What's Moving the Markets in the 2nd Week of August 2023?

While the week is still not in full swing, there are several companies that seem to be sending waves through the markets already. From data analytics giant, Palantir (PLTR) to tech behemoth, Apple (AAPL), here are some of this week’s market movers:

Has the Apple Fallen Far from the Tree?

Tech giant and FAANG company, Apple, seems to be making gloomy headlines in the past couple of days, since its earnings release on Thursday last week. Apple has lost over 200$ billion in market cap in its worst five-day session since Nov 2022. 

Whereas the iPhone maker’s results exceeded Wall Street’s estimates, it appears that overall the company’s revenue and profits were below last year’s numbers. The drops were especially seen from its iPhone, Mac, and iPad segments, whereby iPhone revenues fell 2% YoY, Mac revenues dropped 7% YoY, and iPad revenues fell about 20%. 

Tim Cook, the company’s CEO, stated that the company continues “to face an uneven macroeconomic environment, including nearly four percentage points of foreign exchange headwinds.”On the other hand, he also claimed that Apple reported “an all-time revenue record in Services during the June quarter, driven by over 1 billion pair subscriptions,” and he attributed this to “robust sales of iPhone.” 

As such, given the uncertainties surrounding the world’s biggest company by market cap, it seems that many investors were baffled as to how to approach the company’s stock which may have caused it to lose 4.7% the day after its earnings report and 6.4% as of Monday, August 7th. 

In addition, interestingly, it seems that Apple’s drop came despite its latest iPhone launch details release whereby it was announced that the iPhone will be available for full sales around September 22, 2023, and that the company will schedule a lunch event on either September 12 or 13. If Apple sticks to the anticipated sales date then it would be a Friday, which would increase the chances of Apple’s sales improving. 

Despite the much-anticipated release which could play a vital role in Apple’s growth, many note that the launch may be challenging to the tech giant. This is because Apple’s iPhone 15 launch needs to beat the launch of the iPhone 14 all while having to prove its worth in what is already deemed a “tough” market for smartphones given inflation and high consumer prices. 

Nonetheless, while these results may seem dreary, it is important to keep in mind that since the beginning of the year, Apple’s stock has actually gained over 42% despite the economic headwinds ranging from record-high inflation to recession fears and central banks’ rate hikes. 

Palantir Drops Despite Positive Earnings

Another company making the headlines this week is big data analytics company, Palantir, which also reported above-expected earnings on Monday, August 7th, but dipped about 12% in extended trading following the report, before regaining momentum. 

This may come as a surprise to some given the fact that the company reported a quarterly revenue increase of about 13%, which is above analyst expectations, while it provided higher forecasts for profits and raised its adjusted income from the operations forecast. The company’s CEO, Alex Karp, even noted that he anticipated Palantir to “become eligible for inclusion in the S&P 500 after we report our financial results for Q3 2023 in early November.”  So why did Palantir’s stock dip?

What’s Next for Palantir?

Given the rosy forecasts and earnings data, many may naturally wonder why Palantir’s stock dipped yesterday. While there’s no black-or-white answer to this, it seems that whereas the forecasts for profits were positive and above Wall Street’s predictions, the company’s outlook for its revenues may have disappointed analysts and came in below their expectations. This, in turn, may have contributed to some investors and traders shying away from Palantir’s stock in extended trading. 

Additionally, these drops come against the backdrop of the Artificial Intelligence (AI) hype which took many companies, including Palantir, by storm. CEO Karp even revealed that the demand for Palantir’s AI technology is “unprecedented.” AI is also believed to have boosted the company’s stock which has grown by a whopping 132% this year. (Source:Bloomberg)

Considering that AI may have boosted Palantir this year and Karp’s commentary, it may be worth keeping track of any AI advancements the company makes in the near future to see how these may affect its trajectory and see whether or not Karp’s hopes of including the company in the S&P 500 will hold true. 

Besides Apple and Palantir, this week brings forth some key events that traders, investors, and analysts may want to keep in mind.

Companies from Disney (DIS) and Sony (SONY) are expected to report earnings tomorrow, Wednesday, and Alibaba (BABA) on Thursday. These earnings can reflect economic conditions and consumer spending habits. Moreover, traders may also want to track the upcoming US CPI report on Thursday and the UK Q2 GDP figures on Friday to see how some of the world’s leading economies are faring.