To The Moon

Investors should gear up for the year-end performance push in October. Q3 earnings season appears to be optimistic, but focus lie in expectations for Q4 and 2024.

Recently, treasury yields is rising, putting pressure on US stocks. Any further interest rate hikes will undoubtedly impact the US economy, putting pressure on the Federal Reserve.

The pullback of major tech companies often prompts value investors to reconsider their positions. We have summarized the performance of seven heavyweight tech stocks since Q2 earnings:

• Among them, GOOG, AMZN, and META saw significant gains on the day of their Q2 earnings reports,

• Only GOOG showing an increase of over 5% from the day before the earnings report, META remained relatively stable, while the others experienced declines of over 10%.

  

Here are the expectations for these stocks

AAPL

A significant drop after its Q2 earnings, as the results fell short of high expectations. Investors had hoped for tangible AI product launches, but none materialized, leaving disappointment.

The September product launch event followed a predictable pattern, contributing to a lackluster start for iPhone 15 sales. Additionally, the "Apple tax" has been a point of contention, potentially hiding risks. Apple may need to take defensive measures. However, once the stock price reaches a certain level of correction, it is likely to attract bargain hunters.

MSFT

The highest AI expectations of its Q2 earnings report, leading to mixed performance on the earnings day. The market had already priced in many expectations in the first half of the year.

Despite being the weakest YTD performer among big techs, Microsoft's stock has been relatively stable, making it a dependable choice.

GOOG

performed the best since Q2, being the only major tech stock to consistently show significant gains from before the earnings report. The main reasons are the market's previous underestimation of Google, particularly in underestimating its advertising business while being overly pessimistic about its AI business.

Improvements in the Bard robot and the upcoming release of the powerful Gemini model, developed in collaboration with DeepMind, are attracting capital as potential business-enhancing tools. $Alphabet(GOOG)$ $Alphabet(GOOGL)$

AMZN

Due to its strong ties to e-commerce and the real economy, Amazon's stock price was influenced the most by "inflationary changes," so prior to the Q2 financial report, the market was more focused on recession expectations. Therefore, when the Q2 financial report shocked the market with better-than-expected performance, its performance on that day was the best among all major tech companies. Furthermore, Amazon confidently raised its guidance for Q3 (e-commerce and advertising segments), attracting more capital inflow.

However, recently released August CPI data, which exceeded expectations, and the Federal Reserve's "hawkish" stance once again forced the market to retract its optimism. With energy prices continuing to rise, US bond yields consistently breaking through, and excess savings of US residents being consumed, a significant outflow of funds occurred from companies related to the consumer industry, which is also a key factor in Amazon's recent underperformance compared to the broader market.

Although the Q3 financial report scheduled for October may still exceed expectations, considering the situation in Q4 and the next year, the market prefers not to pay a premium for investments in the consumer sector, so overall sentiment is not good. $Amazon.com(AMZN)$

NVDA

When the Q2 financial report was released, the hype around AI reached its peak, so the battle on the day of NVIDIA's financial report was extremely fierce, with the typical scenario of both long and short investors, a result of many investors choosing to "take profits" after the AI market doubled this year.

Although the performance since the Q2 financial report has been relatively poor, looking at it from an annual perspective, it is still an investment with excess returns. It can only be said that NVIDIA may need some "time to catch up" with the gains accumulated in the AI market in the first half of this year. $NVIDIA Corp(NVDA)$

TSLA

Tesla is always a topic of discussion, and the company reports monthly delivery figures, so financial reports are generally not the most important factor. However, this was an exception for Q2 because of promotional price reductions, which affected profit margins. Moreover, the rebound in the days leading up to the financial report reached its peak, making it the largest decline on the day of the financial report among major tech companies in Q2.

Of course, delivery volume remains a focal point of concern. As the competition in the new energy vehicle industry intensifies, even though Tesla stands out in the industry, it may still not meet investors' expectations. The doubts about September delivery volumes over the past week have also caused the stock price to decline once again.

However, Tesla's stock price volatility is particularly high, making it suitable for frequent trading and investors who enjoy volatility or have a strong interest in options trading.Tesla's stock price movement is not highly correlated with the broader market, so it can be considered an outlier in an investor's portfolio. $Tesla Motors(TSLA)$

META

META has also achieved a return of over 140% since the beginning of the year. It is not strongly associated with the AI market (although it is considered the most likely to expand its commercial capabilities), and its volatility is not as high as Tesla's. Investors are more optimistic about its asset quality and performance prospects.

Similar to Google, Meta's advertising business is also undervalued, and it has become the biggest beneficiary of the market TikTok ceded (Instagram and Reels). Moreover, because the majority of its assets are in the form of US dollars, it is particularly valuable in a high-interest-rate strong-dollar environment. Therefore, Meta's current stock price is also relatively stable compared to before the Q2 earnings report, and the recent pullback is relatively minimal. $Meta Platforms, Inc.(META)$

In conclusion, considering the current macroeconomic environment, these 7 weighted stocks are currently facing different situations.

Without any other factors, the prospects of these companies are as follows:

• Relatively optimistic: META, GOOG

• Relatively stable: MSFT, NVDA

• Relatively pessimistic: AAPL, AMZN

• Outlier: TSLA

If there is further pullback, companies with a relatively optimistic outlook may be more resilient; in the event of a liquidity pullback, it is preferable to bottom fish in relatively optimistic companies.