DK Street Journal

On 5 August, Fastly — a Technology company whose network sits between websites and their users, delivering pages, video and application code, and increasingly filtering attacks on the way through — told investors it had grown June-quarter revenue 23.3% to $183.3m, its fastest rate in four years and an acceleration from 19.8% two quarters earlier. Gross margin hit a record 65.8% on the company's adjusted measure, up 680 basis points, and it swung to $27m of operating income. Net revenue retention, which measures spending by existing customers, reached 117% against 104% a year earlier — the fifth consecutive quarterly improvement. Full-year guidance went up to $732–746m.

A day later Five9, which runs the software call-centre agents use to handle phone, chat and email queues, reported subscription revenue up 14% — a third straight quarter of acceleration — with revenue from its artificial-intelligence products up 78% to an annual run rate above $150m. Management raised its full-year AI growth outlook to at least 60% from more than 40% and lifted total 2026 revenue guidance to $1.266–1.272bn, disclosing a Fortune 100 contract worth $100m over five years that ramps in 2027.

That matters beyond the two companies. The bear case that has crushed this end of the software market all year — named the "SaaSpocalypse" by a Jefferies trader in February — holds that revenue billed per human seat shrinks as autonomous agents replace the humans. Contact centres are the most exposed category there. Five9's seat-linked subscription line accelerated anyway.

The four that did not report

The other four names rose largely on one session. On 7 August, Atlassian gained 34%, Twilio 27% and Cloudflare 9% as investors rotated out of chip stocks back into enterprise software; the same day CNBC catalogued the wreckage the rotation was reprieving — Airtable sold to Bending Spoons for under $1.3bn against a near-$12bn peak valuation, HubSpot down 19% in a day, Datadog down 19%. Elastic rose 7.4% and GitLab 9.2% on no company news.

Elastic sells the search and analytics engine behind log monitoring at large enterprises, now also used to store the vectors that power AI retrieval. Fiscal-2026 revenue was $1.739bn, up 17.3%; its cloud line grew 20% and committed remaining performance obligations accelerated to 20%, but guidance for the year now underway implies about 14.6% growth — deceleration, with margin expansion the offset. GitLab, which sells the platform development teams use to plan, build and ship software, guided fiscal 2027 to $1.112–1.118bn against $955.2m delivered — roughly 16.5% growth after 25.8%. Its transcript does contain the cohort's cleanest anti-deflation datapoint: customers are buying seats for project managers and designers who now write code through agents, at the engineer price.

Q2 Holdings, which supplies online and mobile banking software to community and regional banks, reported on 29 July: subscription annual recurring revenue of $826m up 15%, backlog of $2.8bn up 17%, adjusted EBITDA up 37% with margin 510 basis points wider, eight enterprise wins, guidance raised, debt repaid and $350m added to buyback capacity. Its shares are still down 18% over twelve months.

Lightspeed Commerce, which sells point-of-sale and payments systems to independent retailers, restaurants and golf courses, is the odd one out — flat over the month. Reported revenue grew 5.8%, but organic growth was 17%, payment volume rose 20% organically, and full-year adjusted EBITDA is guided to $75–95m, decisively positive, alongside a $65.1m share repurchase.

Do the numbers justify it

Business verdict: CONFIRMS at Fastly, Five9 and Q2 Holdings, where guidance rose on disclosed acceleration; INCONCLUSIVE at Elastic and GitLab, which are guiding slower and moved on rotation; and CONTRADICTS at Lightspeed, where profitability inflected and the tape ignored it.

Valuation verdict is close to the inverse. Fastly's price-to-sales multiple has gone from 4.99x to 6.50x in a fortnight (6.04x forward), and after the print analyst targets clustered at $25–$32 against a $29.69 close. Management flagged roughly $10m of the quarter as episodic and noted only a quarter of World Cup matches fall in the current period; top-ten customers, now 37% of revenue, supplied 87% of sequential growth while the rest of the base grew 12%. GitLab is the group's richest at 6.86x trailing sales and 50.2x forward earnings on 16–17% guided growth. Against that, Five9 trades at 9.6x forward earnings with an 8.3% free-cash-flow yield, Q2 Holdings at 42.3x trailing earnings compressing to 21.4x forward, Elastic at 5.28x forward gross profit with a median analyst target near $106.50, and Lightspeed at 1.04x book value.

The tape agrees with none of this cleanly. Fastly fell 13.5% the session after its results, then rose 29.3% over the following four sessions — a delayed re-rating, not an earnings reaction. Five9 jumped 19.8% on 7 August and gave back 8.9% by 12 August. Over twelve months the group's headline gain is entirely Fastly's 333%; the median member is up 4%.

The setup

Where it stands — Three of six raised guidance on disclosed acceleration; two rose on a single rotation day without reporting.

Would confirm — Fastly's September quarter holding revenue growth above 18% despite the flagged World Cup timing headwind.

Would invalidate — Fastly net revenue retention slipping below 117%, or Five9 subscription growth falling back under 12%.

