Disney's stock under pressure following earnings, Amazon, Alphabet, and AMD earnings preview

Key Concepts: Disney Succession, Disney Experiences, Direct-to-Consumer (DTC), Bob Iger, OpenAI, Sora, Intellectual Property (IP), Precious Metals, Gold, Silver, Volatility, Kevin Warsh, Quantitative Tightening (QT), De-dollarization, Central Bank Gold Buying, Tether, Stablecoin, Bitcoin, AI Buildout, Data Center Capex, Memory Chips, High Bandwidth Memory (HBM), Micron, Memory Super Cycle, Picks and Shovels, Transformers, Seasonality, S&P 500, VIX, Cloud Revenue Growth, Hyperscalers, Return on Investment (ROI), Alphabet (Google Cloud), AWS, Microsoft Azure, AMD, Nvidia, SoFi, Secured Crypto Lending, OCC Interpretive Letters, Clarity Act, SoFi USD, SoFi Pay.

Market Overview and Disney Succession

The US trading day began with modest gains across major averages: the Dow was up about 150 points (a third of 1%), and the S&P and NASDAQ were up about a tenth of 1%. This early movement was influenced by anticipation for big tech earnings and ripple effects from the metals markets.

Disney's CEO Succession and Earnings: Disney is expected to vote on its next CEO as early as this week, with the decision narrowed down to Dana Walden, co-chair of Disney Entertainment, and Josh D'Amaro, chairman of Disney Experiences. Bloomberg suggests D'Amaro is the likely choice.

• Josh D'Amaro's Profile: Joined Disney in 1998, rising through leadership roles at Disneyland, Walt Disney World, and international parks. He was named head of the parks business in 2020, navigating the division through the pandemic, reopening, and subsequent expansion.
• Disney Experiences' Performance: Under D'Amaro, Disney Experiences has become the company's primary profit driver, accounting for a majority of Disney's operating income in recent years, surpassing media, streaming, and sports. This segment includes 14 theme parks across three continents, attracting nearly 150 million visitors annually, alongside Disney's growing cruise line fleet.
• Succession Process: The CEO succession process has been overseen by the board and led by chairman James Gorman since 2024. A notable "fun fact" is that Josh D'Amaro and Bob Iger share the same birthday, February 10th.
• Earnings Reaction: Despite beating estimates for the latest quarter, Disney shares were under pressure due to a "tepid" outlook for growth.

Chris Marangi, Gabelli Funds Co-CIO of Value, on Disney: Marangi noted that while operating income was down 9% and adjusted EPS down 7%, these are "pretty good numbers" in the context of Disney's transition from traditional linear distribution to Direct-to-Consumer (DTC). He believes the company is "far along" in this transition, experimenting with bundles and reaggregation.

• Rationale for D'Amaro: Marangi stated that "more than two-thirds of earnings and probably three-quarters of the value of the Walt Disney Company is in the experiences business," making D'Amaro a logical choice as CEO, reflecting the company's future.
• Bob Iger's Legacy and Future Role: Iger has done a "great job" over 20 years, successfully pivoting the company to growing businesses like experiences and sports. The question remains whether Iger can truly "step aside" this time, given past issues with his successor, Bob Chapek.
• AI and Filmed Entertainment: Marangi believes the advent of AI will change the business in unpredictable ways, echoing the internet's adoption 25-30 years ago. Disney has embraced AI, signing a deal with OpenAI to allow users to use Sora (an AI model). The company's strategy is to continue producing "great content, great IP," citing Zootopia 2 as an example. The value of Intellectual Property (IP) is underscored by industry battles like that for Warner Bros. Discovery.
• Disney Stock as an Investment: While Disney's 5-year chart shows little movement, Marangi argues it looks better than many other media companies, which face "secularly challenged" linear media businesses. He believes the "value of experiences is not going to go down" and may become "even more valuable" in an AI-dominated world, as "you can't beat IRL [in real life] in terms of going to a theme park."

Metals Market Volatility and Macro Picture

Precious metals were clawing back some losses, but gold and silver remained below their record highs from the previous week.

Christian Derry, CFM Head of Macro Strategy, on Metals: Derry described the recent moves in gold and silver as "almost unprecedented," requiring a look back "roughly four decades" to see similar types of moves (e.g., the Hunt brothers cornering the silver market). He attributed the increased volatility to:

1. More money in the system than ever before.
2. Easier trading via technology.
3. Proliferation of leveraged instruments like options.

