Where Facebook Inc. has faltered, other giants of U.S. tech have continued to thrive.
After the closing bell rang on a day dominated by Facebook’s bombshell earnings report, Amazon.com Inc. posted its most profitable quarter ever, with US$2.5-billion in earnings, while narrowly falling short on revenue. Earnings per share of US$5.07 more than doubled analysts’ consensus forecast.
The company’s stock moved higher in after-market trading, potentially setting up a strong day for tech stocks in what will be a closely watched sector on Friday.
Amazon’s earnings beat rounded out a mixed earnings season for the FANG group of stocks.
On the downside, Facebook rattled investors when it missed projections for revenue and user growth, raising doubts about the company’s growth trajectory. The market reacted forcefully on Thursday, wiping out US$120-billion from Facebook’s market capitalization – the largest one-day drop in value on record.
Netflix Inc. also alarmed the market last week when it fell short of expectations for subscriber growth.
But Google parent Alphabet Inc. handily beat earnings estimates on the might of its advertising business combined with restraint on expenses.
Elsewhere in U.S. tech and internet stocks, after-hours traders were also digesting earnings beats posted by Expedia Group Inc., Western Digital Corp., and Intel Corp. Despite Intel’s beat, and despite raising its full-year guidance, the company’s stock declined after the bell on Thursday, as growth in the company’s data center business fell short of consensus.
Meanwhile, Biotech giant Amgen Inc. came out ahead of its quarterly estimates. As did Starbucks Corp. – another big Nasdaq listing.
All of which should lend support to the tech-heavy Nasdaq Composite Index, which declined by 1 per cent on Thursday on Facebook growth fears.
Facebook’s smaller social-media rival Twitter Inc. also released earnings before market open on Friday. Analysts were expecting adjusted earnings of US$0.16 per share, and results were inline with those forecasts. But shares tumbled 13 per cent in premarket trading after the company reported a decline in monthly active users and weak guidance.
Despite a couple of big exceptions, U.S. earnings season is shaping up to be a strong one for tech stocks, and the market in general.
The tech sector is on track for year-over-year growth of 22.8 per cent, which is slightly higher than the average expected across all S&P 500 companies, according to Thomson Reuters data.
With close to half of the index’s companies having reported, the second quarter is expected to see earnings growth of 22.4 per cent.