A mixed bag for Big Tech earnings: Asking for a Trend

Big names in Big Tech such as Apple (AAPL) and Amazon (AMZN) reported their latest quarterly results with Apple beating expectations on the top and bottom lines while Amazon missed revenue expectations but beat profit expectations. Both reports give insight into the state of the consumer domestically and abroad which is still under pressure from inflation. Maxim Group Managing Director and Senior Consumer Internet Analyst Tom Forte joined to discuss Apple's earnings and give insight into its performance in China.

The major indexes (^GSPC, ^DJI, ^IXIC) closed lower as Wall Street digests hotter-than-expected jobless claims data and a soft US manufacturing print.

Coinbase (COIN) posted second quarter earnings, reporting revenue that more than doubled from a year ago. Transactional revenue for the company did jump 138%, however, it missed the 141% Wall Street expectation.

Fintech companies are also in the spotlight as major players such as Block (SQ) and MicroStrategy (MSTR) report their quarterly earnings. Both companies fell short on revenue expectations. Benchmark managing director & senior research analyst of fintech and digital assets Mark Palmer joined the show to discuss the fintech space and what investors can expect moving forward.

For more expert insight and the latest market action, click here

Video transcript

Check it in.

Now on Apple's third quarter results, they are just crossing the wires and let me get those to you.

So Q through Eps 140 versus the 135 that was expected revenue up 5% to 85.8 billion.

The street was closer to 84.46 billion.

So beats there on the top and the bottom gross margin hangs in there 46.3%.

That was better than expected.

Turning to the segments iphone, 39 point 3 billion.

The street was close to 38.95 billion services.

24.2 estimates were close to 23.95 Mac.

Up 2% to 7.01 billion ipad.

Up 24% to 7.16 billion wearables home and and accessories.

8.1 billion in the quarter.

Finally greater China 14.73 billion estimates had called for something close to 15.26 billion.

I did have the chance.

Uh Julia speak here with CFO Luca Maestri.

Let me bring you uh Maestri's comments overall.

He would characterize this as a very good quarter.

It was a June quarter record.

He said on the top and bottom lines by segment, he said iphone revenue did actually grow when measuring constant currency.

He also called out the installed base of iphone set a new all time record.

So that's important.

He's referring there to the the number of active iphones in people's hands all around the world.

Of course, let's also talk about China which missed expectations.

Luca Maestri telling us, listen, we're seeing positive one.

He said business is improving as we kind of move through this cycle and constant currency.

He said the decline was actually less than 3%.

So he's saying currency playing a factor there all time iphone install based record there.

He told me top three models in urban China, uh were iphones, they feel good about the business guidance.

We know um will come up the call.

Luca Maestri will will, will give a forecast at least color and commentary.

At that point.

It was very interesting to watch the stock reaction as you were speaking because it was kind of bouncing around between positive and negative.

Now it's a little bit more solidly positive here.

Um Something to point out just context wise when we look at the big big picture for Apple, this is a rebound in sales growth, right?

Because the company's sales had fallen for five of the past six quarters.

So that 5% gain in sales better than the 3% that was estimated, you know, that's gotta be a relief for the Apple Bulls out there.

So that's something to point to.

Of course, as you say, the forecast is gonna be really important and of course to beat the drum, anything they say about A I and how A I is gonna form, inform their next I OS how it's gonna inform demand for their devices going forward.

It feels like that's really the other item that the street wants to get more on that call.

Analysts are gonna be all over that trying any which way to get some commentary there?

Will they get any?

We'll see, we'll see uh one more que uh issue here, you know, capital expenditures.

Julie, you wanna touch on that because there's a lot made Apple's big tech rivals are obviously spending a lot on Capex building out these data centers to host A I services.

So I asked Luca Matri just how are you thinking there in Cupertino uh about Capex plans especially to capitalize on the, the A I opportunity.

Um Luca Maestri telling us, listen, we've announced Apple Intelligence.

Uh we've made all the investments we need to uh we're gonna continue making investments.

