AI Boom Drives Tech Earnings While Consumer Sectors Struggle Amid Trade Uncertainties

Bright spots emerge in corporate earnings as tariff uncertainty lingers

July 24 (Reuters) - Some of the world's top tech firms, including U.S. search giant Alphabet, South Korean chipmaker SK Hynix and Indian IT services provider Infosys, have provided upbeat guidance in their latest earnings reports, shrugging off an uncertain U.S. trade policy. Corporate operations have been overshadowed by erratic U.S. trade action that has upended supply chains and left firms to navigate fluid tariffs on top of broader economic uncertainties such as regulatory change and currency fluctuation. But tech titans Alphabet (GOOGL.O), opens new tab, SK Hynix (000660.KS), opens new tab and Infosys (INFY.NS), opens new tab - which all reported earnings that beat market forecasts - predicted brighter days to come, with Alphabet and SK Hynix both flagging plans to boost spending. Nvidia (NVDA.O), opens new tab supplier SK Hynix booked record quarterly profit, boosted by strong demand for artificial intelligence chips and customers stockpiling ahead of potential U.S. tariffs. Indian IT services provider Infosys raised the floor of its annual revenue forecast range to 1% to 3%, from flat to 3%, matching analyst expectations. Among the major earnings on Thursday, Nestle, Reckitt, Roche and Wizz report before local markets open. TURBULENCE The upbeat guidance amounted to a bright spot in a turbulent second-quarter earnings season that has so far seen businesses as varied as chipmakers and steelmakers report downbeat results. Companies have reported over July 16-22 a combined full-year loss of as much as $7.8 billion, with the automotive, aerospace and pharmaceutical sectors being hurt most by tariffs. South Korea's Hyundai Motor (005380.KS), opens new tab on Thursday posted a decline in second-quarter operating profit, down 16% from a year earlier, as U.S. tariffs on vehicles and parts started to weigh on its bottom line. The automaker said U.S. tariffs cost the company 828 billion won ($606.5 million) in the second quarter. General Motors (GM.N), opens new tab said tariffs knocked $1.1 billion from second-quarter earnings. On Wednesday, Tesla (TSLA.O), opens new tab Chief Executive Elon Musk said U.S. government cuts in support for electric vehicle makers could lead to a "few rough quarters", as his firm reported its worst quarterly sales decline in over a decade. TRADE DEALS News that the U.S. had struck a deal with Japan to lower new tariffs on auto imports and spare it punishing levies on other goods lifted stock markets on Wednesday. It stirred hope for a similar deal with the European Union ahead of August 1, when the U.S. said new tariffs will go into effect. The European Union is moving toward a trade deal that could include a 15% U.S. baseline tariff on EU goods and possible exemptions, two European diplomats said. One surprise on Thursday was South Korea's finance ministry saying tariff negotiations had been postponed due to a scheduling conflict for U.S. Treasury Secretary Scott Bessent. The announcement cast fresh doubt about whether South Korea would be able to avert U.S. import duties that could hit some of its major exporting industries. All eyes are on Washington as governments scramble to close trade deals ahead of next week's deadline that the White House has already pushed back under pressure from markets and intense lobbying by industry. While the Japan deal has eased investor worry, the threat of higher tariffs on other large economies remains, including the European Union, Canada and Brazil. An EU-China summit on Thursday will test European resolve and unity as the bloc faces trade pressure from both China as well as the United States, while U.S. Treasury Secretary Scott Bessent meets Chinese officials in Sweden next week. ($1 = 1,365.1800 won) Reporting by Reuters Newsroom; Writing by Anne Marie Roantree; Editing by Christopher Cushing and Lincoln Feast. Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Autos & Transportation * ADAS, AV & Safety * Software-Defined Vehicle * Sustainable & EV Supply Chain

