Antonio Johnson Show

$PZZA Papa John’s had a tough third quarter in 2026, with sales and profits falling compared with last year. Sales across all its restaurants totaled $1.15 billion, down 5.6%. In North America, sales at restaurants open for at least a year fell 8.3%. International sales were also down, but only by 1.8%. Papa John’s did open 47 new restaurants during the quarter, including 11 in North America and 36 in other countries. The company brought in $454.8 million in revenue, compared with $508.2 million during the same quarter last year. Net income, or the money left after expenses, dropped from $4.5 million to $3.3 million. Adjusted EBITDA, which measures how well the business is performing financially, fell from $47.8 million to $38 million. Adjusted earnings per share also dropped from 32 cents to 16 cents. In simple terms, Papa John’s is bringing in less money and having a harder time turning sales into profits. CEO Todd Penegor says the company is fighting back with a new plan called Unbox Better. The goal is to give customers more reasons to choose Papa John’s by improving its pizza, offering better value and making service more consistent. The company also wants franchise owners to spend more money advertising in their local communities, alongside national marketing campaigns. Papa John’s hopes these changes will bring customers back, improve sales and put the company in a stronger position for the future.

Apple $AAPL is facing a new challenge as the AI boom drives up the cost of memory chips. While companies like Meta, Alphabet and Microsoft are spending heavily to build data centers and expand their AI businesses, Apple has taken a different approach. It continues to generate large profits without spending nearly as much on new technology infrastructure. Apple's latest quarterly revenue grew 12% compared with the same period last year. Its services business, which includes music, TV and games, grew 10% and now accounts for more than 25% of the company's total revenue. The results show that Apple continues to grow even as competition and costs increase. Over the past four quarters, Apple generated $145 billion in cash from its operations but spent only $9 billion on capital investments. That is a big difference compared with Meta $META, Alphabet $GOOGL and Microsoft $MSFT, which are investing much more money in AI and data centers. Apple's ability to generate cash while keeping spending low remains one of its biggest advantages, but rising memory chip prices could put pressure on future profits.

$APPL Apple shares fell about 4% in premarket trading Tuesday after the company warned that rising memory costs could hurt its profits. CEO John Ternus said memory prices are rising at an unusual pace and are expected to keep climbing. Apple also expects its profit margins to fall to between 45% and 46% in the December quarter, partly because of higher costs tied to its AI-powered Siri. Despite those concerns, Apple reported record iPhone revenue for the September quarter. iPhone sales reached $57.58 billion, beating Wall Street's estimate of $56.54 billion. The results show that customers are still buying iPhones, even with higher prices. However, analysts warn that rising production costs could eventually force Apple to raise prices again, which could be difficult for customers already dealing with a higher cost of living. Investors are also watching Apple's high stock valuation. The company is worth about $4.94 trillion, and if the stock's losses continue, Apple could lose more than $170 billion in market value. Apple currently trades at nearly 35 times its expected earnings, compared with about 18 times for Alphabet and 23 times for Microsoft. That means investors are paying more for Apple's future earnings than they are for those two major technology companies.

Happy Halloween 🎃 from the Johnsons

$GOOG Alphabet, the parent company of Google, reported third quarter revenue of $127.6 billion, falling short of analysts’ expectations of $128.2 billion. The results disappointed investors, sending Alphabet’s stock down about 8% in after-hours trading. One major reason for the shortfall was Google’s advertising business, which brought in $82.01 billion, about $1.41 billion less than analysts expected. Advertising remains a major source of revenue for Google, so weaker results in this area affected the company’s overall performance. Another concern was the amount of money Alphabet is spending to compete in artificial intelligence (AI). The company reported negative free cash flow of $9.07 billion, meaning it spent more cash than it generated after accounting for its investments and other cash expenses. That was worse than the $5.9 billion cash shortfall in the previous quarter and marked the first time Alphabet had reported negative free cash flow in its 22 years as a public company. The company said heavy spending on data centers, AI research, and expanding its computing capacity contributed to the decline. Despite the disappointing overall results, Google Cloud delivered a strong performance. Revenue from the cloud business more than doubled to $30.71 billion, beating analysts’ expectations. Google Cloud provides businesses with computing power, data storage, and AI services. Demand from companies in industries such as cybersecurity, retail, and financial services has helped drive growth. Alphabet is also investing in its own AI chips and expanding the use of its Gemini AI models, helping it compete with Amazon Web Services and Microsoft Azure. The bigger question for investors is whether Alphabet and other technology giants can turn their enormous AI investments into enough revenue and profit to justify the cost. Alphabet, Microsoft, Amazon, and Meta are expected to spend more than $700 billion combined in 2026 on AI data centers, computer chips, and other infrastructure. Strong demand for cloud-based AI services could help Alphabet earn more money over time, but the rising costs are creating pressure on cash flow. Investors will be watching to see whether Google’s growing cloud business and AI products can make up for weaker advertising results and the massive expense of staying competitive in AI.

