Meta is expected to report solid earnings and guidance thanks to AI-driven momentum and an improving digital ad market.
Starbucks’ stock is trading in a vulnerable range, with technical indicators pointing to potential downside if earnings disappoint.
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The stock market ended higher on Friday, with the major indexes clinching fresh records as cool inflation data and upbeat corporate earnings lifted investor sentiment.
Source: Investing.com
For the week, the 30-stock rallied 2.2%, the benchmark S&P 500 rose 1.9%, while the tech-heavy Nasdaq Composite added 2.3%. The small-cap Russell 2000 jumped 2.5%.
The blockbuster week ahead is expected to be a busy one filled with several market-moving events, including a key Federal Reserve policy meeting, as well as a flurry of heavyweight tech earnings and a meeting between President Donald Trump and Chinese leader Xi Jinping.
The U.S. central bank is all but certain to cut interest rates by 25 basis points on Wednesday, with Fed chair Jerome Powell likely leaving the door open for another rate cut in December. There is a strong chance the Fed also will announce an end to quantitative tightening.
Source: Investing.com
Meanwhile, Wall Street’s third quarter earnings season hits full swing, with five of the so-called ‘Magnificent Seven’ tech stocks set to report their latest results. , , and report on Wednesday night, while and are due late Thursday.
Other high-profile companies on the agenda include , , , , , , , , , , , , , , and .
As if that wasn’t enough, President Trump and Chinese President Xi are expected to meet on Friday on the sidelines of the Asia-Pacific Economic Cooperation (APEC) Summit in South Korea.
Regardless of which direction the market goes, below I highlight one stock likely to be in demand and another which could see fresh downside. Remember though, my timeframe is just for the week ahead, Monday, October 27 – Friday, Oct. 31.
Stock To Buy: Meta Platforms
Meta Platforms emerges as the compelling buy opportunity, with multiple growth drivers converging to support what could be one of the quarter’s most impressive earnings performances from a major technology company.
Meta is scheduled to deliver its update for the third quarter after the U.S. market close on Wednesday at 4:05PM ET. CEO Mark Zuckerberg and CFO Susan Li are scheduled to discuss the results during a 5:00PM ET earnings call.
Market participants foresee a sizable swing in META stock after the print drops, according to the options market, with a possible implied move of +/-7.1% in either direction. Shares gapped up 10% after the last earnings report in July.
Source: InvestingPro
Profit estimates have been revised upward 31 times in the last 90 days, reflecting growing confidence among analysts. Only one downward revision has been noted, underscoring Wall Street’s bullish sentiment toward the tech powerhouse. Meta is seen earning an adjusted $6.68 per share, marking a 10.8% increase from the prior year. Meanwhile, revenue is forecast to jump 21.6% year-over-year to $49.3 billion.
The improving digital advertising market, coupled with Meta’s massive user base across platforms like Facebook, Instagram, Threads, Reels, and WhatsApp, suggest the social media giant may deliver results that exceed tempered expectations. Moreover, Meta’s strategic investments in artificial intelligence, including new state-of-the-art data centers, position it well for long-term growth.
Management is likely to provide optimistic fourth-quarter guidance, reflecting continued advertising market recovery, AI monetization success, and operational leverage from platform improvements.
Source: Investing.com
META stock closed at $738.36 on Friday, about 7% below its all-time high reached in mid-August. Technical analysis paints a convincing picture for bulls: across all major timeframes, from intraday to monthly, the indicators line up as “strong buy,” supported by momentum signals like a healthy RSI, MACD in buy territory, and all moving averages trending upward.
As InvestingPro points out, Meta boasts a “GREAT” Financial Health Overall Score of 3.32, reflecting strong profitability, liquidity, and balance sheet resilience.
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Stock to Sell: Starbucks
On the flip side, Starbucks is also set to release its Q3 financial results this week. However, several challenges may weigh on its performance, leading to potential vulnerabilities in the stock.
The coffee giant has struggled with softening consumer demand, particularly in the crucial North American market, where discretionary spending has taken a hit amid inflationary pressures and economic uncertainty.
With implied volatility pointing to a +/-7.9% stock move post-earnings, the risk of a miss looms large. Analysts have grown increasingly bearish on SBUX ahead of the print, with 25 of the 26 analysts surveyed by InvestingPro revising EPS estimates downward over the past three months.
Source: InvestingPro
Wall Street expects Starbucks to report a profit of $0.56 per share, shrinking 30% year-over-year from EPS of $0.80 in the year-ago period. The coffee chain is grappling with operational challenges, including rising labor and supply chain costs, which are squeezing margins.
Meanwhile, sales are expected to inch up 3% annually to $9.35 billion amid a sluggish performance in its key U.S. market. Starbucks faces increasing competition from value-driven fast-food players like McDonald’s, Dunkin’ as well as local coffee shops. Furthermore, the company’s growth story in China, once a powerful catalyst, has become a source of concern.
Looking ahead, all signs point to CEO Brian Niccol warning of further near-term weakness due to weaker consumer traffic, margin compression, and uncertain turnaround prospects
Source: Investing.com
SBUX stock ended Friday’s session at $86.09. Technically, the picture is mixed. While the short-term (1-hour) chart flashes “strong buy,” longer timeframes show persistent weakness, with daily and weekly signals alternating between neutral and outright sell.
It is worth noting that Starbucks holds a 2.37 Financial Health Score, marked as “FAIR”, reflecting concerns around liquidity and moderate debt.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF (SPY), and the . I am also long on the , and Invesco S&P 500 Equal Weight ETF (RSP).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.
