Amsc 2Q22 orders and Alphabet results +4

14:17 27-Jul-22

The Fed has held course with another 3/4 point hike and zero apparent regard for being behind the curve.  Complete Senate passage of CHIPS is now official and Biden should be signing it before the week is out.  The only surprise for me has been that the market rose before today's Fed statement.  All that remains is Apple and Meta earnings tonight.  The latter may not be good, but I doubt that it alone would be enough to sour current market positivity.  Of course, I will be more interested in MACom and Virtu earnings.  So I will only update this note again in the unlikely event that something drastic changes the general market tone.

The broader market is apparently giving Alphabet a pass despite an unquantified but moderately grim outlook from management, thanks mainly to analysts and the media.  Microsoft guidance for double digit revenue growth is also helping the indexes, despite a miss this quarter.  The fact that the two are both up approximately 4% reeks of zombie capital flowing into ETFs.

The situation is similar for LG Display, which showed an operating loss which will probably continue through next quarter.  Even so, investors are putting faith in the new production technology that I'd flagged, and doing so publicly may be factor.  The company is more exposed to the general consumer than most, though, so I'm staying away from the LPL rebound back above $6 in favor of other growth, as detailed below.

All this confirms the moderately bullish market bias I'd shifted toward last week.  With American chip subsidies set to pass before the August break, I expect appreciation in semiconductors, with MTSI and AKTS being my favorites.  The developments also vaguely support AMSC, with its energy exposure, and it's hard to imagine how the case for natural gas development could get any stronger than it already is, and that goes for the renewable variety as well.  Although we'll have to wait to see how American support fares with a new Congress looming, European Innovation funds are being disbursed, partly for hydrogen.  Thus, I remain willing to take chances on Xebec, despite the strong possibility of adverse second quarter results

On 7/26/22 16:54, Esekla wrote:

Amsc has once again published its new energy orders, coming in at $40M.  This is a huge jump from the steady rise to $24M last time around, but not totally unexpected.  Management says more than half of the total should be recognized in fiscal year 2022, which began in April, but also sees this as the beginning of a global multi-year trend.  AMSC is up 4% so far to trade above $5 after hours.  I still see that as grossly undervalued, but note that this news does not necessarily indicate great results in the upcoming report.

On the other side of the coin is Alphabet, which issued an ugly report this evening.  Top line growth for Search & Cloud exceeded 10%, but still missed narrowly.  The bottom line was flat for Search, and Cloud lost more money, leading to $1.21 of EPS, which was 9 cents below average estimates .  GOOG is also rebounding a few percent from its recent beating, but I wouldn't trust that to last without good guidance.  The conference call is about to begin, but I only care about this from a broader market sentiment standpoint.  So, if I comment again at all, it will not be until I've had a look at how index futures evolve to the morning.