Update Equities: Earnings season ends and tariff harm starts to show
The earnings season has finished. There were mixed results, but overall it was a good earnings season. In mid-July, companies will start sharing the results for the first half of the year, and we will learn more about the effect of trade tariffs.
Here are some of the latest results:
Nvidia reported solid quarterly results with revenue growth surpassing analysts' expectations. The datacentre segment grew by 73%, and the gross margin was slightly higher. Despite a mixed outlook due to the US ban on H20 chip sales to China, Nvidia's non-Chinese activities remain strong. For the next quarter, Nvidia expects revenue slightly below analysts' expectations. Big tech demand for AI infrastructure, including Meta and Microsoft, remains high. Nvidia is addressing supply concerns with increasing Blackwell GPU production, boosting analyst optimism for the year's second half.
Salesforce reported excellent quarterly results, with revenue and operating profit growth surpassing analysts' expectations. However, investor reaction was negative, due to concerns over the Informatica acquisition and the slightly disappointing operating margin. Salesforce plans to pay USD 8 billion for Informatica to strengthen its Agent platforms, though analysts question the necessity and see integration risks. Despite solid results and an upwardly revised full-year outlook the share price dropped due to investor scepticism.
Synopsys withdrew its 2025 outlook due to new US export restrictions on China impacting sales and deliveries. The company, alongside Cadence and Siemens EDA, dominates over 70% of the Chinese electronic design automation (EDA) market, which is crucial for chip design. Synopsys reported strong quarterly results but the stock price dropped due to uncertainties. Revenue from China slowed further. The region accounts for 10% of total sales, and the slowing created a negative investor reaction.
Regarding the macro figures this week, the US ISM Manufacturing index fell from 48.7 to 48.5, vs 49.5 expected, contracting for a third consecutive month. The ISM's import measure dropped to a 16-year low, and the gauge of exports fell to the lowest level in five years. Also, ADP data showed that employment rose by 37,000 jobs, where 114,000 was expected. The US economy has contracted over the past six weeks as hiring has slowed and consumers and businesses are worried about tariff-related price increases, according to the US Federal Reserve’s Beige Book. The OECD has slashed its global economic forecasts due to Trump's trade policies, citing the impact of tariffs and uncertainty regarding confidence and investment.
Jan Wirken