The Week Ahead for the Tech Sector
This week represents another major week for earnings in the tech sector – and likely another very volatile week for the Nasdaq.
Last week, we got Q3 data from GOOGL, AMZN, AMD, MSFT, INTC, XLNX, FSLR, TSLA, TXN, and host of other key names. The themes that emerged were really about serious concerns about the chip cycle and some expectations of softness in overall demand in Q4 that the market simply wasn’t expecting.
If we think in terms of “The Good, the Bad, and the Ugly”, we would focus our interpretation as follows:
The Good: MSFT, XLNX, INTC, and TSLA
The Bad: TXN, AMZN, and GOOGL
The Ugly: FSLR and AMD
However, given the way markets process data and adjudicate share price justice, the opportunities are generally to be found in the Ugly names and the Good names: the former, because the market may have already baked in the problems in these names at this point; the latter, because they continue to execute but were not significantly rewarded by the market given the index selling and hedging we have been seeing.
What’s on Tap
Looking ahead to next week, we have another full slate of high-focus names in the sector set to come to the table with report cards.
The only name of interest on Monday will hit in the afternoon with 8×8, Inc. (NYSE:EGHT). Right now, we have a consensus expectation for -0.05 in EPS, which would be well below the 0.03 reported for the year-ago quarter.
Tuesday is when things really heat up, with 3D Systems Corporation (NYSE:DDD), Facebook, Inc. Common Stock (NASDAQ:FB), Baidu Inc (NASDAQ:BIDU), FireEye Inc (NASDAQ:FEYE), IQIYI Inc (NASDAQ:IQ), and SunPower Corporation (NASDAQ:SPWR) all turning in numbers after the close. Expect a lot more of a cycle sense to emerge for the sector at this point.
On Wednesday, things are a little lighter, with just Fitbit Inc (NYSE:FIT) and NXP Semiconductors NV (NASDAQ:NXPI) of major interest in the afternoon.
Thursday morning, we will hear from Lumentum Holdings Inc (NASDAQ:LITE). Then, in the afternoon, we get word from Acacia Communications, Inc. (NASDAQ:ACIA) and Universal Display Corporation (NASDAQ:OLED). This is when we will also get numbers from Apple Inc. (NASDAQ:AAPL), which will likely be a defining point in this process.
AAPL will be able to tell us if this gloomy Q4 outlook is really justified. That said, this company has a long history of using market weakness to sandbag its outlook and lower the bar so it can go soaring over top of it three months later. So, guidance here may have to be taken with at least a touch of salt.
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