Good Afternoon. The Middle East story moved from "kinetic" to "managed" in 24 hours. After Monday's barrage in the Strait of Hormuz and a missile attack on Fujairah. Earnings did most of the work today — Palantir delivered an 85% revenue jump and a raised full-year guide and still slipped on valuation, Pfizer beat and reaffirmed, PayPal beat but the Q2 guide stung. AMD reports after the close. A choppy but constructive Tuesday.

—Rosie, Wyatt, Evan & Conor

🔥 What’s Hot: 🔥

🥶 What’s Not: 🥶

1. Palantir Posts 85% Revenue Growth, Raises Guide — Stock Falls Anyway

The News: Palantir reported Q1 2026 revenue of $1.633 billion, up 85% year over year and well above the $1.532–$1.536 billion guide it gave in February. U.S. revenue grew 104% to $1.282 billion and U.S. commercial revenue surged 133% to $595 million. Adjusted EPS came in at $0.33 versus the $0.30 consensus, GAAP net income was $871 million for a 53% margin, and adjusted free cash flow reached $925 million. Palantir raised its FY 2026 revenue guide to roughly 71% growth and lifted U.S. commercial guidance to about 120% growth. Shares were down about 5% in Tuesday morning trading despite the beat.

Why It Matters: For investors, this is the cleanest demonstration so far that AI software revenue is real, accelerating, and concentrated in the U.S. enterprise stack — exactly the metric Michael Burry's "Anthropic is eating Palantir's lunch" critique attacked last month. The Rule of 40 score of 145 is among the highest ever reported by a public software company. The stock's negative reaction is purely a valuation argument at 67x sales, not a fundamentals argument. For consumers and policy-watchers, Palantir's commercial growth signals that AI agent deployments are now showing up in the operating accounts of the Fortune 500.

What to Watch: Whether the FY 2027 consensus moves up to $10.5 billion and whether the next downgrade waves get covered, which would set up a re-rate higher.

Source: Business Wire and Morningstar/MarketWatch

2. Hegseth Says U.S.-Iran Ceasefire Holds Despite Hormuz Fire Exchange

The News: Defense Secretary Pete Hegseth told reporters at the Pentagon Tuesday that the U.S.-Iran ceasefire remains in effect after Monday's exchange of fire in the Strait of Hormuz, in which two U.S. Navy destroyers escorted commercial ships through the strait while engaging Iranian missiles, drones and small boats. CENTCOM said it sank seven Iranian vessels; Tehran denied losses. Hegseth called Project Freedom "separate and distinct" from broader operations and said it is "fundamentally defensive, limited and temporary." Iran also fired 12 ballistic missiles, three cruise missiles and four drones at the UAE, the first such attack since the early-April ceasefire. Brent crude eased back under $113 and WTI gave back about 1.5% to roughly $103.50.

Why It Matters: For investors, the framing matters more than the firing. Hegseth's language tells the energy curve and the VIX that Washington wants to keep the operation contained, which is why both retraced today. For consumers, that is the difference between a one-week oil scare and a structural premium — the latter would have rolled into gasoline futures by Wednesday.

What to Watch: Whether Iran's foreign minister Abbas Araghchi commits to a Round 2 venue, and whether U.S. air assets actually withdraw or simply re-position to the Gulf.

Source: CNN and NPR

3. Pfizer Beats and Reaffirms — Non-COVID Business Grows 7%

The News: Pfizer reported Q1 2026 adjusted EPS of $0.75 on revenue of $14.5 billion, topping consensus of $0.71 and $13.84 billion. Excluding COVID-related products, the underlying business grew about 7% operationally, and the launched-and-acquired portfolio rose 22% to $3.1 billion. Adjusted gross margin came in near 76%. The company reaffirmed its full-year revenue guide of $59.5–$62.5 billion and adjusted EPS of $2.80–$3.00. It also closed the sale of its ViiV stake in Q2 for roughly $1.65 billion in net proceeds and made a final $2.6 billion TCJA repatriation payment in April.

Why It Matters: For investors, the question on Pfizer has been whether the post-COVID base could grow without further M&A, and a 7% organic operating revenue gain is the strongest read on that question in two years. The reaffirmed full-year EPS range covers the dividend at the bottom end. For consumers, the Vyndaqel and oncology momentum is the practical signal — those are the franchises absorbing capital that COVID vaccines used to fund.

What to Watch: The Seagen integration revenue line and any signal on tariffs hitting U.S. drug imports, which Pfizer flagged as a watch item on the call.

Source: MarketBeat

4. PayPal Beats Q1 but Q2 Guide Sends Shares Down 9%

The News: PayPal reported Q1 2026 adjusted EPS of $1.34 on revenue of $8.35 billion, topping consensus of $1.27 and $8.05 billion, with total payment volume up 11% at spot and 8% on a currency-neutral basis to $464 billion. Venmo and the enterprise payments unit each grew TPV in the mid-teens. New CEO Enrique Lores announced a reorganization around three lines of business — Checkout/PayPal, Consumer Financial Services/Venmo, and Payment Services/Crypto. Management guided Q2 to roughly low-single-digit revenue growth, transaction-margin dollars down 2–3%, and non-GAAP EPS down about 9% year over year. Shares fell about 9% on the day.

Why It Matters: For investors, the new CEO's first move is a credibility tax — a Q2 guide that bakes in negative operating leverage in exchange for accelerated investment in AI and Venmo. Even with a $6 billion buyback pace and reaffirmed FY 2026 guide, the market is repricing the timing of the turnaround by a quarter. For consumers, the Venmo and PayPal Checkout user base is still growing — monthly active accounts climbed to 225 million — but the take rate continues to compress about 4 basis points ex-FX.

