Morning Watchlist: Tuesday Edition
A quick note from Behind the Markets
It's the first trading day of September. And the new month opened its eyes to the sound of missiles.
Over the weekend, the United States and Iran traded fire for the first time in a month. Oil jumped back above $90. And that wasn't even the only for-sale sign that came down since we last spoke — Friday, a $50 billion takeover died, and the stock it was holding up fell 12%.
The crowd will spend this week arguing about headlines. We'll do what we always do: stand one step behind them.
Three stories this morning. Three pairings. Let's get into it.
1) The Gulf Woke Back Up
Here's what happened, in order. On Sunday, U.S. forces struck rocket launchers on Iran's Larak Island — launchers that Central Command said were preparing to lay sea mines in the Strait of Hormuz. Iran answered with eight missiles fired at two American bases in Jordan. All eight were intercepted. Then Iranian state media reported a tanker in the strait was disabled after striking two sea mines and catching fire.
By Monday morning, Brent crude was back above $90 a barrel, with West Texas around $85 — and that's with President Trump simultaneously announcing a deal he says gives the U.S. majority control of more than 65 billion barrels of Venezuelan oil reserves. Even a headline that size couldn't hold prices down. Treasury Secretary Scott Bessent says new sanctions on Iran's banking partners will now arrive roughly weekly.
Everyone will watch the oil price. We're watching the gas that rides the same water. According to the International Energy Agency, roughly a fifth of the world's LNG — liquefied natural gas, chilled into liquid so it can travel by ship — passes through the Strait of Hormuz, most of it Qatar's. And unlike oil, which has pipelines around the strait, Qatar's gas has no other way out.
Every country that heats homes and runs power plants on that gas just got reminded what a single chokepoint can do. When the pipeline into town gets shaky, you rent a spare port.
The pairing: Excelerate Energy (EE) — Buy
Excelerate operates floating LNG import terminals — ships that anchor offshore and turn liquid cargo back into usable gas, so a country can start importing in months instead of the years a land terminal takes. It runs ten of them, tied with Höegh LNG for the largest fleet on Earth, across Bangladesh, Pakistan, Argentina, Brazil, Kuwait, and the UAE. Think of it as the generator-rental company in a city where the power keeps flickering. Nobody rents a generator when the grid is perfect. The grid is not perfect.
The whole global fleet of these vessels — about 50 ships — is running near full utilization, and Excelerate pioneered the model of selling capacity to multiple customers instead of one. Second-quarter earnings beat expectations, revenue grew 44% last year, the dividend was just raised 13%, and Goldman Sachs recently initiated coverage at Buy with a $49 target against a roughly $38.50 stock. Market cap: about $4.4 billion.
The honest risks? At about 20 times next year's expected earnings, this isn't bargain-bin cheap. Peace breaking out quickly would cool the urgency. And two of its ships work inside the Gulf itself, in Kuwait and the UAE — the same crisis that sells its product can complicate those charters.
A ledger note while we're here. Two weeks ago we put Alaska Air on Watch with a plain trigger: oil holding in the low $80s through the Warsh speech and Iran's response. The response came, and oil didn't hold. Trigger dead. No trade. That's not a failure — that's the system working. And International Seaways, our tanker Watch from August 20th, is exactly why we said pullback, not peak: mines in the strait push freight rates and dangers up together. Still waiting.
2) The Deal Died. Check Whether the Company Did.
On Friday, the private equity firm Advent and the payments company Stripe walked away from their pursuit of PayPal — a takeover that would have topped $50 billion, one of the largest buyouts ever attempted. PayPal fell 12%, to about $54, unwinding a rumor rally that had run more than 40% over the quarter.
Yesterday we told you what a dead deal usually reveals: a stock propped up by a for-sale sign is a house held up by the sign, and Wendy's, sign removed, turned out to be a fixer-upper. So we did the only honest next step. We walked this property too.
Different house. PayPal's board rejected the opening bid as too low — and reports said talks were about pushing the price higher, before the buyers gave up. Over the past twelve months, PayPal earned $4.9 billion on $34 billion in revenue, generated $6.6 billion in free cash flow, and shrank its share count nearly 8% through buybacks. Enrique Lores, the former HP chief who took over in March, has the company posting the strong quarters that attracted the bidders in the first place.
Now the arithmetic. The board said more than $50 billion wasn't enough. After Friday's drop, the entire company sells for about $46 billion — roughly 10 times earnings, against 21 for the S&P 500. The owner turned down an offer, the buyer drove off, and now the house lists below the offer.
The pairing: PayPal (PYPL) — Buy
The risks, plainly: the rest of the rumor premium can keep bleeding — the stock traded meaningfully lower before the bid reports began. Stripe and Apple keep squeezing the checkout button, and PayPal's growth is modest, which is why 43 analysts land at a consensus Hold with a target near $60. But a business gushing over six billion dollars of free cash a year, retiring its own shares, at ten times earnings, doesn't need a takeover to work. The buyout was one way to win. It was never the thesis.
3) The Record Quarter That Fell 8%
Friday gave us one of those results that teaches more than a textbook. Marvell Technology — one of the companies designing custom AI chips for the tech giants — reported revenue up 37%, record data-center sales of $2.17 billion, and a brand-new custom chip agreement with Google.
The stock fell about 8%.
Why? Margins. Custom silicon — chips built to one customer's specs, the fast-growing alternative to buying Nvidia's off-the-shelf hardware — pays the designer less per chip, and Marvell guided its profit margins down. The market spent Friday repricing what a custom-chip dollar is worth, two trading days before Broadcom, the biggest custom-chip player of all, reports on Wednesday night.
Here's the step-behind-the-headline part. Whoever wins that fight — Marvell, Broadcom, Google's own designs, Nvidia — every one of those chips ends up in the same place: an advanced package, assembled and tested, before it ever sees a data center. Whoever wins the holiday shopping war, the cardboard-box maker gets paid.
The pairing: Amkor Technology (AMKR) — Buy
Amkor is the box maker — the largest U.S.-headquartered provider of chip packaging and testing. Nvidia just signed a $1.5 billion multi-year partnership to expand packaging capacity with them. TSMC signed a ten-year agreement to accelerate U.S. packaging alongside its Arizona fabs. Second-quarter revenue hit a record $1.9 billion, up 26%, with earnings of 70 cents a share against the roughly 48 cents Wall Street expected.
And the price? The stock closed Friday near $48 — dragged down 7.5% in the Marvell downdraft — which is about half its 52-week high of $96.68, and roughly 17.6 times next year's expected earnings. The average analyst target is $76, and the consensus is a Buy. We've spent two weeks waiting for a dip in the AI supply chain — Fabrinet and FormFactor never gave us one. This corner of the aisle just did.
The honest risks: Amkor's own third-quarter guidance came in light in July ($2.0 billion versus $2.09 billion expected) on soft phone-assembly work, memory supply is tight, and a poorly received Broadcom report Wednesday could knock the whole aisle down another shelf. That last one cuts both ways — we'd rather own the box maker before the argument than after it's settled.
Before You Go
A strait full of mines and the company that rents the world spare ports.
A dead deal that left a cash machine selling for less than the offer its board refused.
And a record quarter that fell 8%, putting the chip industry's box maker on sale two days before the next big report.
One theme, as always: the crowd prices the headline in a day — the businesses standing one step behind it get repriced later.
Have a wonderful day.
We'll see you tomorrow.
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Written by Behind the Markets