The other important earnings releases this week are highlighted below.
- Tuesday: Walgreens Boots Alliance, Alimentation Couche-Tard
- Wednesday: Micron Technology, General Mills
- Thursday: H&M, Nike, Paychex, McCormick
- Friday: Constellation Brands
Higher expectations ahead of Q2 earnings
The Q2 earnings season starts in little over two weeks from now and while expectations were low going into the Q1 earnings season back in April expectations this are high. In Europe, the 12-month forward earnings estimate has increased 4% which is a step increased over just three months given that earnings among European companies have grown 5.8% annualised since 2004. Earnings estimates and thus expectations might be running higher, but the performance among European stocks has been lacklustre since late May with STOXX 600 down 4% from its peak. This makes it an interesting setup for European earnings season as investors are clearly more negative than analysts.
The biggest change in earnings estimates has come in the S&P 500 Information Technology sector and especially since the Nvidia earnings release on 24 May in which the graphic processing unit maker announced strong earnings and a blowout guidance driven by high demand for its AI chips. The expectations around AI have been rising across the board for US technology companies, but recent earnings releases from Adobe and Accenture failed to show any change in the underlying growth of their businesses due to AI, so big outstanding question is whether the AI hype is just good for Nvidia and AMD, and then nobody else except maybe for the cloud infrastructure providers such as Google, Amazon, and Microsoft.