Tech earnings: Wall Street investors will turn their attention toward Silicon Valley this week. Four of the five most valuable technology companies in the world — Apple, Amazon, Microsoft and Facebook — are all set to report earnings.
AT&T and Verizon also are scheduled to releases financials.
In previous years, optimism ran high for the tech industry’s seemingly limitless potential to sell more products and ads to consumers. Now, warning signs are everywhere.
Apple unofficially kicked off the tech earnings season at the beginning of this month with a stark warning that it would miss its revenue target for the final quarter of 2018 because of weak iPhone sales, which it mostly attributed to a slowdown in China.
The announcement shook Apple’s stock and the overall market, reigniting fears that even corporate giants may be weighed down by broader challenges in the global economy. That includes the trade war between the United States and China.
Intel added to those concerns last Thursday when it reported disappointing results. On a conference call with analysts, Intel’s interim CEO Bob Swan noted that “trade and macro concerns, especially in China, have intensified.” Separately, Intel updated its list of risk factors to include the possibility of a “recession or slowing growth.”
“We continue to believe the China tariff talks and tensions remain a black cloud over the tech space as evidenced with Intel’s comments,” Daniel Ives, an analyst with Wedbush, wrote in an investor note Friday.
The tech sector’s problems don’t stop there.
The Federal Trade Commission is reportedly considering a “record” fine against Facebook after months of data privacy scandals. Advocacy groups have also been pushing the FTC to break up Facebook.
With Democrats now firmly in control of the House of Representatives, this year could see an increase in hearings and attempts to regulate tech companies like Facebook.
Amazon, meanwhile, spooked investors in October by forecasting weaker sales for the holiday quarter than investors expected. Since then, the conversation has turned to a new unknown for the company: how the divorce of founder and CEO Jeff Bezos could impact his stake in, and control over, the company.
And then there’s Microsoft, which regained its title as the most valuable company in the world during the final quarter of 2018 in part by avoiding the recent regulatory and hardware sales troubles of its industry peers.
Now the question is whether Microsoft can stay on top. Central to Microsoft’s success of late is its big bet on the lucrative cloud computing market. Azure, Microsoft’s cloud business, did see growth slow somewhat in the three months ending in October, but Ives says Microsoft still appears to be “gaining share” against the market leader, Amazon.
