Big Tech Q1 Earnings Look Strong: ETFs To Play

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The technology sector has struggled this year to find a solid footing as renewed optimism over the economy has made the previously shunned cyclical and value stocks more attractive. Most of last year’s tech leaders like Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) have become laggards while Facebook (FB - Free Report), Microsoft (MSFT - Free Report), and Alphabet (GOOGL - Free Report) are performing well.

These five companies currently account for about 17% of the total market capitalization of the S&P 500 Index. Total Q1 earnings from the group of five companies are expected to be up 43.5% on revenue growth of 31.4%. This reflects a solid improvement from the Q4 earnings growth of 41.2% and revenue growth of 29%.

Microsoft and Alphabet are scheduled to release their earnings on Apr 27 while Facebook and Apple will report on Apr 28. Amazon slated to report on Apr 29.

Microsoft

Microsoft has a Zacks Rank #2 (Buy) and an Earnings ESP of 0.00%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The stock witnessed no earnings estimate revision for the third quarter fiscal 2021 over the past 30 days. The Zacks Consensus Estimate indicates substantial earnings growth of 25.7% and revenue growth of 16.9% from the year-ago quarter. Microsoft’s earnings track is impressive, with the last four-quarter positive earnings surprise being 14.69%, on average. The stock belongs to a top-ranked Zacks industry (top 43%) and has gained 17.4% so far this year.

Alphabet

Alphabet has a Zacks Rank #3 and an Earnings ESP of +3.71%. It saw positive earnings estimate revision of a couple of cents over the past 7 days for the to-be-reported quarter. Analysts raising estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The company’s earnings surprise track over the past four quarters is good with the beat being 2.46%, on average. Earnings and revenues are expected to grow 57% and 25.6%, respectively, from the year-ago quarter. Additionally, the stock falls under a bottom-ranked Zacks industry (bottom 26%). The Internet behemoth has surged more than 31% in the year-to-date timeframe.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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