What to Expect in the Week Ahead (AVGO, ORCL and ADBE Earnings; CPI Data and Fed Interest Rate Desicion)

Broadcom is set to report its fiscal Q2 earnings on Wednesday, June 12th, with investors closely watching for revenue growth driven by AI and updates on AI chip production for its major tech clients.

Analysts expect the company's revenue to reach $12.04 billion, up from $8.73 billion in the same period last year, following a 34% increase in Q1 revenue. Of particular interest will be the semiconductor unit, which saw a 4% rise in revenue to $7.39 billion last quarter, as its chips are widely used in AI data centers. Broadcom has forecasted $10 billion in AI-related sales by 2024, highlighting the strategic importance of this area for the company's future growth. Meanwhile, net income is expected to decline to $2.22 billion, down from $3.48 billion in the second quarter of 2023

Oracle is set to report its fiscal Q4 and full-year results on Tuesday, June 11th. Analysts expect earnings per share (EPS) of $1.64, which would represent a 1.8% year-on-year decline, while revenues are expected to be $14.56 billion, up 5.2% from the year-ago quarter.

AI has been one of the biggest drivers of growth in the tech sector, and Oracle has been quietly emerging as a major player in the data center market, where it can leverage its expertise in software and hardware to provide integrated solutions for customers. The market will look for evidence that the backlog was converted into revenue, as well as signs of robust demand for AI products and services.

Adobe is set to announce its second-quarter results on Thursday, with experts forecasting 10% revenue growth and higher adjusted profit compared to the same period last year. Analysts expect adjusted profit to reach $4.39 per share, up from $3.91 per share in Q2 2023, while Adobe executives anticipate earnings in the range of $4.35 to $4.40 per share. Second-quarter revenue is projected to increase 10% year-on-year to $5.29 billion, which falls within the upper end of the company's revenue guidance of $5.25 to $5.30 billion.

The Consumer Price Index (CPI) report for May will be released on Wednesday, with analysts expecting the report to show an annual inflation rate steady at 3.4%. This follows a similar rate of increase in April. On a monthly basis, CPI is expected to be up 0.1%, down from 0.3% in April, reflecting some moderation in price increases. Meanwhile, core CPI, which excludes volatile items such as food and energy, is expected to have risen 3.5% in the year to May, slightly lower than the 3.6% increase in April.

The Fed is expected to maintain its benchmark interest rate at the current target range of between 5.25% and 5.5% when it concludes its policy meeting on Wednesday, according to market expectations. The CME's FedWatch tool is pricing in a 97.5% probability of no rate change. Investors will be closely watching the Fed's dot plot projections, which give an indication of when policymakers may start adjusting rates.

Despite market expectations of rate cuts, some Fed officials have expressed concerns about the current policy stance not being restrictive enough to meet the Fed's inflation target of 2%, suggesting a potentially more hawkish outlook.

In addition, interest rate differentials between major central banks, such as the European Central Bank (ECB), could impact currency movements, with the ECB recently cutting its main interest rate and delivering a hawkish press conference. If the Fed's dot plot projections are more hawkish than anticipated, it could support the US dollar and weigh on the euro, while a more dovish outlook could have the opposite effect.