Tesla, Microsoft, Amazon, Alphabet and AMD - 5 Things You Must Know

U.S. stock futures rebound as investors are hopeful a slate of major earnings reports will boost Wall Street following the previous session's collapse; Amazon, Alphabet, Intel and Comcast report earnings; Tesla jumps on a surprise third-quarter profit; Microsoft rides the cloud to an earnings beat.
By Joseph Woelfel ,

Here are five things you must know for Thursday, Oct. 25:

1. -- Stocks Look to Rebound From Sharp Wall Street Selloff

U.S. stock futures rebounded on Thursday, Oct. 25, as investors appeared hopeful a slate of major earnings reports would boost Wall Street following the previous session's collapse.

Contracts tied to the Dow Jones Industrial Average rose 176 points, futures for the S&P 500 gained 21.25 points, and Nasdaq futures jumped 90 points.

On Wednesday, Oct. 24, the Dow declined 605 points, or 2.4%, to 24,586, the S&P 500 fell 3.08%, and the Nasdaq slumped 4.43% as semiconductors and telecom stocks led the selloff. The Dow fell into the red for the year and the Nasdaq slid into a correction amid concerns over weakening U.S. earnings growth, rising geopolitical tensions and the unknown outcome of trade disputes between Washington and its major economic partners.

Stocks in Asia on Thursday fell sharply following the Wall Street rout. Japan's Nikkei 225 was hit hard, falling 3.72% to a six-month low amid the battering for tech stocks and a stronger yen.

The economic calendar in the U.S. on Thursday includes Durable Goods Orders for September at 8:30 a.m. ET, weekly Jobless Claims at 8:30 a.m., International Trade in Goods for September at 8:30 a.m., and the Pending Home Sales Index for September at 10 a.m.

2. -- Amazon, Alphabet and Intel Highlight Thursday's Earnings Calendar

Comcast Corp. (CMCSA) - Get Report  posted third-quarter earnings of 65 cents a share, beating estimates by 4 cents, as revenue of $22.14 billion also topped forecasts. Cable revenue was up 3.4% to $13.8 billion. The stock rose 3.8% in premarket trading.

Merck & Co. (MRK) - Get Report earned $1.19 a share on an adjusted basis in the third quarter vs. estimates of $1.12. The drugmaker also announced a $10 billion buyback authorization and increased its quarterly dividend to 55 cents a share. Shares rose 1.4%.

Twitter Inc. (TWTR) - Get Report  posted stronger-than-expected third-earnings Thursday but said monthly active users fell a bit more than anticipated, suggesting moves by the micro-blogging website to limit hate speech and cull fake accounts were having an impact.

Monthly active users fell 4 million to 326 million, missing analysts' forecasts, and Twitter saw a 20% quarter-on-quarter decline in new sign-ups since it introduced new techniques for detecting potential malicious accounts.

Twitter jumped 13.5% in premarket trading.

Raytheon Co. (RTN) - Get Report  rose 3.2% after the defense company's third-quarter earnings beat Wall Street estimates.

Earnings reports are expected after the closing bell Thursday from Amazon.com Inc. (AMZN) - Get Report , Alphabet Inc. (GOOGL) - Get Report and Intel Corp. (INTC) - Get Report .

Amazon, Alphabet, Comcast and Raytheon are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stocks? Learn more now.

3. -- Tesla Jumps on Surprise Third-Quarter Profit

Tesla Inc. (TSLA) - Get Report  jumped 11.3% in premarket trading after surprising Wall Street with a profit in its third quarter.

The electric vehicle company posted earnings of $1.75 a share. Adjusted profit was $2.90 a share, a swing from a year-earlier adjusted loss of $2.92. Revenue for the quarter was $6.8 billion, beating Wall Street's expectations of $6.32 billion.

Gross margins in the period were 25.8%, compared with last year's 18.3%, due largely to Tesla's ability to sell its Model 3 at higher prices. 

CEO Elon Musk said in a conference call that demand for the Model 3 was "probably on the order of anywhere from 500,000 to 1 million cars a year."

In a letter to shareholders, the company said "sufficient Model 3 profitability was critical to make our business sustainable - something many argued would be impossible to achieve."

Tesla produced $881 million in free cash flow the third quarter, well above analysts' consensus of $191 million, and represented a big reversal from free cash flow of negative $739 million in the second quarter and negative $1.42 billion in the year-earlier period.

Read more on Tesla from TheStreet's Eric Jhonsa here:

4. -- Microsoft's Earnings Beat Driven by the Cloud

Microsoft Corp. (MSFT) - Get Report reported fiscal first-quarter earnings of $1.14 a share, beating analysts' estimates of 94 cents. The stock rose 2.4% in premarket trading on Thursday.

Revenue for the software giant rose to $29.08 billion from $24.54 billion a year earlier and topped forecasts of $27.9 billion.

In Microsoft's Intelligent Cloud computing division, Azure sales rose 76%, helping sales in the division jump 24% to $8.6 billion. Microsoft's productivity and business unit, which includes its Office 365 suite of products, saw sales rise 19% to $9.8 billion while personal computing revenue, which includes Xbox gaming consoles, grew 15% to $10.7 billion.

"We saw strength across each of our segments with strong sales execution by our partners and sales teams," Chief Financial Officer Amy Hood told investors on a conference call. "Customer demand for our hybrid and cloud offerings drove the quarter and we continued to benefit from favorable macroeconomic and IT spending trends."

"We like the solid revenue growth we are seeing in Azure and believe the longer-term customer commitments speaks to the product improvements we have been hearing about in recent months," said Zev Fima, analyst for Jim Cramer's Action Alerts PLUS Portfolio, which owns Microsoft. "These commitments should give investors more confidence in future earnings and help push the stock higher at a time when data center growth is in question -- a view we have disagreed with."

5. -- AMD Plummets as Earnings Miss Forecasts, Outlook Is Soft

Advanced Micro Devices Inc. (AMD) - Get Report  plummeted 19.9% in premarket trading on Thursday after the chipmaker missed third-quarter earnings and revenue estimates.

AMD reported earnings of 9 cents a share vs. estimates of 12 cents, while revenue of $1.65 billion fell short of estimates of $1.7 billion.

Revenue was up 4% year over year but down 6% from the previous quarter. The company attributed the increase to overall growth in its computing and graphics segment, but the sequential decline by lower graphics revenue for the group.

"We delivered our fifth straight quarter of year-over-year revenue and net income growth driven largely by the accelerated adoption of our Ryzen, EPYC and datacenter graphics products," said Lisa Su, AMD president and CEO, in a press release. "Client and server processor sales increased significantly although graphics channel sales were lower in the quarter."

Su said on a conference call that softness in AMD's graphics business could lead to a flat fourth quarter and a slow start to 2019.

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