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Exelixis Reports Solid Earnings—Are New Highs Back on the Table?
Submitted by Chris Markoch. First Published: 2/12/2026.
Key Points
- Exelixis delivered a major EPS beat driven by strong Cabometyx demand, highlighting the company’s profitability and continued leadership in kidney cancer treatments.
- The biotech is transitioning to a multi-franchise oncology model, with zanzalintinib targeting colorectal cancer and representing a potential $5 billion peak-sales opportunity pending FDA review.
- Heavy R&D investment alongside share buybacks signals confidence in the pipeline, positioning Exelixis for sustained growth beyond its current single-drug revenue base.
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Exelixis Inc. (NASDAQ: EXEL) stock is down about 2% in early trading the day after the company delivered a solid but mixed earnings report. The company reported earnings per share (EPS) of $0.94, which was 27% above the consensus estimate and 95% higher year over year.
That profit expanded operating margins, which management said will be reinvested into research and development to support its franchise strategy. Exelixis also repurchased $264.5 million of its stock.
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The revenue picture was mixed. Revenue of $598.66 million missed the $609.17 million consensus but was 5% higher than the $566.76 million reported in the same quarter a year earlier. That growth was largely driven by Cabometyx, the company's branded formulation of cabozantinib used across multiple cancer types.
Exelixis forecasts 2026 revenue between $2.52 billion and $2.62 billion, though that range does not include potential sales from zanzalintinib, its colorectal cancer candidate that is awaiting regulatory review.
What Makes Exelixis Different?
On the surface, Exelixis carries the typical risk-reward profile of a biotech company. What sets it apart is its franchise strategy.
Exelixis is building comprehensive treatment ecosystems around specific drug molecules, aiming to develop deep expertise in particular tumor types with multiple lines of therapy and combination regimens physicians can use at different stages of care.
In plain terms, the company is creating multiple treatment "arrows in its quiver" for cancers such as kidney, colorectal and neuroendocrine tumors — spanning first-line, second-line and combination approaches — to become a preferred option for oncologists.
Two takeaways from the fourth-quarter report:
- Cabozantinib is effective in kidney cancer both as monotherapy and in combination with immunotherapy, and it is the primary revenue driver today.
- Zanzalintinib is being positioned as "the foundation of future oncology franchises," with management projecting up to $5 billion in potential peak annual sales.
Consolidation Now, Growth Later
EXEL trades at roughly 18x trailing twelve-month earnings and 21x forward earnings, a slight premium to the broader biotechnology sector. Its franchise model and pipeline may justify that premium if the expected growth materializes.
The EXEL chart looks constructive: the stock is sitting just below the 50-day simple moving average (SMA), which has recently acted as support. Momentum indicators were neutral heading into the report, and the stock sat about 8.6% below the consensus price target of $46.12.
The day after earnings, Wells Fargo reiterated an Equal Weight rating and raised its price target to $35 from $30. Barclays recently raised its target to $44 from $41 on Feb. 4.
While EXEL is in a consolidation pattern now, successful execution of its growth plan could push the stock to all-time highs within the next 12 months.
Exelixis Is at an Inflection Point
The story isn't just about beating earnings or hitting revenue targets. Exelixis is transitioning from a single-product company to a multi-franchise oncology player, and 2026 is shaping up to be a pivotal year in that shift.
The FDA decision on zanzalintinib in colorectal cancer (Prescription Drug User Fee Act (PDUFA) date: Dec. 3, 2026) represents the company's first major step beyond cabozantinib. If approved, zanzalintinib could open the door to a potential $5 billion peak sales opportunity and validate the franchise approach Exelixis is pursuing.
The real signal is in R&D spending. Despite rising profitability, Exelixis is maintaining roughly $1 billion in annual R&D investment while also executing share buybacks — a sign of confidence in its pipeline economics. That spending supports seven pivotal trials for zanzalintinib alone, plus four early-stage programs advancing toward later development.
For context, the expanded GI sales team is not just about near-term sales growth; it is pre-positioning the company for a potential zanzalintinib launch later this year. The pieces are being put into place for a different kind of biotech story: sustainable, multi-product growth anchored in deep tumor expertise rather than a single binary drug bet.
The AI Land Grab: Why SMCI's Drop Is Your Gain
Submitted by Jeffrey Neal Johnson. First Published: 2/25/2026.
Key Points
- Super Micro Computer continues to deliver record-breaking revenue growth as demand for artificial intelligence hardware infrastructure accelerates globally.
- Management is executing a strategic land grab to secure a massive customer base that will rely on their ecosystem for the next decade of computing.
- Super Micro Computer is pivoting to monetize high-margin liquid-cooling solutions that are essential for operating next-generation AI processors.
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Fear can cloud judgment on Wall Street. Over the past few months, caution has gripped the artificial intelligence (AI) hardware sector. Investors increasingly worry that the "picks and shovels" trade—buying the companies that build AI's physical infrastructure—is ending. As a result, stock prices across the sector have slipped on concerns of a spending slowdown.
