The coming week will be the most important of this quarter’s earnings season – even if the following weeks outweigh the quantity, it will be nearly impossible to get past this slate in terms of dollars and attention.
That’s because all major tech will report, and these five companies – Google’s parent company, Alphabet Inc. GOOGL,
Amazon.com Inc. AMZN, the power of e-commerce and cloud computing,
IPhone Manufacturer Apple Inc. AAPL,
the titan of social media Facebook Inc. FB,
and software giant Microsoft Corp. MSFT,
– can determine the market price at this point in history.
Consider these statistics, from Dow Jones Market Data Group:
The five Big Tech companies accounted for over a fifth of the total market capitalization of the S&P 500 SPX Index,
at the end of the second trimester, 22%.
In the first quarter, they provided nearly 10% of total sales for the 500 Member Index and nearly 18% of total profit (9.7% and 17.8%, respectively).
This proportion of the profits provided by Big Tech in fact decreases as of 2020, when the five companies provided nearly a quarter of the index’s annual earnings, 23.8%, and accounted for 9.1% of total sales.
Over the coming week, all five companies are expected to report strong second-quarter earnings and sales, which can typically be slower leading up to school and vacation shopping in the second semester. Collectively, they are expected to report nearly $ 60 billion in profit on sales of over $ 310 billion, according to analyst estimates gathered by FactSet.
These estimates are probably conservative. So far this quarter, 88% of S&P 500 companies have beaten analysts’ average estimates for earnings per share, and 86% have beaten earnings with nearly a quarter of the index, according to FactSet. Those two numbers would be records for the overall surprise percentage, which FactSet tracked through 2008, according to senior revenue analyst John Butters.
Facebook and Google, for example, are expected to far exceed estimates after other online ad sales companies Snap Inc. SNAP,
and Twitter Inc. TWTR,
blew expectations in their reports last week, which helped Alphabet and Facebook record market highs on Friday, with Snap.
See also: Facebook Revenue Overview and Alphabet Revenue Overview
Stock movement is unlikely to be determined by the numbers reported by these companies, especially after Friday’s big rebound; the forecast has been more important for investors who are waiting to see how long the current boom in corporate earnings will last. And all five companies have been cautious in their forward-looking statements during the COVID-19 pandemic.
Apple has stopped providing advice during the pandemic, which will hamper the annual board game of trying to glean facts about the next version of the iPhone from the company’s financial forecast. While Microsoft is expected to end its fiscal year breaking the records it set the previous year by a healthy amount, it will likely only provide official financial guidance for the next quarter instead of the full year, like executives have done so in the past.
Full results preview: What will Apple say about the next iPhone when it comes to results? Maybe more than usual
Most of the Big Tech predictions that have been shared have ended up underestimating their actual performance, which can lower expectations and produce big beats. Amazon, for example, topped the higher end of its first-quarter sales forecast by 2.3%, which equates to an additional $ 2.5 billion. And that was actually the closest Amazon came to an accurate prediction in Big Tech’s $ 1.2 trillion pandemic year, after beating the high end of its quarterly forecast by 3.8%. , 3.4% and 9.8% looking back from the fourth quarter.
So expect at least some big wins and lots of questions about what to come next as those reports pour in over the week. Apple, Google and Microsoft all expect to release a report Tuesday afternoon after markets close, while Facebook follows Wednesday afternoon and Amazon ends it Thursday afternoon.
The call to put on your agenda
Tesla Inc. When Tesla TSLA,
CEO Elon Musk speaks, markets listen.
Silicon Valley’s most controversial CEO sent cryptocurrencies like BTCUSD bitcoin,
and dogecoin DOGEUSD,
on crazy rides with his tweets and statements so far this year, but when he launches the week’s results list after normal working hours on Monday afternoon, the focus should be on Tesla and his actions.
As always, there are a lot of questions to discuss with the electric car maker. Following the departure of a long-time executive, progress on Tesla’s Semi roadmap will need to be addressed, as will the gross margin effects of the continuing semiconductor shortage, a problem in the auto industry.
Full Overview of Tesla’s Profits: Semi Truck, Cybertruck, and Chip Shortage at a Glance
Tesla is also likely to address plans to sell its advanced driver assistance features as a subscription, even as Consumer Reports joins a chorus of criticism of Tesla’s approach to autonomous driving. Musk’s recent statement that Superchargers will be open to EVs from other manufacturers, as well as demand amid fierce competition in China will also be topics to research.
Also watch for chip shortage comments from other more staid automakers, such as Ford Motor Co. F,
Wednesday, as well as chip supplier Qualcomm Corp. QCOM,
- Hasbro Inc. and Mattel Inc. Is there a phrase more worrisome than “toy shortage” as the holiday shopping season approaches?
Well, analysts sounded the alarm last week that we could be dealing with exactly that, after parents bought out-of-season toy bundles to keep their kids entertained at home during the COVID-19 pandemic, this which has put a damper on the industry’s supply chain. Expect executives to resolve any issues in Santa’s Workshop when Hasbro A,
reports on Monday and Mattel MAT,
will follow on Tuesday.
The numbers to watch
Boeing Co. Boeing BA,
is expected to post another loss in the quarter, but analysts predict it will go against the grain and post a loss much larger than average consensus. “We believe Boeing is on the cusp of reporting another monster second quarter loss, with free cash outflow of around $ 2.8 billion by our estimate,” Vertical Research analysts said, while Benchmark analyst Josh Sullivan predicted last week that Boeing would exceed $ 1 per share in losses, while the average analyst estimate is currently looking for a loss of around 83 cents per share.
Sale of fast food. After strong reports last week from Chipotle Mexican Grill Inc. CMG,
and Domino’s Pizza Inc. DPZ,
Burger makers and other casual restaurant chains will detail whether their pandemic-influenced boom has continued as parts of the United States have opened up. On the program this week, McDonald’s Corp. MCD,
Shake Shack Inc. SHAK,
Yum Brands Inc. YUM,
(and Yum China Holdings Inc. YUMC,
), and Wingstop Inc. WING,
Also, look for signs of change from restaurant chains that are more reliant on internal traffic but have turned to more take-out during the pandemic, such as Cheesecake Factory Inc. CAKE,
and Bloomin ‘Brands Inc. BLMN,
This week in earnings
Exactly one third of the 30 Dow Jones Industrial Average DJIA,
components and more than a third of the S&P 500 components, up to 180, are expected to post profit in the coming week, according to FactSet. Notable reports outside of the major indices include the Canadian e-commerce platform Shopify Inc. SHOP,
and the music streaming service Spotify Inc. SPOT,
reporting that same morning on Wednesday, which is sure to create some confusion between the two companies of the same name, as well as growing Silicon Valley software maker Twilio Inc. TWLO,
Dow Jones Industrial Average reports: 3M Co. MMM,
Apple, Microsoft and Visa Inc. V,
(Tuesday); Boeing and McDonald’s (Wednesday); Merck & Co. Inc. MRK,
(Thusday); Caterpillar Inc. CAT,
Chevron Corp. CLC,
and Proctor & Gamble Co. PG,