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New Delhi: As the earnings season for the second quarter of FY25 unfolds, <keyword id="19959986" type="General" weightage="20" keywordseo="public-sector-banks" source="keywords">public sector banks</keyword> (PSBs) are expected to see a slight dip in profits compared to the previous quarter, according to a report by <keyword id="19896146" type="General" weightage="100" keywordseo="Motilal-Oswal" source="keywords" meta.keywordsubtype="org" meta.entityname="Motilal Oswal" meta.hostid="153" meta.entityid="Motilal Oswal">Motilal Oswal</keyword>. The report estimates that PSBs' Profit After Tax (PAT) will decline by 0.6 per cent quarter-on-quarter (QoQ), while showing a stronger year-on-year (YoY) growth of 17.2 per cent. "We estimate PSBs to report moderate <keyword id="19899597" type="General" weightage="20" keywordseo="earnings-growth" source="keywords">earnings growth</keyword> of 17.2 pc YoY/ a decline of 0.6 pc QoQ in 2QFY25," the report stated. The slower pace of growth can be attributed to flat net interest margins (NIMs) and a slight increase in loan loss provisions (LLP). The <keyword id="20171160" type="General" weightage="20" keywordseo="Net-Interest-Income" source="keywords">Net Interest Income</keyword> (NII) for PSBs is expected to grow by around 6 per cent YoY, although interest margins are likely to remain under pressure. Despite these near-term challenges, the report suggests that public sector banks are on track to post a compound annual growth rate (CAGR) of 15 per cent between FY24 and FY26, pointing to sustained long-term growth. In the private sector banking space, the report forecasts mixed results for the same quarter. For private banks under the coverage, Pre-Provision Operating Profit (PPoP) is expected to grow by 12 per cent YoY and 1 per cent QoQ. However, PAT growth is predicted to be more modest, increasing by 5 per cent YoY and 0.6 per cent QoQ. "For our private bank coverage universe, we estimate a PPoP growth of 12 pc YoY/1 pc QoQ and a PAT growth of 5 pc YoY/0.6 pc QoQ in 2QFY25," the report added. Looking ahead, private sector banks are expected to experience steady profitability growth, with earnings projected to grow at a CAGR of 12.4 per cent over FY24-FY26. Overall, while both public and private sector banks may face moderate growth in the second quarter due to margin pressures and higher provisions, their long-term earnings prospects remain positive. (ANI)

Profit of public sector banks expected to decline by 0.6 percent QoQ : Motilala Oswal

<ul class="summary-list"><li>Chip stocks tumbled Tuesday, with NVDA and AMD down 5% and ASML plunging 16%.</li><li>The downturn came as ASML lowered its 2025 sales guidance. </li></ul>Semiconductor stocks fell Tuesday after ASML slashed guidance for next year, and as the sector mulled reports that the US was weighing a cap on chip exports from some American companies.ASML, Europe's most valuable tech company, plunged 16% in its biggest single-day drop since 1998. Other chip stocks followed, with NVDA dipping almost 5%, AMD falling 5.3%, and Broadcom tumbling 3.5% around midday Tuesday.SMCI, meanwhile, fell as much as 3.4% earlier in the day before paring most losses.The industry's downturn comes after ASML, a Dutch chip machine maker, posted a downbeat earnings report and cut its sales guidance for next year. The report's forward guidance lowered total net sales for 2025 to between €30 billion and €35 billion, the lower half of the previously stated range, citing weak demand from chipmakers for its machinery."It now appears the recovery is more gradual than previously expected. This is expected to continue in 2025, which is leading to customer cautiousness," CEO Christophe Fouquet said in a statement.ASML's third quarter bookings were €2.6 billion, coming in under half the average estimate of €5.39 billion, according to a Bloomberg survey.The report was posted a day earlier than expected, adding to the surprise of the results and lower guidance. Flows into AI stocks slowed over the summer as investors <a target="_blank" href="https://www.businessinsider.com/big-tech-investors-wary-high-ai-spending-markets-selloff-nasdaq-2024-7?utm_medium=ingest&amp;utm_source=markets">expressed worries</a> about returns on huge spending on AI. Investment in the sector has rebounded in recent weeks, though, <a target="_blank" href="https://markets.businessinsider.com/news/stocks/nvidia-stock-tests-record-highs-wall-street-defends-valuation-blackwell-2024-10?utm_medium=ingest&amp;utm_source=markets">propelling Nvidia</a> to a fresh high on Monday to help the S&amp;P 500 hit <a target="_blank" href="https://markets.businessinsider.com/news/stocks/stock-market-today-sp500-hits-another-record-high-q3-earnings-2024-10">another record close</a>.Reports that the US is weighing a cap on chip exports from American chipmakers only compounded the industry's tumultuous start to the week.According to <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-10-15/us-weighs-capping-exports-of-ai-chips-from-nvidia-and-amd-to-some-countries">Bloomberg</a>, the Biden administration has been in talks to cap sales of advanced AI chips from some American chip companies—including Nvidia—to certain countries in order to protect national security.The plans would likely target Persian Gulf countries, which are increasingly interested in AI, sources told the outlet, and would build on existing restrictions that originally set out to curb China's progress in AI. Previously implemented restrictions have regulated chip shipments to over 40 countries in the Middle East, Africa, and Asia to prevent chip technology from flowing to China.

