Apr 27, 2024,09:00am EDT
HEADLINE:
This week witnessed a notable blend of earnings reports, featuring four of the illustrious “magnificent seven” stocks, setting off reverberations across the market and reshuffling billions of dollars in the fortunes of the world’s wealthiest individuals. The whirlwind earnings week for these globally tracked public companies spurred somewhat unexpected reactions, capturing widespread attention.
KEY POINTS:
This week witnessed a significant blend of earnings reports, featuring four of the renowned “magnificent seven” stocks, causing ripple effects throughout the market and reshuffling billions in the fortunes of the world’s wealthiest individuals. Surprisingly, reactions to the whirlwind earnings week for these globally tracked public companies drew attention.
The standout earnings reports for the first quarter included Tesla on Tuesday, Meta on Wednesday, and Alphabet and Microsoft on Thursday. Collectively, these four American tech giants boast a market capitalization of $6.8 trillion, comprising approximately 7% of the world’s total equity market.
Tesla disappointed with missed expectations on both revenue and net income, while its three tech peers delivered strong performances, notably Alphabet with a record-breaking quarterly net income of $23.7 billion. Despite positive results, the market reactions to Meta and Tesla stocks were less straightforward, sparking discussions about the influence of fundamental-based valuations.
Despite Tesla’s underperformance, its shares surged by 16%, while Meta’s stock plummeted by 10% despite reporting a significant annual increase in earnings. This disparity underscores the market’s emphasis on future earnings potential rather than past results.
Meta and Tesla faced contrasting market conditions leading up to earnings, with Meta experiencing a 58% six-month return while Tesla endured a 32% six-month loss. Investors interpreted the narratives presented by Meta and Tesla differently, with Zuckerberg’s cautionary remarks contrasting Musk’s optimistic production updates.
Notable shifts in billionaire fortunes occurred during the eventful week, with Elon Musk gaining $13 billion and Mark Zuckerberg losing approximately $19 billion. Other billionaires, including those associated with Google and Microsoft, witnessed significant gains, while Facebook cofounders experienced losses amidst the selloff.
WHAT TO WATCH FOR:
Earnings reports from Amazon on Tuesday and Apple on Thursday will complete the earnings cycle for the magnificent seven companies. Market analysts anticipate varying performances from these tech giants, with Amazon projected to report robust sales and profit growth, while Apple’s forecasts indicate a slight decline in revenue and profits.
Nvidia’s earnings report, scheduled for May 22, is expected to reveal substantial revenue and profit increases, further contributing to the tech sector’s optimism.
CRUCIAL QUOTE:
- “The strong results from Microsoft and Alphabet helped restore optimism over the outlook for artificial intelligence and the tech sector,” remarked Solita Marcelli, UBS Global Wealth Management’s chief investment officer of the Americas. The Nasdaq’s significant gains reflect renewed confidence, erasing last week’s selloff.