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Are Amazon and Apple good buys after earnings?

Let’s take a look at two more earnings reports from the Magnificent Seven…

We’re more than halfway through the earnings season, which means six of the seven Magnificent Seven companies have posted earnings.

On April 26, I covered it up Alfabet sp.‘S (GOOG), Meta Platform, Inc.‘S (UNDERWORLD), Microsoft Corporation‘S (MSFT) I Tesla limited liability company‘S (TSLA) earnings. Here is a brief overview of their results:

  • Alphabet: reported earnings per share of $1.89, up above analyst estimates of $1.50 per share. Revenue reached $80.54 billion, up 15.4% from the same quarter a year ago.
  • Metaplatforms: It reported earnings of $4.71 per share, well above analysts’ expectations of $4.36 per share. Revenue increased to $36.46 billion, up 27% year-over-year.
  • Microsoft: It reported earnings per share of $2.94, representing a 20% year-over-year increase in earnings. Revenue rose to $61.9 billion, topping analyst estimates of $60.8 billion.
  • Tesla: It reported earnings per share of $0.45, which was lower than analyst estimates of $0.50 per share. Revenue fell 8.6% year-over-year to $21.30 billion.

Last week, two more Magnificent Seven companies announced their earnings: Amazon, Inc. (AMZN) I Apple Inc (AAPL). So in today’s Market 360, I’ll break down Amazon and Apple’s earnings reports and reveal whether they’re good buys after earnings. I’ll also give you a quick preview of the upcoming earnings of the last member of the Magnificent Seven – NVIDIA Corporation (NVDA). And then I will finish with my predictions about the artificial intelligence market. I hope this will be shocking to many of you…

Let’s break down the earnings numbers

Amazon.com, Inc. (AMZN) – Tuesday, April 30

The online retail giant saw first-quarter earnings of $0.98 per share, which topped analyst estimates for earnings of $0.83 per share. Revenue increased 12.5% ​​year over year to $143.31 billion, compared to revenue of $142.55 billion last year.

Its cloud computing segment, Amazon Web Services (AWS), grew sales 17% year-over-year to $25.0 billion.

Amazon is also jockeying for position in the AI ​​space, racing to launch new AI-powered services for businesses and consumers. The company’s management said it expects spending to support AWS development to increase “significantly” this year from nearly $50 billion in 2023.

AWS and NVIDIA have expanded their partnership to make AWS the best place to run NVIDIA graphics processing units (GPUs), which will help unlock AWS’ AI capabilities. In March, Amazon increased its investment in AI startup Anthropic by another $2.75 billion. This brings the total investment to $4 billion.

Amazon also raised its revenue guidance for next quarter, forecasting revenue of $144 billion to $149 billion. Amazon shares rose more than 5% on the back of strong financial results and a positive revenue outlook.

Apple Inc. (AAPL) – Thursday, May 2

Ahead of Apple’s results, the company’s shares had fallen 10% this year, largely due to declining iPhone sales in Asian markets. That’s why investors have been closely watching Apple’s fiscal second-quarter results for signs that the company has regained momentum.

Apple’s second-quarter results exceeded analyst expectations. The company reported earnings of $1.53 per share on revenue of $90.75 billion. Analysts expected earnings of $1.50 per share on revenue of $90.1 billion. The bright spot for Apple was services revenue. It reached $23.87 billion, a minor record and also an all-time record.

What’s more, Apple announced a monster buyout plan. Specifically, it plans to spend $110 billion on stock buybacks, which will be the largest achievement in U.S. history. To further reward investors, the company is raising its quarterly dividend for the 12th year in a row. The board of directors declared a cash dividend of $0.25 per share, an increase of 4%. All shareholders registered on May 13 will receive the dividend on May 16.

A positive earnings report and new share repurchase program lifted AAPL by 7% on Friday, May 3.

