Market Insights

Ex US President Donald Trump’s favourite technology companies, Microsoft Corporation, Apple Inc, Google’s parent Alphabet Inc. and Amazon.com, collectively known as MAGA, are set to release their quarterly earnings this week.

How has the earnings season fared so far?

Big US banks, including JPMorgan Chase & Co., Morgan Stanley, Wells Fargo & Company and Citigroup Inc., kickstarted the earnings season during the week ending October 14, 2022, reporting a decline in profits for the latest quarter. However, most of these banks were still able to exceed consensus estimates amid lowered expectations by analysts.

This week will see big tech companies releasing their quarterly results, which are already under pressure due to factors associated with higher interest rates, strength of the US dollar and the global economic slowdown. The Nasdaq 100 index has lost around 34% since the start of the year, with earnings in the tech industry also expected to drop in the third quarter.

Earnings in the tech sector might have declined as much as 6.5% during Q3, according to Bloomberg, while the consensus had called for growth of around 3% during late June. For the overall S&P 500, earnings are likely to increase just 2.9%, compared to the 10.3% growth forecast in late June.

What are the quarterly estimates for MAGA stocks?

Microsoft: Microsoft has topped both revenue and earnings estimates for the last 20 quarters around 95% of the times. However, having lost around 32% of its value so far this year, overall market sentiment is cautious on Microsoft. Total sales are likely to be between $48.67 billion and $51.44 billion, with the average expectation at $49.82 billion. Sales for the quarter might have increased around 9.9% year over year. The EPS estimates range between $2.25 and $2.46, with the average figure of $2.32, implying just 2.1% year-over-year growth.

Apple: Analysts expect Apple to have earned $1.26 per share during the latest quarter, up from $1.24 per share a year ago. Revenue is expected to come in at $88.86 billion.

Alphabet: Alphabet’s earnings might drop to $1.27 per share from $1.4 per share a year ago, with the company expected to report revenue of $70.92 billion.                     

Amazon: The e-commerce giant is expected to post EPS of $0.22, down from $0.31 in the same quarter a year ago. Revenue is expected at $ 127.86 billion.

Nasdaq 100 Prospects

The tech-laden index has been under pressure this year, following the aggressive rate hikes by the Fed and uncontrolled inflation. Upbeat earnings from these companies could provide some support to the index going forward.

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