Financial news app Zhicong has learned that this week, the global financial community's attention will be focused on a series of heavyweight corporate earnings releases, including technology giants Apple (AAPL.US), Microsoft (MSFT.US), and Samsung Electronics, automotive industry leader Toyota Motor (TM.US), energy sector oil giants Exxon Mobil (XOM.US) and Shell (SHEL.US), as well as European retail giants L'Oréal and Adidas. However, under the impact of rising interest rates and economic weakness affecting consumer confidence worldwide, many companies have had to lower their full-year sales and profit expectations, clouding the picture of their latest quarterly earnings growth highlights.

Even some well-known companies such as McDonald's (MCD.US), automakers Nissan and Tesla (TSLA.US), and consumer goods leaders Nestle and Unilever (UL.US) have failed to meet investor expectations on profitability. Currently, about 40% of US and European companies have released their financial reports, and although their earnings are broadly in line with expectations, it is difficult to satisfy market demand with only "in line with expectations" after a strong global stock market rise.

Brian Mulberry, client portfolio manager at Zacks Investment Management commented on this: "From the performance reported so far, this quarter's performance is mixed. We're beginning to feel the pressure from the long run of high interest rates affecting companies' ability to continue to achieve profit and revenue growth." This remark reflects the market's concern about the growth potential of enterprises and its close attention to the current macroeconomic environment.

Against this backdrop, investors and analysts are eagerly seeking those companies that can maintain strong growth in the face of challenges, while also assessing whether poorly performing firms can quickly adjust their strategies to cope with the constantly changing market conditions. With more corporate earnings reports due to be released, the market will gain a clearer understanding of the health of the global economy, and which industries and companies can lead the next growth wave.

Global corporate profits are now diverging

Data from the London Stock Exchange shows that earnings per share for US companies have grown nearly 12% compared to the same period last year, marking the strongest quarter in the past 10 quarters. Bank of America Securities said earnings per share for European companies grew 4%, slightly higher than expected and the first positive growth since 2022.

However, there are signs of consumer fatigue in all industries and the magnitude of guidance downgrades is increasing. According to data from the London Stock Exchange, as of last Friday, US companies had lowered their year-on-year growth expectations for the third quarter from 8.6% in early July to 7.3%.

Bank of America analysts said in a research report, "Although performance overall in the second quarter was decent, signs of pressure on consumers this quarter are still causing the market to panic."

Both Nestle and Unilever reported sales growth in the first half of the year that fell short of expectations. Companies from the two largest economies in the eurozone are becoming more pessimistic, causing concern about the weakness of eurozone recovery. Nestlé CEO Mark Schneider said in a phone interview with reporters, "Consumers have a value-seeking behavior. There are pressures, especially on low-income groups."

In addition, automakers in the United States are also facing difficulties, with high inventories and logistics issues damaging the profitability of Ford Motor (F.US), Stellantis and Nissan. Meanwhile, the performance of electric car leader Tesla has disappointed investors, many of whom still believe the company is overvalued and that electric vehicle sales are slowing. LG Energy Solution, the electric vehicle battery supplier for Tesla and Hyundai, is expected to see its revenue decline by more than 20% this year due to a larger-than-expected slowdown in global electric vehicle demand. Its larger competitor is China's Contemporary Amperex Technology, which reported a 13% decline in revenue in the second quarter.

Battery company LG Energy Solution provides batteries for Tesla and Hyundai, and its revenue is expected to decline by more than 20% this year due to a larger-than-expected slowdown in global electric vehicle demand. Its larger competitor is China's Contemporary Amperex Technology. It reported a 13% decline in revenue in the second quarter of the year.

Although the profit news is not all bad news, the growth of Alphabet's cloud computing revenue is a good sign for other tech leaders later this week. Industrial conglomerate 3M's performance has brought its stock price close to its highest level in two years, while auto manufacturer General Motors and pharmaceutical giant Johnson & Johnson announced strong profits and banking giant JPMorgan said its profits hit a new record high..

Asian chip makers are becoming more optimistic about demand prospects as they benefit from the global AI wave, which helps them withstand the impact of the pandemic-induced gradual decline in demand for electronic products. Taiwan Semiconductor's Chairman and CEO Wei Zhejia said at a conference call: "AI is very popular; now everyone, all my customers, wants to integrate AI capabilities into their devices." The stock price of Taiwan Semiconductor has risen 56% since 2024.

Despite optimistic forecasts, Asian major chip makers' stock prices are still under pressure and have been struggling to keep up with rising expectations. This is also reflected in the performance of AI leader NVIDIA, whose market cap soared to over $3 trillion earlier this year before falling back in the summer.

BNK Investment & Securities analyst Lee Min-hee said, "Investors' expectations are too high and may be difficult to meet. The stock price may not rise too much in the short term."

Summary

The widely watched MSCI International Index has risen 11% so far this year, reaching a peak earlier this month before selling off, in part because investors expect the Fed to start cutting interest rates after other central banks take similar measures. Cherry Lane Investments partner Rick Meckler said, "If future interest rate cuts are still the common view, analysts are unlikely to lower their overall earnings forecasts for next year."

In summary, although some companies are performing well, the uncertainty of the global economy and the decline in consumer confidence have made investors cautious about the future profitability prospects of enterprises.