DK Street Journal

The price, not the volume

Infosys, the Bengaluru software-services firm with 328,062 employees, told investors in July that clients are returning mid-contract on work already signed and asking for the price to come down. Management called it deflation, and said the pressure should persist through the fiscal year. It cut guidance for the year to March 2027 to constant-currency revenue growth of 1.5-3.0%. Strip out the 1.7 points contributed by acquisitions and roughly half a percentage point of organic growth remains.

That is the mechanism worth understanding in this corner of technology. The first effect of generative AI on firms that sell people by the hour has not been fewer projects. It has been fewer hours billed for the same delivered outcome, and clients who now know it. Wipro, the 240,000-employee Bengaluru rival, put the same point differently on its July call: the cost of running AI models — token economics — has become a chief financial officer's problem, and traditional large deals carrying an AI productivity layer face competitive pricing pressure. Wipro's IT services revenue grew 0.9% year over year, and its operating margin fell 120 basis points to 16% with no timeline offered for a return to its 17-17.5% target.

A month that was three sessions

The shares tell a different story, briefly. Across Accenture, Cognizant, Infosys, EPAM, Grid Dynamics, CGI, Globant and Wipro, the average gain from July 17 to August 17 was 14.4%. Almost all of it landed on July 27, 28 and 29, when the group averaged gains of 7.8%, 12.1% and 7.9%. Remove each name's two best sessions and the average flips to -4.2%. The trigger was rotation: a global selloff that erased more than $1trn from AI-chip valuations pushed money toward firms that build no AI hardware, and on July 27 Jefferies closed its long-standing underweight on Indian IT, citing the reversal of the AI trade and the size of the prior decline while leaving its low-to-mid-single-digit growth forecasts intact. Since the July 29 close, six of the eight are down. August 17 was the worst session of the stretch, on a day Micron closed 20.9% above its August 11 level.

Four cut guidance inside the window

Accenture, the Dublin-headquartered professional-services firm with 799,000 employees and the largest name here, reported new bookings of $19.32bn for its May quarter, down 2%, and trimmed full-year local-currency growth guidance to 3-4%. Its shares fell 18% that June day, the worst session in the company's history. The operating record underneath is not what the price implies: quarterly revenue grew 5.6% to $18.72bn, and operating margin edged up to 16.96%.

EPAM, the Pennsylvania-based software-engineering firm, cut its year to 3.2-4.2% growth on August 6 and disclosed that the Americas, 57% of revenue, grew 0.5%. It also pushed expected revenue from its large AI-led pipeline from this half into the first half of 2027. Globant, the Luxembourg-domiciled services firm now worth $1.57bn, reported June-quarter revenue flat year over year at $614.4m with gross profit down 4.3% and operating margin at 3.2%. Both are converting AI work — EPAM's AI-native revenue reached $160m, 11% of the total; Globant's consumption-priced AI Pods carry annual recurring revenue of $52.8m, up from $32.8m in March — just not fast enough to offset the legacy compression beneath.

Three where the numbers agree with the shares

Cognizant, the Teaneck, New Jersey firm with 356,700 employees serving banks, insurers and hospitals, was the only member to raise. It lifted full-year adjusted earnings guidance to $5.70-$5.82 a share, posted a sixth consecutive quarter of adjusted operating-margin expansion, and reported trailing-twelve-month bookings of $29bn, up 5%, with seven contracts above $100m. It bought back $1.1bn of stock in the quarter and authorized another $2bn, a pace above a tenth of its $25.5bn market value in a year. Management was blunt about the caveat: one in four Global 2000 companies have paused AI deployments.

CGI, the Montreal provider that draws 56% of revenue from managed services, has the cohort's best forward-order evidence — a trailing book-to-bill of 108%, backlog of $31.8bn at 1.9 times annual revenue, and hiring up 50% year over year — while its own organic growth sits near zero. Grid Dynamics, a 4,838-person California firm, is the cleanest AI conversion: AI work is 30.7% of revenue and grew 54.6%, with headcount down 3% as revenue rose 7%. It is also the most expensive name here on 13.6x trailing enterprise value to EBITDA, against a 1.2% operating margin.

What the multiples now assume

Accenture at 12.3x forward and 13.5x trailing earnings, with a 12.1% free-cash-flow yield, compares with trailing multiples of 21.4x to 36.7x at each of its last five fiscal year-ends. Cognizant sits at 9.85x forward against 12.15x trailing and 1.82x book. Infosys is the exception in the other direction: its forward multiple of 14.62x sits above its trailing 14.24x, meaning consensus expects no earnings growth at all, and at 7.69x it is the dearest in the group per dollar of gross profit. EPAM at 7.58x forward and Globant at 5.85x are cheap on deteriorating numbers, which is a different thing.

Budgets are not the binding constraint — Gartner expects worldwide IT spending to rise 14.2% this year to $6.37trn, with services the largest category at more than $1.87trn. The price per unit of delivered work is.

The setup

Where it stands — A three-session rotation out of AI hardware lifted eight IT-services names in July; six have given ground back since. Would confirm — Accenture's fiscal fourth-quarter bookings returning to growth, or Infosys raising its 1.5-3.0% constant-currency guide. Would invalidate — A second consecutive quarter of pricing concessions on renewals at Infosys, or Cognizant cutting its $5.70-$5.82 earnings range. Watch next — Accenture reports fiscal fourth-quarter results in September, with full-year guidance of 3-4% local-currency growth to settle. Valuation — Accenture at 12.3x forward and 13.5x trailing earnings, against 21.4x-36.7x trailing at each of its last five fiscal year-ends.

Six companies assemble the physical layer of the artificial-intelligence buildout. They fabricate circuit boards, machine enclosures, build power distribution units and cooling loops, and integrate the finished server and switch racks that cloud operators wheel into data centers. They own none of the silicon and sell under no brand of their own. They are paid a conversion fee — a few cents of margin on each dollar of components moving through the factory — which is why revenue at these firms can double while profit does something far more ordinary.

In the last week of July, five of the six reported quarters and five raised full-year guidance. What happened next is the interesting part: at the three most levered to AI, the price attached to each dollar of gross profit went down, not up.

