Medicare Agent News: The Bigger They Are...

Tuesday, January 3, 2023

The Bigger They Are...

By Nicholas Jasinski | Thursday, October 27

...The Harder They Fall. Several Big Tech stocks have stumbled big this week, in what may be the worst reporting season for the group ever: Alphabet dropped 9.1% and Microsoft lost 7.7% on Wednesday, Meta Platforms fell 24.6% in today's regular trading, and Amazon.com was down around 15% after hours, setting up a big loss for tomorrow.

Given the massive moves and the companies' combined market-capitalization heft, the losses have been a major drag on the overall market this week. The S&P 500 slid 0.6% today, despite almost two thirds of its constituents rising, and the Nasdaq Composite lost 1.6%. The Dow Jones Industrial Average, which is lighter on tech components, ticked up 0.6% on the day.

Google search advertising is slowing as the economic outlook sours, and Facebook-parent Meta Platforms is spending big on the metaverse despite slowing revenue growth, hurting its bottom line.

Amazon reported after the bell this evening, and the problem was less with its third quarter and more with management's forecast for what comes next. Amazon's overall revenue came in at $127.1 billion in the period, up 15% from a year ago and in the ballpark of analyst expectations and company guidance. Decelerating growth at the company's cloud-computing division, Amazon Web Services, was a blemish on the report.

But the real trouble was with the guidance. Amazon said it expects fourth-quarter revenue to be between $140 billion and $148 billion, versus the $155 billion that analysts had been forecasting on average. That could mean growth of less than 2% year over year. And Amazon only expects operating income in the fourth quarter of between zero and $4 billion.

That's a wide miss and not the kind of performance most investors have come to expect from Amazon.

Barron's Eric Savitz summed it up:

The slowing growth from AWS—which follows a similarly disappointing pattern at Microsoft Azure cloud unit—will raise fresh question about how well cloud computing demand will hold up in a slowing enterprise spending environment. And the company’s light fourth-quarter guidance is an ominous portent of a potential weak holiday shopping season.

If Amazon stock's after-hours losses hold through tomorrow, it would put the shares down by half this year. They would be back at their pre-pandemic levels, despite Amazon's sales being on pace to nearly double from 2019 to 2022. That's before the ugly outlook, that is.

Apple's results released this evening stood apart from the pack. The company beat on the top and bottom lines, but reported slightly weaker-than-expected iPhone sales. Shares were up slightly in after-hours trading this evening.

Read Eric's Apple earnings report here.