August is here and so are new earnings releases from some of the biggest companies in the market. With some of this week’s earnings stemming mostly from tech companies, it may be interesting to keep track of how they’ve fared so far in 2023 and how factors like inflation and persistent central banks’ rate hikes have influenced their trajectory.
From Qualcomm to PayPal and Apple to Amazon, here’s what you can expect from some of this week’s most anticipated earnings releases:
Qualcomm’s Q3 Earnings: Is the Semiconductor Giant in Trouble?
American Software and semiconductor giant, Qualcomm (QCOM), is scheduled to reveal its performance during Q3 2023 fiscal year on Wednesday, August 2nd, after the ring of the bell.
While the demand for semiconductors is expected to increase further as research shows that the global demand for semiconductors may reach $1,124.5 billion by 2032, and although Qualcomm introduced new products and collaborated with Sony (SONY) during the quarter, the company is actually expected to report less-than-stellar earnings.
It seems that despite the company’s efforts, Qualcomm is expecting lower demand for its handset chips due to supply issues stemming from the geopolitical tensions in Europe and Asia as well as macroeconomic and political instabilities. Another factor that may have dragged the demand down is a post-COVID decrease in demand in China, the world’s second-biggest economy.
Accordingly, Zacks Consensus Estimate predicts revenues to come in at $8,514 million which is below last year’s $10,936 million while adjusted Earnings Per Share (EPS) is expected to come in at $1.81 which is below last year’s $2.96.
However pessimistic the predictions may be, it is essential to note that Qualcomm's share price has increased over 23% since the start of the year but it also experienced notable volatility. Moreover, the company has entered into a partnership with Autotalks, a fabless semiconductor company. This collaboration brings together Autotalks' expertise and industry-leading products with Qualcomm's extensive knowledge to potentially expedite the development and adoption of V2X solutions, which aim to enhance traffic efficiency and road user safety. Whether this agreement along with Qualcomm’s other endeavors and efforts will yield positive results remains to be seen.
PayPal: Did the Fintech Giant Have a Strong Quarter?
According to analysts, it seems that the company’s services and strong ties with its customers and merchants may have helped it sustain growth in Q2. This may especially be true for the companies' Total Payment Volume (TPV) which is expected to have increased by 10% YoY. According to Zacks Consensus Estimate, PayPal’s TVP is expected to grow by 8.9% YoY to reach $370.02 billion. Furthermore, the company’s revenue is expected to have risen to $7.2 billion and its GAAP EPS to come in at 82 cents.
The strong earnings are expected to have been driven by PayPal improving its payment solutions offerings for small enterprises as well as allowing Tap to Pay for Android users and introducing Venmo Teen Account, which allows parents and legal guardians to open a Venmo account for their teens. This move could boost PayPal’s presence in the teen community.
Nonetheless, despite these strong predictions, it may be interesting to note that PayPal’s share price grew by only 1.6% since the beginning of the year, and it would be worth keeping track of how it will fare following tomorrow’s release.
Will Amazon Deliver Good Results?
Amazon (AMZN), the e-commerce giant and the world’s biggest cloud computing provider, is expected to report its Q2 earnings on Thursday, August 3rd, after the ring of the bell. On Monday, Amazon revealed that in Q2 it hit record delivery speeds in the US. In addition, the company has been taking cost-cutting measures.
According to Zacks Consensus Estimate, Amazon’s net sales are expected to come in at $131.54 billion which would be 8.5% higher than the year-ago quarter’s figures. Its earnings are also expected to grow from the previous year by 10 cents. In addition, Amazon expects its net sales to grow 5-10% from last year’s quarter and its revenues to come in at $127-$133 billion.
Among the factors that may have contributed to the expected growth are Amazon’s Prime programs, and Prime benefits, as well as its new Prime Free One-Day and Free Same-Day Delivery services which make deliveries easier and faster. Moreover, Amazon’s Fresh grocery store chains are also expected to have driven the company’s business higher.
Besides that, traders and investors may have their eye out on Amazon’s cloud services to see how they are performing in the face of competition from Microsoft (MSFT) and Alphabet (GOOG). One analyst even noted that “there is potential for cloud computing, including Microsoft's Azure, Google Cloud, and AWS, to materially benefit from companies interested in artificial intelligence.”
However, he also noted that amidst a general consumer spending slowdown, companies that have heavily invested in AI and cloud tools are compelled to reevaluate their expenditures, leading to potential implications for the growth of cloud computing.
Other segments that may pique investors’ interest are Amazon’s ad sales in comparison with Google’s ad sales which already showed a rise of 4.4% compared to last year.
Overall, Amazon seems to have sustained a solid growth trajectory since the beginning of the year as it soared by more than 55%. Yet, whether or not it will maintain these gains is yet to be determined. (Source:Yahoo Finance)
What Will Apple’s Earnings Reveal?
Iphone-Maker Apple (AAPL) is expected to report Q3 fiscal year earnings on Thursday, August 3rd, after the ring of the bell. During the reported quarter Apple unveiled and launched three products; the 15-inch MacBook Air, Mac Studio, and Mac Pro, which could potentially drive its earnings.
Despite this, analysts seem to expect Apple’s revenue to show a drop of about 1.7% from the year-ago quarter as its revenue is expected to come in at $81.6 billion.
However, Michael NG, a Goldman Sachs (GS) analyst expects Apple to report above estimates on Thursday. NG stated that “with AAPL up 48% year-to-date, driven entirely by multiple expansion, we recognize investor concerns around valuation and downside risks.” But he also said that believes “that Apple’s growing iPhone installed base serves as the foundation for growing monetization per user driven by ASP (average selling price) increases."
As of the time of the writing and since the beginning of 2023, Apple’s share price soared by over 57% and it will be intriguing to observe Apple’s performance following the release.
The first week of August 2023 seems to be eventful as it ushers forth multiple earnings from some of the biggest companies in the market. As such, traders and investors may want to keep an eye out on the scheduled releases to see what these can reflect about the state of the economy and the stock market.