The ascendancy of stocks exhibited no signs of fading on Wednesday, amid investors discerning the latest set of corporate profit declarations. Anticipation of a rate drop in September continued to maintain a buoyant sentiment, following further endorsement for a reduced federal funds rate from another Federal Reserve member. Although a substantial portion of the S&P 500 companies have disclosed their earnings, there are still many more presentations pending. One of the outstanding post-profits movers on Wednesday was Advanced Micro Devices (AMD), suffering a reduction of 6.4% following its declarations.
Despite exceeding revenue expectations, AMD’s Q2 earnings of 48 cents per share didn’t meet the estimates predicted by Wall Street causing the slump. An additional dent to the chipmaker’s reputation was the year-on-year slowdown of revenue growth in its data center operations, dipping to 14% from 57% in Q1 and 115% back in Q2 2024. A particular blow was the decrease in revenue within AMD’s AI data center business, compared to the prior year.
AMD prioritized its next-gen MI350 series accelerators instead of MI308 sales to China due to U.S. export restrictions, which resulted in a decline in earnings,’ said AMD’s CEO Lisa Su in their earnings communication. Nevertheless, Argus Research analyst Jim Kelleher remains undeterred by these limitations and their impact on future earnings, especially considering hints from the Trump administration indicating a relaxation in export controls related to China-bound chip consignments.
Maintaining his previous Buy rating on the semiconductor stock after earnings, Kelleher enhanced his price objective for AMD from $160 to $200, implying an upside of over 20% compared to present market norms. Other noticeable post-profit performers on the negative side included Super Micro Computer (SMCI, -18.3%) and Walt Disney (DIS, -2.7%).
Contrasting with the downturns was Shopify (SHOP), the e-commerce technology company that observed a 22% rise in the aftermath of its Q2 earnings report. Shopify outperformed on both earnings and revenue expectations, and hinted at an escalation in third-quarter revenue by a ‘mid-to-high twenties percentage rate.’ Current predictions from analysts indicate potential Q3 revenue growth of 22%.
Scott Berg, an analyst with Needham who began coverage on SHOP just last month with a Buy rating, asserts his belief that ‘the firm is only in its mid-cycle of a lasting growth prospect.’ Other entities akin to McDonald’s (MCD, +3.0%) and Arista Networks (ANET, +17.5%) followed suit with post-earnings gains.
In other non-earnings developments, the leading Dow Jones stock, Apple (AAPL), experienced a rise of 5.1% following rumors of an impending announcement regarding another $100 billion investment in U.S. production. This speculation comes in the backdrop of threats made by President Donald Trump to levy a 25% tariff on iPhones should Apple not relocate device production to U.S.
Adding to this, the U.S. administration had earlier doubled tariffs on Indian exports to 50% following India’s refusal to cease its Russian oil purchases. Currently, the majority of iPhones sold in the U.S. are produced in India. As a result of these movements, weighty increases were observed across the key indexes, with the tech-centric Nasdaq Composite up 1.2% reaching 21,169, the broader S&P 500 at 0.7% growth stopping at 6,345, and the prestigious Dow Jones Industrial Average gaining a modest 0.2% to conclude at 44,193.
While there were no significant datapoints on Wednesday’s financial calendar, there were appearances from several Federal Reserve officers. Particularly noteworthy was Minneapolis Fed President Neel Kashkari, a fiscal hawk among central bank members. Speaking to CNBC’s Squawk Box, he suggested that ‘it may be apt to start modulating’ the federal funds rate in the near future due to a cooling economy.
Kashkari’s declaration came in the wake of a July Jobs report unveiling a labor market that was significantly weaker than broadly anticipated. This report, along with other recent fiscal scores, empowers his ‘confidence’ that the American economy is entering a phase of deceleration.
Moreover, Kashkari hinted that it would be ‘reasonable’ to anticipate two rate reductions of a quarter-percentage-point each by the end of the year. However, he did add a note of caution, stating that if the tariff measures imposed by President Trump were to unexpectedly stoke inflation, the Federal Reserve could decide to cut rates just once or not even act on them at all.
Current futures traders, as per CME FedWatch, foresee a 95% probability that the Federal Reserve will opt for a 0.25% rate reduction in their upcoming September meeting. This marks a significant rise from last week’s 47% prediction.
The post AMD Faces Drops in Stocks Following Q2 Earnings appeared first on Real News Now.
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