It’s earnings season again! The big companies in the technology world – Apple, Amazon, Facebook, Microsoft and Alphabet (Google) are expected to announce their quarterly results this week of October 29, after trading hours.
Personally, I’m extremely optimistic about Apple and Amazon’s numbers. Especially with continued working from home and with Amazon Prime Day sales recently.
Since July, shares of Amazon (AMZN) have underperformed the broader market, up 5%, compared to 6.8% for the S&P 500.
Alphabet (GOOG, GOOGL) has roughly tracked the S&P 500, while Facebook (FB) and Apple (AAPL) have each gained about 19% during this period.
Big Tech’s Profit Expectations During the Pandemic
While I expect Amazon and Apple to continue to deliver excellent numbers and balance sheets, Facebook and Alphabet are not far behind.
For Facebook and Google in general, it will be interesting to look at ad spend numbers in North America and around the world (with the holiday season approaching, ad spend is expected to be higher, as is revenue).
Facebook’s key measurement will be ARPU (Average Revenue Per User), particularly in North America (United States and Canada). Other metrics such as time spent on the platform, etc. are also important, but seriously, does it matter? All that matters to investors is the bottom line or revenue.
Even though FB boasts of having over 1 billion daily active users on its platforms (FB + Instagram + WhatsApp), the majority of revenue sources come from the North American region only, with Europe coming next.
Although FB is investing heavily in India and other developing economies, you still can’t expect revenues to be comparable to those in the US and Canada.
It’s also a similar story for Google.
Product sales for Google are at an all-time low, with Pixels and Chrome Books continuing to be a huge disappointment.
Usually the last three months of the year are extremely positive for all businesses with the festive period and the surge in sales towards the end of Christmas and the New Year.
Finally, speaking of Microsoft, it will be interesting to see how the Office and Windows subscription fares. Although I expect to see a higher number, for work from home reasons.
Alongside Microsoft subscriptions, it will be interesting to see how the cloud business (Azure) also performs as well as the latest XBOX and cloud gaming news. It will also be interesting to see sales of Microsoft products (Surface laptops).
Last words
With the US election on November 3 and this week’s results, the stock market can be extremely volatile.
If you’re ready to bet on one of the big tech stocks, it’s best to trade now. If earnings are great (like what happened during July earnings), you can expect a bullish gap to open after hours.
My best personally is on Amazon and Apple reporting extremely good numbers.
Thanks for reading. Let me know your thoughts and comments below.
