The Stock Market Will Explode On Wednesday (Here's My Plan)

All right, what's up everybody and welcome back to another Tuesday here in the stock market. Well, the 24-hour countdown has now officially begun as tomorrow on Wednesday, we are going to get the Q2 earnings reports from both Alphabet and Tesla, which is going to impact the entire stock market and ultimately all of our portfolios as well. And so, because this is going to be such a very important day tomorrow, I wanted to use today's video to get you as prepared as possible. We're going to talk about why these reports matter. We're going to dive into each report and go over the exact numbers and data that you need to be on the lookout for. I'm going to then go into how I believe the market will respond to all of this data. You know, whether I think the stock market's going to climb, maybe dump or go sideways as a result of these earnings reports. And then we'll finish this video up by going into exactly what I'm doing in my own public portfolio as a result of whatever happens tomorrow. So, we have a good bit to get into today. And as I mentioned before, this is a 24-hour countdown, so we don't have that much time on our hands, folks. So, let's go ahead and let's jump straight on in. So, let's start off with why these reports matter. And it is somewhat intuitive, right? I mean, at the end of the day, what you have to remember is that these are Magnificent Seven stocks, both of them. And Magnificent 7 stocks carry the entire market. We're talking about Alphabet, which is the third largest company in the world, and Tesla, which is the 11th largest company in the world. And anytime that you see Mag 7 season kicking off, it impacts everything. Everything starts moving around because these are again the leaders in the space. Look, I know the AI trade has been fantastic recently and there are companies like Micron and AMD and some of the other memory stock semiconductors and the AI trade that have definitely led the charge over the last few you last year, two years. But the reality is that when these major institutions, when these major banks, when these major investment firms are looking and trying to determine whether or not they're risk or risk off, they're paying attention to the Mac 7. They want to know what are happening with these companies. What's happening with Nvidia, Microsoft Apple Alphabet Amazon MetaTla? They want to know what's happening with them and a lot of decisions get made based on what we get from these companies. So anytime you see two mag seven companies reporting in one day, it's going to be a big day. Now in addition to that though, outside of it just being important because they're big, you also have to understand that these are going to have a direct impact on the AI trade itself. You know, Google's cloud revenue is going to be one of the leading numbers that everyone in the AI trade is paying attention to. If Google's cloud revenue is continuing to climb, it is a great sign that AI demand is still there. But if Google's cloud revenue is falling, that is really bad. That is not good. And the reality is that it's not going to be falling. I'll get into that in a second. But people will be paying very close attention to it. And I don't really need to explain why Tesla's so important. Tesla is at the core of the AI trading. They have been for a long time, especially when it comes to the future of AI again, which we will talk about in a second. So all in all, this is going to be a very very important day for the stock market, for the AI trade as a whole, and for our portfolios. And we're going to be watching it super closely. So that's why it's important. Let's dive into the first one. So tomorrow we're going to see Alphabet report. And again, these are both happening after the um after the bell closes tomorrow. This is aftermarket reports. So I'll be able to get a little probably a live stream going for these ones, but nonetheless, whenever you look at this report, this is what you're looking for. Okay. The market is expecting consensus is $116 billion in revenue. That's up about 21% year-over-year. Okay. Now, of this $116 billion worth of revenue, they're looking for roughly $81 billion in search and ads revenue. And if you're not if you don't really care about the AI trade, this is the number to be on the lookout for. You see, Google's biggest cash machine is their search ads, their YouTube search ads, etc. Right? This is where the the real money is made for Google. I mean, look, 81 billion of their 116 billion. So if this comes in better than expected or lower than expected, that is going to be a big tail of where Alphabet is fundamentally and that is very well worth paying attention to, especially if you're investing in the Alphabet. Okay, so you're looking for that 81 billion. I would assume I would assume they're going to beat estimates because they have beaten the estimates over the last four quarters straight, but it is worth paying attention to. Now, as a result of this $116 billion in revenue expected, they're looking for about $287 at earnings per share, up about 24%. Now, I know there are those things going around with the $8 earnings per share, and we did see the weird EPS thing last quarter because of the anthropic deal. I don't factor that in. I'm looking at raw data. I'm looking at without all of the the the paper stuff, right? $2.87 earnings per share