Amazon published its 4Q2024 results yesterday and they were above expectations in many fronts, but the company provided a guidance in sales growth that was below what the market was expecting and suffered a significant correction after market. Imagine you need to project sales growth at a global scale in the middle of a trade war. In the chart below you can see that Amazon sales growth is coming down in great part as a consequence of the law of big numbers. Second, the US just published its biggest Trade deficit ever, with the U.S. dollar strengthening against most trade counterparties. Third, 41% of sales of S&P companies comes from abroad, which means that if tariffs are finally put in place, the impact on earnings and stock prices can be significant. Despite those facts, companies like Amazon or Alphabet keep ramping up their CapEx (104Bn and 75Bn respectively) for 2025. Since resources are finite and companies are investing in the future, they may dial down buyback programs and perhaps we won’t find the same support in the coming quarters if there is a market dip.
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