Quick thought before the next wave of reports: the Fed stayed on hold, February CPI came in at 2.4%, and the Fed said developments in the Middle East make the outlook uncertain. That kind of backdrop can punish anyone trading earnings on headlines alone, so see the earnings setup I’m watching here.
Analysts still expect Q1 earnings growth of 12.5%, but estimates have already been revised lower in nine sectors, and the S&P 500 is trading above its 5-year and 10-year average forward P/E. If you want the pre-report checklist I use before a company reports, read the earnings playbook here.
Inside the eBook, I walk through how I weigh guidance, expectations, and the first reaction after the numbers hit, so I’m not trying to improvise after the move begins. Take a look at the framework I use here.
No one gets every quarter right. But having a process can help you avoid the costly mistakes that show up every earnings season. Get the Earnings Season eBook here.
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To smart investing,
Hiral Ghelani
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Meta Reportedly Plans 20% Layoff: A Sign of Weakness or Strength?
Reported by Leo Miller. First Published: 3/26/2026.
Key Points
- AI CapEx at Meta Platforms is set to surge in 2026, leaving many investors uneasy.
- Reports indicate that the Magnificent Seven company is also looking to lay off 20% or more of its workforce despite recent reports indicating that large cost-cutting measures don't do much to help shares.
- Meta has fallen to a forward price-to-earnings ratio near 20x, a level not seen since Liberation Day roiled markets in April 2025.
- Special Report: Elon Musk's $1 Quadrillion AI IPO
Despite a very strong earnings report earlier in 2026, Meta Platforms (NASDAQ: META) has underperformed year-to-date. The Magnificent Seven stock is down nearly 9% YTD despite a roughly 10% jump the day after the earnings release.
Recent reports of large cost-cutting measures did little to help shares. On March 13, Reuters reported Meta was planning layoffs that could affect 20% or more of its workforce. Meta rose just over 2% the next trading day but has since given back those gains and more.
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Click here to see the full storyThat has sparked debate over whether potentially massive layoffs signal weakness or strength for the tech giant. With huge capital-expenditure (CapEx) plans, some see layoffs as necessary to rein in costs, while others view them as part of Meta's push to drive internal efficiency using AI.
Meta's Massive CapEx Causes Concern Amid Layoff Reports
In 2026, Meta expects to spend between $115 billion and $135 billion on CapEx as it doubles down on artificial intelligence. At the midpoint, that would be about a 73% increase from the $72.2 billion spent on CapEx in 2025.
That level of investment has analysts forecasting a sharp drop in free cash flow—one of the key metrics for valuing a stock. Current estimates put Meta's free cash flow at roughly $11 billion for 2026, an almost 75% decline year over year from 2025.
Given this dynamic, Meta has an incentive to lower costs, and cuts affecting 20% of its workforce would materially offset the expected free-cash-flow reduction. The central question is whether such cuts are a reaction to rising AI spending or the result of real efficiency gains from AI deployment. The company's statements suggest the latter may be playing a significant role.
Meta Touts Emerging AI Efficiency on Internal Workloads
On its latest earnings call, CFO Susan Li said AI tools are improving productivity across the organization. She noted output per engineer rose about 30% since the start of 2025, driven largely by the adoption of agentic AI coding tools.
Li added that heavy users of those tools saw output increase roughly 80% year over year, and the company recorded a "big jump" in agentic tool usage in Q4. She also expects productivity gains to accelerate in the first half of 2026. CEO Mark Zuckerberg echoed this, saying, "We're starting to see projects that used to require big teams now be accomplished by a single, very talented person," highlighting how smaller teams can now deliver the same output.
Those comments indicate tangible, recent efficiency improvements from AI. Li emphasized that agentic-tool adoption surged in Q4 and should pick up further in early 2026, suggesting the benefits are emerging now rather than remaining hypothetical. That bolsters the case that restructuring could reflect genuine productivity gains, not just a stopgap to offset CapEx.
Li Expresses Concern Over AI Startups
Still, one remark Li made at the Morgan Stanley Technology Conference highlights a strategic concern. She acknowledged that a company starting today would "use a lot of AI tools very differently," and warned that Meta—now roughly 20 years old—doesn't want to "find ourselves behind companies that are being born today and that are AI-native from the very day of inception."
Her comments reflect worry that AI-native startups, built from the ground up to leverage AI, could be more efficient from day one. Augmenting long-standing workloads with AI can be harder than building processes around AI from scratch, and that could give new entrants an edge.
But few doubt Meta's dominance in social media. Even if AI-native firms operate more efficiently, replicating Meta's massive user base—over 3.5 billion people—is extraordinarily difficult.
Viewed another way, Li's remarks argue against the idea that layoffs are driven solely by CapEx concerns. They suggest Meta is accelerating AI adoption to maintain a competitive edge as the industry evolves.
Meta Looks Undervalued as Shares Get Hit in 2026
The debate over potential layoffs ultimately hinges on why Meta is cutting costs. Unsustainable CapEx is a plausible driver, but it clashes with the company's reported efficiency gains. Rising costs are a clear overhang on the stock, so it is somewhat surprising the market hasn't rewarded Meta more for pursuing cost savings.