He also reminded us that people compare us to these other big tech companies.

But he pointed out, listen, we have a, a different business model and operating model.

It is a hybrid.

He reminds us we do a lot of work in our data centers but, and, and partner though, with others and use their, on their data centers.

So he's just knowing the differences here between himself and others.

People excited about Apple Intelligence.

It is another reason to upgrade the iphone.

He said, all right, let's get some more uh immediate reaction on this.

Let's go to Tom Forte Maxim Group, managing director, senior consumer internet analyst.

Uh Tom uh Apple's results are out.

Let's get your quick take on the report.

What, what do you make of it, Tom before the June quarter?

Uh I would say it was a net positive with up upside on both top and bottom line uh and better than expected results on the iphone.

So if there was one negative in the June quarter, it was as you pointed out that the revenue performance in China was weaker than expected.

I do think though that investors are going to be hyper focused on this September quarter outlook.

Uh If you look at the June quarter when they gave their outlook, they did not actually give an outlook for iphone saless, they talked about top line being up low single digits, they gave some color on services and ipads, but they didn't give specific outlook for iphones.

So with the expectation that you're gonna have an upgrade cycle on A I, uh I really look forward to their commentary on expectations for September, especially for iphones.

Um and, and what do you think, as you say, we didn't necessarily get all of that color before.

What are you expecting to get from Apple?

And how do we, you know, it's almost like the, the J Powell game, like, how do we read between the lines of what they say?

So I think the ultimate story for Apple is that there will be an upgrade cycle for iphones, which is still the most important pro product, half their revenue.

The question is, how quickly will that start?

Because there were headlines recently suggesting that they're going to have new hardware for consumers assumingly in September, but they may have to wait for a software update to get Apple Intelligence to work.

So how quickly are they gonna see this upgrade cycle for A I?

Uh And I think they'll give us enough breadcrumbs to have a sense after they report after the earnings call, Tom.

You know, you often hear bulls say, listen, a lot of this just comes down to Apple's installed base the number of active devices in people's hands all around the world.

In fact, Apple is saying, um their installed base of active devices reach a new all time high in all geographic segments and bulls.

Tom will say, listen.

Um There's a lot folks out there on relatively old devices and, and they're looking for a reason to upgrade.

So Tim Cook's gonna come to the stage on in September.

He's gonna show you that new iphone, faster processor, better camera.

Hey, some new A IA I features too and, and the optimist to take is there's just so many people who are looking at this point, they're sitting there with a phone that's 234 years old.

Tom.

And, and they're encouraged to, encouraged to upgrade and they're gonna have all the reason they need to, to upgrade.

What do, what do you say to that, that argument, Tom.

So, here's, I guess why I have a hold in the stock because you're looking at a pe north of 30 times uh versus the big tech peers and more like 27.5.

And when you compare the iphone trends before the five G, uh there is actually a lot more pent up demand for new iphones leveraging five G networks.

Then I believe there's pent up demand for artificial intelligence.

So yes, I think you have a lot of devices out there that are in need of upgrade.

The other challenge is regulatory.

So when you look at Europe, which is about 25% of revenue and China, which is about 19% of revenue, it doesn't appear that they're going to be able to launch Apple Intelligence anytime soon.

So I think there's, you know, pent up demand a lot of consumers with older devices, but I don't know that we're going to see an immediate unlock uh with the iphone 16.

Um And you mentioned China, uh of course, even though uh Luca Maister did tell Josh that things in China are trending better.

The number itself did miss estimates last quarter.

So what do you make of that?

I think China is still something we need to monitor closely.

Uh If you remember last quarter, there are a lot of press reports suggesting that things were materially weaker in China than they actually were.

So I think China is holding up reasonably well.

I look for additional details on the earnings call.

But you know, again, I think the challenge will be, will there be a major upgrade cycle if they can't have Apple Intelligence in China?

Tom, always great to have you on the show.

Thanks for that instant reaction and analysis.

Appreciate it.

Thank you.

Still to come.