The month is really two sessions

Over the 30 days to 17 August the six averaged a gain of 11.9%. Remove each company's two best single sessions and that average turns into a loss of 3.5%, with five of the six negative. Two shared dates do the work. On 30 July all but one rose together, Sanmina by 12%. On 4 August every one of the six rose again. The falls were just as collective: Sanmina dropped 20.7% on 28 July and Flex 10.8%, the sessions in which investors turned openly skeptical of hyperscale capital-spending plans after Alphabet's report was panned. Over three months the group is slightly negative, and four of the six sit 15% to 28% below their twelve-month highs. The twelve-month gains — an average near 94% — were earned earlier in the year.

Three grew, and got cheaper

Celestica, the Toronto firm that builds switches, data-center interconnects and custom racks for the largest cloud operators, reported June-quarter revenue of $4.7bn, up 62.4%. Operating margin widened to 9.75% from 9.42%. Gross margin actually narrowed 53 basis points, so the improvement is scale rather than richer work. It raised fiscal 2026 guidance to $20.5bn of revenue and $11.30 in adjusted earnings per share, and disclosed two design wins with multi-billion-dollar 2027 potential: custom racks for OpenAI's Jalapeno accelerator alongside Broadcom, and a manufacturing role on AMD's Helios interconnect.

Its price against trailing gross profit nonetheless fell to 21.63x from the 26.26x this desk recorded in May, and to 16.42x on forward estimates. The proximate cause is a financing, not a demand shock: on 5 August Celestica sold 9,677,419 shares at $310 each, below the prior close of $362.76, raising $3bn to fund capacity. The shares fell about 15% the next session, and the moving-average trend reading that flipped negative on 12 August is that crash catching up, not new information.

Sanmina, contrary to its reputation as an industrial and medical shop, now derives 62% of revenue from cloud and AI infrastructure — $2.148bn last quarter, up 173%. Revenue rose 69.7%, gross margin expanded 160 basis points and operating margin reached 6.43% from 4.70%. It is the cheapest name here at 10.12x trailing gross profit and 17.9x forward earnings, with a 5.1% free-cash-flow yield. The shares slipped anyway after a revenue and earnings beat, on the working capital the ramp consumes.

Flex, which makes power supplies, busway and switchgear as well as owning the Nextracker solar business, grew revenue 20.6% — accelerating from 4% a year ago — with gross margin up 72 basis points. Its Cloud and Power Infrastructure unit ran a 9.7% operating margin with more than 90% of the next three quarters already booked, and Flex intends to spin it off as a separate listed company in early 2027. Its price-to-gross-profit fell to 17.30x from 21.42x in May.

Jabil is the exception in both directions

Jabil, the Florida manufacturer with 135,000 employees spanning cloud, automotive and healthcare programs, raised fiscal 2026 revenue guidance to about $35bn and lifted expected AI-related revenue to roughly $13.6bn, up 50%. The reported quarter was weaker than the story. Revenue growth halved to 11.8% from 23.1% the quarter before. Operating margin went backwards, to 5.09% from 5.15%, and operating income grew more slowly than revenue. Jabil has not held an earnings call since 17 June, so its 23.4% month contains no fresh results at all. It is the only member within 4% of its twelve-month high, and the only one whose multiple has not compressed — 12.51x gross profit against 12.77x in May.

The small two split the same way

Benchmark Electronics, a $3.0bn Arizona firm doing board assembly and system integration for defense, medical and semiconductor-equipment customers, shows the cleanest operating leverage in the group: revenue up 17.7% to $756m, operating income up 33%. Its advanced computing line grew 71%; aerospace and defense fell 12% on program timing. Management said lead times for complex parts dependent on TSMC have stretched to seven-to-twelve months from three-to-five.

Plexus, the Wisconsin builder of healthcare, aerospace and industrial electronics, is the clearest pass-through case. Revenue rose 28.1% but operating income only 14.3%, operating margin compressed 56 basis points to 4.70%, and net income fell 4.7%. The order book is genuinely good — a record $4.5bn opportunity funnel and $400m of aerospace and defense wins this year — but the shares carry the group's richest capital-structure multiple at 29.4x trailing EV/EBITDA on a 0.84% free-cash-flow yield.

What is not settled

Component inflation is the live variable. Server memory contract prices rose 90-95% in the first quarter and were guided up a further 58-63% in the second, with Gartner modeling a 125% annual rise. That inflates the revenue line of every company here at close to zero margin, which is why price against gross profit is the only honest comparison. The second risk is cash: Celestica's trailing free-cash-flow yield is 1.33% against $1bn of capital spending this year and a $1.5bn placeholder for next, and Sanmina told investors working capital will build as its accelerated-compute program ramps. The third is concentration — Celestica's top three customers are about 65% of revenue, worse than 51% — against 2027 consensus that has its revenue rising another 69% to $34.8bn on an analyst range spanning $29.9bn to $40.4bn.

The setup

Where it stands — Three of the six grew fast and de-rated; Jabil rallied hardest on decelerating results and no new numbers since June. Would confirm — Celestica's third-quarter revenue lands in its guided $5.25-5.55bn range with operating margin holding above 9%. Would invalidate — Sanmina or Flex reports gross margin back below the prior year, showing memory costs are not being recovered. Watch next — Jabil's fiscal fourth-quarter results, its first report since 17 June, due in September. Valuation — Celestica 21.63x trailing and 16.42x forward gross profit against 26.26x in May; Jabil 12.51x versus 12.77x.

MACOM Technology Solutions, a 76-year-old Massachusetts maker of radio-frequency, microwave and high-speed analog chips sold into telecom networks, military radar and data-center optics, told investors on 6 August that customers had ordered 1.6 dollars of product for every dollar it shipped in the July quarter. That is a record for the company, and it came with record backlog. Revenue was $342.2m, up 35.8% from a year earlier. Operating income grew 104.8% — roughly three times the revenue growth rate. Management guided the October quarter to $415-425m and framed the next fiscal year as mid-20s percent company growth with its data-center business up about half again.

The shares are about a fifth below their 52-week high.

