CPI radiation and Washington shenanigans (0:30). Old school consumer stocks did well post-earnings (1:40). Tesla and perceived distractions (4:00). Palantir the next wave of AI speculation (5:30). Walmart earnings ahead; what will tariffs bring? (7:00)Show Notes:Palantir, Salesforce best software plays on 'AI Revolution' for 2025 - WedbushTrump announces reciprocal tariffsJanuary CPI Report: Say Goodbye To Rate CutsEpisode transcripts: seekingalpha.com/wsb Sign up for our daily newsletter here and for full access to analyst ratings, stock quant scores, dividend grades, subscribe to Seeking Alpha Premium at seekingalpha.com/subscriptions.
Chapter 1: What are the current market influences according to Seeking Alpha?
Brian Stewart, our Director of News here at Seeking Alpha. Welcome back to our Friday Conversations. Always great to have you.
Great to be here, Rina.
So what are you looking at today? What are you fielding from the market? How are you tiering up, T-I-E-R, the different levels of importance in the market?
There's kind of a background radiation going on in terms of the CPI report that recently came out and the effect on the Fed. Also shenanigans out of Washington, a lot of Doge related headlines coming out recently. I think that's going to be kind of a standard background noise for trading in the foreseeable future.
It seems that we're going to have to kind of rifle through the kind of bickering in Washington. However, I think the stock market itself has seemed pretty immune to any of that. There hasn't been pickup and aggressive volatility over the last several weeks. I think by and large, it's been following momentum of its own. A lot of that is sort of still the AI trade. in effect.
And I think there's still a lot of individual stock picking. I think with the earnings season peaking in the last couple of weeks, I think investors have largely been looking at the individual company's financial results and not been too worried about the macro scene.
So what are you seeing from those results? What has you most interested, either on the plus side or the minus side?
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Chapter 2: How are old school consumer stocks performing post-earnings?
One interesting theme over the last week is there's quite a few old school consumer companies that did well following the earnings. One example is Philip Morris, which jumped 14%. the past week. That was kind of an individual company story. The company is seeing a very successful transition to smoke-free products.
And so it was moving out of the traditional tobacco cigarettes and moving into things like nicotine packages and vapes. And so that process was seen as being sort of aggressively underway in the earnings since that drove But you also have companies like Coca-Cola, which beat expectations, showed strong organic sales growth.
There's worry still about higher costs and the prospects of tariffs affecting a large international company like Coke. But by and large, the results kind of going into the current quarter that just finished have shown that it's prospering pretty well. And the same with a company like McDonald's, which is up 6%. in the past week.
Interestingly, it missed expectations, but there was investors tended to focus more on the strength and global sales that it showed as well as the investments and value deals. So companies like Coke and McDonald's, I think are seen as value plays in an inflationary environment. So you have these strong brands that offer low cost products.
There's a view that those kinds of companies will prosper in that environment. McDonald's missed expectations, but still went higher. Uber dropped in the immediate aftermath of its earnings, but is up 23% in the past week as a whole. So there was a dip and then a buy on the dip. I think the main catalyst there is Bill Ackman announced a stake in the company.
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Chapter 3: What is driving the momentum in Uber and Lyft stocks?
And I think a lot of people saw that as a starter pistol for a higher move up. So I think there's a lot of traders that Jumped into that just sort of on his coattails to ride that trade higher. Also, Lyft dropped after its earnings a light booking forecast. So I think Uber saw the benefit of that. I think there was the idea that Uber might be winning that rivalry.
And in general, and this has been a theme of a lot of companies. I mean, Tesla is a great example of a company that was seen significant benefit on the prospects of future technology, especially autonomous vehicles.
And Uber is right there getting a tailwind from predictions that eventually it'll be able to kind of stick the AV landing and be able to finally have that fuel the top and bottom lines going forward.
In the AI conversation, a conversation we love to take part in, some of the companies have their toes dipped in, some are fully in, but some stocks that we saw some nice numbers from, some nice increases from, was Alibaba and Palantir. And to a lesser degree that they're in the AI conversation, but certainly it was present this week in the conversation around open AI was Tesla on the converse.
doing not so well this week. Care to contextualize the AI part of that and for investors what it means?
Yeah, just to discuss Tesla briefly, I think that has a lot to do with the perceived distraction of Elon Musk being at the centerpiece of the Doge debates and also making a bid and then withdrawing a bid for open AI. I think people did not see that as sort of a serious attempt to take over that company and more of a publicity campaign.
And so I think there's a sense to which he's kind of taking his eye off the ball in terms of Tesla specifically. And I also think that Tesla stock ran up significantly in the post-election timeframe. And there's a process of profit taking that's going on for that. And so it's down 11% in the past week and is at a three-month low.
But like I said, I think that's largely Musk personality related and not really a statement about people's opinions about AI or even Tesla's underpinning prospects. If we look at Palantir, I think that's an interesting one because it rallied immediately after its earnings report had a blockbuster. financial figures and has continued to stair step higher since.
It's been alternating up days and down days since its earnings, but the up days are all bigger than the down days. So it's sort of a aggressive buy on dip going on there. Palantir has become the symbol of, I think, the next wave of AI speculation. Web Bush said about its earnings, the AI software era is now arriving. I'm paraphrasing there.
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Chapter 4: Why is Tesla facing criticism in the AI space?
Anything else to say before we start another week or another weekend as the case may be?
Just looking ahead to next week, the earnings calendar is starting to slow down. There's still a fair number of reports coming out, but the biggest names are kind of off the table at this point. If you're looking for kind of a highlight for next week, I think Walmart. is going to get a lot of attention. It's sitting at 52-week highs recently. It's up 83% in the past 12 months.
So in a lot of ways, it's been trading like a growth stock, even though there couldn't be a more stable establishment.
I was going to say, speaking of value stocks.
Yeah, right. But yeah, there's been sort of... a rush into Walmart. It was not even a rush, it's sort of a steady drip, drip, drip over the last 12 months. And I think that's partly the same kind of Coke McDonald's value play, the expectation that inflation is going to drive people to lower price alternatives. Walmart's also getting a lot of credit for its e-commerce gains.
It's making a lot of inroads there and international expansion. One thing to look out for when the earnings come out is whether or not the company is worried about tariffs. Again, it's a large international company. It's low price. kind of strategy is based around getting cheap goods from overseas.
And so if the management there is starting to sweat it a little bit about potential tariffs, I think that would be a sign that other companies might be following in those footsteps.
And how would they convey that? Straight up or coded in some kind of language?
Yeah, I would expect it to emerge in the earnings conference call after it. I don't expect in the press release they'll say anything about it, unless they actually temper financial expectations. Sales growth won't be as strong as we thought because tariffs. But I don't expect that to happen. I think it'll be more, like you're saying, coded.
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