Cerebras Systems: A Leading AI Semiconductor Company

Cerebras Systems: A Leading AI Semiconductor Company

Founded in 2015, Cerebras Systems (CBRS) designs ultra-high-performance AI hardware and cloud computing services specifically to accelerate deep learning and large language models. The Zacks Rank #3 (Hold) company is best-known for its Wafer-Scale Engine (WSE). Legacy chips (GPUs & CPUs) are designed with hundreds of small silicon wafers. However, Cerebras’ key breakthrough the creation of a single large chip. By housing its technology on a single piece of silicon, Cerebras can eliminate the communication bottlenecks typical of multi-GPU clusters. In other words, communication between cores happens directly on the silicon rather than needing to travel across cables and motherboards. This technological breakthrough dramatically reduces latency by orders of magnitude.

Cerebras’s niche means that it can deliver 1,800 tokens per second, making it more optimal than GPUs for real-time voice, live translation, and multi-step agentic workflows. Additionally, the company’s WSE-3 chip replaces the need for hundreds of GPU clusters, reducing expensive compute, software overhead, and networking costs.

Why Cerebras is Positioned Perfectly

NVIDIA (NVDA) remains the dominant player in AI training. However, Cerebras is fast becoming the leader in inference (running AI models). As real-time AI agents proliferate, Cerebras’s business will grow rapidly. Additionally, the new industry trend of open-source models is a huge tailwind for the company. As models like Meta Platforms’ (META) Llama become increasingly popular, enterprise demand will shift towards execution speed, benefitting Cerebras.

Cerebras Customers & Partnerships

Although Cerebras stock recently debuted, the company already has signed a multi-billion-dollar compute deal with AI leader OpenAI. The company also has a deal with biotech giant GlaxoSmithKline to aid with drug research and discovery. Meanwhile, the company has strategic partnerships with several industry leaders, including Amazon (AMZN), Advanced Micro Devices (AMD), and CrowdStrike (CRWD).

Wall Street Expects Explosive Growth

Zacks Consensus Estimates suggest that Wall Street analysts are extremely bullish on Cerebras. Wall Street expects annual revenue to jump from ~$850 million in 2026 to ~$3 billion in 2027.

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IPO U-Turn Base

CBRS shares are forming a bullish IPO U-Turn base structure. In addition, on Monday, shares cleared the 50-day moving average for the first time, signaling a bullish trend change.

Image Source: Zacks Investment Research

Bottom Line

As artificial intelligence shifts from training toward inference, Cerebras Systems is uniquely positioned to capture significant market share. Its game-changing single-silicon architecture is generating massive revenue growth.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Amazon Just Flipped the AI Capex Narrative

After delivering strong earnings but receiving mixed initial reactions, the hyperscalers are suddenly surging. Amazon (AMZN) and Microsoft (MSFT) have rallied roughly 20%–25% from their pre-earnings levels, while Alphabet (GOOGL) and Meta Platforms (META) have recovered sharply from their post-report lows. What began as another round of anxiety over runaway AI spending has quickly turned into renewed enthusiasm for the companies building the infrastructure behind the boom.

At the beginning of earnings season, however, investors were looking at these results through a very different lens.

Alphabet delivered what was, by almost any operating measure, an exceptional quarter. Revenue increased 24%, operating income climbed 30% and Google Cloud revenue surged 82%, with Cloud operating margins expanding to 35.6%. Yet investors focused overwhelmingly on the company’s $44.9 billion of quarterly capital expenditures and the resulting $5.9 billion free-cash-flow outflow.

Meta faced a similar reaction. Revenue increased 28% year over year, supported by a 14% increase in ad impressions and a 12% increase in average ad prices. But quarterly capital expenditures reached $31.1 billion, leaving the company with just $784 million of free cash flow, down from $8.5 billion a year earlier. Investors again treated the spending as the main story, overlooking the continued strength of the underlying business.

The central question hanging over the entire AI trade was straightforward: What kind of return can these companies ultimately earn on hundreds of billions of dollars of AI investment?