Chipmakers tumble as ASML forecast cut issues a growth warning to the sector

<ul class="summary-list"><li>US stocks rose on Wednesday as traders took in corporate earnings reports.</li><li>Tech stocks have gained, with Tesla popping over 10% in early morning trading.</li></ul>US stocks were mostly higher on Wednesday as traders took in a slew of corporate earnings. The S&amp;P 500 and Nasdaq Composite rose in early morning trading, while the Dow Jones Industrial Average traded mostly flat.Tesla rallied after the electric vehicle maker missed its revenue target, but issued firm guidance on a cheaper mass-market EV. The stock was up 12% shortly after the opening bell on Wednesday. Markets are eyeing results from tech giants this week, with Meta reporting after the closing bell Wednesday and Microsoft set to report financials on Thursday.Investors have been enjoying a relatively upbeat corporate earnings season thus dar. Of the 14% of S&amp;P 500 companies that have reported for the first quarter, 74% beat earnings estimates, according to data from <a href="https://insight.factset.com/sp-500-earnings-season-update-april-19-2024">FactSet</a>. On average, companies are beating estimates by 7.8%. Here's where US indexes stood at the 9:30 a.m. opening bell on Wednesday: <ul><li><a href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">S&amp;P 500</a>: 5,081.49, up 0.2%</li><li><a href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">Dow Jones Industrial Average</a>: 38,448.91, down 0.14% (-54.78 points)</li><li><a href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">Nasdaq Composite</a>: 15,793.38, up 0.68%</li></ul>Here's what else is going on: <ul><li><a href="https://markets.businessinsider.com/news/stocks/meta-earnings-preview-1q-stock-price-outlook-ai-instagram-reels-2024-4">Here's what Wall Street analysts expect from Meta</a> as it gears up for first-quarter earnings.</li><li><a href="https://www.businessinsider.com/jpmorgan-jamie-dimon-economy-inflation-recession-stagflation-geopolitics-crypto-bitcoin-2024-4">Jamie Dimon warned the world order is being challenged</a> and bashed crypto once again.</li><li><a href="https://www.businessinsider.com/elon-musk-net-worth-tesla-stock-ev-billionaires-wealth-layoffs-2024-4">Elon Musk's wealth has crashed over $175 billion from its peak</a> as Tesla's problems pile up.</li></ul>In commodities, bonds, and crypto: <ul><li><a href="https://markets.businessinsider.com/commodities/oil-price?type=wti&amp;utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">West Texas Intermediate</a> crude oil dropped by 0.35% to $83.07 a barrel. <a href="https://markets.businessinsider.com/commodities/oil-price?utm_medium=ingest&amp;utm_source=markets">Brent crude</a>, the international benchmark, slid 0.2% to 88.23 a barrel. </li><li><a href="https://markets.businessinsider.com/commodities/gold-price?utm_medium=ingest&amp;utm_source=markets">Gold</a> fell by 0.7% to $2,320.67 an ounce. </li><li>The 10-year Treasury yield rose three basis points to 4.636%. </li><li><a href="https://markets.businessinsider.com/currencies/btc-usd?utm_medium=ingest&amp;utm_source=markets">Bitcoin</a> was down slightly to $66,079. </li></ul>

