☁️ Google Beats Earnings

+ Echelon Of Earnings From $AMD, $SNAP, $RDDT, $MCD, etc.

October 29, 2024

Good afternoon! McDonald's is finally addressing one of its biggest "McMysteries"—the perpetually broken McFlurry machine. Thanks to a new copyright exemption, franchises can now legally repair the machines without relying on the manufacturer, Taylor. After years of ice-cream-loving customers facing disappointment, this could be the end of the dreaded “Sorry, it’s broken” sign.

For years, McDonald’s franchises couldn’t fix them on their own because Taylor, the manufacturer, had exclusive control over repairs, locking out anyone else with digital restrictions. This setup led to delays and high repair costs, leaving nearly 15% of machines out of service at any given time. Now, with the repair monopoly thawing, customers might finally get a reliable shot at their McFlurry fix.

MARKETS

*Stock data as of market close*

  • Investors sat tight as the Magnificent 7 earnings parade began, pushing the Nasdaq to fresh highs. The tech-heavy index popped 0.78% to close at a record 18,713, while the S&P 500 nudged up 0.16%. Over on the Dow, it was a different story—sticking to its more cautious pace as all eyes shifted to big tech.

  • Alphabet kicked things off by beating Wall Street’s expectations after hours, setting the tone for the rest of the week. With Meta, Microsoft, Amazon, and Apple set to report soon, the pressure’s on for these giants to keep the momentum rolling.

STOCKS
Winners & Losers

What’s up 📈

  • VF Corporation surged 27.01% after its fiscal Q2 earnings beat expectations, posting 60 cents per share on $2.76 billion in revenue, surpassing the forecasted 37 cents per share and $2.71 billion. ($VFC)

  • Welltower rose 5.23% as it reported Q3 revenue of $2.06 billion, a 23.7% increase from the same period last year, with EPS jumping to $1.11 from $0.24 year-over-year. ($WELL)

  • Waste Management climbed 5.21% with an 8% revenue growth in Q3, while EBITDA rose 11% and cash from operations increased 16% over the first three quarters of 2024 compared to 2023. ($WM)

  • Broadcom increased 4.20% following reports that OpenAI is collaborating with TSMC and Broadcom to develop an in-house AI chip, and is now using AMD chips alongside Nvidia's for AI training. ($AVGO)

  • AMD ticked up 3.96% on news of OpenAI's partnership with TSMC and Broadcom to build an in-house AI chip, with AMD chips joining Nvidia's for AI model training. ($AMD)

  • CrowdStrike rose 3.19%. ($CRWD)

What’s down 📉

  • Crocs dropped 19.17% after its Q4 outlook missed analysts' expectations, forecasting adjusted earnings of $2.20 to $2.28 per share compared to the anticipated $2.72. ($CROX)

  • Ford fell 8.44% as it guided to the lower end of its 2024 earnings outlook, despite beating Q3 revenue and earnings forecasts. ($F)

  • D.R. Horton slipped 7.24% after reporting earnings of $3.92 per share on $10.0 billion in revenue, missing estimates of $4.17 per share and $10.22 billion in revenue. The company cited rate volatility as a factor affecting buyer activity. ($DHI)

  • SoFi Technologies declined 6.43% despite reporting record Q3 earnings and raising guidance, with CEO Anthony Noto calling it the company's "strongest quarter in our history." ($SOFI)

  • NextEra Energy dipped 3.99% after announcing plans to raise $1.5 billion through an equity unit offering to fund new projects. ($NEE)

  • PayPal slipped 3.96% after giving softer-than-expected Q4 guidance, forecasting "low single-digit growth" despite exceeding Q3 earnings expectations but missing slightly on revenue. ($PYPL)

EARNINGS
Alphabet Shares Rise On Earnings Beat Boosted by Cloud Revenue

Alphabet’s Q3 results just hit, and the tech giant exceeded Wall Street’s expectations thanks to—you guessed it—Google Cloud.

Revenue clocked in at $88.3 billion, topping estimates, with Google Cloud alone raking in $11.35 billion, up nearly 35% from last year. CEO Sundar Pichai credits their “full-stack” AI, which is pulling in enterprise clients and making big gains against cloud behemoths like Amazon and Microsoft.

But it wasn’t all rosy. Google’s ad machine, its core revenue driver, is showing its age. Search pulled in $49.4 billion, and YouTube added another $8.9 billion, though both grew slower than last quarter.

The ad market is a bit crowded these days, with TikTok, Amazon, and Netflix all vying for screen time and ad dollars, putting the squeeze on Alphabet’s ad growth.

AI as Cost Cutter

With new CFO Anat Ashkenazi at the helm, Alphabet is taking a hard look at costs. She highlighted AI-powered efficiencies and “strategic” workforce adjustments, while also doubling down on data centers to power their expanding AI ambitions. These cost-focused moves aren’t just about trimming the fat—they’re about setting up for long-term AI-driven growth.