Watch next — Elastic's first fiscal-2027 quarter, due late August, against the 14.6% full-year guide.

Valuation — Fastly 6.50x trailing sales versus 4.99x two weeks ago; Five9 9.6x forward earnings versus 41.1x trailing.

The companies that own the buildings where artificial-intelligence computing physically happens have now all reported their latest quarters, and the results sort them into two groups that the tape has not yet distinguished. On 12 August, after CoreWeave and Nebius — the "neocloud" operators that rent capacity rather than own it — reported quarters that sent CoreWeave up 19% and Nebius up 34%, the three smallest names in this group rallied hard while the two largest actual landlords fell. That sorting was by beta to the tenants, not by the economics of the halls.

The landlords that are working

GDS Holdings, which develops and leases colocation space — power, cooling and racks rented to cloud providers, internet firms and banks — across China, grew first-quarter revenue 23.6% to RMB 3.37bn while gross margin widened to 33.6% from 23.7% a year earlier. Operating income rose 148.6% to RMB 908m, an operating margin of 27.0%. That is operating leverage arriving, not promised. GDS logged a record 200 megawatts of new bookings in the quarter and over 340 megawatts year-to-date, lifting its expectation to 500-800 megawatts annually, and has committed RMB 30-50bn of capital spending over three years, roughly RMB 9bn in 2026 against RMB 4.3bn in 2025. The shares are down 13% over twelve months and 27% over three.

VNET Group, the Beijing operator running colocation, managed hosting and wholesale build-to-suit space, is the weaker half of the Chinese pair: revenue grew 19.8% to RMB 2.69bn but gross margin fell to 22.9% from 25.2%, operating income was flat, and it posted a RMB 2.23bn net loss. It guides to delivering another 450-500 megawatts in 2026 on RMB 10-12bn of capital spending, alongside a battery tie-up with CATL. Both companies last reported the March quarter, so the entire three-month drawdown in each happened with no new disclosure at all.

On the metrics that fit leveraged landlords, GDS trades at 13.7x trailing enterprise-value-to-EBITDA, 3.56x sales and 1.36x book value; VNET at 9.8x EV/EBITDA and 1.35x sales, with free cash flow at minus 42.5% of market value as capital spending runs. Equinix and Digital Realty, the mature American data-centre landlords, carried roughly 11x sales when this desk last measured them.

The backlog that has not arrived

Applied Digital, the Dallas operator that converted from crypto hosting to building AI data centres in North Dakota and elsewhere, grew fiscal-2026 revenue 183.7% to $611.3m, with the May quarter up 580.7% to $258.7m. But that quarter's gross margin collapsed to 15.7% from 42.5%, the operating margin was minus 45.2%, and the year's net loss was $244.0m. Its annual report discloses approximately $36.2bn of non-cancellable take-or-pay lease revenue across 1,410 megawatts at five campuses, including a third CoreWeave lease of 150 megawatts that took one campus to 400 megawatts and roughly $11bn. The schedule in the same filing is the sobering part: $451.1m falls due in fiscal 2027 and $1.45bn in fiscal 2028, with $27.1bn in "thereafter" — about 1.3% converting to cash next year. It ended May with $4.2bn of cash against $5.0bn of debt, notes priced at 6.75% and 7.0%, and needs several billion more to build what it has sold. Trailing price-to-sales has halved to 15.6x from 28.7x in early May at essentially the same market value — the multiple compressed because revenue arrived, not because the price fell.

The three that rallied

Keel Infrastructure, formerly the bitcoin miner Bitfarms, is the clearest contradiction. June-quarter revenue fell 60.9% to $30.4m at a gross margin of minus 285%, with a $140.8m operating loss. On its 10 August call it confirmed it has signed no high-performance-computing leases, targets three this year, and reported that Moses Lake's 18 megawatts slips to 2027, Panther Creek's environmental permits are running months late and Scrubgrass has no power secured. It holds $819m of liquidity and is liquidating its remaining 1,861 bitcoin. Consensus has 2026 revenue falling another 59% to $112.5m — which is why forward price-to-sales, at 19.0x, sits above trailing 14.1x.

SharonAI, a 25-employee New York graphics-processor cloud carrying a $2.40bn market value, booked $1.93m of revenue last quarter at a negative gross margin and a $428.3m net loss — 776x trailing sales. It claims 212 megawatts secured, 120 contracted, $8.8bn of year-to-date contract value and a six-year, $4.9bn NVIDIA collaboration, with first material revenue only in the December quarter. A short seller, Bleecker Street Research, has questioned whether its largest contract counterparty can pay.

WhiteFiber, spun out of Bit Digital to run graphics-processor-optimised halls and cloud capacity, grew quarterly revenue 54.5% to $28.8m with adjusted EBITDA of $5.5m — though $12.3m of that revenue was a customer termination payment. It disclosed over $540m of new multi-year cloud agreements and said its North Carolina site reaches full billing by end-August after a switchgear delay. It trades at 11.7x trailing and 8.7x forward sales.

