Financial Trading Blog
Oracle, Adobe Earnings To Shape AI Trade
Markets shudder as Fed rate-hike odds rise, and upcoming earnings from Oracle and Adobe will test the AI resurgence as markets look past the Iran situation.
Key Points Moving the Market
- Latest flare-up in the Middle East ignored by markets amid headline exhaustion as ceasefire officially remains in place.
- Strong jobs growth in May impacted market sentiment as investors priced in a higher chance of a Fed hike this year.
- Oracle earnings expected to rise to $1.96, as investors look to growth in cloud for the latest barometer of the AI trade
- Adobe earnings are expected to improve, potentially reassuring investors as it dives into AI to stay at the forefront of photo software development.
May Jobs Report Weighs on Sentiment
US stocks have risen at a breakneck pace since late April, when the US and Iran agreed to a ceasefire, which has held ever since. However, they suffered a setback on Friday after hitting the most recent high on Wednesday. Retail traders have been piling into AI-based trades, propelling prices higher and further increasing already stretched valuations. The May NFP report showed the US added significantly more jobs than economists predicted, and revised both April and March readings higher. In fact, March was revised up to 204K, the highest since early 2024, and the other two months were just below 180K, widely seen as replacement level. The data suggests that the US jobs market is in full recovery mode and has been so for nearly three months. This was bolstered by the April JOLTS report, which showed that job offers increased. According to the data, the odds of a Fed rate hike by the end of the year rose to 70% from 60% the day before, weighing on the market outlook.
Meanwhile, traders are facing headline exhaustion on the Iran war front, as fresh strikes between Israel and Iran over the weekend failed to spook the markets. US futures were mostly in the green in early trading, with the focus still on AI. Notably, there has been a shift in AI demand away from speculative LLM applications and software companies towards companies building the underlying infrastructure. That could be further illustrated in the upcoming major earnings, with software firm Adobe and infrastructure firm Oracle the highlights of corporate reports this week:
Oracle Riding the Cloud
The tech infrastructure company is set to report earnings on Wednesday after the market closes, with analysts expecting EPS to rise to $1.96 from $1.70 in the prior year. Revenue is anticipated to rise 20% to $19.1 billion, with traders likely to focus on the cloud (OCI) sales segment, which saw an 84% jump in the last quarter. As with most tech companies, the market might react more to guidance than to the actual earnings, and Oracle is set to announce guidance for its new fiscal year. Previously, it guided sales to $90 billion in fiscal year 2027, and traders might be a bit disappointed if it doesn't raise its outlook again. Oracle is likely to be seen as a proxy for the AI market this week, and its earnings could influence the Nasdaq's performance.
Adobe Beating the Software Trend
The company, most known for its photo enhancement software, will report earnings on Thursday after the market close. The consensus is for earnings to rise to $5.81 from $5.06, on a 10% increase in revenue to $6.45 billion. While software companies have been under pressure lately as traders worry they might lose business to AI, Adobe seems to be holding its ground. Traders are likely to focus on the company's AI-first ARR as it stays at the forefront of tech developments. The company previously guided ARR to grow around 10.2% this year, and would likely get a cheer from investors if it raised guidance.
Nasdaq Plunge Brings Double-Bottom Into Focus
After the steep drop last Friday, the Nasdaq is trading just above the lower VWAP of 28490 at 29170, which is still far from the middle line at 29740. However, if the local low at 28740 holds firm and a double bottom forms, the tech-heavy index could enter a range, reclaim 30k, and potentially reverse losses at 30300 before extending to prior record highs at 30750 and the 30990 VWAP high.
Source: SpreadEx, US Tech 100, Daily Chart
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 61% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.spreadex.com.
