Investing.com reported significant developments in the stock market this week as major players released earnings and navigated challenges ahead of the upcoming U.S. election. Here are some noteworthy stocks of the week:
Big Tech (Earnings): Microsoft Disappoints, Amazon Rises
Microsoft released its quarterly earnings update, surpassing estimates for both earnings and revenue. Following the report, the stock saw a decline of over 6% in the following trading session, attributed to anticipated slowing growth due to supply chain issues, including delays in AI capability infrastructure. BMO Capital analysts noted that while Azure’s growth surpassed projections for the September quarter, expectations for the December quarter’s revenue were less favorable. They slightly lowered their target price to $495, citing impacts from OpenAI, but maintained an "Outperform" rating.
In contrast, Amazon’s stock rose by 6.7% on Friday after the company reported strong earnings and revenue, propelled by rising retail sales. Analysts at Citi expressed increased confidence in Amazon’s ability to invest in growth while achieving margin expansion. They highlighted gains in retail efficiency, contributing to faster delivery, improved conversion rates, and market share growth.
Apple also reported exceeding earnings and revenue expectations. However, its stock fell on Friday due to investor dissatisfaction with its guidance.
Super Micro Computer Inc. (SMCI)
SMCI faced a challenging week, with its stock plummeting over 32% on Wednesday subsequent to Ernst & Young LLP’s unexpected resignation as the company’s public accounting firm. Super Micro disclosed to the U.S. Securities and Exchange Commission that EY resigned on October 24, citing an inability to rely on representations from management and the Audit Committee, expressing reluctance to be associated with the financial statements. Consequently, SMCI shares have dropped by more than 41% over the last week, with a further decline of over 6% on Friday. In response to the developments, Rosenblatt suspended its stock rating due to financial uncertainties, halting its rating, price target, and estimates until clarity is obtained.
Estee Lauder
Estee Lauder experienced a significant decline, with its stock plunging 20% on Thursday and dipping an additional 2% on Friday after a revenue miss and withdrawal of its fiscal 2025 outlook amid ongoing challenges in China and travel retail. The company cited increased uncertainty regarding market stabilization in Mainland China and Asian travel retail, compounded by leadership changes, as reasons for withdrawing its outlook. Estee Lauder also announced a reduction in its quarterly dividend and provided a below-expectation outlook for the second fiscal quarter. Consequently, JPMorgan downgraded its rating to Neutral and lowered its target stock price from $113 to $74, advising investors to await clearer indications of demand improvement. The downgrading was attributed to expected delays in executing plans and achieving returns due to operating challenges in China and Asia Travel Retail.
