It’s been a turbulent month for the tech stocks, to say the least. Between Elon Musk’s apparent takeover of Twitter and a disastrous earnings report from Netflix, investors may be experiencing whiplash.
This week, all eyes will remain on the tech space, as many of the biggest tech companies—including Microsoft, Alphabet, Meta, Apple, and Amazon—are due to announce earnings, and many investors may be on edge waiting to see if the market can get a much-needed shot in the arm, or if more disappointment awaits.
Year-to-date, the S&P 500 is down roughly 11%—almost 7% over the past month—and analysts say more disappointing earnings reports could drag the market further down. If “the various earnings figures come in lower than expected, they will very likely add to the weakness of the market as a whole,” says Julius de Kempenaer, senior technical analyst at StockCharts.com. But even a good week of earnings announcements from tech firms probably won’t ease the market, he says.
If earnings are better than expected, “they might be able to put a temporary pause to the [market’s] decline, but I’m afraid it will not be enough to cause a turnaround,” he says.
This group of companies carries a lot of weight in the market, too. So, if earnings are disappointing, it could signal potential weakness in the rest of the economy. Apple, Amazon, Alphabet, and Microsoft “make up 20% of the weight of S&P 500. Obviously, whichever way they move will have a huge impact on the market,” says Anthony Denier, CEO of trading platform Webull. One big factor? Interest rates, Denier says. “Rising interest rates have been a big factor in the technology [sector’s] decline, as growth stocks don’t typically perform well during times of rising rates.”
Needless to say, this earnings season carries a little more weight than usual. Here are the five Big Tech earnings announcements due this week, plus what to watch for:
Alphabet will report Q1 2022 earnings today, April 26, at 2 p.m. PT. Alphabet, like Microsoft, is looking for growth in its cloud-computing division, Google Cloud, along with Google Workspace. Alphabet’s offerings, also like Microsoft, have benefited from an influx of users due to remote work during the pandemic.
Microsoft is reporting Q3 FY 2022 earnings today at 2:30 p.m. PT. Analysts are watching for growth in Microsoft’s Azure cloud platform, a competitor to Amazon Web Services. Microsoft Teams, the company’s Slack competitor, has also seen big growth since the onset of the pandemic, having accumulated 270 million monthly active users as of January, according to GeekWire—that’s up from 75 million in April 2020.
Meta reports Q1 2022 earnings on Wednesday, April 27, at 2 p.m. PT. Meta, the parent company of both Facebook and Instagram, has faced headwinds of late, as the company has made a push into augmented reality and the burgeoning “metaverse.” Hopes are that Meta will have a brighter earnings day than it did in early February, when its fourth-quarter report showed a slowdown in new users, leading to its shares crashing 26%.
Apple’s Q2 2022 results will be released on Thursday, April 28, at 2 p.m. PT. A big concern for Apple over the past quarter was whether it would be affected by further pandemic lockdowns in China, which could have caused disruptions in production for products like iPhones. Apple, along with some other tech companies, also pulled out of Russia following its invasion of Ukraine, which could also impact the bottom line.
Amazon will hold its Q1 2022 earnings call on Thursday at 2:30 p.m. PT. The online retail behemoth recently drew the ire of Congress and saw workers in one of its warehouses vote to unionize for the first time. Rising prices and ongoing supply chain troubles also have been a thorn in the company’s side, which may play into its earnings, too.