Breakfast News: Lofty Expectations Hit UPST

Breakfast News: Lofty Expectations Hit UPST

Source: Image Created by Jester AI.

1. Upstart Suffers From Feverish AI Hype

Upstart Holdings (UPST 1.35%) looks set to open around 16% down, despite beating first-quarter revenue and earnings expectations, with revenue up 67% over the same quarter in 2024. Investors without a long-term focus seem disappointed the company hasn't turned its AI technology into higher profit yet.

• "AI is clearly living up to its promise": CEO Dave Girouard emphasized the company's technological advances, as all but 8% of loans in the period were fully automated. The total value of loan originations rose 89% year over year.
• Up 72% since 2020 IPO: Upstart raised its full-year revenue guidance to $1.01 billion, barely higher than the existing $1 billion consensus. Adjusted EBITDA margin for the year is forecast at 19%, after 20% in Q1.

2. Trade Talks Optimism Boosts Markets

S&P 500 and Nasdaq futures both rose around 0.5% on news that trade talks between the U.S. and China are scheduled to start this week. The two governments announced Treasury Secretary Scott Bessent and trade representative Jamieson Greer will travel to Switzerland to meet a Chinese delegation led by Vice Premier He Lifeng over the coming weekend.

• "We've got to de-escalate before we move forward": Bessent told Fox News the current tariffs aren't sustainable and the drive will be for fair trade. The Chinese Ministry of Commerce said it's open to "equal consultation," adding it will never agree to "blackmail under the guise of talks."
• Bitcoin hits $97,000: The optimism is spreading to risk assets including cryptocurrency, with Bitcoin (BTC -1.47%) up 3% early on Wednesday morning.

3. Top Foolish Movers

Advanced Micro Devices (AMD -1.96%) posted Q1 revenue and earnings beats yesterday. Revenue rose 36% year over year, for the company's best ever first quarter. Data center revenue climbed 57% from last year's Q1, driven by demand for server CPUs and AI chips.

• Beating the S&P 500 by 308% since 2018 Hidden Gems recommendation: Arista Networks (ANET 0.17%) is down more than 5% in pre-market trading, even though the cloud networking provider beat Q1 revenue and earnings growth estimates by 30% and 28% respectively – with quarterly revenue exceeding $2 billion for the first time. Again this is a company driven by AI demand, where doubts about the pace of growth are creeping in for some.
• Up nearly 8% in pre-market trading: Stock Advisor rec Novo Nordisk (NVO 2.94%) posted a 2025 sales forecast downgrade this morning after U.S. prescriptions for weight-loss drug Wegovy have flatlined since February. But expectations for a sales recovery following a court victory against makers of copy versions, coupled with a drug shortage, boosted optimism.

4. Next Up: Notable Wednesday Earnings

We're due a Q1 update from longtime Rule Breakers recommendation MercadoLibre (MELI 0.64%) after market close. The e-commerce giant strongly beat 2024 Q4 estimates, and we should look for signs it's cementing its dominance in the Latin American region.

• "Hollywood shoots overseas for many reasons" – Fool analyst Seth Jayson: Disney (DIS 1.02%) will report its first quarter before the opening bell, as investors weigh up the possible effects of President Trump's latest tariff plans for the movie business. Watch for streaming growth and profitability.
• Q1 revenue guidance of $405 million to $415 million: Unity Software (U 9.89%) posts first-quarter figures this morning, following a revenue beat but earnings miss from the interactive 3D technologist in the previous quarter.

5. Foolish Fun

MercadoLibre has had currency and macro headwinds pretty much its entire existence. Reporting in USD, Q4 saw the company announce revenue growth of 37% year over year to $6.1 billion -- but remove currency impacts, and revenue actually soared by 96%!

Hypothetically, if the U.S. dollar continued to depreciate over the next 5+ years, what do you think will happen to the stock? Discuss with friends and family, or become a member to hear what your fellow Fools are saying!