The earnings bonanza rolls on.

We're gonna get you the latest from Coinbase block and Micro strategy.

Stay tuned.

We're asking for a trend on the other side.

A sharp sell off on Wall Street as recession fears spooked the markets.

Let's get to Yahoo Finance is Josh Shafer with the trading day takeaways, Josh.

Hey, Josh.

Yeah, we had a big sell off in markets today and that really started off some economic data that we got this morning.

So I wanna dig into that here.

Gonna pull up a couple charts for you guys.

So what we're starting with here is us manufacturing activity.

This was out from ISM at 10 a.m. and we saw the weakest manufacturing activity.

You can see it coming down here that we've seen since November 2023.

This was not a good sign according to economists you also saw within that index, the employment index.

So how many people are being employed in the manufacturing sector ticking down significantly in the month of July and then sticking with employment, we're looking at initial jobless claims here.

So this is the amount of Americans that are applying for unemployment benefits in a given week that ticked up more than expected.

You can see a pretty clear trend here that we've been seeing moving higher weekly jobless claims hitting its highest level in nine months.

Now, this guy is basically sparking what we saw if I can go back to my second takeaway here, that rate cuts aren't necessarily helping some areas of the market that we had seen.

This is expectations for rate cuts.

So we had that weak data that gave us a big move down in rates.

But because that is coming from weak economic data, the market did not really take that and stride a little bit of a shift from what we've been talking about overall with rate cuts.

Of course, in the past, we investors have been viewing rate cuts as sort of a positive for the markets.

And then, uh, you know, as we see what's going on here today, Josh, uh what else are you watching?

Usually?

You have three things.

Yes, we do have one more thing, Julie and I cheated and I use the earnings that we've been talking about all afternoon because I wanna steal one of your points that you make.

Julie, that I thought was rather important going into tomorrow.

So we've had just a divergence in big tech earnings over the past week and a half now.

So you have some companies that have been received.

Well, some companies that have been received a little worse.

You look at Microsoft was off a little bit the other day alphabet wasn't necessarily loved to a full extent apple was is up about, uh, it's just barely positive and now it's negative after they just reported earnings, we're looking at Amazon down 6%.

And I guess what I'm sort of getting to here guys is when you have a market sell off like this, you would sort of look to the earnings reports after hours to maybe instill some more confidence in investors headed into tomorrow, headed into this jobs report.

We are not getting a clear picture of that in the after hours action today.

So it'll be interesting to see how that sort of plays out, but there was perhaps feeling that maybe corporate results could give us a little bit more confidence headed in tomorrow.

And that is just not the picture we're looking at at this point.

It's, it's interesting, Josh, because the stories are sort of just, uh, you know, in a sense, people gonna pick in their spots and meta had, you know, pop today, it looked like 5%.

I thought Dan Gallagher over the journal, he had a, he had a good post about how, you know, if you were to kind of pull back the to chart, you know, investors have usually given Zuckerberg some leeway as long as the core business holds up and, you know, you hold other costs down.

It's just interesting how, you know, there was the big A I trend and theme hype and now maybe, you know, seeing some, some possible evidence that that investors are becoming more discerning.

Yeah, Josh, I mean, just looking at meta's trading action throughout the day today, you mentioned, normally they see a little bit bigger of a pop, the stock was up 8% right?

When did it start coming down?

It's when we talked about sort of that overall market shift at 10 a.m. And so really the stock was a little bit resilient.

It wasn't the big move that we might have normally seen, but for Meta to be up 5% on a day when again, we look at the rest of the NASDAQ 101 of the only large cap stocks in the green for the day, it showed a little bit of resilience.

So it'll be interesting to see how that carries forth after we hear calls from Apple and Amazon headed in tomorrow.

Josh, thank you, appreciate it.

Uh, more earnings coming across the wire.

From Coinbase, the company reporting better than expected second quarter revenue, the stock edging higher just by 1.5%.

Now, a couple of things to note here revenue was up more than doubling.

In fact, a year over year to $1.45 billion which was ahead of estimates.

