Mega technology giants, including Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META), and Amazon (NASDAQ:AMZN) are set to report their quarterly earnings this week. While inflation has eased a bit, macro headwinds and ongoing moderation in IT and ad spending could continue to impact these tech giants’ top and bottom lines.
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Against this backdrop, let’s check what analysts project for these companies ahead of their quarterly print.
What to Expect from Google’s Earnings?
Google’s parent company, Alphabet, will announce its first quarter financial results on Tuesday, April 25. Wall Street expects GOOGL to post revenue of $68.87 billion, reflecting a year-over-year increase of over 24%. However, analysts expect Alphabet’s earnings to decline in the first quarter. The Street expects GOOGL to report earnings of $1.08 a share, down from $1.23 in the prior-year quarter.
The ongoing weakness in ad revenues could continue to pressure its top and bottom lines in Q1. On April 21, Brian White of Monness said that Alphabet could meet the consensus estimate. However, the analyst sees revenue declining on a quarter-over-quarter basis. White noted that Google’s ad revenues could decrease by 1% in the first quarter of 2023. However, the analyst expects its cloud revenues to grow by 27%.
Nevertheless, White remains bullish on GOOGL stock and expects the company to benefit from digital transformation and a leaner cost structure.
Overall, GOOGL stock has a Strong Buy consensus rating based on 28 unanimous Buy recommendations. These analysts’ average price target of $127.85 implies 21.29% upside potential.
How is Microsoft Expected to Perform in Q3?
Microsoft is scheduled to report its third-quarter Fiscal 2023 earnings on Tuesday, April 25. Analysts forecast revenue of $51.11 billion, up about 3.4% year-over-year. At the same time, Wall Street expects the company to report earnings of $2.24 a share, reflecting a slight increase over the prior-year quarter’s earnings of $2.22.
Analysts expect the weakness in the PC market, moderation in cloud revenues, and lower ad spending to impact MSFT’s Q3 financials negatively.
Last week, Deutsche Bank analyst Brad Zelnick reiterated his Buy recommendation on MSFT stock. While the analyst sees ongoing challenges across its key businesses, he expects trends to improve as the year progresses. However, the analyst expects the deceleration in Azure (MSFT’s cloud services) to continue in Q3.
Including Zelnick, 27 analysts recommend a Buy on MSFT stock ahead of Q3 earnings. Four analysts recommend a Hold, and one analyst has a Sell. Overall, Microsoft sports a Strong Buy consensus rating on TipRanks. Further, the analysts’ average price target of $307.37 implies 7.56% upside potential.
Is Meta Expected to Beat Earnings?
Meta Platforms will report Q1 financial results after the market closes on Wednesday, April 26. The company has missed analysts’ earnings estimates in three out of four quarters. As for Q1, analysts expect Meta to post earnings of $2.02 per share, reflecting a decline from the prior-year quarter.
Analysts expect Meta’s top line to decline slightly to $27.62, reflecting the challenging macro environment. In a note dated April 17, Monness analyst White said that he expects the social media giant to meet the Q1 revenue estimate. Moreover, the analyst lauded the company’s efforts to improve its structure. However, he expects advertising revenue to decline in Q1 due to the ongoing macro headwinds.
Of the 49 analysts providing recommendations on Meta stock, 39 recommend a Buy. At the same time, seven suggest a Hold, and three have Sell recommendations. Overall, Meta has a Moderate Buy consensus rating. Analysts’ average price target of $234.31 represents 10.06% upside potential.
What Will Amazon’s Earnings Be?
Internet commerce giant Amazon will announce its first quarter financial report on Thursday, April 27. Macro pressure on consumer spending, ongoing softness in the e-commerce business, and moderation in cloud revenues could continue to impact AMZN’s Q1 revenue and earnings negatively.
Wall Street expects AMZN to post revenues of $124.55 billion in Q1, reflecting a growth of about 7% from the $116.44 billion reported in Q1 of the prior year. Further, analysts expect AMZN to post earnings of $0.21 a share in Q1, compared to a loss of $0.38 in the previous year’s period.
J.P. Morgan analyst Doug Anmuth termed AMZN the best internet idea ahead of Q1. While Anmuth expects macro pressure to weigh on AMZN’s growth in Q1, the analyst expects the company to benefit from easier year-over-year comparisons in the retail business. Moreover, Anmuth expects AMZN’s margin to expand in 2023 on the back of its cost restructuring initiatives.
AMZN stock is a Strong Buy on TipRanks based on 35 Buy and one Hold recommendations. Meanwhile, analysts’ average price target of $135.88 implies 27.04% upside potential from current levels.
Bottom Line
The shares of these tech giants saw a recovery in 2023, thanks to the easing of inflation. However, the ongoing macro headwinds could continue to negatively impact the revenue and earnings of these companies in the short term. Nonetheless, easier year-over-year comparisons in the coming quarters, a leaner cost structure, and a recovery in advertising and IT spending will likely support the long-term growth of these companies.
