Carvana (CVNA): 'Be-Mused': Updated Thoughts and 3Q26 Preview: AI Risks Overblown; Raise 3Q Ests on Production Improvement, Though Cut 4Q/27 on Lower GoS Margin from Sustained Rates Increase

J.P. Morgan's updated view and 3Q26 preview on Carvana (CVNA.US). The report argues that agentic AI-related concerns are overblown: Carvana has among the most competitive prices in the industry, its lending rates have become increasingly competitive versus the industry average, and securing rate approval from third-party banks/credit unions remains clunky, favoring first-party integrated lenders; therefore AI-driven rate shopping has limited scope to pressure attach (currently ~85%). CVNA remains the best story in the auto ecosystem, with an Overweight rating and a Dec-2027 price target of $100, and FY27/FY28 estimates remain above consensus. On improved production (reconditioning bottleneck recovery), unit growth assumptions for 3Q are raised to 40% from 38% prior, maintaining 3Q26 EBITDA of $825mn (above BBG consensus of $793mn). However, given sustained benchmark rate increases raising cost of funds, normalized GoS margin assumptions are cut to 7.3% from 7.7% prior, and 4Q26/2027 EB