What to Look for in Facebook Quarterly Reports, Microsoft, Alphabet, Apple и Amazon

Five of the biggest tech companies to publish quarterly reports over the next few days: Facebook, Microsoft, Alphabet, Apple и Amazon. Companies have the highest weight in major indices, which means, the dynamics of the stock market will depend, among other things, from their financial results.

S indices&P 500 and Nasdaq are near historic highs, and stocks are still expensive. So, capitalization ratio of companies from S&P 500 to expected next 12 months of profit - forward coefficient P / And — na 26% exceeds the average for the last 25 years value.

To justify high marks, many companies need to report better than analysts' expectations. And as long as they succeed. About 23% companies from S&P 500 have already published quarterly reports. According to FactSet, 84% reported higher earnings per share, despite rising prices, interruptions in production and supply.

In the case of big tech, expectations are even higher. According to Bloomberg, in the third quarter, technology companies from S&P 500 will report sales growth in 19%. This is more than the average index. Analysts expect bigtech revenue to grow by an average of 28%. That's when they'll report back.

25 October

Facebook. In a month and a half, the company's shares fell by 15%. This is the worst result out of all five: Apple paper, Alphabet and Amazon fell by about 5%. Friday, 22 October, Facebook shares fell immediately by 5%, when another social network reported for the quarter - Snap.

Snapchat Developer Reports Lower-Expected Revenue, Weak Q4 Outlook. According to Snap management, New iOS privacy policy hit ad revenue harder, than expected. Probably, investors will closely monitor not only the results, but also by Facebook forecasts, which makes most of the revenue also on advertising.

26 October

Microsoft. One of the most stable companies, whose shares have already risen by 42% year to date. Microsoft's trump card is the Azure cloud business. Analysts predict Azure Q3 growth at 40% as far as, how more and more companies are moving to the cloud infrastructure.

But weak sales of laptops can negatively affect Microsoft's revenue. At the end of last week, Intel reported a decrease in sales of PC processors by 2%. According to the company, consumer demand remains high, but due to disruptions in the supply, manufacturers do not have enough components.

Alphabet. Parent company shares Google since the beginning of the year they have added more than others - 59%. Like Facebook, The company makes most of its money from advertising.. Unlike social media, Alphabet has a cloud business - Google Cloud, - which grew in the last quarter by 53% comparing with the previous year. Service is growing faster than industry, but still profitable.

28 October

Apple. In October, Bloomberg reported, that Apple will cut production of new iPhones 13 in 2021 at 11%, with 90 up to 80 million devices. All because, that Broadcom and Texas Instruments partners cannot supply the required number of components. Apple also lacks camera modules, which are collected in Vietnam. Another wave of COVID-19 in the country and some factories do not work.

In last quarter's report, Apple warned, that a shortage of chips could negatively affect sales. The company expects to start production as soon as possible, after all, the latter, Apple's holiday quarter of the year is always the most profitable.

Amazon. In 2021, the company's shares are noticeably behind S&P 500: 5 against 23%. Last quarter, the retailer reported worse for the first time since 2018, than analysts expected. According to management, growth of e-commerce, caused by COVID-19, started to slow down. According to forecasts, Amazon's quarterly revenue will grow by 16%. This is the smallest increase since 2015..

Investors will also monitor the profitability of the retailer. Shortage of goods, rising transportation and labor costs may also reduce a company's margins.

Expected quarterly revenue, billion dollars

29,6 (+38%)