Spring is in the air, and investors are looking forward to turning the page after a rocky March.
While stocks have recovered from a surprise banking crisis after Silicon Valley Bank and Signature Bank both failed, their collapses highlighted yet another risk investors are facing in the potential for more bank runs and elevated duration risk.
April will bring the start of a new earnings season and, with it, the latest evidence of how corporate America is faring in a slowing economy. On that note, here are three stocks you'll want to watch in April.
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1. Netflix
A lot has changed with Netflix (NFLX 1.74%) in just a few months. The leading streamer launched an ad tier in November, which only had a marginal effect on its performance in the fourth quarter and is expected to serve as a complement to the free tier rather than the main growth driver this year. Bloomberg reported in March that the company had reached 1 million ad-based subscribers, a sign that the program is gaining traction, even though that constitutes just a fraction of its more than 200 million members.
In addition, the company is stepping up its password crackdown efforts, which should help improve profitability by goading password sharers into signing up for their own accounts or signing up as paid add-on members.
The company is also accelerating its push into gaming, with 40 new games set to be launched this year, according to TechCrunch. Like its ad tier, the financial impact of its gaming push is expected to be marginal for now, but it could build momentum over the long term.
Analysts are expecting just 4% revenue growth and a decline in earnings per share in the quarter, giving Netflix the opportunity to surprise to the upside, especially if any of these initiatives pay off.
2. Microsoft
Since the launch of OpenAI's ChatGPT last November, Microsoft (MSFT -2.45%) has been moving fast to incorporate the new AI chatbot technology into a wide range of products, including its Azure cloud infrastructure service, GitHub CoPilot, its Office software suite, its Edge web browser, and, of course, its Bing search engine.
Microsoft is so confident in its partnership with OpenAI that it invested $10 billion in the tech start-up earlier this year, and we could see some more announcements from Microsoft on artificial intelligence.
The company opened up the new ChatGPT-powered Bing in February to select users, and investors are probably wondering when that user base is going to be expanded to the general public.
Microsoft has already made it clear it sees a tremendous opportunity in search. CEO Satya Nadella called it the world's biggest software category, and CFO Amy Hood noted that each incremental percentage point of market share represents nearly $2 billion in additional revenue.
Whether the public launch of the new Bing comes in April remains to be seen, but the company should provide more details in its first-quarter earnings report at the end of the month.
Microsoft's revenue growth has ground to a halt along with the rest of the big tech sector, but another push in AI would probably push the stock higher.
3. Meta Platforms
Another big tech stock that's been making headlines lately is Meta Platforms (META -10.56%). The Facebook parent was the first of the big tech companies to announce major layoffs in November, and it followed that up with another round of layoffs in March. Combined, the two announcements will cut about 21,000 jobs, or roughly 25% of the company's workforce.
CEO Mark Zuckerberg has been talking up the idea of a "year of efficiency," promising that Meta will sharpen its focus on profitability after years of making growth the highest priority. In addition to the layoffs, the company said it will stop hiring for 5,000 jobs.
Altogether, those moves should help get Meta's bottom line moving in the right direction again, and investors have taken notice. The stock has doubled since it bottomed out following October's third-quarter earnings report.
Meta also launched its own large language model, LLaMa, staking its claim in the AI race. LLaMa isn't a chatbot, but a tool designed to help researchers. It could pave the way to more consumer-facing AI products in search and other areas.
Meta is also expected to report first-quarter earnings at the end of April, and while analysts are expecting another weak quarter, the company's guidance will be key to determining the stock's reaction, as the cost-cutting is likely to lead to a return to earnings growth.
