Ad Spend Could Be a Boon for These Big Tech Stocks

Earnings Preview: Here’s a look at the early winners and losers of the digital ad spending spree... [Derby City Daily logo]( [Derby City Daily logo]( April 23, 2024 [Ad Spend Could Be a Boon for These Big Tech Stocks]( By Andy Swan As earnings season heats up, we're looking into a macro trend that may be able to move the needle for companies in 2024: ad spend. According to three powerful firms in the business, Dentsu, GroupM, and Magna, spending on advertising is projected to grow an average of +5.7% in 2024 compared to +4.7% in 2023. Source: I/O FUND, Forbes This should bode well for major players in the ad game, several of which are due to report earnings in the coming days... ✓ Meta Platforms (META) reports this Wednesday, April 24, after the bell ✓ Microsoft (MSFT) reports this Thursday, April 25, after the bell ✓ Alphabet (GOOGL) reports this Thursday, April 25, after the bell ✓ Amazon.com (AMZN) reports next Tuesday, April 30, after the bell (Heads up: There's still time to unlock our best earnings trade ideas for META, MSFT, GOOGL, and more. [Here’s how](. 🔓) While we can't predict actual ad spend, we CAN predict where the spend may be allocated, based on which platforms consumers spend the most time using. Advertisers are seeking eyeballs, after all. And LikeFolio mention growth data gives us an “insider’s” view into which platforms consumers are engaging with most... RECOMMENDED LINK [Replay Now Available: Luke Just Dropped a Crypto Bombshell]( Luke Lango just dropped a bombshell on his readers. He revealed a new crypto breakthrough that can help you get in front of cryptos before they surge in price. You have to see it to believe... [Click here for details]( Leaders and Laggards in the Battle for Consumer Eyeballs Check out the chart below, which compares the rate of mention growth for each of their media brands. You’ll see some clear leaders and laggards emerge: Reels, META’s answer to TikTok, tops the engagement list, logging 94% year-over-year buzz growth, while Google and YouTube see 30% and 25% year-over-year growth, respectively. Also on the list are Instagram (+20%), TikTok (+20%), Facebook (+19%), Amazon Prime (+15%), and Microsoft’s Bing, which trails with a startling 73% decline. In short, META and GOOGL are outperforming peers. But there's more to this story. While specific [Earnings Scores]( and [trade recommendations]( are reserved for our [paid-up members]( here’s a glimpse into how this battle for consumer eyeballs could play out in the weeks ahead... The Potential Winners Due to its narrower focus, META is likely to prove [the ultimate ad spend leader]( of the bunch. (But we wouldn’t be surprised by near-term volatility around its earnings report this week... [Earnings Season Pass members]( will know why.) We also expect [Amazon]( to benefit tremendously from digital ad spend. The company just added ads to its Prime Video offering in January, and [we saw what that did for Netflix (NFLX)](. The Potential Losers Google may be in for another disappointing showing. YouTube ad revenue came in lower-than-expected last quarter (though to the tune of $9.2 billion). Consumers are turning to platforms like Reels and TikTok for short-form video content – and this preference could be weighing on YouTube’s ad efficacy. The YouTube growth number we have this quarter is exactly in line with what we measured last quarter, so we don't see significant improvement there. (Though the bar may be lower now.) RECOMMENDED LINK [Buy Elon Musk’s New $1 Play before June 30]( Love him or hate him... We can probably all agree that Elon Musk already helped change the world with PayPal, Tesla and SpaceX... But Luke Lango believes [“Project Apollo” will be much bigger than all of those](. And if you buy this sub-$1 play before June 30... You could walk away with a windfall. [Click here to see the details]( The Wild Card Microsoft is the clear laggard in this group, with consumers less than enthusiastic about using its search engine, [Bing](. The company generated around $12.21 billion in revenue from search advertising in fiscal year 2023. Source: Statista We also know Microsoft is restructuring how it leverages ad spend, thanks to early commentary from ad buying platform Perion Network (PERI): “In the first quarter of 2024, Perion experienced a decline in Search Advertising activity, attributable to changes in advertising pricing and mechanisms implemented by Microsoft Bing in its Search Distribution marketplace,” read the April 8 press release. Those “changes” were significant enough for Perion to slash its annual revenue forecast. If those same ad changes are in Microsoft's favor, however, it may well report an unexpected ad boost. Still, we believe declining interest from consumers is more alarming, and ad spend may not prove enough to move the needle for this large tech name versus its other segments like Cloud, Business Processes (Microsoft Office Suite), and other elements of personal computing like Windows, Surface, and Xbox. Bottom line: Increased ad spend is likely to benefit AMZN and META the most over the long haul. We are buyers of both names on dips. If it’s quick-hit profit opportunities you’re looking for, [you’ll find those here](. We have lucrative trades teed up for META, MSFT, and GOOGL this week that could have you cashing out your winnings by Friday. [Go here now]( to see how you can gain immediate access to those trades – plus more than a dozen others you can still play before the week is up. Until next time, [Andy Swan's signature] [Andy Swan's signature] Andy Swan Founder, LikeFolio How to Master Trading in Just 15 Minutes a Day – for Free Jonathan Rose has trained more than 100 professional traders and made millions in the market. His next mission: Demystifying those same highly profitable trading strategies for retail investors like you on Masters in Trading Live. In this new free show, which airs at 11:00 a.m. ET every day the markets are open, you’ll get direct access to the kinds of trades typically reserved for Wall Street insiders, all in 15 minutes or less. [➡️ Click here to be automatically added to the list so you can join Jonathan for tomorrow’s show. ⬅️]( Discover More Free Insights from Derby City Daily Here's what you may have missed from Derby City Daily this week... ✓ [This Could Be the Boost Airbnb Needs]( ✓ [Trend Watch: Tesla, Uber, and the Driverless Future]( ✓ [3 Names Stealing Market Share from Amazon]( Get Instant Access Click to read these free reports and automatically sign up for research throughout the week. [The Infinite Income Manifesto]( [25 Doomed Blue Chip Stocks]( [5 Unapologetically Profitable Stocks for 2024]( © 2024 TradeSmith, LLC t/a Derby City Insights. All Rights Reserved. 1125 N. Charles Street, Baltimore, MD 21201 To unsubscribe or change your email preferences, please [click here](. 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