But the underlying financials paint a different picture. There's a sizable disconnect between market sentiment and business reality, and nowhere is that gap clearer than with Super Micro Computer (NASDAQ: SMCI).
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As of late February, Super Micro stock is trading in the $30–$32 range, well below its 52-week highs and signaling investor skepticism. Yet the company recently reported a record quarter: revenue for the second quarter of fiscal 2026 hit $12.68 billion, a 123% increase year over year.
The company isn't shrinking—it's scaling rapidly. That disparity between explosive revenue growth and a falling stock price creates an unusual opportunity. Investors are selling because profit margins have tightened, but that margin compression appears to be a deliberate land grab to secure long-term dominance in AI infrastructure, not a sign of collapse.
The Cost of Dominance: Why Margins Are Down
To appreciate the opportunity, investors must first confront the bad news. In the most recent quarter, Super Micro's gross margin dropped to 6.4%. Gross margin is the percentage of revenue remaining after the direct costs of manufacturing; historically, Super Micro's margins have been closer to 12% or higher. This sudden decline is the main reason the stock has come under heavy pressure.
Context matters. The drop was not driven by inefficient factories or wasteful spending but by aggressive price competition—primarily against Dell Technologies (NYSE: DELL)—as both firms battle for contracts with the world's hyperscalers, the massive tech companies building AI data centers.
To illustrate the scale: one customer accounted for 63% of Super Micro's revenue last quarter. To win those massive deals against a giant like Dell, Super Micro has aggressively lowered prices—a strategic land grab to lock in customers now.
Why Sacrifice Profit?
Accepting lower profits today can secure a massive, sticky customer base for the future. This strategy makes sense for three reasons:
- Stickiness: Once complex server racks and infrastructure are installed, switching vendors is costly and difficult.
- Scale: More than $12 billion in revenue in a single quarter provides cash flow to expand manufacturing and supply capabilities.
- Duopoly potential: Aggressive pricing forces smaller rivals out, concentrating the AI server market into a smaller number of dominant players—principally Super Micro and Dell.
The Razor and Blade Model: Monetizing the Cooling
If the servers themselves are being sold at low margins, how will the company generate sustainable profits? The answer is a razor-and-blade model: sell the low-margin server now, then monetize higher-margin follow-ons—cooling, power, and services—over time.
For Super Micro, the "blades" are its Data Center Building Block Solutions (DCBBS). The company is moving beyond selling boxes to offering the full ecosystem required to run them.
As AI chips from NVIDIA (NASDAQ: NVDA) and AMD (NASDAQ: AMD) become more powerful, they generate extreme heat. Traditional air cooling struggles to keep up, driving data centers toward Direct Liquid Cooling (DLC), an area where Super Micro has expertise.
The Profit Pivot
While servers may carry thin margins today, the infrastructure to cool and power them is far more profitable.
- The tech: Liquid-cooling equipment, coolant distribution units (CDUs), power distribution shelves, and management software.
- The margins: Management estimates DCBBS products carry gross margins above 20%.
- The growth path: In the first half of the fiscal year, these solutions contributed only about 4% of the company's profit. Management aims to double that contribution by the end of calendar 2026.
This pivot is central to the bullish case: Super Micro has already installed large numbers of servers and is well positioned to upsell higher-margin cooling and power systems that keep those servers running.
A $10 Billion Signal: Why Inventory Is Gold
Bearish investors point to a bloated balance sheet—inventory has risen to $10.6 billion. In retail, big inventory typically signals weak demand and potential markdowns.
But the AI hardware market today is defined more by scarcity than surplus. There's a global shortage of advanced components, so inventory becomes a competitive advantage. Holding roughly $10 billion in ready-built hardware means Super Micro can fulfill orders faster than rivals waiting on parts. That speed-to-ship is vital for customers racing to deploy AI models and infrastructure.
The Roadmap Ahead
The inventory buildup also signals preparation for a technology upgrade cycle later in 2026:
- NVIDIA: the launch of the Vera Rubin platform.
- AMD: the rollout of Helios solutions.
These next-generation chips should prompt a wave of upgrades. By stocking components now, Super Micro can ship systems on day one. Management recently raised full-year revenue guidance to at least $40 billion, indicating confidence that inventory will convert into sales rather than sit idle.
A Discounted Leader: Valuation Meets Opportunity
The easy-money phase of the AI trade is over; the hype has given way to execution. Investors now demand proof that companies can scale while managing costs.
With the stock depressed, Super Micro's valuation looks more attractive relative to its growth. Its price-to-earnings ratio is roughly 23x—typical for a slower-growth manufacturer—yet the company is posting hyper-growth revenue that more than doubled year over year.
Analysts see upside: firms such as Rosenblatt Securities maintain Buy ratings with price targets near $55, suggesting meaningful potential from the current ~$30 level.
Risk around margins and the competitive battle with Dell is real. But the growth trajectory remains intact. Super Micro is building the physical backbone of the AI economy. For investors willing to look past short-term noise and wait for the high-margin infrastructure strategy to take hold, the sell-off presents a rare discount on an industry leader.
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