Big Tech earnings season is now in full swing and investors are hoping names like Meta, Amazon and Alphabet will buck the trend of disappointing third quarter results from their Wall Street counterparts.
Google owner Alphabet is due to report on Tuesday after the bell, followed by Facebook parent company Meta on Wednesday and Amazon on Thursday, along with Apple Inc (NASDAQ:AAPL).
In a note to investors, broker Canaccord was optimistic about Alphabet’s earnings.
READ: Alphabet’s strong cash position puts Google parent on firm third-quarter footing
“What appears to be another solid quarter for travel, along with the utility-like nature of search, likely contributed to another strong quarter, and management may discuss the new Performance Max solution, which is gaining traction with advertisers,” analysts wrote.
“YouTube has likely been impacted by the ongoing pullback in brand spend on top of challenging comps, but should benefit from political advertising spend ahead of the midterm elections. Investors will likely be looking for commentary on Shorts, including an update on engagement and early monetization efforts.”
Canaccord is expecting Alphabet to report nearly $71.5 million in revenue and $20.3 million in adjusted EBITDA, both of which are ahead of consensus Street estimates.
Meta expected to report mixed results
Meanwhile, Meta is likely to report another quarter of mixed results, according to Canaccord, thanks to ongoing macro headwinds, the lingering impact from privacy changes, and a mix shift towards lower-monetizing Reels.
“While Snap's recent results portend continued weakness in ad spend, we suspect some of that softness was company-specific and believe marketers tend to shift budgets to more established platforms in times of economic uncertainty,” analysts wrote.
“Meta also should benefit from accelerating political ad spend and Apple's latest iteration of SKAN, which is in the process of being rolled out, and could be a tailwind for the ad business. Management may also provide an update on its efforts to stimulate Reels content, the recent launch of its Quest Pro VR headset, and the possibility of additional downsizing and cost reductions.”
For its 3Q, Canaccord is expecting around $27.4 million in revenue and $10.9 million adjusted EBITDA, both in line with consensus estimates.
'Solid' outlook for Amazon
As for Amazon, Canaccord is expecting “solid” 3Q results. However, the eCommerce giant is not immune to the impact of weakened consumer spending, they warned.
“While Amazon noted in late July that its core eCommerce business had yet to see a material impact from macro headwinds, consumer spending has softened over recent months, and investors will be looking for further discussion of the macro backdrop and the company's positioning ahead of the holiday season,” Canaccord analysts wrote.
“3Q results will likely be solid, aided in part by a strong Prime Day, and management may also discuss the Thursday Night Football broadcast, recent developments for AWS, and ongoing progress within the company's rapidly expanding advertising business.”
Canaccord is anticipating 3Q revenue of nearly $128 million, in line with consensus, and adjusted EBITDA of $2.6 million, which is slightly below Street consensus.
Canaccord has 'Buy' ratings on all three stocks.
Contact Angela at angela@proactiveinvestors.com
Follow her on Twitter @AHarmantas