Trading Desk: Amazon And Apple Take The Whole Market On A Victory Lap

There we go! The last of the giants have reported their numbers and each of them gave Wall Street more reason to cheer than cower. We all knew that this would be a challenging quarter . . . but as of now, it’s mathematically impossible for end-of-the-world scenarios to come true.

Apple (AAPL) is up 4% after revealing its quarterly report. Amazon (AMZN) is up as much as 13% after hours. As big as they are, that’s enough to overcome about 0.75 percentage points of net drag on the rest of the S&P 500 . . . and 1.45% on the much more technology-focused NASDAQ.

Factor in post-earnings rallies on Microsoft (MSFT), Alphabet (GOOG) and Tesla (TSLA) and 40% of the NASDAQ is already on bullish footing for the next three months. The rest of the index can go nowhere at this point and that high-tech benchmark will still point higher.

And while we’ve seen our share of disappointments this week like Intel (INTC), Meta (META) and Qualcomm (QCOM), the numbers point to a significantly better outcome for most smaller Silicon Valley players. Netflix (NFLX), for example, had a bright enough outlook to rebound 12% since reporting its quarter a little over a week ago.

The numbers aren’t great. A lot of these companies are less profitable than they were a year ago. But on the whole, what we’re seeing is enough to keep a little year-over-year growth alive across the communications and tech sectors.

It’s not enough growth to lift the whole market despite these stocks’ gigantic footprints. After all, AMZN swung to a loss last quarter alongside INTC, while AAPL couldn’t manage to engineer its results to the point where 4% lower income translates into a bigger per-share profit pool.

They aren’t objectively great results. However, a lot of people on Wall Street were secretly bracing for something a lot more apocalyptic . . . a big drop in iPhone sales numbers, a catastrophic decline in online commerce or streaming video subscriptions.

None of that happened to the giants. There were some pockets of weakness, but that’s par for the course after years of pandemic and fiscal upheaval. As it is, the winners are still confident. They’re looking forward to a bigger, brighter and better future.

AAPL sees growth accelerating. The long pivot from hardware sales to services is actually working. They held onto the millions of people in their ecosystem and are now running 12% more service fees across them than they were a year ago.

AMZN tells a similar story. Long-term shareholders know that occasionally its trajectory triggers negative margins as spending on expansion opportunities (in this case, original streaming content) devours profit elsewhere. They think it’s worth it.

And TSLA, needless to say, remains supremely confident in its ability to change the world. These are the kinds of companies that take the market forward, cycle by cycle.

Right now, I’d rather own NFLX than META. META seems confused, reactive and a little angry, blaming the environment instead of pushing ahead without paying much attention to what’s going on elsewhere. That’s not how leadership works.

NFLX, on the other hand, recognizes that it needs to break out of its box. There are problems on the platform. Management is working to tighten the numbers and get back to work.

We could all learn from them. Wall Street isn’t about reacting to the day-to-day gyrations of mood and macroeconomics. It’s about setting a long-term course to success and then only turning when truly necessary.

It’s about the future. Right now, the giants have taken the prospect of “no future” ahead off the table. These numbers jut don’t square with apocalyptic mega-recession scenarios.

We’re probably in a recession now. AMZN, AAPL and MSFT didn’t get where they are by avoiding recessions. They’ve all lived through several.

So have we. They’re looking ahead to a boom beyond. Investors need to do that too. And for the next three months, the apocalypse is off the table.

Ask me again when October rolls around. But by then, I won’t be surprised to see the NASDAQ back above 3,450 . . . wiping out 10-15% of its YTD losses and turning what’s now a bear market environment into something more like an especially fierce correction.

Earnings won’t get in the way until then. We’ve dodged the end of the world and now have months before the possibility comes round again. I’m not going to spend that time on the sidelines. I hope you don’t either.