Yahoo Finance Trending tickers: Microsoft | Alphabet | Visa | UBS | Anglo-American
A look at the stocks making headlines on Tuesday
Alphabet (GOOGL)
Alphabet’s revenue likely improved marginally while net income declined in the first quarter, according to analyst estimates compiled by Visible Alpha.
Google’s parent company will drop its quarterly financial results after markets close this Tuesday.
Investors will be listening for the company's outlook on artificial intelligence on the call, as well as advertising and company revenue.
“AI will be front, and centre of big tech earnings calls this week. Both Alphabet and Meta (META) are facing tough times in advertising and will be looking for AI to be their bodyguard in the meantime,” Neil Wilson, chief market analyst at Finalto, said.
Read more: FTSE and European markets lower as investors await Big Tech earnings
“Alphabet three months ago reported only the second ever quarterly contraction in advertising sales as advertisers cut spending and competition continues to intensify. Cloud growth at Alphabet remained strong, up 32% to $7.32bn, though this was less than expected. Operating expenses rose 10% to $22.5bn.”
Alphabet, like its Big Tech peers, has undertaken a cost-cutting campaign, unwinding the pandemic hiring spree. The company began mass layoffs in January, cutting 12,000 jobs, or 6% of its global workforce.
“After a lukewarm set of figures from Netflix (NFLX) last week, and a sharp year-on-year drop in first-quarter profits from another tech darling, Tesla (TSLA), investors will be looking to five of the MAANAM sextet (or FAANGM group as they once were) to deliver good results and upbeat outlooks and help US equity markets maintain the run that began last October,” said AJ Bell investment director Russ Mould.
Microsoft (MSFT)
Microsoft is seen by investors as one of the most obvious winners in the rapidly emerging AI market, with the stock up 17% this year.
But the company still faces headwinds, as a decline in cloud revenue could spoil the tech giant's quarter.
Analysts are expecting revenue to be around $51.1bn (£40.97bn), according to data from Bloomberg.
Microsoft helped kick off Big Tech's AI obsession with its multi-year, multi-billion dollar investment in ChatGPT developer OpenAI.
Read more: Microsoft earnings: AI hype could take backseat to cloud growth troubles
Traders are betting that AI adoption will help Microsoft — which generated just $3.2bn in search revenue last year — challenge the market dominance of Google.
Investors will be keen to get some indication of the momentum from its steady stream of products and features integrating OpenAI’s GPT-4 and ChatGPT technologies, including Microsoft 365 and Bing.
“America’s S&P 500 (^GSPC) has added $2.4tn in market capitalisation so far in 2023 and just six stocks — Meta Platforms, Amazon (AMZN), Apple (AAPL), Netflix, Google’s parent Alphabet and Microsoft has provided $1.6tn of that gain between them, or two-thirds of the total,” AJ Bell’s Mould said.
Microsoft reports its third quarter earnings after the close of trading this Tuesday.
UBS (UBS)
In Europe, UBS was among the big quarterly results being digested by investors.
The Swiss-based investment bank reported a 52% drop in quarterly income after it set aside an extra $665m in provisions for litigation costs relating to toxic mortgages in the US.
It comes ahead of the lender bracing for the huge challenge of integrating its embattled rival Credit Suisse (CS).
Victoria Scholar, head of investment at Interactive Investor, said: “UBS’ update comes a day after Credit Suisse reported its first quarter results in which it suffered heavy outflows in the lead up to the acquisition.
Read more: UK banks: Here’s what to expect from Q1 results
“UBS’ net profit attributable to shareholders hit $1bn versus forecasts for $1.7bn. Nonetheless it enjoyed inflows of $42bn with $28bn in net new money in its wealth management division. However, it warned that ‘client activity levels could remain subdued in the second quarter.’ Its investment banking unit struggled with quarterly revenue falling 19% and profit before tax down 49%.”
Moreover, the group’s chief executive, Sergio Ermotti, said its share buyback plans have been temporarily suspended rather than cancelled as the group focuses on Credit Suisse first and foremost.
“Today’s earnings report was light on details around Credit Suisse, despite hopes for more clarity on what Ermotti is planning for the combined group,” Scholar added.
Visa (V)
Visa is also reporting its quarterly results on Tuesday after the market close where it is expected to deliver steady growth.
The US company reported better-than-expected results in the last quarter, with net revenues increasing 12% year-on-year to $7.9bn, driven by a 22% rise in cross-border volume and a 5% growth in the payments volume. Additionally, it was boosted by a 10% increase in the number of processed transactions.
Zacks Equity Research highlighted that Visa has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports.
“For the last reported quarter, Visa came out with earnings of $2.18 per share versus the Zacks Consensus Estimate of $2.01 per share, representing a surprise of 8.46%. For the previous quarter, the company was expected to post earnings of $1.86 per share and it actually produced earnings of $1.93 per share, delivering a surprise of 3.76%.”
As a result, Zacks said recent estimates have been moving higher for Visa.
Anglo-American (AAL.L)
Shares in Anglo-American were down 2.15% on Tuesday despite the London-based mining company reporting the same day that overall first-quarter production had risen 9% from a year earlier.
It said the production boost was buoyed by a 28% jump in copper output from its Quellaveco mine in Peru and improvements in its steelmaking coal operations.
However, copper production was still below analysts' expectations, according to Reuters, and was down from the previous quarter due to lower grades at Chilean mines Los Bronces and Collahuasi.
The company kept its full-year production and unit cost guidance unchanged.
Citi analysts said in a note to clients: "With mixed results and no change to production and cost guidance, we do not expect meaningful changes to consensus earnings estimates for 2023."
Watch: Alphabet and Microsoft earnings: Here’s what to expect from the call
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