But the company also highlighted what happened quarter over quarter that it fell 11%.

And that's largely because crypto was down quarter quarter, right.

It peaked earlier in the year and then saw some declines over the course of the quarter.

So a point, the coin base points that out here uh does point out that operating expenses also rose quarter over quarter.

So that's something to highlight as well.

Um Trading volume $226 billion that did beat estimates.

Uh It looks like both on the actually retail trading volume, a little bit short of estimates, but more than made up for by institutional trading volume, which is quite interesting here in the third quarter, subscription and services revenue are gonna be 530 to $600 million comparing with an estimate for about $565 million.

Yeah, they also we were talking about this off camera, Julie.

They also uh take a beat and emphasize what they say is uh extraordinary strides in achieving regulatory clarity um which they say serves as a vital unlock for coin based in a broader crypto economy.

So we're gonna continue driving this forward through the fall elections and beyond.

And of course, we talk a lot about this.

How much, how will he politicized?

Um the asset class has become or, or at least certainly, um such a discussion point in this election.

Yes, most definitely.

Um Let's get to some other sort of crypto adjacent numbers.

Shall we uh specifically in fintech lock and macros micro strategy?

Excuse me, both reporting their second quarter results.

We've got a mixed reaction, those shares micro strategy not moving much.

You could argue it probably moves more on crypto than on the results themselves, perhaps in block shares up about 4.4%.

So for more, we're bringing in Mark Palmer, managing director and senior research analyst for fintech and digital assets at benchmark.

It's good to see you mark.

So as we look at these numbers here, let's start with block and kind of what stands out to you.

Uh Yes.

Um Good to talk to you, Julie.

Uh This was a better than expected quarter four block pretty much across the board.

And uh while the company uh did have a headline revenue miss, uh most of that can be attributed to uh Bitcoin revenue.

And and frankly, uh I think that the street um failed to make an adjustment uh for the fact that uh as you mentioned a few moments ago, uh Crypto and Bitcoin were down during the quarter uh beyond that um the, the company uh really had a, a solid quarter, uh both in terms of top line and especially in bottom line, uh adjusted EBD A, um adjusted operating income, uh adjusted EPS, uh all solid beats in the company, uh raised its uh estimates for the year uh across the bottom line.

Uh In the past, uh block had been a much more of a top line story.

Uh It's really become a bottom line story and we're seeing uh the impact of the company's ability to create operating level uh and drive that through its whole system.

Uh with that said, you know, the stock has been lagging.

Um You know, it's down something like 23% year to date.

Uh but the operating performance uh continues to be solid, the outlook is strong.

Uh And so, uh we think that block is a good buy at these levels.

Mark.

Uh You know, we were talking about Coinbase earlier.

I know you don't cover that name, but just get your thoughts on Bitcoin generally.

Um You know, I'm obviously uh so very strongly this year mark, you know, those new ETF sparked so much enthusiasm, but then kind of cooling since obviously, since seeing that record in March.

And I'm just curious, Mark where you see it headed in, in the near to just kind of intermediate term.

Yes, I think, um you know, we're bullish on the outlook for Bitcoin.

Uh And of course, you know, we have a buy on micro strategy which reported today after the close um the uh underlying uh dynamic here is really one in which um the Bitcoin having, which occurred in April.

Um still in our view has created a nice set up uh for Bitcoin's price going forward.

Uh Typically speaking, uh after a having and there have been four of them.

Uh The one in April was the fourth in the history of Bitcoin.

Uh There's a, a significant rally over the next year and a half or so.

Uh in the Cryptocurrency, um, we've begun to see a little bit of that.

Uh But it's been a muddled path and I think part of that is technical.

Uh, we had some large amounts of Bitcoin, uh that were set to be sold into the market.

Uh, a large chunk of that coming from, uh the um disbursements coming out of the, the, uh Mount Gox case from long ago.

Uh So it has uh created uh near term supply uh of Bitcoin in the market.

