by Louis Navellier
July 28, 2026
In case it was not obvious, Elon Musk’s Tesla and SpaceX hurt the overall stock market last Thursday. Despite strong sales, Tesla’s operating margins are collapsing, giving the company negative cash flow. Also, SpaceX had to delay a test launch of its Starship due to weather, so SpaceX stock has declined by about 50% from its highs. Since we are in the midst of a strong earnings announcement season, the market has no patience for companies not announcing strong sales, earnings, surprises and guidance.
I should add I am not anti-Elon Musk and realize he has made a lot of people, including himself, very rich. However, Tesla has never scored well in my fundamental model, and SpaceX will not be covered in our Stock Grader until it has traded for 52-weeks. However, I can already tell you SpaceX scores poorly in my 8-factor fundamental model. All the fuss about the SpaceX IPO centered around the 21Wall Street underwriters collecting record investment banking fees – and not about any solid business plan. Also, SpaceX only floated 5% of its outstanding shares, partly to help the investment bankers ride the hype, so all that fuss over the SpaceX IPO was a big sales job by the financial media and big investment bankers.
Now, here is my profile of other leading earnings announcements last week, and what they might portend:
On Tuesday, Super Micro Computer (SMCI) got investors excited when it announced its order backlog exceeded $60 billion. SMCI also announced it expects its operating margins to reach between 15% and 17%, significantly above its previous forecasts of around 8.3%. Expanding operating margins can often result in big earnings surprises. SMCI’s rise after the earnings call made it clear Wall Street remains obsessed with order backlogs, so AI and data-center companies with big order backlogs should prosper.
Last Wednesday, Google (GOOG) announced second-quarter sales growth of 24%, to $119.8 billion, which was 2.5% higher than analysts’ consensus estimates of $116.9 billion. The company’s operating margins are expanding, which helped earnings surge 294% to $9.11 per share. The analysts’ consensus earnings estimate was $2.95 per share, so Google posted a whopping 209% earnings surprise! Google also said it now expects to spend between $195 billion and $205 billion on AI infrastructure, well above its prior guidance of $180 billion to $190 billion, which bodes well for many of our AI-related stocks.
As I have mentioned here often, Europe seems to be at war with many U.S. technology companies, and that trend continued last week, when the European Union (EU) hit Google with a $1 billion fine for illegally “undercutting competition” through its dominance as a search engine. President Trump had previously threatened to retaliate against the EU for what he views as their unfair targeting of American technology companies, so the war between the EU and American technology companies persist, as President Trump is now threating additional tariffs on EU imports due to the EU’s latest $1 billion fine on Google.
Also on Wednesday, GE Vernova (GEV) announced its second-quarter revenues rising 22% to $11.1 billion vs. $9.1 billion in the same quarter a year ago. The company’s operating earnings rose 32.8% to $649 million ($2.47 per share), compared with $492 million, or $1.86 per share last year. The analyst community expected $10.8 billion in revenues and operating earnings of $3.10 per share, so GEV posted a 3% revenue surprise and a 20% earnings miss. However, the good news was GEV’s order backlog rose 32.2% to $24.2 billion in the second-quarter, up from $18.3 billion in the first-quarter. In the past year, the company’s order backlog has risen 88% to a whopping $176 billion. As a result, GE Vernova raised its full year revenue guidance above analyst estimates to around $46 billion. Due to this positive guidance on future revenues, the stock was not hit too badly after an initial knee-jerk reaction to their earnings miss.
On Friday, Comfort Systems (FIX) announced second-quarter revenue up 50.3% to $3.27 billion vs. $2.17 billion in the same quarter a year ago. During the same period, the company’s earnings surged 91.9% to $441.6 million ($12.53 per share), compared to $230.8 million or $6.53 per share. The analyst community was expecting $2.94 billion revenue and earnings of $10.38 per share, so Comfort Systems posted an 11% revenue surprise and a 21% earnings surprise. The company’s order backlog also rose to $14.06 billion, up 12.9% from the first-quarter and +73.2% in the past year. The icing on the cake was Comfort Systems’ operating margins in the second-quarter, rising to 17.1%, up from 13.8% a year ago.
