GMS
GMS Inc.
stock NYSE

Google and Tesla both reported earnings after the close with almost identical logic both beat on revenue and both dropped after hours Google made more money but cash flow turned negative for the first time Tesla sold more cars but profits kept shrinking so does this mean AI is failing on the contrary these two reports prove that AI demand is stronger than expected but to secure their tickets to the AI era tech giants are collectively sacrificing short term profits
Lets start with Google if you just look at the business this report is nearly flawless revenue grew 24 percent operating profit grew 30 percent and the standout Google Cloud revenue jumped 82 percent far exceeding expectations Gemini had 950 million monthly active users processing 22 billion tokens per minute which was 6 billion more than last quarter among the fortune 100 companies 90 percent are using Gemini for business backlog orders exceeded 514 billion dollars for the first time and management said more than half of that will not be recognized until the next two years meaning orders are booked two years out on the call they kept repeating one sentence the pace of demand growth still exceeds Googles speed of building compute capacity that sentence is more important than any revenue number because it shows AI infrastructure is still in short supply
So why did the stock drop 4 percent after hours because of another set of numbers capital expenditures were 44 point 9 billion dollars and free cash flow was negative 5 point 9 billion this was Googles first quarterly negative free cash flow in over 20 years since going public on top of that management reiterated that full year capital spending would rise from 190 billion to as high as 205 billion dollars the CFO said cash flow pressure would continue to increase to support this bottomless pit Google recently borrowed nearly 100 billion dollars and in June completed its first large scale stock offering in 20 years raising 85 billion dollars net management is very determined the next generation model GMS has already started pretraining and to prevent losing customers due to insufficient compute power Google even decided to lease large amounts of third party compute capacity in the third quarter as a bridge they would rather sacrifice short term margins than fall behind in the AI race
So Wall Street started recalculating valuations the asset light Google that used to collect taxes from search advertising and contribute tens of billions in net cash flow every year has completely disappeared and it increasingly looks like a manufacturing company building factories at a frantic pace the two things capital markets hate most are first an asset light company becoming asset heavy and second operating cash flow being unable to sustain itself Google is doing both so a short term pullback is inevitable in the medium term the market will no longer reward the act of investing in AI instead it will watch when AI starts generating cash flow Googles most important metric over the next few quarters becomes when free cash flow turns positive again but in the long term Google Clouds over 80 percent growth and over 500 billion dollars in contract backlog have already proven that AI investment is starting to pay off in revenue short term cash flow pressure does not change long term value companies around the world are transitioning to AI and the data centers and servers Google is pouring money into will transform into high barrier monopoly profits over the next few years
Now lets look at Teslas second quarter earnings revenue grew 26 percent deliveries set a record for the same period FSD subscribers continued to grow Robotaxi completed 380 thousand miles of autonomous driving with zero major accidents these numbers are actually pretty good what crushed the stock was profits EPS missed by 35 percent operating profit was less than one third of market expectations and free cash flow turned negative again on the call Musk kept emphasizing that they would continue burning cash just like Google capital spending this year exceeds 25 billion dollars and will keep growing over the next two to three years they also plan to build a 30 billion dollar debt financing facility because Optimus humanoid robots self developed AI chips and wafer fabs all need to move forward together Musk even said this is the fastest industrial expansion in the US since World War Two
Robotaxis performance was indeed impressive but dont forget there are 677 registered autonomous vehicles in total and Tesla only has 175 in the autonomous driving arms race Tesla is playing catch up not leading and on the Optimus front which represents the future Musk told the truth this is the hardest product to mass produce in Teslas history with entirely new parts and a supply chain built from almost nothing so the ramp up curve will be very slow and long
