- Revenues generated by the giant firms forecast to total £324bn
- Earnings season likely to prove ‘eye opener’ for Wall Street, creating stock rally
- Amazon’s revenues predicted to rise 11% in three months to end of September
America’s tech giants are this week set to defy global market gloom as they kick off what is expected to be a bumper earnings season generating a £62billion profit haul.
Revenues generated by the giant firms – Meta, Amazon, Microsoft, Alphabet and Apple – are forecast to total £324billion.
It comes as wider markets are wracked by fears over the conflict in the Middle East, and interest rates.
Government bonds are under pressure, creating difficulties for public finances as well as investors.
But Dan Ives, at Wedbush Securities, said the tech earnings season was likely to prove an ‘eye opener’ for Wall Street, creating a stock rally.
‘The tech universe is poised for a strong earnings season,’ Ives said. ‘The macro story is overshadowing the biggest technology revolution in 30 years.’
Ives argues that developments in artificial intelligence (AI) are creating another ‘1995 moment’ – when it became clear that the internet would have a major impact on business and society. Companies such as Amazon and Alphabet offering cloud services which allow remote access to computing resources, will benefit by making products AI-capable.
Businesses including Alphabet and Microsoft are also involved directly in AI platforms, with Microsoft a major investor in OpenAI – which operates the AI platform, ChatGPT. Google, owned by Alphabet, has created its own AI tool called Bard.
The technological advances are not without hurdles for the companies involved. Sophie Lund-Yates, at Hargreaves Lansdown, said growth had slowed in Amazon’s cloud division AWS and that markets would be ‘hunting for clues that performance is going to reaccelerate’ when it publishes results on Thursday.
Forecasts compiled by Refinitiv suggest Amazon’s revenues will rise 11 per cent to £116billion in the three months to the end of September, helping profits surge to £5billion.
And Amazon seems bullish – hiring 250,000 workers for the Christmas period in the US.
‘This suggests management is confident about the consumer outlook,’ said Ms Lund-Yates.
For Microsoft, however, cloud computing may be ‘picking up the slack’ for a slowdown in its traditional business of selling Windows software, she added.
But again, growth will be the big picture, with revenues of £44.7billion and profits of £16.3billion pencilled in by analysts.
Meta – owner of Facebook, WhatsApp and Instagram – is expected to see quarterly profits hit £7.6billion, with Alphabet bagging a £15.1billion haul.
But Apple, which reports next week, is expected to see sales dip lower to £73billion though its bottom-line is set to continue to outshine the rest at nearly £18billion.
