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US equity futures are pointing to a modestly lower open although, at least at the time of writing, Cboe Volatility Index (VIX) futures are breaking character and are also lower.
As the market gets ready for the start of Big Tech earnings after today’s market close with Alphabet (GOOGL), Microsoft (MSFT), and AMD (AMD)results, and the Fed’s next policy decision tomorrow afternoon, investors are sifting through an increasingly mixed batch of quarterly results. Those include better than expected results from cybersecurity company F5 (FFIV), Sanmina (SANM), and General Motors (GM), but weaker than expected guidance from Whirlpool (WHR), UPS (UPS), Calix Networks (CALX), andHarmonic (HLIT).
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Sanmina (SANM) shares gained serious ground after the company blew away expectations, lifting its 2024 revenue to $1.82-$1.925 billion with EPS of $1.20-$1.30 compared to the consensus forecast of $1.80 billion and $1.09, respectively. Management shared its industrial, medical, defense, and aerospace markets are “pretty stable” but the company is benefitting from cloud infrastructure upgrades.
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Shares of Super Micro Computer (SMCI) popped in aftermarket trading after the company reported December quarter results that crushed the consensus forecast and guided current quarter EPS to $5.20-$6.01 compared to the $4.61 consensus. According to the management team, “While we continue to win new partners, our current end customers continue to demand more of Supermicro’s optimized AI computer platforms and rack-scale Total IT Solutions." Super Micro also boosted its full-year revenue forecast to $14.3-$14.7 billion, up from $10-$11 billion.
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F5 Networks (FFIV) also posted far better than expected December quarter results and lifted its outlook for the current quarter to revenue of $675-$695 million vs. the $673.50 million consensus. During the company’s earnings call, management shared AI is driving demand for a comprehensive API security solution, inclusive of DDoS protection, bot detection, and data masking and leak protection.
As we are once again seeing, it isn’t enough for a company to deliver a solid quarter, with the stock market being priced to perfection, a vibrant outlook is also necessary to send a company’s shares higher. Over the next few days, the pace of earnings reports will skyrocket, including Big Tech companies and approximately 20% of the S&P 500 basket.
As the dust settles on these reports, investors will have a clearer sense of which companies are thriving and poised to deliver outsized earnings growth in the coming quarters. Readers should be mindful of not only top-line estimates but also spending forecasts that could lead to softer than expected margins and bottom-line performance.
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