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Oracle earnings stand out (0:25). Nebius, CoreWeave and the AI conversation (2:15). Circle Internet Group's IPO momentum (4:20). Lululemon earnings underline tariff complications (6:18). Docusign's now and future business (8:10). Musk, Trump, and Tesla (9:30). Homebuilders, consumer health insights, and upcoming Fed meetings (12:35).
Recorded on Thursday morning, June 12, 2025.
Transcript
Rena Sherbill: Brian Stewart, our director of news at Seeking Alpha, welcome back to Wall Street Roundups.
Brian Stewart: Thanks. Great to be here.
RS: Always good to talk to you. At the near the end of the week, getting ready for a new week, a company that seems to be at the top of the list today is Oracle (ORCL), who just reported earnings. What did we see out of Oracle? What does that mean for the tech sector? What are your thoughts?
BS: Going into this week, Oracle was one of the few companies that was a highlight of the earnings schedules, pretty sparse this week.
So Oracle stands out just because there's not a lot else going on, but the results themselves are taken being taken by the market very strongly. Stock is up 14% last time I checked, recording this on Thursday.
Met expectation, issued strong guidance. Revenue growth in its cloud services sector, which is the one most affected by the AI innovations that the the company's putting in place, up 27% in the latest quarter.
This is an acceleration from the previous quarter. It's actually been growing. The growth rate has been accelerating the last several quarters, and the company in its guidance predicted 40% growth over fiscal 2026.
So even the accelerated growth that we've been seeing lately, they see accelerating even further. If you drill down to the infrastructure sector, it showed growth of about 50%, and it sees that growth rising as well.
In the earnings call after the report, company management's targeted growth rate above 70% for that part of the company. So innovations that the company is making are already affecting the the top line.
One concern coming out of it, the extent to which the increased CapEx spending that the company has to make to implement this AI strategy, how much is that going to cut into profitability?
So while the top line is obviously accelerating growth very quickly, there's worries that it might not follow the bottom line because they also have to increase spending.
RS: In terms of the AI conversation, another stock that has been talked about this week that is I think belongs as part of this conversation is Nebius (NBIS).
And we had James Foord talking about how he prefers this stock over CoreWeave (CRWV), which has had a lot of attention as a recent IPO and a lot of increased interest in that name.
Talk to us about why Nebius is being talked about right now, what they have going on, and how AI investors may be thinking about this stock, this company, and that part of the sector.
BS: Nebius has been attracting a very fervent investor base recently.
Just to give a little bit of background, the stock is up around 150% since April. It's up 35% so far in June. Its latest earnings report showed Q1 revenue growth of 385%.
So in a world of AI startups, the company's not quite a startup. It's got kind of an interesting history. But in terms of how we're talking about it, we can think about it as an AI start up because it basically refreshed its business plan a couple years ago.
The stock is showing results already. Like I said, revenue growth approaching 400%. Concerns about its high valuations, already rallied so much. It's already gotten so much attention that there's fear that it might have overshot its near term prospects.
Meanwhile, there's also a risk of dilution. The company recently raised funds. That process, if it keeps up, I mean, it certainly makes sense for management to take advantage of its higher stock price to build up its cash reserves, for further investment, and that process might end up diluting current investors.
So there's that concern overhanging the stock too. So whether or not the stock can push higher is really going to be a factor of what it says in as its earnings reports come out in the coming quarters.
RS: And speaking of huge leaps in momentum, we have another recent IPO, another in context of of the CoreWeave conversation, but another IPO in Circle Internet Group (CRCL).
What are you seeing out of them? Does that mean anything for the IPO market? Is that specific to what part of the sector they're playing in in the IT sector? What are your thoughts there? What are you seeing out of them?
BS: It came public last week. It was up 160% in that first first day. And it's continued to move higher over the past week. It's up four out of five days going into yesterday's close.
Priced its IPO with $31 per share, last week. It closed Wednesday at $117.20, so it's up about 278 percent from its IPO price. I think it's an interesting crypto play. So Circle is a stable coin company.
I think it's interesting in the sense that oftentimes we think about this Bitcoin (BTC-USD) especially, but crypto in general as being an alternative to the current financial structures, even to the point of replacing fiat currencies in some distant future.
But Circle really is the bridge between the two worlds. It points to a future where fiat currencies and crypto work side by side.
So I think that the interest in that shows that there's investor appetite for, I don't know how to frame it, the less aggressive crypto bulls, the ones who feel that it'll literally replace how we do business now.
I also think it's interesting Circle's business is tied to treasuries. The way that they, support their stablecoin is through holding short term treasuries. So, treasury yields will be an impact on the company's business.
So for investors, I think it's both a crypto play, but it's also kind of a bet on some of the more vanilla financial instruments that that we have in the market.
RS: Lululemon (LULU) reported earnings recently. What did you see out of them? Does that further any insight we have into the tariff conversations? Is it still too early to tell? What did you see out of them?
BS: I think Lululemon underlines the complications that remain on the tariff landscape.
So the stock was down 20% last Friday on its earnings. It's also continued to drift lower. If it finishes lower today, it was down when I checked earlier today, that'll be six sessions in a row that it fell.
