A big chunk of the Magnificent Seven — Apple (AAPL) – Get Free Report, Amazon (AMZN) – Get Free Report and Meta (META) – Get Free Report — reported earnings Thursday night, and two of those three tech titans spiked hard in after-hours trading.
New dividends out of Meta, continuing growth in Apple’s base of active devices and Amazon’s expectation-beating operating income have tech analysts feeling confident in a 2024 tech surge.
Meanwhile, Tesla (TSLA) – Get Free Report is conducting a recall of sorts, Ives thinks Tesla moving to Texas would be a great step for the company and a few new reports regarding artificial intelligence have been published.
Let’s get into it.
Here’s what investors are missing in the Apple reaction
Alone among the three Big Tech corporations that reported earnings Thursday, shares of Apple dipped by more than 3% in pre-market trading on ongoing headwinds in China. Still, Apple beat expectations for the quarter, earning $2.18 per share on $119.58 billion in revenue.
Sales of iPhones importantly grew by 6%, though Apple did lower its March guidance by about $5 billion.
Ives said in a note that Wedbush’s Apple thesis remains unchanged; the quarter, he said, was a “major step in the right direction” that was somewhat “neutralized by a soft March guide.”
Apple’s growing installed base — which numbers 2.2 billion, up from 2 billion last year — has Ives confident in Apple over the next 12 to 18 months.
It’s a point that Deepwater’s Gene Munster agrees with: “A growing base is a sign that the customer base is committed, which means they will come back to upgrade down the road, buy new devices and services.”
“The Apple product flywheel continues,” he added.
And with CEO Tim Cook finally mentioning the term “AI” on the conference call, Munster thinks Apple will unveil a generative AI model this year, securing the company to the “generative AI steamroller.”
Shares of Apple dipped about 2% following market open.
Analyst: Meta is ‘going higher this year’
Shares of Meta spiked around 17% in pre-market trading Friday, pushing the stock toward an all-time high.
Mark Zuckerberg’s social media giant earned $40.11 billion in revenue for the quarter, a 25% year-over-year increase. The company’s net income about tripled, spiking to around $14 billion.
And with cash and equivalents swelling to around $65 billion, Meta said it would pay investors a dividend of 50 cents per share on March 26, a historic move for the company. Meta also announced a $50 billion share buyback.
Munster noted that engagement is improving and will continue to do so with AI.
“I believe Meta is going higher this year (not sure what happens tomorrow) given AI has not even started and they will have a real benefit,” he said.
This comes in the immediate wake of Zuckerberg’s eighth appearance before a Congressional committee, where he was grilled for enabling child exploitation on his platforms.
Shares of Meta were up more than 17% following market open.
Amazon brought in $170 billion for the quarter
Though not as powerful a reaction as Meta’s, shares of Amazon were well in the green Friday morning, spiking more than 6% in pre-market trading.
The company reported earnings of $1 per share on revenue of $170 billion for the quarter, both well above analyst expectations of 80 cents and $166.2 billion respectively.
Amazon’s operating income for the quarter spiked to $13.2 billion, a massive increase over last year’s $2.7 billion operating income.
Amazon Web Services sales of $24.2 billion, a 13% year-over-year increase, were in line with analyst expectations.
CEO Andy Jassy, who called the quarter “record-breaking,” issued strong guidance for the current quarter.
Wedbush boosted its price target to $220 (from $210) in response to the report, saying that “Amazon remains our best idea across our consumer internet coverage.”
Shares of Amazon spiked nearly 8% after market open.
Tesla ships a software update
Tesla is undertaking a seemingly massive recall, impacting around 2.2 million units due to an issue identified by U.S. auto safety regulators due to incorrect font size on the car’s instrumental panel that could “increase the risk of a crash.”
The National Highway Traffic Safety Administration (NHTSA) noted that Tesla has already begun an over-the-air software update to fix the problem, which will be sent out for free.
At the same time, NHTSA on Friday upgraded its probe into Tesla vehicles over a loss of power steering to an engineering analysis, according to Reuters, a step before a recall demand.
The organization first opened a probe into this issue in August; NHTSA said it has now identified 2,388 complaints and is aware of more than 50 vehicles allegedly being towed as a result of the problem.
Tesla did not respond to a request for comment.
In other Tesla news, Ives believes that a move to Texas is the “only decision” available to the company, and one that “should resolve the Musk (compensation) package and at the same time take out the uncertainty of Musk and his AI initiatives going anywhere else.”
The AI Rundown: The UK’s House of Lords chimes in
The United Kingdom’s House of Lords released a 95-page report on generative artificial intelligence and Large Language Models (LLMs), importantly addressing the way it believes copyright law ought to apply to generative AI models.
“The point of copyright is to reward creators for their efforts, prevent others from using works without permission, and incentivize innovation,” the report reads. “The current legal framework is failing to ensure these outcomes occur and the Government has a duty to act. It cannot sit on its hands for the next decade.”
OpenAI, which is embroiled in a series of copyright lawsuits, previously told the House that it would be “impossible to train today’s leading AI models without using copyrighted materials.”
OpenAI additionally said, as it has on many occasions, that it views the practice of scraping creative works off the internet to train its models as fair, something the House does not agree with.
“LLMs may offer immense value to society. But that does not warrant the violation of copyright law or its underpinning principles,” the report reads.
“We do not believe it is fair for tech firms to use rightsholder data for commercial purposes without permission or compensation, and to gain vast financial rewards in the process.”
The report calls on the government to publish its view on how copyright law applies to the business of generative AI.
Meanwhile, a new Brookings report called on the U.S. to pointedly balance climate justice initiatives with AI, noting the extreme increases in energy usage, carbon emissions and water usage that AI has already incited, while also noting the ways in which AI can help the country become more sustainable.
“The U.S. stands on the brink of a tremendous opportunity to collaborate with major actors in the AI industry and improve transparency around the technology’s environmental impacts,” the report reads.
Contact Ian with AI stories via email, email@example.com, or Signal 732-804-1223.