AMZN & AAPL - Drive US Market to New Highs?
My Thoughts (mine only).
This week is the Week of US IT titans reporting their quarterly earnings.
I cannot help but wonder if there will be rub-off effects by one titan on another.
Magnificent 7’s Gravity Effect.
On Tue, 23 Jul 2024, $Tesla Motors(TSLA)$ & $Alphabet(GOOG)$ reported dismal earnings (according to Wall Street analysts, not me).
They caused Nasdaq to fall by -3.6% in the span of one calendar week.
On Tue, 30 Jul 2024, Microsoft reported its earnings.
Top & bottom lines met analysts expectations.
But it’s intelligent cloud revenue (including Azure services) missed expectations by $0.2 billion (or $200 million).
Post results, it fell a further -2.74%, then -1.08% on Wednesday and - 0.3% on Thursday.
On Wed, 31 Jul 2024, $Meta Platforms, Inc.(META)$ apart from earnings meeting expectations, they were able to rein in expenditure and forecast a “good” set of data for current quarter.
Q2 Earnings Forecasts
On 01 Aug 2024, .Amazon will release its Q2 earnings after the market closes.
Below is what Wall Street is expecting:
- Earnings per share (EPS) to be $1.01. (see above)
- This will be +155.38% YoY gain from last year’s $0.65.
- Revenue will be as per Amazon guides for 144.00 billion to $149.00 billion.
- YoY gain will be between +7.16% & +10.88%.
YTD Performance.
Earnings come as the share price has had a strong start to 2024.
YTD, Amazon has risen +24.71% so far.
For Q2, earnings before interests & taxes (EBIT) is expected to increase by +17%.
Outlook for Q3 is tentatively +10%; boosted by (a) improved profitability in Norther America and (b) accelerated growth of Amazon Web Services (AWS).
In Q1 2024 reporting, E-commerce and Advertising had a strong showing.
Quite certain, investors will be watching closely at this quarter’s earnings to see if the two revenue streams will continue to grow exponentially.
Technical Analysis.
Delving into this conglomerate “technically” (see above).
- Chart shows that the long-term trend is up.
- In the near term, share price has corrected from its ATH of $200 per share, attained in early July.
- Current share price is July’s low.
- Relative strength index (RSI) (as of 31 Jul 2024) was “49”, neutral reading of neither oversold nor overbought.
Resistance and Support.
Given the near term unknown, knowing its resistance and support level will be useful to retail investors like us:
- Pivot point 1st Resistance level (high) - $188.46.
- Pivot point 2nd Resistance level (high) - $189.94.
- Pivot point 1st Support Point (Low) - $184.98.
- Pivot point 2nd Support Point (Low) - $182.98.
Overall Summary.
- Looking at the summary, it’s a “Sell” rating overall. (see above)
- While “technical” consensus points to a “Neutral” rating, moving average consensus garnered “Strong Sell” rating.
- My verdict is still out on whether Amazon will be caught in the chain reaction “boom-bust” on Thu, 01 Aug 2024.
- I will likely be sitting on the fence, watching how the event will turn out.
- The real action will only take place on Friday, 02 Aug 2024.
AMZN Other Factors.
As mentioned above, the factor that “killed” Microsoft was it’s inability to meet market expectation for its intelligent cloud revenue.
Will Amazon suffer the same fate?
According to a survey conducted by $Jefferies Financial Group Inc.(JEF)$ covering 40 CIOs, cloud spending intentions are accelerating.
43% of respondents highlighted expectations of a more than 10% increase in 2024, versus 28% who anticipated such an increase in 2023.
The survey feedback suggests a notable, ongoing shift in workloads to the cloud.
With 58% of CIOs expecting over 50% of their workloads to be in the cloud by the end of 2025.
This is up from the current 36%.
AMZN the Conglomerate.
I wonder if you noticed the first picture I put up ? (see above)
It consists of many companies that come under different market segmentations eg. Healthcare, Household, Grocery & retail, Logistics, e-Commerce, Devices & services, Technology, Proprietary brands, Media & entertainment and (finally) Cloud Computing.
I am sure not all are profitable but the company has diverse interests to help generate different revenue streams, giving “resilience” a new meaning.
Precisely for the above two reasons, I am fairly optimistic about Amazon’s longer term performance.
The current negative sentiments presents an opportunity for entry, at the "right" price.
- Do you think Amazon is able to keep itself afloat after announcing its earnings, unlike Tesla, Google and Microsoft ?
- Do you think Amazon Cloud Platform will fare better than Microsoft’s Azure when it comes to revenue?
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