Betting on US Big Tech? Top Earnings Reports to Watch in the Coming Week

These heavyweights, who belong to the “Magnificent 7,” are very likely to generate market buzz with the release of their financial results. Let’s take a closer look at what these earnings might reveal and how they could shape the tech landscape in 2024.

Meta Platforms’ Q1 2024 – 24/04/2024 Post Market

Meta Platforms exceeded expectations in February 2024 with an exceptional performance in Q4. Sales surged by 25% year-over-year to reach $40.1 billion, marking the company’s most rapid growth since mid-2021 and surpassing analyst estimates of $39.18 billion. A cost-cutting initiative accompanied this revenue increase, resulting in an 8% year-over-year decrease in expenses to $23.73 billion.

Consequently, the company’s operating margin more than doubled, reaching a robust 41%, underscoring the effectiveness of their strategies to enhance profitability. This financial strength translated into a substantial increase in net income, which more than tripled to $14 billion ($5.33 per share) compared to $4.65 billion ($1.76 per share) in the previous year, surpassing analyst expectations of $4.96 EPS.

Meta Platforms also maintained a “good” user base with 2.11 billion daily active users (DAUs) and 3.07 billion monthly active users (MAUs) in Q4 2023. Additionally, the company’s average revenue per user (ARPU) reached $13.12.

In addition to its financial achievements, it also announced its inaugural dividend payment of $0.50 per share, signalling a potential transition towards a regular dividend payout model in the future.

The company anticipates total revenue for the first quarter of 2024 to fall within the range of $34.5-37 billion.

Meta’s shares are already up more than 42.50% since the beginning of the year.

Alphabet’s Q1 2024 – 25/04/2024 Post Market

Google’s parent company, Alphabet, reported positive results for Q4 2023 in January 2024. Net income surged 52% year-over-year, reaching $20.7 billion ($1.64 per share) compared to $13.6 billion ($1.05 per share) in Q4 2022. This growth was accompanied by an improvement in profitability, with the operating margin expanding to 27% from 24%.

A key driver of growth was Google Cloud, which saw revenue rise 26% year-over-year. This segment is now generating profits, marking a significant turnaround from previous losses as it competes with industry giants like Amazon Web Services and Microsoft Azure. In Q4 2023, Google Cloud achieved a positive operating income of $864 million, a stark contrast to the $186 million loss recorded in the same period last year.

Investors are keen to hear from CEO Sundar Pichai regarding his continued focus on artificial intelligence (AI) and integrating new generative AI tools into Google’s core products. Pichai emphasised both Google Search’s enduring strength and the growing importance of YouTube and Cloud in the last earning report. These areas are benefiting from AI investments and advancements ushered in by the “Gemini era.” This commitment to AI across platforms positions Google for long-term success in the competitive digital landscape.

Market participants expect EPS to slow down at $1.52 and revenue to slow down at $78.68B.

Alphabet’s shares are already up more than 12.40% since the beginning of the year.

Amazon’s Q1 2024 – 25/04/2024 Post Market

Amazon crushed Q4 2023 expectations, with record holiday sales (record-breaking Black Friday and Cyber Monday holiday shopping events) driving a 14% year-over-year net sales jump to $170.0 billion. Operating income surged to $13.2 billion, and the company swung to a net income of $10.6 billion ($1.00 per diluted share) compared to a loss in Q4 2022.

For the full year 2023, net sales grew 12% and profitability returned with a net income of $30.4 billion. Looking ahead, Amazon anticipates continued sales growth (8-13%) in Q1 2024 and expects operating income to exceed the prior year’s figure.

Investors should watch Amazon’s automation efforts (over 750,000 robots deployed) and its expansion of drone delivery in the United States and other countries like Italy and the United Kingdom in 2024, both potentially impacting efficiency and costs.

Additionally, as always, Amazon Web Services (AWS) and advertising sales remain key areas of focus, especially with the growing interest in artificial intelligence and AWS’s position as the company’s fastest-growing business line.

Amazon’s shares are already up more than 20.80% since the beginning of the year.

Microsoft’s Q3 2024 – 25/04/2024 Post Market

In its Q2 2024 earnings report released in January, Microsoft surpassed analyst projections on both earnings per share ($2.93 compared to an expected $2.78) and revenue ($62.02 billion versus an expected $61.12 billion).

The Intelligent Cloud segment, featuring Azure and other cloud services, emerged as a pivotal driver of this success. Revenue surged by 20% year-over-year, with Azure and related cloud services soaring by 30%. Overall, revenue spiked by 18% (16% in constant currency), operating income surged by 33%, net income saw a corresponding 33% increase, and earnings per share leaped by 33%.

Microsoft’s robust Q2 performance was underscored by its Azure cloud business, which continued to exhibit remarkable strength. The company’s outlook for the fiscal third quarter anticipates revenue in the range of $60 billion to $61 billion.

Satya Nadella, Microsoft’s CEO, emphasised in the press release, “We’ve moved from talking about AI to applying AI at scale.” This strategic shift signals a focus on leveraging AI technologies to drive innovation and enhance productivity. Investors are likely to follow Microsoft’s advancements in this area, viewing them as pivotal tools to attract new clientele and bolster efficiency gains.

Microsoft’s shares are already up more than 11.00% since the beginning of the year.

Bottom Line

These earnings reports are like X-rays for the tech industry, revealing the health of these leading companies. The data and guidance provided can significantly impact both short-term trading and long-term investment strategies.

For active traders, these reports often create periods of higher volatility, presenting opportunities for strategies like scalping and day trading. News-based trading becomes particularly relevant, allowing traders to capitalise on price movements in either direction (up or down) using financial instruments like CFDs (Contracts for Difference).

Long-term investors can leverage these reports to reassess their asset allocation. The new information can help ensure their portfolios are aligned with their risk tolerance and current market conditions.

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