The latest earnings week for artificial intelligence-focused companies revealed stark market reactions that demonstrated how good isn't good enough in the current environment. According to reports from Barrons, companies like Sandisk and Western Digital delivered strong earnings beats but faced significant selloffs due to uninspiring guidance. Sandisk reported sales up 372% from last year with gross margins rising 58 percentage points to almost 85%, while Western Digital provided more modest growth figures. Despite these impressive numbers, both stocks were punished with Sandisk falling 7% and Western Digital dropping 13% following their earnings announcements.
Advanced Micro Devices faced profit-taking despite delivering solid results, with the stock dropping 7% the day after reporting earnings. As reported by Barrons, AMD posted small beats on earnings, revenue, and profit margins, but the stock had rallied significantly in the five trading days leading up to earnings. Datadog, which had more than doubled in price this year, saw its stock fall 19% after reporting strong earnings but guidance that implied growth deceleration. The company admitted during earnings that its biggest customer, believed to be OpenAI, was cutting back on usage despite signing a new long-term contract.
The week's most dramatic transformation occurred with Palantir Technologies, which had been down 29% this year but delivered a 29% stock surge the day after reporting earnings. According to Barrons, Palantir backed up its strong narrative with a 12th consecutive quarter that exceeded revenue projections and the 13th quarter of increasing sales growth, now up to 93%. The company converted more than half of revenue into free cash flow over the last 12 months. Similarly, Atlassian performed a similar turnaround with a 35% stock surge on Friday after handily beating expectations and offering strong guidance.
CoreWeave is scheduled to report earnings after the closing bell Tuesday, with traders expecting a sizable move in the cloud computing provider's stock. Based on current options pricing, CoreWeave (CRWV) stock is seen swinging up to 13% in either direction by the end of the week following the results. According to Visible Alpha, the company's second-quarter revenue is expected to have more than doubled year-over-year to $2.56 billion, though losses likely widened to $1.40 per share as costs for hardware components surged. Despite recent concerns about data center construction delays, analysts remain largely bullish with 11 of 14 analysts calling the stock a "buy," and their average price target of about $147 suggesting more than 60% upside from Friday's close.