What should investors really pay attention to Musk specifically thanked Micron saying Micron had already locked in large HBM memory quotas for Tesla for the next several years as I have always emphasized supply chain information is more telling than stock prices HBM is now one of the most scarce resources in the AI supply chain without HBM large model efficiency cannot improve even a super client like Tesla needs to lock inventory years in advance which shows the entire AI memory supply chain remains extremely tight
So although Tesla and Google stocks fell the AI infrastructure supply chain rose after hours Wall Street is deeply divided on Tesla some institutions remain firmly bullish believing that Robotaxi and Optimus are the businesses that truly determine Teslas value and the current profit decline is just the normal cost of entering an AI investment cycle but Morgan Stanley and Jefferies are more cautious they think the market has already accepted falling profits but is starting to worry about cash flow which has been negative for several quarters if Robotaxis commercialization pace continues to lag behind capital expenditure growth valuation pressure will keep mounting shrinking per vehicle profit from price wars combined with massive capital spending that shows no end in sight for two to three years means the company simply cannot deliver a pretty income statement to Wall Street in the short term
Google has proven that AI can make money Tesla is still proving that AI will make money in the future that is the biggest difference between these two companies

# Q2 Earnings call summary High Tide inc
https://preview.redd.it/av140e6wa5fh1.png?width=960&format=png&auto=webp&s=303279dcf737045015bcbc1476c920d50f86bcf8
**SUMMARY :**
Despite the seasonally weaker quarter, it was the company's best quarter, which speaks volumes about HITI's increased operating efficiency.
**Gms on medical cannabis 27%**
https://preview.redd.it/brcrymoya5fh1.png?width=1080&format=png&auto=webp&s=158494ff4ab6990f036ad4cea7e963267705e67a
https://preview.redd.it/82zqv3i0b5fh1.png?width=1080&format=png&auto=webp&s=a124946ad2634ed02b6d36e56ecfb931f83177f3
# Key Strengths of High Tide's Q2 FY2026
# 1. Strong Revenue Growth
* Record revenue of **CAD $179.3 million**.
* Approximately **30% year-over-year growth**, representing one of the strongest growth rates in recent quarters.
# 2. Accelerating EBITDA Growth
* Record **Adjusted EBITDA of CAD $13.9 million**.
* EBITDA increased by approximately **73% year over year**, significantly outpacing revenue growth, which indicates improving operating leverage and efficiency.
# 3. Positive Net Income
* The company reported **positive net income** and positive earnings per share (EPS).
* In the cannabis industry, profitability remains a major challenge for many companies, making High Tide's continued profitability particularly noteworthy.
* **Management expects sustainable NET INCOME**
# 4. Positive Free Cash Flow
* High Tide generated positive free cash flow and strong operating cash flow.
* This reduces the need to raise capital through equity issuances, helping to limit shareholder dilution.
# 5. Germany Continues to Exceed Expectations
* German subsidiary **Remexian Pharma GmbH** generated a record **CAD $31.6 million** in revenue.
* Gross margin improved to **27%**.
* Management stated that several internal targets were achieved roughly 90 days ahead of schedule.
# 6. Rapid Expansion of the Customer Base
* The **Cabana Club** loyalty program surpassed **2.65 million members**, up 39% year over year.
* **ELITE memberships** exceeded **178,000**, up 84% year over year.
* This growing membership ecosystem strengthens customer loyalty, improves data analytics capabilities, and enhances High Tide's competitive advantage in retail.
* The stated goal is to exceed 1 million elite members in the long term.
# 7. Significant Banking Support
* The company secured a new credit facility of up to **CAD $40 million** from **Bank of Montreal**.
* Access to financing from a major Canadian bank is an important signal of financial credibility and stability in the cannabis sector.
* This has led to an increase in institutional interest in the stock which will be reflected as the company's fundamentals continue to improve.
# 8. Market Leadership
* High Tide continues to hold approximately **12% of the Canadian cannabis retail market** in the provinces where it operates.
* The company is also steadily gaining market share in the German medical cannabis market.
* Raj is targeting 20% ​​market share in Germany and I personally believe 30% is achievable in the long term for several reasons.
