Palacios’ Perspectives Week ending August 8th, 2025
From Wall Street to Main Street Highlights from the past week Market / Macro Economic Summary Markets reversed the prior week’s poor performance as more earnings came in and provided further evidence that our economy is on solid footing. The Dow Jones was up 1.3% while the S&P 500 was up 2.4% and the Tech-heavy Nasdaq led the way with a weekly gain of 3.9%. Furthermore, on the year the Dow is up 3.8%, the S&P 500 is up 8.6% and the Nasdaq is higher by 11.1%. Corporate earnings have been stronger than expected, with 82% of S&P 500 companies beating analyst estimates. This has led to a significant increase in earnings growth forecasts for the remainder of the year. The communications and technology sectors are leading this growth, but performance is broad, with only two sectors experiencing a decline. Looking ahead, an economic reacceleration is anticipated for 2026 and 2027, driven by factors like fiscal stimulus and potential Fed rate cuts. I believe remaining invested is the right course of action. Investment allocation should focus on U.S. large- and mid-cap stocks, particularly in the technology, consumer discretionary and financial services. Company Specific / Micro Economic Summary Berkshire Hathaway (BRK.B) Shares declined 2% following its most recent quarterly earnings report, which revealed a dip in operating earnings and a significant cash pile with no new major investments or share buybacks. The company reported total revenues of $92.5 billion, which was a decrease from the prior year and below analyst estimates. Similarly, while the reported earnings per Class A share of $8,601 surpassed the analyst forecast of $7,443, it represented a significant drop from the prior year's performance due to a sharp decline in investment gains and a substantial write-down of its investment in Kraft Heinz. In its commentary, Berkshire management urged investors to focus on operating earnings, which were stable despite a 3.8% year-over-year decrease, rather than the volatile net earnings figures that include unrealized investment gains and losses, which can be misleading. Palantir (PLTR) Shares jumped 4% after the company's latest quarterly earnings report, which highlighted strong performance driven by the AI wave. The company reported adjusted earnings of $0.16 per share, surpassing analyst estimates of $0.14. This was fueled by a record-breaking revenue of over $1 billion, a figure that also exceeded analyst forecasts of around $940 million. In light of the impressive results, CEO Alex Karp remarked on the "astonishing impact of AI leverage" and the company's "phenomenal quarter," expressing enormous pride in the "extraordinary numbers" and raising full-year guidance as a result. Pfizer (PFE) Pfizer's stock rose by 3% to 5% following its latest earnings report, which showcased a strong quarter for the pharmaceutical giant. The company's adjusted diluted earnings per share came in at $0.78, significantly beating the Zacks Consensus Estimate of $0.58. This was supported by robust revenues of $14.7 billion, which also surpassed the consensus estimate of approximately $13.5 billion, representing a 10% operational increase year-over-year. In light of the positive results, CEO Dr. Albert Bourla commented on "another strong quarter of focused execution" and expressed confidence in the company's ability to "create further value for patients and our shareholders," while the company also raised its full-year adjusted EPS guidance. Advanced Micro Devices (AMD) Shares dipped by over 3% in after-hours trading despite a strong revenue beat. The company reported adjusted earnings per share of $0.48, which was in line with analyst estimates. However, revenue came in at a record $7.7 billion, surpassing analyst expectations of approximately $7.4 billion. The stock's negative reaction was largely attributed to a significant $800 million inventory charge related to U.S. export controls on AI chips to China, which impacted gross margins. Despite the headwinds, CEO Dr. Lisa Su expressed confidence in the company's future, stating that AMD is "well positioned to deliver significant growth in the second half of the year" driven by its Instinct MI350 series accelerators and strong demand for its EPYC and Ryzen processors. Uber (UBER) Stock declined 2% in premarket trading despite a strong earnings report that beat expectations. The company's earnings per share came in at $0.63, beating the forecast of $0.62. This was supported by revenue of $12.7 billion, which also surpassed the expected $12.47 billion. The company saw robust growth in both its Mobility and Delivery segments, with a notable increase in trips and gross bookings. To cap off the strong quarter, Uber announced a new $20 billion share repurchase program. CEO Dara Khosrowshahi expressed confidence in the company's "strong top and bottom-line performance" and a commitment to "durable, profitable growth." Disney (DIS) Stock fell in premarket trading despite an earnings beat, as revenue slightly missed analyst expectations and a disappointing full-year forecast dampened investor enthusiasm. The company reported adjusted earnings per share of $1.61, surpassing the Zacks Consensus Estimate of $1.46. However, revenue of $23.65 billion came in just under the $23.7 billion forecast. The mixed results were driven by a decline in the Entertainment segment's operating income, despite strong performance from its Experiences and Sports divisions. CEO Bob Iger commented on the company's "strong creative success and financial performance" in the quarter and emphasized that Disney is "operating from a position of strength and building across our company with a continued focus on quality and innovation." 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
