Tech stocks: Meta, Google, Microsoft under pressure going into Q4

Yahoo Finance’s Daniel Howley joins the Live show to discuss the fourth-quarter expectations for tech.

Video transcript

- And let's stay now on the markets here. Bring in Yahoo Finance's tech editor Dan Howley. Dan, of course let's talk about tech stocks because we saw an ugly third quarter for tech. Is there anything that suggests things could get better now that we're in the fourth quarter?

DAN HOWLEY: Eww. No. Probably not. It's looking like we'll start to see some of the issues that we saw, obviously, in the last quarter bleed on into Q4. We're going to get these results coming up for Q3, obviously, in the coming weeks and days. But I just want to point out some of the changes that we've seen for these companies and their stock prices year to date so far.

So we're looking at the likes of, say, Apple, Amazon, Microsoft, Alphabet, Meta. Obviously, they're up today with the broader market. But year to date, Meta down nearly 60%. We look at something like Google, down 32%. Microsoft, Amazon, they're down around 20%. Tesla, they're down around 20% as well. The only standout here that's really beating the S&P 500 year to date barely is Apple, which is down 21%. But the S&P is down 23% year to date.

So not a great look, but still decent, I guess, compared to the rest of the companies. Now, let's just talk about what's going on internally at some of these firms because they're all dealing with different problems. We talked about Apple, how they were cutting back on the expansion of the production of the iPhone 14, though keeping steady with the iPhone 13, which still sold well.

And we've talked about how the average selling price is likely to be higher on the iPhone 14 because they're pushing that Pro model. So that could do well for them as far as sales and revenue goes. We'll have to see when they report. And don't forget the amount of iPhone 14's that are included in their Q3 report isn't very high. It's really the Q4 report that we'll get. And that's around the holiday season.

Microsoft, they're seeing a little bit of pullback as far as the cloud goes, though they did see revenue growth in their prior quarter. We can start to see some of that pullback, though. Ditto for Amazon on their cloud services as well. Nvidia not doing amazing, obviously, as we saw the crypto issues. And they had actually pre-announced that they were going to pull back some of their projections for the prior quarter. So we have to look into the context of their current quarter with that in mind.

And then Meta, they're still, still, still struggling with those issues with Apple and their privacy changes as well as the pullback in general ad spending. So they're really just kind of floating around at this point. We saw Mark Zuckerberg talking about hiring freezes and really kind of not outright layoffs, but pushing people out who they don't think should be staying. So all these different companies are dealing with multiple different things at the same time that are coming from these larger effects from the economy.

- Dan, while we have you, I've keeping a close tab on the gaming space, and particularly Roblox this morning, as there was some more bullish sentiment that entered into the frame here, especially considering what MoffettNathanson is saying and really spelling out how gaming and Roblox particularly could continue to fall. And I bring this up because in the fourth quarter, that's typically a time where gaming stocks, we track them because there's so much of the purchasing that takes place during the holiday season. Is this holiday season expected to be any differently on the gaming side?

DAN HOWLEY: There are some big name games that are coming out. And there are-- obviously, it's discretionary. You have this kind of very expensive consoles that are out there. They're still at the same prices they were at launch. So they're going to cost you a couple hundred dollars. Games-- like I said, there's a couple of big name titles coming out, but nothing that is going to I think drive people crazy across the board. But I do think that we're still dealing with that kind of malaise that as a result of the pullback from the pandemic explosion. So I think that's part of the conversation.

As far as Roblox goes, they're a gaming and metaverse play. Walmart just launched on there for some reason. I don't know who wants to go shopping at Walmart in the metaverse or even explore Walmart in the metaverse. But it's on there if you want to I guess. So there's different brands trying to capitalize on that. And that'll benefit Roblox in the long run. But I think as far as the gaming aspect, we've seen some issues there with online gaming as people have gone back outside following the pandemic.

- I mean, the play here with Walmart you're working on the Roblox roll back in the metaverse, right. I mean, that's what it is, Dan. That's what people are going to go for. We'll see. Dan, I appreciate it. Look, I just spent a lot of time workshopping that in my head to try and come up with it. I'm not on Walmart's marketing team at all. Staying in the world of tech here. Dan, appreciate the time this morning.