Investors liked what they saw, pushing Alphabet shares up 5.82% in after-hours trading.

And as the rest of Big Tech gears up to report this week, Alphabet’s strong Q3 may set the pace, underscoring that in today’s market, AI might just be the ticket to the top.

NEWS
Market Movements

  • 🍏 Apple’s Jam-Packed Week of Announcements: Apple kicked off a busy week, unveiling the new Apple Intelligence for iPhone 15 and newer models, featuring an upgraded Siri and notification summaries. Later in the week, Apple will launch a new iMac and MacBook Pro with M4 chips, along with a host of accessory upgrades.

  • 🚗 Waymo Raises $5.6B for Autonomous Expansion: Alphabet’s autonomous vehicle arm, Waymo, completed its largest funding round to date, raising $5.6B. With 100,000 weekly robotaxi rides across cities like San Francisco, Phoenix, and LA, Waymo aims to expand its fleet and services further. ($GOOGL)

  • 🏢 Office Loan Stress Hits U.S. Regional Banks: KeyCorp and Fifth Third Bancorp are grappling with rising non-performing loans in their commercial real estate portfolios, particularly in office space, as remote work dampens demand. Analysts warn of further strain as a $950B "maturity wall" looms. ($KEY), ($FITB)

  • 🦃 Target Offers Budget Thanksgiving Meal Deals: Target has lowered its Thanksgiving meal bundle to $20, covering a frozen turkey and sides. This move joins other grocers like Aldi and Walmart in making Thanksgiving affordable, as grocery inflation slows to 1.3% for September. ($TGT)

  • 🛢️ Oil Prices Drop After Israel’s Strike on Iran: Oil prices saw a sharp decline following Israel’s missile strike on Iran, which notably spared the country’s oil production, alleviating fears of supply disruption.

  • 🚗 Volkswagen Plans Mass Layoffs in Germany: Volkswagen faces backlash after revealing plans for extensive layoffs and plant closures in Germany, impacting thousands of workers. Employee protests have begun, and labor leaders warn of strikes if negotiations aren’t settled by December.

  • 📉 Boeing Sells Stock to Avoid Junk Status: Boeing announced a $19 billion stock sale to boost cash flow amid ongoing machinist strikes and credit concerns. Fitch Ratings has threatened to downgrade Boeing to junk if the strike persists, with pension disputes fueling the conflict.

EARNINGS
Echelon Of Earnings

  • 🍔 McDonald’s missed Wall Street expectations in Q3 as international sales struggled, with same-store sales dropping 1.5%—a worse hit than analysts had anticipated. The U.S. market offered a small lift with a 0.3% increase, aided by a popular $5 meal deal that resonated with lower-income consumers. Shares slipped 0.6% as investors eyed the potential impact of the recent E. coli outbreak affecting 20% of U.S. locations. Adjusted EPS came in at $3.23 ($MCD).

  • 🚗 Ford’s stock tumbled 8.44% after revising its 2024 outlook to the lower end of its profit range ($10 billion vs. up to $12 billion initially projected). High warranty costs and scaling back EV spending amid sluggish demand weighed on results, though Q3 earnings still beat expectations at $0.49 EPS on $43.07 billion in automotive revenue. Execs highlighted gains in its Ford Pro division but noted ongoing struggles to contain costs ($F).

  • 💳 PayPal fell 3.96% after issuing a revenue forecast for Q4 that undercut analyst estimates, citing a “price-to-value strategy” that may slow growth. While Q3 revenue of $7.85 billion came up slightly short, payment volume grew 9% to $422.6 billion. EPS rose 6% to $0.99, with the company focusing on enhancing checkout features and digital currencies to boost engagement ($PYPL).

  • 👟 Crocs plunged 19.17% after trimming its full-year sales growth outlook to 3% and forecasting a steep 15% decline in its HeyDude brand sales, as opposed to the prior 8%-10% dip expected. Crocs’ overall Q3 revenue rose 1.6% to $1.06 billion, though concerns over slower HeyDude performance and school bans on Crocs shoes kept investor sentiment down ($CROX).

  • 🔋 AMD slipped 7.64% in after-hours after its Q4 revenue forecast of $7.5 billion missed Wall Street’s target, dampening hopes for rapid growth in its AI chip business. Q3 saw an 18% jump in revenue to $6.82 billion and EPS in line with forecasts at $0.92, yet some investors worry AMD’s AI ambitions are lagging Nvidia’s. AI-related demand from data centers bolstered performance, but slowing gaming chip sales put a drag on results ($AMD).

