Broadcom Inc. shares slipped 4.5% in the extended session Thursday after the chip and software company delivered a revenue forecast for the current quarter that failed to offer upside versus the consensus view.
The company reported fiscal third-quarter net income of $3.30 billion, or $7.74 a share, compared with $3.07 billion, or $7.15 a share, in the year-ago period.
After adjustments, Broadcom AVGO, +3.43%
earned $10.54 a share, compared with $9.73 a share in the year-ago quarter. Analysts tracked by FactSet were expecting $10.43 a share.
Revenue increased to $8.88 billion from $8.46 billion in the year-ago quarter, while analysts were modeling $8.85 billion.
Chip sales rose 5% to $6.94 billion from the year-ago period, and infrastructure software sales also were up by 5%, to $1.94 billion. The FactSet consensus was for $6.97 billion in chip sales and $1.89 billion in software sales.
The latest results “were driven by demand for next-generation networking technologies as hyperscale customers scale out and network their AI clusters within data centers,” Chief Executive Hock Tan said in a statement.
Broadcom generated $4.6 billion in free cash flow during its third quarter.
The company forecast fiscal fourth-quarter revenue of about $9.27 billion, in line with the FactSet consensus.
Year to date, Broadcom is up 65% and the PHLX Semiconductor Index SOX, +0.74%
is up 45%, while the S&P 500 index SPX
is up 18% and the tech-heavy Nasdaq Composite COMP
is up 35%.
Salesforce Inc. shares rallied in the extended session Wednesday after the customer-relations management software giant’s earnings outlook topped Wall Street expectations two weeks ahead of its annual confab.
Salesforce CRM shares rallied more than 6% after hours, and held steadily in that range during the conference call with analysts, following a 1.5% rise to close the regular session at $215.04.
Nvidia Corp. shares rallied in the extended session Wednesday after the maker of graphics processing units that is leading the AI-hardware charge reported a 141% surge in data-center sales and record results.
Nvidia NVDA, +3.17%
shares rallied 9% after hours, following a 3.2% rise in the regular session to close at $471.16, less than 1% below the stock’s record closing high of $474.94, set on July 18, according to FactSet data. A close at such levels on Thursday would mean a new record high for the stock.
The Santa Clara, Calif.-based company reported second-quarter net income of $6.19 billion, or $2.48 a share, compared with $656 million, or 26 cents a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $2.70 a share, compared with 51 cents a share in the year-ago period.
Revenue surged to a record $13.51 billion from $6.7 billion in the year-ago quarter, driven by a 141% leap in data-center revenue to $10.32 billion.
Analysts surveyed by FactSet had forecast earnings of $2.08 a share on revenue of $11.19 billion, and data-center sales of $8.03 billion.
Nvidia forecast third-quarter revenue of $15.68 billion to $16.32 billion.
Analysts had estimated third-quarter earnings of $2.40 a share on revenue of $12.59 billion, with $9.15 billion of that from data-center sales. For the year, Wall Street, on average, expects earnings of $8.29 a share on $44.54 billion in revenue, a 71% increase from fiscal 2023’s $26.97 billion, with $32.41 billion of that in data-center sales.
“Companies worldwide are transitioning from general-purpose to accelerated computing and generative AI,” said Jensen Huang, founder and chief executive of Nvidia, in a statement. “Leading enterprise IT system and software providers announced partnerships to bring Nvidia AI to every industry. The race is on to adopt generative AI.”
Right after the report, Lopez Research analyst Maribel Lopez told MarketWatch that Nvidia’s “numbers prove just how much money there is in the AI hardware opportunity.”
“While cloud companies are selling AI services, Nvidia is walking away with a bulk of the revenue and profits,” Lopez said. “Nvidia’s minting cash with no apparent slowdown in sight.”
Nvidia shares are up more than 222% on a year-to-date basis, compared with a 42% surge in the PHLX Semiconductor Index SOX,
a 15.5% rise by the S&P 500 SPX
and a 31% gain by the tech-heavy Nasdaq Composite COMP
over the same span.
