Microsoft, Google and a 'moment of truth' for tech's upcoming earnings
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With the first-quarter earnings season kicking into high gear, and the likes of Microsoft (NASDAQ:MSFT), Meta Platforms (NASDAQ:META) and Google parent company Alphabet (NASDAQ:GOOG) set to deliver their latest business reports, anticipation on Wall Street is growing that overall tech results will be better than feared.
"The moment of truth is here," said Wedbush analyst Dan Ives, who added that there have been "some signs of improvement" with regards to spending across the tech sector.
Enterprise spending has been under pressure for months amid numerous examples of corporate belt-tightenting, restructurings and layoffs. But, Ives said there are some particular tech areas, such as cloud services and cybersecurity that "are seeing much more resilient growth" than had been expected from Wall Street.
"While budgets are under pressure across the board, enterprises have green lighted projects and deployments in 2023, with many budgets now in place for the remainder of the year," Ives said.
When it comes to the cloud sector, Ives said that it is likely that "stalwarts" Microsoft (MSFT), Amazon and Google (GOOG) should all deliver cloud results that meet and exceed expectations. Both Microsoft (MSFT) and Alphabet (GOOG) are set to deliver their quarterly reports after Tuesday's stock market close, while Amazon's (AMZN) results are scheduled to come out on Thursday.
Ives said that on the whole, tech stocks "have become the new safety trade," with Big Tech leaders, in particular, benefiting from that situation, and that the upcoming earnings season is "set to further calm [Wall Street] demand fears."
In addition to cloud leaders Microsoft (MSFT), Google (GOOG) and Amazon (AMZN), Ives called Apple (AAPL) his tech to pick, and that cybersecurity companies such as Palo Alto Networks (PANW), CheckPoint Software (CHKP) and CrowdStrike Holdings (CRWD) are among the "favorites" in the cybersecurity sector.
More on the outlook for tech:
As IT budgets tighten, cybersecurity companies see growing demand
AMD, Intel lead chips lower as Q1 earnings gets set to move into high-gear
Alphabet details charges it's taking for workforce cuts, accounting shifts