Tesla loses after Q2 earnings report 📉Alphabet gains on beating expectations with strong Google Cloud growth 📈

Alphabet (GOOGL.US) and Tesla (TSLA.US) reported second-quarter results for the year, after the session closed on Wall Street.  Tesla's shares lost nearly 4% in after-hours trading after a disappointing drop in earnings, while Alphabet gained nearly 3% after reporting results that exceeded Wall Street estimates. As a result, Nasdaq 100 (US100) futures retreated 

Alphabet (GOOGL.US) results for Q2 2024

• Revenues: $84.72 billion (13.4% y/y growth) vs. $84.2 billion forecast and $74.6 billion in Q2 2023
• Earnings per share (EPS): $1.89 vs. $1.85 forecasts (2% above expectations and about 30% y/y growth)
• Net income: $23.6 billion (28.6% y/y)
• Advertising revenue: $64.62 billion vs. $64.53 billion forecasts
• Google Cloud revenue: $10.35 billion vs. $10.09 billion forecasts (nearly 29% y/y growth and more than $1.2 billion contribution to operating profit and 6 p.p. improvement in operating margin y/y to 11% today)
• YouTube ad revenue: $8.66 billion vs. $8.95 billion forecast (13% increase y/y)
• Google Search revenue: $48.5 billion vs. $47.6 billion forecasts
• Operating profit: $27.43 billion vs $26.5 billion forecasts
• Cash position: $100.2 billion with $13.65 billion free cash flow and $13.2 billion CAPEX
• Number of employees: down to 179,582 from 181,798 in Q2 2023
• The company declared $2.5 billion in dividends / $0.2 per share (September 16, 2024)

The results confirm the upward momentum of cloud revenues, although the overall scale of the positive surprise is relatively small, in virtually all other key measures of growth. Business is going great for the company, but we definitely can't talk about such a large scale of positive surprise as in the case of Q1 2024 results. The market is waiting for the earnings conference call to find out more - especially regarding the impact on earnings from AI and expected forecasts from it.

Tesla (TSLA.US) results for Q2 2024

• Revenues: $25.5 billion vs. $24.1 billion forecast (2% y/y growth and 4% above estimates)
• Earnings per share (non-GAAP EPS): $0.52 (down 43% y/y, more than 13% below estimates)
• Operating margin: 6.3% (down 3.33 p.p. y/y) vs. 7.3% forecasts
• Operating profit: $1.61 billion vs. $1.81 billion forecasts
• Free cash flow: $1.34 billion vs. $1.92 billion forecasts
• Tesla indicates that the number of vehicles produced in 2024 could be significantly lower year-on-year. 

The team is focused on cost discipline and sees improvement in this area; it also expects Cybertruck production to be profitable - possibly later this year - and additional growth momentum from business generated outside the automotive industry. The company's cash position stands at $30.1 billion. Investors are now awaiting the earnings conference call, where we are likely to learn more about the expected growth catalysts; the market's reaction so far is not yet a foregone conclusion.

Limited reaction on the Nasdaq

The reaction of the US100 to the results of the two Magnificent 7 companies is severely limited and fairly quiet. Contracts are losing slightly; thanks to Alphabet's solid report, they erased some of the initial declines. Visa also reported results after the session, with its shares losing almost 3% - the nearly 10% increase in revenue and the apparent sizable growth in the volume of transactions processed by the company did not convince investors.

Source: xStation5