Apple, Amazon, Meta: What to Expect from Earnings

Three of the Magnificent Seven stocks report their earnings today, so what do Morningstar analysts think of each company right now?

Morningstar Analysts 1 February, 2024 | 7:26AM
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Amazon (AMZN), Meta (META) and Apple (AAPL) report earnings after hours on Thursday. Here's what our analysts expect

What to Watch For in Amazon's Q4 Earnings

Dan Romanoff

Amazon Web Services (AWS) growth: this seemed like it bottomed last quarter and started to improve. Similar trends were seen at Microsoft for Azure. We're expecting a good performance here.

Advertising growth: advertising has been a bright spot, and we expect it to remain robust. We will be watching for relative growth versus Alphabet and Meta Platforms.

E-commerce in general: we will be interested in consumer behaviour (trading down, more staples, etc) to get signals as to what other companies might be looking for in the broader macro environment in the first half of 2024.

Profitability: a year's worth of restructuring has already started to bear fruit, as profitability was strong in the third quarter. We're expecting more of the same for the fourth.

Earnings outlook: Amazon guides one quarter at a time, and only on the revenue and operating profit lines. We're expecting guidance to be mostly in line for revenue and a little better for profitability.

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What to Watch for in Apple's Earnings

William Kerwin

New iPhone 15: the main focus of Apple's earnings report will be iPhone sales, which are the primary driver of the firm's results. We're expecting typical seasonal strength for the December quarter, given the launch of the iPhone 15 lineup.

Apple Watch Sales: we are also looking for commentary on Apple Watch sales, given the company's ongoing patent dispute with Masimo, which provides the oximeter for the Watch. We expect the impact on sales to be minimal, both in the quarter and over the long term.

Vision Pro: finally, we're hoping to hear further commentary on the launch of the Vision Pro, Apple's new augmented reality headset, which is slated for February 2. We don't expect significant sales in its first year, but forecast a rapid ramp-up over the next five years.

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What to Watch For in Meta's Earnings

Ali Mogharabi

The 194% jump in Meta's stock in 2023 was due to user growth, engagement, and monetization with a leaner operation.

We look for further improvement in revenue generated from Reels. It keeps attracting more advertisers, and its impact on Meta's advertising revenue is likely positive after being neutral last quarter and negative in the past.

We expect further improvement in Meta's data analytics, campaign planning, and measurement tools using artificial intelligence.

Some data indicates that ad prices have increased from last year, including for social media, which bodes well. However, we do see revenue growth deceleration in 2024 as the transition from traditional to digital is nearly complete. In addition, Morningstar has projected a slowdown in U.S. economic growth in 2024.

While headcount is expected to grow, we see a slowdown in hiring as the firm is focusing on making individuals more efficient and productive. We expect further indications of cost controls remaining intact.

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Earnings Season Insights

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating Inc182.81 USD-0.68Rating
Apple Inc214.29 USD-1.10Rating
Meta Platforms Inc Class A499.49 USD-1.41Rating

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