Amazon, Alphabet, Facebook Earnings Will Make or Break Tech’s Bull Run
After a bumper start to 2017, the three biggest internet companies face their biggest test of the year: second quarter earnings. This week, Alphabet Inc (GOOG) all report second-quarter earnings, and there is pressure for the numbers to back up stock performance. With the S&P 500 tech index now above the dotcom bubblehighs, sentiment among tech investors has never been higher, putting more pressure on this week’s numbers.
Alphabet, the parent company of Google, kicks off the week reporting second-quarter earnings after the bell Monday. According to FactSet, analysts are expecting Alphabet to report earnings per share (EPS) of $ 8.36 on sales of $ 20.96 billion. Shares in Alphabet have climbed 24 percent year-to-date, and while many continue to see further upside for the internet giant, with a price-to-earnings (P/E) ratio of 33.6, well above the industry average, any disappointment could spark a sell-off. (See also: Goldman Sachs: 5 Trends to Watch in 2Q Earnings.)
Sell-offs after earnings are familiar to Facebook whose stock has fallen the day after its last three earnings calls. However, the sell-offs have become short lived. Year-to-date the Menlo Park-based social media conglomerate is higher by 40 percent, making an all-time high of $ 165 a share last week. According to FactSet, Facebook is expected to report full year EPS of $ 4.87 per share. As social media platforms continue to shift to video, investors will be tuning in for updates on Facebook Live data. “Over the past year, daily watch time for Facebook Live broadcasts has grown by more than four times,” Mark Zuckerberg, CEO and founder of Facebook said after its first-quarter earnings.
Amazon, arguably the biggest story among tech firms in 2017, rounds out the week, reporting earnings after the bell Thursday. Highlighted by its acquisition of Whole Foods, Amazon has added 34 percent to investors pockets in 2017 and taken CEO Jeff Bezos to number two on the list of worlds richest people. Amazon is expected to report quarterly EPS of $ 1.40 on sales of $ 37.2 billion, according to FactSet.
With a combined market cap of $ 1.65 trillion, the three internet giants highlight what will be the biggest week of the second quarter earnings calendar. All three have made double digit gains in 2017 and remain high on investors Buy lists. However, with valuations at such stretched levels, the argument could be made that the risk this time around is to the downside.
