Next week on the stock market

AMD is set to release its third-quarter results next week, with expectations of revenue around $8.7bn and a gross margin near 54%. This follows a strong second quarter, driven by robust growth in the Client and Gaming segment. Investor focus, however, remains on the data center business, which faced challenges last quarter due to US export restrictions on certain AI chips. While licenses for these exports are expected to be approved, AMD’s timeline for securing them and ramping up production remains somewhat uncertain, making this a key area to monitor.

Looking ahead, AMD’s partnership with OpenAI suggests its next-generation chips, expected next year, could be a viable option for some of AI’s largest workloads. Execution at scale remains a challenge, and any updates on this collaboration will be closely watched.

Palantir heads into its third-quarter earnings next week after surpassing a record $1bn in revenue last quarter, up 48% year-over-year. The US commercial business was the standout, growing 93% and now representing roughly one-third of total revenue. While growth in this segment is accelerating, there remains a substantial opportunity to capture a larger share of a massive market that is still in its early stages.

For the third quarter, markets expect a 50% rise in revenue and a 77% jump in underlying operating income, fuelled by growth in both commercial and government contracts. Palantir is clearly a high-quality business, well-positioned to benefit from rising demand for AI-driven data insights. But the stock trades at a hefty premium, leaving little room for missteps.

Sainsbury’s delivered a strong start to the year, with all parts of the business performing well. Solid top-line growth and ongoing efficiency improvements show that the group isn’t resting on its laurels, but management expects profits for the current year to remain broadly flat. This outlook reflects an expected £140mn increase in costs linked to changes in employers’ National Insurance contributions and the national minimum wage.

Looking ahead to next week’s results, we don’t think price competition has been as intense as the sector had feared at the start of the year. Helped by growing real wages, UK consumers are proving resilient. And if Sainsbury's can keep growing volumes and gaining market share, there could be room for management to upgrade its cautious full-year guidance. For the first half, the consensus points towards retail underlying operating profit of around £500mn.