Market Insights

Fourth-quarter earnings season has begun with technology stocks trying to recover from anxiety about AI spending.

Megacap growth stocks like Microsoft (MSFT) and Meta Platforms (META) dropped after their last numbers in October and have underperformed the broader market since. Investors have worried about their spending plans and valuations.

There’s also been a focus on at least two other trends. First has been the pivot toward makers of data-storage products and related capital equipment, like Micron Technology (MU) and Applied Materials (AMAT). Second has been the surge in precious metals and global stocks.

But attention could return to big tech this afternoon when MSFT and META report quarterly results. Interestingly, their earnings may not be the main story. Instead, their capital-spending plans could trigger a potential reaction in suppliers like Nvidia (NVDA).

This table provides the timing for select stocks in the group. (Note: All earnings are due after the closing bell on their respective dates.)

Recent News

• Technology stocks have lagged the market with a gain of 0.9 percent in the last three months. TradeStation data shows a stark dichotomy between chipmakers, which have benefited from capital spending, and software makers, which have mostly fallen on valuation worries.
• Advanced Micro Devices (AMD) has rallied in the last two weeks on optimism about demand for its server CPUs like the EPYC line. KeyBanc triggered the rally with an upgrade on January 13 after its analyst visited Asian suppliers and customers. Other firms including Bernstein, Piper Sandler and UBS followed with positive reports and price-target hikes.

Advanced Micro Devices (AMD), daily chart, with select patterns and indicators.

• MSFT and META are the only stocks in this article below their 200-day moving averages, a potential sign of weak sentiment. They’ve had some price-target cuts because Wall Street views them as less likely to benefit directly from AI spending. An example of this trend came yesterday, when CNBC reported META would buy as much as $6 billion of fiber-optic equipment from Corning (GLW) over the rest of the decade. That made GLW the S&P 500’s biggest gainer of the session, while META was little changed.
• Tesla (TSLA) investors are likely to focus on Fully Self-Driving (FSD) vehicles more than the backward-looking results. Traders know TSLA’s EV sales are slowing, and are now looking for Elon Musk’s company to become a pioneer in autonomous vehicles and robots.
• AAPL peaked in early December and pulled back through last week. Analysts have mostly been positive on the iPhone maker. JPMorgan raised its price target from $305 to $315, seeing improved smartphone demand and lower costs. Bank of America also expects strong unit growth.
• Amazon.com (AMZN) jumped to a new high after its last earnings report, but failed to hold as traders worried about spending and growth at its key AWS business. It’s pushed higher this year as management trims corporate jobs. Attention is likely to focus on whether growth will reaccelerate at AWS.
• NVDA and AVGO report later in the cycle, however both could react to capex plans announced this week. The news has been quieter on them, although JPMorgan and Counterpoint issued positive notes on AVGO this week. Both cited its market position in custom AI chips.

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