These 5 Stocks Just Crushed Earnings. The Fundamentals Say They're Not Done Yet

The earnings season just delivered a reminder of what happens when fundamentals catch up to a stock’s narrative. Many stocks, already delivering impressive YTD performances, reported an even better result than expected. On the face of it, this may look like just another beat earnings estimates and raise guidance pattern, but underneath, it points to the same demand signal that we have observed over the last couple of years. The demand for AI data center buildouts, hyperscaler capex, and defence modernization is driving these companies' earnings higher and their guidance clearly shows they’re not done yet.

In order to determine our top 5 stocks that just delivered an earnings beat, we only considered stocks that beat earnings estimates by at least 10% and grew their revenues by at least 10% as well. We only focused on mid- to large-cap names, where an earnings beat can still translate into meaningful stock price appreciation.

Datadog Inc (DDOG)

Datadog announced revenue of %1.12 billion for the second quarter, comfortably beating estimates of $1.08 billion. The EPS came in at $0.65, more than 12% higher than the consensus estimates. The company’s revenue grew 36% YoY, while the sequential growth of 11% was the highest since 2022. Remaining Performance Obligations (RPO) stand at $3.47 billion, up 38% from the same period last year.

What Drove Datadog’s Earnings Beat?

The unexpected earnings beat was largely due to the growth in customers paying more than $100,000 in annual recurring revenue. The number grew 23% YoY to 4,720 customers. The metric gets way more weight on Wall Street as compared to customer count because it shows enterprise adoption depth. These customers are usually sticky, as once a large enterprise embeds Datadog’s products in its infrastructure, it is much more likely to continue doing so as it grows, resulting in improved revenue for Datadog. 

So the earnings beat isn’t just a one-off, backed by real expansion among the highest value customers. Some would argue that the company’s largest customer pulling back usage is a cause for concern. This is true to an extent and is also what caused the post-earnings sell-off. However, reduced reliance on one large customer bodes well for the long-term, as long as the enterprise adoption depth continues to rise. Since the earnings, the stock has received a handful of upward target price revisions, with the latest coming from Bernstein, which raised its target price from $226 to $237. Needham, a firm significantly more bullish on the stock, raised its target price from $260 to $300.

Why Datadog Stock Could Continue Surging Higher?

For the third quarter, the company expects revenue to be in the range of $1.135 billion to $1.145 billion, implying growth of 28% to 29% from a year earlier. The company guided for adjusted EPS of $0.63 to $0.65 and an operating margin of 23% to 24%. According to management, the guidance already reflects the expected usage decline from its largest customer, while the rest of the business remains strong. Moreover, DDOG continues to invest in research and development, AI products, and observability tools. 

The management was asked about Datadog’s biggest customer renewal and whether lower spending was due to reduced usage or pricing changes. CEO Olivier Pomel said that the customer is using less of the company’s services than before. He added that the company has already factored that weakness into its outlook and the overall performance of the business remains very strong. CEO Pomel, replying to a question about AI inference, said it creates opportunities for Datadog across multiple parts of the technology infrastructure. In addition, CFO David Obstler said that strong deal activity shows large enterprise customers are continuing to use DDOG’s platform and adopting its AI-related products.

Tower Semiconductor (TSEM)

Tower Semiconductor reported its Q2 2026 results on August 4, delivering record revenue and its strongest profitability ever. Revenue reached $460 million, up 24% year-over-year, while net profit nearly doubled to $91 million. Diluted EPS came in at $0.79, up from $0.41 a year earlier and ahead of consensus. Margins hit record levels across the board, with gross margin at 30% and net margin at 20%. The results lifted the stock after the report and prompted Bank of America to initiate coverage with a bullish $367 price target.

What Drove Tower Semiconductor’s Earnings Beat? 

The real driver was silicon photonics. SiPho revenue jumped more than 60% from the previous quarter and over 270% from a year ago, reaching an annualized run rate above $680 million. This is the segment that is tied directly to AI data center optics, and demand is climbing quickly. RF infrastructure was the other contributor, making up 49% of revenue and growing 140% YoY, helped by Tower repurposing factory lines toward higher-capacity production. What made the quarter stand out wasn’t just growth but profitability. A richer product mix pushed margins to record highs, which is why net profit nearly doubled even as revenue rose a more modest 24%. Management also raised its 2028 targets, now guiding for $3.6 billion in revenue and $1.2 billion in net profit. With $1.3 billion in silicon photonics already contracted for 2027, the company has real visibility behind the optimism.

