The Weekend Edition is pulled from the daily Stansberry Digest.
We're getting deeper into earnings season...
More than 100 of the S&P 500 Index companies reported quarterly results this week, including four of the so-called Magnificent Seven.
Three of those companies – Microsoft (MSFT), Meta Platforms (META), and Tesla (TSLA) – released results after market close on Wednesday. And the market had very different reactions to each.
Let's start with Microsoft... On the surface, the software giant had a solid quarter. Earnings and revenue both came in ahead of Wall Street's estimates, and net income jumped more than 10% from the same quarter a year ago.
But investors seem to be focusing on the slower growth in Microsoft's Azure cloud business, which came in at 31% versus 33% in the prior quarter. Microsoft's Chief Financial Officer ("CFO") Amy Hood also said the company expects 31% to 32% cloud-business growth this quarter, which indicates flat growth and is below Wall Street's expectation of 33.4%. Microsoft shares fell 6% on Thursday as a result.
Moving on to Tesla... The electric-vehicle company missed on both sales and earnings. This comes after Tesla's report in early January that it saw its first-ever decline in annual vehicle deliveries in 2024.
But CEO Elon Musk's positive outlook on things like Tesla's "full self-driving" software – which he says will be coming to Austin, Texas in June – appears to have appeased investors. Shares of Tesla were up about 3% following earnings.
As for Meta Platforms... Sales, earnings, and daily users all came in above estimates.
While the company didn't give a specific growth target for 2025, CFO Susan Li said that Meta expects strong revenue growth on top of 22% growth in 2024. And CEO Mark Zuckerberg said that he predicts Meta's artificial-intelligence ("AI") chatbot will reach 1 billion monthly active users in 2025, after hitting 700 million active users in January. Meta shares gained 1.5% on Thursday, closing at a new all-time high.
These three companies make up more than 11% of the market-cap-weighted U.S. benchmark S&P 500. So they can pull markets in one direction or another. But their results were a wash this time... Gains in Tesla and Meta offset Microsoft's drop.
Big Tech's first crack at answering the "DeepSeek question"...
These earnings announcements came just a couple of days after DeepSeek – a China-based AI model that's reportedly cheaper and more energy efficient than U.S. versions – kick-started a pullback in U.S.-based tech stocks.
Zuckerberg said that it's too early to know the full implications of a cheaper AI model like DeepSeek. He said Meta isn't making any changes to its spending, which it forecast between $60 billion and $65 billion for 2025. And he said Meta will continue to spend heavily to build an advantage in AI.
Meanwhile, Microsoft still expects to spend another $30 billion in capital expenditures over the next two quarters as it adds AI to its products and services, and DeepSeek's AI model is even available on its Azure platform.
Outside of the Magnificent Seven, chipmaking equipment giant ASML (ASML) has its own take on DeepSeek. CEO Christophe Fouquet said that an AI model that lowers costs wouldn't be a bad thing for the company.
In fact, Fouquet said that making it cheaper to develop AI applications will result in more apps being built... requiring more chips. And as the leader in advanced chipmaking equipment, ASML is likely to benefit.
An opportunity in the fallout...
In short, the early response from tech companies seems to be that they're not panicking from DeepSeek's emergence on the mainstream AI stage. (We previously called the dramatic sell-off in all "AI stocks" an overreaction.)
If you agree that the sell-off was overdone, it could be a good time to pick up some shares of quality companies.
That's what our colleague and Stansberry's Investment Advisory lead editor Whitney Tilson wrote about Meta in his free daily newsletter on Thursday. After sharing his review of Meta's quarterly report, Whitney offered this conclusion...
At a close of $676.49 yesterday, that meant stock would be trading at 26.6 times the consensus EPS estimate of $25.42 for this year (coming into the earnings report). But Meta blew past EPS estimates and gave solid guidance, so analysts are scrambling to revise their models.
In summary, the stock of one of the greatest businesses of all time, which is firing on all cylinders, is currently trading at a price-to-earnings multiple around that of the average large American business (i.e., the S&P 500 Index). That makes no sense, considering its phenomenal rate of growth and the sheer reach of its products across the globe.
With all this in mind, Meta's stock looks downright cheap at current levels.
One more "macro" note...
On Thursday, Uncle Sam published the first estimate of fourth-quarter GDP. The government reported 2.3% annualized growth for the quarter, which was lower than consensus economists' estimates and the 3.1% growth rate in the third quarter of 2024.
The market opened a bit higher on the report.
I suspect that's because it suggests the U.S. economy isn't running "hot" and that the Fed could lower interest rates some more this year as the pace of inflation drifts lower. That's Wall Street's expectation, at least. But, as we know, surprises can and do happen.
One thing all our readers will benefit from...
Dr. David "Doc" Eifrig went live on Tuesday with Stansberry Research's "most important recommendation" for 2025.
It doesn't have to do with an individual stock, bond, commodity, or even a cryptocurrency. Instead, it's centered around an idea endorsed by the entire Stansberry Research team. And it has already helped thousands of our readers. Perhaps you're one of them...
As Doc explained, it has to do with an idea hatched way back in the 1950s by an academic named Harry Markowitz...
Put simply, he figured out that there was a way to set up your portfolio that would increase your returns AND decrease your risk at the same time. He called it Modern Portfolio Theory. And it completely changed the entire financial world.
As Doc continued to explain, "portfolio construction" doesn't get the same attention as picking the next big individual stock. But the amount of money you allocate to a particular stock compared with others is far more important to your long-term returns than most people think.
In short, a properly allocated, balanced portfolio can generate similar returns as individual stocks... while also limiting losses during market downturns. It helps folks grow – and protect – their wealth.
That's why, back in 2017, Doc, True Wealth founding editor Dr. Steve Sjuggerud, and Stansberry Research founder Porter Stansberry unveiled a complete portfolio of the best ideas across Stansberry Research.
That means folks don't have to sift through the more than 170 recommendations Stansberry Research made last year and find the ones they want to buy. They can find our best ideas all in one place. And they get a diversified portfolio. Doc continued...
This isn't just a ragtag collection of stocks. They all fit together and complement each other perfectly using ideas that are proved to increase your returns over time.
Since its inception in 2017, this portfolio has a total return of 138% – blowing away the roughly 92% return of its benchmark. And that's while navigating both the COVID-19 crash and the bear market of 2022.
As Doc told the thousands of folks who tuned in, this is the best way to access Stansberry's most profitable research ideas, while also taking the guesswork out of what to buy and when.
Next Tuesday, Doc and the rest of the Investment Committee will release their adjustments to the portfolio for 2025...
So if you want the best chance to get in on this opportunity this year, make sure you get started now. For the details, watch a replay of Doc's presentation right here.
All the best,
Corey McLaughlin
Editor's note: The new strategy Doc just unveiled is backed by Stansberry's top analysts. It's proven to double your money, without sacrificing security. And you still have time to get in before the official start date... Get the full details here.
