Wall Street's second-quarter earnings season will accelerate in the coming weeks, with investors bracing for the worst reporting season in over a decade amid the effects of the ongoing corona virus crisis.
Be, with a decrease of 154%, followed by a decrease of 114%. By comparison, corporate earnings are expected to fall by only 8%.
In an unprecedented development, only five companies – Apple, Microsoft, Amazon.com, Alphabet and Facebook – are now responsible for total market capitalization. This increases the risk for the broader market, because it increases the importance of the profit performance of a smaller group of companies.
Overall, 74% of global fund managers are long-tech stocks, making it the most overcrowded trading in the multi-year history of the Bank of America Merrill Fund Manager survey.
Top 5 companies% of market capitalization
The result: Profit from the five names below could make or break the current market rally.
1. Microsoft reports July 22 after the markets close
Estimated earnings per share in the second quarter: + 1.4% annually
Estimated sales growth in the second quarter: + 8% year-on-year
Microsoft (NASDAQ 🙂 performed well during the coronavirus crisis, rising 51% over the past four months, and easily gaining 38% of the S&P over the same time frame. The shares, which reached a record high of $ 216.35 on July 9, reached $ 208.35 on Tuesday. With a market capitalization of $ 1.58 trillion, Microsoft is the second most valuable company in the world.
The technology giant from Redmond, Washington, has seen massive demand for its cloud-based services as more companies have spent a lot to upgrade their online services in response to the coronavirus pandemic and resulting shifts in consumer behavior away from shopping in the store.
Microsoft will report its fiscal fourth quarter results after the closing clock on Wednesday, July 22. According to consensus estimates, the software giant should book a profit of $ 1.39 per share, down from $ 1.37 in the same period last year. Sales are expected to total $ 36.42 billion, up 8% from $ 33.72 billion in the year-ago period.
Another major metric investor will focus on growth in the Intelligent Cloud segment, which includes Azure, GitHub, SQL Server, Windows Server and other enterprise services. Microsoft's commercial cloud revenue was up 39% year over year to $ 13.3 billion in the most recent quarter, while Azure services revenue was up 59%.
2. Amazon reports July 23 after closing the markets
Q2 EPS growth estimate: -73.7% year-on-year
Estimated sales growth Q2: + 27.4% year-on-year
Amazon.com (NASDAQ 🙂 has survived the continued coronavirus-led stock market volatility far better than the broader market and has risen nearly 65% ??since late March. The stock, which hit a record high of $ 3,344 on Monday, closed at $ 3,084.00 last night. With a valuation of $ 1.51 trillion, Amazon is the third most valuable company listed on the US stock exchange.
The Seattle, Washington-based company may have been one of the foremost winners of the corona virus crisis, benefiting from increased online shopping during the crisis.
Amazon then reports gains after the markets close on Thursday, July 23. Consensus calls for revenues of $ 80.8 billion in the second quarter, which would indicate annual growth of 27.4%, reflecting strength in both e-commerce and cloud computing. However, earnings are expected to fall nearly 74% from to $ 1.37 per share, due to heavy spending on worker safety measures during the pandemic and upgrades to delivery logistics.
In addition to EPS and earnings, investors will also focus on the company's thriving cloud computing business to see if it can sustain its scorching growth rate. Amazon Web Services revenues increased to $ 10.22 billion in the first three months of the year, bringing AWS sales to $ 10 billion in the first quarter.
3. Facebook reports July 29 after closing the markets
Q2 EPS growth estimate: + 50.5% year-on-year
Estimated sales growth Q2: + 1.3% year-on-year
Another megacap technology company that has blossomed during the coronavirus crisis is Facebook (NASDAQ :), with an inventory of approximately 60% in the past four months. On Monday the stock reached a record high of $ 250.05 and ended at $ 239.73 yesterday. At the current level, Facebook is valued at $ 681 billion, making it the smallest of the five major technology companies and the only one with a market capitalization of less than $ 1 trillion.
The Menlo Park, California-based social media giant is widely regarded as one of the biggest winners of the COVID-19 crisis, as government-imposed measures to stay at home and take measures at a distance are more important than ever to stay virtually connected with friends and family.
Not surprisingly, all three platforms, which besides Facebook also include Instagram and WhatsApp, have a growing audience, now with the social network counting 2.6 billion members.
Facebook, which ranks in the middle of one of 1,000 advertisers for its treatment of hate speech and misinformation, reports its closing profit on Wednesday, July 29. Consensus calls for second quarter earnings per share to the same period a year earlier to $ 1.37, while sales are expected to increase to $ 17.1 billion from $ 16.89 billion in the year-ago period.
Beyond the top-and-bottom line numbers, investors will be waiting to hear more about the boycott's impact on ad revenues for the rest of 2020 and beyond.
4. Apple reports July 30 after closing the markets
Q2 EPS growth estimate: -7.8% annually
Estimated sales growth Q2: -5.3% year-on-year
Anyone looking at the stock market probably knows that the Apple (NASDAQ 🙂 shares have been gaining momentum in recent months. The technology and consumer conglomerate has seen its shares rise by around 70% since late March, even as the broader market experienced strong volatility.
The stock, which reached a record high of $ 399.82 on Monday, ended. for $ 388.23 on Tuesday. It has a market capitalization of $ 1.68 trillion, making it the most valuable company trading on the US stock exchange.
The Gigantico-based tech giant from Cupertino, California, reports earnings after the market closes on Thursday, July 30. Consensus calls for earnings per share of $ 2.01 for the fiscal third quarter, up from earnings per share of $ 2.18 in the same period last year.
Revenue is expected to decline by 5.3% from the same period a year earlier to $ 50.92 billion, with sales likely to be heavily impacted by store closings and economic closings across most of the US and Europe.
While Apple no longer reports individual sales of its product range, many will be eager to hear if the company will provide insight into the initial impact of the iPhone SE, which was announced in mid-April. Any updates on the growth in the wearables segment, including AirPods and Apple Watch, will also be noticed.
5. Google reports July 30 after the markets are closed
Q2 EPS Estimated Growth: -44.4% YoY
Estimated sales growth in the second quarter: -4.7% year-on-year
Google Mother Alphabet (NASDAQ 🙂 has been benefiting from the corona virus pandemic since the early days, mainly due to an increasing demand for its cloud-related services. However, concerns about reduced ad spend have suppressed the search giant's earnings.
It is clear that Google stock, which hit a record high of $ 1,576.16 on Monday and closed at $ 1,520.86 last night, is lagging that of the other four names mentioned above, with a stock of "only" 42% in the past four months. It has a market capitalization of $ 1.04 trillion, making it the fourth most valuable company listed on the US Stock Exchange.
Google is expected to report its second quarter financial results after the US market closed on Thursday, July 30. Consensus calls for earnings of $ 7.90 per share, a sharp decline from earnings per share of $ 14.21 in the same period last year. Revenue is expected to reach $ 37.11 billion, or $ 38.94 billion in the year-ago quarter.
The main question among investors is how severely the coronavirus crisis and economic shutdowns have negatively impacted the company's advertising revenues. company. Google's ad revenues increased to $ 33.76 billion in the previous quarter, representing 82% of the company's total quarterly revenues.
One segment to prepare for blockbuster, however, is Alphabet's Google Cloud Platform, where sales skyrocketed 52% in the most recent quarter to $ 2.78 billion.
