Apple, Amazon and Alphabet reports are coming ⌚ What to expect from BigTech?

Wall Street's biggest companies will show financial results for Q4 2022 today after the session. The market will pay particular attention to device sales (Apple), cloud-computing revenue (Alphabet, Amazon) and advertising (Alphabet), as well as estimated investments, costs and of course forecasts for 2023. Analysts expect a marked slowdown in tech reports. A relatively well received Meta Platforms (META.US) report gave bulls hope that the publications of the other three tech giants would be positive, however. Alphabet and Amazon shares are gaining nearly 6%, Apple's share price is rising slowlier.

Apple (AAPL.US)

Forecast (Bloomberg)

Revenue $121.14 billion vs. $123.95 billion in Q4 2021
Earnings per share (EPS) $1.94 vs. $2.1 in Q4 2021 
IPhone revenue: $68.3 billion
MacBook revenue: $9.72 billion
Revenue from products / services: $98.98 billion / $20.47 billion

Wall Street expects the company to report a decline in revenue for the first time since 2019. Apple intends to gradually move production out of China, which could affect costs. Analysts will turn their attention to sales of iPhones and MacBooks in the face of weaker economic conditions, supply chain issues and production shutdowns in China. Analysts estimate a 2% year-on-year decline in revenue in the usually record-breaking Christmas quarter, and expect a negative impact from the supply chain and exchange rates. According to analysts at Cowen, Apple's business will enter a slowdown after several years of boom that lasted in an environment of cheap debt financing and a very positive global economy. 

Amazon (AMZN.US)

Forecast (Bloomberg)

Revenue: $145.8 billion (Bloomberg) vs. $137.41 billion in Q4 2021
Earnings per share: $0.17 vs. $0.29 in Q4 2021
Cloud revenue (AWS): $21.76 billion
Operating margin: 1.85%
Wall Street expects the e-commerce giant to post its slowest revenue growth in more than 20 years. Attention will focus on Christmas sales, cost reductions, and whether the company will be able to cut costs enough after the recent wave of layoffs (18,000 employees) to boost profits after a period of massive investment in 2020-2021. 

Very important will be the profitability of the Amazon Web Services cloud-computing business, which, although it accounts for about 22% of the company's revenue, accounts for more than half of its total profits (!) Last week, Microsoft issued forecasts of weaker Azure cloud growth.If this is also noted by the largest cloud-computing provider, Amazon investors will likely see this as confirmation of a broader slowdown in the technology market. Analysts estimate that cloud sales growth was around 23.5% in 2022, and could fall below 20% in 2023.

Alphabet (GOOGL.US)

Forecast (Bloomberg)

Revenue: $76.48 billion vs. $75.32 billion in Q4 2022
Earnings per share (EPS): $1.20 vs. $1.53 in Q4 2021
Google revenue: $60.64 billion (more than 80% is advertising)
Estimated Google cloud revenue: $7.29 billion
Operating margin: 23.8%

Analysts expect that Google's digital advertising business (more than 60% of revenue) will not resist the broader slowdown in the ad market, and Meta's results show that while 'tragedy' is not in sight, 2023 may not be much better than the previous year. Wall Street will be listening to CEO Sundar Pichai's New Year's predictions and expecting commentary on massive job cuts. Also important will be cloud computing, which the company is trying to match with Amazon and Microsoft so results and forecasts on 'cloud computing' may also weigh on sentiment.

Alphabet, as one of the global leaders in the AI industry, has been affected by Microsoft's record investment in OpenAi, provider of the popular chat-bot, ChatGPT. The trend of new search engines using artificial intelligence has led some analysts to see a threat to Google's continued dominance. Investors will pay attention to whether management also sees this threat and whether it intends to 'pick up the gauntlet' by developing a 'you.com' browser or other steps.

Apple shares (AAPL.US), W1 interval. Looking more broadly at the shares of Apple, whose capitalization is the largest among all Wall Street companies, we see that sentiment has deteriorated markedly, with the RSI indicator recording a slowdown since 2020 and currently at neutral levels around 50 points. In the fall, the price dived below the 100-week average (SMA100, in black), which was a long-term resistance line and has now gone from support to resistance. A weaker report could push the price towards the 38.2 Fibonacci retracement of the upward wave started in March 2020, at $132 per share with the next potential support being the SMA 200 (red line). Outperformance, on the other hand, may cause the price to overcome resistance in the form of SMA100 and 23.6 Fibo elimination. Source: xStation5