# Most Bullish Takeaways
If I had to identify nine most bullish developments from the quarter, they would be:
1. **73% growth in Adjusted EBITDA**, demonstrating strong operational execution.
2. **Remexian's 27% gross margin**, showing that the German business is scaling successfully and profitably.
3. **The new CAD $40 million credit facility**, which provides growth capital without diluting shareholders.
4. **SNDL will have to sell some of its assets** because it has violated regulations for years, and I wouldn't be surprised if it had to pay a hefty fine for breaking the law for so long. These assets will be carefully evaluated by Hiti for purchase.
5. **Possible increase in the cap in Ontario from 150->300 which Raj calls "a dream come true" bringing the number of canna cabana shops +500**, but we'll have to see how things evolve
6. The medical branch is growing throughout Europe, a constantly growing market, where Raj intends to be the leader in every country in which it operates (Germany, UK to follow).
7. GMS have reached an all-time high. Raj states that due to competition, they will shrink slightly in the medium term in order to gain market share, but thanks to initiatives such as increasing ELITE/WHITE LABEL inventory from the current 2% to 25%, GMS will exceed 30% in the long term, also driven by Remexian's improved efficiency.
8. Raj has stated his intention to enter the US, but for now he's focused on the European medical market and I support that.
9. He says there's no rush to pursue multiple objectives at once, but rather to focus on one market at a time, strengthen its position by positioning itself as a leader, and move on to the next.
Together, these results suggest that High Tide is evolving from a pure growth story into a **profitable growth company**, a transition that investors often reward with higher valuation multiples over time.
HITI is becoming the definition of non-stop execution and deserves more credit for this. Remexian's goal is clear: gain more market share to satisfy this insatiable and ever-growing demand, in order to reach 20-30% market share in the long term and then achieve pricing determination with a consequent increase in GMS and profitability.
**Still think** **HITI** **is vastly undiscovered.**
Despite an increase in CAPEX linked to the expansion, the company continues to generate FCF+ and expects to increase net income thanks to ongoing synergies.
Raj is carefully evaluating expansion into another jurisdiction (UK), choosing the right partner for the long term.
This looks more like short-term noise than a deterioration in fundamentals. Remexian’s expansion in Germany and the economies of scale enjoyed by Canna Cabana represent genuine, differentiating competitive advantages. As long as management continues to pursue its market share targets and secure future pricing power, the valuation gap should gradually narrow. Investing in HITI will certainly be volatile, but the current fundamentals are much healthier than the stock price suggests. What's needed is patience and faith in the story.
**The UK is the European market that excites him the most.**
The UK medical market appears more interesting than the German one because High Tide could own the entire chain (from production directly to the patient). This is the medical system in which it is structured, which makes it exciting and unique in some respects.
I might be biased because HITI is my largest position by a wide margin, but that’s not why I’m saying this. Execution here has simply been exceptional. The numbers speak for themselves, the customer wins speak for themselves, and the pace of announcements speaks for itself.
