Tesla & Google Earnings to Set Tone for Tech Sector

AI is still expected to be the catalyst for the start of tech earnings season, with cloud in focus now that Google and Tesla are competing in the same space: AI and robotaxis.

Tesla: Robotaxis Up, Deliveries Down

Analysts are expecting another dour quarter for Tesla, following its for the three months between April and June. The company shipped 13.5% fewer vehicles in Q2 than it did a year ago, and at 384.1K, it was below the consensus expectation of 394.4K. The drop was attributed to continued backlash from CEO Elon Musk's political takes as well as a lack of renewal in the vehicle offer. The bright spot in sales was the refresh of the Model Y, which isn't yet fully available in its main selling regions.

Tesla will report earnings on Wednesday after the market closes, and the consensus among analysts is for per share. That would be down from $0.52 a year ago but an improvement over Q1's $0.27. A similar pattern is expected for revenue, which is projected to decline 11% from the same period last year to $22.7 billion but to improve sequentially from $19.3 billion. While the company's core business of car sales could be overcoming a hurdle, market focus is likely to be around its growth prospects, such as robotaxis and the long-promised "cheap" EV. The company is facing increasing competition on both fronts, from cheaper Chinese vehicles and Waymo's already operational driverless taxis, as well as Uber joining the market.

Google Is Still All About the Ad Revenue

Although Alphabet's Waymo has mileage in the last six months, the company's primary focus and revenue source remains advertising on its Google and YouTube platforms. The company's share price has been on a rollercoaster this year, as it has come under threat from AI, including OpenAI's plan to host advertising and Perplexity's plan to launch a browser to rival Chrome. That could explain the worries of traders after the company posted a perfect Q1 earnings report, including .

This sets a particularly high bar, however. Analysts believe from $1.89 a year ago, with revenues increasing 11% to $93.9 billion. The focus from traders will likely still be on how Google defends itself against AI threats, with the notable increase in cloud revenue indicating that it is capturing revenue from one of the few areas of LLM that consistently generates revenue.

Tesla to Resume Decline or Breakout of Pennant

After staging a modest recovery in April, Tesla's stock price has failed to build momentum and may be consolidating for a break lower, particularly if its earnings disappoint. A move lower could encounter support at the 200-day moving average (MA) at $319, with the recent swing low of $293 providing the next floor. However, the RSI is still above 50, and the MA is inclined upward. Its longer-term chart pattern also points to a pennant. A break higher could overcome resistance at the round $350 level, the latest swing high, followed by resistance at the quarterly high of $365.

Source: SpreadEx | TSLA

Key Takeaways

The tech earnings season kicks off with Alphabet and Tesla earnings on Wednesday, after both companies have seen notable declines in their stock prices over the last quarter. Tesla's sales recovery over the prior quarter could help reassure investors if it proves optimistic about its driverless taxis. Alphabet's efforts to repel threats from AI rivals will be the focus of the upcoming earnings, which have a hard bar to beat compared to the prior quarter.