The week may have started quietly with markets closed for Martin Luther King Day on Monday (20 Jan) and the inauguration of President Trump, but the calm didn’t last.
Stocks took off with gains across the board, with all the main indices up around 3% and the S&P 500 notching up a new all-time high.
Markets were buoyed by Trump’s measured approach to trade tariffs and became positively ecstatic when he announced a $500 billion plan to build AI infrastructure including up to 20 new datacentres.
The project, called Stargate, was in the works before Trump took office and is a joint venture between OpenAI, Oracle (ORCL:NYSE), Japan’s Softbank (9984:TYO) and MGX, a technology investment arm of the government of the UAE. The news sent Oracle shares up over 17%.
It was relatively quiet on the macroeconomic front, with all eyes on next Wednesday’s (29 Jan) Fed meeting and a slew of big technology earnings announcements.
Global streaming giant Netflix (NFLX:NASDAQ) was one of the biggest gainers after reporting blowout earnings and chalking up a record 19 million new subscribers.
Video games publisher Electronic Arts (EA:NASDAQ) sank more than 15% after lowering full-year revenue guidance following a sharp slowdown in sales in its football gaming franchise.
NETFLIX
It has been a good week for Netflix (NFLX:NASDAQ) as the global streaming giant’s shares hit a new all-time high on 22 January of $1,000 (albeit briefly) after announcing an impressive set of fourth quarter results.
Wall Street analysts were wowed by Netflix’s 19 million new subscribers for the fourth quarter taking its annual figure for 2024 to 302 million, ahead of estimates. Coupled with stellar viewing numbers for the Mike Tyson versus Jake Paul fight and two NFL (National Football League) games on Christmas Day, what is there not to like?
Original series like season two of Squid Game struck a chord with global audiences, attracting 165.7 million views, Senna proved popular in Brazil with 16.2 million views, and in the UK spy drama Black Doves garnered 46.8 million views.
It is easy to conclude that in 2024, Netflix has truly diversified its content. Sports and games now comfortably sit alongside films and TV shows, making Netflix a broader entertainment hub.
The streaming giant has raised its revenue guidance for 2025 to between $43.5 billion and $44.5 billion, which is $500 million higher than the company's previous forecast, a notable achievement in the current economic climate.
3M
Excitement surrounding the turnaround potential under new chief executive Bill Brown drove a strong rally at 3M (MMM:NYSE) in 2024. This week, shares in the industrial conglomerate gained another 8% to trade at a three-year high of $149.10 after the Post-it notes-to-Scotch tape maker reported (21 January) forecast-beating fourth quarter sales and earnings driven by ‘broad based growth’ across a wide array of its products.
Led by Brown, who created shareholder value aplenty during his stint in charge of aerospace-to-defence technology solutions company L3Harris (LHX:NYSE), the fourth quarter capped a year of strong results as 3M returned to positive organic revenue growth in the full year.
‘I would like to thank the 3M team for their strong operational execution which helped us deliver double-digit earnings growth and robust free cash flow while returning $3.8 billion to shareholders,’ said Brown.
‘We are carrying this momentum forward and are confident in our ability to deliver our 2025 guidance.’
TEXAS INSTRUMENTS
Chipmaker Texas Instruments (TXN:NASDAQ) is facing pressure on its share price as growth in its key markets remains stubbornly limp. Demand from the automotive and industrial spaces continues to be dampened by a cyclical downturn that is, so far, refusing to lift.
Not that you would know it from last quarterly figures to 31 December 2024, which comfortably beat consensus forecasts with EPS (earnings per share) of $1.30 and revenue of $4.01 billion ahead of analyst polls of $1.21 and $3.9 billion respectively.
Guidance for the latest quarter, Q1 of 2025, looks soft, however. The company is steering for a range between of $3.74 billion to $4.06 billion in revenue, not much to see against consensus of $3.85 billion, but an EPS guide of $0.94 to $1.16 looks meek versus the $1.17 consensus.
Everything seems to be very gung-ho in the AI chip space but clearly not elsewhere, with consumer electronics demand also working through built-up inventory further dampening demand for new chips.
So, while the stock bounced off initial weakness in response to the results, the shares face a tough Friday session, with pre-market data steering to a 5% slide from $200 to $190.