Stock market today: US stocks rise with tech sector gaining amid earnings

<ul class="summary-list"><li><a target="_blank" class="" href="https://www.businessinsider.com/lvmh-luxury-louis-vuitton-struggles-china-slowdown-2024">LVMH said sales dropped</a> during the third quarter, with revenue down double digits in China.</li><li>The company acts as a bellwether for the luxury industry, which is expected to continue to struggle.</li></ul>The luxury slump isn't going anywhere — and the fashion and leather goods houses of the world should beware.<a target="_blank" href="https://www.businessinsider.com/lvmh-luxury-louis-vuitton-struggles-china-slowdown-2024">LVMH, the largest of the luxury conglomerates</a>, announced its third-quarter earnings this week, and the results were grim. Revenue was down 3% at the Louis Vuitton owner, and for the first time since the pandemic, sales in the company's fashion and leather goods sector, its largest, fell. Its other sectors — watches and jewelry, wine and spirits, and perfume and cosmetics — missed analysts' estimates, and the company's stock dropped.Salvatore Ferragamo, which also reported earnings this week, had an even steeper sales decline.Word on the Street is that things may <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/lvmh-stock-price-earnings-lucury-sales-china-economy-demand-stimulus-2024-10">get worse for the sector before they get better</a>."We see a challenging backdrop for luxury consumption and expect a difficult six months ahead," Goldman Sachs analysts wrote in a note following LVMH's earnings call.Over the next week, Kering, the owner of <a target="_blank" class="" href="https://www.businessinsider.com/gucci-sales-profit-reputation-falling-luxury-kering-michele-china-2024-5">Gucci</a> and Balenciaga, and Hermès will announce their earnings. Richemont, Moncler, and Burberry will follow.In some ways, the poor showing may have been inevitable."This is largely cyclical, and right now we're kind of in the trough or valley, so there is a fair amount of weathering that needs to take place on an industry-wide basis," Sky Canaves, a principal analyst at EMARKETER, a sister company of Business Insider, said.Luxury has had its ups and downs before and was riding a particularly — and perhaps artificially — high high fueled by a pandemic bump in spending. Consumers had savings and stimulus checks and nowhere to go, so they spent extra cash on bags, wallets, and the like.While economic uncertainty has affected countries worldwide in recent years, <a target="_blank" href="https://www.businessinsider.com/china-luxury-slump-stimulus-measures-lvmh-revenue-earnings-2024-10">a property crisis and high youth unemployment rates in China</a>, one of the world's biggest luxury markets, have hit the region particularly hard. LVMH sales in Asia, excluding Japan, fell 16% year-over-year for the quarter."Consumer confidence in mainland China today is back in line with the all-time low reached during COVID," LVMH's chief financial officer, Jean-Jacques Guiony, told analysts during its earnings call.He added that it's too early to tell if the country's stimulus package or the recent national holiday would boost sales.While personal luxury sales in China grew by more than 37% each year from 2019 through 2021, that annual growth is not expected to hit more than 4.2% through 2028, according to EMARKETER data.<h2 id="a8668278-865b-4731-8ca2-2e215ef67ebd">How brands can bounce back</h2>Still, the contraction in luxury spending may not have had to be as sharp as it was, regardless of the macroeconomic conditions. There are levers that brands can pull to hamper their losses — or add to them."The big question is whether it is only a weakness in consumer confidence that is responsible for the slowdown in spending or whether there are some more structural issues," Adam Cochrane, a retail and luxury equity analyst at Deutsche Bank, told BI over email.Pricing, for example, is well within companies' control, and some have been too liberal with increases. Houses like Louis Vuitton and Chanel have more than doubled the prices of their signature bags — the Never Full and Classic Flap, respectively — over the past decade, and the brands have accelerated price hikes since 2020, turning off customers, according to data from Sotheby's.<a target="_blank" href="https://www.businessinsider.com/hermes-became-ultimate-status-symbol-2024-2">Hermès</a>, meanwhile, has raised prices more moderately.More conservative increases appeal to customers, who may be turned off from buying a product that they could have bought five years ago at a significantly lower price, Canaves said.LVMH, for its part, defended its price hikes. "Do you really think that if we had not increased prices the way we have done, we would be doing double-digit [growth] today? I really don't think so," Guiony said.Birkin-maker Hermès, which has consistently outperformed its luxury rivals this year, has also been smart about expanding product offerings slowly and intentionally. It has largely relied on an affluent consumer base rather than the aspirational customers that helped fuel growth at Louis Vuitton or Gucci. Those <a target="_blank" class="" href="https://www.businessinsider.com/lvmh-says-the-aspirational-customer-is-suffering-2023-7">aspirational customers</a> are the first to go when the economy gets choppy.There are some other bright spots.Sales in LVMH's jewelry and watch business only fell 4%, and the "<a target="_blank" class="" href="https://www.businessinsider.com/critics-roasted-lvmh-spending-big-tiffany-bet-is-paying-off-2024-7">Tiffany rebrand</a> is being well received," Deutsche Bank's Cochrane wrote in his note. That may mean that <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/lvmh-stock-price-earnings-lucury-sales-china-economy-demand-stimulus-2024-10">Richemont, the owner of Cartier,</a> will have "less negative" results, he said.Brunello Cucinelli, the Italian house best known for its cashmere, reported increased revenue in the third quarter, including in China.Moving forward, brands that innovate more may fare better.EMARKETER's Canaves pointed to the collaborations and moves toward streetwear that helped some brands emerge from the last luxury slump. This time around, she said, labels may turn to experiences, like hospitality and services, to appeal to consumers.Louis Vuitton sells everything "from chocolates to bespoke jewelry," HSBC's Erwan Rambourg wrote in a note earlier this month. Earlier this year, LVMH made headlines when it purchased the Paris restaurant Chez L'Ami Louis.Of course, any expansion into new categories should not take attention from handbags and clothing, the revenue drivers of luxury brands."Time is ripe for brands to start taking those creative risks and laying the groundwork for when the consumer does come back and seek out the opportunities," Canaves said.

LVMH had a rough week. That's a bad sign for the luxury sector. 

