What you Need to Know for August 19th

OpenAI's shocking 2Q Numbers. Houston we have a rates problem.

Author

HY Harry
August 19, 2026

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Welcome back! This is a pretty lengthy and info-packed newsletter. We’ve been bombarded with information since we last spoke, so let’s talk oil first:

There was an attack on a ship in the Strait of Hormuz yesterday, resulting in a crew member casualty. President Trump has stated there are no current talks taking place with Iran at the moment. The 30-year hit a 19-year high as geopolitical risks are driving rates higher:

It’s important to remember, rates aren’t just an oil story; it’s an AI story too: With AI becoming more of a financing story from lending (instead of cash flow investing), any rate sensitivity might make financing slower or more expensive.

And this comes right as we got Anthropic and OpenAI’s recent financials..

Anthropic’s ARR is on track for $65B+, a herculean rise since $47B in May and $9B in FY25. The Problem? This is actually lower than Yipit data of what people thought. Yipit data was floating $80B of ARR, meaning this came in lower than buyside expectations. Honestly, think the Buyside community who were disappointed need to get a grip.

The bigger issue seems to be OpenAI’s 2Q numbers. The WSJ leaked that 2Q revenue of $6.7B is up just 18% sequentially, while losses have widened. OpenAI has still achieved a massive feat, but this is dwarfed by Anthropic’s $11.6B in 2Q revenue. Basically, Anthropic might have eaten OpenAI’s lunch within 6 months. From reading the tea leaves, the IPO that Anthropic is racing towards looks fine, while the lagging IPO story for OpenAI comparatively looks less compelling.

$QQQ ( ▼ 1.69% ) struggled yesterday, there might be some more pain today, and tbh my eye is on Oracle CDS (OpenAI is a massive part of their RPOs). Let’s get into it.

Here’s a look at the remaining earnings for this week.

  • Wednesday: Analog Devices, TJX Companies, Lowe’s, Target, Viking Holdings, Estée Lauder, Nordson, Dycom Industries, BILL Holdings, Webull, Coty, Wolfspeed

  • Thursday: Walmart, Alibaba, Deere & Company, NetEase, Aegon, Advance Auto Parts, Ross Stores, Flowers Foods

  • Friday: BJ’s Wholesale Club, KE Holdings, The Buckle

Here’s a look at economic data this week (estimates are in quotations).

  • Wednesday: Federal Open Market Committee meeting minutes published

  • Thursday: Philadelphia Fed Business Outlook Survey (25), Weekly Jobless Claims (205K), Leading Indicators (0%)

  • Friday: U.S. Flash Manufacturing PMI (54.3), US Flash Services PMI (53.8)

Earnings Corner 💸 

  • Fabrinet $FN ( ▼ 19.38% ) Beat on both the top and bottom lines, with revenue of $1.32B vs. $1.28B and EPS of $4.10 vs. $3.81, driven by strong AI data-center demand as data-center revenue rose 68% YoY and became more than half of total sales. Growth was broad across data-center interconnect, high-performance computing, and communications infrastructure, while mgmt. said demand remains strong enough to keep expanding manufacturing capacity. Q1 guidance also beat, but shares still fell as Datacom revenue declined sequentially, HPC growth came in more modestly, and FY revenue from Nvidia fell 21%.

  • Home Depot $HD ( ▼ 0.12% ) Revenue beat at $47.86B vs. $47.27B and EPS beat at $4.92 vs. $4.73. Results were driven by broad demand across Pro and DIY, continued spending on smaller projects, and a higher average ticket, helping comp sales rise 1.7%, while tariff refunds also supported profitability. Larger projects remain pressured by high mortgage rates, which have kept housing turnover low and customers hesitant to take on bigger renovations. Mgmt. reaffirmed FY guidance, keeping sales growth at 2.5%-4.5% and comp sales at flat to +2%, rather than raising the outlook given ongoing uncertainty around inflation, fuel costs, and the broader economy.

  • Toll Brothers $TOL ( ▼ 1.78% ) Top and bottom line beat with revenue of $2.66B vs. $2.62B and EPS of $2.97, though revenue fell nearly 10% YoY as home deliveries declined. Net signed contracts rose 5% YoY, helped by resilient demand from its higher-end customer base, but backlog slipped to $6.24B and operating margin fell to 13.5% from 17.4% as lower volumes and higher costs weighed on profitability. Shares fell as contract volume came in below expectations and the broader housing backdrop remained pressured.

