Guidance
earnings guidance
Guidance is a company's own forecast of upcoming revenue, profit or other metrics, usually given with its earnings; it often moves the stock more than the results just reported.
In plain terms
Earnings are the report card for the past three months; guidance is the company's predicted score on the next test. It is often given as a range, such as "next-quarter revenue of $100 billion to $105 billion." Many US companies issue it regularly, while some choose not to give any.
Why it matters
Stock prices reflect future profits, so even a strong quarter can be followed by a falling share price if guidance falls short of expectations. A weaker quarter with upbeat guidance can send the stock higher. Guidance from large companies also reshapes expectations for peers and suppliers.
How it connects to markets
- Guidance above expectations (a raise): the stock tends to rise, often lifting peers and suppliers
- Guidance below expectations (a cut): the stock tends to fall, and sector-wide expectations come down
- AI and chips: capital-spending guidance from big tech companies directly moves chipmakers and power-equipment suppliers