Stronger-than-expected results from Meta, Microsoft and Alphabet last week may have allayed some concerns about the slowdown in demand for technology, but investor angst over the sector hasn’t completely dissipated.
(Bloomberg) — Stronger-than-expected results from Meta, Microsoft and Alphabet last week may have allayed some concerns about the slowdown in demand for technology, but investor angst over the sector hasn’t completely dissipated.
Even with US consumer spending rising at the fastest pace in almost two years, Amazon’s warning over lackluster growth in its cloud-computing business and Cloudflare’s move to cut its full-year revenue outlook underscore the uncertainty surrounding the broader economy.
This week’s earnings calls by Apple, AMD and Qualcomm will be parsed for signs of a recovery, led by consumer demand for smartphones and PCs, after Intel joined the likes of TSMC and Samsung Electronics to predict a rebound later in the year.
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Highlights to look for this week:
Monday: Check Point Software (CHKP US) is due before the bell. Revenue growth at the cybersecurity firm is expected to slow as the products and licenses segment will be close to flat on a year-on-year basis. Bloomberg Intelligence cites a “subsiding appliance-refresh cycle” and a shift to the cloud as risks, while analysts at Raymond James and Guggenheim warned of tougher days ahead as the company continues to lose market share to rivals that offer firewall products. Increased R&D investment and potential discounts to retain existing customers could also weigh on operating margins.
Tuesday: Advanced Micro Devices (AMD US) is due after market. Data-center sales could get a boost from the Big Tech-led rush into artificial intelligence, and the increased demand for AMD’s AI accelerators may offset persistent weakness in PC-chip sales. With its client and gaming segments remaining subdued, data centers will be key for AMD to keep up with revenue expectations, Bloomberg Intelligence says.
- Ford’s (F US) margin is at risk from inventory levels, which surged to 2.3 times versus sales in March compared to 1.7 times a year ago, Bloomberg Intelligence analysts say. The company could see its pricing power eroded as a result, with CEO Jim Farley warning that recent price cuts by Tesla could spark a price war in electric vehicles. In March, Ford reaffirmed its profit forecast for the year and revealed that losses from its EV business could grow to $3 billion this year. Earnings are due after the bell.
Wednesday: Investors will scrutinize Qualcomm’s (QCOM US) quarterly guidance for signs of recovery and OEM-inventory replenishment amid persistent weakness in smartphone demand, BI says. In March, semiconductor peers Micron Technology and Infineon Technologies offered better-than-expected guidance, boosting hopes for a rebound. Qualcomm announces results post-market.
Thursday: Apple (AAPL US) is likely to report its first across-the-board contraction in its Products segment in three years, with iPad and iPhone sales set to slip from a year ago. Bloomberg Intelligence warns of a more pronounced slowdown in Mac sales with weak consumer spending on higher-end devices still weighing on top-line growth. The impact of iPhone supply-chain issues and currency headwinds will likely show up in the quarterly earnings, expected after the market close. Barclays sees the slump extending to the current quarter, with slower demand especially for the iPhone 14 Pro model.
- Coinbase (COIN US) and Block (SQ US) are both due postmarket. Coinbase, the largest crypto-trading platform in the US, may comment on its regulatory and legal challenges after the Securities and Exchange Commission served it with a Wells notice on possible enforcement action. CEO Brian Armstrong may also elaborate on recent comments about a possible exit from the US, Bloomberg Intelligence adds. Jack Dorsey’s Block is likely to post a 5.9% rise in Bitcoin revenue, snapping a four-quarter streak of declines. Nonetheless, BI says the firm should expect to address questions on compliance following a report by short seller Hindenburg Research last month alleging lapses at Block’s wildly popular Cash App.
- Peloton (PTON US) reports third-quarter earnings before the opening bell. Driven by heavy holiday discounts and strong Amazon sales, the home-cycling company’s Connected Fitness subscribers could beat guidance. The former pandemic darling still faces concerns over subscriber growth prospects and online growth. In the fourth quarter, Peloton could see the first sequential drop in the closely-watched subscriber metric since its 2019 IPO, according to Bloomberg consensus.
Friday: Warner Bros. (WBD US) is due premarket. The parent of CNN and TNT networks could see a mid-double digit decline in quarterly ad revenue, Bloomberg Intelligence says. Investors are likely to turn their attention to the company’s recently rebranded streaming service — now named Max — and size up its subscriber growth prospects. Though Max’s global reach remains to be seen, BI says it may break even in the US next year due to Warner Bros.’ disciplined approach to streaming.
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