Jonathan Kitchen
As first-quarter earnings roll on in full swing, of the Magnificent 7, Tesla (NASDAQ:TSLA), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), Meta (NASDAQ:META), and Microsoft (NASDAQ:MSFT) will report their results next week.
The Magnificent Seven – Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Nvidia (NVDA), Meta (META), Alphabet (GOOG) (GOOGL), and Tesla (TSLA) – fueled the stock market rally in 2023. Together, they were responsible for 37% of the S&P 500’s 10.2% first-quarter gain this year, according to data from Howard Silverblatt, senior index analyst at S&P Global Indices.
Here is a quick recap of the performance and sentiment around the stocks reporting their results next week:
Coming on Tuesday, Tesla (TSLA) has been in a weak spot, losing about 40% of its value since the start of the year as demand for electric vehicles wanes off while competition from Chinese and other OEMs intensifies. Recently, the company also announced its plans to lay off more than 10% of its global workforce.
Deutsche Bank recently lowered its rating on Tesla, commenting that the delay in launch of Model 2 creates a risk of no new vehicle in Tesla’s line-up would put downward pressure on its volume and pricing for many more years, requiring downward earnings estimate revisions for 2026+.
On the other, gaining about 40% since the start of 2024, Meta (META) has seen strong sentiment since its 2023 “Year of Efficiency” strategy paid off. Eyeing improved monetization and AI investments resulting in better ranking and recommendations for users and advertisers, Truist upped its price target to $550 from $525 and projected that the company would top the consensus estimate.
Microsoft (MSFT) has gained about 6.5% since 2024 began. Azure growth trends have been boosted by AI services, while there has been “solid” interest in the company’s various CoPilot offerings, said Citi, which expected that MSFT’s artificial intelligence-related revenue is likely to surprise to the upside during the third-quarter earnings coming on Thursday.
Since the start of the year, Alphabet (GOOG) (GOOGL) has gained about 10%. Its healthy user engagement continued to drive more ad spending across Search and Social with growth in the first quarter helped by an ongoing recovery in pricing, noted Truist. The firm also claimed that Alphabet’s 1Q24 results to come in slightly ahead of consensus, with cost containment driving higher Y/Y margins.
Commenting on Microsoft and Google’s cloud segments, UBS commented that overall cloud infrastructure spending appeared to be stable, but it was still not yet hearing anecdotes of any material cyclical cloud spending improvement, reducing the potential for sharp near-term growth accelerations.
Other technology stocks due to report earnings next week include:
- Spotify Technology (SPOT) (+47.59% YTD)
- SAP (SAP) (+15.56% YTD)
- Lam Research Corp. (LRCX) (+12.62% YTD)
- International Business Machines (IBM) (+11.30% YTD)
- ServiceNow (NOW) (+1.09% YTD)
- Roper Technologies (ROP) (-2.59% YTD)
- Intel (INTC) (-30% YTD)