That gap — between order books that are still setting records and prices that peaked in the spring — runs through six other suppliers of the parts that move light and signals around an AI data center, and through two companies whose problems are entirely elsewhere.

The month is two days

Over the 30 sessions to 17 August the seven averaged a 25.3% gain, which is what makes them look like a group in motion. Remove each name's two best single sessions and the average becomes -4.5%, with five of the seven negative. Stretch the window to 90 days and the average is +0.3%; four are down. Every one of the seven lost its strongest uptrend reading between 30 June and 29 July, as the July selloff that took more than $1 trillion off global chip stocks on fears that AI infrastructure spending had peaked pulled them down together. August has been a rebound off that low, not a new trend.

What the quarters said

SiTime, a Santa Clara company with 441 employees that builds silicon timing devices — the parts that keep racks of AI servers in step — grew revenue 126.5% to $157.4m, with gross margin at 63.0% against 51.9% a year earlier. Its communications and data-center unit reached $101m, a ninth straight quarter of triple-digit growth, and it told investors customers now place orders 12 to 18 months ahead. Guidance implies roughly a $1.2bn annual run-rate.

MaxLinear, which designs communications chips for optical transceivers and broadband gear, grew 55.2% to $168.8m and returned to a GAAP profit. Its infrastructure segment rose 145% to about $85m, entirely on optical data-center signal processors, and it raised full-year optical revenue guidance by roughly $50m to $210-230m. September-quarter guidance implies a 25% sequential step up.

Applied Optoelectronics, the Texas maker of fiber-optic transceivers and lasers, reported its fifth consecutive record quarter on 6 August: revenue up 86.4% to $191.9m, 800G shipment volumes more than doubling sequentially, and September guidance of $255-290m. It is adding nearly 400,000 square feet in Pearland to build 800G and 1.6-terabit parts. The caution is in the margin: gross margin slipped to 27.7% from 30.3%, the thinnest in the group, and the operating margin was -12.9%. Consensus asks for $1.04bn this year and $2.80bn next against $343m delivered in the first half.

Semtech, which makes signal-integrity and long-range wireless chips, is the laggard: 15.9% revenue growth last reported quarter and operating income down 17.1%. It agreed on 13 August to sell its cellular module business to Compal for $62m, and analysts tie its August jump to a large cloud customer adopting its CopperEdge active copper cables.

The two that are genuinely rolling

Qualcomm is the only name where revenue, gross margin and operating income all fell at once: $9.95bn, down 4.0%; margin 53.1% from 55.6%; operating income down 41.1%. On 29 July it said its share of the coming iPhone would be materially below the prior 20% estimate, implying roughly a 50% sequential drop in Apple revenue into the December quarter. Its automotive business set a record at $1.6bn, up 61%, but that is not yet large enough to fill the hole.

indie Semiconductor, a $1.0bn automotive sensor and connectivity chipmaker, is not a data-center story. Revenue grew 24.0% to $64.0m on radar and vision ramps, but gross margin fell to 36.1% and the operating margin is -54.8%. Two sessions, up 18.8% and 17.8%, carry its entire month.

What the price level allows

Earnings multiples do not compare here — four of the seven have negative trailing earnings, and gross margins run from 27.7% to 63.0%. Against gross profit, MACOM trades at 38.0x trailing and 35.0x forward, versus 40.4x when this desk last measured it in May, while gross profit compounded 47%. Applied Optoelectronics is at 72.1x trailing and 41.3x forward, against 104.4x in May, on 71% gross-profit growth. Both are cheaper against a three-month-old anchor at a higher price. SiTime is the exception at 72.0x trailing and 38.8x forward, only 16.5% below its high after a 232% year. Qualcomm, at 18.5x trailing and 15.3x forward earnings with a 6.1% free-cash-flow yield, is the cheapest — on shrinking earnings.

Two outside forces sit under all of it. Morgan Stanley now projects hyperscaler capital spending near $800bn in 2026 and $1.2 trillion in 2027. And the Federal Communications Commission (FCC) is drafting a ban on new Chinese optical transceiver models for AI data centers, aimed at suppliers that hold over 60% of the 800G-and-above market — though Western replacements would need 12 to 24 months to scale and still depend on Chinese indium phosphide for the lasers inside.

The setup

Where it stands — Five of the seven guided the September quarter higher on data-center optics; only Qualcomm and Semtech reported falling operating income. Would confirm — MACOM's October-quarter revenue lands inside its $415-425m guidance with gross margin at 60% or better. Would invalidate — Applied Optoelectronics prints below the $255m low end of guidance, or MACOM's book-to-bill falls under 1.0. Watch next — MACOM reports fiscal fourth-quarter results in early November; the FCC aims to publish its draft transceiver rule before end-2026. Valuation — MACOM 38.0x trailing and 35.0x forward price-to-gross-profit, against 40.4x in May; SiTime 72.0x and 38.8x.

The chipmakers that supply power switches, sensors and microcontrollers to carmakers and factory-automation customers spent July falling. The trigger came from a different aisle of the industry. A reduced earnings forecast from the memory maker SK Hynix and a broad reassessment of artificial-intelligence spending produced the worst month for semiconductor shares in more than a decade, and analog chipmakers went down with everything else.

What makes that awkward is the direction of the underlying squeeze. Memory manufacturers have shifted more than 80% of advanced capacity toward high-bandwidth and server memory, and the resulting scarcity has spread into analog and power chips and long-life automotive parts. For most of this group, tight capacity has meant longer lead times, firmer prices and rising utilization.

The order books

Microchip Technology, which sells microcontrollers and analog parts into cars, factories and aerospace from Chandler, Arizona, reported June-quarter revenue of $1.485bn, up 38% from a year earlier. Gross margin recovered to 63.2% from 53.6%. Management said bookings were the strongest in about four years, that distributor inventory had normalized to 25 days — the low end of its historical range — and that its mid-August price increases were "one and done," recovering roughly six months of absorbed foundry and packaging cost inflation rather than starting a cadence. It guided the September quarter up 8% sequentially.

