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We are in the peak of the first-quarter earnings season, and tech giants are in the spotlight this week and the next. The five biggest tech players — Microsoft (MSFT - Free Report) , Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , Meta Platforms (META - Free Report) and Alphabet (GOOGL - Free Report) — are set to report. All these tech giants have gained between 18% and 70% this year.
The mega-cap tech stocks have roared in recent months on investors’ flight to cash-rich companies amid the banking crunch. This is especially true as tech giants have strong balance sheets, durable revenue streams and robust profit margins and are, thus, better positioned to withstand a possible economic downturn. The tech stocks also received a boost from weakening economic data and the heightened risk of a recession (read: 5 Tech Stocks That Powered Nasdaq ETF in the First Quarter).
Microsoft and Alphabet are expected to release results on Apr 25 after market close, while Meta Platforms will report on Apr 26. Amazon is scheduled to release its earnings on Apr 27 and Apple will report on May 4.
Microsoft
Microsoft has a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The stock witnessed no earnings estimate revision for the to-be-reported quarter over the past 30 days. Microsoft’s earnings track is impressive, with the last four-quarter earnings surprise being 1.12%, on average. The Zacks Consensus Estimate indicates no earnings growth and a modest revenue growth of 3.2% from the year-ago quarter. Microsoft belongs to a top-ranked Zacks industry (top 43%) and has risen 19.2% so far this year (read: ETFs to Gain on Microsoft's $13-Billion Bet on OpenAI).
Alphabet
Alphabet has a Zacks Rank #4 and an Earnings ESP of 6.55%. It saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. The company’s earnings surprise track over the past four quarters is not good, with the beat being negative 8%, on average. Earnings are expected to decline 13%, while revenues are expected to grow 2% from the year-ago quarter. Alphabet falls under a botton-ranked Zacks industry (bottom 41%). The Internet behemoth has climbed about 19.5% so far this year.
Meta Platforms
Meta Platforms has a Zacks Rank #1 and an Earnings ESP of +11.23%. The social media giant saw a negative earnings estimate revision of a penny for the to-be-reported quarter over the past seven days. The current Zacks Consensus Estimate for the yet-to-be-reported quarter indicates a substantial year-over-year earnings decline of 27.9%. Revenues are also expected to decrease 1.5%. Meta Platforms delivered an earnings surprise of 8.56%, on average, in the last four quarters. The stock belongs to a top-ranked Zacks industry (top 28%). Shares of META have surged about 77% so far this year.
Amazon
Amazon has a Zacks Rank #3 and an Earnings ESP of +20.82%. The stock saw negative earnings estimate revision of 4 cents over the past seven days for the first quarter. The Zacks Consensus Estimate represents substantial year-over-year revenue growth of 7.1% but no earnings growth. Amazon’s earnings surprise history is impressive, with an average beat of 10.52% for the last four quarters. The stock falls under a top-ranked Zacks industry (top 32%). The online e-commerce behemoth has witnessed a share price increase of 27.3% in the year-to-date timeframe.
Apple
Apple has a Zacks Rank #3 and an Earnings ESP of -0.29%. The stock saw positive earnings estimate revision of a penny over the past 7 days for second-quarter fiscal 2023. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The stock delivered an earnings surprise of 2.84%, on average, over the past four quarters. Apple is expected to report an earnings decline of 5.3% and a revenue decline of 4.1% from the year-ago quarter. It belongs to a top-ranked Zacks industry (top 23%). The stock has gained 27% in the year-to-date timeframe (see: all the Technology ETFs here).
ETFs to Tap
Given this, investors may want to play these stocks with the help of ETFs. Below, we have highlighted five ETFs having the largest exposure to these tech giants.
MicroSectors FANG+ ETN (FNGS): This ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of the FAANG stocks and has a Zacks ETF Rank #3 (Hold).
Blue Chip Growth ETF (TCHP): This fund focuses on companies with leading market positions, seasoned management and strong financial fundamentals. It accounts for a combined 41.4% share in the five firms.
Vanguard Mega Cap Growth ETF (MGK): This ETF offers exposure to the largest growth stocks in the U.S. market and has a Zacks ETF Rank #3. The five firms account for a combined 41.2% share in the basket.
Invesco QQQ (QQQ): This ETF focuses on 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. This fund makes up for a 39% share in the in-focus firms and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Nasdaq-100 Enters Bull Market: ETFs to Ride on).
iShares U.S. Tech Independence Focused ETF (IETC): This fund offers exposure to U.S. companies with a focus on U.S. tech independence. The five firms account for a combined 25.2% share in the basket.
