Next week on the stock market

Pipelines under the microscope for GSK and AstraZeneca

Half-year readouts for the UK’s largest pharmaceutical giants will not only shine a light on their financial health, but also progress within the laboratory. AstraZeneca’s recent late-stage setback with heart-disease medicine Wainua was a reminder that drug development is never risk-free, but such misses have been relatively rare given its strong pipeline record.

We don’t expect it to threaten medium-term guidance, but it raises the bar for the rest of the pipeline if upgrades are to come through. GSK’s had its own disappointment leading it to abandon its development of refractory chronic cough drug camlipixant which it acquired through a $2bn acquisition back in 2023.

Both companies need to keep driving new revenue opportunities, particularly as exclusivity expires on older treatments, so we’ll want to see evidence of healthy spending on R&D. Acquisitions and partnerships are another route to filling the hopper. GSK recently completed the $10.6bn takeover of Nuvalent.

AstraZeneca’s been busy with smaller acquisitions and licensing deals. There are plenty of good reasons for Big Pharma to keep spending, and investors will want reassurance that cash generation and balance sheet strength can support continued investment.

Rio Tinto and Anglo American dig deeper into copper growth

Rio Tinto and Anglo American report against a supportive backdrop for copper, with prices still benefiting from demand linked to electrification, grid upgrades, data centres and constrained supply.

That should provide a helpful tailwind to earnings, but investors will be just as focused on how both groups plan to grow exposure to one of mining’s most attractive long-term markets.

For Anglo American, the tie-up with Teck is the clearest signal of intent. The deal would create one of the world’s leading copper producers and shift the portfolio further towards future-facing commodities, at a time when Anglo is already reshaping the business around higher-quality assets.

Investors will want reassurance that the strategic logic remains intact, while also keeping an eye on execution risk and balance sheet discipline.

Rio Tinto’s route is more heavily weighted to organic growth. Its Oyu Tolgoi mine in Mongolia remains a major long-term copper growth driver, while the Resolution project in the US and the Winu project in Western Australia offer further potential, albeit with long development timelines and permitting challenges.

With copper demand increasingly tied to the buildout of digital and energy infrastructure, progress on these projects could matter just as much as the latest production numbers.

Investment budgets in focus for Amazon, Meta and Microsoft

Next week’s Amazon, Meta and Microsoft results will put the AI spending boom back under the microscope. Markets remain uneasy about the sheer scale of investment, particularly when higher capital expenditure weighs on near-term cash flow.

But for the wider AI trade, the most important signals will be continued customer wins, strong demand for computing power and confidence that the infrastructure buildout is continuing at scale.

Any sign that projects are being delayed or budgets trimmed would raise questions across the AI supply chain. We expect the opposite, with current spending plans likely to rise as demand continues to outpace available capacity.

Cloud will be the clearest test of whether that spending is translating into growth. Investors will want to see Azure and AWS maintain their recent momentum, supported by strong demand for AI services and improving access to new capacity.

Meta doesn’t have a cloud business today, which makes its spending harder for markets to value. That could start to change if management provides more details on plans to rent computing power to outside customers or sign large cloud agreements.

Even early signs of progress would give investors a clearer route from Meta’s vast infrastructure budget to a new source of revenue beyond advertising.

The author holds shares in Amazon, Meta and Microsoft.

Rolls-Royce looking to fly towards its full-year targets

Rolls-Royce had a good start to the year, with all three divisions performing well over the first quarter. In Civil Aerospace, there were concerns that the Middle East conflict would reduce the time its engines spent in the air, weighing on revenues.

However, engine flying hours are still tracking in line with management’s targets, which saw full-year guidance reiterated as underlying operating profits and free cash flow expected to land between £4.0-4.2bn and £3.6-3.8bn, respectively.

Looking ahead to next week’s half-year results, we expect flying hours to continue tracking in line with guidance, albeit at the bottom end. But rising defence budgets and growing power demand from data centres in its Defence and Power Systems businesses should drive strong growth. As a result, first-half underlying operating profits are expected to grow by around 10% to £1.9bn.

The author holds shares in Rolls-Royce.