NXP Semiconductors, the Dutch maker of automotive and industrial processors and connectivity chips, grew revenue 19.5% to $3.50bn, with operating margin at 30.6% against 23.5% a year earlier. Its industrial and internet-of-things segment grew 38%, to $755m. Management told investors that orders exceed shipments, that backlog signals now extend 18 months out, and that it sees no evidence of customers pulling forward inventory. Pricing was described as neutral — increases taken only to offset packaging and precious-metal costs.

Onsemi, the Phoenix supplier of power switching, silicon carbide and image sensors, lifted factory utilization to 83% from 77% in a single quarter and extended lead times to 32 weeks from 27. Channel inventory fell to 10.1 weeks.

Texas Instruments, the largest of the group, grew revenue 22.8% to $5.46bn, with industrial up 30% and data-center revenue doubling. Its lead times remain under 13 weeks while it points to competitors quoting 52 — which it frames as a chance to take share. STMicroelectronics guided third-quarter revenue to $3.70bn with gross margin improving to 37%, on industrial revenue up 34%. Diodes, a maker of discrete and power components, guided to roughly 30% year-over-year growth. Monolithic Power, which sells power-management chips into AI servers, grew 47.6% and raised its full-year floor for enterprise-data growth to 130% from 85%.

What the trend measures are actually describing

Eleven of the fourteen set their 52-week highs between 26 May and 22 June — one synchronized peak, not staggered single-name breaks. Every member then bottomed between 14 July and 5 August, and twelve of the fourteen have risen since the start of August. The moving-average signals that turned negative for Microchip, NXP and onsemi in the week to 14 August are lagging arithmetic catching up with July. Microchip's flipped on 11 August — four sessions after the shares jumped about 14% in a day on earnings, and its 17 August close was still above the pre-earnings level.

Where price and business disagree

NXP is the widest gap. Down about 20% over three months, it trades at 15.4x forward earnings against 19.8x trailing, on 4.1x forward sales, with a trailing free-cash-flow yield of 5.0% — the cheapest large company here on both earnings and cash, on record revenue.

Microchip sits at 25.1x forward earnings; its trailing multiple above 100x reflects trough profits and means little. Consensus has fiscal 2027 revenue of $6.22bn, up 33%, with earnings per share of $3.19 against $1.57 — estimates rising, not being cut. Onsemi's discount is partly self-inflicted: its 25 June agreement to buy Synaptics for about $7bn in stock, its largest deal ever, lands within days of its high. It trades at 26.1x forward earnings against 52.8x trailing.

The other side is valuation. Monolithic Power is the most expensive name on every lens — 52.1x forward earnings, 30.6x forward gross profit and a free-cash-flow yield below 1% — so its decline is compression from a very high base rather than a verdict on demand. Texas Instruments at 33.4x forward earnings and 11.8x forward sales, and Analog Devices at 31.5x forward, are in the same category. Analog Devices, which grew 37% last quarter, reports on 19 August.

One name is genuinely deteriorating. Cirrus Logic, the Austin designer of audio and power chips for smartphones and PCs, is the only member still making new lows. Its June quarter was a record $459.7m, up 12.9%, but on 5 August it lowered its PC expectations, citing constrained supply of a key platform and memory and component shortages pressuring customer pricing. Consensus fiscal 2027 earnings of $8.43 a share are 7% below fiscal 2026, and its forward multiple of 14.2x has caught up with its trailing one.

The RF rally that isn't

Qorvo and Skyworks, the radio-frequency chipmakers merging under an October 2025 agreement of 0.960 Skyworks shares plus $32.50 in cash per Qorvo share, look like leadership rotating toward consumer chips. The math says otherwise: at Skyworks' 17 August close of $69.68, the terms imply $99.39 for Qorvo, against its actual close of $98.20. Qorvo tracks its acquirer. And Skyworks is the one business here that is shrinking — July-quarter revenue fell 3.1%, a third consecutive decline, with operating income down 56%; consensus has fiscal 2027 earnings per share falling again. Silicon Labs is not a trend reading either: it sits about 5% below the $231 a share Texas Instruments agreed to pay in cash in February, which is why it is flat over both 30 and 90 days.

The setup

Where it stands — Analog order books are accelerating while shares sit below June highs; the bearish trend flags describe July, not August. Would confirm — Analog Devices' 19 August quarter showing sequential revenue growth with gross margin above 67%. Would invalidate — Distributor inventory days rebuilding above 30 at Microchip, or book-to-bill slipping below 1 at NXP. Watch next — Analog Devices reports fiscal third-quarter results before the open on 19 August 2026. Valuation — NXP at 15.4x forward earnings against 19.8x trailing; Monolithic Power at 52.1x forward against 86.3x trailing.

The pricing turn nobody in the public market got to own

For four years Atkore sold steel and plastic conduit into a falling price list. The company — which makes electrical conduit, armored cable, metal framing and cable-management systems sold through contractors under brands including Allied Tube & Conduit, AFC Cable Systems and Unistrut — watched annual revenue slide from $3.914bn in fiscal 2022 to $2.850bn in fiscal 2025. Operating margin went from 31.6% to 8.3% over that stretch. Last fiscal year it lost $15.2m.

Then, on 2 August, Atkore reported fiscal third-quarter sales of $794.8m, up 8.1%. The composition mattered more than the total: $65.7m of the increase came from volume and $22.4m from higher average selling prices. That is the first quarter in this cycle where price added rather than subtracted. Gross margin recovered sequentially to 22.18% from 18.61%, though it remains barely half the 40.98% of fiscal 2022.

The following day, Prysmian agreed to buy the company for $95.00 a share in cash, an enterprise value of roughly $3.8bn and a 30% premium to the prior close. The Italian cablemaker, the world's largest, framed the purchase as a bet on electrification and AI-driven infrastructure, funding it about 60% with debt and expecting $150m of annual run-rate synergies within three years. The deal requires Atkore shareholder approval and antitrust clearance, with closing targeted for year-end.

Atkore's shares gained 28.2% on 3 August on 8.9m shares, against a normal day of 175,000 to 520,000. They have since traded in a narrow range of $93.53 to $94.08, closing at $93.81 — 1.3% below the cash price. That is merger arithmetic, not exposure to data-center demand.

