It can be assumed that the broader US markets are very sensitive to the movements in the stocks of the technology giants. An unfavourable momentum in the technology sector could negatively impact the broader equity markets. Therefore, the investors need to carefully analyse the factors which could impact the technology stocks and what could be the drivers of these stocks. The technology sector is also sensitive to the geopolitical worries.
The investors in the US markets got worried about the economic downturn after Apple Inc. (NASDAQ: AAPL) announced that they are expecting lower revenues in the December 2018 quarter when compared to expectations provided by them. It’s important to note that, moving forward, market players would be largely focusing on the earnings releases of the big technology giants. On January 30, 2019, Facebook would be out with its earnings for the quarter ended December 2018 while Apple Inc. would be releasing the December quarter earnings report on January 29, 2019. However, on January 31, 2019, Amazon.com Inc. (NASDAQ: AMZN) will be reporting the earnings for December 2018 quarter. Therefore, it can be assumed that the market players would be tracking the earnings of these big companies.
Facebook Inc. (NASDAQ: FB), which is a component of FAANG (Facebook, Apple, Amazon, Netflix and Alphabet’s Google), had earlier posted the results for September 2018 quarter. The technology giant garnered revenues amounting to $13.73 billion which implies the YoY growth of 33% in Q3 2018. The company’s total costs, as well as expenses, amounted to $7.95 billion. As per the company’s report, Facebook had been focusing on the activities which could help in driving the growth in the revenues. These activities include supporting the marketers to utilize the products of Facebook so that the consumers can be connected as well as making the ads more effective and relevant. Facebook garners most of the revenues with the help of advertising. The company garners the advertising revenues when it displays the ad products on Facebook, Instagram, Messenger as well as mobile applications or third-party affiliated websites.
The company posted income from the operations amounting to $5.78 billion in the September 2018 quarter and, during the same period, the company incurred capital expenditures amounting to $3.34 billion. The company’s report also suggested that, in the September 2018 quarter, they have made deployments towards the developed ecosystems like Instagram and Facebook as well as towards the growth and developing the ecosystems with regards to the products which have large user bases like WhatsApp as well as Messenger and the company has worked towards the features including Stories. The company has also made deployments towards the long-term technology initiatives which includes AI (or Artificial Intelligence), connectivity as well as augmented and virtual reality. Moreover, the company’s CEO (or Chief Executive Officer) had informed the media panels that there are plans for integrating messaging services of Instagram, WhatsApp as well as Facebook Messenger. Also, there are plans for incorporating the end-to-end encryption in the applications.
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