Analysis: INTC LRCX TSLA MRVL NVDA AMAT F GM MSFT CVS JNJ WFC AMD BA ABT AAPL MAT DIS HAS

We see yet another step up in the velocity of quarterly earnings today, with earnings after today's market close from Intel (INTC) , Lam Research (LRCX) , and Tesla (TSLA) . Not only will folks be listening for what Intel has to say about the chip shortage and its capital spending outlook but also how it's fending off competition in the data center market.

We will of course be dialing into that report given our position in Marvell (MRVL) and Nvidia (NVDA) but also Applied Materials (AMAT) . Sticking with the outlook for semiconductor capital equipment, we expect confirmation on our thesis for AMAT shares in the quarterly results from Lam.

Turning to Tesla, in addition to the usual EV shipment data, inside Tesla's comments we'd be curious to see what the company has to say about the growing competitive landscape. As members can imagine, we're interested given our position in Ford Motor (F) but also following the news General Motors (GM) will invest $6.6 billion to increase EV production and build a new EV battery cell plant.

Before we get to those earnings, it is Fed Day and that means at 2 pm ET the Federal Reserve will publish its latest monetary policy statement and trot out Fed Chairman Powell for the subsequent press conference at 2:30 pm. Given the volatile stock market thus far in 2022 and the expected but still happening step down in the speed of the global economy in January due to the omicron variant, today's comments from the Fed will be akin to walking an even higher tightrope. The Fed has to convince the market its efforts will tame inflation but without sending the economy into a tailspin as it does so.

Currently, Fed Futures are pricing in four rate hikes in 2022, but given the lag effect with monetary policy we could see Powell once again manage expectations, citing it will remain "data dependent." Should that happen, market watchers would likely embrace those comments but still keep a close watch on forthcoming inflation data. If Powell takes a stricter tone regrading inflation, confirming the market's current rate hike expectation in the process, the year-to-date market volatility will more than likely be with us at least through the current earnings season.

Microsoft

Despite reporting better than expected December quarter results that included 32% YoY growth at its cloud business and favorable comparisons across its other segments, shares of Microsoft (MSFT) traded off in after-market trading last night. This morning, however, as a more sober view is taken on the report, the shares are moving higher. While the company reported favorable year over year comparisons across its business lines, what weighed on the shares last night was slower year over year growth at its Azure business compared to the July and September quarters. We have to keep in mind that Azure posted 46% revenue growth year over year, hardly a figure to complain about vs. 50%-51% in the prior two quarters, especially as some of that could be tied to year-end budgets and contract timing.

Fending off Azure concerns, Microsoft pointed to recent wins with CVS Health (CVS) , Johnson & Johnson (JNJ) , Wells Fargo (WFC) and others and issued guidance for better year over year revenue growth in the current quarter vs. the reported one. This more than likely means Wall Street will have to at least modestly bump up its 2022 EPS expectations. Adding to that notion is the outlook for overall margins, which after guiding for margin contraction, Microsoft now sees them improving in 2022 as operating leverage is realized.

Looking ahead, Microsoft sees continued strength in PC shipments, particularly in the commercial segment despite ongoing supply chain constraints. We see that as a positive for our shares of AMD (AMD) , but we will of course cross check this outlook with comments from Intel tonight. Microsoft also sees gaming console sales continuing to be impacted by supply chain uncertainty as we head into a seasonally slower time of year for the gaming sector.

Given the above, we see EPS expectations for Microsoft in the coming quarters inching ahead, and in response we are bumping our price target to $360 from $340. Given the pullback in the shares, the company's continued growth prospects and its ability to support the share price with share buyback activity, we see the reward to be had in the shares outweighing additional downside. As such we are bumping our investment rating on the shares to "One" From "Two."

Boeing

While Boeing's (BA) December quarter results fell short of expectations on the top line and its loss for the quarter was greater than expected, they showed further confirmation the worst of the company's issues are in rear view mirror as evidenced by the stabilization in commercial airplane segment revenues vs. the year ago quarter. In particular, 737-MAX production volumes increased during the quarter as approvals for the aircraft were had, and with China airworthiness directive in December, Boeing targets further production hikes. Management commented it targets producing 31 737-MAX in early December and evaluating additional increases. We see that pointing to overall aircraft deliveries improving in the coming quarters relative to the 99 airplanes delivered in the December quarter. Exiting the quarter, Boeing's backlog stood at more than 4,200 aircraft up from 4,100 aircraft exiting the December quarter.

As those manufacturing lines gear up, we would expect economy of scale efficiencies to be realized, driving margins, EPS and cash flow. On the earnings conference call to be had this morning, we'll look for more on that as well as what the prognosis is for its 787 product and its currently low production volumes. We'll also be looking for confirmation the quicker than expected return to being cash flow positive is sustainable, a point that would confirm the view the worst is behind the company.

All in all, the earnings report was a confirming one for our position in BA shares.

Abbott Labs

Abbott (ABT) reported better than expected results for its December quarter with EPS and revenue topping consensus expectations and the company boosted its outlook for the current quarter. Abbott sees EPS of "at-least" $1.50 vs. the $1.13 consensus and affirmed its 2022 EPS guidance of at least $4.70 vs. the $4.76 consensus.

Ahead of the company's earnings call this morning, we interpret its guidance for the current quarter as confirming the expected strength for Covid-19 testing sales. As we listen to the earnings call, the question we look to answer is given the stronger outlook for the current quarter, how conservative is the company's guidance?

Based on what we learn, we'll look to revisit our current $150 price target.

Quick Portfolio Hits

Bloomberg reports Apple's (AAPL) iPhone was the top selling smartphone in China in Q4 of 2021 for the first time since 2015.

Mattel (MAT) reportedly wins Walt Disney (DIS) toy license deal, taking partnership back from Hasbro (HAS) .