Breakfast News: Earnings Season Ramps Up

Breakfast News: Earnings Season Ramps Up

1. Popular Stocks to Post Q3 Updates

Wednesday brings third-quarter earnings from Tesla (TSLA), following this month's launch of new "affordable" models. Analysts expect an earnings beat, as the company produced more than 447,000 vehicles in the quarter. Eyes will be on artificial intelligence (AI)-led autonomous driving technology and on CEO Elon Musk's proposed pay deal.

• Superscore of 81 on our Moneyball database: Longtime Stock Advisor recommendation Netflix (NFLX) will post results Tuesday, after beating top- and bottom-line expectations in Q2. Forecasts suggest a 17% rise in sales year over year, with the company boasting more than 300 million global subscribers.
• "The capacity to produce AI-oriented hardware": Hidden Gems rec IBM (IBM) reports Wednesday. Motley Fool CEO and co-founder Tom Gardner recently noted: "IBM has been able to restore its reputation by working hard to establish its watsonx AI platform as a valuable tool for enterprise customers implementing artificial intelligence initiatives."

2. Amazon Internet Outage

Amazon (AMZN) Web Services suffered a major failure this morning, bringing down dozens of websites, including Snap's (SNAP) Snapchat, Duolingo (DUOL -2.44%), and Zoom (ZM 2.56%), and affecting some banking services. Even some people's doorbells stopped working, highlighting the huge reach of Amazon's cloud computing division.

• "We have identified a potential root cause for error rates for the DynamoDB APIs in the US-EAST-1 Region": Amazon's status service page identified the location of the problem and quickly assured us, "We are working on multiple parallel paths to accelerate recovery."
• Other services unaffected: Web services hosted by Alphabet's (GOOG) Google were unaffected by the issues, with Meta (META) services, including Facebook, working as usual. Elon Musk says X is fine.

3. Markets up Despite Rare-Earth Worries

Markets rallied last week, even with no end in sight for the government shutdown and trade tension continuing with China over rare-earth supplies. The S&P 500 ended Friday with a 1.7% rise on the week, with the Nasdaq up 2.1%. Futures rose marginally before today's market open.

• "This rule gives China control over basically the entire global economy in the technology supply chain": U.S. trade representative Jamieson Greer spoke on China's new rules requiring all foreign firms to obtain approval before exporting magnets with any Chinese rare-earth content. It echoes U.S. laws restricting technology exports.
• "Australia equals the periodic table": Ambassador Kevin Rudd last week highlighted Australia's sources of critical minerals, as Bloomberg reports Prime Minister Anthony Albanese is set to push for a deal with President Donald Trump at a meeting today.

4. SMMT, WRB, and STLD Report Today

Summit Therapeutics (SMMT) reported Q3 operating expenses of $234.2 million, with cash and short-term investments at $238.6 million on Sept. 30. The company holds the global rights to cancer treatment ivonescimab, developed by China's Akeso Biopharma, and plans to submit a license application to the FDA in Q4.

• 7% premium growth in Q2: Insurance company W. R. Berkley (WRB) will report after the closing bell, following a quarterly record of $3.35 billion net written premiums in Q2 with earnings beating expectations.
• Facing uncertain tariffs effects: Steel Dynamics (STLD), one of the country's biggest steel producers, will also reveal its latest quarter this afternoon, following revenue and earnings misses in Q2.

5. Apple Enjoys iPhone 17 Boost

The new iPhone 17 is providing the biggest smartphone sales growth for Apple (AAPL) since the COVID-19 pandemic, reports the Financial Times. Data from Visible Alpha shows analysts forecasting a 4% revenue rise this year to around $209 billion, with a further 5% in 2026.

• "It's fair to describe the iPhone 17 launch as surprising": Gene Munster at Deepwater Asset Management pushed back against earlier pessimism following AI feature delays and tariff-led pressures on Apple stock.
• "Except for the Air model, sales have been solid so far": Japan's Mizuho Securities, meanwhile, claims Apple is planning to cut back iPhone Air production following lacklustre sales, reports The Elec in Korea.

6. Your Take

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