Three Tech Titans to Report Earnings: ETFs in Spotlight

Investing

Published: July 24, 2023 10:45 pm

We are in the thick of the second-quarter earnings season, and tech giants are in the spotlight this week. Three of the seven biggest tech players — Microsoft MSFT, Alphabet GOOGL and Meta Platforms META — are set to report. These stocks have roared this year on an artificial intelligence mania and bets on Fed tightening policy.

Microsoft and Alphabet are expected to release results on Jul 25 after market close, while Meta Platforms will report on Jul 26 (see: all the Technology ETFs here).

Microsoft

Microsoft has a Zacks Rank #3 (Hold) and an Earnings ESP of -0.84%. According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The Zacks Consensus Estimate for the to-be-reported earnings declined by a penny over the past 7 days. Microsoft’s earnings track is impressive, with the last four-quarter earnings surprise being 3.25%, on average. The Zacks Consensus Estimate indicates earnings growth of 13.9% and modest revenue growth of 6.7% from the year-ago quarter. Microsoft belongs to a top-ranked Zacks industry (top 24%) and has risen 25% over the past three months (read: ETFs in Focus as Microsoft Hits All-Time High: What Lies Ahead?).

Alphabet

Alphabet has a Zacks Rank #2 and an Earnings ESP of +2.49%. The Zacks Consensus Estimate for earnings saw a decline of a penny over the past 30 days for the to-be-reported quarter. The company’s earnings surprise track over the past four quarters is not good, with the negative earnings surprise being 4.36%, on average. Earnings are expected to increase 9.1%, while revenues are expected to grow 4.8% from the year-ago quarter. Alphabet falls under a top-ranked Zacks industry (top 29%). The Internet behemoth has climbed about 16% in the last three months.

Meta Platforms

Meta Platforms has a Zacks Rank #2 and an Earnings ESP of +5.83%. The social media giant saw a positive earnings estimate revision of a couple of cents for the to-be-reported quarter over the past 7 days. The current Zacks Consensus Estimate for the yet-to-be-reported quarter indicates substantial year-over-year earnings growth of 16.7%. Revenues are also expected to increase 7.3%. Meta Platforms delivered an earnings surprise of 15.46%, on average, in the last four quarters. The stock belongs to a top-ranked Zacks industry (top 26%). Shares of META have surged about 38% over the past three months.

ETFs to Tap

Given this, investors may want to play these stocks with the help of ETFs. Below, we have highlighted five ETFs having the largest exposure to these tech giants.

MicroSectors FANG+ ETN (FNGS)

This ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of these stocks (read: Best & Worst ETF Areas of First Half 2023).

MicroSectors FANG+ ETN has accumulated $142.4 million in its asset base and charges 58 bps in annual fees. It trades in a moderate volume of 166,000 shares a day on average and has a Zacks ETF Rank #3 (Hold).

iShares U.S. Technology ETF (IYW)

iShares U.S. Technology ETF provides exposure to U.S. electronics, computer software and hardware, and informational technology companies. It tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, holding 136 securities in its basket. The three in-focus firms together make up for nearly 30% share.

iShares Dow Jones US Technology ETF has AUM of $13.6 billion and charges 39 bps in fees and expenses. Volume is good as it exchanges nearly 927,000 shares a day. IYW has a Zacks ETF Rank #1 (Strong Buy).

Roundhill BIG Tech ETF (BIGT)

Roundhill BIG Tech ETF is the first-ever FAAMG ETF offering investors concentrated exposure to five mega-cap technology companies known as the “FAAMG” stocks. The three in-focus firms account for a combined 22.8% share in the basket.

Roundhill BIG Tech ETF has amassed $3.8 million in its asset base and charges 29 bps in fees per year. It trades in an average daily volume of 7,000 shares.

iShares Expanded Tech Sector ETF (IGM)

iShares Expanded Tech Sector ETF offers broad exposure to the technology sector, and technology-related companies in the communication services and consumer discretionary sectors. It tracks the S&P North American Expanded Technology Sector Index, holding 280 stocks in its basket. Microsoft, Alphabet and Meta Platforms collectively account for 22.9% share.

iShares Expanded Tech Sector ETF has AUM of $3.3 billion and charges 40 bps in annual fees. It trades in a moderate volume of nearly 32,000 shares a day on average. IGM has a Zacks ETF Rank #1.

Vanguard Mega Cap Growth ETF (MGK)

Vanguard Mega Cap Growth ETF tracks the CRSP US Mega Cap Growth Index. It holds 96 securities in its basket, with the in-focus three firms collectively accounting for 21.6% of the total assets. It has key holdings in technology and consumer discretionary that account for double-digit exposure each (read: 5 Growth ETFs at New Highs to Start 2H).

Vanguard Mega Cap Growth ETF charges 7 basis points in annual fees and trades in a good volume of around 275,000 shares a day on average. The fund has AUM of $14.6 billion and a Zacks ETF Rank #2 (Buy).

Single-Stock ETFs

Single-stock ETFs have also been gaining immense popularity this year. Unlike traditional ETFs, which typically track a broad index or sector, single-stock ETFs provide exposure to the performance of one specific company by using derivatives. This allows investors to gain exposure to a particular stock without having to buy the stock directly (read: Guide to Single-Stock ETF Investing).

Direxion Daily MSFT Bull 1.5X Shares (MSFU)

Direxion Daily MSFT Bull 1.5X Shares tracks the 1.5 times the performance of the stock of Microsoft. It charges 95 bps in annual fees and trades in an average daily volume of 84,000 shares. MSFU has AUM of $38.7 million.

Direxion Daily GOOGL Bull 1.5X Shares (GGLL)

Direxion Daily GOOGL Bull 1.5X Shares tracks the 1.5 times the performance of the Class A shares of Alphabet, charging 95 bps in annual fees. It trades in volume of 82,000 shares a day on average and has accumulated assets worth $23.1 million.

GraniteShares 1.5x Long Meta Daily ETF (FBL)

GraniteShares 1.5x Long Meta Daily ETF tracks the 1.5 times the performance of the stock of Meta Platforms. It charges 99 bps in annual fees and trades in an average daily volume of 16,000 shares. FBL has gathered $10.3 million in its asset base since its debut last December.

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