Nvidia currently stands as the fifth-largest U.S. company by market cap behind Apple Inc. AAPL, +2.19%,
Microsoft Corp. MSFT, +1.41%,
Alphabet Inc. GOOG, +2.71%
GOOGL, +2.55%
and Amazon.com Inc. AMZN, +0.95%.
While all have a big stake in the future of AI, the latter three companies are scrambling to outfit their cloud-service provider data centers with new AI gear amid tight supply.
While Nvidia is considered the overwhelming leader in the AI chip market, Advanced Micro Devices Inc. AMD, +3.57%
is considered a distant second. AMD’s data-center numbers declined in the company’s recent earnings report, although the company didn’t have comparable AI chip sales in its results.
Shares of AMD and TSMC were both up more than 3% after hours Wednesday.
crushed Wall Street’s earnings estimates and increased fiscal-year financial guidance. The stock, however, was down. Current results were great, but investors are worried about whether the current phase of rising demand for agricultural equipment is over.
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Ford Motor Co. late Thursday reported quarterly profit that was about three times higher than last year’s and a 12% increase in its revenue, moving it to raise its outlook for 2023, but the beat-and-raise was overshadowed by a delay in EV production goals.
Ford stock F, +0.44%
initially rose about 3% after the positive results, with Chief Executive Jim Farley telling investors that the company’s goal is to match an “exciting, long-term vision” of itself with “boringly predictable execution quarter after quarter, year after year.”
Share gains started to fade, however, as investors zeroed in on the shifted production goal, and ended the extended session down 1.2%. Ford said it expects to reach a production rate of 600,000 EVs in 2024; when it reported first-quarter earnings in May it said it would reach that milestone by the end of this year.
The company’s EV production growth has been “disappointing,” CFRA analyst Garrett Nelson said Thursday.
Nelson said he was “cautious” on Ford in light of the stock’s run so far this year and the possibility that “higher-for-longer” interest rates would weigh on sales after a strong first half of the year. Looming labor negotiations with the United Auto Workers are another reason for caution, he said.
Ford earned $1.9 billion, or 47 cents a share, in the second quarter, nearly three times higher than in the year-ago period and a 4% margin, the company said. Adjusted for one-time items, the automaker earned 72 cents a share.
Revenue rose 12% to $45 billion, Ford said, and its cash and liquidity are “persistently strong.” The revenue increase included a 39% rise for Ford’s EV business.
Analysts polled by FactSet expected Ford to report adjusted earnings of 54 cents a share on sales of $43.17 billion.
Supply-chain “disruptions” have persisted but are now easing, and Ford has “more work to do” to streamline its systems, reduce costs and improve quality, Farley said in the call.
EV adoption is still in the upswing, Farley said, but the number of companies entering the market is growing even at the higher end of the market. With its varied offers, though, Ford is building EV “loyalists” to its brand, Farley said.
Ford lifted its EBIT guidance range for the full year to between $11 billion and $12 billion. It also adjusted upward its expectations for 2023 adjusted free cash flow to between $6.5 billion and $7 billion. Capital expenditures would be between $8 billion and $9 billion, the automaker said.
The guidance presumes “headwinds” including “global economic uncertainty and inflationary pressures, higher industrywide customer incentives and continued EV pricing pressure,” Ford said, as well as increased warranty costs and costs associated with union contract negotiations.
On the positive side, “tailwinds” accounted for in the guidance included “improved” supply chain, higher industry volumes, upside from the its all-new Ford Super Duty truck and lower commodity costs, Ford said.
Shares of Ford have gained 19% so far this year, matching the advance for the S&P 500 index SPX, -0.64%.
The stock holds an outperformance, however, in the past three months, up 19% to the S&P’s 11%.
Microsoft Corp. easily topped profit and revenue expectations for its latest quarter, though its shares were moving more than 3% lower in extended trading Tuesday after the company discussed the year ahead.
