Nike Hits Fresh Lows Ahead of Earnings
Nike has become one of the most punished names on Wall Street, sliding to yet another 52-week low and a 10-year low ahead of its earnings report. The stock simply cannot seem to climb out of the mud — it was down again by more than 1.5% on the day, but that single-session move only scratches the surface of the damage. Heading into the day, the stock was already down more than 30%, and the longer-term picture is no kinder: it is off more than 30% on a year-over-year basis and down more than 70% over a five-year horizon. For anyone who has been holding and waiting for a recovery, the experience has been genuinely difficult, and conviction in the name has been tested repeatedly.
The latest blow came from KeyBank, which downgraded the stock. (Note: the commentary was internally inconsistent on direction, at one point describing a downgrade "to overweight from sector weight" and elsewhere "to sector weight from overweight" — the substance is that KeyBank pulled back its rating and explicitly said it can no longer justify a bullish stance on the name.) Notably, KeyBank attached no price target, signaling a lack of conviction about where the stock goes from here. The firm did not declare the turnaround a failure — it still believes a turnaround is underway — but its core message is that investors need to be far more patient. That raises the central, unanswered question hanging over the stock: how long does an investor actually have to wait?
The Turnaround Under Elliot Hill
Nike has spent considerable time trying to revive growth under CEO Elliot Hill, anchored by its "win now" strategy. So far, that strategy is not winning investors over, and the recovery is clearly taking much longer than expected. The company has been working on several fronts simultaneously: launching new products, repairing and improving relationships with wholesale partners, and clearing out excess inventory. There has been genuine progress on the inventory cleanup specifically — a point noted in prior discussions as well.
The bigger obstacles, however, remain unresolved. KeyBank points to China, historically one of Nike's strongest growth markets, as still a significant headwind. Demand there continues to disappoint, undercutting what was supposed to be a reliable engine of growth. On top of that, the firm flagged weakening trends across Europe, the Middle East, and Africa, adding another layer of uncertainty to the outlook. Margins, meanwhile, remain under pressure. Taken together, the picture is far from rosy.
A Competitive Footnote
A telling cultural anecdote underscored the brand's challenges: New York Knicks player OG Anunoby was spotted wearing Skechers rather than the brands fans typically covet — Adidas and Nike. The broader competitive landscape now includes the likes of Hoka and On (the "Encloud"/On Cloud sneakers). The contrast in stock performance is stark: Skechers shares are up roughly 12% over six months, while Nike is down about 30% over the same period. One clarifying point that emerged during the discussion: Skechers is no longer publicly traded in the usual sense — it went private late last year (with the last meaningful trading activity around September to November), so it is no longer a conventional stock to track even as its products gain visibility.
Applied Materials Gains Conviction
In contrast to Nike, Applied Materials (ticker AMAT) is drawing more bullish conviction from Wall Street, with price-target hikes from multiple firms. Wells Fargo raised its target to $740 from $715 while maintaining an overweight rating — essentially the equivalent of a buy. Jefferies went further, lifting its price target dramatically to $770, up from $510. The stock was nonetheless under pressure on the day, but that weakness was attributed to broad softness across the tech sector rather than anything specific to the company.
Wells Fargo's increased confidence followed the company's investor events. The firm came away impressed by the technology road map and more convinced that Applied Materials offers a broad portfolio investors should be paying attention to. Crucially, Wells Fargo believes the company has the tools needed for the next generation of semiconductor manufacturing. The underlying thesis is that AI is driving the next wave of spending, which benefits Applied Materials directly: chipmakers will need advanced manufacturing capabilities and will therefore spend billions on new factories and new equipment. Because Applied Materials supplies the tools used to make cutting-edge chips, that spending boom flows straight to its business.
One of the biggest themes Jefferies highlighted was advanced packaging — a key area of focus that supports its bullishness. Jefferies also noted that memory demand remains strong, another tailwind that bodes well for the company. The combination of AI-driven capital expenditure, advanced packaging, and robust memory demand forms the backbone of the optimistic case.
Airlines: Rising Conviction as Oil Falls
The airline sector is the third area attracting growing analyst optimism, and the timing is no coincidence. As oil prices come down, more analysts are gaining conviction around airlines, since fuel is a major cost input. Citi is taking a broadly bullish view across the sector. The firm expects nearly every major airline to top second-quarter estimates and to issue better guidance for the third quarter.
Citi's top buy-rated names are United, Delta, and American. The firm also raised price targets on a wider group of carriers — Southwest, JetBlue, Frontier, SkyWest, and Alaska Air. However, Citi applied a more measured stance to some of these names: several have already staged strong rallies, meaning much of the upside is arguably already baked into their valuations. That is the reasoning behind the neutral ratings assigned to some of those carriers, even amid the firm's generally constructive sector view. The bullish airline thesis, notably, was an earlier high-conviction call that has since been vindicated as conditions improved.