expected. Okay, that's for Alphabet as a company. Now, if you're more interested in the AI side of things, which I know most of you are, and this will be very impactful, you're also going to want to look very, very closely at the Google Cloud revenue. It's expected to come in around $22 billion, which would represent growth of about 63% as they're sitting on a $462 billion backlog. So realistically, although analysts are expecting 22 billion, I mean, if you're an AI investor and you care about the AI trading, you're probably looking for something higher than that. I mean, we're talking 23, 24, 25 billion because remember, this AI trade is so emotional and so irrational right now. A company could come out and give you exactly what analysts are expecting and its stock would still crash and bring the whole AI market down. So although analysts are expecting 22 billion, you're definitely going to want to see it come in a bit higher than that. Remember, the reason why it's so important that you pay attention to Google Cloud revenue is because it is a representation of AI demand. Think about it. The reason as to why we've seen AI kind of on shaky legs recently is because of the supply and demand curve. A lot of these companies are spending a ton of money on supply, building out infrastructure. I mean, think about Google itself. They're spending a staggering 180 to $190 billion dollars this year building AI data centers, right? So, a lot of these companies are spending hundreds of billions of dollars on infrastructure and supply, but people are questioning the demand side. Do people actually want it? Do people actually need it? And Google Cloud revenue from Alphabet is going to be a clear read on that. If their revenue is up and growing and scaling, it means that demand is growing and scaling. And all of this capex isn't for for nothing. You know, they're not spending all this money for no reason. But man, if for some reason you see Google Cloud revenue miss, dude, that that wouldn't [snorts] be good. I don't think it's going to happen. And one thing to consider is that they have beat estimates for four quarters straight and they seem to be on track to continue to do so. So, I'm not imagining that some big doomsday is going to happen tomorrow in which they miss Google Cloud revenue and everyone just sells out of the AI trade. But again, it's still going to be important to watch it because you guys have seen what's happened, right? you've seen what's happened when these hyperscalers report or when these AI companies report and the market even gets a sense that it doesn't like what they're saying, things go buck wild. So again, Alphabet is going to be extremely important for the stock market, extremely important for the AI trade, and for any of you who are invested in any of it at all. All right, so we're going to be watching it very closely. I should be on a live stream tomorrow covering it, but if I'm not, remember these are the numbers that you're looking for. Now, moving into the next earnings report tomorrow, we have Tesla giving their Q2 earnings report after the bell closes as well. And this one's going to be extremely important, especially if you care about the AI trade and you're concerned about the future of AI, where it's actually going, which we'll talk about in a second. Now, Tesla is currently expected to release 27.5 billion worth of revenue earned in the previous quarter, giving them an adjusted expected earnings per share of 55. Now, although these two numbers are always important because it's just your headline numbers, the number that I'm actually paying attention to myself is their gross margin. And the reason why I say that is because Tesla recently announced that they had broken a record for their total car deliveries at 480,126 cars. Now, the question that a lot of people have is whether or not they were able to break this record by slashing prices or not. Margin's going to tell you everything you need to know about it. And so, that's why it's going to be very important to see what their actual gross margin was on all of these deliveries. So, if you care about Tesla as a car company, this is the number to watch. Maybe not maybe not as important, you know, revenue and earnings per share because these usually come in around what you'd expect. This is the one that can swing in either direction pretty wildly. And this is the one that I'm personally watching very closely. But that's more for Tesla as a car company. If you care about Tesla as an AI company or as a read on the AI trade, you need to be tuning into the call because on the call, they are very likely going to talk about all of the different things that impact the AI market moving into the future. Remember, when people think about Tesla, they think about it in 10, 15 years from now, being a company that's contributing to the AI trade in the form of robotics and in the form of self-driving, all of these things. And so, although Tesla isn't really a great right now AI play, people look at it as a future AI play. And so on the call, you're going to want to listen to what they say about robo taxiing, full self-driving, their affordable models, Optimus as a whole, right? These sorts of things that contribute to the long-term AI trade. If Tesla's not moving in a great direction and they're saying something along the lines of hypothetical, I'm just make something up, right? Yeah, these robotics