of Nasdaq has risen for the fifth straight week, up 3.3% over the last five days. This is the longest consecutive weekly increase since the stretch ended in November 2021. Coming out of its worst year since 2008, the Nasdaq is up 15% in early 2023.
Last time tech stocks rose for such a long time, investors geared up for electric-car makers Livians After a blockbuster IPO, the US economy capped its strongest year of growth since 1984 and the Nasdaq was trading in record numbers.
Much less champagne popping this time around. Cost cutting has replaced Wall Street’s checklist growth, and tech executives value efficiency over innovation. The IPO market is dead. many layoffs.
Earnings reports are the talk of the week, with results from many of the world’s most valuable technology companies. But most of the time the numbers weren’t good.
apple Facebook parent company misses quotes for first time since 2016 meta Recorded three consecutive quarters of decline in sales, GoogleThe advertising business, which is the core of Amazon It ended the slowest year of growth in its 25-year history as a publicly traded company.
Investor reaction to the individual reports was mixed, but all four stocks ended the week with solid gains. microsoftwhich reported last week’s earnings and issued lackluster guidance, forecasting earnings growth of about 3% this quarter.
Cost control is king
Meta was the group’s best performer this week, with its stock gaining 23%, its third best week to date.among them Earnings were slightly ahead of expectations on earnings Wednesday, even though sales declined year-on-year, and the company’s first-quarter forecast was largely in line.
Key to the rise was CEO Mark Zuckerberg’s earnings call statement that 2023 will be the “year of efficiency” and that “we are focused on becoming a stronger, more agile organization.” was his promise.
“It was really a game changer,” Stephanie Link, chief investment strategist at Hightower Advisors, said in an interview with CNBC’s Squawk Box on Friday.
“The quarter itself was fine, but it was the cost savings that ultimately earned them credibility. I think that’s what really made Meta so successful,” she said.
Zuckerberg acknowledged that times are changing. From his IPO in 2012 to his 2021, the company has grown from 22% to his 58% annual growth. However, 2022 revenue will fall by 1%, and analysts expect him to grow by only 5% in 2023, according to Refinitiv.
Mr. Zuckerberg said on the earnings call that he doesn’t expect the decline to continue, but “I don’t think it will return to what it was before.” Meta said in November that he would cut 13% of his workforce, or 11,000.
Link said the reason Meta’s share price soared post-earnings was because “expectations were very low and the valuation was very attractive.” The stock lost almost two-thirds of its value last year.
Navigating a ‘Very Challenging Environment’
Apple, which fell 27% last year, is up 6.2% this week. Significant decline in sales for the first time in seven years. CEO Tim Cook said the strong dollar, production problems in China impacting the iPhone 14 Pro and iPhone 14 Pro Max, and the overall macroeconomic environment had an impact on earnings.
Neuberger Berman analyst Dan Flux told Squawk Box on Friday: “Over the next few months and quarters, we will see a return to growth and markets will start to downplay it.We continue to love the name in the face of these macro challenges. .”
Amazon CEO Andy Jassy, who will replace Jeff Bezos in mid-2021, joins an earnings call with analysts on Thursday after his company released a weaker-than-expected first-quarter forecast. Amazon is set to begin layoffs in January, with more than 18,000 jobs expected to be lost.
“This last quarter marks the end of my first year in this role and given the economy and some unusual parts of our business, I thought this could be a good one to join. rice field.
Managing expenses is a big topic for Amazon. Amazon expanded rapidly during the pandemic and later admitted that it hired too many people during that time.
“We work hard to streamline our costs,” says Jassy.
The alphabet is also in reduced mode. The company announced last month that it would cut 12,000 jobs. The revenue shortfall in the fourth quarter included disappointing sales from lower ad spend on YouTube and weakness in the cloud division as companies tightened their belts.
Alphabet’s chief financial officer, Ruth Porat, told CNBC’s Deirdre Bosa that the company is significantly slowing its hiring pace to ensure long-term profitable growth.
Alphabet shares ended the week up 5.4%, even after giving up some gains after Friday’s plunge. The stock is currently up 19% year over year.
Alphabet CFO Ruth Porat at the WEF in Davos, Switzerland, May 23, 2022.
Adam Galika | CNBC
If the Nasdaq continues its uptrend, recording a sixth week of gains, it would match its longest rally since the stretch that ended in January 2020, just before the Covid pandemic hit the US.
Investors have turned to small business earnings reports. Some of the names they’ll hear from next week include Pinterest, robin hood, agree with and cloudflare.
Another area of technology that flourished this week was the semiconductor space. As with consumer tech companies, there hasn’t been enough growth to excite Wall Street.
AMD Revenue and profit outperformed on Tuesday, but analysts said revenue for the quarter was down 10% year-over-year. predicted a 40% decline in sales.
Still, AMD is up 14% over the course of the week, and Intel is up almost 8%. texas instruments and NVIDIA It also recorded a nice profit.
The semiconductor industry is dealing with an oversupply of surplus components at PC and server makers and falling prices for components such as memory and central processing units. But after a dismal year in 2022, stocks are rebounding on signs that a easing Federal Reserve rate hike and lower inflation will boost businesses later this year.
clock: Watch CNBC’s full interview with Truist’s Youssef Squali.
