Welcome to the Fear & Greed Business Interview. I'm Sean Aylmer. Earning season in the US is drawing to a close, which means it's a great time to see who the winners and losers on Wall Street are. We're talking about some of the biggest companies in the world, but of course we've been focusing so much on the Magnificent Seven tech stocks recently we probably need to look a bit beyond that. Remember, this is general information only. You should certainly seek professional advice before making investment decisions. Josh Gilbert is a market analyst at social investment network eToro and a regular guest here on the podcast. Josh, welcome back to Fear & Greed.

Welcome to the Fear & Greed Business Interview. I'm Sean Aylmer. Earning season in the US is drawing to a close, which means it's a great time to see who the winners and losers on Wall Street are. We're talking about some of the biggest companies in the world, but of course we've been focusing so much on the Magnificent Seven tech stocks recently we probably need to look a bit beyond that. Remember, this is general information only. You should certainly seek professional advice before making investment decisions. Josh Gilbert is a market analyst at social investment network eToro and a regular guest here on the podcast. Josh, welcome back to Fear & Greed.

Thanks for having me back, Sean.

Thanks for having me back, Sean.

Okay, overall impression of the March quarter earning season in the US?

Okay, overall impression of the March quarter earning season in the US?

Yeah, so in our eyes it's been a good earning season so far. We've obviously still got a couple of big names left to report, but we aren't getting ahead of ourselves just yet. We are seeing growth at just over 5.5%, which is slightly less than what we saw last quarter, but it's better than what many had expected heading in. We also do have every sector on the S& P 500 ahead of analyst forecasts as well, which is a positive. And we're also seeing those analysts lift their estimates for the second quarter as well. So a lot of positives to take away and it's really, for us, been good enough, we think, to rejuvenate the rally that we've seen in the S&P 500 and broad tech stocks. And our view is that we are going to see earnings continue to move into double- digits and we may even get there by the next quarter. And for us, that will remain a fundamental pillar of this bull market and will continue to drive markets higher.

Yeah, so in our eyes it's been a good earning season so far. We've obviously still got a couple of big names left to report, but we aren't getting ahead of ourselves just yet. We are seeing growth at just over 5.5%, which is slightly less than what we saw last quarter, but it's better than what many had expected heading in. We also do have every sector on the S& P 500 ahead of analyst forecasts as well, which is a positive. And we're also seeing those analysts lift their estimates for the second quarter as well. So a lot of positives to take away and it's really, for us, been good enough, we think, to rejuvenate the rally that we've seen in the S&P 500 and broad tech stocks. And our view is that we are going to see earnings continue to move into double- digits and we may even get there by the next quarter. And for us, that will remain a fundamental pillar of this bull market and will continue to drive markets higher.

It's a pretty good effort given how high interest rates have run and how quickly they got to these levels.

It's a pretty good effort given how high interest rates have run and how quickly they got to these levels.

Absolutely, yeah. I think one of the big standouts for us over the last year and I think for many has been the resilience of the global economy. Obviously, the US economy is probably that sort of standout. That's obviously really been a big help. We're still seeing GDP growth in a lot of countries in a lot of major economies across the world, and that really helped. And obviously, the emergence of AI as well is really helping a lot of businesses and really, you mentioned it at the top of the episode, but it's tech. Tech is doing the heavy lifting and the Magnificent Seven, as you say, are doing what they do best. They're sort of growing earnings at the fastest pace. Saw 36% earnings growth in the quarter as well. And we still obviously have Nvidia to come as well.

Absolutely, yeah. I think one of the big standouts for us over the last year and I think for many has been the resilience of the global economy. Obviously, the US economy is probably that sort of standout. That's obviously really been a big help. We're still seeing GDP growth in a lot of countries in a lot of major economies across the world, and that really helped. And obviously, the emergence of AI as well is really helping a lot of businesses and really, you mentioned it at the top of the episode, but it's tech. Tech is doing the heavy lifting and the Magnificent Seven, as you say, are doing what they do best. They're sort of growing earnings at the fastest pace. Saw 36% earnings growth in the quarter as well. And we still obviously have Nvidia to come as well.

So we have to wait for Nvidia. Apple, though, what about it? Because it really hasn't done so well this year. It's been one of the laggards of the Magnificent Seven, but things have picked up a bit for Apple.

