Tech continues to lead the charge on Wall Street to start the week, with the Nasdaq closing up 2.6% on Monday and futures pointing to another 1% gain at the open.
The move higher follows the WSB/Reddit trader disruption, which saw the market log its worst week since October. New catalysts appear to be on the horizon as the last of the FAANGs report earnings after today’s closing bell.
Alphabet (GOOG, GOOGL) –
Supported by a recovery in digital ad spending during the holiday season, the tech giant is likely to top $50B in Q4 sales.
Other areas of Alphabet’s business have also been growing strongly, including Google’s Cloud business, Search and YouTube. While these are all positive signals, analysts will also be listening closely for commentary on policy developments. Google recently removed Parler from the Play Store, and it will have to deal with upcoming privacy changes being instituted by Apple (and may even unveil its own).
“Our checks with SEMs [search engine marketers] suggest search spending accelerated from 3Q to 4Q,” said JPMorgan analyst Doug Anmuth. “Certain verticals heavily affected by COVID-19, including travel that we believe represented 10-15% of search revenue prior to the pandemic, likely remained challenged throughout 4Q given resurgence and related shutdowns.
We believe recovery in these verticals will happen through ’21 as consumers continue to get vaccinated, driving further acceleration in ad revenue.”
An accelerating shift to online shopping will bolster results, especially over “Prime Day” and the holiday shopping season.
The e-commerce behemoth is set to report its first-ever quarter doing more than $100B in revenue, bringing full-year 2020 revenue to an astounding $379B, with additional support from the AWS powerhouse. Also be on the lookout for some major expenses. Amazon has earmarked more capital for worker safety during the pandemic and pledged to pour more money back into the company to sustain its growth rate
“Thematic data points we have gathered throughout 2020… collectively point to consumers globally becoming increasingly comfortable purchasing online every day as opposed to every now and then,” Credit Suisse analyst Stephen Ju declared.
“These factors amount to the following near to long-term potential implications for Amazon:
- upside to GMV [gross merchandise value] estimates in 2021 and beyond, and
- moderating customer acquisition/retention costs as greater purchase frequency reinforces Amazon/Prime brand.”