Why Tower Semiconductor Stock Could Continue Surging Higher?

A key reason for investor optimism is management’s increasingly ambitious long-term growth outlook. For the third quarter of fiscal 2026, Tower guided for midrange revenue of $520 million, which would imply an annualized run rate above $2 billion. CEO Russell Ellwanger tied the raised long-term framework to Japan 300-milimeter expansion. He added that the second phase is designed to meet growing customer demand from AI and data center applications. Moreover, the updated long-term model reflects stronger demand, especially in silicon photonics and silicon germanium, along with the impact of its $920 million capacity expansion plan. On a more positive front, management noted that 40% of the planned investment has already been paid, with remaining spending expected to occur throughout 2026 and 2027. 

Cody Acree of Benchmark asked about the company’s photonics bookings, capacity plans, and the durability of growth. One question asked whether the company had updated its $1.3 billion 2027 silicon photonics bookings figure. Management said it had not changed that number, but it expects wafer-start capacity about three times higher by the fourth quarter of 2026 than it was in the second quarter. Another question centred on the company’s Japan expansion. CEO Ellwanger said the first phase of the plan is already reflected in the 2028 model and that the second phase would quadruple 300mm capacity. 

Advanced Energy Industries (AEIS)

Advanced Energy Industries is up 16% so far this month, primarily because of the excitement surrounding its Aug 3 earnings report. The firm reported Q2 revenue of $574 million, up 30% YoY and comfortably reaching the higher end of the company’s own guidance. The EPS of $2.74 beat some estimates by more than 25%, justifying the rally leading up to the earnings report. While the stock price action has been relatively stable since the earnings came out, there’s reason to believe that the stock could surge higher in the coming days.

What Drove Advanced Energy Industries’ Earnings Beat?

AEIS continues to register growth across all its segments. Semiconductor segment revenue was recorded at $278 million, up 33% YoY. Data Center and Industrial & Medical revenue reported growth of 25% and 17%, respectively. But the major fundamental improvement came in the form of higher gross margins, up 3.8% YoY. 

A deeper look at the company’s business suggests these metrics are likely to improve even further. The company continues to see demand for its eVerst and eVoS platforms, which are replacing older power delivery systems across the semiconductor value chain. The 800-volt power solutions are seeing a similar surge in demand due to AI workloads, but some in the market do not appreciate the fact that this is more of a long-term catalyst. The initial revenue is expected to arrive in 2027, but by 2029, it is expected to be a more significant contributor to revenue. In other words, management sees this as driving the next leg of AI-driven data center demand.

Multiple analysts, already bullish on the company’s prospects, revised their price targets upward. Citi analyst Elizabeth Sun raised her price target from $435 to $460 while Morgan Stanley’s Shane Brett upped his price target from $421 to $439.

Why Advanced Energy Industries Stock Could Continue Surging Higher?

Beyond its strong quarterly results, Advanced Energy gave investors another reason to be optimistic by raising its long-term growth expectations. For the third quarter, AEIS guided for revenue of about $640 million, plus or minus $20 million. EPS is expected to be $3, plus or minus $0.25. The company expects gross margin to be in the 41% to 41.5% range, with operating expenses of $120 million to $124 million. Management also raised its full-year 2026 revenue growth outlook to the low-to-mid 30% range. On a more positive front, data center computing revenue is expected to grow at least 50% for the full year, up from a prior mid-30% growth target. Moreover, management said the Thailand factory should begin contributing first production revenue in the fourth quarter of 2026. It noted the facility, once fully built out, could help support roughly $5 billion of revenue-generating capacity across the company’s network. 

During the earnings call, Matthew Prisco of Cantor Fitzgerald asked what management meant by accelerating growth into 2027. CEO Stephen Kelly said customers had largely resolved earlier supply chain constraints, improving the company’s outlook for the market. He added that growth in 2027 is expected to be driven by hyperscale customers ramping to volume, a second wave of customer programs coming online, and the adoption of 800-volt power solutions that are expected to increase production in 2028. 

Astera Labs (ALAB)

Astera Labs reported its Q2 2026 earnings on August 4, and the numbers were exceptional. Revenue came in at $392.4 million, up 104% from a year ago and well past the $360.8 million consensus. Non-GAAP EPS of $0.80 beat estimates by more than 15%, marking the company’s eighth consecutive quarter of surpassing expectations. It was a record quarter on nearly every measure, with non-GAAP gross margin at 73.7% and operating margin expanding to 39.1%. Despite the strong performance, the stock slipped after the report, primarily because it had already run up sharply heading into earnings. 