So we have to wait for Nvidia. Apple, though, what about it? Because it really hasn't done so well this year. It's been one of the laggards of the Magnificent Seven, but things have picked up a bit for Apple.

Yeah, I think there was plenty of trepidation for Apple heading into the result. There was question marks overgrowth, as you said, and I think the big question was if they could still deliver the growth that investors have become accustomed to over the years. But I think Tim Cook really navigated it perfectly. All of those question marks over growth and then he essentially just shows how much of a financial powerhouse Apple is. They announced the biggest buyback in history, 110 billion US dollars. If that's not a statement, I'm not sure what it is. But sales in China were also better than feared, helping things look slightly better. And I think really what we saw from Apple was just a bit of a resilience really after a tough period. And I think it would be naive to think that Apple aren't building the foundations, laying the groundwork in the background for continued growth. And I think it's going to be a couple of tricky quarters for Apple, but I think if they lay out their plans for AI, we've got the new iPhone 16 probably coming very soon, I think we're probably going to see a shinier Apple come the end of 2024.

Yeah, I think there was plenty of trepidation for Apple heading into the result. There was question marks overgrowth, as you said, and I think the big question was if they could still deliver the growth that investors have become accustomed to over the years. But I think Tim Cook really navigated it perfectly. All of those question marks over growth and then he essentially just shows how much of a financial powerhouse Apple is. They announced the biggest buyback in history, 110 billion US dollars. If that's not a statement, I'm not sure what it is. But sales in China were also better than feared, helping things look slightly better. And I think really what we saw from Apple was just a bit of a resilience really after a tough period. And I think it would be naive to think that Apple aren't building the foundations, laying the groundwork in the background for continued growth. And I think it's going to be a couple of tricky quarters for Apple, but I think if they lay out their plans for AI, we've got the new iPhone 16 probably coming very soon, I think we're probably going to see a shinier Apple come the end of 2024.

I like the idea of a shinier Apple. Microsoft, world's biggest company or Wall Street's biggest company, what do you make of their results?

I like the idea of a shinier Apple. Microsoft, world's biggest company or Wall Street's biggest company, what do you make of their results?

Yeah, again, solid beats across the top and bottom line. Cloud growth is that key. That's the key across all of those sort of big businesses that think Amazon, think Alphabet, those are the three key players really when it comes to cloud growth. AI is obviously front and center. They even say they can't even keep up with demand right now, and they're spending more to try and keep up with that demand. They invested early into ChatGPT, OpenAI, and it's clearly paying off and they're going to continue to be one of the main benefactors from this AI boom.

Yeah, again, solid beats across the top and bottom line. Cloud growth is that key. That's the key across all of those sort of big businesses that think Amazon, think Alphabet, those are the three key players really when it comes to cloud growth. AI is obviously front and center. They even say they can't even keep up with demand right now, and they're spending more to try and keep up with that demand. They invested early into ChatGPT, OpenAI, and it's clearly paying off and they're going to continue to be one of the main benefactors from this AI boom.

And Amazon and Alphabet fit into that category as well?

And Amazon and Alphabet fit into that category as well?

Absolutely, yeah. I think if we look at Amazon, it was probably one of the standout names for me, I think. Stronger sales in that sort of cloud growth, cloud unit to start the year, the fastest growth that we've seen in over 12 months from that unit as well. Operating income jumped by about 200%. And I think in terms of AWS, which is Amazon's Web Services, which is really a fundamental part of their business, when we think about Amazon e- commerce is what drives the revenue. When we think about Amazon as a general consumer, we think about their online store. That's what drives revenue. But if we look at AWS, that's the crown jewel. It generates 10% of revenue, but it contributes over 60% of overall operating profits.

Absolutely, yeah. I think if we look at Amazon, it was probably one of the standout names for me, I think. Stronger sales in that sort of cloud growth, cloud unit to start the year, the fastest growth that we've seen in over 12 months from that unit as well. Operating income jumped by about 200%. And I think in terms of AWS, which is Amazon's Web Services, which is really a fundamental part of their business, when we think about Amazon e- commerce is what drives the revenue. When we think about Amazon as a general consumer, we think about their online store. That's what drives revenue. But if we look at AWS, that's the crown jewel. It generates 10% of revenue, but it contributes over 60% of overall operating profits.

Wow.

Wow.