This came as a company reported soft Q1 comparable results. The top and bottom line for the latest quarter were in line with expectations, but the comparable sales were soft.
Also, it cut its profit forecast. It cited tariff uncertainty. Also, analysts noted the rise in competition for it, and it puts Lululemon in a strange position.
One way that they can fight that increased competition is by cutting prices, but with the tariffs, that becomes difficult. In fact, the company might be tempted to raise prices to make up for the the higher tariffs.
On the earnings call, the CEO said that they're gonna look at price increases item by item, so taking it almost, to the individual apparel item that they're selling.
And they're looking to increase prices on a small portion of its its products, and those are meant to be modest in nature.
So you can see the company struggling to battle the higher costs that it's facing at the same time where it's facing competitive landscape with consumers having less funds available to spend.
RS: And we saw DocuSign's (DOCU) earnings also recently. Anything to mention there?
BS: DocuSign's another company, and, we'll probably talk about Tesla (TSLA). But we've talked about Tesla in the past as a company that has the now business and the future business.
And DocuSign's another company in that position, so they were down about 19% last Friday on earnings. That's after they lowered their full year billings guidance. Some analysts defended the company saying that this was really a renewal timing issue.
It was something that that management, one called it an unforced error on management, but fundamentally a near term issue that the company would work out over time.
Bulls look to the company's intelligent agreement management product, which is a AI driven way for businesses to manage their their contracts.
So it's a company where if you're a bull on it and you look at this as a a buying opportunity, it's recent decline, you're looking longer term as it rolls out these AI driven products that make business more efficient.
However, if you're bearish on on the company, you'd say it already got its COVID pop. It's already kind of built in that that customer base, and management clearly is having a little trouble just sort of the blocking and tackling in the near term.
So that might sap some confidence in management going forward.
RS: Let's get into Tesla. More back and forth, more changing of the current moment's reality. What did we see from Musk? What are your thoughts there? What did we see out of Tesla? What have you seen and how have you seen the market react to that? What's your sense there?
BS: So after the feud between Musk and Trump started to get pretty heated last week, we saw Tesla stock drop 14% last Thursday as that exchange heated up.
Recently, Musk has signaled a tactical retreat. He hasn't taken back everything he said. For instance, the critique he had of the spending bill that's making its way through Congress, he hasn't backed off of that, but he did say that he went too far with some of the other comments.
At one point, Musk had suggested impeachment for Trump. He's deleted that that tweet now. He was saying that he wanted to found a third party, which he seems to have backed off on that somewhat too.
All of Musk's businesses from Tesla but also SpaceX (SPACE), Starlink (STRLK) are heavily intertwined with government policy, that starts with actual contracts with government entities that those companies have, but it also points to just the regulatory environment.
So having an ongoing dispute with a sitting president who is certainly willing to use government powers to to fight a beef with individuals, just look at how Trump is handling the dispute with Harvard. I think Musk probably had people in his life warning him of potential problems ahead and convinced him to back down.
This comes ahead of a robo taxi launch in Austin on June 22. Wedbush's Dan Ives believes that the vast majority of the valuation upside for Tesla is in the autonomous future.
With that being a situation that requires a lot of communication with regulators, obviously, it's a business that, the government could shut down at any moment if they chose to, I think Musk probably made the business decision that it was better to be at least at peace with Trump if if not in the administration anymore.
RS: Anything else to point out in terms of upcoming earnings or previous earnings that we've seen recently that matter to you or to the market? What else from the earnings picture?
BS: Looking ahead, there's not much next week. It's kind of a strange week. The Juneteenth holiday is on Thursday, so markets are closed that day. It also, I think it's convinced a lot of companies to hold off on reporting earnings during a slow week. So you're basically getting a three day week, followed by a one day week for trading next week.
So, just in terms of themes, homebuilding is gonna be something to look for. Housing starts are coming out next Wednesday, but also Lennar (LEN), one of the the big players in the home building market, is coming out Monday. So we might get some information there.
Meanwhile, we see Kroger (KR) coming out later next week, CarMax (KMX). So these are stocks where we could get some some insight into the health of the consumer.
RS: And anything from the macro point of view? Anything else you would add to that part of the conversation?
BS: Just that the the big news next week is gonna come from the Fed. The Fed decision is on Wednesday. Currently, almost 100% chance, 99.7% chance baked in that there's gonna be no change in interest rates. So should be a pretty boring announcement as it goes.
Obviously, what's gonna be interesting is the way the Fed is signaling for the future. Currently, also broadly expected to be no change in July. There's another Fed meeting in July. 79.2% chance baked in, as we're speaking now. That changes as we get to September.
At that point, there's about 75% chance that there will be some rate change at that point. Only a 25% chance that things will still be the same in September.
So the the basic consensus is that we're gonna get a rate cut in September and maybe a couple more for the rest of the year. One note that's interesting is there are fractional chances of higher rates in the next few meetings.
All of them, for each meeting, it's below 1%. But it's the first time that's kinda come on the radar that there's a slight chance, it dissipates as things move forward. Like, if you look towards the end of the year, there's no chance currently baked into trading that there'd be higher rates.
But it's just an interesting note that's starting to be a blip on the radar.
