MW As consumers fret, executives have been talking a little less about inflation - and more about this

By Bill Peters

Earnings Watch: Nike and FedEx report results this week

With prices still high and President Donald Trump's trade war forcing a market retreat, consumer sentiment, by one measure, is at a 29-month low.

But on calls with Wall Street analysts during this fourth-quarter earnings season, executives have been talking about inflation a little less - and more about artificial intelligence.

According to a FactSet analysis of the past three months of S&P 500 SPX corporate earnings calls, 230 companies mentioned "inflation" on those calls. While that's still elevated relative to the past decade, it's below the number of companies that called out the topic during fourth-quarter calls for 2023 and 2022, and the second-lowest figure since the second quarter of 2021.

Meanwhile, 241 companies cited "AI" on those calls, according to the FactSet analysis, which was published Friday. That's the highest number tracked in the past 10 years.

The discussions on earnings calls are happening amid what one analyst has called a "crisis of confidence" surrounding AI stocks, as sky-high expectations have given way to concerns about competition, the mountains of cash shoveled into developing the technology, and the extent of the eventual returns.

As for tariffs - threatened, applied, postponed or otherwise - Trump hopes they can help extract U.S.-friendly trade deals and restore American manufacturing jobs, even if they squeeze consumers in the meantime and complicate companies' efforts to plan and make financial forecasts. Economists have worried that tariffs will prompt businesses to raise prices, as they look to pass on the cost of those import taxes to already struggling consumers.

Against that backdrop, executives haven't been talking up the prospect of a recession as much recently. But they have noted the worsening vibes.

Delta Air Lines Inc. $(DAL)$ Chief Executive Ed Bastian, speaking at a conference last week, said sales growth had slowed after a snow and ice storm in Atlanta (where the airline has its biggest hub), the deadly midair collision between an American Airlines $(AAL)$ flight and a military helicopter in Washington, D.C. in January, and a Delta crash in Toronto in February. But he said there were other factors as well.

"It became pretty quickly obvious to us, too, [that] there was more than just the consumer sentiment coming out of the incidents," Bastian said. "There was something going on with economic sentiment, something going on with consumer confidence, and we were seeing that very much in the close-in bookings."

Macy's Inc. (M) CEO Tony Spring recently noted that wealthier consumers, who have been less bothered by inflation in recent years, haven't been spared either.

"I think the affluent customer that's shopping [at] Macy's is just as uncertain and as confused and concerned by what's transpiring," he said on the department-store chain's earnings call this month.

John Mercer, head of global research at research firm Coresight, told MarketWatch that since mid-January, consumer optimism among people making more than $100,000 - who tend to have more money wrapped up in the stock market - had fallen more sharply than for lower-income consumers, who have been feeling less secure for far longer after three years of steep price increases.

"High-income groups are more insulated from the pressures of inflation on essentials," he said. "But they're more more likely to respond to negative changes in asset prices, which could be the stock market. That could also be house prices."

This week in earnings

More retailers - including Five Below Inc. (FIVE), J.Jill Inc. (JILL) and Ollie's Bargain Outlet Holdings Inc. $(OLLI)$ - report this week, as chains have warned of uncertainty among shoppers across the income spectrum. General Mills Inc. $(GIS)$, Darden Restaurants Inc. $(DRI)$, Micron Technology Inc. $(MU)$ and Lennar Corp. $(LEN)$ also report.

The call to put on your calendar

Nike: After facing weaker demand overall and an oversupply of throwback sneakers, some analysts think Nike Inc.'s stoke $(NKE)$ has mostly bottomed out following a 28% drop over the past 12 months. When the sneaker and athletic-wear maker reports quarterly results on Thursday, we'll see whether that's the case as its new CEO, Elliott Hill, tries to focus more on athletes' needs, and as the company teams up with Kim Kardashian in a bid to revive its fortunes. But not every celebrity collaboration is a sure-fire bet.

The number to watch

FedEx's profits, sales and outlook: To some degree, shipping demand can function as a proxy for the broader economy. Since FedEx Corp. $(FDX)$ hauls a lot of packages around the globe, its results and outlook could offer more detail on how deep consumers' current hesitations run. Those results, due Thursday, will also land after of months of cost cutting from the company, which in December said it would spin off its freight business.

-Bill Peters

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March 16, 2025 10:00 ET (14:00 GMT)

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