Earnings Outlook: The main attractions arrive: Apple, Microsoft, Google, Facebook, Amazon and Tesla headline the biggest week of earnings

Consider these stats, from Dow Jones Market Data Group:

• The five Big Tech companies comprised more one-fifth of the total market cap of the S&P 500 index
  SPX,
  +1.01%
  as of the end of the second quarter, 22%.

• In the first quarter, they provided nearly 10% of the total sales of the 500-member index, and nearly 18% of the total profit (9.7% and 17.8%, respectively).

• That proportion of profit provided by Big Tech actually decreased from 2020, when the five companies provided nearly a quarter of the index’s full-year earnings, 23.8%, and accounted for 9.1% of the total sales.

In the coming week, the five companies are expected to reveal some large earnings and sales for the second quarter, which can typically be slower ahead of back-to-school and holiday shopping in the second half of the year. Collectively, they are expected to report profit of nearly $60 billion on sales of more than $310 billion, according to analysts’ estimates collected by FactSet.

Those estimates are likely conservative. So far this quarter, 88% of S&P 500 companies have surpassed analysts’ average estimates for earnings per share, and 86% have beaten on revenue with nearly a quarter of the index reporting, according to FactSet. Both of those figures would be records for overall surprise percentage, which FactSet has tracked back to 2008, according to senior earnings analyst John Butters.

Facebook and Google, for example, are widely expected to outdistance estimates after fellow online ad-sales companies Snap Inc.
SNAP,
+23.82%
and Twitter Inc.
TWTR,
+3.05%
blew away expectations in their reports last week, which helped boost Alphabet and Facebook to record stock highs Friday, along with Snap.

See also: Facebook earnings preview and Alphabet earnings preview

Stock movement is unlikely to be determined by the numbers those companies report, especially after the big bounce on Friday; forecasts have been more important for investors as they wait to see how long the current boom in corporate earnings will last. And all five companies have been careful with their forward-looking statements during the COVID-19 pandemic.

Apple has stopped providing guidance during the pandemic, which will obstruct the annual parlor game of trying to glean facts about the coming iPhone release from the company’s financial forecast. While Microsoft is expected to wrap up its fiscal year by breaking the records it put up the year before by a healthy amount, it will likely only provide official financial guidance for the coming quarter instead of the full year, as executives have done in the past.

Full earnings preview: What will Apple say about the next iPhone at earnings time? Maybe more than usual

Most Big Tech forecasts that have been shared ended up undershooting their actual performance, which can keep expectations low and produce big beats. Amazon, for instance, topped the highest end of its sales forecast by 2.3% in the first quarter, which equates to an additional $2.5 billion. And that was actually the closest Amazon came to an accurate prediction in Big Tech’s $1.2 trillion pandemic year, after beating the top end of its quarterly guidance by 3.8%, 3.4% and 9.8% looking backward from the fourth quarter.

So expect at least a couple of big earnings beats and a lot of questions about what comes next as these reports flood in during the week. Apple, Google and Microsoft all expect to report on Tuesday afternoon following the close of markets, while Facebook follows Wednesday afternoon and Amazon wraps it up on Thursday afternoon.

The call to put on your calendar

• Tesla Inc. When Tesla
  TSLA,
  -0.91%
  Chief Executive Elon Musk speaks, the markets listen.

The most controversial CEO in Silicon Valley has sent cryptocurrencies like bitcoin
BTCUSD,
+2.41%
and dogecoin
DOGEUSD,
+1.01%
on crazy rides with his tweets and pronouncements so far this year, but when he kicks off the week’s after-hours earnings slate Monday afternoon, the focus should be on Tesla and its stock.

As always, there are plenty of issues to discuss with the electric-car manufacturer. After the departure of a longtime executive, the progress of Tesla’s Semi road map will need to be addressed, as will the gross-margin effects of the continuing semiconductor shortage, an issue across the automotive industry.

Full Tesla earnings preview: Semi truck, Cybertruck pickup and chip shortage in focus

Tesla is also likely to address its plans to sell its advanced driver-assistance features as a subscription package, even as Consumer Reports joins in a chorus of criticism about Tesla’s approach to autonomous driving. Musk’s recent pronouncement that Superchargers will be opened to electric vehicles from other manufacturers, as well as demand amid heated competition in China will also be topics to look for.

Also watch for chip-shortage commentary from other, more staid automakers, such as Ford Motor Co.
F,
-0.65%
on Wednesday, as well as chip supplier Qualcomm Corp.
QCOM,
+1.71%.

• Hasbro Inc. and Mattel Inc. Could there be a more worrisome phrase than “toy shortage” as we approach the holiday shopping season?

Well, analysts raised the alarm last week that we could face exactly that, after parents purchased bundles of toys out of season to keep their kids entertained while home from school during the COVID-19 pandemic, which put a crimp on the industry’s supply chain. Expect executives to address any problems at Santa’s workshop when Hasbro
HAS,
-0.89%
reports on Monday and Mattel
MAT,
-1.60%
follows on Tuesday.

The numbers to watch

• Boeing Co.’s bottom line. Boeing
  BA,
  +0.29%
  is expected to post another loss in the quarter, but analysts predict that it will go against the grain and post a loss much wider than the average consensus. “We think Boeing is set to announce another monster 2Q loss, with a free cash outflow of ~$2.8bn by our estimates,” Vertical Research analysts said, while Benchmark analyst Josh Sullivan predicted last week that Boeing would top $1 a share in losses, while the average analyst estimate currently is looking for a loss of about 83 cents a share.

• Fast food sales. After strong reports last week from Chipotle Mexican Grill Inc.
  CMG,
  +1.81%
  and Domino’s Pizza Inc.
  DPZ,
  -2.48%,
  burger makers and other casual dining chains will detail if their pandemic-influenced boom continued as certain areas of the U.S. opened up. On the schedule this week are McDonald’s Corp.
  MCD,
  +1.80%,
  Shake Shack Inc.
  SHAK,
  +0.63%,
  Yum Brands Inc.
  YUM,
  +2.10%
  (and Yum China Holdings Inc.
  YUMC,
  +0.65%
  ), and Wingstop Inc.
  WING,
  +1.20%.
  Also look for signs of change from chain restaurants that depend more on in-house traffic but pivoted to more takeout during the pandemic, such as Cheesecake Factory Inc.
  CAKE,
  -0.31%
  and Bloomin’ Brands Inc.
  BLMN,
  +0.55%.

This week in earnings

Exactly one-third of the 30 Dow Jones Industrial Average
DJIA,
+0.68%
components and more than one-third of the S&P 500 components, up to 180, are expected to report earnings in the coming week, according to FactSet. Notable reports from outside the major indexes include Canadian e-commerce platform Shopify Inc.
SHOP,
+3.09%
and streaming-music service Spotify Inc.
SPOT,
-0.22%
reporting on the same morning Wednesday, which is bound to produce some confusion between the two similarly named companies, as well as growing Silicon Valley software maker Twilio Inc.
TWLO,
+1.07%
on Thursday afternoon.

Dow Jones Industrial Average reports: 3M Co.
MMM,
+0.71%,
Apple, Microsoft and Visa Inc.
V,
+2.00%
(Tuesday); Boeing and McDonald’s (Wednesday); Merck & Co. Inc.
MRK,
+1.32%
(Thursday); Caterpillar Inc.
CAT,
+0.18%,
Chevron Corp.
CVX,
+0.04%
and Proctor & Gamble Co.
PG,
+1.44%
(Friday)