Verdicts

Business momentum CONFIRMS the story for GDS and Applied Digital, and CONTRADICTS it for Keel and SharonAI. Valuation CONFIRMS a dislocation at GDS and VNET — improving operations, falling shares, single-digit-to-low-teens EV/EBITDA against American peers at multiples of that — and is INCONCLUSIVE for Applied Digital, where a genuine backlog meets $5.0bn of debt and a one-year cash conversion of 1.3%.

The tape agrees with the businesses only in China's case, and inversely: GDS and VNET have traded with their 50-day averages below their 200-day since spring, Applied Digital has been mildly below since July, and all three small-caps lost their uptrends on 28 July. The binding constraint on every one of them is electricity: American interconnection queues hold roughly 2,600 gigawatts of proposed capacity with waits of five years or more, and switchgear is sold out through 2028, while a Texas moratorium risks delaying about 20% of the national pipeline.

The setup

Where it stands — Two landlords are growing into falling shares; three smaller names rallied on tenants' results rather than their own.

Would confirm — GDS second-quarter bookings above 150 megawatts with gross margin holding above 33%.

Would invalidate — Applied Digital's fiscal-2027 revenue tracking below the $822m consensus, or new debt raised above 7%.

Watch next — GDS and VNET report June-quarter results; WhiteFiber's North Carolina site reaches full billing by end-August.

Valuation — GDS 13.7x trailing EV/EBITDA and 1.36x book; Applied Digital 15.6x trailing, 10.9x forward sales; Keel 14.1x trailing versus 19.0x forward.

A memorandum, not a wire transfer

Nvidia, which designs the graphics processors that nearly every artificial-intelligence data centre is built around, said on 10 August it had signed memorandums of understanding with six financial firms — Apollo Global Management, BlackRock, Blackstone, Brookfield Asset Management, Goldman Sachs and KKR — to establish financing platforms mobilising more than $500bn of third-party capital for hyperscalers, frontier AI labs and enterprises. Chief executive Jensen Huang described the effort as making chips an investable asset class — long-lived, revenue-generating hardware to borrow against the way lenders borrow against office towers or toll roads. The next session Apollo, an alternative manager that also owns the Athene annuity business, rose 5.95%; KKR rose more than 6% and Blackstone about 4%.

A memorandum of understanding is not funded capital. Apollo made the distinction itself on its 4 August call, telling investors that its $35bn financing for the chipmaker Broadcom — the largest private-credit deal on record — draws over multiple quarters weighted to the fourth quarter of 2026 through the third of 2027, and that fees are booked on deployment, not on announcement.

The fee lines were already there

What these firms sell in this story is arrangement: they raise money from pensions and insurers, lend it or invest it against data-centre construction, and take a management fee plus a spread. That business is compounding fast. Blackstone, the world's largest alternative asset manager, reported second-quarter fee-related earnings of $1.8bn, up 22%, with infrastructure assets of $90bn up 40% and a data-centre platform valued at $185bn against $130bn at the start of the year; it holds 15 gigawatts of entitled, powered sites. KKR, a private-equity, credit and infrastructure firm, posted fee-related earnings of $1.32 a share, up 34%, on $120bn of infrastructure assets, and in June launched Helix, a permanent vehicle with more than $10bn of founding capital from KKR, the Kuwait Investment Authority, Nvidia and the power producer Vistra. Apollo's fee-related earnings rose 25% with fee-generating assets up 34% and $82bn of dry powder carrying roughly $400m of embedded annual fees. Ares Management, a Los Angeles credit specialist, grew fee-related earnings 20% and is building seven data-centre campuses totalling about a gigawatt through its Ada Infrastructure arm, worth an estimated $50m–$100m of incremental fee earnings by 2027. Brookfield Asset Management, the Canadian infrastructure and real-assets manager, grew fee earnings 20% to $808m and is raising a $10bn AI fund against a pipeline above $100bn, with Nvidia as cornerstone investor.

Verdict on the business: CONFIRMS the direction, CONTRADICTS the timing. Every one of those lines was accelerating through the twelve months in which the same shares fell — Blackstone down 13%, KKR 22%, Ares 24%, Brookfield 11%, Blue Owl 36%. Nothing in the fundamentals turned over on 10 August.

What is already priced

The valuations split the group three ways. Apollo shows the widest compression from trailing to expected earnings — 30.0 times to 15.7 times, on enterprise value of just 5.9 times EBITDA — and KKR is close behind at 33.0 to 17.9. Blackstone compresses less, 32.5 to 24.7. At the expensive end, Brookfield trades at 31.3 times trailing and 29.6 times forward, almost no compression at all, on 16.1 times sales, the richest in the group; Ares carries 62.2 times trailing against 24.2 forward with a price-to-book of 8.1.

