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3 Must-Watch Tech Earnings Reports This Week

By Daniel Sparks – Oct 27, 2020 at 6:46AM

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These tech giants will provide key insight into the U.S. and global economy.

Earnings season is here -- and this week is particularly packed with reports. Though many tech companies will be releasing their latest quarterly results this week, three definitely worth watching are tech giants Amazon (AMZN 2.92%) Facebook (META 2.24%), Apple (AAPL 1.81%). All three of these companies are slated to report quarterly results after market close on Thursday.

Ahead of their earnings reports, here's a quick preview of some items related to each company that will be worth checking on.

The word "technology" written over codes

Image source: Getty Images.

Amazon: Did revenue soar again?

E-commerce and cloud-computing giant Amazon absolutely obliterated analyst estimates when it reported second-quarter results in July. Net sales soared 40% year over year to an all-time record of $88.9 billion. Net income jumped from $2.6 billion in the year-ago quarter to $5.2 billion. The ongoing adoption of e-commerce was accelerated during the quarter as consumers sheltered at home. 

While investors are planning for a deceleration in Amazon's revenue growth rate in Q3, they are still expecting impressive growth. On average, analysts forecast third-quarter revenue to rise about 32% year over year.

Investors should also look to Amazon's guidance for the important holiday quarter. On average, the consensus analyst forecast for the period currently calls for 27% year-over-year growth. 

Apple: Can services keep up its momentum?

Tech giant Apple surprised investors when it reported double-digit revenue growth and growth in every single product segment and geography in its last quarter. The strong business performance highlighted the resiliency of Apple's business model during trying times. Did Apple keep up this momentum in fiscal Q3?

Analysts were shooting in the dark when it came to estimating Apple's revenue growth for its just-ended fiscal fourth quarter, as management didn't provide any guidance. On average, analysts are expecting revenue for the period to be about flat compared to the year-ago period. Meanwhile, earnings per share is expected to decline about 7%.

Investors should check in on Apple's services business. As the company's second-largest segment, the lucrative segment is becoming increasingly important to a long-term thesis for Apple stock. Did the service business keep up a similar growth rate as it achieved in fiscal Q3, its revenue increased 15% year over year?

Facebook: A critical look at advertising spend trends

Facebook's third-quarter report will be particularly interesting since it will help investors get a good look at how global advertising spend is faring during these uncertain times. In Q2, Facebook's year-over-year advertising revenue growth rate slowed to 10% -- down from 17% in the first quarter of 2020.

Analysts are largely expecting another quarter of slower growth compared to before the coronavirus. On average, analysts are modeling for the tech company's advertising revenue to grow about 12% year over year in Q3.

Just as is the case with Amazon, investors should look for any insight into management's expectations for the important holiday quarter. Advertising spend typically jumps sharply sequentially in Q4. But there's a lot of uncertainty surrounding how 2020's holiday season could play out.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, and Facebook and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. The Motley Fool has a disclosure policy.

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