January's in the books. Joining me is Kenny Pulcari, partner and chief market strategist of Slatestone Wealth with five names to add to your February playbook. Kenny, great to have you here.>> Well, thank you for having me back. I love coming home to the New York Stock Exchange. >> Well, it's great to have you. And you have five names that we need to add.They're a mix of growth and value. So, all Dow components >> across a range of sectors, right. Talk about diversification.So, it's all good. >> And uh all ...

Group 1 - The Conservative Income Portfolio focuses on value stocks with high margins of safety and uses well-priced options to reduce volatility [1] - The Enhanced Equity Income Solutions Portfolio aims to generate yields of 7-9% while minimizing volatility [1] - Microsoft Corporation (MSFT) is highlighted as a key stock attracting value investors in the current bull market, indicating its strong performance [2] Group 2 - Trapping Value is a team of analysts with over 40 years of combined experience, focusing on options income and capital preservation [2] - The Conservative Income Portfolio includes two income-generating portfolios and a bond ladder, emphasizing lower volatility and high income potential [2]

Earnings Overview - The Q4 2025 earnings season shows solid earnings and sales growth for the S&P 500, but the percentage of companies beating expectations is lower compared to previous periods [1] - Post-earnings reactions have varied, with Meta Platforms (META) experiencing a share price increase while Microsoft (MSFT) faced significant declines [2] Microsoft (MSFT) Performance - Microsoft reported a double-beat with adjusted EPS of $4.14, a 24% year-over-year increase, and sales of $81.3 billion, up 17% from the previous year [3] - Despite impressive headline growth, investor concerns arose due to high capital expenditures of $37.5 billion, primarily for cloud and AI investments, and a slowdown in Azure growth [4][6] - Azure's revenue growth decelerated to 31% year-over-year, down from previous growth rates of 35% and 39% [8] Meta Platforms (META) Performance - Meta also achieved a double-beat with adjusted EPS of $8.88, an 11% year-over-year increase, and a 24% rise in sales [9] - The company saw a 7% year-over-year increase in average Family Daily Active People, reaching approximately 3.6 billion, and ad impressions grew by 18% [10] - Meta's full-year 2026 expense guidance is between $162 billion and $169 billion, with significant allocations for infrastructure and talent compensation [12] Comparative Analysis - The contrasting post-earnings reactions highlight the market's differing perceptions of capital expenditures and growth rates between META and MSFT [13]

Earnings reality, software doubt, crypto stressMETA and MSFT Earnings Reset ExpectationsMeta (NASDAQ:META) and Microsoft (NASDAQ:MSFT) earnings forced a reset in how the market is thinking about AI-led growth. Meta's results reinforced operating leverage and disciplined monetization, while Microsoft's print highlighted how elevated expectations leave little room for execution noise. The reaction was less about whether AI is working and more about how much is already priced in.The broader message is valuatio ...

分组1 - Starbucks is focusing on operational excellence and customer service through its Green Apron service program, which aims to enhance the customer experience and improve transaction growth [2][34][37] - The company reported positive same-store sales in the US and strong growth in China, indicating a successful turnaround strategy [33][34] - Starbucks plans to introduce new drinks, food items, and an upgraded rewards program, along with remodeling stores to enhance customer experience [34][41][46] 分组2 - In the tech sector, companies that fail to deliver on AI promises during earnings reports, such as Microsoft and ServiceNow, are facing significant market penalties, with Microsoft losing $357 billion in market cap [5][6] - Conversely, companies like Apple that demonstrate strong performance and potential in AI, particularly with a $16 billion year-over-year increase in iPhone sales, are being rewarded by the market [7][10] - The S&P 500 software and services index has reached a nine-month low, highlighting a bifurcation in tech stocks where only those with strong AI strategies are thriving [6][22] 分组3 - The recent appointment of Kevin Walsh as the next Fed chairman could influence market dynamics, particularly regarding interest rates and asset allocation strategies [3][31] - The market is currently experiencing volatility in precious metals, with gold prices dropping significantly, indicating potential shifts in investor sentiment [24][25][28] - Analysts are observing a super cycle in memory stocks, driven by demand for AI-related technologies, which could present investment opportunities [18][19]

Core Insights - Concerns about returns in the AI sector are resurfacing, with Big Tech earnings indicating that companies must show results quickly after significant investments in AI or face market penalties [1] Group 1: Meta Platforms - Meta Platforms (META) experienced a stock increase of 10.4% on January 29, 2026, with a revenue growth of 24% in the December quarter, driven by AI-enhanced online advertising [2] - The company provided a first-quarter revenue forecast of $53.5 billion to $56.5 billion, surpassing analyst expectations of $51.41 billion [3] - Meta's capital expenditures related to AI are projected to be between $115 billion and $135 billion for 2026, exceeding analyst expectations of $110.7 billion and nearly doubling the 2025 figure of $72.2 billion [4] Group 2: Microsoft - Microsoft (MSFT) saw a stock decline of about 10% on January 29, 2026, despite reporting better-than-expected earnings and sales, as investors were concerned about slowing momentum and rising risks [6] - Azure cloud revenue grew by 39% in the fiscal second quarter, slightly above forecasts, but below the 40% growth seen in the previous quarter [6] - A significant concern for Microsoft is that OpenAI accounts for 45% of its remaining performance obligations, raising fears about future revenue stability [8] Group 3: Tesla - Tesla's stock fell by 3.2% on January 29, 2026, despite beating quarterly profit and revenue expectations, as investors reacted to the scale of future spending [9] - The company announced plans to more than double its capital expenditures to over $20 billion, focusing on AI, humanoid robots, and fully autonomous vehicles [9] Group 4: Competitive Landscape - The AI race is intensifying, with OpenAI issuing an internal "code red" following strong early reviews of Google's Gemini 3, while Anthropic's Claude Code has reached an annualized revenue run rate exceeding $1 billion [12] - AI ETFs such as AIQ, BOTZ, and ARKQ are considered long-term investment opportunities despite short-term volatility [11] Group 5: ETFs Performance - ETFs heavily invested in Meta, like Fidelity MSCI Communication Services Index ETF (FCOM) and Vanguard Communication Services ETF (VOX), gained approximately 2.8% each [13] - Conversely, ETFs focused on Microsoft, such as Roundhill MSFT WeeklyPay ETF (MSFW) and iShares U.S. Technology ETF (IYW), experienced declines of 12.2% and 1.4%, respectively [13]