https://preview.redd.it/5shupxp1b5fh1.png?width=1080&format=png&auto=webp&s=8cfe2de770dea6e09a69f673c07718700bacc017
# Every analyst covering the company has a Buy rating
Canaccord Genuity → Buy, Target $US 5.50
Haywood → Buy, Target $US 5.90
Roth → Buy, target $US 5.00
TD Cowen → Buy, target $6.5 CAD
ATB CAPITAL Target 7$CAD[](https://preview.redd.it/q2-earnings-call-summary-high-tide-inc-v0-ukywmk6r85fh1.png?width=1080&format=png&auto=webp&s=88fb60ca56698017eaf2fd14faff22db46beb790)
https://preview.redd.it/c97h87m3b5fh1.png?width=1080&format=png&auto=webp&s=4d4571f0e29fa3cd14e687a297a1d68f4c5be551
company presentation [https://hightideinc.com/presentation/](https://hightideinc.com/presentation/)
I am Long term

Google and Tesla both reported earnings after the close with almost identical logic both beat on revenue and both dropped after hours Google made more money but cash flow turned negative for the first time Tesla sold more cars but profits kept shrinking so does this mean AI is failing on the contrary these two reports prove that AI demand is stronger than expected but to secure their tickets to the AI era tech giants are collectively sacrificing short term profits
Lets start with Google if you just look at the business this report is nearly flawless revenue grew 24 percent operating profit grew 30 percent and the standout Google Cloud revenue jumped 82 percent far exceeding expectations Gemini had 950 million monthly active users processing 22 billion tokens per minute which was 6 billion more than last quarter among the fortune 100 companies 90 percent are using Gemini for business backlog orders exceeded 514 billion dollars for the first time and management said more than half of that will not be recognized until the next two years meaning orders are booked two years out on the call they kept repeating one sentence the pace of demand growth still exceeds Googles speed of building compute capacity that sentence is more important than any revenue number because it shows AI infrastructure is still in short supply
So why did the stock drop 4 percent after hours because of another set of numbers capital expenditures were 44 point 9 billion dollars and free cash flow was negative 5 point 9 billion this was Googles first quarterly negative free cash flow in over 20 years since going public on top of that management reiterated that full year capital spending would rise from 190 billion to as high as 205 billion dollars the CFO said cash flow pressure would continue to increase to support this bottomless pit Google recently borrowed nearly 100 billion dollars and in June completed its first large scale stock offering in 20 years raising 85 billion dollars net management is very determined the next generation model GMS has already started pretraining and to prevent losing customers due to insufficient compute power Google even decided to lease large amounts of third party compute capacity in the third quarter as a bridge they would rather sacrifice short term margins than fall behind in the AI race
So Wall Street started recalculating valuations the asset light Google that used to collect taxes from search advertising and contribute tens of billions in net cash flow every year has completely disappeared and it increasingly looks like a manufacturing company building factories at a frantic pace the two things capital markets hate most are first an asset light company becoming asset heavy and second operating cash flow being unable to sustain itself Google is doing both so a short term pullback is inevitable in the medium term the market will no longer reward the act of investing in AI instead it will watch when AI starts generating cash flow Googles most important metric over the next few quarters becomes when free cash flow turns positive again but in the long term Google Clouds over 80 percent growth and over 500 billion dollars in contract backlog have already proven that AI investment is starting to pay off in revenue short term cash flow pressure does not change long term value companies around the world are transitioning to AI and the data centers and servers Google is pouring money into will transform into high barrier monopoly profits over the next few years
Now lets look at Teslas second quarter earnings revenue grew 26 percent deliveries set a record for the same period FSD subscribers continued to grow Robotaxi completed 380 thousand miles of autonomous driving with zero major accidents these numbers are actually pretty good what crushed the stock was profits EPS missed by 35 percent operating profit was less than one third of market expectations and free cash flow turned negative again on the call Musk kept emphasizing that they would continue burning cash just like Google capital spending this year exceeds 25 billion dollars and will keep growing over the next two to three years they also plan to build a 30 billion dollar debt financing facility because Optimus humanoid robots self developed AI chips and wafer fabs all need to move forward together Musk even said this is the fastest industrial expansion in the US since World War Two
