Tech earnings: What Apple, Amazon, Meta need to succeed

The next slew of Big Tech earnings includes Apple (AAPL), Amazon (AMZN), and Meta Platforms (META), all scheduled to report earnings on Thursday. After several tech giants fell short of advertising revenue expectations, what should investors expect from these next big three?

Yahoo Finance Tech Editor Dan Howley highlights what investors will be paying the closest attention to, including Apple's iPhone demand in China, Amazon's AWS segment, and Meta's AI strategy.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

Video transcript

AKIKO FUJITA: Well, the pressure is on for the three Magnificent Seven companies set to report their latest quarterly results after the bell this afternoon. Investors will be scrutinizing every word from leaders at Amazon, Apple, and Meta after the first three Mag Seven members, Tesla, Microsoft, and Alphabet failed to impress investors. We have our very own tech reporter Dan Howley with us.

Dan, we should say expectations are sky high. We've learned that from the other companies that have reported so far. What should investors be watching this afternoon?

DAN HOWLEY: Yeah, Akiko, expectations are sky high. I mean Microsoft had a great report and you saw shares fall off. And then as far as Google, Alphabet goes they missed on ad sales and you saw what happened. They were getting hammered as a result of that.

But as far as Apple, Amazon, and Meta, let's go over some of the big numbers that people are going to be watching. Revenue and earnings per share, $2.11 on $117.9 billion for Apple. That's the big number.

But the number that most people are going to be watching is iPhone revenue. That's expected to come in at $68.6 billion. That would be up from the $65.7 billion they reported in the same quarter last year.

And that's important because we've been getting reports from different analysts saying that overall in China, iPhone 15 sales are sluggish. And there's a number of reasons for that-- a resurgent Huawei, which is offering high-end phones at a cheaper price that can rival Apple, as well as the slower economic outlook in China itself. So there's a lot of kind of rumblings there. There's also some issues with the Mac and iPad line.

As far as Meta goes, we're looking at earnings per share of $5.05 on revenue of $39 billion. The big number there that we're looking at is advertising revenue. That's expected to be $37.8 billion in the quarter up from $31.3 billion.

Advertising has really rebounded from Meta over the past few quarters. They seem to have figured out how to get around Apple's app transparency tracking or app tracking transparency. That really put a dent in their advertising, as well as the interest rate issues that we had seen where advertisers had pulled back.

And then as far as Amazon goes, we're looking at just an EPS of $1.4 on revenue of $166 billion. And of course, the big item we're going to be looking at here is AWS, Amazon Web Services, with expected revenue of $24.2 billion. The generative AI, general AI conversation that we're seeing really does feed into cloud services like AWS.

If you look at what Microsoft had announced during its earnings, its Azure and general cloud services got a jump from AI. They said the intelligent cloud segment, which includes Azure, had a 6% revenue bump from AI. That was up from 3% in the prior quarter. So you're seeing AI take hold for them. We'll have to see now if generative AI and the spending that Amazon has done on its own chips, inferencing things along those lines, start to pay off for AWS.

RACHELLE AKUFFO: So Dan, it's interesting because these are three very different companies. Obviously, Meta based in social media then expanded into devices. Apple, you think devices, software. And then you have Amazon, a bit of consumer, a bit of everything. How fair is it to stack them up against each other?

DAN HOWLEY: I think there's competing services across the mall. Advertising is a big piece of each of those three companies. You might not think of it with Apple, but they generate a lot of advertising revenue. Meta, they're chiefly advertising.

And Amazon's advertising is huge now. It's a mega part of what they have to offer. And then there's other pieces where they compete with each other. Obviously, Meta and Apple are now going head to head starting tomorrow with the launch of the Vision Pro headset.

For Meta, that could be a good thing while Apple is getting all the fanfare because of the headset. It's interesting. It's a new Apple product that's generally going to generate a lot of buzz. It's $3,500, $3,499.

A lot of people aren't going be able to afford that. And some analysts are expecting perhaps a knock on effect on Meta's headsets, the Quest 3, which is significantly cheaper, but offers an AR/VR experience like Apple's. It's not as good. The technology isn't nearly what Apple has to offer, but people can get a general sense of what AR and VR has to offer.

I think the key thing for both of these companies when it comes to these devices is keeping people hooked. We've seen that Meta has had a problem with that, with some executives saying that people six months out don't necessarily stick around. And so for Apple, that's going to be a big deal. And then for Meta, if they do get that knock on effect, that's going to be a big deal.

And obviously, generative AI is playing a part across the entire industry, Amazon being a big part. Meta is looking to get general artificial intelligence out, that's what Mark Zuckerberg said spending billions of dollars on NVIDIA AI chips. And Apple is reportedly expected to get into the generative AI game for consumers in the next version of iOS.

So they're working on that in the background. There's been reports of that for some time now. So they really do compete across a number of industries. It just feels like they're so different because of what the companies really are when you look at them as a monolith.

RACHELLE AKUFFO: No, you raise a fair point there. I appreciate that breakdown, our very own Dan Howley.