Iran conflict and oil
Crude oil is the main gauge for how markets react to the Middle East fight. When crude rises, it signals the conflict is getting worse. The US widened strikes on Iran overnight, marking the 11th straight day of strikes after a ceasefire set about a month ago fell apart. The move shows up more sharply in Brent crude, the regional benchmark, now above $94 a barrel for September. Traders have shifted from August to September contracts, so higher prices are bleeding into later-dated contracts, a "higher for longer" pattern usually used to describe interest rates.
Houthi threats around the Red Sea remain a growing worry for shipping there. Trump suggested Iran may be acting in the strait to pressure his party ahead of the midterms. He named Pickax Mountain, a site suspected of nuclear activity. Iran vowed a powerful strike against any attack on its nuclear facilities and blamed the US for breaking the deal. Both sides are escalating with little sign of talks, though back-channel conversations likely continue. Based on crude's reaction, the market reads this as moving further from the end, not closer.
Super Micro (SMCI)
Shares jumped roughly 14-15% pre-market. The standout was new order numbers from its fiscal fourth quarter. Revenue is expected near the low end of guidance, between $11 billion and $12.5 billion. Gross margins are seen at 15-17%, well ahead of prior guidance. Backlog hit a record, with more than $60 billion in new fourth-quarter orders to be delivered over future quarters. That compares with about $39 billion in orders disclosed in early June. The earnings call is set for August 11th.
Analyst reactions: one firm with a buy rating raised its price target to $46 from $40. Wedbush's Matt Bryson kept a neutral rating and a $34 target, calling margin performance the key surprise but not expecting the stock's upside. Citi holds a neutral rating, citing lower revenue and higher gross margins, and noting the record backlog shows strong order momentum. The street's themes: AI server demand stays strong, margin improvement was the big positive surprise alongside backlog growth, and investors focused on profitability and order strength over the weaker revenue.
GE Vernova (GEV)
Shares fell pre-market despite strong results, because AI infrastructure names are now expected to deliver and good numbers alone often aren't enough. EPS came in at $2.47, up from $1.86 a year earlier. Revenue was $11.1 billion, up 22%, beating estimates. Net income rose 32%.
By segment: wind fell nearly 10% and disappointed, electrification rose almost 70%, and power rose 14%. Power came in slightly below estimates. Electrification, the highest-growth segment, beat. Wind, weak on growth, beat on guidance. The company raised its revenue guidance range by $1 billion on each end, from $44.5-$45.5 billion to $45.5-$46.5 billion. It nearly doubled adjusted free cash flow guidance, from a $7 billion midpoint to $12 billion, and kept its EBITDA margin. Backlog grew to $176 billion, up $13 billion sequentially from equipment and services demand. The company is well positioned for data-center power demand, but that wasn't enough to excite the market.
AT&T (T)
Shares rose pre-market, a needed win given weak recent performance and depressed valuation multiples for these companies. Wireless post-paid net phone adds were up 432,000, far better than expected. Phone-only churn was under 1%, at 0.86% (86 basis points). Revenue grew 2.6%, slightly below estimates but roughly in line. Adjusted EPS was 65 cents, beating the ~59-60 cents expected and up from 54 cents a year ago. Adjusted EBITDA beat, growing 5.1%. Free cash flow was $4.7 billion.
The company reaffirmed guidance, which looks slightly light on EPS: its $2.30 midpoint versus a $2.32 consensus. It reaffirmed EBIT growth of 3-4% and free cash flow of at least $18 billion, both in line. The key takeaway: wireless subscriber additions were significantly above expectations, and this time not driven by the pricing wars that defined last year.
Pegasystems
This smaller, overlooked software name is under heavy pressure. It closed near $31 and was set to open below $26. Adjusted EPS was 35 cents, missing the 44-cent estimate, though up about 25% year over year against 28% last year. Revenue rose 9.4%, missing estimates. The biggest concern was operating income at $16.6 million against a ~$70 million estimate, a metric that fell year over year. Deferred revenue rose 10% but fell well short of estimates.
If a larger company like ServiceNow, reporting later today, said the same thing, it could hit the whole software sector. Similar to ServiceNow last time, Pegasystems all but said customers are waiting in the fast-changing AI landscape, unwilling to re-up deals or expand software relationships because they don't know what they'll need. Pegasystems is far smaller than Salesforce, Adobe, or ServiceNow, but if this becomes a common theme, it could trigger another software-stock leg lower. IBM's pre-reporting fits the same pattern, so watch whether ServiceNow continues it.
