💰 NEW ALPHA|Game changers in the earnings season: ALAB/APP/CRDO
💰 The market is experiencing a volatile upward trend, with risk appetite further increasing.
💹 $Astera Labs, Inc.(ALAB)$/$AppLovin Corporation(APP)$/$Credo Technology Group Holding Ltd(CRDO)$: Core providers of AI infrastructure and application companies are set to announce their earnings soon.
📣 Stay tuned, supercharge purchasing power through CashBoost!
| Tesla Q2 Earnings: The Good, The Bad & The Ugly
In case anyone missed the key points -
The good: The self-driving and energy businesses shine. The FSD adoption rate in North America has increased by 25%, with FSD-equipped vehicles showing a tenfold improvement in safety. The energy business achieved a gross margin of 17.2%, with soaring demand for energy storage providing a new growth avenue for the company.
The bad: Q2 revenue reached $22.5 billion, a 12% year-over-year decline; net profit was $1.393 billion, down 23% year-over-year; free cash flow plummeted 89%. These figures highlight operational pressures faced by the company this quarter.
The ugly: Changes in electric vehicle tax policies and increased tariffs pose significant challenges. The Inflation Reduction Act has limited vehicle supply, and tariffs have added $300 million in costs this quarter, with two-thirds affecting the automotive business and the remainder impacting the energy sector. Cost pressures are expected to persist in upcoming quarters.
& The opportunities:
RoboTaxi services have seen success in Austin, with plans to cover half the U.S. population by the end of the year - though this is constrained by “regulatory factors” (according to Elon himself), so take it with a grain of salt.
The Optimus humanoid robot aims to produce one million units annually within five years - a medium to long-term goal that cannot be reflected in stock prices just yet.
The energy business is poised to expand market share with the launch of the LFP battery factory and the construction of Gigafactories - solid, but not as anticipated.
All hope is not lost, though. Core providers of AI infrastructure and application companies still have the potential to benefit continually. Keep an eye on $Astera Labs, Inc.(ALAB)$/$AppLovin Corporation(APP)$/$Credo Technology Group Holding Ltd(CRDO)$, which will soon release their financial reports.
| Market recap
The S&P 500 and Nasdaq indices continue to hit record highs, rising 0.07% and 0.18%, respectively. $Alphabet(GOOG)$'s commitment to increased investment in AI has boosted the AI sector, with $NVIDIA(NVDA)$ continuing to perform strongly, ultimately reaching new highs.
Megacaps - META vs MSFT
Following in the footsteps of TSLA and GOOG, the Mag 7 are releasing their earnings. $Meta Platforms, Inc.(META)$ and $Microsoft(MSFT)$ have the most optimistic performance guidance, respectively expecting revenues of $44.72 billion and $73.79 billion, with earnings per share of $5.88 and $3.35.
META: After hours on July 30, Q2 earnings will be disclosed, with market consensus anticipating revenue of $44.8 billion and EPS of $5.88, both up about 14% year-over-year.
Highlights - AI growth prospects. Management has revised capital expenditure for 2025 upward to over $69 billion, leveraging an operating cash flow of $96 billion to recruit 44 top talents for Superintelligence Labs (21 of whom have backgrounds from Chinese universities).
Risks - The fundamentals of advertising may be affected by tariffs. Tariffs and a contraction in Chinese advertising budgets could slow advertising pricing growth by 200–300 basis points, although AI tools have already improved Reels conversion rates by 5%, with 30% of users having adopted them.
MSFT: On July 30, the company will release its Q4 FY2025 earnings, with market expectations for revenue between $73.5 billion and $74.5 billion, a 14% year-over-year growth; net profit is projected to be between $25 billion and $25.6 billion, a 14.5% increase from the previous year, with EPS of $3.35, up 13.56%.
Highlights - Azure is a key focus. In the intelligent cloud business, Azure's growth rate has reached 34%-35%, with AI contributing nearly half, potentially exceeding $15 billion in annual revenue. The company expects capital expenditures in FY2026 to reach $95 billion for hardware and AI infrastructure, driving future growth.
