MARKET RECAP
🏆 Markets Notch 9th Weekly Gain As Iran Ceasefire Inches Closer

📈 The market continues to soar, with the S&P 500 clocking its 9th straight week of green, an absolutely wild winning streak last hit in Dec 2023. Across the indexes:

• The S&P 500 rose +1.43%

• The Nasdaq 100 rose +2.89%

• The TSX rose +0.86%

…With the S&P now sitting at over +10% year-to-date!

🚀 Our major story this week is the insane rally Dell ($DELL) has been on, rising 57% this week and 229% year-to-date, but first, let’s cover 2 broader market stories: a quick war update, and a warning sign from the private credit markets.

✋ Iran-US War: Almost A Ceasefire

🤝 On Tuesday, U.S. officials announced that terms of a Memorandum of Understanding (MOU) were “mostly agreed to” on both sides, and was just needing approval from senior leadership. Key terms of the MOU were:

• 🚢 An unrestricted Strait of Hormuz passage with no tolls,

• 💣 A removal of all Iranian naval mines within 30 days,

• ⚓ The lifting of the U.S. naval blockade (in proportion to restored shipping),

• ☢️ And a 60-day window to negotiate the nuclear issue (specifically the fate of Iran’s highly enriched uranium stockpile)

💥 But on Wednesday, the Iran navy fired warning shots at four vessels near the Strait attempting to pass, with the U.S. responding with its own fire. U.S. Vice President JD Vance was asked about the small altercation, saying:

📱 Trump then posted on Truth Social on Friday, emphasizing the deal’s main elements and signaling he was leaning toward accepting it, until later issuing a new set of demands, which Iran rejected.

⏳ As of market close on Friday, the MOU remained unsigned, but a real deal is closer than it’s ever been since the war started in February.

😬 Private Credit Losses Deepen

🏦 We first covered private credit back in October (when the First Brands and Tricolor bankruptcies sent bank stocks falling on "bad loans" fears), and unfortunately, the data has only gotten worse since then.

👀 A new Reuters analysis released Friday shows that unrealized losses at U.S. private credit lenders have deepened to their worst level since Q2 2022.

🤔 Back in October, I called the bad loan fears "largely overblown," and that has turned out to be correct, but 7 months later, the private credit markets are still moving in the wrong direction.

🔍 The reason this matters is if private credit losses keep getting worse, lenders will pull back on issuing new loans, which would leave a lot of mid-sized U.S. businesses (who rely on private credit for ~$1.5T in financing) unable to refinance their debt when it comes due.

⚠️ In a worst-case scenario, that could trigger a wave of bankruptcies and layoffs, and likely spill into regional banks that lend to the private credit funds (think 2023 SVB-style stress all over again).

🏥 The other big domino is the U.S. insurance industry, which has become one of the largest buyers of private credit on Wall Street. According to Moody's, roughly a third of U.S. life insurers' $6 trillion in assets are now parked in private credit. If a wave of those loans starts blowing up, it puts real pressure on the same companies backing US annuities, life insurance policies, and pension payments.

😬 None of this is happening yet, but it's a sizable under-the-radar risk worth keeping an eye on with both the U.S. Treasury and the IMF flagging this as a top financial-stability risk to watch. More on this story from Reuters here.

🍁 Canada’s Surprise Recession

🇨🇦 For my fellow Canadians, another big story this week was Canada’s economy posting a surprise -0.1% contraction in the first quarter, compared with 1.5% first-quarter growth expected by Reuters and the Bank of Canada, meaning we’re technically in a recession

🤔 So what dragged us down? A spike in gold imports hit the Q1 trade balance, exports were mildly negative, the housing resale market stayed weak, and business capex fell for a fifth straight quarter as companies stayed paralyzed by U.S. tariff uncertainty.

🛢️ The silver lining is economists expect Q2 to bounce back on rising oil and gas activity, meaning the "trade-induced" recession may already be mostly behind us.

⭐️ Ok, now that we’ve covered the macro picture, let’s dive into our top story, Dell’s under-the-radar rise this year. But first, a quick word from our sponsor Fidelity!

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TOP STORY
📈 Dell Soars 57% Following Extraordinary Earnings (and Trump’s Comments)

📅 On Thursday, Dell Technologies ($DELL) reported its Q1 FY 2027 earnings after the bell, posting what analysts are calling one of the most extraordinary quarters in the company’s history.

