The stock market rebounded from midweek lows, with the major indexes rising for the week, closing in on record highs but still in a choppy range. AppLovin, Robinhood, Upstart Holdings and Dutch Bros were notable earnings winners, but there were losers such as Astera Labs. Tesla archrival BYD kept running as it made a big driver-assist rollout. Investors largely shrugged off inflation reports that were hot, at least on the surface. President Donald Trump announced plans for new "reciprocal" tariffs, but they won't start until at least April. The 10-year Treasury yield rose but slashed weekly gains.
Stock Market Near Record Highs
On Wednesday morning, the Nasdaq had tumbled below its 50-day line with the S&P 500 testing that key level. But the stock market bounced back, with the S&P 500 and other major indexes near all-time highs, though still in a recent range. Investors saw positives in seemingly negative headlines on inflation and Trump tariffs. There were a number of big earnings winners, but also several losers.
Inflation Headlines Mask Tame Details
Inflation data gave markets a jump scare this week, before delivering the happy conclusion that disinflation progress continues — at least ahead of the impact of Trump tariffs. Now, after Friday's reported sharp drop in January retail sales, markets see 50-50 odds of a Fed rate cut in June, higher odds than a week ago. The consumer price index blew past estimates with a 0.5% January rise, and a 0.45% increase in core prices. Even the producer price index appeared hot at first glance. Then the PPI and core PPI for final demand showed 12-month inflation rising, instead of cooling as expected. Yet key components of the PPI which feed into the Fed's primary inflation rate, the core PCE price index, came in surprisingly cool. As a result, economists expect the Fed's key core inflation rate to fall to 2.6% from 2.8% when it is reported on Feb. 28.
AppLovin Crushes Q4 Targets
AppLovin smashed estimates for the fourth quarter, sending its stock soaring. Earnings per share surged 253% year over year while revenue increased 44% to $1.37 billion. For the current quarter, the app marketing platform forecast revenue of $1.37 billion, up 29%, slightly above views.
Shopify Rallies On Earnings
Shopify said Q4 adjusted EPS rose 29%, with growth slowing significantly for a third straight quarter. Revenue rose 31% to $2.81 billion, with gains picking up for a second quarter. Gross merchandise volume from merchant transactions rose 24% to $94.4 billion. All three metrics slightly topped views. The e-commerce software giant guided lower on free cash flow for Q1. But shares rallied to a new high, clearing an alternate buy point.
Astera Labs Investors Nitpick Report
Astera Labs crushed Wall Street's Q4 targets, with adjusted EPS spiking 208% and sales up 179% to $141.1 million The AI-chip network switches maker also guided up for Q1. But ALAB stock tumbled as investors considered lower-than-expected gross profit margins and decelerating revenue growth. Meanwhile, Taiwan Semiconductor Manufacturing warned that its first-quarter revenue will be at the lower end of its prior forecast range due to the impact from a recent earthquake and aftershocks. However, it reiterated its full-year outlook.
Cybersecurity Firms Beat
Palo Alto Networks beat Q2 views but guidance underwhelmed as analysts mulled key metrics. In the quarter ended Jan. 31, Palo Alto's adjusted EPS grew 11% while revenue climbed 14% to $2.3 billion, including the QRadar acquisition. Annual recurring revenue from cloud computing products rose 37% to $4.8 billion, slightly topping. Free cash flow was below consensus. For the current Q3, Palo Alto forecast revenue and subscription-based ARR in line with views. Shares fell Friday, erasing weekly gains and dropping back below a buy point. CyberArk Software reported Q4 EPS dipped 1% while revenue rose 41% to $314.4 million, both topping. It forecast Q1 revenue above views. Shares jumped.
Tesla Rival Surges On Self-Driving Push
Tesla archrival BYD moved to address its biggest weakness in a big way, rolling out driver-assist software across its lineup, even the Seagull, which starts below $10,000. More-expensive EVs will get more advanced tech, including Lidar. Notably, BYD isn't raising prices for these systems. How, the "God's Eye" system measures up to Tesla's FSD and driver-assist systems from XPeng, Huawei and others is unclear. But it promises to spark the next phase of growth for BYD, which has already shot up the global auto sales ranks as it expands fast at home and overseas. BYD rallied to a new high after spiking 20% in the prior week ahead of the Feb. 10 event. Tesla stock tumbled to 2025 lows, but pared weekly losses.
Robinhood Soars On Crypto-Fueled Growth
The disruptive zero-fee crypto and stock broker stomped past earnings and revenue estimates for the period, with earnings soaring more than 3,200% as revenue more than doubled. Robinhood also delivered its first-ever yearly profit. Notably, crypto trading revenue surpassed equity revenue by roughly a factor of six. average revenue per user (ARPU) jumped 102% to $164. Robinhood stock shot to fresh highs, continuing a huge run.
Coinbase Earnings Surge, Crush Views
Coinbase reported Q4 EPS skyrocketed 350% with revenue spiking 138% to $2.27 billion. Both easily beat views amid the big postelection run in cryptocurrencies. Transaction revenue spiked to $1.6 billion, while subscriptions and services jumped 71%. Coinbase noted that it generated $750 million in transaction revenue through Feb. 11, and expects Q1 subscription and services revenue to range from $685 million to $765 million. Shares tumbled Friday after earnings, but rose for the week.
DoorDash Extends Run On Results
The food-delivery company reported a better-than-expected 25% revenue gain in Q4 to $2.87 billion and forecast gross orders of $22.8 billion in Q1, above views. That offset a slight earnings miss for DoorDash. Shares rose to a new high.
