earnings season

Fed Chair Powell Hints To Strong Earnings Season

Fed Chair Jerome Powell said today to Congress that the economy was “strong.” A strong economy should mean strong earnings reports coming this earnings season.

We had been listening to see if trade concerns might slow orders and demand in Q3 but Chairman Powell’s comments were bullish.  That’s important when it comes to guidance which is usually the swing factor for earnings reports.

The Atlanta Fed had a pickup in their Q2 GDP estimate to 4.5% which aligns with Chairman Powell’s comments.

We’d guess as business leaders see the pick up of economic strength they likely will not hold back demand in Q3. Being already in Q3 and assuming Powell talks to many business leaders daily or weekly, that should be a big hint that overall guidance can be decent. When we speak to companies we also don’t get a sense that trends should slow.

We remain bullish for earnings season.

Hitting Tech Stock Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

We’re about to hit our prime time, earnings season.

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All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

Tech Stocks Earnings Season: Gartner Confirms Enterprise Can Drive Q2

Tech stocks start to report earnings next week. We’ve been saying tech’s new driver is the “enterprise” which should support the coming earnings season (here here here). Gartner just confirmed that upgrade cycle is on.

Remember the days decades ago when we needed a new Microsoft Windows (NASDAQ:MSFT) version to drive the entire tech food chain? As we know companies like Micron (NASDAQ:MU) and Applied Materials (NASDAQ:AMAT) have said this latest tech cycle is bigger than the past because we’re not solely dependent on a new Windows upgrade to drive tech. AI, data, cloud have all been drivers. But one segment was left out, enterprise.

Traditional companies known as “enterprise” had not been spending aggressively on tech for about a decade.

Overall there is a much larger wallet size at enterprise than the cloud/hyperscalers like Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG)(NASDAQ:GOOGL) and Facebook (NASDAQ:FB). And those cloud players are the ones that have been driving that tech spend so far. So adding this new leg of spending can be huge.

Gartner Confirms Our Thinking

Gartner just confirmed what we had been saying. They just reported PC sales grew by a not-so-big 1.2% in Q2. But that was the first time PC growth had been positive since 2012. What was the driver?

Here’s what they said,

“PC shipment growth in the second quarter of 2018 was driven by demand in the business market, which was offset by declining shipments in the consumer segment.”

Builds Conviction

The more confirmational data you have the more you can have conviction on your top ideas going into earnings season, especially those tech stocks that benefit from the enterprise and PC food chain.

Trade War

The offset risk to earnings season as we’ve been saying is the Q3 guide. Do trade war concerns spook business leaders into slowing purchases. So far our work says no. We still expect strong Q3 guides but we are still doing the work.

Conclusion

We still expect a strong earnings season. AI, data, cloud and now enterprise should help the tech stock food chain.

Hitting Tech Stock Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

We’re about to hit our prime time, earnings season.

START FREE TRIAL

Read Reviews

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

Tech Stocks: What To Watch In Earnings Season And Trade Wars

Tech Stocks are about to start reporting earnings next week. Fundamental trends should have been strong for Q2 but the question remains will trade fears slow spending in Q3? Which way will guidance go for companies on their earnings calls? We think guidance keeps moving higher but that’s very much in question and we’re looking for clues.

President Trump followed through on upping the ante on tariffs with a new $200B of targeted goods. China has said it would respond which probably occurs when the US tariffs go into effect in the Fall.

Will Q3 Guidance Be Affected By Trade War Concerns?

In the meantime we’re focused on reported earnings which start for, our focus, tech stocks next week. There will be a ton of conjecture if current trade friction slowed demand until we actually hear it in the earnings calls.

We’re collecting clues ahead of those calls.

We’ve said we don’t think that demand trends would have slowed much. If they did they are coming off super-strong Q2 levels. Even if the Q2 pace slows Q3 might still beat Street estimates. That will come out in guidance and that’s really what should matter for the stock action on earnings.

Reporting next week in our universe that will shed some light on trade-war affected demand trends are IBM (NYSE:IBM) and Microsoft (NASDAQ:MSFT).

Netflix (NASDAQ:NFLX) reports Monday after the close but has less exposure to trade friction.

Can The New Secular Dynamic, Enterprise, Offset Trade Concerns?

We’ve been picking up that enterprise customers are starting to spend big for the first time in years. Up until maybe a couple of quarters ago, the majority of the spending growth was led by cloud/hyperscalers like Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) and Facebook (NASDAQ:FB).

More recently though enterprise customers, traditional companies, are starting to upgrade their tech. There had been a multi-year trend to roll-out usage in the public cloud. More recently though, specifically this year, traditional companies are starting to more aggressively build out their own internal technology infrastructure. It’s an upgrade cycle.

We think that upgrade cycle can benefit many tech stocks this year.

So that’s the Q2 story.

For now we think that trend should be strong enough to have spillover demand into Q3 offsetting any CEO concerns on trade. That’s our guess for now, which could change as we collect data. That Q3 take by companies on their earnings calls will be key in how the stock prices react. That’s what to watch next.

Hitting Tech Stock Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

We’re about to hit our prime time, earnings season.

START FREE TRIAL

Read Reviews

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.

TSMC Trade War Comments Hint Ahead Of Earnings Season

TSMC’s founder’s comments may have given us a real-time read into the trade war impacts on current business.

We have been bulled up on Q2 tech stock earnings. Since doing the work on our companies though trade war shots could have spooked Q3 company ordering decisions which would change the strong potential Q2 trend.

We don’t think Q3 will be weak but we’re listening for any early evidence of any companies talking about what they’re seeing in Q3. Those Q3 changes can affect the stock prices and sentiment.

TSMC Has Helped Us In The Past

We’ve successfully used TSMC comments to give us conviction ahead of AMD (NASDAQ:AMD) and NVDIA’s (NASDAQ:NDVA) quarters last quarter.

TSMC was just out implying that they see no change in business from the trade war.

Yes they are worried about the risks of the trade war but if you listen carefully to what they said, we’d guess they are not seeing any weakness just yet.

TSMC founder Morris Chang said, “Currently, businesses are not yet actors in this reality show but they could be added into the casting anytime.”

That means to us, in Mr. Chang’s view business has not slowed because of the trade war yet.

He went on to say, “TSMC is still doing well but we need to be on alert.”

That implies to us they are not seeing orders pulled yet in Q3.

Conclusion

Earnings begin to report next week. We want to listen carefully if there’s been any trade war induced slowdown in the tech supply chain.

We’ve said previously that we think the accelerated pace of revenue growth in Q2 could soften any Q3 blow given the trends coming into this trade war were so strong.

On the one hand we’re early and would guess not much trade-war induced slowdown happened. On the other hand we want our ears on the train tracks listening for any change. That can help bias our positioning going into key earnings reports.

Mr. Chang’s “on alert” sounds right.

Hitting Tech Stock Earnings Home Runs

We spoke to the top tech companies over the last few months to identify what tech stocks have home run earnings potential. Earnings are what drives stocks, especially tech stocks. Finding those few tech stocks that have realistic earnings trajectories way above the Street can give you conviction to see a stock through to big upside. Dip your toe in the water with a free trial.

We’re about to hit our prime time, earnings season.

START FREE TRIAL

Read Reviews

All investments have many risks and can lose principal in the short and long term. The information provided is for information purposes only and can be wrong. By reading this you agree, understand and accept that you take upon yourself all responsibility for all of your investment decisions and to do your own work and hold Elazar Advisors, LLC, and their related parties harmless.

We have no holdings in the stocks mentioned unless otherwise noted.