- More than a third of S&P 500 companies are reporting earnings next week.
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Alphabet sales may get a hit from the possible spending cut on digital ads and Russian war.
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Amazon’s e-commerce business is facing a sharp slowdown as people shift their spending pattern after the pandemic.
- Inflation
- Geopolitical turmoil
- Disruptive technologies
- Interest rate hikes
Earnings releases from some of the largest US companies may help provide direction for investors this week who are looking for signs of weakness in consumer demand amid a threat of recession.
More than a third of S&P 500 companies are reporting, including tech and industrial giants that have global footprints and have the latest update on how inflationary pressures and war in Europe are impacting consumer behavior.
In addition to major earnings announcements, the US Federal Reserve will also announce its decision on interest rates this week amid expectations that a 75 basis point jump is a done deal. The Fed has been pursuing the most aggressive monetary tightening in decades to cool down the economy and tame a four-decade high rate of inflation.
Below, we've short-listed three stocks from different sectors we’re monitoring as Q2 earnings season ramps into full swing:
1. Alphabet
Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG), the parent company of Google, will be reporting second-quarter 2022 earnings on Tuesday, July 26, after the market close. On average, expectations are for earnings per share of $1.28 on revenue of $70.04 billion.
Google’s Q2 results are likely to be impacted by the Russian war in Ukraine, a worsening macro environment in which companies are cutting their ad spending, tougher comparisons against pandemic highs and changing foreign exchange rates.
Alphabet Earnings History
Ahead of the earnings announcement, some equity analysts have lowered estimates for YouTube sales in part to reflect the heightened competition from ByteDance Ltd.’s TikTok video app.
Google is also facing a tougher regulatory environment in Europe. Google’s second-largest business line, its network system that runs ads elsewhere on the web, was likely limited by new regulations in Europe that restricted ad targeting.
Google stock, which has lost more than 25% this year, closed at $107.90 on Friday.
2. Amazon.com
Online retail juggernaut Amazon (NASDAQ:AMZN) will report Q2 earnings after the market closes on Thursday, July 28. The consensus is that the world’s largest e-commerce company will report $119.18 billion in sales, producing per share profit of $0.1279.
Amazon’s business is facing a sharp slowdown after the pandemic-induced boom as people shift their spending to activities, such as travel and eating out.
The Seattle-based behemoth reported sales that rose just 7% during the first quarter of 2022, compared to the 44% expansion during the year-ago period. It marked the slowest growth rate for any quarter since the dot-com bust in 2001 and the second straight period of single-digit growth.
Source: InvestingPro+
This slowdown will likely continue for the remainder of the year as both consumers and companies face rising interest rates, and a rate of inflation that is the highest in four decades.
Amazon stock, which closed on Friday at $122.42, has weakened more than 25% this year.
3. Intel
Chipmaker Intel (NASDAQ:INTC) is yet another tech heavyweight set to release earnings during the upcoming week. The Santa Clara, California-based company will report its latest quarterly earnings on Thursday after the close.
The semiconductor giant is forecast to report $0.6967 a share profit on revenue of $17.96 billion, according to analyst consensus, amid reports that demand for chips in some industries is slowing.
Source: Investing.com
While chips used in cars and data centers are still in high demand, prices of memory chips used in many electronic gadgets have fallen in recent months, prompting some producers to get ready for tougher days ahead.
Intel has lagged in introducing newer and faster products and has lost some of its biggest customers, such as Apple, which has decided to manufacture its own chips. Intel shares, which closed at $39.20 on Friday, have weakened about 25% this year.
Disclosure: The writer owns shares of Amazon.com
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