Stock Market Hits Highs As AI Plays Skyrocket: Weekly Review

The stock market rally generally advanced with the S&P 500 hitting 5,000 for the first time and the Nasdaq at its best levels in over two years. The Dow Jones held just below its all-time highs while the Russell 2000 rebounded back above key levels. AI plays Palantir (PLTR) and Arm Holdings (ARM) became the latest AI plays to surge on earnings. Eli Lilly (LLY) kept running on its results. Several cybersecurity firms rallied on earnings. Snap (SNAP) crashed on weak revenue.




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AI-Fueled Market Rally Hits New Highs

The Nasdaq led, fueled by AI-related earnings, climbing to a two-year highs. The S&P 500 advanced modestly to a fresh record high. The Dow Jones was little changed, but near all-time peaks as well. The Russell 2000 rebounded back above key levels. The 10-year Treasury yield jumped back above key levels.

Palantir Skyrockets On Commercial Growth

Palantir (PLTR) said Q4 earnings using generally accepted accounting principles, or GAAP, met views for a 100% gain. The data analytics firm’s revenue rose 20% to $608 million, slightly topping. Government revenue rose 11% to $324 million, missing estimates. But commercial revenue rose 32% to $284 million. For 2024, Palantir guided slightly higher on revenue, led by commercial growth. Shares of the AI play skyrocketed.


S&P 500 Hits 5,000; AI Plays Continue To Go Vertical


Arm Rockets On Earnings

Chip designer Arm Holdings (ARM) delivered better-than-expected December-quarter results and guidance, sending its shares up nearly 50% on the news. Arm was the latest semiconductor stock to get a boost from exposure to the red-hot artificial intelligence market. Power-chip maker Monolithic Power Systems (MPWR) also jumped on its AI-fueled fourth-quarter results and outlook. Other chip stocks rising on upbeat earnings reports included audio-chip supplier Cirrus Logic (CRUS) and tracking-chip maker Impinj (PI). Chip stocks falling on weak guidance included Alpha & Omega Semiconductor (AOSL), Diodes (DIOD) and Rambus (RMBS). Automotive chipmaker NXP Semiconductors (NXPI) and Onsemi (ON) guided lower, but rallied as analysts described their outlooks as better than feared.

Lilly Soars On Weight-Loss Drugs

Eli Lilly (LLY) handily beat Wall Street’s fourth-quarter expectations with adjusted income of $2.49 per share and $9.35 billion in sales, up a respective 19% and 28% year over year. Guidance for 2024 was also promising. High points included diabetes drug Mounjaro, which brought in $2.21 billion in sales, and weight-loss drug Zepbound, which delivered more than double what analysts expected at $175.8 million in sales. Lilly also said tirzepatide, the chemical backbone behind Mounjaro and Zepbound, showed promise in treating a liver disease known by the shorthand MASH.

Affirm, PayPal Fall On Earnings

Affirm Holdings (AFRM) reported a smaller-than-expected loss while revenue jumped 48% to $591.1 million, the third straight quarter of accelerating growth. But shares tumbled Friday following earnings, slashing big weekly gains. PayPal (PYPL) said Q4 earnings rose 19% as revenue climbed 9% to $8 billion, both exceeding forecasts. But the digital payments giant guided low on 2024 EPS.

Uber Drives Higher

Ride-hailing giant Uber Technologies (UBER) said Q4 earnings surged 127% to 66 cents per share, buoyed by investment gains, crushing views for 16 cents. Revenue climbed 15% to $9.9 billion, slightly topping estimates. Gross bookings grew 22% to $37.6 billion, edging past views. It may update shareholder return plans at its Feb. 14 analyst day.

Snap, Pinterest Skid On Weak Revenue

Snap (SNAP) reported a 43% EPS decline, though that beat views. The Snapchat parent also guided up on Q1 EBITDA. But shares crashed as Snap fell short on Q4 revenue. Pinterest (PINS) earnings nearly doubled, just topping consensus. Revenue rose 12% but missed views. Revenue guidance also was weak. PINS stock tumbled from a two-year high.

