Earnings reactions and the next wave of AI speculation
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What are the current market influences according to Seeking Alpha?
Brian Stewart, our Director of News here at Seeking Alpha. Welcome back to our Friday Conversations. Always great to have you.
Great to be here, Rina.
So what are you looking at today? What are you fielding from the market? How are you tiering up, T-I-E-R, the different levels of importance in the market?
There's kind of a background radiation going on in terms of the CPI report that recently came out and the effect on the Fed. Also shenanigans out of Washington, a lot of Doge related headlines coming out recently. I think that's going to be kind of a standard background noise for trading in the foreseeable future. It seems that we're going to have to kind of rifle through the kind of bickering in Washington. However, I think the stock market itself has seemed pretty immune to any of that. There hasn't been pickup and aggressive volatility over the last several weeks. I think by and large, it's been following momentum of its own. A lot of that is sort of still the AI trade. in effect. And I think there's still a lot of individual stock picking. I think with the earnings season peaking in the last couple of weeks, I think investors have largely been looking at the individual company's financial results and not been too worried about the macro scene.
So what are you seeing from those results? What has you most interested, either on the plus side or the minus side?
How are old school consumer stocks performing post-earnings?
One interesting theme over the last week is there's quite a few old school consumer companies that did well following the earnings. One example is Philip Morris, which jumped 14%. the past week. That was kind of an individual company story. The company is seeing a very successful transition to smoke-free products. And so it was moving out of the traditional tobacco cigarettes and moving into things like nicotine packages and vapes. And so that process was seen as being sort of aggressively underway in the earnings since that drove But you also have companies like Coca-Cola, which beat expectations, showed strong organic sales growth. There's worry still about higher costs and the prospects of tariffs affecting a large international company like Coke. But by and large, the results kind of going into the current quarter that just finished have shown that it's prospering pretty well. And the same with a company like McDonald's, which is up 6%. in the past week.
Interestingly, it missed expectations, but there was investors tended to focus more on the strength and global sales that it showed as well as the investments and value deals. So companies like Coke and McDonald's, I think are seen as value plays in an inflationary environment. So you have these strong brands that offer low cost products. There's a view that those kinds of companies will prosper in that environment. McDonald's missed expectations, but still went higher. Uber dropped in the immediate aftermath of its earnings, but is up 23% in the past week as a whole. So there was a dip and then a buy on the dip. I think the main catalyst there is Bill Ackman announced a stake in the company.
What is driving the momentum in Uber and Lyft stocks?
And I think a lot of people saw that as a starter pistol for a higher move up. So I think there's a lot of traders that Jumped into that just sort of on his coattails to ride that trade higher. Also, Lyft dropped after its earnings a light booking forecast. So I think Uber saw the benefit of that. I think there was the idea that Uber might be winning that rivalry. And in general, and this has been a theme of a lot of companies. I mean, Tesla is a great example of a company that was seen significant benefit on the prospects of future technology, especially autonomous vehicles. And Uber is right there getting a tailwind from predictions that eventually it'll be able to kind of stick the AV landing and be able to finally have that fuel the top and bottom lines going forward.
In the AI conversation, a conversation we love to take part in, some of the companies have their toes dipped in, some are fully in, but some stocks that we saw some nice numbers from, some nice increases from, was Alibaba and Palantir. And to a lesser degree that they're in the AI conversation, but certainly it was present this week in the conversation around open AI was Tesla on the converse.
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