Retail, AI, and China Tech Headline the Week

Retail, AI, and China Tech Headline the Week

Note: The information below are meant for educational purposes and must not be taken as any investment advice or an investment recommendation, or solicitation for any transactions.

• Novovax Makes Big Moves

• SoundHound AI Revenue Tops Q1 Estimates

• Moderna Stock Falls on FDA Delay

• Tesla Shares Dip Following Spending News

• Major Earnings Reports: Walmart, Target, Home Depot, Vodafone

Events in the Week Ahead

This week in corporate earnings, anticipate important reports from Walmart, Alibaba, Home Depot, and Deere. Keep an eye on 13F filings, which are regulatory disclosures revealing quarterly equity ownership changes by major funds. Additionally, significant AI developments are expected: Microsoft-backed OpenAI is likely to unveil a new AI search tool potentially rivaling Google. Google will present its latest AI innovations at its annual I/O Developer Conference. Apple also plans a special event on May 7 to launch new iPad models and accessories.

CPI Preview

Economists forecast a 0.3% monthly increase for April's core and headline CPI, with an annual rise of 3.4%. Morgan Stanley suggests a potential slowdown in the service sector might soften core CPI, pointing to lower costs in car insurance, healthcare, and moderating rent inflation. Conversely, Bank of America links steady headline CPI to a 1.3% increase in gasoline prices, noting a recent decline in early May. These trends in core and headline inflation could influence upcoming interest rate decisions.

UK Economy Ends Recession

Recent data shows the UK economy grew by 0.6% in the first quarter, exiting a "technical recession." This growth was driven particularly by the services sector, indicating a strong recovery in early 2021, according to the Office for National Statistics. This resurgence underscores a robust economic rebound during the initial months of the year.

Arm to Launch AI Chips by 2025

SoftBank's subsidiary ARM plans to launch AI chips by 2025. In partnership with TSMC, the prototype is expected in spring 2025 with mass production in fall. Arm's stock has surged 45% this year.

SPX500
On Friday, the S&P 500 approached 5,220, marking its third consecutive week of gains and the longest streak since February. Meanwhile, the Dow had its best week of the year.

NVAX
Novavax's stock soared after announcing a $1.4 billion agreement with Sanofi to market its COVID-19 vaccine and develop a flu-covid combo vaccine. Meanwhile, Pfizer and AstraZeneca announce nearly $1 billion investments in France, enhancing research and development ahead of the 'Choose France' summit.

TSM
TSMC's April sales surged nearly 60% to $7.3 billion, fueled by robust demand for AI chips. Its ADRs increased by about 5%, boosted by large orders from companies like Apple and Nvidia.

SOUN
SoundHound AI's shares rose 7% as its Q1 revenue surpassed expectations, leading to an upgraded annual sales forecast. Growth is driven by heightened demand for its voice AI products in customer service. The stock is up 1.77% in extended trading too.

What to watch

Upcoming Tencent and Alibaba earnings on Tuesday, followed by JD.com and Baidu on Thursday, are critical for sustaining the recent rally in Chinese stocks. These tech giants, representing over a quarter of the MSCI China gauge, face heightened scrutiny as their performance can significantly influence the broader market. Although the market has entered a bull phase, it remains 40%-60% below early 2021 peaks. The continuation of this recovery hinges on these key earnings outcomes amidst market concerns of technical overvaluation and underwhelming early quarter performances.

Home Depot is scheduled to release its earnings on May 14, anticipating revenues of $36.7 billion and an EPS of $3.61. Forecasts suggest a 2.2% dip in same-store sales but stable profit margins at 34.1% gross and 14.0% operating. Attention is also on its recent $18.25 billion acquisition of SRS Distribution, aimed at expanding into complex renovations. Despite the strategic fit, analysts from Seeking Alpha and Envision Research advise a cautious 'Hold' on the stock.

Vodafone is set to announce its full-year earnings on May 14. As one of the FTSE 100's underperformers in recent years, CEO Margherita Della Valle's strategic overhauls, including major asset mergers and sales, are pivotal for its prospective turnaround.