BIG TECH EARNINGS REVIEW, APPLE, ZETA, REDDIT, SANDISK TODAY | MARKET CLOSE

SUMMARY

Amit Kukreja reviews a pivotal day of earnings for major technology companies, including Apple, Zeta, Reddit, and Sandisk, as well as broader market movements. The episode covers volatile stock reactions, sector rotations, and the implications of robust capital expenditures and AI-driven growth across the industry.

MAIN POINTS

• Amazon, Microsoft, Meta, and Google earnings spark significant pre-market volatility, with Amazon and Meta experiencing sharp drops and Google surging on strong results. [3:00]
• Google emerges as the standout among big tech, reporting 63% cloud growth and a $420 billion market cap increase, while Meta, Microsoft, and Nvidia face declines despite strong numbers. [6:02]
• Qualcomm and Nokia rally on announcements of entering the AI data center hardware market, reflecting a shift in market favor from software to hardware providers. [8:00]
• Meta's forward P/E drops to 14, raising comparisons to Google's past valuation, while Trump news and Meta's $96 billion bond sale add to the day's headlines. [10:03]
• Anthropic's soaring valuation benefits Google and Amazon, both major stakeholders, while AMD and quantum computing stocks also gain traction. [12:00]
• Geopolitical tensions ease as Trump claims to have intervened in Iran, with markets showing resilience and S&P 500 hitting new highs. [15:00]
• Preview of upcoming earnings: Zeta expected to post strong growth and profitability, while concerns linger over Reddit's ability to catch a bid amid Meta's struggles. [18:01]
• SanDisk and Western Digital anticipated to follow Seagate's lead with strong earnings, but questions arise about how much is already priced in after massive run-ups. [21:01]
• Labor market data shows strength, with low unemployment claims and robust consumer spending, boosting outlooks for retail and advertising-driven tech companies. [24:00]
• Debate over an AI bubble intensifies, with comparisons to dot-com era valuations and skepticism about current multiples for leading tech firms. [27:01]
• Market closes at record highs; Meta, Apple, and Google diverge in performance, while anticipation builds for after-hours earnings from Rivian, Roku, Zeta, Reddit, and others. [29:01]
• Western Digital and SanDisk report strong year-over-year growth in EPS and revenue, but both stocks trade flat or down due to prior run-ups and high expectations. [32:02]
• SanDisk beats EPS and revenue estimates by wide margins but drops 3% as the market digests the results; Roblox plunges on a major miss in daily active users. [35:02]
• Zeta posts 50% year-over-year revenue growth and raises full-year guidance, while Reddit beats on both EPS and revenue, showing 69% year-over-year revenue growth. [37:00]
• SanDisk's forward guidance exceeds expectations, but the stock remains down, reflecting concerns about sustainability after a massive rally. [39:01]
• Software sector rebounds as Atlassian and Twilio post strong results, lifting other software names and sparking a rotation back into the sector. [41:00]
• Atlassian surprises with data center revenue and 30% growth, helping drive a broader software rally despite earlier sector weakness. [45:01]
• Discussion shifts to which earnings calls to follow live, with Zeta, Apple, and Reddit competing for attention amid complaints about unengaging presentations. [49:01]
• Apple's earnings release triggers rapid after-hours volatility, with initial declines reversing as details emerge about record revenue, strong services growth, and a $100 billion buyback. [59:01]
• Tim Cook highlights supply constraints for Mac Mini and Mac Studio, strong demand for new iPhone and MacBook Neo, and a positive outlook for services and international markets. [1:02:00]
• Zeta emphasizes Athena AI's role in winning major enterprise deals and driving platform adoption, with proprietary data and AI integration cited as key differentiators. [1:07:00]
• Reddit Q&A focuses on user growth strategies, onboarding improvements, and the rollout of dynamic product ads, while Zeta's Q&A addresses competitive positioning versus Trade Desk. [1:22:01]
• Apple's executive transition is discussed, with Tim Cook expressing confidence in John Turnis and reiterating Apple's focus on innovation, AI integration, and global expansion. [1:35:00]
• Post-earnings analysis reviews sector rotations, the impact of capex on hardware and memory stocks, and the market's shifting preferences between growth and value. [1:54:01]
• Nvidia's decline despite bullish capex signals from peers prompts debate, while S&P 500 and tech indices remain at all-time highs, reflecting overall market optimism. [2:00:01]
• The episode concludes with reflections on big tech's performance, the importance of consensus for future earnings call coverage, and a look ahead to upcoming reports. [2:19:00]

DETAILED ANALYSIS

The trading day was marked by a flurry of earnings reports from technology giants, resulting in significant volatility and sector rotation across the market. Early in the day, Amazon, Microsoft, Meta, and Google released their quarterly results, setting the stage for dramatic price swings. Amazon and Meta experienced sharp declines at the open, with Amazon dropping from $273 to $258 before partially recovering, while Meta fell from $670 to $600, a move attributed to market makers pinning the stock at a round number.

Microsoft also saw a rapid reversal, climbing to $430 before retreating to $408. In contrast, Google stood out as the clear winner, surging 9% on the back of exceptional cloud growth and a $420 billion increase in market capitalization, driven by 63% year-over-year growth in Google Cloud Platform and a $460 billion backlog.

