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What future for US technology stocks? The coming weeks will tell, while eight of the most dominant technology companies publish results.
Microsoft, Alphabet (parent of Google), Amazon, Snap Inc. (Snapchat), Twitter, Facebook, Apple and Spotify are all expected to publish quarterly results by early November. Four of them announced the same day.
The results will come after a difficult month for technology companies. A little over two weeks ago, the worst drop in the Dow Jones average in eight months was mainly due to the sharp drop in technology stocks, in the image of Nasdaq. On Wednesday, the best performing stocks of the past year, among which the so-called Faang companies: Facebook, Apple, Amazon, Netflix and Google, suffered one of the biggest losses. Amazon was down 6.2% and Netflix 8.4%.
Several factors contributed to the decline, the most important concerns being trade tensions between the United States and China and rising interest rates. Technology companies tend to be heavily indebted and may therefore be vulnerable to rising interest rates. EU tax on technology companies is also putting pressure on them.
The first to report on Wednesday will be Microsoft, which will release its first quarter results. Attention will be focused on the growth potential of the company's Azure cloud service. The platform has recently been used by several governments.
Then "Super Thursday" will see Alphabet, Amazon, Snap Inc. and Twitter reporting on the same day. For Alphabet, Hargreaves Lansdown's analysis highlights the recent € 4.3 billion fine imposed by the EU on Google, while forecasting revenue growth. Moreover, the company has invested heavily in areas such as autonomous cars and cloud computing.
According to analysts, Amazon should have recorded a strong growth in its turnover, services such as Prime and Alexa progressing more and more, as the division of Web services of the company. Snap Inc., parent of the Snapchat social media app, will also release its third quarter results. Investors saw the light earlier this month when CEO Evan Spiegel said he hoped the company would make a profit next year.
Finally, on Thursday, Twitter will make an announcement for the third quarter. In July, his shares fell more than 20% after recording a drop of one million users as a result of his action to remove fictitious and offensive accounts. At the time, the social media platform had told investors to expect a drop in the number of users while it was acting to block fake accounts.
One of the most anticipated results will be that of Facebook: its third quarter results will be published on October 30th. During the summer, the company said revenue growth would continue to slow in the second half of this year. Daily and monthly active users on the site fell for the first time in the second quarter of this year.
When Apple reports November 1, it will be important to determine whether the high price of iPhones has affected handset demand. Analysts at Hargreaves Lansdown say they expect a solid result, but warn that a slowdown of the first company worth $ 1 million in the US market would not be well captured in the markets.
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