Chart of the day - US100 (21.04.2025)

Futures on the U.S. Nasdaq index (US100) are down nearly 1.3% today, and strong earnings and forecasts from Netflix—whose shares are up nearly 3% in pre-market trading—have not been enough to lift sentiment on Wall Street. This week, two U.S. Big Tech companies are set to report earnings: Tesla (Tuesday, April 22) and Alphabet (Thursday, April 24). Both face significant challenges, though Alphabet’s valuation appears much “healthier” and, in the case of a very strong report and optimistic guidance, could appeal to the markets.

• Tesla’s valuation remains stretched, while the company’s business is slowing. The latest quarter showed a year-over-year revenue decline. Car sales in Europe are falling, and production in China could be seriously impacted if tensions between Washington and Beijing escalate further. Tesla is also struggling with the rise of Chinese EV competition, with battery giant CATL recently announcing a new, durable battery type now installed in Chinese EV models.
• If Tesla’s results disappoint in terms of sales and margins, a pullback is likely. The company is also exposed to a potential increase in costs due to tariffs, which could affect pricing and further worsen margin pressure. Additionally, the lack of meaningful progress in autonomous software development and its commercialization in the Chinese market appears to be weighing on the stock. Adoption of this software in China seems increasingly dependent on ongoing U.S.–China tariff negotiations, which currently look unfavorable.
• Alphabet’s situation is somewhat different. The company’s valuation remains more balanced and falls within the average range for S&P 500 firms. Its business continues to grow, and its dominant position in the industry remains intact. A beat on revenue and profits could support a market rebound. On the other hand, the company still faces risks related to regulations, financial penalties, and a possible digital services tax in the European Union. Investors are also closely watching the trend of rising traffic to ChatGPT, which is likely capturing some user activity away from Google.

US100 (H1 interval)

Positive reactions to Tesla’s and Alphabet’s earnings could push the index above 19,200 points, while ongoing Wall Street weakness increases the likelihood of a test of the 17,200–17,600 zone. Beyond individual company reports, the market is also weighing the risk of weaker U.S. macro data and continued uncertainty surrounding Fed policy, especially as Powell faces pressure from Donald Trump.

Source: xStation5