The two banks are the cheapest and the ones that did not move. Goldman Sachs trades at 15.8 times trailing and 14.9 times forward earnings at 2.54 times book, Morgan Stanley at 17.5 and 16.9 at 3.10 times book — but both are up more than 44% over twelve months and both slipped about 1.8% during the month the managers rallied. Their businesses are strong: Goldman posted record revenue of $20.3bn with financing revenues across fixed income and equities of $4.5bn, up 62%, and Morgan Stanley grew investment banking 58% and raised its 2026 data-centre capital-spending forecast to $850bn from $575bn. Goldman also named the constraint: its supplementary leverage ratio, a capital floor, fell to 4.3%, the lowest among peers, limiting how much of this debt it can hold itself. Verdict on valuation: INCONCLUSIVE — supported at Apollo and KKR, stretched at Brookfield and Ares.

Where the risk sits

KKR told investors on 30 July that hyperscaler data-centre spreads had recently widened and that the market was showing indigestion on large deals. Blue Owl, the group's worst twelve-month performer, capped private-credit redemptions at 5% per fund after roughly $5.4bn of first-quarter withdrawal requests, including requests equal to 40.7% of shares in its technology fund. The Bank for International Settlements counts private credit outstanding to AI-related borrowers above $200bn and warns of "shadow borrowing" — obligations economically like debt sitting outside corporate balance sheets, linking hyperscalers to insurers and pensions. Banks that have hit single-counterparty limits on Oracle's $300bn buildout are pushing that paper toward pension and insurance portfolios.

On the tape, the managers were in downtrends days before the announcement: Apollo, Carlyle — the Washington buyout firm, still down 3.6% over three months — and Blue Owl were all below their long-term averages as of 11 August, and KKR's 50-day average crossed above its 200-day only that day. Goldman and Morgan Stanley have held that crossover for 76 and 78 sessions since mid-April. A macro tailwind helped too: July payrolls unexpectedly fell, pulling Treasury yields down days before Nvidia's announcement.

One name in this grouping does not belong to the story: HASI finances renewable energy and efficiency projects, not data centres, and is down 3.9% over three months despite a 71.7% twelve-month gain.

The setup

Where it stands — A two-week repricing of managers that were in downtrends, triggered by non-binding Nvidia financing memorandums layered on fee growth that was already running. Would confirm — Third-quarter disclosure converting the $500bn memorandums into funded commitments, with fee-related earnings growth holding above 20% at Blackstone, Apollo and Ares. Would invalidate — Further widening in hyperscaler data-centre spreads, or another private-credit vehicle gating redemptions as Blue Owl did. Watch next — Third-quarter results in late October, and Apollo's Broadcom deployment schedule beginning in the fourth quarter of 2026. Valuation — Apollo 30.0x trailing to 15.7x forward; Brookfield 31.3x to 29.6x; Goldman 15.8x to 14.9x at 2.54x book.

In the quarter to 1 May, Dell Technologies — which sells enterprise servers, storage and networking to corporate and hyperscale buyers alongside its PC business — booked $24.4bn of artificial-intelligence server orders, shipped $16.1bn and closed with a record $51.3bn backlog across more than 5,000 AI customers, a count up over half in six months. It raised full-year guidance to $165-169bn of revenue with $60bn of that from AI servers. Hewlett Packard Enterprise, which sells ProLiant and Cray servers plus, since buying Juniper, a large networking portfolio, took $1.8bn of new AI systems orders, lifting cumulative bookings to $16.4bn and backlog to a record $5.9bn. Super Micro Computer, a 6,238-person builder of liquid-cooled rack-scale AI systems, took more than $60bn of orders in its June quarter and guided fiscal 2027 revenue to $65-72bn against roughly $52.5bn of analyst consensus.

Volume is reaching earnings — at two of three

The standing worry about this layer is that it buys expensive chips and memory, adds sheet metal and cooling, and keeps almost nothing. Dell's gross margin did compress, to 17.8% from 21.1% a year earlier. But its Infrastructure Solutions Group posted $29bn of revenue, up 181%, with record operating income of $3.1bn, up 206% — segment profitability rose as AI mix rose. Group revenue grew 87.5% to $43.8bn and operating margin widened to 8.3% from 5.3%.

HPE is the sharper margin story. Revenue grew 40.7% to $10.68bn, and its Cloud & AI segment, which houses servers, grew 22.9% with operating margin of 12.4% against 6.6% a year earlier. Notably, the acquired networking business went the other way, margin falling to 21.6% from 25.0% — servers expanded profitability, Juniper diluted it. Management raised full-year earnings guidance to $3.35-3.45 from $2.30-2.50 and free cash flow to at least $3.5bn from $2bn.

Super Micro diverges. June-quarter revenue rose 93.2% to $11.12bn and gross margin jumped to 17.5% from 9.5%, but part of that came from lower excess-and-obsolete inventory reserve costs management flagged as potentially non-recurring. Full-year gross margin still fell, to 10.8% from 11.1% and from 13.8% two years ago. Trailing free cash flow is negative 28.7% of market value, and in June the company priced $5bn of stock and mandatory convertible preferred on top of a $2bn drip-feed share sale to fund components; the $7bn total equalled about 42% of its market value and the shares fell 26% in two sessions. Business momentum CONFIRMS at all three; margin quality confirms only at Dell and HPE.

