• This week’s spotlight includes the Fed FOMC Meeting, PCE inflation data, and earnings reports from major tech companies.
• Meta’s bold advancements in AI, along with strong revenue and profit growth, position it as an attractive investment option.
• Caution is advised with Apple, which is contending with diminishing iPhone sales and a slowdown in innovation.
• Interested in more actionable trading ideas? Subscribe here for a 50% discount on InvestingPro!
U.S. stocks experienced a decline on Friday; however, both the Dow and S&P 500 recorded their second consecutive week of gains following President Donald Trump’s inauguration.
The Dow rose by 2.1%, the S&P 500 increased by 1.7%, and the tech-centered index saw a 1.6% uptick.
Source: Investing.com
This upcoming week is gearing up to be packed with significant market-moving events, highlighted by the crucial Fed FOMC meeting, a pivotal inflation report, and a slew of substantial tech earnings releases.
The Federal Reserve is anticipated to maintain interest rates during Wednesday’s meeting, though Fed Chair Jerome Powell might counter pressure for rate cuts from President Trump during the post-meeting press conference.
Current market sentiment indicates no expectation for a rate cut until June, though the May meeting remains in close consideration, according to Investing.com.
A key focus will be Friday’s release of the personal consumption expenditures (PCE) price index, which is the Fed’s favored inflation metric.
Simultaneously, earnings season will reach its peak as four major tech corporations prepare to announce their results. Microsoft (NASDAQ:), Meta Platforms (NASDAQ:), and Tesla (NASDAQ:) will report on Wednesday evening, while Apple (NASDAQ:) is scheduled for Thursday night.
These tech giants will be accompanied by a range of well-known names like Intel (NASDAQ:), IBM (NYSE:), ASML (AS:), Boeing (NYSE:), United Parcel Service (NYSE:), General Motors (NYSE:), Caterpillar (NYSE:), ExxonMobil (NYSE:), Chevron (NYSE:), Visa (NYSE:), Mastercard (NYSE:), Starbucks (NASDAQ:), AT&T (NYSE:), Lockheed Martin (NYSE:), and Southwest Airlines (NYSE:).
Regardless of market direction, I will highlight one stock that is likely to be in demand and another that may experience downward pressure. Note that my focus is solely on the week ahead, from Monday, January 27 to Friday, January 31.
Recommended Stock to Buy: Meta Platforms
Meta Platforms, the parent company of Facebook, Instagram, Threads, and WhatsApp, is strongly positioned as a top pick for investment this week, particularly with its highly anticipated Q4 earnings report expected to act as a major catalyst.
Meta’s Q4 results will be released after market close on Wednesday at 4:05 PM ET, with CEO Mark Zuckerberg and CFO Susan Li discussing the outcomes during a subsequent earnings call at 5:00 PM ET.
Market participants anticipate a significant price movement for META following the earnings release, with options suggesting an implied volatility of 7.5% in either direction. Shares previously dropped 4.3% following the last earnings report in October.
Source: InvestingPro
Profit projections have been raised 26 times in recent weeks, based on an InvestingPro survey, with only three down revisions, signaling increased optimism regarding Meta’s earnings outlook.
Analysts predict Meta will report a 26% year-over-year increase in adjusted earnings per share (EPS) to $6.73 and a 17% revenue growth to $47 billion for the quarter ending in December. This strong performance is fueled by robust ad revenue and the company’s strategic advancements in artificial intelligence (AI).
Meta has indicated a capital expenditure budget of $60 billion to $65 billion for 2025, aimed at bolstering its AI investments, including modernizing data centers.
I expect Meta’s guidance for the upcoming quarter to surpass consensus forecasts, as the company benefits from an expanding user base, innovative AI projects, and fresh monetization strategies.
Moreover, Meta’s commitment to enhancing its AI capabilities has improved its ad-targeting effectiveness and fortified its suite of products, which includes Facebook, Instagram, Messenger, Reels, Threads, and WhatsApp.
Source: Investing.com
META stock reached an all-time high of $652 on Friday, closing at $647.49, surpassing the previous day’s record high close of $636.45. Currently, the company has a market capitalization of $1.63 trillion, ranking as the sixth-largest entity on the U.S. stock exchange.
Year-to-date, shares have risen by 10.6%, following an impressive annual gain of 65% in the previous year.
InvestingPro highlights Meta’s strong Financial Health Score of 3.4 out of 5, based on its solid earnings and revenue expansion prospects, alongside strong gross profit margins and high return on equity.
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Recommended Stock to Sell: Apple
Conversely, Apple, the largest consumer electronics firm, faces challenges due to disappointing demand for the iPhone 16 and broader difficulties in the consumer electronics space.
Apple will release its fiscal first-quarter earnings report after market close on Thursday at 4:30 PM ET, making it one of the week’s most closely monitored announcements. A conference call with CEO Tim Cook and CFO Kevan Parekh is scheduled for 5:00 PM ET.
The options market suggests an expected price movement of approximately 4.6% up or down. Following the fiscal Q4 report released in late October, shares dropped 3.1%.
Source: InvestingPro
Recent analyses indicate that Apple is grappling with several short-term challenges, as evidenced by 11 out of 17 analysts surveyed by InvestingPro having lowered their revenue forecasts in the past 90 days.
While the company is forecasted to achieve EPS of $2.35 on revenues of $124.09 billion for its latest quarter, concerns linger regarding diminishing iPhone demand—especially in China—leading to doubts about Apple’s growth prospects.
Analysts are also wary of Apple’s slower integration and commercialization of AI, which may hamper future product development.
Furthermore, guidance for the current quarter is expected to be lackluster, with Wall Street forecasting limited sales and earnings growth.
Source: Investing.com
AAPL shares closed at $228.78 on Friday, just above a recent four-month low of $219.38 from January 21. With shares currently testing their 200-day moving average, they have declined by 11% at the start of the new year.
Apple boasts a market cap of $3.35 trillion, making it the second most valuable company on the U.S. stock exchange, trailing only Nvidia (NASDAQ:).
Despite its recent underperformance, AAPL is still considered overvalued based on Fair Value models on InvestingPro, which indicate potential downside of approximately -15.5%, targeting a price of about $188/share.
Additionally, Apple holds a Financial Health Score of 2.6/5 on InvestingPro, highlighting its declining sales and profit growth. The stock also trades at high valuations in terms of earnings and revenue.
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Disclosure: At the time of this writing, I am long on the S&P 500 via the SPDR® S&P 500 ETF (SPY) and the Invesco QQQ Trust ETF (QQQ). I am also invested in the Invesco Top QQQ ETF (QBIG), Invesco S&P 500 Equal Weight ETF (RSP), and the VanEck Vectors Semiconductor ETF (SMH).
I regularly adjust my portfolio of individual stocks and ETFs based on ongoing risk assessments of the macroeconomic landscape and the companies’ financial health.
The opinions expressed in this article are solely those of the author and should not be interpreted as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for further stock market analysis and insights.