Cybersecurity Results Mixed

Cybersecurity firms topped EPS views, often easily, but some diverged on other metrics.

Fortinet (FTNT) reported Q4 earnings, revenue and billings that topped analyst estimates amid lowered expectations, with EPS up 16%, revenue up 10% and billings up 8.5%. The cybersecurity giant guided in line for 2024 EPS.

Qualys (QLYS) reported Q4 EPS growth of 38%, topping views, while a 10% revenue gain just met. Guidance was weak for 2024. Also, Microsoft (MSFT) will end its marketing pact with the security vulnerability management services firm on May 1.

Tenable (TENB) reported Q4 EPS of 25 cents, up 108%, easily beating views. Revenue rose 16% to $213.3 million, modestly above consensus.

Rapid7 (RPD) reported Q4 earnings and revenue that rose 106% and 11%, respectively, topping estimates. But an 11% billings gain fell short.

CyberArk Software (CYBR) said EPS jumped 406%, crushing views, while revenue rose 32% to $223.1 million, above forecasts. CyberArk guided up on 2024 revenue.

Fortinet and Tenable rose above buy points during the week, while Cloudflare skyrocketed and CyberArk gapped up to a new high. Rapid7 rose modestly, around a buy point. Qualys plunged.

ELF Earnings Dwarf Rivals’

ELF Beauty (ELF) reported a 54% EPS gain, ending four quarters of triple-digit growth, but easily beating fiscal Q3 views. Revenue of $270.9 million was well above views, with the 85% growth accelerating. ELF guided higher for the full year. Shares fell on results but rose for the week, right at all-time highs.

Estee Lauder earnings fell 43%, the seventh straight decline but far above consensus. Net sales fell 7% to $4.28 billion, also beating. The company will cut 3%-5% of staff as part of restructuring. Shares jumped but then slashed gains. Coty (COTY) earnings rose 14% and sales advanced 13%, both modestly beating; the company also guiding higher for the year. Shares reversed lower.

Disney Soars On Earnings, Big News

Disney reported a 23% EPS gain, well above views. Revenue rose a fraction to $23.55 billion, just missing. Disney+ subscribers fell slightly after a price hike, but still beat views. The Dow entertainment giant raised its full-year earnings target, saying it’s on track to “meet or exceed” its target of achieving $7.5 billion in annual savings by the end of fiscal 2024. Disney said it’s buying a $1.5 billion stake in “Fornite” developer Epic Games, pending regulatory approval. Disney+ secured the streaming rights to “Taylor Swift: The Eras Tour.” Also, Disney’s ESPN, Fox (FOXA) and Warner Bros. Discovery (WBD) will launch a sports streaming service this fall. Shares surged to their best level in nearly two years.

Expedia Tumbles On Bookings

Expedia earnings slightly beat views, but gross bookings were a little light. Also, Expedia (EXPE) CEO Peter Kern will step down May 13, with senior exec Ariane Gorin stepping in. Shares of the online travel site, which had broken out ahead of results, sold off Friday. Hilton Worldwide (HLT) topped EPS with a 6% gain. Revenue rose 7% to $2.61 billion, in line with views and with growth slowing for a third straight quarter. Hilton’s 2024 EPS guidance was a little light. Shares were little changed for the week around record highs.

Chipotle Growth Heats Up

Chipotle Mexican Grill (CMG) earnings rose 25% while revenue rose 15% to $2.5 billion. Both beat views, with growth picking up from Q3. McDonald’s (MCD) EPS rose 14%, beating. Revenue climbed 9% to $6.41 billion, slightly missing as the Mideast conflict took a toll. KFC, Pizza Hut and Taco Bell parent Yum Brands (YUM) missed views amid Mideast headwinds, with EPS down 4% and sales edging higher to $2.03 billion. Chipotle stock jumped to a new high. MCD fell on earnings but pared weekly losses. Yum rose slightly.

