Earnings This Week: Apple, Amazon and AMD

Corporate earnings calendar: July 31 – August 4

It is another busy week for earnings. Apple and Amazon headline the US calendar, alongside chipmakers AMD and Qualcomm, payments firms PayPal and Block, rental platform Airbnb, trading platform Robinhood, delivery apps Uber and DoorDash, and pharmaceutical firms Moderna and Pfizer.

The UK calendar is also busy with updates due out from oil giant BP, bank HSBC, baker Greggs, gold miner Fresnillo, housebuilder Taylor Wimpey, consumer healthcare giant Haleon, airplane engine maker Rolls Royce, airline Wizz Air, retailers Next and Pets at Home, as well as the London Stock Exchange Group.

Below is a full calendar of all the earnings we are watching this week:

Apple stock: Q3 earnings preview

Apple’s results have been uninspiring so far this financial year but this has not stopped the company from climbing to fresh all-time highs and earnings that $3 trillion valuation. Forecasts for this quarter are not overly rousing either with sales forecast to fall for a third consecutive quarter and earnings predicted to come in flat.

Revenue is expected to fall 1.8% from last year at $81.5 billion. Weak demand for hardware remains the problem. iPhones, which account for over half of revenue, are expected to be down 2.2% at $39.8 billion while appetite for Macs and iPads remains under pressure. Don’t forget, Apple is likely to unveil its newest iPhone in September so demand starts to taper off as consumers wait for the newer model. We have recently heard reports that Apple expects to ship around the same number of iPhone 15s this year as it did the year before as demand stalls, although higher prices should help bolster revenue. Its services arm, underpinned by the likes of the App Store, Apple Pay, AppleCare and Apple Music, should continue to steadily grow and see sales rise 5.8% to $20.7 billion.

Adjusted EPS forecast to edge up just 0.2% from last year to $1.20. That would be the slowest of any Big Tech member. Apple often beats expectations by flexing buybacks, although analysts think these will slow to less than $18.5 billion in the third quarter from around $19.5 billion in the first two.

Apple has kept any plans related to AI under wraps so far, so keep an eye out for any commentary on how the technology could provide a catalyst for the company.

Amazon stock: Q2 earnings preview

The outlook for Amazon is becoming rosier as the volatile comps seen in recent years finally starts to normalise, although most of its businesses remain highly sensitive to the economy and it is still struggling with inflationary pressures.

The main focus will be on Amazon Web Services, which generates the bulk of profits. Revenue is expected to grow 10% from last year to $21.7 billion, marking the sixth consecutive quarter of slower growth as businesses scale-back their IT spending, with markets not expecting this to start growing again until late 2023. There are hopes that Amazon can counter softer enterprise spending with new AI demand, although this may take time. Microsoft is thought to be ahead of Amazon considering its cloud arm is already handling workloads from ChatGPT and only saw a minor contribution to growth in the second quarter. Microsoft has also warned it will need to spend money to get its hardware ready for AI workloads before it will be able to reap rewards, and Amazon will be in the same position – so keep an eye on commentary about spending and investment, and whether Amazon will follow its rivals in trying to counter it with cost discipline elsewhere.

That is especially true considering Amazon is having a tougher time dealing with inflationary pressures than its rivals at present. Still, operating profit is estimated to jump 41.5% to $4.7 billion in the second quarter and markets think this will more than double year-on-year in the third and fourth quarters thanks to more normal comps.

Amazon is only trading at around half the peaks we saw in 2021 despite being a much larger and more profitable business today than back then, suggesting there is plenty of room for shares to keep up the momentum.

AMD stock: Q2 earnings preview

NVIDIA has stolen all the headlines as the eruption of AI grabs the imagination of the markets in 2023, leaving AMD and others in the dust. However, AI is too large a breakthrough to be monopolised by just one business and eyes are on how the rest of semiconductor space can catch-up. Commentary around AI will be key given the rest of AMD’s business remains under pressure.

Revenue is forecast to fall 18.8% from the year before to $5.3 billion, marking a second consecutive quarter of lower sales. Weak demand for gaming and other hardware remains the key problem but markets are hopeful we could see a recovery toward the end of this year and into 2024. The bigger concern may be a slip in datacentre chips, which is expected to see a rare slip in sales of 5.8% this quarter. Adjusted EPS at the bottom-line is set to fall for a fourth consecutive quarter, this time by 45% to $0.57. However, earnings should return to growth in the second half as comparatives normalise.

HSBC share price: H1 earnings preview

Rising interest rates and beneficial currency movements are expected to provide a solid base for HSBC However, investors will be watching deposit flows from instant access to higher-paying time deposit accounts, which could prove to be a headwind. Bad loan losses are expected to fall compared to the first quarter, reflecting an improving picture in China. However, higher rates coupled with the rising chance of a recession in the UK add risk.

HSBC is forecast to report a 48% year-on-year jump in pretax profit to $7.4 billion in the second quarter as the boost provided by higher interest rates to net interest income forecast to counter tighter margins. Deposits are expected to keep declining as they have done over the last year and loan demand has faltered for even longer!

BP share price: Q2 earnings preview

We know that oil prices and refining margins were both lower in the second quarter compared to the first and that the industry is starting to come up against tough comparatives from the record numbers we saw in 2022, when the war in Ukraine sent oil prices flying.

BP is forecast to report an underlying replacement-cost profit, its headline measure, of $3.5 billion in the second quarter – down 59% from the year before! Profit at the bottom-line is predicted to drop 63% to $3.4 billion.

All eyes will be on what this means for returns and whether they will slow the pace of buybacks. Analysts believe it will repurchase around $2 billion worth of shares in the second quarter, down from $2.5 billion in the first – and they believe this could drop to under $1.5 billion in the third! It would be bullish for BP if it can demonstrate that the pace can be maintained and defy concerns of a slowdown.

Elsewhere, we could see commentary about how BP plans to balance its transition to clean energy while protecting its financial performance by expanding its oil and gas projects as UK oil giants are trying to close the valuation gap with their American rivals.

Rolls Royce share price: H1 earnings preview

Rolls Royce has already taken the element of surprise out of the equation ahead of interim results this week, having already released an update that has significantly raised the bar. The engine maker is currently trying to turn things around and appears to be making much swifter progress than markets ever thought was possible.

We already know that underlying operating profit in the first half will be in the range of £660 million to £680 million, which it said was well ahead of consensus for just £328 million. Free cashflow of £340 million to £360 million was also much better than the £50 million consensus. 

Rolls Royce has already revealed what to expect in the first half and raised its guidance for the full year, so there is little chance for any more catalysts to come to light this week given the share price has already rallied on the news.