The technology giant has won favor on Wall Street for its positioning in the artificial-intelligence revolution, though Chief Financial Officer Amy Hood said on Tuesday’s earnings call that “even with strong demand and a leadership position,” Microsoft’s MSFT, +1.70%
“growth from our AI services will be gradual.” Microsoft’s AI for its Azure cloud-computing business needs to ramp, and the company is working toward the general availability of its Copilot productivity product.
Microsoft’s AI revenue impacts will thus be weighted toward the second half of the new fiscal year that just began, she continued. Meanwhile, she expects that Microsoft’s capital expenditures will rise sequentially each quarter “as we scale to meet demand signals.”
Hood’s commentary came as Microsoft posted fiscal fourth-quarter results Tuesday afternoon that showed a 15% jump in revenue for the company’s cloud-computing segment, which it calls Intelligent Cloud. Revenue for the segment came in at $24.0 billion, while analysts had been anticipating $23.8 billion. The growth rate was 17% on a currency-neutral basis.
The company said revenue for Azure and other cloud services was up 26%, or 27% in constant currency. Microsoft’s forecast had been for 26% to 27% in constant-currency Azure sales growth, while the company posted 31% constant-currency growth on the metric in the March period. The FactSet consensus was for 27% growth in constant currency.
“While we believe the Street was hoping for Azure growth more in the ~28% range, we believe the consumption part of the business held up well,” Evercore ISI analyst Kirk Materne said in a note to clients.
For the September quarter, Microsoft anticipates 25% to 26% in constant-currency Azure growth.
The cloud migration is still in the “early innings,” Chief Executive Satya Nadella said on the call, while also highlighting a “new world of AI driving a set of new workloads.”
“We think of that, again, being pretty expansive from a TAM [total addressable market] opportunity and we’ll play it out,” he continued, though the company is also up against the “law of large numbers” given the massive scale of its cloud business.
The company generated fiscal fourth-quarter net income of $20.1 billion, or $2.69 a share, compared with $16.7 billion, or $2.23 a share, in the year-earlier period. Analysts tracked by FactSet were modeling $2.55 a share.
Overall revenue for Microsoft climbed to $56.2 billion from $51.9 billion, whereas analysts had been expecting $55.5 billion.
Microsoft logged $18.3 billion in revenue for its productivity and business processes unit, up 10% from a year before, or up 12% in constant currency. That part of the business includes LinkedIn and both commercial and consumer versions of Office. Analysts had been looking for $18.1 billion.
Revenue for the More Personal Computing segment, which includes Windows and Xbox content and services, dropped 4% to $13.9 billion and was off 3% on a constant-currency basis. The FactSet consensus was for $13.6 billion.
Nadella, meanwhile, expressed optimism about the eventual opportunities brought upon by Microsoft’s Copilot offerings.
“I do think people are going to look at how can they complement their [operating-expense] spend with essentially these Copilots in order to drive more efficiency and, quite frankly, even reduce the burden and drudgery of work on their OpEx and their people and so on,” he said.
Evercore’s Materne called the overall results “solid” amid “a lot of macro headwinds.” Microsoft’s investment story “gets stronger in [the second half of the calendar year] as some optical headwinds reverse and [comparisons] soften, and Microsoft’s position in the enterprise market continues to get stronger as customers look to consolidate spending,” he wrote.
Chevron Corp. released a second-quarter performance update that was better than expected on Sunday, ahead of the oil major’s earnings announcement this week.
Adjusted profit of $3.08 a share beat the consensus of $2.97 a share as tracked by FactSet. That is down about 47% from the second quarter last year and down from profit of $3.55 a share in the first quarter of 2023.
The company also announced its chief financial officer, Pierre Breber, is retiring after 35 years at the company. Eimear Bonner, the chief technology officer, will succeed him starting in March 2024.
Chief Executive Mike Wirth thanked Breber for his contributions and welcomed Bonner, a 24-year Chevron veteran, saying she can “build on Chevron’s strong foundation and drive further value for shareholders.”
