Apple, Microsoft and Tesla Headline Key Earnings Week Amid Nasdaq’s Slide

Also expected to report quarterly updates are industrial conglomerates like General Electric Co. and 3M Co. ; food heavyweights Mondelez International Inc. and McDonald’s Corp. ; and other big names in manufacturing, pharmaceuticals and telecommunications.

Tech giants have largely benefited from the pandemic, as socially distanced living pushed people and businesses to rely more on their gadgets to stay connected. As a result, shares of Microsoft, Apple and other tech companies have soared over the past two years.

But those same stocks have been hammered so far this year on expectations that the Federal Reserve will raise interest rates more than once in 2022. The Nasdaq is down almost 12% so far this year, while shares of Microsoft and Apple are down 12% and 8%, respectively.

As earnings reports for the holiday quarter roll in, investors will be looking to parse the highflying pandemic success stories in tech from the fundamentally strong businesses, said Brian Belski, chief investment strategist at BMO Capital Markets.

“These technology stocks have sold off into earnings,” Mr. Belski said. “But then you have got to take two steps back and ask, ‘Am I really going to give up my operating system?’ And the answer is no.”

“Where are we spending our money?” he said. “We’re spending our money on content and technology, period. Drop the mic.”

So far, about 13% of S&P 500 companies have reported earnings results for 2021’s final quarter, according to data from J.P. Morgan Asset Management. Earnings are on track to rise 34% year-over-year for the quarter, based on actual results and estimates for companies that have yet to report, JPMorgan said, and revenue is poised to rise 12% year-over-year.

Analysts surveyed by FactSet have high hopes for the holiday-quarter results of Microsoft, Apple and Tesla. Microsoft, which reports its fiscal second-quarter results on Tuesday, is expected to report quarterly revenue of more than $50 billion for the first time, according to FactSet.

The Redmond, Wash., software maker is projected to post its highest-ever profit, too, of $17.41 billion, according to FactSet. And investors will likely be looking for some more color on the company’s $75 billion all-cash deal to buy videogame maker Activision Blizzard Inc.

Apple, which reports its first-quarter earnings on Thursday afternoon, is expected to post a record profit of $31.16 billion on its highest-ever quarterly sales of $118.74 billion, according to FactSet.

Tesla, likewise, is expected to set records with a quarterly profit of $2.33 billion on revenue of $16.99 billion when it reports fourth-quarter results on Wednesday afternoon, according to FactSet.

Analysts will be listening to hear what Tesla has to say about the supply chain. The electric-car maker has navigated the shortage of microchips better than traditional auto makers, which have had to cut production of new vehicles because of supply constraints.

Beyond tech, major telecommunications, military contractors and other companies are also releasing their results in the week ahead. Las Vegas Sands Corp. is expected to report Wednesday afternoon, providing some insight into how much the Omicron variant of Covid-19 reduced consumer demand for travel. McDonald’s will follow before the bell on Thursday, providing a look at the strength of consumers generally.

Verizon Communications Inc. is reporting results Tuesday morning, followed by AT&T Inc. on Wednesday and Comcast Corp. on Thursday.

3M, a major manufacturer of N95 masks, will report its results on Tuesday, as will GE, followed by Caterpillar Inc. on Friday morning.

Other notables scheduled to report include Johnson & Johnson on Tuesday; Boeing Co. on Wednesday; MasterCard Inc. and Visa Inc. on Thursday; and Colgate-Palmolive Co. on Friday.

Write to Will Feuer at [email protected]