The big US banking reporting season went off with a bang last week but for many investors the mega-tech FAAMG stocks are the real star turn of the July to September quarter.
The FAAMG stocks are Facebook, Amazon, Apple, Microsoft and Alphabet, or Google to complete the acronym. These are not just the biggest tech companies in the world, they are the biggest companies period, with a combined market cap of $9.4 trillion that makes up about a quarter of the total value of the S&P 500.
HOPES RUNNING HOT
Expectations are high heading into the quarter. According to analysts, the S&P 500 revenue growth average is forecast at 14.6% in Q3, yet all five FAAMG names are expected to beat that, with growth estimates ranging from Amazon’s 16% increase to the 37% anticipated for Alphabet and Facebook.
Expect the same major themes to be addressed, including inflation pressures and rising interest rates threats, supply chain disruptions and staff recruitment, while the market always hangs its hat on forward guidance.
Recent comments from tech executives suggest that they believe the recent online-first habits picked up during the pandemic will remain ‘sticky’ even in a post-pandemic world, but investors should be looking for evidence to back this up.
WHAT THE MARKET EXPECTS
Here’s how consensus forecasts are pitched ahead of a potentially market-shifting week:
Facebook (Q3) - After market close, Monday 25 October
Revenues: $29.5 billion
Year-on-year growth: +37%
Earnings per share: $3.18
Year-on-year growth: +17%
Amazon (Q3) - After market close, Thursday 28 October
Revenues: $111.6 billion
Year-on-year growth: +16%
Earnings per share: $8.90
Year-on-year growth: -28%
Apple (Q4) - After market close, Thursday 28 October
Revenues: $85.0 billion
Year-on-year growth: +31%
Earnings per share: $1.23
Year-on-year growth: +69%
Microsoft (Q1) - After market close, Tuesday 26 October
Revenues: $43.9 billion
Year-on-year growth: +18%
Earnings per share: $2.07
Year-on-year growth: +14%
Alphabet, aka Google (Q3) - After market close, Tuesday 26 October
Revenues: $63.5 billion
Year-on-year growth: +37%
Earnings per share: $23.8
Year-on-year growth: +45%