aren't looking great, and they won't, but you get the point. That's obviously really bad for the AI market because the AI market is pricing in a little bit future growth, future development. Where does AI go from here with the Gentics and robotics? where does it go in terms of actually fulfilling another value threshold outside of just answering questions on claude or doing presentations for you, right? People want to know where is this going in the future. That's why it's priced so dang on high. And so Tesla is a major contributing factor to that. Unfortunately, so is SpaceX as well with all of the things that they're doing. And so when they get on this call and they start talking about how the future is progressing, you're going to want to listen closely because the market is going to determine how it feels based on those sorts of things. So this isn't just going to impact Tesla. This is going to also impact the market as a whole, especially the AI market which has a real grasp on the market as a whole again. And so because of that, whenever I talk about these two earnings reports and say, "Listen, they're going to impact the whole market." I'm not bluffing. These are going to impact the market as a whole. They're also going to impact AI and it's up to us to watch them very closely and then determine what we think is going to happen afterwards. So, with that in mind, let's talk about what we can sort of expect from the market tomorrow following these earnings reports. Because I know a lot of you are going to say, "Hey, Tyler, so if we see Alphabet smash it and Google Cloud revenue is above expectations and we see Tesla come out and they're talking very positively about the AI trade, does that, you know, is that what gets us back? Is that the thing that just sends this market upwards and finally gives us some gains again?" And especially considering things have been so slow for the last month. And although I wish I could say yes, although I wish I could just be here and be uber bullish and say, "Guys, if Google Cloud revenue comes in at 25 billion, the whole market's going to rally." The unfortunate truth that most people won't tell you is that it in this market that we're in, especially over the last few weeks, that's definitely not guaranteed. I mean, the reality is that you could get perfect numbers from both of these tomorrow. Blowout beats, raised guidance, everything, and watch them sell off anyway. And I need you to be ready for that. It could be a great day of earnings and a bad day in the market. And we've seen that repeat over and over and over again. ASML, for example, beat, raised, sold off. TSMC, beat, raised, sold off. Netflix, beat on earnings, sold off. I mean, we have seen decent or great earnings reports still lead this market downwards. And the reason why that's happening is because we are in corrective territory, folks. And I need you to understand that. And I'm going to dive into the charts a little bit more in a second here towards the end of the video. But still, I need you to understand we are in corrective territory. Anytime that you're in corrective territory, which means that you are no longer in an uptrend, you are now in a macro downtrend. You are going to still see great news lead you down, bad news leads you down, everything leads you down until the market has corrected, until it's reset, until the liquidity has been distributed and it finds a stable base to try to continue upwards. We are in corrective territory. And until this corrective territory ends, no no news realistically can guarantee you that this market will be back. And so realistically folks, I don't want you to expect the reaction that we get from the market tomorrow to make sense whatsoever. Matter of fact, I want you to expect it to be irrational and expect it to be emotional and ridiculous. Because if you look back over the last month, that's exactly what we've gotten. You see, in a market like we're in right now that's incorrective territory, that is very, very emotional. The day of move is always emotion. It's not truth. You remember I made a video for you all on Saturday talking to you all about investor sentiment. And I said, "Look, this market doesn't move based on facts. It moves based on how people respond to facts. There could be something terrible happen, but if the market responds to it in a positive way, guess what? Stock prices are going to go up. If they respond to it in a negative way, stock prices are going to go down. So, it's not always about truth. It's about positioning, options, knee-jerk reactions. And it's not a verdict on the business. It's not a verdict on the fundamental value here in the market. And you have to keep your eyes set on the long term. Don't look at what Google's price or Alphabet's price or Tesla's price or even the AI sector or the market does tomorrow. You have to look at the fundamental value that is either being injected or removed from the market based on the information that we're getting. That's going to determine whether or not this is a good day tomorrow or a bad day tomorrow. Because the reality is this, right? If Alphabet comes out and they kill it all the way across the board, their search revenue is great, their um cloud revenue is great, everything is great, they're moving in a great direction, Tesla comes out tomorrow and they did a very good job, their margins are high, they're speaking very positively