Reports of 20% workforce reductions—which would likely equal more than 10,000 positions—remain unconfirmed. Outlets have, however, verified that Meta recently laid off several hundred workers. Investors are also processing a separate legal overhang after a Los Angeles jury found Meta and Google liable in a social-media addiction case on March 25; punitive damages are still to be determined.
Amid these developments, Meta's shares have dropped to a forward price-to-earnings ratio near 20x—a level not seen since Liberation Day roiled markets in April 2025.
Regulatory Jackpot: Gaming Stocks Surge on a Surprise Bill
Written by Jeffrey Neal Johnson. Date Posted: 3/24/2026.
Key Points
- Proposed U.S. legislation is set to create a powerful regulatory barrier that shields established operators from unregulated competition.
- The potential removal of a disruptive competitor class clears a path for improved long-term profitability and solidifies both DraftKings and Flutter's market leadership.
- A surge in DraftKings and Flutter stock prices, driven by high trading volume and bullish options market activity, indicates strong investor confidence in the companies following the legislative news.
- Special Report: Elon Musk's $1 Quadrillion AI IPO
A sudden burst of activity in Washington, D.C., sent shockwaves through the U.S. gaming and entertainment sector on March 23, 2026.
Shares of industry leaders DraftKings Inc. (NASDAQ: DKNG) and Flutter Entertainment plc (NYSE: FLUT) jumped in heavy trading, diverging sharply from recent trends. That move was driven not by earnings or a market-wide rally but by a powerful legislative catalyst.
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Click here to see the full storyThe introduction of a new bipartisan Senate bill, the Prediction Markets Are Gambling Act, immediately shifted the competitive landscape. The bill targets a disruptive class of rivals that has operated in a regulatory gray area. For established players like DraftKings and Flutter, the change represents a material shift that could be highly profitable.
The Catalyst and the Moat: A Rival Threat Neutralized
To understand the market's enthusiastic reaction, investors should first consider the competitive threat that was just curtailed.
In recent years, prediction markets such as Kalshi and Polymarket emerged as disruptive competitors. These platforms let users trade contracts tied to the outcomes of future events, increasingly encroaching on the core territory of traditional sportsbooks.
The primary danger these platforms posed was structural. With approvals from the Commodity Futures Trading Commission (CFTC), they could operate nationwide and avoid the expensive and time-consuming state-by-state licensing process that licensed operators like DraftKings and FanDuel must complete. That created an uneven playing field.
The new Senate bill aims to level that field by banning sports-related contracts on these platforms. In business terms, it creates a regulatory moat — a government-built barrier that favors established, compliant companies.
By curbing unregulated competition in the sports vertical, the bill effectively erects a protective wall around DraftKings and Flutter. The moat preserves their market share, reduces pricing pressure from unregulated rivals, and validates their state-licensed business models as the industry standard.
Why Investors Are Rushing Into DraftKings
The legislative news boosted DraftKings' stock price, and the market sent several clear bullish signals.
An immediate price spike on high trading volume signaled strong investor approval. Technically, the rally pushed the stock up to test its descending 40-day moving average — a level that, if decisively broken, often signals a reversal of a downtrend and can attract further buying.
Sentiment was also evident in the options market. Call options — bets that a stock will rise — saw a massive surge in volume. On the day of the news, call volume outpaced puts — bets that the price will fall — by more than four to one, indicating that sophisticated traders are positioning for continued upside.
Beyond the market reaction, the bill improves DraftKings' fundamental outlook. With a class of competitors removed, DraftKings' path to sustained profitability becomes clearer. Marketing dollars may become more efficient in a less crowded field, potentially accelerating margin improvement and improving returns on the company's brand-building investments.
Wall Street also appears supportive. The majority of firms covering DraftKings rate the stock as a Buy or Outperform, and a median price target of $37.09 implies meaningful upside from current levels — reinforcing the view that DraftKings' growth story remains intact.
Why Flutter Stands to Gain the Most
As the parent of FanDuel — the clear U.S. online sports-betting leader — Flutter Entertainment is especially well positioned to benefit from a more consolidated competitive landscape. A less crowded market lets FanDuel leverage its brand recognition and operational scale, reinforcing its leadership and creating a clearer path for growth in its most important market.
Leadership signals matter. While recent filings showed some executive share sales, such transactions are often part of pre-arranged financial plans. A more significant signal is the board's authorization of a substantial share buyback program — a use of capital that typically indicates management believes the stock is undervalued.
Flutter's profitable, global operations — including the U.K. and Australia — provide a stable financial foundation. That global strength lets Flutter continue aggressive, effective investment in the U.S. from a position of stability, an advantage over rivals focused solely on the U.S. market.
Analysts echo that confidence. Consensus estimates put the average price target at $234.65, implying more than 100% upside and underscoring broad confidence in Flutter's strategy and ability to capture the sizable U.S. opportunity.
Betting on a Favorable Future
The Prediction Markets Are Gambling Act represents more than a daily headline; it signals a meaningful, positive shift for the U.S. sports-betting industry. The legislation favors established, licensed operators that have invested heavily in building compliant businesses.
For DraftKings and Flutter, the resulting regulatory moat provides a durable competitive advantage and strengthens the long-term investment case for both companies. It reduces a layer of uncertainty and validates their strategic approach. This episode illustrates how legislative developments can be powerful catalysts — and how identifying well-positioned incumbents that benefit when regulators draw clear lines can unlock significant shareholder value.
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