Chevron CVX, +1.46%
said it had record quarterly production in the Permian Basin, 11% higher than last year’s second quarter. It produced 772,000 barrels of oil equivalent a day, and added that it is on-track for its full-year guidance. The Permian is a shale basin covering parts of West Texas and southeastern New Mexico.
Quarterly shareholder distributions of $7.2 billion also set a record, Chevron said, including $4.4 billion in share buybacks and $2.8 billion in dividends.
Chevron expects to close the acquisition of shale driller PDC Energy in August.
Stocks rose for a fourth day in a row on Thursday, a day ahead of second-quarter earnings from America’s biggest lenders. The Dow Jones Industrial Average DJIA, +0.14%
rose about 46 points, or 0.1%, ending near 34,394, according to preliminary data from FactSet. But the S&P 500 index SPX, +0.85%
gained 0.9% to end at 4,509, clearing the 4,500 mark for the first time since April 5, 2022 when it ended at 4,545.86, according to Dow Jones Market Data. The Nasdaq Composite Index COMP, +1.58%
scored another blockbuster day, up 1.6%. Investors have been optimistic as inflation pressures ease and as perhaps the best-telegraphed U.S. economic recession in recent history has yet to materialize. The S&P 500 and Nasdaq have been charging higher on buzz about AI technology, with much of this year’s stock-market gains fueled by a small group of stocks. The risk-on tone ahead of earnings from JPMorgan Chase and Co., JPM, +0.49%
Wells Fargo WFC, +1.04%
and Citigroup C, +0.63%,
had the U.S. dollar DXY, -0.74%
earlier on pace to end at its lowest level since early April 2022. Treasury yields also continued to fall, with the 10-year TMUBMUSD10Y, 3.768%
rate back down to 3.759%, after topping 4% in recent weeks. The six biggest banks are expected to issue a deluge of fresh debt after earnings, despite the Federal Reserve having sharply increased rates and borrowing costs for businesses and households to tame inflation.
Nvidia Corp. executives predicted record revenue well beyond anything the company has experienced Wednesday, pushing shares toward all-time highs, as margins improve with AI-driven data-center sales.
Nvidia NVDA, -0.49%
guided for second-quarter revenue of $11 billion, plus or minus 2%; the chip maker has never before reported quarterly revenue higher than $8.29 billion, which it hit in the fiscal first quarter a year ago. Analysts on average were expecting $7.17 billion, according to FactSet, a gain from the $6.7 billion in sales Nvidia put up in the fiscal second quarter last year.
On the conference call with analysts, Huang said the simple way to think about it is that the world has “a trillion dollars of data center installed and it used to be 100% CPU,” or central processing units, as opposed to Nvidia’s graphics processors that data centers and AI models have embraced in recent years. And while the world’s data-center budget is strapped, at the same time larger and larger AI models require more and more computing power, he said.
“The easiest way to think about that is over the next four or five, 10 years, most of that trillion dollars, and compensating adjusting for all the growth in data center still, it will be largely generative AI,” Huang said.
“What happened is, when generative AI came along, it triggered a killer app for this computing platform that’s been in preparation for some time,” he added.
The company forecast adjusted gross margins of 70% for the second quarter, after reporting 66.8% for the first quarter, not only as higher data-center margins counter the deficit in gaming, but as Nvidia Chief Financial Officer Colette Kress said on the call: ” We believe the channel inventory correction is behind us.”
Shares soared more than 25% in after-hours trading, following a 0.5% decline in the regular session to $305.38. Nvidia’s record closing price is $333.76 and the all-time intraday high is $346.47, according to FactSet data. After-hours “prices” topped both of those marks, reaching more than 14% beyond all-time highs for the regular session, as shares registered as high as $395, according to FactSet. The last time Nvidia shares rallied as much in a single session was Nov. 11, 2016, when shares surged 29.8% after the company reported that profit more than doubled.
