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Microsoft crossed past earnings estimates and issued a better-than-expected forecast. So did Intel. Apple and Tesla topped expectations across the board, while subscription software vendors ServiceNow, Qualtrics and Atlassian all posted crucial beats.
All that happened this week. But that was not enough, as of midday on Friday, to prevent the Nasdaq from extending its loss streak to five weeks, the longest stretch since the end of 2012. The technology-heavy index fell 1.5% over the past five days, even after Friday’s Apple-powered rally.
This technological earnings season has been considered the most important in a decade, as investors struggle with the highest inflation in 40 years and the likelihood of a series of forthcoming interest rate hikes from the Federal Reserve. Cloud software, e-commerce, trading apps and chip stocks have been hammered in the middle of a rotation out of the bull market’s best results and into areas that are considered more secure like energy and economy.
So far, with the exception of Netflix, the best technology companies have not only delivered but also provided a degree of assurance to Wall Street that they will be able to cope through supply chain concerns, a tight labor market and the prospect of higher costs. of capital. Apple said late Thursday that revenue in the most recent quarter rose 11% year-over-year, while earnings per share fell share of $ 2.10 flew past the average analyst estimate of $ 1.89, proving that the company is growing while keeping costs in check.
“Despite a lack of components, the company continues to demonstrate the strength of its product ecosystem with broad growth across its lineup,” analysts at Canaccord Genuity wrote in a report following Apple’s announcement. They maintained their buy rating on the stock.
Apple, the most valuable US company, rose nearly 6% on Friday, helping lift the Nasdaq by 1.6%. But big falls on Tuesday and Thursday were too much to overcome for the index, which fell 13% in January and is ready to close its worst month since 2008.
All eyes are on next week where the rest of the mega-cap tech group along with other key tech vendors will report quarterly results.
The alphabet starts on Tuesday, followed by Meta on Wednesday and Amazon on Thursday, Chipmakers AMD and Qualcomm also report next week. They have each fallen between 9% and 28% to start the year.
Technology companies reporting next week
Alphabet was the only one among the five to pick up a win this week, catching up with Apple on Friday. Powered by Google and YouTube ads, the company is expected to report another quarter with strong growth of close to 27%, but analysts expect significant moderation this year in their teens.
Between Google’s comment on Tuesday and Meta’s Facebook numbers the next day, investors should start to get a clear picture of the path to online advertising and whether the big users feel in a pinch. Meta is expected to show revenue growth of around 19% in the fourth quarter, its slowest expansion rate since mid-2020, with analysts expecting annual growth for 2022 to be halved to 19% from last year’s level.
Google and Facebook have both proven that they can withstand all sorts of challenges in recent years, from pandemic closures and regulatory pressures to Apple’s iOS privacy changes. Their dominance over web audiences means that even when marketers pull back their expenses, they continue to invest their dollars in ways that allow them to target the largest number of consumers on the Internet and on mobile devices.
Argus Research wrote in a earnings statement last week that Metas “most dangerous short-term risks arise from regulatory investigations and intense critical media coverage.”
Still, the company has a buy recommendation on the stock and a price target of $ 410, representing a 38% increase from Friday’s price.
Meta may be better positioned to withstand the storm due to “the secular trend of advertisers moving to digital from other channels, and since much of its revenue comes from direct response advertising from e-commerce sites,” Argus wrote.
Amazon’s results on Thursday will cover the critical holiday period. Analysts expect to see growth of close to 10% in the fourth quarter compared to a year earlier. But just like with Facebook and Google, Amazon’s control over the e-commerce market has convinced investors that regardless of any concerns about consumer consumption, they will continue to rely on one site, especially for their fast and cheap deliveries.
Amazon’s growth in 2022 is expected to reach 17%, a slight decrease from around 22% last year.
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