Despite Google's outperformance, the broader market reaction was mixed. Nvidia, a key beneficiary of increased capital expenditures by hyperscalers, paradoxically traded below $200 even as companies announced aggressive spending on AI infrastructure. This disconnect highlighted a complex market dynamic where hardware providers, such as Qualcomm and Nokia, rallied on news of entering the AI data center space, while traditional software leaders and even Nvidia faced selling pressure.

Qualcomm, in particular, enjoyed its best day in seven years after announcing plans to ship data center chips to a major hyperscaler, offsetting otherwise weak handset guidance. The market's enthusiasm for hardware was further evidenced by strong moves in Dell and Western Digital, both of which benefited from the sector's focus on AI infrastructure.

Meta's valuation became a focal point, with its forward P/E dropping to 14, prompting comparisons to Google's valuation in previous years. However, Meta's decision to raise $96 billion through bond sales to finance ongoing capital expenditures was met with skepticism, as the market appeared to penalize the company for heavy spending without a corresponding cloud business. Meanwhile, Anthropic's surging valuation, with Google and Amazon each holding 15% stakes, provided a tailwind for both companies as the AI startup's worth more than doubled in its latest funding round.

Geopolitical developments also played a role, with former President Trump claiming to have intervened to prevent executions in Iran, contributing to a sense of easing tensions. The S&P 500 reached new all-time highs, and oil prices remained elevated but appeared to have less influence on equity markets than in previous cycles. Strong labor market data, including the lowest initial jobless claims in four months and robust consumer spending, bolstered confidence in the resilience of the U.S. economy.

This optimism extended to retail and advertising-driven tech companies, with Sprouts Farmers Market and Urban Outfitters cited as potential beneficiaries.

As the market closed, attention shifted to after-hours earnings from a diverse set of companies. Western Digital and SanDisk reported substantial year-over-year growth in both EPS and revenue, but their stocks traded flat or down due to high expectations and significant run-ups following Seagate's earlier results. SanDisk, for example, beat EPS estimates by 60% and revenue by 26%, yet fell 3% as investors questioned the sustainability of such rapid growth after a 350% rally in the past year.

Roblox suffered a steep decline, plunging over 20% after missing daily active user estimates by 11 million, raising concerns about user engagement and competitive pressures.

Zeta delivered a standout report, posting 50% year-over-year revenue growth and raising full-year guidance by $30 million. The company highlighted the success of its Athena AI platform in winning major enterprise deals, including a global apparel retailer consolidating from four vendors to Zeta. Zeta's proprietary data infrastructure, the Supergraph, was credited with driving client wins and deepening customer relationships.

Despite these achievements, the stock's after-hours reaction was muted, reflecting broader market skepticism toward software names even as they demonstrate strong fundamentals. Reddit also posted impressive results, beating on both EPS and revenue with 69% year-over-year growth, but its stock exhibited volatility as investors digested the numbers.

The software sector experienced a notable rebound, led by strong earnings from Atlassian and Twilio. Atlassian surprised the market with 30% revenue growth and unexpected data center revenue, helping to lift other software names and spark a rotation back into the sector. This shift was underscored by a chart showing software valuations at all-time lows relative to semiconductors, suggesting a potential bottom for the sector.

Apple's earnings release was a focal point of the evening, triggering rapid after-hours volatility. The company reported a double beat, with EPS up 22% and revenue up 17% year-over-year, marking a March quarter record. However, iPhone sales missed estimates, and initial stock reactions were mixed.

Tim Cook emphasized supply constraints for the Mac Mini and Mac Studio, strong demand for the new iPhone 17 lineup, and robust growth in services and international markets, particularly China and India. Apple announced a 4% dividend increase and a $100 billion share buyback, reinforcing its commitment to shareholder returns. The executive transition from Tim Cook to John Turnis was discussed, with both leaders expressing confidence in Apple's innovation pipeline and long-term strategy.

Q&A sessions across Zeta, Reddit, and Apple provided additional insights. Zeta addressed competitive dynamics with Trade Desk, emphasizing its proprietary data and AI capabilities as key differentiators. Reddit discussed user growth strategies, onboarding improvements, and the rollout of dynamic product ads.

Apple's Q&A focused on supply constraints, memory cost inflation, and the company's approach to AI and agentic smartphones, with management reiterating a commitment to R&D and incremental investment in AI across products and services.

The episode concluded with reflections on the challenges of covering multiple simultaneous earnings calls, the importance of consensus for future live coverage, and a look ahead to upcoming reports from AMD, Palantir, and others. The broader takeaway was that big tech companies have largely delivered on expectations, driving the S&P 500 and Nasdaq to new highs, even as individual stock reactions remain unpredictable. The market's focus on capital expenditures, AI-driven growth, and sector rotation underscores the dynamic and rapidly evolving landscape for investors.

LINKS

• Amit Kukreja's Twitter/X profile.
• Amit's Deep Dives newsletter on Substack.
• Amit Kukreja's new website for news and analysis.
• Chicago meetup event link.
• Amit Kukreja's Instagram profile.

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