Earnings Theater Likely Meaningful for These ETFs | ETF Trends

First-quarter earnings season ramps up in earnest this week. On the back of Tuesday’s reports from Google parent Alphabet (GOOG) and Tesla (TSLA), some large-cap growth ETFs are likely to be under the earnings microscope in the days ahead.

That group includes the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM), both of which track the Nasdaq-100 Index (NDX). The Invesco ETFs allocate a combined 7.3% of their rosters to Alphabet and Tesla. The latter of which is mired in a nearly 900-day slump. Additionally, that’s the stock’s second-longest slide since its 2010 initial public offering (IPO).

Some analysts believe the earnings reports from select QQQ and QQQM firms could be pivotal in determining the near-term courses of those stocks. However, it may also be important to the broader appetite for large- and mega-cap tech stocks among investors.

In an interview last week with Bloomberg TV, Dan Ives, senior equity analyst at Wedbush Securities said this “is a get out the popcorn moment” for tech stocks.

These Stocks Could Drive QQQ, QQQM This Week

Facebook parent Meta Platforms (META), the largest communication services holding in QQQ and QQQM, steps into the earnings confessional on Wednesday, and with stock up 123% over the past year, some investors are concerned about potential lethargy. However, analysts argue that some sluggishness may already be priced into the name and the stock isn’t expensive.

“We believe slower growth is well-anticipated, & likely taken into account in META’s undemanding multiple,” wrote JPMorgan analyst Doug Anmuth in a recent note. “META is an exception, w/ implementation of AI in the ad stack perceived as an important contributor to growth.”

Accordingly, big things are expected of Microsoft (MSFT) and that company’s Thursday earnings report is meaningful to QQQ and QQQM investors because that stock is the ETFs’ largest holding at a weight of 8.90%. Bank of America recently waxed bullish on Microsoft. They cited Azure, Microsoft 365, and the potential for the AI market to balloon to $944 billion by 2027.

Finally, Amazon (AMZN), the largest consumer cyclical holding in QQQ and QQQM, delivers results on Tuesday, April 30, indicating the ETFs have earnings catalysts beyond this week. JPMorgan is also constructive on that stock.

“Amazon is our Best Idea, even as it is most owned across our coverage,” added Anmuth. “Easing optimizations, new workload deployment, favorable comps, & very early GenAI monetization should support AWS accel through 2024.”

For more news, information, and analysis, visit the ETF Education Channel.