Electronic Arts, Alphabet, and Chipotle Mexican Grill reported their latest earnings, sending ripples through the financial markets. On Tuesday, Electronic Arts announced earnings of $1.11 per share on revenue totaling $2.22 billion. Meanwhile, Alphabet, Google's parent company, revealed its fourth-quarter revenue of $96.47 billion, falling short of the anticipated $96.56 billion. This revenue miss led to a significant drop in Alphabet shares, which tumbled 9% in extended trading.
Google Cloud's revenue also failed to meet expectations, contributing to Alphabet's disappointing performance. As a result, Alphabet shares plunged 7.4% during regular trading hours. The downturn in Alphabet's stock impacted the broader market, with S&P 500 futures and Nasdaq 100 futures sliding 0.29% and 0.41%, respectively. Dow Jones Industrial Average futures fell by 34 points, or 0.08%.
In the restaurant sector, Chipotle Mexican Grill experienced a nearly 5% decline in shares after reporting fourth-quarter same-store sales that rose less than expected. The company reported adjusted earnings of 25 cents per share on revenue of $2.85 billion, missing analysts' expectations of $3.07 per share on $2.32 billion in revenue.
Despite these setbacks, the S&P 500 and Nasdaq indices found support from strong results from Palantir, which hit a fresh record high during the session. Additionally, the 30-stock Dow rose by 134 points, or 0.3%. Snap also delivered positive news, with shares advancing approximately 6% following its fourth-quarter results that surpassed estimates.
The earnings season continues to unfold with anticipation building for results from Walt Disney and Uber Technologies, both scheduled to report before the market opens on Wednesday.
Market analysts provided insights into the current financial landscape. Bank of America's Savita Subramanian commented on the challenging environment for tech giants.
"Where we are is an environment where you want to sort of prepare yourself for upside pressure, to rates, to inflation, to the idea that we don't have an all-clear on policy decisions until maybe closer to the second half." – Subramanian
The firm's head of U.S. equity and quantitative strategy expressed optimism regarding big-cap tech companies.
"I don't think it's game over for big cap tech. I think these are big companies with lots of optionality. They can do what they did in 2023, cut costs, they can shore up balance sheets, do big buybacks, and they're doing a lot of that."
Subramanian highlighted the challenges faced by tech companies in maintaining competitiveness.
"These companies, the hyper scalers, are damned if they do and damned if they don't, because they have to spend a lot to remain competitive, but they are cutting into their cash flow."