Weekly Equities Outlook: Amazon, Alphabet and Lloyds

Overview

This article provides a detailed outlook on the upcoming earnings reports from major companies including Amazon, Alphabet, and Lloyds. It highlights the current market sentiment, particularly concerns regarding heavy AI spending, and the implications for these companies' performances.

Amazon Q3 Earnings Preview

Amazon is set to report its Q3 earnings on October 29, with expectations of earnings per share (EPS) at $1.96, reflecting a 0.4% annual growth, and revenue projected at $202.21 billion, a 12% increase year-on-year. The stock has seen a slight decline of 2.5% over the past week due to investor concerns over substantial AI investments.

Key areas of focus include:

• Performance of Amazon Web Services (AWS), which is crucial for profitability.
• Capital expenditure (capex) guidance of $220 billion, with scrutiny on whether this spending translates into increased capacity or merely escalates costs.
• Free cash flow trends, particularly after negative reports from other tech giants.
• Growth in high-margin advertising revenue.

Technical analysis suggests that Amazon's stock remains above its rising trend line and key moving averages, with potential resistance levels at $265 and $277, while immediate support is noted at $242.

Alphabet Q3 Earnings Preview

Alphabet will report its Q3 earnings on October 28, with expectations for EPS of $2.98 and revenue of $24.8 billion. Despite strong AI investments bolstering growth across its platforms, Alphabet's stock performance has lagged behind the S&P 500.

Investors are particularly concerned about:

• The impact of rising AI infrastructure costs on profitability.
• Alphabet's ability to maintain its competitive edge in advertising amidst heavy spending.

Technical indicators show that Alphabet's stock has faced resistance after reaching a record high, with potential support levels at $320 and $273.

Lloyds Q3 Earnings Preview

Lloyds is scheduled to report on October 29, following the UK Budget announcement. The bank has shown strong performance in the first half of the year, with significant growth in loans and customer deposits.

Key considerations include:

• Potential tax hikes on banks and their impact on net interest income.
• Competition for customer deposits affecting lending margins.
• Pressure from inflation and rising mortgage refinancing costs on household incomes.

Technical analysis indicates that Lloyds' stock has recently broken below a rising trend line, with critical support levels at 90 and 84.