2 weeks Ago
FinkAvenue Listen below or on the go on Apple Podcasts and Spotify IBM shares slump in worries about cost-cutting impact on consulting. (0:15) Time to buy gold after the biggest drop in 4 years? (2:01) Tesla starts robotaxi tests. (3:21) The following is an abridged transcript: IBM ( NYSE: IBM ) is selling off as worries about its consulting business and the negative impact of DOGE overshadowed better-than-expected Q1 results and guidance.
Software revenue for the first quarter increased 7% year over year to $6.336 billion, but consulting declined 2% to $5.068 billion.
SA Analyst Uttam Dey said the report “demonstrated continued strength in its Software business while Consulting continued to drag," “Red Hat continued to pull the Software business ahead with low-teens growth. Overall, IBM's earnings Q1 was impressive, but management made no changes to its mid-single digit growth model for the year. The lack of any revisions to its growth model along with the pressure in its Consulting business might keep the stock rangebound for now.
" On the earnings call , CEO Arvin Krishna said in “the near term, uncertainty may cause clients to pause and take a wait and see approach.” For "clients with a more direct impact from current policy, the slowdown may be more pronounced. Consulting is also more susceptible to discretionary pullbacks and DOGE-related initiatives.
" CFO James Kavanaugh added: “While we feel good about the core growth drivers of our business, there are areas of our portfolio that could see greater variability in the event that the macroeconomic environment deteriorates. This includes Consulting, which is more sensitive to discretionary pullbacks and DOGE-related initiatives, consumption-based services and software, including in Red Hat, and areas of Distributed Infrastructure.” For Q1, Big Blue reported revenue of $14.
54 billion, which was more than the consensus estimate of $14.39 billion. The company expects Q2 revenue to range from $16.
4 billion to $16.75 billion, with a midpoint of $16.565 billion above the estimate of $16.
28 billion. Gold ( XAUUSD:CUR ) is steadying following its biggest percentage decline in nearly four years. The front-month contract is up around +0.
5%, following a -3.6% drop in the yellow metal, the largest since June 2021, to below $3,300. Gold tumbled as money moved back into risk on Wednesday as President Donald Trump said he had no intention of firing Fed chief Jay Powell and also indicated there a deal could be made on tariffs with Beijing.
But the safe haven finished off its lows after Treasury Secretary Scott Bessent muddied the waters by saying a China trade deal could take two to three years. Michael Brown, senior research strategist at Pepperstone, says $3,500 per ounce is looking like a near-term top. "Still, with the yellow metal now over $200 off those highs, this represents a solid dip buying opportunity, with bullion still representing an attractive haven, given its somewhat insulated nature from the political to-and-fro seen elsewhere," he added.
SA analyst Money Metals Exchange says "gold’s price correction may have ended this furious, nearly parabolic run, but it doesn’t spell the end of this bull market ." "The severity of the drop was likely due to trend-following traders jumping in with shorts, but ..
. they’ll be very quick to cover once the big buyers return," they said, adding "much if not most of the buying in gold during this new bull market has come from central banks, and it’s hard to imagine deeper pockets and stronger hands than these." And Tesla ( TSLA ) is now testing its robotaxi service with employees in Austin and the Bay Area ahead of a planned launch in the summer of 2025.
The company said: “FSD Supervised ride-hailing service is live for an early set of employees in Austin & San Francisco Bay Area. We've completed over 1.5k trips & 15k miles of driving.
” Tesla’s subscription-based Full Self-Driving driver assistance system is not an autonomous driving setup. It requires the driver to keep their hands on the wheel of the vehicle. Supervised FSD is already available to Tesla owners.
Waymo ( GOOG ) ( GOOGL ) has already made a strong start with its own robotaxi service in Austin. The service attracted 20% of the rides offered by Uber ( UBER ) in Austin during the last week of March, according to a report from YipitData. Amazon's ( AMZN ) Zoox ( ZOOX ) is another future player in the space.
Globally, Baidu ( BIDU ), WeRide ( WRD ) and Pony AI ( PONY ) are out in front of other competitors. What’s Trending on Seeking Alpha: The FT says Trump plans some tariff relief for automakers Netflix’s co-CEO expresses confidence in achieving a $1 trillion valuation The PBOC governor said Beijing will firmly support free trade at Washington G20 Now let’s take a look at the markets. Stock index futures ( SPX ) ( INDU ) ( US100:IND ) are slightly in the red, while the 10-year Treasury yield ( US10Y ) is down near 4.
35%. WTI crude ( CL1:COM ) is up more than +0.5%.
Among active stocks, Texas Instruments ( TXN ) and ServiceNow ( NOW ) are rallying post-earnings. Nokiea ( NOK ) is slumping on its results. On today’s economic calendar: 8:30 AM March Durable Goods 8:30 AM Jobless Claims 10:00 AM March Existing Home Sales.