In earnings season, it's AI good, everything else, not so much

July 24 (Reuters) - Businesses focused on artificial intelligence are raking it in so far this earnings season. Those catering to actual people, less so. The AI spending surge is providing a big boost for semiconductor and software giants like Google parent Alphabet (GOOGL.O), opens new tab, while companies from airlines to restaurants and food manufacturers are struggling to navigate an erratic U.S. trade policy which is boosting costs, upending supply chains and hurting consumer confidence. Along with Alphabet, SK Hynix and India's Infosys (INFY.NS), opens new tab exceeded market forecasts on Thursday and predicted brighter days to come, with Alphabet and SK Hynix both flagging plans to boost spending. SK supplies the world's most valuable company Nvidia (NVDA.O), opens new tab, the AI chipmaking giant that recently surpassed $4 trillion in market value. By contrast, executives at many consumer names were less enthusiastic, from luxury bellwether LVMH (LVMH.PA), opens new tab, packaged food giant Nestle (NESN.S), opens new tab, to toymakers Hasbro (HAS.O), opens new tab and Mattel (MAT.O), opens new tab and airlines Southwest (LUV.N), opens new tab and American (AAL.O), opens new tab. They, along with automakers and giants like Coca-Cola(KO.N), opens new tab, have indicated that some segments of the buying public have pulled in their spending as prices and interest rates remain high. The dichotomy is evident in IBM's results. Sales in Big Blue's "AI book of business" grew 25 percent in its most recent quarter to $7.5 billion, while its software segment fell short of expectations and the company sounded cautious about how much its consulting segment might grow this year. The equity market has accentuated the positive. News that the U.S. had struck a trade deal with Japan and was closing in on a deal with the European Union ahead of an Aug 1. deadline boosted markets. The broad S&P 500 (.SPX), opens new tab notched another record this week and the Eurostoxx (.STOXXE), opens new tab was just a few points shy of that mark. "The market is getting friendly with a view that tariffs ending up higher than they have ever been for 100 years will not have a negative impact on economic growth, because we haven't seen any negative impact on economic growth so far," said Van Luu, head of solutions strategy, fixed income and foreign exchange at Russell Investments. Whether companies continue to absorb that hit remains to be seen. So far, companies have reported over July 16-22 a combined full-year loss of as much as $7.8 billion, with automotive, aerospace and pharmaceutical sectors hurt the most by tariffs, according to a Reuters tariff tracker. U.S. averages have been buoyed by the so-called Magnificent Seven, a group of tech giants that has benefited heavily from spending plans on artificial intelligence, and currently accounts for more than 30% of the value of the S&P. "AI is one of the strongest areas of growth for the economy, and the market mirrors the economy," said Adam Sarhan, chief executive of 50 Park Investments. To be sure, the market's reaction may be in part because a larger-than-normal percentage of companies are clearing a lowered bar for estimates. At the beginning of April, the market expected 10.2% year-over-year S&P earnings growth, but by July, that number had dropped to 5.8%, according to LSEG data. With about 30% of constituents reporting results, the blended earnings growth rate sits at 7.7%. TECH GOES FULL SPEED AHEAD AI-focused businesses continued to print money in the most recent quarter. Nvidia (NVDA.O), opens new tab supplier SK Hynix posted record quarterly profit, boosted by demand for artificial intelligence chips and customers stockpiling ahead of potential U.S. tariffs. Indian IT services provider Infosys (INFY.NS), opens new tab raised the floor of its annual revenue forecast range to 1% to 3%, from flat to 3%, matching analyst expectations. "The tech community is going ahead full speed ahead... and banks are in a very strong position now," said Bill George, former chairman and CEO of Medtronic and executive education fellow at Harvard Business School. "Other companies will struggle to get growth." UNCERTAIN CONSUMER Consumer companies have been less upbeat. Nestle, the world's biggest packaged food maker, reported softer demand as it struggled to win thrifty shoppers to its big brands. U.S. airlines Southwest and American Airlines warned that Americans are travelling less, the latest signal that U.S. consumers are remaining cautious about their spending. Toymakers Mattel and Hasbro both said uncertainties around tariffs are acting as a headwind. Carmakers are among firms dealing with the most difficulty. The auto giants are resisting raising prices, eating the cost of tariffs that may cost them millions or billions of dollars. Levies on metals, copper and auto parts made it harder to navigate changing tariff policies. South Korea's Hyundai Motor (005380.KS), opens new tab on Thursday posted a 16% decline in second-quarter operating profit, saying U.S. tariffs cost it 828 billion won ($606.5 million) in the second quarter, with a bigger hit expected in the current quarter. General Motors (GM.N), opens new tab still expects a $4 billion to $5 billion hit to its bottom line this year. On Wednesday, Tesla (TSLA.O), opens new tab Chief Executive Elon Musk said U.S. government cuts in support for electric vehicle makers could lead to a "few rough quarters", as his firm reported its worst quarterly sales decline in over a decade. ($1 = 1,365 won) Reporting by Reuters Newsroom; additional reporting by Nikhil Sharma, Naomi Rovnik; Writing by Anne Marie Roantree, Josephine Mason and David Gaffen; Editing by Nick Zieminski Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Autos & Transportation * Corporate Counsel * ADAS, AV & Safety * Software-Defined Vehicle * Sustainable & EV Supply Chain

In earnings season, it's AI good, everything else, not so much - The Economic Times

