- Alphabet, Meta Platforms, Microsoft, Amazon, and Apple are all set to report their respective earnings next week.
- ‘FAAMG’ profit and revenue growth, as well as guidance updates will be the next test for the stock market.
- As such, here’s what to watch for when the ‘Big Five’ mega-cap tech companies release their latest financial results.
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The upcoming earnings season is shaping up to be a critical one for the FAAMG group - Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and Apple (NASDAQ:AAPL).
These five mega-cap tech giants, which have driven a large portion of the stock market's gains in the past 12 months, are preparing to release their quarterly results, with all eyes on how they’ve fared amid ongoing macroeconomic uncertainty.
Source: Investing.com
Notably, each of these companies has seen significant upward revisions to their profit and sales estimates in the weeks leading up to their respective reports, according to data from InvestingPro.
Here’s what to expect and the key metrics to watch as each company releases its earnings report.
1. Alphabet
- *Earnings Date: Tuesday, Oct. 29
- *EPS Estimate: $1.85 (+19.3% Y/Y)
- *Revenue Estimate: $86.2B (+12.4% Y/Y)
Alphabet, Google’s parent company, will be the first ‘FAAMG’ company to report earnings when it delivers its latest quarterly results after U.S. markets close on Tuesday, October 29, at 4:00 PM ET.
The focus will be on its core advertising business, which remains the tech giant’s main revenue driver. Investors will be closely watching YouTube's performance as well, especially after changes in its Shorts and advertising strategies.
Another area to monitor is the growth of Google Cloud, which has seen tremendous expansion in recent quarters.
The company has been investing heavily in its cloud business, which includes Google Workspace productivity apps in addition to Google Cloud Platform, as it plays catch up with Amazon Web Services and Microsoft Azure, the top two players in the market.
Source: InvestingPro
Analysts have raised their profit and sales estimates, expecting solid results: of the 32 analysts surveyed, 18 upwardly revised their GOOGL earnings forecast to reflect an increase of almost 12% from their initial expectations.
GOOGL stock - which is up 16.5% year-to-date - ended Thursday’s session at $162.72. It reached an all-time high of $191.75 on July 10.
Source: Investing.com
At current levels, the Mountain View, California-based company has a market cap of $2.01 trillion, making it the fourth most valuable company trading on the U.S. stock exchange.
2. Meta Platforms
- *Earnings Date: Wednesday, Oct. 30
- *EPS Estimate: $5.27 (+20.1% Y/Y)
- *Revenue Estimate: $40.3B (+18% Y/Y)
Meta Platforms, parent of social networks Facebook, Instagram, Threads, and WhatsApp, is projected to release third-quarter earnings on Wednesday, October 30 after the U.S. market closes at 4:05PM ET and it is expected to be one of its most profitable quarters on record.
Most of the focus will be on its advertising revenue and the growth of its Reality Labs division, which is responsible for the company’s virtual and augmented reality projects.
Additionally, investors will be looking at user engagement metrics on platforms like Facebook, Instagram, and WhatsApp, as well as how Meta is navigating privacy policy changes that have affected ad targeting.
Meta has benefited from strong demand for digital advertising, a trend likely to reflect in its top-line growth. Additionally, the company’s efforts to monetize Reels and its push into the Metaverse will be closely scrutinized.
Source: InvestingPro
Analysts have been bullish, with substantial upward revisions to Meta’s earnings per share (EPS) and revenue estimates.
META stock closed at $567.78 yesterday, not far below an October 7 all-time high of $602.95. Shares of the Menlo Park, California-based social media giant have staged an astonishing rally in the year to date and are up 60.4%.
Source: Investing.com
At current levels, Meta has a market cap of $1.44 trillion, making it the sixth most valuable company trading on the U.S. stock market.
3. Microsoft
- *Earnings Date: Wednesday, Oct. 30
- *EPS Estimate: $3.10 (+3.7% Y/Y)
- *Revenue Estimate: $65.5B (+14.2% Y/Y)
Microsoft is set to deliver its fiscal first-quarter earnings and revenue update after the U.S. market closes on Wednesday, October 30 at 4:10PM ET with investors keenly awaiting updates on its cloud computing division, Azure.
