What you Need to Know for October 30th

Welcome back!

Well Google has blown it out of the water and NVIDIA has shockingly passed $5T in valuation!!! I thought Microsoft numbers were incredible too, not really sure why it’s trading down after hours. The Fed officially cut 25bps (despite two dissents) so the road seems clear over the short-term for aggressive AI spend to continue.

Still the economy is a little bit “K-shaped” and the winners are winning back, while the losers are fading away. Chipotle in particular had an extremely disappointing report - it truly feels like their reputation of quality deteriorating and being associated as a “slop bowl” company is starting to chase away their core 20s to early 30s demo.

Let’s get into it.

Earnings Corner 📈 📉

Microsoft $MSFT ( ▼ 0.1% ) Revenue of $77.7B and EPS of $4.13 both beat expectations, driven by a 40% surge in Azure revenue as AI demand continues to fuel cloud growth. Net income rose despite a $3.1B hit tied to its OpenAI investment, underscoring the scale of its AI exposure. They spent a whopping $35B on capex in a single quarter, half of which were on GPUs & CPUs. Management guided for another strong quarter with Azure up 37% and capex is rising more as Microsoft builds greater AI infrastructure.

Google $GOOG ( ▲ 2.51% ) Google delivered a big beat on both revenue and EPS, posting $102.4B and $3.10, fueled by surging AI demand and a 35% jump in Cloud. Gemini adoption continues to impress, topping 650M users, while Search and YouTube both saw double-digit growth. Management lifted capex to as high as $93B and signaled another ramp next year.

Meta $META ( ▲ 0.03% ) Meta beat on both revenue and EPS, posting $51.2B and $7.25 respectively, as strong ad demand and AI fueled engagement drove 26% y/y growth. But a $16B one time tax charge and mounting AI infrastructure costs weighed on sentiment. With capex raised as high as $72B and more hikes expected next year, investors are starting to worry as spending starts to catch up to growth. Zuck has shown zero signs of stopping spend and even noted that he thinks the ROI is there.

Paypal $PYPL ( ▼ 4.57% ) Revenue rose 7.3% y/y but just missed estimates as softer discretionary spending offset solid payment volumes, while EPS of $1.34 beat expectations. Shares jumped after it unveiled a deal with OpenAI to embed its wallet into ChatGPT.

UnitedHealth $UNH ( ▼ 3.42% ) Revenue rose 12% but missed slightly, while EPS of $2.92 beat on stronger commercial membership and Optum Rx growth. Management raised FY EPS guidance to at least $16.25, signaling confidence despite elevated medical costs and ongoing regulatory scrutiny.

Starbucks $SBUX ( ▼ 1.48% ) Profit slumped on restructuring charges and U.S. store closures, though sales showed early signs of stabilizing. Management reiterated its turnaround focus amid investor scrutiny and labor tensions.

Chipotle $CMG ( ▼ 1.24% ) The chain cut its sales outlook as traffic fell for a third straight quarter, hit by softer spending from younger and middle-income consumers facing inflation and student loan pressures, a sign that fast casual dining is losing pricing power.

D.R. Horton $DHI ( ▼ 3.55% )  Homebuilder sentiment stayed cautious as affordability pressures weighed on new orders, even as demand for lower priced homes held firm.

Royal Caribbean $RCL ( ▼ 4.4% ) EPS beat but guidance slipped on rising fuel and maintenance costs, even as cruise demand stays firm.

Visa Inc $V ( ▼ 1.62% ) Steady spending and travel demand kept transaction volumes strong, prompting upbeat guidance and reinforcing global consumer resilience heading into 2026.

