Steve Eisman — Earnings Keep the Market Strong Despite Signs of Consumer Weakness

Charter is the cable company behind Spectrum — broadband internet plus a fast-growing mobile-phone service. Eisman recommended it in January at $223; it's since fallen to about −22% on the year, with a brutal 25% one-day drop after a bad quarter (it lost 120,000 broadband customers, worse than expected). He hasn't flinched — he actually bought more, and warns himself against "thesis creep," the trap of quietly abandoning your reasoning just because the stock fell.

The case is two-part. First, valuation: the company is shockingly cheap — about 4× this year's earnings, and in a few years less than 2× its free cash flow (the cash left after all spending), implying a roughly 70% "free-cash-flow yield" (cash generated per dollar of stock price). Second, the turnaround: Charter has been spending heavily upgrading its network, and that spending is about to fall sharply (from $11B to ~$7.5–8B). Every dollar it stops spending becomes free cash — which it plans to use to buy back as much as half its own shares over four to five years, a huge lift to per-share value given the company is worth only $23B. As cable and mobile bundle together, Charter is the cheap option ($100 vs $180–200 from rivals). His verdict: cheap alone isn't enough, "but I'm being paid to wait."

Eisman uses GM as the living proof of his Charter bet: a cheap, out-of-favor stock with a real turnaround can soar — GM went from $27 in late 2023 to $78 today simply because the business started performing. This quarter beat on everything (revenue $43.6B, earnings $3.70 vs $2.60 expected) and it raised its outlook, even with US car sales down 10% and a hard electric-vehicle backdrop. "It's what I'm hoping for with Charter."

Starbucks is the coffee chain whose turnaround "stubbornly refused to turn around" — until maybe now. The key number for any retailer is same-store sales (sales at shops open at least a year, which strips out new-store growth), and Starbucks just posted +6.2%, its second straight quarter of more customers walking in. Earnings beat, it raised its full-year outlook, and the stock jumped 8%. Eisman's lesson: inflection points are hard to time because real fixes take time to show up — you rarely catch the exact bottom.

Visa runs the network that moves card payments between banks and merchants, taking a small cut of every transaction. Because nearly all consumer spending flows across it, Eisman calls it "as good a read on the consumer as any company in the world." This quarter was strong — revenue +17% (its best since 2022), earnings +20%, and the dollar value of payments up 9%.

The nuance fits his K-shaped theme: overall spending is still healthy, but the strength is top-heavy — the middle and lower-income consumer is struggling, which is exactly why a value brand like Domino's is weak. He's owned Visa for years.

Eli Lilly is the drugmaker behind the leading weight-loss (GLP-1) medicines, and Eisman — a longtime owner — says it has flatly "won the diet drug wars." The quarter was a blowout: earnings of $8.55 versus $6.66 expected (and just $3.34 a year ago), revenue well ahead, and raised guidance for the year. It's the rare name where the numbers more than justify the enthusiasm.

Quanta is the contractor utilities hire to build and maintain the electric grid — power lines, substations, the physical plumbing of electricity. Eisman, an owner for years, frames it as a direct AI play: data centers need enormous amounts of power, which means utilities must build out, which means more work for Quanta. The quarter confirmed it — earnings of $2.68 versus $2.08 expected, revenue up 26%. It's a way to ride the AI boom by owning the picks-and-shovels rather than the AI companies themselves.

Caterpillar makes the heavy construction and mining equipment — the yellow bulldozers and excavators. You might not think of it as an AI stock, Eisman says, but it is: building all those data centers requires Cat machines. The proof is in the numbers — earnings of $5.54 versus $4.63 expected, revenue up 22%, and most tellingly the construction division (the part most tied to AI build-out) grew 38%. Another supplier-side beneficiary of the AI spending wave.

On this week's earnings alone, Google delivered "just a really powerful quarter" — revenue of $94.7B beat expectations, and crucially its cloud-computing business accelerated to $20B versus $18B expected. Faster cloud growth is the clearest sign that corporate AI demand is real and rising. The stock jumped 10%. "That's all you really need to know."

Amazon's quarter was a clean beat — earnings of $2.78 versus $1.63 expected — but the part that mattered was AWS, its cloud unit, reaccelerating to 28% growth (up from 24% the prior quarter). Management also said it now has over $225B in revenue commitments tied to its own AI training chips, a sign customers are betting on Amazon's AI hardware. That news flipped the stock from down to up on the day.

Comcast is the other big US cable company, reporting the day before Charter. Eisman read it as "mixed but mostly okay," and the stock rose — the calmer counterpoint to Charter's ugly print the next day. He's not making a call on it here; it's context for the cable-industry backdrop.