Until Amazon reported, the answer remained somewhat opaque. There were signs of accelerating demand across cloud, advertising and enterprise AI, but investors lacked a clear example connecting the enormous infrastructure buildout to both rapid revenue growth and expanding profits.

Amazon provided that example.

Second-quarter revenue increased 20% to $200.6 billion, while operating income surged 43% to $27.5 billion. More importantly, AWS revenue accelerated 37% to $42.2 billion, its fastest growth in 18 quarters, while AWS operating income jumped 64% to $16.6 billion. Despite the massive investment required to support that growth, the segment produced an operating margin of 39.4%.

The results underneath those headline numbers were even more revealing. Amazon disclosed that its AI business has surpassed a $25 billion annualized revenue run rate and continues to grow at a triple-digit percentage rate. Its custom-chip business, which includes Trainium and Graviton, has also exceeded a $25 billion run rate while growing at a triple-digit pace. AWS as a whole is now operating at a $169 billion annualized revenue rate.

That is what flipped the narrative.

Amazon is still spending aggressively, and its trailing-12-month free cash flow has fallen to a $7.6 billion outflow as infrastructure investment has surged. But the spending is no longer supported only by projections about future AI demand. It is already feeding businesses generating tens of billions of dollars in revenue, growing at exceptional rates and producing substantial operating profits.

Microsoft reinforced the same conclusion. Azure revenue increased 43% during the latest quarter, while annual Azure revenue surpassed $100 billion after growing 41% for the fiscal year. Microsoft Cloud generated $59.3 billion of quarterly revenue, up 27%, and Microsoft 365 Copilot surpassed 30 million paid seats, up from 20 million a year earlier.

We still do not have a complete answer to the AI ROI question. Amazon and Microsoft have demonstrated that the hyperscalers can monetize the infrastructure layer through cloud consumption, custom silicon, software subscriptions and enterprise services. The remaining uncertainty rests more heavily with the AI labs themselves, including OpenAI, Anthropic and their competitors where the ultimate margins, pricing power and economics of training and serving increasingly capable models remain less visible.

But the burden of proof has shifted. The hyperscalers are no longer merely promising that AI investment will eventually produce attractive returns. Amazon just gave investors their clearest evidence yet that those returns are already beginning to appear.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Best Stocks to Buy in August: AI-Boosted CECO for 70% Upside

Investors looking to buy some of the best stocks to start August should consider Zacks Rank #1 (Strong Buy) air pollution control, water treatment, and energy transition solutions technologies leader CECO Environmental CECO.

The industrial emissions specialist is projected to more than double its revenue and its adjusted earnings between 2025 and 2027. CECO’s business is thriving as it rides the AI-driven natural gas boom and the broader capex-heavy investment cycle driving the economy right now.

CECO’s orders jumped 97% in the first quarter, with its backlog up 72% to $1.04 billion, fueled by its “largest ever order in the Natural Gas Power market.”

CECO stock has skyrocketed 875% over the last five years as it rides the AI-driven energy and capex megatrend.

Yet investors can buy CECO stock down ~33% from its June highs heading into its Q2 earnings release on Thursday, August 6, as it attempts to find support at key technical ranges.

Buy this Zacks Rank #1 (Strong Buy) Stock Now for Long-Term Upside

CECO Environmental builds specialized equipment to clean up air pollution, treat water, and make industrial processes run cleaner and more efficiently.

It designs and manufactures equipment such as air filters, scrubbers, and much, much more to help an array of critical industries reduce emissions, manage wastewater, improve energy efficiency, and beyond.

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The industrial emissions specialist’s core business is focused on power plants and heavy industry. CECO is expanding as the power-hungry AI data center arms race, reshoring, and a wave of capital-heavy economic expansion creates a once-in-a-generation megatrend.  

The Texas-based industrial company is expanding its reach via acquisitions. CECO completed its “strategic combination” with Thermon Group Holdings on June 1. The deal added an industrial technology company and a global leader in industrial process heating solutions.

