A new report by Bloomberg shows that despite strong performances by leading Nasdaq tech stocks over the past week, the companies are projecting murky future growth forecasts that are making investors more worried than remaining optimistic.
Companies including Apple, Alphabet (Google), Meta, Amazon, and Tesla have given investors cause for concern this quarter, be it Apple’s lukewarm holiday season forecast reporting a steep decline in global shipments, or the lackluster performance of Google’s cloud-based services, or Tesla suggesting that consumer demand for electric vehicles have diminished.
Leading Tech Companies Expect Reduced Revenue Growth, Worrying Investors
According to the report, the seven largest tech stocks are down by an average of about 9% from highs that lasted 52 weeks, with Apple suffering the most as the trillion-dollar tech behemoth’s market value declined by more than $300 billion over the course of the year.
Last week, Apple issued a sales forecast for the holiday season, which typically is its strongest revenue period. However, the numbers fell far below Wall Street’s high expectations for the company. According to the earnings report, Apple’s profits were down due to a reduced demand for its iPads and Apple Watch, which are some of the most sold devices during the holiday season.
Despite the downtrend, Bloomberg’s market intelligence depicts the profits of the S&P 500’s largest “grown companies” are on track to climb 50% in value. The list includes Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.
Sharing his thoughts with the news outlet, Scott Colyer, the chief executive of Advisors Asset Management said the concerns were all about “failure of future guidance” because big tech stocks are usually priced to “historic perfection” and when they came up short, it leaves investors vastly disappointed.
Colyer expects more market uncertainty for some larger growth stocks. Meanwhile, his company is backing Microsoft as the tech giant’s focus on developing artificial intelligence-based technologies and a $10 billion investment in OpenAI will bear fruit, according to the CEO.
Retail Advocacy Group NRF Suggests Holiday Spending Could Regain Pre-COVID Levels
Experts predict that the slowest rise in sales in years during the most critical and competitive shopping period of the year is largely due to inflation. Apple’s forecast coincided with the National Retail Federation (NRF) publishing its own report suggesting that holiday spending by Americans could get back to the pre-pandemic growth rate of between 3% and 4% by the end of the year.
However, the retail advocacy group noted that its estimated growth rate is slower than what was seen over the last three years but is comparable to the average annual increase of 3.6% seen in the decade prior to the pandemic, which is expected to be in a range between $957.3 billion and $966.6 billion.
NRF also predicts the online shopping trend that took over during the pandemic to continue as non-store sales, including online, are expected to rise between 7% and 9% compared to 2022. The agency forecasts the numbers to reach a total of between $273.7 billion and $278.8 billion by the end of the year.
Mastercard Says Consumers Are “Rebalancing” Spending Habits For Upcoming Holidays
In its holiday spending forecast from September, payments giant Mastercard said that it expects a “rebalancing” in consumer spending for the upcoming holiday season. The company’s SpendingPulse report shows retail sales to increase by 3.7% for the period between November 1 and December 24.
Michelle Meyer, the US chief economist at the Mastercard Economics Insitute, said that during the past several holiday seasons, consumers were trying “to find a footing” in a rapidly shifting economy, whereas, the consumer of holidays present have taken back their spending power. The company expects customers to navigate the holiday season “impressively” by making choices and trade-offs that “best suit their lifestyle”.
The trend was noticed in the market last week when Wamart’s shares reached a 50-year high. This could be attributed to consumers’ trust in the retail giant’s ability to perform well during the holiday season. The NRF report also suggests that retailers could hire between 345,000 and 450,000 seasonal workers to support the buying events they have planned for holidays.