that customer inventories remain lean and meaningful restocking has yet to occur, leaving additional room for the broader semiconductor recovery to continue.

Looking ahead, management expects fourth-quarter revenue of $4.3 billion alongside an operating margin of approximately 52%. Management expects Communications revenue to lead sequential growth at roughly 10%, Industrial and Consumer to grow high-single digits, and Automotive to increase low-single digits.

Long ADI.

Walmart reported another strong quarter as continued eCommerce momentum, rapidly growing advertising and membership businesses, and improving digital economics helped operating income significantly outpace revenue growth.

Profits fell to $6.37 billion, however, largely reflecting a $1.2 billion loss from equity and other investments compared to $2.7 billion in gains during the same quarter last year. U.S. comparable sales increased 2.6%, with pharmacy deflation weighing on growth, while eCommerce sales jumped 24%. Walmart's higher-margin businesses continued to scale quickly, with its global advertising business growing 38% and global membership fee revenue increasing 17%.

Walmart International revenue increased 13% to $35.2 billion, or 8% on a constant-currency basis, while eCommerce sales grew 19%. Sam's Club U.S. revenue increased 9% to $25.7 billion, supported by a 4.4% comparable-sales increase, 26% eCommerce growth, and continued membership growth.

Management emphasized that Walmart's retail, eCommerce, Marketplace, advertising, and membership businesses are increasingly reinforcing one another and improving the economics of the overall company. Global eCommerce grew 23%, while Walmart U.S. Marketplace sales increased 52%. Management also highlighted fast delivery as an increasingly important customer acquisition tool, with U.S. fast-delivery volume growing 48% during the quarter as stores increasingly serve as last-mile fulfillment hubs.

Looking ahead, management expects Q3 net sales to increase between 3.0% and 3.75% and operating income to grow between 2.0% and 4.0%. Walmart also raised its full-year 2027 outlook, now expecting net sales growth of 4.0% to 5.0% and adjusted operating income growth of 7.0% to 8.5%.

No position.

Home Depot reported a solid quarter as customers continued spending on smaller home improvement projects despite persistent housing affordability pressures. Revenue increased 6% YoY to $47.86 billion while comparable sales grew 1.7%, marking the strongest comparable-sales growth the company has reported in several years.

Demand was broad based, with 13 of Home Depot's 16 merchandising departments posting positive comparable sales, including electrical, hardware, power, plumbing, kitchen, paint, bath and building materials. Pro customers continued to outperform DIY customers, while big-ticket transactions over $1,000 increased 2.4%. Online sales grew 11%, marking the company's fifth consecutive quarter of double-digit digital growth.

Management emphasized that larger discretionary renovation projects remain pressured by elevated borrowing costs, housing affordability and historically low housing turnover. At the same time, Home Depot continues expanding its Pro ecosystem through SRS, GMS and Mingledorff's, allowing the company to cross-sell a broader catalog of building products to contractors and capture a larger share of professional customer spending. Management expects approximately $400 million in cross-selling benefits across the broader Pro platform this year.

The quarter also benefited from $730 million in IEEPA tariff refunds, with $685 million reducing cost of goods sold. Management noted that the benefit helped offset rising fuel, energy and product input costs and expects those higher expenses to effectively absorb the tariff-refund benefit over the full year.

Looking ahead, management reaffirmed full-year 2026 guidance, expecting total sales growth between 2.5% and 4.5%, comparable sales between flat and +2%, and an operating margin between 12.4% and 12.6%.

Long HD.

“What Nvidia has built with these six banks is effectively a private central bank for AI infrastructure. They’ve mobilized more third-party capital in one announcement than the entire venture industry has invested in AI in the last two years combined. This is what a monopoly does when it wants to make sure its customers keep spending.”