Robotaxis performance was indeed impressive but dont forget there are 677 registered autonomous vehicles in total and Tesla only has 175 in the autonomous driving arms race Tesla is playing catch up not leading and on the Optimus front which represents the future Musk told the truth this is the hardest product to mass produce in Teslas history with entirely new parts and a supply chain built from almost nothing so the ramp up curve will be very slow and long
What should investors really pay attention to Musk specifically thanked Micron saying Micron had already locked in large HBM memory quotas for Tesla for the next several years as I have always emphasized supply chain information is more telling than stock prices HBM is now one of the most scarce resources in the AI supply chain without HBM large model efficiency cannot improve even a super client like Tesla needs to lock inventory years in advance which shows the entire AI memory supply chain remains extremely tight
So although Tesla and Google stocks fell the AI infrastructure supply chain rose after hours Wall Street is deeply divided on Tesla some institutions remain firmly bullish believing that Robotaxi and Optimus are the businesses that truly determine Teslas value and the current profit decline is just the normal cost of entering an AI investment cycle but Morgan Stanley and Jefferies are more cautious they think the market has already accepted falling profits but is starting to worry about cash flow which has been negative for several quarters if Robotaxis commercialization pace continues to lag behind capital expenditure growth valuation pressure will keep mounting shrinking per vehicle profit from price wars combined with massive capital spending that shows no end in sight for two to three years means the company simply cannot deliver a pretty income statement to Wall Street in the short term
Google has proven that AI can make money Tesla is still proving that AI will make money in the future that is the biggest difference between these two companies

# Q2 Earnings call summary High Tide inc
https://preview.redd.it/av140e6wa5fh1.png?width=960&format=png&auto=webp&s=303279dcf737045015bcbc1476c920d50f86bcf8
**SUMMARY :**
Despite the seasonally weaker quarter, it was the company's best quarter, which speaks volumes about HITI's increased operating efficiency.
**Gms on medical cannabis 27%**
https://preview.redd.it/brcrymoya5fh1.png?width=1080&format=png&auto=webp&s=158494ff4ab6990f036ad4cea7e963267705e67a
https://preview.redd.it/82zqv3i0b5fh1.png?width=1080&format=png&auto=webp&s=a124946ad2634ed02b6d36e56ecfb931f83177f3
# Key Strengths of High Tide's Q2 FY2026
# 1. Strong Revenue Growth
* Record revenue of **CAD $179.3 million**.
* Approximately **30% year-over-year growth**, representing one of the strongest growth rates in recent quarters.
# 2. Accelerating EBITDA Growth
* Record **Adjusted EBITDA of CAD $13.9 million**.
* EBITDA increased by approximately **73% year over year**, significantly outpacing revenue growth, which indicates improving operating leverage and efficiency.
# 3. Positive Net Income
* The company reported **positive net income** and positive earnings per share (EPS).
* In the cannabis industry, profitability remains a major challenge for many companies, making High Tide's continued profitability particularly noteworthy.
* **Management expects sustainable NET INCOME**
# 4. Positive Free Cash Flow
* High Tide generated positive free cash flow and strong operating cash flow.
* This reduces the need to raise capital through equity issuances, helping to limit shareholder dilution.
# 5. Germany Continues to Exceed Expectations
* German subsidiary **Remexian Pharma GmbH** generated a record **CAD $31.6 million** in revenue.
* Gross margin improved to **27%**.
* Management stated that several internal targets were achieved roughly 90 days ahead of schedule.
# 6. Rapid Expansion of the Customer Base
* The **Cabana Club** loyalty program surpassed **2.65 million members**, up 39% year over year.
* **ELITE memberships** exceeded **178,000**, up 84% year over year.
* This growing membership ecosystem strengthens customer loyalty, improves data analytics capabilities, and enhances High Tide's competitive advantage in retail.
* The stated goal is to exceed 1 million elite members in the long term.
# 7. Significant Banking Support
* The company secured a new credit facility of up to **CAD $40 million** from **Bank of Montreal**.
* Access to financing from a major Canadian bank is an important signal of financial credibility and stability in the cannabis sector.
* This has led to an increase in institutional interest in the stock which will be reflected as the company's fundamentals continue to improve.
# 8. Market Leadership
* High Tide continues to hold approximately **12% of the Canadian cannabis retail market** in the provinces where it operates.
* The company is also steadily gaining market share in the German medical cannabis market.
* Raj is targeting 20% ​​market share in Germany and I personally believe 30% is achievable in the long term for several reasons.
