Newsletter · · Ashutosh Agarwal

Private Equity Comes for Software and the Memory Boom Cuts Both Ways - Daily Market Wrap - Thursday, August 13, 2026

The session of Thursday, August 13, 2026: a Reuters report that Silver Lake wants to take Workday private set off a software rally, Cisco's record quarter got punished anyway, and SanDisk rode the memory supercycle, all on a day when cooler inflation kept the tape calm and pushed stocks to fresh highs.

Daily Market Wrap

Thursday, August 13, 2026: Private Equity Comes for Software and the Memory Boom Cuts Both Ways

Thursday, August 13, 2026, US market close. A Reuters report that Silver Lake wants to take Workday private set off a software rally, Cisco's record quarter got punished anyway, and SanDisk rode the memory supercycle, all on a day when cooler inflation kept the tape calm and pushed stocks to fresh highs.

The shape of the day

  • S&P 500: 7,798.86, +0.65%, a record close (the index touched its 52-week high intraday).
  • Nasdaq Composite: 26,805.23, +0.82%. Dow: 53,839.99, +0.13%. Russell 2000 (small caps): 3,052.85, +0.24%.
  • VIX: 14.63, Wall Street's "fear gauge" barely moved and sits near a one-year low, i.e. investors are calm.
  • 10-year Treasury yield: 4.64%, down ~4 basis points (a basis point is 0.01%). Yields fell after a soft July inflation report, lower yields make future profits worth more today, which helps the highest-growth stocks.
  • Best sectors: Communication Services +1.39% and Technology +0.99%. Worst: Healthcare -1.13%.
  • The macro backdrop: July producer prices (what companies charge each other, an early read on inflation) came in cooler than expected, roughly flat on the month versus the small rise economists had penciled in, following an equally tame consumer-price report the day before. That "softer-than-feared inflation" tone is what kept bonds bid and let risk-taking run. Note: despite the cool data, futures markets are not pricing a September rate cut, the live debate at the Fed is hold-versus-hike, not cut-versus-hold.

Big Story 1: Private Equity Comes Knocking at Workday, and the Whole Software Aisle Re-Rates

What happened

  • Workday (WDAY) soared 17.8% to $206.45, and was briefly halted, after Reuters reported the HR-and-finance software maker is in talks to be taken private by Silver Lake, a deal Reuters said "would rank among the largest software buyouts in history."
  • The report dragged up the entire beaten-down software complex: HubSpot +14.5%, JFrog +10.6%, DocuSign +10.3%, GoDaddy +9.5%, Rubrik +8.6%, Figma +11.0%. Software was the day's dominant equity theme and the reason Tech and Communication Services led.

Why it happened

  • Software-as-a-service stocks (companies that rent their software by subscription) have been crushed in 2026 on fears that AI would eat their lunch. A serious private-equity bid for a marquee name like Workday tells the market those businesses are being valued as cheap, cheap enough that buyout firms want them whole.
  • So investors did the obvious trade: if Workday is worth a premium to a savvy buyer, maybe the rest of the aisle is too. That's a re-rating, paying a higher multiple for the same earnings because the perceived floor just moved up. None of the other names reported news today; they rose in sympathy.

What people said

  • The move is still developing, this is an unconfirmed report, and Workday has not commented, so there is no management quote to share yet. Silver Lake and Workday both declined to confirm.
  • Ahead of the report, the mood on software had already been thawing. Wells Fargo's Michael Turrin lifted his Workday target to $215 this week, arguing cheaper, more open AI models actually raise "the terminal value of incumbent platforms" rather than kill them.
  • The tension is real, though. On InvestTalk's "SaaSpocalypse Debate" (Aug 12), the hosts noted software valuations have compressed from about 8.2x to 5.8x revenue, exactly the kind of markdown that turns public software companies into private-equity targets.

Big Story 2: Cisco Had a Record Quarter. The Stock Fell 8.4% Anyway.

What happened

  • Cisco (CSCO) fell 8.4% to $113.47 despite reporting (Wednesday night) record quarterly revenue of $17.3B, up 18%, and beating on earnings ($1.22 vs. ~$1.17 expected).
  • It also raised its full-year outlook well above Wall Street, fiscal-2027 revenue of $72.2B–$73.4B versus ~$69B expected, and disclosed $9.3B of AI-infrastructure orders from the big cloud players this year, roughly 4.5x the prior year.
  • The catch: gross margin fell about 210 basis points (to 66.3%), and management guided to more of the same, citing a heavier hardware mix and higher memory costs.

Why it happened

  • This was a classic "sell the news." The stock had run up more than 60% into the print, so a beat-and-raise wasn't enough, investors zeroed in on the two soft spots: a guidance that implied slower order growth than the blistering recent pace, and margin pressure as more of the revenue comes from lower-margin AI hardware.
  • Morgan Stanley captured it: gross margin was "a clear point of friction," with most investors having hoped this quarter would be the "margin trough" (the low point). Cisco's guidance suggested that pressure sticks around into 2027 instead.