The AI spending surge is providing a big boost for semiconductor and software giants like Google parent Alphabet , while companies from airlines to restaurants and food manufacturers are struggling to navigate an erratic U.S. trade policy which is boosting costs, upending supply chains and hurting consumer confidence.Businesses focused on artificial intelligence are raking it in so far this earnings season. Those catering to actual people, less so. The AI spending surge is providing a big boost for semiconductor and software giants like Google parent Alphabet , while companies from airlines to restaurants and food manufacturers are struggling to navigate an erratic U.S. trade policy which is boosting costs, upending supply chains and hurting consumer confidence. Along with Alphabet, SK Hynix and India's Infosys exceeded market forecasts on Thursday and predicted brighter days to come, with Alphabet and SK Hynix both flagging plans to boost spending. SK supplies the world's most valuable company Nvidia, the AI chipmaking giant that recently surpassed $4 trillion in market value. By contrast, executives at many consumer names were less enthusiastic, from luxury bellwether LVMH, packaged food giant Nestle, to toymakers Hasbro and Mattel and airlines Southwest and American . They, along with automakers and giants like Coca-Cola, have indicated that some segments of the buying public have pulled in their spending as prices and interest rates remain high. The dichotomy is evident in IBM's results. Sales in Big Blue's "AI book of business" grew 25 percent in its most recent quarter to $7.5 billion, while its software segment fell short of expectations and the company sounded cautious about how much its consulting segment might grow this year. The equity market has accentuated the positive. News that the U.S. had struck a trade deal with Japan and was closing in on a deal with the European Union ahead of an Aug 1. deadline boosted markets. The broad S&P 500 notched another record this week and the Eurostoxx was just a few points shy of that mark. "The market is getting friendly with a view that tariffs ending up higher than they have ever been for 100 years will not have a negative impact on economic growth, because we haven't seen any negative impact on economic growth so far," said Van Luu, head of solutions strategy, fixed income and foreign exchange at Russell Investments. Whether companies continue to absorb that hit remains to be seen. So far, companies have reported over July 16-22 a combined full-year loss of as much as $7.8 billion, with automotive, aerospace and pharmaceutical sectors hurt the most by tariffs, according to a Reuters tariff tracker. U.S. averages have been buoyed by the so-called Magnificent Seven, a group of tech giants that has benefited heavily from spending plans on artificial intelligence, and currently accounts for more than 30% of the value of the S&P. "AI is one of the strongest areas of growth for the economy, and the market mirrors the economy," said Adam Sarhan, chief executive of 50 Park Investments. To be sure, the market's reaction may be in part because a larger-than-normal percentage of companies are clearing a lowered bar for estimates. At the beginning of April, the market expected 10.2% year-over-year S&P earnings growth, but by July, that number had dropped to 5.8%, according to LSEG data. With about 30% of constituents reporting results, the blended earnings growth rate sits at 7.7%. Tech goes full speed ahead AI-focused businesses continued to print money in the most recent quarter. Nvidia supplier SK Hynix posted record quarterly profit, boosted by demand for artificial intelligence chips and customers stockpiling ahead of potential U.S. tariffs. Indian IT services provider Infosys raised the floor of its annual revenue forecast range to 1% to 3%, from flat to 3%, matching analyst expectations. "The tech community is going ahead full speed ahead... and banks are in a very strong position now," said Bill George, former chairman and CEO of Medtronic and executive education fellow at Harvard Business School. "Other companies will struggle to get growth." Uncertain consumer Consumer companies have been less upbeat. Nestle, the world's biggest packaged food maker, reported softer demand as it struggled to win thrifty shoppers to its big brands. U.S. airlines Southwest and American Airlines warned that Americans are travelling less, the latest signal that U.S. consumers are remaining cautious about their spending. Toymakers Mattel and Hasbro both said uncertainties around tariffs are acting as a headwind. Carmakers are among firms dealing with the most difficulty. The auto giants are resisting raising prices, eating the cost of tariffs that may cost them millions or billions of dollars. Levies on metals, copper and auto parts made it harder to navigate changing tariff policies. South Korea's Hyundai Motor on Thursday posted a 16% decline in second-quarter operating profit, saying U.S. tariffs cost it 828 billion won ($606.5 million) in the second quarter, with a bigger hit expected in the current quarter. General Motors still expects a $4 billion to $5 billion hit to its bottom line this year. On Wednesday, Tesla Chief Executive Elon Musk said U.S. government cuts in support for electric vehicle makers could lead to a "few rough quarters", as his firm reported its worst quarterly sales decline in over a decade.