Three sessions, not a trend

The same is broadly true of the group. Over the month, AMETEK rose 7.9%, Atkore 27.8% and Preformed Line Products 45.3%. Remove each name's two best days and the average turns into a 3.4% decline. Preformed Line's two largest sessions were its record second-quarter release on 30 July and, on 4 August, an upgrade from Freedom Broker with a $480 price target. The shares closed at $475.83 — essentially at that target. AMETEK's 4.2% earnings-day gain is the only move in the group produced by operations.

The one order book

AMETEK, a $58.3bn maker of electronic instruments and electromechanical devices, is where the demand story is documented. Second-quarter orders were a record $2.3bn, up 25% organically, with a book-to-bill of 1.12 and record backlog of $4.11bn, up 21%. Revenue grew 15.0% to $2.044bn, the fourth straight quarterly acceleration. Management raised full-year earnings guidance to $8.20-$8.30 from $7.94-$8.14 and sized the data-center and artificial-intelligence ecosystem — including semiconductors and power infrastructure — at roughly half the business, with Zygo optical metrology and RTDS power-grid simulators named as the vehicles. Direct hyperscaler sales are much smaller.

What the price already assumes is the other half. AMETEK trades at 36.99x trailing and 30.62x forward earnings, 24.8x trailing EBITDA, on a 3.13% free cash flow yield. Consensus has earnings growing 12.7% this year. Its shares are up 41% over twelve months, so roughly three-quarters of that return came from a higher multiple rather than higher profit.

A small-cap on two good quarters

Preformed Line Products, a $2.32bn maker of formed-wire fittings, pole-line hardware, dampers and protective closures that hold up overhead power and fiber lines, delivered record second-quarter sales of $212.7m, up 25%, with US sales up 32% and gross margin of 34.3%, 160 basis points better than a year earlier. Operating income rose 62.9%. Two qualifiers sit under the headline: part of the growth came from currency and the May acquisition of Brazil's Delta Star, and a buyback of 556,316 shares for $64.95m retired 11.3% of the share count, mechanically lifting per-share results. The recovery is two quarters old: 2024 net income fell 41.4%, and 2025 fell again. The stock carries 53.31x trailing earnings and a 1.48% free cash flow yield, and one analyst covers it, with a $9.75 full-year estimate already passed by $6.63 of first-half actuals.

What the end markets say

The backdrop splits along the same line as the businesses. US investor-owned utilities are forecast to spend about $1.295trn on capital projects over 2026-30, roughly 42% of it on transmission and distribution — Preformed Line's exact market. Atkore's core is heading the other way: private non-residential construction excluding data centers fell 7.9% year over year in June, and manufacturing construction is down about 15% as chip and battery megaprojects wind down. Data-center construction is up 46% year over year but remains too small to offset the rest. Prysmian is buying the pricing turn before that arithmetic resolves.

The setup

Where it stands — One takeout, one upgrade and one earnings beat produced a month that looks like a sector move. Would confirm — AMETEK organic orders keeping book-to-bill above 1.0 in the September quarter. Would invalidate — Atkore's pricing contribution turning negative again, or the Prysmian deal failing antitrust review. Watch next — Atkore's shareholder vote and Hart-Scott-Rodino expiry, with closing targeted for year-end 2026. Valuation — AMETEK at 36.99x trailing and 30.62x forward earnings, against 12.7% expected earnings growth.

For two years the makers of unglamorous silicon — the microcontroller inside a washing machine, the power switch in an electric-vehicle inverter, the converter that turns a sensor's voltage into a number a computer can read — had one problem. Customers had over-ordered during the pandemic and spent eight quarters working the parts off. In earnings calls over the past three weeks, one company after another described the opposite condition.

The glut is over

Microchip Technology, which sells 8- to 32-bit microcontrollers, programmable logic and analog parts into factories, cars and defense programs, told investors on 6 August that orders were running well above shipments and that this was its strongest booking quarter in roughly four years. Inventory held by its distributors has fallen to 25 days, the low end of its historical range, with sell-through up 17% from the prior quarter. Revenue reached $1.485bn, up 38% year on year from a June 2025 quarter in which the company lost money. September revenue is guided up about 41%, at a gross margin of 66-67% — above Microchip's own 65% long-run model.

onsemi, which supplies power switches, silicon-carbide modules and image sensors to electric vehicles and industrial power systems, ran its factories at 83% utilization last quarter, six percentage points higher than the quarter before. Lead times stretched from 27 weeks to 32. Channel inventory fell to 10.1 weeks. The company has now launched a second round of price increases and expects input costs to keep rising into 2027. Microchip pushed through what it called "one and done" increases in mid-August, citing scarce foundry, assembly and substrate capacity; NXP warned of a memory-component shortage and possible foundry wafer access fee increases. This is the vocabulary of a shortage, not a correction.

Analog Devices, whose data converters and amplifiers sit in industrial instruments, cars and aerospace systems, grew revenue 37.2% to $3.62bn in the quarter ended 2 May, with operating income more than doubling. Its gross margin has improved for five straight quarters, reaching 67.3% against a 59.0% trough in early 2025. BNP Paribas notes that ADI reported record orders with lean customer inventories and guided industrial up more than 20% sequentially, part of a broader restocking cycle that is not solely about AI.

NXP Semiconductors, the Dutch maker of automotive microcontrollers, radar and secure connectivity chips, grew 19.5% to $3.50bn with gross margin at 57.3% against 53.4% a year earlier. Management said orders exceed shipments and are climbing, that backlog signals now extend 18 months out, and — pointedly — that it sees no evidence of restocking. Its industrial and internet-of-things segment grew 38% to $755m, its fastest end market.

The AI content is not where you'd guess

Monolithic Power Systems, which designs dense DC-DC power chips with only 4,501 employees, posted a record $980.6m, up 47.6%, as enterprise data revenue jumped 45% sequentially; it raised the floor on that business's full-year growth from 85% to 130%. Lattice Semiconductor, a maker of low-power programmable chips, hit a record $201.1m at a 70.3% gross margin and says 2027 is "pretty much booked."

