Leading tech stocks Amazon (AMZN), Apple (AAPL), and Microsoft (MSFT) are about to enter earnings season. Wall Street analysts expect Amazon’s and Apple’s earnings to fall 21% YoY (year-over-year) and 3% YoY, respectively, in their upcoming quarterly results. However, they expect Microsoft’s earnings to rise 9% YoY. In such a scenario, let’s analyze their performances and moving averages to figure out their outlooks.
Tech stocks’ performances
Tech stocks have posted mixed performances since the beginning of the third quarter. They’re being affected by volatile equity markets, macro concerns, and expectations for their upcoming earnings. Since July 1, the beginning of the third quarter, Amazon stock has fallen 8.5%. Apple and Microsoft have risen 14.7% and 2.4%, respectively.
Amazon stock has slumped the most among its peers, as it’s facing heat from all sides. It could reportedly be facing an FTC probe. It’s also been grappling with allegations of search-listing tampering, political criticism, and weaker earnings estimates.
Microsoft stock has risen, as analysts hold a robust outlook for the company’s upcoming earnings. Apple stock has surged due to its new launches, which could boost its sales next year.
Peers Facebook (FB) and Netflix (NFLX) have fallen 6.9% and 25.3%, respectively, since July 1. However, Alphabet (GOOGL) (GOOG) and Twitter (TWTR) have risen 11.6% and 16.9%, respectively, in the same period.
Impact on tech stocks’ moving averages
The mixed performances of tech stocks have affected their 50-day moving averages. While Amazon’s 50-day moving average has fallen, Microsoft’s and Apple’s 50-day moving averages have risen since July 1. Amazon stock has broken below its 50-day moving average. Usually, when a stock breaks below its 50-day moving average, it’s considered a technically negative short-term sign, and vice versa.
Microsoft stock is hovering around its 50-day moving average, but Apple stock has managed to remain above its 50-day moving average.
Amazon stock: Weak now, good long term
Amazon stock is down 8.5% since July 1, steeper than the fall of 4.0% in its 50-day moving average. Due to this, Amazon stock has fallen below its 50-day moving average. Amazon stock, which stood 2.8% above its 50-day moving average at the beginning of the third quarter, now sits 3.5% below its 50-day moving average.
Amazon is developing its logistics infrastructure for one-day shipments, which is affecting its earnings and next-quarter outlook. In the long term, it will be beneficial, as the company will have a highly developed network with a reduced cost structure to support its e-commerce growth.
Plus, its strong Amazon Web Services segment will continue to drive growth. Amazon’s robust earnings model is making market participants positive on its stock. To learn more, read Amazon Stock: Is It Slated for a 40% Upside?
Amazon’s 50-day moving average stands 0.8% above its 200-day moving average. However, its 50-day moving average stood 7.2% above its 200-day moving average at the beginning of the third quarter. Despite the narrowing gap between its moving averages, Amazon’s 50-day moving average has continued to hold above its 200-day moving average—a good sign.
Microsoft stock favorable in the long term
Microsoft stock, which stood 5.2% above its 50-day moving average on July 1, the beginning of the third quarter, now stands in line with its 50-day moving average. This change is the result of a steeper rise of 6.6% in its 50-day moving average than the increase of 2.6% in its stock. However, Microsoft’s 50-day moving average is trading 10.5% above its 200-day moving average.
Microsoft has a robust earnings model with growing business segments. The company’s primary growth driver is its cloud business, Azure. Recently, Jefferies upgraded Microsoft stock to “buy” and raised its target price. Jefferies also prefers Microsoft over Oracle in the tech sector.
Microsoft stock has been jittery in the short term due to market volatility, trade tensions, and macro concerns. However, in the long term, the company has a robust earnings model. Plus, Microsoft stock seems to be well placed, with its 50-day moving average far higher than its 200-day moving average, a technically bullish zone.
Apple stock, which stood 3.9% above its 50-day moving average at the beginning of the quarter, now sits 6.9% above its 50-day moving average. The situation is the result of a 14.7% rise in the stock since July 1. AAPL is facing a tough time given its declining iPhone sales. However, the launch of the new iPhone 11 in September has given analysts hope. In 2020, the new iPhone could boost revenue for the company.
Apple stock is showing positive short-term movements. It’s sitting far above its 50-day moving average. Further, Apple’s 50-day moving average is trading 11.2% above its 200-day moving average—a favorable scenario.
Tech stocks such as Amazon and Microsoft are showing weakness in the short term, but their 50-day moving averages continue to hold above their 200-day moving averages, which is good news for the long term. Apple stock also seems to be holding firm, with its 50-day moving average standing above its 200-day moving average—bullish territory.
Microsoft and Apple also offer good dividend yields. To learn more about tech stocks’ long-term earnings outlooks, read AMZN, FB, AAPL, MSFT, GOOGL: Tech Stock Forecasts.