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Today’s Headlines 🍿 

• Fed Meeting takeaways: As expected, the Fed announced a 25 bps cut, lowering its target range to 3.75%-4%. The vote was 10-2, with Miran dissenting in favor of a 50bps cut and Kansas City Fed President Jeffrey Schmid voting not to cut at all. The Fed acknowledged that inflation remains elevated, but rising downside risks to employment drove a rate reduction

  • The headline, though, came from the Fed’s commentary around a December cut, with Powell saying that another reduction this year is “not a forgone conclusion, far from it.” Powell explained that officials may want to “at least wait a cycle” before cutting again. This came off as more hawkish than expected, causing treasury yields and the dollar to jump while stocks fell. Odds of a December cut now sit at around 60%

  • The Fed also announced that on December 1st it will stop shrinking its portfolio of assets, ending a process of quantitative tightening that began in 2022. Thinning reserves and signs of tightening in short-term lending markets are cause to stop reducing the balance sheet, which is at its smallest size since 2020

• Layoffs: There were some notable layoffs this week - while we are flagging them, we do not want to extrapolate these as real worries in the market. A lot of these companies are dealing with structural or idiosyncratic issues and are not necessarily indicative of broader labor concerns: Amazon (14K additional, UPS (48K YTD), Chegg (45% of workforce), Paramount (2K), PWC (5.6K)

• 1X unveils $20K humanoid housekeeper ‘Neo’ for U.S. homes: The Palo Alto robotics firm has opened preorders for Neo, a 5.5-foot humanoid robot designed to perform household chores. Available for $20K or a $499 monthly plan, Neo can handle laundry, serve drinks, and climb stairs, operating up to four hours per charge. The robot uses “Tendon Drive” tech for human-like dexterity and includes cameras, microphones, and AI navigation

• US pending home sales flat as job worries weigh on buyers: Contract signings for existing homes were unchanged in September. After an August gain, a softening labor market offset the benefits of easing mortgage rates, now near three-year lows. Affordability is improving and the “lock-in” effect may be fading, but regional results are still mixed

• Microsoft, OpenAI rework their deal to enable fundraising and IPO path: The duo reached a deal converting OpenAI into a public benefit corporation, freeing it to raise capital and pursue an IPO while Microsoft retains a 27% stake worth about $135B. The move ends exclusive compute rights for Microsoft and lifts prior funding limit

• NVIDIA hits $5T: The chipmaker has been the driving force behind the AI boom, and now becomes the first company to reach $5T in market value. The stock rose 5% on Tuesday and 3% on Wednesday to hit the mark, driven by Trump’s comments on their Blackwell chip and a flurry of deals with companies including Palantir, Eli Lilly, Uber, and CrowdStrike

• Cathie Wood’s AI warning: The CEO of Ark Invest is confident that the lofty valuations of tech firms will be justified in the long run, insisting that we are only in the start of a major technological revolution and that it will take time for large firms to realize the full potential of AI. However, Wood predicts that interest rates will rise, creating a “reality check” for some companies

• Apollo: Slow PE Exits are expected to persist, but not because it’s a tough exit environment. The recent era of near-zero interest rates allowed PE firms to acquire good companies, but according to Apollo they were “purchased at prices that don’t make sense,” forcing firms to continue selling their assets at a slower pace

• DB is a BB: DB’s US distressed desk pulled in a whopping $200mm profit in Q3 and about $300mm YTD, its best performance in over a decade. Trades on EchoStar’s equity and convertible bonds were a main driver, while credit trading and distressed products also picked up last quarter

• Are Co-Ops anti-competitive?: Deltroit, Algebris, and CQS are among the lenders arguing that some co-op group bondholders (including SVP, Invesco, Man Group, and Diameter) blocked minority creditors from joining a deal in an anti-competitive fashion. Co-ops are increasingly used by lenders to negotiate collectively against a borrower, but some argue foul play when some creditors are more advantaged than others

• Kirkland & Ellis retrains lawyers after investor backlash: The law giant has launched communication training for its PE lawyers to counter a reputation of being hard to work with and uncooperative in negotiations. The move follows investor complaints

• Brookfield says PE is here to stay: Head of Brookfield Asset Management’s private equity division said that credit is expanding alongside not replacing equity, citing strong investor demand and reduced government funding as catalysts

• The Secondaries market for properties is opening up: Warburg Pincus and Madison International Realty are working on deals across data centers, industrial, cold storage, and residential. The firms are preparing to invest at least $300mm into secondaries across these industries, targeting what they believe to be attractive discounts to underwritten real estate value

• Here’s the banks leading the $20B in debt needed in the EA Buyout: JPMorgan, BofA, Citi, and Morgan Stanley are in the group of about 20 banks backing the biggest LBO ever. The group was allocated between 1% and 5% of the financing

