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Ah, April. The crack of the bat. The smell of fresh-cut grass. The frantic search for year-old receipts. And the sound of conference calls ringing in the air. Its baseball season. Its tax season. And even better, its first-quarter earnings season.

The first quarter of 2023 was a remarkably profitable one for tech investors, helping to turn the corner on a nightmarish 2022. Stocks that were pummeled last year have rebounded with strong gains. The seven tech companies with market values above $500 billion Apple (ticker: AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon.com (AMZN), Nvidia (NVDA), Tesla (TSLA), and Meta Platforms (META)have each rallied at least 20% in 2023, outstripping a 7% gain for the S&P 500 index. Investors think the Federal Reserve is nearly finished tightening monetary policyand they anticipate steady and then declining rates. As a result, miserable first-quarter resultsand they almost certainly are going to be pretty badmight not matter.

You could see that dynamic in the recent earnings report from memory-chip producer Micron Technology (MU). With PC and smartphone demand flaggingand many customers oversupplied with inventoryMicrons financial results cratered. For its quarter ended March 2, Microns revenue plunged 53% from a year earlier. But Micron said customers are cleaning up their inventory issues and predicted that results will show sequential growth from here. By 2025, Micron said, its total addressable market would be at a record level, aided by growth in automotive and industrial applications. It was a tough quarter, but we are seeing good, positive signs for the future, Sumit Sadana, Microns chief business officer, tells me.

I suspect thats going to be the theme running through first-quarter earnings season: Conditions arent great, but they should get better soon. The question is how much improvement has already been discounted in stocksafter buying the rumor, it might be time to sell the news.

Here are some key questions and themes to look for in the weeks ahead.

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The New Netflix. The streaming-video service kicks off tech earnings season on April 18 with a quarter that will mark a fundamental shift in its reporting practices. Starting with the 2022 fourth quarter, Netflix (NFLX) stopped providing specific guidance on subscriber growthalthough it will still report its total subscribers at the end of the quarter. That could lead to surprises around subscriber numbers and more volatility for the stock. Meanwhile, investors will be looking for signs of progress on the companys two big initiativesadvertising and a crackdown on password sharing. Netflix has projected modest positive net subscriber growth in the quarter, with revenue of $8.2 billiongrowing just 4%and profits of $2.82 a share. Another change: This will be the first call without Reed Hastings, who last quarter gave up the CEO role to become executive chairman.

The Year of Efficiency, Part III. Shares of Meta Platforms have surged nearly 80% this year, thanks to CEO Mark Zuckerbergs decision to placate investors and rein in spending. Meta, which operates Facebook, Instagram, and WhatsApp, cut 11,000 jobs shortly after a poorly received third-quarter earnings report, and recently chopped 10,000 more. On the last Meta earnings call, Zuckerberg declared 2023 to be the year of efficiency, talked up artificial intelligence, and largely ignored the metaverse, the initiative that he once considered so important that he changed the companys name.

Meta investors will be looking for updates on efficiency movesand any evidence that they will spur the companys sagging growth. Wall Street sees a 1% year-over-year first-quarter revenue dip, reflecting a still weak advertising market. Shareholders await updates on monetizing Reels, the companys TikTok competitor, particularly given recent pressure in Washington to ban TikTok. Zuckerberg will surely continue to talk about AI, and probably not so much about the metaverse.

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Thin Cloud Cover. Amazon shares have rallied 24% this year, and Microsoft is up 20%no thanks to their cloud businesses. Amazon Web Services and Microsoft Azure continue to dominate cloud computing, but both have suffered a multiquarter deceleration, as customers tighten budgets. This past week, research firm IDC trimmed its 2023 enterprise spending forecast for the fifth month in a row. According to FactSet, analysts see March-quarter AWS growth of 17%, down from 20% in December and 27% in September; for Azure, consensus estimates call for 28% growth, down from 31%, 35%, 40%, and 46% growth, respectively, over the four prior quarters. But as with Micron, the thinking on the Street is that things get better from herethat recession or no, the transition to cloud computing will continue. There are some near-term worries: for Microsoft, soft PC demand; for Amazon, sluggish online-shopping growth.

Cashing Out. Apple is almost certainly going to raise its dividend and expand its stock-buyback program when the company reports next month. But there are tough questions for Apple about reviving growth. Wall Street sees revenue declining 4% in the March quarter and 1% for the full year. This past week, Apple contract manufacturer Foxconn said it expected business to decline in the second quarter.

For Apple investors, the focus is on this falls release of the iPhone 15 and, before that, an expected launch of virtual- and mixed-reality products. The outstanding question is how Apple is planning to take advantage of AI. Ill have to ask ChatGPT.

Write to Eric J. Savitz at eric.savitz@barrons.com

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Tech Stocks Have Been on Fire. Earnings Could Spell Trouble. - Barron's