Breakfast News: Apple’s Record Quarter Has a Catch

1. Ternus Debuts With a Record Apple Quarter

John Ternus hosted his first earnings call as Apple’s (AAPL -1.83%) chief executive officer on Monday, and he brought a record quarter with him. Revenue climbed 12% to $114.5 billion in the fourth quarter of fiscal year 2026, Apple’s best September quarter ever. iPhone sales rose 17%, and Mac sales jumped 24% despite tight supply. Shares still slid almost 3% pre-market as the talk turned to memory chips.

• Memory costs are hurting margins: Apple expects December-quarter revenue to grow 7% to 10%, which would be the biggest quarter in its history. Gross margin, however, could fall to 45.5% at the midpoint from 47.9% sequentially. Apple has already “reluctantly” raised prices on iPhones, Macs, and iPads. Ternus called memory pricing “unprecedented” and expects it to keep climbing past December.
• Shortages may impact quarters, not years: The new iPhone Duo is in short supply, and management can’t say when that will change. The real question is whether higher prices stick without denting sales, and Apple says it’s too early to tell. It is heading into the holiday season with the Duo and other launches, but parts are getting pricier. These are industrywide shortages, and they only shift the timing of Apple’s sales and squeeze near-term margins more than the long-term story.

2. Election Day is Not a Trading Signal

The S&P 500 rose in the 12 months after 32 of the last 38 midterm elections. Total return, which counts dividends, averaged 14%, versus 11% for any 12-month period. That comes from our study of every midterm since 1874. Today’s election is a weak reason to reposition a portfolio.

• Seat losses didn’t set the return: Neither the seats the president’s party lost nor which party ran Washington afterward was closely tied to the next year’s return. Divided government averaged 16% versus 12% for unified government, but the samples are small. The worst years, including 1906 ahead of the Panic of 1907 and 1930 in the Great Depression, had other causes.
• The month after is quiet: The S&P 500 averaged just 0.5% in the month after a midterm and rose only 55% of the time. Gains came later, averaging 10% over six months. 2026 brings artificial intelligence (AI) spending worries, high valuations, and a possible Fed rate hike. The averages don’t guarantee anything. What the businesses you own earn will matter far more than who won, so leave portfolio decisions for a calmer day.

3. Palantir Falls, BBB Foods Jumps, and Vertex Shrugs on Earnings

Three of our recommendations reported overnight, drawing different reactions.

• Palantir (PLTR -3.13%)beat on revenue and earnings and raised guidance, yet fell 3% after hours. Total contract value bookings for the data analytics and AI software company rose only 6% year over year to $2.9 billion versus 49% in Q2. The slowdown came mostly in U.S. commercial contracts, raising concerns over decelerating revenue growth for this Team Hidden Gems and Team Rule Breakers recommendation.
• BBB Foods (TBBB +0.65%)swung to a profit, helping push the stock up over 6% before the opening bell. It runs Tiendas 3B, a fast-growing chain of hard-discount grocery stores in Mexico. Net profit was 23.3 million pesos versus a 1.42 billion peso loss a year earlier. Same-store sales, or sales at stores open at least a year, rose 20.5%. The stock is beating the S&P 500 by 90% since the July 2025 Rule Breakers recommendation.
• Vertex Pharmaceuticals’ (VRTX -1.02%) 0.5% pre-market gain looks like a shrug ata quarter that landed close to expectations. The biotech is best known for its cystic fibrosis drugs and is expanding into pain, sickle cell disease, and kidney treatments. Revenue for the Team Rule Breakers and Team Hidden Gems recommendation rose 12% to $3.4 billion. Management raised full-year guidance to $13.2 billion at the midpoint. GAAP profit fell on about $500 million of Crinetics-related costs.

4. AMD, Toast, and Datadog Each Face a Question Beyond the Beat

Three recommendations enter the earnings spotlight over the next 24 hours:

• Advanced Micro Devices (AMD -7.52%) reports after the close tonight. Management guided to revenue of about $13 billion, up roughly 41% year over year. Recommended by both Team Rule Breakers and Team Hidden Gems, the semiconductor giant has beaten revenue estimates for 15 straight quarters, so the fourth-quarter outlook may matter more.
• Toast (TOST +5.49%) also reports after the closing bell tonight. The Team Rule Breakers rec sells point-of-sale software and payments tools to restaurants. Investors will watch annualized recurring revenue, which rose 25% to $2.4 billion last quarter. The FTC and eight states sued Toast last week over hidden fees and hard-to-cancel subscriptions. Toast denied the allegations.
• Datadog (DDOG -8.15%) reports before the market opens tomorrow. It sells software that monitors applications and cloud infrastructure. Last earnings report, the stock dropped after the company revealed that its largest customer signed a nine-figure renewal but cut usage. Management says the cut is factored into guidance. For the Team Rule Breakers and Team Hidden Gems recommendation, the real test tomorrow will be whether growth across the rest of the business offsets the hit.

5. At Salesforce, the Only Constant is Change

Team Rule Breakers

When it comes to customer relationship management (CRM), Salesforce (CRM -1.30%) has long been in a class by itself. It should come as no surprise, then, that Rule Breakers has recommended it four times. All four recommendations are up. The first, in January 2009 at $6.76, has gained 3,288%, beating the market by 2,131 percentage points. The December 2011 recommendation is up 843%, beating the S&P 500 by 146 points. The two most recent, from 2018 and 2019, trail the S&P 500 (for now).

• Room to cross-sell: Braze (BRZE -0.17%) is the latest textbook example of the bolt-on acquisition strategy Salesforce has used so effectively to expand its offerings and drive its revenue higher. Former Rule Breakers recommendation Braze’s real-time business-to-consumer customer engagement platform reaches across mobile, websites, email, and messaging. It fills a gap in Salesforce’s otherwise robust marketing solutions. The combination represents a keen opportunity to cross-sell and up-sell across both customer bases.
• AI is already selling: Despite fears of an AI-related SaaS-pocalypse, Salesforce just delivered one of the best quarters in the company’s history. Salesforce has been leaning heavil

  Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.