Episode summary
Deere’s Disappointing Outlook Shows Farm Recovery Is Elusive | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney, Kristine Aquino · Guests: Christopher Ciolino, Woo Jin Ho, Diana Rosero Pena, Matt Britton
Summary
Deere’s outlook was the clearest sign that the U.S. farm recovery remains elusive: a guest said guidance came in well below expectations and points to a “lower for longer” cycle in North America. Deere now expects another 10% decline in 2026 net income, with U.S. retail sales down about 30% this year and volumes potentially falling another 15% to 20% in 2026, which would mark the lowest level in more than four decades. The guest tied the weakness to depressed crop prices, still-high input costs and trade uncertainty, especially around Chinese soybean demand.
On technology hardware, Dell raised its AI server guidance from $20 billion to $25 billion as demand tied to Blackwell and large customer deals continues to build. The guest said Dell’s balance sheet and diversified business mix should help cushion weaker AI server and PC margins, even as higher DRAM and other commodity costs pressure profitability. HP, by contrast, cut its profit outlook and plans to eliminate 4,000 to 6,000 jobs by fiscal 2028, with the guest framing the move as a sign of weakness rather than strength.
Petco reported stronger-than-expected EBITDA margin expansion and said its strategy of better inventory, more services and store closures is working. The final segment argued that AI is reshaping shopping behavior, with Gen Alpha and younger consumers increasingly starting searches in chatbots and buying through social and live-shopping platforms rather than traditional search and retail funnels.
Key takeaways
- Deere’s weak 2026 outlook suggests the farm cycle is still in a trough, with earnings expected to fall another 10% and equipment volumes near four-decade lows.
- The guest said Deere’s biggest recovery signals are stable crop prices and consistent Chinese soybean buying, not just one-off trade headlines.
- Dell lifted AI server guidance to $25 billion, but higher DRAM costs and lower AI-server margins still weigh on profitability.
- HP’s 4,000 to 6,000 planned layoffs through fiscal 2028 reflect cost pressure and softer profits, not operating strength.
- Petco is seeing margin improvement from services, inventory changes and store closures, with comparable-sales growth expected later in 2026.
- The guest said AI shopping tools and social commerce could rewire the consumer funnel, creating new winners and losers quickly.
Notable quotes
“this was, you know, well below our expectations. Um, and I'd say even, you know, below some of the most bearish estimates out there”
“their 26th net income guide, uh, calls for another 10% decline in 2026”
“we're we're starting to see some of these uh clustered uh Blackwell deals starting to come through”
“they cut their EPS guidance. Well, they're saying that the high commodity cost is going to pinch about 30 cents in EPS in fiscal 26”
“the the higher commodity cost is actually going to be pinching uh gross margins”
How the episode opens
Bloomberg Audio Studios podcasts, radio, news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m.
Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. One of my favorite American companies is Deer, John Deere Company, because it just to me, a the products are just awesome, the big tractors and stuff like that.
And B, they're such high quality. Uh, and they're just known around the world and great engineering, great technology. Uh, and they're just the backbone for the American farmer.
It's the tool for the American farmer, uh, who feeds the world. So, I just always followed this company really closely, and they came out with some numbers. Uh, disappointing.
It's a little tough out there in farm country. So, we want to break it down with Chris Chelino. Uh, he covers all the big machinery uh, companies uh, for Bloomberg Intelligence.
Just one of our top top analysts. He knows the story well. Chris, tell us what you heard from Deer with their most recent quarterly results.
Yeah, thanks Paul. You know, we expected pretty conservative guidance uh, coming into the print, but this was, you know, well below our expectations. Um, and I'd say even, you know, below some of the most bearish estimates out there and really just kind of points to a lower for longer a cycle here in North America.
Uh, their 26th net income guide, uh, calls for another 10% decline in 2026. It implies roughly earnings per share in the the $16.50 range, which is, you know, 18% below consensus. So, it's not great news.
I I would say there are a couple positive takeaways, though. Uh, one, um, we do finally now have, I think, visibility and line of sight on trough earnings this cycle.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- deere earnings
- us farm recovery
- tariffs and trade
- ai server demand
- pet retail earnings
Companies and tickers mentioned
- DE
- DELL
- HPQ
- WOOF
- Deere & Co.
- Dell Technologies
- HP Inc.
- Petco Health and Wellness Company
- Suzy
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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