Twenty of 21 tech firms beat EPS forecasts this week, Seeking Alpha reports

what happened

According to Seeking Alpha, 21 tickers from the information technology sector reported results this week. Twenty of them beat analysts' earnings-per-share estimates, and Trimble posted EPS in line with the market. Revenue beat expectations at all 21 companies, and every one of them grew year over year. The sector has gained nearly 15.65% so far this year, while the S&P 500 rose about 7.4%.

Apple reported EPS of $2.10 for its fiscal fourth quarter ended September 26, with revenue up 12% to $114.48B. iPhone sales reached $57.58B, compared with a $56.49B estimate. Its revenue growth guidance of 7% to 10% topped the 6% forecast, but the company expects gross margins of 45% to 46%, below the 46.9% Wall Street expected. Palantir posted revenue of $2.31B, up 96%, and raised its full-year outlook. AMD reported revenue of $13.38B, up 45%, and guided fourth-quarter revenue to $17B, plus or minus 3%, above the $16.29B estimate.

why it matters

A run of strong reports supports earnings expectations for the tech sector and lowers the risk of disappointment in the next round of results. Applied Materials and Cisco Systems are next in the spotlight. For markets, the key question is whether the sector can keep up its growth pace given already high expectations.

market impact

US tech: a run of beats and raised outlooks supports IT shares

• ▲US technology stocks pressure up — strong beats and guidance above expectations support sector valuations
• ↔Apple shares mixed — iPhone strength and revenue guidance offset by weaker expected gross margin

instruments

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