What the multiples already assume

Dell trades at 37.9 times trailing and 26.2 times forward earnings, against consensus for fiscal 2027 revenue of $171.8bn and EPS of $18.48. The gap between those two multiples is the expected earnings jump — but the forward figure sits far above the 14-19 times this desk's own notes anchored on in May and July, meaning the re-rating, not just the profit, did the work. Valuation CONTRADICTS the idea of untapped runway at Dell.

HPE's 53.9 times trailing is distorted by fiscal 2025 net income of just $57m after Juniper charges; forward is 17.2 times, with a 5.1% trailing free-cash-flow yield and consensus EPS of $3.42 sitting inside company guidance. Supported. Super Micro is cheapest on every sales-based lens — 0.46 times forward sales — yet its forward price/earnings of 11.6 times sits above its trailing 10.5 times: consensus fiscal 2027 EPS of $3.24 is fractionally below the $3.26 just delivered, despite a revenue guide 24% above the Street. INCONCLUSIVE.

The tape, briefly

Dell has held an uptrend since 31 March, its 50-day average above its 200-day every session since, and is up 299% over six months — among the largest gainers in this universe, not a quiet compounder. HPE has done the same since 23 April. Super Micro was in a downtrend as recently as 11 August and gained 18.6% the next day on volume more than triple normal, alongside AI landlords CoreWeave, up 19% after reporting $2.575bn of revenue, a $104bn backlog and capex guidance of $35-39bn, and Nebius. Taiwan's contract manufacturers are growing too — Quanta posted its second-highest monthly revenue on record in July — so hyperscaler direct-sourcing is expanding alongside the American OEMs rather than displacing them.

The setup

Where it stands — Dell and HPE converted AI volume into wider operating margins; Super Micro converted it into revenue, dilution and negative cash flow.

Would confirm — Dell's next quarter showing infrastructure operating margin at or above the record 10.7% implied by $3.1bn on $29bn.

Would invalidate — Super Micro's fiscal 2027 gross margin printing back near 10% once inventory-reserve releases stop, or another equity raise.

Watch next — Dell's fiscal Q2 results due late August, with AI backlog against the $51.3bn record and the $60bn full-year AI revenue target.

Valuation — Dell 37.9x trailing / 26.2x forward versus 14-19x forward three months ago; HPE 17.2x forward; Super Micro 11.6x forward above 10.5x trailing.

Fortinet, a $118bn maker of FortiGate firewall appliances that also sells branch networking, endpoint and cloud-security software off one operating system, told investors on 29 July that its June quarter was the best in its recent history. Revenue rose 25.6% to $2.048bn, billings 33% to $2.37bn and product revenue 52% to $773m, with a record 33.7% GAAP operating margin. Free cash flow more than tripled to $966m. Management raised full-year guidance to billings of $9.35–9.55bn and revenue of $8.02–8.18bn. Revenue growth has now accelerated four quarters running, from 14.4%.

The stock has gone nowhere since. Across the seven largest listed pure-play security vendors, the past 30 days produced an equal-weighted gain of roughly 8.8% — and Fortinet is down 1.5%, second from last. The name that led, at +19.6%, was Zscaler, which has published no financial information since 26 May.

What actually moved them

The advance is not a slow accumulation on improving orders. All seven fell together between 6 July and 28 July, then rose together over the eleven sessions to 12 August by 17.8% equal-weighted. On 4 August every one of them gained between 3.1% and 8.6% with no security-sector news at all: the Nasdaq Composite rose 2.59% and information-technology shares 4% as investors rotated back into software after a month of selling semiconductors, with Palantir up 29% the same day. The other outsized session was 14 July, when IBM pre-announced revenue of $17.2bn against $17.9bn expected and chief executive Arvind Krishna said clients would pause new security deals until they knew what securing artificial intelligence would cost. Security shares rallied on that warning — CrowdStrike 12.1%, Okta 10.8%.

One housekeeping correction matters before any of the twelve-month figures are read. CrowdStrike's board approved a four-for-one forward stock split on 3 June, with split-adjusted trading from 2 July. Unadjusted price series show the shares down 48.5% over a year; adjusted, they are up 105.9%, and the group's twelve-month gain is 60.7%, not 38%.

Which businesses back the move

Three do. Fortinet is described above. Cloudflare, which runs a global edge network selling content delivery, denial-of-service protection and zero-trust access, grew revenue 35.9% to $696.1m — a fourth consecutive acceleration — with dollar-based net retention at 120%, remaining performance obligations up 38% to $2.73bn, and full-year guidance raised to $2.864–2.870bn on a beat of $696.1m against $664.7m expected. CrowdStrike, whose Falcon platform sells endpoint, cloud-workload and identity protection by subscription, grew 25.6% with record net-new annual recurring revenue of $255.8m, up 32%, as the customer-commitment packages issued after its 2024 outage rolled off.

