Michael Kramer and the clients of Mott Capital own Apple, Microsoft, Tesla

Stocks just wandered around today. Not what I thought we see, which was for the S&P 500 rise, but that is how it goes sometimes.  Earnings results are front and center of course with AMD and Apple reporting tonight. So let’s move on to that.

Apple

Apple is jumping to $163.50 after hours after it posted results mainly as expected.  Revenue guidance for the second quarter is $57 billion at the mid-point below estimates of $58.9 billion. So a miss on guidance but not a disaster either, which is what the stock seemingly had been priced for.

The company broke out its service business for the first time, with gross margins of 62.9% up from 58.3% last year. The services had 19% growth, and wearables had 33%. Wearables shockingly had revenue of $7.3 billion, just behind the Mac, and is likely to be the third largest business unit by next quarter based on the current growth. Remember Beats?

By region, the significant damage came from China as reported previously. But the amount of the drop, which had not been already reported, was a stunning 27%.

If the gains hold and rises above $164, may trigger a break out to back to $182.

AMD

AMD was better than feared after the Nvidia disaster. The stock is trading back to $20.85 after hours. The company reported inline revenue and earnings, while revenue guidance for the first quarter is light at 1.25 billion at the mid-point versus estimates of $1.47. Certainly not a disaster, and far better than Nvidia.

This may be the key paragraph in the AMD release, and it should worry Nvidia shareholders, at least based on my first impression:

Operating income was $115 million compared to $33 million a year ago and $100 million in the prior quarter. The year-over-year improvement was primarily driven by the ramp of Ryzen processors. The improvement compared to the prior quarter was primarily driven by Ryzen processors and datacenter GPUs, which more than offset the benefit of IP-related revenue in the third quarter of 2018.

It doesn’t seem like AMD sees softness in the data center. It sounds very different from what Nvidia was complaining about yesterday.

The stock now needs to get back above $21 to keep the momentum moving forward and the potential to rise to $24.

Chips

The good news is that Apple and AMD are helping to lift the chips stocks. Today I wrote a brief article about how well the chips stocks are performing despite disappointing results out of Intel and Nvidia. Positive Trends In Chips Despite Negative Headlines

We can see that the SMH is trading higher tonight to around $95.

Square (SQ)

Square fell sharply on that downgrade we noted this morning. I was surprised to see it have such a negative impact, to be honest. The good news is that stock stopped falling where it should around $68. You can see in the chart below how the $68 level has acted as an area of consolidation over the recent days. Overall, the trend is still higher. I see this as a set back in a stock that is otherwise trending higher.

Nvidia (NVDA)

Nvidia fell again today, and it seems to be heading back to the lows of around $125. I think AMD’s results show how many problems Nvidia may be having.

Tesla (TSLA)

Tesla reports results tomorrow after the close, and it looks like it is getting ready for a break out should it rise above $298, which could trigger an increase back to $333.

Microsoft (MSFT)

Microsoft posts its results tomorrow, and for now, it continues to hold support around $102.80.

Facebook (FB)

Facebook also reports tomorrow, and the chart appears to be deteriorating. I want to think the stock is going to rise because it would be good for the overall market.  But now, I do not see it.  There is even a risk of that uptrend breaking. Be careful with this one

Night

-Mike

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