Two major topics that US companies cannot do without this financial reporting season: cost reduction and AI

Zhitong Finance ·  02/12 21:09

An analysis by a Morgan Stanley strategist shows that in an effort to reallocate capital and invest in new technology, US companies are discussing cost control issues on earnings calls at a record pace.

The Zhitong Finance App learned that an analysis by a Morgan Stanley strategist shows that in the process of trying to reallocate capital and invest in new technology, US companies are discussing cost control issues at a record speed during earnings calls.

A team led by Michael Wilson wrote in a report that during this earnings season, US companies mentioned “operational efficiency” at an all-time high level because companies focused on spending discipline but also invested in “technologies that can drive future productivity, such as artificial intelligence.”

Strategists say there is significant overlap between the industries most commonly discussing operational efficiency and those discussing artificial intelligence. These groups include software, professional services, healthcare services, and financial services.

Compiled data shows that$Pfizer (PFE.US)$,$Blackrock (BLK.US)$und$Lam Research (LRCX.US)$The S&P 500 index constituent companies are all promoting operational efficiency during this quarter's earnings conference call.

Cost control is receiving more and more attention, at a time when companies are protecting profit margins in the hope of a soft landing in the economy. Investors have been looking for signs that the job market is cooling to determine when the Federal Reserve will lower borrowing costs, but recent data shows that the Fed will not relax its policy in the short term.

Managing expenses has been a key theme this quarter.$Disney (DIS.US)$Said that profits will increase by at least 20% this year due to cost cuts;$Hertz Global (HTZ.US)$cost reduction is being sought;$Levi Strauss & Co. (LEVI.US)$It said that a new measure to improve efficiency will include actions to reduce costs, such as layoffs.

Some companies are reallocating these funds to grow their businesses. As part of the reform plan,$Estee Lauder (EL.US)$Staff are being cut to respond more quickly to new beauty trends and increase investment in its brands.$Meta Platforms (META.US)$It is investing heavily in artificial intelligence technology, and$Amazon (AMZN.US)$Will be wary of new investments.

In the field of artificial intelligence, everyone's eyes will be on$NVIDIA (NVDA.US)$The company is expected to release earnings reports later this month. So far this quarter,$Arm Holdings (ARM.US)$The stock price continued to soar, mainly because spending on artificial intelligence helped support the chip design company's performance guidance.$Palantir (PLTR.US)$It is also benefiting from the huge demand for its artificial intelligence technology.

As the biggest beneficiary of the AI trend, the market's expectations for Nvidia are high. Analysts generally expect the company's earnings per share to increase 602% year over year in the fiscal quarter ending January 31. Many strategists believe that the “Big Seven”, including Nvidia, need outstanding performance in order to continue to outperform the market.

Morgan Stanley's Wilson recently$NVIDIA (NVDA.US)$,$Apple (AAPL.US)$,$Microsoft (MSFT.US)$und$Alphabet-A (GOOGL.US)$It was included in the list of high-quality growth stocks that the bank's analysts gave an “increase in holdings” rating. He has a positive view of this group of high-quality stocks and stocks that provide high operational efficiency as an extension.


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