Some of the world’s biggest technology companies will be releasing their third-quarter results today. All eyes are on the US’s West Coast as investors wait to hear from Alphabet, Amazon, Microsoft, and Twitter.
Here’s what we could expect to see from today’s results.
Amazon: Whole Foods deal and bitcoin
Jeff Bezos’s Amazon has been having a great year, with the company’s shares nearly doubling the market’s gain already this year. Analysts are particularly pleased about the Amazon’s acquisition of Whole Foods.
The online retailer bought the health food brand for $13.7bn in June. Analysts believe this deal will bring more Prime subscribers to the company, of which it has this many already, to take advantage of the higher food offering.
Aside from Whole Foods, the next big thing Amazon could be pursuing is bitcoin. Rumours have been swirling for weeks that the company could start accepting bitcoin as payment, and it could be announced in today’s earnings call.
Alphabet: EU commission fine and YouTube breakdown
Google’s parent company hasn’t had the easiest of rides this year. For starters, the EU Commission hit Google with a $2.7bn fine for breaking anti-trust law, which could affect investor happiness today as the change will be recognised in the results.
It is likely that Alphabet will break down individual earnings today, after changes by the US Securities and Exchange Commission (SEC) to standardise earnings. Before YouTube was combined with Google Search and other advertising but today we could finally see what the video platform brings in for Alphabet.
As well, Alphabet could continue its streak of surpassing revenue expectations for five quarters.
Microsoft: it’s all in the cloud
Microsoft’s shares are currently at a yearly high, up from $60.63 at this time last year, to $78.63 today. Will it be able to sustain this today?
The company has been performing very well in the past year as a result of its cloud-first strategy, with Microsoft Azure. According to Nasdaq, analysts will be looking at the performance of Intelligent Cloud services to see if this growth can continue into next year and beyond.
The question is whether Microsoft can hold on to this momentum against the likes of Amazon Web Services and IBM.
Evercore analyst, Kirk Materne, said:
While [Amazon Web Services] remains the clear reader in terms of public computing today, one of the most notable takeways from our meeting was the improving position of Azure, both as it relates to product maturity and market presence.
Twitter: can’t fight the trolls but what about Square?
Oh Twitter. Despite your best efforts, the trolls and bots are still swarming the platform. Monthly users didn’t grow at all in the last quarter. That means Twitter really needs to deliver on the 4m new users that analysts think it will.
Recode is also predicting that the social media company could face its third straight quarter of year-over-year revenue declines. What’s chief executive Jack Dorsey to do?
Notably, Dorsey’s other company, Square is worth nearly as much as Twitter. The digital payments company is worth around $12.5bn, only $130m less than Twitter at the moment. If Twitter’s stock price goes down after earnings, Square will be worth more Twitter. Very interesting.