The second-quarter earnings season hasn’t been much of a windfall for Big Tech, so I’m looking for next week’s numbers to give the sector bulls one last shot at breaking into a full bull run before the cycle ends.
The stakes are high: since mid-July, technology companies have scored 11% faster year-over-year earnings growth than Wall Street expected, but the Nasdaq Composite has barely yawned.
We’re nearing the end of Q2 earnings, too, as more than 91% of companies within the broader market have given investors a glimpse into their financials.
Still, if any of the late comers to the earnings party on my screen can catch a spark, we could enjoy a little summer fire after all.
Tech Stocks Reporting Earnings: Salesforce (CRM)
salesforce.com, inc. (NYSE:CRM) starts the final inning Tuesday night. I’m looking for healthy 33% growth, more than double the sector trend. If that doesn’t give the bulls what they need, it’s hard to imagine what else it would take to stop them from running in circles.
The odds of CRM reporting less than 32 cents a share are relatively low — the company only missed the target once in the past two years — but there may not be a lot of reward waiting for an upside surprise.
It’s been a tough season for most companies reporting their numbers, with the line between “winners” and outright losers coming down to the amount of a stock’s decline. Whether it beat earnings or missed doesn’t seem to matter.
CRM has already dropped 1.75% from its pre-earnings peak, so a lot of caution is baked in here. Even if shares jump that much on good results, we’re really only back where we were yesterday.
Tech Stocks Reporting Earnings: HP (HPQ)
HP Inc (NYSE:HPQ) will be a more straightforward old-school hardware story. Based on what we saw from rival Lenovo, I’m not hugely optimistic that HPQ can meet the 43-cents-a-share whisper Wednesday night.
HPQ is still new enough as a separate entity that analysts may be betting on efficiencies of scale that vanished in the split from Hewlett Packard Enterprise Co (NYSE:HPE) a few years back.
Wall Street evidently agrees with me because HPQ has retreated 4.8% over the previous two weeks.
Win or lose, if HPQ stock sags below $18.37 support next week, it could be hard for the bulls to push the chart back to record levels.
Tech Stocks Reporting Earnings: VMware (VMW)
Finally, I’m watching VMware, Inc. (NYSE:VMW) to both deliver the last seasonal note of the sector Thursday night and hint at the health of the cloud-computing industry.
This one’s a test of management, which has guided us to expect at least $1.15 a share even though outside models point to $1.14 a share at best. That’s the kind of storyline that’s been disappointing investors once the 10-Q hits the market, but I want to believe the sector can end on a high note.
One way or another, this is the last real beat Big Tech will hit until early October. While it would be nice if it’s a cheer, the odds aren’t great.
In that scenario, VMW may have gone as far as it can for the next few months. Those who’ve ridden the post-election wave all the way from $43 may want to lock in a little profit while they can.
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.