📊 By the numbers:

• ✅ Revenue hit $43.8 billion vs. $35.4 billion expected, up 88% year-over-year

• ✅ Adj. EPS came in at $4.86 vs. $2.94 expected, up 256% year-over-year

  • ✅ AI server revenue hit $16.1 billion this quarter, up 757% year-over-year

📈 Just on Friday, Dell shares surged +33% (its single best day ever), and are now up 229% year-to-date.

🤖 Wait, Dell is in AI?

💻 Now, if you're like me, when you think of Dell, you may think just of computers… so how is Dell involved in AI?

💡 Well, while Dell is known for laptops, the much bigger (and quieter) part of its business has always been enterprise servers, the workhorse computers that companies, hyperscalers, and data centers rely on. So when the AI boom kicked off, Dell was already sitting on one of the deepest server businesses in the world, and just had to retool it for AI.

🤝 Dell did this through a partnership with Nvidia, packaging Nvidia's top-of-the-line GPUs into ready-to-deploy AI server racks, letting customers skip the headache of building their own AI infrastructure from scratch.

📈 And the demand for this is soaring. Dell ended Q1 with a record $51.3B in AI server orders not yet delivered, and raised its full-year AI server revenue guidance from $50B to $60B, a 144% increase over the prior year.

🪏 Dell has quietly become one of the biggest "picks and shovels" plays of the AI boom.

🔍 But there’s more to the story…

🤝 The Trump Connection

📅 Back in December 2025, Dell CEO Michael Dell, alongside his wife Susan, announced a $6.25 billion gift to fund “Trump Accounts” for 25 million American children (more than double their foundation’s entire lifetime giving).

🏛️ At the time, this was seen as yet another philanthropic billionaire gesture. But later it was revealed (via filings) that around this time, Trump’s money managers purchased around $1-5 million in Dell shares (in February).

🎙️ In addition, during a Mother’s Day event at the White House earlier this month, Trump told Americans to “go out and buy a Dell,” while thanking the Dell family for their Trump Account participation.

💰 Fast forward to Wednesday this week, one day before earnings, and the Pentagon awarded Dell a $9.7 billion, 5-year contract to provide software and services across the entire Defense Department, sending the stock parabolic.

📈 And since Trump said to buy Dell, shares have risen well over 100%:

🎯 Analyst Reactions

😮 But even if Trump’s help is part of Dell’s growth story, analysts are still very impressed by Dell’s numbers, with many completely stunned by them.

🙅‍♂️The results were so unexpected that one analyst at Morgan Stanley admitted that he and his team got their thesis on the company “wrong”:

🤯 As a result, many analysts raised their price targets with a number of pretty jaw-dropping increases:

• Barclays raised its target from $168 → $550

• TD Cowen raised its target from $150 → $450

• J.P. Morgan raised its target from $280 → $500

📊 Overall, analysts rate Dell a "Moderate Buy," with price targets ranging from $400 to $550 per share (well above Dell’s current price of $420).

🐻 The Bear Case

⚠️ But not everyone is sold. The most notable bear move came three weeks ago, when UBS analyst David Vogt downgraded Dell from Buy to Neutral, arguing the AI server boom was already fully priced in.

⚠️ Two concerns the bears keep coming back to:

• 💸 Margin compression. Gross margin fell from 21.1% to 17.8% year-over-year. AI servers are mostly Nvidia GPUs (a passthrough cost) wrapped in a thin Dell margin, meaning the more AI Dell sells, the lower its blended margin gets.

• 🎯 Customer concentration. Over Dell's first 3 years in AI servers, it shipped roughly 616,000 GPUs total, and 50,000 of those went to a single customer (xAI's Colossus).

🏆 But risks (and however you feel about Trump’s involvement) aside, it’s hard to deny that Dell had a generational quarter and is becoming firmly established as one of the biggest "picks and shovels" plays in the AI build-out.

👀 That said, with shares up 229% YTD, anyone buying now is paying a much steeper price than early believers, and any margin compression or a major customer slip would land harder now than it would have a year ago.

🤑 Blossom Took Profits

👀 If we look at Blossom trade activity, the community had been quietly building a Dell position all spring. March and April each saw modest net buying, and the first three weeks of May saw retail net buy ~$148k, more than Q1 combined.

🤑 This week that flipped, with Blossom net selling and taking profits as the stock ripped, a sign that some Blossom members think the stock is flying a little too high.

😎 All right, now that we’ve covered Dell, let’s switch gears to the key takeaways from the Canadian Big Bank earnings. But first, a quick word from our other sponsor this week, Dynamic Funds!

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BIG TECH
🏦 Canadian Banks Post Strong Earnings Across the Board

🚀 Canadian bank stocks climbed this week after a clean sweep of earnings beats, with all six major banks (the “Big Six”) reporting higher profits than a year ago and topping analyst estimates.