<ul class="summary-list"><li>Investors are awaiting TSMC earnings for signs of what's to come for the chip sector. </li><li>AMSL sparked a panic on Tuesday as it slashed sales guidance for 2025. </li></ul>This week's <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-today-chip-stocks-asml-nvidia-morgan-stanley-earnings-2024-10">sell-off in chip stocks</a> and lingering questions about the demand for artificial intelligence tech has raised the stakes for Taiwan Semiconductor Manufacturing Company's coming earnings report.The chipmaker will report its full third-quarter earnings in the early hours on Thursday. The results will serve as a key update for investors eagerly watching for signs of an industry slowdown after <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/chipmakers-tumble-asml-guidance-semiconductor-nvidia-chip-growth-2024-10">downbeat guidance from ASML</a> triggered a sell-off in top semiconductor shares on Tuesday. TSMC, which is one of ASML's largest customers and a top supplier to tech firms like Nvidia and Apple, revealed last week that it pulled in revenue of $759.69 billion New Taiwan dollars, or around $23.57 billion, in the third quarter, beating estimates.TSMC edged 1% lower Wednesday afternoon, with shares trading around $187.82. The stock is up 84% year-to-date, thanks partly to the firm's strong financial results so far in 2024.Chip and semiconductor stocks, meanwhile, traded slightly higher, with the SPDR S&amp;P Semiconductor ETF rising nearly 1% by mid-day.Traders are waiting for guidance from TSMC executives on the firm's earnings call regarding demand in the current quarter as well as the coming year. Fears about demand were ignited recently when Nvidia reported results for the second quarter in August. The chip giant's earnings beat estimates but fell short of the loftiest projections, leading to questions about cooling appetite for AI-enabling technology as firms have yet to report meaningful returns on huge capital expenditures in the space. Since then, Nvidia has once again traded close to all-time highs. Recent comments from CEO J<a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/nvidia-stock-price-jensen-huang-blackwell-gpu-demand-ai-tech-2024-10">ensen Huang point to extremely high demand</a> for the next-generation Blackwell chip, which Huang has said will be sold out for the next 12 months.

All eyes are on TSMC earnings as the chipmaker industry faces slowdown worries

<ul class="summary-list"><li>US stocks traded mixed on Tuesday, with the tech sector rallying ahead of key earnings reports.</li><li>The S&amp;P 500 and Nasdaq ended the day in the green, with the tech-heavy Nasdaq hitting a fresh record.</li></ul>US stocks traded mixed on Tuesday, with the Nasdaq Composite rising to a fresh record as traders looked ahead to high-profile earnings reports. The tech-heavy index and the S&amp;P 500 finished the day in the green, while bond yields wobbled.Shares of <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/googl-stock">Alphabet</a> and <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/snap-stock">Snap</a> rose 1%, while <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/amd-stock">Advanced Micro Devices </a>popped 3% as investors awaited earnings after the closing bell.Shares of <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/msft-stock">Microsoft</a> also rose 1%, while <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/meta-stock">Meta</a> shares climbed 2% as traders anticipated their <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/meta-q3-earnings-preview-meta-stock-price-ai-growth-guidance-2024-10">financials</a> on Wednesday. <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/aapl-stock">Apple</a>, which held mostly steady, is on deck to report on Thursday.Corporate profits have come in strong so far for the quarter. The S&amp;P 500 is on track to post a net profit margin of at least 12% for the reporting period, which would mark the second straight quarter it's done so, according to a <a target="_blank" class="" href="https://insight.factset.com/sp-500-reporting-net-profit-margin-of-at-least-12-for-the-2nd-straight-quarter">FactSet</a> analysis.Traders are looking to a <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-outlook-tech-earnings-gdp-inflation-jobs-report-economy-2024-10">big few weeks</a> for markets, with third-quarter GDP set to be published Wednesday and the October jobs report due out Friday. The Fed is due to make its next rates decision next week, a day after the presidential election. Some doubts linger over whether the Fed will take interest rates as low as some investors initially hoped. Markets are pricing in a 53% chance rates will stay within 50 basis-points of their current target range at the Fed's January meeting, up from 0% odds priced in a month ago, according to the <a target="_blank" class="" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html">CME FedWatch tool</a>.Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Tuesday:<ul><li><a target="_blank" href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">S&amp;P 500</a>: 5,832.92, up 0.16% <a target="_blank" href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Dow Jones Industrial Average</a>: 42,233.05, down 0.36% (-154.52 points)</li><li><a target="_blank" href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest%3Futm_source%3Dmarkets&amp;utm_medium=ingest&amp;utm_medium=ingest&amp;utm_source=markets">Nasdaq composite</a>: 18,712.75, up 0.78% </li></ul>Here's what else is going on:<ul><li>A hint in <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/stock-market-earnings-outlook-q3-bottom-demand-manufacturing-election-bofa-2024-10?_gl=1*gr9ay9*_ga*OTI1ODIwOTQ2LjE3MTYzOTg2NjU.*_ga_E21CV80ZCZ*MTczMDIyMjUxNS40OTYuMS4xNzMwMjIzMTMxLjguMC4w">S&amp;P 500 earnings calls</a> suggests that corporate profits are about to boom, Bank of America says.</li><li>Here's what Wall Street is expecting for <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/meta-q3-earnings-preview-meta-stock-price-ai-growth-guidance-2024-10?_gl=1*i0lfm3*_ga*OTI1ODIwOTQ2LjE3MTYzOTg2NjU.*_ga_E21CV80ZCZ*MTczMDIyMjUxNS40OTYuMS4xNzMwMjIzMTEyLjI3LjAuMA..">Meta's third-quarter earnings report</a>.</li><li>The Fed is likely to disappoint markets with <a target="_blank" class="" href="https://www.businessinsider.com/fed-cut-rates-inflation-powell-blackrock-ceo-larry-fink-2024-10">just one more rate cut this year</a>, according to BlackRock's Larry Fink.</li></ul>In commodities, bonds, and crypto:<ul><li><a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price">West Texas Intermediate</a> crude oil dipped 0.22% to $67.23 a barrel. <a target="_blank" href="https://markets.businessinsider.com/commodities/oil-price">Brent crude</a>, the international benchmark, held steady at $70.74 a barrel.</li><li><a target="_blank" href="https://markets.businessinsider.com/commodities/gold-price">Gold</a> rose 1.13% to $2,772.63 an ounce.</li><li>The 10-year Treasury yield traded mostly event at 4.274%.</li><li><a target="_blank" href="https://markets.businessinsider.com/currencies/btc-usd">Bitcoin</a> popped 5.84% to $73,279.</li></ul>

