The U.S. markets have been running hot in 2023. With the NASDAQ-100 up 45% for the year, tech stocks have done particularly well. It’s been an exciting time to be invested. On the one hand, the higher stocks go, the greater the probability that they will crash. On the other hand, the latest gains in the NASDAQ have been supported by some good earnings put out by tech companies. In this article, I will explore three U.S. tech stocks worth watching ahead of their upcoming earnings releases.
Apple
Apple Inc (NASDAQ: AAPL) is reporting earnings tomorrow, August 3. Apple’s earnings release will be closely watched, as the company is the world’s largest, and will be reporting after large earnings beats by Alphabet and Meta Platforms.
Will Apple beat expectations?
It’s hard to say for sure. As Google and Meta showed, advertising technology is doing very well this year, but Apple is more of a hardware manufacturer than an advertising company. Its ad business, which mainly consists of app store ads, is comparatively small as a percentage of the total business.
The latest industry reports suggest that hardware sales are slowing down this year. A recent report suggested that Apple’s MacBook sales fell 40% last quarter. The subsequent earnings release showed the sales decline wasn’t quite as bad as predicted, but Mac sales did decline. If that trend continues, then Apple’s earnings may disappoint.
Amazon
Amazon Inc (NASDAQ: AMZN) is another stock that’s reporting earnings tomorrow. This one will be very interesting to watch because its last few quarters were rather poor. In the second quarter of 2022, it reported negative earnings. It recovered to profitability in subsequent quarters, but the margins were quite thin. In the upcoming quarterly release, investors will be hoping to see Amazon’s margins improve. The company generally has fairly thin margins, being a retailer, but something better than what was seen in Q1 would be appreciated.
NVIDIA
NVIDIA (NASDAQ: NVDA) is another U.S. tech company reporting this month. Its earnings will be coming out on August 23, which is a bit later than the rest of the big tech.
NVIDIA has some big expectations to meet this time around. Last quarter, it guided for $11 billion in revenue for the current quarter. That would be a 64% growth rate from the prior year quarter, and $4 billion ahead of what analysts expected. If NVIDIA can meet or beat these high expectations, then its stock will likely rally. On the other hand, other semiconductor stocks reported earnings recently, and cautioned investors that the expected sales boost from AI chips was not as big as expected. So, NVIDIA’s next earnings release will be watched closely.
Before concluding, I should also mention that Constellation Software (TSX: CSU), a Canadian stock similar to the ones mentioned above, is also reporting earnings this month (specifically on August 11).
CSU had a pretty good release the last time it reported earnings. In its first quarter release, Constellation showed a 34% increase in revenue, and increased free cash flow (previously, FCF had been trending down). If the company can keep up the momentum into the current quarter, then it will likely be rewarded. CSU is an expensive stock, but 34% top line growth is pretty rare these days. Thus, such growth will stand out as exceptional if Constellation Software reports it once more.
