Quentin’s Day : FANGs on Fire

After hours on 27 April was a huge day for big tech, with results from Google (Alphabet), Amazon and Microsoft, three companies with a combined market value of $1.6 trillion. Billions don’t cut it in Wall Street any more.

The only one of the three which registered any sort of disappointment was Microsoft were revenue missed expectations because of a slump in Surface PC sales. The company’s laptoptablet hybrid saw revenue drop 26pc. Who cares was the more measured reaction with overall sales for the group rising to $23.6bn compared to $22.1bn for the first quarter a year ago. The exciting Azure cloud computing business delivered a stunning quarter with sales up 93pc to $3.66bn. The shares wavered at first but ended the day slightly higher at $68.46. The chart looks great, fully confirming the idea that Microsoft is fast recovering its mojo as it adapts to the new era of cloud computing under Satya Nadella, who became CEO in 2014, with the declared aim of making Microsoft a force in cloud.
Google’s results were just amazing. A company that first achieved dominance in search more than a decade ago managed to increase paid ad clicks on its own sites by 53pc with reported Q1 revenue up 22pc to $24.75bn. The shares soared $33 to $925, neck and neck with Amazon, and both chart and fundamentals look bullish (in layman’s speak that means the shares should keep climbing).

Amazon’s results were pretty cool too. In the words of the analysts the group ‘crushed’ expectations. Prime revenue rose nearly 50pc and profits jumped 41pc, amazing numbers for such a giant business. The shares initially blazed some $30 higher to above $950 before calming back down to $925 on profit-taking.

FANG stands for Facebook, Amazon, Netflix and Google. I have included Microsoft as an honorary member of the group. All three, actually all five, are in the QL Live Portfolio. The three discussed above remain strong buys in the QV system and between them have clocked up 53 buy recommendations since 2009 between my two investment newsletters, Quantum Leap and Chart Breakout.