Video: Gene Munster Breaks Down Amazon, Google Ahead Of Earnings

The market will knock out two FAANG stocks in Thursday’s earnings rush, and Loup Ventures managing partner Gene Munster anticipates positive news.

Amazon’s Authority

For Amazon.com, Inc. AMZN, the metric to watch is growth in successful units sold, or the pace of sales, which Munster expects to end above 20 percent for the sixth consecutive quarter.

“Amazon’s going to sell around 9 billion items this year, and there’s about 7.5 billion people in the world, so it’s just really impressive velocity, and I think that’s going to be the biggest takeaway,” he said during a visit to Benzinga’s Detroit headquarters.

The Whole Foods acquisition and associated integration costs are a “smaller part of the story.”

“Investors just have an appetite for giving Amazon room, and they will let them spend appropriately,” Munster said. “Whatever they do to the margins, which they’re probably going to go down after this [earnings] report, I think will be generally accepted by investors as long as that unit sales number is there.”

Google’s Game Changer

Munster expects a reversal on Alphabet Inc GOOGL GOOG’s key earnings snag, the traffic acquisition cost, or TAC. Decelerating growth in TAC expenses could improve earnings in the second half of the year, he said. 

At the same time, Google is setting up to profit from a major, long-term artificial intelligence theme with its eight new hardware products. “My simple take is probably one of the best ways to play AI is to play Google,” Munster said.

iRobot’s Instincts

To play a parallel theme in robotics, Munster champions iRobot Corporation IRBT, which he considers a leader in home robots.

“We think that they have a good opportunity here to really pioneer an important part of the space, and it will evolve,” Munster said, anticipating the firm’s shift from cleaning bots to lawn mowing bots.

iRobot reported earnings beats Tuesday but traded down 12.4 percent Wednesday on negative assessments from Spruce Point Capital.

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Main image: Loup Ventures managing partner Gene Munster, left, chats with Benzinga PreMarket Prep host Joel Elconin in the newsroom Tuesday, Oct. 24. Photo by Dustin Blitchok.