Apple, Amazon, Microsoft headline busy earnings week

About a third of the S&P 500 and nearly half the Dow Jones Industrial Average are set to provide their quarterly updates starting Monday.

Apple, which reports its second-quarter earnings on Thursday afternoon, is expected to see its profit fall slightly to $US23.33bn. Picture: Getty Images

Tech giants including Apple, Amazon.com and Microsoft are headlining a busy earnings week as investors weigh concerns over rising rates, the Russian invasion of Ukraine and surging costs.

Overall, about a third of the S&P 500 and nearly half of the Dow Jones Industrial Average are expected to provide their quarterly updates this week, according to FactSet.

Facebook parent Meta Platforms, Google owner Alphabet and Twitter have earnings on tap next week. Also expected to provide quarterly updates are industrial conglomerates such as General Electric and 3M, food heavyweights Mondelez International and McDonald’s, and other big names in manufacturing and pharmaceuticals.

Covid-19-related supply-chain issues remain a problem, and the Russian invasion of Ukraine is presenting new obstacles for businesses. Investors are looking to see how companies are addressing those topics as well as manoeuvring amid a macroeconomic backdrop marked by high inflation.

“Inflation is higher than we thought,” Scott Kirby, chief executive of United Airlines, said on Thursday.

“We built high inflation in over a year ago, and we thought we were being conservative, but I think everyone has been surprised by how high inflation has been.”

Tech companies, after benefiting during the pandemic as restrictions and public health concerns kept many Americans at home, now face an evolving landscape as consumer spending shifts toward in-person goods and ­services.

Netflix already has sounded a note of caution by reporting that it lost subscribers for the first time in more than 10 years and expects those losses to accelerate in the current quarter.

As other companies report earnings for the recently completed quarter, many were expected to point to the severe public health restrictions in Shanghai and elsewhere in China that had disrupted supply chains, said Brian Belski, chief investment strategist at BMO Capital Markets.

“Technology companies have a free pass right now, because the sector’s down,” Mr Belski said, adding that CEOs would use supply-chain issues tied to China to lower expectations.

“It doesn’t mean that the earnings are going to suck. It just means that this is their opportunity to really set the bar lower and under-promise and over-deliver.”

So far, about 20 per cent of S&P 500 companies have reported earnings for the recently ended quarter, according to FactSet.

Earnings are on track to rise 6.6 per cent year-over-year for the quarter, based on actual results and estimates for companies that have yet to report, FactSet said. That would be the lowest earnings-growth rate reported by FactSet’s index since the fourth quarter of 2020.

Revenue for the recent period was poised to rise 11.1 per cent year-over-year, FactSet said.

Microsoft, which reports its fiscal third-quarter results on Tuesday afternoon, is expected to report a nearly 18 per cent rise in revenue, according to FactSet, driven by continued cloud growth. Investors are also likely to be looking for more insights into the company’s $US75bn ($103.5bn) all-cash deal to buy video game maker Activision Blizzard, which posts results on Monday.

Apple, which reports its second-quarter earnings on Thursday afternoon, is expected to see its profit fall slightly to $US23.33bn from the prior-year period’s pandemic-boosted results, according to FactSet. Analysts expect Amazon, also slated to report Thursday, to show its quarterly profit fell almost 46 per cent to $US4.39bn after a pandemic-era burst, according to FactSet estimates. Meta, which posts first-quarter results on Wednesday, is expected to report its quarterly profit dropped to $US7.17bn, as the company continues to invest in its metaverse initiatives, according to FactSet. Analysts will be listening for more about the company’s metaverse vision and reasons to turn around the stock’s 45 per cent decline this year.

Analysts expect Alphabet’s profit also to fall slightly amid tough year-earlier comparisons. Google’s parent reports its first-quarter earnings on Tuesday.

Twitter, the social-media firm now reviewing a takeover offer by Tesla chief executive Elon Musk, is scheduled to report first-quarter earnings on Thursday.

Beyond tech, other major companies are also releasing their results in the week ahead. Las Vegas Sands is scheduled to report on Wednesday afternoon, probably providing insight into the state of travel demand.

McDonald’s will follow before the bell on Thursday, with indications of the strength of consumers generally.

3M, a major manufacturer of N95 masks, will issue its results on Tuesday, as will GE, followed by Caterpillar on Friday morning.

Other notables set to report include Coca-Cola on Monday; Visa on Tuesday; Boeing on Wednesday; MasterCard on Thursday; and Colgate-Palmolive on Friday.