Trading Observations

• Earnings now the focus

• Fed behind us and Powell saying rates still restrictive, so despite any narrative, bias is flat/down

• TSLA, IBM, LVS, LRCX, and META higher, but MSFT 2026 cap-ex guide a concern for semis?

• SMH needs to reclaim $244 first hurdle, but really $254 to get constructive

• NOW, UPS, WHR, and CAT lower on numbers with AAPL due post close

• Q4 GDP and jobless claims premkt

• 5980 support vs. 6100 resistance

• Short term still overbought

Futures

DOW -75

S&P +18

Nasdaq +122

10-Year Yield

Oil

BITCOIN

Financials / Retail / Healthcare

MA – Up 2% - MasterCard – With a nice beat on in-line volumes. Winning on anti-fraud services, data analysis (huge potential), and cross border.

SBUX – Baird removes their Fresh Pick Bullish designation in a complete victory lap.

Baird positive on PLD and industrial REITs in general.

LVS - the casino operator reported net revenue for the fourth quarter that beat the average analyst estimate.

Technology

Magnificent Seven: Alphabet (GOOGL) +0.7%, Amazon (AMZN) +0.1, Apple (AAPL) -0.3%, Microsoft (MSFT) -4%, Meta Platforms (META) +1%, Nvidia (NVDA) -0.4% and Tesla (TSLA) +4%

AAPL Preview: -4.5% YTD versus NDX +1.9% .... positioning 4 out of 10 .. Focus tonight on March qrt revs guide - buyside around $94-95B (vs est $96B)

ANET rises 4% following positive AI-investment commentary from Meta and Microsoft.

AVGO: +4% from META CFO: "We expect to further ramp adoption of MTIA for these use cases throughout 2025 before extending our custom silicon efforts to training workloads for ranking and recommendations next year"

IBM: +8% squeeze / crowded short - solid qrtr - top-line growth driven by acceleration in software, which offset declines in consulting and infrastructure ... GMs were decent, w/ 50bp Y/Y expansion to 60.6%. Exposure to AI cont to expand (“our genAI book of business now stands at >$5B inception-to-date, up nearly $2B q/q”). Guidance for 2025 bit ahead. FCF ahead

LRCX: +5.5% beat + raise; another solid semicap print. Qrtr driven by a combination of modestly higher sales and margins (rev $4.37B vs est $4.3B). For the Mar Q, guided ahead ... bullish call: Technology inflections, driven by AI applications, are expected to lead to faster growth for Lam in 2025; Gate-all-around and advanced packaging technologies are critical enablers for AI device manufacturing, including GPUs and HBM

META: +2.3% cleanest megacap; solid Q1 / big Oper margin beat (48% vs est 42.6%); Guides below due to fx; Not providing FY25 rev guide. Sees '25 total opex $114B-119B (est $108B). Reit capex $60-65B given last wk; Says regulatory landscape in EU, US could impact biz ...

META: co said majority of 2025 capex to be directed to core business ... Zuck: "I continue to think that investing very heavily in capex and infra is going to be a strategic advantage over time" ...... Predicts 2025 will be a "really big year" for Meta's AI assistant, expecting it to reach over 1 billion people and become the most widely used in the industry. Meta plans to heavily invest in AI infrastructure, with Zuckerberg stating the company will eventually spend hundreds of billions of dollars to ensure its dominance

META platforms: Daily active people, which you will remember includes the number of users across Facebook, Instagram, Messenger and WhatsApp, was 3.35 billion on average in Dec (stronger than est) ..

MSFT: -4% Azure light for qrtr/guide; Capex commentary mixed (flattish next two qrtrs; FY26 capex growth below FY25) .... Azure +31% cc (buyside 32%+)

NOW: -8% crowded long; not good with cRPO miss and guide lower. Q4: +22% ccy vs bogeys closer to 23%; Q1 cRPO guide 20.5% guide (bogeys 21%); Q1 Sub guide revs 19.5% - 20% (bogeys of 21.5%). FY25 sub guide of 19.5% -20% (below) .. checks had been bullish hence big reaction .

NVDA: px action remains poor / cont to see rallies sold versus dips bought (def shift from what we saw in 2023/24 ... skeptics now questioning NVDA rev ramp in light of DeepSeek ... last night, shrs faded during MSFT call as its talked down FY26 capex growth ... Shrs hit midday / held 200D on headline that Trump admin to discuss tightening curbs on Nvidia China sales

TSLA: +2.5% reversal higher after hrs despite poor #s - highly diversified play on AI and robotics. EPS beat buyside bar but sales missed; auto GMs ex credits missed (heading the wrong way). Robotaxi volume production scheduled to start in 2026; expect energy storage deployments to grow >50% y/y in 2025; lower cost model on track for production in 1H ....

Ride-Share weakness contd: UBER -2% / LYFT - 1% Musk talking up FSD/robotaxi rollout (2025 biggst year in co's history) ... Ystrdy both were hit as TheVerge saying Waymo will roll out to 10 new cities in 2025, which seems to be a bit of an uptick vs. what Sundar said at Dealbook in Dec

WDC: -2% qrtr inline with pre but EPS guide a bit worse - expectations were depressed around WDC, and so people probably won’t be that surprised by the shortfall

MBLY – 2025 Rev forecast missed

Industrials 

CAT – posted another revenue miss due to lower sales volumes to end users …Q4 sees Y/Y rev declines across all segments and regions - On a positive note, dealer inventories slumped in Q4 (this was a large revenue headwind; dealer inventory fell more during Q4:24 than Q4:23) and the Q4 backlog rose (it advanced $1.3B Q/Q and $2.5B Y/Y).

UPS – stock -11% this am.. Revs slipping… stock Down big this am after cutting biz with its largest customer by 50% (believed to be AMZN)

AOS - top/bottom miss for Q4 - FY25 EPS & Rev guide below consensus. Stock offered down (4%).

Lennox (LII) Cut to Neutral at Mizuho Securities; PT $625

LHX – Q4 Revs/EPS beats, FY25 Rev/FCF/EPS guidance looks good, stock bid up 3%.

OSK – Q4 beats handily, FY25 EPS guidance well ahead of consensus, stock bid up 8%.

SHW – Q4 EPS beat on inline revs but FY25 guide is below consensus. Stock offered down (4%).

UPS – Q4 EPS beats, FY Revenue guidance shaded lower, stock trading down 10%. UPS lowers volume targets with AMZN – “Today the company announces the following set of strategic actions: first, it has reached an agreement in principle with its largest customer to lower its volume by more than 50% by H2 of 2026”.

URI - Q4 largely in line but 2025 EBITDA and FCF guide soft. No comments on any benefit from hurricane cleanup though this likely helped 4Q. Headwinds set to intensify as 2025 progresses.

LUV – nice beat, fueled by intense travel appetite and smarter pricing strategies.