Risks - Excessive capital expenditures. CEO Nadella stated that the company will maintain AI infrastructure investment at $80 billion in FY2026, with a July 25 announcement of an additional 9,000 layoffs, accounting for 3.9% of the global workforce. This brings the total layoffs for the year to nearly 16,000, the largest since 2014. Previously, Microsoft's capital expenditures on hardware consistently exceeded expectations, triggering panic on Wall Street, with the market speculating that FY2026 could reach $95 billion or higher.
US and Japan deal made
Trump announced a trade agreement with Japan, which includes a 15% tariff rate and $550 billion in investments in the U.S. Japan will immediately increase its imports of U.S. rice by 75% and purchase $8 billion worth of American goods, focusing on sectors such as semiconductor design and manufacturing.
Top movers
OPEN, AEYE
$Opendoor Technologies Inc(OPEN)$ has surged over 350% this month, driven by retail investor enthusiasm and social media buzz, resulting in continued funding inflow. The stock became the most active on the Stocktwits platform on Monday afternoon and was frequently mentioned by posters on the Reddit forum WallStreetBets. On Thursday, OPEN's trading volume surpassed $1.2 billion, while the company’s market cap is only $1.8 billion.
$AEye, Inc.(LIDR)$ rose over 158% on Thursday, with an opening surge nearing 320%. This lidar technology company has had its Apollo lidar product integrated into NVIDIA's DRIVE AGX platform, which is a crucial component of the autonomous vehicle ecosystem. Similar to OPEN but more aggressively, AEYE's trading volume exceeded $1.2 billion, but its market cap is only $60 million. The good news is, if it rises again tonight, it could go beyond that.
American Eagle × Sydney Sweeney
$American Eagle Outfitters(AEO)$ has partnered with Sydney Sweeney to launch a new jeans advertisement, leading to two consecutive days of stock price increases. On X, users expressed sentiments such as, “In 2025, woke is dead.”
$Palantir Technologies Inc.(PLTR)$ executive Younes humorously suggested hiring actress Sydney Sweeney as a model for the company, sparking an interesting discussion on X.
| Game changers in the earnings season
During this earnings season, providers of AI infrastructure and application companies remain poised to benefit continually.
ALAB - to report earnings on Aug. 5
$Astera Labs, Inc.(ALAB)$ provides AI infrastructure connectivity solutions, offering data center connectors designed to enhance data transmission efficiency between servers, reducing latency and loss, with products deployed by clients like Nvidia.
The company reported a 144.1% year-over-year revenue increase in Q1, far exceeding market expectations.
With a current market cap exceeding $20 billion, shares have risen over 24% in the past five days. Recently, Astera Labs announced a partnership with NVIDIA to enhance its NVLink solution, aimed at improving AI network performance for large-scale vendors. This collaboration builds on previous joint efforts and is expected to solidify Astera Labs' market position.
APP - to report earnings on Aug. 6
$AppLovin Corporation(APP)$ is a well-known giant in the gaming and mobile advertising industries, breaking into the mainstream with impressive growth. It provides a platform to help developers promote their games or applications and achieve profitability.
In Q1 2025, AppLovin saw a significant revenue and profit surge, driven by its AI-driven advertising engine, Axon, reporting revenue of $1.484 billion, a 40% year-over-year increase, and net profit of $576 million, up 144% year-over-year.
Currently, APP has a market cap of $121.8 billion, with a gross margin of 77.7%, demonstrating strong financial performance. The company expects its Q2 2025 results to exceed expectations, with sustained growth momentum in its high-margin advertising business.
CRDO - to report earnings on Sep. 3
$Credo Technology Group Holding Ltd(CRDO)$ focuses on high-speed connectivity solutions and is riding the wave of AI demand. With major cloud service providers ramping up investments in AI infrastructure, Credo's demand is expected to continue to grow.
In Q1, the company achieved significant increases in both revenue and gross margin, reflecting its leading position in the high-speed connectivity solutions sector, benefiting from accelerated AI cluster deployments, and is likely to maintain a high growth trajectory in performance.
Credo's Q2 earnings per share are expected to reach $0.35, a more than sevenfold increase from $0.04 in the same period last year. Benefiting from rising market demand for its energy-efficient connectivity solutions, revenue is projected to increase by 220% year-over-year.
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