U.S. Tech Giants Experience Varied Earnings Season

Introduction

The recent earnings season for the largest U.S. technology companies portrayed a mixed picture. While there was considerable excitement surrounding the advancements in artificial intelligence, concerns about slower consumer spending served as a counterbalance. DataTrek Research suggests that Amazon.com, Meta Platforms, and Alphabet emerged as the strongest performers.

Positive Outlook for Amazon, Meta, and Alphabet

Wall Street analysts responded to the earnings reports by revising their profit forecasts upwards for Amazon (ticker: AMZN), Meta (META), and Alphabet (GOOGL). DataTrek co-founder Jessica Rabe's research note on Friday revealed the positive sentiment towards these companies for both the current and following quarters.

Apple and Microsoft Experience Mixed Revisions

In contrast, Apple (AAPL) and Microsoft (MSFT) witnessed upward revisions in their profit forecasts for the current quarter, but expectations were lowered for the subsequent quarter. As for Tesla (TSLA), its performance forecasts declined for both quarters after its earnings report. Nvidia (NVDA) is yet to report its second-quarter earnings later this month.

Analysts Positive about Amazon's Performance

"Wall Street analysts mostly liked what they saw in these companies' Q2 earnings reports, especially for Amazon which is the standout in terms of improved investor sentiment over the past month," wrote Rabe. The market responded positively to Amazon's earnings, resulting in a surge in its stock as investors celebrated the growth of its cloud-computing business. According to DataTrek, earnings forecasts for the current quarter saw an increase of 45%, with a further 29% increase projected for the next quarter.

Market Response and Outlook

While Amazon observed a 0.2% rise in its stock on Friday, the S&P 500 remained volatile with small gains and losses. Nevertheless, Amazon's stock has experienced a 65% surge this year so far.

Forecasts for Meta and Alphabet saw more modest increases. The market applauded the positive signs in advertising for both companies, as well as their advancements in AI. Rabe concluded her note by stating, "Largely positive earnings momentum after just reporting Q2 results is an encouraging fundamental signal, but further cost-cutting initiatives would be helpful to sustaining this trend."