$MSFT Microsoft $MSFT reported stronger than expected results from its Azure cloud business, showing that its heavy investments in artificial intelligence (AI) may be paying off. Azure revenue grew 48% to $33.17 billion in the quarter ending in September, beating analysts’ expectations of $32.84 billion. That was up from $29.4 billion in the previous quarter. Microsoft recently began reporting Azure revenue in dollars instead of only showing its growth rate, giving investors a clearer picture of how its cloud business compares with Amazon and Google. However, investors are becoming more concerned about how much Big Tech companies are spending to compete in AI. Major technology companies are expected to invest more than $700 billion this year in data centers, computer chips, and the energy needed to run AI systems. Microsoft has projected $190 billion in capital spending for 2026. While these investments could lead to more revenue, they also create risks if companies borrow too much money or fail to earn enough from their AI products. Concerns about rising debt, falling cash flow, and the cost of funding new projects have already put pressure on technology stocks. Microsoft may be in a stronger position than some of its competitors because of its financial strength. Analysts at Truist say the cost of insuring Microsoft’s debt against default remains lower than that of other major technology companies, suggesting investors view its debt as less risky. Microsoft is also expected to generate positive cash flow next year, while some rivals, including Alphabet, Amazon, and Oracle, may spend more cash than they bring in. Still, Microsoft faces another challenge as advanced AI tools become capable of performing tasks that people currently use its productivity software to complete. Investors will be watching closely to see whether Microsoft can turn its massive AI spending into lasting profits without putting too much pressure on its finances.

$NOW ServiceNow reported strong third-quarter results, with revenue growing 20.5% compared with the same period last year. The company brought in $4.11 billion in revenue, slightly beating analysts’ expectations of $4.09 billion. However, adjusted earnings per share came in at $1.00, missing the $1.02 analysts expected. The company also reported net income of $277 million and subscription revenue of $3.99 billion. One of the biggest drivers of ServiceNow’s growth was rising demand for artificial intelligence (AI). The company said more customers are using its AI products, helping increase the value of its contracts and overall business activity. ServiceNow also reported 19 new contract deals worth more than $5 million each in annual contract value, an increase of over 135% from last year. These larger deals show that major customers are spending more on the company’s services. Looking ahead, ServiceNow raised its full-year 2026 subscription revenue forecast to between $15.78 billion and $15.79 billion. It also increased its free cash flow margin target by one percentage point to 36%, meaning it expects to keep more cash from its revenue after covering operating expenses and other cash costs. For the fourth quarter, the company expects subscription revenue between $4.245 billion and $4.255 billion. Overall, ServiceNow is seeing strong demand for its AI products and expects continued growth, although its earnings per share came in slightly below analysts’ expectations.

I’ve been researching four stocks that could be worth watching for investors willing to look beyond the obvious: $CRK (Comstock Resources), $GASS (StealthGas), $COLL (Collegium Pharmaceutical), and $XRAY (DENTSPLY SIRONA). $CRK is a natural gas company whose reserves could become more valuable if gas prices and demand rise. $GASS transports liquefied petroleum gas and has cash and shipping assets that investors may be overlooking. $COLL makes prescription medicines, including ADHD treatments, and could benefit from growth in its newer products. $XRAY makes dental equipment and technology, and its potential opportunity depends on whether management can improve sales, control costs, and turn the business around. What makes these companies interesting is that each has a different path to potentially creating more value. Better natural gas prices could help $CRK, strong shipping earnings and smart use of its cash could benefit $GASS, growth in newer medicines could help $COLL, and a successful recovery could lift $XRAY. But each has risks, including debt, changing market conditions, competition, and the possibility that the businesses do not improve as expected. These are not guaranteed winners, and a 5x to 10x return is an ambitious possibility, not a prediction. My approach is to look for companies the market may be undervaluing, study their cash flow, debt, management, and long-term potential, and ask what could cause investors to see them differently in the future. These four stocks are worth researching further, but price and valuation matter just as much as the company itself. This is my personal opinion for educational purposes, not financial advice or a recommendation to buy. Do your own research, understand the risks, and make decisions based on your own financial situation.

