Will Earnings Spark a Catch-Up Rally in Tech Stocks?

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Stocks Analysis by Ivana Delevska covering: Microsoft Corporation, Amazon.com Inc, NVIDIA Corporation, Tesla Inc. Read Ivana Delevska's latest article on Investing.com

Consumer vs. B2B - comps are getting tougher for consumer tech while enterprise tech is at the bottom of the cycle.Technology stocks have been consolidating through the summer despite earnings stabilizing and inflecting upwards. But if 3Q23 earnings continue the strong trend, we are likely to experience a catch-up rally into year-end as valuations are now approaching the bottom of a historical range.

Microsoft's Azure grew 27% last quarter on a ~$60bn base. Investors are expecting Azure to grow 26% in C3Q23. We will be looking to learn about the company's AI initiatives , the contribution from AI to growth , and the potential for an in-house GPU. The same dynamic does not apply to B2B. Large enterprises are generating record cash flows and are looking to invest in technology to enhance their products and services and further optimize their operations. This trend is amplified by developments in artificial intelligence that require significant investment as companies don't want to get left behind.

The caveat with these data points is that sentiment could have worsened post the recent move in the 10Y, but budgets were already cut dramatically ahead of an expected recession in 2023 limiting the potential for more cuts.Views expressed here are for informational purposes only and are not investment recommendations. Spear may, but does not necessarily have investments in the companies mentioned.All content is original and has been researched and produced by Spear unless otherwise stated.

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