The explosion in AI data centers is creating massive demand for more electricity, with U.S. demand set to soar ~100% by 2050. AI hyperscalers from Meta to Microsoft are making deals to buy as much reliable natural gas as possible to power their AI ambitions.

The natural gas boom is helping CECO because its portfolio helps new and existing power facilities meet strict environmental rules while staying reliable and efficient.

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CECO also serves high-growth areas such as semiconductor manufacturing, battery production, nuclear power, and much more. “We continue to secure strategic, large-scale projects to enable natural gas power generation expansion in support of a tremendous global investment in electrical power demand for data centers, artificial intelligence computing, industrial reshoring and electrification,” CEO Todd Gleason said in prepared Q1 remarks.

The AI-boosted industrial stock easily doubled its revenue between 2021 and 2025, including 39% YoY growth in 2025. Its orders soared 97% in the first quarter to $449.5 million, with its backlog up 72% to $1.04 billion, boosted by CECO’s “largest ever order in the Natural Gas Power market.”

Image Source: Zacks Investment Research

The pollution control company is projected to grow its revenue by 66% in 2026 and 37% next year to reach $1.77 billion, up from $774.4 million in 2025.

Better yet, CECO is expected to boost its adjusted earnings by 121% in 2026 and another 47% next year to more than double its EPS from $0.89 a share in 2025 to $2.89 per share in 2027.

CECO’s upward EPS revisions earn the stock its Zacks Rank #1 (Strong Buy). Its most accurate Q2 estimate is 30% above consensus, and it beat our Q1 estimate by 200%.

The stock has skyrocketed ~860% over the last five years as it rides the AI-driven energy and capex boom, blowing away its highly-ranked Pollution Control industry’s 40%. This run has CECO stock up 620% in the past decade to more than double the S&P 500’s 270%.

Investors who missed this run can buy CECO down ~33% from its June highs heading into its Q2 earnings release on Thursday, August 6.

The stock found support near 50-week and 200-day moving averages to close July. It is also now trading at some of its lower RSI levels over the past decade after floating near some of its most overbought earlier this year.

Image Source: Zacks Investment Research

CECO’s average Zacks price target implies 70% upside from its current levels, and six of the seven brokerage recommendations Zacks has are “Strong Buys.” Its fall, mixed with its impressive EPS growth outlook, has it trading at a ~50% discount to its highs at 26.3X forward 12-month earnings.

Investors might want to take a starter position on CECO before its release given the potential volatility the stock faces.

Any larger potential near-term pullback would likely mark a great chance to buy the strong AI-boosted industrial pollution control stock at an even more attractive level.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Atmos Energy Gears Up to Report Q3 Earnings: Here's What to Expect

Atmos Energy Corporation ATO ) is scheduled to release third-quarter fiscal 2026 results on Aug 5, after market close. In the last reported quarter, the company delivered an earnings surprise of 2.97%.

Let’s discuss the factors that are likely to be reflected in the upcoming quarterly results.

Fiscal Q3 Expectations for ATO

The Zacks Consensus Estimate for earnings is pegged at $1.34 per share, indicating a year-over-year increase of 15.52%. 

The Zacks Consensus Estimate for revenues is pinned at $1.04 billion, implying a year-over-year improvement of 23.73%.

The Zacks Consensus Estimate for Total consolidated distribution throughput volumes in the fiscal third quarter is pegged at 78,000 MMcf, indicating a 3.5% year-over-year increase.

Key Factors Influencing ATO’s Q3 Earnings

Atmos Energy's fiscal third-quarter earnings are expected to have benefited from continued customer additions, fueled by strong economic and population growth across its service territories. Expanding residential and commercial demand, particularly in Texas, is expected to have supported natural gas distribution revenues in the fiscal third quarter.

Higher natural gas demand is expected to have supported the company's fiscal third-quarter performance. Ongoing rate implementations and constructive regulatory mechanisms are also expected to have provided a tailwind to earnings.