Caterpillar, Terex Earnings Mixed

Caterpillar (CAT) reported Q4 adjusted EPS of $5.23, up 35% from a year ago and 47 cents ahead of estimates. Revenue grew 3% to $17.07 billion, roughly as expected. End results were stronger, with dealer inventories down by $900 million. The Dow giant sees flattish 2024 sales, but raised its margin guidance. CAT stock rose modestly, hitting a record high. Terex (TEX) earnings just topped views, while revenue slightly missed. The maker of aerial work platforms and materials processing equipment gave so-so guidance. Terex fell on earnings, erasing modest weekly gains.

Biotech Earnings Diverge

Biotech earnings were a split bag as Amgen (AMGN) and Vertex Pharmaceuticals (VRTX) beat fourth-quarter expectations, but Gilead Sciences (GILD) came in with light earnings and a narrow sales beat. On the flip side, Neurocrine Biosciences (NBIX) beat profit expectations, but sales came in light. Neurocrine guided to $2.1 billion to $2.2 billion in full-year sales of its bread-and-butter drug, Ingrezza, a treatment for tardive dyskinesia. That was slightly ahead of estimates. But Gilead’s earnings guidance missed forecasts at the midpoint. For Amgen and Vertex, analysts focused on obesity and cystic fibrosis treatments, respectively. Amgen showed an increasing dose of its weight-loss drug led to 14.5% weight loss over 85 days, and Vertex said its next-generation triple-drug approach to cystic fibrosis outperformed its approved triplet, Trikafta, in two Phase 3 studies. All four biotech stocks fell for the week.

Trucking Stocks Roll On Earnings

ArcBest (ARCB) and XPO (XPO) reported better-than-expected earnings. Less-than-truckload carrier ArcBest reported a 2% EPS gain, ending a four-quarter string of year-over-year declines. Revenue fell 6%, but  came in better than the double-digit declines in the prior three periods. XPO, with heavy less-than-truckload exposure, reported smaller year-over-year drops, with EPS off 23% and revenue down 9%. Both ARCB and XPO gapped higher in huge weeks, with several other trucking firms cruising higher.

Ford, Toyota Jump On Earnings

Ford (F) joined General Motors (GM) in providing a bullish 2024 outlook after a less harsh-than-expected report for the final quarter of 2023. Ford earnings tumbled 43% in Q4 but easily beat views. Revenue rose 4% to $46 billion, defying views for a decline. Profit from Ford’s commercial vehicle and combustion vehicle segments offset steep losses from its emerging electric-vehicle unit. Ford said it will launch next-gen EVs “only when they can be profitable.” Toyota (TM) and Honda (HMC) also boosted their profit forecasts, thanks in part to growing demand for hybrid vehicles. All three auto stocks jumped, with Toyota soaring to a record high.

In Brief

Cloudfare (NET) reported a 166% EPS gain while Q4 revenue climbed 32% to $362.5 million, both beating. The software maker, which speeds up and secures web applications, guided up on 2024. Shares skyrocketed.

Dynatrace (DT) reported a 28% EPS gain with revenue up 23% to $365 million, both modestly beating. The network monitoring software maker guided up on Q1, but shares fell sharply on earnings.

Alibaba (BABA) reported a 4% EPS drop while revenue rose 2% to $36.7 billion, both slightly topping views. The Chinese e-commerce and cloud-computing giant also announced a $25 billion buyback. Shares fell solidly.

O’Reilly Automotive (ORLY) reported an 11% EPS gain, slightly beating. Revenue climbed 5% to $3.83 billion, just missing. The auto parts retailer slumped, but held above the buy point.

Spotify Technology (SPOT) jumped after the music streaming leader added 10 million premium subscribers in the fourth quarter to 236 million, slightly more than expected.

Symbotic (SYM), a maker of robotic technologies for automating warehouses, reported in-line results for the December quarter but guided below views for the March quarter. Shares plunged 24% on Tuesday.

Intapp (INTA) beat Wall Street’s targets for the December quarter, but the enterprise cloud software firm disappointed with its in-line guidance for the current quarter. Shares plunged.

CDW (CDW) narrowly beat earnings estimates but came up short on sales. The IT products reseller said customers are reducing or delaying purchases amid economic uncertainty. But shares rose sharply.

Roblox (RBLX) surged higher after the youth-centric video game platform beat Q4 estimates and guided higher than views for Q1 and 2024.

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