Stock market today: Nasdaq closes at a record ahead of key tech earnings

<ul class="summary-list"><li>Tech giants Meta, Alphabet, Amazon, and Apple all reported earnings this week.</li><li>Companies beat expectations, with some boosted by large cloud growth.</li></ul>Tech giants Meta, Alphabet, Amazon, Apple, and Microsoft all reported earnings this week, with investors laser-focused on the results of AI investments.Kate Leaman, chief market analyst at AvaTrade, told Business Insider that while the tech giants "all delivered solid growth, what really stands out is the clear investment in AI and how it's setting the stage for their future strategies."Here are some of the biggest themes that emerged during earnings week.<h2 id="fdf15bd0-2f86-4c0b-8dc7-43d1890a1cd7">Cloud is king</h2>Microsoft, Alphabet, and Amazon all saw significant growth in their cloud businesses, fueled by increased demand.Revenue from <a target="_blank" class="" href="https://www.businessinsider.com/microsoft-beats-estimates-ramps-up-capex-on-ai-2024-10">Microsoft's Intelligent Cloud segment</a>, including its customer-facing platform Azure, jumped 20% year over year to $24.1 billion. Revenue from Azure itself was up 34% year over year, and the company said that 12 percentage points of that growth stemmed from high demand for AI services.Jeremy Goldman, EMARKETER's senior director of briefings, told BI that Microsoft's cloud business had decelerated from the "breakneck pace" of previous quarters."Demand continues to be higher than our available capacity," Microsoft CFO Amy Hood said in Wednesday's earnings call. She added that the company expects its cloud sector to grow at a slightly slower rate, between 18% and 20%, in the second quarter of next year.Dan Romanoff, senior equity analyst at Morningstar, told BI that capacity limits are raising questions about how much Microsoft, Google, and Amazon are investing in their public cloud offerings."As big as Azure is, they are operating at capacity, so clearly there is a need for more data centers," he said.Google Cloud's revenue was smaller — $11.4 billion — but <a target="_blank" href="https://www.businessinsider.com/google-third-quarter-earnings-report-q3-2024-2024-10">grew at a rate of 35% year over</a><a target="_blank" class="" href="https://www.businessinsider.com/google-third-quarter-earnings-report-q3-2024-2024-10"> year</a>, which Alphabet said was fueled by "accelerated growth" in its AI segment.While Google reported stronger cloud growth, Microsoft still leads it in cloud market share, with both behind Amazon Web Services.On Thursday's earnings call, Amazon CEO Andy Jassy <a target="_blank" class="" href="https://www.businessinsider.com/amazon-ceo-andy-jassy-even-more-bullish-ai-cloud-opportunity-2024-10">painted a particularly bullish outlook</a> for AI in Amazon Web Services, whose revenue grew 19% year over year to $27.5 billion.Tracy Woo, principal analyst at Forrester, told BI that the increase in cloud revenue speaks to "AWS's continued market dominance.""The company's mainstay offerings in ad revenue and online retail have bolstered and shielded the same fearful perception of over-investment in AI AWS as compared to its closest competitor in Microsoft Azure," she said.<h2 id="dce60525-8311-4452-953f-c97c13833af6">Investment into generative AI is starting to pay off</h2>Big Tech has been pouring billions into generative AI — and it's starting to pay off.Jassy said the company's AI sector, which includes the development tool <a target="_blank" class="" href="https://www.businessinsider.com/amazon-ai-models-bedrock-service-success-2024-9">Bedrock</a> and its shopping assistant <a target="_blank" class="" href="https://www.businessinsider.com/what-amazon-ai-shopping-assistant-rufus-is-like-2024-7">Rufus</a>, is "growing more than three times faster" than AWS when the latter was at a similar stage of its business evolution."We've proven over time that we can drive enough operating income and free cash flow to make this a very successful return on invested capital business," Jassy said on Amazon's earnings call. "And we expect the same thing will happen here with generative AI. It is a really unusually large, maybe once-in-a-lifetime type of opportunity."Google CEO <a target="_blank" rel="noopener noreferrer" class="c-link" href="https://www.businessinsider.com/sundar-pichai-google-alphabet-ceo-career-life">Sundar