The company's systematic capital investments in transmission and distribution infrastructure are expected to have benefited fiscal third-quarter results. These investments likely enhanced the safety and reliability of its network while supporting earnings.

However, higher operating, maintenance and compliance costs, along with commodity price volatility, remain key risks for the to-be-reported quarter.

What Our Quantitative Model Predicts for ATO

Our proven model does not predict an earnings beat for Atmos Energy this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here, as you will see below.

Earnings ESP: The company’s Earnings ESP is -0.75%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Atmos Energy carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Investors may consider the following players from the same sector, as these also have the right combination of elements to post an earnings beat this reporting cycle.

Duke Energy Corporation DUK is scheduled to report second-quarter results on Aug. 4 and is likely to have registered an earnings beat. It has an Earnings ESP of +0.16% and a Zacks Rank #3 at present.

DUK’s long-term (three to five years) earnings growth rate is 6.76%. The Zacks Consensus Estimate for second-quarter EPS is pinned at $1.29, which implies a year-over-year increase of 3.20%.

Southwest Gas SWX is scheduled to report second-quarter results on Aug. 5 and is likely to have come up with an earnings beat. It has an Earnings ESP of +5.64% and a Zacks Rank #2 at present.

SWX’s long-term earnings growth rate is 9.89%. The Zacks Consensus Estimate for second-quarter EPS is pinned at 47 cents, which implies a year-over-year decrease of 11.32%.

Spire SR is set to report third-quarter fiscal 2026 results on Aug 5 and is likely to have come up with an earnings beat. It has an Earnings ESP of +16.67% and a Zacks Rank #3 at present.

SR’s long-term earnings growth rate is 11.17%. The Zacks Consensus Estimate for third-quarter fiscal sales is pinned at $397.87 million, which suggests a year-over-year decline of 5.70%.

 

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Toast to Report Q2 Earnings: What Should Investors Do?

Toast, Inc. TOST is set to report its second-quarter 2026 results on Aug. 4, after market close.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $1.87 billion, indicating an increase of 20.8% from the year-ago quarter’s reported figure.

The consensus mark for earnings per share (EPS) is pinned at 32 cents and has remained unchanged over the past two months. It indicates a rise of 33.3% from the figure reported in the year-ago quarter.

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The company’s EPS surpassed the Zacks Consensus Estimate in two of the trailing four quarters, met once and missed on another, with the average surprise being 0.89%. The graph below depicts this surprising history:

Toast, Inc. Price and EPS Surprise

Toast, Inc. price-eps-surprise | Toast, Inc. Quote

TOST’s Q2 Earnings Whispers

However, our proprietary model does not conclusively predict an earnings beat for Toast this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Toast crrently has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors Likely to Shape Toast’s Q2 Results

Toast’s second-quarter performance is likely to have been shaped by strong revenue momentum and increased adoption of AI-driven products. The company’s ability to leverage AI-driven innovation and deepen its value proposition for restaurant operators bodes well for long-term prospects.

Strong customer momentum across the Subscription and FinTech segments is likely to have aided TOST’s top and bottom lines. It expects second-quarter non-GAAP total subscription and fintech gross profit in the range of $565-$575 million, implying 22-24% year-over-year growth. Adjusted EBITDA is projected to be between $185 million and $195 million.

Toast is likely to have strengthened its growth case ahead of second-quarter results as its expansion beyond its core restaurant base has continued to broaden its total addressable market and drive new highs in Annualized Recurring Run-Rate (ARR). The company may have benefitted from this broader mix while still continuing to apply its vertical playbook with discipline, which is expected to have supported momentum into the second quarter.

However, higher tariff-related costs are likely to have been a spoilsport for Toast in the to-be-reported quarter.

Q2 Projections for TOST

The Zacks Consensus Estimate for Toast’s subscription services revenues is pegged at $283.5 million, which suggests a 24.9% increase from the year-ago quarter.

The consensus mark for revenues from financial technology solutions is pegged at $1.55 billion for the second quarter, up 21.2% from the year-ago period.

