Big Tech: What Else To Watch On Apple’s Earnings Day

Daniel Martins

Apple’s earnings day is this Thursday, October 29. But the Cupertino company is not the only Big Tech company to report the results of its most recent quarter.

According to Stock Rover, a total of 415 companies that trade in the largest US exchanges will be doing the same. This is the busiest day of earnings in the month of October.

Among these many names, a few stand out. Within the FAAMG group of Big Tech companies, Facebook $FB, Amazon $AMZN and Alphabet $GOOG $GOOGL will share calendar third quarter numbers as well. Today, we look at expectations for each of them and a few fun facts about price action worth keeping in mind.

But first, as a reminder, the Apple Maven will cover Apple’s results and earnings call live on Thursday, starting at 4 p.m. EST (1 p.m. PST). Tune in to the live blog by visiting thestreet.com/apple .

A snapshot on price action

Let’s start with a quick look on price action.

Of the four FAAMG names to report earnings on Thursday, Apple is still the one that rallied the most since the March 2020 lows, despite the September correction: up 118%. At the same time, Apple is also the deepest “in the hole” since achieving all-time highs: down 16%.

The other three FAAMGs have pulled back in tandem from the 2020 peak: 9%. Alphabet, however, is having the worst year of the four. The stock is up “only” 56% from the bottom and has climbed about 13% for the full year so far.

Rally from 52-week low:

  • AAPL: up 118%
  • AMZN: up 99%
  • FB: up 103%
  • GOOG: up 56%

Drop from 52-week high:

  • AAPL: down 16%
  • AMZN: down 9%
  • FB: down 9%
  • GOOG: down 9%

Amazon: stay-at-home beneficiary

Amazon is expected to be the fastest growing of all Big Tech companies to report on Thursday. Analysts project sales to increase by about 32%. Earnings per share are forecasted to come in at $7.25, well above last year’s $4.23. See table below.

A few months ago, I explained why Amazon has been on “a quest for world domination”. This is the theme that will likely drive the company’s strong double-digit revenue growth in the third quarter.

Expect to see solid numbers in e-commerce, considering how shopping habits have barely changed in this COVID-19 year. Case in point, North America revenue growth has accelerated substantially since even before the pandemic, and has reached levels seen only once, briefly, in 2018.

The wildcard will be Amazon Web Services, the company’s cloud platform business. The segment performed “less strongly” in the second quarter. But the hiccup may have been caused by revenues having been pulled into the previous three-month period. A return to normalcy should be expected.

Facebook: looking to repeat 2Q

Facebook is expected to deliver the usual, steady growth in revenues. Wall Street anticipates sales to rise 12% year-over-year, but EPS to decrease 11%. See table below.

It is no secret that I have not been much of a Facebook bull. In my opinion, the company has longed peaked, and I do not see a solid path forward for long-term growth – which is not a problem for names like Apple and Amazon, in my view.

The advertising model is limited. Meanwhile, the platform comes under frequent scrutiny for not providing the best user experience (i.e. dissemination of malicious content, mishandling of user data, etc.).

That said, Facebook’s second quarter was strong compared to expectations. Daily active users grew by 12%, and average revenue per user easily topped consensus estimates. Will the Menlo Park company deliver another surprise quarter this time?

Alphabet: will cloud save the day?

Lastly, Alphabet will probably deliver the most modest top-line growth rate of all FAAMG names in the third quarter. Analysts are looking for about 5% increase in revenues, and barely 2% earnings growth. See table below.

It will be interesting to see the dynamic between ad and cloud revenues. The first has been under pressure, despite good results coming from YouTube. The latter has been on fire lately, growing at a 40%-plus pace and helping to offset lack of revenue firepower elsewhere.

I appreciate Alphabet as an investment, although not as much as Apple and Amazon (and Microsoft, which does not report earnings on Thursday). Let’s see if the Mountain View-based company’s third quarter results will turn me into a more enthusiastic bull.

Looking to build a killer portfolio?

The Apple Maven also hosts a community of curious investors looking to build a market-beating growth portfolio. So far, the flagship All Equities Storm-Resistant Growth (SRG) strategy has produced more than 20% in annual returns since inception – at no more than market-like levels of risk.

If you are interested in exploring stocks beyond Apple and the technology sector, join the SRG group. I will be glad to share my insights with you, and exchange investment ideas in our Live Chat room. Better yet, it is free to join for 14 days!

(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)

Comments

Top Stories

FEATURED
COMMUNITY