Amazon and Apple to headline Q2 earnings this week

The results from those companies, which are big enough to make or break a single quarter’s worth for the S&P 500 Index SPX, +0.99%, will follow those from the other tech giants like Microsoft Corp. MSFT, +2.31% and Facebook parent Meta Platforms Inc. META, +4.42%. And they’ll arrive as Wall Street starts to get a tad more realistic about AI: Microsoft shares fell after management said the expansion of its AI capabilities would be “gradual” — and gradually more expensive.

D.A. Davidson analyst Tom Forte, in a research note this month, said Amazon, like other big tech companies, was taking more steps to control its costs. That might help margins, he said. But he said he’d be watching for any impact to e-commerce sales growth, following thousands of layoffs and pulling back on its expansion of Amazon Fresh.

Amazon began tacking on servicing fees onto some Amazon Fresh delivery orders this year. And Forte noted what he said were other tweaks to service: Charging for a home pickup of a defective smoke alarm that used to be free, and incentives to wait longer during Prime Day.

“In our view, Amazon is playing a ‘game of chicken’ and banking on other e-commerce companies not to offer a superior service, instead of its historical approach of working backwards with a customer-obsessed approach,” D.A. Davidson analyst Tom Forte said in a research note.

He added later: “We believe there is something to be said about the experience of having an Amazon-branded delivery vehicle show up at your house EVERY day. Having one show up once a week or twice is not the same.”

At Apple, Forte said in a separate note, the iPhone, whose sales were still solid, had turned into more of a consumer staple than a discretionary buy. He also said he’d be looking for more detail about the upcoming iPhone 15 — likely to be modestly fancier than previous iPhones — the recovery in China and growth in India. Apple last month also unveiled its Vision Pro VR headset — for $3,499. Forte said he had his doubts.

“We believe Apple will have to overcome a number of structural challenges to achieve mass adoption for its AR/VR headset,” he said.

This week in earnings

Apple and Amazon will report as more companies than normal report quarterly profit ahead of estimates, according to a FactSet report on Friday. For the week ahead, 170 S&P 500 companies report results, with four from the Dow, the repot said.

Results from Uber Technologies Inc. UBER, +3.28% and DoorDash Inc. DASH, +4.20% will offer an update on the gig economy and how far app-based deliveries can go, while results from Kraft Heinz Inc. KHC, -0.11% will offer an update on food prices and how much they might ease from the highs seen in recent months.

With the “Barbie” movie lifting rival Mattel Inc. MAT, -2.40%, results from Hasbro Inc HAS, -0.29% during the week will offer a glance at the rest of the toy industry, where demand hasn’t exactly been great, and what entertainment options Hasbro has up its sleeve to keep apace with its archrival. Drug maker Pfizer Inc. PFE, -0.36% reports, as does video-game maker Electronic Arts Inc. EA, +0.25%. Starbucks Corp. SBUX, +0.47% reports as well.

The call to put on your calendar

“Barbie,” the Hollywood strike and Warner Bros. Discovery: Mattel has said it wants to turn “Barbie” into a content franchise. Now we’ll hear what Warner Bros. Discovery Inc. WBD, +4.07%, the media conglomerate that produced the film, thinks about the film’s results and its prospects, as studios increasingly pump out sequels or offshoots of well-known, established character universes like “Star Wars,” Marvel and DC. The company — which reports oversees Warner Bros. CNN, TNT and the streaming service Max — reports quarterly results on Thursday. But even as “Barbie” and “Oppenheimer” carry the parts of the entertainment industry that are still functioning through the Hollywood strike, Wall Street will likely be focused on contingency plans, and any sense of whether more viewers are turning to streaming with productions on pause.

The number to watch

Payments and crypto volumes: Results this week from trading app Robinhood Markets Inc. HOOD, +4.09% and crypto exchange Coinbase Global Inc. COIN, +2.23%, along with PayPal Holdings Inc. PYPL, +2.71% and Block SQ, +3.42%, will land at the intersection of rebounding markets and job-market concerns.

UBS analysts predicted solid growth and cost control for Block, and “steady” e-commerce trends for PayPal. But BofA analysts said PayPal’s search for a new chief executive, following the announcement of Dan Schulman’s retirement at the end of the year, would become more important, adding that “we think investors should rightfully expect the CEO search to conclude in the near-term.” While Bitcoin’s rebound helped Coinbase, the company and others in the industry face the prospect of tougher regulations. Robinhood and PayPal report on Wednesday. Coinbase and Block report on Thursday.