5 min read

Tech Stock Roundup: Alibaba Drops On Layoffs News; Arm And Qualcomm Rise

Published November 11, 2024 12:42 PM

Edited by Samantha Dunn

Meta Platforms stock surged on news of a potential TikTok ban in the U.S., while Cathie Wood's ARK Invest trimmed its Spotify position. l Credit: Derek Fenech/CCN.com

Key Takeaways

Alibaba, like many other tech giants, is scaling back its metaverse ambitions due to the rising prominence of AI.
This news hit the stock before the earnings release.
Arm and Qualcomm increased after their quarterly reports.
Eyes will turn to Cisco, as it will report the first figures of its new financial year.

Alibaba will release its quarterly earnings this Friday after scaling back its metaverse efforts to focus on artificial intelligence, a move that hit the stock both in New York and Hong Kong.

While tech investors hailed Arm and Qualcomm’s results, this week’s attention is on Alibaba and Cisco earnings.

Alibaba’s Metaverse Strategy Doesn’t Pay Off

Alibaba, the Chinese tech giant, was the latest to scale back its metaverse ambitions. Yuanjing, its metaverse unit, will undergo layoffs as the company pivots towards AI development.

Alibaba’s decision to cut back on its metaverse efforts aligns with the broader industry shift towards AI. The immediate and widespread applications of AI across various sectors, from healthcare to retail, have made it a more compelling focus for tech giants.

Alibaba stock performance — Alibaba stock dropped by 4.3% last week on layoffs news. | Credit: Yahoo! Finance

As companies like Alibaba reallocate resources to AI development, it signals a potential turning point in the technology industry, with AI emerging as the dominant force shaping the future.

Alibaba EPS — Analysts expect a drop in Alibaba’s quarterly earnings per share. | Credit: TipRanks

According to Wall Street analysts , earnings per share will be $2.06, notably lower than last year’s $15.63. Despite this momentum, the experts have a ‘strong buy’ recommendation on BABA stock.

The leading chip designer, Arm, delivered a strong performance in its latest quarter, surpassing analyst expectations. Revenue climbed 5% year-over-year to $844 million, driven by a 23% surge in royalty revenue to $514 million.

This marked a significant improvement from the previous year’s loss of $110 million, with net income reaching $107 million or 10 cents per share.

Arm Q2 results — Arm second quarter highlights. | Credit: Arm

However, the company’s outlook for the current quarter fell short of analyst forecasts. Arm projected revenue between $920 million and $970 million, with a midpoint of $945 million, slightly below the consensus estimate of $944.3 million.

This news dampened investor sentiment, causing a 5% decline in share price. The stock closed the week with a 7.2% gain despite the dip.

Qualcomm Stock Increase

Qualcomm, which is in a legal battle with Arm, also saw its stock increase last week after it published its quarterly results. The stock rose by 3.4% in the entire week, driven by a 4% gain after the results only.

Qualcomm delivered a strong performance in its fourth quarter, surpassing Wall Street expectations for both earnings and revenue. The company also provided a promising outlook for the current quarter.

Qualcomm stock performance — Qualcomm gained 3.4% last week after its quarterly results. | Credit: Yahoo! Finance

The chipmaker reported earnings per share of $2.69, exceeding the consensus estimate of $2.56. Revenue reached $10.24 billion, outperforming the expected $9.90 billion. Qualcomm anticipates revenue between $10.5 billion and $11.3 billion for the upcoming quarter, with the midpoint surpassing analyst estimates.

The company’s strong performance was driven by a 12% increase in handset chip sales to $6.1 billion. Qualcomm’s position as a leading provider of chips for both high-end and low-end Android devices, as well as its ongoing partnership with Apple, has been instrumental in its success. The recent launch of the Snapdragon 8 Elite chip for 2025 further solidifies Qualcomm’s position in the market.

What’s Next?

This week, in addition to Alibaba, Cisco will also report its quarterly results related to the first quarter of its 2025 financial year.

Analysts projected a decline in both earnings and revenue. Earnings per share are expected to reach $0.87, marking a 21.6% year-over-year decrease. Revenue is anticipated to decline by 6.2% to $13.76 billion.

Analysts have adjusted their EPS estimates downward by 0.6% over the past 30 days, reflecting a collective reevaluation of the stock’s potential.

Cisco quarterly results — Cisco’s last quarterly results. | Credit: TipRanks

A deeper dive into the projections reveals that “Revenue-Product” is estimated to contract by 11% year-over-year to $9.90 billion. On the other hand, “Non-Gaap Gross Margin- Service” is expected to increase to $2.59 billion from the previous year’s $2.44 billion.

The Non-Gaap gross margin of its Product division is forecast to decline to $6.48 billion from $7.41 billion in the same quarter last year. Eyes will also turn to Cisco’s stock, which has increased by 8.5% over the past month.

Was this Article helpful? Yes No

About the Author

Giuseppe Ciccomascolo

Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors. Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.

[email protected] LinkedIn