$SPOT Spotify expects fourth-quarter operating profit of about $921 million, beating Wall Street’s estimate of approximately $914 million. The Swedish music streaming company hopes its AI-powered features will attract more users during the holiday season, when music listening often increases. In the third quarter, Spotify reported operating profit of approximately $754 million, nearly matching analysts’ expectations of about $754 million. Revenue reached approximately $5.57 billion, slightly below Wall Street’s estimate of about $5.58 billion. Investors are watching to see whether Spotify can keep growing profits while using artificial intelligence to improve music recommendations and keep listeners engaged. Spotify co-CEO Alex Norstrom said the company delivered on its plans, is managing costs, and continues to invest when it sees opportunities for growth. Spotify also faces competition from AI music generators such as Suno and Udio. For investors, the big question is whether Spotify can use AI to attract more listeners, stay ahead of competitors, and increase profits over time.

As the third quarter earnings season begins, investors are becoming more divided over artificial intelligence. Some believe AI will create enormous profits, while others worry companies are spending too much money without generating enough returns. Since ChatGPT launched in November 2022, a group of 41 AI related stocks has accounted for 75% of the S&P 500’s returns, 80% of its earnings growth and 90% of its capital spending growth, according to JPMorgan Private Bank. That means a large part of the stock market’s gains depends on the future of AI. The upcoming earnings reports from chipmakers, cloud computing companies and software providers could help determine whether that growth continues into 2027. One major concern is the difference between how AI stocks and AI related bonds are performing. Stocks represent ownership in a company, while bonds are loans that companies must repay. Some AI stocks have recovered from recent declines, but the bonds issued to finance AI expansion are showing signs of stress. CoreWeave, an AI computing company backed by Nvidia, is losing money and carrying substantial debt. Its stock has fallen this year, while one of its bonds has dropped more than 20% since its April launch. Analysts disagree about the company’s future. HSBC believes its investments could destroy value and recommends selling the stock, with a price target of $39. Goldman Sachs, however, upgraded the stock to a buy, arguing that future revenue could improve. Its revised price target of $106 suggests substantial potential gains from its recent price near $62. That wide disagreement shows how difficult it is to determine which AI companies will become profitable. Another problem is that demand for AI is growing faster than companies can turn it into revenue. AI models process information using units called tokens, and the number of tokens being used continues to increase. However, spending growth is slowing partly because token prices are falling. That raises questions about whether AI companies can turn rising usage into higher profits. Electricity is another major obstacle. Data centers need enormous amounts of power to operate their AI chips, but some facilities cannot get enough electricity to run. Microsoft recently withdrew from a proposed data center project in Britain after officials indicated that the site might not receive power until the 2030s. Morgan Stanley estimates that US data center developers could face a 30% to 40% power shortfall through 2028. This means companies could spend billions on chips and equipment that cannot be fully used because the necessary electricity and infrastructure are not available. The biggest question is whether the money being invested in AI will eventually generate enough revenue to justify the cost. McKinsey and S&P Global estimate that six major US cloud computing companies alone will spend more than $7 trillion on data centers and other AI related investments between 2025 and 2030. Columbia University’s Stijn Van Nieuwerburgh estimates that financing the AI expansion from 2025 through 2032 could cost $10.3 trillion. To earn a 10% return on that investment, he estimates the industry would need approximately $3.55 trillion in annual revenue by 2032. Some analysts believe the required figure could exceed $4 trillion. That is an enormous target, representing more than 10% of projected US economic output in 2032. For investors, the key is not simply whether AI adoption continues to grow. It is whether the revenue and profits can eventually justify the trillions of dollars being spent.

