Highlights
- 75% of S&P 500 companies exceed analysts’ expectations.
- Early Q2 results promising for equity markets.
- Big Tech giants’ earnings in the spotlight; AI and cloud performance monitored.
Earnings Below 3-Year Average of 80%
The earnings season has kicked off with a mix of results for S&P 500 companies. According to FactSet data, 75% of the companies that have reported so far have exceeded analysts’ expectations. While this is a commendable performance, it falls slightly below the three-year average of 80%, as reported by The Earnings Scout.
Mixed Start, but Promising Enough
Despite the mixed start, early Q2 results seem to be promising enough for equity markets to continue their upward trajectory. However, the upcoming week will be more telling, with approximately 50% of market capitalization reporting their earnings. Investors and analysts eagerly await the releases to gauge the broader earnings dynamics.
Alphabet Kicks of the Week
Big Tech giants take the spotlight in the packed earnings calendar for the week of July 24-28. Alphabet, Google’s parent company, will kick off the week with its second-quarter earnings report. Analysts expect the company to report earnings of $1.34 per share, showcasing a 10.7% year-over-year growth. Analysts are expecting revenue to reach $72.8 billion, up 4.5% YoY. Investors will closely monitor Alphabet’s performance, particularly its AI prospects and the company’s ability to sustain a strong growth pace in the coming years.
Keen Eye on Microsoft’s AI
Next up is Microsoft, set to disclose its fiscal fourth-quarter results. The industry analysts expect MSFT to report earnings of $2.55 per share, indicating a significant 14.3% YoY growth, with revenue reaching $55.5 billion, up 6.9% YoY. Investors will keep a keen eye on Microsoft’s AI efforts and its potential impact on the company’s top-line growth, particularly in the Azure cloud division.
Another tech giant in the spotlight is Amazon.com. With a remarkable climb of over 26% in the second quarter, the consumer discretionary stock is anticipated to show solid growth in its Q2 financial results. Analysts expect Amazon to swing to a per-share profit of 35 cents, compared to a loss of 2 cents per share in the year-ago period. Revenue is forecasted to climb 8.4% YoY to $131.5 billion.
Key segments to watch include advertising and third-party seller services, expected to show strong growth, while first-party online store sales may see a more modest increase due to shifting consumer spending patterns. Additionally, analysts predict that year-over-year revenue growth for Amazon Web Services, the company’s cloud division, bottomed at 11% in Q2, setting the stage for accelerated growth ahead.
Big Tech Watch Highlights Pivotal Week
As the earnings season unfolds, investors and analysts remain attentive to these Big Tech companies. Especially their performance, which could have a significant impact on the broader market sentiment and direction. Positive surprises and strong guidance may reinforce the market’s resilience, while any disappointments may introduce volatility. The week ahead promises to be pivotal in shaping the market’s trajectory in the coming weeks.