Three are unresolved. Palo Alto Networks, the group's largest at $314bn, grew 31.1% to $3.00bn — but gross margin fell 5.3 points to 67.6%, it swung to a GAAP operating loss of $183m, and diluted shares rose from 713m to 744m. That is the CyberArk identity acquisition, not organic acceleration; roughly $1.6bn of its $8.1bn next-generation security recurring revenue came from deals. Rubrik, a data-security and cyber-recovery vendor and the group's newest listing, grows fastest at 39.0% but is decelerating from 51.2% a year ago. Zscaler holds 25.4% growth and improving 77.3% gross margins, but its shares fell more than 30% in May after soft fourth-quarter guidance and the departure of two sales leaders.

One contradicts. Okta, which sells corporate single sign-on and the Auth0 developer identity portfolio, grew 11.2% — its fifth straight quarter in an 11–13% band — with consensus modelling 10.0% growth next fiscal year. The shares are up 83% in three months. Operating margin genuinely improved, from -2.4% two years ago to 7.3%, but the growth rate has not moved.

Business verdict: CONFIRMS at Fortinet, Cloudflare and CrowdStrike; INCONCLUSIVE at Palo Alto, Rubrik and Zscaler; CONTRADICTS at Okta.

The valuation spread

Because gross margins run from 67.6% at Palo Alto to 80.5% at Rubrik, price-to-gross-profit is the fairer normaliser than price-to-sales, and four of the seven have no usable trailing earnings. Trailing multiples span 5.7-fold: Cloudflare 60.5x, CrowdStrike 59.2x, Palo Alto 41.2x, Fortinet 19.5x, Rubrik 17.2x, Zscaler 11.8x, Okta 10.6x. Every one compresses on forward figures. Fortinet is the only member whose advance is earnings rather than re-rating — 19.5x to 18.2x gross profit, 56.4x to 47.1x earnings, a 2.6% free-cash-flow yield. Palo Alto's trailing price-to-sales has roughly doubled from 14.8x in May to 29.6x. Cloudflare carries 259.5x forward earnings, though Goldman Sachs raised its target to $389 from $266 and BTIG to $382 after the August print.

Valuation verdict: CONTRADICTS for five of seven; CONFIRMS at Fortinet. The open cell is Zscaler, growing at CrowdStrike's rate for a fifth of the multiple.

On the tape, five names have held an uptrend with the 50-day average above the 200-day since May or June — Fortinet and Cloudflare both since 5 May, 65 trading sessions. Zscaler has not: it led the month while still below its 200-day average of $186.93. That is the tension in one line.

Demand is not the problem. Gartner forecasts global information-security spending of $244.2bn in 2026, up 13.3%, and among government technology chiefs cybersecurity is the top area for increased 2026 investment at 85%, ahead of artificial intelligence at 80%. The question is which of these seven collects it.

The setup

Where it stands — Fortinet delivered the group's best quarter and its worst month of price action; Zscaler led on no disclosure at all. Would confirm — Zscaler's July-quarter revenue lands at or above its $875–878m guide with billings growth restored. Would invalidate — Okta's 26 August print holds revenue growth at or below 11% while shares stay near highs. Watch next — Okta reports 26 August, Rubrik 27 August, Palo Alto 1 September, CrowdStrike 2 September. Valuation — Zscaler 11.8x trailing and 9.6x forward gross profit against CrowdStrike's 59.2x and 50.7x on the same 25.6% growth.

The week the guidance went up

Between 4 and 7 August the eight publicly traded American local gas distribution companies reported June-quarter results, and the direction of travel was almost uniformly upward.

ONE Gas, a pure-play distributor serving 2.2 million customers through Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, grew adjusted earnings per share 52% to $0.82 despite weather 25% warmer than normal, and raised full-year guidance to the upper half of its range at $4.89–$4.95. Spire, the St Louis holding company that owns the Missouri and Alabama gas utilities, sold its Marketing and Storage arms to become fully regulated and reaffirmed a step from $3.90–$4.10 this fiscal year to $5.40–$5.60 next, roughly 40%. Northwest Natural, which serves 786,000 meters in Oregon and southwest Washington, guided to the top half of its $2.95–$3.15 range and won new Washington rates effective 1 August at a 9.5% allowed return on equity. Southwest Gas, the Arizona and Nevada distributor, grew adjusted EPS 22% and enlarged its Great Basin pipeline expansion to about $2.3bn with roughly 1 Bcf/day contracted, after an open season drew bids near 2.5 Bcf/day. New Jersey Resources raised its guidance midpoint. Chesapeake Utilities, which distributes gas in Delaware, Maryland and Florida, announced the Florida Energy Pathway — a 97-mile, $1.2bn transmission line from Palm Beach to Miami-Dade anchored by shippers committing 250,000 dekatherms a day — and lifted its dividend 7.3%.

What actually moved the shares

The long end of the curve. The 10-year Treasury yield pushed above 4.7% on 12 August, near its highest since January, with the 30-year above 5.1%, extending a rise that took the 10-year past 4.6% in July. Bond-proxy utilities re-price against that. Over the same 30 days the five large regulated electric utilities fell an average 5.8% — American Electric Power 9.0%, WEC Energy 7.9% — against the gas distributors' 3.4%. The gas names diverged by falling less, not more.