$CCI Crown Castle (CCI) reported lower revenue and net income for the third quarter of 2026 compared with a year ago. Revenue from renting space on its wireless towers fell 5% to $966 million, while net income dropped 12% to $283 million. Adjusted EBITDA, a measure of operating performance, declined 6% to $673 million. However, adjusted funds from operations (AFFO), a key measure of cash available to support dividends and other financial needs, increased 8% to $530 million, or $1.24 per share, up 11% from last year. The company said its results were affected by the loss of revenue from DISH and the cancellation of Sprint contracts. Excluding those impacts, Crown Castle's underlying tower rental business continued to grow, with adjusted organic growth of 3.8% during the quarter. The company also benefited from lower interest expenses and fewer shares outstanding, helping boost AFFO despite weaker revenue. Crown Castle paid shareholders $1.0625 per share in dividends during the quarter, unchanged from the same period last year. Crown Castle raised parts of its full year 2026 financial outlook. The company now expects adjusted EBITDA of approximately $2.715 billion at the midpoint, up $25 million from its previous forecast. It also expects AFFO of approximately $1.98 billion, up $5 million from its earlier outlook, with AFFO per share projected at $4.60. The company expects full year site rental revenue of about $3.875 billion, down roughly 4% from 2025. Management said the improved outlook reflects cost savings, operational efficiencies, customer agreements and increased activity buying out land leases beneath its towers. CEO Chris Hillabrant said Crown Castle is focused on improving efficiency, updating its systems and owning more of the land beneath its towers. The company also reported a strong financial position, with 97% of its debt carrying fixed interest rates, an average debt maturity of about seven years and approximately $3.9 billion available through its revolving credit facility. For investors, the key takeaway is that Crown Castle is facing lower revenue and operating earnings, but improving cash flow and a slightly higher forecast could help support its dividend. The question is whether those improvements can continue as the company works through customer losses and positions its tower business for long term growth.

$META Meta reported strong third quarter results, with revenue rising 26% from a year earlier to $64.6 billion. That beat analysts’ average estimate of $63.37 billion. Adjusted earnings per share reached $3.83, helped by growth in its core business. Advertising was the main driver, as the number of ads shown increased and the average price per ad rose 14%. Meta said its investments in artificial intelligence are helping improve user engagement and generate more advertising revenue. Looking ahead, the company expects fourth quarter revenue between $73 billion and $76 billion. Meta also raised the low end of its 2026 spending forecast to $135 billion, while keeping the high end at $145 billion. The company said the updated outlook includes about $9.9 billion in legal charges. Meta expects losses in its Reality Labs division, which develops virtual reality products and related technology, to narrow to between $18 billion and $19 billion in 2026. The company also approved a new Class C common stock and a one time stock dividend. For investors, the key points are strong advertising growth, AI investments that are helping the business, and the enormous amount of money Meta plans to spend. The big question is whether those investments will generate enough future profit to justify the cost.

$SPCX SpaceX reported a strong third quarter, turning a year ago’s loss into a profit as revenue climbed much higher than Wall Street expected. The rocket and satellite company earned 35 cents per share, compared with a loss of 36 cents per share a year earlier. Revenue jumped 161% to $14.58 billion, beating analysts’ expectations of $12.87 billion. Its artificial intelligence division was a major driver of that growth, with revenue soaring 830% to $7.56 billion. The company credited new cloud service agreements, its acquisition of Cursor and increased use of Grok, its AI technology. SpaceX also saw strong growth in its connectivity business, which includes satellite internet and related services. Revenue in that division increased 69% to $5.25 billion. However, the company is spending heavily to expand its business. Capital expenditures, which are the money companies spend on major investments such as equipment and infrastructure, climbed to $19.59 billion from $6.88 billion a year earlier. That means SpaceX is investing aggressively in its future, but investors will want to see those investments produce lasting profits and cash flow. One major goal is reaching $100 billion in annual recurring revenue by the end of the year. Annual recurring revenue estimates how much money a company can expect to bring in over a year from ongoing business agreements. Oppenheimer analysts said SpaceX appears to be on track, helped by major AI computing contracts. Four deals, including agreements involving Anthropic and Google, represent about $46 billion in annualized revenue, according to the firm. SpaceX is also expanding its wireless ambitions. Earlier this month, it agreed to acquire a nationwide portfolio of low-band wireless spectrum as it works to make Starlink Mobile a bigger player in the U.S. mobile phone market. SpaceX shares rose about 1% in after-hours trading and have gained 20% over the past three months. The company went public in June in what was described as a record-breaking initial public offering. Investors are also watching speculation about a possible merger with Tesla, another company led by Elon Musk. Analysts expect SpaceX management to continue sharing ambitious growth plans. The big question for investors is whether the company can turn its rapid revenue growth and massive investments in AI, satellites and wireless services into sustainable profits over the long term.

