The busiest week of earnings season is about to begin, and the companies Tesla and Big Tech are expected to dominate the headlines. The six largest companies in the S&P 500 SPX index, + 1.09%, will report gains in the next week, as roughly a third of the index reveals first-quarter numbers. The good results from the tech giants helped offset the weaker performance of many other sectors early in the COVID-19 pandemic, and investors will have an idea if that momentum can continue as the world begins to reopen.
One of the newest members of the S&P 500, Tesla Inc. TSLA, + 1.35%, starts the week on Monday afternoon. The company has already reported first-quarter deliveries that far exceeded expectations, so investors will look to Tesla’s earnings call for clues as to how the rest of the year could turn out. The consensus forecast currently foresees around 800,000 deliveries over the course of 2021. Earnings preview: Tesla to report earnings amid renewed concerns about Autopilot Microsoft Corp. MSFT, + 1.55% and Alphabet Inc. GOOG, + 2.09% GOOGL, + 2.10% follows Tuesday afternoon with two portraits of the cloud computing landscape. Microsoft’s Azure cloud business “may slow modestly” in March quarter results, Cowen & Co.’s J. Derrick Wood wrote in a note to clients, but expects an acceleration in overall growth driven by improvement. demand for products such as the Office suite. amid the economic recovery and strong shipments of personal computers that could help the Windows business. Alphabet appears to be showing “sustained strength in the cloud,” wrote Jefferies analyst Brent Thill, who expects that part of the business to benefit from “pent-up demand” as the year progresses. It also anticipates acceleration ad momentum. Alphabet earnings preview: Google‘s ad revenue expected to be bright despite dark antitrust clouds Another take on the ad landscape to come from Facebook Inc. FB, + 1.55% Wednesday afternoon, following the report SNAP, + 7.45% from Snap Inc. showing healthy ad spend. The biggest growth drivers for Facebook could be the increased revenue from Instagram Stories and the growth of impressions on the top mobile feeds on Facebook and Instagram, wrote John Blackledge of Cowen. Earnings Preview: Facebook’s Digital Ad Revenue Keeps In Despite Antitrust Threat Apple Inc. AAPL, + 1.80% was a strong beneficiary of the pandemic as its iPad and Mac categories saw solid growth since the remote work boom, and Morgan Stanley’s Katy Huberty argues that strength in those categories may have accelerated in the March quarter. His forecasts point to a 53% growth in the Mac business and a 52% growth in the iPad business when Apple releases the results on Wednesday afternoon. Earnings Preview: Apple’s business is roaring and investors are about to find out how much of that cash will make it to them. Rounding out the week on Thursday afternoon is Amazon.com Inc. AMZN, + 0.96% It was another big winner from the pandemic amid an online shopping boom, and admittedly “there is no easy catalyst. in sight “for Amazon today, wrote Bernstein analyst Mark Shmulik. Still, it signals “positive business momentum and attractive secular growth everywhere we look.” Thinking back to the first quarter, he expects the company to benefit from the continued strength of e-commerce and the arrival of stimulus controls. Ultimately, Shmulik expects a “workload migration acceleration” for Amazon’s cloud business as workers return to office life, but admits this may take a few quarters to materialize. Don’t Miss: The COVID-19 tech boom won’t last forever, but Tesla isn’t over yet, and the tech titans are among the 177 S&P 500 members to report in the next week. The list also includes 10 Dow Jones Industrial Average DJIA, + 0.67% components, a third of the components of the top-line index. Overall corporate earnings have beat estimates so far, with a 73% improvement rate for the S&P 500, according to JPMorgan analyst Mislav Matejka. About a quarter of the index has already delivered results, and analysts surveyed by FactSet expect earnings to have increased overall by 33.7% during the first quarter. That’s a 15.7% increase that was expected at the end of December. These are some of the other highlights for next week. Big week for the Dow Among the 10 Dow components on the agenda are Boeing Co. BA, + 1.73% and Chevron Corp. CVX, + 0.59%, two companies looking to recover from dismal recent earnings performance. Analysts tracked by FactSet expect Chevron’s earnings to fall 31% in the March quarter, although that drop is not as steep as what Chevron posted in previous quarters. Mizuho analyst Daniel Boyd anticipates that the last period was a “challenging” quarter for Chevron, as the winter storms “negatively affected Permian production, chemicals and the Pasadena refinery on the US coast. Gulf”. The company reports on Friday morning. Even more tech While the five largest tech companies are reporting this week, there are plenty of other tech stalwarts lined up to report. Advanced Micro Devices Inc. AMD, + 4.68% will publish results Tuesday afternoon after rival Intel Corp. INTC, -5.32% showed a drop in data center sales that some analysts attributed to the competition from AMD. Even before Intel’s earnings, Cowen’s Matthew Ramsay wrote that “AMD‘s earnings (and product roadmaps) have become much less volatile compared to Intel’s, and we expect more of the same this quarter. “. Facebook won’t be the only social media name in the spotlight, such as Pinterest Inc. PINS, + 4.17% reporting Tuesday afternoon and Twitter Inc. TWTR, + 4.21% reporting Thursday afternoon. Some elements of Snap‘s recent report bode well for Pinterest, according to Wedbush analyst Ygal Arounian, who cited strength in categories like retail, e-commerce, and packaged goods that are also important categories for Pinterest. While the reopening appears to be helping Snap‘s user engagement trends, it could hurt Pinterest, he warned. What to think about A series of food-related stocks will be on the menu next week. Mondelez International Inc. MDLZ, -0.07% and Starbucks Corp. SBUX, + 1.41% reported Tuesday, while Domino’s Pizza Inc. DPZ, -0.26% and McDonald’s Corp. MCD, + 0.70% published results Thursday. One trend to watch out for with McDonald’s is early demand for the company’s new chicken sandwiches, which launched in February. Third-party data indicates that the company “saw a growing gap against [quick-service] pairs starting in late February and continuing through March as a result primarily, in our opinion, of their long-awaited new crispy chicken sandwich, ”wrote Jefferies analyst Andy Barish, who said stimulus controls may also have given a boost. to the company. Pay it forward Multiple readings on consumer spending will come from Visa Inc. V, + 1.07% (Tuesday afternoon), PayPal Holdings Inc. PYPL, + 1.43% (Wednesday afternoon) and Mastercard Inc. MA, + 0.97 % (Thursday morning) . Some improvements in travel trends could help Visa and Mastercard, while all three could benefit from sustained traction in e-commerce. For PayPal, investors will be looking for updates on the company’s efforts to introduce cryptocurrencies into its ecosystem. PayPal began allowing US users to buy, sell and hold bitcoins and other cryptocurrencies in their PayPal wallets late last year, something that it said was driving greater engagement with its app. More recently, the company started allowing customers to shop online using those crypto stocks, and management can share more about early trends there.