Technology, media and telecommunications market update Report Interpretation

Overview

This daily TMT update connects strong AI-related earnings and guidance with improving near-term technology sentiment. Its central message is that data-center, GPU and optical demand remain strong, but investors face elevated expectations, normalizing margins in some AI-server businesses, and a more demanding setup after hardware’s strong rally.

Core views

The report opens with a constructive read-through from AI-related earnings. CoreWeave, Lumentum and Super Micro Computer were among the pre-market gainers after better-than-expected results or outlooks, supporting early technology outperformance. Goldman Sachs describes the initial tape as favoring momentum and semiconductors over software and internet, with several large software names lower pre-market. CoreWeave reported 2Q revenue of $2.575bn versus $2.56bn consensus. Adjusted EBITDA margin rose to 59% from 56% in the prior quarter, while adjusted operating margin increased to 5% from 1%. Revenue backlog increased by about $5bn quarter on quarter to roughly $104bn as of June 2026, compared with $99.4bn at March 31, and the company noted in a footnote that this figure excludes more than $25bn of net new customer commitments added early in 3Q. FY revenue guidance was raised to $12.4-$13.2bn from $12-$13bn. Management said newly signed 2Q contracts carried expected contribution margins 5-10 percentage points above recent additions, and cited broad backlog, utilization and pricing strength, including record pricing and margins for Blackwell and Vera Rubin products. Lumentum’s fiscal 4Q revenue reached $1.01bn, at the top of its $960mn-$1.01bn guidance range and above $990mn consensus, up 106% year on year. Gross margin was 50.4% versus 48.8% consensus and 47.9% in the prior quarter; operating margin was 36.6% against guidance of about 35%-36%. For fiscal 1Q, it guided revenue to $1.225-$1.275bn, up 24% quarter on quarter at the midpoint and above $1.151bn consensus, with operating margin of 39.5%-40.5% versus roughly 37% consensus and EPS of $4.05-$4.35 versus $3.58 consensus. The company identified OCS solutions, cloud modules and advancing 1.6T adoption as growth drivers. It also pointed to rising demand for ultra-high-power CPO lasers, an initial ELS-module order and NPO engagements as early evidence that optics are entering rack connectivity and expanding the addressable market. SMCI’s fiscal 4Q26 EPS of $1.70 exceeded its $0.65-$0.79 guidance, primarily because gross margin reached 17.6% versus an 8.2%-8.4% outlook. Revenue of $11.1bn was near the low end of the $11.0-$12.5bn guidance range because customers delayed projects amid power, cooling, networking and broader data-center-readiness issues. The temporary project delays shifted mix toward higher-margin enterprise customers and CPU servers: AI represented about 60% of fiscal 4Q revenue, down from more than 80% in fiscal 3Q. Management attributed roughly 75% of gross-margin outperformance to favorable customer and product mix, and 25% to lower tariff costs and inventory-related benefits. For fiscal 1Q27, SMCI guided revenue to $14.5-$15.5bn and introduced FY27 revenue guidance of $65-$72bn, supported by more than $60bn of orders received in fiscal 4Q. About 70% of those orders were tied to pure-AI GPU deployments and about 30% to CPU-based AI and CPU demand. Management expects AI revenue to return above 80% of sales, which implies a more normalized AI-server mix and gross margin: fiscal 1Q27 gross-margin guidance of 10.4%-10.8% is well below fiscal 4Q’s 17.6%. The company nevertheless emphasized profitability discipline, saying new business must meet minimum return thresholds rather than simply pursuing margin-dilutive volume. It also aims to diversify through enterprise customers, CPU servers, storage and DCBBS solutions. Following its capital raise, management said the current FY27 outlook can be financed through the balance sheet and operating cash flow, though revenue materially above the $65-$72bn range, such as more than $80bn, could require additional financing. Ahead of Nvidia’s 2Q results, Goldman Sachs expects attention on the company’s recently announced $500bn partner financing platform, the 2H Rubin ramp, gross-margin trends and possible agentic-AI upside for CPUs. The report expects a solid quarter and meaningful upside to guidance on tight GPU supply-demand conditions, but says the stock’s 12% gain in two weeks leaves expectations elevated. It believes a further re-rating would require evidence of improving hyperscaler profitability that can sustain spending growth, measured capital outlays for customer-financing platforms, and continued strong buybacks and dividends. Goldman Sachs states that its CY26 and CY27 estimates are 6% and 19% above Street estimates, respectively, and reiterates Buy with a $285 target price; it also notes its view that the shares trade at a discount to fair value of 14.4x CY27E EPS. For IT hardware, the report expects higher ASPs and improving enterprise AI-infrastructure demand to create upside to estimates across vendors. On-premise agentic-AI adoption and data-center modernization should support servers, storage and networking, while supply constraints are expected to limit near-term shipment growth but strengthen backlogs and support revenue visibility for 2H26 and 2027. Consequently, much of expected C2Q26 data-center-hardware growth is expected to come from pricing rather than unit growth. PC unit shipments are still expected to decline by double digits in C2H26, although higher pricing is expected to more than offset those volume declines. Goldman Sachs cautions that hardware’s 11% 2Q outperformance versus the S&P 500’s 13% gain creates a challenging risk/reward setup into earnings, while reiterating Buy on Dell, HPE and NetApp.

Analysis framework

The update combines reported earnings and guidance against company guidance and consensus expectations, then links backlog, pricing, product mix, margins and customer demand to future revenue and profitability. It also uses sector performance, supply constraints and valuation context to frame the near-term setup for AI infrastructure and IT hardware.

