To The Moon

10 August 2026

Weak US employment data lowered expectations for a rate hike, driving a rebound in US equities and Treasuries last Friday. Over the weekend, Berkshire Hathaway’s strong earnings and AAOI’s results boosted interest in optical networking stocks. However, renewed uncertainty surrounding the Strait of Hormuz negotiations and an attack on a Saudi Aramco refinery raised energy-supply risks.

S&P 500 rose 0.62%

Dow Jones rose 0.28%

Nasdaq rose 1.30%

US 2-year Treasury yield fell approximately 5 basis points to around 4.20%

US 10-year Treasury yield fell approximately 2 basis points to around 4.64%

All three major US indices advanced last Friday, mainly because US nonfarm payrolls unexpectedly fell by 23,000 in July, significantly weaker than expectations for an increase of 80,000. This lowered the market-implied probability of a September rate hike from approximately 55% to 40%.

For the week, the S&P 500 gained 3.6%, the Dow rose 3.0%, and the Nasdaq advanced 5.2%.

Sources: Reuters and AP

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Key News

1) Strait of Hormuz Negotiations Remain Uncertain as Saudi Aramco Refinery Is Attacked Again

* Iran’s Parliamentary Committee on National Security and Foreign Policy unanimously approved the general framework of its Strategic Action Plan to Ensure the Security and Development of the Strait of Hormuz. However, this was only approval at the committee level, and the detailed provisions and implementation timeline remain unclear.

* Iran said its agreement with Oman on a new shipping arrangement for the Strait of Hormuz had entered its “final stage.” However, an agreement on shipping lanes would not necessarily mean that the strait would immediately reopen fully.

* Iran’s main conditions reportedly include an end to US military threats, a halt to attacks on Iran and its regional allies, the lifting of restrictions on Iranian ports, the removal of sanctions, the release of frozen Iranian assets, and compensation for damage caused by earlier airstrikes.

* US Vice President JD Vance described the US-Iran conflict as still being in the “middle stage of the game.” He said the US was using a combination of diplomatic, economic, and military measures while seeking a path to end the conflict.

* President Trump said the US was handling the situation with Iran in a relatively low-profile manner, suggesting that Washington currently favours pressure and indirect negotiations over an immediate military escalation.

* Separately, the Houthis claimed responsibility for a drone attack on Saudi Aramco’s Jazan refinery, which can process approximately 400,000 barrels of crude oil per day. Saudi Arabia said the fire had been extinguished, with no casualties reported.

* The Houthis also attacked Yemen’s Port of Mokha, extending the risk from the Strait of Hormuz to the Bab el-Mandeb Strait, which connects the Red Sea and the Gulf of Aden. Two of the world’s most important energy and shipping routes are therefore facing security threats simultaneously.

Market impact: Continued restrictions in the strait and attacks on energy infrastructure could push up oil prices, shipping insurance costs, and inflation expectations. This may weigh on airlines, transportation companies, and highly valued growth stocks.

On the positive side: Iran and Oman appear close to finalising their shipping-lane agreement, while the US and Iran continue to exchange messages through intermediaries. If both sides can resolve the sequencing of their respective actions, there remains a credible diplomatic path towards reopening the strait.

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2) US Senate Passes Stopgap Funding Bill, Temporarily Reducing Shutdown Risk

* The US Senate voted 90–6 to approve a stopgap funding bill that would keep most federal government agencies operating at current funding levels until 11 December.

* The legislation aims to prevent a government shutdown after existing funding expires on 30 September, particularly ahead of the 3 November midterm elections.

* The Republican-controlled House of Representatives previously passed its own version of the stopgap funding bill, but the two versions are not identical.

* The Senate bill has therefore not yet become law. Both chambers must reconcile their differences and pass a unified version before sending it to President Trump for his signature.

* The Senate version restricts the government from reallocating funding from other programmes towards border security.

* The legislation allows the government to adjust funding for housing and food-assistance programmes. It also temporarily limits the Office of Management and Budget’s ability to place political appointees in control of major funding allocations.

* The bipartisan 90–6 vote shows that lawmakers broadly want to avoid a shutdown before the midterm elections. However, individual spending provisions could remain key points of contention during the next phase of negotiations.

Market impact: The reduced near-term shutdown risk should support stability in government services, the release of economic data, and federal employee spending. However, political uncertainty has not disappeared because the House and Senate have yet to reach a final agreement.

On the positive side: The overwhelming 90-vote majority reflects strong bipartisan support for avoiding a shutdown, increasing the likelihood that lawmakers will reach an agreement before the end-September deadline.

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3) Berkshire Hathaway’s Q2 Profit Doubles as It Ends 14 Consecutive Quarters of Net Stock Selling

* Berkshire Hathaway’s Q2 revenue rose 10% year over year to US$101.81 billion, while operating profit increased 16% to US$12.98 billion, exceeding market expectations.

* Net income attributable to shareholders more than doubled from US$12.37 billion a year earlier to US$25.67 billion. However, net income includes unrealised gains and losses from the company’s equity investments and can therefore be volatile.

* Profit at BNSF Railway increased 6%, while Berkshire Hathaway Energy’s profit rose 27%. NetJets and electronic-components distributor TTI also reported improved performance.

* In contrast, GEICO’s pre-tax underwriting profit fell 45%, while overall insurance and reinsurance profit declined 11%, representing the main weakness in the results.

