Thematic Spotlight: All Eyes on FANG As Earnings Season Kicks Off

Artificial Intelligence and Big Tech

The third major earning season of the 2024 financial year is quickly approaching, and all eyes will be on the FANG stocks. Microsoft, Meta, Google and Tesla will be the first of the group to be tested against market expectations and should history prove meaningful, any misses are unlikely to be taken kindly. Last week was a taste of just how harsh investors could be. Nvidia’s stock price fell 10%, wiping US$200 billion in market value, on the mere news of a partnering firm’s refusal to post preliminary results.1 Nvidia is yet to post its Q3 FY24 results which are scheduled to arrive in late May.2

Despite the high-stakes environment, most analysts predict that the FANGs will outperform this quarter and help continue the winning streak the tech sector has enjoyed since the beginning of the year.3 That is, except for Tesla, the worst performer of the FANGs this year, and the first to report, which analysts expect to report poorly. Last week, the company announced price cuts across its entire range of EVs citing severe competition and laid-off roughly 10% of its workforce to cut costs.4

Meta Platforms, however, up almost 40% this year and due to report this Thursday, is expected to be a star performer.5 Analysts say the company will show revenue growth of 26% this quarter, and nearly double its net earnings YoY after focusing on AI to improve ad targeting and content algorithms.6 Microsoft and Google, adversaries in the ongoing AI race, will report simultaneously this Friday.7 Investors will be watching closely to see which of the two firms demonstrates the best ability to translate AI prowess into tangible profits. Analyst broadly anticipate both Microsoft and Google to report well, with consensus estimates signalling a 15% and 11% rise in revenue respectively.8

While it is always difficult to predict how a company will report each earnings season, the FANG stocks do have reason to perform. After all, they are some of the best positioned companies in the world to capture the AI megatrend. One thing is certain, with how much sway these firms have over the market, this earnings season is one that you will want to watch closely.

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Forecasts are not guaranteed and undue reliance should not be placed on them. This information is based on views held by Global X as at 22/04/2024.

Past performance is not a reliable indicator of future performance

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