For Immediate Release
Chicago, IL – May 27, 2026 – Zacks Equity Research shares Starbucks Corp. SBUX as the Bull of the Day and James Hardie Industries plc JHX as the Bear of the Day. In addition, Zacks Equity Research provides analysis on NVIDIA NVDA, Taiwan Semiconductor Manufacturing Co. TSM and Advanced Micro Devices AMD.
Here is a synopsis of all five stocks.
Bull of the Day:
Starbucks Corp. is staging a comeback as comparable store sales have turned around this year. This Zacks Rank #1 (Strong Buy) is expected to grow earnings by the double digits in 2026.
Starbucks operates more than 41,000 company-operated and licensed coffeehouses. It also has a growing presence in consumer-packaged goods.
Starbucks Beats in the Fiscal Second Quarter 2026
On Apr 28, 2026, Starbucks reported its fiscal second quarter 2026 earnings and beat on the Zacks Consensus by $0.06. Earnings were $0.50 versus the consensus of $0.44.
It was the first earnings beat in the last five quarters as the company has been struggling.
Comparable store sales, a key metric for restaurants, were better than expected.
Global comparable store sales rose 6.2%, driven by a 3.8% increase in comparable transactions and a 2.4% increase in average ticket.
U.S comparable store sales, its largest market, rose 7.1%, primarily driven by a 4.3% increase in comparable transactions and a 2.7% increase in average ticket.
International comparable store sales rose 2.6%, but China, one of its largest international markets, was up just 0.5%. However, China has been struggling so to see a positive comparable number was a surprise.
“We’ve been clear that topline improvement would come first, with earnings growth to follow. We have more work to do, but we're pleased to see the combination of our comp growth and cost discipline starting to show up in margins,” said Cathy Smith, CFO.
Starbucks Raised Full Year Earnings and Comparable Sales Guidance
Starbucks is starting to see some fruit from its labor in the turnaround.
It raised its fiscal 2026 comparable sales guidance to 5% or higher from 3% or higher which it gave back in Jan 2026.
Starbucks also raised its earnings guidance to a range of $2.25 to $2.45 from the prior guidance of $2.15 to $2.40.
The analysts are bullish too. Nine estimates were raised for fiscal 2026 in the last month with eight being revised higher for fiscal 2027 during that time as well.
The fiscal 2026 Zacks Consensus estimate rose to $2.40 from $2.30 in the last 30 days. That’s an earnings gain of 12.7% year-over-year because Starbucks made just $2.13 last year.
For fiscal 2027, the Zacks Consensus has jumped to $3.05 from $2.93 in the last month. This is further earnings growth of 27.3%.
Here’s what it looks like on the price and consensus chart. You can see that 2026 and 2027 are starting to turn higher.
Shares of Starbucks Are Outperforming in 2026
It’s been tough being a Starbucks shareholder over the last 5 years. Shares are down 10.9% compared to the S&P 500, which has gained 78.7%.
But this year, shares are up year-to-date and are outperforming the S&P 500.
It’s still a turnaround story, and not a fundamental one. Starbucks is trading with a forward price-to-earnings (P/E) ratio of 43. A P/E ratio over 30 usually means a company is extremely expensive.
Starbucks pays a dividend of $2.48, which is higher than the expected earnings this year. That’s a yield of 2.4%. But the dividend rewards shareholders for their patience.
Starbucks has not been a Zacks Rank #1 Strong Buy stock since 2019.
If you are looking for a turnaround play in the restaurant stocks, Starbucks should be on your short list.
[In full disclosure, Tracey owns shares of SBUX in her personal portfolio.]
Bear of the Day:
James Hardie Industries plc is waiting for the global housing industry to recover. This Zacks Rank #5 (Strong Sell) is controlling what it can even amidst the uncertainty.
James Hardie manufactures exterior home and outdoor living solutions, including fiber cement, fiber gypsum building products, and composite and PVC decking and railing products.
It recently closed on its acquisition of AZEK, so it acquired AZEK Exteriors and its brands also include Hardie, TimberTech, Versatex, fermacell and StruXure.
James Hardie is a global company. It’s headquartered in Ireland. The company’s products are sold throughout North America, Europe, Australia, and New Zealand.