Core Viewpoint - Microsoft (MSFT) experienced a significant drop of approximately 10% in its stock price following the announcement of its second-quarter earnings, despite exceeding expectations in earnings per share and revenue. The decline was attributed to slowing growth in Azure, a 66% increase in capital expenditures to $37.5 billion, and 45% of its $625 billion backlog being related to OpenAI [1][2]. Group 1 - Microsoft reported second-quarter earnings per share and revenue that surpassed expectations [1][2] - The stock price fell about 10% due to concerns over Azure's growth slowdown [1][2] - Capital expenditures surged by 66% to $37.5 billion [1][2] - 45% of the $625 billion commercial backlog is associated with OpenAI [1][2]

Core Viewpoint - Microsoft has experienced a significant stock price drop of 12% shortly after trading began on January 29, marking one of the worst single-day declines in its history, indicating a reset in investor expectations [1] Financial Performance - Microsoft reported earnings on January 28, with revenue of $81.3 billion, exceeding expectations by $1.1 billion, and earnings per share (EPS) of $4.14, which was $0.22 above expectations [2] - The company spent $37.5 billion on capital expenditures in the latest quarter, a 66% increase from the previous year, primarily for artificial intelligence infrastructure and data centers [3] Growth Concerns - Azure's revenue grew by 39% year over year, but growth is expected to slow due to physical capacity limitations in meeting demand [4] - Investors are becoming impatient regarding the timeline for returns on Microsoft's significant investments, raising concerns about the impact on profit margins [3]

Core Insights - Microsoft shares fell 10% despite exceeding analysts' expectations for Q2 fiscal 2026 earnings and revenues, primarily due to higher-than-expected capital expenditures and slowing cloud growth expectations [1][10] Financial Performance - In Q2, Microsoft's adjusted earnings per share (EPS) surpassed the Zacks Consensus Estimate by 6.7%, and revenues exceeded the consensus by 1.3%, with both metrics showing double-digit year-over-year growth [5] - Revenue from Azure and other cloud services grew by 39%, while Microsoft 365 Commercial products and cloud services revenues increased by 16%, and Microsoft 365 Consumer products and services revenue rose by 27% [6] - LinkedIn revenues increased by 11% due to growth in Marketing Solutions [6] Future Outlook - Microsoft anticipates revenues between $80.65 billion and $81.75 billion for Q3, exceeding the Zacks Consensus Estimate of $80.47 billion, driven by strong growth in commercial businesses [7] - The company expects a decline in Microsoft Cloud gross margin percentage to approximately 65% year-over-year due to ongoing investments in AI, and Xbox content and services revenues are projected to decline in the mid-single digits in Q3 [8] Analyst Reactions - JPMorgan analyst Mark Murphy maintained an Overweight rating but reduced the price target from $575 to $550, citing concerns over CPU supply constraints affecting Azure growth [9] - Goldman Sachs analyst Gabriela Borges maintained a Buy rating and lowered the price target from $655 to $600 [11] Investment Opportunities - Investors optimistic about Microsoft's cloud growth may consider ETFs with significant exposure to Microsoft, such as: - iShares Dow Jones US Technology ETF (IYW), which has $21.06 billion in net assets and a 12.32% allocation to Microsoft, with a 25.9% increase over the past year [12][13] - iShares Top 20 U.S. Stocks ETF (TOPT), with $486.3 million in net assets and an 11.23% allocation to Microsoft, showing a 17% increase over the past year [14][15] - Select Sector SPDR Technology ETF (XLK), with $94.07 billion in assets and an 11.38% allocation to Microsoft, which has rallied 26.5% over the past year [16][17] - Vanguard Information Technology ETF (VGT), with $112.8 billion in net assets and a 12.19% allocation to Microsoft, which has soared 22.8% over the past year [18][19]

Core Viewpoint - Microsoft has been a leader in the AI sector, particularly after its investments in OpenAI, but recent earnings reports indicate potential challenges ahead, leading to a significant drop in stock price [1][2]. Financial Performance - Revenue increased by 17% to $81.3 billion, and operating income rose by 21% to $38.3 billion, resulting in an operating margin of 47% [5]. - Adjusted earnings per share grew by 24% to $4.14, with Azure revenue up 39%, contributing to $32.9 billion in the intelligent cloud segment [5]. Market Reaction - Despite solid fiscal second-quarter results, investors reacted negatively to flat revenue guidance for the third quarter, which is projected to be between $80.65 billion and $81.75 billion, reflecting a growth rate of 15%-17% [6]. - The stock experienced a double-digit decline, erasing over $400 billion from the company's market capitalization, which may be viewed as excessive [8]. Future Outlook - The company anticipates a 22%-23% increase in cost of goods sold, which could impact margins, and has indicated a decrease in capital expenditures due to normal variability [6]. - Free cash flow is declining as capital expenditures increase, and there is slower growth in the consumer business, potentially influenced by macroeconomic factors [7]. - Remaining performance obligations (RPO) rose to $625 billion, indicating positive future demand [7].