July is shaping up to be an interesting month for the stock market. In June, any stock associated with artificial intelligence (AI) saw huge demand and sent stock prices soaring. However, not every part of the tech world is as rosy as AI, and many companies have many questions heading into the second-quarter earnings season.
So let's look at three U.S. stocks that will be interesting to watch throughout July.
1. Nvidia
Nvidia (NVDA -0.61%) has had an incredible run lately, with the stock up nearly 200% in 2023. However, June was a bit of a break for the stock, as it only rose 6%.
With the bombshell guidance Nvidia gave at the end of May discussing massive growth fueled by AI demand, investors have gotten excited about Nvidia's prospects. In July, we'll find out if investors are willing to bid the stock up more because it's already reached nosebleed valuation levels.
NVDA P/E Ratio (Forward) data by YCharts.
While Nvidia's second-quarter results won't be available until late August, watching Nvidia's stock movements will clue investors in on the market's appetite for risk.
Should Nvidia's stock move higher, it will show that the market can tolerate more risk, pushing other growth stocks higher. But if Nvidia's share prices fall or stay steady, it will convey that the market will have topped out until investors start seeing results.
Either way, Nvidia is a key stock in today's market.
2. Tesla
Tesla (TSLA 16.40%) has been the most polarizing stock in the market for years. In the first quarter, Tesla's production numbers were solid, rising 44% year over year. However, Tesla's margins came under pressure thanks to the company slashing prices on some of its models. As a result, Tesla's earnings per share (EPS) fell 23% year over year.
Q2 production numbers are available and continue to paint a solid production environment, with the company producing 479,700 vehicles in Q2 -- an 86% rise. Q2 2022 was plagued with supply chain issues and the COVID-19 shutdown in its China facilities, so it wasn't very efficient in comparison to this year.
However, with price cuts eating into margins, investors must pay attention to Tesla's Q2 results on July 19 to see if the increased production can offset the price reduction. If it can, expect Tesla's stock to continue on its upward trajectory. If it can't, don't be surprised if Tesla gets sold off.
3. Airbnb
Perhaps the most intriguing stock to watch in July is Airbnb (ABNB -1.57%). A widely circulated statistic from AllTheRooms shows that Airbnb rental revenue is down around 50% in key markets like Austin and Phoenix. However, others have pushed back against this allegation and stated that revenue is only slightly down.
None of these metrics come straight from the source, so investors need to pay attention to what Airbnb says. While it may not report Q2 results until August, if the company sees pressure on its stock, it may elect to release results early to soothe investors.
However, if AllTheRooms is right and Airbnb is seeing a massive revenue drop, it has wider implications than just a dip in Airbnb stock. If consumers are no longer traveling, it shows a lack of discretionary income. Because of that, many discretionary purchases like traveling or electronics are in danger of getting cut out. This could signal the start of a true economic downturn, which isn't good for the stock market.
All three stocks will be important to watch for the U.S. stock markets in July. Many questions surround this trio, and their answers have much wider implications than just these three stocks.
