Q3 earnings season 'critical test' for big tech - Saxo Bank
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Q3 EARNINGS SEASON 'CRITICAL TEST' FOR BIG TECH - SAXO BANK
With so much to focus on - budgets, elections and rate cuts spring to mind - megacap earnings are perhaps receiving less attention than usual.
But they're coming; five of them this week alone.
Saxo’s head of FX strategy Charu Chanana says this week's "Magnificent 7" results could be a critical test for big tech shares, most of which have failed to reclaim their July highs, though they're still trading above historical norms and the broader market.
Apple AAPL.O, Alphabet GOOGL.O, Amazon AMZN.O, Meta META.O, and Microsoft MSFT.O all report earnings in the next few days.
Saxo says investors will be looking out for updates on core businesses such as advertising and cloud services, as well as AI spending and any tangible returns from that.
It is concern over the latter driving a narrowing gap between big tech and the rest of the market in recent months.
"While the transformative potential of AI is widely acknowledged, investors are now questioning the timing and scale of returns from these hefty investments," writes Chanana.
Crunching the numbers, it's no wonder. Saxo says Microsoft, Alphabet, Amazon, and Meta have collectively increased their capital expenditures in Q3, pouring $56 billion—a 52% year-over-year increase—into areas like AI.
For all the worry, this spending is an "unequivocal positive" for Nvidia NVDA.O.
"As long as Big Tech remains committed to advancing their AI infrastructure, Nvidia stands to benefit as the go-to supplier, securing its growth trajectory even if some tech giants face profitability pressures," says Chanana.
Here's a big tech earnings schedule to add to your calendar and Saxo's revenue estimate for each.
-Alphabet Oct 29 post-market close ($86.44 billion (vs. $76.69 bn in Q3 2023)
-Meta Oct 30 post-market close ($40.26 bn (vs. $36.15 bn in Q3 2023)
-Microsoft Oct 30 post-market close ($64.52 bn ($56.52 bn in Q1 FY2024)
-Apple Oct 31 post-market close ($94.31 bn (vs. $89.50 bn in Q4 FY2023)
-Amazon Oct 31 post-market close ($157.29 bn (vs. $143.08 bn in Q3 2023)
(Lucy Raitano)
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