Meanwhile, shares of rival Advanced Micro Devices Inc. AMD, +0.14%
rallied 6% after hours.
Nvidia did not provide full-year guidance, but Chief Executive Jensen Huang has been effusive in his predictions that increased focus on AI from Big Tech partners such as Microsoft Corp. MSFT, -0.45%
and Alphabet Inc. GOOGL, -1.35% GOOG, -1.34%
will lead to revenue gains in the near future. Speaking to the media at Nvidia’s developers conference in March, he said that generative AI has only accounted for a “tiny, tiny, tiny” single-digit percentage of revenue over the past 12 months, but predicted that in the next year, revenue from generative AI will grow to be “quite large — exactly how large, it’s hard to say.”
Nvidia reported fiscal first-quarter earnings of $2.04 billion, or 82 cents a share, on sales of $7.19 billion, a decline from $8.29 billion a year ago but well ahead of expectations. After adjusting for stock compensation and other effects, the chip maker reported earnings of $1.09 a share, a decline from $1.36 a share a year ago. Analysts on average were expecting adjusted earnings of 92 cents a share on sales of $6.53 billion, according to FactSet.
Gaming sales for the first quarter fell 38% to $2.24 billion, while data-center sales at Nvidia rose 14% to a record $4.28 billion, “led by growing demand for generative AI and large language models using GPUs based on our Nvidia Hopper and Ampere architectures.”
“The revenue growth reflects strong demand from large consumer internet companies and cloud service providers,” the company said in a statement. “Enterprise demand for GPU platforms was strong, although general purpose networking solutions declined both sequentially and from a year ago.”
Analysts had expected gaming sales of $1.97 billion — nearly half of last year’s $3.62 billion — and data-center sales of $3.9 billion, a 4% increase from a year ago. Auto chip sales soared 114% to $296 million from a year ago.
Nvidia’s profit and sales have declined in recent quarters as the company deals with oversupply in the market, a result of pandemic-era shortages flipping to a glut after demand for personal computers and gaming gear waned. Analysts expect that trend to end with this report, however, as demand for gear that can power artificial intelligence kicks into higher gear amid a bevy of promises from tech companies about the power of generative AI.
The market capitalization of Apple Inc. has surpassed that of the entire Russell 2000for two weeks, the longest stretch on record, according to Bloomberg data.
Apple’s market capitalization,which measures how much the company is worth based on the value of all its outstanding stock, surpassed that of the Russell 2000 RUT, +1.19%
on April 27 and has held higher through Monday. The only other time that occurred was Sept. 1, 2020, when Apple’s valuation passed that of the small-cap index for only a day.
Apple’s premium over this group of small-cap stocks continued to widen over the past two weeks as the consumer-technology giant reported earnings that surpassed Wall Street analysts’ expectations.
With a market capitalization of roughly $2.7 trillion, Apple is now worth roughly $100 billion more than the combined value of all 2,000 stocks in the Russell 2000, according to Bloomberg data shared with MarketWatch.
To be sure, the gap narrowed somewhat on Monday as Apple shares declined by 0.4% to $171.80, while the Russell 2000 gained 1.3% to trade at 1,763.
A team of stock-market analysts from Bespoke Investment Group illustrated the trend in a chart shared on Twitter Monday.
U.S. equity benchmarks have powered higher in 2023, but some say the strength in popular indexs like the S&P 500 and Nasdaq Composite has masked weakness in other corners of the market.
Both the S&P 500, which has risen more than 7% year-to-date, and the Nasdaq Composite, which has risen nearly 18%, owe the bulk of their gains to a handful of megacap technology stocks including Apple, Microsoft Corp. MSFT, +0.16%,
Alphabet Inc. GOOG, -0.81%
and Nvidia Corp. NVDA, +2.16%
The top 10 stocks in the S&P 500 hold a 29% weight in the index, and have been responsible for around 70% of its year-to-date performance gains, according to a MarketWatch report from last week.