The consensus mark for Gross Payment Volume (GPV) is pinned at $60.31 billion, which is above the company’s reported figure of $49.9 billion in the year-ago quarter. The consensus mark for the total ARR is pegged at $2.39 billion, up from the year-ago figure of $1.93 billion.

The consensus mark for total locations served stands at 179,375, up from 148,000 reported a year ago.

However, the Zacks Consensus Estimate for hardware and professional services is pegged at $44.3 billion, indicating a decline from $47 million reported year over year.

TOST’s Price Performance & Valuation

Toast’s shares have gained 9.7% in the past three months. The Zacks Internet Software Market and the S&P 500 have increased 0.5% and 3.1%, respectively, over the same period. Peers like PayPal, Inc. PYPL and Lightspeed Commerce, Inc. LSPD continue to expand their offerings, challenging Toast’s dominance in the global technology platform built for restaurant and retail businesses. PayPal shares have increased 13.5%, while Lightspeed shares have gained 5.8% over the same time frame.

Image Source: Zacks Investment Research

From a valuation standpoint, in terms of forward 12-month Price/Sales (P/S), TOST stock is trading at 2.04X compared with the Zacks Internet Software Market industry’s 3.76X.

On the other hand, PYPL trades at 1.38X forward 12-month P/S, while LSPD trades near 1.06X forward 12-month P/S.

Image Source: Zacks Investment Research

TOST: Buy, Sell or Hold?

Toast is a solid company with strong growth, improving margins and a clear product strategy. Its rising location count, AI roadmap and new-market expansion continue to support the long-term story. However, higher costs are likely to have posed challenges in the to-be-reported quarter.

Given its strategic advantages and the existing headwinds, the stock is best treated as a hold. For long-term investors, its important to wait before adding to positions due to short-term volatility.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Should Iron Mountain Stock Be in Your Portfolio Ahead of Q2 Earnings?

Iron Mountain Incorporated IRM is slated to release second-quarter 2026 results on Aug. 5, before the opening bell. The quarterly results are likely to display year-over-year growth in revenues and adjusted funds from operations (AFFO) per share.

In the last reported quarter, this real estate investment trust (REIT) delivered an AFFO per share surprise of 2.88%. The quarter reflected broad-based momentum, led by strong expansion in growth businesses and solid pricing in the core storage franchise.

Over the trailing four quarters, Iron Mountain’s AFFO per share surpassed the Zacks Consensus Estimate on all occasions, the average beat being 3.25%. The graph below depicts this surprising history:

Iron Mountain Incorporated Price and EPS Surprise

Iron Mountain Incorporated price-eps-surprise | Iron Mountain Incorporated Quote

Factors to Consider Ahead of IRM’s Q2 Results

In the second quarter, Iron Mountain’s earnings are likely to have been supported by stable recurring revenues from its core storage and records management businesses, which are expected to have driven overall revenue growth during the period.

Alongside its storage operations, Iron Mountain continues to strengthen performance through the expansion of its faster-growing segments, particularly data centers. Strong demand for connectivity, interconnection and colocation space is likely to have boosted leasing activity, supporting growth in the company’s global data center segment during the second quarter.

Foreign currency movements, along with higher interest expenses, are expected to have acted as headwinds to the quarterly performance.

Projections for IRM

The Zacks Consensus Estimate for storage rental revenues is pegged at $1.13 billion, up from $1.01 billion reported in the year-ago period. The consensus estimate for service revenues is pinned at $840.5 million, up from $702 million reported in the prior-year quarter. The consensus estimate for its global data center segment revenues is pegged at $239.5 million, up from $189.4 million reported in the year-ago period.

The consensus estimate for quarterly total revenues is pegged at $1.97 billion, indicating an increase of 14.9% from the prior-year quarter’s reported figure.

The company’s activities in the to-be-reported quarter were inadequate to garner analysts’ confidence. The Zacks Consensus Estimate for the quarterly AFFO per share has remained unchanged at $1.40 over the past three months. The figure implies significant growth from the year-ago quarter’s reported number.

