It was quite a way to end the year. During the last three months of 2019, tech companies Alphabet, Amazon, Apple, Facebook, and Microsoft added a collective $764 billion in market capitalization. But that may not make early 2020 any easier. 

Indeed, analysts are already raising concerns about some of these firms as they begin reporting their earnings this week and next. The apprehension isn’t about the earnings—which will likely be strong—but around the mounting expectations that few leaders have faced on this scale. Investor appetite for Apple stock alone increased the iPhone maker’s value by a stunning $307 billion from October through December. Such a “high bar of investor expectations” will be hard to meet, predicts one JPMorgan analyst report.

For its part, Apple smashed expectations, beating on both revenue and earnings and reporting its best quarter of the year. It remains to be seen whether Alphabet, Amazon, Facebook, and Microsoft follow suit. Consider that in comparison to the S&P 500’s gain of roughly 12% since the start of October, Alphabet, Facebook and Microsoft shares have each gained about 20%; Amazon is the only one of the group to underperform the S&P 500 over that time, gaining just 6%. 

Chris Cantarella, a senior client partner with Korn Ferry’s Global Technology Markets practice, says one reason for the gains stems from the first phase trade deal between the United States and China. The resolution, which is still tenuous, removed a large headwind for these product companies, says Cantarella. 

But Cantarella adds the only way to keep up with investor expectations is to keep innovating. He says for these companies that means a few things, among them driving content and cloud subscriptions, new and improved wearables, and continued investment in artificial intelligence, 5G, and other emerging technologies. 

“Apple, Amazon, Google, and Microsoft are in a dogfight for the consumer at home, in the car, and at work,” says Cantarella. “In the enterprise space, Amazon, Microsoft, and Google all need to push new sales in the cloud.”

On Wednesday, Microsoft's profits topped expectations and the stock rose, while Facebook's earnings also beat estimates but its sales and profit growth rates didn't impress investors. Amazon reports Thursday, and Alphabet reports February 3. Analyst expectations vary, with revenue gains predicated between 10% and 23%. Earnings expectations, however, range from a gain of 20% for Microsoft to a decline of as much as 30% for Amazon due to increased package delivery spending during the holiday season. 

The wide range of performance expectations means that leaders and investor relations teams must carefully manage how and what they communicate during earnings calls, says Peter McDermott, a senior client partner in Korn Ferry's Corporate Affairs Center of Expertise. “Strong confidence in an equity story is valuable for a company,” he says. “But for these companies transparency has also paid off in a longer-term growth strategy.”

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