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Reddit Falls On User Growth
The social media site reported a 227% EPS gain while revenue grew 71% to $427.7 million, both beating. Daily active users grew 39% to 101.7 million, but that slightly missed estimates. CEO Steve Huffman said a change in Google's search algorithm led to some "volatility" for user acquisition late in Q4. But he said Reddit resolved the issue, issuing a strong Q1 revenue forecast. Reddit shares fell sharply for the week after a massive run from its March 2024 IPO.
McDonald's Jumps, But BROS Is The Man
McDonald's missed fourth-quarter earnings and revenue estimates Monday, with EPS down 4% and revenue off 0.3%. But global same-store sales beat and rose for the first time in three quarters. McDonald's stock gapped up within a base, clearing an early buy point, after forecasting a U.S. recovery by the start of Q2 2025. Dutch Bros beat Q4 views, with revenue jumping 75% and sales leaping 35%. The drive-thru coffee chain also guided higher. BROS stock skyrocketed. Burger King and Popeye's parent Restaurant Brands and Wendy's also beat Q4 earnings forecasts. QSR stock rose modestly but hit resistance. Wendy's is at its worst levels since the Covid crash.
Howmet Earnings Rise 40%
That slightly beat views. So did revenue, which rose 9% to $1.9 billion, driven by a 13% gain in its commercial aerospace segment. Howmet Aerospace guided up for Q1 but in line for the full year. The Boeing and F-35 jet fighter supplier also announced a 25% dividend hike. Shares initially fell on results, but rebounded to clear a short tight pattern, just above a prior base.
Gilead Jumps As Peers Fall On Results
Biotech companies largely beat fourth-quarter sales forecasts. Gilead Sciences also beat on EPS, up 10.5%, with sales up 6% to $7.57 billion. Excluding Covid treatment Veklury, which saw a marked sales decline, total revenue grew 8%. Biogen reported a 17% EPS gain with sales up 3% to $2.45 billion, both beating, but shares fell on a light 2025 outlook. Vertex Pharmaceuticals skidded on its light earnings, which fell 5%. Sales climbed 16% to $2.91 billion.
Hotel Results Mixed, Airbnb Jumps
Marriott edged out estimates with a 31% EPS decline on 5.5% revenue growth, but guided low on Q1. Wyndham Hotels topped earnings estimates, but fell short on revenue. Hyatt Hotels tumbled after reporting a surprise EPS drop, days after agreeing to buy the rest of all-inclusive resort operator Playa Hotels & Resorts. All three companies said they expect 2025 revenue per available room (RevPAR) growth in the low- to mid-single digits. Meanwhile, Airbnb reported a 4% EPS decline that easily beat views. Revenue rose 12% to $2.48 billion, also beating. The vacations-rental booking site guided slightly lower on Q1 revenue. But shares gapped up Friday above a buy point.
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Stock Market News In Brief
Apple will rely on Alibaba's AI models to power new iPhone features in China. Apple reportedly considered Baidu and Tencent as partners prior to choosing Alibaba. U.S.-listed BABA stock surged to a two-year high. Meanwhile, Baidu said it would offer free access to ChatGPT-style Ernie bot, while multiple reports said Apple will still work with Baidu. U.S.-listed Baidu stock rose solidly for the week.
Roku surged to a 52-week high after reporting a smaller-than-expected Q4 loss with revenue rising 22% to $1.2 billion, with top-line growth accelerating for a second straight quarter. Users slightly topped forecasts as well. The streaming platform guided in line for Q1 and 2025 revenue but said it expects to have an operating profit in 2026.
DraftKings reported a wider-than-expected Q4 GAAP loss, though adjusted EPS topped views. Revenue rose 13% to $1.39 million, in line with views. Monthly unique players jumped 36%, though average revenue fell 16%. DraftKings raised its 2025 revenue outlook slightly. Shares jumped for the week.
Monday.com reported Q4 earnings jumped 66%, easily beating, while revenue topped with a 32% gain to $268 million. The workplace management software maker guided up slightly on 2025 revenue. Shares gapped higher.
Upstart Holdings reported a surprise profit vs. a year-earlier loss while revenue jumped 56% to $219 million, both easily beating. The AI lender also guided higher for 2025. Shares vaulted to a 52-week high, trading around a buy point.
Vertiv, a data center infrastructure provider, handily beat Q4 estimates. EPS was up 77% with sales rising 26% to $2.35 billion. But its guidance was a tad light on earnings with sales above estimates. Vertiv stock fell solidly.
Super Micro Computer missed expectations with its preliminary second-quarter results. It also slashed its sales outlook for the full fiscal 2025. However, it guided fiscal 2026 revenue to $40 billion, far above views for $29.2 billion. Supermicro expects a lift from sales of AI servers with Nvidia Blackwell processors.
Datadog topped Q4 views with EPS up 11% while revenue climbed 25% to $738 million. But it forecast 2025 revenue below consensus. Shares tumbled.
HubSpot reported Q4 EPS grew 31% while revenue rose 21% to $703.2 million, both topping estimates. The maker of marketing software forecast 2025 revenue just below estimates. But shares rose out of a base.
Cisco Systems reported adjusted Q2 EPS rose 8% while revenue climbed 8.5% to $15 billion, both beating. The networking giant guided higher for Q3 sales.
SharkNinja reported a 49% EPS gain with revenue up 30% to $1.79 billion. The maker of kitchen and household appliances also guided higher. Shares whipsawed around a buy point, little changed for the week.
Deere reported a 49% earnings slide, slightly less than feared, on a 30% revenue slump, much worse than expected. The mixed report came as more farmers held on to aging equipment or switched to rentals due to weak incomes and high borrowing costs. Deere maintained its 2025 profit forecast. Management said it is trying to understand the impact of Trump tariffs and tariff threats. Deere stock initially tumbled on earnings but then rebounded to retake a buy point.
