Earnings season is the heartbeat of the market - and every day brings fresh signals about where money is flowing.
With each report, we learn not just how companies are performing, but how investors are reacting.
In the Daily Beat, we spotlight the most important earnings moves from the prior session - the winners, the losers, and the reactions that reveal what really matters to the market right now.
Whether it’s a bellwether with broad economic implications or a niche name making waves, we cut through the noise to focus on the setups that matter most.
Here are the latest earnings stats from the S&P 500 👇
*Click the image to enlarge it
After reporting a double beat, the world's second-largest semiconductor stock, Broadcom $AVGO, had a +2.78 reaction score.
They posted revenues of $15.95B, versus the expected $15.83B, and earnings per share of $1.69, versus the expected $1.66.
Following a mixed earnings report, the $20B apparel retailer, Lululemon Athletica $LULU, had a -5.98 reaction score.
Their report showed revenues of $2.53B, versus the expected $2.54B, and earnings per share of $3.10, versus the expected $2.86.
Now let's dive into the fundamentals and technicals 👇
AVGO has been rewarded for 4 of its last 6 earnings reports 🔥
Broadcom rallied 9.4% after this earnings report, and here's what happened:
The top-line hit a new all-time high, growing by 22% year-over-year. This was driven by AI semiconductor revenue, which is increasing by 63% over the same timeframe.
With profit margins growing faster than expected, operating income growth outpaced the top-line by 10% year-over-year.
In addition to the great quarter, the management team boosted its forward guidance, expecting 50-60% revenue growth for the foreseeable future.
In last week's Weekly Beat column, we said it wouldn't surprise us to see a negative earnings reaction, given how the market treated Nvidia's $NVDA recent blockbuster earnings report.
We also said that this is the new leader of the semiconductor industry, so anything can happen.
After this report and Friday's reaction, it's clear to us that Mr. Market has solidified this company as the best semiconductor stock in the world.
With a record backlog of $110B, demand for their products has never been stronger. This should help fuel further profitability in future reports.
So long as AVGO is above 318, the path of least resistance is likely to remain higher for the foreseeable future.
LULU suffered its 3rd consecutive negative earnings reaction 🐻
Lululemon Athletica fell 18.6% after this earnings report, and here's what happened:
The top-line increased by 7% year-over-year. However, this was offset by tariffs, which shrank gross margin by 110 basis points.
The U.S. is the only geographic segment that's not performing well, which is a significant problem because it accounts for over 60% of total revenue.
Making a bad quarter worse, the management team lowered its forward guidance.
This was a particularly challenging quarter for what was once a leader in the apparel retail industry. Confirming the negative fundamentals are consistent negative earnings reactions and a stock that's in free fall.
Since reaching its all-time high in late 2023, the stock has fallen nearly 70%, firmly establishing momentum in a bearish regime.
Price is now testing a key level of polarity, and it looks vulnerable to further downside. Now is the time for the bears to step on the gas and take down the bulls.
If and when LULU closes below 160, we expect a further decline in the price.
Cheers to the week ahead
-The Beat Team
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