Tech Earnings Take Center Stage as S&P 500 Earnings Season Heats Up
With 14% of the S&P 500 companies already reporting their second-quarter earnings, investors are anxiously awaiting the official start of the tech reporting season, which kicks off this week. The market, which has been facing a recent pullback, will likely be closely watching for signs of growth and stability from the tech giants.
Key Takeaways:
- Earnings Remain Strong: The blended earnings growth rate for the S&P 500 is currently estimated at 9.7%, suggesting positive momentum for the second quarter.
- Tech Giants in Focus: Companies like Tesla, Alphabet, and Netflix will be closely watched for their earnings reports, particularly in the wake of recent market volatility.
- Diversified Earnings Calendar: The week will see earnings reports from over 138 S&P 500 companies, covering various sectors including telecom, auto, steel, chips, homebuilding, defense, airline, and of course, tech.
A Mixed Bag of Results So Far
The initial phase of the earnings season has delivered a mixed bag of results. While ASML Holding N.V. (ASML) saw a 16% decline in its stock following a weak third-quarter outlook and China chip ban concerns, Netflix, Inc. (NFLX) managed to weather the storm, despite disappointing guidance, thanks to positive analyst sentiment.
Meanwhile, major banks, including Bank of America Corporation (BAC), Morgan Stanley (MS), and Goldman Sachs Group, Inc. (GS), reported strong earnings fueled by a rebound in investment banking and solid trading revenue.
Earnings Trend: Growth Remains Positive
According to FactSet, 80% of companies reporting earnings so far have surpassed analysts’ estimates, compared to the five-year average of 77%. This suggests that corporate earnings remain relatively strong, though the average upside of 5.5% is slightly below the five-year average of 8.6%.
Eight of the eleven S&P 500 sectors are projected to report year-over-year earnings growth, with four sectors – communication services, healthcare, IT, and financials – expected to see double-digit growth. On the other hand, three sectors, led by the materials sector, are predicted to report earnings declines.
Tech Earnings: The Week’s Spotlight
The week ahead will see the release of earnings reports from some of the tech world’s biggest players, including:
Alphabet Inc. (GOOGL, GOOG): Alphabet’s earnings, the first among AI-leveraged mega-cap companies, could set the tone for the rest of the sector.
Tesla Inc. (TSLA): Analysts and fund managers remain optimistic about Tesla’s future, following the company’s recent delivery beat and expectations of an inflection point in the second half of the year.
Other tech giants reporting earnings this week include Nvidia Corporation (NVDA), Microsoft Corporation (MSFT), Adobe Inc. (ADBE), and Qualcomm Inc. (QCOM). These companies will be closely watched for their performance, particularly in the realm of AI and cloud computing.
Market Volatility Amidst Earnings Reports
The market has experienced some pullback in recent weeks, likely influenced by concerns about rising interest rates and economic uncertainties. The Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100 Index, and the SPDR S&P 500 ETF Trust (SPY) both closed Friday’s session down, suggesting investor nervousness.
However, the strong earnings trends so far could offer some respite for the market, particularly if tech giants deliver positive results.
Key Companies Reporting Earnings This Week
Here’s a detailed look at the notable companies releasing earnings this week:
Monday:
- Before market open:
- Verizon Communications Inc. (VZ)
- After close:
- Agilysys, Inc. (AGYS)
- Cleveland-Cliffs Inc. (CLF)
- Nucor Corporation (NUE)
- NXP Semiconductors N.V. (NXPI)
Tuesday:
- Before market open:
- Coca-Cola Company (KO)
- Freeport-McMoRan Inc. (FCX)
- GATX Corporation (GATX)
- GE Aerospace (GE)
- General Motors Company (GM)
- Kimberly-Clark Corporation (KMB)
- Lockheed Martin Corporation (LMT)
- Philip Morris International Inc. (PM)
- PulteGroup, Inc. (PHM)
- Quest Diagnostics Incorporated (DGX)
- Spotify Technology S.A. (SPOT)
- United Parcel Service, Inc. (UPS)
- After close:
- Alphabet
- Capital One Financial Corporation (COF)
- Chubb Limited (CB)
- Mattel, Inc. (MAT)
- Packaging Corporation of America (PKG)
- Seagate Technology Holdings plc (STX)
- Tesla
- Texas Instruments, Inc (TXN)
- Visa Inc. (V)
Wednesday:
- Before market open:
- AT&T Inc. (T)
- Check Point Software Technologies Ltd. (CHKP)
- Boston Scientific Corporation (BSX)
- CME Group Inc. (CME)
- General Dynamics Corporation (GD)
- Old Dominion Freight Line, Inc. (ODFL)
- GE Vernova Inc. (GEV)
- Thermo Fisher Scientific Inc. (TMO)
- After close:
- Chipotle Mexican Grill, Inc. (CMG)
- Edwards Lifesciences Corporation (EW)
- Ford Motor Co. (F)
- International Business Machines Corporation (IBM)
- Knight-Swift Transportation Holdings Inc. (KNX)
- Las Vegas Sands Corp. (LVS)
- Meritage Homes Corporation (MTH)
- Whirlpool Corporation (WHR)
- ServiceNow, Inc. (NOW)
- O’Reilly Automotive, Inc. (ORLY)
Thursday:
- Before market open:
- AbbVie Inc. (ABBV)
- American Airlines Group Inc. (AAL)
- AstraZeneca PLC (AZN)
- Comcast Corporation (CMCSA)
- Dow Inc. (DOW)
- Hasbro, Inc. (HAS)
- Honeywell International Inc. (HON)
- Sanofi (SNY)
- Southwest Airlines Co. (LUV)
- STMicroelectronics N.V. (STM)
- Union Pacific Corporation (UNP)
- Xerox Holdings Corporation (XRX)
- After close:
- SkyWest, Inc. (SKYW)
- Juniper Networks, Inc. (JNPR)
- Deckers Outdoor Corporation (DECK)
- Boyd Gaming Corporation (BYD)
- BJ’s Restaurants, Inc. (BJRI)
- VeriSign, Inc. (VRSN)
Friday:
- Before market open:
- 3M Company (MMM)
- Barnes Group Inc. (B)
- Bristol-Myers Squibb Company (BMY)
- Newell Brands Inc. (NWL)
- Colgate-Palmolive Company (CL)
- Charter Communications, Inc. (CHTR)
As the tech earnings season gears up, investors will be carefully analyzing these reports to gauge the health of the sector and the broader economy. Market volatility is likely to continue, particularly during the period when the major tech companies report their earnings.
