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Tag: Wall Street estimates

  • Mixed share reaction to megacap earnings burst, Meta droops

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    (Reuters) -Shares in three of the “Magnificent Seven” companies with significant investments in artificial intelligence were mixed in after-hours trade on Wednesday after the mega caps released third quarter earnings.

    Shares in Google-parent Alphabet rose 6.2% after the company beat Wall Street estimates for third-quarter revenue on Wednesday, as both its core advertising business and cloud computing unit showed steady growth.

    The cloud services and AI giant raised its capital expenditure forecast for the year to between $91 billion and $93 billion, compared with the estimates of $80.67 billion.

    But Microsoft fell 3.4% in extended trading even though the company reported blockbuster growth in its cloud-computing business that pushed its quarterly revenue past Wall Street estimates, showing businesses are still splurging on AI services despite fears of a bubble.

    The results highlight the growing returns from Microsoft’s massive AI investments.

    Shares in Meta fell more than 8% after it said it recorded a nearly $16 billion one-time charge in the third quarter related to U.S. President Donald Trump’s Big Beautiful Bill, and said its capital expenditure next year would be “notably larger” than in 2025.

    Meta has been doubling down on AI, CEO Mark Zuckerberg has personally led an aggressive talent hiring spree and has said that the company would spend hundreds of billions of dollars to build several massive AI data centers for superintelligence.

    COMMENTS:

    MICHAEL ASHLEY SCHULMAN, CHIEF INVESTMENT OFFICER, RUNNING POINT CAPITAL, LOS ANGELES

    “From a market perspective the earnings wave says the AI investments are being somewhat vindicated; they’re not wild hype anymore, but not fully matured either. From a geopolitical angle the tech sector isn’t just about widgets, it’s now about data wars, platform power, regulatory maneuvers, and global supply chain guts. And the investor in me says great results, but buckle up, because the real test is converting those massive outlays into steady predictable returns. AI is both overhyped and under penetrated, simultaneously a bubble and a base case depending on your time horizon. Machine as narrative velocity moves prices faster than cash flows can catch up, and the market algorithm rewards engagement over fundamentals. For boring detail: In aggregate the trio basically told us the artificial intelligence land grab is real and the shovels are very expensive, with Alphabet clearing the $100 billion quarter while lifting capital expenditures to feed cloud and search, Meta posting record sales but face-planting on a nearly sixteen billion dollar tax charge as it leans into a $70 to $72 billion build out, and Microsoft reaffirming that the enterprise cloud is the toll road of artificial intelligence with a fresh revenue beat and rapid Azure growth. Nonetheless, for all the good news out there, parts of the market are behaving more like a social network than a discounting machine as narrative velocity moves prices faster than cash flows can catch up, and the market algorithm rewards engagement over fundamentals.”

    STEVE SOSNICK, CHIEF STRATEGIST, INTERACTIVE BROKERS, GREENWICH, CONNECTICUT

    “From a broad market point of view, they’re sort of a push (not an index catalyst) because the good reaction in Alphabet is enough to offset the uninspiring outcome in Microsoft and the surprise tax loss at Meta. The reactions in Meta and Alphabet are currently greater than the implied volatility moves that were priced into weekly options, but not egregiously so, with Microsoft being a somewhat more subdued move.”

    BESPOKE INVESTMENT GROUP (emailed note)

    “Taken together, while these results weren’t all necessarily

    constructive for the stocks they show zero signal of a slowdown in the AI capex boom. Their combined capex rose $14bn QoQ or more than 22%, (the same pace as last quarter) and is up 88% YoY.”

    (Compiled by the Global Finance & Markets Breaking News team)

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  • Palantir forecasts strong 2024 profit on robust AI demand

    Palantir forecasts strong 2024 profit on robust AI demand

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    By Arsheeya Bajwa

    (Reuters) – Palantir Technologies forecast a full-year profit above Wall Street estimates on Tuesday, as the data analytics company benefits from strong demand for its artificial intelligence offerings.

    Enterprises are looking to build and deploy their own AI-backed offerings, helping demand for Palantir’s products including its Artificial Intelligence Program, which CEO Alex Karp sees as the “future” of the company.

    Palantir signed 103 deals of over $1 million each in the fourth quarter, Chief Revenue Officer Ryan Taylor told Reuters.

    U.S. commercial revenue in the quarter ended Dec. 31 surged 70% to $131 million, compared with a 12% increase a year earlier.

    The company said it expects 2024 U.S. commercial revenue above $640 million, projecting growth of at least 40%, compared with a 36% rise in 2023.

    Fourth-quarter commercial revenue stood at $284 million, beating analysts’ average estimate of $270 million, according to LSEG data.

    The company reported quarterly revenue of $608.4 million above estimates, and a record profit of $93.4 million.

    However, growth at its mainstay government segment, which contributed more than half of total fourth-quarter revenue, has continued to slow. Government revenue grew 11% compared with a 23% jump a year earlier.

    Analysts have flagged uncertainty in the recognition of revenue from government deals, citing “lumpiness of government contracts” as revenue from such deals likely shows up in the company’s books without much consistency.

    Last month, Palantir entered into an agreement with the Israeli Defense Ministry to provide technology as the war in Gaza continues.

    On an adjusted basis, the company forecast 2024 profit between $834 million and $850 million, above LSEG estimates of $658.8 million. Its revenue forecast was in line with estimates.

