Second-quarter earnings season is in full bloom. Broadly speaking, the results from mega-cap growth stocks have been solid even if ensuing reaction by market participants hasn’t been.
That sentiment is applicable to several components in the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM). While not every QQQ and QQQM member firm that’s recently reported has been met with investor excitement, the exchange traded funds are higher by 5.55% over the past month.
Some marquee members of the QQQ and QQQM portfolios, including Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOG), and Tesla (NASDAQ: TSLA) have already reported and reaction has been mixed. Next week marks the halfway point of earnings season. There are many opportunities remaining for QQQ and QQQM holdings to foster confidence among investors.
The ETFs could be in a good place over the near-term because Morgan Stanley recently unveiled its top picks for the remainder of earnings season. That group includes some QQQ and QQQM holdings.
Two “A’s” Could Help QQQ, QQQM
Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN), which combine for nearly 17% of the QQQ and QQQM rosters, are among the ETFs’ components stepping into the earnings confessional next week. Both are on Morgan Stanley’s list of top ideas for the remainder of earnings season.
“We think upward revisions to North America profits, driven by shipping and fulfillment cost per unit efficiencies, combined with a more durable consumer and a potential reacceleration of AWS revenue in 3Q/2H23 provides a favorable backdrop as we head into the second half,” said analyst Brian Nowak of Amazon.
Amazon and Apple both report on Aug. 3 after the close of U.S. markets. Though not on the Morgan Stanley list, Advanced Micro Devices (AMD) is another example of a growth name reporting next week. The semiconductor giant delivers results on Aug. 1.
Specific to Apple, the company’s upcoming earnings report might be short on surprises. Still, things could get more interesting on the earnings front later this year.
“We expect a largely in-line June Q but see 4-9% upside to Sept Q rev/EPS, driven by relative strength in iPhone, Mac, Services & Gross Margins,” Apple Insider reported, citing Morgan Stanley research. “History shows Apple outperforms by 5-10 pts after guiding the Sept Q higher, creating a positive setup into earnings next [week].”
Apple will launch the latest iPhone in September. Significant improvements to that product or new products could lift the already hot stock.
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