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ETFs in Focus Ahead of Big Tech Q1 Earnings
We are in the peak of the first-quarter earnings season, and tech giants are in the spotlight this week and the next. The five biggest tech players — Microsoft (MSFT - Free Report) , Apple (AAPL - Free Report) , Amazon (AMZN - Free Report) , Meta Platforms (META - Free Report) and Alphabet (GOOGL - Free Report) — are set to report. All these tech giants have gained between 18% and 70% this year.
The mega-cap tech stocks have roared in recent months on investors’ flight to cash-rich companies amid the banking crunch. This is especially true as tech giants have strong balance sheets, durable revenue streams and robust profit margins and are, thus, better positioned to withstand a possible economic downturn. The tech stocks also received a boost from weakening economic data and the heightened risk of a recession (read: 5 Tech Stocks That Powered Nasdaq ETF in the First Quarter).
Microsoft and Alphabet are expected to release results on Apr 25 after market close, while Meta Platforms will report on Apr 26. Amazon is scheduled to release its earnings on Apr 27 and Apple will report on May 4.
Microsoft
Microsoft has a Zacks Rank #3 (Hold) and an Earnings ESP of 0.00%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The stock witnessed no earnings estimate revision for the to-be-reported quarter over the past 30 days. Microsoft’s earnings track is impressive, with the last four-quarter earnings surprise being 1.12%, on average. The Zacks Consensus Estimate indicates no earnings growth and a modest revenue growth of 3.2% from the year-ago quarter. Microsoft belongs to a top-ranked Zacks industry (top 43%) and has risen 19.2% so far this year (read: ETFs to Gain on Microsoft's $13-Billion Bet on OpenAI).
Alphabet
Alphabet has a Zacks Rank #4 and an Earnings ESP of 6.55%. It saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. The company’s earnings surprise track over the past four quarters is not good, with the beat being negative 8%, on average. Earnings are expected to decline 13%, while revenues are expected to grow 2% from the year-ago quarter. Alphabet falls under a botton-ranked Zacks industry (bottom 41%). The Internet behemoth has climbed about 19.5% so far this year.
Meta Platforms
Meta Platforms has a Zacks Rank #1 and an Earnings ESP of +11.23%. The social media giant saw a negative earnings estimate revision of a penny for the to-be-reported quarter over the past seven days. The current Zacks Consensus Estimate for the yet-to-be-reported quarter indicates a substantial year-over-year earnings decline of 27.9%. Revenues are also expected to decrease 1.5%. Meta Platforms delivered an earnings surprise of 8.56%, on average, in the last four quarters. The stock belongs to a top-ranked Zacks industry (top 28%). Shares of META have surged about 77% so far this year.
Amazon
Amazon has a Zacks Rank #3 and an Earnings ESP of +20.82%. The stock saw negative earnings estimate revision of 4 cents over the past seven days for the first quarter. The Zacks Consensus Estimate represents substantial year-over-year revenue growth of 7.1% but no earnings growth. Amazon’s earnings surprise history is impressive, with an average beat of 10.52% for the last four quarters. The stock falls under a top-ranked Zacks industry (top 32%). The online e-commerce behemoth has witnessed a share price increase of 27.3% in the year-to-date timeframe.
Apple
Apple has a Zacks Rank #3 and an Earnings ESP of -0.29%. The stock saw positive earnings estimate revision of a penny over the past 7 days for second-quarter fiscal 2023. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The stock delivered an earnings surprise of 2.84%, on average, over the past four quarters. Apple is expected to report an earnings decline of 5.3% and a revenue decline of 4.1% from the year-ago quarter. It belongs to a top-ranked Zacks industry (top 23%). The stock has gained 27% in the year-to-date timeframe (see: all the Technology ETFs here).
ETFs to Tap
Given this, investors may want to play these stocks with the help of ETFs. Below, we have highlighted five ETFs having the largest exposure to these tech giants.
MicroSectors FANG+ ETN (FNGS): This ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of the FAANG stocks and has a Zacks ETF Rank #3 (Hold).
Blue Chip Growth ETF (TCHP): This fund focuses on companies with leading market positions, seasoned management and strong financial fundamentals. It accounts for a combined 41.4% share in the five firms.
Vanguard Mega Cap Growth ETF (MGK): This ETF offers exposure to the largest growth stocks in the U.S. market and has a Zacks ETF Rank #3. The five firms account for a combined 41.2% share in the basket.
Invesco QQQ (QQQ): This ETF focuses on 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization. This fund makes up for a 39% share in the in-focus firms and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Nasdaq-100 Enters Bull Market: ETFs to Ride on).
iShares U.S. Tech Independence Focused ETF (IETC): This fund offers exposure to U.S. companies with a focus on U.S. tech independence. The five firms account for a combined 25.2% share in the basket.