Apple, Amazon, Microsoft Headline Busy Earnings Week

Tech giants including Apple Inc., AAPL -2.78% Amazon. AMZN -2.66% com Inc. and Microsoft Corp. MSFT -2.41% are among the companies headlining a busy earnings week that comes as investors weigh concerns over rising interest rates, the Russian invasion of Ukraine and surging costs.

Overall, about a third of the S&P 500 and nearly half of the Dow Jones Industrial Average are expected to provide their quarterly updates during the week starting Monday, according to FactSet.

Facebook parent Meta Platforms Inc., FB -2.11% Google owner Alphabet Inc. GOOG -4.26% and Twitter Inc. have earnings on tap next week. Also expected to provide quarterly updates are industrial conglomerates such as General Electric Co. and 3M Co. ; food heavyweights Mondelez International Inc. and McDonald’s Corp. MCD -1.99% ; and other big names in manufacturing and pharmaceuticals.

 

Covid-19-related supply-chain issues remain a problem, and the Russian invasion of Ukraine is presenting new obstacles for businesses. Investors are looking to see how companies are addressing those topics as well as maneuvering amid a macroeconomic backdrop marked by high inflation.

 

“Inflation is higher than we thought,” Scott Kirby, chief executive of United Airlines Holdings Inc., said on Thursday. “We built high inflation in over a year ago, and we thought we were being conservative, but I think everyone has been surprised by how high inflation has been.”

Tech companies, after benefiting during the pandemic as restrictions and public-health concerns left many Americans homebound, now face an evolving landscape as consumer spending shifts toward in-person goods and services.

 

Netflix Inc. already has sounded a note of caution by reporting that it lost subscribers for the first time in more than 10 years and expects those losses to accelerate in the current quarter.

As other companies report earnings for the recently completed quarter, many are expected to point to the severe public-health restrictions in Shanghai and elsewhere in China that have disrupted supply chains, said Brian Belski, chief investment strategist at BMO Capital Markets.

“Technology companies have a free pass right now, because the sector’s down,” Mr. Belski said, adding that CEOs will use supply-chain issues tied to China to lower expectations. “It doesn’t mean that the earnings are going to suck. It just means that this is their opportunity to really set the bar lower and under promise and over deliver.”

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So far, about 20% of S&P 500 companies have reported earnings for the recently ended quarter, according to FactSet. Earnings are on track to rise 6.6% year-over-year for the quarter, based on actual results and estimates for companies that have yet to report, FactSet said. That would be the lowest earnings-growth rate reported by FactSet’s index since the fourth quarter of 2020. Revenue for the recent period is poised to rise 11.1% year-over-year, FactSet said.

Microsoft, which reports its fiscal third-quarter results on Tuesday afternoon, is expected to report a nearly 18% rise in revenue, according to FactSet, driven by continued cloud growth. Investors will also likely be looking for more insights into the company’s $75 billion all-cash deal to buy videogame maker Activision Blizzard Inc., which posts its quarterly results Monday.

Apple, which reports its second-quarter earnings on Thursday afternoon, is expected to see its profit fall slightly to $23.33 billion from the prior-year period’s pandemic-boosted results, according to FactSet. Analysts expect Amazon, also slated to report Thursday, to show its quarterly profit fell almost 46% to $4.39 billion after a pandemic-era burst, according to FactSet estimates.