From NASDAQ.: 2024-08-02 18:56:00

Of the six members of ‘The Magnificent 7′ group, Apple and Meta had favorable quarterly results, while Tesla, Alphabet, Microsoft, and Amazon disappointed. Market sentiment may be signaling tougher times ahead, but strong revenue and earnings growth indicate a promising future, driven by investments in AI infrastructure beyond what the market expected.

Amazon reported Q2 earnings almost doubling from the prior year to $13.16 billion, with a 10.1% revenue increase to $148 billion. Alphabet’s Q2 earnings rose 28.6% to $23.6 billion on a 15% revenue increase to $71.4 billion. Microsoft also beat expectations, with Q2 earnings up 9.7% to $22 billion on a 15.2% revenue increase to $56.2 billion.

Investor concerns stem from the significant investments these companies are making in AI infrastructure without a clear monetization plan. Despite this, the Mag 7 stocks are expected to maintain strong growth through next year and beyond. Market sentiment may be overly pessimistic, failing to appreciate the companies’ long-term strategies.

Total Q2 earnings for the Technology sector are expected to rise 20.3% from last year on 10.1% higher revenues. The favorable earnings revision trend in the Tech sector, led by the Mag 7 companies, indicates a strong performance ahead. A substantial number of companies are set to report earnings this week, including Disney, Uber, Airbnb, and Caterpillar.

Q2 earnings growth is expected to reach 10.5% for the S&P 500 as a whole, the highest pace in the last nine quarters. Despite concerns over revenue beats, the overall earnings picture looks positive, with expectations for continued growth. For more detailed analysis, refer to the weekly Earnings Trends report.



Read more at NASDAQ.:: Magnificent 7 Earnings: Good or Bad?