What people said

  • CEO Chuck Robbins was defiant on CNBC's Squawk on the Street Thursday morning, needling the analysts pushing back on his guidance:

"The analysts were looking for 9% growth. It was kind of funny to me that they were looking for 9% growth. We gave them 15 and they said, why are you being so conservative?"

  • On the margin worry, Robbins argued Cisco is choosing lower-margin AI business on purpose because it's so profitable at the operating line (operating margin hit a near-record 35.9% last quarter):

"Sometimes when you have gross margin pressure, it's happening to you. And sometimes you make a cognizant business model decision that there's business out there at lower gross margins that is absolutely worth going after."

  • He waved off the memory-cost angle specifically, "the memory thing we're managing… that part is not a meaningful issue," and on the earnings call framed the whole moment as a "networking super cycle" fueled by "the accelerating adoption of agentic AI." CNBC's Jim Cramer noted Cisco has "a history of not talking itself up on the day of reports."

Big Story 3: The Memory Boom Cuts Both Ways, SanDisk Soars While Everyone Else Pays the Memory Tax

What happened

  • SanDisk (SNDK) jumped 13.7% after an investor day laid out a strikingly profitable multi-year model: revenue growing mid-to-high teens with non-GAAP gross margins holding around 80% through fiscal 2028–2030, all tied to booming demand for AI data-storage.
  • The very same force, surging prices for NAND flash and other memory chips, is what nicked Cisco's margins (Big Story 2). Memory is having a supercycle, and it mints the chip makers while it taxes the hardware companies that buy their parts.

Why it happened

  • AI data centers need vast amounts of storage, and memory supply is tight. Prices have climbed repeatedly, and, crucially, buyers are now locking in multi-year contracts at much higher prices than in past cycles. That's what has memory investors betting this boom lasts, rather than crashing the way memory cycles usually do.
  • SanDisk leaned into it, with CEO David Goeckeler framing the results as "the direct result of disciplined execution against the strategy we outlined 18 months ago." Sell-side reaction was strong: Evercore ISI stayed Outperform citing "multi-year demand visibility," and Argus upgraded the stock to Buy.

What people said

  • On The Circuit's "Future of Memory Summit" episode (Aug 9), the host walked through SanDisk's numbers and the debate over whether the boom is durable:

"Gross margins of 85% are… an incredible thing for the memory industry to see."

  • The bullish case is about duration, not just price. As the same discussion put it, the number of large customers "signing four to five year deals" is the real tell, "your supply chain professionals would be out of their job" if they thought prices would ease in a couple of years.
  • Not everyone thinks it's forever. On The Morning Filter (Aug 10), Morningstar's Dave Larson said SanDisk and Western Digital are commanding "huge margins during current supply shortages" but pegged the supercycle to peak in early 2028, with a downturn to follow in 2029–2030.

Quick Hits

  • Tapestry (TPR) cratered 16.5%, the worst large-cap move of the day. The Coach parent beat the quarter (Coach revenue +15%) but its fiscal-2027 guidance implied a sharp slowdown from this year's ~14% growth, and Kate Spade sales fell again (-7%). Wells Fargo's Ike Boruchow cut his target and didn't mince words: "this simply was a bad print given where expectations were."
  • Netflix (NFLX) rose ~5% after Bill Ackman's Pershing Square disclosed a new stake, with Ackman arguing Netflix has "effectively won the streaming wars." That, plus strength in The Trade Desk (+7.8%), Paramount Skydance and Charter, powered Communication Services to the top of the leaderboard.
  • Cerebras (CBRS) fell 11.9% even though the AI-chip startup's core revenue more than doubled (+103%). Losses ballooned as spending surged, and after a huge run, "high investor expectations" (Wedbush's phrase) did the rest. OpenAI separately touted a new "Ultrafast" tier "Powered by Cerebras."
  • CoStar (CSGP) climbed 8.4% after CEO Andrew Florance bought roughly $2.5M of stock, an insider-confidence signal that sparked dip-buying following a late-July selloff.
  • Healthcare was the day's laggard (-1.13%) as money rotated out of defensive corners and into high-growth tech and media. Eli Lilly, UnitedHealth and CVS were among the weak spots amid ongoing debate over drug-pricing and pharmacy-benefit economics.
  • Rates and the Fed: the cool July PPI and CPI prints pulled the 10-year yield to 4.64%, but, worth repeating, markets are not betting on a September rate cut. On CNBC's Fast Money (Aug 12), one guest went the other way entirely with "a bold call for three rate hikes this year."
  • The memory-cost theme is spreading. On Top Traders Unplugged (Aug 12), strategist Charles-Henry Monchau argued the AI capex boom is "inflationary in the near term," pushing up prices for chips, memory and even devices like iPhones, the same squeeze now showing up in Cisco's margins.