Apple and Amazon Earnings In Focus This Week
S&P 500 index continued its upward surge last week, rising
0.85%. In 2023, the S&P 500 index has gained close to 20%,
despite a weak macro environment. The equity markets will be
impacted by a slew of Q2 earnings which will be reported over the
next few days.
MSFT) and Alphabet
(NASDAQ: GOOGL) released
Q2 earnings. While
estimates, Alphabet stock
surged around 10% following its Q2 results. Let’s see
Why is Alphabet stock surging post Q2
Alphabet shares experienced a
roughly 7% surge in extended trading on Tuesday as the companyU+02019s revenue and
earnings exceeded anticipations, fueled primarily by its
cloud-computing unitU+02019s growth.
HereU+02019s the breakdown:
In Q2, Alphabet
- Earnings: $1.44 per share, surpassing the
Refinitiv expectation of $1.34 per share.
- Revenue: $74.6 billion, exceeding the Refinitiv
projection of $72.82 billion.
Additionally, Alphabet reported
these notable figures:
- YouTube ads: $7.67 billion, outpacing the Street
AccountU+02019s forecast of $7.43 billion.
- Google Cloud: $8.03 billion, higher than Street
AccountU+02019s $7.87 billion prediction.
- Traffic acquisition costs: $12.54 billion,
slightly higher than the Street AccountU+02019s $12.37 billion
Alphabet reported a 7% increase
in its second-quarter revenue, from $69.7 billion in the
year-earlier period to $74.6 billion.
It marks the fourth consecutive
quarter that the parent company of Google has posted single-digit
growth amidst a contraction in digital advertising expenditure due
to economic uncertainties. Analysts predict a return to
double-digit growth is likely in the fourth quarter.
Despite these challenges,
GoogleU+02019s search revenue, the lionU+02019s share of its ad
business, maintained steady growth throughout the quarter. This was
a welcome sign for investors who have expressed concern about
traditional search users migrating towards generative AI chatbots
from OpenAI and Microsoft.
GoogleU+02019s cloud unit,
encompassing infrastructure and productivity apps, saw a revenue
increase of 28%. The division, which first turned profitable on an
operating basis in the first quarter, posted an operating income of
$395 million in the second quarter, reversing a loss of $590
million from a year earlier.
Meanwhile, GoogleU+02019s ad
revenue nudged by 3.3% to $58.14 billion from $56.29 billion the
previous year. YouTube ads, registering a rise from $7.34 billion
the year before to $7.67 billion, surpassed analyst predictions.
The video platform, however, continues to face stiff competition in
short-form videos from rivals such as TikTok.
Investors will closely watch the
earnings of tech giants such as Apple
(NASDAQ: AAPL) and Amazon (NASDAQ:
AMZN) in the upcoming week.
Labor market and interest rates
On Tuesday, the Labor Department
will release its June Job Openings and Labor Turnover Survey
(JOLTS) report. The report details the monthU+02019s data on job
openings, hires, resignations, and separations.
Job openings are anticipated to
have decreased to 9.5 million in June, down from 9.82 million in
May, indicating a slowdown in availability. On Wednesday, ADP, the
payroll service provider, will deliver its National Employment
Report, which monitors growth in private-sector
A growth of 210,000 is expected
for July, following a half-million increase in June. These updates
could establish expectations for FridayU+02019s nonfarm payrolls
report. ItU+02019s estimated that US employers added 184,000 jobs
in July, a slight decrease from the 209,000 in June, suggesting the
FedU+02019s interest rate hikes are tempering the labor market. The
unemployment rate is expected to remain steady at 3.6%.
Policymakers at the Bank of
England (BoE) will convene for their latest meeting on monetary
policy on Thursday. The UKU+02019s central bank is forecast to
raise interest rates by a quarter of a percentage point to 5.25%,
making it the 14th consecutive rate increase since the tightening
efforts began in late 2021 to counteract surging
The UK is experiencing inflation
below 8%, the highest among the G7 nations, and it has not eased as
quickly as in other economies. According to a Reuters poll, BoE
officials are likely to increase their benchmark rate to a high of
5.75% by the end of the year, setting borrowing costs at their peak
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