Big Tech results move center stage after Congressional bruising


By Sagarika Jaisinghani and Neha Malara

Four of the United States’ big tech firms, accounting for nearly a fifth of the S&P 500’s total value, report results on Thursday on the heels of a bruising Congressional hearing to look into alleged abuse of their global dominance.

It will be the first time Apple Inc <AAPL.O>, Inc <AMZN.O>, Alphabet Inc <GOOGL.O> and Facebook Inc <FB.O> post financial results on the same day and investors wonder if they can deliver enough to extend a rally that has been central to Wall Street’s recovery since March.

Deemed “stay-at-home” winners as millions of Americans were ordered indoors to contain the COVID-19 pandemic, shares in the big tech players have scaled record highs at a time when the benchmark S&P 500 <.SPX> is up less than 1% on the year.

But with many of Apple’s stores still closed and Amazon’s e-commerce costs soaring, there are question marks, and some on Wall Street argue that stock prices for all four have been bloated beyond rational valuations.

Shares in Microsoft Corp <MSFT.O> fell 4.4% the day after its report last week, despite better-than-expected cloud revenue and its stock is now nearly flat on the month after hitting an all-time high in early July.

“It’s simply momentum,” Leo Kelly, founder of Verdence Capital Advisors, told the Reuters Global Markets Forum, ahead of the results, due after the closing bell.

“When you have stocks looking like they’re moving into a bubble, what you don’t know is how far it will go. You can’t just look at valuation and say ‘it’s going to fall.’ It can go anywhere and the risk is becoming extremely, extremely high.”


Alphabet’s Google and Facebook took particularly sharp jabs on Wednesday from Democrats and Republicans who say they have crippled smaller rivals in the quest for market share, the latest blows in an increasingly threatening regulatory landscape.

Apple’s headache is a slowdown in hardware sales as the world slides into recession, with analysts predicting pandemic disruptions will see revenue fall about 3% and the iPhone business by nearly 14%.

Similarly, Facebook and Google are contending with a collapse in marketing spending. Refinitiv analysts estimate Facebook could generate its slowest revenue growth – around 3% – since it became a public company.

Still, despite the surge in stock prices raising the specter of another tech bubble – Amazon is up 64% this year and the others 13%-29% – analysts remain confident about the longer-term growth prospects for the four companies.

“Even the bears will say that these are fantastic companies and they are not going to stop being fantastic,” said Nicholas Colas, co-founder of DataTrek Research.

“The unifying factor is they have the ability to both grow and control their cost structures through the pandemic. That is always a good place to start from when you have a downturn.”

(Reporting by Sagarika Jaisinghani and Neha Malara in Bengaluru; additional reporting by Lisa Pauline Mattackal in Bengaluru and Noel Randewich in San Francisco; Editing by Patrick Graham, Bernard Orr)

- Advertisement -

Add your comment(s)



Harris’ Indian heritage could boost Biden with Asian-American voters

By Joseph Ax Joe Biden's presidential campaign plans to step up engagement with Asian-American voters this fall and is betting running mate Kamala Harris' experience...

Special report: A collapsing economy and a family feud pile pressure on Syria’s Assad

By Suleiman Al-Khalidi, Maha El Dahan, Tom Perry and Michael Georgy BEIRUT/AMMAN/DUBAI - In May, Syrian tycoon Rami Makhlouf, a cousin and long-time ally of...

Spice is right as Indonesian startups eye value in vanilla

By Fransiska Nangoy and Bernadette Christina JAKARTA - Indonesian Sofa Arbiyanto had a manufacturing job in South Korea two years ago when he learned about...

How a Texas shale supplier’s founders made fortunes as the firm failed

By Liz Hampton On July 7, the board of directors at Texas fracking sand supplier Hi-Crush granted nearly $3 million in bonuses to four top...

Twitter to expand censorship rules against misinformation on mail-in ballots & early voting

By Kanishka Singh Twitter said late on Wednesday it plans to expand its rules censoring misinformation regarding mail-in ballots and early voting in the U.S....