Google is firing on all cylinders
Expectations are close to all-time high when Alphabet (Google) reports Q2 earnings on Monday after the market close. Analysts expect earnings per share of $10.39, up 23% y/y, as mobile ad sales at Google and YouTube are driving top-line growth. Investors will also pay close attention to the cloud business where Google is number three after Amazon and Microsoft.
Any positive outlook on hardware sales from the Pixel phone and Google Home segment could fuel investor sentiment. The stock has a positive rating in our quant model, driven by attractive valuation, higher-than-average yield and recent relative weakness relative to peers.
Alphabet (Google) weekly share price
Source: Saxo Bank
Instagram is next growth engine
Facebook shares hit a new record this week and are up 43% year-to-date. Expectations are high for Q2 earnings to be published on Wednesday after the market closes. Analysts expecting EPS of $1.38, up 42% y/y, and revenue of $9.2 billion, up 43% y/y, driven by higher ad prices and explosive growth in monetisation of Instagram and video ads.
Facebook's stock has a slightly negative score in our quant model due to its above-average valuation and recently weaker momentum relative to the industry. We expect strong earnings. Facebook's EPS has surprised positively in all but two quarters since the company's IPO, creating one the best and most sure runs on Wall Street.
Facebook weekly share price
Source: Saxo Bank
Seattle-based Amazon is the world leader in e-commerce. Photo: Shutterstock
The everything store powers on
Amazon shares also hit new all-time high this week ahead of Q2 earnings. Expectations are also high, and investors will especially seek an update on the Whole Foods acquisition and what the exact plans are. Earnings are slated to be published on Thursday after the market close. Analysts expect EPS of $3.04, up 8% y/y, and revenue $37.2 billion, up 22%, as the Prime business continues to grow. Some estimates put Prime subscriber growth at around 35% y/y in Q2.
Amazon Web Services, the world's largest cloud infrastructure business, continues to grow fast and is currently the biggest driver of EBITDA margin expansion and growth in profits. Amazon's stock has a positive rating in our quant model due to low volatility and recent underperformance relative to industry.
Amazon weekly share price
Below are the most important earnings releases next week.
Source: companies and Saxo Bank