THE Magnificent Seven stocks – giants of the S&P 500 Amazon.com (AMZN), Apple (AAPL), parent Google Alphabet (GOOGLE), Metaplatforms (META), Microsoft (MSFT), Nvidia (NVDA) And You’re here (TSLA) — have grouped together since the start of the bull market in January 2023.
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The group appeared less and less appropriate. Tesla’s profits have fallen in recent quarters, while Tesla shares have fallen. Apple’s profits rose just 1% last quarter, with sales falling.
Ultimately, stock prices depend on earnings and earnings expectations. Companies that are able to generate strong earnings growth over time will tend to outperform.
In fact, only three Magnificent Seven stocks can boast earnings per share growth of at least 25% in the most recent quarter, expected EPS growth of 25% for the current fiscal year, and 25% for the following year: Nvidia, Google and Amazon.
Meta Platforms comes close, with EPS growth of 78% in the first quarter and 36% for the full year. But earnings per share growth is expected to slow to almost 15% in 2025.
Google’s profits jumped 53% in the first quarter, while sales growth accelerated for a fourth straight quarter, to 15%. Full-year EPS is expected to rise 30%, but profit gains in 2025 are expected to slow to 14%.
Microsoft reported 20% EPS growth in its most recent quarter and is expected to post 20% growth for the 2024 fiscal year that ended in June.
Meanwhile, another mega-cap stock, Elie Lilly (THERE IS), meets this triple criterion of 25% gains.
Nvidia Earnings
The AI ​​chip leader reported Wednesday evening. Analysts expect Nvidia’s earnings to jump 413% to $5.59 per share and sales to rise 242% to $24.57 billion.
In the previous quarter, Nvidia’s profits exploded by 486%.
For the full fiscal year, Wall Street expects EPS growth of 93%, followed by 26% for the following year.
NVDA stock rose 2.9% to 924.79 last week. Shares hit 922.20 cup with handle buy point on Wednesday, retreating to test this entry on Friday.
Amazon Earnings
Amazon’s profits soared 216% in the first quarter, with 57% growth expected for 2024. For 2025, the e-commerce and cloud computing giant is expected to post a 28% gain.
Amazon stock has been consolidating for several weeks, arguably forming a mess flat base. Stocks find support at the 21-day moving average, just above the 10-week line. AMZN stock has forged a three tight weeks pattern with an official buy point of 191.70 which could also contribute to broader consolidation.
Eli Lilly Earnings
Eli Lilly’s profits jumped 59% in the first quarter as sales of the weight-loss drug Zepbound rise sharply. Earnings per share are expected to jump 116% in 2024, followed by a 40% gain in 2025.
Rival of Eli Lilly Novo Nordisk (NGO) almost meets the triple-25% earnings criteria. The Danish pharmaceutical giant’s first-quarter EPS rose 28%, with annual profit up just over 25%. But 2025 EPS is expected to rise 23%.
Eli Lilly shares rose 1.3% to 770 last week, the fourth consecutive weekly gain. Investors could use 793.67 or 795.50 as buy points.
The S&P 500 giant has a market capitalization of $731 billion. That’s higher than Tesla stock at $566 billion, but lower than the other Magnificent Seven stocks, all of which exceed $1 trillion.
Please follow Ed Carson on the discussions at @edcarson1971 and X/Twitter on @IBD_ECarson for stock market updates and more.
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