Pichai also</a> said the company's AI investments were already "paying off," crediting AI as a key driver in Google's quarterly growth. In a note, BofA Securities called Google's Cloud growth, which grew at <a target="_blank" rel="noopener noreferrer" class="c-link" href="https://www.businessinsider.com/google-third-quarter-earnings-report-q3-2024-2024-10">a rate of 35% year over year</a>, a "positive surprise" that suggested the "AI growth cycle has arrived."Pichai also said the company's AI Overviews are "performing well" and now reach over 1 billion users on a monthly basis. The company said it plans to extend the AI-search feature to over 100 countries.The company has also been leveraging AI to boost its internal efficiency. Pichai said that more than a quarter of new code at Google is <a target="_blank" rel="noopener noreferrer" class="c-link" href="https://www.businessinsider.com/google-earnings-q3-2024-new-code-created-by-ai-2024-10">made by AI</a> and then checked by employees.On Meta's earnings call, CEO Mark Zuckerberg said more than one million advertisers had used the company's generative AI tools to create more than 15 million ads in the last month. He said the company estimated that businesses using Meta's image generation were seeing a 7% increase in conversions.The need for more data centers and other AI infrastructure is pushing up <a target="_blank" class="" href="https://www.businessinsider.com/microsoft-google-cloud-ai-earnings-2024-10">capital expenditures</a> across the industry.Microsoft's capital expansion totaled $20 billion in the quarter ending September 30, up from $19 billion in the previous quarter and nearly double the $11.2 billion it spent in the same quarter last year.Hood said the company expects this to "increase on a sequential basis" but is monitoring demand.Jassy, on the other hand, said Amazon expects its capital expenditure to hit $75 billion this year and plans to spend even more in 2025, mostly for its AWS cloud unit.Michael Field, equity strategist at Morningstar, told BI that AI's potential excited investors but they were "less excited about how much money the Big Tech names are dropping on developing AI.""With Microsoft and Meta, their results were solid, but it was these concerns that drove share prices lower. Expect this theme to continue in the coming quarters," he added.<h2 id="f207b36e-1e26-4661-891f-5cd5263f289b">AI chips are hot — but not all chipmakers are riding the wave</h2><a target="_blank" class="" href="https://www.businessinsider.com/samsung-executives-six-day-work-week-report-2024-4">Samsung's</a> chip business has not been able to ride the AI wave as well as other companies like <a target="_blank" class="" href="https://www.businessinsider.com/tsmc-chips-huawei-export-controls-supply-chain-2024-10">TSMC</a>. The South Korean conglomerate has struggled to get its chips certified by Nvidia, causing it to cede ground to its local rival, SK Hynix.Jaejune Kim, the executive vice president of Samsung's memory business, said in an earnings call Thursday that the company has made "meaningful" progress in Nvidia certification and expected higher sales in the fourth quarter. Samsung's shares are down 28% year to date.But Samsung isn't alone in having trouble with chips.On Wednesday, AMD's stock price dipped by as much as 10% even though the company's CEO, Lisa Su, said AMD had "<a target="_blank" href="https://www.businessinsider.com/amd-earnings-q3-2024-ceo-lisa-su-nvidia-ai-chips-2024-10">closed a good part of</a>" its gap with Nvidia, which controls 80% of the market for GPUs, or graphic process units, which can process large datasets required for training AI models. Meanwhile, <a target="_blank" href="https://www.businessinsider.com/amazon-ceo-andy-jassy-secret-weapon-ai-aws-2024-10">Jassy</a> said Thursday that Amazon Web Services is investing in its own <a target="_blank" href="https://www.businessinsider.com/amazon-nvidia-aws-ai-chip-dominance-gpu-trainium-inferentia-2024-5">Trainium and Inferentia</a> AI chips."While we have a deep partnership with Nvidia, we've also heard from customers that they want better price performance on their AI workloads," Jassy told analysts."We're seeing significant interest in these chips, and we've gone back to our manufacturing partners multiple times to produce much more than we'd originally planned," he added.

