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Big tech is off to an excellent earnings week with Google (GOOGL - Free Report) , Microsoft (MSFT - Free Report) , Facebook , and Tesla (TSLA - Free Report) , all bouncing off their March quarter results. Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) are preparing to put the icing on the earnings cake when they release after the bell today.
Tech firms that rely on revenue from engagement and cloud computing are driving pandemic immunity that has propelled the tech sector so far this year.
Companies like Google and Facebook both rely on the combination of engagement and advertising for topline growth. With the world working from home, it is no surprise that people were surfing the web and using social media more than ever. GOOGL is up over 9% since it reported Tuesday evening, and FB is up north of 6% following its release last night (Wednesday after the close).
The question now is whether businesses are going to be willing to maintain this level of ad spending in the coming quarters.
Personally, I do not think that we are going to see a sharp decline in ad spending in Q2 and the quarter to follow. Businesses need to cut spending wherever they can, and advertising is one of the first things to be cut. I think that engagement will remain high, but I don’t think that Google or Facebook will be able to sustain the same revenue growth that they both reported in this week's results. I suspect we will a decline in ad spending for at least the next 12 months.
I would be trimming positions in both GOOGL & FB, pulling profits and waiting for a pullback to get back in.
Microsoft is the largest publicly traded US company by market cap, and it deserves to be. The company is a relentless technological powerhouse that consistently stays ahead of the innovative curve. The business decision to transition to cloud technology early on has propelled MSFT to continuously new highs. MSFT is up a modest 1% from yesterday’s results, but that is how this stock reacts. Consistent, reliable share price appreciation.
MSFT is up over 11% for the year, and I think that its portfolio of essential enterprise cloud services will keep this stock buoyant throughout the pandemic. These shares are still apt to fall if the broader market takes a tumble, which I expect in the coming weeks. I wouldn’t sell out of the tech powerhouse, but I will look to buy more if the price falls below $160 a share. Right now, I think these shares are trading at their fair value.
TSLA is an enigma to traders and investors alike, from being one of the most shorted stock in the market to appreciating 235% over the past 52-week. Tesla and its eccentric CEO and founder, Elon Musk, have finally started keeping its promises. A company that was renowned for overpromising and underdelivering has finally become reliable. Elon's fantastic promises are actually coming to fruition, and investors are excited.
As of April, Tesla delivered a grand total of 1 million cars since its inception and will soon surpass this milestone by multitudes. Its newly opened and currently expanding Shanghai Gigafactory, combined with its anticipated Berlin Gigafactory, will solidify Tesla as the global EV king.
Tesla continues to defy odds, with an amazing Q1 beat on production and deliveries. The company was also able to maintain its profitable growth image. Tesla remains very liquid with a $1.8 billion increase in cash & equivalents to $8.1 billion.
TSLA's outrageous growth over the past year makes me hesitant to add to my position at the peak of the rally. I would add to TSLA if these shares dipped below $600 per share.
These two tech pioneers are reporting their March quarter results after the bell today, and I expect that their results will be market moving with a combined S&P 500 weight of 9%.
AMZN is sitting at all-time highs as it embraces the rare tailwind that the global pandemic has extended to it. I expect to see strong results from this cloud computing & e-commerce giant. According to Zacks Consensus estimates, analysts are anticipating an EPS of $6.36 on sales of $74.36 billion, which would represent an EPS decline but a 25% topline expansion.
AAPL has been less buoyant due to its supply chain issues and global demand halt. According to Zacks Consensus estimates, analysts are anticipating an EPS of $2.09 on sales of $53.67 billion, representing declines of 15% and 7.5%, respectively.
Apple’s 2020 outlook is grim with its much anticipated 5G iPhone release being pushed back and demand for current iPhones shrinking. Smartphone shipments are down 20% in Q1 and are anticipated to be decline more than that in Q2. Apple’s subscription-based services may still see growth, but they make up only a small portion of the firm’s topline. AAPL investors are now looking to 2021 figures for their investing approaches.
I would not invest in either AMZN or AAPL before earnings. AMZN has had a huge run-up, and I am not going to chase this rally. I see investors pulling profits from AMZN after this earnings release. AAPL has an enormous amount of headwind in front of it, with both supply and demand issues weighing on the firm’s sales potential.
Take Away
This week’s big tech earnings are off to a running start, with a new level of optimism being priced into the reported stocks. AMZN’s and AAPL’s are substantial market players and are poised to move the market when they report after the close this evening (Thursday, April 30th).
