Apple Inc, Tesla Inc and Facebook Inc earnings under big scrutiny in coming week

Investors around the world will be looking towards Silicon Valley for some of the major business stories of the coming week of US earnings season, including the biggest company in the world, the most powerful social media giant and the largest carmaker by market value.

Microsoft Corporation () kicks things off for Big Tech after-hours on Tuesday, then deluge begins as Apple Inc (), () and  () all report quarterly earnings on Wednesday evening, with Tim Cook, Mark Zuckerberg, Elon Musk reporting after the markets close, at 5pm Eastern time (10pm in the UK).

Microsoft

With its Teams and Azure cloud software having been among the big winners from lockdown, Microsoft enjoyed a renaissance last year with four successive quarters of growth. 

For this past quarter, Bill Gates old company is forecast to report earnings per share of US$1.64 on revenues of US$40.12bn, according to the average Wall Street forecast, with whispers it could hit US$1.77 of EPS.

Wedbush analysts in recent days reiterated their ‘outperform’ rating on the stock, hiking their target price to US$270 from US$260.

They reckon Microsoft will post a “beat and raise special,” driven by strong demand for Azure services.

“This current work-from-home environment is further catalyzing more enterprises to make the strategic cloud shift with Microsoft across the board with Azure growth remaining brisk,” Wedbush said in a note to clients.

“In many cases we are seeing enterprises accelerate their digital transformation and cloud strategy with Microsoft by six to 12 months as the prospects of a semi remote workforce for the foreseeable future looks here to stay.”

First $100bn quarter for Apple?

The big number for Apple, outside of its eye-popping US$2trn-topping market valuation, is US$100bn. This is the quarterly revenue record that most analysts expect the Cupertino company to notch up for the first time in its history.

Hitting the Wall Street top-line forecast of $102.6bn would equate to year-on-year growth of 12%, its fastest progress in ten quarters.

The past quarter, including both Thanksgiving and Christmas, tends to be the one that generates the most product enthusiasm and upgrades for Apple, with new upgrades launched for the iPad, new Apple Watch and the new Apple ONE subscription bundle of Apple Music, Apple TV+, iCloud, Apple News, Apple Arcade and Apple Fitness+ which have been grouped together to take on Amazon Prime.

“This looks like an attempt by Apple to tap into the lucrative online fitness market with a Fitness Plus option which connects to the Apple Watch and tailors’ online workouts where you can do virtual workouts online,” says analyst Michael Hewson at CMC Markets.

“The new iPhone 12 which was announced a month later in October was rather underwhelming, though we did finally get the long awaited 5G model.”

Expect the focus to be on Apple’s hardware sales in these first-quarter results, said analyst Susannah Streeter at Hargreaves Lansdown, as while there has been a lot of fanfare around its Apple ONE services bundle, “that big product line is hugely dependent on people continuing to buy Apple devices”.

With iPhone sales having been a bit lacklustre last year, Apple hopes the initial interest in its new 5G enabled models will have translated into higher sales and that the rise in working from home leads to ongoing demand for sales of Mac laptops and iPads.

“If they don’t that is likely to adversely affect the share price, given its high valuation,” says Streeter, also wondering if there might be an inkling of Apple’s progress in developing its own search engine.

Tesla has much further to go, some analysts reckon

Over at Tesla, Musk has been as busy as usual this year, already reporting that the electric carmaker just missed his…