The busiest week of earnings season is about to kick off, with Tesla and Big Tech companies expected to dominate the headlines.
The six largest companies in the S&P 500 index SPX,
One of the S&P 500’s newest members, Tesla Inc. TSLA,
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Microsoft Corp. MSFT,
Microsoft’s Azure cloud business “may modestly decelerate” in March-quarter results, Cowen & Co.’s J. Derrick Wood wrote in a note to clients, but he expects an acceleration in overall growth driven by improving demand for products like the Office suite amid the economic recovery as well as strong personal-computer shipments that could help the Windows business.
Alphabet seems to be showing “sustained strength in the cloud,” wrote Jefferies analyst Brent Thill, who expects that part of the business to benefit from “pent-up demand” as the year goes on. He also anticipates an acceleration in ad momentum.
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Another take on the ad landscape will come from Facebook Inc. FB,
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Apple Inc. AAPL,
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Rounding out the week on Thursday afternoon is Amazon.com Inc. AMZN,
Thinking about the first quarter, he expects the company to benefit from continued strength in e-commerce and the arrival of stimulus checks. Shmulik ultimately expects an “acceleration in workload migration” for Amazon’s cloud business as workers return to office life, but he admits that may take a few quarters to pan out.
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Tesla and the tech titans are among 177 members of the S&P 500 that are set to report in the week ahead. The slate also includes 10 Dow Jones Industrial Average DJIA,
Corporate earnings have generally exceeded estimates thus far, with a 73% beat rate for the S&P 500, according to JPMorgan analyst Mislav Matejka. Roughly a quarter of the index has already delivered results, and analysts surveyed by FactSet expect that profits rose in aggregate by 33.7% for the first quarter. That’s up from the 15.7% that was expected as of the end of December.
Here are some of the other highlights in the week ahead.
Big week for the Dow
Among the 10 Dow components on the docket are Boeing Co. BA,
Analysts tracked by FactSet expect that Chevron’s earnings fell 31% in the March quarter, though that decline is not as steep as what Chevron posted in the previous few quarters. Mizuho analyst Daniel Boyd anticipates that the latest period was a “challenging” quarter for Chevron as winter storms “negatively impacted Permian production, chemicals, and the Pasadena refinery in the Gulf Coast.” The company reports Friday morning.
Even more tech
While the five largest tech companies report this week, there are plenty of other tech stalwarts lined up to report.
Advanced Micro Devices Inc. AMD,
Facebook won’t be the only social-media name in the spotlight, as Pinterest Inc. PINS,
Some elements of Snap’s recent report bode well for Pinterest, according to Wedbush analyst Ygal Arounian, who cited strength in categories like retail, e-commerce and packaged goods that are important categories for Pinterest as well. While the reopening seems to be helping Snap’s user-engagement trends, it might hurt Pinterest’s, he cautioned.
Food for thought
A number of food-related stocks are on the menu this coming week. Mondelez International Inc. MDLZ,
One trend to watch for with McDonald’s is early demand for the company’s new chicken sandwiches, which rolled out in February. Third-party data indicate that the company “saw a widening gap versus [quick-service] peers starting in late February and continuing through March as a result primarily, in our view, of its new much-anticipated Crispy Chicken sandwich,” wrote Jefferies analyst Andy Barish, who said that stimulus checks also may have given the company a boost.
Pay it forward
Several reads on consumer spending will come from Visa Inc. V,
For PayPal, investors will be looking for updates on the company’s efforts to introduce cryptocurrency into its ecosystem. PayPal began allowing U.S. users to buy, sell, and hold bitcoin and other cryptocurrencies in their PayPal wallets late last year, something it said was driving heightened engagement with its app. More recently, the company started allowing customers to make online purchases using those crypto holdings, and management may share more about early trends there.