Big Tech earnings: What to expect this week as tech titans report
Wall Street is gearing up for a slew of Big Tech earnings this week with Apple, Amazon, Facebook, Google and Microsoft all set to deliver figures for their latest quarter.
Twitter and Snap kicked off proceedings by smashing expectations last week, raising hopes that a post-pandemic advertising rebound will boost other platforms.
Tesla also shrugged off a semiconductor shortage and supply chain troubles to deliver a surge in profits.
But will the rest of the tech titans bring more good news for US investors?
Apple
All eyes will be on Apple this evening, with tech-watchers expecting strong growth from the company thanks to bumper revenue from both iPhones and its services such as Apple Music and the app store.
Analysts expect Apple’s services sales to rise 24.1 per cent to $16.3bn, more than a fifth of its expected overall sales of $73.3bn, according to IBES data from Refinitiv.
Total iPhone sales for the company’s third quarter are also expected to jump 28.7 per cent to $34bn.
“We expect another very robust quarter for Apple, with little sign of demand for iPhone slowing as we near the traditional autumn product launch window,” said Leo Gebbie, principal analyst at CCS Insight.
“Company revenue should see double-digit growth thanks to strong iPhone replacement cycles, work-from-home trends helping Mac and iPad, and services benefiting from good performance across the portfolio.”
Last week it emerged Apple is set to double down on 5G for its next line-up of iPhones in — a move that should continue to fuel demand in 2022.
But investors will also have a keen eye on how the tech giant plans to respond to mounting regulatory scrutiny, with authorities in the US, UK and Europe probing antitrust issues such as Apple’s app store commission and its dominance in the smartphone market.
Alphabet
Also reporting tonight is Google owner Alphabet, which will be hoping to cash in on a rise in digital advertising spend as Covid restrictions continue to ease.
Analysts said Google’s exposure to travel and small businesses such as physical stores would boost ad revenue both as re-opening continues and the online shopping trends that boomed during Covid is maintained.
Alphabet’s revenue is forecast to grow 46.6 per cent to $56.2bn.
More concerns could be raised over regulatory issues as Alphabet faces question marks over its decision to block third-party cookies, which has been delayed following pressure from the CMA.
Google could also be hit by changes to Apple’s iOS privacy settings earlier this year, which mean users of each app are now asked for permission to track their activity.
But Liam Patterson, chief executive of marketing firm Bidnamic said the company was in a “strong position overall”.
“The pandemic has led to an acceleration in digital advertising and therefore a surge in Google’s bottom line,” he said.
It will be a similar story for Facebook when it reports its second quarter earnings tomorrow evening, with the social media giant hoping for a strong rebound in advertising.
Analyst forecasts put the company’s revenue at $27.9bn — a 49 per cent rise — including a 47.5 per cent jump in ad revenue.
Again, regulatory issues abound for the tech platform, which has been hit with a two-pronged competition probe in the UK and EU over its use of data.
But experts pointed to Facebook’s moves into ecommerce as a key potential area of growth — though warned it faced stiff competition from the likes of Tiktok, Snapchat and Twitter.
“Facebook has been doubling down on building meaningful social commerce experiences – across shoppable posts, conversational commerce and live shopping experiences,” siad Yuval Ben-Itzhak, chief of strategy at social media marketing firm Emplifi.
“Facebook is providing the perfect space for brands to experiment with social commerce and learn what works best for their audiences, by offering a range of e-commerce capabilities to try out. After years of focusing on the top of the marketing funnel – activities with reach and engagement metrics – Facebook is finally investing further into conversion opportunities with e-commerce.”
Amazon
Capping off a big week for Big Tech will be Amazon, which reports its latest figures on Thursday night.
Amazon has been one of the stand-out winners of the pandemic as repeated lockdowns drove record trading for the ecommerce giant.
While the platform could now face a challenge to maintain its momentum, this will likely be offset in its latest quarter by its mammoth Prime Day sale.
Amazon is forecast to pull in revenue of $115bn, up from $88.9bn in the same quarter last year.
Investors will also be focusing on potential shifts in strategy for Amazon after it splurged $8.45bn to buy James Bond studio MGM.
“We expect Amazon to post really strong results, boosted by the progressive opening of economies around the world, as well as its international Prime Day promotion,” said Martin Garner, chief operating officer at CCS Insight.
“This will be supported by its very rapid expansion of capacity, which began during the early part of the pandemic and continues at pace.
“In addition to Prime Day, Amazon has made some big moves during 2Q21, which will not show benefits in this set of earnings but highlight its confidence and set the ground for the future.”