What to Watch: Whether the Q3 guide steps back up sequentially. If not, the 2026 EPS range is at risk.

Source: MarketBeat

5. AMD Reports After the Bell — All Eyes on Data Center

The News: Advanced Micro Devices reports first-quarter 2026 results after Tuesday's close, with consensus calling for revenue near $9.84 billion (in line with AMD's own guide of $9.8 billion plus or minus $300 million) and adjusted EPS of about $1.30, implying revenue growth of roughly 32% year over year. Data center revenue is expected near $5.6 billion, up 52%, including roughly $100 million from MI308 sales to China. The stock rose about 3.8% to $354 midday Tuesday on a positive Morgan Stanley note and despite a fresh downgrade that Jim Cramer publicly disagreed with on CNBC.

Why It Matters: For investors, AMD has become the cleanest non-Nvidia AI accelerator read and the closest cross-check on the Palantir commercial-AI signal — if data center revenue clears $5.6 billion and MI350 demand commentary is tight, the entire semiconductor capital-equipment complex re-rates. For consumers, AMD's Ryzen X3D processor cycle is the gaming and high-end laptop story, and the Q2 guide will set the back-to-school price point.

What to Watch: The data center segment number, MI308 China dynamics, and any commentary on hyperscaler order timing into the back half.

Source: TheStreet

6. UAE Says Iran Launched 19 Missiles and Drones at Fujairah

The News: The United Arab Emirates' Ministry of Defense said its air defenses engaged 12 ballistic missiles, three cruise missiles and four drones launched from Iran late Monday — the first direct strike on Emirati territory since the early-April U.S.-Iran ceasefire. A drone strike on an oil port at Fujairah ignited a fire and injured three Indian nationals. Iran's Islamic Revolutionary Guard Corps later took responsibility on a Telegram channel. The UAE foreign ministry condemned the "unprovoked Iranian attacks." Brent crude rose to roughly $113.79 on the news Monday before easing today.

Why It Matters: For investors, this is the second-order escalation that energy markets had not priced — Iran extending the conflict to Gulf neighbors makes the freight and insurance components of Brent stickier than the headline price implies. For consumers, the UAE is the lowest-cost transshipment node in the Gulf; sustained drone risk on Fujairah moves a measurable amount of regional refining offline.

What to Watch: Whether Saudi Arabia or Oman make a public statement on collective Gulf air-defense, and whether Lloyd's of London raises the Hormuz war-risk premium beyond the current 0.5% of hull value.

Source: CBS News and Al Jazeera

7. Brent Crude Eases From Multiyear High to Just Under $113

The News: Brent crude futures slipped Tuesday to under $113 a barrel after closing Monday at $113.79 — the highest settlement since June 2022 — as Hegseth's "ceasefire holds" remarks took the immediate war premium back out of the curve. WTI eased to roughly $103.50 from $105.10 Monday. The 10-year Treasury yield, which jumped to a five-week high of 4.46% on the oil spike, retreated to around 4.42%. Even with today's pullback, Brent is still up about 5% on the week and roughly 89% year over year.

Why It Matters: For investors, the speed of the retracement matters as much as the direction — markets are signalling that they believe Hegseth, not the IRGC. That keeps energy-equity exposure tactical rather than strategic until either a real Project Freedom escort is hit, or the oil curve flattens further. For consumers, retail gasoline lags Brent by about 10–14 days, so a sustained move back below $110 keeps Memorial Day pump prices in the high $3 range rather than approaching $4.

What to Watch: Wednesday's EIA inventory report, OPEC+ commentary out of the joint ministerial monitoring committee meeting, and U.S. SPR drawdown decisions.

Source: WSJ and Trading Economics

8. Israel Quietly Joins U.S. Hormuz Coordination

The News: An Israeli source confirmed to CNN that Israel is now coordinating with the United States on rising tensions in the Strait of Hormuz, even as Defense Secretary Hegseth publicly insisted Project Freedom is "limited and temporary." The IRGC published a map Monday claiming a new "control area" stretching from Iran's Qeshm Island to Umm al-Quwain in the UAE and east toward the Gulf of Oman, language Western analysts read as an attempt to legitimize harassment of commercial shipping. President Trump declined to confirm whether the U.S.-Iran ceasefire remains formally intact, while warning that Iranian forces would be "blown off the face of the Earth" if they targeted American vessels.

Why It Matters: For investors, an Israeli operational role expands the conflict surface even if Project Freedom itself stays narrow. The geopolitical risk premium that has bled out of Treasuries and gold over the past month would re-enter quickly on any confirmed joint U.S.-Israel kinetic action. For consumers, a wider conflict footprint makes shipping insurance, not crude itself, the channel through which prices move.

What to Watch: Whether Israel publicly acknowledges naval or aerial deployment to the Gulf, and any statement out of the Pakistani and Omani back channels.

Source: CNN

Q: How do you count cows?

A: With a cowculator.

A durable structural advantage — such as network effects, switching costs, scale economies, intangible assets, or low-cost production — that allows a company to defend long-term returns on capital against competitors. Coined by Warren Buffett and operationalized by Morningstar's "wide-moat" rating framework.

Usage: "Palantir's 145 Rule-of-40 score and 53% net income margin look like the early read on a software economic moat built around its Foundry deployment depth, not a one-quarter wonder."

Elite Trade Club: Every morning, get a confidential email with a list of the fastest-moving stocks based on world news and current events. Sign-up here.