Earnings Season Update: Tech Sector Shares Skyward as Giants Report Progress

Strategic Insights -

As the earnings season continues to unfold, the outlook for corporate performance in the third quarter has improved, despite lower expectations. Recent reports from major players such as Alphabet, Microsoft, and Amazon have driven tech sector shares up, with analysts predicting a less dire decline in earnings. According to S&P Capital IQ, U.S. corporate earnings are now estimated to have dropped by an average of about 3.8 percent in the third quarter, led by steep declines in the energy and commodities sectors. However, consumer goods makers and telecommunications companies are leading gains, with overall U.S. corporate earnings still in the red but not as deeply as initially expected.

Key Takeaways:

  • Tech sector shares have surged in response to upbeat earnings reports from giants like Alphabet, Microsoft, and Amazon, with analysts predicting a less dire decline in earnings.
  • U.S. corporate earnings are now estimated to have dropped by an average of about 3.8 percent in the third quarter, with consumer goods makers and telecommunications companies leading gains.
  • Major companies such as Apple, Ford Motor, Starbucks, and United Parcel Service are set to report their earnings this week, with expected revenue and profit figures ranging from $35.07 billion (Ford) to $10.72 billion (Apple).
  • Analysts have lowered their earnings expectations for both the fourth quarter and the year, indicating a cautious outlook for corporate performance.
  • Energy companies such as ConocoPhillips are expected to report losses, with revenue down from $12.92 billion to $8.11 billion year-over-year.

Statistics:

  • U.S. corporate earnings are estimated to have dropped by an average of about 3.8 percent in the third quarter.
  • Consumer goods makers and telecommunications companies are leading gains, with an estimated increase in earnings of 4.3 percent.
  • Alphabet is expected to report quarterly revenue of $31.04 billion, up 27.1 percent year-over-year.
  • Apple is forecast to report quarterly revenue of $51.11 billion, up 21.3 percent year-over-year.

Sources:

  • S&P Capital IQ
  • U.S. Bank
  • Thomson Reuters
  • CNBC
  • FindTheData
  • Alphabet
  • Microsoft
  • Amazon
  • Apple
  • Ford Motor
  • General Dynamics
  • Yelp Inc.
  • GoPro Inc.
  • Johnson Controls
  • ConocoPhillips
  • Starbucks
  • LinkedIn Corp.