Earnings Predictions – AMD, Amazon, Apple, Alphabet

Two days this week will determine the next three months in the stock market. This week, 6 of the biggest companies in the world report earnings. Microsoft earnings, AMD earnings, Alphabet earnings (Google earnings), Apple earnings, Amazon earnings, and Meta earnings will have a major impact on the stock market this week. These stock market earnings could provide an incredible stock market prediction for the next three months. If you want to know how to invest money in the stock market, perhaps you’re looking for a stock market course, then this stock market for beginners video is for you. Stock market investing is easy once you know how to trade the current stock market news. And with AI hype in full swing, and investors all over the place getting FOMO, this week could be the biggest week of the year for the share market. So keep you eye on the stocks reporting earnings this week, as MSFT, AMD, GOOG, GOOGL, AAPL, AMZN, and META will all be reporting earnings.

Rarely is there a day so important that it determines the future of the stock market for the next three months. And this week we have not one, but two days, that will determine the direction of the stock market for the next three months. I’m Stock Curry, I’m a former Merrill Lynch and Morgan Stanley investment banker, and I have over twenty five years of trading experience. And these days are very important to watch out for. It is very rare to have two days in one week that will determine the direction of the stock market for such a long period of time.

As you probably already know, the stock market has been going up for the past year and a half, with the past three months seeing a major rally in stocks. And as you also probably know, that rally has been limited to just seven stocks in the stock market for the most part. Seven stocks in the stock market over the past year and a half have gone up nearly 100%, while the remaining 9,000 stocks in the stock market have traded pretty much flat. Those seven stocks are the Magnificent Seven – your seven mega-cap tech companies. And the reason that the S&P 500 and the Nasdaq rallied so much over the past year and a half is not because the entire stock market’s gone up; it is because those seven stocks have gone up. Those seven stocks make up 25% of the S&P 500 and 50% of the Nasdaq. And now six of those seven stocks are reporting earnings this week.

Microsoft, AMD, and Alphabet are reporting on Tuesday, and Apple, Amazon, and Meta are reporting on Thursday. Now you might be asking, “What are these companies going to report for earnings? Are they gonna beat earnings? Are they going to miss earnings? Are the stocks gonna go up? Are the stocks gonna go down?” Certainly, anybody who wants to trade earnings wants to know this. And luckily, we don’t really have to guess. We have a pretty good idea how these companies are gonna perform based upon some companies that have already reported earnings earlier this week and last week. Two weeks ago, Taiwan Semiconductor beat their profit and revenue expectations in the fourth quarter. Now Taiwan Semiconductor beating earnings is kind of a big deal.

Because over the past year and a half, the majority of the rally in the stock market has been due to AI hype, meaning stocks have been rallying up because of the hype around artificial intelligence and AI. And the biggest beneficiary of this AI hype has been the chipmakers. Just like during any gold rush, some gold miners are gonna hit it big, most are gonna go bust, but it’s almost guaranteed that those who sell shovels are going to make money. And during this AI hype, while some AI companies are gonna hit a big, most are gonna bust out, it’s almost guaranteed that those who sell AI chips are going to make money. And that means any chip manufacturers such as Nvidia, AMD, ARM, Intel, Taiwan Semiconductor, all of these, should benefit from AI hype.

So when Taiwan Semiconductor beat earnings, it was a huge boost to AI chip stocks. The day Taiwan semiconductor beat earnings, NVIDIA stock rose over 4%. Of course, the stock rallied because investors were hoping that NVIDIA would also beat earnings, causing NVIDIA stock to go up as well. But even though Taiwan Semiconductor beat analyst expectations for earnings, does not mean that they reported good earnings. Taiwan Semiconductor reported a revenue decline of 1.5% from a year ago, and a profit decline of 19% from a year ago. It’s important to distinguish between a company beating earnings expectations and reporting good earnings. Analysts could be expecting really horrible earnings, and so long as a company beats those horrible expectations and only reports bad earnings, then technically, they beat analyst expectations. And that’s exactly what we saw with Taiwan Semiconductor. They reported some pretty horrible earnings. Anytime your profit drops 20% is a pretty horrible quarter. And that’s what Taiwan Semiconductor did. But because analysts were expecting even worse earnings than that, technically, they did beat earnings.

Now because AI hype is still strong, even though Taiwan Semiconductor had bad earnings, it still caused stocks like Nvidia and AMD and others to rise. And that’s because Taiwan Semiconductor’s earnings have a really important meaning for some stocks, including Apple and Nvidia. Taiwan Semiconductor counts Apple and Nvidia among its biggest clients. So when Taiwan Semiconductor beat earnings, it meant there was a really good chance that Apple and Nvidia were going to beat earnings expectations also. And this is one of the main reasons why we’ve seen Nvidia rally so much over the past two weeks, is hope that NVIDIA is going to beat analyst expectations once again, and the stock is going to continue to go up. Now there’s no doubt that there’s a lot of hype and FOMO around NVIDIA stock right now. The question is whether that rally that we’ve seen over the past few weeks is justified or not. We’ll talk about that in a minute. But one thing that we have to understand is that Taiwan Semiconductor isn’t the only company that reported earnings already.

