The first quarter of 2026 is almost completely printed. Over 300 of the 500 companies in the S&P had reported. Palantir stock is down 22% this year. Anything in software is problematic because of AI fears. Let's look at recession probability from a different angle. And a great measure of market direction and economy strength is to look closely at how well or poorly the analysts predicted the actual revenue growth and earnings growth of all the companies in the S&P. Let's get started.
Hi, this is Steve Eisman and this is another edition of the weekly wrap. This is for the week ending Friday, May 8, 2026, but recorded Thursday night, May 7th. As some of you may know, I am very excited to share that on Friday, May 15th, I'm launching the Real Eisman Playbook Premium, a members-only subscription. I want to emphasize that Monday and Friday episodes will stay accessible at no cost on YouTube and all audio channels. There will be no change at all in the Real Eisman Playbook twice-weekly free episodes. Premium is for our listeners and viewers who just want more. Premium members get a weekly bonus episode that will run the gamut from master classes to deep-dive analysis of industry sectors and subsectors to mailbag episodes where I can answer many more questions. We will have a private community board where we can all connect and learn from each other. Also, all of the past and future episodes of the Real Eisman Playbook will be available ad-free. I want to thank everyone who has already signed up for the mailing list on the Real Eisman Playbook. And for those of you who have not yet signed up, see the link attached or go to my website, therealeismanplaybook.com.
We will launch Premium on May 15th with parts one and two of a two-hour master class called A Conspiracy of Credit. Part three will be available Wednesday, May 20th. In this master class, I discuss the intricacies of what is going on in the world of private credit and then connect private credit to the Great Financial Crisis of 2008 and explain the toxic mortgage bonds that Wall Street manufactured during the GFC. The master class also includes a primer on how the fixed-income world actually works. If you've ever wanted to really understand what happened in 2008 — not the movie version, the real version — this is it. Go to the link in the show notes and sign up for the mailing list. Members on the list will get first access when we launch on May 15th, and they'll receive a special founders' offer. When you sign up, you will receive a confirmation email inviting you to join the Founders Club. The link is in the show notes.
In this week's wrap, we will cover: one, news about the war in Iran; two, expansion plans — Amazon's aggressive move into FedEx and UPS territory, and GameStop's bid for eBay, four times its size; three, an analysis of revenue, EPS growth, and margins for the S&P 500 and what the strength tells us about the economy; four, a very long list of earnings reports from a diverse set of companies; and one mailbag. Let's get started.
On Monday, oil prices surged as critical infrastructure and tankers in the Strait of Hormuz came under attack. However, the market is taking a glass-half-full attitude. Also, President Trump is claiming that the war is over. At the same time, he also said that if Iran does not accept a peace deal, bombing will resume. By Thursday, oil prices were back down, with Brent declining below $100. As a result, the market keeps reaching new highs, with the S&P up around 7% and NASDAQ up around 10% for the year.
There was some very interesting logistics news Monday morning. Amazon has been building out its distribution network for years, and that network was focused on fast shipping for sellers on Amazon's marketplace. Amazon is now opening that network to businesses beyond Amazon resellers. It will offer freight, distribution, and parcel shipping to non-Amazon sellers, from industrial manufacturers to retailers. Needless to say, logistics stocks were down on Monday, with FedEx down 8% and UPS down 9%.
In other news, GameStop made an offer to buy eBay for about $60 billion in cash and stock, a 20% premium to Friday's close. The odd thing about this potential deal is that eBay is four times larger than GameStop. I expect that eBay will, of course, reject the offer. By the way, Michael Burry has been touting GameStop since last year, but on Monday he announced in his Substack that he had sold his entire position because he does not like the debt levels that GameStop will take on to buy eBay.
And now on to earnings. Now, before we discuss specific earnings results for this week — and there were a ton of them — now is a good time to take some stock of the quarter. Two weeks ago, when the banks reported, I pointed out that bank credit quality data was benign and that without deterioration in credit, a recession was not imminent. Let's look at recession probability from a different angle: revenue and earnings growth and margins. The first quarter of 2026 is almost completely printed. And a great measure of market direction and economy strength is to look closely at how well or poorly the analysts predicted the actual revenue growth and earnings growth of all the companies in the S&P. By May 4th, Monday of this week, over 300 of the 500 companies in the S&P had reported, which gives us a great opportunity to compare what the analysts thought would happen. In every sector, revenue growth beat estimates.
I'm showing a table that shows the revenue growth actual, with three-fifths of companies reporting, against the estimates analysts made as the quarter progressed. This chart shows how analyst estimates on January 1st and April 1st stacked up against actual results for the S&P 500 and its 11 sectors. The reason for offering this data is to show the steady progression in estimate increases — revenue estimate increases. For those of you who are only listening and can't see the table, I will read a few lines. On January 1st of this year, the estimate for the S&P 500 was for 7.5% revenue growth for 1Q26. On April 1, that estimate had increased to 9% and is now at 11.5%. Let's look at InfoTech. On January 1, the estimate for InfoTech was for 20% revenue growth for 1Q26. On April 1, that number had increased to 27% and is now at 28.7%.