Microsoft actually reported a good quarter — revenue and earnings both beat (earnings +23%), its Azure cloud grew 39%, and guidance was strong. Yet the stock fell 4%, because that 39% was only one percentage point above what analysts expected and some wanted more. Eisman's point is less about Microsoft's business than about how a hot market works: when expectations are sky-high, even a fine quarter can disappoint. "On such data, stocks move."

Meta (Facebook/Instagram) beat on almost everything, but the stock dropped 8.5% on one thing: spending. It raised its 2026 capital-expenditure plan — the cash it pours into AI data centers and chips — to $135B from $125B, and investors "have grown tired" of that number climbing. The irony Eisman flags: even at $135B, Meta is still being outspent by Google, Microsoft and Amazon. It captures his broader worry that the AI arms race is forcing ever-larger spending with no ceiling in sight.

Apple's quarter was "good, but not great" — earnings up 22% and a revenue beat, but the soft spot is the one that matters most: iPhone sales missed estimates, the second miss in three quarters. With the iPhone still Apple's core engine, repeated misses there keep Eisman neutral rather than enthusiastic.

Booking (the parent of Booking.com, Priceline, Kayak) is "a very good company," and its actual results were fine — earnings up 15%. The problem is the forecast: it slashed its expected revenue growth for the coming quarter to 4–6%, versus the 11% Wall Street had penciled in, because the war is denting travel demand. United and American Airlines had cut their outlooks for the same reason a week earlier. The stock fell on the downgrade — a clean example of the war seeping into corporate guidance.

FICO is the company behind the credit score lenders use to decide who gets a mortgage — and Eisman has been betting against it ("short") for months. FICO beat earnings and raised guidance, and management insists it won't lose mortgage business to VantageScore (a rival score from the three big credit bureaus). Eisman thinks that confidence "could be terribly wrong."

The reason is price. Regulators are about to approve both scores for mortgages. For every 100 mortgage applications, FICO's new product would collect about $2,049 (a small fee per application plus a big $65 fee on each loan that actually funds), while VantageScore would charge just $99 — a 20-to-1 gap. When the cheaper product is "good enough," that kind of pricing difference is hard to defend. The kicker: FICO is a near-monopoly, yet it builds its score using data from the three bureaus — meaning it now makes money off the very competitors who supply it. Pilots run in 2026, full rollout in 2027.

Domino's is Eisman's clearest read on the struggling consumer. Its same-store sales — the standard retail health gauge — rose just 0.9% versus the 2.3% expected, earnings fell 5%, and the stock dropped 8%. Pizza is a cheap, everyday purchase, so when even a pizza chain is soft, "it implies the middle and low-end consumer is having a hard time."

This is the bottom of his "K-shaped economy": one arm of the K (wealthier consumers, AI-driven companies) rises while the other (lower-income households) falls. His blunt read: "the bottom of the K consumers are in a deep recession," even though the overall market keeps climbing on AI spending.

Enphase sells the gear for home solar — microinverters (which convert solar panels' power for household use) and battery storage. The residential-solar market has been in a multi-year slump, and the stock shows it: from $335 at the end of 2022 to about $33 now. This quarter earnings fell 31%, and while next-quarter guidance was "in line," there was no sign of a turn. Eisman's verdict is the harshest kind for an investor — "the stock lacks a thesis": with no clear reason to expect improvement, there's no case to own it.

Ares Capital is a "BDC" (business development company) — essentially a publicly traded fund that lends money to private companies, here $29.5B worth, heavily to software firms owned by private-equity buyers. Its manager hired a consultant who labeled 85% of those software loans "low risk." Eisman doesn't buy the comfort: "low risk" just means the borrowers are paying their bills today, which isn't the real question.

The real question is refinancing. Using ServiceNow (down 60% in a year) as a stand-in for software valuations, the equity cushion beneath these loans — the owners' stake that protects the lender — is now worth less than half what was paid. When a loan comes due, someone has to refinance it; "who is going to refinance the loans when the equity value is less than half?" That unanswered question is why he's skeptical of the whole private-credit-to-software chain.

Blue Owl is an alternative asset manager — a big player in private credit (lending outside the banking system). Its stock popped 10% because results weren't a disaster and a lot of traders were betting against it (19% of the shares were sold short, so any good news forces them to buy back). But Eisman flags two problems. First, its direct-lending portfolio posted a small negative return, raising the same refinancing worry as Ares Capital.

Second, and more pointed: Blue Owl paid its executives $196M in stock — up 21% in a single quarter and 50% more than expected — even though the stock is down 39% this year. Alternative managers like to report "adjusted" profits that add this stock pay back in; strip the gimmick away and use standard accounting, and Blue Owl is "barely profitable." It's a quiet way of saying the reported earnings flatter reality.