Earnings season is winding down.
Ninety percent of S&P 500 companies have already reported their quarterly results, and most of them have been quite impressive.
So far this quarter, 81% of companies have reported positive revenue and earnings surprises, and the net result has been a blended 11.8% year-over-year earnings growth rate, which would be the third consecutive quarter of double-digit earnings growth for the S&P 500, assuming the results hold.
Most of the market’s focus will be elsewhere (CPI: Tuesday, August 12; PPI and initial jobless claims: Thursday, August 14; retail sales, Empire State manufacturing, and consumer sentiment: Friday, August 15), but there are still a few earnings reports to watch this week that will give us fresh insights into some of the market’s most important trends.
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So, let’s look at what this week has in store for earnings and the insights we can garner from earnings season’s closing days.
Earnings Reports to Watch This Week
Circle Internet Group (CRCL) – Tuesday, August 12, Before the Open
Circle has been a major beneficiary of the rollout of new stablecoin legislation this year after it IPO’d in early June. The stock initially priced at 31 per share and closed the first day of trading at 83; it’s roughly doubled since then.
The company mints (creates) stablecoins against a reserve of short-term Treasuries, cash and other cash equivalents, and most of their revenue is generated by the interest spread between their holdings and their non-yielding stablecoin offerings.
They’re engaged in a revenue share model, where Coinbase (COIN) receives half of the interest generated from USDC (Circle’s stablecoin) held on the platform, but management and investors have been focused on the company’s potential to create new payment rails going forward.
Analysts are expecting earnings of $0.34/share on revenue of $645 million, but focus belongs on management commentary (again, it’s an interest rate arbitrage play as far as earnings and revenue are concerned), especially as it concerns stablecoin adoption and the plans moving forward.
The big knock against crypto products has been that the long-anticipated adoption of cryptocurrencies has never materialized in day-to-day life. Stablecoins promise to “fix” that, and Circle’s earnings should help shed some light on whether that’s changing.
CoreWeave (CRWV) – Tuesday, August 12, After the Close
CoreWeave is another recent IPO that’s been flying high this year, and they’re about to report their second quarter as a public company.
The much-anticipated IPO priced at 40 per share in late March and has run up 247% in the subsequent five months.
Nvidia (NVDA) is a big backer of the company, which offers AI Cloud services (cloud-based access to cutting-edge AI hardware built around Nvidia’s chips).
For shareholders, it’s important to note that their earnings report falls just two days before the IPO lockup expires, which could produce selling pressure if insiders think shares are too rich here.
But for those not invested in the company itself, there’s still a lot to be gained from this quarterly report.
As of March 31, CoreWeave had a revenue backlog of $25.9 billion, $11.2 billion of which comes from a five-year deal with OpenAI to “deliver AI infrastructure to OpenAI, expanding OpenAI’s compute capacity for training and delivering its latest models at scale to its hundreds of millions of users around the world.”
Strong growth in the backlog going forward would mean that CoreWeave’s clients and business partners continue to anticipate high demand for their own AI offerings.
A flat (or even declining) backlog, on the other hand, would be an early indication that AI spending is slowing down.
Analysts are expecting an EPS loss of $0.20 on revenue of $1.08 billion.
Also Reporting
Also reporting this week are Deere & Co. (DE) (U.S. agricultural manufacturer and a net exporter), Advance Auto Parts (AAP) (auto parts retailer; should offer some insights into consumer spending behavior, impact of tariffs, etc.), Sandisk (SNDK) (flash memory and solid-state drive manufacturer), and a variety of other names that can offer us incremental insights into the strength of manufacturing and the consumer.
But given the outsized impact of AI and crypto on the markets this year, the most impactful reports will be Circle and CoreWeave, and they’re worth watching when they report earnings this week.
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