Now I would add that investors were eagerly waiting for the company’s plans for artificial intelligence. The tech giant has remained tight-lipped on the issue, raising investor concerns that Apple could fall behind its tech rivals like Amazon and Google parent Alphabet.

CEO Tim Cook partially addressed these concerns during a conference call hosted by the company. Here’s what he said:

We believe in the transformative power and promise of artificial intelligence and believe we have the advantages that will set us apart in this new era, including Apple’s unique combination of seamless integration of hardware, software and services; breakthrough Apple silicon with our industry-leading neural engine; and unwavering commitment to privacy.

On Tuesday, Apple gave investors a taste of this by unveiling the latest iPad Pros with the all-new M4 processor. It has a new 16-core neural engine that is said to be more powerful than any other neural processing unit. Apple was quick to note that it has been adding M4 neural engines to its processors for years.

The reality, however, is that what investors really want to know is the company’s artificial intelligence plans for the iPhone. We will only know whether Apple has regained its former spirit when the company organizes a global developer conference in June. This is traditionally one of the windows where Apple announces important product information.

Are Amazon and Apple still good buys?

Now that we’ve reviewed their earnings, the big question is: Are they still a good buy?

Let’s take a look at what my portfolio evaluator has to say…

As you can see, Apple receives a D in the Total Grade category, which means the company’s stock is a “Sell”. The reality is that institutional buying pressure is weak, as evidenced by the D grade Apple assigns for its quantitative rating. His grade of C in Basic is also somewhat lacking.

Amazon, on the other hand, receives an A for its overall rating, which translates to “Buy.” And given that it also has an A grade in the quantitative category, that means institutional buying pressure is strong. In other words, money continues to flow into the stock.

NVIDIA Earnings Preview

Since we’re talking about Magnificent Seven stocks today, I would be remiss if I didn’t mention NVIDIA. The company is scheduled to release first-quarter results on Wednesday, May 22. The consensus estimate is for earnings per share of $5.16 on revenue of $22.78 billion. This means a profit growth rate of 426.5% and a revenue growth of 249.6%.

In other words, analysts are expecting another stunning set of results based on NVIDIA’s quarterly earnings. You may remember that after the impressive previous quarter results that topped analyst estimates, the company’s stock rose 16% the next day.

So is NVIDIA a good buy ahead of earnings? As you can see below, my portfolio evaluator says “yes” with an A rating in both the total and quantitative ratings.

My Bearish AI Forecast

The fact is that NVIDIA dominates the AI ​​industry, so it’s no surprise that it still boasts stunning fundamentals (and clearly has the best fundamentals of any Magnificent Seven stock). With these fundamentals, I am confident that NVIDIA will one day become a $1,000 stock as AI continues to innovate and the AI ​​industry grows.

However, given the hype surrounding artificial intelligence, I am also deeply concerned that humans are falling into the same trap they fell into during the dotcom boom of the 1990s.

In the 1990s, Wall Street and the mainstream media pushed the idea that the Internet was such a game-changing technology that the old rules for valuing stocks had to be thrown out the window.

We are witnessing the same situation with artificial intelligence. So I predict that the speculation craze surrounding artificial intelligence will collapse just like any previous craze. And when that crash happens… people who invested in the wrong AI stocks will be left with a problem.

I don’t want you to be surprised when this accident happens. That’s why I’m issuing an urgent warning about AI “losers” that won’t last – and how you can find AI trophy stocks (like NVIDIA) that can become cornerstones of your portfolio for the next decade.

Go here to learn more about my shocking bearish AI predictions.

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Kind regards,

Signed by Louis NavellierSigned by Louis Navellier

Ludwik Navellier

Editor, Rynek 360

The Editor hereby discloses that, as of the date of this email, the Editor, directly or indirectly, owns the following securities which are the subject of the comments, analyses, opinions, advice or recommendations in or otherwise mentioned in the essay below:

Microsoft Corporation (MSFT) and NVIDIA Corporation (NVDA)