• Keurig Dr. Pepper turns to private credit: KKR and Apollo will invest $3B into the company’s beverage division in exchange for preferred stock in KDP. The two firms, with participation from Goldman, will also provide $4B toward a partnership with the company’s coffee business. Keurig Dr Pepper will eventually separate its beverage and coffee businesses into two public companies

• Taylor Sheridan is leaving Paramount: The “Yellowstone” creator will be joining rival NBCUniversal in 2029 after tension with new Paramount CEO David Ellison’s leadership team

M&A Transactions💭 

Morgan Stanley (NAS: MS) has agreed to acquire EquityZen, a trading platform for shares in private companies for an undisclosed amount of money.

Bending Spoons, a tech consumer app rollup, agreed to a deal to acquire AOL, a unit of Yahoo, for $1.5B. Yahoo is an Apollo Global Management portfolio company.

Avidity Biosciences (NAS: RNA), a biopharmaceutical company, has reached a definitive agreement to be acquired for $8.701B by Novartis (SWX: NOVN). EV/Revenue was 810.99x. Barclays and Goldman Sachs advised on the sale.

The Data Center Infrastructure Manufacturing Business of ZT Systems was acquired by Sanmina (NAS: SANM) for $3.0B. The purchase price included $2.55B in cash and equity, as well as $450.0M in contingent consideration. Morgan Stanley advised on the sale.

Trasna, provider of cellular internet of things modules, SIM, and eSIM technology, has reached a definitive agreement to acquire Anemoi International (LON: AMOI) through a $200.91M reverse merger.

Shermco Industries, provider of electrical maintenance and design services, was acquired for $1.6B by Blackstone. The transaction was supported by $650.0M of debt. Harris Williams advised on the sale.

First Citizens Bancshares (PINX: FIZN), a financial holding company, has reached a definitive agreement to be acquired for $317.3M by Park National (ASE: PRK). Olsen Palmer advised on the sale.

Dogu Biga Madencilik Sanayi ve Tic. A.S., operator of Kirazli, Agi, Dagi, and Camyurt projects located in Turkey, was acquired for $470.0M by TUMAD MADENCILIK SAN. TIC. 

Clever Fit, operator of fitness centers, has reached a definitive agreement to be acquired for EUR 175.0M by Basic-Fit (AMS: BFIT).

Cadence Bank (NYS: CADE), a bank, has reached a definitive agreement to be acquired for $3.832B by Huntington Bancshares (NAS: HBAN). EV/Net Income was 7.3x and EV/Revenue was 2.1x. Keefe, Bruyette & Woods advised on the sale.

BMLL Technologies, developer of a data and analytics platform, has entered into a definitive agreement to be acquired for $250.0M by Nordic Capital. EV/Revenue was 29.68x.

Aero 3, provider of maintenance services, has reached a definitive agreement to be acquired for $350.0M by VSE (NAS: VSEC). EV/EBITDA was 14.58x and EV/Revenue was 2.92x. Harris Williams advised on the sale.

Tourmaline Bio, a late-stage clinical biotechnology company, was acquired for $1.146B by Novartis (SWX: NOVN). Leerink Partners advised on the sale.

Kiwetinohk Energy (TSE: KEC), developer and produces natural gas, has entered into a definitive agreement to be acquired for CAD 1.4B by Cygnet Energy. EV/EBITDA was 3.71x and EV/Revenue was 2.36x. RBC Capital Markets advised on the sale.

Idox (LON: IDOX), a supplier of software and services, has entered into a definitive agreement to be acquired for GBP 339.5M by Long Path Partners. EV/EBITDA was 153.56x and EV/Revenue was 3.97x. Peel Hunt and Rothschild & Co advised on the sale.

BW/IP New Mexico, operator of asbestos liabilities and related insurance assets, has entered into a definitive agreement to be acquired for $219.0M by Acorn Investment Partners. J.P. Morgan advised on the sale.

Best Egg, developer of an online lending platform, has reached a definitive agreement to be acquired for $800.0M by Barclays (LON: BARC).

Mowi (OSL: MOWI) acquired a 46% stake in Nova Sea, a producer of farmed salmon, for EUR 625.0M. After the transaction, Mowi owns a 95% stake in the company. Arctic advised on the sale.

Basler Electric Company, operator of an electronic manufacturing company, has reached a definitive agreement to be acquired for $350.0M by Littelfuse (NAS: LFUS). EV/Revenue was 2.8x.

Clario, provider of health outcomes research services, has reached a definitive agreement to be acquired for $8.875B by Thermo Fisher Scientific (NYS: TMO). EV/Revenue was 7.1x. Evercore Group advised on the sale.

CSG International (NAS: CSGS), a purpose driven SaaS platform company, has reached a definitive agreement to be acquired for $2.9B by NEC (TKS: 6701). EV/EBITDA was 14.4x and EV/Revenue was 2.4x. Jefferies advised on the sale.

Fubo (NYS: FUBO), a sports-first live TV streaming company, was acquired for $1.123B by The Walt Disney (NYS: DIS). EV/EBITDA was 11.25x and EV/Revenue was 0.99x. Evercore Group and Wells Fargo advised on the sale.

Jamf (NAS: JAMF), the standard Apple Enterprise Management, and its cloud software platform, has entered into a definitive agreement to be acquired for $2.5B by Francisco Partners. EV/EBITDA was 1,011.53x and EV/Revenue was 3.75x. Citigroup advised on the sale.

Tyr Tactical, manufacturer of tactical gear and equipment, has reached a definitive agreement to be acquired for $175.0M by Cadre Holdings (NYS: CDRE).

Private Placement Transactions💭 

Wealthsimple Technologies, operator of a financial advisory and trading platform, raised CAD 750.0M of venture funding led by Dragoneer Investment Group and GIC Private at a pre-money valuation of CAD 9.25B.

SavvyMoney, developer of a credit score and analytics platform, raised $225.0M of venture funding led by PSG and Canapi Ventures.

Ontic, developer of a security intelligence platform, raised $426.43M of Series C venture funding led by JMI Equity, Silverton Partners, Ridge Ventures, Kohlberg Kravis Roberts, and Ten Eleven Ventures at a pre-money valuation of $443.57M.

Kraken, developer of a trading platform, raised $500.0M of venture funding from Tribe Capital at a pre-money valuation of $14.5B.

Jade Bird Display, manufacturer of microLED displays, raised nearly CNY 1.0B of Series B venture funding led by CITIC Jinshi Investment Company and Chaos Investment.

Hemab, developer of prophylactic therapeutics, raised $157.0M of Series C venture funding led by Sofinnova Partners.

empact, developer of a decentralized and interconnected energy supply system, raised EUR 100.0M of venture funding from Dietmar Hopp, Thomas Strungmann, and Paul Bauwens-Adenauer.

Whatnot, developer of a live stream platform, raised $225.0M of Series F venture funding led by CapitalG and DST Global at a pre-money valuation of $11.28B.

Substrate, operator of a semiconductor technology, raised $100.0M of seed funding from Allen & Company of Florida, Valor Equity Partners, and Founders Fund at a pre-money valuation of $900.0M.

Sublime Security, developer an email security platform, raised $150.0M of Series C venture funding led by Georgian.

SetPoint Medical, developer of an implantable bioelectronic medical device, raised $115.5M of Series D venture funding led by Elevage Medical Technologies and Ally Bridge Group.

Perfumeo, developer of an AI powered smart home fragrance diffuser, raised $105.45M of Series D venture funding led by Sapphire Ventures at a pre-money valuation of $345.0M.

HyperCycle Korea, developer of decentralized AI infrastructure, was formed as a joint venture between Hypercycle, Addeep Inc, and other undisclosed Korean Investors.

Fireworks AI, developer of a generative AI platform, raised $230.0M of Series C venture funding led by Evantic Capital, Lightspeed Venture Partners, and Index Ventures at a pre-money valuation of $3.77B.

Goldi Solar, manufacturer of solar panels, raised INR 21.6B of venture funding led by Havells India.

Odds of the Day 🍒 

Is this the start of something? Cuomo odds have doubled (albeit from very low levels to a 14% chance of winning. Kalshi traders are still pricing in a 87% chance of Zohran winning the race to be NYC’s next mayor though.

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Meme Cleanser 😆 

Until next time!

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