To The Moon

On Tue, 04 Feb 2025, US stock market decided to shrug off the latest tariff jitters as Wall Street turned its attention back to earnings season.

There were a few notable companies that released its earnings on tuesday. More on that later.

By the time market called it a day: (see above)

• DJIA: +0.30% (+134.13 to 44,556.04).

• S&P 500: +0.72% (+43.31 to 6,037.88).

• Nasdaq: Uninched (16,654.02).

On the 10% tariffs imposed on China that have been effected from Tue, 04 Feb 2025, China struck back against it with:

• 15% tariff on US coal and liquefied natural-gas (LNG) products, 10% tariff on (i) crude oil, (ii) agricultural machinery and (iii) large-engine cars - all effective from Mon, 10 Feb 2025 onwards.

• In total, the new tariffs cover about $14 billion of the $163 billion imported by China from the US last year.

• Antitrust probe into Google, where in 2023 it was estimated that China represented 3.1% of Alphabet’s revenue.

• Restrictions on Chinese exports of key rare earth minerals like tungsten, tellurium, bismith, molybdenum and indium.

By responding in kinds, China’s retaliatory moves have kickstarted the tit-for-tat new trade war between the world's two largest economies.

Tariffs between US & China and Rest of the World (RoW)

According to Citibank, Chief China economist, Xiangrong Yu:

• The trade disputes are at a turning point. (see above)

• A delay in US tariffs and China's reciprocal response, along with cooperation on drug issues, could possibly lead to a new trade deal.

• Otherwise, the disputes may worsen. I do not think this is what Mr Trump wants but being a full of drama man, his bully-tactics negotiation approach is left much to be desired.

Jobs Opening & Labour Turnover Surveys (JOLTs)

Tuesday also saw the first US jobs report out in February 2025.

US Labour department reported:

• Job openings slid in December 2024, while hiring, voluntary quits and layoffs held steady.

• Available positions tumbled to 7.6 million vs Dow Jones estimates of 8.0 million. This is the lowest since September 2024

• The decline left the ratio of open jobs to available workers at 1.1 to 1.

• Layoffs totaled 1.77 million for December 2024, down just 29,000.

• Hires on the other hand, nudged up to 5.46 million and quits also saw a small gain to near 3.2 million.

• Total separations also moved little, at 5.27 million.

Even though the JOLTs report runs a month behind other jobs data, the Fed still watches it closely for signs of a slack or tight labour market.

Magnificent 7 Q4 earnings.

Coming back to quarterly earnings reporting, so far 5 of 7 Magnificent seven stocks have reported their earnings :

• Wed, 29 Jan - $Microsoft(MSFT)$ .

• Wed, 29 Jan - $Meta Platforms, Inc.(META)$ .

• Wed, 29 Jan - $Tesla Motors(TSLA)$ .

• Thu, 30 Jan - $Apple(AAPL)$ .

• Tue, 04 Feb - $Alphabet(GOOG)$.

Mag 7 Performances.

Microsoft.

• MSFT stock price has been trending down since 29 Jan 2025. (see above)

• Microsoft dipped dropped because (a) reported quarterly revenue growth slowed, (b) its Azure cloud business did not bring in as much revenue as expected, and (c) revenue guidance for fiscal Q3 is weaker than expected.

Meta Platform.

• Beat analysts' forecasts, with revenue up 21% YoY.

• This suggests that their cost-cutting measures and focus on AI are paying off.

• As a result, it is the best performing Mag 7 stock since 29 Jan 2025. (see above)

Tesla.

• TSLA's reported disappointing results on the top & bottom lines, although it did achieve record deliveries.

• This may signal increasing competition in the electric vehicle market and potential price pressures.

• Its CEO is still talking about robotaxi and the revamped Model Y due out in H2 2025, nothing that brings excitement to the car maker.

• Stock movement has been volatile, crashing one day, skyrocket the next, very meme-like.

Apple.

• AAPL reported top and bottom lines that met expectations.

• However, revenue from its star product (iPhone) fell short of expectations.

• Similarly, Apple has trended down upon earnings reported.

• On Tuesday, it managed to rise when positive sentiments descended US market for the day.

Google’s Earnings.

IT giant, Google reported its quarterly earnings on Tue, 04 Feb 2025, after market has closed for the day.

• Earnings Per Share (EPS): came in $2.12 vs analysts' estimates of $2.10. It was an impressive +37% YoY increase.

• Revenue: was $88.3 billion, a +15% YoY gain, although it fell short of analysts’ expectations by $0.3 billion.

• Net Income: rose by +34% to $26.3 billion, reflecting strong overall performance.

Google Cloud Revenue: grew by +35% to $11.4 billion, falling short of Wall Street estimates of $11.6 billion by $0.2 billion, performing marginally better than Microsoft’s cloud that fell short of estimates by $0.29 billion. Google’s cloud growth was driven by increased demand for AI infrastructure and generative AI solutions.

Google’s cloud revenue: grew a strong +35% to $11.4 billion, but missed analysts' target by a marginal $0.2 billion. It did slightly better than Microsoft's cloud that missed by $0.29 billion. Google's cloud growth was fueled by rising demand for AI.

Wed, 05 February 2025

Google has tumbled -7% after posting a cloud revenue miss.

As it ramps up spending on artificial intelligence, it is spooking investors who worried the megacap tech company will take longer to capitalize on its AI ambitions.

On a brighter note, Bank of America, Hd of US equity & quantitative strategy, Savita Subramanian believes:

• It is not the end for major tech company like Google.

• It has options and could also undertake what they did in 2023, cut costs, shore up balance sheets, do big buybacks etc…

• However, future profit growth would not be as easy as before; Google will need to hire and spend more in order to stay at the forefront of technology.

I Like Google.

Out of the 7 stocks in Magnificent Seven, I like Google best.

It is (really) an IT leader, in the following front:

• Cloud computing - it has Google cloud platform (GCP).

• Autonomous driving - it has Waymo that is leaps & bounds ahead of Tesla that is still in talking phase.

• Augmented Reality (AR) / Virtual Reality (VR) - although less actively pursued, it has “Google Glass”. Nevertheless, Google is still investing to develop it.

• Quantum computing - it has successfully developed its breakthrough chip called “Willow”.

• Artificial intelligence - it has “Gemini”.

With the cat out of the bag, the next few days could present an opportunity to shore up more Googles with an expected correction in tow. Agree ?

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

• Avoid GM, STLA, F, in US Politics-Poker game.

• NVDA Crashes On Back Of Trump's Tariffs ?

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• Do you think Google is the best of Magnificent Seven ?

• Do you think US IT giant stocks are too big to fail, given their deep pockets ?

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