In the past two weeks, the S&P 500 index has once again hit a historic high after two years, and the quality of this round of gains will also face a high-intensity test next week (January 29th to February 2nd).
As the background of this article, although the S&P 500 index has reached a new high, in reality, among the 11 segmented sector indices, only the information technology index, which includes star stocks such as Apple, Microsoft, and Nvidia, has also reached a new high. The average of the other 10 sector indices is still 15% away from the new high. In January 2022, when S&P hit a new high, a total of 8 sectors hit a new high together.
(Information technology sector stands out, source: Trading View)
Is the AI chip feast exclusive to "Nvidia Moments"?
Coincidentally, next week will also be a day for tech and chip giants such as Apple, Microsoft, Qualcomm, and AMD in the US stock market to release their financial reports. Coupled with the Federal Reserve's interest rate resolution and non farm reports, this whole week has been an exciting one!
(Apple and Microsoft are also the two most weighted companies in the S&P 500 Information Technology Index)
More importantly, after Intel released its financial report this week, it plummeted by 11.9%, and its first quarter revenue guidance fell by a whopping $2 billion from expectations; After Tesla plummeted 13% in a week and wiped out Musk's position as the world's richest person, investors have found that after weak demand for smartphones and PCs in 2023, they are now worried about the demand for cars and traditional industrial applications in 2024.
From the schedule, AMD (after hours on January 30th) and Qualcomm (after hours on January 31st) will both release their financial reports next week, one being Nvidia's biggest competitor and the other being the leader in AI chip empowerment for smartphones and computer devices. In addition to the performance of these companies themselves, the US stock market is also waiting for a key answer: what kind of crowding out effect does Nvidia's dominance have on its competitors.
For example, Zuckerberg, who investors are very familiar with, announced this month that Meta will acquire nearly 600000 high-end graphics cards by the end of the year, most of which are products of Nvidia. Many analysts have also pointed out that Intel's poor financial guidance is also related to Nvidia. In data centers where companies such as Microsoft, OpenAI, and Meta are investing heavily, Nvidia's accelerator card is the preferred choice.
Intel CEO Gersinger attempted to reassure investors this week, stating that Gaudi AI chips will show significant revenue growth in the future, but the stock price performance indicates that investors are not buying it. So next week, analysts will come to AMD's earnings conference call with many questions, such as what kind of state AMD is in competition with Nvidia in the data center business.
While a few giants are heavily betting on the AI track, bringing huge benefits to companies such as NVIDIA and "Huang Renxun's circle of friends" - TSMC and AMD - some companies that manufacture chips for traditional industry customers, such as Texas Instruments and STMicroelectronics, have reported performance that falls short of market expectations.
The Q1 revenue guidance provided by Texas Instruments this week is also about 10% lower than Wall Street's expectations. Dave Pahl, the head of investor relations at the company, stated that the company expects to continue operating in a weak environment, with customers remaining in a state of balanced inventory. Analysts in the chip industry also pointed out that Texas Instruments reported a sustained increase in order cancellations over the past few quarters.
On Sunday, it was also reported that Japanese printer and camera giant Canon expects "nanoimprinting" equipment to be shipped this year or next. This cheaper and more energy-efficient chip manufacturing equipment means that products like lithography machines face route challenges. Of course, for Asma, which has just reached a new high, the greater impact still depends on the specific launch situation of the product.
Giant Financial Reports: Apple Has the Biggest Hidden Worries
Microsoft with a market value of $3 trillion (after trading on January 30th), Apple with a market value of $2.98 trillion (after trading on February 1st), Alphabet/Google with a market value of $1.92 trillion (after trading on January 30th), Amazon with a market value of $1.6 trillion (after trading on February 1st), and Meta with a market value of $1 trillion (after trading on February 1st) will all release their financial reports next week.
Based on previous analyst expectations, Google, Microsoft, Meta under the concept of AI, as well as Amazon, whose stock prices are 17% below historical highs, are relatively safe. Former US stock king Apple is most likely to have problems.
For Apple, the first quarter report covering the year-end holiday season is also the quarter with the highest annual revenue. At present, the market expects Apple's Q1 revenue to be close to $118 billion, with a net profit per share of approximately $2.10; Horizontal comparison, Q1 revenue for fiscal year 2023 was $117.1 billion, with an EPS of $1.88.
In the last three months of last year, which was also the first full sales quarter after the launch of the iPhone 15 series and two new smartwatches, the iMac and laptop with M3 chips were also updated at the best selling time at the end of the year.
As with the previous fiscal quarter, the market is also closely monitoring the guidance of consumer electronics giants. Due to the relatively limited upgrade range of various product lines, the revenue of AI related functions that have not yet appeared, as well as software services such as app stores, are facing policy and regulatory pressures. Recently, the investment circle has also begun to voice negative opinions about Apple. Although Apple's ecological advantage will not disappear overnight, whether it can sustain a valuation of $3 trillion is another question.
