Big Tech Earnings Week: What To Expect?

It’s the earnings season again! The big companies of the technology world – Apple, Amazon, Facebook, Microsoft and Alphabet (Google) are all set to announce the quarterly results this week on the 29th of October, after market hours.  

I’m personally extremely bullish on the Apple and Amazon numbers. Especially with the work from home continuing and with the Amazon prime day sales recently. 

Since July, shares of Amazon (AMZN) underperformed the broader market, rising 5% versus the S&P 500’s 6.8% gain.

Alphabet (GOOG, GOOGL) tracked about in-line with the S&P 500, while Facebook (FB) and Apple (AAPL) each gained about 19% over that period.

Big Tech Earnings Expectation During The Pandemic

While I do expect Amazon and Apple to continue delivering 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 the North American and the Global advertising spend numbers (with the holiday season around, the advertising spend should be more and so is the revenue). 

Facebook’s key metric will be the ARPU (Average Revenue Per User), especially in the North American territory (US & Canada). Other metrics such as time spent on the platform etc. are important as well, but seriously is it important? All that matters to the investors is the bottom-line or revenue. 

Even though FB boasts of having more than 1B+ active daily users across its platforms (FB + Instagram + WhatsApp), the majority of the income driver is from the North American region alone, with Europe coming in next. 

Though FB is heavily investing in India and other developing economies, you still can’t expect the revenues to be on par with the US+Canadian earnings.

That’s a similar story for Google as well.

The product sales for Google are at an all-time low, with the Pixels and the chrome books continuing to be a huge disappointment. 

Usually, the last three months of the year is extremely positive for all companies with the holiday season and sales surging towards the end of Christmas and the new year’s

Finally, talking about Microsoft, it will be interesting to see how the Office and Windows subscription is doing. Even though I do expect to see a higher number, due to work from home reasons.

Along with the Microsoft subscriptions, it will be interesting to see how the cloud business (Azure) is performing as well along with the latest XBOX and cloud games news. It will be interesting to see Microsoft’s product sales as well (surface laptops). 

Final Words

With the US elections on November 3rd and the earnings reports this week, the stock market can be extremely volatile. 

If you are willing to bet on any of the big tech stocks, better trade now. If the earnings are excellent (like what happened in the July earnings) you can expect a gap up opening during the after hours. 

My best is personally on Amazon and Apple to report extremely good numbers. 

Thanks for reading. Let me know your thoughts and comments below. 

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