Our Plan for Amazon, Apple and More Amid Continued Market Turbulence

* Post earnings from Amazon, Apple, and Universal Display, our price targets are unchanged.

* Here’s our strategy for each of those portfolio positions.

As the market digests the wide miss in the July Employment Report and the pop in the July Unemployment rate, let’s turn to earnings last night from three of our portfolio holdings: Apple AAPL, Universal Display OLED, and Amazon AMZN.

We are seeing several price target increases for AAPL shares and based on greater visibility for H2 2024, Universal Display lifted the low end of its 2024 guidance. However, those shares are feeling the weight of the overall market, which, as we touched on earlier, is reeling from the horrible earnings and guidance from Intel INTC earnings and slightly weaker-than-expected September top-line guidance from Amazon.

While that could be Amazon "sandbagging" somewhat, it guided its capital spending levels higher in H2 2024 compared to the $30.4 billion spent in H1 2024. Management said the majority of that spending will be to support AWS infrastructure. We’re not surprised by this given comments from Alphabet GOOGL and Microsoft MSFT, and this is another supporting data point for Nvidia NVDA and Marvell MRVL.

Still, the market is going to overlook those positives, including the AWS revenue beat, and react to the headlines, including some price target cuts for AMZN shares to $210-$235 from $240-$250. We’ll keep ours at $220, in part because we continue to see Amazon winning share with consumers, cloud, and AI, but also because its profit picture continues to improve. This will have us watching to see if the 200-day technical support level near $168 for AMZN holds and is successfully tested.

In our opening comments this morning, we shared that we plan to let the market absorb last night's earnings reports, this morning’s data and Monday’s July Service PMI reports before making any potential moves with the portfolio. Odds are there will be opportunities for us to take advantage of, but we’ll let them come to us.

Apple

As we mentioned above, Apple shares are seeing several price target increases to $255-$270 after beating June-quarter expectations, encouraging developer feedback on beta iOS18 Apple Intelligence features launched this week and growing confidence in a multi-year iPhone replacement cycle. For the June quarter, Apple topped consensus expectations with better-than-expected Mac, iPad, and Services revenues.

On its earnings call, Apple shared that its install base hit another record during the quarter due in part to iPad and Mac adoption. We see that along with Apple Intelligence capable iPhone adoption lifting that install base further, which in turn bodes well for Apple’s high margin Services revenue.

For now, we will maintain our $250 AAPL price target, but as we collect July and August revenue data from Taiwan Semiconductor TSM we aim to revisit it as needed. The biggest upside lever for our target will be the speed of iPhone upgrades, something we’ll have a much better feel for perhaps late this quarter if not early in the December one. As a frame of reference, Apple’s iPhone 14 models went on sale September 16, 2022, while the iPhone 15 models were available on September 22 of last year.

Between now and then, we will continue to watch the technical setup for AAPL shares, which are currently above their 50-day moving average near $212. While Apple’s shares are trading higher today, should the weight of the market drag them lower, that is the support level that will have our attention. The next one, the 100-day moving average, clocks in near $193. We will be watching these as the market digests today’s July Employment Report and other key economic data on Monday.

Universal Display

Quarterly results from Universal Display were a modest disappointment given very modest revenue and EPS shortfalls for the June period. Helping to take the sting out of things, management lifted the low-end for its 2024 revenue guidance to $645 million-$675 million from $635 million-$675 million and the market consensus of $664.8 million.

Based on other company comments this week about H2 2024 smartphone market prospects, we suspect Universal management could have lifted that lower-end even further. Adding to that thinking are Q2 2024 launches for tablets and PCs with organic light-emitting diodes from Apple, Samsung, Dell DELL, Honor, Wacom, and Microsoft MSFT. This means Universal should also be a beneficiary of the PC upgrade cycle that will benefit from AI on device as well as Windows 11. This growing end-market adoption supports our medium to longer-term thesis for the company,

OLED shares are in the red today, and that's no surprise given how we’ve seen the market react to even modest earnings misses. While we have a full OLED position in the portfolio, our message to newer members is to stay on the sidelines at least until we’ve digested the July Employment Report and Monday’s July Services PMI ones.

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At the time of publication, TheStreet Pro Portfolio was long AAPL, AMZN, OLED, MSFT, GOOGL, NVDA and MRVL.