As investors brace for earning reports from two of the “Magnificent Seven” tech giants -- Tesla and Alphabet -- one Wall Street expert says questions need to be answered about both companies’ priorities amidst the changing landscape of artificial intelligence.
Christine Short, head of global corporate events research at Wall Street Horizon, joined BNN Bloomberg on Tuesday to discuss investor sentiment on both tech giants prior to the release of their earnings reports after markets close.
Tesla
Short said that the tide is turning for Tesla, a member of the Magnificent Seven which, she says, “hasn’t been so magnificent.”
“Earlier in the month we got two predictions in deliveries that ended up being better than expected,” Short said.
“Deliveries were still down year-over-year, but that’s why you’re seeing a pickup in the stock. Investors are really rewarding those numbers because it hasn’t been a great year for Tesla.”
Short said investors are waiting to hear about the company’s major developments on self-driving vehicles and robotaxis, which would entail converting fleets of self-driving cars to compete with ride-sharing platforms such as Uber and Lyft.
“Where is that going? What’s that technology? What are the regulatory hurtles there? We need an update,” Short said.
Ultimately, Tesla is trying to make up for a wane in demand, Short explained.
“Certainly interest rates haven’t helped that. They’ve had to make some price cuts on some of their models. Customers are tiring on some of the models on the market. They’re waiting for this more affordable model that’s meant to be in production later this year or next year.”
Alphabet
When it comes to Alphabet, Short says the numbers “look pretty good.”
“Analysts are looking for about 28 per cent growth on the bottom line, 14 per cent on the top line,” she said.
“(Alphabet) has the momentum coming into this, not necessarily the stock price, but analyst revisions,” Short explained, adding that analysts revised those bottom line estimates up by nine per cent.
“That’s actually pretty atypical. We don’t see analysts (normally) revising estimates upward coming into a quarter, which means that the company themselves believe they could likely beat those or they’d be pestering (analysts) to lower them a little bit.”
Short mentioned that investors are hoping for updates on Gemini Live, Project Astra, and how the company’s developments compare to competition such as Microsoft’s OpenAI.
“There’s a lot of updates there that investors are going to be looking for.”