The cloud rises and AI pays off — 3 takeaways from tech's big earnings week

<ul class="summary-list"><li>PepsiCo and major banks like JPMorgan and Wells Fargo will kick off earnings season next week.</li><li>Investors expect S&amp;P 500 earnings growth of 4.6% as the stock market trades near record highs.</li></ul>Earnings season is fast approaching, and investors have a lot to be on the lookout for as companies report third-quarter results. <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/pep-stock">PepsiCo</a> will kick off the flurry of reports this Tuesday, followed by earnings from major banks <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/jpm-stock">JPMorgan</a> and <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/wfc-stock">Wells Fargo</a> on Friday.With the <a target="_blank" class="" href="https://markets.businessinsider.com/index/s&amp;p_500">S&amp;P 500</a> gaining 5% in the third quarter and trading near record highs, companies have a lot to prove."Given the growth expectations already baked into the market of course we aren't going to want to see any weakness there," Horizon Investments head of research Michael Dickson told Business Insider."We'll need to see EPS expectations exceeded by high single digits in the aggregate to keep the strong year going in my view," he added. According to data from FactSet, Wall Street analysts expect the S&amp;P 500 to see year-over-year earnings growth of 4.6%, which would mark the fifth consecutive quarter of growth.The bottoms-up earnings per share estimate for all companies within the S&amp;P 500 is $60.82 in the third quarter, according to FactSet.Tom Hainlin, an investment strategist at US Bank Wealth Management, told Business Insider that third-quarter earnings results will need to show signs of "waning inflation, moderating interest rates, and stable 2025 earnings projections" to support higher stock prices into year-end.In addition to the actual earnings figures, investors will be monitoring key themes as company executives offer guidance during earnings calls.Here are the big things Wall Street will be watching for. <h2 id="6ea1435c-35de-4b91-a190-e931a5d9858d">AI adoption</h2>There is growing concern that the massive investments being made in AI infrastructure <a target="_blank" class="" href="https://www.businessinsider.com/ai-impact-overblown-investment-tech-stocks-billions-daron-acemoglu-mit-2024-10">won't actually pay off in the form of higher revenues and profits.</a>"There's almost like a prisoner's dilemma in the market right now, and companies are feeling like they're being forced to invest hand over fist in AI technology, despite lack of revenues being generated," Gabelli Funds managing director John Belton told Business Insider.If tech companies signal that they're cutting spending on AI investments, it could lead to a major unwinding of the current tech boom, so investors will be looking for clues as to how companies are progressing in monetizing their AI investments.There's also the question of sectors other than tech where AI may be having an impact. "A big driver of future growth is going to hinge on how the applications of AI will be broadening out into other sectors such as Healthcare, Industrials, and Aerospace and Defense. These are sectors that are most likely to be phase two beneficiaries of this crucial technology beyond chip makers and data centers," Horizon Investments' Dickson said.<h2 id="ac3f2d29-9ffa-4a02-8886-d18e86e36f86">Consumer health</h2>After <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/ally-financial-stock-price-plunges-cfo-says-consumer-pressures-intensifying-2024-9">a worrying update from lending giant</a> Ally Financial in September and fears of a spending slowdown as pandemic savings dry up, investors will be keenly focused on the strength of the consumer."It will be important to keep a close eye on what the banks say about credit delinquencies and loan quality, along with the retail-focused firms and what they see in consumer spending behavior. GDP-related data shows strong trends here but more timely and granular views will be in focus," Dickson said.Hainlin said he is encouraged by continued growth in consumer spending as credit card defaults "are within normal levels" and the holiday shopping season is right around the corner.But there are some warning signs."While travel remains strong, overall experiences spending appears to have plateaued with consumers redirecting or broadening spending in other sectors. Additionally, lower-income groups are exhibiting signs of financial stress and slowing overall spending," Hainlin said.Earnings guidance from banks, retailers, and consumer discretionary companies should offer the granular views that will help investors assess what to expect from the consumer heading into year-end and in 2025. <h2 id="14095169-d8ee-47c5-81bf-dd9fe87396b8">The impact of lower interest rates</h2>With the Federal Reserve delivering <a target="_blank" class="" href="https://www.businessinsider.com/september-jobs-report-fed-rate-cut-outlook-november-labor-market-2024-10">its first interest rate cut of the cycle at the end of last quarter,</a> investors will want to see if lower capital costs have trickled down into company results and/or their guidance.The spotlight will be on rate-sensitive sectors, like banks and utilities, as well as smaller-sized companies which tend to carry more debt, according to Dickson."It will be key to see how mid and small-cap companies respond to falling rates that we've seen over the third quarter. These firms were hurt a lot on a relative basis so if they discuss a meaningful reduction in debt service pressures that would be bullish for a broadening out in those smaller cap names," Dickson said.Lower interest rates also have <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/mortgages/average-mortgage-interest-rate">an outsized impact on the housing market,</a> and homebuilders can offer solid guidance on what they're seeing in that market."Lower mortgage rates are breathing some life back into the housing market, evidenced by a ramp up in weekly mortgage applications by almost 50% since the end of July, to the highest point since mid-2022," Hainlin said.He added: "Lower mortgage rates should push up housing demand, bring some additional inventory online, and provide a modest boost to home sales and housing-related consumer spending."

