What to Expect in the Week Ahead (Google and Tesla Earnings; GDP and PCE Data)

Moomoo Breakfast US wrote a column · Jul 21, 2024 17:36

What to Expect in the Week Ahead (Google and Tesla Earnings; GDP and PCE Data)

Roughly a quarter of the companies in the S&P 500 are scheduled to release their second-quarter results this week. Investors will be particularly focused on updates from some of the 'Magnificent Seven', which will reveal whether the artificial intelligence (AI) trend continues.

$Alphabet-A (GOOGL.US)$, the parent company of Google, is expected to report revenue of $84.3bn and net income of $23bn, or $1.85 per share, in its Q2 earnings report. Analysts expect Google Cloud revenue to continue to grow, with revenue of $10.22bn.

Investors are also likely to be watching for updates on Alphabet's artificial intelligence initiatives, including Gemini Live and Project Astra. The company is reportedly in talks to acquire cybersecurity firm Wiz in a deal worth $23bn, which would be its largest acquisition to date. Alphabet shares have gained almost 30% since the start of the year.

$Tesla (TSLA.US)$ is set to release its Q2 earnings report after the market closes on July 23. Consensus estimates suggest a year-over-year decline in revenue of 1.46%, but a quarter-over-quarter increase of 15.32%. Adjusted net income is expected to decline 21.01% YoY but increase 39.02% QoQ, while diluted adjusted EPS is expected to decrease by 34% YoY but increase by 33% QoQ.

Tesla's core business of electric vehicles is expected to show profit improvement, and investors will be watching for sustained growth in the energy generation and storage division. Tesla lost market share to rivals in its domestic market, and concerns remain over inventory levels and market share challenges in Europe and China.

The development of autonomous taxi platform Robotaxi and Full Self-Driving suite of advanced driver-assistance systems will be of interest to investors, as will the impact of these initiatives on future revenue streams. Tesla's high valuation means there is a risk of a correction if earnings or guidance fall short of market expectations.

$Visa (V.US)$, $Coca-Cola (KO.US)$, $GE Aerospace (GE.US)$, $AbbVie (ABBV.US)$, $American Airlines (AAL.US)$ are also expected to report their earnings in this week.

Economic-data highlights will include a first look at second-quarter gross domestic product and the Federal Reserve's preferred measure of inflation for June.

The Bureau of Economic Analysis is set to release its initial assessment of second-quarter gross domestic product on Thursday. Analysts predict a seasonally adjusted annual growth rate of 1.9%, up from 1.4% in the first quarter of 2024.

Investors should also keep an eye out for the personal consumption expenditures price index, which is expected to show a year-over-year increase of 2.5% for June, a slight decrease from May's figure of 2.6%.

Additionally, this week will see the release of S&P Global's Manufacturing and Services Purchasing Managers' Indexes for July, as well as the Census Bureau's durable goods report for June on Thursday.