Tech earnings and the hurdles ahead of us for the rest of the year.
In response to last week's muted response to tech earning in markets, the current narrative that Tech earnings were incredibly underwhelming rings quite hollow. From a fundamental point of view, there are no issues with large-cap tech companies. All of them showed strong sales, strong profitability, and strong expense management.
Going into Thursday, it just wasn’t helpful that tech shares surged significantly going into the reports later that day. In regards to actual underwhelming results, Apple’s iPhone revenue fell by over $1bn and Apple has given no specific guidance given the current climate.
Amazon’s December guidance also fell contrary to expectations given COVID-related expenses. FB had an extraordinarily strong quarter but also talked down expectations going forward and noted they would spend more on capex and opex. Google had strong top-line trends and expense controls though they had the lowest bar to hurdle.
Going into December Q4, investors will be focusing on increasing infection numbers and the government's response in the form of fiscal stimulus, with the largest focus being on the fiscal stimulus discussions after the Presidential and Senate elections. In regards to the political races – Biden is still in the lead in polls and the Senate is expected to flip blue.