The clearest way to say it is that all 11 sectors — I'm going to say that again — all 11 sectors of the S&P posted stronger 1Q growth in revenue than what analysts had assumed on January 1. The pessimism on revenue growth that some investors had turned out to be unwarranted, even in the context of the war in Iran. Now, if we look at earnings as opposed to revenue, we see a similar pattern. The earnings of eight out of 11 of these sectors mirrored the revenue growth and beat the market's estimates. Only three sectors — staples, energy, and health care — disappointed relative to where earnings estimates were on January 1. These three sectors were the hardest to handicap because of the war, tariffs, and structural problems in health care.
Now, let's look at margins. The estimate for the next 12 months' S&P 500 operating margin now stands at an all-time high of 20%. It was 16% in 2023 and has been in a straight upward trajectory ever since. If only revenues were expanding, an argument could be made that the channels are being stuffed. It's more difficult to take a negative view on the economic outlook when margins are expanding with revenue.
The overall story, in my view, continues to be a K-shaped market reflecting the underlying K-shaped economy. The market and GDP growth are led upward by tech, industrials related to power, and financials. Yes, the middle to lower end of the consumer is having a difficult time. And as I have said before, the reason why that does not impact the market is that tech dominates the S&P to an incredible degree. As the lower part of the K's spending shrinks, the percentage impact on the S&P shrinks. AI continues to drive the economy and market at an increasing rate. The InfoTech sector represents 35% of the S&P. And if you then add companies that are not technically in InfoTech, like Google, Meta, and Amazon, you quickly get to 50%. So long as tech reports good numbers and beats estimates, the market will continue to do well. That's just the way the math works. And tech is doing well. As I just said, the InfoTech sector just posted revenue growth of 28.7%. With revenue growth like that, in a sector that dominates the S&P, a recession is not imminent.
Now, let's look at individual company results for the week. I pick and choose among the many companies I report each week for a few different reasons. I like to highlight the results of companies that I think offer the most interesting understanding of what's happening in their sectors. I will almost always circle back to tech companies, and the private equity and credit and software company results and payment companies interest me because competition is intense, which means results will be under pressure unless the payment companies can find a way to not just maintain market share but grow it, and this is never easy. Sometimes I choose a company with internal shenanigans that needs to be revealed. And as I interview energy and defense experts in the next few months, I will be weaving in those companies' quarterly and annual results during my earnings season reporting.
First up is Palantir. Now, the stock's reaction to earnings by Palantir shows that even though tech hardware stocks are doing well, anything in software is problematic because of AI fears. Palantir stock is down 22% this year on AI fears. But even down 22%, the stock has a 2026 P/E of 100 times. Regardless, the company reported mostly a good quarter. EPS was 33 cents versus 13, a 154% increase and a beat to estimates as well. Palantir's revenue was $1.63 billion, a beat, and up an incredible 85% versus last year. The only negative — and it's kind of nitpicky — was that Palantir's commercial revenue of $595 million was short of expectations, but it was still up 133% versus last year. So, good numbers. Despite these strong numbers, the stock was barely up after hours and was down 7% on Tuesday, which just goes to show that the negative AI narrative still dominates.
TransDigm is a company we haven't spoken about before. This is a $65 billion market cap company that largely supplies aftermarket or replacement parts for commercial and military aircraft. If you will recall, GE Aerospace reported strong numbers last week as airlines need GE jet engines for their new planes. They also need aftermarket parts as well. TransDigm reported earnings per share of $9.85 versus $9.11 and a beat. Revenue was also a beat, and the company raised guidance for the second quarter, and the stock was up 4% on the print. This is a very good company.
KKR first-quarter earnings per share of $1.39 versus $1.15 and versus expectations of $1.26. Solid results driven by better management fees and $28 billion worth of broad-based fundraising. Despite the challenging exit backdrop, KKR returned $20 billion of capital in the quarter. And despite all the negative noise surrounding software, I have to say there was not much to negatively pick out in these results.
Apollo, in my view, Apollo actually had a mixed quarter. 1Q26 EPS of $1.94 versus the street of $1.88 and versus $1.82 last year. So only 7% earnings per share growth. Now, Apollo has two major sources of income: fee-related income, or people call it FRE, and spread-related income, SR. Apollo owns a large insurance company, Athene, whose income is largely from net interest income, or spread-related income. SR is very, very sensitive to movements in interest rates. So for the quarter, FRE was up 30% year-over-year, which is good. However, SR was down 13% year-over-year, which is bad, largely because of a higher cost of funds. So all in all, a mixed quarter, but the company reported Wednesday morning and the market was up strong that day, so the stock did fine at the same time.
