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Next week’s earnings could boost tech stocks once again




But wait a minute: great technology may have another ace up its sleeve.

Next week’s earnings schedule is full of high-profile performance reports from Google (GOOGL), Microsoft (MSFT), chip maker AMD (AMD), apple (AAPL), Facebook (FB), Amazon (AMZN) i Twitter (TWTR).

The solid gains from these companies could mean a new recovery in technology stocks, according to Wedbush Securities analyst Daniel Ives.

“We believe earnings (in the first quarter) over the next few weeks will be a major positive catalyst for tech names,” given the industry’s solid fundamentals, Ives said in a note to customers last week.

And as technology stocks go, so does the market, because they are among the largest stocks in the major equity indices.

Of course, there will be many months until we know how much of the remote pandemic-driven way of life that raised technology company margins last year will continue once the economy is completely reopened.

Still, there are many things to optimize in the industry. Companies are preparing to let workers continue to log in remotely after the pandemic, which means continued dependence on apparatus and services. And it’s likely that some of the transformations that have taken place over the last year will continue, such as digital meetings or virtual doctor visits.

A digital transformation is underway and could lead to the next multi-year rally for technology companies, according to Ives. That said, it can be tricky for investors to determine whether to allocate money to cybersecurity, artificial intelligence or cloud computing right now.

“Today we estimate that 35% of workloads are in the cloud, with a doubling of cloud workloads projected for 2023,” he said.

Thus, while the valuations of technology stocks are very high, even after recent sales, there is reason to believe that these stocks will continue to rise even further. Growth prospects could only offset high stock prices.

Of course, there are also some clouds on the horizon for big technologies.

The regulatory environment could change under Biden’s administration. And the White House is intention to raise corporate taxes, which could severely affect technology companies.
President Joe Biden is watching it too increase capital gains taxes about the rich. This caused stocks dropped last week. A change in tax liabilities could change the way people invest in the stock market.