  • La-Za-Boy $LZB ( ▼ 1.66% ) Missed on both top and bottom line with revenue of $475.7M vs. $501M and adjusted EPS of $0.43 vs. $0.49, as sales fell amid an uneven consumer environment. Retail delivered sales rose 10%, but were more than offset by weaker wholesale sales, while Joybird written sales fell 17% as demand remained volatile. Mgmt. guided Q2 revenue below expectations and warned investments in new stores, advertising, pricing, and digital initiatives will pressure margins, sending shares down after hours.

On The Move 📈 📉

IPO Roundup 📍 

  • Anthropic’s ARR crossed $65B by end of July, up from $47B in May, ahead of a potential IPO later this year. The company is projecting $190B-$200B in 2028 revenue, which its IPO valuation is expected to hinge on.

    • Dario’s stake is only 2% - this was revealed in a recent article that highlighted Anthropic is working to get him and other co-founders advanced voting rights regardless.

  • Shein, once valued at $100B, is looking to raise ~$2B at a $26B-27B valuation in Hong Kong. Existing shareholders including IDG Capital, Mubadala, Coatue, and HSG may take up half of the deal.

  • General Atlantic, the $130Bn AUM growth equity firm, is eyeing an IPO potentially as soon as this year, after previously filing confidentially with the SEC in 2023 without ever listing.

  • Fort Robotics is going public via a SPAC merger with Newbury Street II Acquisition Corp. at a $500M valuation. The Mark Cuban-backed physical AI startup makes hardware and software for safely operating autonomous robots.

Today’s Headlines 📖🍿 

  • Trump paused for 3 days 50% US tariffs on ~$20B of Canadian goods that were about to take effect Wednesday. This last minute pause comes as Trump and Carney are seemingly close to a deal.

  • Industrial production in July rose just +0.2% (below estimates of 0.4%), with tech and defense output growing well, but autos struggling.

  • Long-term sovereign bond yields are surging, with 30-year US Treasury yields hitting a 20-year high of 5.33%, while French, German, UK, and Japanese long bonds approach multi-decade or record highs.

  • Google won a $10M bankruptcy auction for Spirit Airlines’ data to train its AI models. The deal covers ~100M emails and ~500M Microsoft Teams chats, plus marketed materials, HR info, financial databases, and audits.

  • PIMCO’s Credit Maker Lens says BDC equities are lagging bonds as investors demand a higher risk premium for uncertainty around portfolio valuations. Deal flow premiums eroded from ~300bps in 2017-18 to under 100bps in Q1 2026 and PIMCO warns BDC equity valuations may face more pressure as marks eventually converge with public markets.

  • Mark Walter and Todd Boehly are in talks to sell their Chelsea FC stakes to Clearlake Capital. The move follows Walter’s $12.5B Lakers sale just 14 months after buying the team for $10B, and comes as federal investigators probe loans his insurers made to other firms he controls.

  • Jeanie Buss is disputing her family’s sale of their 17.8% Lakers stake to Joshua Kushner and Bob Iger at the same $12.5Bn valuation Mark Walter agreed to last week, with her lawyer citing a 2017 court ruling that requires co-trustee approval for any sale.

  • Nvidia will back up to $105B of an Ohio data center project for OpenAI, which is part of a partnership that could generate ~$600B in Nvidia revenue through 2030. Jensen Huang denied the deal is “circular financing,” and OpenAI will pay the lease as capacity comes online.

  • Barclays names Adeel Khan and Mike Joo as co-CEOs of its investment bank, promoting global markets chief Khan and hiring Joo from a co-head role at Bank of America amid a solid Q2 for the bank’s investment division.

  • Four states took Meta to federal court seeking $200Bn in damages, accusing the company of designing addictive products that fueled a youth mental health crisis while promoting its apps as safe.

  • KKR-owned Internet Brands plans to issue a bond within the next few weeks to refinance debt, with $3Bn in first-lien loans due May 2028 and $2.8Bn maturing 2029-2031. The company seeks to capitalize on improved business performance after its debt sold off in February amid AI competition fears.

  • Cogent Communications is looking to refinance $750M of 7% unsecured notes due June 2027, with Bank of America shopping a first-lien bond deal at 9.5%. $CCOI ( ▼ 5.77% ) has tumbled 87% in the last 18 months, and S&P cut to B- last week.

  • Boeing and Lockheed’s Martin’s rocket joint venture United Launch Alliance is closing a $1.5B private bond deal, tripling its original $500M target.

  • Blackstone’s BCRED and Blue Owl Technology Finance both upsized bond sales, with BCRED raising $750M against a $500M target and Blue Owl raising $400M against a $200M target.