Here’s What Our Quantitative Model Predicts for IRM

Our proven model does not conclusively predict a surprise in terms of AFFO per share for Iron Mountain this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an FFO beat, which is not the case here.

Iron Mountain has an Earnings ESP of 0.00% and a Zacks Rank of 3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks That Warrant a Look

Here are two stocks from the broader REIT industry — Host Hotels & Resorts HST and Lamar Advertising LAMR — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

HST, scheduled to report quarterly numbers on Aug. 5, has an Earnings ESP of +1.48% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lamar Advertising is slated to report quarterly numbers on Aug. 6. LAMR has an Earnings ESP of +0.22% and a Zacks Rank of 3 at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Is Host Hotels Stock a Smart Buy Before Q2 Earnings Release?

Host Hotels & Resorts, Inc. HST is scheduled to release second-quarter 2026 earnings results on Aug. 5, after market close. The company’s quarterly results are likely to display a year-over-year rise in revenues and adjusted funds from operations (AFFO) per share.

In the previous quarter, this Bethesda, MD-based lodging real estate investment trust (REIT) reported an AFFO per share of 67 cents, which surpassed the Zacks Consensus Estimate of 63 cents. The results reflected higher revenues, driven by year-over-year comparable hotel RevPAR growth.

Over the trailing four quarters, Host Hotels’ AFFO per share surpassed estimates on all occasions, the average surprise being 8.66%. The graph below depicts this surprising history:

Host Hotels & Resorts, Inc. Price and EPS Surprise

Host Hotels & Resorts, Inc. price-eps-surprise | Host Hotels & Resorts, Inc. Quote

HST’s Upcoming Results

Host Hotels & Resorts benefits from a portfolio of luxury and upper-upscale hotels across key U.S. markets, including gateway cities and resort destinations. The company’s properties are strategically positioned in high-demand locations, which continue to support steady room pricing.

The continued recovery in group demand, along with stable transient and leisure travel, is likely to have supported revenue per available room (RevPAR) growth in the to-be-reported quarter.

Host Hotels’ disciplined capital allocation strategy and ongoing reinvestment in its portfolio are likely to have enhanced asset quality and strengthened its competitive positioning. This, along with rate-led growth, is expected to have aided EBITDA growth and modest margin expansion, even in a rising cost environment.

However, elevated interest expenses are expected to have acted as a headwind to the bottom-line growth during the second quarter.

Q2 Estimates for HST

The Zacks Consensus Estimate for HST’s quarterly revenues is presently pegged at $1.62 billion, implying growth of 2.2% from the prior-year period’s reported figure.

The Zacks Consensus Estimate for quarterly RevPAR is pinned at $244.77, indicating an increase from $239.64 reported in the year-ago quarter.

The company’s activities during the to-be-reported quarter were adequate to garner analysts’ confidence. The Zacks Consensus Estimate for AFFO per share has moved northward to 62 cents over the past month. The figure implies a 6.90% rise from the year-ago reported number.

However, the consensus mark for the average occupancy rate in the second quarter is pegged at 72.09%, implying a decrease from the prior-year quarter’s reported figure of 73.80%.

We expect second-quarter 2026 interest expenses to rise 3.8% year over year.

What Our Quantitative Model Predicts for HST

Our proven model predicts a likely surprise in terms of AFFO per share for Host Hotels this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an AFFO beat, which is the case here.

Host Hotels currently has an Earnings ESP of +1.48% and carries a Zacks Rank of 2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks That Warrant a Look

Here are two stocks from the broader REIT industry — Ryman Hospitality Properties RHP and Lamar Advertising LAMR — that you may want to consider, as our model shows that these have the right combination of elements to report a surprise this quarter.

RHP, scheduled to report quarterly numbers on Aug. 6, has an Earnings ESP of +0.25% and a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lamar Advertising is slated to report quarterly numbers on Aug. 6. LAMR has an Earnings ESP of +0.22% and a Zacks Rank of 3 at present.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.

Beyond Nvidia: AI's Second Wave Is Here

The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research