Wall Street analysts expected the first quarter to be bad, as investors continue to bite their nails over the prospect of a recession, but after a tidal wave of quarterly financial results from corporate America last week, led by online retail behemoth Amazon.com Inc., there are signs of a little less anguish.
Throughout April, Wall Street analysts lowered their second-quarter profit expectations for the 500 companies that make up the S&P 500 index
SPX,
by a smaller margin than normal, FactSet Senior Earnings Analyst John Butters said in a report on Friday. Between March 31 and April 27, second-quarter earnings estimates were trimmed by 0.8%, Butters said, less than half the 1.9% average declined over the past five years.
Wall Street analysts’ expectations for 2023 overall have shown flashes of optimism too. Butters added that while earnings-per-share estimates for full year slipped by 0.2% through April, they rose 0.4% over the past week as big names flooded the earnings docket. One of the biggest names last week was Amazon
AMZN,
which Butters said was the biggest contributor to expected profit growth for the S&P 500 index this year. Amazon on Thursday reported its biggest quarterly profit since 2021, but shares retreated after the company’s chief financial officer warned of slowing sales growth in its cloud business.
Now it is time for another massive tech company, Apple Inc.
AAPL,
which reported its steepest sales drop in more than six years in February. The iPhone maker and most valuable public U.S. company reports on Thursday, as Wall Street needles the tech industry for answers on how it might nudge sales higher after the world binged on digital devices and became a more extremely-online place when pandemic restrictions were still in effect.
For other tech companies, that answer has largely been AI, or, at least, talking about AI a whole lot. By one analyst’s estimate, ChatGPT — the bot that launched a landslide’s worth of talk about the future of how we live and work — is one of the few big things giving the stock market life right now. For Apple, the gains from AI could land in its lap no matter which direction the industry takes, Wedbush analysts said in April.
“As Apple is a leading player in nearly everything regarding tech and consumer technology, we believe the company will step up its AI efforts over the coming months with a dramatic increase in pressure on this topic since the beginning of this year,” they said.
More immediately, analysts will be focusing on more pedestrian matters. D.A. Davidson analyst Tom Forte, in a research note on Thursday, noted the possibility of a more forgiving foreign-exchange backdrop for the company, which sells phones and laptops all over the world. Nearly 58% of Apple’s sales came from outside the U.S. in the quarter that ended in December, he said.
Elsewhere, Forte said, he’ll be looking for more detail on how Apple sources products, amid uncertainty surrounding China’s economy.
“We continue to see China related risks as the most significant for the stock and expect the company to accelerate its effort to diversify its footprint,” D.A. Davidson analyst Tom Forte said in a research note on Thursday. “To illustrate Apple’s dependence on China, 95% of its AirPods, iPads, iPhones, and Macs are manufactured there.”
This week in earnings
For the week ahead, 162 S&P 500 companies, including one component of the Dow Jones Industrial Average
DJIA,
are expected to report quarterly results, according to FactSet.
Among the highlights, casino operator MGM Resorts International
MGM,
reports results, after Las Vegas Sands said a “robust” recovery in tourism was under way, including in areas like the global gaming hub Macau and Singapore. Marriott International Inc.
MAR,
and Hyatt Hotels Corp.
H,
will also publish quarterly figures. Taken together, the companies’ results will offer more detail about the world’s appetite for revenge travel, as higher prices for food and gas cut into what travelers can spend on gambling and hotels.
Several entertainment giants will also report, as the industry consolidates and investors press streaming platforms for more profit — potentially via fewer shows and movies, or more of the same shows and movies, and more ads. Warner Bros. Discovery Inc.
WBD,
World Wrestling Entertainment Inc.
WWE,
which is planning to combine with UFC, and meme-stock AMC Entertainment Holdings Inc.
AMC,
are expected.
Pharmaceutical giant Pfizer Inc.
PFE,
will also issue earnings, as it retools following a surge in COVID-19 vaccine demand in years past. Results are also due from gig-economy giants Uber Technologies Inc.
UBER,
DoorDash Inc.
DASH,
and Lyft
LYFT,
as more people seek out ride-hailing services amid a return to prepandemic life that has left delivery in flux. Starbucks Corp.
SBUX,
Advanced Micro Devices Inc.
AMD,
and CVS Health Corp.
CVS,
also report.
The calls to put on your calendar
Anheuser Busch InBev results: Several weeks ago, Bud Light began a promotional campaign with trans influencer Dylan Mulvaney — consisting of a handful of social-media posts. In response, some right-wing personalities made calls for a boycott against Bud Light’s parent company, Anheuser Busch-InBev
BUD,
which reports results on Thursday. In response to the uproar, Anheuser Busch’s chief executive, in a statement that appeared handcrafted to please exactly no one, said: “We never intended to be part of a discussion that divides people.”
By one analysis, sales of Bud Light fell 17% for the seven-day period ending April 15. Two executives were put on leave. But the effects of previous social-media boycotts has been short-lived, and light beer demand has been on a yearslong slide. Whether this boycott, carried by anti-trans sentiment directed at a big Republican donor, will be any different remains to be seen. Earnings calls, by design, are jargon-cluttered, low-drama affairs. But executives could weigh in to some degree, and offer more detail on the impact of sales.
The number to watch
Ford and auto sales: A new government analysis has found that dealer markups played a big part in pushing prices for new automobiles higher, The Wall Street Journal recently reported, adding to the scrutiny of the role companies, and their efforts to keep margins plump, are playing in driving prices higher overall. Ford Motor Co.
F,
reports earnings on Tuesday. While the big auto maker has tempered its short-term hopes on self-driving cars, its results will offer more detail about pricing, demand and the state of its production pipeline, after a squeeze on chip manufacturing made cars almost everywhere more expensive.
Thawing crypto winter? The price of bitcoin has rebounded, after FTX collapsed last year and other sinkholes opened up in the crypto universe. Results from crypto exchange Coinbase Global
COIN,
due Thursday, will put more numbers behind traders’ interest in messing around with crypto, after concerns about fraud and security.
