Wall Street Lunch: Sentiment Improves; All About Earnings

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2 day rally in tech (0:30) Big tech earnings coming (1:00) Coke’s strong results (2:10) Boeing sell-off; home sales and consumer confidence (2:40) Earnings after the bell (5:10)

Transcript

Rena Sherbill: Welcome back to another Wall Street lunch with Chris Ciaccia, our tech editor on Seeking Alpha’s news team. What do you have for this afternoon, Chris?

Chris Ciaccia: I think we’re seeing a little bit of a rebound again, a nice little two-day rally here in tech stocks.

Sentiment’s changing a little bit for the better, going into earnings and the Fed meeting tomorrow. Seeing some buying interest in the AI trade, Meta (META) is helping that. They upsized the equity portion of their big offering that we talked about yesterday, NVIDIA (NVDA) and (AMD) confirmed that they’re gonna be a part of that.

So that’s kind of helping sentiment here. And then, just all about earnings.

Rena Sherbill: What is top of mind in terms of the earnings you’re looking at and what are the points that you’re most interested in in those earnings?

Chris Ciaccia: The two big ones in the tech space are Google or Alphabet (GOOG) (GOOGL), whatever you want to call it, Microsoft (MSFT), those are top of mind, and then you’ve got Amazon (AMZN) later in the week. And those are the three big cloud players.

So we’re gonna look to see how those cloud units are doing, GCP, Azure, and AWS respectively.

For Microsoft, we should see mid-40s growth. That’s kind of what investors are keying off of. GCP, we could see perhaps 100% year-over-year growth, which is super, super strong. Obviously, GCP is a little bit smaller than Azure in terms of size, but 100% year-over-year growth, still healthy nonetheless.

And then AWS, which is the 800-pound gorilla in the room, we should see somewhere to the tune of 30% growth.

Amazon CEO Andy Jassy was on a podcast late last week and said AWS has sold out through twenty twenty six, most of twenty twenty-seven and some going into twenty twenty-eight. So there’s just insatiable demand there. And it doesn’t seem like it’s stopping anytime soon.

Rena Sherbill: Anything to note about Coke’s (KO) earnings today?

Chris Ciaccia: I thought the results were good. We’re seeing strong growth here in the US and other regions. Stock was selling off a little bit last time I checked, but the stock’s had an incredible run year to date.

Investors have piled in into consumer goods and Coke is one of the preeminent, if not the preeminent, consumer goods companies. so strong results there and just kind of steady as she goes.

Rena Sherbill: Boeing (BA) also released earnings on Tuesday. They sharply narrowed their losses and generated positive cash flow as their turnaround efforts continued.

And some broader economic data points. We saw US new home sales edge down 0.6% in September. And we also saw the consumer confidence report that showed a sharp rebound in October. Anything to add to those data points?

Chris Ciaccia: For Boeing, I think the stock is selling off sharply today. I think it’s down the most in ten months or so. And that’s all due to the changes to the order book, which I think kind of came as a surprise given how strong Boeing and the airline industry’s order book has been.

So that’s a little bit of a concern for the company. I think we’ll be able to right the ship in a few quarters, but this seems like the stock’s gonna be in the penalty box for at least a foreseeable future here, given they did something that investors were really not anticipating.

Then consumer confidence and home sales. Home sales, we’re still kind of muddling along. Interest rates are higher than they’ve been in some time. They do not seem like they’re going any lower.

The Fed’s probably gonna raise rates again in December and that’s gonna hit the ten year and the two year and the ten year is the one that most affects mortgage rates. So it seems like we’re just stuck in this high price, low sales growth scenario and you’re starting to see some pockets of weakness in certain areas of the country.

You’ve seen it a little bit in the northeast, starting to see a little bit in the southeast too, which has historically been, one of the stronger areas of the US market. So we’re just hoping new supply comes online, but that’s all relative and that’s all local and that’s kinda hoping that happens, but that’s not gonna happen anytime soon.

And consumer confidence is all about where gas prices and food prices are. If you see that gas prices are coming down and you’re going to the supermarket every week and spending a little bit less money on gas or a little less money on food and and other products, then that helps confidence. And when prices rise it hurts confidence.

Rena Sherbill: Indubitably. Some other names that are reporting later today after the bell. We have Visa (V), we have RobinHood (HOOD), we have SK Hynix (SKHY), we have Seagate Technology (STX), a slew of others. You can find that all on Seeking Alpha. I’ll leave a link to our full earnings season calendar.

We also have a special Fed episode with our beloved Kim Khan after the meeting tomorrow. So look forward to that.

Chris, any final words on this fine Tuesday?

Chris Ciaccia: It’s just like you said, Rena, it’s just all about earnings. We’ve got those big companies that you mentioned, Visa, SK Hynix.

I mean, those are hundreds of billions of dollars in terms of market cap. So what they say about their quarterly results and guidance in the shape of the consumer, that’s gonna weigh on sentiment, one way or the other.

I would think for Visa, given we’re seeing the stock rise sharply over the past month, maybe investors are reallocating some funds outside of the Magnificent Seven in tech, and that could bode well for consumer spending both here in the US and globally.

SK Hynix, it’s all about memory prices and signing contracts, long-term contracts, with companies that are either here based in the US or Asia or elsewhere.

The memory shortage is real. It’s not ending anytime soon and Samsung (SSNLF) and SK Hynix have been two of the biggest beneficiaries along with Micron (MU).

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.