And in a move to provide transparency to opaque credit markets, Apollo said that by September it would provide daily pricing for all of its investment-grade corporate fixed income, direct lending, and asset-backed finance assets. This is an important differentiator for Apollo, I have to say. We will see if any of the competitors follow. I would point out that the entire private credit, private equity sector has had a rally as some of the private credit fears have faded, at least for now. These things tend to go in waves. I still believe that the major issue facing private equity and private credit is overexposure to software. And the essential problem is that public software stocks are down more than 50%, implying that the software companies that private equity purchased are also worth less than half of their investment. When those loans come due, private equity will be forced by the lenders to put up more equity or walk away. I'd also point out that of all the private equity, private credit firms, Apollo probably has the least exposure to software.
Moving on, Eaton. This is an industrial company that provides electrification equipment to the industrial sector. It is perceived as a major beneficiary of AI because its equipment is needed to build out AI data centers. Prior to Tuesday, the stock was up over 30%. But it reported quite a disappointing quarter. Earnings per share of $2.81 was up only 3% versus last year. However, its 2Q guidance was slightly below street expectations. That's a no-no. Needless to say, the stock was down pretty good on Tuesday.
Rockwell, an industrial automation company. This is another industrial company that is perceived to be a beneficiary of AI. But unlike Eaton, Rockwell's results were strong. The company reported earnings per share of $3.30 versus $2.45 and versus the estimate of $2.88. So quite a strong beat. The company posted organic sales growth of 9%, which in the industrial world is very good. It raised 2026 revenue and EPS guidance, and the stock was up 9% on this print.
Diamondback. We've never spoken about this company before. This is a US oil and gas driller in the Permian Basin, which is in West Texas. Earnings per share results are not important, but I'll mention them anyway. The company reported $4.23 versus $4.54 last year. So, slightly down versus last year. What is important is that because of higher oil and gas prices, Diamondback increased its oil and gas production targets. EPS is expected to grow over 100% in the second quarter.
Moving on, PayPal. Now we get into the payment space, and we've spoken about this company many times before, and it is a problematic payments company. Apple and Google Pay have robbed PayPal of its importance, and the company is trying to jumpstart revenue growth. This quarter, not good. The actual results were okay. Revenue of $8.35 billion was up 7% versus last year and was better than expectations. Earnings per share of $1.34 was up 1% versus last year, but did beat the consensus. So, so far not so bad, but the guidance was really bad. The company projected a second-quarter earnings per share decline of 9% as compared to the consensus of a 4% decline, and the stock was down 8% on Tuesday and is down over 20% this year.
Fiserv, another payment company. This is a legacy payment company that has been having problems as it loses market share to the newer companies. The stock collapsed last October as management was fired and new management reset growth and earnings expectations. Pre the collapse, the stock was $120 a share. It is $57 now and is down 15% just this year. Everyone likes a turnaround story, me included, but Fiserv is showing no signs of that yet. It reported 1Q earnings per share of $1.79 versus $2.14, down 16% versus last year. And more importantly, organic revenue growth was a negative 4% versus the estimate of a negative 2%. Like PayPal, Fiserv is a problematic company in the payment space, and there is no sign that things are getting better. The stock was down 9% on this earnings report on Tuesday.
I've said it before, making money in the payment space is very difficult as competition is incredibly intense. The safest thing to do is to own Visa or Mastercard because their network franchises remain impregnable.
Shopify. This is another iconic software company that provides its customers an entire e-commerce solution, from front-end website to marketing to payments. It's been a great stock until the recent AI software fears, and like every other software stock, it is down this year. The company reported, and the results were very mixed and guidance was poor. Revenue totaled $3.2 billion, up 3.4% versus a year ago, and a beat. Net income of $360 million was up 59%, but was a miss versus expectations of $419 million. The guidance pointed to slowing revenue growth and 2Q revenue below expectations given the horrendous software narrative. Needless to say, Shopify was down over 15% on Tuesday and is down over 30% this year.
Moving on to tech, Arista Networks reported Tuesday — Tuesday night, actually. Arista is Cisco's chief competitor and a major beneficiary of the buildout of AI. Prior to Tuesday night, the stock was up 30% this year alone and up over 70% over the last year. The company reported earnings per share of 87 cents, up 34% versus last year, and a beat. Revenue also beat by a bit. It guided 2Q revenue to $2.8 billion versus the estimate of $2.79 billion — really just in line. Given how much the stock is up, the results and the guidance were not enough for investors, and the stock went down after hours.
