Back To Reality: The Earnings Recession Has Arrived

Sentiment became euphoric Thursday on the back of META earnings yesterday afternoon sending the Nasdaq up 3.25% and the S&P 1.47%. Unfortunately – as I suggested in my blog this morning (“The Bear Market Has Been Cancelled”) – price was diverging from fundamentals and Apple (AAPL), Google (GOOG/GOOGL), and Amazon (AMZN) earnings – just out after the close – have confirmed that suspicion.

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Let’s start with the most important stock in the world: AAPL. While AAPL broke out above its 200 DMA today, its fundamentals are actually breaking down and so its stay in that territory is likely to be short-lived. Revenue declined 5.5% and Net Income 13.4% from a year ago, misses on both the top and bottom line. AAPL shares are currently -4% in the after-hours.

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GOOG/GOOGL also broke out above its 200 DMA today but the fundamental story is the same. Revenue was only +1% and EPS declined 31% year over year.

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Same story with AMZN: the stock got ahead of fundamentals. The crown jewel of AMZN is Amazon Web Services (AWS) – their cloud business – and revenue growth in that segment decelerated to +20%. AMZN’s 1Q23 revenue guidance also came in light as you can see in the tweet above by Benzinga.

In last weekend’s Market Preview, I said that this week was “poised to be epic” and it has not disappointed. Unfortunately for the bulls, it looks like it will be ending on a sour note.


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