Market Outlook
Stock futures pointed lower on Wednesday as Wall Street prepared for Nvidia’s fourth-quarter earnings report and the release of minutes from the Federal Reserve’s latest policy meeting.
Nvidia’s Earnings Report
Nvidia fell 1.7% in premarket trading in anticipation of its earnings report scheduled for after the closing bell. The stock suffered a 4.4% decline on Tuesday, wiping out approximately $75 billion of market value. This marked the steepest drop since October. Analysts expect Nvidia to report revenue of $20.4 billion—an impressive 240% increase from the previous year—along with adjusted earnings of $4.59 per share compared to 88 cents a year earlier.
Changes in Dow Jones Industrial Average
Amazon.com, the e-commerce and technology giant, will replace Walgreens Boots Alliance in the Dow Jones Industrial Average at the start of trading next Monday. This marks the first adjustment to the blue-chip index since 2020 when Walgreens was added. Amazon saw a 1.3% increase in premarket trading while Walgreens experienced a 2.9% decline.
Palo Alto Networks Performance
Palo Alto Networks reported fiscal second-quarter adjusted earnings and revenue that exceeded analyst expectations. Despite this positive news, the stock plummeted by 22% as the cybersecurity company revised its fiscal-year revenue outlook. Palo Alto now anticipates revenue between $7.95 billion and $8 billion for the year, down from the previous estimate of $8.15 billion to $8.2 billion. CEO Nikesh Arora clarified that this adjustment is not due to a change in demand but stems from a strategic shift as Palo Alto aims to establish itself as a prominent “platform” within the cybersecurity sector.
Market Update: Stock Performance Review
SolarEdge Technologies
SolarEdge Technologies experienced a significant drop of 14% following a report showing a 65% decline in fourth-quarter revenue. The company expects first-quarter revenue between $175 million to $215 million, which reflects a decline of 77% to 81% compared to the previous year. CEO Zvi Lando attributed this to record installations in the first half of 2023 but anticipates a weaker market in the second half due to higher interest rates and lower power prices.
Teladoc Health
Teladoc Health shares tumbled by 21% after announcing projected first-quarter sales of $630 million to $645 million, falling below analysts’ forecasts. The company also anticipates a loss of 45 cents to 55 cents per share, wider than expected.
RingCentral
RingCentral, a cloud-based communications company, saw a decrease of 6.7% after providing sales guidance for the fiscal first quarter and fiscal year that didn’t meet analysts’ expectations.
Caesars Entertainment
Caesars Entertainment reported a fourth-quarter loss of 34 cents per share, which was narrower than the previous year’s loss of 70 cents. Despite revenue slightly below estimates at $2.83 billion, the stock was down by 2.2%.
Diamondback Energy
Diamondback Energy exceeded expectations with fourth-quarter adjusted earnings of $4.74 per share, outperforming analysts’ projections of $4.70. Moreover, the company increased its oil production to 273.1 thousand barrels of oil equivalent per day, up from 226.1 thousand barrels last year, resulting in shares rising by 1.1%.
Toll Brothers
Toll Brothers, a luxury home builder, reported fiscal first-quarter earnings that surpassed analyst estimates. The company’s revenue jumped by 9% to $1.95 billion, with 1,927 homes delivered during the period, exceeding expectations and showcasing growth in the market segment.
Upcoming Earnings Reports
Exciting Reports Ahead
In addition to Nvidia, we anticipate earnings reports on Wednesday from a variety of companies including Analog Devices, Rivian Automotive, Lucid Group, Marathon Oil, Synopsys, Vertiv Holdings, and Etsy. Stay tuned for the latest updates!
