Investing.com’s stocks of the week
Investing.com — With earnings well underway and the U.S. election fast approaching, there has been lots to talk about in markets this week, with various big names making significant moves. Here are Investing.com’s stocks of the week:
Big Tech (Earnings): Microsoft (NASDAQ:) disappoints, Amazon (NASDAQ:) Up
Microsoft reported its latest quarterly earnings on Wednesday. The tech giant posted an earnings and revenue beat. However, the stock dropped more than 6% in the following session as the company said it sees a slight deceleration in the next quarter given supply chain challenges, such as delays in third-party infrastructure for AI capabilities.
“While Azure growth for the September Q was 1pt above guidance, we think investors will be modestly disappointed with the Azure December Q rev guide, even though supply/demand imbalance is impacting the December Q more so than the September Q,” said analysts at BMO Capital. “Given lower EPS estimates, largely due to the impact of OpenAI, we are modestly lowering our target price to $495. We retain our Outperform rating.”
Meanwhile, Amazon shares jumped by 6.7% Friday after reporting an earnings and revenue beat, with improving retail sales boosting profits.
Following the report, Citi analysts said they are “incrementally confident that the company can invest in growth while delivering significant margin expansion.”
“We highlight Retail efficiency gains lowering Amazon’s cost to serve, resulting in faster delivery, boosting conversion rates, and wallet share gains as lower ASP / essential products attract greater overall spend,” added the bank.
Apple (NASDAQ:) also reported earnings this week, topping earnings and revenue expectations. However, its stock fell on Friday as investors were disappointed with its guidance.
SMCI
It was another awful week for SMCI, which dropped more than 32% on Wednesday after the abrupt resignation of Ernst & Young LLP (EY) as the company’s registered public accounting firm.
In a filing with the U.S. Securities and Exchange Commission (SEC), Super Micro disclosed that EY submitted its resignation on October 24.
EY concluded that it would “no longer be able to rely on management’s and the Audit Committee’s representations” and expressed unwillingness to be associated with the financial statements.
SMCI shares have cratered more than 41% in the last week. On Friday, at the time of writing, the stock is down over 6%.
Reacting to the news, Rosenblatt suspended its rating for the stock, citing financial uncertainty. “Given the uncertainty surrounding the company’s financials, we are suspending our rating, price target, and estimates on Super Micro until we have an outcome that can determine our recommendation,” said the firm.
Estee Lauder (NYSE:)
It was also not a good week for beauty company Estee Lauder, which plunged 20% Thursday and is down a further 2% on Friday after the company reported a revenue miss and withdrew its fiscal 2025 outlook amid ongoing challenges in China and travel retail.
The company said it withdrew the fiscal 2025 outlook on “incremental uncertainty on [the] timing of stabilization in Mainland China market and Asia travel retail as well as in the context of leadership changes.”
Furthermore, the company also announced a cut to its quarterly dividend, while its F2Q outlook was below expectations.
Following the report, JPMorgan downgraded Estee Lauder to Neutral and lowered its target for the stock to $74 from $113. The bank stated: “We don’t expect to receive any visibility for at least another three months or so.
“Because of the operating deleverage from lower than expected volumes in China and Asia Travel Retail, the execution of the plan and returns will likely be delayed, and as such, we believe it is prudent to advise investors to wait for better signs of improvement in demand.”
