Which Tech Giant to Buy Before a Busy Earnings Week?

Updated: Jan 31, 2021

Tech gi­ants Mi­crosoft, Apple, and Tesla Inc. will be among the com­pa­nies head­lin­ing a busy earn­ings week, shed­ding more light on how busi­nesses per­formed at the end of 2020.

Over­all, more than a fifth of the S&P 500 and a third of the Dow Jones In­dus­trial Av­er­age are ex­pected to pro­vide their quar­terly up­dates start­ing Mon­day, ac­cord­ing to Fact­Set. In ad­di­tion to tech, the sched­ule in­cludes some of the big­gest names in man­u­fac­tur­ing, restau­rants and telecom­mu­ni­ca­tions.

Many tech com­pa­nies have seen their sales jump dur­ing the coro­n-avirus pan­demic, as peo­ple leaned more on their prod­ucts and ser­vices while work­ing, school­ing and en­ter­tain­ing from home. And the strong re­sults are ex­pected to con­tinue in the hol­i­day quar­ter. For the first time ever in their re­spec­tive his­to­ries, Apple’s quar­terly sales are ex­pected to cross $100 bil­lion and Mi­crosoft is pro­jected to pass $40 bil­lion.

Mi­crosoft, which re­ports its sec­ond-quar­ter re­sults on Tues­day, has ben­e­fited from rises at its cloud and gam­ing busi­nesses. The com­pany re­cently re­leased two new Xbox gam­ing con­soles—the X Box Se­ries S and X Box Se­ries X—for which it was ex­pect­ing strong de­mand. Still, other parts of Mi­crosoft’s busi­ness have faced chal­lenges in the pan­demic, such as its on-premise server busi­ness and its LinkedIn so­cial net­work.

Apple, which re­ports first-quar­ter re­sults Wednes­day, is ex­pected to show strong iPhone sales af­ter the de­layed launch of the iPhone 12 weighed on its fourth-quar­ter rev­enue. The com­pany is among the top ven­dors of per­sonal com­put­ers, which in 2020 saw their best growth in a decade. In Apple’s fourth quar­ter, sales of iPads and lap­tops boosted its re­sults. Shares of Apple have also been re­silient dur­ing the pan­demic, ris­ing 75% dur­ing the past 12 months. Mi­crosoft shares have gained 36%.

Te­la’s shares have ral­lied more than sev­en­fold dur­ing the past year. Elon Musk’s com­pany will re­port its fourth-quar­ter re­sults on Wednes­day. An­a­lysts are ex­pect­ing the elec­tric-ve­hi­cle maker to post a profit, ac­cord­ing to Fact­Set, which would be the sixth quar­ter in a row the com­pany has done so. An­a­lysts are ex­pect­ing rev­enue to sur­pass $10 bil­lion, Fact­Set said.

In ad­di­tion to the tech heavy-weights, ma­jor telecom­mu­ni­ca­tions and food com­pa­nies are also re­leas­ing their re­sults. Star­bucks Corp. is slated to re­port on Tues­day, and Mc­Don­ald’s Corp. will fol­low on Thurs­day. Ver­i­zon Com­mu­ni­ca­tions Inc. is re­port­ing re­sults Tues­day, fol­lowed by AT&T Inc. on Wednes­day and Com­cast Corp. on Thurs­day. 3M Co.—a big maker of N95 masks—is re­port­ing its re­sults on Tues­day.

Other no­ta­bles sched­uled to re­port in­clude Gen­eral Elec­tric Co., John­son & John­son and Ad­vanced Mi­cro De­vices Inc. on Tues­day; Boe­ing Co. and Face­book Inc. on Wednes­day; Mast­erCard Inc. and Visa Inc. on Thurs­day; and Cater­pil­lar Inc. on Fri­day.

Only 13% of the S&P 500 in­dex have re­ported earn­ings re­sults so far this pe­riod, ac­cord­ing to Fact­Set. Earn­ings are on track to fall 4.7% year-over-year for the quar­ter, based on ac­tual re­sults and es­ti­mates for com­pa­nies that have yet to re­port, Fact­Set said. Such a drop would mark the fourth straight quar­ter in which the in­dex has re­ported a year-over-year de­cline in earn­ings.

Rev­enue for 2020’s fi­nal quar­ter is on pace to in­crease 0.7% year-over-year, also based on ac­tual re­sults and es­ti­mates for com­pa­nies that have yet to re­port, Fact­Set said.