Stock Market Update

[BRIEFING.COM] The major averages are maintaining their early gains at midday.

On the earnings front, Cerebras Systems (CBRS 186.41, -40.31, -17.78%) is under pressure, sinking to post-IPO lows, even after reporting Q1 revenue above expectations and highlighting a multi-year OpenAI agreement valued at more than $20 billion, suggesting investors are focusing less on demand validation and more on profitability, execution, and valuation in the company's first earnings report since its blockbuster IPO on May 14. The company posted Q1 revenue of $193.4 million versus the $181.2 million FactSet consensus, with core revenue up 92% year-over-year to $191.3 million, but the growth outlook came with a notable margin reset as Q2 core gross margin is expected to fall to 36-38% from 47% in Q1 and FY26 core gross margin is seen at 38-41%, a compression that, combined with a stock trading at 62x sales, is likely driving the sell-the-news reaction.

Elsewhere, FedEx (FDX 314.47, -2.77, -0.87%) is trading modestly lower despite reporting big EPS upside and more moderate revenue upside with its Q4 (May) earnings report last night. This was a milestone report for FedEx because its FedEx Freight (FDXF 164.82, -1.65, -0.99%) segment was spun off on June 1, so we now get to see FedEx on a standalone basis. Another housekeeping matter that was previously announced is that FedEx is changing its fiscal year end from May 31 to December 31, so it will match the calendar year going forward. This started June 1, and may create some confusion in terms of comparisons to consensus estimates in the coming quarters. Just something to be aware of. In terms of guidance, FedEx expects calendar year 2026 adjusted EPS from continuing operations to be $16.90-18.10. Its revenue outlook for CY 2026 is for 11% growth on top of a CY 2025 revenue baseline of approximately $82 billion.