US tech stocks have enjoyed a strong “growth showing no sign of slowing” on Wall Street ahead of earnings reports from the technology heavyweights.
The rally comes a few days after share values were impacted negatively by tightening coronavirus restrictions in Europe with investors eagerly awaiting updates on the progress made by the tech giants- Facebook, Amazon and Apple, to name a few.
The online retailer-to-streaming operator, Amazon was clearly one of the biggest winners from the pandemic, with third quarter revenues rising to $96.1bn from $70bn in the same period in 2019.
It credited pandemic demand for household essentials and said it was already seeing evidence of early buying for Christmas gifts following its Prime Day sale earlier in October.
Meanwhile Facebook’s shares also extended their gains when it revealed that businesses using its digital advertising tools had accounted for a surge in sales during the third quarter.
Revenue rose to $21.5bn from $17.7bn despite a limited ad boycott in July as part of a protest against hate speech on its platforms.
Facebook’s monthly active user number of 2.74 billion also surpassed analysts’ estimates.
Facebook Inc however warned of a tougher 2021 despite beating analysts’ estimates as businesses adjusting to the global coronavirus pandemic continued to rely on the company’s digital ad tools.
The social media company said in its outlook that it faced “a significant amount of uncertainty”, referring to impending privacy changes by Apple and a possible reversal in the shift to online commerce that was created by the pandemic.
“Considering that online commerce is our largest ad vertical, a change in this trend could serve as a headwind to our 2021 ad revenue growth,” the company said in a statement.
Twitter’s stock also advanced by 8% ahead of its own results. However, its user growth fell short of analysts’ expectations – rising by just one million from July to 187 million “monetizable daily active users”.
The company also warned that the outlook for advertising trends which is up sharply in advance of the US election was unclear.
Google’s parent firm, Alphabet also reported a return to advertising sales growth between July and September as the US economy also rebounded in the period.
Google, the biggest supplier of online ads partly thanks to its YouTube video service, accounted for 80% of its $46.2bn of revenue.
Meanwhile, Apple announced lockdown-popular Airpods and Macs helped total revenue climb to $64.7bn while services revenue, which includes Apple TV and App Store sales, was 16% up.
However, shares fell 5% after it reported a slowdown in sales of premium product, the iPhone, with more than 20% drop in iPhone revenue.
The hit was especially evident in Apple’s Greater China region – where it typically generates about 20% of its sales and sales dropped almost 30%.
Apple expressed confidence that buyers were simply holding out for its latest phone, which went on sale later than in prior years.
“Despite the ongoing impacts of Covid-19, Apple is in the midst of our most prolific product introduction period ever, and the early response to all our new products, led by our first 5G-enabled iPhone line-up, has been tremendously positive,” Chief Executive,Tim Cook said.