This Thursday is set to be a battle of the technology heavyweights, as behemoths Amazon, Alphabet, Snap and Twitter all report their quarterly results.
Both Amazon and Alphabet, the parent company of Google, trounced consensus estimates last quarter, with Amazon truly shaking up the game on Wall Street with earnings per share rising over 1,157 per cent year-on-year in July. But now that the firms have a solid track record of far surpassing expectations, investors could lose faith in the duo if they do not achieve those elephant-sized leaps again.
For Amazon, consensus estimates polled by S&P Global Market Intelligence have predicted revenue to fall at the top end of the company’s guidance at $57.1bn (£43.7bn). Profit before tax is expected at a conservative $1.9bn, although Amazon beat estimates last quarter by 68 per cent to report profits of $2.6bn.
Alphabet, on the other hand, is expected to pull in revenue of $34bn, at a growth rate of 23 per cent growth compared with the same period in 2017. Additionally, the EU’s $5bn antitrust fine is predicted to continue to weigh heavily on the firm’s profits.
Analysis from investment firm Hargreaves Lansdown said it is expecting a showdown between the two firms in the cloud computing sector, as Alphabet strives to push Amazon off the global top spot by plugging more investment into the division. Alphabet said its biggest headcount additions were in its cloud business last quarter, while Amazon’s Web Services has historically proven to be its largest profit engine.
Devices will also prove an interesting battleground, as Amazon chief Jeff Bezos’ Alexa ambitions go head-to-head with Google’s revamped smart home and phone tech updates.
Meanwhile Snap and Twitter are in for a rockier ride, having both disappointed investors at their last earnings call in July. Though Twitter posted its first quarterly profit earlier this year and Snap chief Evan Spiegel reinvigorated shareholders with promises of a profitable 2019 last month, flat-lining user numbers on both social media apps have become causes for concern.
The US-based tech bubble as a whole suffered earlier this month, when a Wall Street slide caused primarily by rising interest rates hit tech stocks the hardest. The so-called FAANGs group, which includes Facebook, Apple, Amazon, Netflix and Google, lost a staggering $172bn in market value in a single day.
Additionally, Microsoft chief executive Satya Nadella is set to prove whether his faith in its cloud business has continued its near-meteoric rise for another quarter.
In its first quarter earnings report on Wednesday night, investors will be watching to see if Microsoft, which currently holds second place for global market share behind Amazon, can top July’s impressive results for its cloud computing division. Its cloud solution Azure posted 90 per cent growth year-on-year last quarter, pushing results for its commercial cloud segment up 53 per cent to $6.9bn.
Consensus estimates collated by S&P Global Market Intelligence have predicted Microsoft’s overall revenue to fall just below the upper range of company guidance of up to $28.1bn, coming in at $27.9bn.
CMC Markets’ chief analyst Michael Hewson said this week’s results will be held as an indicator as to whether Microsoft can achieve the lofty full-year 12 per cent revenue growth target investors are hoping for.