🏦 For the quarter, here’s where each bank landed:

• RBC ($RY): Adj. EPS $3.90 vs. $3.77 expected, up 29% year-over-year

• TD ($TD): Adj. EPS $2.38 vs. $2.26 expected, up 21% year-over-year

• BMO ($BMO): Adj. EPS $3.67 vs. $3.41 expected, up 47% year-over-year

• Scotiabank ($BNS): Adj. EPS $2.02 vs. $1.93 expected, up 36% year-over-year

• CIBC ($CM): Adj. EPS $2.54 vs. $2.42 expected, up 25% year-over-year

• National Bank ($NA): Adj. EPS $3.23 vs. $3.14 expected, up 49% year-over-year

💵 Collectively, the Big Six reported $18.57 billion in profit for the quarter, up from $14.89 billion in the same period last year, or a 25% increase year-over-year.

📈 Despite the strong earnings, RBC and BMO stocks were flat this week, with CIBC and National Bank falling over 5% each. But if we zoom out, all the banks are squarely in the green year-to-date, with the Equal Weight Banks Index ($ZEB) up 16.4% (outperforming the S&P 500)

🏆 Across the Big Six, capital markets was the primary driver of the record profits, rising 27% year-over-year to nearly $4.5 billion (Canadian dollars). Just CIBC’s capital markets profits surged 40%, while RBC’s corporate and investment banking revenue grew 17%, and National Bank’s capital markets unit rose 31%.

🛢️ TD’s CFO Kelvin Tran described the stock market environment as “quite robust,” helped by what he called “the right level of volatility”:

🤝 RBC pointed to specific transactions including its advisory role on Arc Resources’ $20 billion sale to Shell and its lead bookrunner role on Fervo Energy’s $1.9 billion IPO, which played crucial roles in its rising capital markets revenue.

🌴 CIBC also announced the sale of its Caribbean unit for about $1.6 billion, as well as a management shuffle that will see the company create a new wealth-management unit.

☁️ Cautious Optimism

😰 But with all the positives, executives at most of the banks have mixed feelings on the global economic environment, with RBC’s CEO saying:

🛡️ TD’s chief risk officer even flagged the Iran war specifically as a “watch item,” noting the bank has already built incremental reserves and will “continue to reassess each quarter,” while Scotiabank CEO Scott Thomson was more optimistic:

🌏 Thomson also noted a “significant change in tone” from international investors toward Canada, with foreign money that had been leaving for 15 years now looking to come back.

💰 Well-Capitalized, and Returning Capital to Shareholders

🛡️ The Big Six’s CET1 ratios (the key measure of how much cash a bank holds against its risk-weighted assets) averaged above 13% this quarter, well above the regulatory minimum of 11.5%. In general, a higher ratio is safer, and these levels are near historic highs. And with this historic extra cash, banks are returning to shareholders.

📤 Both RBC and CIBC announced new share buyback programs, and five of six banks raised dividends (RBC by the most, rising its payout by 7% to $1.76 per share).

⚠️ Overall, Canada’s banks are printing money even as the domestic economy technically slips into recession, thanks to capital markets covering for the slower parts of the business.

🔮 The real test will come once market volatility starts to dwindle. Because when trading revenue normalizes, the banks will have to face a slower domestic economy that is very much still finding its footing amid global trade tensions (especially amid renegotiations of CUSMA).

CBOE ETF ALERT
📣 New ETF Alert: CIBC Fixed Income ETFs

🍁 Speaking of Canada, two new ETFs hit the market this week worth adding to the watchlist:

• 🏡 CSTB, the CIBC Short-Term Income Fund, provides a high level of income and some capital growth, while attempting to preserve capital by investing primarily in first mortgages on Canadian residential and commercial properties that are National Housing Act insured, mortgage backed securities, and short-term debt securities of Canadian governments and corporations.

• 💸 CCBA, the CIBC Canadian Bond Fund, provides a high level of income and some capital growth, while attempting to preserve capital by investing primarily in bonds, debentures and other debt instruments of Canadian governments and corporations.

✨ Both fixed-income ETFs “offer investors access to CIBC's deep fixed income expertise and robust risk management with the flexibility and convenience of an ETF” according to Greg Gipson, the Head of ETFs at CIBC Global Asset Management

💡 Make sure to check out the New Listing Alert on the Blossom markets tab to stay in the loop about new ETFs as they hit the market!

FROM THE BLOSSOM COMMUNITY
⭐️ Top Discussions of the Week

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