Companies such as Pfizer, BlackRock, and Lam Research have been emphasizing operational efficiency in their earnings calls this season. This increased focus on cost control is a strategic move by firms to protect their margins, in anticipation of a potential soft economic landing. Investors are watching for signs of a slowdown in the jobs market to predict when the Federal Reserve might lower borrowing costs, although recent strong data suggests the Fed won't be easing anytime soon.
Key takeaways:
- US companies are discussing cost control on earnings calls at a record rate, as they aim to reallocate funds and invest in new technologies, according to Morgan Stanley strategists.
- Transcript mentions of "operational efficiency" are at the highest ever in the US during this earnings season, with companies focusing on expense discipline and investment in technologies like AI.
- Industries discussing operational efficiency most prevalently and those discussing AI overlap significantly, including software, professional services, health care services, and financial services.
- The rising focus on cost control is a strategy by firms to protect margins amid hopes for a soft economic landing, with investors looking for signs of cooling in the jobs market to gauge when the Federal Reserve will lower borrowing costs.