But the AI money is spread wider than those two. Microchip projects roughly $1bn of data-center sales this fiscal year, up 69%. NXP guides its data-center line above $500m from about $200m in 2025. onsemi expects its AI data-center revenue to more than double. The AI names are not carrying a dead industrial base; both are growing at once.

The hole is automotive

onsemi's automotive revenue of $781m grew 7% year on year and fell 2% sequentially, with industrial up just 4% — and the company said it deliberately prioritized AI data-center shipments over auto and industrial because capacity is tight. Monolithic expects only mid-teens automotive growth for the year, with the first half flat.

indie Semiconductor, a sub-$1bn designer of automotive radar and vision chips, grew 24% to $64.0m but runs an operating margin of -54.8%, with gross margin down to 36.1% from 40.6%. It has a $25m initial production order for 77 GHz radar through a Tier 1 partner and a Volvo win that chief executive Donald McClymont declined to size. Cash fell $35.7m in the quarter to $149m.

The two that actually shrank

Skyworks Solutions, which makes radio front-end modules for smartphones, saw revenue fall 3.1% to $934.8m and operating income drop 56%. Apple is now 57% of its revenue, down from 63%, after dual-sourcing a premier radio socket on the iPhone 17 cost Skyworks 20-25% of that content. Qorvo's revenue fell 4.2% to $784.8m, though gross margin expanded to 51.1% from 40.5%. The two are merging in a roughly $9.76bn all-stock deal closing in early 2027; together they already supply about 40% of Apple's front-end content.

What the price says

Over the past three months the nine are down about 2% equal-weighted while the S&P 500 gained 5.8%. NXP fell 19.8%, onsemi 19.7% and Microchip 12.2%. This is analog-specific, not a chip selloff: Nvidia rose 2.0% over the same span while Texas Instruments fell 6.0% and STMicroelectronics 7.0%. The group's cheerful-looking 30-day gain is a handful of sessions — strip each name's two best days and seven of the nine turn negative, indie from +28.6% to -8.1%. The only two survivors are Skyworks and Qorvo, and their gains are merger arithmetic.

Against the multiples these companies carried in May, every one that can be anchored has de-rated while its gross profit accelerated: ADI from 27.5x gross profit to 23.1x, Monolithic 49.8x to 38.5x, Microchip 20.1x to 14.1x, onsemi 16.9x to 14.0x. NXP is the extreme case at 15.4x forward earnings, 7.4x forward gross profit and a 5.0% free-cash-flow yield, closing at $235.95 against a one-year average of $238.30 — average price, record revenue. It fell 7.0% on 29 July and another 6.5% on 31 July after beating estimates, the second leg alongside a Financial Times report that it was in talks to buy edge-AI chipmaker Ambarella for more than $3bn.

The caveats are specific. Microchip carries $5.2bn of net debt at 2.85x EBITDA and has ruled out buybacks. Lattice, at 62.3x forward earnings, needs consensus revenue growth of 76.6% next year to land. Skyworks' forward gross-profit multiple sits above its trailing one — the signature of an expected decline.

The setup

Where it stands — Bookings, lead times and pricing all say the analog shortage has returned, while three-month share prices say otherwise.

Would confirm — onsemi's automotive revenue growing sequentially in the September quarter after this quarter's 2% decline.

Would invalidate — Book-to-bill falling back below 1.0 at NXP or Microchip, or distributor inventory rising above 25 days.

Watch next — onsemi's analyst day in New York on 16 September; Microchip's September-quarter print against $1.603bn guidance.

Valuation — NXP at 19.8x trailing and 15.4x forward earnings; Lattice at 62.3x forward, the group's high end.

Taboola, an Israeli company whose software places "recommended for you" story links and ad units at the bottom of newspaper and magazine web pages, told investors on 5 August that it was lifting its full-year targets. The shares fell 26.7% in that session, from $5.29 to $3.875.

The complaint was the top line. Reported revenue grew 2.4% year over year to $476.8m, a sharp deceleration from 9.1% in the prior quarter and 14.7% a year earlier. That figure is the least informative number Taboola publishes, because most of it is passed straight back to the publishers who host its widgets. On the measure management runs the business by — gross profit after traffic-acquisition costs, or ex-TAC — the quarter grew 12% to $192.4m. Adjusted earnings before interest, taxes, depreciation and amortization were $55.5m.

What actually broke

One product. Google deprecated "Explore More," a feature that monetized the moment a searcher hit the back button, and Taboola put the cost at more than $20m of ex-TAC gross profit in the second half of 2026. Two further items were one-off: a $12m non-cash write-down on prepayments to publishers, which is what pushed reported gross margin down to 29.3% from 33.6% two quarters earlier, and roughly $7.5m of currency headwind to EBITDA. Management also culled low-quality international publishers, mostly in Greater China, deliberately shedding revenue that was converting badly for advertisers.

Against that, full-year guidance went up, not down: revenue of $1.93bn to $1.96bn, ex-TAC gross profit of $772m to $783m — about $7m higher at the midpoint — and an ex-TAC growth target lifted to 9%. Taboola also disclosed a competitive win at FOX News and an unnamed top-tier publisher expanding to full-page monetization, where display inventory is worth two to three times traditional native placements. Neither contributes before the fourth quarter.

The thing the price is arguing about

The bear case is not about one Google product. It is that the open web is being drained. Google referral traffic to publishers fell 38% year over year, click-through rates dropped 61% on queries showing AI Overviews, and AI-training crawlers reached 52% of crawler requests by June 2026, against 22% a year before. Fewer visits to publisher pages means fewer widgets loaded and fewer clicks billed.

Taboola's answer is that less than 5% of US pageviews on its network arrive from search, so the funnel being cut is not mainly its own. Its more interesting answer is DeeperDive, an answer engine it runs on publisher sites, now at roughly 10 million users with commanding five-to-ten-times CPM uplift over legacy placements. In June the company opened it as an advertising network for third-party chatbots and agents on a cost-per-click revenue share. Whether that works is unsettled. That it exists means the company is not a passive object of the disruption.

