Mega Caution for Mega Cap EPS

The Big D Looms

First, lets consider the order of earnings this upcoming week. ON Semiconductor reports tomorrow before the open. It “seems” like it should be like TXN which will benefit from China EV exposure uptick. ON believes they are in 60% of China EV models. The stock is cheap at mid teens multiple and many are still short it for auto downticks. So, ON has more a chance to rally then disappoint.

AMD & Google report after the close Tuesday followed by Microsoft and META on Wednesday followed by Apple & Amazon on Thursday. Sprinkle in some “smaller” market caps COIN, ROKU (Wed), Uber and INTC (Thurs pre market and PM report, respectively).

I have done my prep for most of the big ones that are reporting. AMD, for example, needs to raise their GPU sales for 2024 to more than the $5 billion some previewing. Why? $5 billion would be pathetic sequential growth, $500m in 1Q, $1 billion in 2Q, $1.5b in 3Q and projections for $2 billion in 4Q gets you to $5 billion. Does this excite you relative to Nvidia? Of course, keeping their $4.5 billion guide would be a disaster. I would short a gap up on that guide ($5 billion) afterhours (all things equal), which would be basically inline quarter and maybe slight upside to 4Q estimates. What would make me buy AMD? If they raised to $5.5 billion and more so $6 billion you can see a path to $12 billion in 2025 GPU sales. The rest of the businesses get little credit for the multiple AMD trades including XLNX (embedded), CPU client and gaming.

How about Google, Microsoft, META, Apple and Amazon (23% of the QQQ)?