Palacios’ Perspectives Week ending May 9th, 2025 From Wall Street to Main Street Highlights from the past week
Market / Macro Economic Summary Markets were roughly flat on the week as we concluded a Federal Reserve meeting and had some bright signs of conclusions to tariffs. The Dow Jones was down .2% on the week while the S&P was down .5% and the Nasdaq was lower by .3%. The U.S. and U.K. announced a limited trade deal this week, marking the first such agreement since new tariffs were introduced in April. While the immediate economic impact is expected to be modest, the deal signals progress in trade negotiations and could serve as a template for future agreements. Looking ahead, U.S. and China officials were set to begin trade talks this weekend in Geneva, with any sign of de-escalation seen as a potential boost for the economy and markets. At the moment, it seems like the markets are set to open higher tomorrow on optimism on results. Meanwhile, the Federal Reserve held interest rates steady at its May meeting, citing increased risks to both employment and inflation, and its projections suggest two rate cuts later this year, though bond markets anticipate a slightly more aggressive easing cycle. Year to date, the Dow is down only 3%, the S&P is lower by 3.8% and the Nasdaq is down 7.2% which shows you the markets have rebounded from the early August lows. Company Specific / Micro Economic Summary Palantir (PLTR) Shares were down 12% despite the company reporting a strong quarter. I truly believe this is a case whereby the stock had risen too much leading into the quarter. Palantir exceeded expectations for its first-quarter revenue, reporting $884 million against an anticipated $863 million, and maintained adjusted earnings per share at 13 cents, aligning with forecasts. The company also raised its full-year guidance, attributing its success to the increasing adoption of its artificial intelligence software. CEO Alex Karp emphasized Palantir's role as the "operating system for the modern enterprise in the era of AI," noting a significant shift in software adoption. Palantir experienced substantial growth across its sectors, with commercial revenue increasing by 71% to $255 million and government segment sales rising by 45% to $373 million year-over-year. The company projects its U.S. commercial revenue to surpass $1.178 billion for the year, and its stock has significantly outperformed the broader tech market in 2025, rising over 60% year-to-date. It is though the highest valuation of any company from a price-to-earnings ratio in the market today. Advanced Micro Devices (AMD) Shares were up 3% as the chip maker reported a top and bottom-line beat. Earnings per share of $0.96 cents was three cents better than the Wall Street estimates of $0.93 cents. Revenue of $7.44 billion was also stronger than the expectations for $7.12 billion. CEO Lisa Su said the company had an outstanding start to 2025 as they grew Q1 revenue by 36% year over year. Despite facing regulations on advanced AI chip exports that resulted in $800 million in costs during the first quarter, AMD still projects roughly $7.4 billion in sales with a 43% gross margin for the current period. This forecast exceeds Wall Street's consensus estimates of 86 cents adjusted earnings on $7.25 billion in revenue, according to CEO Su. Uber Technologies (UBER) Shares were down 2% as the stock reported a mixed quarter. With earnings per share of 83 cents, significantly exceeding Wall Street's expectation of 50 cents. However, the company's revenue of $11.53 billion fell slightly short of the anticipated $11.62 billion. Despite the revenue miss, Uber's revenue still grew by approximately 14% compared to the first quarter of 2024. The company also saw a substantial improvement in profitability, reporting a net income of $1.78 billion (83 cents per share) compared to a net loss of $654 million (32 cents per share) in the same period last year. CEO Dara Khosrowshahi highlighted autonomous vehicle technology as Uber's most significant future opportunity. Disney (DIS) Shares were up 10% as the company reported strong fiscal second-quarter earnings on Wednesday, exceeding both revenue and earnings per share expectations, primarily driven by better-than-anticipated subscriber growth for Disney+. The company saw a 1.4 million increase in Disney+ subscribers, reaching 126 million globally, contrary to previous expectations of a decline. This growth, along with higher prices, contributed to an 8% rise in direct-to-consumer revenue to $6.12 billion. Overall revenue reached $23.62 billion, surpassing the $23.14 billion expected, and adjusted earnings per share were $1.45, beating the $1.20 forecast. Additionally, Disney raised some of its fiscal 2025 guidance and announced plans for a new theme park and resort in Abu Dhabi. The Trade Desk (TTD) Shares were up 17% as the online advertising platform delivered a strong first quarter report. Earnings per share of $0.33 cents was much stronger than the calls for $0.25 cents. Revenue of $616 million also came in stronger than the expectations for $575 million. CEO Jeff Green said leading marketers are looking for ways to embrace the open internet, where their consumers are spending most of their time, to drive business differentiation and growth. Kokai is giving them more power than ever to accomplish that, in stark contrast to the many limitations of walled gardens. As a result, The Trade Desk is well positioned to help our clients succeed and capture greater share by harnessing the full power of the open internet.” Parting Thoughts We welcome an opportunity to discuss the above detail and wish you much success in the rest of your week! Regards, Erick J. Palacios, MBA Wealth/Fiduciary Advisor
Palacios’ Perspectives Week ending May 9th, 2025 From Wall Street to Main Street Highlights from the past week