The stock now trades at 8.8x forward earnings against 9.4x trailing, 4.4x trailing EV/EBITDA and an 18.9% trailing free-cash-flow yield. Taboola bought back 9.4m shares at an average $4.42 in the quarter and has retired roughly a fifth of its share count since early 2025, with $114m of authorization left and $61.1m of net cash.

Three companies filed under the same heading

Shutterstock, which licenses stock images and footage, is the only name here whose business is genuinely contracting: second-quarter revenue fell 16.9% to $221.8m, and consensus has revenue down 23.3% this year and a further 8.0% next. Its collapse is also dateable — Getty Images walked away from a $3.7bn merger in July, and the quarter carried a $163.4m goodwill write-off tied to the break. Notably, Getty's own revenue fell just 2.5%, with editorial up 9.2%, which suggests image licensing is eroding far more slowly than Shutterstock's number implies.

Opera, the Norwegian browser maker that sells search-query revenue and ads, grew revenue 23.2% to $175.8m in its last report with operating margin widening to 17.3%, and raised full-year guidance to $727m-$740m. It trades at 16.8x forward earnings and reports second-quarter results on 19 August. Genius Sports, which collects and distributes live sports data and betting feeds under league contracts, grew revenue 64.7% to $195.5m and lifted gross margin to 32.6% from 7.5%; it signed data and integrity deals with the prediction markets Polymarket and Kalshi in early August and rose over 23% in a month.

The average of the four is down about 8% over thirty days. Inside it, Shutterstock is down 28.8% and Taboola 27.6%, while Opera is up 1.7% and Genius up 23.4%. Strip Taboola's two worst sessions and its month is positive.

The setup

Where it stands — Taboola raised full-year ex-TAC guidance and lost a quarter of its value the same day, on one dateable Google product deprecation. Would confirm — Fourth-quarter ex-TAC gross profit growth holding near the 9% full-year target as FOX News and full-page monetization begin contributing. Would invalidate — Ex-TAC gross profit growth falling below mid-single digits, or full-year guidance being cut back toward $772m. Watch next — Opera reports second-quarter results on 19 August; Taboola's third-quarter print follows in November. Valuation — 8.8x forward earnings against 9.4x trailing, 4.4x EV/EBITDA, 18.9% trailing free-cash-flow yield.

Between 29 July and 6 August, four American companies that supply the equipment behind automated factories and warehouses reported quarterly results. All four beat consensus. Three of the four raised full-year guidance. And three of the four fell on the day they reported.

The one that rose sells almost no robots.

The year belongs to chip test

Teradyne builds the automated test systems chipmakers use to check microchips at the wafer and packaged-device stage; it also owns Universal Robots and Mobile Industrial Robots, which make collaborative arms and warehouse carts. Second-quarter revenue was $1.329bn, up 103.9% from a year earlier. Operating margin reached 32.9%, against 13.9% a year ago.

Almost none of that is robotics. Semiconductor test alone cleared $1.0bn for a second straight quarter, up 128%, with compute — chips for artificial-intelligence accelerators, central processors and networking — at 70% of system-on-chip revenue and growing nearly 600%. Teradyne shipped its first merchant graphics-processor order and completed correlation at a second hyperscale customer. Memory test hit a record $212m on high-bandwidth memory demand, with book-to-bill above 2x. The Robotics segment grew 33%, to $100m — about 7.5% of the quarter.

The stock's 35% month was not a robotics move either. Over the same thirty days FormFactor rose 31%, Onto Innovation 25% and Cohu 23%. Teradyne's mid-August leg followed the beat plus a new $1bn revolving credit line. At 60.5x trailing and 48.1x forward earnings, the multiple is actually lower than the 66x this desk recorded in May, even as market value rose 24% to $69.3bn. Consensus has earnings per share up 159% this year and then growth halving to 28% next year — that is the deceleration the forward multiple is being paid against.

The names that actually deploy robots

Rockwell Automation, the largest pure-play industrial-automation vendor, sells drives, sensing hardware and the Logix control software that factories standardize on. Fiscal third-quarter revenue was $2.313bn, up 10% organically. Gross margin was 49.5%, against 40.9% a year earlier. E-commerce and warehouse-automation orders grew 30%, automotive returned to double digits, and Software & Control grew 18% organically. Management raised full-year organic growth guidance by 150 basis points and lifted the earnings midpoint to $13.15.

The shares fell about 7% on the day. The reaction was read as profit-taking after a 24% run into the print, with a 12% reported decline in the Lifecycle Services consulting arm and questions about margin durability. Yet organic growth was still 8% excluding anything data-center-related, and management was explicit that there is no broad capital-spending recovery underneath. Rockwell now trades at 41.6x trailing and 33.7x forward earnings, and 10.0x forward gross profit — cheaper on both than in May, and the cheapest in this group.

Cognex sells image-based sensors, barcode readers and vision software into electronics, automotive, packaging and logistics lines. Revenue of $291.3m grew 17%, an eighth consecutive quarter of growth, with operating margin of 29.4% against 17.4%. It raised full-year revenue to $1.13–1.15bn and lifted its semiconductor, electronics and packaging outlooks to double digits; automotive stayed flat on European weakness. It also made its OneVision artificial-intelligence platform generally available. The stock fell about 5%. Its earnings multiple has de-rated from 79x to 63.4x trailing, 44.5x forward, though price-to-gross-profit crept higher. Notably, Zebra Technologies — its closest competitor in machine vision — rose 40% over the past month against Cognex's 4%.

Symbotic installs complete robotic warehouse systems, overwhelmingly for Walmart. Revenue grew 22% to $720.8m, gross margin widened to 22.3% from 18.2%, and adjusted earnings before interest, taxes, depreciation and amortization roughly doubled to $95m. The stock lost 16%. Contracted backlog was flat at $22.5bn, with only about 15% converting within twelve months, and the 400-store back-of-store conversion slipped to early 2028 — and is not in backlog. Price-to-gross-profit collapsed from 72.8x in May to 47.6x. Consensus for fiscal 2028 sits below fiscal 2027.

