Breakfast News: Alphabet Misses Targets
Alphabet's Q4 cloud revenue of $11.96 billion fell short of expectations, leading to a 7% drop in after-hours trading. Despite a 46% rise in adjusted earnings per share, the company missed its total revenue target. Other companies like AMD and Chipotle also disappointed the market with their earnings. Trade tensions are escalating, with a significant trade deficit forecast. Novo Nordisk's Wegovy sales surged, while Disney is set to report its first-quarter figures, with a focus on subscriber numbers and upcoming releases.
Breakfast News: Alphabet Misses Targets
February 5, 2025
| Tuesday's Markets |
|---|
| S&P 500 6,038 (+0.72%) |
| Nasdaq 19,654 (+1.35%) |
| Dow 44,556 (+0.3%) |
| Bitcoin $97,009 (-4.97%) |
Source: Image created by JesterAI.
1. Alphabet's Cloud Concerns
Alphabet (GOOG 2.50%) fell 7% after hours Tuesday, after $11.96 billion Q4 cloud revenue fell short of hopes for $12.19 billion. Adjusted earnings per share, up 46% from the previous quarter, beat expectations.
- $75 billion capital expenditure in 2025: A 12% total revenue rise was a miss. But CEO Sundar Pichai still puts Alphabet at the leading edge of long-term AI research, which remains expensive.
- "Leaked internal docs suggests that Google's "Gemini" AI brand trails others familiarity and usage": However, Fool analyst Kirsten Guerra continued: "Things move fast in AI development" and, following Gemini 2.0's December release, doubts the lower early adoption rates "will be a long-term issue ... with a refreshed, consistent image."
2. Other Stock Advisor Recs Set to Open Lower
Advanced Micro Devices (AMD 4.58%) and Chipotle (CMG 1.13%) disappointed the market following fourth-quarter results after the closing bell yesterday. The latter fell 5% in late trading, after same-store Q4 sales growth of 5.4% fell short of the expected 5.67%. Revenue and earnings came in bang on estimates.
- "Progressively tougher" comparisons: Chipotle CFO Adam Rymer spoke of slowing growth, with low- to mid-single-digit same-store sales on the cards for 2025. That doesn't include possible tariff effects, which the company said would raise its cost of sales by only 0.6 percentage points.
- "Strong double-digit percentage revenue and EPS growth": AMD's CEO Lisa Su predicted a healthy 2025, despite a 9% fall in pre-market trading after the chip maker posted a miss against Q4 estimates for its key data center business.
3. Trade War Tension
As fears grow for retaliation in escalating trade tensions, the December trade deficit figure is due today. Forecasts suggest it will hit -$96.8 billion, from -$78.2 billion in November.
- App store probe: Apple (AAPL 2.10%) looks set to start the day down, after Bloomberg reported Chinese regulators are looking into its policies toward third-party payment services and the cut it takes on in-app spending.
- Antitrust investigation: China is also probing Google's Android operating system dominance, and how it could affect Chinese phonemakers like Oppo and Xiaomi.
4. Wegovy Sales Double
Novo Nordisk (NVO -0.04%) got a 4% pre-market boost after demand for its Wegovy obesity drug climbed 107% year over year. It helped the Danish pharmaceutical company to an expectation-beating 21% full-year net profit gain. Total sales rose 30%.
- "Intensifying competition and continued pricing pressure within Diabetes and Obesity care": The company expects sales growth to slow in 2025, to between 16% to 24%.
- "A long way to run": Susannah Streeter at Hargreaves Lansdown suggested obesity drugs growth needs increased approvals by health regulators.
5. Can the House of Mouse Thrill Again?
Disney (DIS -0.61%) will post first-quarter figures before the market opens today, with analysts expecting a 4% revenue rise over the same period last year. Eyes will be on Disney+ subscriber numbers, expected to drop a little from Q4. Management's push toward ad-supported tiers should improve profitability.
- Several major new releases are scheduled for 2025: Watch for any management hopes for the likes of Captain America: Brave New World, and the live-action remakes of Snow White and Lilo & Stitch.
- Shares down 21.72% over five years: The past year has shown a 17% rebound, after earnings beats for the previous four quarters. Hurricanes won't have helped Disney Parks in the latest quarter.
6. Foolish Fun
Disney strives to "entertain, inform and inspire people around the globe through the power of unparalleled storytelling."
What company's mission statement or motto most resonates with you, and why? Discuss with friends and family, or become a member to hear what your fellow Fools are saying.