Combined effects of Magnificent 7
The narrative surrounding the Magnificent 7 mega-cap tech stocks has been mixed, even in the face of plenty of positive earnings news.
Microsoft stock traded lower on Tuesday even after the company narrowly beat Wall Street expectations with its fourth-quarter fiscal results and better year-over-year results. Investors have been scrutinizing AI performance statistics in particular; Microsoft's Intelligent Cloud revenue rose 19% year over year and contributed 8 percentage points of growth to Azure and other cloud services revenue, which grew 29%. Apparently that wasn't enough.
The owner of Facebook and Instagram Meta Platforms, in contrast, the best analyst forecasts for the second quarter. It grew revenue 73% in the same quarter last year and is gaining more advertising market share than legacy Alphabet. Compared to its Mag 7 peers, the Meta has been a stock market bull since 2022 but has been undertaking a cost-cutting and downsizing campaign that now seems to be paying off.
Apple also beat expectations for revenue and earnings, posting particularly strong results in its iPhone and iPad divisions. Cloud services, computers and wearables were all in line with the ratings.
Amazon was penalized after missing analyst consensus on revenue, or beating earnings estimates. Although Amazon Web Services' performance was strong, the company's core sales and marketing businesses were depressed.
Microsoft, Meta, Apple, Amazon are the highlights
Financial figures in this section are reported in USD.
- Microsoft (MSFT/NASDAQ): Earnings per share of $2.95 (vs. $2.94 forecast). Revenue of $64.7 billion (compared to an estimate of $64.5 billion).
- Meta Platform (META/NASDAQ): Earnings per share of $5.16 (versus $4.63 expected). Revenue of $39.07 billion (compared to an average of $38.31 billion).
- Apple (AAPL/NASDAQ): Earnings per share of $1.40 (versus $1.35 expected) . Revenue of $85.78 billion (compared to an average of $84.53 billion).
- Amazon (AMZN/NASDAQ): Earnings per share of $1.26 (versus $1.03 expected). Revenue of $147.98 billion (compared to an average of $148.56 billion).
The US Fed is on hold for now
There were no assassination attempts or presidential nominees out of the race for the White House this week. The news out of Washington, DC on Wednesday, however, was eagerly awaited by the markets.
The US Federal Reserve chose to hold its overnight lending rate at 5.5%. In a statement, the central bank's Open Market Committee acknowledged signs of economic weakness but said it would not cut rates “until it has strong confidence that inflation is moving closer to 2%.” The market continues to place its bets on a rate cut in September, which would be the first since 2020.
That leaves the Bank of Canada, which has cut rates in both of the past two months, a full percentage point below the US Fed. The Canadian dollar however gained slightly against the greenback, at USD$0.72485, after the announcement, suggesting a policy decision was expected.
Source link