What the shares did

The group's 9.6% month is not a trend; it is a handful of sessions. Thirteen of roughly eighty-four trading days moved more than 5%. Strip each name's two best days and the month turns negative, at −5.5%, with every member failing. Three of the four had their 50-day average cross back below the trend that had supported them since spring; Symbotic's has been below its 200-day since 21 May. The macro backdrop, meanwhile, improved: the July manufacturing index from the Institute for Supply Management read 55.6%, its highest since May 2022, with new orders expanding a seventh straight month.

The setup

Where it stands — All four businesses accelerated last quarter; the three that sell robots de-rated while the chip-test name absorbed the group's gains.

Would confirm — Rockwell's fiscal fourth-quarter organic growth printing inside its raised 7.5–9.5% guide with warehouse orders still up double digits.

Would invalidate — Symbotic's backlog falling below $22.5bn, or Rockwell's Lifecycle Services decline spreading to Intelligent Devices.

Watch next — Rockwell's fiscal fourth quarter, due early November; Symbotic's fiscal year-end report and any dated SymMicro schedule.

Valuation — Rockwell 41.6x trailing / 33.7x forward earnings, against 45.3x in May; Teradyne 60.5x / 48.1x, against 66x.

Corning told investors on 28 July that it expects the world to buy mid-teens percent fewer smartphones in 2026. The reason it gave was not design fatigue or tariffs. It was the price of memory: artificial-intelligence data centers are bidding DRAM and NAND chips away from consumer devices, phone makers are absorbing the cost, and fewer handsets get built.

That single sentence is the story of the three companies that turn glass and light into components. Corning draws optical fiber and cable and makes the glass substrates beneath phone and television screens. Universal Display licenses the patents and sells the phosphorescent emitter chemicals that make an OLED panel glow. LightPath Technologies molds infrared lenses and builds camera assemblies, mostly for defense customers. The AI build-out pays the first, taxes the second, and has nothing to do with the third.

The company on both sides

Corning's June quarter grew revenue 16.6% to $4.51bn, with operating income up 21.8% — real leverage. Optical Communications sales rose 32% to $2.07bn, and inside it the enterprise line, which sells into hyperscaler campuses, rose 65% to $1.27bn as AI data-center sales nearly doubled. Management says optical content per graphics processor should rise 1.3x to 1.5x by 2028, and that the scale-up interconnect inside a server rack is today entirely copper — if optics wins any of it, fiber per processor could rise roughly tenfold.

Glass Innovations, the display and cover-glass half, grew 1% to $1.46bn. Its customers are the phone makers being squeezed.

The shares did not reward any of this. Corning beat and raised, and fell as much as 20% on the day, its worst since 2002, because guidance landed marginally under consensus. From a peak close of $255.69 on 29 June the stock halved to $124.05 by 29 July. At $169.49 it has recovered much of that but remains 33.7% below the peak and down 5.1% over three months. Against consensus 2026 earnings of $3.27 a share, that is about 51.9x — versus 78x at the June high and 38x at the July low. The rebound has already closed roughly 70% of the dislocation, and returned the multiple to the level the same investors were calling expensive in May.

Paid by the gram, in a shrinking market

Universal Display is the cleanest read on the tax. Its revenue fell 11.4% to $152.2m in the June quarter, after a 14.5% decline in the March quarter. Material sales — the per-gram line — dropped 26% to $66m, with green emitters at $51m from $64m. Royalty and license fees rose 6.6% to $81m, but roughly $10m of that was catch-up adjustment. Operating margin compressed to 35.3% from 39.9%, and full-year revenue was guided to the low end of a $630-670m range.

Management was explicit that pricing is intact — five-year contracts hold selling prices — and that the shortfall is volume, caused by memory-inflated phone prices. Outside forecasters agree on direction: smartphone OLED panel shipments are expected to fall 3% this year with the overall market flat, and AMOLED panel prices are seen falling more than 20% in the second half.

The stock has fallen 38.8% in twelve months and has traded below both its 50- and 200-day averages since mid-May. It now sits at 20.6x forward earnings against 36x at its twelve-month high, 8.3x forward gross profit, 2.4x book and a 4.3% free-cash-flow yield, with $855m of cash against a $3.98bn market value. Consensus has revenue falling 2.7% this year, then rising 7.4% in 2027 as Generation 8.6 OLED fabs at Samsung Display and BOE reach full-year utilization.

A defense order, not a quarter

LightPath is the outlier, and not part of the display economy at all. It has not reported since 7 May, so nothing financial explains its 49% gain over the past month. What happened instead was an $11m follow-on order on 20 July for infrared camera systems used against drones, including a switch from scarce germanium optics to the company's proprietary BlackDiamond glass.

The underlying business is genuinely inflecting: March-quarter revenue rose 108.9% to $19.15m, gross margin reached 36.3% from 29.1%, the operating loss narrowed to -$0.9m from -$3.3m, and backlog hit a record $110.6m, up 196% since the fiscal year began. It is also still lossmaking — a -$14.9m net loss in fiscal 2025 — and consensus does not show profit until fiscal 2027, at three cents a share. At a $929m market value, roughly 4.7 times what the equity was worth a year ago, the usable measure is price-to-gross-profit: about 27.5x forward.

What the month actually was

The three averaged a 22.1% gain over thirty days, which describes none of them: LightPath rose 49.1%, Corning 10.7%, Universal Display 6.6%. Remove each name's two best sessions and the group turns into a 2.1% decline, with only LightPath still positive. All three now trade with their 50-day average below their 200-day — Universal Display since 14 May, LightPath since 30 July, Corning since 14 August.

The setup

Where it stands — AI capex is lifting Corning's fiber business and, through memory prices, suppressing the phone volumes that Corning's glass and Universal Display's emitters depend on. Would confirm — Universal Display's September-quarter material sales fall again year on year while Corning's enterprise optical line holds growth above 50%. Would invalidate — Universal Display raises 2026 revenue back toward the $670m top end, or handset unit forecasts stop falling. Watch next — Corning's third-quarter print against guidance of $4.9-5.0bn sales and $0.85-0.89 core earnings per share. Valuation — Corning ~51.9x forward earnings versus 38x at its July low; Universal Display 20.6x forward against 36x at its twelve-month high.