Amazon (AMZN)
Amazon shares rose in premarket trading after rising more than 4% in Thursday trading as strong results from retail beacon Walmart eased recession fears across the market.
Despite the momentum, Amazon's shares are still down 15% from an all-time high of $201.20 (£155.94) hit in July, leaving many investors wondering whether now is the time to buy as the stock is undervalued.
“And similar to the sell-off in Meta (META) after Q1'24, we believe Amazon's recent share price sell-off suggests that even though expectations have been revised downward, the fundamentals remain as strong as they were prior to the earnings release, providing a suitable entry point,” the Bernstein analysts wrote.
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The research firm expects Amazon to post strong growth in operating profit and free cash flow despite its weaker-than-expected second-quarter sales.
“The inflection point for operating profit remains intact, driven by further contributions from solid growth from Amazon Web Services, a re-acceleration in advertising (in the second half of 2024) driven by increased Prime Video advertising, and steady retail margin expansion while prioritizing gross margins,” the report said.
Amazon announced plans to increase spending on AI-related infrastructure for its Amazon Web Services cloud division.
JD.com shares rose 3% in premarket trading after the company reported a nearly doubling of quarterly profit despite increased competition.
Chinese e-commerce platforms' net profits in the June quarter rose 92% year-on-year to 12.64 billion yuan (£1.31 billion/$1.7 billion), benefiting from price cuts that attracted price-sensitive consumers to the platforms.
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JD.com said sales rose 1.2% to 291.4 billion yuan ($40.7 billion), beating expectations of 291 billion yuan, according to FactSet.
“Rather than relying on subsidies, we continued to strengthen our price competitiveness during the promotional season through our supply chain and disciplined approach,” Chief Financial Officer Ian Siu Shan said in a statement, adding that gross profit margin rose to 15.8 percent in the quarter.
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Bayer shares soared after the company won a lengthy legal battle over its Roundup weedkiller.
The three-judge panel dismissed the lawsuit brought by David Schaffner, a Pennsylvania man who was diagnosed with non-Hodgkin's lymphoma in 2006. Schaffner argued that Bayer violated state law by failing to include cancer warnings on Roundup.
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The court ruled that the company could not include the warning in Pennsylvania because of the Federal Insecticide, Fungicide, and Rodenticide Act, which requires pesticide labels to be standardized nationwide.
The company's shares fell about 49% last year and are down more than 70% since Bayer completed its acquisition of Monsanto Co, the agriculture company that makes Roundup, in 2018.
Applied Materials (AMAT)
Shares of Santa Clara-based Applied Materials fell more than 3% in premarket trading even though the company said its fourth-quarter earnings were slightly ahead of Wall Street expectations.
The drop also appears to be a response to a sharp rise in the stock price earlier in the day, according to Michael Ashley Shulman, chief investment officer at Running Point Capital.
“Part of the decline in stock prices after the market close was due to today's share price gains, mixed sales reports from China and widely differing fourth-quarter guidance,” Schulman said. “Some analysts may have been hoping for a stronger outlook for next quarter.”
Applied Materials Inc. on Thursday forecast fourth-quarter sales that would beat Wall Street expectations slightly, thanks to a surge in demand for semiconductor manufacturing equipment fueled by the AI boom.
Rising demand for AI-enabled chips is driving up the need for advanced wafer-fabrication equipment essential to chip production, which is expected to benefit companies like Applied Materials Inc. But market reaction suggests investors remain cautious.
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