Earnings season for the first half of the year is well underway.
But this weeks line up of mega cap stocks, those with over $1 trillion in market cap, are hitting the tape.
We got Microsoft, Alphabet and Meta on tap this week.
Today, I’ll break down what you can expect from each.
And I’m doing it Bank It or Tank It style because I think these stocks are going to offer some great trading opportunities in the coming weeks. By adding them to my list, they will become tradeable stocks in my Flash Alerts service that builds on these free insights.
Let’s dive in…
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Microsoft (Nasdaq: MSFT)
Earnings: July 25. After the Close.
Consensus: EPS $2.54, Revenue $55.44B.
Avg. Analyst Rating: 1.8 (Strong Buy), Price Target $371.86.
I wrote about Microsoft the other day.
About how their AI-driven pop would mark a short-term top.
It exploded to new, all-time highs, which honestly is a bullish move.
But coming on that AI report seeing the stock pop over 4%, I wasn’t buying it. And now it has plenty of room to drop.
With earnings coming up this week, the expectations are building for more bullish news. I don’t know how many companies are going to keep up though.
My concern is that as soon as the cracks in the economy and market start to show, through an earnings report like we could get this week, the downslide is going to be swift.
So, even after the latest pop in the stock, I have Microsoft on my Tank It list.
This is one rally I don’t feel the need to chase.
At least not right now.
Alphabet (Nasdaq: GOOG)
Earnings: June 15, After the Close.
Consensus: EPS $3.79, Revenue $4.78B.
Avg. Analyst Rating: 1.6 (Strong Buy), Price Target $131.56.
Alphabet, also known as Google, is in a more dire situation. This stock is still in a broad downtrend, despite climbing for most of 2023.
That red resistance line is going to be the major level to watch. For now, I’m bearish on Google.
For starters, I think the AI trend is not good news for Google. ChatGPT is growing in popularity and offers a much more robust answer/solution to questions you may have.
It is the future and I think Google’s dominance as a search engine is set to fade. Youtube is a whole separate topic, but the social media trends are also taking away its influence for the company.
As both of its major revenue streams hit headwinds, look for more pain ahead.
Alphabet is on my Tank It list today too.
Meta Platforms Inc. (Nasdaq: META)
Earnings: July 26, After the Close.
Consensus: EPS $2.87, Revenue $31.06B.
Avg. Analyst Rating: 1.9 (Buy), Price Target $306.46.
That leaves Meta Platforms to try and buck my bearish viewpoint. I mean, what’s not to like?
Facebook remains popular, but virtual reality remains nothing more than a sideshow. And it’s much-hyped metaverse has completely fallen flat.
So you might be shocked to see a really strong rally has occurred over the past seven months. The almost straight shot higher is set to lose momentum though.
Unfortunately, that means all three stocks on my Earnings Edge today did not get a Bank It reading.
Meta ended up on my Tank It list as well.
I always like to point out these views can change in quick fashion, but, encompassing my entire viewpoint on the companies, the Fed, and the market in general, it’s going to take a lot for me to turn bullish at the moment.
It just is.
You see the headwinds stacking up for each of these companies. Arguably, Microsoft is probably in the best position of the three, but it is entirely driven by the economy.
A recession means fewer companies starting up, fewer consumers added to enterprise plans and less leverage for Microsoft. That’s when lofty valuations get trimmed even more and the price decline can accelerate. And it will all happen before an official recession is on the books.
The weakness in the market will come first.
And these three stocks did not give me enough to turn bullish just yet.
That’s all for today.
Regards,
Chad Shoop, CMT
Editor, Bank It or Tank It ELITE