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Amazon, Apple, Microsoft, Alphabet and Facebook are part of Zacks Earnings Preview
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For Immediate Release
Chicago, IL – August 2, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Amazon.com, Inc. (AMZN - Free Report) , Apple Inc. (AAPL - Free Report) , Microsoft Corporation (MSFT - Free Report) , Alphabet Inc. (GOOGL - Free Report) and Facebook, Inc. .
Is Big Tech Growth Really Decelerating?
The market’s Amazon disappointment follows somewhat similar attitudes towards results from Apple and Microsoft.
Not to make light of Amazon’s top-line ‘miss’ and weak guidance, but the stock wasn’t exactly flying high before the post-release selloff. Apple shares have been following essentially the Amazon trend this year as well, though Microsoft has been a standout performer. In fact, of the ‘Big 5’ Tech players – Apple, Amazon, Alphabet, Facebook & Microsoft – the market appreciated only Alphabet’s Q2 numbers that followed similar love for the search giant’s numbers last quarter.
Looking at this elite group of five ‘Big Tech’ players as a whole, these companies earned $74.9 billion in earnings in the June quarter on $320.7 billion in revenues. This group’s Q2 earnings and revenues are up +88% and +35.4% from the year-earlier period, respectively.
If the question is whether the ‘doubling’ of the group’s profitability as we saw in 2021 Q1 is now firmly behind us, then the answer is ‘yes.’ You can see that in current consensus expectations for the next four quarters in the above chart.
Even if we account for some upward revisions to these estimates over the coming days, there is no doubt that the perfect alignment of stars last year for these companies was a unique opportunity. In other words, we will see growth decelerate for these Tech players over the next few quarters, simply as a result of unusually tough comparisons and the ‘law of large numbers.’
This a very short-term view of this group as all of these companies are still capable of generating impressive growth by most conventional standards in the long run.
Whether the growth trend for these companies is decelerating or not is a function of your holding horizon.
These companies are impressive growth engines in the long run. Beyond the big 5 Tech players, total Q2 earnings for the Technology sector as a whole are expected to be up +58.4% from the same period last year on +24.1% higher revenues.
Q2 Earnings Season Scorecard
We now have Q2 results from 296 S&P 500 members or 59.3% of the index’s total membership. With another 149 index members on deck to report Q2 results this week, we will have seen results from more than 89% of the index’s total membership by the end of this week.
Total earnings (or aggregate net income) for these 296 companies are up +102% from the same period last year on +26.8% lower revenues, with 89.2% beating EPS estimates and a record 887.5% beating revenue estimates.
What is Expected for 2021 Q2 & Beyond?
Looking at Q2 on a blended basis, combining the results that have come out with estimates for the still-to-come companies, total earnings for the S&P 500 index are currently expected to be up +88.3% from the same period last year on +22.2% higher revenues, with the growth rate steadily going up as companies come out with better-than-expected results. This would follow the +49.9% earnings growth on +10.3% higher revenues in 2021 Q1.
A big part of the unusually strong earnings growth expected in the Q2 earnings season is due to easy comparisons to last year’s Covid-hit period. But as we have been consistently pointing out, not all of the growth is a result of easy comparisons. In fact, Q2 earnings are on track to be up +27.5% from the pre-Covid 2019 Q2 period and are on track to reach a new all-time quarterly record.
Double-digit earnings growth is expected in each of the next two years. This suggests that the market isn’t looking for a one-off rebound this year, but rather an enduring growth cycle that continues over the next couple of years.
To the extent that this growth outlook can improve as we move into the back half of 2021 will determine whether the overall earnings picture is getting better or leveling off.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>The Tech Sector’s Enormous Earnings Power
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Amazon, Apple, Microsoft, Alphabet and Facebook are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – August 2, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Amazon.com, Inc. (AMZN - Free Report) , Apple Inc. (AAPL - Free Report) , Microsoft Corporation (MSFT - Free Report) , Alphabet Inc. (GOOGL - Free Report) and Facebook, Inc. .
Is Big Tech Growth Really Decelerating?
The market’s Amazon disappointment follows somewhat similar attitudes towards results from Apple and Microsoft.
Not to make light of Amazon’s top-line ‘miss’ and weak guidance, but the stock wasn’t exactly flying high before the post-release selloff. Apple shares have been following essentially the Amazon trend this year as well, though Microsoft has been a standout performer. In fact, of the ‘Big 5’ Tech players – Apple, Amazon, Alphabet, Facebook & Microsoft – the market appreciated only Alphabet’s Q2 numbers that followed similar love for the search giant’s numbers last quarter.
Looking at this elite group of five ‘Big Tech’ players as a whole, these companies earned $74.9 billion in earnings in the June quarter on $320.7 billion in revenues. This group’s Q2 earnings and revenues are up +88% and +35.4% from the year-earlier period, respectively.
If the question is whether the ‘doubling’ of the group’s profitability as we saw in 2021 Q1 is now firmly behind us, then the answer is ‘yes.’ You can see that in current consensus expectations for the next four quarters in the above chart.
Even if we account for some upward revisions to these estimates over the coming days, there is no doubt that the perfect alignment of stars last year for these companies was a unique opportunity. In other words, we will see growth decelerate for these Tech players over the next few quarters, simply as a result of unusually tough comparisons and the ‘law of large numbers.’
This a very short-term view of this group as all of these companies are still capable of generating impressive growth by most conventional standards in the long run.
Whether the growth trend for these companies is decelerating or not is a function of your holding horizon.
These companies are impressive growth engines in the long run. Beyond the big 5 Tech players, total Q2 earnings for the Technology sector as a whole are expected to be up +58.4% from the same period last year on +24.1% higher revenues.
Q2 Earnings Season Scorecard
We now have Q2 results from 296 S&P 500 members or 59.3% of the index’s total membership. With another 149 index members on deck to report Q2 results this week, we will have seen results from more than 89% of the index’s total membership by the end of this week.
Total earnings (or aggregate net income) for these 296 companies are up +102% from the same period last year on +26.8% lower revenues, with 89.2% beating EPS estimates and a record 887.5% beating revenue estimates.
What is Expected for 2021 Q2 & Beyond?
Looking at Q2 on a blended basis, combining the results that have come out with estimates for the still-to-come companies, total earnings for the S&P 500 index are currently expected to be up +88.3% from the same period last year on +22.2% higher revenues, with the growth rate steadily going up as companies come out with better-than-expected results. This would follow the +49.9% earnings growth on +10.3% higher revenues in 2021 Q1.
A big part of the unusually strong earnings growth expected in the Q2 earnings season is due to easy comparisons to last year’s Covid-hit period. But as we have been consistently pointing out, not all of the growth is a result of easy comparisons. In fact, Q2 earnings are on track to be up +27.5% from the pre-Covid 2019 Q2 period and are on track to reach a new all-time quarterly record.
Double-digit earnings growth is expected in each of the next two years. This suggests that the market isn’t looking for a one-off rebound this year, but rather an enduring growth cycle that continues over the next couple of years.
To the extent that this growth outlook can improve as we move into the back half of 2021 will determine whether the overall earnings picture is getting better or leveling off.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>The Tech Sector’s Enormous Earnings Power
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.