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This is an exciting week for big tech, as four of the sector’s largest companies prepare to report earnings. Meta Platforms (NASDAQ:META) will report 2022 Q4 earnings on February 1. One day later, Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL) will do the same. Apple (NASDAQ:AAPL) is scheduled to report Q1 2023 earnings on Feb. 2 as well. All four stocks are struggling today, even as anticipation for the big tech earnings remains high.
The eyes of the investing community are on Silicon Valley, as questions abound as to what 2023 will look like for the tech sector. All four stocks are good to a good start for the year but a questionable earnings report could change that.
Big Tech Earnings: What to Expect
So far, the prominent word regarding tech stocks for 2023 has been layoffs. As this week’s big tech earnings approach, investors are wondering when this trend will shift. Many of the sector’s biggest names have slashed their workforces in recent weeks, Amazon and Meta among them. As InvestorPlace contributor Craig Shapiro reports:
“Very large companies like Amazon and Salesforce (NYSE:CRM) have announced layoffs in recent weeks after aggressive hiring following the pandemic. More layoffs are expected to come over the course of 2023. According to data tracker layoffs.fyi, tech companies collectively laid off 154,336 workers last year and have already announced over 25,000 layoffs in 2023.”
Despite the month of growth that these tech giants have enjoyed, they are off to a rocky start for the most important week of the year. That isn’t surprising. It is common for companies’ stock to dip as their earnings report date approaches as market instability pushes them down. Electric vehicle (EV) leader Tesla (NASDAQ:TSLA) recently surprised Wall Street when it reported stronger-than-expected Q4 earnings. That may give investors cause for optimism that more stable companies, such as Amazon and Apple will report strong earnings and pull back into the green.
While January has been a good month for these stocks, all four have fallen considerably over the past six months. But if this week’s big tech earnings reports are positive, it may signal the start of a new bull market. InvestorPlace senior investment analyst Luke Lango has been predicting this positive market shift for weeks, which he attributes to falling inflation. In January 2022, Lango flagged AMZN stock’s recent declines as a key buying opportunity. In his words:
“Amazon’s online retail business will likely grow at a fairly steady 10% annualized clip over the next few years. The physical store business is good for about 5% growth per year. The ad business will likely grow around 20% per year, representative of market share expansion in a 10% to 15% growth industry. And the cloud business will likely grow around 25% per year, in line with market estimates for cloud spending growth.”
Even if the company doesn’t quite reach those numbers, just coming close will mean significant growth for any investment made in early 2023.
The Bottom Line
All four of the tech giants that are scheduled to report earnings this week need a positive catalyst to launch them into 2023. If they follow Tesla’s example and come in above Wall Street expectations, it will show investors that the tech sector is back and that it is primed for a year of growth. These big tech earnings will do more to determine how the sector performs throughout the first half of the year.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.
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