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Good morning investors!
If this is your first time reading, welcome to The Investor’s Edge — a thriving community of over 25,000 subscribers striving to be better investors with an edge in the market.
Every Wednesday we publish “The Mid-Week Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!
This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.
This article is designed to truly give you that EDGE in the day ahead!
Grab your afternoon pick me up and let’s dive in.
Market Talk
The major indexes have bounced following last week’s US/China related sell-off.
3 Stories Moving the Market
These are some of the biggest stories so far this week that are having an influence on market action.
U.S.-China Tensions Escalate Across Multiple Fronts
A tense week has seen U.S.-China relations deteriorate across multiple fronts, from rare earth controls to shipping fees and sanctions. Beijing’s expanded export curbs triggered U.S. threats of 100% tariffs and mirrored port charges on Chinese vessels. With both nations hardening their tone ahead of the Trump–Xi APEC meeting, investors are bracing for extended volatility across trade-sensitive sectors.
🔑 Key Points
Rare Earth Limits: China tightened rare earth exports, weaponizing dominance over key minerals essential to technology and defense sectors.
Tariff Threat: Trump vowed 100% tariffs on Chinese goods, calling Beijing’s restrictions unfair while signaling possible escalation before APEC.
Port Fee Clash: Both nations enacted matching port fees, amplifying trade friction and creating uncertainty across global shipping routes.
Regulatory Moves: China launched a Qualcomm antitrust probe as Washington sanctioned Chinese firms tied to illicit Iranian oil exports.
Market Fallout: A South China Sea clash and falling equities underscored rising geopolitical risk pressuring investor confidence and valuations.
👀 What You Need to Know
This escalation is the sharpest in months, blending trade, tech, and maritime disputes into a broad economic contest. Rare earth restrictions spotlight China’s strategic leverage, while the U.S. tariff threat risks reigniting inflationary pressure. Port fees represent a new, harder-to-measure front that could reshape shipping and commodity costs. Markets are treating the conflict as posturing, but sustained escalation could spill into a global supply chain crisis.
🔐 Edge Takeaway: Tariff headlines are loud, but markets are trading like a trade war isn’t going to happen. Despite talk of 100% tariffs and new port fees, names like…upgrade to Edge+ to read the full Edge Takeaway.
OpenAI and Broadcom Announce 10 GW Custom Chip Partnership
OpenAI and Broadcom $AVGO ( ▼ 1.36% ) officially announced a partnership to co-develop and deploy 10 gigawatts of custom AI accelerators beginning next year. The deal, reportedly worth several billion dollars, will give OpenAI control over its chip design while Broadcom provides development and networking infrastructure. Broadcom shares surged on the news, extending a 50% year-to-date rally.
🔑 Key Points
Massive Scale Buildout: The 10 GW plan is five times OpenAI’s current capacity and could exceed $500 billion in total infrastructure costs.
Custom Silicon Control: OpenAI will design chips optimized for its models, integrating compute, memory, and networking on Broadcom’s Ethernet stack.
Strategic Advantage for Broadcom: The deal cements Broadcom as a key AI infrastructure supplier alongside Nvidia and AMD.
Funding Challenge Ahead: OpenAI projects $13 billion in 2025 revenue but faces hundreds of billions in capital requirements for compute expansion.
Altman’s Long-Term Vision: OpenAI targets 250 GW of capacity by 2033 at a cost exceeding $10 trillion based on current data center estimates.
👀 What You Need to Know
The partnership deepens OpenAI’s collaboration with major chipmakers as demand for AI computing power continues to surge. Broadcom will supply customized systems integrating compute, memory, and networking to support OpenAI’s expanding workloads. The initiative follows OpenAI’s recent deals with Nvidia and AMD, signaling an industry-wide race to scale infrastructure. Broadcom’s stock reaction underscores the market’s optimism around large-scale AI investments.
🔐 Edge Takeaway: Broadcom’s OpenAI deal adds fuel to an already stretched AI buildout cycle, but it…upgrade to Edge+ to read the full Edge Takeaway, including the Edge score and CMG Strength Ratio.
📚 Edge-ucation: Understanding Valuation Multiples
Valuation multiples are one of the simplest, and most misused, tools in investing. They give a shorthand for how expensive or cheap a stock looks relative to its earnings, sales, or cash flow. But multiples are only as useful as the context: a high multiple can signal growth expectations, while a low one may flag risk, slowing growth, or poor capital efficiency.