about the future of AI, but the market still decides to drop because it's irrational and that's just the market that we're in. That's not a bad day for me. That's an opportunistic day for me because on a day in which the fundamentals climb but the prices fall, that spread is opportunity. The distance between fundamental value and price is that's your opportunity to make money. And so I look at that as a good day and that's more of what I'm paying attention to. So don't expect the market to to do the right thing. There is no right thing. It doesn't exist. This is a stock market, folks. Some days you go up, some days you go down. It's just what happens. pay more attention to the fundamental value that is again either being removed or injected by these earnings reports tomorrow and that'll give you a gauge of where to go from there. So my own personal response is I'm probably not really going to do too much because you guys know me, I don't like to make moves in my portfolio as a result of big emotional earnings reports and days like this. But I will say that if for some reason we get some smashing reports tomorrow and we do end up seeing, you know, for example, the market falling, we see the AI trade collapsing, we see Google down, we see Tesla down, I'm going to go in and I'm going to be buying. I'm going to be dollar cost averaging in my positions because anytime, like I mentioned before, that I see fundamental value increasing but price falling based on emotion. I know that eventually that spread, that gap between fundamentals and price is going to close. It's going to close at some point. And when it closes, I'm going to make money. It's the exact way that I've dollar cost averaged into this market and it's the exact reason why I've been able to generate tens of thousands of dollars in this portfolio over the last year. Even in these times in which I'm not investing super heavily into anything super risky. I made $60,000 investing into very not so risky things because it's all about looking for those prime positions in which the market's not making sense and it's opening up doors of opportunity. Okay? So, don't get too wrapped up into this mindset of, oh, well, if I see a good earnings report, I'm going to buy or if I see a bad earnings report, I'm going to sell. That's not how this market works. it will just go against you one way or another. If you buy, it's going to go down. If you sell, it's going to go up. Just assume that's going to happen. Care more about the long term. Focus on positioning for the long term because that gap will eventually close and that's where people like you and me are going to make money. Okay? So, this is going to be a very, very important day in the market tomorrow. And it's extremely important that you watch it moving forward. And so, with that in mind, I'm going to be keeping an eye on this. One thing that I am watching extremely closely tomorrow, especially when it comes to the chart side of things, when it comes to SPY, is how SPY responds to this news and whether or not it does start to work itself back up to that seller zone. You see, we've been talking a lot about the seller zone that's above SPY right now, currently right around that $753 level. And I actually think that there is a world in which if we do see the market have a positive response, that SPY does try to work itself up towards 75 75 and maybe even break above it. And remember, I told you all on the stream, if you see SPY starting to clear back above 755, there's no reason why it couldn't start to work its way up towards 770 or 785. And I know a lot of you are going to say, "Well, Tyler, that's not going to happen." Because every time we get an earnings report, the market crashes, and that is the exact reason as to why it could happen. Most people are going to this earnings day tomorrow thinking the market's going to crash because that's what the market's been doing. And so I'm just in case preparing and watching very closely to see what could happen to the upside and preparing for a possible move to the upside to go against the grain. Look, if it falls, I'm going to dollar cost average. I already know that. But I still want to prepare for that upside. And what I'm doing is again watching SPY closely to see what happens at 752 to 755. This little range, I'm telling you, that's going to be the range that tells you everything you need to know of where SPY can go from there and what sort of potential growth can happen. So I'll keep you updated as it all does play out. Don't forget that if you do want to do a bit of technical analysis leading into the earnings report tomorrow, the toolkit is now available and it's live in the link down below. I know a lot of you asked me about it for a very long time. So, check out the link down below if you want to be able to do technical analysis within seconds without needing to know a whole bunch of information about how it works. Okay? So, I'll keep you all updated on how it plays out and um yeah, it's going to be a wild day. I want you all to be consistent. I want you to be patient. I want to keep I want you to keep those emotions under control cuz I'm sure it's going to get a little bit wild and then we'll go from there. So, thank you all so much for tuning in. Sorry today's video got a little bit longer than usual, but I had a couple things I had to get into. And I can't wait to see you all in the next one.