In earnings season, it's AI good, everything else, not so much

(Reuters) -Businesses focused on artificial intelligence are raking it in so far this earnings season. Those catering to actual people, less so. The AI spending surge is providing a big boost for semiconductor and software giants like Google parent Alphabet, while companies from airlines to restaurants and food manufacturers are struggling to navigate an erratic U.S. trade policy which is boosting costs, upending supply chains and hurting consumer confidence. Along with Alphabet, SK Hynix and India's Infosys exceeded market forecasts on Thursday and predicted brighter days to come, with Alphabet and SK Hynix both flagging plans to boost spending. SK supplies the world's most valuable company Nvidia, the AI chipmaking giant that recently surpassed $4 trillion in market value. By contrast, executives at many consumer names were less enthusiastic, from luxury bellwether LVMH, packaged food giant Nestle, to toymakers Hasbro and Mattel and airlines Southwest and American. They, along with automakers and giants like Coca-Cola, have indicated that some segments of the buying public have pulled in their spending as prices and interest rates remain high. The dichotomy is evident in IBM's results. Sales in Big Blue's "AI book of business" grew 25 percent in its most recent quarter to $7.5 billion, while its software segment fell short of expectations and the company sounded cautious about how much its consulting segment might grow this year. The equity market has accentuated the positive. News that the U.S. had struck a trade deal with Japan and was closing in on a deal with the European Union ahead of an Aug 1. deadline boosted markets. The broad S&P 500 notched another record this week and the Eurostoxx was just a few points shy of that mark. "The market is getting friendly with a view that tariffs ending up higher than they have ever been for 100 years will not have a negative impact on economic growth, because we haven't seen any negative impact on economic growth so far," said Van Luu, head of solutions strategy, fixed income and foreign exchange at Russell Investments. Whether companies continue to absorb that hit remains to be seen. So far, companies have reported over July 16-22 a combined full-year loss of as much as $7.8 billion, with automotive, aerospace and pharmaceutical sectors hurt the most by tariffs, according to a Reuters tariff tracker. U.S. averages have been buoyed by the so-called Magnificent Seven, a group of tech giants that has benefited heavily from spending plans on artificial intelligence, and currently accounts for more than 30% of the value of the S&P. "AI is one of the strongest areas of growth for the economy, and the market mirrors the economy," said Adam Sarhan, chief executive of 50 Park Investments. To be sure, the market's reaction may be in part because a larger-than-normal percentage of companies are clearing a lowered bar for estimates. At the beginning of April, the market expected 10.2% year-over-year S&P earnings growth, but by July, that number had dropped to 5.8%, according to LSEG data. With about 30% of constituents reporting results, the blended earnings growth rate sits at 7.7%. TECH GOES FULL SPEED AHEAD AI-focused businesses continued to print money in the most recent quarter. Nvidia supplier SK Hynix posted record quarterly profit, boosted by demand for artificial intelligence chips and customers stockpiling ahead of potential U.S. tariffs. Indian IT services provider Infosys raised the floor of its annual revenue forecast range to 1% to 3%, from flat to 3%, matching analyst expectations. "The tech community is going ahead full speed ahead... and banks are in a very strong position now," said Bill George, former chairman and CEO of Medtronic and executive education fellow at Harvard Business School. "Other companies will struggle to get growth." UNCERTAIN CONSUMER Consumer companies have been less upbeat. Nestle, the world's biggest packaged food maker, reported softer demand as it struggled to win thrifty shoppers to its big brands. U.S. airlines Southwest and American Airlines warned that Americans are travelling less, the latest signal that U.S. consumers are remaining cautious about their spending. Toymakers Mattel and Hasbro both said uncertainties around tariffs are acting as a headwind. Carmakers are among firms dealing with the most difficulty. The auto giants are resisting raising prices, eating the cost of tariffs that may cost them millions or billions of dollars. Levies on metals, copper and auto parts made it harder to navigate changing tariff policies. South Korea's Hyundai Motor on Thursday posted a 16% decline in second-quarter operating profit, saying U.S. tariffs cost it 828 billion won ($606.5 million) in the second quarter, with a bigger hit expected in the current quarter. General Motors still expects a $4 billion to $5 billion hit to its bottom line this year. On Wednesday, Tesla Chief Executive Elon Musk said U.S. government cuts in support for electric vehicle makers could lead to a "few rough quarters", as his firm reported its worst quarterly sales decline in over a decade. ($1 = 1,365 won) (Reporting by Reuters Newsroom; additional reporting by Nikhil Sharma, Naomi Rovnik; Writing by Anne Marie Roantree, Josephine Mason and David Gaffen; Editing by Nick Zieminski)