It might not be obvious looking at the stock market’s performance lately, but the third-quarter earnings season has been very strong. Despite indices sliding lower throughout October, financial results from corporate America have continued to recover from the sharp downturn seen in 2022. With nearly half of all publicly traded companies having reported their Q3 results, the average earnings per share among companies listed on the benchmark S&P 500 index are up compared to last year, marking the third consecutive quarter of positive growth.
Quarterly earnings among some S&P 500 companies are now just below the record high they reached in the final quarter of 2021 when the stock market peaked. As is often the case, technology companies have led the way during the Q3 earnings parade, with better-than-expected numbers across the board. Here are three tech stocks to buy after terrific Q3 earnings.
Advanced Micro Devices (AMD)
On the day of this writing, shares of Advanced Micro Devices (NASDAQ:AMD) are up 7% after the microchip and semiconductor designer beat Wall Street predictions with its third-quarter print and forecasted $2 billion of artificial intelligence (AI) microchip sales in 2024. AMD reported earnings per share (EPS) of 70 cents versus the 68 cents expected by analysts. Revenue in the quarter was $5.80 billion compared to the $5.7 billion anticipated and up 4% from $5.60 billion in sales a year earlier. Revenue in the client group, which includes microchips for personal computers (PCs), increased 42% year-over-year to $1.50 billion.
However, the Q3 results and subsequent stock price movements are all about AI. In an earnings call, AMD executives said they expect AI microchip sales to total $400 million in Q4 of this year and beat $2 billion in 2024. The company is rolling out new high-end graphics processing unit (GPU) microchips used to train and run generative AI models. The GPU market is currently dominated by Nvidia (NASDAQ:NVDA), but AMD hopes to take market share with its powerful new MI300A and MI300X chips. With the post-earnings gain, AMD stock is now up 69% year-to-date (YTD).
Amazon (AMZN)
Has any company had a better Q3 print than Amazon (NASDAQ:AMZN)? The e-commerce company crushed Wall Street forecasts across the board and posted its best financial results in two years. Amazon announced EPS of 94 cents, which was 62% higher than the 58 cents expected among analysts. Revenue came in at $143.1 billion, edging estimates of $141.4 billion. Revenue in the quarter rose 13% from a year earlier driven by growth in the company’s e-commerce sales, which now benefit from two Prime Day sales events each year.
Analysts applauded the Q3 print from Amazon and were especially impressed by the fact that digital advertising revenue increased 26% from a year earlier, while Amazon Web Services (AWS), the company’s cloud-computing unit, saw growth of 12% year-over-year. Looking forward, Amazon forecasts Q4 sales, which include the busy holiday shopping season, will be $160 billion to $167 billion. Analysts liked the guidance and the fact that Amazon’s cost-cutting measures have improved the company’s profit margin, taking it to 7.8% in Q3, the highest level in two years. AMZN stock is up 60% YTD.
Meta Platforms (META)
Meta Platforms (NASDAQ:META) also delivered strong Q3 results, announcing a 23% increase in its revenue, the fastest rate of growth in two years and a new quarterly record. Like Amazon, Meta has benefitted from a rebound in the market for online advertising. Additionally, Meta Platforms reported that its net income rose 164% year-over-year to a record $11.6 billion, and its operating margins doubled to 40% from 20% previously. Meta also impressed with daily active users (DAUs) that totaled 2.09 billion and average revenue per user (ARPU) of $11.23, both of which topped estimates.
Meta executives said they are seeing faster growth in digital advertisements after a difficult 2022 when revenue dropped for three consecutive quarters. Ad sales in Q3 increased by $27.71 billion from a year earlier. In terms of guidance, Meta’s leadership team said they expect revenue of $36.50 billion to $40 billion in the current fourth quarter of the year. While the guidance was softer than the $38.85 billion in Q4 sales that Wall Street expected, it shouldn’t detract from what were otherwise blowout results. META stock has gained 150% so far in 2023.
On the date of publication, Joel Baglole held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
