Big Tech earnings approach under antitrust cloud

Tech Titans

Apple, Alphabet, Amazon and Facebook, together accounting for about a fifth of their S&P 500’s total value, report their quarterly results on Thursday, with their stocks trading near record highs, much as they face raising antitrust scrutiny.

Amazon and Apple have soared 74 percent and 57%, respectively, this season, far outperforming the S&P 500’s 5% profit since the coronavirus pandemic accelerates trends toward online shopping, video streaming and other technology helping Wall Street’s biggest companies take market share from smaller rivals.

Substantial Tech for years has been criticized for choking competition and stifling smaller rivals, and investors are searching for signs that they are extending their lead throughout the pandemic. But, antitrust storm clouds in recent months have increased.

A scathing report by a House of Representatives panel this month detailing abuses of market power by big technology firms suggests a challenging road ahead should Democratic presidential candidate Joe Biden, who’s leading in surveys, win the November the 3rd election.

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Morgan said he expects to see companies put money aside to pay for possible future fines.

Apple, Google-parent Alphabet, Amazon and Facebook have a joint stock market value of $5.5 trillion, in contrast to this S&P 500’s $29 trillion market capitalization.

Their reports come amid turbulence on Wall Street, with the S&P 500 on Monday posting its largest daily decline in four weeks, as soaring coronavirus instances and uncertainty about a financial relief bill in Washington dim the outlook for an economic recovery.

Microsoft, which places its results late on Tuesday, has elevated its stock market value with a third in 2020 to $1.6 trillion. Investors expect that the software manufacturer to report an 8 percent increase in quarterly revenue and a 10% jump in earnings, together with Cowen analyst Derrick Wood saying in a recent client note that Windows sales could find a lift from additional laptop demand as people keep working at home.

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S&P 500 technology sector earnings per share have been seen rising 0.3% in the next quarter, based on I/B/E/S statistics from Refinitiv.

In contrast, analysts expect S&P 500 companies to see an aggregate decrease of 16.7percent in their third-quarter earnings as the US market remains crippled from the pandemic.

Amazon’s September-quarter report will probably be a “calm before the storm” because the online merchant assembles more fulfilment centres in anticipation of a busy holiday shopping season, Bernstein analyst Mark Shmulik composed in a client note on Monday.

“With a holiday crunch expected, the scale and pace at which (Amazon) is bringing incremental capacity online is encouraging,” Shmulik wrote.

Twitter additionally reports its results on Thursday, together with analysts on average expecting a 9% revenue decline as advertisers hurt from the pandemic spend .

Analysts on average expect Apple’s report after the bell on Thursday to reflect a 0.5% drop in revenue to $63.7 billion and earnings down 11.2% to $12.1 billion. However, Apple investors are mostly centered on the outlook for sales of the newest iPhone and increase in recurring revenue from apps, games and video and audio streaming.

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