  • The University of California sold $1Bn of private equity stakes at more than a 10% discount, including funds tied to software and tech-focused buyouts. The sale comes amid a broader secondaries market boom as client-led deal volume grew from $54Bn in H1 2025 to $56Bn in H1 2026.

  • Dallas private equity firm Broadwing Capital Management closed its debut fund $90M above its $350M target, focusing on small, founder-owned manufacturing, distribution, and services businesses.

M&A Transactions💭 

Ultradent Products, manufacturer of dental medical devices and supplies, was acquired for JPY 144.3B by Mitsui Chemical America. Jefferies advised on the sale.

TDX Technology, manufacturer of display and camera modules, was acquired for $4.5B by Bhagwati Products.

Talkspace (NAS: TALK), a virtual behavioral healthcare company, has reached a definitive agreement to be acquired for $835.0M by Universal Health Services (NYS: UHS). EV/Revenue was 3.4x. Wells Fargo advised on the sale.

NEOS Investments, provider of investment management services, was acquired for $2.25B by The Goldman Sachs Group. Barclays advised on the sale.

Equity Residential (NYS: EQR), owns a portfolio of 312 apartment communities, was acquired for $6.196B by AvalonBay Communities (NYS: AVB). EV/EBITDA was 5.53x and EV/Revenue was 3.87x. Bank of America, Centerview Partners, and Morgan Stanley advised on the sale.

Epiq Solutions, developer of wireless sensing tools, has reached a definitive agreement to be acquired for $1.1B by TTM Technologies (NAS: TTMI). Robert W. Baird & Co and Goldman Sachs advised on the sale.

ebm-papst, manufacturer of fans and motors, has reached a definitive agreement to be acquired for EUR 5.1B by Madison Air (NYS: MAIR). EV/EBITDA was 17.07x and EV/Revenue was 2.09x. Goldman Sachs advised on the sale.

Ecopetrol Investimentos do Brasil acquired 25% of Brava Energia (BVMF: BRAV3), a company engaged in the oil and gas sector, for $1.2B. After the transaction, Ecopetrol Investimentos do Brasil owns a 51% stake in the company. EV/EBITDA was 5.67x and EV/Revenue was 2.06x.

Blue Ridge Bankshares (ASE: BRBS), a company engaged in offering commercial and consumer banking and financial services, has reached a definitive agreement to be acquired for $448.1M by HomeTrust Bancshares (NYS: HTB). EV/Net Income was 47.73x and EV/Revenue was 5.33x. Stephens advised on the sale.

The 6GW Renewabe Energy Portfolio of Vena Energy was acquired by INOX Clean Energy for INR 60.0B.

RAFI Indices, operator of a global index company, was acquired for $490.0M by TMX VettaFi. EV/EBITDA was 12.89x and EV/Revenue was 10.0x. Ardea Partners advised on the sale.

Omnetics Connector, manufacturer of miniature connectors, was acquired for $770.0M by Arxis (NAS: ARXS).

LCN Capital Partners, provider of real estate investment and asset management services, has entered into a definitive agreement to be acquired for $410.0M by The Goldman Sachs Group. RBC Capital Markets advised on the sale.

Dermatouch, manufacturer of skincare products, was acquired for $3.875B by Wipro Consumer Care & Lighting.

Private Placement Transactions💭 

Wispr Flow, developer of a voice interface platform, raised $280.0M of Series B venture funding led by Menlo Ventures at a pre-money valuation of $1.72B.

Unrivaled, operator of a professional women’s basketball league, raised $106.35M of venture funding from undisclosed investors.

Lovable Labs, developer of an AI-driven application builder, raised $400.0M of Series C venture funding led by EQT and Menlo Ventures at a pre-money valuation of $12.9B.

Higgsfield, developer of an AI-driven video creation platform, raised $400.0M of Series B venture funding led by DST Global at a pre-money valuation of $5.0B.

Groq, developer of AI inference platform, raised $1.0B of Series A venture funding led by Disruptive and Infinitum at a pre-money valuation of $2.5B.

Gravis Robotics, developer of robotic excavators, raised $200.0M of Series A venture funding from Softbank.

Antares, manufacturer of transportable fission microreactors, raised $530.0M of Series C venture funding led by Caffeinated Capital and Paradigm.

Velaura, developer of a web infrastructure platform, raised $110.0M of Series A venture funding led by Seligman Ventures at a pre-money valuation of $890.0M.

Odds of the Day 🍒 

Polymarket traders are pricing in a 69% chance of an Anthropic IPO by October 31st.

Chart of the Day - Honey Deuce Inflation

The popular US Open drink will remain at $23 this year, BUT has outpaced inflation since 2012…

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