Wall Street: in a key week for the market, bigtech companies present results

Although stocks on Wall Street closed last Friday with a mixed trend, the Nasdaq suffered its sixth consecutive drop. The market apparently decided to be in “away from risk“(risk off), a dominant focus ahead of first-quarter earnings season. With the tech index enduring its longest streak of declines in more than a yearthis could also indicate that bigtech is oversold.

While concerns linked to geopolitical tensions and persistent inflation also hit the New York market as it enters the first quarter earnings season, The market will be watching to see if tech giants like the Magnificent Seven can energize stocks. These mega-cap tech giants that include Alphabet (GOOG, GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA) They have been big winners in the last year. QBut since early April, it’s been a different story.

Furthermore, the market now expects the Federal Reserve to be more aggressive and possibly delaying plans to cut interest rates. At this point, it’s hard to imagine there will be three rate cuts, which was the expectation at the start of the year. But it is possible that technological results could revive the sentiment. As for the market’s next direction, many of these questions will be answered in the coming weeks as we enter first quarter earnings season., especially the numbers that come from large-cap technology companies. Here are the names I will be watching.

Wall Street: what to expect from Tesla

This compares to the year-ago quarter, when earnings were 85 cents per share on revenue of $23.33 billion.

What to watch: Unlike its technological peers in the Magnificent Seven, Tesla shares have retreated since the beginning of the yearfalling 40% year to date, compared to the 5% gain in the S&P 500 index.

The stock has also fallen 14% in thirty days to a new 52-week low, while the S&P 500 index has only fallen 3%. Earlier this week, Deutsche Bank analyst Emmanuel Rosner downgraded his rating on Tesla from Buy to Hold, citing the likelihood that the Model 2 launch will be delayed in favor of prioritizing the Robotaxis business.

“Without new vehicles, we believe Tesla could face more headwinds to growth as competition arises in China and from other OEMs.which the company may not be able to respond to due to limited free cash flow,” Rosner added of the near-term outlook.

Wedbush Securities analyst Dan Ives also weighed in, noting that the Model 2 initiative was key to Tesla’s growth in the coming years. The implications of cutting prices on the company’s FSD package, and an announcement by Elon Musk of 10% global job cuts are factors investors are considering. Therefore, the company’s profit margins will be closely watched.

But I think the depressed price is a buying opportunity for investors who have been waiting for a better entry point. The company is betting big on FSD, which will be the start of the autonomous vehicle evolution and is designed to automate Tesla vehicles so they can operate without a driver behind the wheel.

Once FSD can navigate autonomously, it will not only boost Tesla’s profit margins, but will be a recurring revenue center for Tesla through the company’s ambition for Robotaxis. As such, with Tesla shares trading near 52-week lows, betting on a rebound over the next 12 to 18 months looks very attractive.

Wall Street and META

As to Meta Platforms (META), Facebook’s parent company is expected to earn $4.31 per share on revenue of $36.14 billion. This compares to last year’s quarter, when earnings were $2.20 per share, on revenue of $28.64 billion.

What to watch: Meta Platforms has already enjoyed stock gains of nearly 40% so far this year, outpacing the 5% gain in the S&P 500 index. Meanwhile, over the past year, Facebook’s parent company, Instagram and WhatsApp are up 125%, crushing the 20% rise in the S&P 500 index. Wall Street analysts are optimistic about the company’s potential for further monetization.

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Meanwhile, investors appear to be fully committed to management’s various cost optimization initiatives. ANDIn that sense, the company maintains its momentum on improving efficiency, with my calculations indicating that the recently announced round of layoffs will contribute $30 billion in shareholder value. Additionally, META has entered the generative AI competition with its newly revealed Llama 3 language model and an image generator.

These initiatives not only put the company in a much stronger financial position in the near term, suggesting there is still value to be realized in the stock. Meanwhile, Citigroup analyst Ronald Josey recently reiterated his Buy rating on the stock and raised his price target to $590 from $525.