Positive start to Q2 earnings season with tech sector outlook strong

From Nasdaq: 2024-07-17 19:39:00

The Q2 earnings season is off to a good start, with growth improving and more companies beating EPS estimates. However, companies are struggling to beat revenue estimates. So far, for 45 S&P 500 companies, total earnings are up +8.7% with 82.2% beating EPS estimates and 55.6% beating revenue estimates.

Big banks like Bank of America and Goldman Sachs reported better-than-expected results, with Bank of America offering a favorable outlook for the second half of the year. Despite various headwinds, banks are optimistic about their earnings outlook due to expected Fed easing cycles. Tech sector earnings are also expected to be strong.

Positive Tech sector earnings outlook for 2024, with a fourth consecutive quarter of growth expected. Margins are expected to be higher, driven by software and services. The sector’s productivity may also benefit from AI. Accounting for nearly 30% of all S&P 500 earnings, Tech sector is crucial to overall earnings growth.

Earnings growth in 2024 expected to be +8.8%, with revenue weakness in the Finance sector dragging down overall top-line gains. Excluding Finance sector, earnings growth is +8.7% and revenue growth rate improves to +3.9%. Tech, Finance, and Consumer Discretionary sectors are expected to have higher margins in 2024.

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