Dear Fellow Investor,
The government just made one of the biggest bets in its history.
Two hundred billion dollars.
All of it aimed at building computer chips on American soil.
Most investors likely saw the headline and moved on.
George Gilder did not.
He thinks Washington tipped its hand, and almost nobody is recognizing this tell.
When the government pours money this big into one corner of technology, it is pointing to where the future is going.
George has spent forty- plus years watching for signals exactly like this one.
And he believes this one points to a coming shift in computing that could leave today's machines behind.
He will lay out what he found the moment you take a look.
See the signal George is reading.
To the future,
Roger Michalski
Publisher, Eagle Financial Publications
American Eagle’s Q1 Beat Leaves Investors With a Bigger Question
Reported by Jennifer Ryan Woods. Article Posted: 6/19/2026.
Key Points
- American Eagle Outfitters beat Q1 expectations, but investors remain focused on weakness in the core American Eagle brand.
- Aerie and OFFLINE delivered standout growth, helping offset pressure in women’s apparel and seasonal categories.
- The next test is whether Aerie can keep growing while American Eagle stabilizes margins ahead of the back-to-school season.
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American Eagle Outfitters Inc. (NYSE: AEO) has now delivered consecutive earnings beats. Yet even after posting another better-than-expected quarter on May 28, shares sold off as concerns about weakness in the core American Eagle brand and pressure on second-quarter gross margin overshadowed stellar performance at Aerie.
Since then, the stock has recovered its losses. Where shares go next will likely depend on Aerie's ability to maintain its momentum after posting 25% comparable sales growth, whether the American Eagle brand can regain its footing, and how much pressure tariffs and other costs ultimately place on margins.
Aerie's Strength Helps Offset American Eagle's Weakness
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See the 5 stocks to avoidAmerican Eagle reported first-quarter earnings of 14 cents per share, a sharp improvement from the 29-cent-per-share loss reported a year earlier. Earnings exceeded Wall Street estimates by 3 cents. Revenue rose nearly 10% from the prior-year period to $1.2 billion, topping expectations by more than $10 million. The results marked the company's fourth consecutive quarter of earnings and revenue beats.
Total comparable sales increased 8%. Gross margin expanded 860 basis points to 38.2%, while merchandise margin improved 710 basis points. The results benefited from an inventory write-down recorded in the prior-year quarter, which weighed on margins.
Aerie and its activewear-focused OFFLINE brand were the company's standout performers. Revenue for the brands increased 34% year over year to $481 million.
On the earnings call, CEO Jay Schottenstein said he was "extremely pleased" with the continued momentum at Aerie and OFFLINE, citing strong demand across categories and channels, compelling product offerings, high customer engagement, and growing brand awareness.
The flagship American Eagle brand faced challenges during the quarter. Revenue and comparable sales each declined about 2% from a year earlier to roughly $697 million. Results across categories were mixed, with the men's business delivering its third consecutive quarter of positive performance while certain areas of the women's business, including bottoms and seasonal categories, remained under pressure.
The company said it has already begun refining its product assortment ahead of the important back-to-school season.
Second-Quarter Gross Margin Faces Pressure
American Eagle also provided guidance calling for second-quarter operating income of between $45 million and $50 million, and comparable sales growth in the mid- to high-single digits. Gross margin is projected to decline from the previous year as the company faces a 150- to 200-basis-point tariff headwind, as well as markdown pressure at the American Eagle brand.
Momentum at Aerie and OFFLINE is expected to continue in Q2, with comparable sales growth in the high teens to low twenties. On the flip side, the American Eagle brand is expected to remain under pressure, with comparable sales ranging from flat to down low single digits. Schottenstein did note, however, “While May started slowly for the AE brand, we're encouraged by the improvement in the business that we have seen over the last few weeks.”
For the full year, the retailer expects operating income of $390 million to $410 million, supported by mid-single-digit comparable sales growth. Gross margin is expected to increase year over year.
Multiple Analysts Lower Price Targets Following Q1 Report
Despite posting another earnings and revenue beat, investors appeared focused on the challenges facing the American Eagle brand and the expected decline in second-quarter gross margin.
At least six analysts lowered their price targets following the report. The stock currently carries a consensus Hold rating and a 12-month price target of $20.36. Price targets range from a low of $16 to a high of $31.
The average price target has declined steadily since early January, when it stood above $28. Even so, it remains well above the sub-$10 consensus target seen a year ago.
AEO's 2026 Pull Back Follows Major Rally
The Q1 report and the wave of analyst price-target cuts that followed sent the stock down roughly 12%, extending an already difficult stretch for shareholders. Year to date, shares are down by over 30%.
However, the recent weakness follows a powerful rally in the second half of 2025. Helped by a string of positive earnings reports, shares climbed from a 52-week low of less than $10 in July to a 52-week high above $28 in early January. Despite the pullback over the last several months, the stock remains up around 77% over the past year.
The pullback has also made the stock's valuation more attractive. American Eagle Outfitters' price-to-earnings ratio sits around 11x, well below the retail industry average of 16.3x. However, the stock is not the cheapest among some of its peers. Abercrombie & Fitch Co. (NYSE: ANF) trades at roughly 8.3x earnings, while The Gap Inc. (NYSE: GAP) trades at about 8.5x.
