The Compound: Profits Are Up 10% and Everyone Is Beating Estimates
Amid the tariff drama this week, investors were largely distracted by positive news coming out of the market. It’s still earnings season, and several large-cap companies were reporting this week.
Over time, growing earnings tends to be the best indicator of a stock’s success. Rising earnings across the board are a good sign that markets are in a healthy place for now. Conventional valuation may be a bit stretched, particularly with the tech stocks, but the earnings trend is bullish.
That may not translate into an immediate profit right away. For instance, tech giant Google (GOOG) managed to beat earnings expectations by 1%. Shares sold off heavily on the news, especially since the company’s cloud-related revenue was on the weaker side.
Chipmaker Advanced Micro Devices (AMD) also managed to beat earnings estimates. But investors are still rethinking the valuation of chip stocks following the launch of the DeepSeek AI.
Intelligence company Palantir Technologies (PLTR) soared to new all-time highs, jumping nearly 25% after earnings. Palantir is in a sweet spot given its software, its unique moat in the services it provides, and its push to profitability over the past year.
Generally, earnings are beating estimates. Especially for the big tech players that many thought would slow down. While stocks may be down after reporting earnings for various reasons, an earnings beat remains a long-term bullish sign.