Weekly Snapshot: Earnings to Watch This Week (AAPL, AMD, FB, MSFT, TSLA)
AAfter hitting record highs earlier in the week, stocks closed mostly lower on Friday, which to some suggests a level of fatigue has set in. far. Although Wall Street analysts broadly expect the trend to continue, including positive first-quarter results, investors are nonetheless taking a cautious approach, it seems.
The Dow Jones Industrial Average fell 179.03 points on Friday to close at 30,996.98, losing 0.6%. The Blue Chip Index came under pressure from a 9% decline in IBM (IBM) which reported fourth-quarter revenue results that missed Street’s estimates. Intel (INTC), which lost 7% during the session, also dragged the Dow down despite posting better-than-expected fourth-quarter results. The S&P 500 index closed down 11.60 points at 3,841.47, while the Nasdaq Composite index added 12.15 points to close at a record high of 13,543.06.
The Nasdaq rally was carried, among others, by Apple (AAPL), Microsoft (MSFT) and Facebook (Facebook), which are due to release their results next week. But as noted, some fatigue is starting to creep into the market. Part of the reason is due to a combination of factors. Along with reports of various lockdown measures being considered to combat the COVID-19 pandemic, particularly in Europe, Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, said Thursday during a a White House briefing that vaccines currently on the market may be less effective in combating newer variants of the virus.
Additionally, the US Senate opposed President Joe Biden’s new $1.9 trillion fiscal stimulus round, which not only includes $1,400 in cash payments to households, but additional unemployment benefits as well. than money for the distribution of COVID-19 vaccines. A number of Republicans do not support the bill and have criticized the award. But there are also Democrats, including Sen. Joe Manchin, who have criticized the size of the proposed stimulus checks.
As things stand, with political opposition seemingly on both sides, the market is unsure whether the president’s stimulus targets will become law. And that should put pressure on cyclical stocks (energy, financials, materials, etc.) – those that are likely to benefit from additional stimulus.
Meanwhile, this week, tech mega-corporate earnings are front and center. These reports, along with their outlook for 2021, will be closely watched as their revenue and earnings growth is less dependent on fiscal stimulus. Here are the names to watch out for.
Advanced micro-systems (AMD) – Reports after the close, Tuesday, January 26
Wall Street expects AMD to earn 47 cents per share on revenue of $3.02 billion. That compares to the year-ago quarter where earnings were 32 cents per share on $2.13 billion in revenue.
Keep an eye on: Expectations are high for AMD, given the strong fourth quarter results and the upward guidance released last week by rival Intel (INTC) which showed a rebound not only in the data center sector, but also in PC sales. These trends bode well for AMD, which has steadily gained market share over Intel in both categories. The market assumes minimal disruption to AMD’s business despite the pandemic. AMD shares have risen around 5% over the past week, and are now up 1.2% year-to-date. The stock’s popularity has been driven by several factors, namely AMD’s execution, which includes exceeding Street’s revenue estimates in five of its last six quarters. The company is well positioned to do so again. Along with the top and bottom numbers, investors will focus on metrics such as shipment growth and any management commentary on expectations for the first quarter and all of 2021.
Microsoft (MSFT) – Reports after the close, Tuesday, January 26
Wall Street expects Microsoft to earn $1.64 per share on revenue of $40.18 billion. That compares to the year-ago quarter where earnings were $1.51 per share on $36.91 billion in revenue.
What to watch: Work and learn-from-home trends continue to fuel growing demand for Microsoft services, as evidenced by strong fourth-quarter demands in its Productivity and Enterprise and Intelligent Cloud segments. But the strength of Microsoft’s Commercial Cloud business has been and will continue to be the catalyst for the stock’s strong performance over the past year. Last quarter, Azure revenue grew 48% year-over-year, a slight deceleration from 50% growth in the fourth quarter. Wall Street remains broadly optimistic about the company’s prospects of achieving double-digit revenue growth in fiscal 2021, driven by momentum from Azure. On Wednesday, investors will want evidence that Azure and Microsoft Teams (a Zoom (ZM) competitor) can continue to propel the company upwards.
Apple (AAPL) – Reports after closing, Wednesday, January 27
Wall Street expects Apple to earn $1.40 per share on revenue of $102.76 billion. That compares to the year-ago quarter when earnings were $1.25 per share on revenue of $88.5 billion.
What to watch: This quarter will be all about revenue and unit sales of the iPhone 12, in all its variants. Analysts hailed the device, describing it as the biggest iPhone super upgrade cycle since the iPhone 6 launched with a bigger screen. The iPhone 12, however, is deemed more important not just for its 5G capabilities, but also for features like its globally-facing LIDAR sensor that comes on the Pro models. All in all, unlike previous models, there are few “incremental” upgrades not the device. It’s more revolutionary. The question is whether the sales of his vacation quarters will meet such high expectations? But Apple is more than just a phone store. The company’s Services business, which now accounts for nearly 22% of total revenue, surged last quarter to a record $14.5 billion, beating consensus of $14.12 billion.
Facebook (Facebook) – Post Closing Reports, Wednesday, January 27
Wall Street expects Facebook to earn $3.19 per share on revenue of $26.34 billion. That compares to the year-ago quarter where earnings were $2.56 per share on revenue of $21.08 billion.
What to watch: Facebook shares have surged impressively over the past week, posting gains of around 12%, suggesting that market concerns over digital ad market weakness , especially amid the pandemic, are now gone. The company has been a model of consistency, beating consensus earnings expectations in each of the past eleven quarters. In total, the company has only missed its earnings estimates once in the past five years. Yet over the past year, FB stocks have been relatively underperforming for fear of political risks caused by his domination. But if the company can show a strong increase in daily active users and monthly active users, while providing an optimistic revenue forecast, the stock should continue to perform as it has in recent sessions.
You’re here (TSLA) – Post Closing Reports, Wednesday, January 27
Wall Street expects Tesla to earn $1.00 per share on revenue of $10.32 billion. That compares to the year-ago quarter when earnings were 41 cents per share on revenue of $7.38 billion.
What to watch: Already up 20% year-to-date, Tesla shares are erasing doubt about the company’s ability in 2021 to achieve the rate of return produced in 2020. While skeptics continue to scoff at the stock’s lofty valuation, Tesla has focused on executing its strategy. With four double beats (high and low) in a row, few companies have performed better over the past year, including its reported fourth-quarter deliveries of 180,570 and delivered 499,550 vehicles for 2020. And it doesn’t. There are no signs of slowing down, as evidenced by the company. California vehicle registrations which jumped nearly 63% year over year in the fourth quarter. The electric vehicle pioneer will have to keep its foot on the accelerator pedal next week as its 2021 delivery forecast will likely determine the direction the stock takes in the near term.
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