US stock market investors cautiously await earnings reports from big technology companies this week. The US earnings season will kick into a higher gear this week with Microsoft, Alphabet, Facebook, Amazon, Coca-Cola, Visa, Boeing, Mastercard, and Exxon Mobil set to report their quarterly financial results. After all, the gains witnessed in the leading US tech firms were a major factor in the recent bull market rise of 20% in the Nasdaq index.
With Microsoft, Alphabet, Amazon and Meta all reporting their earnings this week, investors around the world are switching their attention from banks to Big Tech, says Nigel Green, CEO, deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organisations.
Investors prepare for corporate earnings reports from mega-cap tech titans.
Also Read – How to invest in US stock market from India: All that you need to know about process, rules
Green says: “Many of the tech giants spent 2022 ‘cleaning house’ and getting rid of factors weighing on earnings, so we expect to see some positive reports this week.
Which companies were able to keep their margins will come out into the open once the quarterly results are announced by these companies. Some businesses including US regional banks have struggled to maintain margins in this context of higher rates for a longer period of time than initially anticipated, while others have done well.
Also Read: US stock market offers unique opportunities for investors to diversify their portfolio
Big Tech, though, is probably going to offer some respectable earnings due to the challenging work done last year.
There are three main factors that investors will be looking for, says Nigel Green.
“Guidance will be critical as indicators show the economy is headed for a downturn and investors will be eager to know which companies are best-positioned to manage this. Guidance helps evaluate a company’s past performance in light of its future prospects.
Secondly, cost-cutting measures and their efficacy will be poured over too. Have the recent mass lay-offs, following the mass hiring spree during and post-Covid had an impact on the bottom line?”
Finally, the AI (artificial intelligence) race will be closely monitored by investors.”
Only two months after its launch in late November, ChatGPT had 100 million monthly active users in January. To put this into context, it took Instagram two and a half years to get to 100 million.
“Therefore, the pressure is on for all tech titans to ramp up their AI divisions. This week is a big week and the halfway point in earnings season. Just five tech companies have made up two-thirds of the S&P 500’s gains this year. Needless to say, all eyes are on Big Tech earnings this week,” adds Green.
In the US, the advance estimate for Q1 GDP growth rate, personal income and spending, PCE price index, durable goods orders, and new home sales will all be in the focus. The GDP figures for France, the Euro Area, Germany, Italy, Spain, South Korea, and Mexico will also be made public. Investors will also pay special attention to Japan’s monetary policy decision as well as the inflation rates for France, Spain, Germany, and Australia.