Friday Feb 2 2024 13:43
6 min
Big Tech is in focus this week, as Google, Amazon, and Meta Platforms all held earnings calls — with highly divergent results.
Google-parent Alphabet appeared to be on track for a weekly decline on Friday, as the company’s digital ad revenue narrowly fell short of analysts’ expectations.
Despite reporting a significant increase in fourth-quarter revenue — primarily from advertising — Alphabet shares, which trade on the Nasdaq under the tickers GOOG (Class C) and GOOGL (Class A) look set to end the week over 7% lower.
Despite reporting a jump in Q4 revenue growth, Alphabet fell short of the Wall Street estimate for total advertising revenue — it grew by 11% to $65.5 billion from $59 billion the previous year, but came in a few hundred million shy of the average analyst forecast of $65.8 billion. The miss raised concerns about the broader digital ad environment.
YouTube's advertising revenue increased by 16% to $9.2 billion, up from $7.96 billion, and Google Cloud's sales rose by 26% to $9.2 billion from $7.3 billion.
Thomas Monteiro, senior analyst at Investing.com, commented on the earnings report in an email to MarketWatch:
“Alphabet’s disappointing ad-revenue numbers suggest that corporations worldwide are still uncertain about the pace of interest-rate cuts from global central banks, thus keeping some powder dry while waiting for more clues before opening up their wallets”.
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The Meta Platforms share price surged in premarket trading on Friday after the company revealed a better-than-expected revenue forecast for its March quarter.
The social media giant reported an adjusted earnings per share of $5.33 for Q4 2023, exceeding the consensus estimate of $4.82 set by Wall Street analysts, as per FactSet data.
The company's revenue reached $40.1 billion — above analysts’ expectations of $39.1 billion.
Meta also gave solid revenue guidance for Q1 2024, projecting figures between $34.5 billion and $37 billion — compared to Wall Street’s estimate of $33.9 billion for the same period.
Meta's board also declared its first-ever dividend of $0.50 per share, scheduled to be paid on March 26, 2024.
Meta shares rose close to 9% after the earnings results and rose over 17% in premarket trading on Friday, poised to rise to over $462 when the market opens.
Amazon stock surged on Friday, buoyed by a flurry of positive updates to price targets from Wall Street analysts following the release of the company's impressive quarterly results.
In early trading on Friday, Amazon shares soared by 7.4% around the $171 mark after the company reported earnings of $1 per share (EPS) on $170 billion in revenue for the for the quarter, surpassing the projections of analysts surveyed by FactSet.
In a note shared with Barron’s, Bernstein analyst Mark Shmulik wrote:
“We read the earnings press release with gusto. Every number we checked looked good”.
The company's stellar performance was driven by Amazon’s robust sales in its primary e-commerce platform and a notable rise in its advertising sector. Amazon Web Services, its cloud computing arm, also saw growth slightly ahead of analysts’ projections.
Amazon’s guidance further fueled the stock's rise, with the company projecting its revenue for the current quarter to be in the range of $138 billion to $143.5 billion, which suggests a potential upside to the consensus estimate of $142 billion.
A number of Wall Street analysts quickly updated their Amazon share price forecasts following the e-commerce giant’s earnings report. Out of 20 analysts surveyed by FactSet, all have adjusted their predictions upwards. Amazon currently enjoys an average Strong Buy recommendation polled by FactSet, with the average target price implying that Amazon's stock could rise by over 20% from its present value.
Year-to-date, Amazon shares have grown by 4.83%, while Google stock has risen by a more modest 1.05%, as of Feb. 2. Meta stock, however, has shown far more impressive double-digit growth of close to 11.5% (prior to market open on Friday).
In contrast, the benchmark S&P 500 index, which includes all three Big Tech firms as constituents, rose by 2.86% since the start of this year. The index is on track for a modest rise of 0.3% this week.
Markets.com’s overview of last week’s top S&P 500 headlines included an overview of Tesla and Netflix earnings, as well as a closer look at the U.S. aerospace giant Boeing, which is facing continuing troubles as the quality of its planes come into question.
When considering shares and indices for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.
Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
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