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Towering Titans of Tech: Stellar Tech Earnings This Week so far, the Bar is high for Amazon and Apple

Apr 25, 2019

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  • After an onslaught of impressive quarterly releases from major US tech companies this week, the spotlight will move to earnings from Amazon (AMZN) and Apple (AAPL), and investor expectations will undoubtedly be high. In light of this, let’s take a bit of a deeper dive into the financials results from US tech companies that reported this week so we can get an idea of what is driving strong tech earnings this season and what investors will be looking for when the two aforementioned tech giants report quarterly results.  
     
  • Twitter (TWTR) kicked off the symbolic start to US tech earnings season when they reported their quarterly financials pre-market on 4/23/2019 that sent the stock price soaring by 15.66% in intraday trading.
     
  • Analysts that follow Twitter mainly praised the social media company’s daily average user growth (DAU), which grew to 134 million from 126 million in the fourth quarter -- analysts had expected just 128.4 million DAUs. Twitter also reported q/q growth in Monthly Active Users (MAUs) for the first time since early 2018. Twitter also reported top-line revenue that topped analyst estimates.
     
  • EBay (EBAY) followed Twitter’s lead when the company announced first quarter financials results post-market on 4/23/2019 that sent the stock price higher by 5.04% in the next day of trading.
     
  • Highlighting EBay’s financials release was its quarterly revenue, which increased to $2.64 billion and topped analyst estimates for $2.58 billion. EBay’s revenue growth, which came above guidance of between $2.55 billion and $2.60 billion, provided to analysts that the company’s increased spending on advertising and its new payments business could indeed yield higher sales. As a result of its first quarter success, EBay hiked its revenue and profit guidance to the high-end of analyst projections.
     
  • Strong results from tech companies continued on Wednesday when Microsoft (MSFT) reported quarter financials that sent the stock price higher by roughly 4% intraday in Thursday trading, leading Microsoft to retake the crown as the world’s largest company by total market capitalization.
     
  • Analysts primarily hailed top-line growth in Microsoft’s cloud computing business, which rose 73% in the quarter. Although slower than the 76% generated by Microsoft’s cloud computing business in the prior quarter, the expanding segment still drove Microsoft’s revenue of $30.6 billion to top analyst projections of $29.9 billion. Microsoft’s EPS of $1.14/share also came significantly above consensus for earnings of just $1.00/share.
     
  • Facebook (FB) also reported quarterly financials post-market on Wednesday that were strong, sending the price higher by about 6% in intraday trading on Thursday.
     
  • Facebook’s sales jumped by a robust 26% in the first quarter while its MAUs of 2.7 billion topped Wall Street estimates. The caveat to Facebook’s earnings was a $3 billion charge set aside for legal expenses related to an inquiry from the US FTC -- excluding the charge, Facebook’s EPS of $1.89 came largely above analyst expectations for earnings of $1.62/share.
     
  • Amazon (AMZN) will report their first quarter financial results post-market on Thursday. The focal point of Amazon’s financials results will be it’s spending after the company hinted last quarter that it would like spending on investments in data centers and warehouses through the course of 2019.
     
  • Apple (AAPL) will head into its quarterly earnings conference call freed of the burden of its legal dispute with Qualcomm (QCOM) for the first time since the first quarter of 2017. Analysts will be critical of Apple’s iPhone sales, which have been trending lower amid increased competition from smartphone makers like Huawei and Xiaomi. Analysts will also search for clues that offer clarity on the company’s content services set to be released in 2019 that seeks to capitalize on the 900 billion-strong iPhone user base.

 

 

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