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Big Tech Earnings Preview: Alphabet, Facebook, and Amazon

Three "big techs" scheduled to report their second-quarter 2021 results this week are Google parent Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) on Tuesday, July 27, Facebook (NASDAQ: FB) on Wednesday, and Amazon (NASDAQ: AMZN) on Thursday. All three report after the market close.

(Apple also reports on Tuesday, but this article doesn't discuss the iPhone giant.)

Year-over-year growth expectations are unusually high for Alphabet and Facebook because their digital advertising-based businesses were significantly hurt in the year-ago period, which was the first full quarter affected by the COVID-19 pandemic. Many businesses were temporarily closed or operating at less than full capacity in that quarter. In other words, the search-engine and social-media leaders are facing easy sales comparables, and Alphabet is also facing an easy comparable on the bottom line.

The same is not true with Amazon, as the e-commerce and all-around-tech titan's sales got a brisk tailwind in the year-ago period, as the pandemic drove consumers around the world to embrace online shopping. And its strong sales growth helped boost its profit.

Magnifying glass magnifying the word "Technology" and surrounded by tech-related words.

Image source: Getty Images.

Alphabet: Tuesday (earnings call at 4:30 p.m. EDT)

Going into the earnings week, Alphabet stock is outperforming shares of Facebook and Amazon, as well as the broader market, in 2021 to date (July 23) and over the last year. So far in 2021, Alphabet shares are up 51.8% (Class A) and 57.3% (Class C), Facebook stock is up 35.4%, and Amazon stock trails with a 12.3% gain. The e-commerce mammoth's stock is the only one of the three underperforming the S&P 500, which has returned 18.4% so far this year.

Here's what Wall Street is expecting in Alphabet's report:

Metric Q2 2020 Result Wall Street's Q2 2021 Consensus Estimate Wall Street's Projected Change

Revenue

$38.3 billion

$56.0 billion

46%

Earnings per share (EPS)

$10.13

$19.21

90%

Data sources: Alphabet and Yahoo! Finance.

As to Alphabet's low-bar comparable, in the the year-ago period, its revenue edged down 2% and its EPS dropped 29% year over year.

For context, in the first quarter, Alphabet's revenue jumped 34% year over year to $55.3 billion. EPS rocketed 166% to $26.29, crushing the $15.82 Wall Street was expecting.

FB Chart

Data by YCharts.

Facebook: Wednesday (earnings call at 5 p.m. EDT)

Here's what the Street is expecting from the social-networking behemoth:

Metric Q2 2020 Result Wall Street's Q2 2021 Consensus Estimate Wall Street's Projected Change
Revenue $18.7 billion $27.8 billion 49%
Earnings per share (EPS) $1.80 $3.02 68%

Data sources: Facebook and Yahoo! Finance.

Facebook didn't issue specific guidance, but CFO Dave Wehner said in last quarter's release that management expects Q2's "year-over-year total revenue growth to remain stable or modestly accelerate relative to the growth rate in the first quarter of 2021 [48%] as we lap slower growth related to the pandemic during the second quarter of 2020."

In the first quarter, Facebook's revenue soared 48% year over year to $26.2 billion. Growth was driven by a 30% year-over-year jump in the average price per ad and a 12% increase in the number of ads delivered. The number of daily and monthly active users rose 8% and 10%, respectively, year over year. EPS surged 93% to $3.30, speeding by the analyst consensus estimate of $2.37.

Amazon: Thursday (earnings call at 5:30 p.m. EDT)

Here are numbers to use as benchmarks.

Metric

Q2 2020 Result

Amazon's Q2 2021 Guidance

Amazon's Projected Change

Wall Street's Q2 2021 Consensus Estimate

Wall Street's Projected Change

Revenue

$88.9 billion

$110 billion to $116 billion

24% to 30%

$115.1 billion

29%

Earnings per share (EPS)

$10.30

N/A

N/A

$12.22

19%

Data sources: Amazon and Yahoo! Finance. Note: Amazon does not provide earnings guidance.

While Amazon doesn't provide earnings guidance, it does issue an operating income outlook. For Q2, management guided for operating income to range from $4.5 billion to $8 billion. This range represents operating income declining by as much as 22% to rising by as much as 38% year over year.

The company's Q2 revenue will include sales from its big annual Prime Day event, held in June this year. Last year, this event took place in the fourth quarter, while it's traditionally been in the third quarter.

In the first quarter, Amazon's revenue surged 44% year over year to $108.5 billion, beating the $104.5 billion analysts had expected. EPS skyrocketed 215% to $15.79, demolishing the consensus estimate of $9.54.

Again, Facebook reports on Tuesday, Alphabet on Wednesday, and Amazon on Thursday, all after the closing bell.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Beth McKenna has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, and Facebook. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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