Q1 Earnings Season Is Winding Down. Here Are The 5 Stocks…

1. Alphabet

Alphabet (GOOG +0.02%)(GOOGL +0.03%) continues to roll, reporting 19% year-over-year revenue growth (on a constant-currency basis) for the three months ended March. Its cloud computing arm, which offers artificial intelligence (AI) data center solutions, of course, outpaced all of the company’s other businesses.

There’s a curious detail quietly buried in the numbers, though. That’s the fact that Google’s advertising revenue grew by more than 15%, accelerating Q4’s year-over-year growth pace of just over 13%.

Alphabet Stock Quote

NASDAQ: GOOGL

Alphabet

Today’s Change

(0.03%) $0.12

Current Price

$389.00

Key Data Points

Market Cap

$4.7T

Day’s Range

$386.00 – $393.87

52wk Range

$162.00 – $408.61

Volume

699K

Avg Vol

28.1M

Gross Margin

60.43%

Dividend Yield

0.22%

What it tells us: Rather than cutting back on promotional efforts in an economic environment that doesn’t look or feel all that strong, advertisers are actually getting more aggressive. This acceleration may be a sign that Google Ads offers the most bang for the buck, so to speak.

2. Meta Platforms

Meta Platforms‘ (META +3.76%) Q1 revenue of $56.3 billion and adjusted per-profits of $7.31 easily topped expectations of $55.5 billion and $6.78 per (respectively). Nevertheless, s tanked for several reasons ing the late-April release of these results.

First, daily active user growth of only 4% (year over year) to 3.56 billion was its slowest user growth in years, so much so that the number actually fell from Q4’s figure of 3.58 billion… another multiyear first.

And second, although Meta didn’t spend as much on artificial intelligence infrastructure during the first quarter as expected, it did warn holders that its capital expenditures would ly be between $125 billion and $145 billion, up from previous guidance of between $115 billion and $135 billion.

What it tells us: The market’s response confirms that investors are still sensitive to aggressive AI investments without ironclad assurance that this spending will be worth it, at least by paying for itself.

3. Bank of America

Bank of America (BAC 2.11%) beat its first-quarter earnings estimates as well.

That’s not the noteworthy detail of its Q1 report, though. What’s so surprising is that despite the seemingly grim economic backdrop where everyone seems to be in debt up to their eyeballs, BofA’s provision for credit losses fell from $1.48 billion in the first quarter of last year to only $1.35 billion this time around, despite nearly a 9% increase in the size of its total loan portfolio during this time. Similarly, the total amount of its non-performing loans also fell year over year.

Bank of America Stock Quote

NYSE: BAC

Bank of America

Today’s Change

(-2.11%) $-1.10

Current Price

$51.10

Key Data Points

Market Cap

$363B

Day’s Range

$50.76 – $52.49

52wk Range

$43.36 – $57.55

Volume

4.8K

Avg Vol

37.5M

Dividend Yield

2.15%

What it tells us: The Federal Reserve reports that total household debt in the United States reached a record-breaking $18.8 trillion last quarter. So far, however, consumers don’t seem to be any more unwilling or unable to continue paying on these loans.

4. Walmart

Make no mistake: Consumers are feeling some significant financial strain. Even Walmart (WMT 0.03%) — typically a beneficiary of a tough economy — is being impacted.

While the world’s biggest brick-and-mortar retailer’s top-line growth of 5.9% (constant currency) and per-profit of $0.66 beat analysts’ fiscal Q1 estimates of $174.8 billion and $0.65, guidance didn’t. As CFO John Rainey explained in the company’s first-quarter earnings conference call:

We absorbed approximately $175 million, or about 250 basis points of operating income growth [in Q1] from higher-than-planned fuel costs in our global distribution and fulfillment operations. We continue to play offense despite the short-term pressure on profits. If the current elevated cost environment persists, we’d expect somewhat higher retail price inflation in Q2 and the second half of the year.

Walmart Stock Quote

NASDAQ: WMT

Walmart

Today’s Change

(-0.03%) $-0.03

Current Price

$118.54

Key Data Points

Market Cap

$945B

Day’s Range

$118.04 – $119.43

52wk Range

$93.43 – $135.16

Volume

23K

Avg Vol

19.3M

Gross Margin

23.48%

Dividend Yield

0.81%

What it tells us: Rainey’s comments confirm that consumer-facing companies may be able to handle a short burst of inflation. Lingering inflation, however, will eventually grind consumer spending down. It may even take a toll on consumers’ ability to continue paying off loans, or, for that matter, undermine their willingness to even click on a Google ad.

5. Nvidia

Last but certainly not least, Nvidia (NVDA 0.99%) continues to dominate headlines. Its first-quarter revenue of $81.6 billion and per-profit of $1.87 not only topped expectations for revenue of $79.2 billion and earnings of $1.78 per , but were up a whopping 85% and 140% year over year, respectively.

The vast majority of this revenue, of course, came from the data center business.

What it tells us: Despite concerns of an AI bubble, the continued proliferation of artificial intelligence data centers is still going strong. Nvidia’s revenue guidance for the quarter underway implies top-line growth of 95%, underscoring the industry’s impressive near-term potential.

And this has implications beyond the AI business, or for that matter, the technology sector. One-third of the S&P 500’s value right now is made up of tech stocks — most of which are well exposed to the artificial intelligence industry — so it’s possible that technology companies alone could keep the overall market’s earnings looking healthy even though several key sectors are actually struggling on the profit-growth front. Just make sure you understand just how imbalanced earnings growth is right now.