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ETFs to Stack as Reopening Poses No Hindrance for Big Tech
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The tech-heavy Nasdaq Composite Index was a strong performer in the virus-ridden 2020 and managed to gain around 43.2% in 2020. Tech stocks surged last year as the virus-led social distancing boosted the demand for the work-learn-shop-and-play-from-home culture. With the vaccination taking steam this year, and economic reopening and the resultant broad-based growth taking root, some expect moderate success for the Nasdaq this year.
But the Nasdaq pessimists may be proven wrong as big tech companies or most of the FAANGs have come up with blowout earnings in the ongoing reporting season, indicating that economic reopening is no hindrance for the space. The world has changed and is turning digital every day. Hence, big tech or Nasdaq ETFs will be in fine fettle. Let’s delve a little deeper.
Amazon Crushes Estimates
Lockdown or no lockdown, Amazon (AMZN - Free Report) story continues to be thriving. It trashed the bottom-line consensus of $9.75 per share with a reported earnings per share figure of $15.79 — marking more than triple the earnings from the year-ago quarter. Revenues of $108.5 billion blew past the $105.2 billion anticipated.
Further, revenue guidance for the upcoming quarter has been increased notably from the Zacks Consensus Estimate of $108 billion prior to the earnings release to a range of $110-116 billion. AWS, Amazon Prime, Advertising all outperformed in the quarter. Only Physical Stores underperformed. The company also noted that expenses related to the Covid-19 contagion will continue to fall in Q2.
Apple's Blowout Quarter
Apple (AAPL - Free Report) reported a smashing second-quarter fiscal 2021 results on Apr 28. Earnings per share came in at $1.40, beating the Zacks Consensus Estimate by 40 cents and more than doubled year over year. Revenues increased 54% to a record $89.6 billion and edged past the estimate of $77.6 billion. This marks the fastest revenue growth since 2012 and came on the back of record revenues in each of its geographic segments and double-digit growth in each product category (see: all the Technology ETFs here).
Apple has been benefitting from new devices adapted to the 5G wireless technology. iPhone sales jumped 66% to a record $47.9 billion on higher demand for 5G phones. Services revenues climbed 27%. Revenues from Wearables, Home and Accessories, which include Apple Watch, AirPods, HomePod, Apple TV and Beats headphones, soared 24% while iPad and Mac sales increased 79% and 70%, respectively. Apple authorized $90 billion in share buybacks (read: Apple ETFs to Buy as 5G iPhones Power Q2 Earnings).
Facebook Impresses Too
Facebook’s first-quarter 2021 earnings of $3.30 per share beat the Zacks Consensus Estimate by 39.8% and surged 93% year over year. Revenues of $26.17 billion comfortably surpassed the Zacks Consensus Estimate by 9.8% and rose 47.6% year over year. At constant currency (cc), the top line improved 44%.
Average Revenue per User (ARPU) registered considerable growth while Monthly active users (MAUs) were up 9.6% and Daily Active Users (DAUs) increased 8.3% year over year and represented 66% of MAUs.
Alphabet Too Amazes Investors
Alphabet Inc. (GOOG - Free Report) came up with quarterly earnings of $26.29 per share, beating the Zacks Consensus Estimate of $15.66 per share as well as year-ago earnings of $9.87 per share. Alphabet’s revenues of a record $45.6 billion topped the Zacks Consensus Estimate by 7.41%. This compares to year-ago revenues of $33.71 billion.
Alphabet’s ad earnings were up by an impressive 32%. YouTube ad revenue grew nearly 50% year over year. According to a recent Pew report, YouTube saw usage jump from 73% of U.S. adults in 2019 to 81% in 2021, as quoted on CNBC. Alphabet approved an additional stock repurchase of up to $50 billion on Apr 23.
Microsoft Logs Biggest Revenue Growth Since 2018
Microsoft's(MSFT - Free Report) earnings per share came in at $1.95, outpacing the Zacks Consensus Estimate by 19 cents and improving 39% year over year. Investors should note that Microsoft has not missed on quarterly earnings since third-quarter fiscal 2016.
Revenues grew 19% year over year to $41.7 billion, topping the consensus estimate of $40.9 billion. This marks the biggest quarterly increase since 2018, per CNBC, thanks in part to PC sales growth. The company said its Azure public cloud grew 50%, faster than the 46% growth expectations by analysts, according to a CNBC review of 14 equity research notes.
ETFs in Focus
Against this backdrop, investors can bet on tech-heavy ETFs. Apart from Nasdaq ETF (QQQ - Free Report) , following ETFs could be good picks right now.
