5 tech stocks poised to beat Q3 earnings estimates

The technology sector had a tough third quarter of 2022 due to challenging global macroeconomic conditions, semiconductor chip shortages, supply chain constraints, raging inflation, unfavorable exchange rates due to a strong US dollar and an increasingly dovish stance by the US Federal Reserve.

Tech giants such as Microsoft and Alphabet reported unenthusiastic earnings results, while Meta Platforms disappointed.

Apple was the standout, reporting strong results for its fiscal fourth quarter, with record revenues and profits led by robust iPhone sales and a jump in Mac sales (25.4% year-on-year) despite a decline in global PC shipments.

According to Gartner’s latest report, 68 million PCs were shipped in the third quarter (ended September) of 2022, down 19.5% from the previous period. Lenovo, HP and Dell Technologies witnessed declines of 15.3%, 27.9% and 21.1% respectively. Apple posted a 15.6% decline, much better than HP and Dell.

Declines in PC shipments, along with a slowing cloud business, hurt Microsoft’s results for the first quarter of fiscal 2023.

Alphabet also warned of a slowdown in cloud growth. Google’s parent company witnessed ad slowdowns on YouTube and the Google Network due to digital advertising slowdowns, which also severely affected partner meta-platforms.

Meta ad revenue in Q3 2022 (down 3.7% year-over-year) suffered from weak ad demand. Healthcare and travel verticals were the biggest positive contributors to ad revenue growth in the reported quarter, fully offset by weakness in online commerce, gaming and financial services.

Upcoming earnings to watch

A number of tech companies are set to report their results in the next few weeks. While they are expected to have faced the issues plaguing the tech sector this earnings season, we believe some of them are well positioned to beat earnings estimates. Keep up with upcoming earnings announcements with the Zacks Earnings Calendar.

Nonetheless, finding tech stocks with the potential to beat earnings estimates can be daunting. However, our proprietary methodology makes it quite simple.

You could narrow the list of choices by looking at stocks that have a combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive earnings ESP. You can discover the best stocks to buy or sell before they are reported with our ESP Earnings Filter.

Earnings ESP is our proprietary methodology for identifying stocks that have the best chance of surprising with their next earnings announcement. This is the percentage difference between the most accurate estimate and the Zacks Consensus Estimate.

Our research shows that for stocks with this combination of ingredients, the chances of a positive earnings surprise are as high as 70%.

Top bets

Five tech stocks mentioned below have the right mix of elements to beat earnings this reporting cycle:

Based in San Francisco, California Airbnb ABNB has an Earnings ESP of +0.81% and currently sports a Zacks Rank of 1. You can see the full list of today’s Zacks #1 Rank stocks here.

The company is due to report results for the third quarter of 2022 on November 1. The Zacks Consensus Estimate for its earnings has risen 2.1% to $1.46 per share over the past 30 days.

Airbnb, Inc. Price and EPS surprise

Airbnb, Inc. Price and EPS surprise

Airbnb, Inc. price-eps-surprise | Quote from Airbnb, Inc

Based in Sunnyvale, California Fortinet FTNT is scheduled to report Q3 2022 results on November 2.

The company has a Zacks Rank #2 and an Earnings ESP of +2.44%.

Fortinet, Inc. Price and EPS surprise

Fortinet, Inc.  Price and EPS surprise

Fortinet, Inc. Price and EPS surprise

Fortinet, Inc. price-eps-surprise | Quote from Fortinet, Inc

The Zacks Consensus Estimate for earnings was unchanged at 27 cents per share over the past month.

Based in San Ramon, California five9 FIVN has a Zacks Rank of 2 and an Earnings ESP of +7.04%. The company is scheduled to report third quarter 2022 results on November 7.

The Zacks Consensus Estimate for its earnings has been revised 12.5% ​​to 36 cents per share over the past 30 days.

Five9, Inc. Price and EPS surprise

Five9, Inc.  Price and EPS surprise

Five9, Inc. Price and EPS surprise

Five9, Inc. price-eps-surprise | Quote from Five9, Inc

Based in Ventura, California The Trade Bureau TTD currently has a Zacks Rank #2 and an Earnings ESP of +2.13%.

The company is scheduled to report third quarter 2022 results on November 9. The consensus estimate for earnings has risen one penny to 24 cents per share over the past 30 days.

The Trade Desk Price and EPS Surprise

The Trade Desk Price and EPS Surprise

The Trade Desk Price and EPS Surprise

The Trade Desk price-eps-surprise | The offer of the trading desk

Based in Vancouver, Washington ZoomInfo ZI is due to report Q3 2022 results on November 1. The company has an Earnings ESP of +1.27% and a Zacks Rank of 2.

ZoomInfo Technologies Inc. Price and EPS surprise

ZoomInfo Technologies Inc.  Price and EPS surprise

ZoomInfo Technologies Inc. Price and EPS surprise

ZoomInfo Technologies Inc. price-eps-surprise | Quote from ZoomInfo Technologies Inc

The consensus estimate for its earnings has been unchanged at 20 cents per share over the past 30 days.

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