(Reuters). Four U.S. high-tech firms, which account for nearly a fifth of the total value of the S&P 500, said on Thursday the heels of a bluish congressional hearing to investigate alleged abuses of their global dominance.
PHOTOS PHOTO: Amazon, Apple, Facebook and Google logos appear in a combined photo from Reuters files. REUTERS / File Photos / File Photo
This will be the first time that Apple Inc. (AAPL.O), Amazon.com Inc. (AMZN.O), Alphabet Inc (GOOGL.O) and Facebook Inc (FB.O) announces financial results on the same day and investors are wondering if they can provide enough time to extend the rally, which has been a key factor in the revival of Wall Street since March.
The stay-at-home winners have been announced as millions of Americans have been told to hit the COVID-19 pandemic indoors. Shares of high-tech players hit record highs at a time when the S&P 500 .SPX benchmark is below 1% year on year.
But as many Apple stores are still closed and Amazon’s e-commerce costs are rising sharply, there are signs of questioning, with some on Wall Street claiming that stock prices for all four have risen above rational estimates.
Microsoft Corp shares (MSFT.O) fell 4.4% the day after last week’s announcement, despite better-than-expected cloud revenue, and its monthly stock is almost equal, reaching an all-time high in early July.
“It’s the simplest push,” Leo Kelly, founder of Verdence Capital Advisors, told Reuters Global Markets Forum ahead of the results that will be announced after the closing bell.
“When you have stocks that look like turning into a bubble, you don’t know how far they will go. You can’t just look at the assessment and say “it will fall”. It can happen anywhere, and the risk becomes extremely high, extremely high. ”
The alphabets Google and Facebook on Wednesday took a particularly sharp look at Democrats and Republicans who say they have hit smaller competitors to gain market share – the latest shocks in an increasingly threatening regulatory environment.
Apple’s headache is a slowdown in hardware sales as the world slips into recession as analysts predict pandemic disruptions, with revenue down about 3% and the iPhone business nearly 14%.
Similarly, Facebook and Google are struggling with failed marketing spending. According to Refinitiv analysts, Facebook was able to generate the slowest revenue growth of about 3% since it became a joint-stock company.
Despite rising stock prices, the specter of another technology bubble has risen, with Amazon rising 64 percent this year and others rising 13-29 percent. – Analysts remain confident about the long-term growth prospects of the four companies.
“Even bears will say they’re fantastic companies and don’t stop being fantastic,” said Nicholas Colas, founder of DataTrek Research.
“The unifying factor is that they can both grow during a pandemic and control their spending structures. It’s always a good place to start a recession. ”
Sagarika Jaisinghani and Neha Malara for reporting in Bengaluru; additional reports by Lisa Pauline Mattackal Bengaluru and Noel Randewich San Francisco; Edited by Patrick Graham, Bernard Orr