Microsoft, Meta, Apple, Amazon and Google owner Alphabet are set to report quarterly earnings this week amid a bullish streak for the tech mega-caps in the S&P 500.
The US index is rallying on confidence in big tech results this year, with Bloomberg predicting the tech stocks to rise 46 per cent in the fourth quarter, slightly behind the previous quarter’s 53 per cent.
Microsoft and Alphabet are kicking off earnings, with results on Tuesday, followed by Apple, Meta and Amazon on Thursday. Investors are eyeing developments in artificial intelligence (AI), regulation, and cloud computing.
Microsoft, with an estimated revenue of $52.94bn for the second quarter, has been at the forefront of AI innovation and got a headstart by backing ChatGPT creator OpenAI.
But “it is not all champagne and caviar for Microsoft,” said Dan Coatsworth, investment analyst at AJ Bell.
Microsoft and OpenAI are facing a legal challenge from the New York Times over alleged data theft. The paper is seeking billions of dollars in damages.
The tech giant is also attracting attention from regulators. In December, the UK’s competition watchdog announced it is inviting comments on the company’s partnership with OpenAI
And last week the Federal Trade Commission (FTC) launched a “market inquiry” into the major AI players, including Alphabet and Amazon who also have partnerships with AI players such as Google Deepmind and Anthropic, respectively.
“Antitrust probes are likely to be a key focus for investors in 2024,” Coatsworth said.
Analysts have forecast revenue of $85.16bn for Alphabet’s fourth quarter versus $76bn the previous year.
Alphabet is “lagging” behind its tech rivals in terms of AI, according Kathleen Brooks, research director at trading platform XTB, although it could be making advances with its Gemini AI model, unveiled late last year.
Meta is also making a big push into AI but “its efforts are yet to bear meaningful fruit,” she added. Meta’s AI ideas include improving user experience with language translation and improved Instagram effects.
Advertising is likely to remain a key source of income for the Facebook owner, despite its warning of lower demand in the final quarter of 2023. Analysts expect Meta’s revenue to be $39bn compared to just over $34bn the previous quarter.
Looking further into 2024, the Metaverse could see a revival if Apple’s new Vision Pro headset impresses when it goes on sale in February for $3,500.
Analysts expect Apple to report $118bn revenue as it faces challenges amid cautious consumer spending and sluggish demand in its key Chinese market. Apple is doing less than the other tech giants in the AI space.
The analyst consensus forecast is $165.86bn in revenue.
Looking further into 2024, the Metaverse could see a revival if Apple’s new Vision Pro headset impresses when it goes on sale in February for $3,500.
Analysts expect Apple to report $118bn revenue as it faces challenges amid cautious consumer spending and sluggish demand in its key Chinese market. Apple is doing less than the other tech giants in the AI space.
Jeff Bezos’s company has been rolling out new versions of AI chips which it said offer enhanced performance and announced plans to invest up to $4 billion in Anthropic, a US company generating AI systems and large language models.
Last quarter Amazon posted strong online sales, success with advertising and its cloud computing division signing more deals. Analysts have forecast $165.86bn in revenue.
Last September it announced a $4bn investment into generative AI company Anthropic as it tries to play catch up with Google.
Coatsworth suggested interest in this might offset potential troubles in Amazon’s cloud computing division as companies increasingly consider IT cost cutting.