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https://d1-invdn-com.investing.com/content/picdf795eea276be89daa4443b14c30e010.pngInvesting.com — Here is your weekly Pro Recap on this past week’s most momentous tech headlines: Alphabet’s Google gets in the AI game; PayPal, Airbnb, and Twilio issue disappointing forecasts; and Zscaler has good news for investors.
InvestingPro subscribers got these headlines in real time, giving them a chance to rapidly readjust their portfolios. See for yourself by starting a 7-day free trial.
Artificial intelligence capabilities are being integrated into Google search, Gmail, and Google Photos, said Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) this past week at its annual I/O conference. The announcement comes in the aftermath of Microsoft’s (NASDAQ:MSFT) headline-making venture into AI with that company’s $10 billion investment in ChatGPT and its integration into the tech giant’s Bing search product.
The new Google search product, dubbed Search Generative Experience, would be able to verbally answer search queries alongside producing relevant links, and will be available via waitlist for U.S. customers over the coming weeks.
Analysts were positive on the prospects for Alphabet here. Goldman Sachs said that it is
Jefferies wrote, regarding Alphabet’s generative AI strategy: “We see momentum accelerating, and monetization before year-end.” And Evercore ISI said Google has taken the AI gloves off and “reminded everyone of how long it has been investing in, developing, and deploying AI capabilities across all of its offerings.”
Alphabet shares gained 4% during the Wednesday session, when the conference took place, and were up nearly 12% for the week.
PayPal (NASDAQ:PYPL) raised its full-year profit guidance, and first-quarter results topped expectations, but shares slumped on a lowered operating-margin outlook – from +125bps to +100bps – for the full year.
Q1 earnings were $1.17 per share, better than the $1.10 average expectation, driven by cost cuts and an increase in new accounts. And sales of $7.04B edged past the consensus.
Looking ahead, the company now expects to grow adjusted EPS by about 20% to $4.95 – up from prior guidance of 18% growth to $4.87.
Still, at least three analysts downgraded the stock, as InvestingPro subscribers found out first: Credit Suisse to Neutral from Outperform; Edward Jones to Hold from Buy, and Exane BNP Paribas (OTC:BNPQY) to Neutral from Outperform.
Credit Suisse said in a note:
And Oppenheimer believes PayPal stock “may be stuck” in the near term.
PayPal shares crashed more than 18% for the week.
Airbnb (NASDAQ:ABNB) said it made $0.18 a share – a swing from last year’s loss but also $0.02 shy of Street expectations – on in-line revenue of $1.8B. The company also announced a new share buyback program of up to $2.5B.
Looking ahead to Q2, the company guided revenue in a range of $2.35B to $2.45B, in line with Wall Street estimates, but also said Night and Experiences Booked “will have unfavorable year-over-year comparisons in Q2 2023 as we overlap pent-up 2022 demand following the COVID Omicron variant.”
After that, the shares took a quick fall. Morgan Stanley cut the price target to $95 per share and reiterated an Underweight rating on ABNB stock, as InvestingPro reported in real time:
Oppenheimer believes that the velocity of 2Q23 nights deceleration will heighten concerns about slowing growth:
Shares tumbled more than 14% for the week.
Twilio (NYSE:TWLO) offered a soft Q2 revenue outlook, saying it expects EPS in the range of $0.27-$0.31, compared with the Wall Street consensus of $0.29. Revenue is seen at $980 million to $990M, missing the consensus estimate of $1.05B.
Q1 EPS of $0.47 and revenue of $1.01 billion came in better than anticipated, but Q2 guidance disappointed investors.
For the full year, the company expects non-GAAP income from operations in the range of $275M-$350M.
Oppenheimer cut the stock’s price target to $75, citing continued headwinds for Twilio. However, the analyst remains Buy-rated, saying, “the risk/reward is positively skewed.”
Bernstein also cut the stock’s price target, going to $58:
Shares lost more than 14% for the week to $45.83.
Zscaler (NASDAQ:ZS) shares surged more than 20% Monday after the company’s preliminary Q3 results beat expectations: Its top line should be between $415M and $419M, well above the previous guidance range of $396 million to $398 million.
In addition, the company’s adjusted income from operations is far higher, now estimated to range between $60M and $64M.
CEO Jay Chaudhry said the company “had a strong finish to the quarter” thanks to high ROI from its Zscaler Zero Trust Exchange platform.
The cloud security company also now expects full-year revenue to range between $1.587B and $1.591B, above the previously forecast range of $1.558 billion to $1.563 billion.
On the heels of that news, CFRA upped the stock to Strong Buy from Buy. Zscaler earnings are expected June 1.
Shares were up 6.5% for the week.
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Sam Boughedda, Yasin Ebrahim, Senad Karaahmetovic, and Davit Kirakosyan contributed to this report.
