Amazon, Alphabet, McDonald's, Twitter and U.S. GDP - 5 Things You Must Know
Spencer Platt/Getty
Here are five things you must know for Friday, July 26:
1. -- Stock Futures Rise as Wall Street Awaits Data on U.S. Growth
U.S. stock futures were rising on Friday following earnings reports from tech giants Amazon.com (AMZN) - Get Report , Alphabet (GOOGL) - Get Report and Intel (INTC) - Get Report and as Wall Street looked ahead to the release of data on U.S. economic growth.
Contracts tied to the Dow Jones Industrial Average were up 76 points, futures for the S&P 500 gained 8.50 points, and Nasdaq futures rose 30.75 points.
The economic calendar in the U.S. on Friday includes the first estimate of second-quarter GDP. Economists surveyed by FactSet expect the U.S. economy to have grown 1.8% in the second quarter, the weakest in more than two years and down from 3.1% in the first quarter.
The GDP report will be the last major piece of data for the Federal Reserve before it meets next Tuesday and Wednesday. The Fed is expected to cut interest rates next week despite what the data may show amid rising risks to the U.S. economy, particularly the ongoing trade war between the U.S. and China.
Twitter (TWTR) - Get Report earned 5 cents a share on an adjusted basis in the second quarter, below forecasts of 18 cents. The social media company said monetizable daily active users in the second quarter of 139 million rose from a year earlier and topped estimates of 134.7 million.
Earnings reports are also expected Friday from McDonald's (MCD) - Get Report and AbbVie (ABBV) - Get Report .
2. -- Amazon Slips After Earnings Miss Wall Street Forecasts
Amazon.com (AMZN) - Get Report posted second-quarter revenue that topped analysts' estimates but earnings and operating income guidance fell short of forecasts as the online retailing giant invests in the move to one-day shipping for Prime members.
Shares of Amazon fell 1.43% in premarket trading to $1,945.50.
The e-commerce and cloud giant reported second-quarter revenue of $63.4 billion and earnings of $5.22 a share, vs. expectations for revenue of $62.5 billion and profit earnings of $5.56 a share.
For the third quarter, Amazon guided for revenue between $66 billion to $70 billion, which at the midpoint was ahead of estimates of $67.28 billion. But operating income guidance of $2.1 billion to $3.1 billion was well short of consensus estimates of $4.39 billion.
"Customers are responding to Prime's move to one-day delivery -- we've received a lot of positive feedback and seen accelerating sales growth," said Jeff Bezos, Amazon founder and CEO. "Free one-day delivery is now available to Prime members on more than 10 million items, and we're just getting started."
Revenue at the Amazon Web Services segment revenue rose 37% in the second quarter to $8.38 billion, missing consensus of $8.49 billion. The segment's operating profit rose 29% to $2.12 billion, and its operating margin was 25.3%, down from the year-earlier level of 26.9%.
"There was nothing in this quarter that causes us to change our view on the company or the stock and we would be inclined to view the weakness as a potential buying opportunity once the sellers tire themselves out ... ," said Jim Cramer and the Action Alerts PLUS team, which holds Amazon in its portfolio.
3. -- Alphabet Jumps as Earnings Top Forecasts, Announces $25B Buyback
Alphabet (GOOGL) - Get Report surged in premarket trading Friday after second-quarter earnings of $14.21 a share handily beat estimates of $11.30, and revenue of $38.9 billion at the parent company of Google also topped Wall Street forecasts of $38.15 billion.
Shares of Alphabet jumped 8.59% in premarket trading to $1,233.49.
Advertising revenue, which represents the lion's share of the company's revenue, rose to $32.6 billion from $28.1 billion a year earlier.
Alphabet also authorized the repurchase of up to $25 billion of its Class C capital stock.
On a call with investors, CEO Sundar Pichai revealed that Google Cloud Platform has an annual run rate of $8 billion - a metric that the company hasn't regularly disclosed despite talking up the progress of the segment in more qualitative terms. The disclosure from Alphabet, which usually errs on the side of ambiguity on quarterly earnings calls, was applauded by analysts eager for more details on the breakdown of Alphabet's business performance.
"So is Alphabet back? This is certainly how you come back from the disaster that was the first quarter when it posted a bad miss and management was opaque about the drivers of the company," said said Jim Cramer and the Action Alerts PLUS team, which holds Alphabet in its portfolio. "Thankfully, it was the opposite result this time around as Alphabet cruised past the estimates and management provided enough disclosures around the Google Cloud ($8 billion annual revenue run rate) and what's driving YouTube to keep investors and the sell-side happy."
4. -- Intel's Earnings Smash Estimates, Chip Giant Lifts Outlook
Intel (INTC) - Get Report rose 4.83% to $54.68 in premarket trading Friday after the chip giant posted earnings that smashed estimates and lifted its outlook for the year.
Second-quarter adjusted earnings were $1.06 a share, beating forecasts of 89 cents. Revenue in the period declined to $16.51 billion from $16.96 billion a year earlier but came in above forecasts of $15.68 billion.
Revenue at Intel's client-computing division rose 1% to $8.8 billion, topping forecasts of $8.13 billion. Data-center group of $5 billion also beat analysts' estimates.
Intel said it expects third-quarter adjusted earnings of $1.24 a share on revenue of about $18 billion, and earnings for the fiscal year of $4.40 a share on revenue of about $69.5 billion.
Analysts had been expecting profit of $1.15 a share on revenue of $17.74 billion for the third quarter, and fiscal-year earnings of $4.23 a share on revenue of $68.47 billion.
"Second-quarter results exceeded our expectations on both revenue and earnings, as the growth of data and compute-intensive applications are driving customer demand for higher performance products in both our PC centric and data-centric businesses," said Intel CEO Bob Swan. "Based on our outperformance in the quarter, we're raising our full-year guidance. Intel's ambitions are as big as ever, our collection of assets is unrivaled, and our transformation continues."
Intel also said it agreed to sell the majority of its smartphone business to Apple (AAPL) - Get Report for about $1 billion. The deal is expected to close in the fourth quarter.
5. -- Starbucks Surges on Earnings Beat, Raised Guidance
Starbucks (SBUX) - Get Report rose 6.59% in premarket trading to $96.98 after posting better-than-expected fiscal third-quarter earnings and sales and raising fiscal-year guidance.
Adjusted earnings in the quarter were 78 cents a share, beating estimates of 72 cents. Revenue at the coffee chain rose to $6.8 billion in the period from $6.3 billion a year earlier.
"Our two targeted long-term growth markets, the U.S. and China, performed extremely well across a number of measures as a result of our focus on enhancing the customer experience, driving new beverage innovation and accelerating the expansion of our digital customer relationships," said CEO Kevin Johnson.
Save 76% with our Summer Break Sale. Subscribe to our premium site Real Money and become a smarter investor! Click here today to sign up!