Get ready for an exciting week in the world of big tech earnings. Investors are eagerly awaiting the Q3 results, hoping they can ignite a rally as we head into the end of the year. Two major players in the spotlight are Meta Platforms (META) and Alphabet (GOOGL). In this analysis, we’ll delve into the expectations for each company and take a closer look at their advertising revenue.
Meta Platforms
Analysts have shown optimism for Meta’s upcoming quarter. The Zacks Consensus EPS Estimate has increased by 6% since July, reflecting a significant 120% jump year-over-year. Top line expectations are also on the rise, with the quarterly estimate of $33.4 billion up 2.5% and a 20% improvement from the same period last year.
Advertising revenue is a crucial factor for Meta, accounting for a significant portion of its total sales. The Zacks Consensus Estimate for Advertising Revenue stands at $32.9 billion, showing a notable 20% increase compared to the previous year. It’s worth noting that Meta has consistently surpassed consensus ad revenue expectations, with the most recent beat reaching 4.2%.
In terms of valuation, Meta’s projected growth looks promising. Earnings are forecasted to climb 36% on 12% higher revenues in the current year. The stock is currently trading at a 23.4X forward earnings multiple (F1), which aligns with its five-year median of 23.1X.
Alphabet
Similar optimism surrounds Alphabet’s upcoming release. The Zacks Consensus EPS Estimate has risen by 1.4% since July, representing a solid 36% boost from the year-ago quarter. Revenue expectations have also seen a modest increase, with the quarterly estimate of $63.1 billion up 0.5% and a 10% improvement from last year’s sales of $57.3 billion.
Alphabet’s advertising business plays a significant role in its total revenue. For the quarter, the Zacks Consensus Estimate for advertising revenue stands at $58.9 billion, reflecting an 8% change compared to the previous year. Like Meta, Alphabet has consistently outperformed expectations on this metric, indicating that ad spending remains strong.
Bottom Line
With big tech earnings on the horizon, investors should prepare for an eventful period. All eyes will be on Alphabet and Meta Platforms as they are anticipated to deliver robust earnings growth and improved revenues. The tech sector as a whole has shown enhanced profitability, thanks to successful cost-cutting measures implemented after a challenging 2022. Both companies are expected to post strong earnings growth rates, reflecting these positive developments.
FAQs
Q: What is the Zacks Consensus EPS Estimate?
The Zacks Consensus EPS Estimate is a widely followed financial metric that represents the average expected earnings per share (EPS) for a particular company over a specific period. Analysts contribute their individual estimates, and the Zacks Consensus Estimate reflects the consensus view.
Q: How important is advertising revenue for Meta and Alphabet?
Advertising revenue is vital for both Meta and Alphabet, as it significantly contributes to their overall sales. Meta’s Consensus Estimate for Advertising Revenue stands at $32.9 billion, while Alphabet’s stands at $58.9 billion for the upcoming quarter.
Pros and Cons
Pros:
- Positive analyst sentiment for Meta and Alphabet’s upcoming earnings releases
- Consistently exceeding expectations in advertising revenue for both companies
- Promising valuation and growth projections for Meta
Cons:
- Uncertainty surrounding the broader market and the potential impact on tech stocks
- Potential risks associated with changes in ad spending patterns
As always, it’s essential to conduct thorough research and carefully consider the risks before making any investment decisions.
Conclusion
The upcoming earnings releases for Meta Platforms and Alphabet are highly anticipated by investors. The positive outlook for both companies, including strong earnings growth and improved revenues, is generating excitement among market participants. Advertising revenue plays a critical role in the success of these tech giants, and recent performance suggests a steady demand for ad spending. However, investors should remain cautious and analyze all factors before making any investment decisions.
Disclaimer: The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
