Costco Expected to Post Higher Q4 Sales and Profit
What 5 Things to Know; Before the Stock Market Opens
Stock Market Development
The stock market is shaping up for a busy day, with several major developments expected to influence trading. Key earnings reports, product unveilings, and economic data releases are setting the stage, especially for tech and consumer sectors. U.S. stock futures are moving higher in premarket trading, led by the tech-heavy Nasdaq, buoyed by positive news from the semiconductor industry and consumer retail. Here’s what investors should watch for today:
1. Micron's Bullish Outlook Lifts Chipmakers and Peers
Micron Technology (MU) is making waves in the premarket, with shares surging 16% after the company reported much stronger-than-expected earnings and a positive outlook for future growth. In its fiscal fourth-quarter results, Micron swung back to profitability, driven by booming demand for memory chips in artificial intelligence (AI) applications. According to CEO Sanjay Mehrotra, Micron’s revenue nearly doubled year-over-year, thanks to "robust AI demand" that is fueling growth across the tech sector.
The optimism around Micron is lifting other chipmakers as well, with ASML Holding (ASML) jumping 4% and Advanced Micro Devices (AMD), Broadcom (AVGO), and Nvidia (NVDA) also climbing about 2% each in premarket trading. The strong performance across the semiconductor sector reflects broader confidence in AI-driven growth, particularly as demand for high-performance chips is expected to continue rising in the coming quarters.
This strong outlook has sent a ripple effect across the tech industry, as companies that rely on AI and data processing power are poised to benefit from advancements in chip technology.
2. Costco Expected to Post Higher Q4 Sales and Profit
Costco Wholesale (COST) is preparing to report its fiscal fourth-quarter earnings after the market closes today. Analysts are expecting solid results, with forecasts projecting year-over-year growth in both sales and profits. This will be Costco’s first earnings release since the company increased its membership fees—its first fee hike in seven years. The fee increase could provide a notable boost to the retailer's bottom line.
While Costco shares are already up nearly 40% this year, the stock is edging higher in premarket trading, as investors remain optimistic about the company's ability to continue delivering strong financial performance. Despite this, some analysts are projecting limited upside potential for the stock in the near term, given the robust gains already seen in 2024.
Costco’s earnings will be closely watched for any guidance on how consumer spending is faring amid inflationary pressures. The company’s strong positioning in the warehouse retail space has allowed it to weather economic turbulence better than many of its peers, but investors will look for signs of how it plans to sustain growth heading into 2025.
3. Meta Stock Rises After Setting Record High on New Product Announcements
Meta Platforms (META) continues to reach new heights, with shares hitting an all-time high on Wednesday and rising an additional 2% in premarket trading today. The social media giant unveiled a suite of new products at its annual Connect conference, where CEO Mark Zuckerberg outlined Meta’s vision for the future of virtual and augmented reality (VR/AR), as well as its ongoing investments in artificial intelligence (AI).
Among the highlights of the conference were the unveiling of the lower-cost Quest 3S headset, new Orion AR glasses, and updates to Meta’s smart glasses in partnership with Ray-Ban. The company also announced new AI-powered features, reinforcing its position in the increasingly competitive landscape of AR, VR, and AI-driven products.
Meta’s foray into these emerging technologies is seen as a key part of its long-term strategy to diversify beyond social media and advertising, especially as it seeks to build the metaverse. Investors are closely watching how these developments will impact Meta's growth trajectory, particularly as the company continues to invest heavily in cutting-edge technologies.
4. OpenAI Plans to Restructure Into For-Profit Organization, Offering Sam Altman a Massive Stake
OpenAI, the AI research lab backed by Microsoft (MSFT), is reportedly planning a major restructuring that would transform it into a for-profit organization. According to reports from Reuters and Bloomberg, the move is being considered to address an ongoing talent exodus, as several key executives have recently left the company.
In the proposed restructuring, OpenAI is in talks to grant CEO Sam Altman a sizable equity stake, potentially valued at up to $150 billion, or about 7% of the company. This plan comes amid ongoing challenges, including the departure of Chief Technology Officer Mira Murati, one of OpenAI’s long-serving leaders, who announced her resignation on Wednesday.
The restructuring is likely aimed at retaining talent and capitalizing on the growing commercial demand for AI technologies, particularly in light of OpenAI’s significant advances in natural language processing and machine learning. Investors are watching closely, as the changes could have broader implications for the company’s partnerships and future direction, particularly with major stakeholders like Microsoft.
5. Federal Reserve Chair Jerome Powell to Make First Remarks After Last Week’s Interest-Rate Cut
In the wake of last week’s surprise jumbo-sized interest-rate cut, all eyes will be on Federal Reserve Chair Jerome Powell today as he delivers his first public remarks since the move. Powell is scheduled to deliver pre-recorded opening remarks at the 2024 U.S. Treasury Market Conference, and investors will be listening closely for any signals about the Fed’s future monetary policy stance.
The Federal Reserve’s decision to cut rates was seen as a bold move to counteract slowing economic growth and rising inflation concerns. In addition to Powell, investors will hear from New York Fed President John Williams and Fed Vice Chair Michael Barr, both of whom are expected to offer insights into the health of the U.S. economy and the outlook for inflation.
Also due today is a revised estimate of second-quarter GDP, which could provide further clues about the economic trajectory heading into the end of the year. Investors are hoping for positive economic data to support the recent rally in stocks, but any signs of weakness could lead to increased volatility in the markets.
Conclusion
As the stock market opens today, investors are closely watching a range of factors, from Micron’s AI-driven growth to Costco’s earnings, Meta’s new product launches, and the latest developments in Federal Reserve policy. With the tech and consumer sectors leading the charge, today’s trading session is poised to be an active one. Ongoing geopolitical and economic concerns, however, could still inject uncertainty into the markets, making today’s announcements particularly important for setting the tone for the rest of the week.