2 ETF Areas With Further Run-Up Potential on Tech Earnings Cues
Microsoft and Advanced Micro Devices' earnings hint at the fact that cloud computing and video gaming are two hot investing areas.
This week is packed with big-tech earnings releases. Already, Microsoft MSFT and Alphabet GOOGL smashed earnings expectations and lifted investors’ mood about the super-hot tech zones. Microsoft shares edged 2% higher in the aftermarket session on Tuesday after the software and hardware maker reported fiscal first-quarter earnings that topped analysts’ estimates.
Microsoft reported quarterly earnings of $2.27 per share, beating the Zacks Consensus Estimate of $2.06 per share. This compares favorably with earnings of $1.82 per share a year ago. Microsoft recorded revenues of $45.32 billion for the quarter ended September 2021, surpassing the Zacks Consensus Estimate. This compares to year-ago revenues of $37.15 billion.
Alphabet too came up with quarterly earnings of $27.99 per share, beating the Zacks Consensus Estimate of $23.13. This compares to earnings of $16.40 per share a year ago. Alphabet posted revenues of $53.62 billion for the quarter ended September 2021, surpassing the Zacks Consensus Estimate by 3.52%. This compares to year-ago revenues of $38.01 billion.
Advanced Micro Devices AMD recorded quarterly earnings of 73 cents per share, surpassing the Zacks Consensus Estimate of 66 cents and year-ago earnings of 41cents. Advanced Micro, which belongs to the Zacks Electronics - Semiconductors industry, reported revenues of $4.31 billion for the quarter ended September 2021, beating the Zacks Consensus Estimate. This compares to year-ago revenues of $2.8 billion.
However, recent releases pointed out that two tech areas are especially showing strength. Below we highlight those.
Tech Space in Focus
Gaming & eSports
AMD sales soared 54% on strong demand for chips for servers and game consoles. The video game industry continues to thrive amid COVID-induced fears and restrictions, which have boosted stay-at-home activities. For nine months, the total consumer spending on gaming is up 12% year over year to $42.28 billion. It is impressive to observe that the video gaming industry is witnessing strong sales growth despite tough year-over-year comparisons, highlighting the strength in the space.
Recently-released data from The NPD Group emphasizes that the video game industry, including packaged media, digital, consoles and accessories, witnessed robust sales in September, with people spending $4.36 billion in all, reflecting 3% growth year over year. Hardware spending surged 49% in September to $412 million, led by a wider distribution of new-generation consoles from Microsoft and Sony, per the same NPD Group report (read: Bet on These Video Gaming ETFs to Gain From Surging Sales).
VanEck Video Gaming and eSports ETF ESPO
Global X Video Games & Esports ETF HERO
Microsoft’s Intelligent Cloud segment — which comprises the Azure public cloud, enterprise services, GitHub, SQL Server, System Center, Visual Studio and Windows Server — generated $16.96 billion in revenues, up 31% year over year. That also beat the $16.51 billion consensus estimate among analysts polled by StreetAccount, as quoted on CNBC.
Microsoft said Azure and other cloud services grew 50% year over year in the quarter. Microsoft’s Azure public cloud revenue growth was expected to be 47%, according to a CNBC survey of 12 analysts, while analysts polled by StreetAccount are looking for 48% Azure growth. It shows that cloud computing continues to be a thriving zone.
Cloud computing and storage are expected to stay in vogue in 2021. The space has received quite a push amid the coronavirus outbreak with a vast population working from home across the globe. Considering the accelerated coronavirus vaccine rollout globally, demand for cloud computing is set to stay robust even after the pandemic.
It is worth knowing here that cloud computing and storage have found applications in social networking, messaging apps and streaming services. It has empowered video conferencing, gaming, e-commerce shopping, remote project collaboration, online classes, editing, etc. Cloud computing is also supporting organizations in remotely processing a lot of information, developing and running key applications and services.
First Trust Cloud Computing ETF SKYY
Global X Cloud Computing ETF CLOU
WisdomTree Cloud Computing Fund WCLD
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Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
Microsoft Corporation (MSFT): Free Stock Analysis Report
Global X Video Games & Esports ETF (HERO): ETF Research Reports
Alphabet Inc. (GOOGL): Free Stock Analysis Report
First Trust Cloud Computing ETF (SKYY): ETF Research Reports
VanEck Video Gaming and eSports ETF (ESPO): ETF Research Reports
Global X Cloud Computing ETF (CLOU): ETF Research Reports
WisdomTree Cloud Computing ETF (WCLD): ETF Research Reports
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