How tech earnings impact your portfolio
Mark Avallone, Founder & President, Potomac Wealth Advisors, joined TheStreet to discuss how big tech earnings directly impact consumers.
Transcript
00:00 For the most part, tech earnings, which is what we're largely going to talk about today,
00:03 they have been pretty strong.
00:04 Talk to me about some of your biggest takeaways from the reports that we've already seen.
00:08 And Mark, I wonder if there are any notable trends or maybe surprises that you have observed
00:14 that maybe you were not expecting.
00:16 Well, what we really saw was that guidance means a lot.
00:21 And what happened in the rear view matters, but sometimes what they predict about the
00:25 future is going to matter more.
00:27 And we also saw how penal the market can be to a company like Alphabet if it just doesn't
00:33 hit a superb growth rate on its cloud division.
00:39 So it's a mixed bag because taking Alphabet or Google, their ad revenue was strong and
00:46 YouTube was strong, and that's the vast majority of their business.
00:50 And yet when the cloud numbers came in, just a bit disappointing, the stock got pummeled
00:56 down almost 10%.
00:57 So we take away that if the good news isn't really good news, the market can be very punitive
01:05 to these companies.
01:07 And then what they say about the future can be even more important.
01:12 So what do they say about the future, do you suspect, right now?
01:15 And maybe how do they even influence individual consumers?
01:19 Obviously, for the most part, if you have exposure to the S&P 500, Mark, you have exposure
01:25 to these big tech companies.
01:27 Yes, and in a big way.
01:29 Well, we're looking at AI as a driver and a company like Microsoft is now being coronated
01:37 the leader in regenerative AI and as such is getting some market boost from time to
01:45 time.
01:46 But it also has superb underlying businesses, terrific management, and the response of the
01:51 market in all likelihood reflects the entire picture.
01:56 We also think that people are misunderstanding one aspect of 2024, and that's a giant election
02:02 year in meta and alphabet while we consider them tech companies, they're really ad companies.
02:10 And people need to look beyond the nomenclature of them being tech organizations and realize
02:16 they're going to derive a lot of ad revenue next year.
02:20 And with the election cycle in full force, we wouldn't be surprised to see them have
02:25 positive responses to a massive, what we expect to be a massive amount of political advertising.
02:31 Thanks.
02:32 Thanks.
02:32 Thanks.
02:33 Thanks.
02:33 [BLANK_AUDIO]