The Russell 2000, meanwhile, is essentially unchanged since the start of 2023. Apple, by comparison, has risen more than 32% since Jan. 1, according to FactSet data. The relative weakness in small-caps has inspired discussion about whether this might be a buying opportunity, as market strategists told Barron’s.
Small-caps have struggled against a plethora of headwinds since the start of 2023. Shrinking corporate earnings, a string of regional-bank failures and signs of a looming recession have taken a heavy toll. Facing so much uncertainty, equity investors have sought safety in shares of megacap technology names this year following a punishing selloff in 2022.
“It is pretty incredible that one company could overtake an entire universe of small-cap stocks in terms of size,” said Callie Cox, U.S. equity strategist at eToro, during a phone interview with MarketWatch. “To me, it really speaks to how beaten down small-caps are.”
When Apple reported earnings for the quarter ended in March last week, the company’s management revealed a surprise growth in its iPhone business, which helped to overcoming a shortfall in Mac revenue. The company also promised investors billions more in dividends and stock repurchases, which helped to boost the stock price. Apple’s shares traded higher in response.
Palantir Technologies Inc. delivered a surprise profit for the second quarter in a row Monday, while also topping revenue expectations, sending shares more than 20% higher in after-hours trading.
The software company reported first-quarter net income of $17 million, or 1 cent a share, whereas Palantir PLTR posted a loss of $101 million, or 5 cents a share, in the year-earlier quarter. Analysts tracked by FactSet were expecting a loss of a penny a share on a GAAP basis. The stock closed with a 4.7% gain at $7.76 in Monday’s…
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These Stocks Are Moving the Most Today: Chegg, Arista, Uber, Pfizer, DuPont, and More
Stock futures were falling Tuesday ahead of the start of the Federal Reserve’s two-day policy-setting meeting and after Treasury Secretary Janet Yellen said the U.
Chegg Inc. shares plunged more than 30% Monday afternoon and were headed toward their lowest price since 2017, after the online-education company’s forecast called for an unexpected revenue decline as students begin to use ChatGPT.
Chegg CHGG reported first-quarter earnings of $2.2 million, or 2 cents a share, on net revenue of $187.6 million, down from $202.2 million a year ago. After adjusting for stock compensation and other effects, the company reported earnings of 27 cents a share, down from 32 cents a share in the same…
Snap Inc.’s stock plunged more than 18% in extended trading Thursday after the social-media company reported a decline in revenue as it retools its ad platform.
Revenue dropped 7% to $988.6 million, from $1.06 billion a year ago. Analysts surveyed by FactSet had expected on average a net loss of a penny a share on revenue of $1 billion.
Amazon.com Inc. shares zoomed higher in extended trading Thursday after the company posted its biggest quarterly profit since 2021, but shares turned around after the company’s chief financial officer said in a conference call that cloud revenue is decelerating in the current quarter.
Amazon AMZN shares jumped more than 10% in after-hours trading immediately following the release of first-quarter results, but those gains disappeared after Chief Financial Officer Brian Olsavsky said in a conference call with analysts that…
Roku Inc. shares moved 2% higher in Wednesday’s after-hours action as the streaming-media company cited continued ad-market pressures but topped expectations for its latest quarter.
The company reported a first-quarter net loss of $193.6 million, or $1.38 a share, compared with a loss of $26.3 million, or 19 cents a share, in the year-earlier quarter. Analysts tracked by FactSet were expecting a $1.47 loss per share.
Microsoft Corp. shares headed toward their highest prices in more than year in Tuesday’s extended session, after the software giant reported better-then-expected profit and revenue and guided for continued strong results in an uncertain economy.
Microsoft MSFT reported fiscal third-quarter profit of $18.3 billion, or $2.45 a share, up from $2.22 a share a year ago. Revenue grew to $52.86 billion from $49.36 billion in the same quarter last year. Analysts on average were expecting earnings of $2.24 a share on sales of $51.02…
