TOP STORY
📈 Apple & Meta Up, 📉 Amazon & Microsoft (and many more) Down

🤯 What a week! We knew we were in for an exciting ride with 4 of the Mag 7 reporting earnings, and the markets did not disappoint.

There is a LOT to unpack, but let’s start off by summarizing how each of the key players moved this week:

🛍️ Amazon: -8.6% this week / +12% YTD

🧑‍💻 Microsoft: -5.4% this week / +10% YTD

🍎 Apple: +1.2% this week / +18% YTD

💬 Meta: +3.9% this week / +41% YTD

😱 Intel: -32% this week / -55% YTD

And while they didn’t report earnings this week, for good measure:

🤖 Nvidia: -5.7% this week / +123% YTD

🚗 Tesla: -7.7% this week / -16% YTD

🔤 Alphabet: -1.2% this week / +21% YTD

Altogether, the S&P 500, which is ~40% weighted into tech, fell 2.77% this week (posting its worst day since 2022 on Friday) but is still up +12.27% YTD.

🤿 While some news publications pointed to the weak US jobs report as reason for this week’s drop, it seems much more likely that the market is reacting to the big tech earnings season - so let’s take a look under the hood of the giants who reported this week…

🛍️ Amazon stock plummets 9%, with Price to Operating Cash Flow Falling to the Lowest Point in 14 Years

Amazon ($AMZN) was the biggest loser this week after a revenue miss and disappointing forecasts for the quarter ahead. Here are the key points to know:

• ❌ Revenue rose 10% to $148B, missing analyst forecast by a thin margin (0.4%)

• 📈 Net Income DOUBLED, crushing expectations by 23%

• 🎯 Despite this, the stock got hit hard as Amazon’s revenue forecast for next quarter fell short of expectations

• 😥 Investors were also worried about Amazon’s slowing retail business sales, which only grew 5% compared to 7% the previous quarter

• 📈 AWS sales (which makes up a whopping 63% of Amazon’s operating income) re-accelerated with +19% revenue growth (compared to +12% last year)

If the stock’s 12% drop seems like a bit of an overreaction to these arguably pretty strong results, you’re not alone.

As Daniel Pronk points out, Amazon’s Price to Operating Cash Flow is its lowest in 14 years with the recent stock drop:

This has led many on Blossom to see Amazon as undervalued, with @jacobb saying that turning a blind eye to Amazon is “spitting in the face of an amazing opportunity.”

🍎 Meta up 4% with “Healthy Global Ad Demand”

It wasn’t ALL bad news for Big Tech this week, with Meta jumping up 6% from Monday to Thursday before ending the week up 4%. Some key points to know:

• 💰 Revenue passed $39B, a 22% increase from the previous year, beating analysts expectations

• 🔊 This revenue growth was fueled by “healthy global advertising demand”

• 💸 Net income has skyrocketed 73% compared to last year as Meta has reined in costs (particularly in the Metaverse division)

• Meta expects significant capital expenditure growth with an increase in AI investment, with Zuck admitting that Big Tech is in an “arms race” that’s forcing companies to spend more than needed.

Analysts remain bullish on the stock, with a median price target of $550 (current price is $488).

While overall bearish on the stock (see below), some in the Blossom community still say the stock is undervalued, with @thesimpleinvestor calling it an “underestimated ai play.”

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TOP STORY
📊 Big Tech Earnings continued: Apple, Microsoft and more…

So much happened this week, and it’s impossible to deep dive into everything, so let’s rapid-fire the other key news and biggest movers:

🧑‍💻 Microsoft Down 5.4% After AI Revenues Disappoint

• ✅ Microsoft beat overall revenue expectations, with quarterly sales up 15%

• 😥 Despite this, Microsoft was hit hard as its Azure cloud computing and AI-heavy intelligent cloud division unit came in below estimates

• 💰 Microsoft (and the rest of big tech) has invested billions into AI infrastructure but, according to some, is “failing to convince Wall Street that AI is paying off.”

🍎 Apple Up 1.2% Despite Declining iPhone Sales

• ✅ Apple’s quarterly revenue was up 5%, and earnings were up 11% compared to last year

• 🇨🇳 Revenue in China fell 6.4% compared to last year, and overall iPhone sales fell slightly compared to last quarter

• 👴🏻 Warren Buffet / Berkshire Hathaway slashed his stake in Apple by nearly half but continues to hold Apple as his biggest holding

• 📲 Despite this, the stock rose over anticipation of the launch of Apple’s AI software update later this fall (read my full breakdown of that here)

🤖 Nvidia Down 5.7% Amid Market Bloodbath

• 🧐 While Nvidia isn’t set to report earnings until August 28, it was still hit hard this week as disappointing Big Tech earnings made investors scrutinize AI bets more closely

• 💰 Despite this, the tech titans have continued to emphasize plans to increase investment into AI (with a ton of that money set to go to Nvidia), saying ‘getting left behind is a greater risk than overspending.’

💻 Intel Crashes 32%, Its Biggest Drop in 40 Years

• 😭 Intel was by FAR the biggest loser this week after a disastrous earnings report and announcing plans for a massive restructuring, which includes suspending its dividend payments.

• 🐢 Intel has lost significant market share to its rivals AMD, Taiwan Semiconductor, and Qualcomm, and will likely need to spend big on R&D to catch up

😰 The Market Is Now In a State of Fear

The market has officially moved to a state of fear bordering on ‘extreme fear’ according to the Fear-Greed Index reported by CNN.

📈 🐂 The Blossom Community Remains Bullish

Despite the week’s bloodbath, the Blossom community remains bullish, with 61% saying it’s time to buy and that the week was a healthy pullback.

💡 With over 1,400 posts this week, don’t miss out on the incredible posts and discussions in the Blossom community!

FROM THE BLOSSOM COMMUNITY
🎙️ Top Discussions this Week

👇 Click to see the full post!

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A QUICK WORD
✍️ Meet the Author

Thanks for reading to the end of the buzz 🐝! Let me take a second to introduce myself 😎

My name is Max, and I’m the founder and CEO of Blossom! A few fun facts about me and my credentials:

• 👨‍🎓 I graduated with an honours degree in economics from the University of Victoria and wrote a textbook on Microeconomics that was used by over 2,000 students

• 👨‍💼 Before founding Blossom, I worked as a Management Consultant at the Global Consulting Firm McKinsey & Company, where I advised Fortune 500 companies on strategy and operations

• 📊 I would consider myself a ‘fundamental investor’. My top holding is the $ZSP S&P 500 index fund

• 🎥 In addition to writing the Weekly Buzz (and running Blossom 😅), I’ve also started making weekly news recap videos on Instagram, check them out here!

As a thank you for reading all the way to the end, the first 5 people who follow and DM me “Buzz 🐝” on Instagram, I’ll send you a $10 Starbucks gift card ☕️

Thanks again for being part of the Blossom community!

-Max