April 26, 2021
With a quarter of S&P 500 companies already reported for Q1, 84% have reported positive surprises, and earnings growth is running +34% on average.
These are big numbers, and expect this to be the trend for the quarter and for the year — big numbers and big positive surprises, both in earnings and in the economic data.
That said, the big tech stocks will report this week, and they will have a hard time competing with the eye-popping earnings beats of the more "traditional economy" stocks. Why? The big tech numbers will be compared to a much higher base of a year ago. Remember, when the economy was in various forms of shutdown, these companies (Facebook, Apple, Amazon, Google) did even better. With that, we may find that these stocks get some tough love from investors this week, on less exciting numbers (and maybe some profit taking).
Let's take a look at the charts on big tech…
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Google (Alphabet) heads into earnings on record highs.
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Microsoft heads into earnings on record highs.
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Apple heads into earnings about 8% off of record highs.
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Facebook heads into earnings 4% off of record highs.
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And Amazon heads into earnings about 4% off of record highs.
In an investing world where investors are searching for pockets of value, it’s the earnings surprises outside of big tech that are providing some opportunities. And we are unlikely to see something equally exciting materialize in big tech. Add to that, these stocks are all priced as monopoly powers, and the political scrutiny has plenty of reasons to check that power in the coming months. With the above in mind, I like big tech stocks lower on earnings this week. |