James Hardie Beat on Earnings Again in Q4 FY2026
On May 19, 2026, James Hardie reported its fourth quarter fiscal 2026 earnings and beat on the Zacks Consensus by $0.01. Earnings were $0.30 versus the Zacks Consensus of $0.29.
It was the third consecutive quarter where the company beat on the Zacks Consensus by just $0.01.
Market conditions remained challenging, with subdued building activity and ongoing affordability pressures in the quarter. Siding & Trim experienced weather-related volume headwinds in February and March.
James Hardie considered FY2026 to be a “transformational” year for the company as it acquired AZEK and is already seeing cost and commercial synergies.
James Hardie Bullish Going into FY2027
Despite the ongoing challenges in the housing industry, James Hardie is looking forward.
“Inflationary and affordability pressures continue to weigh on housing activity. We are focused on what we can control: our cost base, pricing discipline, and providing exceptional products and service to our customers,” said Aaron Erter, CEO.
“We also expect a meaningful step-up in Free Cash Flow to greater than $500 million in FY27,” he added.
Analysts Cut James Hardie’s FY2027 Earnings Estimates
James Hardie looks to commentary from large homebuilders, trends in home remodeling, channel inventory across its distribution network and broader consumer sentiment to try and figure it all out and give guidance.
“The operating environment remains uncertain. We are not assuming a market recovery,” said Ryan Lada, CFO.
The analysts have adjusted full year earnings estimates for this year in the last week.
One estimate was revised higher, and two were cut in the last 7 days. This has pushed the Zacks Consensus Estimate down to $1.24 from $1.33.
This is still earnings growth of 13.8% as the company made $1.09 last year.
Shares of James Hardie Sink as Mortgage Rates Rise
James Hardie tracks what is going on in the housing industry, including mortgage rates. As rates have risen in 2026, many stocks in the housing industry have fallen.
Shares of James Hardie are down 12.3% in the last three months.
Is this a buying opportunity?
James Hardie is trading with a forward price-to-earnings (P/E) ratio of 16.8. A P/E ratio under 20 is usually considered to be attractively priced but a P/E under 15 is often considered to be a value.
The company doesn’t pay a dividend.
Housing won’t stay down forever. But investors may want to wait on the sidelines until the recovery.
Additional content:
NVDA, TSM Up Big Since Early April: What's Driving the Rally?
Since April 1, shares of NVIDIA and Taiwan Semiconductor Manufacturing Co., or TSMC, have gained 23.5% and 19.7%, respectively, driven by accelerating AI compute demand and persistent supply tightness across advanced semiconductors.
NVIDIA has once again emerged as the frontrunner in AI demand after reporting fiscal first-quarter 2027 revenue growth of 85%, as hyperscalers accelerated “AI factory” deployments and agentic AI workloads. At the same time, Taiwan Semiconductor has been benefiting from surging orders for 3nm wafers and advanced packaging technologies such as CoWoS, prompting the company to lift its 2026 capital spending target.
From investors’ point of view, the rally could continue as demand for advanced AI chips and packaging technologies is expected to exceed available supply through 2027. However, export restrictions to China, rising energy and chemical costs, and geopolitical tensions remain key stumbling blocks.
Let’s delve deeper.
Driving Factors for NVIDIA
Massive AI Infrastructure Spending: NVIDIA’s momentum continues to be powered by unprecedented hyperscaler and enterprise AI infrastructure investments. First-quarter fiscal 2027 revenues surged 85% year over year, while Data Center revenues jumped 92%. Management described the ongoing buildout of AI factories as the largest infrastructure expansion in human history, driven by agentic AI deployments across cloud, enterprise and sovereign AI projects. NVIDIA guided fiscal second-quarter revenues to be roughly $91 billion, despite excluding any China Data Center contribution, highlighting exceptionally strong underlying demand.
Expanding AI Platform Ecosystem: Beyond GPUs, NVIDIA is rapidly expanding its AI ecosystem through networking, CPUs, inference software and edge AI. Networking revenues nearly tripled year over year in the fiscal first quarter as the adoption of NVLink, InfiniBand and Spectrum-X accelerated. The company also unveiled its Vera Rubin AI platform, BlueField-4 infrastructure processors and Dynamo 1.0 inference software, which reportedly improves generative and agentic inference performance by up to seven times. Strategic partnerships with Meta, Hyundai, Uber and major cloud providers further strengthen NVIDIA’s position as a full-stack AI infrastructure leader rather than just a chip supplier.
