Tech Earnings Boost The Stock Market

Facebook and chipmaker AMD reported blow out tech earnings yesterday and propelled the tech-heavy NASDAQ to a 1.5% gain.  The FANG stocks (Facebook, Amazon, Netflix, and Google) added a whopping $87 billion to their collective market cap on Thursday.

But the tech earnings party didn’t stop there.  After hours, Amazon and Intel reported earnings and both knocked the cover off the ball.  Subsequently, the NASDAQ futures show strong gains and today will likely start off strong again.

Moreover, earnings will continue to dominate the rest of this week and next as 1,151 companies report earnings.  Corporate tax cuts will provide a big boost to earnings this quarter and the rest of this year.

Analysts expect earnings to grow by a lofty 17% for the stock market this quarter.  About 9.9% of that growth comes from tax cuts.  Accordingly, there is still a high bar set for earnings beyond the tax cuts.

Apple next up for tech earnings

Apple is will report earnings on May 1st after the market close.  Apple’s earnings report is a particularly important one as it is the world’s biggest company with a market capitalization of $833 billion.

However, the company goes into this earnings report with investor concern that a smartphone sales slump is going to hit earnings.  These concerns picked up steam as major Apple supplier Taiwan Semiconductor reported soft demand.

More recently, Samsung also confirmed weak demand from its mobile division — though the company made up for it with strong memory chip sales.  That means Apple’s two biggest suppliers reported weak sales for mobile components.

This potentially portends weak sales and a possible earnings miss by Apple.  That could temper the tech earnings run higher and also put downward pressure on the stock market early next week.

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Al Basoglu

I am a financial services professional with over a decade of experience in various roles. I've lived and worked abroad in 5 different countries while pursuing personal and professional challenges. My interests include markets, history and different cultures. I tend to weave all of my interest into my analysis and articles.