Summary
- Most companies reported solid earnings last week and confirmed that corporate demand for tech goods and services remains robust. But some see more headwinds ahead.
- A scant three companies report this week – but two are Oracle and Adobe. Look for intense focus on what they say about their corporate clients’ spending plans.
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Summary
- Most companies reported solid earnings last week and confirmed that corporate demand for tech goods and services remains robust. But some see more headwinds ahead.
- A scant three companies report this week – but two are Oracle and Adobe. Look for intense focus on what they say about their corporate clients’ spending plans.
What We Learned Last Week
Only 10 companies reported earnings last week. Most posted solid beats, and some even upped their full-year forecasts.
Six were software or tech companies that focus on industrial applications such as managing or migrating data and systems to the cloud or cybersecurity. We have frequently noted that tech companies serving this segment have generally been doing much better than those focused more on consumers.
However, one company, Uni-Path (PATH), mentioned growing macro headwinds and FX pressures. And Guidewire Software (GWRE) offered a ‘muted’ outlook. So, it appears some adverse pressures are starting to build even in this segment.
Grocery chain Kroger (KR) reported a solid beat and, surprisingly, raised its EPS forecast to as high as $4.05 from no higher than $3.95 previously, presumably with a push from inflation. The company said people are turning more to store brands, which portends more weakness for food companies focused on name-brand products.
Former meme favourite GameStop (GME) reported weak earnings as its retail base continues to shrink. People mostly game online now or download games rather than buy physical products. But GME is still trying to stay relevant with a push into nonfungible tokens (NFTs) and crypto. GME stock bounced about 18% on that news to $28.92, recovering what it lost since 1 September. That is nothing like its 2021 heyday volatility, but it still has some game left for speculators.
The Week Ahead – And Then There Were Three
Only three companies in our Russell 1000 universe report next week, but two are tech biggies – Oracle Corp (ORCL) on Monday and Adobe Inc (ADBE) on Thursday. We should get a useful read on whether industrial demand for tech goods and services will continue through the end of 2022 and beyond.