U.S. stocks set for mixed open as chip earnings, M&A talks and index changes drive Friday moves

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Highlights

Applied Materials declines nearly 6% despite a 25% sales increase and adjusted EPS of $3.50, as guidance to $10.25 billion revenue misses elevated expectations.
Reddit surges 11.5% premarket after being chosen to replace AvalonBay Communities in the S&P 500 on August 18, reversing a more than 30% year-to-date loss.
RBC Capital lifts Palo Alto Networks price target to $434 and CrowdStrike to $256 ahead of earnings, while Bernstein upgrades Wayfair to buy with a $125 target.

Corporate catalysts shape Friday trading

As reported by CNBC, Friday's market focus centers on a fresh set of company-specific developments, from earnings and analyst calls to takeover discussions and index changes.

Applied Materials is falling nearly 6% after posting strong quarterly results that still miss elevated near-term expectations. Sales rise 25% from a year earlier, adjusted earnings per share reach $3.50 against expectations of $3.42, and the semiconductor equipment maker guides revenue to $10.25 billion with adjusted EPS of $4.02.

Sandisk is adding to Thursday's rally after a bullish analyst meeting, rising another 6% following a 13.7% jump in the prior session. JPMorgan starts the stock with a buy rating, saying long-term agreements are resetting margins higher and reducing cyclicality, while Micron also advances in the broader memory trade.

Reddit is surging 11.5% in premarket trading after being selected to replace AvalonBay Communities in the S&P 500 on Aug. 18. The move lifts a stock that has struggled this year and was down more than 30% year to date as of Thursday's close.

Workday is giving back some of its sharp late-Thursday gains after Reuters reports the human resources software company is in talks with Silver Lake about a potential acquisition. Cowen says the company could be worth about $230 per share in a takeout, even as enterprise software names face pressure from concerns about AI disruption.

Analyst calls highlight sector pressure and opportunity

Broker research is also driving moves across cybersecurity, consumer finance, telecoms, retail and media as investors position for the second half of the year.

RBC Capital lifts price targets on Palo Alto Networks and CrowdStrike ahead of upcoming earnings, raising Palo Alto to $434 from $330 and CrowdStrike to $256 from $188.75. TD Cowen reiterates Capital One as its top pick in credit cards, pointing to expected benefits from the Discover deal, buybacks and an improvement in return on tangible equity.

T-Mobile is downgraded to hold from buy by Wolfe Research, which cites new competitive pressure from AT&T, Verizon and cable operators offering mobile devices. Wolfe also warns that SpaceX's Starlink satellite internet service could weigh on T-Mobile's wireless business and says investor expectations for the stock are too high.

Wayfair is upgraded to buy by Bernstein, which raises its price target to $125 from $100 on signs of more durable growth. The online retailer's shares are up 5% in morning trading, extending a strong post-earnings run, although the stock remains well below its March 2021 record close of $345.

Fox also wins upgrades from JPMorgan and Wells Fargo, with both firms raising price targets and backing the company's Roku acquisition. Wells Fargo describes Roku as a growth and cash-generating asset for Fox, while the broadcaster is also coming off the World Cup, which is expected to support earnings.

In our earlier article on Reddit’s planned addition to the S&P 500, we covered how the index change sparked a sharp premarket jump in the stock and set up potential buying from funds that track the benchmark. We also noted that the move was linked to AvalonBay Communities’ exit ahead of its merger with Equity Residential, and that new entrants often see an initial pop that can fade in the months after inclusion.

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