Big week for earnings at Apple and other big tech as scrutiny increases        

Apple, Google, Amazon, and Facebook together accounting for about a fifth of the S&P 500's total value, report their quarterly results on Thursday, with their shares trading near record highs, even as they face increasing antitrust scrutiny.

Amazon and Apple have surged 74% and 57%, respectively, this year, far outperforming the S&P 500’s 5% gain as the coronavirus pandemic accelerates trends toward online shopping, video streaming, and other technologies helping Wall Street’s largest companies take market share from smaller rivals.

Big Tech for years has been criticised for choking competition and stifling smaller competitors, and investors are looking for signs that they are extending their lead during the pandemic. However, competition scrutiny storm clouds in recent months have increased.

A scathing report by a US House of Representatives panel this month detailing abuses of market power by large tech companies suggests a tough road ahead should Democratic presidential candidate Joe Biden, who is leading in polls, win next week's election.

“There seems to be a lot of angst and desire to not only fine these companies, but potentially change the way they do their business. In the past, there was a lot of lip service, but now you are starting to see some pretty active postures,” said Dan Morgan, a portfolio manager at Synovus Trust. Mr Morgan said he expects to see companies set money aside to pay for potential future fines.

Apple, Google-parent Alphabet, Amazon, and Facebook have a combined stock market value of $5.5 trillion (€4.6 trillion), compared to the S&P 500’s $29 trillion market capitalisation.

Microsoft, which posts its results late on Tuesday, has elevated its stock market value by a third in 2020 to $1.6 trillion. Investors expect the software maker to report an 8% rise in quarterly revenue and a 10% jump in net income, with Cowen analyst Derrick Wood saying that Windows sales could get a lift from additional laptop demand as people keep working from home.

Amazon’s September-quarter report will likely be a “calm before the storm” as the online retailer builds more fulfilment centres in anticipation of a busy holiday shopping season, Bernstein analyst Mark Shmulik wrote in a client note. 

Twitter also reports its results on Thursday, with analysts on average expecting a 9% revenue decline as advertisers hurt by the pandemic spend less.

Analysts on average expect Apple’s report after the bell on Thursday to reflect a 0.5% drop in revenue to $63.7bn and net income down 11.2% to $12.1bn.

However, Apple investors are mostly focused on the outlook for sales of the newest iPhone and growth in recurring revenue from apps, games and video and music streaming. 

• Reuters