TALKING TALKING POINTPOINT Our views on topical issues
16 | SHARES | 01 August 2019
Alphabet, Microsoft, Facebook and Amazon continue to capture the market’s attentionUS tech firms (mostly)
shine in latest quarterly
earnings season
T
he FANGs and other big
US tech stocks are being
viewed through the lens
of record high share prices by
investors worried about a US
stock market on the point of
ŽǀĞƌŚĞĂƟŶŐ͘
Yet many of the biggest and
fastest-growing tech companies
ĂƌĞƐƟůůŬŶŽĐŬŝŶŐƚŚĞďĂůůŽƵƚ
of the park when it comes to
earnings, based on the latest
ƋƵĂƌƚĞƌůLJƵƉĚĂƚĞƐ͘
FANG stocks are Facebook,
ŵĂnjŽŶ͕EĞƞůŝdžĂŶĚ'ŽŽŐůĞ
;ŽĸĐŝĂůůLJĐĂůůĞĚůƉŚĂďĞƚͿ͕Ă
well-used grouping of some
of the fastest growing big tech
ƐƚŽĐŬƐŝŶƚŚĞǁŽƌůĚ͘
YƵĂƌƚĞƌůLJĞĂƌŶŝŶŐƐǁĞƌĞŵŝdžĞĚ
across the broader spectrum yet
ƚŚĞƵŶĚĞƌĐƵƌƌĞŶƚŝƐƐƟůůŚƵŐĞůLJ
ƉŽƐŝƟǀĞŝŶďŽƚŚŐƌŽǁƚŚĂŶĚ
stock performance terms, led by
ďĞƩĞƌͲƚŚĂŶͲĞdžƉĞĐƚĞĚĞĂƌŶŝŶŐƐ
from Alphabet and Facebook
with knock-out revenue and
ƵƐĞƌŐƌŽǁƚŚƉŽƐƚĞĚďLJdǁŝƩĞƌ͕
ĂůƚŚŽƵŐŚƚŚĞƌĞǁĂƐŶĞŐĂƟǀĞ
ŵĂƌŬĞƚƌĞĂĐƟŽŶƐƚŽďŽƚŚ
ŵĂnjŽŶĂŶĚEĞƞůŝdž͘ROBUST EARNINGS
POWER US MARKETS
TO NEW RECORDS
The updates helped US stock
markets to close at new record
ŚŝŐŚƐ͘dŚĞƚĞĐŚŚĞĂǀLJEĂƐĚĂƋ
Composite closed last weekĂƚΘ͕ϯϯϬ͘Ϯϭ͕ĂŶĚĞǀĞŶƚŚĞ
more broadly-based S&P 500
ĐŽŶƟŶƵĞĚŝƚƐƌƵŶŽĨƌĞĐŽƌĚͲ
breaking closes above 30,000,
ĞŶĚŝŶŐƚŚĞƐĞƐƐŝŽŶĂƚϯϬ͕ϬϮρ͘Θς͘
dŚŝƐǁĞĞŬ͛ƐĞdžƉĞĐƚĞĚ
interest rate cut by the Federal
Reserve is likely to fuel further
ƉĞƌĨŽƌŵĂŶĐĞŽƉƟŵŝƐŵŝŶƚŚĞ
ǁĞĞŬƐĂŶĚŵŽŶƚŚƐĂŚĞĂĚ͘
Alphabet led the way with the
ƐƚŽĐŬũƵŵƉŝŶŐĐůŽƐĞŽŶϭϬйƚŽ
Ψϭ͕ϮκρĂŌĞƌƉŽƐƟŶŐĂϯκйũƵŵƉ
in quarterly earnings, its biggest
LJĞĂƌͲŽŶͲLJĞĂƌŐĂŝŶŝŶƚŚƌĞĞLJĞĂƌƐ͘
ZĞǀĞŶƵĞƌŽƐĞϭεйĂƐŝƚƐƚĂŐĞĚ
a remarkable recovery from the
previous quarter’s weak internet
ĂĚǀĞƌƟƐŝŶŐŐƌŽǁƚŚƌĂƚĞƐƚŚĂƚ
ŚĂĚŵĂŶLJŝŶǀĞƐƚŽƌƐǁŽƌƌŝĞĚ͘ALPHABET QUARTERLY EPS
VS
CONSENSUS$14.21 VS $11.
dŽĐĂƉƚŚŝŶŐƐŽīůƉŚĂďĞƚ
ƐĂŝĚŝƚƐĐůŽƵĚĐŽŵƉƵƟŶŐ
business is now on an $8bn
a year revenue run-rate and
ŝƚƵŶǀĞŝůĞĚƉůĂŶƐĨŽƌĂΨϮρďŶ
ƐŚĂƌĞďƵLJďĂĐŬ͘dŚĞĐůŽƵĚ
ďƵƐŝŶĞƐƐŶĞǁƐŝƐƉĂƌƟĐƵůĂƌůLJ
encouraging for investors
because it has historically
lagged behind rivals Amazon
ĂŶĚDŝĐƌŽƐŽŌ͘
This represents a stunning
return to favour for the internet
ĂĚǀĞƌƟƐŝŶŐĂŶĚƐĞĂƌĐŚŐŝĂŶƚ
considering that its stock had
ƉůƵŵďĞĚĚĞƉƚŚƐŽĨΨϭ͕ϬϯΘĂƐ
ƌĞĐĞŶƚůLJĂƐϯ:ƵŶĞ͘FACEBOOK’S $5BN FINE
In the social media space
&ĂĐĞŬƌĞƉŽƌƚĞĚďĞƩĞƌͲ
ƚŚĂŶͲĞdžƉĞĐƚĞĚƐĞĐŽŶĚƋƵĂƌƚĞƌ
earnings although that was
ŽīƐĞƚďLJĐŽŶĮƌŵĂƟŽŶŽĨŝƚƐ
record-breaking $5bn privacy
ĮŶĞƐĞƩůĞŵĞŶƚǁŝƚŚƚŚĞ&ĞĚĞƌĂů
Trade Commission for past
ŝŶĨƌŝŶŐĞŵĞŶƚƐ͘