Earnings season continues next week, with several big tech names — Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG), Advanced Micro Devices, Inc. (NASDAQ:AMD) and Facebook Inc (NASDAQ:FB) all reporting their most recent quarterly results.
While these companies are not necessarily competitors, each focusing in large part on different sectors of the technology industry, they share a few common threads. Tech investors should pay close attention when each of these companies reports earnings next week, as even an indirect connection could lead the ripple effect to push or pull these stocks in either direction.
Here’s what investors should watch next week.
Earnings Reports to Watch Next Week: Alphabet Inc (GOOGL)
Earnings Date: July 24, 2017
The Nasdaq has been strong so far this year, but Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) has been stronger. Shares of the tech behemoth have climbed 25% year to date, with another 6 percentage points added on if you zoom out to the last 12 months. In fact, shares are now quickly approaching the four-digit mark.
Despite the strength, the forecast for Alphabet’s upcoming earnings report isn’t all that impressive. For the most recent three-month period, the company is expected to earn $8.25 per share, which would represent a slight decline from the same period a year ago, despite the fact that sales are slated to grow by nearly 20%.
Still, long-term earnings growth is supposed to be, more or less, in line with that top-line expansion, which also happens to be not far off from GOOGL stock’s forward P/E. If investors panic about the slight dip in EPS, consider buying some shares.
Earnings Reports to Watch Next Week: Advanced Micro Devices, Inc. (AMD)
Earnings Date: July 25, 2017
Advanced Micro Devices, Inc. (NASDAQ:AMD) has enjoyed a volatile path to eye-popping gains, with shares gaining 168% over the last 12 months. The company, which makes chips for all major gaming consoles, may not be profitable in the earnings report slated to come out next week. The high estimate is for a penny per share, while the low is for a loss of 3 cents per share.
Then again, a year ago AMD lost 5 cents per share, so even the bottom of the barrel would technically be an improvement. Revenue is expected to grow by 12%.
AMD stock did tumble this week, though, with some analysts suggesting it’s overvalued heading into earnings. As MarketWatch reported, “Analyst Blayne Curtis cut his rating to a rare underweight from equal weight while keeping his stock price target at $9, which is 33% below current levels.” The irony is that this call could actually weed out the doubters and leave more upside in the case of a strong earnings report.
Earnings Reports to Watch Next Week: Facebook Inc (FB)
Earnings Date: July 26, 2017
So far this year, Facebook Inc (NASDAQ:FB) has gained 43% on a steady upward trajectory. Next week, Facebook also reports earnings and strong results could fuel a further climb. Despite the run, FB stock’s forward P/E of 27 is in line with the expected long-term growth, which will likely be driven by Instagram and AR/VR.
For the most recent three months, specifically, Facebook is expected to post earnings of $1.12 compared to 97 cents a year ago. That’s thanks, in part, to stellar top-line growth — nearly 43% expansion year over year.
The downside is that current estimates for Facebook are lower than they were three months ago, suggesting sentiment on Wall Street is heading in the wrong direction. But, that could be a blessing in disguise. Facebook, as you may remember, is coming off an earnings miss and management is working hard to control expectations and set a lower bar.
Remember, an earnings beat is a great shortcut to headlines. Besides, it’s not like FB doesn’t have the organic growth to back it up.
Hilary Kramer is the editor of GameChangers, Breakout Stocks, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
