1Q26 Earnings Updates: Part One – IBM, TMUS, META, GOOG, AAPL, LLY, VICI
IBM Corporation (IBM): IBM delivered a modest beat in the first quarter, exceeding expectations on revenue, EPS, and free cash flow. Infrastructure was the clear standout, while software was in line but somewhat noisy, and consulting came in a bit light. Demand trends remain solid. Management highlighted no signs of slowing and pointed to record activity in Europe and the Middle East. Despite the strong start, full-year guidance was reiterated, consistent with IBM’s typical first-quarter approach, though caution around macro conditions and geopolitical tensions is also a factor.
The stock reaction reflects a high starting bar and continued skepticism toward the broader software industry as AI disruption reshapes investor expectations, not just IBM’s positioning. There was also some confusion around reported software growth due to the timing of the Confluent acquisition. We continue to view IBM as a credible growth story, with a potential guidance raise later this year as confidence builds. At under 20x 2026 and 17x 2027 earnings, valuation looks attractive. There is a path back to prior highs near $300, or roughly 30% upside. It may take a few more steady quarters to get there, but the setup remains favorable and worth the patience.
T-Mobile US, Inc. (TMUS): T-Mobile delivered a strong start to the year, with a clean beat and raise across both financial results and subscriber metrics. The upside was driven by better-than-expected ARPA (average revenue per account) and continued customer growth, supporting high single-digit to low double-digit growth across the business. Full-year guidance was nudged higher to reflect the first-quarter strength despite second-quarter guidance that came in a bit below expectations, driven by acquisition dilution, tougher comparisons, and some expenses shifting out of 1Q.
The bigger question for investors is durability. In a maturing telecom market where most competitors are growing slowly or not at all, there is skepticism around how long T-Mobile can sustain this level of outperformance. Management addressed that directly on the call. They pushed back on concerns around fiber strategy and a potential combination with Deutsche Telekom, while highlighting new growth areas like edge AI compute and business broadband. Most importantly, they continue to take share in the core mobile and broadband businesses. The stock moved higher on the print, up about 5%, but valuation still does not fully reflect the company’s relative growth and buyback support. As sentiment improves, we see the stock working back toward the upper end of the $230–$260 range.
Meta Platforms, Inc. (META): Meta’s first quarter came in better than expected, with beats across revenue, EPS, and operating income, but that was not enough to keep the stock from slipping back into the penalty box. The focus quickly shifted to a slightly softer outlook for the second quarter and another increase in capital spending. AI continues to drive improvements in engagement and ad conversion, supporting healthy revenue growth, though margins are expected to come under some pressure as investment levels step higher.
Management spent much of the call reinforcing the long-term vision. Zuckerberg pointed to clear early signals, including higher time spent across Facebook and Instagram, growth in business messaging on WhatsApp, increased usage of Meta AI, and improving ad performance. The debate centers on returns. Unlike peers such as Amazon, Google, and Microsoft, Meta’s AI investments are largely internal, making the path to returns less direct and harder to measure. That uncertainty came through in the tone of the call, where the messaging around ROI felt less defined. The stock has pulled back about 10%, giving up roughly half of its rebound from late March lows. At current levels, valuation provides support, particularly as the underlying business continues to deliver strong revenue growth at attractive margins. While investor confidence may take time to rebuild, we view the recent weakness as an opportunity, with upside to $700+ at just 20x 2027 estimates.
Alphabet Inc. (GOOG): Google reported a very strong quarter, with a meaningful beat on both revenue and EPS, driven by continued strength in Search and a standout performance in Cloud. Free cash flow declined as spending ramped, and network advertising remained a weak spot, but the broader takeaway is that core demand trends remain solid. AI is starting to show up as a driver of the business, not just a cost center. Cloud growth is benefiting from enterprise AI demand, while AI features are improving engagement and monetization in Search across key verticals including retail, financials, and healthcare.
