Will Apple and Facebook results justify stock market rally?

Written by on May 3, 2017 in News with 0 Comments

REUTERS/Brendan McDermid

SAN FRANCISCO (Reuters) – Apple and Facebook may expand their already outsized share of U.S. technology revenue when they report their earnings this week, as investors look for evidence to justify this year’s U.S. stock market rally.

The two are the last of the top five U.S. tech companies by market value to release their quarterly results, following reports from Alphabet, Microsoft and Amazon.com last week. Those reports impressed analysts and fuelled confidence in the sector, which has so far been the top performer on Wall Street in 2017.

“If we look at the lion’s share of the numbers, they’re performing above expectations,” said Daniel Morgan, a portfolio manager at Synovus Trust, which owns shares of Apple worth about $41 million and shares of Facebook worth $68 million.

“It gives validity to my position, which is that tech is, by far, the most exciting sector,” Morgan said.

Shares of Facebook and Apple both hit record highs on Tuesday, up 0.53 percent and 0.75 percent respectively.

Surges in Apple, Facebook and other Silicon Valley heavyweights have pushed the S&P 500 technology index up by 16 percent this year.

And planned measures by President Donald Trump for steep corporate tax cuts and the easing of tax restrictions on profits made abroad would help Apple and other technology companies return more cash to shareholders.

The largest five Silicon Valley companies for years have been increasing their share of revenue and profits generated in the technology sector at the expense of smaller competitors.

Those five players boosted their share of revenue among technology companies in the benchmark S&P 500 index to 46 percent in 2016, from 38 percent in 2013, according to Thomson Reuters data. Their share of net income increased to 46 percent from 42 percent during the same time.

Facebook and Google, which is owned by Alphabet, received 77 percent of gross spending on digital advertising in 2016, compared to 72 percent the year before, according to industry data analyzed by Pivotal Research analyst Brian Wieser.

Technology company earnings are expected to have grown 17.7 percent in the latest three months, the strongest quarterly expansion since 2014, according to Thomson Reuters I/B/E/S.

Apple is expected by analysts to have boosted its revenue by 4.8 percent when it reports on Tuesday.

On Wednesday, Facebook is expected to post a 45.6-percent leap in revenue and a similar increase in earnings per share, according to analysts’ estimates.

(By Noel Randewich; Additional reporting by David Ingram; Editing by Bernadette Baum)

Tags: , ,

About the Author

About the Author: Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. .


If you enjoyed this article, subscribe now to receive more just like it.

Subscribe via RSS Feed

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: