The past week proved turbulent for valuations. Concerns about the semiconductor sector are clearly rising despite strong gains. Even an occasional show of caution from company management is treated as an admission of failure, as seen in TSMC’s case, and this will likely remain visible across the technology sector for the rest of the earnings season. The fourth week of October will be marked by earnings releases focused mainly on defense companies, industrials, regional banks, and parts of healthcare. Several of these segments and companies show a clear asymmetry between expectations and fundamental factors, increasing the probability of a sharp price reaction to earnings.
Lam Research [LRCX.US] – 21 October
In the complex and volatile world of semiconductors, Lam Research offers an almost entirely unique product. As chipmakers and designers increasingly run into the physical limits of miniaturization, this product may turn out to be not merely attractive, but indispensable. Put simply, the company sells a range of solutions and services designed to optimize chip and memory manufacturing processes in three dimensions. This adds an additional layer for yield optimization. Under current conditions of prolonged and extreme shortages across almost the entire supply chain, the company’s results could come in even better than the already optimistic expectations. The revenue forecast is USD 8.11–8.15bn, with EPS around USD 2.2. This implies roughly 40% revenue growth and nearly a doubling of profit. At the same time, in the week preceding the earnings release, the share price is about 30% below its yearly high, suggesting a meaningful rise in concerns about the next investment cycle. As is often the case with “growth” companies in this sector, beating consensus is not enough. The key will be reassurance about the durability of the cycle and margin quality. However, given the large and growing commitments from the company’s customers, nothing points to attempts to reduce demand for its products. The market has already priced in a significant portion of the risks and potential issues, but the investment thesis that supported valuations over recent years remains strong. A potentially underappreciated mechanism is Lam increasing its share of customer spending. More complex manufacturing requires additional etch and deposition steps. AI capex dynamics alone do not describe the full opportunity. The best-case scenario is a strong result and confirmation of further growth, without delivery push-outs.
GE Aerospace – 20 October
“Old economy” companies are often seen as static in today’s market context, but that is more of a tendency than a rule. General Electric increasingly stands in opposition to that tendency. The annual EPS guidance of USD 7.65–7.85 remains below the consensus of around USD 7.93. Raising it to roughly USD 7.9 would mostly be a confirmation of expectations. Often, such elevated expectations imply overheated sentiment, but it is worth asking what, in the market’s view, justifies such large gains before management confirms what the market already suspects. The LEAP-1B durability kit received certification, expected to deliver about a twofold improvement in “wing time on wing.” The FLIGHT DECK lean manufacturing program is producing tangible results, including shorter lead times for component orders. In addition, industry sources point to improved component availability after a period of significant shortages. Given record and rising needs in commercial aviation and defense, with GE’s backlog at around USD 210bn, even very high expectations may prove conservative.
Bloom Energy [BE.US] – 22 October
It is no secret that data centers in the US (and beyond) are generating a growing and increasingly chronic electricity deficit, and all available forecasts from investment firms and public organizations estimate that in the medium term this shortage will only worsen. However, not every AI-related bottleneck guarantees higher valuations. Bloom Energy’s issue is not the product, the industry, or operational or strategic execution, but investor expectations. In Q2 2026, the company reported revenue growth of 166% year over year, with a P/E of around 250 and forward P/E hovering around 80–90. A company providing a solution to what is ultimately a temporary problem cannot sustain that growth rate long enough to justify its (current) valuations. One of the company’s key customers, Oracle, invoked a “force majeure” clause on one of the most important projects for both companies, the “Jupiter” data center in New Mexico. Worse, the company is currently facing a federal class action lawsuit over allegedly misleading investors regarding its dependence on imports of scandium oxide from China. The market has priced a growth scenario oscillating between “euphoria” and fantasy, while ignoring an entire array of risks. This does not guarantee a drop after the next earnings call, but the risk asymmetry is currently extremely unfavorable for the company. Tesla [TSLA.US] – 21 October Better vehicle deliveries are already known and priced in, potentially more than fully. The weaker-than-expected energy storage volume is also known. Quarterly consensus EPS has been cut to around USD 0.4–0.5. Profit weakness itself will not be new information, but the market may be underestimating the overhang of risk for the company. “Physical AI” and robots are a project with minimal business justification, and even if it were to achieve part of the expected volumes, it would take years rather than quarters. The company’s huge capex is putting, and will continue to put, pressure on profitability and on one of the company’s few strong points, free cash flow. Strong car sales are a major positive and a show of strength, but this may not be organic growth. Many analysts note that sales growth may have been achieved through price cuts, mainly affecting vehicles in the Chinese market. Even indirect confirmation of this cause-and-effect chain undermines any support coming from higher unit sales. It is worth remembering that the company’s margins have been shrinking for years, and recently they have been moving closer to the profitability threshold. Oil prices remain a wildcard, as they could push some consumers toward EVs, though competition in the sector remains strong and consumer health leaves a lot to be desired, especially in the context of the interest rate hiking cycle. Once again, the make-or-break factor will be Robotaxi. If Elon Musk presents positive Robotaxi data or forecasts, and if the market believes them, even a significant erosion of fundamentals could be pushed into the background