$HAS Hasbro shares jumped 9.3% on Tuesday after the toy company reported better than expected third quarter results and raised its financial outlook for 2026. Revenue increased 15% from a year ago to about $1.6 billion, beating Wall Street's estimate of $1.48 billion. Adjusted earnings climbed to $2.90 per share, compared with $1.68 a year earlier, also beating expectations. Hasbro now expects full year revenue growth of 7% to 9%, up from its previous forecast of 5% to 7%. The company also raised its earnings outlook, helped by strong demand for its games. Hasbro's biggest growth driver was its Wizards of the Coast and digital gaming business, which includes Magic: The Gathering. Revenue in that segment jumped 31% to $747.2 million, while tabletop gaming revenue surged 39% to $613.1 million. Magic: The Gathering generated more than $600 million in revenue during the quarter for the first time ever. The company's entertainment business also grew, supported by family brands, although declines in film and television partly offset those gains. Hasbro said it has now delivered four straight quarters of double digit revenue growth and expects the momentum to continue into 2027. Hasbro is also increasing its planned stock buybacks to $400 million for 2026, double its previous target of $200 million. Buybacks allow a company to purchase its own shares, potentially increasing the ownership percentage of investors who continue to hold their stock. However, the company still faces rising costs, including expenses tied to oil, which can affect manufacturing and transportation. Hasbro said it is taking steps to offset those pressures. The strong earnings report and improved outlook helped push the stock's gains for the year to 31%, as investors reacted to stronger sales and growing demand for its gaming products.

$UAL United Airlines reported $17.9 billion in revenue for the third quarter of 2026, up 17.4% from the same period last year. The airline earned $1 billion in net income, or $3.14 per share. Higher fuel costs remained a challenge, with fuel expenses rising $1.8 billion compared with the third quarter of 2025. Despite those costs, United saw strong demand across its business, including a 17% increase in premium cabin revenue, a 16% increase in Basic Economy revenue, a 17% increase in loyalty program revenue and a 23% increase in cargo revenue. Revenue from corporate customers also climbed 26%, showing that business travel remained strong. United is investing heavily in technology to attract more customers and stand out from competitors. Its Starlink satellite internet service is now available on more than 640 aircraft, and the airline plans to have it across its entire fleet by the end of 2027. More than 5.4 million passengers used Starlink on United flights in September. Customers can also watch live professional and college football on equipped seatback screens, with free Starlink access for MileagePlus members in every class of service. United said customer satisfaction reached its highest third-quarter level since 2022, and satisfaction scores on Starlink-equipped planes were nearly twice those on planes with other Wi-Fi services. The airline is also upgrading airport facilities, including a new Houston terminal concourse with a United Club lounge that can seat 800 people. United also reported strong travel demand and operational results. The airline carried a record 49.5 million paying passengers during the quarter and averaged about 538,000 customers per day. It operated its largest domestic schedule ever, serving 241 airports across the United States and Canada. United also ranked among the most reliable major U.S. airlines this summer, recording the lowest seat cancellation rate among the country's three largest airlines. Looking ahead, the company announced plans to add 10 international destinations in summer 2027, including locations in Italy, Spain, France, Japan and Portugal. It also plans to expand several existing international routes and has added new domestic service from Newark, New Jersey. United is also working to strengthen its finances while investing in its employees and communities. On October 16, the airline expanded its revolving credit facility from $3 billion to $5 billion, giving it more access to emergency funding and financial flexibility. United ended the quarter with $17.7 billion in available liquidity, which includes cash and other available financial resources. The company also expanded its pilot training center in Denver, adding simulators to help train up to 860 pilots daily. Beyond its business operations, United supported charities through donations, volunteer work and fundraising, including raising $1.3 million for Special Olympics. Overall, the results show an airline benefiting from strong travel demand while spending heavily on technology, airport improvements and future growth.

$NFLX Netflix reported a profit of $3.66 billion in the third quarter, equal to 87 cents per share. The streaming company, based in Los Gatos, California, performed better than Wall Street expected. Analysts had predicted earnings of 82 cents per share. Netflix brought in $12.87 billion in revenue for the quarter, matching analysts’ expectations. Revenue is the money a company earns before paying its expenses. The results show that Netflix continues to generate billions of dollars from its streaming business. Looking ahead, Netflix expects to bring in $13.44 billion in revenue for the quarter ending in December. For the full year, the company expects revenue to reach $51.1 billion. Investors will be watching to see whether Netflix can continue growing its revenue and profits as it competes for viewers in the streaming market.