Weekly equities forecast: Netflix ,TSMC, Goldman Sachs

Earnings season kicked off on Friday with banks and is set to ramp up this week with earnings from more banks, including Goldman Sachs and Bank of America, as well as big names such as Netflix, TSMC, and ASML.

Wall Street is expecting a very strong earnings season to support lofty valuations—all three US indices trade around all-time highs.

Netflix earnings preview

Netflix is due to announce its Q2 earnings on 19 July, and the markets will be keen to see whether it's still attracting new subscribers amid fierce competition.

Revenue is expected to rise 16% year over year to $9.49 billion, although the whisper number is $9.53 billion. In the first quarter of 2024, Netflix's revenue was up 15% to $9.37 billion.

A lot of focus will be on Netflix's ad-supported service and the size of the ad-supported user base. The market will be looking to see if subscriber growth is slowing after the network has enjoyed the tailwind from its password-sharing crackdown. International sales and subscriber growth will also be in focus, given that this will be a key driver when domestic growth slows.

Paid subscribers in the second quarter are expected to be lower quarter on quarter due to normal seasonal demand patterns, especially after bumper figures in Q1, when 9.3 million new subscribers were added in the best Q1 since the pandemic lockdown.

Netflix forecast – technical analysis.

After reaching a high of 697 at the start of July, the price has tumbled lower, falling out of the near-term rising channel as it heads towards support at 640, the April high and mid-June low. A break below here opens the door to 600. On the upside, should buyers defend 640, resistance can be seen at 697 for fresh 2024 highs.

TSMC (TSM) earnings preview

TSMC is due to report on Thursday, July 18th, which will be a key test for the valuation after a $420 billion equity rally so far this year.

The world's largest contract chipmaker is expected to report a 29% increase in Q2 net income and raise its full-year sales guidance, justifying another leg higher in the rally.

Like Nvidia, TSMC has become an AI darling for investors, with few competitors able to duplicate its technology. This gives this company the bargaining power to raise prices even if demand slows.

Results come as the market cap surged to $1 trillion in the US earlier this week. The only provider of Nvidia and Apple's most advanced chips has guided full-year revenue growth by low to mid-20 %, which is now potentially considered too cautious.

TSMC has indicated that second-quarter sales may have jumped by around 40% compared to forecasts of a 36% rise. Investors will listen carefully to the call's tone to further clarify the recovery in the chip market and AI demand trends.

TSMC forecast- technical analysis

TSM has trended higher across 2024, reaching an all-time high of 193 last week. The bull trend is strong, with evidence from traders buying the dips. Should momentum continue, buyers will look to rise above 193 to fresh ATHs. On the downside, minor support can be seen at 170, the July low, ahead of 148, the June low.

Goldman Sachs Q2 earnings preview

Goldman Sachs will release their Q2 earnings ahead of the open on Monday, July 15, and is expected to benefit from the recovery of the investment banking industry.

The results follow JP Morgan's earnings at the end of last week, which saw profits rise to a record level fueled by a 52% surge in investment banking fees.

Like JP Morgan, Goldman Sachs's business model is heavily influenced by investment banking, a sector that is recovering thanks to more IPOs and M&A deals. The bank will also focus on asset and wealth management, two areas that CEO David Solomon has highlighted as potential growth engines.

Expectations are for EPS of $8.34 on revenue of $12.46 billion. Trading revenue is expected at $2.96 billion for fixed income and $3.17 billion for Equities. Investment banking revenue is forecast to be $1.80 billion.

Goldman Sachs forecast – technical analysis.

Goldman Sachs's share price has been trending higher across the year, forging a series of higher lows and higher highs. The price trades at an all-time high of 483. Buyers will look to extend gains towards 500 as the next logical level. Support can be seen at 460, the July low. A break below here exposes the 50 SMA, which has guided the price higher at 456. A break below 440 creates a lower low.