Skip to main content
Access every election story that matters
Enjoy unlimited digital access
$1.99
per week for 24 weeks
Access every election story that matters
Enjoy unlimited digital access
$1.99
per week
for 24 weeks
// //

On the heels of blockbuster earnings from major U.S. banks, investors are focused on whether an upcoming batch of earnings from major technology-related companies can sustain the season’s early momentum.

Estimated year-over-year first-quarter earnings growth for S&P 500 companies rose to 31% from 25% in the past week, based on Refinitiv data, driven by last week’s stronger-than-expected results from Wells Fargo & Co, Goldman Sachs Group Inc and other banks.

Tuesday brings results from stay-at-home winner Netflix Inc, which is part of the FAANG group of high-profile tech-related names. Chipmaker Intel Corp’s results are due later this week.

Story continues below advertisement

After the bell Monday, shares of International Business Machines Corp were up more than 2% as the company resumed sales growth in the first quarter after a year of declines and beat Wall Street targets.

Earnings for the technology sector, which continued to grow last year while S&P 500 overall earnings dropped as the pandemic took its toll on businesses and consumers, are on track for 25% year-over-year growth in the first quarter.

But this year, tech is expected to lag profit growth of sectors that should benefit from the reopening of the economy, such as financials.

First-quarter profit growth for the S&P 500 financials sector, is now estimated at 116%, compared with 76% a week earlier.

“Every time we go to earnings, there’s always the question of whether (tech) can keep delivering, especially in terms of guidance,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey.

“And they have,” she said. “What you are seeing is investors are prepared to have them - or some of them - in their portfolios along with cyclicals.”

To be sure, many strategists have been bullish on economically focused sectors, and U.S. technology and growth stocks have recently begun to gain again after months of being outpaced by economically sensitive names that appear to be a better value.

Story continues below advertisement

Netflix still lags the broader market. Its stock is up 2.5% so far in 2021 after gaining 67% in 2020, when consumers embraced at-home entertainment during the early pandemic lockdowns, but some analysts are optimistic Netflix’s strong run is not over.

“It is reasonable to anticipate reduced engagement on the platform as the global economy reopens,” Brian White, an internet and software analyst at Monness Crespi Hardt who recommends buying the stock, wrote in a recent note.

“However, this crisis has acted as a catalyst in introducing more consumers to the service and we believe this story has a long runway of growth in the coming years.”

The current cycle of rising chip demand is expected to help semiconductors, said Daniel Morgan, senior portfolio manager at Synovus Trust Company.

“Semiconductors are operating on all cylinders right now. They can’t make them fast enough,” he said.

Micron Technology Inc shares rose when it forecast quarterly revenue above Wall Street estimates due to a rise in demand for memory chips, thanks to 5G smartphones and artificial intelligence software.

Story continues below advertisement

As companies have more money to increase their technology spending, that will support tech companies as well.

“With tech, either way they win. They’re really in a great position right now,” Morgan said.

Microsoft Corp is expected to report April 27.

Rounding out the FAANG reports, Google parent Alphabet Inc , Apple Inc, Facebook Inc and Amazon.com Inc also are due to report results later this month.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies