This Earnings Week Will Be A Busy One

Apple Inc AAPL, Facebook Inc FB, Microsoft Corporation MSFT, and Tesla Inc TSLA are ready to report record sales this week, along with nearly a quarter of S&P 500 companies scheduled to release their earnings reports. It will also be a busy week, or more precisely a busy Tuesday, for the Dow Jones Industrial Average, with 3M Co MMM, Johnson & Johnson JNJ, American Express AXP and Verizon Communications VZ joining Microsoft as fourth-quarter earnings season gets into full swing.

Tuesday

The chip saga continues with Advanced Micro Devices AMD whose shares rose about 5% over the past week. Expectations are high due to its strong fourth quarter results and Intel Corporation's INTC upside guidance that was issued last week. Wall Street expects earnings of $0.47 on revenue of $3.02 billion as it assumes the pandemic made a minimal disruption to its business with positive trends in the data center business and PC sales. AMD has steadily gained market share from Intel in both of these categories.

Microsoft will also report after the close, with Wall Street expecting earnings of $1.64 per share on revenue of $40.18 billion. The trends of working and learning from home continue to intensify demands for Microsoft's offerings, as evidenced by the strong Q4 demand. But its biggest strength over the past year has been the commercial cloud business, and Wall Street remains strongly positive about the company's outlook for fiscal 2021 due to Azure's momentum as it's revenue was up 48% on a YoY basis in the previous quarter. This was, however, a slight deceleration from the 50% growth in Q4, and investors will want some evidence that both Azure and Microsoft's Teams that compete against Zoom Video Communications Inc ZM can continue fueling its revenues to new heights.

Wednesday

Apple will report after the close, and Wall Street expects earnings of $1.40 per share on revenue of $102.76 billion. The holiday quarter is always a big quarter for Apple and it needs to meet these high expectations, as last year's quarter saw earnings of $1.25 per share on revenue of $88.5 billion. This quarter will be all about sales of the iPhone 12. However, Apple is about more than the iPhone, as its services business now accounts for almost 22% of total revenue. Last quarter, its revenue surged to a new record of $14.5 billion.

Facebook will also report after the close with Wall Street expecting earnings of $3.19 per share on revenue of $26.34 billion. Facebook shares had an impressive run over the past week, suggesting that the concerns over digital advertising due to the pandemic have vanished. The social media giant topped consensus earnings expectations in each of the past eleven quarters and has missed earnings estimates just once over the past half of a decade. Yet, over the past year, its shares have been underperforming due to fears of regulatory and political risk. But if it shows a strong surge in daily and monthly active users with upbeat revenue guidance, its stock should be just fine.

Tesla will report for the first time since it became part of the S&P 500. Wall Street expects earnings of $1.00 per share on revenue of $10.32 billion. Tesla's shares are up 20% year to date and 99.9% since the company last reported earnings on October 21, confirming that it is not showing any signs of slowing down. Elon Musk's focus has been on executing the strategy that brought top and bottom-line improvements while delivering almost half a million vehicles in 2020. Now, the electric vehicle pioneer has to show it intends to keep pressing the gas pedal.

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