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Image: Bigstock
Big Tech Earnings Off To A Running Start
Big tech is off to an excellent earnings week with Google (GOOGL - Free Report) , Microsoft (MSFT - Free Report) , Facebook , and Tesla (TSLA - Free Report) , all bouncing off their March quarter results. Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) are preparing to put the icing on the earnings cake when they release after the bell today.
Tech firms that rely on revenue from engagement and cloud computing are driving pandemic immunity that has propelled the tech sector so far this year.
Google (GOOGL - Free Report) ) & Facebook
Companies like Google and Facebook both rely on the combination of engagement and advertising for topline growth. With the world working from home, it is no surprise that people were surfing the web and using social media more than ever. GOOGL is up over 9% since it reported Tuesday evening, and FB is up north of 6% following its release last night (Wednesday after the close).
The question now is whether businesses are going to be willing to maintain this level of ad spending in the coming quarters.
Personally, I do not think that we are going to see a sharp decline in ad spending in Q2 and the quarter to follow. Businesses need to cut spending wherever they can, and advertising is one of the first things to be cut. I think that engagement will remain high, but I don’t think that Google or Facebook will be able to sustain the same revenue growth that they both reported in this week's results. I suspect we will a decline in ad spending for at least the next 12 months.
I would be trimming positions in both GOOGL & FB, pulling profits and waiting for a pullback to get back in.
Microsoft (MSFT - Free Report)
Microsoft is the largest publicly traded US company by market cap, and it deserves to be. The company is a relentless technological powerhouse that consistently stays ahead of the innovative curve. The business decision to transition to cloud technology early on has propelled MSFT to continuously new highs. MSFT is up a modest 1% from yesterday’s results, but that is how this stock reacts. Consistent, reliable share price appreciation.
MSFT is up over 11% for the year, and I think that its portfolio of essential enterprise cloud services will keep this stock buoyant throughout the pandemic. These shares are still apt to fall if the broader market takes a tumble, which I expect in the coming weeks. I wouldn’t sell out of the tech powerhouse, but I will look to buy more if the price falls below $160 a share. Right now, I think these shares are trading at their fair value.
Tesla (TSLA - Free Report)
TSLA is an enigma to traders and investors alike, from being one of the most shorted stock in the market to appreciating 235% over the past 52-week. Tesla and its eccentric CEO and founder, Elon Musk, have finally started keeping its promises. A company that was renowned for overpromising and underdelivering has finally become reliable. Elon's fantastic promises are actually coming to fruition, and investors are excited.
As of April, Tesla delivered a grand total of 1 million cars since its inception and will soon surpass this milestone by multitudes. Its newly opened and currently expanding Shanghai Gigafactory, combined with its anticipated Berlin Gigafactory, will solidify Tesla as the global EV king.
Tesla continues to defy odds, with an amazing Q1 beat on production and deliveries. The company was also able to maintain its profitable growth image. Tesla remains very liquid with a $1.8 billion increase in cash & equivalents to $8.1 billion.
TSLA's outrageous growth over the past year makes me hesitant to add to my position at the peak of the rally. I would add to TSLA if these shares dipped below $600 per share.
Amazon (AMZN - Free Report) ) & Apple (AAPL - Free Report)
These two tech pioneers are reporting their March quarter results after the bell today, and I expect that their results will be market moving with a combined S&P 500 weight of 9%.
AMZN is sitting at all-time highs as it embraces the rare tailwind that the global pandemic has extended to it. I expect to see strong results from this cloud computing & e-commerce giant. According to Zacks Consensus estimates, analysts are anticipating an EPS of $6.36 on sales of $74.36 billion, which would represent an EPS decline but a 25% topline expansion.
AAPL has been less buoyant due to its supply chain issues and global demand halt. According to Zacks Consensus estimates, analysts are anticipating an EPS of $2.09 on sales of $53.67 billion, representing declines of 15% and 7.5%, respectively.
Apple’s 2020 outlook is grim with its much anticipated 5G iPhone release being pushed back and demand for current iPhones shrinking. Smartphone shipments are down 20% in Q1 and are anticipated to be decline more than that in Q2. Apple’s subscription-based services may still see growth, but they make up only a small portion of the firm’s topline. AAPL investors are now looking to 2021 figures for their investing approaches.
I would not invest in either AMZN or AAPL before earnings. AMZN has had a huge run-up, and I am not going to chase this rally. I see investors pulling profits from AMZN after this earnings release. AAPL has an enormous amount of headwind in front of it, with both supply and demand issues weighing on the firm’s sales potential.
Take Away
This week’s big tech earnings are off to a running start, with a new level of optimism being priced into the reported stocks. AMZN’s and AAPL’s are substantial market players and are poised to move the market when they report after the close this evening (Thursday, April 30th).
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>