Investors have been waiting for this one: the quarterly results of tech companies! However, this quarter could see a disruption to the rapid growth we’ve seen lately. With this in mind, let’s take a closer look at the main tech stocks in focus this week.
Battling a global chip shortage
Tech companies have outperformed the rest of the market during the health crisis, but now they face new challenges: global supply chain issues and a shortage of microchips. Analysts are therefore cautious. They predict that even the most successful companies could suffer and lose a big chunk of profits in the process.
Overall, tech companies could post 29% year-on-year profit growth for the third quarter, according to a FactSet study. This figure would be a slowdown from the previous quarter, when profits climbed 48%.
Should tech companies be worried?
Supply chain problems could hit Amazon hard. The company reports its figures on Thursday, October 28th and Wall Street expects revenue to grow by 16% year-on-year, which is a little disappointing. Earnings-per-share is forecast to drop 27% on last year. Amazon is hoping to expand its cloud activities which could help overcome this slump.
Facebook could also take a hit because it has a large e-commerce marketplace. Indeed, Facebook enjoyed an explosion in spending on its e-commerce platform during the pandemic. Now, growth is expected to be more moderate. We’ll find out on Monday October 25th when Mark Zuckerberg’s company reports earnings.
This problem won’t affect all technology companies. Those that focus on cloud products or online services could lead the pack. For example, Google (Alphabet) could see earnings-per-share rise by 92% year-over-year. Find out if Google can hit these high expectations on Tuesday October 26th.
Last of all, investors will have their eyes on Apple, which recently revealed a range of new products. Check out our detailed analysis on Apple’s upcoming earnings results which will be revealed on Thursday October 29th.
The ETF to watch
Most of the large US tech companies are listed on the Nasdaq 100 index. Keep your eye on the ETF that replicates this index over the next week: the Nasdaq 100 Index ETF (iShares).
What about the tech sector in Europe?
When we think about tech stocks, we usually think about the big names in Silicon Valley. However, we shouldn’t forget about the European tech companies!
On Monday October 25th, check out the results of Sword Group – a Luxembourg-based digital services company. Next up is Swedish music streaming giant Spotify on Wednesday October 27th. After a record year, Spotify is now hoping its podcast business will bring in new revenue to the business. Finally, on the same day, French company Alten will release its figures, with an estimated net profit growth of 42% year-on-year.
Your ultimate guide to earnings season
You might have noticed a few financial terms in this article. If you’d like to know more about the financial language used during earnings season, we wrote this guide for you to better understand what’s going on.
Economic and results calendar
Tuesday – Industrial profits in China (September). Quarterly figures from Alphabet, S&P Global, General Electric, Twitter, Orange, Microsoft, Worldline, ASM, Thales, Bureau Veritas, Nexity, BE Semiconductor, Casino.
Wednesday – GfK Consumer Confidence Index in Germany (November). Unemployment rate in France (September). Weekly stocks of oil in the United States. Quarterly figures from Boeing, McDonald’s, Sony, BASF, Ford, Santander, Heineken, eBay, Kraft Heinz, Spotify, Deutsche Bank, Puma, Sodexo, Upwork, Alten, Synergie, Schneider Electric.
Thursday – Unemployment rate in Germany (September) and Spain (October). Economic sentiment in the eurozone (October). ECB decision on interest rates. Inflation rate in Germany (October). Quarterly figures from Apple, Amazon, Mastercard, Comcast, Merck & Co, Shell, Volkswagen, Sanofi, Starbucks, Caterpillar, Airbus, Kering, Dassault, Baidu, STMicroelectronics, Capgemini, Beiersdorf, Ubisoft, Lagardère, Coface.
Friday – Inflation rate in France and the eurozone (October). Estimated Q3 GDP in France, Spain and Germany. Quarterly figures from Alibaba, Berkshire Hathaway, Daimler, BNP Paribas, Essilor Luxottica, Chevron, Exxon Mobil.
We’ll be back next with another edition of the BUX Breakdown. In the meantime, have a great week on the markets!
The BUX Breakdown was written by Clémentine Pougnet.
All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.