Uh But bigger picture, uh We think it's just a question of time before more institutions uh begin to adopt Bitcoin.

I mean, on the uh pension fund side, uh we've seen three large entities that have gotten involved, uh, the State of Michigan, the State of Wisconsin and then Jersey City, New Jersey have all, uh, invested in Bitcoin spot Bitcoin, et um You're seeing a lot of tire kicking going on out there among institutions.

It takes some time uh for a pension fund, uh to, uh arrive at the, um, choice to, uh add Bitcoin to its holdings.

Uh But, um, again, uh, these spot Bitcoin ETF S were only introduced to the market, uh in January.

Uh, we think that this is a trend that is going to be long lasting.

Um Just quickly, I wanted to ask you about something else that Coinbase mentioned in its statement, which is what it says that Coinbase and the crypto industry made great strides towards achieving regulatory clarity in the U SI I I don't know where they're looking at that regulatory clarity because I, I don't see that regulatory clarity, do you?

I think it's been showing up uh at least on the margins and I think it's also a relative thing because the past few years we've seen uh the US government and the SEC in particular, you know, really cracking down on the space uh including, you know, what was known as operation show 0.2 0.0 where uh it it was very difficult for any company involved in crypto uh to get access to the traditional banking system.

But we've seen a couple of big developments, you know, one is uh as I mentioned, the approval of the spot Bitcoin ETF in January and more recently, the approval of the Spot uh Ethereum or Ether ETF uh and also even in the S ECs proceeding against, uh, Coinbase and some of its other proceedings, it has taken a step back and has, uh, refiled its motion so that it is, uh, stating to the court that a wide range of different cryptocurrencies, which it had previously said were securities should not be characterized as such.

So, uh, these are um, modest steps, um, they may frankly be driven to some extent by what's going on in the political realm.

Uh where um you do have uh a large portion um or it's actually a large number.

Uh The portion is much smaller.

It's something like 14% of Americans who hold crypto.

Uh But still, uh that's an important constituency and uh I don't know that uh either one of the major parties wants to alienate those folks right now.

Mark, great to have you on the show today.

Thanks for taking the time to join us.

Thank you coming up.

We're gonna get you caught up on a few more tickers that are moving after hours.

We'll ask you for a trend on the other side.

Let's take a look at what's trending after hours.

Shares of Roku jump in after hours following a beat for the second quarter revenue.

As the streamer benefited from strong ad sales, streaming hours for the quarter grew 20% year over year while active customer accounts jumped 14% in the same time.

Guidance for the third quarter came in line with the street's estimates shares of Twilio higher after beating across the top and bottom line in the second quarter.

The company's forecast for the upcoming quarter also a bright spot to see adjusted earnings per share for the third quarter in a range of 81 to 86 cents.

Well above the Bloomberg estimate of 72 cents.

The company did narrow its full year organic revenue guides to 6 to 7% versus the previous 5 to 10%.

And draft Kings announcing Q two earnings, the sports betting platform point in revenue 1.1 billion just under Wall Street estimates of 1.11 billion and a miss on adjusted eps at 22 cents versus an estimate of 25 cents.

Draft Kings boosted its revenue guide and so for the full year guy and speed, the average analyst estimates and that is a wrap on today's coverage and what a day that was one last check here on some of the earnings we broke earlier including numbers from Apple Amazon on Intel.

Uh Apple's uh ca call going on very soon here in which in which of course, investors will be focus on what guidance, Tim Cook and Luke and Master have to offer.

And in Amazon, really the focus is gonna be on for that third quarter.

Guidance.

Why is there this expected revenue and operating income shortfall?

What are the um you know inputs to that?

And why is that going to be happening.

And of course, all of this could be moved in terms of the stock action when we get the jobs report tomorrow morning at 830 that's gonna sort of sweep the macro narrative away.

But it is interesting to see pressure on many of those big companies that reported with the exception of Apple, for sure.

All right, be sure to come back tomorrow 4:30 p.m. Eastern for all of the latest market moving stories affecting your wall.

Have a great night.