- Microsoft looks to have put in a low and is ready to rally with a good report.
- Alphabet will need to seriously impress to justify another move north.
- Meta has delivered the most gains this year; any slip could be dangerous.
Earnings season is ramping up, with many companies already coming in ahead of expectations in what will be an eagerly watched couple of weeks. Investors will have a lot to chew on as companies report. For example, the S&P 500 index has been trending down since August, so a strong season is needed to reverse that momentum. Persistently warm inflation readings continue to cause some concern, and there's the prospect of war in the Middle East.
Three of the biggest tech stocks out there are due to report this week, and you can be sure most, if not all, of Wall Street will have eyes on the numbers. Here's a preview of each, along with some ideas on how to trade around the release and make money regardless of the results.
Microsoft Corp
Microsoft (NASDAQ:MSFT) shares are up 7% since the end of September, which looks like at least a temporary bottom after a post-summer slide. A strong report would go a long way to making this a permanent bottom while propelling shares back towards the all-time highs the stock reached in July.
One of the main numbers to watch will be its earnings. Analysts are looking for an EPS print of $2.65. Alongside this, the company's revenue will also be key, and expectations are for a topline revenue print of $54.5 billion. In addition to registering strong beats on the headline numbers, investors will pay attention to management's guidance. It's here that Piper Sandler thinks the needle could really be moved.
The analyst firm is looking for strong upside indications in the group's non-cloud revenue, and their $400 price target points to a potential upside of at least 20% from current levels. Considering shares have now twice bounced off the $310 level in recent months, there's some decent protection in place should investors want to dip their toe in ahead of the release on Tuesday.
Alphabet Inc
Alphabet's (NASDAQ:GOOGL) shares may have last touched an all-time high in early 2022, but they've been on an incredible run all year. GOOGL shares are currently up 60% since January, and investors will be looking for the earnings report to add fresh fuel to this rally.
In particular, the company's performance around its Search revenue will be closely watched, as will its revenue from YouTube. It goes without saying that any bullish updates regarding steps taken in the direction of AI will also drive volume to the bid.
The team over at Citi has reiterated their Buy rating on Google shares ahead of the release, alongside a price target of $153. That implies an upside of about 10%, which is bullish but not massively so. That's why we're inclined to urge a little caution, especially considering that Alphabet shares have been rallying all year. With that kind of hyped-up expectation, the company will need a red-hot report to justify both the current run and the next stage of the rally. Unless you're super bullish, this might be one to sit back and watch for before committing.
Meta Inc
Meta (NASDAQ:META) will report on Wednesday, and even with a year-long rally like Alphabet's behind it, Wall Street is calling for even more. Wedbush reiterated its Buy rating on Meta shares ahead of the company's Q2 report, and the firm is looking for strong performance out of its digital advertising revenue unit.
Meta shares have been trading somewhat sideways since July, which isn't perhaps a bad thing considering the stock is still up more than 250% since January. Like with Alphabet, we’re inclined to urge some caution here, as any slip in Meta's recovery story could quickly undo a year of gains.
But at the same time, a 250% run in one of the world's biggest names doesn't happen in a vacuum. Given shares have had nearly three months to cool, with a couple of mini-corrections in the meantime, we think the upside with Meta might be worth the risk. If there is a negative surprise and shares threaten to fall below $280, get out; otherwise, the risk/reward profile here supports a strong position.