TLDR: Last night's tech earnings unleashed a mixed bag of surprises and setbacks, leaving investors on the edge of their seats. But what do these numbers really tell us about the state of the tech giants?
Alphabet's revenue rose by 13% year-over-year, yet its EPS of $1.64, barely over the $1.62 forecast, didn't excite the market, leading to a 6% drop in share value.
Investor concerns focus on Alphabet's AI ventures and advertising income, heightened by no updates on the Gemini AI project and recent job and office space cuts, hinting at adaptation struggles in the tech sector.
Microsoft's financials were more complex. Cloud computing drove earnings beyond forecasts, but despite these positive results, Microsoft's shares dipped slightly in after-hours trading as investors weighed the implications of rising costs associated with the development of new artificial intelligence features.
AMD's report was mixed: a 38% revenue boost in its Data Center segment, contrasted with a 24% drop in the Embedded segment. The results reflect a company in a steady state, meeting its targets but with a somewhat conservative outlook for the immediate future.
Stock trends suggest GOOGL could fall 10% a week later, as seen last quarter. Microsoft often gains post-earnings, with the highest median returns two weeks later. AMD's history indicates potential losses, advising investors to consider stop losses.
Here is the performance of Alphabet competitors on a median basis post 10% drops in GOOGL stock:
The top 3 performing stocks:
The bottom 3 performing stocks:
Analysts are predicting a year-over-year increase in earnings with higher revenues. Over the past 30 days, the consensus EPS estimate for the quarter has been slightly revised upwards.
Investors will be keenly watching Amazon's performance in key business areas like its cloud service AWS, which is expected to show robust growth, and its online advertising business, which has been growing steadily.
Discover how other companies could react post earnings with the help of TOGGLE's WhatIF Earnings tool.
Toggle analyzed 11 similar instances where SPY increased as uncertainty declined. Typically, this led to further rises in the ETF's price over the ensuing month.
Yet, with the market's rally predominantly driven by seven tech stocks, their forthcoming earnings are likely to dictate the market's next move.