The fiercest stretch of the fourth-quarter earnings storm hits this week, with 106 companies scheduled to report results. But results from just five — all part of the cabal of tech giants known as the Wonder Seven — will play a big role in guiding collective corporate earnings growth into positive territory for the period.
The numbers begin to explode on Tuesday, with results for two of those seven, Microsoft Corp.'s MSFT,
Alphabet Inc., the parent company of Google and GOOGL,
Google,
It continues Thursday with three more: online retail giant Amazon.com Inc. AMZN,
Facebook's parent company Meta Platforms Inc. META,
And Apple Inc. AAPL,
The remaining two companies include electric car maker Tesla Inc. TSLA,
reported last week — with results and expectations that disappointed investors — while chipmaker Nvidia Corp. NVDA,
Reports next month.
Six of the seven largest companies are expected to be the top six drivers of earnings per share growth for S&P 500 companies overall for the fourth quarter, according to a FactSet report released Friday. These six are Nvidia, Amazon, Meta, Alphabet, Apple and Microsoft, the company said.
Combined, these six are expected to report a jump in fourth-quarter profits of 53.7%, the FactSet report said. Factor it out, and for everyone else the equation becomes much worse.
“Excluding these six companies, the blended earnings decline (which combines actual and estimated results) for the remaining 494 companies in the S&P 500 will be -10.5% for the fourth quarter of 2023,” John Butters, senior earnings analyst at FactSet, said in the report.
Results from the Big Five tech companies this week will lure investors into demand for artificial intelligence — something that has sent their shares soaring in the past year. Markets will also get a fresh look at demand for digital advertising, cloud services and e-commerce amid ongoing concerns about regulations, tighter technology budgets and prices that are still too high. For Apple, there are signs of declining demand for the iPhone in China, amid increasing competition.
For the entire seven companies – and their stocks – there are other questions.
Some analysts noted that strong gains could lie elsewhere in the S&P 500, if the Fed cuts interest rates and thus eases pressure on small businesses competing with more debt. Others wondered how much higher Mag Seven had left to go, after averaging gains of 111% last year.
“Mag Seven stocks have really been the perfect antidote to what we saw in 2023, where there was a lot of economic uncertainty, but also rising interest rates,” Chris Marangi, co-chief executive officer of value at Gabelli Funds, said in an interview earlier this year. . Month. “Where interest rates were rising, they were safe havens.”
He added: “Although there is some difference to Mag Seven, it is more appreciated today than it was a year ago.”
This week in earnings
Other companies reporting this week include United Parcel Service Inc. UPS,
Rival FedEx continues to deal with weak shipping demand. Video game developer Electronic Arts Inc. EA,
Reports, too, following layoffs elsewhere in the industry. Results are also due from Pfizer Inc. PFE for the pharmaceutical industry.
coffee chain Starbucks Corp SBUX,
and appliance maker Whirlpool Corp.WHR,
Also deserved. mastercard company,
Reports also say, after concerns about purchasing trends in the US this month sank rival Visa Inc.
Calls to put on your calendar
Boeing: David Calhoun, CEO of planemaker Boeing, said this month that the company needs to own up to its mistakes, after an Alaska Airlines in-flight explosion that grounded dozens of 737 Max 9 planes. Alaska Airlines' CEO expressed anger. So did the Federal Aviation Administration. United Airlines Holdings Inc. UAL,
It backed away from some of its long-term plans with Boeing. More questions about safety protocols and company culture at Boeing — and perhaps some answers — could emerge when Boeing reports results and holds its conference call on Wednesday.
JetBlue: Elsewhere in the aviation drama, JetBlue Airways Corp. JBLU,
Results reports Tuesday, facing a potential future for solo aviation after a federal judge blocked a merger deal with Spirit Airlines Inc.
While the airlines said they had appealed that ruling, JetBlue said Friday that the deal may have to be terminated on or after Jan. 28, an assessment that Spirit disputed. Expect more comments from executives as JetBlue seeks ways to stimulate growth and Spirit tries to right its finances.
Numbers to watch
General Motors sales forecast: GM automaker,
It announces its quarterly results on Tuesday. According to Barron's, Wolfe Research recently upgraded the stock, citing the potential gains of lower interest rates, which will make it easier to get auto loans. But the company is making the announcement amid slowing growth in electric vehicle sales.