Methodology notes

• Industry AnalysisSupply-demand framework

  GPU, optical and data-center infrastructure supply-demand analysis

  The report uses tight GPU supply, customer commitments, backlog, utilization and infrastructure readiness to explain demand strength, revenue visibility and near-term shipment constraints.

• Industry AnalysisVolume-price decomposition

  Separating price-driven growth from unit-volume growth

  For data-center hardware and PCs, Goldman Sachs distinguishes higher pricing and ASPs from shipment volumes, arguing that pricing is likely to account for much of near-term growth.

• Valuation methodsP/E and PEG Valuation

  Nvidia valuation using CY27E EPS multiple

  The Nvidia discussion cites a fair-value reference of 14.4x CY27E EPS to support the report’s statement that the shares trade at a discount to its assessed fair value.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• CoreWeave (CRWV)

  AI infrastructure beneficiary of improving contract margins, pricing and new customer commitments.

  Strengths

  2Q revenue beat, EBITDA-margin improvement, backlog growth and raised FY revenue guidance.

  Comparison

  Revenue exceeded $2.56bn consensus; adjusted EBITDA margin was 59% versus 56% in the prior quarter.

• Lumentum (LITE)

  Optical-networking beneficiary of cloud modules, OCS, 1.6T adoption and emerging rack-connectivity demand.

  Strengths

  Revenue, gross margin and outlook exceeded consensus expectations.

  Comparison

  Fiscal 1Q revenue and operating-margin guidance exceeded consensus.

• Super Micro Computer (SMCI)

  AI-server supplier exposed to the normalization of AI deployment mix and data-center readiness.

  Strengths

  FY27 revenue outlook is supported by more than $60bn of orders; management is emphasizing profitability thresholds and diversification.

  Weaknesses

  Fiscal 4Q revenue was near the low end of guidance due to customer delays.

  Comparison

  Fiscal 4Q gross margin of 17.6% exceeded 8.2%-8.4% guidance, but fiscal 1Q27 guidance is 10.4%-10.8%.

  Risks

  Project delays and revenue above $80bn could require incremental financing.

• Nvidia (NVDA)

  GPU leader benefiting from tight supply-demand conditions and AI spending, with results-dependent re-rating potential.

  Strengths

  Goldman Sachs expects a solid quarter and meaningful guidance upside; its CY26/27 estimates are above Street.

  Weaknesses

  The stock’s 12% two-week gain leaves expectations elevated.

  Comparison

  Goldman Sachs cites fair value at 14.4x CY27E EPS and says the shares trade at a wide discount to that view.

  Risks

  Financing-platform spending, gross-margin trends and the Rubin ramp could affect the setup.

• Dell, HPE and NetApp

  IT-hardware beneficiaries of enterprise AI infrastructure and data-center modernization.

  Strengths

  Goldman Sachs expects higher ASPs and improving AI-related infrastructure demand to support estimates.

  Weaknesses

  Near-term shipment growth is constrained; PC unit shipments are expected to decline by double digits in C2H26.

  Comparison

  Hardware gained 11% in 2Q versus the S&P 500’s 13% gain.

  Risks

  Recent outperformance creates a challenging risk/reward setup into earnings.

Key data

• CoreWeave 2Q revenue$2.575bnVersus $2.56bn consensus.
• CoreWeave revenue backlog~$104bnAs of June 2026, up about $5bn quarter on quarter; excludes more than $25bn of net new customer commitments added early in 3Q.
• CoreWeave FY revenue guidance$12.4-$13.2bnRaised from $12-$13bn.
• Lumentum fiscal 1Q revenue guidance$1.225-$1.275bnUp 24% quarter on quarter at the midpoint, versus $1.151bn consensus.
• SMCI FY27 revenue guidance$65-$72bnSupported by more than $60bn of fiscal 4Q orders.
• SMCI fiscal 1Q27 gross-margin guidance10.4%-10.8%Implies normalization from 17.6% in fiscal 4Q26.
• Nvidia estimates versus StreetCY26 +6%; CY27 +19%Goldman Sachs estimates are above Street estimates.
• Nvidia price target$285Buy rating reiterated.

Impact & implications

The report sees AI infrastructure demand, pricing and backlog as continuing supports for technology earnings, especially in GPU, server and optical ecosystems. However, it expects margin normalization where favorable mix was temporary, and it cautions that strong recent performance and high expectations raise the burden of proof for upcoming results.

Risks

• AI project delays related to power, cooling, networking and broader data-center readiness can defer server revenue.
• SMCI’s gross margin is expected to normalize as its AI-server mix returns to above 80% of sales.
• Supply constraints may limit near-term data-center-hardware shipment growth.
• Nvidia faces an elevated earnings bar after a 12% move in two weeks.
• SMCI may require incremental financing if revenue materially exceeds its $65-$72bn FY27 outlook, such as above $80bn.

What to watch

• Details of Nvidia’s $500bn partner financing platform and the pace of the Rubin product ramp in 2H.
• Nvidia gross-margin trends, hyperscaler profitability and capital spending that could support sustained AI investment.
• SMCI’s customer and product mix, AI revenue share, gross-margin normalization and data-center deployment timing.
• CoreWeave’s conversion of new customer commitments into backlog and its pricing and contribution-margin trajectory.
• Whether enterprise AI adoption, backlog and higher pricing offset constrained hardware shipments and declining PC units.