Tech stocks get ready for a rocky road ahead
BIG TECH braces itself for another testing earnings season, as the biggest names in Silicon Valley post their quarterly figures this week.
Kicking off the tumble last Friday, Snapchat posted a rocky quarter, citing squeezed ad spend and ongoing macroeconomic uncertainty as the main driver.
Not only has Snapchat’s parent firm lost a quarter of its value since then, but it has also dragged its tech rivals alongside it.
Head of investment at interactive investor Victoria Scholar told City PM that this “doesn’t bode well” for Facebook’s owner Meta, Google’s parent firm Alphabet, Apple and Amazon.
While she noted that Snap was “considerably more fragile” than the likes of Meta, which owns WhatsApp and Instagram, the sector has fallen out of favour among investors, with the tech-laden Nasdaq down by more than 30 per cent in the year to date.
Scholar added that the US dollar strength is also likely to be another major headwind that firms must grapple with, particularly when it comes to the heavy international focus for the biggest players.
Indeed although Amazon is expected to deliver mid double digit revenue growth this week, Hargreaves Lansdown analyst Matt Britzman reckons that this will prove tricky to deliver – especially after the e-commerce giant put out a “warning signal” this month of an additional Prime Day for discount items, attempting to lure in thrifty shoppers.
However, tech analyst at PP Foresight Paolo Pescatore backs Apple to lead the way, explaining to City PM that it “typically sets the tone and the benchmark” for its Big Tech peers. It is also nursing relatively moderate year-to-date losses compared to counterparts like Amazon and Meta.
Scholar backed that Apple was likely to see the latest iPhone boost profitability, which will only get better as we head into the Christmas period.
Microsoft and Alphabet will post their results late tomorrow, Meta on Wednesday and Amazon and Apple on Thursday.