Is the technology sector due for a correction? The next week is crucial for many investors in technology stocks. Some well-known tech stocks are expected to release their third-quarter earnings in the coming week. The social media platform Twitter (TWTR) and multinational tech company Intel Corporation (INTC) will release their Q3 2019 earnings on October 24.
Also, Microsoft (MSFT) will announce its first-quarter results for the fiscal year 2020 on October 23, 2019. Before we look at what to expect from these tech stocks, first let’s look at the Nasdaq 100 Technology Index (NDXT) and how the index has fared from the start of July until October 18, 2019.
Nasdaq 100 Technology Index (NXDT)
For the period from July to October 18, 2019, the Nasdaq 100 technology index moved upwards by 0.89%. However, there was a lot of volatility in the index. The index quoted $4,766 on the first of July and briefly crossed the $5,000 threshold on July 24. Most of the technology companies declared their quarterly earnings around this time.
In the next two weeks, the market was extremely volatile. This is mainly because of the trade war, increased tariffs, and the onset of recessionary fears. Even the NXDT index plunged by approximately 11% from July 24 to August 5. The uncertainty spilled over to September 2019. Though the tech sector faced the heat, it was still among the best performers for the year. The Nasdaq 100 Technology Index has grown by 29% on a YTD (year-to-date) basis.
What’s in the cards for Twitter’s stock?
Although Twitter hasn’t officially announced, analysts believe that third-quarter results will be declared on October 24. Among a consensus of 39 analysts, the tech stock’s revenues are expected to rise to an average of $875 million with a movement of about $25 million. The revenues for the second quarter of 2019 were reported at $841 million.
Also, most of the analysts suggest that the turnover could exceed $1 billion by the end of the last quarter of the year. The EPS forecast based on a consensus of 24 analysts suggests that the current quarter will report an EPS anywhere around $0.12 to $0.27.
For the past four quarters, Twitter has beat expectations and reported EPS (earnings per share) higher than anticipated. The consensus EPS for the last quarter ended June 2019 was $0.09, but the social media platform reported an EPS of $0.12. The reported EPS was 33% higher than the analyst estimates.
What do Microsoft estimates suggest?
Microsoft is one of the tech stocks that every investor should track. Microsoft has recently announced some changes to its revenue reporting standards. The upcoming financials could feature the suggested changes. Microsoft announced earlier that it would be classifying revenues from Xbox as a different segment. The Xbox segment is seeing a lot of growth. The new heading in the financials will comprise of revenues from subscriptions, transactions, cloud services, and advertising.
Zacks Investment Research’s 13 analysts forecasted that the EPS for the third quarter of 2019 will be around $1.25. The earnings per share for the same period one year ago was $1.14. Microsoft has had a history of achieving and beating analysts’ estimates. In the last four quarters, Microsoft has consistently delivered an EPS above the anticipated figures. In the previous quarter ended in June 2019, the Actual EPS was $1.37 with respect to the consensus EPS of $1.21.
Based on other market sources, a group of 27 analysts estimated that the third-quarter 2019 revenues could range between $31.8 billion to $32.8 billion. In comparison to the same period one year ago, Microsoft reported revenues of $29.08 billion.
Forecasts for Intel Corporation stocks
Just like the other two tech stocks, even Intel has been a consistent achiever. Reported figures for the last four quarters have been above analyst expectations. In the quarter ended June 2019, Intel reported an EPS of $1.06. This is compared to an estimate of $0.89.
In the current period, 31 analysts forecast the quarterly EPS to be between the range of $1.27 to $1.21. The revenue estimates for the company are expected between $17.7 billion to $18.8 billion. In the quarter ending in September 2018, Intel reported revenues of $19.16 billion against a consensus estimate of $18.11 billion.
Microsoft will be releasing its earnings one day before Intel and Twitter. Even the online e-commerce website Amazon Inc. is expected to release its third-quarter earnings on October 24. Based on past trends and estimates, the stock prices for all three tech stocks could see an uptick in the coming week.