P/E (Price-to-Earnings): Compares share price to earnings per share. Widely used, but distorted if earnings are cyclical, depressed, or inflated.
P/S (Price-to-Sales): Useful for unprofitable growth companies. A high P/S only works if margins expand over time — otherwise it’s dead money.
EV/EBITDA: Strips out capital structure and focuses on core operating performance. Often used in M&A because it reflects enterprise value.
P/FCF (Price-to-Free Cash Flow): Favored by long-term investors. High free cash flow yields usually anchor multiples, especially in mature companies.
Multiples only matter when you understand what’s being priced in, and whether a company’s growth, margins, or cash flow can actually deliver against it.
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Q3 Earnings Season is Underway
Several major U.S. banks and healthcare leaders posted third-quarter earnings this week. Results were broadly solid, with trading and wealth performance driving strength in financials, while healthcare names delivered steady growth and reaffirmed guidance.
JPMorgan Chase $JPM ( ▼ 0.33% ) reported firm-wide strength as NII and markets both exceeded expectations.
EPS: $4.21 vs $4.10 est.
Revenue: $41.9B vs $40.8B est.
Highlights: Markets revenue +15% YoY to $9.4B; card lending +12%; NII guidance raised to ~$92B.
Bank of America $BAC ( ▲ 1.67% ) posted resilient results supported by higher trading and disciplined expense control.
EPS: $0.89 vs $0.86 est.
Revenue: $26.7B vs $26.6B est.
Highlights: NII +$0.8B QoQ; provision for credit losses –5%; CET1 ratio 12.8%.
Morgan Stanley $MS ( ▼ 0.84% ) beat on both lines as trading and wealth management outperformed expectations.
EPS: $2.13 vs $2.01 est.
Revenue: $16.79B vs $16.15B est.
Highlights: Equities +23% YoY; wealth management +14%; IB –5% YoY; ROTCE 17.2%.
Goldman Sachs $GS ( ▼ 0.97% ) posted a standout quarter with record equity trading and advisory strength.
EPS: $10.91 vs $9.69 est.
Revenue: $14.58B vs $13.5B est.
Highlights: GBM +24%; equity trading +36%; IB fees +26%; ROE 12.8%.
BlackRock $BLK ( ▼ 0.87% ) reported record AUM and double-digit tech revenue growth but slower long-term inflows.
EPS: $12.05 vs $10.36 est.
Revenue: $5.42B vs $5.41B est.
Highlights: AUM $12.53T; tech revenue +26%; long-term inflows –10% YoY.
Johnson & Johnson $JNJ ( ▲ 0.57% ) delivered in-line revenue and steady margins, reaffirming full-year guidance.
EPS: $2.82 vs $2.71 est.
Revenue: $22.9B vs $22.5B est.
Highlights: Pharma +4.3%; MedTech +4.9%; gross margin expanded 70 bps; FY25 EPS guide reaffirmed.
Abbott Laboratories $ABT ( ▲ 0.71% ) posted balanced growth across segments with double-digit device strength.
EPS: $1.26 vs $1.19 est.
Revenue: $11.08B vs $10.8B est.
Highlights: Organic sales +9.3%; Med Devices +12%; Diagnostics –3% as testing normalizes; FY EPS raised to $4.65–$4.70.
🔐 Edge Takeaway: The first week of Q3 earnings has been mixed, but the banks…upgrade to Edge+ to read the full Edge Takeaway, including the Edge score and CMG Strength Ratio.
In Other News
In this section we'll be curating a selection of news headlines we think you'll find interesting. If a topic catches your eye, click the provided links to read more about it.
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The Second Half
With the government shutdown, the second half of the week should be quiet from a news standpoint. All focus continues to be on the US/China tensions, so we’ll be keeping our eyes on that as well.
Earnings Reports
There are a number of major earnings due out this week, but only one stock we cover is left to report - Taiwan Semi.
Here is the calendar of earnings releases scheduled for the rest of the week:
Source: Earnings Whisper
Economic Reports
Barring a resolution on the government shutdown, many of the economic reports scheduled to end the week will not be released.
Here is the full calendar of events scheduled for the remainder of the week:
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Thank you for reading this edition of the Mid-Week Wrap-Up.
Until next time investors!
Mark & Chris
The Investor’s Edge
Disclosure
This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.