While shares of American Eagle have recovered from their post-earnings decline, investors are still weighing the strength of Aerie against ongoing challenges at the American Eagle brand. In the coming quarters, attention is likely to remain focused on whether Aerie's momentum can continue, whether the American Eagle brand can regain its footing, and how much pressure tariffs, markdowns, and other costs ultimately place on margins.
Lululemon’s China Backlash May Be Hiding a Bigger Valuation Story
By Sam Quirke. Date Posted: 6/22/2026.
Key Points
- A high-profile promotional gaffe on the Great Wall of China has piled fresh pressure on Lululemon, with the stock now trading near multi-year lows.
- Beneath the noise, however, the company continues to top earnings expectations and is trading at one of its cheapest valuations in over a decade.
- For investors with a long enough time horizon, the latest dip in sentiment may be remembered as the kind of opportunity that doesn't come around often.
- Special Report: SpaceX is offering you shares. Don't take them.
It’s not often that a yoga festival becomes a stock market story, but that’s exactly what’s happening to Lululemon Athletica Inc (NASDAQ: LULU) right now. The activewear giant staged a large-scale promotional event on a section of the Great Wall of China near Beijing in late May, complete with thousands of attendees, Chinese celebrities, and what was meant to be a traditional drum performance. The trouble is that the drum used reportedly wasn’t Chinese at all. It was Japanese, and Chinese social media has not been gentle about it.
The backlash on the Chinese social media platform Weibo has been substantial, with the related discussion drawing tens of millions of views, and the company was forced to issue an apology. Considering that China has been one of the most important growth markets for Lululemon over the past few years, this is the absolute last thing the stock needed. The shares were already deep in the doghouse, and a public misstep like this only deepens the sense that everything that could be going wrong for Lululemon is.
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Discover Porter Stansberry's full analysis and investment recommendations todayHowever, for those who can step back and look at the bigger picture, this might be exactly the kind of moment that long-term bulls will look back on with a wry smile.
A Stock That's Been Badly Beaten Up
This latest gaffe in China didn't cause the selloff in Lululemon, but it has added to one that's been quietly grinding away since late 2023. Shares are down close to 50% year to date, having hit a fresh low earlier this month, and are trading at roughly the same level as they were eight years ago.
For a brand that was, not so long ago, one of the great growth stories in consumer retail, that’s a stunning reversal of fortune. The interesting part is that this collapse has not been driven by a business that’s falling apart. Lululemon has continued to exceed analyst expectations for both earnings and revenue in recent quarterly reports, including its latest results earlier this month.
The problem, instead, has been an overall deceleration in growth and consistently soft forward guidance. Each quarter has come with a slightly weaker outlook than the market wanted to hear, and that sense of deceleration is what has truly done the damage. When a stock is priced like a growth name but stops growing like one, the re-rating can be brutal.
The Valuation Tells Its Own Story
But here’s where it gets interesting for those willing to look past the noise. Lululemon's price-to-earnings (PE) ratio is currently below 10, the first time it’s been at that level in more than a decade. For a profitable, cash-generative, globally recognized brand with a still-growing footprint in some of the world’s largest markets, that multiple is starting to feel like a bargain.
Compared with Lululemon’s peak valuation, the current one is almost unrecognizable. That’s not because the business has structurally broken, but because the market has gone from extreme optimism to extreme pessimism. The truth, as is so often the case, is likely somewhere in the middle. And for patient investors, the middle is exactly where the outsized opportunities tend to live.
Even the Cautious Voices Imply Upside
Arguably, the most striking point about Lululemon’s current setup is what the cautious analysts are saying. Sure, much of the recent commentary has been distinctly downbeat, with some calling the company a "rudderless ship in increasingly choppy seas," and there’s a sense that not much will change until the new CEO, Heidi O'Neill, takes the helm in September.
However, even with all of that skepticism baked in, Lululemon's consensus rating of Reduce may not tell the full story. The recently refreshed price targets from the more cautious firms still imply upside from current levels. The likes of Daiwa Securities, Deutsche Bank, and Bank of America, for example, each rate Lululemon a Hold or equivalent and set targets ranging from $120 to $140, comfortably above where the stock is currently trading at around $110. Combine that with the rock-bottom valuation the stock is currently trading at, and you have the kind of setup that's hard to ignore.
A Risk-Reward That's Starting to Tilt
To be sure, this still isn't a stock for the faint-hearted. There's a genuine possibility that things could get worse before they get better, particularly if the China headwinds intensify or if O'Neill's arrival sparks further strategic changes that need time to take hold. The market will likely remain unforgiving until there's hard evidence that the deceleration story has finally hit a floor.
But patience here may eventually be rewarded handsomely. The China gaffe is the kind of headline that scares short-term traders out of a stock and lets long-term bulls quietly begin building positions. While the rest of the market is busy pointing and laughing at a misplaced drum, the smarter money may be paying closer attention to what comes next.
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