Every Friday on "Mad Money," I prepare a gameplan that sketches out the upcoming week. However, given the constraints of television time, this overview is necessarily brief, spanning about 1,200 words. As a result, I often can't delve deeply into each company's earnings report without missing other key news items. As a member of the CNBC Investing Club, you deserve more thorough insights into our Charitable Trust's holdings—a detailed dive we're entitled to during one of the biggest weeks of the year.
This week, with 14 Club companies reporting, let's dig into notable earnings: Tuesday evening's reports from Alphabet and Advanced Micro Devices; Wednesday's announcements from Eli Lilly in the morning and Meta Platforms along with Microsoft in the evening; and the significant Thursday evening reports from Amazon and Apple. To round out the week, we'll also ponder the government's employment numbers on Friday, which cast a long shadow over the stock market.
Before pivoting to specific stocks, let’s discuss the broader forces at play. The market is currently unsettled by the rising ten-year Treasury yield, which hit around 4.24%. Key metrics such as nonfarm payrolls, the unemployment rate, and wage inflation could dictate yield directions. The stock market seems almost paralyzed by these numbers, fearing the economic signals they might send. Yet, succumbing to these worries often misguides our investment strategies. This fixation, driven by the so-called expert traders and financial journalists, turns into an endless cycle of misguided judgments about Federal Reserve policy.
For years, we've accepted flawed beliefs like an inverted yield curve as a recession indicator—beliefs proved false over time. Similarly, the current focus on a rising ten-year Treasury yield shouldn't unduly influence stock valuations. Successful companies have historically thrived regardless of the economic environment. Recognizing this, we should prioritize specific company strengths rather than broad market fears.
Let's explore our earnings expectations, beginning with Alphabet. The intriguing aspect with Google parent Alphabet lies in how its business components—search, YouTube, and Other Bets like Waymo—struggle with market perception versus actual performance. While search yields have diminished in a competitive landscape, YouTube shines brightly as a monetization platform. Despite uncertainties around its AI initiatives and stock price fluctuations, Alphabet remains a compelling prospect especially when factoring in Waymo's rising valuation potential.
Turning to Advanced Micro Devices (AMD), the narrative is more optimistic. AMD is successfully chipping away at Nvidia's AI dominance and challenging Intel in the PC and server markets. Despite some consumer reluctance toward AI-based PCs, AMD appears poised for growth, which is why we increased our holdings recently.
Eli Lilly, standing out in the pharmaceutical sector, continues to surge thanks to its groundbreaking GLP-1 drugs for diabetes and weight loss. These medicines, poised to expand into treatments for other diseases, are expected to drive further stock appreciation. As positive clinical trials unfold, health insurer reimbursements could follow, boosting the company's financial outlook.
Meta Platforms offers significant potential as its dominance in digital advertising grows. Mark Zuckerberg's commitment to enhancing Meta’s AI capabilities is strengthening its market position. The collaboration with Nvidia CEO Jensen Huang in AI technology solidifies Meta's advantageous stance over competitors, promising continued growth in profitability.
Microsoft, despite unease regarding its Copilot AI platform, remains a stalwart due to its comprehensive portfolio. Concerns are mitigated by Azure's steady development, and while cautious optimism pervades, it’s essential to keep an eye on evolving AI technologies.
Amazon and Apple conclude our investment scope for this busy week. While Amazon faces retail headwinds, Amazon Web Services continues to perform robustly, shining light on future revenue streams. For Apple, challenges from a weak iPhone cycle and high valuation multiply doubt yet, opportunities will arise. An elongated iPhone 16 cycle alongside a burgeoning services sector point towards bright prospects, reminiscent of Warren Buffett's long-haul investment philosophy.
In summary, while earnings weeks are complex and fraught with macroeconomic shadows, we rely on diligent analysis post-reporting for clear vision and strategy. Embracing this helps us navigate the market and seize opportunities with paramount foresight and precision.
