Latest Tech Earnings Bring Fresh Support for Our Holdings

As we discussed on Tuesday, the pace of earnings has accelerated and that means we are granted the opportunity to mine for useful data points before holdings in the Portfolio do the same.

Comments on Tuesday night from F5 FFIV and Qorvo QRVO as well as initial ones on Wednesday morning from Corning GLW are supportive of our shares of the First Trust Nasdaq Cybersecurity ETF CIBR, Elastic ESTC and ServiceNow NOW as well as Marvell MRVL, Apple AAPL and others. Corning will hold its earnings call on Wednesday morning, which should bring another layer of insight that we’ll be sure to share with you later on.

We’ll also have a standalone alert regarding the wonderful earnings on Wednesday morning from ASML ASML, what’s driving the surge in its bookings and what that means for our shares of Applied Materials AMAT.

We also have the Fed’s policy statement out at 2 p.m. ET and Fed Chair Powell’s presser kicking off around 2:30 p.m. ET. The Fed is expected to leave interest rates unchanged, but we will be very interested in the policy statement’s wording and Powell’s tone following clear signs that inflation pressures did not abate in December and January. We’ll also be interested in Powell’s response should he be asked about President Trump’s comment that he will “demand” lower interest rates or potential Trump tariffs.

F5: AI Drives Cloud Adoption, Security Risks

We’re paying close attention to quarterly results and guidance from F5 because the shares are a constituent of the First Trust Nasdaq Cybersecurity ETF, but also because of the cybersecurity businesses inside Elastic, Microsoft MSFT and Alphabet GOOGL. The company was quick to support one of our lines of thinking when it comes to AI, admittedly the darker side:

As AI becomes ubiquitous, it will add fuel to the ball of fire, requiring more capacity to handle massive amounts of data, more sophisticated traffic management to deal with complex traffic patterns, and enhanced security capabilities to stay ahead of new security threats.

We expect that within three years, 80% of applications and processes will be infused with AI. There is evidence of this ramp in our own business with more than 50% of our F5 distributed cloud customers already leveraging our AI agent, which provides configuration assistance and insights. While AI promises to bring massive productivity benefits it is also creating new compliance infrastructure, networking, and security challenges for customers.

We see those comments supporting the cybersecurity businesses that we have exposure to as well as AI adoption, which reaffirms our positions in Elastic, ServiceNow as well as Microsoft. Both ServiceNow and Microsoft report after Wednesday night's market close as does Meta META, and we expect to hear much on the topic of AI adoption. While we look for Microsoft and Meta to reiterate their large capital spending plans for AI and data center, we will also be interested in their comments about DeepSeek.

Later this week, Check Point Software CHKP, one of CIBR’s larger holdings, will report and two others, Cloudflare NET and Fortinet FTNT will do the same next week. As the dust settles on those reports, roughly 25% of the constituent weight in CIBR will have reported, which will give us enough backing to revisit our CIBR price target. Should we see similar growth in deferred revenue, an indicator of future revenue, as we saw at F5, it could be more than just a small adjustment. For its December quarter, F5’s total deferred revenue grew 8% to $1.9 billion compared to the September 2024 quarter.

Corning on Enterprise Networking and More

Tucked inside the second comment we shared from F5 was a quick word about networking challenges, and for more on that let’s turn to comments from Corning.

Inside Corning’s December earnings press release on Wednesday morning, it reported revenue for its Optical Communications segment soared 51% year over year to $1.4 billion (up 10% sequentially) driven by AI and enterprise networking, which was up 93% year over year. That is another data point supporting the expected rebound in Marvell’s enterprise networking business.

Corning also reported revenue for its Specialty Materials segment, which contains its Gorilla Glass offerings used in mobile phones, tablets, laptops and smartwatches, rose 9% year over year in the December quarter. In Corning’s earnings press release, it referred to “continued strong demand for the company’s premium glass innovations” as driving its year-over-year growth in Specialty Materials.

During Corning’s earnings call this morning, we’ll look for more details on that as well as the components behind its March quarter revenue guidance that calls for a 10% year-over-year increase. Per earnings call comments from RF chip company Qorvo on Tuesday night, it sees less than usual seasonal declines in the current quarter for its largest customer — wink, wink that’s Apple — compared to the December one.

With Qorvo exiting the low-tier Android handset, a factor that will likely reduce Wall Street’s revenue expectations and price targets, we could see our shares of Qualcomm QCOM and Universal Display OLED get dragged lower on Wednesday despite Qorvo’s issues being a company-specific one.

Incremental comments this morning from Corning and possibly T-Mobile US TMUS could help us get our arms around that “less than usual seasonal decline” comment from Qorvo ahead of Apple’s earnings on Thursday night. We’ll also be looking for more details in Corning’s expected March quarter revenue increase, including how much is being fueled by a rebound in enterprise networking demand.

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At the time of publication, TheStreet Pro Portfolio was long CIBR, ESTC, NOW, MRVL, AAPL, AMAT, MSFT, GOOGL, META, QCOM and OLED.