Big Tech Earnings, Congress Hearing To Determine Trajectory Of Growth

What Happened?

Last week set the scene for a momentous Silicon Valley earnings week, with results due from Amazon Inc AMZN, Apple Inc AAPL, Alphabet Inc Class A GOOG and Facebook Inc FB.

Earnings Analysis

• Facebook realized a 17.6% growth in revenue year-over-year, while guidance remained uncertain due to cuts in company marketing budgets and anti-hate speech campaigns. Decreased ad-spend amongst advertisers is a change that won't be reflected in this quarter's report.
• Alphabet announced that it won't charge third-party retailers a fee for transacting with customers through Google Shopping. As a result, Alphabet may steal market share by luring retailers who aren't fond of Amazon's fees.
• Amazon shares are up 60% year-to-date on strength in e-commerce and cloud technology. Despite strong top lines, profits are expected to be much lower than normal, given the company's COVID-19 response. Additionally, similar to how rival Microsoft reported a deceleration in its Azure segment last week, AWS may show lower growth.
• Apple was among the first to report on the impact of the pandemic, warning of supply chain disruptions, and a hit to sales. With its global reach and ties to the consumer market, Apple will provide investors with great insight into how the overall market is struggling in the new coronavirus world.

The Biggest Event Will Be The Hearing 

Major technology companies will soon testify regarding their business practices. The hearing is the government's most aggressive move against tech since its pursuit to break up Microsoft two decades ago.

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