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Key Stories from the past week: Disney Magic & Google AI Woes
Markets have been closely monitoring developments regarding trade-related uncertainties, and therefore it was clearly quite welcome news on sentiment when the White House showcased the US / UK trade deal along with more positive comments from President Trump on US-China tariffs. Several big earnings releases hit throughout the week, including Rheinmetall and Disney reporting strong figures vs estimates, whereas Palantir failed to meet lofty expectations – declining 12% despite an increase in full-year forecast. The Bank of England cut policy rate 25bps & Federal Reserve kept rates steady, meanwhile Bitcoin surpassed $100k again and Google might be facing elevated competition from AI. Read more in this week’s key stories below: Rheinmetall grows with EU military spend Disney Magic Could AI shake Google’s core business? Palantir’s lofty valuation Next week markets will adjust to any developments from initial US-China trade talks. Q1 company earnings highlights include Sea Ltd, Softbank, JD.com, Nu Holdings (Tues). Tencent, Cisco Systems, Sony (Weds). Alibaba, Walmart, Deutsche Telekom, Allianz, Mitsubishi Financial, Deere, Applied Materials (Thurs). Richemont (Fri). Key data announcements include German May ZEW economic sentiment, US Apr CPI (Tuesday), EU & UK Q1 GDP, US Apr Retail Sales, US May Philadelphia Fed Manufacturing (Thursday), Japan Q1 GDP, US May Michigan Consumer Sentiment (Friday).
Europe’s push for military rearmament bolstered demand for Rheinmetall’s combat vehicles, artillery and munitions with the firm’s first quarter earnings beating estimates with operating profit jumping +49% YoY. The company reaffirmed its full year forecast of +25% to +30% sales growth.
Riding the wave of Europe's defence boom
Disney’s quarterly earnings results beat estimates from strong performance in experience segment (parks) & significant subscriber growth in Disney+ streaming service. The company also nearly doubled their annual growth expectation to 16%, while CEO Bob Iger acknowledge “confident but cautious” view as broader economic uncertainties and their implications still linger.
Disney shines bright as streaming and parks outperform expectations
On May 7th shares in Google-parent Alphabet declined more than 7% after Apple executive Eddy Cue’s testimony confirmed Safari search volumes are falling as users shift to AI tools like ChatGPT. Investors were quick to react to the comments, as search remains Alphabet’s core business, contributing over 50% of total revenues.
Alphabet’s Kodak moment?
Palantir revenue for the first quarter jumped 39%, beating analyst’s estimates with the company also raising its full year revenue forecast. This wasn’t sufficient to meet incredibly high expectations and shares sold off by -12%. Most of this was regained by the end of the week and general risk sentiment grew.
Buy the dip or brace for a reset?