Wall Street is gearing up this week for the climax of earnings season.
The mega-cap names that make up the Magnificent Seven will begin reporting, starting with Tesla.
Investors are looking to Elon Musk to allay fears after a difficult period, while AI will come to the forefront more broadly.
Investors are gearing up for what has become the main event of recent quarters’ earnings season, focusing on ultra-large-cap companies as they unveil their first-quarter results.
Despite recent declines, investors are hoping major tech giants can continue their momentum, emphasizing artificial intelligence as the technology continues to captivate Wall Street.
“I think the next few weeks will be the time to break out the popcorn for tech,” said Dan Ives, senior equity analyst at Wedbush Securities. told Bloomberg TV last Thursday, adding that this earnings period will be a “muscle-building moment” for tech companies and a “golden buying opportunity” for investors.
Enthusiasm is high as investors look for the next catalyst that would help spur further gains for stocks amid bleak, sell-offs triggered by still-strong inflation and geopolitical turmoil in the Middle East.
Here’s what Wall Street is focusing on as the first generation of mega-cap titans prepare to report.
You’re here — April 23
Elon Musk’s automaker is causing a lot of stress for investors as earnings approach, with a long list of problems on the radar, including a diving into vehicle sales in the first quarter, controversy over Musk A remuneration of 56 billion dollarsand the recent layoffs that saw the company lay off more than 10% of its staff.
The stock is down 40% year to date, and a slew of banks have lowered their outlook for the stock as it shifts from a more affordable vehicle model to moves such as robotaxis and fully autonomous driving technology.
However, Wedbush’s Dan Ives said he remained optimistic but stressed that Musk needed to address key issues during next week’s earnings conference call to prevent investors from fleeing the stock.
This includes explaining the decline in Chinese growth, providing clear guidance on growth, margins and cash flow, confirming the development status of Model 2 and providing detailed plans for AI .
Alphabet — April 23
Bank of America is optimistic about Google’s parent company’s results, saying in a note Thursday that limited job postings indicate cost management, but analysts see upside potential of 13% above estimates. growth of 11% on Wall Street, thanks to the strong performance of YouTube.
Additionally, the bank places great importance on Google’s strong search results, seeing them as the second catalyst for a recovery in AI sentiment from March lows, especially with the Google Developer Event I/O still on the horizon.
“The use of AI presents long-term competitive risks for Google, but in 2024, Google (and its peers) will likely see improvements in AI monetization,” the note said.
Meta — April 24
Meta recently discontinued its latest AI chatbot, Llama 3flexing their muscles with performance above industry benchmarks and enhanced reasoning skills.
JPMorgan analysts led by Doug Anmuth have warned that Mark Zuckerberg’s company could be headed for a slowdown after the first quarter, due to difficult comparisons and a perceived lack of new catalysts compared to 2023.
“We believe a slowdown in growth is well expected and likely factored into META’s undemanding multiple,” Anmuth wrote.
Although generative AI still dominates investor discussions, the buzz is shifting toward recognizing its early wins in coding efficiencies and cost reductions rather than new revenue streams and software upgrades. products, analysts said.
“META is an exception, with the implementation of AI in the advertising stack seen as an important contributor to growth,” the note said.
Microsoft – April 25
Microsoft is seen by Wall Street as an AI heavyweight in terms of profits, as the company prepares to triple its number of GPUs in 2024, with a goal of accumulating 1.8 million AI chips by the end of the year.
Bank of America is optimistic about the tech giant’s earnings release on April 25, increasing its 1% profit estimatepowered by strong performance in the Azure and Microsoft 365 segments.
Meanwhile, the bank kept its $480 price target unchanged, signaling a potential 20% upside from the stock’s trading price Friday evening.
Despite an estimated free cash flow ratio of 37x for 2025, the bank believes that Microsoft’s value will remain stable thanks to the rapid growth of the AI sector, which is expected to reach $944 billion by 2027.
Amazon — April 30
“Amazon is our best idea, even though it is the most widely held in our coverage,” JPMorgan analysts wrote in the note.
The bank expects Amazon Web Services to be a bright spot for the first quarter.
“Facilitation of optimizations, deployment of new workloads, favorable compositions and very early monetization of GenAI should support the acceleration of AWS through 2024,” Anmuth said.
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