It was a pretty tough week for US stocks all told as uneven results from the dominant tech sector put indices on the back foot.
There is also nervousness ahead of the upcoming US election which remains on a knife edge. In terms of individual stocks, wearable tech brand Garmin (GRMN:NYSE) got hearts racing with third-quarter earnings which beat expectations and also unveiled an improved outlook.
Online payroll and human resource software specialist Paycom (PAYC:NYSE) was also in demand as its own quarterly earnings came in ahead of forecasts.
Heading in the opposite direction was beauty products giant Estee Lauder (EL:NYSE) which served up a really ugly set of results and slashed its dividend. The company continues to be a victim of weak trading in China and sees no imminent signs of recovery.
Automotive tech firm Aptiv (APTV:NYSE) stalled as the transition towards electric vehicles in the industry slows thanks to weak demand.
MAGNIFICENT SEVEN ROUND-UP
It was a mixed bag as five of the so-called Magnificent Seven lined up to deliver their latest earnings. Google parent Alphabet (GOOG:NASDAQ) delivered EPS (earnings per share) of $2.12, around 15% ahead of consensus as group revenue jumped 15% to $88.3 billion.
Closely watched cloud revenue surged by 35% to $11.6 billion while search revenue, the largest business segment increased 12% to $49.4 billion.Amazon (AMZN) shares jumped 5% in after-market trading after the online marketplace and web services company delivered a 25% earnings beat.
Web services revenue grew 19% to $27.4 billion, slightly below estimates. Apple (APPL:NASDAQ) revealed iPhone sales grew 6% in the fourth quarter as it delivered revenue and EPS slightly ahead of market estimates, but that was not enough to placate investors with the shares falling 2% in after-market trading.
Investors reacted negatively to plans from Facebook owner Meta Platforms (META:NASDAQ) to increase AI (artificial intelligence) spending to as much as $40 billion. Despite delivering EPS growth of 35% to $6.03, surpassing Street expectations of $5.29, the company came up short on the key metric of daily active users.
Microsoft (MSFT:NASDAQ) managed to beat earnings expectations but fell short on the outlook, with a muted cloud computing growth forecast and substantial spend on AI combining to send the shares down around 7%.
SUPER MICRO COMPUTER
Is something rotten in the state of Super Micro Computer? The stock plunged by a third on 30 October after the company disclosed that its auditor, Ernst & Young, had resigned, saying it was ‘unwilling to be associated with the financial statements prepared by management’.
It fell another 12% the day after. Ernst & Young was new to the job, having just replaced Deloitte & Touche as Super Micro’s accounting firm in March 2023. Super Micro is now at risk of being delisted from the Nasdaq, and has until 16 November to regain compliance with the stock exchange.
‘We see higher delisting risk in the absence of an auditor and the potential challenge to getting a new one’, analysts at Mizuho wrote in a report.
Targeted by Nathan Anderson’s short selling firm Hindenburg Research at the end of August, it is reportedly also facing a Department of Justice probe. A prosecutor in the US attorney’s office in San Francisco has asked for information about a former employee who has previously accused Super Micro of accounting violations, according to market intelligence.
In March, Super Micro Computer was added to the S&P 500 after an epic run that lifted the stock by more than 2,000% in two years, dwarfing even Nvidia’s gains.
SHAKE SHACK
Burgers and milkshakes joint Shake Shack (SHAK:NYSE) delivered another scoop of good news to send the fast casual restaurant’s shares up 12% to $122.6 for the week and take year-to-date gains to almost 70%.
Third-quarter sales and adjusted earnings per share both beat Wall Street estimates, coming in at $316.92 million and $0.25 respectively, while ‘same-shack’ sales growth of 4.4% topped the 3.6% called for by consensus.
Investors peered past the write-down and asset disposal-driven quarterly loss as new CEO Rob Lynch, famed for turning round pizza chain Papa John’s, left investors salivating over his goal to ‘bring Shake Shack to the world’.
Lynch insisted Shake Shack’s positive momentum had persisted into the fourth quarter as ‘our marketing and operational initiatives continue to take hold’.