The 3 biggest themes investors are watching for as earnings season kicks off

India's corporate credit landscape is showing positive trends that are expected to persist, according to a recent report by <keyword id="19990557" type="General" weightage="20" keywordseo="SP-Global" source="keywords" meta.keywordsubtype="org" meta.entityname="S&amp;P Global" meta.hostid="261" meta.entityid="S&amp;P Global">S&amp;P Global</keyword>. The report highlights strengthening credit quality across various sectors, driven by enhanced <keyword id="20994126" type="General" weightage="20" keywordseo="financial-discipline" source="keywords">financial discipline</keyword>, broad-based <keyword id="19899597" type="General" weightage="20" keywordseo="earnings-growth" source="keywords">earnings growth</keyword>, and robust liquidity profiles. S&amp;P Global's analysis reveals that one in three ratings within India now shows a positive outlook, marking a significant shift after three years of net positive rating actions. The report indicates that corporate India has built greater resilience against downside risks, reflecting a more stable and robust credit environment. However, corporate leverage in India is expected to decline marginally, even as capital expenditure (capex) rises by 30% compared to pre-pandemic levels. This improvement is attributed to more entrenched financial discipline among companies, which have managed to balance rising capex with prudent financial management. The report forecasts a 10% growth in aggregate EBITDA in 2024, driven by strong performance in sectors such as telecommunications, airports, commodities, and chemicals. This broad-based earnings growth underscores the resilience of corporate India and its ability to generate substantial cash flows despite a challenging global environment. Indian companies are benefiting from strong onshore liquidity and the absence of large debt maturities, which support their liquidity profiles. The resilience of these companies to foreign exchange and interest rate volatility further strengthens their liquidity positions. Corporate India's positive credit trends are closely linked to broader economic drivers such as GDP growth. Increased consumer spending is bolstering sectors like airports, automobiles, and telecommunications. Meanwhile, infrastructure investment is significantly boosting the commodities, utilities, and commercial automotive sectors. S&amp;P Global notes that both infrastructure and non-infrastructure sectors are experiencing reductions in leverage, with absolute debt reduction more pronounced in non-infrastructure sectors. However, infrastructure entities are slower in reducing debt due to higher capex, particularly in energy transition initiatives. Operating cash flows across sectors are outpacing capex, supporting further deleveraging. While capex intensity remains higher in infrastructure sectors, the neutral free operating cash flow is seen as a positive trend, indicating that companies are managing their capital expenditures efficiently while maintaining cash flows. The transportation infrastructure sector is benefiting from traffic growth and tariff increases, with rising cargo volumes supporting port revenues and improved operating efficiencies boosting margins. Airports are also experiencing higher traffic levels and tariff increases, contributing to better operating cash flows and overall credit quality. In the utilities sector, rising demand and new capacity are driving earnings growth, though capex remains high, particularly for energy transition projects. The steel sector is expected to see increased operating cash flow due to falling input prices and new capacity additions. Earnings in the oil and gas sector are expected to remain stable, supported by a favorable price outlook and consistent production levels. The telecom sector is also on a path to significant deleveraging, with capex expected to moderate following the 5G auctions in 2023. The auto sector is witnessing sustained operating performance as volumes stabilize after the supply chain disruptions of 2022. S&amp;P Global notes that debt levels in the auto sector are expected to remain low following sharp deleveraging, while normalized growth in auto sales and stable margins support the sector's positive outlook. In the chemicals sector, falling input costs and stabilized product prices are expected to drive earnings recovery following a downturn in 2023. Improved signals show a broader trend of recovery across various industrial sectors in India. S&amp;P Global concludes that with the highest proportion of positive credit outlooks in the region, India's corporate sector is well-positioned for continued <keyword id="22758432" type="General" weightage="20" keywordseo="credit-quality-improvement" source="keywords">credit quality improvement</keyword>. SEE ALSO:<a href="https://www.businessinsider.in/stock-market/webstories/saraswati-saree-depot-ipo-price-band-to-risk-factors-all-you-need-to-know/slidelist/112457330.cms" target="_blank"></a> <a href="https://www.businessinsider.in/stock-market/webstories/saraswati-saree-depot-ipo-price-band-to-risk-factors-all-you-need-to-know/slidelist/112457330.cms" target="_blank">Saraswati Saree Depot IPO – Price band to risk factors, all you need to know</a><a href="https://www.businessinsider.in/tech/news/indias-wearables-market-decline-for-the-first-time-as-smartwatch-shipments-fall/articleshow/112397246.cms" target="_blank"></a> <a href="https://www.businessinsider.in/tech/news/indias-wearables-market-decline-for-the-first-time-as-smartwatch-shipments-fall/articleshow/112397246.cms" target="_blank">India’s wearables market decline for the first time as smartwatch shipments fall</a><a href="https://www.businessinsider.in/business/news/ola-wants-to-re-enter-the-quick-commerce-business-to-take-on-blinkit-and-swiggy-instamart/articleshow/112364583.cms" target="_blank"></a> <a href="https://www.businessinsider.in/business/news/ola-wants-to-re-enter-the-quick-commerce-business-to-take-on-blinkit-and-swiggy-instamart/articleshow/112364583.cms" target="_blank">Ola wants to re-enter the quick commerce business to take on Blinkit and Swiggy Instamart</a>

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