# Most Bullish Takeaways
If I had to identify nine most bullish developments from the quarter, they would be:
1. **73% growth in Adjusted EBITDA**, demonstrating strong operational execution.
2. **Remexian's 27% gross margin**, showing that the German business is scaling successfully and profitably.
3. **The new CAD $40 million credit facility**, which provides growth capital without diluting shareholders.
4. **SNDL will have to sell some of its assets** because it has violated regulations for years, and I wouldn't be surprised if it had to pay a hefty fine for breaking the law for so long. These assets will be carefully evaluated by Hiti for purchase.
5. **Possible increase in the cap in Ontario from 150->300 which Raj calls "a dream come true" bringing the number of canna cabana shops +500**, but we'll have to see how things evolve
6. The medical branch is growing throughout Europe, a constantly growing market, where Raj intends to be the leader in every country in which it operates (Germany, UK to follow).
7. GMS have reached an all-time high. Raj states that due to competition, they will shrink slightly in the medium term in order to gain market share, but thanks to initiatives such as increasing ELITE/WHITE LABEL inventory from the current 2% to 25%, GMS will exceed 30% in the long term, also driven by Remexian's improved efficiency.
8. Raj has stated his intention to enter the US, but for now he's focused on the European medical market and I support that.
9. He says there's no rush to pursue multiple objectives at once, but rather to focus on one market at a time, strengthen its position by positioning itself as a leader, and move on to the next.
Together, these results suggest that High Tide is evolving from a pure growth story into a **profitable growth company**, a transition that investors often reward with higher valuation multiples over time.
HITI is becoming the definition of non-stop execution and deserves more credit for this. Remexian's goal is clear: gain more market share to satisfy this insatiable and ever-growing demand, in order to reach 20-30% market share in the long term and then achieve pricing determination with a consequent increase in GMS and profitability.
**Still think** **HITI** **is vastly undiscovered.**
Despite an increase in CAPEX linked to the expansion, the company continues to generate FCF+ and expects to increase net income thanks to ongoing synergies.
Raj is carefully evaluating expansion into another jurisdiction (UK), choosing the right partner for the long term.
This looks more like short-term noise than a deterioration in fundamentals. Remexian’s expansion in Germany and the economies of scale enjoyed by Canna Cabana represent genuine, differentiating competitive advantages. As long as management continues to pursue its market share targets and secure future pricing power, the valuation gap should gradually narrow. Investing in HITI will certainly be volatile, but the current fundamentals are much healthier than the stock price suggests. What's needed is patience and faith in the story.
**The UK is the European market that excites him the most.**
The UK medical market appears more interesting than the German one because High Tide could own the entire chain (from production directly to the patient). This is the medical system in which it is structured, which makes it exciting and unique in some respects.
I might be biased because HITI is my largest position by a wide margin, but that’s not why I’m saying this. Execution here has simply been exceptional. The numbers speak for themselves, the customer wins speak for themselves, and the pace of announcements speaks for itself.
https://preview.redd.it/5shupxp1b5fh1.png?width=1080&format=png&auto=webp&s=8cfe2de770dea6e09a69f673c07718700bacc017
# Every analyst covering the company has a Buy rating
Canaccord Genuity → Buy, Target $US 5.50
Haywood → Buy, Target $US 5.90
Roth → Buy, target $US 5.00
TD Cowen → Buy, target $6.5 CAD
ATB CAPITAL Target 7$CAD[](https://preview.redd.it/q2-earnings-call-summary-high-tide-inc-v0-ukywmk6r85fh1.png?width=1080&format=png&auto=webp&s=88fb60ca56698017eaf2fd14faff22db46beb790)
https://preview.redd.it/c97h87m3b5fh1.png?width=1080&format=png&auto=webp&s=4d4571f0e29fa3cd14e687a297a1d68f4c5be551
company presentation [https://hightideinc.com/presentation/](https://hightideinc.com/presentation/)
I am Long term