We can see from these examples that growing order backlogs remain a very important metric for data-center related companies. Now, the question is what states will allow (or bar) new data-centers. New York became the first state to impose a data-center moratorium, but it is only expected to last a year.
Upstate New York is ideal for data-centers, since it has: (1) clean hydroelectricity, (2) abundant land, (3) cold nights to vent heat, and (4) fast fiber optic internet. Concerns over water are not an issue. The concern is a 20% increase in electricity in the Buffalo area over the past few years after data-centers moved in. But if upstate New York becomes a data-center haven, it will boost the state’s economic growth.
The War in Iran Escalates – Once Again
Today marks the 5-month anniversary of America’s first strike on Iran last February 28. The U.S. has been hitting Iran hard, especially after the U.S. military suffered more casualties at a U.S. base in Jordan. Southern Iran has been hit especially hard, and many bridges have been destroyed because the U.S. wants to stop the transportation of drones and missiles to the coast near the Strait of Hormuz. Despite slightly higher crude oil prices, there has been virtually no negative impact on the U.S. economy. This is a good time to remind investors that the U.S. remains an economic oasis compared to the rest of the world.
Unfortunately, shipping through the Strait of Hormuz has ground to a halt and Houthi militants attacked two Saudi Arabia crude oil tankers in the Red Sea. As a result, crude oil prices are rising and reigniting inflation fears. This is causing Treasury bond yields to rise, as the bond vigilantes have reappeared.
On a podcast, JPMorgan CEO Jamie Dimon warned of a bond market reckoning coming. Specifically, Dimon seems worried about long-term Treasury bond yields as the cumulative U.S. debt approaches $40 trillion. Dimon said, “Debt and deficit figures are hitting startling levels even as the economy, and broader equity markets, continue to outperform.” He added, “[Usually] you have to have a ‘Great recession’ or a depression or war to have numbers like that … and so my view is it will become a problem.”
I should add that Treasury Secretary Scott Bessent said Treasury auctions and bid-to-call ratios are normal, so there is no real problem at this moment. Also, the “velocity of money,” which is how fast money changes hands, is accelerating, helping fuel the healthy bidding levels at the Treasury auctions.
Britain’s new Prime Minister Andrew Burnham is promising to revitalize stagnant economic growth and promised a 10-year plan to be announced later this year. Burnham wants to revitalize manufacturing plants in Britain, but unfortunately high electricity prices severely impede manufacturing industries in the UK, so if Burnham wants to boost manufacturing growth, his best option is to tap Scotland’s vast energy resources, especially natural gas. So far, Britain’s Labour Party has been suppressing Scotland’s economic growth by pushing expensive green energy options, which have become so cost prohibitive that approximately half of British households need subsidies to pay their electric bills. Good luck, Andrew!
Meanwhile, China’s central bank bought $5.7 billion in gold in the first half of 2026. Most of this buying pressure occurred in the second-quarter, when gold prices were consolidating. Renewed central bank buying pressure is expected to effectively put a floor under the price of gold. Although foreign central banks own almost $10 trillion in U.S. Treasuries, they still own more gold than U.S. Treasury securities.
Navellier & Associates; own Super Micro Computer, Inc. (SMCI), Alphabet Inc. Class A & C (GOOGL), Comfort Systems USA, Inc. (FIX) and GE Vernova Inc. (GEV) in managed accounts. A few accounts own Tesla (TSLA) per client request. We do not own Space Exploration Technology Corp (SPCX). Louis Navellier and his family own Super Micro Computer, Inc. (SMCI), Alphabet Inc. Class A & C (GOOGL), Comfort Systems USA, Inc. (FIX) and GE Vernova Inc. (GEV) via a Navellier managed account. They do not own Tesla (TSLA) or Space Exploration Technology Corp (SPCX) personally.
All content above represents the opinion of Louis Navellier of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
What Some Early Earnings Announcements Portend for the Market
Income Mail by Bryan Perry
Growth Stocks Are Hit by Deleveraging and Higher Interest Rates
Growth Mail by Gary Alexander
An Undeclared New Gold Standard Has Quietly Returned
Global Mail by Ivan Martchev
Will Oil at (or near) $100 Generate a “Diplomatic Offramp”?
Sector Spotlight by Jason Bodner
Using a Market Sextant to Plot Your Course
View Full Archive
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Louis Navellier
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