Sector Rotation from AI to Fallen Angels? HPQ Silicon, Mercedes-Benz and PayPal

HPQ Silicon: Milestones in Storage Technologies

Against the backdrop of the global wave of electrification and the expansion of data centers and drone applications, the company HPQ Silicon (WKN: A3DQZ3 | ISIN: CA40444L1031 | Ticker Symbol: O08) is strategically positioning itself in high-margin niche markets for energy storage. With a focus on silicon-based anode materials and recent operational advances in its proprietary Fumed Silica Reactor (FSR) technology, the group is perfectly positioned to meet growing industrial demand. To support the company's expansion and strengthen its balance sheet, management recently initiated a targeted debt repayment through the issuance of new shares. This balance sheet measure, the conversion of debt to equity, creates the financial flexibility to consistently advance ongoing pilot programs and achieve economies of scale without liquidity constraints.

A key value driver is the company's proprietary GEN4 technology, which recently achieved a fundamental milestone on the path to full commercialization with the UL 1642 safety certification for its Gen4-21700 lithium-ion cell platform. In collaboration with its portfolio company Novacium, the company also achieved a technological breakthrough. With semi-solid electrolyte battery packs for drones, featuring an energy density of 395 Wh/kg and a capacity of 15,900 mAh, the company has already outperformed established battery systems by up to 36%. This leap in innovation significantly improves not only the transportable payload but also flight duration in industrial applications. This leap in innovation was already showcased at a large-scale presentation at the Eurosatory defence industry trade show in Paris in June of this year. A key economic advantage lies simply in the fact that these significant performance improvements can be integrated directly into existing industrial mass-production lines without the need for costly retrofits.

To accelerate global market penetration, HPQ Silicon has strategically expanded its sales teams for the industrial and defence sectors and is continuing to drive marketing efforts under the HPQ Endura+ brand in North America. At the same time, a strategic memorandum of understanding with GH Technologies aims to rapidly tap into the Asian markets, which currently account for over 57% of global demand for cylindrical lithium-ion cells. Since the crucial industry-specific safety certifications are now being obtained in stages, the likelihood of securing the first binding large-scale purchase agreements from the Asia-Pacific region should have increased significantly. The combination of certified high-performance technology, scalable production processes, and the expansion into international growth markets forms a strong foundation for the planned revenue growth in 2026.

Mercedes-Benz Shares Jump After Q2 Results: Is This a Trend Reversal?

Mercedes-Benz shares (WKN: 710000 | ISIN: DE0007100000 | Ticker: MBG) initially rose sharply on Tuesday following the release of second-quarter results. At one point, the gain was nearly 6%. Over the course of Wednesday, buying and selling were roughly balanced, and the stock closed at around EUR 46.60. Investors particularly welcomed the surprisingly robust adjusted passenger vehicle margin and the confirmation of the margin target despite the challenging market environment. This allowed the stock to break above the 20-day moving average and surpass its recent highs in the EUR 46 range. However, this is not yet enough for a genuine trend reversal as the share continues to trade below the 50-, 100-, and 200-day moving averages.

Fundamentally, the quarter turned out better than revenue figures suggest. Revenue fell 3.3% year-over-year to EUR 32.06 billion. Nevertheless, operating profit rose 21.5% to EUR 1.55 billion. On an adjusted basis, EBIT rose by 15.6% to EUR 2.30 billion, while net income improved by 13.5% to EUR 1.09 billion. The cost-cutting measures implemented are already having an effect. Administrative expenses fell by 14%, and research and development expenses by 12%. However, the strongest growth came not from the core passenger vehicle business, but from Mercedes-Benz Financial Services. This segment increased its adjusted EBIT by 70% to EUR 492 million and achieved a return on equity of 15.3%. The van division also performed well, with an adjusted return on sales of 10.2%. Sales of electric vehicles also showed positive growth. Sales of fully electric passenger vehicles rose by 51%, and in Europe by as much as 87%.

