Fast Money Blog- 5/3/24
The week on Wall Street was dominated by earnings releases by some major companies, such as Amazon.com (AMZN), Advanced Micro Devices, Inc. (AMD), and Apple, Inc. (AAPL), as well as the latest U.S. labor market news.
Here’s how it all played out:
On Friday, May 3rd, April’s U.S. Jobs report was released. Job growth only totaled 175,000 in April, while unemployment rose to 3.9%. Remember high unemployment slows down inflation. This weaker-than-expected jobs growth news caused the Dow Jones Industrial Average to rise over 400 points.
Amazon’s Q1 2024 earnings report once again shows why Amazon is a Wealthy Investor favorite. The company reported top-line revenue of $143.3 billion, an increase of 13%, which was driven by growth in advertising and the cloud.
Highlights
Amazon saw advertising sales grow 24% year-over-year for a total of $11.8 billion in Q1 2024. This marks the company’s first report since Amazon started running ads in Prime Video.
Amazon Web Services, its cloud revenue segment, grew 17% to $25 billion.
In addition, revenue from third-party seller services, grew 16% year over year to $34.5 billion.
I expect to see AMZN shares double in the next 5 years, based on outstanding revenue across all segments.
Advanced Micro Devices
AMD announced top-line revenue for Q1 2024 of $5.47 billion, up 2% year-over-year, but down 11% from the prior quarter (Q4 2023).
Quarterly results were as follows:
Data Center segment revenue was $2.3 billion, up 80% year-over-year.
Client segment (which includes PC chips) revenue was $1.4 billion, up 85% year-over-year.
AMD’s weakest division was its gaming segment, which was down 48% year over year to $922 million.
Their embedded segment revenue, which includes CPU hardware for commercial and industrial use, came in at $846 million, down 46% year-over-year.
As you can see, revenues across all of AMD’s segments are not steady and consistent, which was shown in the difference between the numbers for Q1 2024 and Q4 2023.
Because of this, I can no longer recommend AMD as a long-term hold or short-term trade.
On Thursday, May 2nd, Apple, Inc. (AAPL) announced results for its 2024 Q2 with quarterly revenue of $90.8 billion, down 4% year over year.
Apple’s Segment Highlights
iPhone revenue came in at $45.9 billion in Q2, down 10% year-over-year.
Mac revenue was $7.45 billion in the quarter, up 3.9% year-over-year.
iPad revenue had $5.6 billion in quarterly income, down 17% year over year.
Apple’s wearables, home and accessories category, which includes AirPods, the Apple Watch and Vision Pro, saw revenue of $7.91 billion, down 9.6% year over year
However, Mac revenue was $7.45 billion in the quarter, up 3.9% year-over-year, and Apple’s services business set an all-time revenue record of $23.87 billion, up 14% year-over-year. Keep in mind that their service revenue is only rising because the company keeps raising its fees to the consumer.
In other news, Apple also announced a $110 billion share buyback and Apple’s board of directors increased the cash dividend by 4%. We’ve seen this trick before.
Apple’s lack of innovation over the last few years cause them to have to charge consumers more for its product in order to prop up their quarterly revenue. Instead the educated shareholder wants to see future sales connected to future AI initiatives.
This said, Wall Street is temporarily rewarding them for their historic $110 billion share buyback.
At this time I can not recommend Apple as a long-term investment.
Stay disciplined, stay smart and stay open!
Tyrone Jackson, The Wealthy Investor