| Greetings, Here are the top business stories for the next week: - Nvidia will announce the most anticipated earnings of the quarter.
- FED will release minutes from its latest meeting.
- Walmart will post Q4 results.
Thanks for reading! Stjepan
p/stjepan-kalinic | |
| 1 | | Nvidia will report its fiscal Q4 2024 results on February 21 after market close, with analysts anticipating significant revenue and profit gains, largely driven by the increasing demand for artificial intelligence (AI) chips. The company's guidance will be closely watched to gauge the sustainability of the spending boom for data center-based AI. 
What the numbers say: Analysts expect Nvidia's Q4 2024 revenue to reach $20.38B, more than triple the figure from the same period a year ago, showcasing the substantial growth in demand for its products. Net income is projected to surge to $10.4B and earnings per share (EPS) to $4.18, indicating a significant increase from the fiscal fourth quarter of 2023. The data center business, a key metric for Nvidia, is expected to contribute significantly, potentially reaching $16.86B in revenue, further highlighting the impact of AI and cloud computing trends. Why it matters? Nvidia has led the recent market surge, rallying over 50% year-to-date. The earnings should provide much-needed clarification, as analysts are taking sides, with some setting new, higher profit targets. In contrast, others warn about decreasing lead times for GPU orders – indicating a potential future sequential growth peak. Additionally, if further detailed in the earnings call, Nvidia's strategic move to launch a new business unit focused on custom chips. The move could be pivotal for the company's future growth and its position in the competitive chip market. |     | |
| 2 | | The Federal Open Market Committee (FOMC) will release minutes from the latest FED meeting on Wednesday, February 21. The minutes offer insights into the Federal Reserve's decision-making process and serve as a guide to future U.S. interest rate policies. More: - FOMC minutes are released about three weeks after the latest FED meeting (January 30). The minutes detail the reasoning behind the Fed's decisions, providing transparency into the central bank's stance on interest rates and economic measures.
- Investors closely track the minutes for clues about the longer-term plans of Fed officials, shaping expectations and influencing decisions in financial markets.
- With seven remaining meetings scheduled in 2024, the FED is expected to cut interest rates by a little more than 1% or four 25 basis point (bps) rate cuts. The latest inflation uptick might shift the expectations, which are already down from 6 rate cuts.
- FOMC minutes remain in focus despite the asset price response declining to its release since 2008.
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| 3 | | Walmart will report earnings on Tuesday, February 20, before the market opens, with Wall Street expecting $169.37B in revenues. Analysts are particularly interested in Walmart's performance in discretionary categories and the impact of its everyday low-price model across income levels. More: - Analysts project an EPS of $1.65 and anticipate a 3.2% increase in revenue to $169.37B, reflecting Walmart's position as a key indicator of consumer spending trends.
- Walmart has consistently surpassed EPS estimates (88% success) and revenue estimates (100% success) over the last two years, with Q3 earnings beating estimates but raising concerns about consumer spending.
- Analysts now foresee an improved outlook for spending on discretionary categories, especially among lower-income consumers, citing Walmart's success in retaining share gains across income levels.
- Walmart's plans to open or expand 150 stores in the U.S. over the next five years and its focus on advertising/retail media segment momentum are expected to be discussed, impacting the company's revenue growth target.
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| 4 | | Realty Income ($O) will announce its Q4 earnings after market close on February 20, with a consensus revenue estimate of $983.7M. The planned acquisition of Spirit Realty Capital is expected to enhance Realty Income's financial position, but market concerns have led to a stock decline of 10.65% year-to-date. More: - The $9.3B all-stock deal to acquire Spirit Realty Capital is viewed positively for its potential to enhance Realty Income's long-term financial landscape and market position, with expectations of over 2.5% annualized adjusted FFO per share growth.
- Realty Income nudged up the lower end of its 2023 earnings guidance after Q3 earnings, with improved same-store rent growth of over 1.5% and an unchanged occupancy rate outlook of over 98%.
- Over the last two years, O has beaten FFO estimates 63% of the time, and revenue estimates 75% of the time.
- FED's "higher for longer" policy still poses a danger to the REIT sector, which significantly underperformed the S&P 500 in 2023.
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| 5 | | Palo Alto Networks is set to announce its second-quarter earnings on February 20, with analysts anticipating year-over-year growth in earnings per share and revenues. The cybersecurity firm is poised for strong results amid increasing cyber budgets, persistent service demand, and growing requirements from regulators and insurers. More: - Analysts expect adjusted profit of $1.30 per share, reflecting a 24% increase from last year's quarter, and revenue is projected to grow by 19% to $1.97B.
- Palo Alto Networks faces scrutiny on billings, especially after missing expectations in the last two quarters. Analysts are attentive to billing trends, considering factors such as payment plans versus financing deals and consolidation efforts by enterprise customers to combat vendor sprawl.
- Consolidation is a prevailing theme as enterprise customers seek to streamline cybersecurity vendors, and Palo Alto Networks stands to benefit from this trend. The company has consistently demonstrated resilience in the face of market challenges and is expected to gain from consolidating market share across its platform.
- Wedbush highlights a substantial $200B growth opportunity in cloud security over the next few years, positioning Palo Alto Networks as a key player with the solution sets to protect critical cloud deployments from growing threats and attacks.
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| 6 | | Consumer Analyst Group of New York (CAGNY) Conference starts on February 19 at Mizner Center, Boca Raton, Florida. The annual five-day conference will feature numerous industry-leading companies discussing their recent results and long-term strategies. More: - The February conference is an annual one-week event for an organization that connects nearly 1,000 sell-side and buy-side members through monthly lunches.
- CAGNY's goal is to provide a fair and collegial environment for industry professionals, contributing to the advancement and understanding of the consumer sector.
- The conference offers valuable opportunities for investors and analysts to engage directly with management teams from over 30 global consumer companies, fostering a robust dialogue and facilitating informed investment decisions.
- Industry leaders like The Coca-Cola Company, General Mills, McCormick & Company, PepsiCo, Philip Morris International, and many others will participate with a full suite of C-level executives.
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 | Freelance Writer | | Stjepan Kalinic is an analyst and writer with a background in institutional investment research. He's passionate about reading, playing music, lifting weights, and practicing martial sports. He values interesting books above everything else, and you can send recommendations through LinkedIn. | | This newsletter was edited by Megan LaBruna | |
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