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Investors eye ‘critical season’ for Big Tech earnings

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Five Big Tech companies with a combined market value of more than $10 trln will report earnings this week in a “critical season.”

All eyes are on Microsoft, Google-parent Alphabet, facebook’s Meta Platforms, Amazon and Apple which are on deck between Tuesday and Thursday.

Investors are looking for clues on the companies that will benefit the most from the possibilities of artificial intelligence (AI) technologies, said the CEO of a leading independent financial advisory and fintech.

“The S&P 500 index is pushing further into record territory, and this is mostly down to the tech titans,” said deVere Group’s Nigel Green. “These megacaps were also the drivers of most of the index’s 24% gain in 2023.”

Besides, there are five compelling reasons why this earnings season is described by the deVere CEO as “critical” for Big Tech.

Market barometers

“The combined market value of these five tech behemoths is a staggering reflection of their influence on the broader market. Investors often view these companies as barometers for the health of the technology sector and, by extension, the overall economy. A strong earnings performance from these giants can provide a positive sentiment boost to the entire market, while any signs of weakness may lead to increased market volatility.”

Leadership in the S&P 500

“The rally in the stock market last year was notably fuelled by megacap tech stocks. As investors continue to place significant emphasis on the potential of AI services offered by these tech giants, their earnings reports will be scrutinised for insights into the sustainability of this leadership and its impact on wider market trends.”

Tech’s role in economic growth

“The tech sector is now a linchpin in driving economic growth. The reliance on digital services, cloud computing, and e-commerce has surged, and these companies are at the forefront of these trends. A strong earnings season from tech leaders would signal a continuation of the sector’s pivotal role in supporting economic growth, influencing investor confidence.”

AI and innovation

“Investors are excited by the promises and possibilities of AI services. Companies like Microsoft, Alphabet and Nvidia have been leading the charge in AI innovation, and their earnings reports will be closely monitored for updates on advancements, partnerships, and commercialisation of AI technologies. Positive signals in this regard will drive enthusiasm among investors looking for exposure to cutting-edge technologies.”

Consumer behaviour and e-commerce

“Amazon and Apple, in particular, are closely tied to consumer behaviour and spending patterns. Amazon’s performance is a key indicator of the strength of e-commerce, while Apple’s earnings shed light on consumer demand for tech products. As these companies navigate global challenges and evolving consumer preferences, their earnings reports provide valuable insights into economic trends and potential shifts in consumer behaviour.”

Nigel Green concluded that this reporting season for these five major tech companies holds immense significance for investors, as “their performance not only influences sector-specific trends but also serves as a bellwether for broader market and economic sentiment.”