Earnings-palooza: Welcome to Club Trillion!

Strong communication skills are essential in business and life, and the Think Fast, Talk Smart podcast, with its expert guests and practical tips, can help individuals hone their communication abilities. Amazon's impressive financial results, with its massive market cap and expanding Prime membership base, highlight the importance of a profitable business model and a large customer base. However, it's crucial to recognize that competition, particularly from Alphabet, Microsoft, and IBM, exists in the market and may impact Amazon's market share. Additionally, Amazon's continued investment in infrastructure may result in a decrease in operating margins. Overall, it's essential to focus on the positives, such as Amazon's North American and AWS segments' profitability, while keeping an eye on potential competition and infrastructure investments.

Both Amazon and Apple had impressive quarters with significant growth in various areas of their businesses. Amazon's advertising business is a fast-growing sector, contributing to the company's overall evolution. Apple, on the other hand, saw strong sales of iPhones, pushing the stock to new highs, and continued growth in wearables, home, and accessories, as well as services. Apple's wearables business experienced a 44% increase, and the company even slightly adjusted pricing on some products, indicating potential pressure in those markets. Microsoft's second quarter profits exceeded expectations, with $37 billion in revenue and a $1.3 trillion market cap. Microsoft's Azure business is growing rapidly, putting pressure on Amazon Web Services' market share. Microsoft returned $8.5 billion to shareholders and continues to execute well under Satya Nadella's leadership. Despite the impressive growth of these tech giants, some may be surprised by their stock performance, defying the "law of big numbers."

The tech industry continues to demonstrate impressive growth and cash flow generation, with companies like Microsoft and Apple leading the way. Microsoft's recent earnings report showed strong growth in both revenue and earnings per share, leading to a significant increase in stock price despite a high forward earnings multiple. Apple's stock has also seen significant growth, driven in part by multiple expansion. Meanwhile, Facebook's core business remains strong, with over 3 billion monthly active users and 2.3 billion daily active users. Despite concerns about expenses and slower growth, the company still generates over $15 billion in free cash flow per year, making it an attractive investment despite its forward earnings multiple. Additionally, the importance of these tech companies extends beyond their current businesses, as they continue to expand into new areas like cloud computing and e-commerce. Despite some challenges, these companies remain essential parts of the value chain for businesses and individuals alike. Facebook, for example, has over 140 million small businesses using its platform, making it an important player in the e-commerce space. Overall, the tech industry continues to demonstrate impressive growth and potential for the future.

While Facebook's Libra project has faced several setbacks with high-profile partners backing out and questions surrounding its profitability, Tesla continues to shine with impressive earnings and delivery numbers. Tesla's stock has tripled in value over the past few months, making it a $100 billion company, and Elon Musk's focus on the business seems to be paying off. Despite Visa reporting a record profit of $1 billion, its shares still saw a 4% decline, possibly due to the overall hot market conditions. Tesla, on the other hand, is seen as a company that is growing into its own and doesn't need to raise additional capital at this time.

Visa had a strong quarter with total network volume surpassing $3 trillion for the first time and a 9% increase in cross-border volume. Transactions rose 11% and ecommerce grew faster than non-ecommerce, contributing to a third of consumer spend. Visa also provided some clarity on Plaid's revenue model and potential integration into Visa's network. Colgate Palmolive also reported a solid quarter with a 5.5% increase in sales and 5% growth in global unit volume. However, profits were down due to increased advertising spend. McCormick's quarter was less impressive with only 2% sales growth and disappointing guidance for 2020. Despite the dip in shares, both Visa and Colgate Palmolive are performing well and should be on investors' radar.

Both McCormick and Starbucks reported strong financial results for Q1, with McCormick experiencing a 15% increase in full year operating cash flow and Starbucks reporting a 7% revenue growth. However, both companies have been impacted by the coronavirus outbreak in China, with Starbucks closing over half of its stores in the region and McCormick facing tax issues. Despite these challenges, both companies continue to innovate and consider acquisitions. Starbucks' impressive "James Bond-like" Spice Lab showcases their commitment to innovation. Transparent communication from these companies regarding the coronavirus situation is crucial for investors, as the situation is rapidly evolving and the impact on sales is significant and irreversible once the stores are reopened. Starbucks suspended its guidance and will update it as soon as more information becomes available. China accounts for a significant portion of both companies' sales, making their ability to navigate this situation essential.

McDonald's strong brand and consumer engagement in China, coupled with their focus on technology investments, have helped them rebound from a rough second half of 2019 and post higher than expected fourth quarter profits. Their international and US segments both showed growth, with global comparable sales up 5.9%, the highest in over 10 years. McDonald's has been investing in consumer-facing and restaurant technology, including self-order kiosks, mobile ordering, delivery partnerships, and AI technology. Their new CEO, Chris Kamsinski, is expected to continue these technological investments. While some may criticize the expense of these initiatives, they appear to be paying off for McDonald's. Additionally, McDonald's change in leadership, with the sudden departure of Steve Easterbrook and the appointment of Chris Kamsinski, has not seemed to disrupt their progress. Overall, McDonald's focus on technology and consumer engagement is driving their growth and helping them compete in a rapidly changing market.

Both PayPal and IBM are making strategic moves to expand their businesses and remain competitive in their respective industries. PayPal, through acquisitions like Honey and partnerships with companies like MercadoLibra and UnionPay, is aiming to become a commerce solution rather than just a payment one. This shift is expected to boost the business and be accretive to earnings in 2021. IBM, on the other hand, is undergoing a leadership change with Arvind Krishna taking over as CEO. Krishna, who was the senior vice president for cloud and cognitive software and the principal architect of the Red Hat acquisition, is seen as the right person to lead IBM's pivot to the cloud. The creation of a new president role for Jim Whitehurst, the CEO of Red Hat, is also a sign of IBM's commitment to this area. Both companies are making moves to adapt to changing market conditions and capitalize on growth opportunities.

Atari is making a comeback in a modern way with the announcement of video game themed hotels. This venture is not just a nostalgic trip but also incorporates updated technology and esports events to attract younger audiences. Atari's brand name, combined with new technologies, could potentially create an engaging experience for guests. Walker Dunlop, a commercial real estate financial services provider, is another investment opportunity due to its great reputation, size, and profitability. Mastercard's recent move into augmented reality technology for their benefits program is an exciting development, potentially setting the stage for more immersive experiences in various industries, including hospitality at Atari's video game themed hotels.

Credit card companies, such as Mastercard and Visa, are looking for new ways to engage with customers using tools like mobile apps. This is in response to the growing trend of smartphone usage and the potential for increased awareness and utilization of card benefits. Meanwhile, social media platforms like Pinterest, with its large user base and growing advertising potential, are also worth keeping an eye on for investment opportunities. The average revenue per Pinterest user is currently low, but with a large and growing international user base, the future of monetization for the company is expected to be through advertising rather than a paid subscription model.