Nasdaq At Record Highs Ahead of Tesla, Intel Earnings

The premier tech index had the best multi-day performance in over a decade after a solid start to earnings season, but upcoming reports from Tesla and Intel could shake up the market outlook.

What Could Move the Market

• Nasdaq is on the back foot after progress in easing tensions in the Middle East collapsed over the weekend and ahead of key earnings.
• Some analysts worry that recent good news from the tech space, combined with high analyst estimates, might have set a too high bar for Tesla and Intel.
• Tesla is expected to post EPS of $0.36 despite a decline in EV sales as the focus remains on Optimus and robotaxi updates.
• Intel is expected to report earnings of $0.01, as investors look to Q2 guidance, hoping for a sales pickup to lift the bottom line.

Nasdaq to Come Off Record Highs

US stocks jumped on Friday after both US and Iranian officials announced that the Strait of Hormuz was reopened. But over the weekend, the IRGC made it clear that ships were not allowed to transit the passage by firing on at least two ships. After the closure, US President Donald Trump suggested the ceasefire, due to expire on Wednesday, might not be extended. The incident increased uncertainty, as it cast doubt on whether a deal could be enforced and on whether civilian authorities in Tehran had control over the paramilitary IRGC. Traffic in Hormuz is at a standstill once again at the start of the week, but crude prices have not risen to prior levels and have returned to the normal WTI-to-Brent ratio. The international price has risen to just over $95 per barrel, with WTI at $89.

The setback is expected to end the Nasdaq's win streak, the longest since 1992, and pull back from a record high. The index has also been bolstered by strong performance among tech companies last week, including AMSL and TSMC, suggesting that demand for AI infrastructure remains strong. However, this could set a high bar for upcoming earnings reports. The strong growth in the index, coupled with analysts' expectations for the sixth consecutive quarter of double-digit earnings growth, has stretched valuations.

On top of that, the two main companies set to report, Intel and Tesla, already saw their stock prices rise earlier in the month after announcing a deal under which the chipmaker will supply the carmaker for its robotics and data centre growth. CEO Elon Musk plans to build a massive "terafab" to produce compute, likely related to SpaceX, which is aiming to IPO next quarter.

Here is what markets are expecting these companies to report this week:

Tesla Shifts to Tech Amid Sliding EV Demand

The automaker will report after the market close on Wednesday, with earnings expected to rise to $0.36 from $0.27 a year ago on a 15.5% increase in sales to $22.34 billion. The company already reported a 6% quarter-on-quarter decline in deliveries amid a global trend of slower vehicle sales, especially EVs. However, markets are mostly focused on Tesla's robotaxi unit, which is still experiencing delays and is behind its competitor's rollout. It will likely take some announcement of progress on this front to cheer markets. Additionally, some analysts have warned that SpaceX's market entry in June could negatively impact Tesla by diverting Musk's AI initiatives. Traders who want to be on the tech edge might sell Tesla holdings to buy SpaceX.

Intel Hoping for Demand Revival

The chipmaker will issue its Q1 earnings report after the market closes on Thursday, and the median expectation for EPS is $0.01, down substantially from $0.13 a year ago. Revenue is anticipated to decline 2% to $12.42 billion. After lagging in the AI race, investors appear to be relying on a resurgence in PC demand to complement robust server chip demand. Analysts note that the company has raised prices by 10% on its server units, which could help improve margins amid continued strong demand for infrastructure, as evidenced by rivals' sales projections. However, the market reaction might hinge on the company's Q2 sales guidance.

Nasdaq at Risk of Pullback After 12-Day Winning Streak

Nasdaq completed a 12-day winning streak on Friday, tagging the upper VWAP once again, with the lower VWAP now following suit. As it trades above its prior peak at 26,250, the tech index has its next resistance at 27,100, which is the expanded upper VWAP level. However, with the RSI overbought, a breakout might be difficult to achieve, which brings into focus the next support at 25,800 should a pullback occur. Below that lies the 25K handle, followed by the middle VWAP line at 24,750.

Source: SpreadEx | US Tech 100, Daily Chart