- Big Tech earnings, U.S. jobs report, PCE inflation data will be in focus this week.
- Meta is positioned to deliver strong results, benefiting from a favorable digital advertising landscape and the successful integration of AI across its platforms.
- Intel continues to face significant operational and financial challenges, casting doubt on its ability to compete effectively in the semiconductor market.
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U.S. stocks closed mixed on Friday, with the tech-heavy Nasdaq Composite reaching a new record amid a rally in megacap tech stocks.
Only the Nasdaq closed the week with gains, adding 0.2%, while the S&P 500 fell 1% and the blue-chip Dow Jones Industrial Average declined 2.7%. Both the S&P 500 and Dow snapped a six-week winning streak.
Equities were unsettled by a rapid spike in yields as bets on rate cuts by the Federal Reserve unraveled on expectations of a stronger economic outlook.
Source: Investing.com
The blockbuster week ahead is expected to be an eventful one filled with several market-moving events as investors continue to assess the outlook for the economy, inflation, and rate cuts.
Most important on the economic calendar will be Friday’s U.S. employment report for October, which is forecast to show the economy added 111,000 positions. The unemployment rate is seen holding steady at 4.1%.
The personal consumption expenditures (PCE) price index - which is the Fed’s preferred inflation measure - is also on the agenda.
Source: Investing.com
Meanwhile, Fed officials will be in a blackout period ahead of the U.S. central bank’s policy meeting scheduled for November 7. As of Sunday morning, traders see a 92% chance of the Fed cutting rates by 25 basis points next month, according to Investing.com’s Fed Monitor Tool.
Elsewhere, the earnings season hits full swing, with five of the massive ‘Magnificent Seven’ tech stocks set to report their latest results. Alphabet (NASDAQ:GOOGL) reports on Tuesday night, Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:META) on Wednesday, while Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) are due late Thursday.
These mega-caps will be joined by notable companies like Advanced Micro Devices (NASDAQ:AMD), Intel (NASDAQ:INTC), Coinbase (NASDAQ:COIN), Uber (NYSE:UBER), PayPal (NASDAQ:PYPL), Visa (NYSE:V), Mastercard (NYSE:MA), McDonald’s (NYSE:MCD), Eli Lilly (NYSE:LLY), ExxonMobil (NYSE:XOM), and Chevron (NYSE:CVX).
Regardless of which direction the market goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is just for the week ahead, Monday, October 28 - Friday, November 1.
Stock To Buy: Meta Platforms
Meta Platforms stands out as a top buy this week, with its highly anticipated third-quarter earnings report set to be a major catalyst for the tech giant.
Meta is scheduled to deliver its Q3 update after the U.S. market close on Wednesday at 4:05PM ET. With CEO Mark Zuckerberg and CFO Susan Li scheduled to discuss results during a 5:00PM ET earnings call, investors will be watching closely for further insight into the impact of AI and potential growth strategies for Reels and Threads.
Market participants expect a sizable swing in META stock after the print drops, according to the options market, with a possible implied move of 7.2% in either direction. Shares gapped up 7.4% after its last earnings report in July.
Source: InvestingPro
Analysts are anticipating another strong quarter of top-and bottom-line growth amid improving conditions in the digital advertising market. Profit estimates have been revised upward 23 times in recent weeks, according to an InvestingPro survey, with just three downward revisions, reflecting growing bullishness around Meta’s earnings potential.
Meta is seen earning $5.27 per share, jumping 20.1% from EPS of $4.39 in the year-ago period. Revenue is forecast to increase 18% year-over-year to $40.3 billion as the social media giant benefits from favorable digital advertising trends and its strategic investments in artificial intelligence.
The company’s focus on expanding its AI infrastructure has not only enhanced the effectiveness of its ad-targeting capabilities but also strengthened its product ecosystem, including Facebook, Instagram, Messenger, Reels, Threads, and WhatsApp.
Looking ahead, I believe Meta’s guidance for the fourth quarter will also beat consensus estimates as the social media company reaps the benefits of its expanding user base and fresh AI initiatives.
Source: Investing.com
META stock - which rallied to a record high of $602.95 on October 7 - ended at $573.25 on Friday. Shares have gained nearly 62% year-to-date.
At current levels, the Menlo Park, California-based company has a market cap of $1.45 trillion, making it the sixth largest company trading on the U.S. stock exchange.
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Stock to Sell: Intel
In contrast, Intel is set to deliver a disappointing earnings report when it updates investors on its third quarter after the market closes on Thursday at 4:00PM ET as the struggling semiconductor company faces significant challenges.
Intel has been struggling to regain its footing in the competitive semiconductor space, particularly as it continues to lose market share to more agile rivals.
Based on moves in the options market, traders expect a sharp swing in INTC shares following the results, with a possible implied move of 7.9% in either direction. Shares plunged 30% after Intel last reported earnings in August.
Source: InvestingPro
Analysts have grown increasingly bearish, with all 32 surveyed by InvestingPro revising profit estimates downward over the past three months, reflecting a sharp decrease in investor confidence.
Wall Street expects Intel to report a loss of 2 cents per share, a marked decline from last year’s profit of 41 cents per share. Revenue is forecast to drop 8.2% annually to $13.04 billion amid a sluggish performance in its all-important chip business, weak data center sales, as well as dwindling PC demand from consumers.
Looking ahead, it is my belief that Intel’s forward guidance will point to further near-term weakness as I become increasingly concerned by the chipmaker’s prospects.
Once considered the undisputed leader in the computer processors industry, Intel has been steadily losing market share in recent years to rivals such as AMD, Nvidia (NASDAQ:NVDA), and Taiwan Semi (NYSE:TSM). In addition, its business has also suffered as more and more Big Tech companies, including Apple, Microsoft, and Amazon, opt to develop their own chips and microprocessors.
Source: Investing.com
INTC stock, which slumped to a 14-year low of $18.51 on September 10, closed at $22.68 on Friday. Shares are down 54.8% in 2024.
At current valuations, the Santa Clara, California-based chipmaker has a market cap of $97 billion.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF, and the Invesco QQQ Trust ETF. I am also long on the Technology Select Sector SPDR ETF (NYSE:XLK).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies' financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.