The damage was also concentrated where index ownership is heaviest: NiSource, New Jersey Resources and Atmos took the month's losses, while ONE Gas, Spire, Southwest Gas and Chesapeake finished within 1.3% of flat. Over twelve months it was the small caps that carried the group — Northwest Natural, New Jersey Resources and Southwest Gas each up 15% or more — while Atmos gained 2% and NiSource lost ground.

The exception, and the soft spot

NiSource, which runs the Columbia gas utilities across five states plus the NIPSCO electric system in northern Indiana, is the one name where the business matches the tape. Second-quarter net income fell to $45.5m from $102.2m and adjusted EPS to $0.16 from $0.22. On earnings day Indiana regulators denied its full gas-modernisation tracker recovery, demanding better documentation of customer benefits. Management reaffirmed 2026 adjusted EPS of $2.02–$2.07 and points to a data-centre pipeline of up to 9 gigawatts and a $28.6bn 2026–2030 capital plan, with signed Amazon and Alphabet load expected to return about $1.4bn to Indiana customers.

Atmos Energy, the largest US pure-play gas distributor, has a narrower problem: spreads on its Texas pipeline arm averaged $4.66 over nine months against $1.77 a year earlier but tightened once two new takeaway pipelines started up in late June and July, and full-year operating and maintenance cost guidance rose to $875–885m. The utility itself is unbothered — nine-month EPS of $7.33 is up 14.5%, $396m of annualised rate increases are implemented with $334m more filed, and 51,000 net customers were added.

Valuation

Business verdict: CONTRADICTS the move for six of eight; CONFIRMS it for NiSource. Valuation verdict: the de-rating is real and not obviously earned. Against this desk's own 3 May readings, Atmos has gone from 24.4x trailing earnings to 20.0x, NiSource 24.9x to 22.1x, ONE Gas 20.2x to 17.1x and Northwest Natural 19.3x to 16.4x. On fiscal 2027 consensus the group sits at roughly 15–19x, with Spire at 14.9x and Southwest Gas at 18.7x; trailing multiples for those two are distorted by one-off divestiture and deconsolidation gains and carry no information.

Two cautions survive the screen. New Jersey Resources' consensus 2027 EPS of $3.42 sits below 2026's $3.57, so its forward multiple rises with time rather than falling — the last twelve months' gain partly capitalised. Spire's funds-from-operations-to-debt ratio is 13% against a 14–15% target it does not expect to reach until end-2028.

On the tape, Atmos's 50-day average slipped below its 200-day in early June and has stayed there; NiSource's did the same only on 5 August, immediately after earnings — the single technical event that agrees with a fundamental one. New Jersey Resources, down 7% on the month, is still in an uptrend by the same measure.

The setup

Where it stands — Six of eight gas distributors raised guidance in August while their shares fell with the long bond; NiSource alone missed.

Would confirm — Spire's Alabama rate case lands near its 10.5% requested return, and ONE Gas prints full-year adjusted EPS inside $4.89–$4.95.

Would invalidate — Atmos cuts fiscal 2026 EPS guidance below $8.40 as Texas pipeline spreads compress further, or Nevada awards Southwest Gas nearer the intervenors' $40m.

Watch next — Alabama return-on-equity decision in September; Nevada rates effective October; Indiana order on NiSource's 400 MW Amazon expansion by November.

Valuation — Group at roughly 15–19x fiscal 2027 consensus, against trailing multiples of 19–25x for the same names in May.

Eleven companies that mine uranium, enrich it, or design and build reactors reported second-quarter results between 31 July and 7 August. Read together, the prints separate the group into three businesses with almost nothing in common except a shared narrative about electricity for artificial-intelligence data centres — and the shares of all eleven bottomed on the same day, 29 July, and rallied through the reporting week regardless of what they said.

The developers are financed by share sales, not customers

Oklo, a developer of 15-to-75-megawatt "Aurora" fission powerhouses with 215 employees, recorded $1.21m of revenue in the quarter against a $73.2m operating loss. It ended June with $3bn of cash, having raised $1.9bn during 2026 through an at-the-market programme — a drip-feed sale of new shares — and it raised its own spending guidance twice, to $120-150m of operating cash use (from $80-100m) and $400-500m of capital expenditure (from $350-450m). The engineering is moving: its Groves isotope reactor reached first criticality in under eleven months from groundbreaking. The revenue is not. Oklo's first Idaho plant is slated for commissioning by late 2027 or early 2028, with commercial deployments as early as 2029 and Google eyeing 2030, and its agreements with Meta, Switch, Equinix and Wyoming Hyperscale are non-binding letters of intent or frameworks — Equinix's 500-megawatt commitment, the first of its kind, is a procurement agreement, not a plant under construction. Consensus puts Oklo's 2030 revenue at $286m, in a range spanning $72m to $514m, with a net loss still forecast that year. At 6,619x trailing and 4,317x forward sales — the only applicable lens for a pre-revenue company — the price embeds the 2030s in full.

