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US Tech Stock Earnings Update (so far)

US tech stocks earnings have been impressive; so impressive that they have managed to just about steal the show from coronavirus fears.

This week Apple, Facebook, Microsoft, Tesla and Amazon reported, in some cases record breaking figures, hitting fresh record highs this week. Here we take a look into the key takeaways from each stock.

Apple Q1 
  • Revenue $91.8 billion vs $88.1 billion exp.
  • EPS $4.99 vs $4.54 exp.
Apple reported revenue and profits significantly higher than forecast, in its best quarter of the year. Revenue, a solid 9% higher was partially driven by iPhone revenues which grew an impressive 8%. Recently, investors have turning more attention towards Apple’s “Other Products” which includes Apple Watch and AirPods. Apple confirmed that demand outstripped supply of these two products during the quarter, boding well for future sales. This category alone achieved $10 billion in sales.
Whilst the potential impact from coronavirus across the supply chain must be factored in, investors are also looking ahead to the roll out of 5G and the first 5G iPhone in September could see iPhone sales jump as customers have a strong reason to upgrade.

Facebook Q4

  • Revenue $21.08 billion vs $21.08 exp.
  • EPS $2.56 vs $2.53 exp.
After hitting an all-time high before releasing its results, Facebook plunged 7% in aftermarket trading following the release of Q4 results. Whilst the tech giant beat on top and bottom lines, rising costs and expenses, which have narrowed operating margin unnerved investors. Expenses rose by 51% to $46.71 billion. Expenses are on the rise as Facebook struggles with numerous regulatory changes. With privacy set to be a key focus for 2029 costs could remain high. Facebook is facing four separate anti-trust focused investigations that were launched over the past year.

Tesla Q4
  • Revenue $7.4 billion vs $6.95 billion exp.
  • EPS $2.14 vs $1.62 exp.
Tesla shares have been on an eye watering bull run since Q3 results were released back in October.  A second straight quarter of blowout earnings has helped cement the change in sentiment towards the stock and push the share price to a fresh record high. In addition to record deliveries, CEO Elon Musk again accelerated the introduction of Model Y crossover, with deliveries now set to begin in March, earlier than planned. After years of over promising and under delivering Tesla, until recently he most bet against US stock, appears to be turning a corner. Whilst sales in the US are slowing, demand in Europe and China is soaring. The strong outlook for these regions in addition to a new factory in China and one planed for Germany and expectations of 500,000 vehicle deliveries this year (+35%) are keeping the bulls in control

Microsoft Q2
  • Revenue $36.9 billion vs $34.7 billion exp.
  • EPS $1.51 vs $1.32 exp.
Microsoft boasted double digit revenue and earning growth thanks to its rapidly growing cloud business, Azure. Revenue at Azure grew 62% as Microsoft’s hybrid cloud is well positioned against peers Amazon and Apple. Recent surveys by Morgan Stanley and Credit Suisse showing that Azure was the preferred cloud enterprise option boding well for the outlook. With the cloud business firing on all cylinders shares in Microsoft are continuing their upward rise. The stock is up over 67% across the past year.

Amazon Q4
  • Revenue $87.44 billion vs $86.02 billion exp.
  • EPS $6.47 vs $4.03 exp.
Q4 results topped estimates on revenue and earnings. Expectations were relatively low heading into Q4 after a slip in Q3 earnings as Amazon had invested heavily in one day shipping for its Prime customers. The payoff for this investment has come around much quicker than expected. The number of monthly paying prime members hit 150 million globally, after a record number of sign up in Q4. Amazon also boasts record holiday sales adding to the positivity surrounding the stock. The price jumped by double digits in the grey market following the release taking Amazon into the exclusive 41 trillion-dollar market cap club. One point to note is, after Microsoft Azure’s stellar performance, Amazon’s webservices was under the microscope. With growth of 35% it trails its rival. Signs that Amazon are looking to cut margins to stay competitive could raise some eyebrows.


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