The tech rally needs further reasons for a continued rally- Earnings next.

The earnings season has arrived, and the technology sector is the main focus. With Nasdaq having run high this year, traders are looking for reasons to be convinced to stay on the high road. Indeed, it is not hard to remain bullish, but further climb requires deeper conviction.

Big Tech Earnings to Lead the Momentum

The next two weeks are critical as major tech companies will report their June quarter result. We will welcome Microsoft, Alphabet, and Meta Platforms results this week. Subsequently, Amazon and Apple will have their reports due next week.

It is no secret that these tech companies are registering massive year-to-date gains, and any disappointment could send the stock spiral down easily by a double-digit percentage, just as we had seen for Netflix and Tesla.

Guidance is key

More important, the forecast will be keenly screened as we need more indications that consumers’ health is strong. Apple is recently rumoured to request suppliers to main about a similar level of their iPhone 15 series, the upcoming launch, which breathes fresh optimism into yesterday’s trading. With the expectation to raise the price of its Pros series, there are higher odds of revenue growth. That will be a calming scenario for investors.

Anything short of that, as you are aware, will trigger profit-taking.

What to look out for in Microsoft, Alphabet and Meta Platforms?

1. Microsoft

Based on our readings, the key highlight in its earnings will be the enthusiasm and ambition of its artificial intelligence software. We have seen how it shares “moon” after announcing a “Copilot” software to be added to its array of office applications with a good price tag. Microsoft hasn’t any AI revenue; thus, news on such technology adoption with a near-term revenue stream could boost its stock price.

There are also expectations that its Azure cloud computing business is seeing a bottoming sign and demand for related AI- processing needs may lead to a rebound in this business segment. Investors hope such a potential reversal could help alleviate the pain from a slowdown in PC demand that has eaten into its Windows and device businesses.

There’s one secret juice to be revealed. Investors might also be curious if its Ai-powered Bing chatbot is competitive in acquiring market share from the Google search market. That’s going to be interesting.

2. Alphabet

The health of online advertisement will come into the picture, given its dominance with its Google and YouTube platforms. There are signs from some Wall Street analysts’ commentary that online ads spending is returning to a healthy level, and that could potentially set Alphabet for a good report card.

There are both fears and optimism about AI’s future to its business. The twin challenge of trivial AI chatbots like ChatGPT and Microsoft Bing have clouded the prospect of Alphabet’s future growth, primarily resting on the fear that its search dominance status will be challenged.

And to maintain its leadership could require intensive capital spending that could eat into profitability. There is also uneasiness about its cloud computing business. That could explain why Alphabet is not a joyous stock in this market euphoria.

3. Meta Platforms

Finally, the kid of the massive run-up is back on focus. With four social media under its pockets, Facebook, Instagram, WhatsApp and a newly founded Threads, it is a firework year for the social media giant. The stock had risen by almost 150%, baffling many investors who had long doubted its long-term prospect given a challenge from TikTok.

We have seen analysts speaking of improvement sentiments on Meta’s advertising business as it navigates pretty well from the woes of Apple’s privacy policy, especially for iPhone users. Then it created Reels, somewhat a replicate version of TikTok, a key business unit investors will likely ask questions about during earnings calls.

We also know that Meta has been working and investing heavily in its large AI language models. Analysts will want more light on how such investment can be monetised within its ecosystem.

Then, the hype about Metaverse seems to have toned down recently, but any chatter on this sphere could ignite another round of buzz on the stock.

With that, it will be a fun pack of earning releases from Big Tech this week and let’s ride this wave together.

Catch up soon, pal.