  • 👻 Snap rebounded 7.07% after initially dropping on mixed Q3 results, with revenue climbing 15% to $1.37 billion, just ahead of expectations. Snapchat’s daily active users rose 9% to 443 million, driven by increased video engagement, though Q4 guidance came in soft as upper-funnel ad spending from large clients faltered. Snap approved a $500 million buyback as part of efforts to boost shareholder value ($SNAP).

  • 📈 Reddit soared 21.65% in after-hours trading as its Q3 sales and holiday-quarter forecast surpassed analyst expectations. Revenue for Q3 came in at $348.4 million, easily topping the $312.8 million consensus, and marked Reddit’s first profitable quarter since its IPO in March. The platform’s shares have nearly tripled from their debut price, a boost attributed to strong ad tech investments. For the holiday season, Reddit projects revenue between $385 million and $400 million, above the $356 million Wall Street forecasted ($RDDT).

Calendar
On The Horizon

Tomorrow

September’s ADP report showed a strong boost in private sector jobs, with 143,000 positions added. If October’s numbers follow suit, the Fed might be smiling, knowing the labor market is still holding up amid their rate hikes.

Tomorrow, we get the first look at Q3 GDP, though it’s just the initial slice in a three-month data cake. Not the most precise reading, but still a useful clue for assessing the pulse of the U.S. economy.

And for earnings-watchers, two of the “Magnificent 7” stocks drop their results tomorrow, along with a heavyweight in Big Pharma and a legend in the condiment game.

Before Market Open:

  • Eli Lilly is making waves as one of the top dogs in the weight-loss drug game, thanks to blockbuster meds like Mounjaro and Zepbound. But heads up—new GLP-1 contenders are popping up faster than you can say “pharma boom.” Luckily, Lilly’s broader pipeline is looking solid, and with profits soaring, they’ve got the cash flow to keep pouring into R&D. Analysts are betting on $4.49 EPS with $12.21 billion in revenue ($LLY).

After Market Close:

  • Microsoft’s partnership with OpenAI should have it dominating the AI race, and while it’s a clear leader in the field, the stock’s been sluggish. Investors are eyeing ongoing boardroom drama at OpenAI, ballooning costs, and a lukewarm reception to Microsoft’s AI products. Still, Microsoft’s pouring billions into AI infrastructure, and shareholders are hoping that investment won’t be a money pit. Consensus: $3.10 EPS, $64.48 billion in revenue ($MSFT).

  • Meta Platforms, meanwhile, has shifted focus from the metaverse flop to an AI-heavy strategy. Over the past 18 months, Meta has laid off tens of thousands to boost efficiency, funneled funds into smart glasses, and built up Threads. But its bread and butter? Ads. With election season fueling political ad revenue, investors are eager to see Zuckerberg’s plans for reinvesting those profits. Consensus: $5.21 EPS, $40.13 billion in revenue ($META).

NEWS
The Daily Rundown

  • 💸 Philly Sues Musk’s PAC Over Sweepstakes Scheme: Elon Musk’s MAGA-affiliated PAC is under fire as Philadelphia’s DA sues over a $1 million daily giveaway, claiming it’s an “illegal lottery” violating state consumer protection laws. Critics argue the non-random winnings could influence swing state voters ahead of the election.

  • 📉 Washington Post Loses Subscribers After Endorsement Fallout: The Washington Post reportedly lost over 200,000 subscribers—8% of its base—in the days following the blocked Kamala Harris endorsement. Owner Jeff Bezos responded to the significant backlash, though specifics remain under wraps.

  • 📈 Robinhood Enters Election Betting: Robinhood joins Polymarket and PredictIt, offering election “contracts” for users to bet on the 2024 presidential race. This neck-and-neck election season, where neither candidate leads by more than 5 points, has sparked high interest in predictive betting markets.

  • 🧀 Stolen Artisan Cheese Mystery: Chef Jamie Oliver has called for help locating 48,502 pounds of stolen Hafod Welsh Cheddar valued at $390,000. The cheese was swiped from Neal’s Yard Dairy after thieves tricked sellers into a fake warehouse drop-off, and authorities suspect it may be bound for Russia or the Middle East.

  • 🔥 Arson Targets Ballot Drop Boxes in WA and OR: Hundreds of mail-in ballots were destroyed after fires were intentionally set at drop boxes in Washington state and Oregon on Monday morning, raising concerns about voter security and ballot integrity.

  • 🍔 Quarter Pounder Returns at McDonald’s: McDonald’s Quarter Pounder is back on the menu after tests cleared the brand’s beef patties as the source of a recent E. coli outbreak, though onions remain off the table for select locations.

  • 💵 JPMorgan Sues Over Viral ATM ‘Glitch’: JPMorgan is taking legal action against customers who exploited an ATM glitch that allowed early withdrawals before checks cleared. The incident went viral on TikTok in late August, drawing attention to the “infinite money glitch.”

RESOURCES
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