EC Previewing Big Tech Earnings

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Technology stocks have been less than stellar performers this year, with a number of last year’s leaders struggling to find traction in an environment that made the previously shunned cyclical/value stocks more attractive.

You can see the group’s recent performance in the chart below that shows the year-to-date performance of the Zacks Technology sector (blue line; third from the top, up +12.1%) and the S&P 500 index (red line; fourth from the top, up +10.9%), Microsoft (MSFT - Free Report) – purple line; second from the top, up +17.3%), Apple (AAPL – orange line at the bottom, up +1.6%) and Amazon (AMZN – green line, second from the bottom, up +3.6%) and Facebook (FB - Free Report) – light green line, up +10.3%).

As you can see above, Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) are clearly the laggards this year, with Microsoft and Alphabet doing better than the market. Part of the explanation likely is that Apple and Amazon were flying high last year and they have been going through a period of consolidation before resuming their upward move. It will be interesting to see if this week’s quarterly results will help change sentiment on these two stocks, as we saw happen for Alphabet (GOOGL - Free Report) following the search giant’s last earnings release.

These five companies combined now account for 16.9% of the total market capitalization of the S&P 500 index, down from 17.4% of the total in October last year, but still second only to the Technology sector’s weight in the index at 31.4% and above the other 15 sectors, including Finance at 13.4% (Finance’s weight increased from 12.1% in October last year).

The chart below shows the earnings and revenue picture for this group of 5 companies in the aggregate, on a quarterly basis, with expectations for 2021 Q1 highlighted.

The table below shows the group’s earnings picture on an annual basis.

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Disclosure: 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 specific ...

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