* Berkshire repurchased US$4.5 billion of its own shares during Q2, its largest quarterly buyback since 2021. It repurchased more than another US$3.3 billion in July.

* Berkshire’s stock purchases exceeded its stock sales by nearly US$20 billion during Q2, ending 14 consecutive quarters of net equity selling.

* Berkshire increased its investment in Alphabet by approximately US$10 billion, making Google’s parent company one of its five largest equity holdings. Its cash reserves declined from US$380.2 billion at the end of March to US$364.7 billion.

Market impact: The large share repurchases and return to net equity buying suggest that Berkshire is beginning to find attractive opportunities in the market. This could support sentiment towards both Berkshire and Alphabet while providing a broader confidence boost to equities.

On the positive side: Even after investing nearly US$20 billion on a net basis, Berkshire still holds more than US$360 billion in cash. This gives the company both defensive strength and substantial capacity for further acquisitions, investments, and share repurchases.

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4) SK Hynix Confirms It Is Reviewing Additional Shareholder Returns, but Reported US$71 Billion Plan Remains Unverified

* South Korean media reported that SK Hynix could be preparing a shareholder-return programme worth approximately KRW100 trillion, or around US$71 billion, comprising cash dividends and share repurchases.

* The report estimated that share buybacks could total approximately KRW40 trillion, representing around 40% of the overall plan.

* The market believes the buyback could offset the dilution resulting from a potential US ADR listing involving the issuance of new shares equivalent to approximately 2.5% of the company.

* However, SK Hynix previously clarified that it had neither confirmed nor specifically reviewed the reported KRW100 trillion shareholder-return programme or KRW40 trillion buyback. The amounts should therefore still be treated as media speculation.

* The company has officially confirmed only that it is “actively reviewing” additional shareholder-return measures and intends to finalise and announce the details during the third quarter.

* SK Hynix also announced a dividend of KRW375 per share, confirming the direction of its shareholder-return policy, although the final scale of additional measures remains pending.

* Strong demand for high-bandwidth memory from AI servers, together with the company’s growing cash flow, provides the fundamental support for higher dividends, share repurchases, or share cancellations.

Market impact: Expectations for a large buyback could ease concerns about dilution from a potential ADR issuance and support the valuation of SK Hynix and the broader memory sector. However, the shares could face a “buy the rumour, sell the fact” reaction if the final programme falls short of market expectations.

On the positive side: Even though the reported US$71 billion figure remains unconfirmed, the company has officially committed to announcing additional shareholder-return measures in Q3. This indicates that strong HBM earnings are gradually translating from capacity investment into tangible returns for shareholders.

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5) AAOI’s Strong Results Lift the Broader Optical Networking Sector

* Applied Optoelectronics, or AAOI, reported Q2 revenue of US$191.9 million, representing growth of 86% year over year and 27% quarter over quarter. This marked the company’s fifth consecutive quarter of record revenue.

* Adjusted earnings came in at US$0.06 per share, returning the company to non-GAAP profitability and exceeding market expectations of approximately US$0.01–US$0.02.

* Sales of 800G optical transceivers more than doubled from the previous quarter, showing that AI data-centre upgrades are driving rapid growth in demand for high-speed optical connectivity.

* AAOI expects Q3 revenue of US$255 million to US$290 million and adjusted earnings of US$0.11–US$0.26 per share, pointing to a further acceleration in both revenue and earnings.

* The company’s total monthly production capacity is currently close to 200,000 units. It aims to increase the monthly capacity of its 800G and 1.6T products to approximately 650,000 units by year-end.

* Management expects demand to continue exceeding production capacity until at least mid-2027, indicating that the main near-term constraint is supply rather than customer demand.

* AAOI gained approximately 9% last Friday, while Coherent rose around 13%, Lumentum gained approximately 6%, and Corning advanced about 5%. The market is also anticipating possible US restrictions on advanced optical modules manufactured in China and used in American data centres.

Market impact: The results provide further evidence that AI data-centre investment is expanding beyond GPUs into optical modules, switches, and high-speed networking. Capital could therefore continue rotating from individual chipmakers into the broader optical-communications supply chain.

On the positive side: Although AAOI remains loss-making on a GAAP basis and faces execution risks as it expands capacity, demand exceeding supply, rapid growth in 800G products, and the ramp-up of 1.6T products provide stronger visibility for future revenue and margin improvement.

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Today’s Focus

Major Developments

* Continue monitoring the conditions being exchanged between the US and Iran through intermediaries, as well as whether the Iran-Oman shipping-lane agreement will be formally announced.

* Watch for Saudi Arabia’s response to the attack on the Jazan refinery and whether Türkiye and Pakistan provide support under their latest defence arrangements.

* Monitor negotiations between the US House and Senate over the stopgap funding bill.

* Berkshire Hathaway and Alphabet will see their first market reactions following the weekend earnings announcements.

US Economic Data

* The more important releases this week will be the US July CPI report on Wednesday and the PPI report on Thursday.

What stocks to watch today:

Before the market opens

* Monday.com (MNDY)

* CEVA (CEVA)

* Camtek (CAMT)

After the market closes:

* AST SpaceMobile (ASTS)

* $Rocket Lab USA, Inc.(RKLB)$  

* Rapid7 (RPD)

* Upwork (UPWK)

* $USA Rare Earth Inc.(USAR)$  

* Plug Power (PLUG)

* Archer Aviation (ACHR)

* Hims & Hers Health (HIMS)

Which companies earnings are you excited about today?

@TheMarketLens101