Tech Heavy Hitters to Report

US earnings season rolls on and today marks an important day for the tech sector with heavy hitters Alphabet and Microsoft both due to report Q4 results at the market close. Given the sudden AI gold-rush we’ve seen emerge over the last year, these two companies’ results are drawing even more attention than usual as traders look to gain an insight into how the AI arms-race is developing.

Alphabet Forecasts

In terms of the numbers for today, the market is expecting Alphabet to post EPS of $1.594 on revenues of $85.23 billion. If seen, this will mark a nice lift from the prior quarter’s results and a strong uptick against the same period a year prior, keeping the current rally firmly supported.

Microsoft Forecasts

For Microsoft, the market is looking for EPS of $2.77 on revenues of $61.14 billion. If seen, this would mark a slight downturn in terms of EPS but a solid lift in revenues versus the prior quarter and the same period a year prior. Given the broader bull trend in tech stocks currently, results in this region should keep the uptrend intact.

Fed on Watch

Positive results from these two companies today will no doubt further feed the Nasdaq rally which is unfolding this year. The index has rallied around 9% off the YTD lows and while stalled for now, upside surprises from either (or both) tech names today should provide a fresh lift. However, the bigger focus will of course be on the FOMC tomorrow which holds the potential to force a correction lower in tech stocks if the Fed is seen striking a more hawkish tone.

Technical Views

Nasdaq

The index continues to trade higher within the bull channel which has framed price action over recent months. However, we are seeing some bearish divergence in momentum studies, raising risks of a near-term correction lower. 16971 will be the key support area to note, with the bull channel lows there also. Should we move below this area, 16010 will be the deeper support to watch.