NuScale, whose 77-megawatt module is the only small reactor design certified by the Nuclear Regulatory Commission (NRC), reported revenue of $75,000 against $8.05m a year earlier and a $64.0m operating loss. It holds $1.9bn of cash, up $900m in three months, and management described talks with the Tennessee Valley Authority and its partner ENTRA1 as active but with no signed power-purchase agreement; Romania's RoPower notice to proceed is roughly twelve months away. At 0.75x book value it is the only member of the group trading below its stated equity. NANO Nuclear, a $1.03bn company with 36 employees and four unbuilt reactor concepts, has never recorded revenue and is not forecast to be profitable in 2030. Lightbridge, a 13-person developer of metallic reactor fuel, raised $44.4m through its own share programme against $8.3m of first-half cash burn; its supply memorandum with Centrus carries no price, quantity or exclusivity.

For these four, the business CONFIRMS the year-long de-rating.

The fuel cycle: better contracts, worse earnings

Cameco, which mines and mills uranium and converts it into reactor fuel, is the mirror image. Reported revenue fell 7.2% to $814.1m, gross margin narrowed from 29.3% to 21.1% and net income fell 92.1% to $25.2m — mostly the absence of a one-off Westinghouse payment from the Czech Dukovany project booked in 2025, plus currency costs and spring disruptions at Key Lake, McArthur River and Cigar Lake. Production guidance was unchanged at 19.5-21.5m pounds. The contract book improved: deliveries averaging more than 28m pounds a year, with market-related floors in the high-$70s. The long-term price indicator reached $93 a pound in March, its highest since 2008, with spot at $86.48 on 8 August, and Kazatomprom cut 2026 output about 10%, roughly 5% of world primary supply. Cameco also disclosed that Westinghouse, 49% owned by Cameco and 51% by Brookfield, has filed a confidential draft registration for a US listing. Valuation CONTRADICTS the bounce: the trailing multiple went from 106.8x in May to 168.8x now, and price-to-gross-profit from 38.6x to 62.7x, as the market value fell from $50.3bn to $43.2bn. The shares got dearer, not cheaper. Forward earnings put it at 60.5x.

Centrus, the only US commercial enricher, grew revenue 14.0% to $176.1m but saw operating income fall 69% as separative-work volumes dropped 23%, prices rose 3% and unit costs rose 13%. Backlog reached $4.5bn extending to 2040, and a $900m Department of Energy task order moves its Piketon cascade from demonstration to commercial operation. Commercial production starts 2029; X-energy deliveries begin 2030. At 75.0x trailing and 73.6x forward earnings, the market prices no growth into next year — consensus 2026 earnings per share of $2.56 are down 42.9%. INCONCLUSIVE on the business, unsupportive on price. Among the miners, Energy Fuels grew revenue six-fold to $25.1m at a 57.4% gross margin yet lost $33.4m and is not forecast profitable until 2027; Uranium Energy booked no revenue at all in its April quarter against a $40.8m operating loss.

BWX Technologies is the outlier

BWXT, which builds reactors, fuel and missile launch tubes for the US naval propulsion programme and components for commercial utilities, grew revenue 18.0% to $901.6m — its fourth consecutive quarter above 18% — with net income up 13.6%, backlog of $8.4bn up 40%, a book-to-bill ratio of 1.7x, and guidance raised on revenue, earnings and free cash flow. Commercial operations revenue rose 72%. Management expects at least one new-build equipment order by year-end. Its multiple compressed from 55.0x trailing earnings in May to 43.7x, and 35.8x forward, while 2027 consensus earnings rose to $5.29 a share. The business CONTRADICTS its tape, and the valuation confirms the contradiction. Yet BWXT is the only member down over the past 30 days: shares slipped after hours on 3 August despite an earnings beat, on a $4m revenue shortfall and higher planned capital spending.

The tape agrees with none of this yet. Every name has traded with its 50-day average below its 200-day since early July at the most negative reading the measure produces, and BWXT and Cameco stepped down through June — before the prints — so the break is price, not a corporate event. Ninety-day returns run from -12% to -32%. It is also not a nuclear-specific reset: AI-power and data-centre names fell together in late July. And the dates the companies themselves disclose sit outside this decade — Centrus 2029, X-energy 2030, and construction on the reactors backed by the Department of Energy's conditional $17.5bn loan package beginning by 2030, for service in 2033-34.

The setup

Where it stands — Eleven nuclear names rallied off a 29 July low through earnings week; only BWXT's results and multiple moved in opposite directions.

Would confirm — BWXT books the new-build reactor equipment order management promised by year-end, and Cameco's next quarter restores gross margin above 29%.

Would invalidate — Oklo or NuScale launches another equity raise before signing a definitive power-purchase agreement, or uranium term price slips below $86.

Watch next — Third-quarter results in late October and early November; the Westinghouse listing terms, still undetermined; the Department of Energy's five site selections.

Valuation — BWXT 43.7x trailing and 35.8x forward earnings, against 55.0x in May; Cameco 168.8x trailing, 60.5x forward, versus 106.8x in May.