Despite the stock market's response, tech earnings have been strong across the board. Mark Avallone, Founder & President, Potomac Wealth Advisors, joined TheStreet to discuss how the performance of big tech directly impacts consumers as well as how they may perform in 2024.
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Full Video Transcript Below:
J.D. DURKIN: For the most part, tech earnings, which is what we're largely going to talk about today, they have been pretty strong. Talk to me about some of your biggest takeaways from the reports that we've already seen. And Mark, I wonder if there are any notable trends or maybe surprises that you have observed that maybe you were not expecting.
MARK AVALLONE: Well, what we really saw was that guidance means a lot and what happened in the rear view matters. But sometimes what they predict about the future is going to matter more. And we also saw how painful the market can be to a company like Alphabet if it just doesn't hit a superb growth rate on its cloud division. So there, it's a mixed bag because taking Alphabet or Google, their ad revenue was strong and YouTube was strong and that's the vast majority of their business. And yet when the cloud numbers came in just a bit disappointing, the stock got pummeled down almost 10%. So we take away that if the good news isn't really good news, the market can be very punitive to these companies. And then what they say about the future can be even more important.
J.D. DURKIN: So what do they say about the future, do you suspect, right now? And maybe how do they even influence individual consumers that, you know, obviously, for the most part, if you have exposure to the S&P 500 Mark, you have exposure to these big tech companies.
MARK AVALLONE: Yes and in a big way. Well, we're looking at AI as a driver. And a company like Microsoft is now being coronated the leader in regenerative AI and as such is getting some market boost from time to time. But it also has superb underlying businesses, terrific management. And the response of the market in all likelihood reflects the entire picture. We also think that people are misunderstanding one aspect of 2024, and that's a giant election year. And Meta and Alphabet, while we consider them tech companies, they're really ad companies and people need to look beyond the nomenclature of them being tech organizations and realize they're going to derive a lot of ad revenue next year. And with the election cycle in full force, we wouldn't be surprised to see them have positive responses to a massive what we expect to be a massive amount of political advertising.
