We're midway through the earnings season and there are already some clear winners in these critical weeks. I want to go over the ones I found to be the standouts, with the benchmark, as always being the expectations versus the beat.
Let's start with what I think is actually the obvious one: AMD ( AMD) . When I was fishing in the Gulf of Mexico, I caught a 7-foot, black-tipped shark. We called it El Monstro.
This quarter was an El Monstro quarter for CEO Lisa Su and her team because for the first time in my 30 years of covering this industry.
AMD jumped ahead of Intel ( INTC) in a slew of categories, from gaming chips and data centers to actual personal computer innards. Not only that, but the leap over Intel may be just beginning and the gross margins are just starting to go higher. Su's turnaround is rather remarkable. She became CEO in 2014 when the stock was $3. She first fixed a tattered balance sheet, then began to bring in some new, fresh bright minds, that didn't shoot for the moon but for the stars. I had been a skeptic but you can't stay that way after several fabulous quarters. As she said on the call, "We ended the first half of 2018 strong, delivering our fourth consecutive quarter of double digit year-over-year revenue growth, driven by increased demand for our high-performance products." She continued, "Second quarter revenue of $1.76 billion grew 53% year-over-year, and gross margins improved more than 3 percentage points, resulting in our highest quarterly net income in seven years.
Bravo.
Next has to be Microsoft ( MSFT) . This quarter represented a fantastic beat on the top and bottom line. Gaming, personal computers, standard operating systems and LinkedIn were all tremendous. But the star of the show was Azure, Microsoft's cloud business. It's tough to catch Amazon ( AMZN) . I don't even think it can happen. But what an amazing reinvention of what had been thought to be, at one time, a moribund company left behind by smartphone technology.
Then we have a trio of industrials: Honeywell, Ingersoll Rand ( IR) and United Technologies ( UTX) . Honeywell ( HON) , which is breaking up, revealed that Amazon had become an incredibly important client for warehouse automation. Who knew? Of course, its aerospace and climate controls that were much better than expected. Same goes for United Technologies. These companies are coining money with much better than expected organic growth, margins and revenues.
Ingersoll Rand blew through organic growth expectations with remarkable order growth again for climate controls. What a terrific business.
Next I have to applaud Expedia ( EXPE) , which managed, at last to integrate its HomeAway acquisition and become as close as possible to a public Airbnb as possible. Hats off to frequent Halftime and Closing Bell contributor Stephanie Link for urging people to buy this stock
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Finally I would be remiss not to mention Amazon on earnings and Alphabet ( GOOGL) on top and bottom lines. I know the death of FANG is all over everywhere, wall-to-wall, 24/7, but that obscured two incredible quarters from two amazing companies. Amazon is making so much money that it can't even hide it anymore by spending for growth, which had been the Amazon way.
Alphabet's gotten religion -- again -- with better than expected advertising and some real prospects for earnings this year for its Waymo autonomous driving. Google's an advertising juggernaut, as is Youtube.Remember when the latter seemed to be knocked out by scatological copy next to premier ads? That's over.
There are lots of others I am slighting but these have been the stars of the show so far. They are the best places to go as the market tumbles down in confusion over what's guilty and what's innocent into what's rapidly becoming, after a strong start, a confusing and rapidly eroding earnings season.