• Catalyst for Selloff: The news of Kevin Warsh's nomination as Fed chair was a catalyst, as he is viewed as a "hawkish pick." Warsh supports lower rates but aims to reverse Bernanke's Quantitative Easing (QE) via Quantitative Tightening (QT), which would negatively impact asset prices, leading to rate cuts. Other factors included month-end effects and a large option expiry.
• Gold's Structural Case: Despite the correction, the structural case for gold remains "very compelling."
  • De-dollarization: Biden-era sanctions have led central banks to de-dollarize.
  • Geopolitical Risk: Rising geopolitical risks drive investors to seek stores of value.
  • Central Bank Buying: Central banks are buying significant amounts of gold (e.g., China, Poland recently bought 150 tons).
  • Crypto Community's Role: Tether, a gold-backed stablecoin, owns 140 tons of gold and is purchasing 2-4 tons per week for physical settlement in Swiss vaults.
  • Institutional Underownership: Gold is not a large allocation for global institutional investors, suggesting potential for "explosive price action" if psychology shifts.
• Gold vs. Bitcoin as Store of Value: Derry noted that Bitcoin is "much more correlated to the stock market, particularly technology stocks," and is "just not emerging" as a store of value, unlike gold. This could lead to rotation from crypto into traditional assets like gold.
• Silver's Role: Silver is more speculative and not typically owned by central banks. Its demand is tied to the AI buildout, specifically in solar panels, where 94% use silver as an input. The cost of silver in solar panels has risen from 3% to about 40%, creating an "indirect link to the data center buildout."

Tech Stocks and AI Investment Landscape

Derry also discussed investment in tech stocks, particularly those tied to the AI buildout.

• Investor Selectivity: Investors should be "more selective," focusing on inputs into the data center buildout where firms have "moats" and "a lot of pricing power."
• Memory (HBM): High Bandwidth Memory (HBM) is a critical input for data centers. OpenAI secured 40% of the global DRAM market in October. Only three companies can produce HBM at scale: Micron (US), SK Hynix, and Samsung (Korea). HBM costs were up 90% last year and 25% this year, with prices rising "50 to 100% every single month" due to "insatiable demand." This creates a "memory super cycle," which Derry believes will continue, calling it the "largest industrial investment cycle in the United States since World War II."
• Other "Picks and Shovels" of AI: Beyond memory, investors should look at specialized inputs like transformers to power data centers. European companies like ABB are highly specialized in these areas, benefiting from massive backlogs and pricing power.

Top Analyst Calls on Wall Street

Brooke Pom highlighted some of today's top analyst calls:

• Humana: Morgan Stanley downgraded the health insurer to Underweight from Equal Weight, citing a weaker-than-expected Medicare Advantage rate and new policies.
• Novo Nordisk: ABG downgraded the stock to Hold from Buy. While the obesity segment shows attractive long-term growth, increased pricing challenges could offset volume growth.
• McDonald's: BTI analyst Peter Saleh upgraded the fast-food giant to Buy from Neutral. He anticipates an early recovery for the lower-income consumer, driven by a "one big beautiful bill" leading to $200 billion in tax refunds ($1,000 per person). McDonald's new "Cosmic" beverage platform, launching in H1 2026, is also seen as a catalyst for US sales growth.

SoFi's Earnings and Future Strategy

Brian Sozzi interviewed Anthony Noto, SoFi CEO, about the company's latest quarter, crypto, and the new Federal Reserve chair.

• Q4 Performance: SoFi reported its first-ever quarter with over $1 billion in revenue, serving nearly 14 million members. The company achieved 37% revenue growth.
• SoFi's Strategy: Noto described SoFi as a "one-stop shop" for financial services (buying, spending, savings, investing, protecting), aiming to help members achieve their financial goals. He emphasized "durable growth driven by consistent innovation and brand building."
• US Economy and SoFi's Growth: Noto believes the US economy is "doing okay," with SoFi's growth stemming from both market share capture and organic expansion, indicating strong consumer demand.
• Investor Outlook: SoFi projects "durable compounding growth" with 30%+ revenue growth and 40%+ earnings growth through 2028. The company aims to capture market share as financial services shift from "physical or old analog opportunities to digital," leveraging a "better economic model with 30% EBITDA margins" and technology in new areas like crypto, blockchain, and AI.
• Secured Crypto Lending: SoFi has rolled out "buy, sell, and hold cryptocurrency" services, now permissible for national banks following OCC interpretive letters in Spring 2025. They will offer secured lending against crypto assets, similar to a home equity line of credit.
• Clarity Act: Noto stressed the importance of the Clarity Act to establish law making it permissible for banks to operate in cryptocurrency and blockchain, rather than relying on interpretive letters that could be reversed by a future OCC chairman.
• SoFi USD Stablecoin: SoFi launched SoFi USD in December, a stablecoin designed to power SoFi Pay (international money transfers, replacing Bitcoin on the Lightning Network) and settle with trading partners. It will also facilitate "corresponding banking" between banks, offering cheaper, faster, and safer money movement.
• Kevin Warsh as Fed Chair: Noto expressed excitement about Kevin Warsh as a potential Fed chair, praising his experience as a former Fed governor and public markets participant, bringing a "great combination of skills and experience." (Note: Noto initially misstated Warsh as a Treasury Secretary pick, but corrected to Fed Chair in context).

