The five largest U.S. traded companies report June quarter earnings this week beginning Monday evening with Tesla. We previewed expectations for GE, Raytheon, Tesla, 3M and UPS last Friday, and we also had a look at what to look for from Apple, Starbucks and Visa. We will cover several more over the next few days.
By the end of this week, we shall have seen results from the five FAANG stocks. Here’s a preview of what to expect from three top tech companies reporting quarterly results after markets close on Tuesday.
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AMD
Advanced Micro Devices Inc. (NASDAQ: AMD) stock has risen more than 49% in the past 12 months, including a modest improvement of just 0.5% for the year to date. The chipmaker’s stock price doubled in 2020 with virtually all the gain coming in the second half of the year.
New PlayStation 5 and Xbox gaming consoles drove revenues for AMD, and a coming handheld gaming device from Valve will be powered by semi-custom AMD CPUs and graphics processors. Valve’s Steam Deck represents AMD’s entry into the handheld market, and the device is expected to perform well against Nintendo’s Nvidia-powered Switch.
Of 39 surveyed analysts covering AMD stock, 22 rate the shares a Buy or Strong Buy and 15 have put a Hold rating on the stock. At a recent price of around $92.20, the implied upside to a median price target of $105 is nearly 14%. At the high price target of $135, the upside potential is around 46%.
AMD is expected to post second-quarter revenue of $3.61 billion, up 4.6% sequentially and 87% higher year over year. Adjusted earnings per share (EPS) are forecast to rise by two cents sequentially to $0.54, triple EPS of $0.18 in the same quarter last year. For the full year, current estimates call for EPS of $2.17, up 68% year over year, on revenue of $14.7 billion, which would be a gain of 51%.
AMD’s stock trades at 42.5 times expected 2021 EPS, 34.2 times estimated 2022 earnings and 27.5 times estimated 2023 earnings. The stock’s 52-week range is $67.02 to $99.23. AMD does not pay a dividend.
Alphabet
After the blistering results posted last week by Twitter and Snap, concerns about advertising revenue have been put to rest. Alphabet Inc. (NASDAQ: GOOGL), which derives more than 80% of its revenue from ads on its Google search engine, is likely to post a sharp increase as well. The company has added 70% to its share price over the past 12 months, including a jump of 52% so far in 2021. That year-to-date gain is tops among the FAANG stocks.
A whopping 43 of 45 analysts covering the stock have a Buy or Strong Buy rating on the shares, and the two holdouts rate the stock a Hold. At a trading price of $2,660.30, the upside potential based on a median price target of $2,837.50 is about 6.7%. At the high price target of $3,350, upside potential reaches nearly 26%.
Alphabet’s second-quarter revenue is forecast to rise by 1.3% to $56.05 billion. That would be up 46% compared to revenue of $38.3 billion in the year-ago quarter. EPS is forecast to decline by 27% sequentially to $19.15 but soar by 89% year over year. For the full year, Wall Street is forecasting EPS of $87.74, up nearly 50% year over year, on revenue of $236.5 billion, or nearly 30% higher.
Alphabet stock trades at 30.8 times expected 2021 EPS, 29.0 times estimated 2022 earnings and 24.2 times estimated 2023 earnings. Its 52-week range is $1,402.15 to $2,667.98. Alphabet does not pay a dividend.
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Microsoft
Over the past 12 months, Microsoft Corp. (NASDAQ: MSFT) stock has added more than 44% to its share price. To date in 2021, the shares are up 30%. On Friday, the stock closed at a new record high of $289.58. At the day’s close, Microsoft’s market cap of $2.18 trillion trailed only Apple’s ($2.48 trillion) in the rankings of the world’s most valuable companies. The better news for Microsoft (and its investors) is that opportunities for further growth abound, according to many analysts.
Of 39 analysts surveyed, 37 rate the shares a Buy or Strong Buy, and the other two recommend hold rating the shares. At a trading price of around $288, the median price target of $300 implies a potential upside of about 4.2%. At the high price target of $378, the upside potential is more than 31%.
For its fiscal fourth quarter, Microsoft is expected to post revenue of $44.3 billion, which would be up 6.2% sequentially and 16.5% compared to the year-ago quarter. Forecast EPS of $1.92 is 1.3% lower sequentially and 31.5% higher year over year. For the full fiscal year, EPS is forecast to rise by nearly 35% to $7.77 on revenue of $166.24, up 15.3% year over year.
Microsoft stock trades at 37.0 times expected 2021 EPS, 34.5 times estimated 2022 earnings and 30.0 times estimated 2023 earnings. The stock’s 52-week range is $196.25 to $289.99, and the company pays an annual dividend of $2.24 (yield of 0.77%).
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