27/01/2025
Can the Magnificent 7 maintain an Upbeat Earning Season?
Highly anticipated reports from the Magnificent 7 will be in focus over the next couple of weeks. Tesla (NASDAQ:TSLA), Microsoft (NASDAQ:MSFT) and Meta (NASDAQ:META) are slated to report Wednesday, January 29 after-the-bell, followed by Apple (NASDAQ:AAPL) on Thursday, January 30. The following week, Google (NASDAQ:GOOGL) is confirmed to report Tuesday, February 4, and Amazon (NASDAQ:AMZN) on Thursday, February 6. And as usual, Nvidia (NASDAQ:NVDA) will close things out when they report on February 26.
After putting up profit growth north of 35% from Q1 - Q3 2024, Q4 is expected to show a marked slowdown for these seven names. Even so, the blended EPS growth expectation of 21.7% for Q4 is nothing to sneeze at. In fact, if you remove these seven companies, S&P 500 growth for the quarter drops to 9.7%.
Just as Mag 7 growth looks to begin to slow, other sectors are coming back to life after a lackluster 2023 - 2024. The S&P 500 minus Mag 7 goes from a current expectation of sub-10% EPS growth in Q4 to an anticipated increase of nearly 15% in the back half of 2025. Lagging sectors such as Industrials and Materials are expected to pick up in the latter half of the year, partially due to easier YoY comps.
As noted above, expectations remain high for the Magnificent 7 this earnings season. We’ve seen what happens to big tech stocks when results don’t impress. For the Q3 2024 earnings season, despite beating expectations on the top and bottom line, Meta, Microsoft and Apple, saw their stocks fall when other quarterly metrics or soft guidance disappointed investors.