Tech Stocks January 21 earnings list: INTC, STX and IBM

The fourth-quarter earnings season of 2020 with technology stocks is likely to reflect gains in consistent demand for remote work and web-based learning technology amid fears of the coronavirus.

In particular, the wave of homework induced by coronavirus may have boosted sales of processors used in corporate laptops and data center servers, which in turn must have benefited the technology sector in the quarter to be reported.

In addition, the encouraging trend in PC shipments in the fourth quarter, driven by increased demand and improvement in the supply chain, may have favored the performance of technology stocks in the fourth quarter.

In fact, according to IDC data, PC shipments in the fourth quarter of the 2020 calendar improved 26.1% year-on-year to 91.6 million units. This is expected to have favored the performance of Intel INTC and Seagate STX, which depends on trends in the PC market, and is likely to be reflected in upcoming earnings releases on January 21.

In addition, the trend to work from home may have benefited companies that offer videoconferencing tools and workspace management offerings.

In addition, the wave is likely to stay at home has driven the adoption of cloud computing solutions, including contactless payment, online education portals, cloud games, social media platforms and other leisure tools, which must have acted as a wind in favor.

The strong adoption of digital transformation techniques and the increased deployment of 5G must have helped technology companies in the quarter to be reported.

For example, LogitechLOGI’s December quarter benefited from increased demand for its video collaboration tools, mainly driven by the growing trends in work at home and learning at home. In addition, the strong demand for game products with the growing popularity of online video games and eSports amid the pandemic-led home stay environment has helped performance.

Besides that, Citrix SystemsCTXS ‘fourth quarter results were achieved with the solid adoption of unified workspace solutions, courtesy of the demand induced by the coronavirus crisis for safe solutions for working at home.

Coronavirus crisis led to macro weakness to prevent growth

The performance of technology stocks in the fourth quarter should provide a glimpse of the deep and long-lasting business impacts of the coronavirus outbreak, as the pace of recovery does not meet the expectations of some companies.

The impacts of the slow pace of coronavirus on IT spending and the weakness in small and medium-sized businesses may have affected the performance of technology companies in the fourth quarter.

Side effects are already apparent and can be seen from the preliminary results for the fourth quarter of SAP SE SAP. Management noted that cloud revenues were impacted by lower prepayment transactional revenues, mainly related to Concur’s business trips, due to on-site shelter regulations driven by the coronavirus crisis.

Upcoming earnings releases of technology stocks

Considering this mixed scenario, investors interested in the technology sector are eagerly awaiting earnings releases from companies like Intel, Seagate and International Business Machines Corporation IBM on January 21.

Intelthe performance of the fourth quarter of 2020 may have benefited from the strength in its customer computing business, courtesy of the growing demand for PCs amid the wave of work at home induced by the coronavirus crisis.

The chip maker’s fourth quarter results are likely to reflect gains from the solid momentum of its latest high-performance Xeon processors.

Intel Corporation price and EPS surprise

Intel Corporation’s surprise price-eps | Intel Corporation quote

However, increasing investments in accelerated ramp up of 10 nm products and improvement in 7 nm production, in an attempt to contain the strong competition from Advanced micro devices AMD, especially after the acquisition of Xilinx, probably pushed prices and weighed on fourth-quarter profitability.

Our proven model does not conclusively predict a earnings beat for Intel in the fourth quarter of 2020. The combination of a positive earnings ESP and a Zacks Rank # 1 (strong buy), 2 (buy) or 3 (wait) increases the chances of a beaten win. You can see the complete list of today’s Zacks # 1 Rank shares here.

Meanwhile, Intel has an ESP gain of 0.00% and a Zacks Rank # 3, which makes forecasting by surprise difficult.

Zacks’ consensus estimate for fourth quarter earnings has remained stable at $ 1.10 for the past 60 days. (Read more: Intel to report fourth quarter earnings: CCG and DCG highlighted)

Seagatefiscal performance in the second quarter of 2021 is expected to have gained from the continued traction witnessed by the mass capacity product portfolio in cloud and edge computing verticals.

Seagate is also expanding its portfolio of 18 terabyte (TB) drives, which is positive. The company’s second quarter fiscal results are expected to reflect gains from solid demand for 16TB products.

However, the slow spending induced by the coronavirus crisis in small and medium-sized companies may have had a negative impact on revenue in the second fiscal quarter. In addition, management expects to witness higher costs due to the COVID-19 crisis.

Seagate Technology PLC price and EPS surprise

Seagate Technology PLC price-eps-surprise | Seagate Technology PLC quote

Our proven model does not conclusively predict a win beat for Seagate this time, as it has a Zacks Rank # 3 and an Earnings ESP of 0.00%. You can find out the best stocks to buy or sell before they are reported with our ESP earnings filter.

Zacks’ consensus estimate for second quarter fiscal gains has been stable at $ 1.10 over the past 30 days. (Read more: Seagate to report second quarter earnings: What’s on the cards?)

IBMThe results for the fourth quarter of 2020 are likely to reflect gains from the acquisition synergies of Red Hat and a solid increase in its hybrid cloud computing resources, mobile devices, analytics, cognitive technologies and AI-related solutions.

In addition, the wave of digital transformation has driven the adoption of cloud-based QRadar, identity and trust services and CloudPak for Security offerings. In addition, gains from the rapid adoption of the IBM z15 are expected to have acted as a breeze in favor.

However, the coronavirus-induced crisis may have hurt business prospects in the fourth quarter, due to restricted economic activity and declining IT spending worldwide.

International Business Machines Corporation price and surprise EPS

Surprise price-eps from International Business Machines Corporation | International Business Machines Corporation quote

Our proven model does not conclusively predict a profit beat for IBM this time. IBM has a Zacks Rank # 3 and an Earnings ESP of -1.31%.

Notably, Zacks’ consensus estimate for earnings has remained stable at $ 1.77 for the past 30 days. (Read more: Ahead of IBM’s fourth quarter earnings: cloud, GBS and featured systems)

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