What does the future hold for US tech stocks? The coming weeks will tell, as eight of the most dominant technology companies report results.
Microsoft, Alphabet (Google’s parent), Amazon, Snap Inc (Snapchat), Twitter, Facebook, Apple and Spotify are all scheduled to report quarterly results between now and the start of November, with four of them making their announcements on the same day.
The results will come after a difficult month for the tech companies. Just over two weeks ago, the worst drop in the Dow Jones average in eight months was led by sharp declines in technology stocks, mirrored on the Nasdaq. That Wednesday, the best-performing stocks over the past year – which include the so-called Faang companies: Facebook, Apple, Amazon, Netflix and Google – took some of the biggest losses. Amazon was down 6.2% and Netflix 8.4%.
There were several factors contributing to the drop, concerns over trade tensions between the US and China and rising interest rates being the most prominent. Tech companies tend to be highly leveraged, so can be vulnerable to rising interest rates. The EU’s planned tax on technology firms is also putting them under pressure.
The first to report, on Wednesday, will be Microsoft, releasing first-quarter results. Attention will be focused on whether the company’s Azure cloud computing service is driving growth. The platform has been used by a number of governments recently.
Next up, “Super Thursday” will see Alphabet, Amazon, Snap Inc and Twitter all report on the same day. For Alphabet, analysis from Hargreaves Lansdown highlights the recent €4.3bn fine the EU slapped on Google, but says it expects growth in revenue numbers. Separately, the company has been investing heavily in areas such as self-driving cars and cloud computing.
Amazon is expected to have enjoyed strong revenue growth, according to the analysts, with services such as Prime and Alexa making increasing progress, as is the company’s web services division. Snap Inc, parent of social media app Snapchat, will also report third-quarter results. Investors saw some light earlier this month when chief executive Evan Spiegel said that he hoped the company would turn a profit next year.
Finally for Thursday, Twitter will also make a third-quarter announcement. In July, its shares dropped by more than 20% after it reported a drop of a million users following its action to delete fake and offensive accounts. At the time, the social media platform told investors to expect user numbers to fall further as it took action to block fake accounts.
One of the most eagerly anticipated results will be Facebook’s: its third-quarter results will be reported on 30 October. In the summer, the company said that revenue growth would continue to slow in the second half of this year. Daily and monthly active users on the site fell for the first time in the second quarter of this financial year.
When Apple reports on 1 November, the focus will be on whether the high price of the iPhones has affected the demand for the handsets. Hargreaves Lansdown analysts say they are hopeful of a strong result, but warn that a slowdown in the US market’s first $1tn company would not be taken well on the markets.