Google, MS, Meta, Amazon... US Big Tech Earnings Are Coming One After Another

Following Tesla's 'earnings miss,' this week (23rd-27th) will see a series of third-quarter earnings reports from leading big tech companies including Alphabet, the parent company of Google, Meta Platforms, Amazon, and Microsoft (MS). Attention is focused on whether the earnings of these big tech firms, which drove the New York stock market in the first half of the year, can revive investor sentiment that has been dampened by the recent surge in Treasury yields and the war between Israel and the Palestinian militant group Hamas.

[Image source=Reuters Yonhap News]

According to economic media CNBC on the 22nd (local time), about 150 companies listed on the S&P 500 index, including MS, Meta, Amazon, and Alphabet, will release their quarterly earnings this week. Particularly, investors' attention is concentrated on the so-called 'magnificent 7' big tech companies' performance reports.

First, MS and Alphabet will announce their earnings after the market closes on the 24th. Financial information provider LSEG estimates that MS's quarterly net profit will increase by more than 10% compared to the previous year. The key point will be the guidance for the fourth quarter. Investors are expected to look to confirm whether AI-related cloud computing expenditures are translating into revenue growth. Additionally, financial flows related to the $68.7 billion acquisition of Activision Blizzard will also be scrutinized. Alphabet is also expected to report increased profits compared to the same period last year, with investors focusing on whether it can maintain its AI momentum.

Meta will release its earnings the following day, on the 25th. Wall Street currently expects a strong quarterly performance and guidance that could be double that of the previous year. Justin Post, an analyst at Bank of America (BoA), maintained a 'buy' rating on Meta, stating, "The key driver of the stock price will be the fourth-quarter guidance." He also added that e-commerce advertising, Reels, and monetization related to messaging are important factors. Amazon's earnings, to be released on the 26th, are also expected to exceed forecasts. However, JP Morgan noted, "Consumer spending is strong, but concerns about spending are growing," emphasizing that whether Amazon can maintain its current momentum amid a worsening macro outlook will be crucial.

Notably, this week's big tech earnings announcements come as the 10-year U.S. Treasury yield surpassed 5% in the New York bond market, dampening investor sentiment. Middle East risks are also escalating, with the possibility of Iran's involvement in the Israel-Hamas conflict being raised. In this context, if earnings or guidance fall short of expectations, it could have an even more negative impact on stock prices. Tesla's stock price, which plunged amid investor disappointment after its earnings miss last week, is a representative example. Major foreign media outlets reported, "Given the worsening economic conditions, investors may be less tolerant of companies that report poor earnings than before."

The big tech earnings released so far have been mixed. Netflix announced strong earnings last week along with the largest quarterly subscriber growth in over three years, resulting in a surge of up to 16% in its stock price in a single day. This helped push its weekly stock price increase to the 12% range. On the other hand, Tesla's quarterly earnings fell short of expectations, causing its stock price to plummet. The day after the earnings release, 14 Wall Street analysts lowered Tesla's target price, with the median falling to $260. Tesla CEO Elon Musk's expression of concerns about weakening electric vehicle demand was interpreted as reflecting investor disappointment over profitability in the stock price. Tesla's stock price decline last week exceeded 15%.

In addition, this week General Motors (GM), Coca-Cola, Boeing, IBM, and Merck are also scheduled to release earnings. Other scheduled events include Federal Reserve Chair Jerome Powell's keynote speech, the U.S. third-quarter gross domestic product (GDP) growth rate, and the release of the personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge. The September PCE price index is estimated to rise by 0.4% compared to the previous month.