What to Expect in the Week Ahead (SMCI, NVO, LLY and DIS Earnings; ISM Services Report)

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What to Expect in the Week Ahead (SMCI, NVO, LLY and DIS Earnings; ISM Services Report)

After the busy period of big tech stocks reporting their earnings, attention now turn to some of the mid-cap companies. $Super Micro Computer (SMCI.US)$, $Novo-Nordisk A/S (NVO.US)$, $Eli Lilly and Co (LLY.US)$, $Disney (DIS.US)$ and $Shopify (SHOP.US)$ will reease earnings this week.

$Super Micro Computer (SMCI.US)$ will release its quarterly earnings after the market closes on Tuesday, August 6th. Super Micro Computer stock has experienced a remarkable 136% increase year-to-date, driven by its strong position in the AI server market. Investors are now curious whether the demand for SMCI's products will continue in the upcoming June quarter (fiscal fourth quarter) report.

Analysts anticipate the company will report earnings of $7.83 per share for the quarter. Super Micro's customizable products and partnerships with top chip designers like $NVIDIA (NVDA.US)$ are fueling innovation. SMCI reported $3.85 billion in last quarterly sales and $402 million in net income, and its recent addition to the $NASDAQ 100 Index (.NDX.US)$ enhances its investor appeal.

$Novo-Nordisk A/S (NVO.US)$ is set to report earnings for the second quarter on Wednesday morning after a first half in which the company's market of potential customers for its Ozempic and Wegovy weight-loss drugs expanded.

Analysts project that Novo Nordisk's drugs will help lift the Danish drugmaker's revenue and income. Analyst estimates compiled by Visible Alpha project Novo Nordisk will report a year-over-year jump of about 26% in revenue to 68.47 billion Danish kroner ($9.9 billion), with a rise of nearly 10% in profit to 21.27 billion kroner ($3.08 billion).

$Eli Lilly and Co (LLY.US)$ will also report earnings this week before market opens on August 8, with analysts projecting revenue and profits to be boosted by the popularity of the weight-loss drugs Mounjaro and Zepbound.

The drugmaker is projected to report $9.97 billion in revenue, a 20% bump from last year's mark of $8.31 billion, with net income also projected to rise over 35% to $2.39 billion from $1.76 billion a year ago, according to estimates compiled by Visible Alpha.

Demand for the weight-loss drugs has boosted the revenue and shares of Eli Lilly along with Novo Nordisk over the past year, as the companies have increased production capacity to meet demand.

$Disney (DIS.US)$ is set to report third-quarter earnings before the opening bell Wednesday, with investors likely to be watching for strength in its experiences segment and updates on its streaming business.

In the second quarter, Disney said revenue from its experiences segment surged, driven by growth from its parks and cruises.

Disney CEO Bog Iger said the company sees "lots of opportunities to continue to grow attendance, both domestically and internationally," especially in its cruise business. Disney recently announced it is launching a Tokyo-based cruise ship.

Analysts expect experiences revenue to come in at $8.59 billion, per consensus estimates, which would represent nearly 5% growth from the year-ago period.

ISM services report is the main economic event to watch next week

USD bears and Fed doves were finally vindicated with another batch of weak economic data, and the Fed signalling rate cuts from next month. This week, ISM manufacturing contracted at a faster pace than expected. And if this is to be coupled with another weak ISM services report, it could further spook investors into thinking the Fed are late with cuts and they have finally broken something.

Last month’s report revealed the headline ISM figure contracted the services sector contracted at its fastest pace since the pandemic. New orders, employment and business activity were also negative. And if we are to see an extension of these patterns, then it points to a US (and therefore a global) recession on the horizon. That should be a bearish case for US indices, although it may be inadvertently bullish for the US dollar on a safe-haven basis, even if it does point to more aggressive easing from the Fed. Regardless, the ISM services report is the main economic event to watch next week.