4Q23 Earnings Recap

Every quarter we listen to companies report their earnings to gauge broad high-level trends and monitor changes in portfolio holdings. Below, we've highlighted a couple of key themes from 4Q23:

• If you are big tech, AI will make or break you (META, MSFT, NVDA getting rewarded, GOOG, AAPL lagging).

• Middle East tensions are the current crutch/excuse for poor performance, raising questions about whether these issues are genuine challenges or convenient scapegoats.

• Major automakers are adjusting to consumer preferences, favoring hybrids over EVs and restructuring their cost models accordingly.

• Consumers are becoming more selective with their spending habits as the economy softens, favoring brands with strong value propositions.

• The market is becoming more discerning – missing earnings expectations leads to stock price declines, marking a departure from earlier trends in 2023.

4Q23 Earnings Season Recap

• United Parcel (UPS) – Headline miss, additional layoffs, increase RTO policies, slowing volumes (shares -7% on day of release)

• General Motors (GM) – Beat, soft EVs, increasing PHEV focus, strong 24 guide (+8%)

• Microsoft (MSFT) – Beat, cloud +30% y/y (vs. 27% expected), addtl layoffs/cost measures, Activision acquisition, lighter guide (+/-%)

• Alphabet (GOOG) – Headline beat, ad revenue miss, YouTube miss, cloud solid (-7.5%)

• Starbucks (SBUX) – Miss (better than feared), NA good, ROW soft (-1%)

• Advanced Micro Devices (AMD) – In-line, soft guide (-5%)

• Boeing (BA) – Good revs, better-than-expected loss, CF improvement, suspended guidance (+6%)

• Meta (META) – Huge beat, op mgns 2X, first dividend announced, headcount down 22% (+20%)

• Amazon (AMZN) – Big profit beat, AWS in-line, continued cost controls (+10%)

• Apple (AAPL) – Mostly in-line, China soft, first rev growth in 4 Qs (-4%)

• McDonald's (MCD) – Comps light (mid-east issues, US in-line), softer low-end consumer (-4%)

• Chipotle (CMG) – Big beat, traffic up 7%, comps up 8%, 300 new stores in 24 (+9%)

• Ford (F) – Big beat, strong guide, special dividend announced (+6%)

• Snapchat (SNAP) – Miss, weak guide, mid-east headwinds (-35%)

• Yum! Brands (YUM) – Miss, soft traffic, mid-east headwinds (-3%)

• Uber (UBER) – Beat, EBITDA up 93% y/y, bookings strong (+9%)

• Eli Lilly (LLY) – Beat on already high expectations, GLP-1 drugs huge, strong guide (+2%)

• Emerson Electric (EMR) – Big beat, signs of traction in recovery, strong guide (+10%)

• Disney (DIS) – Solid beat, traction with cost controls, good guide, ESPN progress (+10%)

• PayPal (PYPL) – In-line, weak guide, nothing much to like (-12%)

• Arm Holdings (ARM) – Huge beat on chip sales/AI (+35%)

• Lyft (LYFT) – Beat, FCF expected for the 1st time in 24 (+40%)

• Airbnb (ABNB) – Slight beat on Q and solid guide (+3%)

• Walmart (WMT) – Solid beat, ticket down traffic up, buying Vizio, strength online (+3%)

• Home Depot (HD) – Solid beat, expects return to sales growth in 24, some consumer/housing concerns (+/-%)

• Nvidia (NVDA) – Blowout beat, startup level growth across the board, blew past already high expectations (+15%)

• Adobe (ADBE) – Weak guide, generative AI concerns (-14%)

• Costco (COST) – Sales miss, steady fundamentals, no announcement of membership fee increase (-5%)