February Market Seasonality

Jared Blikre, host of Stocks and Translation, discussed market seasonality.

• Concept of Seasonality: Recurring calendar patterns in market returns, serving as a tendency rather than a definite prediction. It helps set expectations for market headwinds and tailwinds and should be used as context with other tools (technicals, fundamentals, chart reading), not as a standalone trading system.
• S&P 500 Historical Performance (since 1990, median returns):
  • January: Typically up 1.7% (actual 1.4% this year), with a 58% "win percentage" (closing green).
  • February: Typically up 0.8%, also with a 58% win percentage.
  • March, April, May: Usually see gains over 1%, with win percentages increasing to over 70% for April and May.
  • Summer/Early Fall: Typical gains are small, except for July (up 1.8%).
  • October-December: The year typically ends bullishly with "nicely" positive returns.
• S&P 500 (since 1928, matching day of week): This model shows a trend up into late April, a dip into May, a rally into early August, another dip into late September, and then a big rally into early December, followed by sideways to upward movement into year-end.
• VIX Seasonality (since 1990): The VIX (the "fear gauge") typically starts the year with a median of about 19 (currently around 15, lower than historical average). Volatility tends to trend up into mid-March, dips over the summer, then sees a large rise with the "largest readings of the year typically in October and November," which is "prime time crash season." Volatility then reduces towards year-end, concurrent with the year-end stock rally.
• Conclusion: Seasonality is a "handy guide," but actual market behavior can vary, especially with "big unexpected news like tariffs."

Cloud Revenue Growth and AI Investment Outlook

Maribel Lopez, Lopez Research founder, discussed the outlook for cloud revenue growth and AI investment.

• Cloud Growth Expectations: While double-digit cloud growth has been consistent, achieving "high 20s, high 30s" is "getting hard." AI is not yet driving cloud revenue growth at previously anticipated expectations, making the situation "very tenuous."
• AI Investment vs. Revenue: Investment in AI has consistently "outpaced the revenue." Investors are showing "limited willingness" to continue seeing billions invested without clear returns. The question is whether significant AI cloud growth revenue is a "10-year game" or will materialize in the "next coming year or two." While all hyperscalers claim AI cloud revenue, the key is whether it's "enough to justify the investment."
• Communication to Investors: Companies "don't really know" the exact ROI for AI, as it's embedded in many applications, making it hard to parse the hyperscalers' specific contributions. The focus has been on massive investments in companies like OpenAI.
• AI "Horse Race":
  • Alphabet (Google Cloud): Lopez considers Alphabet a "sleeping horse," increasingly winning AI workloads and seen as innovative. She believes they have "a lot of growth opportunity" and are entering the "Alphabet game" for AI, following Microsoft and AWS.
  • AMD: Has seen a "huge run-up" as a key competitor to Nvidia. The critical question for AMD is whether it will be the "second choice" for hyperscalers after Nvidia, or a "third choice." It's unclear if current deals will translate into "huge data center revenue opportunity" for AMD.
• "Everybody Wins" in AI?: Lopez described the current phase as a "secuitous investment phase," where money flows are complex and profitability is hard to discern. Currently, "no one's losing yet," but the focus is on "building infrastructure." Hyperscalers are still growing at "huge double-digit percentages." The long-term question is whether OpenAI might become a "loser" as other models emerge.
• Investment Strategy: Investors should look for "value dips" in cloud growth. Nvidia is expected to continue selling as much as it can for "probably two years," and while valuations are "hard to justify," the fundamentals remain strong. There are "no net new competitors" emerging, except potentially in the Chinese market. Investment decisions depend on individual risk tolerance and whether optimizing for long-term or short-term gains.

Synthesis and Conclusion

The market is navigating a complex landscape marked by significant leadership transitions, unprecedented volatility in commodity markets, and a transformative wave of AI investment. Disney is at a pivotal moment with its CEO succession, likely favoring Josh D'Amaro, whose leadership of the highly profitable Experiences division underscores the company's strategic pivot away from traditional media. Meanwhile, precious metals, particularly gold, are seeing structural demand driven by de-dollarization and geopolitical risks, despite short-term speculative volatility. The AI revolution is fueling a "memory super cycle" and massive industrial investment, creating opportunities in specialized "picks and shovels" components like HBM and transformers. Financial innovators like SoFi are capitalizing on the digital transformation of banking and the emerging crypto market, pushing for regulatory clarity. Finally, while historical seasonality offers a "handy guide" for market expectations, investors are reminded that day-to-day market action can diverge significantly, especially in the face of unexpected news and the ongoing, capital-intensive buildout of AI infrastructure, where the long-term return on investment remains a key question.