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BIG TECH WEEKLY | Who's Strongest in Q3 Earnings Season?

@MaverickWealthBuilder
Big-Tech’s Performance There were no surprises at this week's FOMC meeting and Powell's stance remained largely unchanged. The overall wording was not as tight as before, indicating that the current market interest rates are already having a tightening effect. Therefore, the market is more hopeful that the tightening pace will be relaxed earlier next year. US treasury yields have also started to plunge. As a result, risk sentiment has returned and second-tier growth stocks have rebounded significantly under the leadership of some financial reports. Meta, Tesla, and Google among the big tech companies have also rebounded significantly. As of the close on November 2nd, all major tech companies have risen in the past five trading days. The biggest increase was $Amazon.com(AMZN)$ (+15.5%), followed by $NVIDIA Corp(NVDA)$ (+7.9%), $Meta Platforms, Inc.(META)$ (+7.8%), $Apple(AAPL)$ (+6.4%), $Microsoft(MSFT)$ (+6.2%), $Tesla Motors(TSLA)$ (+6.2%), and $Alphabet(GOOG)$ (+4.2%). Big-Tech’s Top Newsfeed -Apple announced its Q4 23 financial report, with revenue declining for five consecutive quarters and profits rising by 13%. -Apple expects iPhone revenue to increase year-on-year in the December quarter, while iPad and wearable devices are expected to see a significant decline. -Apple achieved a historic high in smartphone shipments in India in Q3, and Guo Mingji predicts that about 12-14% of iPhones worldwide will be produced in India by 2023, with the iPhone 17 NPI possibly launching in India. -The Netherlands claims that Apple's commission system violates EU antitrust laws. -Apple released the 3nm Mac chips M3, M3 PRO, and M3 MAX, as well as new Macs with the M3 series. -Microsoft released Windows 11 with an AI assistant Copilot, while Office AI started pre-orders at a price of $30 per month for a minimum of 300 accounts. -Google invested $2 billion in AI startup Anthropic, following Amazon's lead. -The FTC believes that Amazon has tried to obstruct antitrust investigations by destroying communication records. - $Advanced Micro Devices(AMD)$ and $Qualcomm(QCOM)$ had excellent financial reports and are optimistic about AI chips bringing in $2 billion in sales revenue next year. -Qualcomm believes that the newly developed Snapdragon X computer chip can surpass Apple and Intel's best products. -Due to the US government's expansion of export restrictions on chips to China, Nvidia may lose orders worth more than $5 billion. -The president of the US UAW auto workers union is eyeing Tesla. Big-Tech’s Key insights Apple Earnings Review Apple FY23Q4: Revenue slightly better than expected, but year-on-year decline for four consecutive quarters, with declines in Europe, Greater China, and Japan. Mac and iPad business demand remained insufficient, while iPhone performance was mediocre. Service revenue increased by 16%, and gross margin rose to 45.2%. The company remains optimistic about the growth of iPhone and Mac in the next quarter, but expects a "significant decline" in iPad and wearable devices. Who are the Strongest Tech Stocks? The financial reports of major tech companies have mostly concluded, and overall performance in Q3 exceeded expectations, aligning with the optimistic economic data for Q3. However, there are differences in trends. We have summarized the results (NVIDIA's financial report is not yet released, and only Apple's report is included after-hours): The worst performer on the day of the financial report, both in terms of the largest intraday decline and closing decline, was TSLA; the best performer was AMZN. AMZN had the best performance on the day of the financial report, but when considering the two-day change before the report, MSFT actually had the most stable performance. This coincides with our previous statement that MSFT excels in "stability." As for AMZN, it dropped nearly 7% in the two days before the financial report, so the 6.8% increase on the day of the report can only be considered a "recovery." Despite poor performance on the day of the financial report, META rebounded strongly and showed strength. Based on this analysis, big-tech stocks after the financial reports can be ranked as follows: MSFT > AMZN > META > GOOG > AAPL > TSLA. This ranking aligns with the recent performance and industry expectations of these companies. Additionally, growth tech stocks rebounded strongly this week, with some companies experiencing double-digit rebounds after their financial reports. However, many individual stocks had significant declines in the past two quarters, so their short-term rebound potential is high. Looking back at the overall returns over 1-2 quarters or since the beginning of this year, they still cannot match the performance of major tech companies. Currently, NVDA (AI market) has been the best performer year-to-date, followed by META with a 158% increase, and it even has the potential to reach new all-time highs. We look forward to NVDA's market performance at the end of the month, which will provide further guidance for the overall tech stocks. The NVDA financial report on Q1 and Q2 had significant fluctuations on the day of and a few days before and after the report, presenting trading opportunities. The Big-Tech Portfolio We have combined these seven companies with the highest weight into an investment portfolio called the "TANMAM" portfolio. By equally weighting and adjusting the weights quarterly, this portfolio has outperformed the $SPDR S&P 500 ETF Trust(SPY)$ by a large margin since 2015, with a total return of 1320% compared to SPY's 145% during the same period. Since the beginning of this year, the total return of this portfolio is 87.7%, with a Sharpe ratio of 4.2, while SPY's total return has risen to 13.9% with a Sharpe ratio of 0.9. This week's rebound saw a 7.8% increase in the TANMAM portfolio and a 4.4% increase in SPY.
BIG TECH WEEKLY | Who's Strongest in Q3 Earnings Season?

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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