    But its current-quarter revenue forecast was below estimates. Revenue chief Taylor attributed this to seasonal weakness in the first three months of the year.

    (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Shinjini Ganguli)

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  • Qualcomm profit forecast beats estimates amid AI push, stock slips

    Qualcomm profit forecast beats estimates amid AI push, stock slips

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    By Stephen Nellis and Max A. Cherney

    (Reuters) – Qualcomm on Wednesday forecast fiscal second-quarter profit slightly above Wall Street estimates and sales in line with market expectations, as a new line of AI-enabled chips helps power it out of last year’s smartphone slump.

    The sales outlook reflects a ramp-up in purchases of new Qualcomm chips with features designed to help run chatbots, image generators and other artificial-intelligence features directly on a device instead of in cloud computing data centers.

    Qualcomm shares initially rose sharply in after-hours trade but then reversed course to trade down 2%.

    Qualcomm predicted sales and adjusted profit with a midpoint of $9.30 billion and $2.30 per share for the current fiscal second quarter ending in March. The outlook compares with analyst estimates of $9.30 billion and $2.25 per share, according to data from LSEG.

    In addition to the results, the company said on Wednesday it has reached a chip supply deal with Samsung to supply chips globally for its top-end Galaxy S24 model.

    In its patent business, Qualcomm said Apple extended a licensing deal through March 2027. Qualcomm said in September it had signed a deal to supply Apple with chips through 2026 but noted that part of a patent deal made with the iPhone maker in the wake of a major antitrust battle was set to expire next year.

    For Qualcomm, “5% revenue growth and 24% earnings growth is very constructive in a skeptical earnings season environment,” said Thomas J. Hayes of Great Hill Capital.

    Qualcomm is the biggest supplier of chips to a smartphone market that had its worst sales year in a decade in 2023. As the smartphone industry slowly recovers, Qualcomm is facing competition on multiple fronts, with Huawei and Samsung Electronics both selling phones powered by in-house chips and Taiwan’s MediaTek challenging Qualcomm’s stronghold in mid- and premium-tier Android phones.

    San Diego, California-based Qualcomm is also expanding into other markets such as personal computers, with partners such as Dell Technologies and Lenovo Group expected to debut laptops with chips that Qualcomm claims are faster than Apple’s in-house processors.

    For the fiscal first quarter ended on Dec. 24, Qualcomm reported sales and adjusted profit of $9.94 billion and $2.75 per share, above estimates of $9.52 billion and $2.37 per share, according to LSEG data.

    In Qualcomm’s chip segment, the company forecast fiscal second-quarter sales with a midpoint of $7.9 billion, above analyst estimates of $7.86 billion. Qualcomm predicted second- quarter sales with a midpoint of $1.3 billion in its patent-licensing business, in line with estimates of $1.3 billion.

    For the just-ended fiscal first quarter, Qualcomm said chip and licensing revenues were $8.42 billion and $1.46 billion, respectively, above/below analyst estimates of $7.99 billion and $1.41 billion, according to LSEG data.

    Within its chip business, Qualcomm said that mobile handsets generated $6.69 billion in sales in the first quarter, above estimates of $6.37 billion, according to data from Visible Alpha. Automotive and Internet-of-Things chip revenues in the first quarter were $598 million and $1.14 billion, respectively, compared with analyst estimates of $518.3 million and $1.22 billion.

    (Reporting by Stephen Nellis and Max A. Cherney in San Francisco; Additional reporting by Arsheeya Singh Bajwa in Bengaluru; Editing by Sayantani Ghosh and Matthew Lewis)

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  • Illumina cuts annual profit forecast for second straight quarter

    Illumina cuts annual profit forecast for second straight quarter

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    (Reuters) – U.S. genetic testing Illumina on Thursday trimmed its annual profit forecast for the second straight quarter, hurt by weakness in demand for its sequencing instruments, consumables and services.

    Shares of the San Diego, California-based company fell about 9% to $97.51 in extended trading, after it also missed Wall Street estimates for third-quarter sales.

    The U.S. life sciences firm in the last quarter had flagged weakness in demand for its genetic testing tools and diagnostics products over protracted recovery in China, cautious consumer spending and lengthened sales cycles.

    Sales at its core business, which advances sequencing instruments, consumables and services for genetic analysis, were $941 million in the third quarter, compared with LSEG estimates of $963.80 million.

    Illumina also disclosed it recognized $712 million in goodwill and $109 million in intangible asset impairment related to the Grail segment, in the quarter.

    The company’s deal for cancer test maker Grail is facing pressure from antitrust regulators. Illumina said last month it would divest Grail in 12 months, according to the terms of the European Commission’s order, if it does not win its challenge in court.

    Illumina sees full-year adjusted profit per share to be between $0.60 and $0.70, versus its prior forecast range of $0.75 to $0.90.

    It makes tools and provides sequencing services to hospitals, biotech and pharmaceutical companies for disease research and drug development process. It also makes and sells molecular diagnostic tests.

    Its total revenue was $1.12 billion for the third quarter, compared with analysts’ average estimate of $1.13 billion.

    It expects FY23 consolidated revenue to decrease 2% to 3% from FY22.

    On an adjusted basis, the company earned 33 cents per share during the quarter, versus analysts’ estimate of 12 cents per share.

    (Reporting by Pratik Jain in Bengaluru; Editing by Shilpi Majumdar)

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