So, huge numbers from a small part of the business, but really has a huge, huge impact. So I think maybe the downside from that report was that we didn't see a dividend, which Alphabet did deliver, given that these businesses have huge cash piles, but instead they sort of said that they were going to refocus on reinvesting back into the business. And I think when you are talking about reinvesting in AI, I think anything around that is well- placed at the moment and Wall Street is applauding that.

So, huge numbers from a small part of the business, but really has a huge, huge impact. So I think maybe the downside from that report was that we didn't see a dividend, which Alphabet did deliver, given that these businesses have huge cash piles, but instead they sort of said that they were going to refocus on reinvesting back into the business. And I think when you are talking about reinvesting in AI, I think anything around that is well- placed at the moment and Wall Street is applauding that.

Stay with me, Josh, we'll be back in a minute. I am speaking to Josh Gilbert, market analyst at social investment network eToro. The Magnificent Seven laggard, without a doubt, is Tesla. What did they say this quarter?

Stay with me, Josh, we'll be back in a minute. I am speaking to Josh Gilbert, market analyst at social investment network eToro. The Magnificent Seven laggard, without a doubt, is Tesla. What did they say this quarter?

Yeah, look, this was the name that I think most investors were sort of watching heading into earnings season. It's a stock loved by retail investors. It's the most owned stock globally at eToro by retail investors, so we know it's loved. But for earnings, it was the worst performing stock on the S& P 500, which is no easy task. And for a name like Tesla is unexpected. And I actually said before earnings that if the stock was going to move high, that we needed Musk to deliver some magic. And that's exactly what he did. He sort of gave us some magic. The result was worse than expected. We had a bigger miss on earnings, but Musk stepped up. He laid out the foundation for Tesla's future growth strategy, and that importantly included a lower cost vehicle that's set to be released in 2025, and that was what Wall Street has sort of longed for. And I think what's really important here is that Tesla is going through a challenging period through delivery growth, margin compression, obviously higher rates are really hurting the EV space, we're seeing demand fall, but I think Musk is taking the reins slightly here. He's really pulling things back in. And let's not forget, I think when we think about EVs and businesses, we often think startups, but Tesla isn't a startup anymore. They've got the financial power, unlike other EV names to navigate this period. And I think what Musk is doing really well, maybe compared to some of the other businesses, I think he's really trying to take competition out, and I think he's really trying to cut off their legs. And if we think about some of their competitors, your Rivians, other names, these businesses are losing huge amounts of money on every vehicle they sell. So it's going to be a really difficult time for them, but Tesla have the financial power to cut costs, to continue delivering vehicles and actually navigate this period, even if it is going to be a challenging one.

Yeah, look, this was the name that I think most investors were sort of watching heading into earnings season. It's a stock loved by retail investors. It's the most owned stock globally at eToro by retail investors, so we know it's loved. But for earnings, it was the worst performing stock on the S& P 500, which is no easy task. And for a name like Tesla is unexpected. And I actually said before earnings that if the stock was going to move high, that we needed Musk to deliver some magic. And that's exactly what he did. He sort of gave us some magic. The result was worse than expected. We had a bigger miss on earnings, but Musk stepped up. He laid out the foundation for Tesla's future growth strategy, and that importantly included a lower cost vehicle that's set to be released in 2025, and that was what Wall Street has sort of longed for. And I think what's really important here is that Tesla is going through a challenging period through delivery growth, margin compression, obviously higher rates are really hurting the EV space, we're seeing demand fall, but I think Musk is taking the reins slightly here. He's really pulling things back in. And let's not forget, I think when we think about EVs and businesses, we often think startups, but Tesla isn't a startup anymore. They've got the financial power, unlike other EV names to navigate this period. And I think what Musk is doing really well, maybe compared to some of the other businesses, I think he's really trying to take competition out, and I think he's really trying to cut off their legs. And if we think about some of their competitors, your Rivians, other names, these businesses are losing huge amounts of money on every vehicle they sell. So it's going to be a really difficult time for them, but Tesla have the financial power to cut costs, to continue delivering vehicles and actually navigate this period, even if it is going to be a challenging one.

I want to get away from the tech stocks. I know a couple of companies that you have looked at, which I think are really interesting are the cruise liners, Caribbean or in Carnival?

I want to get away from the tech stocks. I know a couple of companies that you have looked at, which I think are really interesting are the cruise liners, Caribbean or in Carnival?