Strong Cash Generation and Balance Sheet Strength: In the fiscal first quarter, NVDA generated quarterly operating cash flow of $52.8 billion and ended the quarter with $67.4 billion in cash, cash equivalents and marketable securities. NVIDIA also repurchased $14.1 billion worth of shares during the quarter. The company’s strong liquidity position supports continued investments in next-generation AI platforms such as Blackwell Ultra, Vera Rubin and advanced networking infrastructure while helping offset risks tied to export controls and supply-chain constraints.
Reasons to Be Bullish on TSMC
Persistent 3nm and AI Chip Supply Tightness: TSMC continues to benefit from severe undersupply in advanced-node AI semiconductors. The company recently noted that the demand for 3nm capacity, advanced packaging and AI accelerators remains exceptionally strong, with demand continuing to outpace available supply through at least 2027. In TSMC’s last-reported first-quarter 2026 results, HPC revenues rose 20% sequentially and accounted for 61% of total revenues, while advanced technologies below 7nm contributed 74% of wafer revenues. TSMC also raised 2026 capital spending toward the high end of its $52-$56 billion range to accelerate N3 and N2 capacity expansion globally.
AI Packaging and Long-Term Technology Leadership: The company recently noted that advanced packaging capacity remains extremely tight as AI chips become larger and more complex. TSMC is aggressively expanding global N3 production across Taiwan, Arizona and Japan while simultaneously ramping 2nm production and preparing its A14 node for 2028. TSMC expects AI accelerator revenue CAGR to trend toward the higher end of its mid-to-high 50% long-term outlook, supported by sustained demand from hyperscalers and agentic AI applications.
Cash Position Supporting Capacity Expansion: During the first quarter of 2026, TSMC generated roughly TWD 699 billion in operating cash flow and ended the quarter with TWD 3 trillion ($106 billion) in cash and marketable securities. This financial flexibility allows TSMC to aggressively fund advanced-node fabs, CoWoS packaging expansion and 2nm production ramps without materially weakening profitability. The company also raised its 2026 capital spending outlook toward the high end of the $52-$56 billion range to meet persistent AI-chip demand. Despite rising overseas fab costs, TSMC continues targeting long-term gross margins above 56%.
What Could Slow Down the AI Rally for NVDA and TSMC?
Despite NVIDIA’s AI dominance, risks remain. Tightening U.S. export restrictions on advanced AI chips to China could weigh on future growth, while NVIDIA’s high valuation increases the risk of a sharp downside if growth slows. Competition from Advanced Micro Devices and custom AI chips developed by hyperscalers like Alphabet, Amazon and Microsoft could also pressure margins over time.
TSMC, meanwhile, faces geopolitical and cost-related risks despite booming AI demand. The company warned that overseas fab expansion could dilute gross margins by 2-4% over time due to higher operating costs. Rising energy and chemical prices, supply-chain uncertainties and growing competition from Samsung and Intel Foundry Services also remain key concerns for investors.
Expensive Valuation
Both NVDA and TSM shares are trading at a premium to the S&P 500 index. NVDA and TSM’s 12-month forward price-to-earnings are 24.21X and 24.11X, respectively, much higher than the index’s 19.76X over the past five years.
Both stocks have a Value Score of D, indicating a stretched valuation at this moment.
Final Take
Despite valuation concerns and geopolitical risks, both NVIDIA and TSMC remain among the strongest long-term beneficiaries of the global AI infrastructure boom. In 2026, however, NVIDIA appears to hold the stronger near-term momentum, supported by explosive hyperscaler AI spending and faster revenue acceleration.
Meanwhile, TSMC retains leadership in advanced-node manufacturing and AI packaging technologies. Its strong balance sheets, robust demand visibility and aggressive capacity expansion plans are likely to support continued growth through 2027. With both stocks carrying a Zacks Rank #3 (Hold), existing investors may benefit more from holding positions rather than aggressively adding at current valuations. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
Starbucks Corporation (SBUX): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM): Free Stock Analysis Report
James Hardie Industries PLC. (JHX): Free Stock Analysis Report
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