As corporate giants release quarterly earnings updates in the coming days, one investment bank is recommending investors short two major technology stocks. Analysts at Itau BBA, Latin America’s largest investment bank, said investors should short Apple and Amazon before they release quarterly financial results on October 31. Buy them. Investors also often use options contracts to take short positions in stocks to limit losses or expand returns. The investment bank said that while these companies are financially sound, profitable and have good long-term growth prospects, their share prices have begun to price in very optimistic scenarios that are unlikely to come to fruition. “Overall,” Itau analysts Thiago Alves Kapulskis and Maria Clara Infantozzi said in a research note to clients. Our confidence level for the quarter is low, especially after a phenomenal year for many tech investors, and we’re not positioned for third-quarter results from a name we like. Analysts expect Apple Intelligence, its newest feature, to be strong. Boosting sales of Apple’s flagship iPhone. However, Itau analysts said Apple shares are “performing well in a less strong environment,” noting that its valuation is higher based on FactSet data. It’s 31 times, compared with the stock’s five-year average price-to-earnings ratio of 26 times, Kapulskis and Infantozzi added. The bank rates the trade idea a 6 on a scale of 1 to 10, with 10 representing strong belief. We like it as funding for other ideas,” they said. AAPL 1Y line Amazon Itau Analysts say the e-commerce giant’s profit margins may have peaked, which could lead to a sell-off after Amazon reports quarterly earnings. Analysts say : “The stock has hit new highs despite consensus being lower almost daily over the past 3-4 weeks. “We do not believe retail margins will continue to rise, which could put pressure on the stock again, especially if 3P (third-party sales) and advertising revenue cannot recover.” However, they warned that Amazon’s cloud computing unit should show “strong acceleration” and push the stock price higher. For this reason, Kapurskis and Infantozzi said they considered the deal idea Rated 3 out of 10, adding, “Our confidence in AMZN is very low, but we will go short this time. AMZN 1Y Line
