- Wall Street is gearing up for the highlight of the earnings season this week.
- Starting with Tesla, the mega-cap stocks that make up the Magnificent Seven will begin reporting.
- Investors are looking to Elon Musk to ease fears after a tough time, while AI becomes more widespread and front and center.
Investors are gearing up for earnings releases, which have been the main event of earnings season in recent quarters, with a focus on mega-cap companies reporting first-quarter results.
Despite the recent downturn, investors are hopeful that the big tech giants can maintain momentum, with a focus on artificial intelligence, a technology that continues to fascinate Wall Street.
“I think the next few weeks will be 'popcorn time' for the tech industry,” Dan Ives, senior equity analyst at Wedbush Securities, told Bloomberg TV last Thursday, calling this earnings season a “muscle season.” He added that it will be a period of “training.” It's a golden moment for technology companies and a golden buying opportunity for investors.
Excitement is running high as investors look for the next catalyst to fuel a new rally in stock prices amid continued misery and declines fueled by still-high inflation and geopolitical turmoil in the Middle East.
Here's what Wall Street is watching as the first wave of giant companies gears up for press coverage.
Tesla — April 23rd
Elon Musk's auto company faces a number of woes, including a sharp drop in car sales in the first quarter, controversy over Musk's $56 billion pay package and recent layoffs, leading to a slide toward profitability. This is causing a lot of stress to investors. The company accounts for more than 10% of its employees.
The stock has fallen 40% since the beginning of the year, and many banks have lowered their outlooks for the stock as the company pivots away from more affordable vehicle models to initiatives such as robotaxis and fully autonomous driving technology.
However, Wedbush's Dan Ives said he remains bullish, but said Musk needs to address key issues at next week's earnings conference to avoid investors fleeing the stock. emphasized.
This includes explaining the slowdown in China's growth, providing clear guidance on growth, profits and cash flow, confirming the progress of Model 2 development, and detailed plans for AI.
Alphabet — April 23rd
Bank of America said in a note Thursday that limited openings are a sign of cost control and was bullish on Google's parent company's earnings report, but analysts said YouTube's strong performance has led to The city is forecasting a potential upside of 13%, which is higher than the city's growth forecast of 11%.
Additionally, the bank values Google's strong search results, especially with the Google I/O developer event still coming up. I think this will be the trigger for the second one.
“While the use of AI certainly poses long-term competitive risks for Google, Google (and its peers) is likely to see improved monetization from AI in 2024,” the memo said. has been written.
Meta — April 24th
Meta recently released its latest AI chatbot, Llama 3, which outperforms industry benchmarks with upgraded inference skills.
JPMorgan analysts led by Doug Anmuth say Mark Zuckerberg's company will be weaker after the first quarter due to tough comparisons and a perceived lack of fresh catalysts compared to 2023. warned that there is a possibility of a slowdown.
“We believe the slowdown in growth is well anticipated and likely accounted for in the lower multiples required by META,” Ammuth wrote.
Analysts say generative AI still dominates the conversation among investors, but the conversation is less about new revenue streams and product upgrades and more about its early gains in coding efficiency and cost savings. It is said that it is moving to
”“META is an exception, and the introduction of AI into the ad stack is recognized as a key contributor to growth,” the memo said.
Microsoft – April 25th
Microsoft is preparing to triple the number of GPUs in 2024, aims to accumulate 1.8 million AI chips by the end of the year, and is seen on Wall Street as a big player in AI revenue growth. There is.
Bank of America was optimistic about the tech giant's April 25 earnings report, beating earnings estimates by 1% on the back of strong results from its Azure and Microsoft 365 divisions.
Meanwhile, the bank maintained its $480 price target, suggesting the stock could rise 20% from late Friday trading.
Although the free cash flow ratio in 2025 is expected to be quite high at 37x, Microsoft's value remains stable thanks to the rapid growth of the AI sector, which is expected to reach $944 billion by 2027. The bank believes that this is the case.
Amazon — April 30th
“Amazon is our best idea despite being the most heavily owned across our coverage,” JPMorgan analysts said in a note.
The bank expects Amazon Web Services to be a bright spot in the first quarter.
“Optimization relaxation, new workload deployments, favorable comps, and very early GenAI monetization should support AWS acceleration through 2024,” Anmuth said.
