Josh Gilbert, market analyst at eToro, shares his three things to watch in Australia in the coming days.
1. Microsoft (NASDAQ:MSFT) FQ2 earnings
After knocking Apple (NASDAQ:AAPL) off its perch in the last few weeks by taking the crown of ‘world’s most valuable stock’, Microsoft shareholders will expect more good news when its earnings arrive next week.
In the last 12 months, shares have had a terrific run, climbing by 70%, leaving little margin for error heading into the results.
It’s been all about AI, with Microsoft chasing the tail of Nvidia, looking to capture the first adoption benefits. Microsoft has invested significantly, from its big stake in Chat-GPT pioneer Open AI to AI chips and a copilot AI subscription service.
Its results this week will give a clearer picture of both the AI spending wave and the transition to the cloud, with Azure Cloud usually a focal point from Microsoft’s results. The consensus is for earnings to rise by 20%, whilst revenue is seen climbing by 16%, the highest growth for two years.
The good news for investors is that Microsoft knows how to deliver on earnings; missing earnings expectations just once in the last seven years, demonstrating why it's now the world's most valuable company.
2. Netflix (NASDAQ:NFLX) Q4 earnings
It’s been a rollercoaster few years for Netflix; struggling to maintain growth after its pandemic surge, losing its place amongst the world’s top stocks, FAANG’s replacement by the magnificent seven – and finally sparking a comeback in the last year with shares up more than 50%.
This resurgence is partly thanks to its new advertising plan and crackdown on password sharing. Netflix has also stepped up its games service, adding the world-renowned Grand Theft Auto, which should provide a boost in the quarter.
The consensus is another big quarter from Netflix, with net subscriber additions at nine million and revenue projected to see the fastest growth in three years at $8.7 billion.
The focus for the quarter is likely to be on the outlook for the full year 2024, with consumer spending set to slow, and investors wanting to see strong profit growth with subscribers now at record levels.
3. ResMed FQ2 earnings
It was a pretty torrid year for ResMed on the ASX. The company, perhaps best known for its CPAP masks, saw shares drop 18% due to headwinds from the internationally trending Ozempic drug, which some investors felt would dampen ResMed’s sales due to the connection between obesity and sleep apnoea.
On top of this, the business has also suffered product recalls but the main headwind has been margins, which look set to fall again this week. Gross margins are expected at 56%, down from a year ago.
The good news is that the consensus is for net income to rise by 9% to US$245 million and revenue growth in double digits thanks to strength across masks and software. Its valuation also remains attractive at 23 times forward earnings, much lower than its historical average, pricing in recent challenges.
A good result would give shares the next leg up after a solid three months, but a miss on estimates could put shares under pressure, given its recent strong performance.