Yeah, absolutely. So for me, the travel sector has probably been one of the surprises for me. We've got a really busy summer coming up and we've had some mixed results. And as you said there, I think the biggest surprise and the standout was the cruise liners, and it maybe over the last couple of years, they're businesses that we've probably forgotten about, and I think that comes from the fact that they were decimated in COVID. And yeah, particularly Royal Caribbean and Carnival, they've come back with a vengeance and they really have. If we look at Royal Caribbean specifically, 360 million in net income. A year ago, that was a $ 48 million loss, so a huge, huge turnaround, and they upgraded their earnings guidance for the full year saying demand was high, customers are spending more on extras. So when they're getting on board, they're upgrading their packages, they're spending more money. And Royal Caribbean were hitting records across the boards. They were seeing over a hundred percent capacity on their ships, which means that we're seeing more than one person in each cabin and just basically record bookings, which is really surprising. Then on the flip side of that, you've got Airbnb who beat expectations last week, but then they got punished for weaker guidance. That also follows suits from the likes of Booking. com and Expedia as well, who earlier in earning season also said that guidance is looking a little bit shaky. They're not sure if demand is going to hold up, even though it started pretty well. And as I say, that surprised me given what we've seen, one, from this cruise liners, but also ahead of a busy summer. We've got the Olympics, we've got Euro 2024 in Europe, so there's a very busy summer coming up. So a real mix I think there between those travel names, but also I think it just goes to show that we are still seeing consumers spend, but it's just where that spending is coming through. Maybe we're seeing cruise liners do well because maybe the older generation, the retired generation have more capital to spend. Higher interest rates may have obviously been more rewarding for them and they can spend on cruising. Whereas maybe people just looking for a normal holiday through Airbnb, Booking and Expedia don't have the same expendable cash. So, real two ends of the scale there, and that was a big surprise for me.

Yeah, absolutely. So for me, the travel sector has probably been one of the surprises for me. We've got a really busy summer coming up and we've had some mixed results. And as you said there, I think the biggest surprise and the standout was the cruise liners, and it maybe over the last couple of years, they're businesses that we've probably forgotten about, and I think that comes from the fact that they were decimated in COVID. And yeah, particularly Royal Caribbean and Carnival, they've come back with a vengeance and they really have. If we look at Royal Caribbean specifically, 360 million in net income. A year ago, that was a $ 48 million loss, so a huge, huge turnaround, and they upgraded their earnings guidance for the full year saying demand was high, customers are spending more on extras. So when they're getting on board, they're upgrading their packages, they're spending more money. And Royal Caribbean were hitting records across the boards. They were seeing over a hundred percent capacity on their ships, which means that we're seeing more than one person in each cabin and just basically record bookings, which is really surprising. Then on the flip side of that, you've got Airbnb who beat expectations last week, but then they got punished for weaker guidance. That also follows suits from the likes of Booking. com and Expedia as well, who earlier in earning season also said that guidance is looking a little bit shaky. They're not sure if demand is going to hold up, even though it started pretty well. And as I say, that surprised me given what we've seen, one, from this cruise liners, but also ahead of a busy summer. We've got the Olympics, we've got Euro 2024 in Europe, so there's a very busy summer coming up. So a real mix I think there between those travel names, but also I think it just goes to show that we are still seeing consumers spend, but it's just where that spending is coming through. Maybe we're seeing cruise liners do well because maybe the older generation, the retired generation have more capital to spend. Higher interest rates may have obviously been more rewarding for them and they can spend on cruising. Whereas maybe people just looking for a normal holiday through Airbnb, Booking and Expedia don't have the same expendable cash. So, real two ends of the scale there, and that was a big surprise for me.

Josh, thank you for talking to Fear & Greed.

Josh, thank you for talking to Fear & Greed.

Thanks so much, Sean.

Thanks so much, Sean.

That is Josh Gilbert, market analyst at social investment network eToro. This is the Fear & Greed Business Interview. Remember, this is general information only and you should always seek professional advice before making investment decisions. Join us every morning for the full episode of Fear & Greed, daily business news for people who make their own decisions. I'm Sean Aylmer. Enjoy your day.

That is Josh Gilbert, market analyst at social investment network eToro. This is the Fear & Greed Business Interview. Remember, this is general information only and you should always seek professional advice before making investment decisions. Join us every morning for the full episode of Fear & Greed, daily business news for people who make their own decisions. I'm Sean Aylmer. Enjoy your day.