Management made it clear that demand is running ahead of capacity, particularly in Cloud, which could have delivered even stronger results with more infrastructure in place. That dynamic is pushing CapEx higher into 2026 and likely again into 2027, with near-term margin pressure also coming from the Wiz acquisition. The investor debate is split between those who see clear evidence that AI is driving real growth today and those focused on rising spending, lower near-term cash flow, and a more competitive landscape.
We increasingly view GOOG as an AI payoff story rather than simply an AI defense story. The constraint today is capacity, not demand, and the key will be execution—bringing new capacity online, converting backlog into revenue, and maintaining margin discipline. After a roughly 10% move higher on the quarter, the stock is less obviously cheap, but remains constructive. If Cloud momentum continues, Search holds up, and elevated investment translates into revenue and cash flow, there is still moderate upside as the market shifts toward 2027 estimates and recognizes Google more clearly as an AI winner.
Apple Inc. (AAPL): Apple delivered another strong quarter, with broad-based revenue strength across products and geographies, and margins again coming in better than expected. Demand across the portfolio remains very strong, though supply constraints continue to limit full upside. Even with those constraints, Apple is leveraging revenue growth effectively, supporting margins despite early signs of pressure from rising memory costs.
Guidance for the third quarter came in well ahead of expectations, reinforcing the durability of demand, though management acknowledged that margin pressure is likely to build over the next few quarters. The decision to move away from a net cash neutral target adds another layer to the story. Despite this shift in capital allocation, the company raised its dividend and announced a new share buyback. The investor debate is shifting toward how Apple manages margin pressure from here, what is driving the change in capital allocation strategy, and whether AI-driven product enhancements, particularly around Siri, can further support the iPhone cycle, alongside the CEO leadership transition later this year.
Our view is largely unchanged. Apple continues to operate from a position of strength, with sustained demand and a favorable product cycle. We expect management to navigate margin pressure effectively, supported by scale and strong positioning with both suppliers and customers. At over 30x 2026 earnings, valuation already reflects much of this strength, suggesting more modest upside from current levels. We continue to view Apple as a core holding, with incremental upside tied to sustained demand, improving AI sentiment, and continued execution on margins.
Eli Lilly and Company (LLY): Lilly put up another strong quarter, continuing a streak of meaningful beats and upward revisions to expectations. The core story is intact and getting stronger. Mounjaro and Zepbound continue to drive the majority of growth, while the newly approved obesity pill Foundayo and advancing clinical progress in oncology and neurology should help sustain elevated growth. That added breadth is important and was reinforced by management increasing full-year guidance in line with the first-quarter upside. The investor debate centers on how the next leg of growth unfolds, particularly around Foundayo, the balance between volume and pricing, and potential policy headwinds including tariffs and government pricing pressure.
Lilly is executing a proven playbook with Foundayo in diabetes and obesity, while also expanding in oncology and neurology and using its financial strength to support growth-enhancing M&A. Since our initial purchase less than a year ago, earnings estimates have increased by roughly 33% while the stock is up about 22%, leading to a more attractive valuation in the low 20s on 2027 estimates. With continued execution, we see a path back toward new highs near $1,100.
VICI Properties Inc. (VICI): A solid, clean quarter that leaves the core story largely unchanged. VICI continues to deliver steady growth, deploy capital into new deals, and modestly raise guidance, reinforcing the durability of the model. AFFO, the key metric for investors, is now expected to grow about 4.5%, reflecting a slight increase to guidance despite a rising share count.
Capital deployment is the main driver, with recent transactions across both new and existing tenants continuing to build out the growth pipeline. Portfolio quality is high, and management is focused on expanding within its current partner base.
The investor debate centers on upside versus stability. Bulls see a durable, partner-led model with limited operating risk, while bears argue the stock already reflects that stability. Tenant concentration, particularly exposure to Caesars, is still a key focus.
Our positive view remains intact. VICI continues to execute, and the dividend, now yielding over 6%, supports a double-digit total return alongside steady AFFO growth. We maintain our $31 target based on 12.5x the $2.45 AFFO per share guide. The stock looks attractive on pullbacks, though a more meaningful breakout likely requires faster per-share growth and improved tenant diversification.
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