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Tuesday's Market Minute: Tech Heavy Weights AMZN, GOOGL Ahead Of Earnings

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Tuesday's Market Minute: Tech Heavy Weights AMZN, GOOGL Ahead Of Earnings

Ahead of Alphabet Inc (NASDAQ: GOOGL) and Amazon.com, Inc.’s (NASDAQ: AMZN) quarterly numbers, which will release after the bell Tuesday, analysts have lofty expectations. In the S&P 500, currently the 10 largest stocks compose roughly 30% of the index’s market value, meaning that between Amazon’s and Alphabet’s combined near 6% weight, these large-caps have the scale to significantly move the index with their reports.

As we enter the second month of the new year, Alphabet bulls are anticipating a rebound in online advertising as industries around the world attempt to normalize. Guidance on renewed growth for Google and YouTube’s ad business would be a positive for Alphabet’s stock.

Another notable factor to consider in Alphabet’s 4Q is that its cloud computing will be broken out into a separate segment. This is what many analysts are saying could be the highlight of the company’s December quarter results. Plus, the company has an ongoing repurchase program which could aid in boosting earnings. In its third quarter, Alphabet bought just shy of $8 billion of its own shares compared to $7 billion in June and $8.5 billion in March.

On the other hand, the Street believes this quarter will only solidify Amazon’s position as the main pandemic “winner”. The e-commerce and tech company has been regularly surpassing its operating profit outlook in the last few years. Last quarter, this number blew estimates of $2 billion to $5 billion out of the water, coming in at $6.2 billion.

And in addition to getting clarity on Amazon’s holiday shopping season, revenue should also get a boost from the annual Prime Day event, which was pushed back to the fourth quarter this year due to the ongoing pandemic. Investors should also continue maintaining focus on AWS overall. In third quarter, AWS’s revenue surged nearly 30% Y/Y to $11.6 billion, or 12% of the company’s total revenue.

Despite remaining down about 10% since its October earnings, Amazon shares have soared over 72% in the year-long period ending January 29, compared to the S&P 500’s over 15% return in the same period.

Photo by Brett Jordan on Unsplash

 

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Posted-In: Alphabet Amazon.comEarnings News Guidance Markets Tech General

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