Investors are Monitoring Tech Companies and their Results
Tech giants such as Tesla, Apple will release their numbers this week. Investors are also monitoring Amazon, Meta, and Google’s parent company Alphabet. All three of them will offer their reports next week.
On Tuesday, Microsoft reported better-than-expected earnings and revenue for the fiscal second quarter. The company’s stock initially fell in extended trading but turned positive after Microsoft issued a sales forecast that also surpassed expectations.
The company’s revenue rose by 20% from a year earlier, according to a statement. Its net income grew by 21% to $18.77 billion. The tech giant had $36.77 billion in unearned revenue at the end of 2021.
Interestingly, amid the slump, the bull thesis hasn’t changed much. Undoubtedly, the world’s digital transformation is in its early innings. Many people think that cloud computing and artificial intelligence will transform every industry in the coming years. As a result, tech’s bellwethers are poised to capture huge amounts of consumer and business spending.
In the meantime, the bear cap jumped on high-growth tech stocks, particularly those that soared during the pandemic. Without a doubt, investors are witnessing inflationary pressures as the economy opens, and they are awaiting interest rate hikes from the Federal Reserve.
Tech stocks in 2022
In the first three weeks of 2022, investors turned their back on tech stocks. Last week, the Nasdaq Composite fell 7.6%, its steepest one-week decline since 2020.
People should keep in mind that the expectation of rising interest rates sent investors fleeing from growth and toward less-risky areas.
Robust earnings performances from the biggest names in tech will support the thesis that the premier names can continue to perform regardless of economic conditions. Their products are more resistant to inflation. Moreover, the stock multiples are at reasonable levels on a historical basis.
