Apple, Amazon poised for $170 billion loss of market value after disappointing earnings report

• Apple and Amazon fell sharply in premarket after disappointing earnings

• Microsoft set to replace Apple as world’s largest listed company in terms of market cap

Shares of Apple Inc and Amazon.com Inc are set to shed nearly $170 billion in market value after the companies warned of a difficult holiday season and reported disappointing earnings.

Apple announced its quarterly earnings on Thursday after the market was closed and was down 3.6% in premarket trading after Chief Executive Officer Tim Cook said supply constraints were affecting most of its products.

Amazon slumped about 5% after the e-commerce giant reported its earnings and warned that high costs could wipe out any profit in its most important quarter of the year.

Tech stocks or not

During the pandemic, tech stocks had a record run, as the whole world shifted to internet companies, and the rising bond yields put the spotlight on the sector’s frothy valuations.

However, the ongoing earnings season, been hard for the tech companies.

Several hedge funds have turned negative on the sector, which is seeing the most significant increase in short selling among major industries this year, according to Morgan Stanley.

Still, most analysts backed their buy calls on the stocks, saying the issues are transitory.

Evercore ISI maintained its outperform rating on Apple after the company warned on chip shortages, and analyst Amit Daryanani said, “Even Goliath feels the pain.”

Also Read: Amazon earnings miss expectations due to labor shortages, supply issues

For Amazon, the impact of cost inflation and supply shortages on smaller competitors could present an opportunity to grab even more market share, according to Morgan Stanley’s Brian Nowak, who has an overweight rating.

“Amazon sounds very confident around its capacity and supply chain advantages heading into the holidays,” Barclays Plc analyst Ross Sandler said, rating the stock overweight.

Overshadow on Google and Microsoft’s strong earnings

The earnings news from the iPhone maker and e-commerce giant has overshadowed this week, which had been a strong earnings period for the sector.

Also Read: Microsoft’s cloud business boosts quarterly revenue

Earlier this week, Google’s parent company Alphabet Inc and Microsoft Corp rose more than 4% individually after the companies beat earnings beat expectations. 

Even Apple’s drop in premarket trading puts Microsoft on pace to become the world’s largest listed company by market capitalization.

Picture Credit: Financial Express