Another company reported earnings on Friday, and that was Intel, another chip manufacturer. Like Taiwan Semiconductor, Intel also beat analyst expectations with earnings at 54 cents per share versus only 45 cents per share expected. And revenue came in at $15.4 billion versus $15.1 billion expected. So with Intel also beating analyst expectations, you would expect it to have had another boost in stocks, and caused stocks to go higher, as well as Intel stock to rise higher. However, what you have to understand about the stock market is that the stock market really doesn’t care that much about what happened in the past. What the stock market really wants to know is what’s going to happen in the future. And some people believe the stock market is forward looking by about six months. Some people say twelve months. Let’s just go in between and say the stock market’s forward looking by about nine months.

That means when a company reports earnings, what investors are really interested in is not so much whether or not that company beat the analyst expectations for the past quarter. What people really want to know is, “What is the company’s forward guidance? What does the company expect to do next quarter, and over the next four quarters?” And, unfortunately, Intel issued an outlook for the first quarter of 2024 that lagged analyst forecasts. Which means even though Intel beat analyst expectations last quarter, they’re predicting sales to go down next quarter. Most telling though is that Intel’s second biggest division, their data center and AI, saw sales decline 10% last quarter. And stock market investors did not like this at all. As a result of the bad forward guidance, Intel’s stock sank more than 10% on Friday. So of the two chip manufacturers who have reported earnings so far, Intel and Taiwan Semiconductor both reported a sales decline in their chips last quarter, and Intel took it one step further and forecast an even worse quarter for Q1 of 2024. Investors did not like this at all, and it sent other chip stocks down, with AMD falling 1.7% on Friday, and ARM falling 3.7%.

Now you may be saying, “Well Scott, isn’t this decline of sales already priced into the stocks? Aren’t investors expecting that earnings are gonna go down? So so long as they beat analyst expectations, the stock should go up and continue to rise. Right?” Well, unfortunately, the decline in sales is not priced into stocks, with AMD reaching a PE ratio of 1,470. AMD is so overvalued right now, pricing in such incredible, impossible growth, that one analyst actually gave AMD a “heck if we know” rating.

The thing you have to understand is the Magnificent Seven stocks, especially the chip stocks such as Nvidia, AMD, ARM, and others, are in the middle of an AI bubble right now. And like all bubbles, they do eventually burst. During COVID, we saw a bubble in a number of stocks such as Zoom, which rallied all the way up to over $580 per share. But the thing you have to understand is that all bubbles eventually pop, and all stocks eventually fall back down to reality. Not only did we see this with Zoom, we also saw it with BNGO, Bionano Genomics, and NNDM, Nanodimension.

Of course, 2020 and 2021 wasn’t the only time we’ve had a bubble in the stock market. We also had a bubble during the dot-com era in the late 90’s and early 2000’s. That bubble also popped as you can see here on this chart with Amazon from around the year 2000 and this chart of Apple from around the year 2000. Now it’s true. Nobody really knows how long the bubble might last before it burst. The bubble during 2020 and 2021 only lasted about six months. The dot-com bubble lasted for almost two years. But eventually, they do burst. And a lot of the stocks that people invested in in 2021 ended up being down over 90% by the end of the year. A lot of stocks people invested in during the dot-com bubble also fell, with the Nasdaq eventually falling 80% from highs and the S&P 500 eventually falling 50% from highs. Of course, this bubble is showing signs that it is also starting to burst as well. This is most notably seen in stocks like Tesla, which is down over 60% from all time highs, and continues to fall.

Now I’m not saying that stocks are guaranteed to fall this week. Obviously, if companies that report earnings this week are able to beat analyst expectations and give forward guidance that beats analyst expectations as well, then those stocks should rally. That’s exactly what we saw with Netflix this past week, as it went up over 13% this week after it not only beat analyst expectations for earnings last quarter, but also provided good forward guidance. Of course, the big difference between Netflix and a lot of other stocks, is that Netflix is not running up at all time highs and extremely overvalued. Netflix hasn’t even reached all time highs yet, even with the massive rally over the past week. And that means the stocks that are most likely to rally this week are going to be the stocks that are still beat down and have yet to join in on all the hype. Stocks like PayPal have a really good chance of going up this earning season.

Now whether stocks go up or down this week, nobody really knows. I’ve given you the reasons why stocks might go up, and I’ve given you the reasons why stocks might go down.

Regardless of what the stocks do, we can make money either way. As DWAC rallied last week, I bought a call option, and I made a 400% profit on DWAC last week. When Netflix beat earnings, I knew that QQQ was going to rise. So within fifteen minutes of the market closing, I bought a QQQ call option and made a 198% profit on that overnight. And when Tesla missed analyst expectations and started falling back down to reality, I had a Tesla put option that I made a 347% profit on. Altogether last week, I made 8 trades. 7 were profitable, 1 lost. It ended up being an 87% win ratio with an average profit per trade of 157%. And if you want to make money like this in your portfolio, then come join me in my Stock Dads Discord, where I post all of my trade alerts. I’ll teach you how to trade options. I’ll show you exactly what I’m buying and selling. I post my trades within minutes of making the trades, so you can copy them, and you can learn from my trades, and you can make money with me. If you want to make money like this, come join me in the Stock Dads Discord here.

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