US earnings season is upon us.
Macroeconomic data has been driving markets in recent weeks, as investors try and second guess the Federal Reserve’s next move with interest rates. So, it’s a welcome relief to have some company earnings to dive into.
There’s plenty to look out for, but here are three mega-cap names that stand out.
This article isn’t personal advice. If you’re not sure an investment is right for you, seek advice. Investments and any income from them will rise and fall in value, so you could get back less than you invest. Ratios also shouldn’t be looked at on their own.
Investing in an individual company isn’t right for everyone because if that company fails, you could lose your whole investment. If you cannot afford this, investing in a single company might not be right for you. You should make sure you understand the companies you’re investing in and their specific risks. You should also make sure any shares you own are part of a diversified portfolio.
Remember, before you can trade US shares, you need to complete and return a W-8BEN form – this entitles you to save tax on any dividends. Tax rules can change, and benefits depend on personal circumstances.
Tesla – 23 July
There’s been a seismic shift in sentiment toward Tesla over the past couple of months.
It all started with shareholders voting to reinstate Elon Musk’s multi-billion-dollar pay package, and removing some doubts that his focus might shift to other ventures. Tesla then went on to deliver better-than-expected second-quarter delivery numbers.
The electric vehicle market is still challenging, so a key question heading into second-quarter earnings is how much impact incentives have had on margins.
Attention will also be on the energy storage business, after Tesla saw deployments more than double over the quarter. Based on those numbers, it’s not a stretch to model second-quarter energy revenue of more than $3.5bn, and this is Tesla’s highest-margin business.
If it can capture a good chunk of the artificial intelligence-related energy demand that’s coming, it’ll go a long way to supporting the bull case that Tesla is more than just a car maker.
Meta – 31 July
Meta spooked markets back in April, despite some decent first-quarter results.
Revenue was up almost a third year-on-year, and the mid-point of management’s guidance points to 18% growth in the second quarter.
But Mark Zuckerberg’s comments that material revenue from new artificial intelligence (AI) initiatives is still a few years away were a little disappointing.
The other bugbear was around capital expenditure targets. Meta’s meteoric valuation recovery since the start of 2023 can, in part, be put down to belt-tightening. But news that AI projects will need more cash funnelled their way wasn’t what investors were hoping to hear.
We’ll be watching for Mark Zuckerberg’s commentary as much as the numbers themselves.
In today's landscape, throwing cash at AI is the aim of the game. But Meta needs to convince investors there’ll be a decent enough return at the end of the road and there are no guarantees.
Apple – 1 August
Apple reports third-quarter earnings on the heels of its recent developer day, which lit the spark on its AI journey. This is a key period for a business that’s struggled to deliver real innovation lately.
The hope is that with new tech that’s only available on newer models, a long-awaited iPhone upgrade is coming.
This isn’t an immediate switch, though, with most of the benefits likely to feed into next year's results. That said, reports from Bloomberg suggest Apple is expecting to see a 10% uplift in new iPhone sales this year. It’ll require a strong end to the year, given sales were down around 1% over the first half.
A note of caution is coming from competition in China after back-to-back quarters of revenue declines. We’ll be watching closely for how the demand picture evolves here.
Despite an overall decline in sales in the region, the flagship iPhone saw growth last quarter. And news that the iPhone 15 and iPhone 15 Pro Max were the best-selling smartphones in urban China suggests that Apple's allure is still there.
The author holds shares in Tesla.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.