The US earnings calendar is entering a blockbuster day on Thursday, with the majority of the FAANG set of tech giants scheduled to release quarterly earnings.
Those reporting comprise phone and computer giant Apple Inc (NASDAQ:AAPL), Google parent Alphabet Inc (NASDAQ:AAPL), e-commerce titan Amazon Inc (NASDAQ:AMZN) and social media network Facebook Inc (NASDAQ:FB).
Apple’s results will be one of the most closely watched following the announcement of its new iPhone 12 range of smartphones as well as a number of other new products.
On October 13, the company announced four new devices, all of which incorporate 5G mobile internet in a first for the firm, however it was also said that none of the phones will ship with headphones or a power adaptor, ostensibly to reduce the carbon footprint.
The mid-range model, named simply the iPhone 12, will be priced from £799 in the UK and US$799 in the US and will be available from October 23.
Other products making their first appearance at the launch event included the HomePod mini, a smaller version of Apple’s HomePod smart speaker, which will be priced at £99 in the UK and US$99 in the US and will be shipping on November 16.
Meanwhile, investors will also be keeping an eye on the firm’s services revenues, which include its Apple TV+ streaming service through which it is hoping to go toe-to-toe with rival services set up by Amazon, Netflix Inc (NASDAQ:NFLX) and Walt Disney Co (NYSE:DIS).
There is generally a positive sentiment around the firm even though the market is expecting (with wide consensus) a drop in quarterly earnings.
“The shares may not have quite recaptured the closing all-time high of $134.18 achieved on 1 September (straight after the 4-for-1 stock split) but they are still up by more than 60% in 2020, so expectations are running hot for Apple,” UK stockbroker AJ Bell said in a note.
Like its tech giant peers, Alphabet continues to be a major beneficiary amidst the increased digitalisation of the workplace and social space as a result of the COVID-19 pandemic – albeit, it has somewhat lagged the likes of Amazon and Facebook.
In July, Alphabet managed to meet Wall Street expectations for its second quarter with a net income of US$6.96bn, down from US$9.95bn a year ago, while revenues fell to US$31.6bn from US$31.7bn.
The number followed a dip in advertising revenues, which dropped by US$2.6bn year-on-year, although sales from its Google Cloud and YouTube businesses grew 43% to US$3bn and 6% to US$3.8bn respectively.
Scrutiny over policy and privacy, meanwhile, remain consistent discussion points around the search engine business – the most recent and possibly significant of late came earlier this month as Google’s search business was hit with an anti-trust lawsuit.
Google has been accused of abusing its market position and maintaining an illegal monopoly over internet searches by the US Department of Justice. Sources in the Justice Department quoted by the Wall Street Journal said that the lawsuit will also challenge how Google’s search engine is embedded on mobile phones running the Android operating system.
The US move follows a step-up in actions against the major tech firms by the European Union and comes a year after the DoJ and Federal Trade Commission started an investigation into the combined power of Google, Amazon.com, Apple and Facebook.
The EU has already fined Google more than US$9bn in three different actions related to blocking access to advertisers and Android.
There will naturally be plenty of attention on such matters as Alphabet announces its quarterly numbers.
As COVID-19 has driven more and more retail transactions online it’s no surprise that the world’s largest e-commerce business, Amazon is going from strength to strength.
Most recently quarterly trading, reported in July, revealed an 89.5% rise in operating profit which amounted to US$5.8bn on revenue of US$88.9bn, which was marked 40% higher. Amazon generated some US$13.1bn of free cash flow.
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At that time, it guided for US$87bn to US$93bn of net sales for the next quarter.
Investors will see just how strongly Amazon fared through the ‘new normal’ and will keenly eye at the online seller’s outlook for the holiday period ahead, as well as any numbers from its recent ‘Prime Day’ sales.
Back in July, Facebook Inc (NASDAQ:FB) topped Wall Street expectations for its second quarter and investors will be hoping for more of the same in its new figures.
Policy, privacy, advertising and political influence are naturally still hot topics around the social network, especially in the days and weeks running up to the Presidential Election on November 3.
The firm and its boss Mark Zuckerberg are also finding themselves back under the glare of public scrutiny after appearing in front of the US Senate Commerce Committee on Wednesday alongside Google and Twitter as debate rages in America about the future of the controversial Section 230, a law that designates that the websites are not responsible for content published on their platforms, protecting them from legal liability.
While the hearing revealed that Zuckerberg was in favour of “updating” the rules if done appropriately, Democrat politicians accused Republican representatives of using the hearing to criticise the tech firms for supposedly censoring conservative political opinions, particularly those of president Donald Trump, who tweeted for the repeal of Section 230 during the hearing.
In pre-market trading in New York on Thursday, shares in Apple were up 1.5% at US$112.8 while Alphabet rose 1.2% to US$1,529, Amazon increased 1.2% to US$3,201 and Facebook climbed 3.2% to US$276.