Amazon, Apple earnings preview: What investors should know

Amazon and Apple are set to report earnings after today's closing bell. Yahoo Finance Tech Reporter Allie Garfinkle outlines what she is watching ahead of these Big Tech earnings, including the performance of Amazon's AWS cloud segment and the strength of Apple's iPhone sales.

Video Transcript

JULIE HYMAN: Well, tech giants Apple and Amazon, you may have heard they're set to report after the bell today. So what can we expect from two of the biggest names in the S&P 500? Allie Garfinkle's here. She's in town.

ALLIE GARFINKLE: Hello.

JULIE HYMAN: Appropriately enough. Hello. So what should we be looking for from these guys?

ALLIE GARFINKLE: So Julie, I'm going to give you two key metrics to watch here, one from each company. For Amazon, it's crystal clear, AWS sales is where it's at. They are going to show us where the cloud slowdown is at. And it's also going to tell us something about corporate spending in the macroeconomic sense. This is going to be especially important, I think, in the aftermath of mixed cloud results, both from Google and Microsoft last week. This is a chance for a land grab on Amazon's part, I would say.

Now, for Apple, also if there's going to be one number to watch, it's going to be iPhone sales. They account for half of Apple's revenue. And they're going to say a lot about where consumer demand, I think, is really landing. There's a chance for a win here for Apple. Recently, the Conference Board Data did show the consumer sentiment is at the highest it's been in two years. However, there's-- those chances of a win are maybe slim. The projections are showing Apple careening towards a third straight quarter of revenue declines, which is pretty staggering, Julie.

JULIE HYMAN: Yeah. And it's really interesting when you heard from the likes of Qualcomm, saying that not only was handset-- demand for handset chips weaker last quarter, that they're also going to be weak for the full year. And Apple is a big, big client of Qualcomm. So you have to wonder what the read through is.

ALLIE GARFINKLE: You have to wonder what the read through is. And Julie, it's a really vulnerable time for Apple, right? They're diversifying their supply chain away from China. And one of the interesting fallout effects, I think, we're going to see here is there's going to be more pressure on that services revenue. Now, services revenue is Apple Music, Apple Arcade, and of course, Apple TV. And that services revenue has been growing. However, if iPhone sales are down, that growth is really, really going to need to keep up in order for Apple to frankly keep meeting these incredibly high expectations that analysts have and that investors have.

JULIE HYMAN: Right, exactly. I mean-- and the stocks have done quite well, particularly Apple, running up to this report. So it seems like expectations--

ALLIE GARFINKLE: 3 trillion.

JULIE HYMAN: --are high.

ALLIE GARFINKLE: Expectations are high. But that revenue sliding, Apple's going to have something to answer for here if the numbers don't look good.

JULIE HYMAN: Yes, it will. That's what we've seen some of the other tech-- big tech firms. Well, looking forward to the numbers, looking forward to your coverage of them. Thanks so much, Allie Garfinkle. Appreciate it.