AMD, the semiconductor company and another big AI data center beneficiary, also reported Tuesday night. AMD is a competitor to Nvidia. 1Q sales of $10.3 billion rose 38% — impressive. EPS was $1.37 versus $1.28 expected and up 43% last year — also impressive. It projected second-quarter sales of $11.2 billion versus $10.5 billion expected. The stock has done very well this year, and the second-quarter projections were good enough for the stock to climb 15% after hours.
Disney. The most important statement I can make about Disney is that the stock price is where it was 10 years ago. I'll say it again. The most important statement to make about Disney is that the stock price is where it was 10 years ago. When looking at Disney earnings, there are three things to focus on: the parks, the legacy media business, and the new streaming businesses. Earnings per share was $1.57 versus the estimate of $1.51 and versus $1.45 last year. So, they had 8% earnings growth, which is okay. Revenue of $25.2 billion was up 6.5%, which is also not bad. Despite the war news, the parks segment posted $9.5 billion in revenue, up 6.7% versus last year, which is quite impressive under the circumstances. Entertainment revenue of $11.7 billion was up 9.7%, as streaming growth plus some strong movies offset the continued decline in linear television. And the stock was up on this news.
By the way, this was an incredibly busy earnings week. So, I'm just going to summarize a few consumer-related companies that reported on Wednesday night and Thursday. Bottom line, consumer-related stocks have winners and losers, and housing-related stocks are pretty much all problematic. McDonald's reported earnings per share of $2.83, 6% growth, and a beat. Revenue also beat by a touch, and same-store sales growth was 3.8%, which is pretty good. So, McDonald's is navigating the tough consumer environment. Shake Shack is not. Shake Shack reported a break-even quarter versus 14 cents last year and a miss. Revenue missed, and the stock was down 30% on the news.
In housing, there were two reports on Wednesday night: Whirlpool and Zillow. Whirlpool's results were a disaster. The company reported a loss of 56 cents versus $1.70 last year — a massive miss. It missed revenue as well. Worse, it slashed guidance to $3 to $3.50 from, get this, previous guidance of $6. Whirlpool blamed its problems on the war. The stock was down 12%. Zillow also reported; its results were fine, but it guided 2Q EBITDA well below consensus. On the call, the CFO said that the housing market has been effectively flat and the company is not planning for it to get better.
Now, let's turn to the mailbag. Our question is from Mert, who asks: 'Hi Steve, my questions are: how do you use the market valuation indicators such as Shiller PE and market cap to GDP? What do you think about the current Shiller PE of S&P being greater than 40.4 versus the all-time historical average of 17.88, and Wilshire 5000 to GDP ratio being 228% versus the all-time mean of 85%? What do these numbers tell us, and how can we use them to inform our portfolio allocation decisions?' These are great questions.
My answer: there is no question that by any traditional measurement, the market is expensive. The Shiller PE, the market cap to GDP metric, or even just the plain current market multiple — they all point to the same thing: expensiveness. But there is a reason why the market looks expensive. Tech has become an increasing percentage of the market. Today, InfoTech is 35% of the S&P, an all-time high. If you add companies like Amazon, Google, Meta, and other tech-related names, like I said before, that are not in InfoTech, you get to around 50%. If we just focus on InfoTech, in April 2016 it was 20% of the S&P, in April 2020 it was 25%, and now it is 35%. Because they are growth stocks, tech stocks sell at higher multiples. Thus, as tech has become a higher percentage of the market, by definition the market multiple, no matter which metric you choose, has to increase. That's why I'm not overly concerned that the market looks expensive. As long as tech continues to perform, the market will be fine, and the indices heavily weighted with tech will be fine as well. Stock picking in other sectors remains tricky. I would also add immediately: all bets are off if a recession appears.
This last Monday, May 4th, we hosted an interview with Chris Ferrara, head strategist at Strategas, and Todd Son, head chartist at Strategas. We discussed the recent rally in the market, what's working and what is not, and any and all pitfalls to avoid. So, check it out. And this coming Monday, May 11th, we will host an interview with Kelsey Zhu, the financial information services analyst at Autonomous. This interview is largely about the war over FICO, a consumer credit scoring service we all use and pay for in order to get a mortgage, a new credit card, or any other type of consumer loan. Have you noticed that the price of your FICO report went up? Did you know the price went up 1,500% over the last five years? Can you believe it? I can't. You've got to watch Kelsey explain the shenanigans. This is one for the history books. We spent much of the interview discussing the war between Fair Isaac and the three credit bureaus over who is going to control consumer credit scoring. That war could change how consumers interact with all kinds of consumer lenders. In my experience, what FICO has done — raising scoring pricing by 1,500% over the last five years — is one of the most egregious monopolistic acts I have ever seen, and it has angered the entire lending ecosystem. So, please tune in.
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This podcast is for informational purposes only and does not constitute investment advice. The hosts and guests may hold positions in stocks discussed. Opinions expressed are their own and not recommendations. Please do your own due diligence and consult a licensed financial adviser before making any investment decisions.
