Good results offer the tech giants a chance to change the subject

After a torrid period for Silicon Valley’s reputation, strong financial news may help improve investors’ mood

In an age where nearly every commercial activity has a significant technological dimension, is it even possible to refer to “tech” companies any more? This week’s set of financial results are a case in point. The markets will hear from Spotify, which sells advertising and music; Twitter, Google and Facebook, which deploy a broad spread of techniques to sell advertising – or in some cases our personal data; and Amazon, which sells, well, everything.

It is increasingly difficult to throw a blanket over a group of companies this diverse. They do share some common ground, though. All of them have grown rapidly to become household names. All have harnessed technology to disrupt traditional industries or create new ones. All would welcome the chance to talk about strong financial results this week, rather than ethical or regulatory matters. Facebook probably has most cause to want to shift the narrative.

Its attitude to users’ data remains firmly in the spotlight after the Cambridge Analytica scandal, while the chief executive, Mark Zuckerberg, spent much of last week explaining why the social network would not ban Holocaust denial. Far easier, surely, to be taking plaudits from investors after presenting second-quarter figures on Wednesday. Facebook increasingly dominates the online advertising market, something that analysts at Jefferies have said shows no sign of abating. Its shares have already recovered from the losses caused by concerns about users’ privacy and Jefferies reckons rising sales – and increased potential for video advertising through Instagram – will continue to drive it forward.

A queue of people looking at their phones while waiting to get into a Google event
Google was fined £3.8bn for anticompetitive practices related to its Android smartphone operating system. Photograph: Elijah Nouvelage/AFP/Getty Images

Amazon’s second-quarter figures are out on Thursday, with the cardboard-clad retail juggernaut expected to roll on. JP Morgan makes the retailer one of its top stock picks, predicting revenues higher than expectations at nearly $54bn (£41bn). That’ll be another red letter day for the founder, Jeff Bezos, named the richest man in modern history last week with a net worth of $150bn. Amazon’s workers, some of whom have reported sleeping in tents to save money or skipping toilet breaks to avoid disciplinary action, may be marginally less delighted.

Twitter reports on Friday and will be hoping to rack up its third profit in a row. At some point this year, it is likely to report a steep fall in user numbers after a purge of fake accounts, part of an effort to deal with what some trendy kids are calling “fake news”. High user numbers tend to support high advertising revenue, so the prospect of a fall caused some jitters in the shares recently, but the effect of the purge won’t show up until next quarter, Twitter’s chief financial officer said earlier this month.

No tech company has taken a bigger knock recently than Google, slapped with a record €4.3bn fine by the EU last week for using its Android phone operating system to cement its dominance of internet searches. Hefty as the fine was, it’s fairly small beer for Google’s parent, Alphabet, which has more than $100bn in cash reserves. While litigation remains a concern, Alphabet has shown that its horizons extend beyond Google by spreading into lucrative areas such as healthcare. Investors will be watching its eye-watering investment figures closely, but it has been a consistent financial performer and no big surprises are expected come half-year figures on Monday.

If Google is the sturdy old oak of tech stocks, Spotify is a mere sapling after its unconventional but successful float earlier this year. Despite never having made a profit, its shares have risen ever since, with investors keen on the huge growth potential of music streaming, where Spotify is dominant. Analysts are predicting continued revenue growth at half-year results on Thursday, believing it can emulate the rise of Netflix in the parallel world of film and TV – as long as it doesn’t fall victim to a backlash from major labels.


Rob Davies

The GuardianTramp

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