Growth in Microsoft’s cloud business has been a dominant driver for the company, and the market will want to see continued momentum here, especially amid fierce competition from Amazon’s AWS and Google Cloud.
The integration of artificial intelligence into Microsoft’s software offerings, such as Office 365 and its cloud services, will also be a focal point, particularly following the company’s high-profile partnership with OpenAI.
Investors will pay attention to any AI-related revenue contributions and the impact of macroeconomic trends on enterprise spending.
Source: InvestingPro
MSFT stock closed at $424.73 last night. Shares of the Redmond, Washington-based software-and-hardware giant - which have gained 13% in 2024 - rose to a record of $468.35 on July 5.
Source: Investing.com
With a market cap of $3.16 trillion, Microsoft is the world’s third-most valuable company.
4. Amazon
- *Earnings Date: Thursday, Oct. 31
- *EPS Estimate: $5.27 (+20.1% Y/Y)
- *Revenue Estimate: $40.3B (+18% Y/Y)
Amazon is slated to release its Q3 financial results on Thursday, October 31 at 4:00 PM ET, and the market is expecting strong numbers, especially from its cloud computing arm, Amazon Web Services (AWS), and its e-commerce business.
Amazon’s AWS is widely considered as the leader in the cloud-computing space, ahead of Microsoft Azure and Google Cloud, and its performance will be crucial to Amazon’s overall results.
The retail giant’s North America and international e-commerce operations will also be under the microscope, particularly as consumers face inflationary pressures.
Analysts will be keen to see how Amazon’s logistics and advertising businesses have fared, as these segments have become increasingly important to the company’s growth.
Source: InvestingPro
AMZN stock closed at $186.38 on Thursday. Shares rose to a record peak of $201.20 on July 8 and are up by 22.7% in 2024.
Source: Investing.com
With a market cap of $1.96 trillion, the Seattle, Washington-based e-commerce and cloud giant is the fifth most valuable company listed on the U.S. stock exchange.
5. Apple
- *Earnings Date: Thursday, Oct. 31
- *EPS Estimate: $1.55 (+6.1% Y/Y)
- *Revenue Estimate: $94.2B (+5.3% Y/Y)
Apple will be the final ‘FAAMG’ stock to report quarterly results when it delivers fiscal fourth-quarter earnings after the market closes at 4:30PM ET on Thursday, October 31.
Analysts expect strong results from the company’s iPhone segment, but challenges in China and the broader consumer electronics market could impact growth.
Apple’s Services segment, which includes revenue from the App Store, Apple Music, and iCloud, is expected to be a major contributor to its earnings. The tech giant has seen strong growth in this area, making it a key focus for investors.
Additionally, Wall Street is looking for signs of whether Apple’s wearables, such as the Apple Watch and AirPods, can maintain their strong growth trajectory.
Source: InvestingPro
An InvestingPro survey of analyst earnings revisions shows that analysts boosted their EPS estimates 20 times over the last 90 days, compared to five downward revisions.
AAPL stock - which has gained 19.8% year-to-date - ended at $230.57 on Thursday, not far from its mid-October all-time high of $237.49.
Source: Investing.com
At current levels, the Cupertino, California-based consumer electronics conglomerate has a market cap of $3.51 trillion, making it the most valuable company in the world.
Final Thoughts
As the FAAMG group of mega cap tech companies prepare to report their quarterly results, expectations are high following significant upward revisions to both profit and sales estimates.
These tech titans are expected to deliver strong performances across their key business segments, driven by innovation, cloud growth, digital advertising, and AI-driven advancements.
Investors should remain cautious, however, as any miss or underperformance could trigger substantial volatility in the broader market given the outsized influence these companies have on major stock indices.
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Disclosure: At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF, and the Invesco QQQ Trust ETF. I am also long on the Technology Select Sector SPDR ETF (NYSE:XLK).
I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies' financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.