Article published at 9:35 a.m. CT
JJ Kinahan is Senior Vice President, Head of Retail Expansion and Alternative Investment Products at Cboe Global Markets, Inc. (Cboe).
Key Takeaways:
- Microsoft shares advance after robust earnings
- Amazon AWS division revenues up 37%
- Reddit shares tumble on “choppy” Google traffic
Technology stocks are mixed in early trading after mega-cap earnings reports from Microsoft, Amazon and Meta have calmed investor worries about the pricey investments in artificial intelligence but prompted others to take profits. The chip demand is massive and is paying off, according to their reports.
South Korea’s Kospi index followed yesterday’s U.S. tech rally, increasing 18% in what was reportedly its biggest one-day percentage jump in its history. Coupled with those earnings reports, that was helping drive the Nasdaq Composite early on, but it was bouncing around the flat line since, down modestly. The S&P 500 Index and the Dow Jones Industrial Average were turning downward too, off by 0.20% and 0.19% respectively.
Microsoft’s strong earnings and capital expenditures yesterday sent the tech giant’s shares to historic levels, up 15.5%, reported as the largest single-day market value hike in stock market history. Volume was the biggest in its history and helped boost other tech stocks. Shares were moderately higher in early trading.
Sandisk advanced by nearly 26% yesterday while Micron added 18%, Western Digital by 15% and Seagate Technology by 11%. In early trading, profits-taking was in the works, with Sandisk falling 6% early on and Micron off 4.6%. Western Digital and Seagate both fell earlier, but climbed into positive terrain in recent trading. Western Digital added 1.5% and Seagate was by 0.78%.
Amazon shares are trading 13.5% to the upside after earnings late Thursday handily beat Wall Street’s expectations. Amazon Web Services revenues increased 37% for the quarter, equal to $42.2 billion compared with the $40.54 billion estimate. That marked AWS’ fastest growth in 18 years, the company said. Bottom line profits and topline revenues also outpaced expectations. However, capital expenditures jumped nearly 69% and left free cash flow $7.6 billion in the red compared with the $18.2 billion inflow a year ago. Amazon also raised its capex budget by $20 billion to $220 billion.
Apple iPhone revenues outpaced expectations but it wasn’t enough to offset the softer-than-expected services division and its China sales. The maker of the Mac and iPod also lowered its sales forecast to rise in a 9% to 10% range, short of the 12% estimate, blaming the “significantly higher” memory expenses. Outgoing Chief Executive Tim Cook called the memory situation “difficult,” describing it as a “100-year flood,” on the conference call. Shares tumbled better than 9% in early trading.
Reddit shares took a 23% spill in early trading after the online community platform reported record earnings – revenues were 61% higher -- that easily put Wall Street’s expectations to shame, but noted that Google traffic was “choppy.” Chief Executive Steve Huffman said that while Google searches were off, direct searches on the Reddit app, which are more valuable, were growing.
Shares of Novo Nordisk are falling more than 9% in early trading after the drugmaker said an experimental heart drug ziltivekimab failed to lessen major cardiovascular events, which include cardiovascular death as well as non-fatal heart attacks or strokes.
Jersey Mike’s went public Thursday at $21 per share – short of its initial public offering price of $23 a share – and fell 6% in its debut. Still, the sub sandwich chain managed to raise about $1 billion. Shares were higher by nearly 2% in the early going.
WTI Crude Oil is heading higher again, up 2% as the Iran war continues to disrupt supply out of the Strait of Hormuz. Prices are in the mid-$85 range. Brent crude, which is the global benchmark, was higher by 1%.
Major oil companies are reaping the benefits of these higher oil costs, turning in record earnings and guidance. Exxon Mobil and Chevron reported off-the-chart earnings today: Exxon, the largest U.S. oil firm, saw its earnings more than double to $14.53 billion and Chevron’s grew 385% to $12.07 billion from $2.49 billion in the year-ago period. Exxon’s shares were slightly lower in early trading as investors took profits while Chevron’s shares rose.
Happy trading!
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