Big tech's big earnings

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Happy Wednesday, folks.

Yesterday was a bit doom and gloom. Today’s and tomorrow’s premium edition are more optimistic, so let’s turn that frown upside down.

Big tech reports mixed earnings

Big tech reported earnings this past week, and if you thought the views were high already, the market reaction proved things can always get loftier.

• Meta is up more than 20% on the week after announcing impressive earnings and a dividend (finally, your DCF can apply to tech!)

• Amazon is up almost 8% after a beat and further investment into AI products

• Microsoft beat expectations but barely moved as investors expected just a tad more out of the AI investments

• Nvidia flew 8% just because any good news for any company currently means Nvidia rockets

Not every MATANG+ member was quite so successful, though:

• Apple was down more than 3% after confirming slowing iPhone sales, though maybe if their employees hype up every investor placing a trade like they did for the first customers for the Vision Pro, things will turn around soon?

• Google was down close to 7% after reporting slowing ad revenue

• Tesla has been a rollercoaster, missing on earnings and dropping on the news that Elon won’t get his 25% stake after all (investors are concerned he’ll lose interest), though many are looking at the <$188 price and asking how much further it can really go

Much of this success was driven by widespread layoffs, some AI-driven and some post-COVID correction as companies realized that the free money environment would come to an end and it’s not possible to hire everyone with a CS degree.

Big tech is still doing well, warranted (at least to this degree) or not. However, little of this success is being shared by startups. Instead, we’re seeing more shutdowns and layoffs.

The jobs report was also misleading, referencing an employment gain which was actually driven by part-time employment. The number of full-time jobs actually fell.

For the few startups that have the money to hire, there won’t be any shortage of talent, and wages are compressed.

However, the misleading employment numbers do give the Fed an excuse to keep rates high, not something that was desired (or expected) by those in the tech and financial sectors.

Don’t let $NVDA prices trick you into thinking things are getting better. The top 7 stocks (actually pulled down by an underperforming Tesla) are masking a stock market which is doing anything but moving up and to the right.

As the valuations between the Mag 7 and the rest of the pack continue to de-pair, it’s only more likely that the rubber band snaps the Apples of the world back to the median rather than the rest of the market getting pulled to their heights.

Big tech's mixed earnings reveal a divided sector: companies like Meta and Amazon surged on strong results and AI investment, while Apple and Google struggled with slowing sales and ad revenue. Despite layoffs boosting some tech giants, startups face more challenges, with layoffs and shutdowns amid misleading job reports and high interest rates, hinting at a broader market disparity masked by a few overperforming stocks.

Cheers to another day,

Trey