The biggest problem remains China, where passenger vehicle sales plummeted by 30%. Worldwide, Mercedes-Benz sold 417,765 vehicles, 7.9% fewer than in the previous year. Adjusted EBIT for the passenger vehicle division fell by 26% to EUR 909 million, while the adjusted margin dropped from 5.1% to 4.0%. Due to impairment charges of EUR 704 million on Chinese investments, the passenger vehicle division's EBIT amounted to just EUR 49 million. Cash flow also sends a warning signal. Free cash flow from the industrial business fell by 40.9% to EUR 1.10 billion, even though the partial sale of the Daimler Truck stake contributed EUR 417 million. The balance sheet, however, remains stable. After dividends and share buybacks totaling EUR 5 billion, net industrial liquidity stood at EUR 30.4 billion. At the same time, Mercedes lowered its outlook. Group revenue and passenger vehicle sales are now expected to be slightly below the previous year's levels in 2026. On a positive note, however, the return forecast for Financial Services has been raised to 12 to 14%.

From a technical analysis perspective, the recovery therefore remains only an initial attempt to break out of the range for now. Above EUR 46, the resistance zone around EUR 50 comes into focus. Only a sustained breakout above this level would noticeably brighten the outlook. The 200-day moving average, currently at around EUR 53.70, is still about 15% away. As long as these hurdles remain, the overarching downtrend continues to dominate despite the positive price reaction.

PayPal Shares Surge After Q2 Results: Will It Break Through the USD 60 Mark Now?

PayPal (WKN: A14R7U | ISIN: US70450Y1038 | Ticker: PYPL) reported its second-quarter 2026 results on Tuesday, July 28—and investors reacted with relief. As a result, the stock jumped by just under 4% to around USD 58. The reason: the payment service provider exceeded expectations, raised its full-year outlook, and provided evidence that the restructuring under CEO Enrique Lores is finally taking hold. Additionally, speculation about an offer from Stripe and Advent at USD 60.50 per share is supporting the stock price. Revenue rose 5% to USD 8.68 billion, exceeding the consensus estimate of approximately USD 8.47 billion. On a currency-adjusted basis, however, growth was only 3%. Adjusted earnings per share reached USD 1.38, significantly beating the expected USD 1.28, but fell 1% compared to the same quarter a year ago. Under GAAP, net income actually fell by 12% to USD 1.10 billion.

Operationally, the platform remains robust. Total payment volume grew by 10% to USD 486.4 billion; on a currency-adjusted basis, growth was 9%. The number of transactions increased by 8% to 6.75 billion. Venmo and Braintree each saw their payment volumes grow in the mid-teens. "Buy Now, Pay Later" performed particularly strongly with 26% growth, as did active users of the Venmo debit card, which rose by more than 50%. However, profitability remains the key weak point. The adjusted operating margin fell from 19.8% to 17.4%, while adjusted operating profit declined by 8%. Even the higher-margin, brand-affiliated online checkout business grew by only 2% on a currency-adjusted basis. While the stabilization is positive, PayPal will need to demonstrate significantly more momentum here to tell a genuine growth story. In addition, the number of active accounts stagnated at 439 million; compared to the previous quarter, approximately 0.2 million accounts were lost.

Free cash flow, however, was strong, rising to USD 1.78 billion. At the same time, PayPal repurchased approximately 33 million of its own shares for USD 1.5 billion during the quarter. For 2026, management now expects adjusted earnings per share of approximately USD 5.38, adjusted free cash flow of more than USD 6 billion, and share repurchases totaling over USD 6 billion. In addition, the company aims to achieve at least USD 1.5 billion in annual gross savings over the next two to three years. For the third quarter, however, adjusted earnings are still expected to decline by a low single-digit percentage.

From a technical analysis perspective, the picture has brightened significantly. The stock is trading above the 20-, 50-, 100-, and 200-day moving averages. The rise above the previous highs of around USD 51.70 triggered an important buy signal; the 200-day moving average at about USD 52.30 is now the key support level. The next test will be the resistance zone around USD 60. Only a sustained breakout above this level would confirm the turnaround from a technical perspective. The Q2 results provide momentum for this—but PayPal must now prove that higher volume will translate back into rising margins.

HPQ Silicon is making strong headway in a growth market with its GEN4 technology for drone batteries. The presentation at the defence trade show in Paris, as well as the expansion into Asia, should bear fruit in the coming months.

Mercedes-Benz provided an initial positive signal from the German automotive industry. Often, especially in challenging times marked by high pressure to adapt and plummeting market capitalization, interesting buying opportunities arise.

PayPal's stock appears to have emerged from the valley of tears. After heavy selling pressure over the past five years, the bulls are now slowly regaining the upper hand.