Apple, Amazon, Alphabet, Meta Platforms and Microsoft are part of Zacks Earnings Preview
For Immediate Release
Chicago, IL – November 1, 2021 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Apple Inc. AAPL, Amazon.com, Inc. AMZN, Alphabet Inc. GOOGL, Meta Platforms, Inc. FB and Microsoft Corporation MSFT.
Even Big Tech Has Supply Chain Problems
A recurring theme this earnings season has been supply-chain woes and shortages of essential inputs, as well as labor, with not even the mighty Apple and Amazon immune from the issues.
Of the ‘Big 5’ Tech players – Apple, Amazon, Alphabet, Facebook & Microsoft– these challenges caused Apple and Amazon to miss estimates, while it was a non-issue for Alphabet and Microsoft. Facebook would have been in the latter camp as well, but it was dealing with some platform-specific issues in the quarter.
Looking at this elite group of five ‘Big Tech’ players as a whole, these companies earned $69.1 billion in earnings in the September quarter on $322.1 billion in revenues. This group’s Q3 earnings and revenues are up +32.8% and +25.1% from the year-earlier period, respectively.
Current consensus expectations for this group for the coming periods in the context of what they were able to achieve in 2021 Q3 and the preceding period.
What we see here is that growth is decelerating in a major way, even if we account for some upward revision estimates in the coming days.
This is a very short-term view of this group, as all of these companies are still capable of generating impressive growth by most conventional standards in the long run.
Whether the growth trend for these companies is decelerating or not is a function of your holding horizon. These companies are impressive growth engines in the long run.
Beyond the big 5 Tech players, total Q3 earnings for the Technology sector as a whole, are expected to be up +30.8% from the same period last year on +16.1% higher revenues.
This big picture view of the ‘Big 5’ players, as well as the sector as whole shows a decelerating growth trend.
That said, unlike this ‘quarterly view’, the annual picture shows a lot more stability.
Q3 Earnings Season Scorecard
Including all the results that came out through Friday, October 29th, we now have Q3 results from 279 S&P 500 members or 55.9% of the index’s total membership. Total earnings (or aggregate net income) for these 279 companies are up +39.2% from the same period last year on +17.8% lower revenues, with 82.1% beating EPS estimates and 73.5% beating revenue estimates.
The Q3 numbers not only represent a growth deceleration from the first half’s blistering pace, but also in terms of the beats percentages.
For the Technology sector, we now have Q3 results from 76.3% of the sector’s market capitalization in the S&P 500 index. Total Q3 earnings for these Tech companies are up +37% from the same period last year on +18.6% higher revenues, with 88.2% beating EPS estimates and 61.8% beating revenue estimates.
The revenue beats percentages show that Apple and Amazon are hardly the only companies that struggled to beat estimates.
Expectations for Q3 & Beyond
Looking at the quarter as a whole, combining the actual results that have come out with estimates for the still-to-come companies, total Q3 earnings for the S&P 500 index are expected to be up +37.6% from the same period last year on +14.9% higher revenues. The growth rate has started going up as companies come out with better-than-expected results.
For a detailed look at the overall earnings picture, including expectations for the coming periods, please check out our weekly Earnings Trends report >>>>A Very Strong & Improving Earnings Picture
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