What Drove Astera Labs’ Earnings Beat? 

The standout was the rapid growth of the Scorpio fabric switch platform. Management now expects Scorpio to become its largest product family in Q3, a full quarter ahead of schedule. PCIe 6 products also crossed 50% of total revenue, up from around a third in Q1, showing how quickly newer, higher-value products are scaling. The Aries signal conditioning line posted record revenue too, so the strength was broad rather than tied to one product. 

The bigger signal came from guidance. Astera guided Q3 revenue to $540 million to $560 million, implying roughly 40% sequential growth and blowing past the $417 million analysts expected. That kind of jump suggests the AI infrastructure demand behind these results isn’t slowing. The beat looks less like a one-off and more like the start of an even stronger second half. Analysts at Citi and UBS see significant further upside after updating their financial models with the latest earnings beat, announcing price targets of $430 and $425 respectively.

Why Astera Labs Stock Could Continue Surging Higher?

ALAB’s upbeat outlook points to continued momentum in the AI infrastructure market, where Astera Labs is benefiting from both expanding customer adoption and new product launches. For the third quarter, Astera Labs guided revenue of $540 million to $560 million, with a midpoint at $550 million. That would represent about 40% sequential growth from the second quarter. CFO Desmond Lynch said the increased revenue guidance was driven by the transition of Scorpio X-Series to volume production, continued strength in Aries PCIe 6 Retimers, and preproduction shipments of Taurus solutions supporting 100 gigabits per lane for 800-gigabyte Ethernet. The company also guided for non-GAAP gross margin of about 27%, operating expenses of $156 million to $160 million, and operating margin of about 43%. 

Analysts focused on the pace of Scorpio X adoption. Harlan Sur of JPMorgan asked whether Scorpio X ramps in Q3 or later and if it overtakes Scorpio P in revenue. President Sanjay Gajendra said the lead customer is expected to move into high-volume production in the third quarter. He added that Scorpio X should surpass the Scorpio P-Series in revenue, making the Scorpio family the company’s largest product line starting in the third quarter. 

CACI INTERNATIONAL (CACI)

CACI INTERNATIONAL stock is up a staggering 37% so far this month. The company reported its fiscal Q4 2026 results on Aug 6, comfortably beating analyst estimates on both revenue and non-GAAP EPS. It announced revenue of $2.7 billion for the quarter, resulting in an EPS of $8.91. Of the 17.6% growth registered by the company, 11.6% came organically while the remaining came through acquisitions, a healthy sign for a business that is still dealing with higher interest expenses due to acquisitions.

What Drove CACI INTERNATIONAL’s Earnings Beat?

The organic growth registered by the company drove a part of the positive sentiment post-earnings. Apart from that, the focus on higher-margin technology work during the quarter, as opposed to the lower-margin service work, drove a 1.5% increase in EBITDA margin to 13%. In fiscal 2026, contract awards exceeded $10 billion, bringing the total backlog to $32 billion. As management focuses on technology and Department of War contracts, the company is emerging as a beneficiary of high-growth and high-priority segments like counter-drone systems, electronic warfare, and even space, driving the company’s bullish thesis.

The bullish sentiment is also reflected in analyst updates after the earnings beat. Jefferies moved its price target up from $510 to $700 while UBS raised its target from $598 to $804, a level that represents over 19% upside from here on.

Why CACI INTERNATIONAL Stock Could Continue Surging Higher?

The company’s latest outlook suggests that the growth drivers behind its recent success remain firmly in place. For full-year 2027, CACI guided revenue to $10.65 billion to $10.85 billion, implying growth of 11.3% to 13.4%. The company expects adjusted diluted EPS of $32.96 to $33.86 and free cash flow of at least $900 million. On growth composition and cadence, management said organic growth should be stronger in the second half of the year, with first-quarter organic growth expected in the low single digits. Revenue is expected to be about 45% in the first half and 55% in the second. The company also said it expects leverage to fall to the low three by June 2027, one quarter earlier than previously planned. That reflects continued debt reduction after the ARKA acquisition and stronger cash generation. 

Gavin Parsons of UBS asked what has driven CACI’s accelerating organic growth since 2024. CEO John Mengucci said the company has benefited from a clear strategy, a more focused approach to winning contracts, and investments in technology made ahead of demand. Looking ahead, Mengucci said he expects 2027 to be another year of exceptional growth for the company.