It's no secret this is one of the most important earnings seasons in decades, and one thing it's showing us is that tech stocks continue to power forward. That won't change in August.
Four times a year, public companies report earnings, giving us a glimpse into how businesses all around the world are doing. But these earnings have gotten much more important during the pandemic. Uncertainty is through the roof, and this is our only chance to evaluate how it's impacted business.
Drug companies have shifted their pipelines, automotive companies have added manufacturing capacity to make respirators, and most of America has moved to buying products online. Last month, when tech firms started to report earnings, we learned a lot more about what's happening with the U.S. economy.
And one thing we learned is that tech is no slouch. Just look at the largest technology ETF (NYSEArca: XLK) this year, which is up almost 20% vs. the Dow Jones, which is down 8.45%.
Amazon.com Inc. (NASDAQ: AMZN) stock jumped almost $200 a share on record earnings and reported sales of $88.9 billion. Divisions like online grocery saw sales triple year over year, and the company welcomed more than 175,000 new employees in March and April. Shopify Inc. (NYSE: SHOP), another e-commerce player helping businesses create their own sales channel online, also announced very positive earnings. Already up 150% this year and having announced revenue growth of 97.34% year over year, it shows no signs of slowing down. Every company that had to close its physical location now needs to have an online presence.
With e-commerce holding up so well this quarter, I'm ready for MercadoLibre Inc. (NASDAQ: MELI) and Sea Ltd. (NYSE: SE) to report earnings this month, both of which I have written about here and here. MercadoLibre operates in South America and Sea Ltd. in Asia. If Amazon and Shopify along with many other online businesses are any indication, we should see numbers from the rest of the group. Just look at DocuSign Inc. (NASDAQ: DOCU), an e-signature company booming with the shift from in-person signing of all different kinds of contracts.
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E-commerce isn't the only group of stocks that have done well this quarter. We saw semiconductors perform well with companies like Lam Research Corp. (NASDAQ: LRCX), an equipment maker highlighting work-from-home, telehealth, online gaming, and streaming driving demand for semiconductors. We Also saw Advanced Micro Devices Inc. (NASDAQ: AMD), one of the largest semiconductor companies in the world, produce strong earnings. It had record quarterly notebook processor unit shipment and saw mobile GPU revenue growth driven by the launch of Apple and Dell gaming notebooks.
Now I'm expecting this trend to continue with even more tech earnings rolling in this week.
Here are the three tech stocks lighting up my radar this week...
The 3 Biggest Tech Earnings to Watch This Week
I've already mentioned MercadoLibre and Sea Ltd. as two companies on my radar, but they don't report until a bit later this month. I'm watching these three companies below.
Fastly Inc. (NYSE: FSLY) has been on a tear this year and is already up over 300%. This edge cloud computing platform provides a content delivery network, streaming services, and Internet security. With some of the biggest companies in the world as customers, including Spotify Technology SA (NYSE: SPOT), Shopify, Pinterest Inc. (NYSE: PINS), jetBlue Airways Corp. (NASDQ: JBLU), Airbnb, and Twitter Inc. (NYSE: TWTR), and gaining new customers during the pandemic, Fastly could post solid earnings. I am especially excited to see what Fastly can do for its partner Shopify as Walmart Inc. (NYSE: WMT) announced its first-ever commerce platform partner with them. This could really bulk up Fastly's business as Walmart is one of the largest corporations in the world.
Next up I'm looking at Zynga Inc. (NASDAQ: ZNGA), a provider of free mobile and online games. With the pandemic keeping everyone at home, Zynga has finally started to see an uptick in users.
While last quarter was down year over year, it was an increase after three consecutive declining quarters. It now has daily active users of 21 million and monthly active users of 68 million. I was also excited to hear that it acquired Peak games, which I talk about here. This acquisition will increase daily active users by over 50%, giving Zynga a great opportunity to cross-sell its games.
Last one up is Inseego Corp. (NASDQ: INSG), a key beneficiary to 5G trends and a provider of IoT & Mobile solutions that power applications such as asset tracking, fleet management, industrial IoT, and mobile broadband services. The pandemic has led to a structural shift toward anything online, and with demand for 5G booming, I want to make sure I get in on the action. Qorvo Inc. (NAADAQ: QRVO) and Qualcomm Inc. (NASDAQ: QCOM), two major semiconductor companies, have already discussed tailwinds from 5G, and this could mean Inseego is in a good position. The company serves over 10 carriers including companies like Verizon Communications Inc. (NYSE: VZ), and with millions of people working, learning, and getting healthcare from home, I'll be looking for a strong outlook.
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About the Author
Alex Kagin is the Director of Technology Investing Research at Money Map Press. He has spent the last decade working in equity research, most recently with Energy Capital Research Group (ECRG), where he led technology stock research along with working as part of a team developing a customizable financial data platform for securities analysis.
Prior to joining ECRG, Alex spent 8 years at DeMatteo Research, a boutique primary research firm and broker-dealer servicing the institutional investment community. He managed the Tech, Media, and Telecom vertical where he spent time connecting with hundreds of tech executives and hedge funds to get the pulse of the market.
Alex has a B.S. in Economics from American University and previously held Series 7 and 63 security licenses.