US Stocks: Tech Giants Report Earnings (Feb 7)
The NASDAQ-100 index fell -2.58% this week, reflecting investor nervousness at the peak of earnings season. While the artificial intelligence (AI) boom continues to support growth, the market severely punished companies whose future forecasts fell short of expectations or whose spending grew too quickly. RYTM's analysis highlights that the key to success is increasingly real profitability and a clear future outlook, not just promises.
What happened: The company shattered expectations—revenue grew by 70.0% and operating profit made a phenomenal 5110.5% leap. Why: Demand for artificial intelligence platforms is explosive, especially among US business clients. Costs grew significantly slower than revenue. Reaction: The stock fell -6.7% for the week, suggesting profit-taking after a previous major rally, despite analysts raising their forecasts.
What happened: Operating profit grew a strong 16.0%, driven by a 47.8% revenue increase in the cloud services segment. Why: The search business remains solid and cloud services are gaining market share. However, the company announced a doubling of AI investments (capital expenditures), which sparked investor fears about short-term profitability. Reaction: The stock fell -4.6% for the week as the market digests the massive spending.
What happened: Operating profit more than doubled (+101.1%), reaching $1.75 billion. Why: Growth was driven by the data center segment (+39.0%) due to high demand for EPYC processors and AI chips. However, the forecast fell slightly short of the market's very high expectations. Reaction: The stock dropped -12.4% for the week, although it saw a strong rebound at the end of the week.
What happened: The company reported a net loss of $12.4 billion. Why: A new accounting rule forced the company to recognize the decline in Bitcoin's market value. The core business (software) grew by only 1.9%, completely overshadowed by its crypto investments. Reaction: The stock was extremely volatile and ended the week down -13.7%, moving in tandem with the price of Bitcoin.
What happened: Operating profit turned to a 5.3% decline, and the company issued a weak forecast. Why: The cost of goods sold grew faster than revenue. Management warned of a memory chip shortage and weakening demand from phone manufacturers, which overshadowed success in the automotive segment. Reaction: The stock fell -9.0% for the week as investors were disappointed with the outlook.
What happened: Net profit jumped 66.8%, although sales volumes declined. Why: Profit growth was supported by price increases and the absence of one-off expenses from the previous year. The company announced a $10 billion share buyback and a dividend increase. Reaction: The stock rallied +9.7% as investors highly valued the shareholder returns.
What happened: Operating profit grew a solid 17.7%, and net profit more than doubled. Why: Sales of new drugs (e.g., Repatha) offset increased development costs. The results were better than expected, despite some setbacks in partnerships. Reaction: The stock rose +10.3% and reached a new 52-week high.
What happened: The operating loss narrowed by 70.7%, but the company remains in the red. Why: Sales of console and mobile games (including GTA) grew, but high costs are keeping the company from profitability. Investors are waiting for a clearer path to profitability. Reaction: The stock fell -11.9%, dropping to a yearly low.
What happened: Operating profit growth slowed to 9.0%, but the forecast was strong. Why: Sales costs grew faster than revenue, pressuring margins. However, the company predicts rapid growth in new security segments, which reassured investors. Reaction: The stock managed to end the week up +0.7% thanks to the optimistic outlook.
What happened: Operating profit made a powerful turnaround, growing 390.9% year-over-year. Why: The distributor and microcontroller market is recovering from a cyclical downturn. The company managed to keep costs under control. Reaction: The stock fell -1.7%, likely due to profit-taking after a previous rally.
What happened: Operating profit grew 12.2%, driven by strong sales to commercial customers. Why: The auto parts market is strong, but the company issued a cautious forecast regarding rising operating costs, which overshadowed the good quarterly results. Reaction: The stock fell -6.7% as the market fears a growth slowdown.
What happened: Operating profit grew 21.5%, rebounding from a previous decline. Why: Sales in China recovered strongly (+56.3%) thanks to eased restrictions. Demand for chip design software is high. Reaction: The stock fell -4.9% for the week but made a strong comeback on Friday.
Conclusion
This week's results confirm two main trends. First, artificial intelligence (AI) remains a powerful growth driver (Palantir, Google Cloud), but investors have become sensitive to spending. Second, the market does not forgive a weak future forecast—even good results (Qualcomm, O'Reilly) cannot save a stock from falling if management is cautious. RYTM recommends monitoring companies' ability to maintain profitability in an environment of rising costs.
RYTM content is for informational purposes only, not financial advice or recommendations. You are solely responsible for your investment decisions. Always consult a professional.