Alphabet, AMD, Ford, Earnings Talking Points:
- Alphabet reported strong ad revenue, but slowdown was seen late in quarter
- Ford reports net loss of $2.0 billion on Virus impact
- Full impact of COVID-19 still unknown for companies
Earning season is in full swing as Alphabet, AMD, and Ford reported Q1 earnings Tuesday afternoon. Investors are keeping a close eye on earnings in hopes to help judge the economic impacts from the COVID-19 pandemic. The first month of the quarter was unphased by the coronavirus pandemic as the United States did not see its first confirmed case until late January. However, lockdown orders across states accelerated through the end of March into April, essentially halting the economy.
Alphabet, one of the largest companies by market cap weight in the S&P 500, reported revenues of $41.2 billion for Q1, up 13 percent from the prior year. Performance was driven from its search, YouTube, and Cloud offerings. The company noted the ad revenues started off strong at the beginning of the year but were hit with a sharp slowdown towards the end of the quarter. Alphabet stock is currently trading 3.5 percent higher in after-hours trading.
Source: Alphabet Investor Relations
AMD, the California based semiconductor company, reported revenues of $1.79B and EPS of $0.14. The strong results follow those of similar companies like Intel and Micron. Stay-at-home orders helped the company’s results as demand from the PC market accelerated. Gross margin expansion was driven by the companies Ryzen and EPYC processors, according to AMD CEO Lisa Su. The company noted that its strategy remains unchanged. AMD stock is currently trading 5 percent lower in after-hours trading, suggesting the results fell short of investor expectations despite the strong performance.
Source: AMD Investor Relations
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Ford reported weak numbers as the automobile company faced demand side pressures from the COVID-19 stay-at-home and lockdown orders in the United States and elsewhere. Total vehicle sales for the first quarter read 516k, down 12.5 percent from the year prior. The automobile company reported Q1 total revenues of $34.3 billion and -$0.50 EPS. Ford stock is trading 5 percent lower in after-hours trading.
Ford noted that it will reduce capital expenditures going forward along with foregoing portions on executive salaries. The company will also be suspending its regular dividend payments. Ford’s CFO said “We’ve taken decisive actions to lower our costs and capital expenditures and been opportunistic in strengthening our balance sheet and optimizing our financial flexibility.”
Source: Ford Investor Relations
With a mixed bag of performances on Tuesday, investors will shift their focus to upcoming earnings later this week for further insight. As more are released, market participants will continue to flesh out the broader impact on the Dow Jones. As it stands, it can be argued sentiment is relatively split, so a slew of beats or misses could meaningfully tip the scale in favor of bulls or bears.