Technology Select Sector SPDR Fund (XLK - Free Report) – Heavy on AAPL and MSFT
Communication Services Select Sector SPDR Fund (XLC - Free Report) – Heavy on FB and GOOG
ProShares Online Retail ETF (ONLN - Free Report) – Heavy on AMZN
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ETFs to Stack as Reopening Poses No Hindrance for Big Tech
The tech-heavy Nasdaq Composite Index was a strong performer in the virus-ridden 2020 and managed to gain around 43.2% in 2020. Tech stocks surged last year as the virus-led social distancing boosted the demand for the work-learn-shop-and-play-from-home culture. With the vaccination taking steam this year, and economic reopening and the resultant broad-based growth taking root, some expect moderate success for the Nasdaq this year.
But the Nasdaq pessimists may be proven wrong as big tech companies or most of the FAANGs have come up with blowout earnings in the ongoing reporting season, indicating that economic reopening is no hindrance for the space. The world has changed and is turning digital every day. Hence, big tech or Nasdaq ETFs will be in fine fettle. Let’s delve a little deeper.
Amazon Crushes Estimates
Lockdown or no lockdown, Amazon (AMZN - Free Report) story continues to be thriving. It trashed the bottom-line consensus of $9.75 per share with a reported earnings per share figure of $15.79 — marking more than triple the earnings from the year-ago quarter. Revenues of $108.5 billion blew past the $105.2 billion anticipated.
Further, revenue guidance for the upcoming quarter has been increased notably from the Zacks Consensus Estimate of $108 billion prior to the earnings release to a range of $110-116 billion. AWS, Amazon Prime, Advertising all outperformed in the quarter. Only Physical Stores underperformed. The company also noted that expenses related to the Covid-19 contagion will continue to fall in Q2.
Apple's Blowout Quarter
Apple (AAPL - Free Report) reported a smashing second-quarter fiscal 2021 results on Apr 28. Earnings per share came in at $1.40, beating the Zacks Consensus Estimate by 40 cents and more than doubled year over year. Revenues increased 54% to a record $89.6 billion and edged past the estimate of $77.6 billion. This marks the fastest revenue growth since 2012 and came on the back of record revenues in each of its geographic segments and double-digit growth in each product category (see: all the Technology ETFs here).
Apple has been benefitting from new devices adapted to the 5G wireless technology. iPhone sales jumped 66% to a record $47.9 billion on higher demand for 5G phones. Services revenues climbed 27%. Revenues from Wearables, Home and Accessories, which include Apple Watch, AirPods, HomePod, Apple TV and Beats headphones, soared 24% while iPad and Mac sales increased 79% and 70%, respectively. Apple authorized $90 billion in share buybacks (read: Apple ETFs to Buy as 5G iPhones Power Q2 Earnings).
Facebook Impresses Too
Facebook’s first-quarter 2021 earnings of $3.30 per share beat the Zacks Consensus Estimate by 39.8% and surged 93% year over year. Revenues of $26.17 billion comfortably surpassed the Zacks Consensus Estimate by 9.8% and rose 47.6% year over year. At constant currency (cc), the top line improved 44%.
Average Revenue per User (ARPU) registered considerable growth while Monthly active users (MAUs) were up 9.6% and Daily Active Users (DAUs) increased 8.3% year over year and represented 66% of MAUs.
Alphabet Too Amazes Investors
Alphabet Inc. (GOOG - Free Report) came up with quarterly earnings of $26.29 per share, beating the Zacks Consensus Estimate of $15.66 per share as well as year-ago earnings of $9.87 per share. Alphabet’s revenues of a record $45.6 billion topped the Zacks Consensus Estimate by 7.41%. This compares to year-ago revenues of $33.71 billion.
Alphabet’s ad earnings were up by an impressive 32%. YouTube ad revenue grew nearly 50% year over year. According to a recent Pew report, YouTube saw usage jump from 73% of U.S. adults in 2019 to 81% in 2021, as quoted on CNBC. Alphabet approved an additional stock repurchase of up to $50 billion on Apr 23.
Microsoft Logs Biggest Revenue Growth Since 2018
Microsoft's (MSFT - Free Report) earnings per share came in at $1.95, outpacing the Zacks Consensus Estimate by 19 cents and improving 39% year over year. Investors should note that Microsoft has not missed on quarterly earnings since third-quarter fiscal 2016.
Revenues grew 19% year over year to $41.7 billion, topping the consensus estimate of $40.9 billion. This marks the biggest quarterly increase since 2018, per CNBC, thanks in part to PC sales growth. The company said its Azure public cloud grew 50%, faster than the 46% growth expectations by analysts, according to a CNBC review of 14 equity research notes.
ETFs in Focus
Against this backdrop, investors can bet on tech-heavy ETFs. Apart from Nasdaq ETF (QQQ - Free Report) , following ETFs could be good picks right now.
Technology Select Sector SPDR Fund (XLK - Free Report) – Heavy on AAPL and MSFT
Communication Services Select Sector SPDR Fund (XLC - Free Report) – Heavy on FB and GOOG
ProShares Online Retail ETF (ONLN - Free Report) – Heavy on AMZN
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>