Investing.com has been abuzz this week with the U.S. elections on the horizon and the earnings season in full swing. Several market heavyweights have been in the spotlight, making noteworthy strides. Here’s a rundown of Investing.com’s top picks for the week:
Big Tech’s Earnings Rollercoaster: Microsoft Disappoints, Amazon Surges
Tech behemoth Microsoft announced a beat on earnings and revenue in its latest quarterly report on Wednesday. Despite this, shares dipped over 6% in the following trading session due to the company’s prediction of a minor slowdown in the upcoming quarter, primarily owing to supply chain disruptions including delays in third-party infrastructure for AI capabilities.
Analysts from BMO Capital stated, “Azure’s growth in the September quarter was 1pt above guidance, but investors might be slightly let down with Azure’s revenue guide for December, even though supply/demand imbalance is affecting December more than September. Due to lower EPS estimates, largely because of the impact of OpenAI, we are slightly reducing our target price to $495. Our Outperform rating remains unchanged.”
On the other hand, Amazon shares soared by 6.7% on Friday after posting an earnings and revenue beat. Increased retail sales have contributed to profit growth.
Citi analysts expressed growing confidence that Amazon can balance growth investments with significant margin expansion, following the report.
“Retail efficiency gains are reducing Amazon’s operating costs, resulting in faster delivery, improved conversion rates, and wallet share gains as lower ASP / essential products attract more overall spending,” the bank further noted.
Apple also announced earnings this week, exceeding earnings and revenue expectations. However, its stock took a hit on Friday due to investor disappointment with its guidance.
SMCI’s Turbulent Week
SMCI had a particularly rough week, with shares plummeting over 32% on Wednesday following the sudden departure of Ernst & Young LLP (EY) as the company’s registered public accounting firm.
According to a U.S. Securities and Exchange Commission (SEC) filing, Super Micro disclosed EY’s resignation on October 24.
EY stated that it could no longer rely on the representations of the management and the Audit Committee, leading to an unwillingness to be associated with the financial statements.
SMCI’s shares have fallen more than 41% in the past week and were down over 6% on Friday at the time of writing.
Rosenblatt suspended its rating for the stock in response to the news due to financial uncertainty. “We are suspending our rating, price target, and estimates on Super Micro until an outcome determines our recommendation,” the firm noted.
Estee Lauder: A Challenging Week
Beauty giant Estee Lauder also had a challenging week, with shares nose-diving 20% on Thursday and a further 2% on Friday. The company reported a revenue miss and withdrew its fiscal 2025 outlook due to ongoing difficulties in China and travel retail.
Estee Lauder withdrew its 2025 fiscal outlook due to “increased uncertainty on the timing of stabilization in the Mainland China market and Asia travel retail, as well as leadership changes.”
In addition, the company announced a cut to its quarterly dividend, and its F2Q outlook fell short of expectations.
Following the report, JPMorgan downgraded Estee Lauder to Neutral and reduced its stock target from $113 to $74. The bank stated, “We don’t expect visibility for at least another three months. Given the operating deleverage from lower than anticipated volumes in China and Asia Travel Retail, the execution of the plan and returns will likely be delayed. Consequently, we believe it is prudent to advise investors to wait for better signs of improvement in demand.”
