As time progressed into mid-April, the first quarter earnings season for US stocks slowly began.
Global investors are once again focusing on the big seven tech giants in the US stock market —$Apple (AAPL.US)$,$Microsoft (MSFT.US)$,$Alphabet-C (GOOG.US)$,$Amazon (AMZN.US)$,$NVIDIA (NVDA.US)$,$Meta Platforms (META.US)$und$Tesla (TSLA.US)$. According to data compiled by Bloomberg, the profit of the US stock “Mag 7” in the first quarter of 2024 is expected to increase by 38%.
According to analysts' unanimous expectations, Futu Information has compiled the market's performance forecasts for large technology stocks for reference:
According to market opinion, in the first three quarters of last year, the S&P 500 index constituent stocks experienced three consecutive quarters of profit contraction, and this trend was not reversed until the fourth quarter of last year. Driven by strong economic growth and consumer demand, S&P 500 constituent stocks are expected to achieve profit growth for the second consecutive quarter, while strong profit growth from large technology companies may be a key driver.
The media quoted George Ball, chairman of Sanders Morris, as saying, “The future driving the market will no longer be the Federal Reserve's interest rate cuts, but corporate profits. Even in the current high interest rate environment, actual corporate profits are far better than people expected.”
Currently, the market is generally optimistic about the performance of large technology companies. Jessica Rabe, co-founder of DataTrek Research, pointed out that with the exception of Apple and Tesla, the performance expectations of other technology companies in the “Big Seven” have all been raised, not only for the first quarter, but also for the whole of this year and the whole of next year.
Looking specifically at individual stocks, Nvidia remained strong in the first quarter of 2024, with a cumulative increase of over 78% this year. Cantor Fitzgerald's analyst C.J. Muse recently said that increasing Nvidia holdings is one of the best tactical suggestions for this earnings season.
Nvidia's AI momentum is still strong, and it is expected that it will once again hand over an explosive report card, which may “become a catalyst for the continued rise in stock prices.”
Recently, however, tech giants have successively launched new “go to Nvidia” AI chip products, and this risk cannot be ignored. Furthermore, current market investors' expectations for Nvidia's performance are very high, which in turn curbs Nvidia's potential to exceed expectations. If Nvidia's earnings report does not meet expectations, the pressure on the stock price will be enormous.
Furthermore, with regard to Google and Amazon, which have recently been catching up with stock prices, the market believes that
Although Google's path to monetizing artificial intelligence remains unclear, the stock's low valuation relative to other tech giants makes it attractive to many on Wall Street.
Bank of America also said that Google's hardware advancements, Gemini's advancements, and AI-powered application demonstrations should help boost people's confidence in its AI capabilities. Given AI's credibility and room for growth, we think the cloud division will be a positive driver for the stock.
Damo, on the other hand, is also increasingly optimistic about Amazon's retail business. It said that the increase in retail profits has boosted investors' confidence that Amazon can achieve stronger profits and free cash flow in the next few years.
In contrast to Nvidia's strength, Apple and Tesla, which have been left behind by the tech giants since 2024, may still have unsatisfactory results in the first quarter.
Jeffrey Buchbinder, chief stock strategist at LPL Financial, pointed out that although the profits of the Big Seven are expected to grow 40% in the first quarter, the profit situation of Tesla and Apple is expected to decline.
According to the first-quarter automobile production and delivery report previously released by Tesla, Tesla's deliveries fell 8.5% year on year to about 386,800 vehicles, while the month-on-month drop was more than 20%, far lower than analysts' previous expectations of 449,000 vehicles, breaking the record for the biggest margin below expectations.
However, compared to Wall Street's pessimism about Tesla, Apple's situation seems to be different. At a time when Apple has experienced a series of disadvantages since the beginning of the year and its stock price is in trouble, some Wall Street analysts such as Bank of America and J.P. Morgan Chase bucked the trend and were optimistic about the company.
Bank of America analysts said investors have once again underestimated Apple's gross profit margin.
We believe Wall Street is once again underestimating Apple's long-term gross margin potential in products and services. We expect the gross margin of the Apple product segment to rise by about 180 basis points in the next few years, and the gross margin of the service segment to increase by about 150 basis points.
The bank pointed out that the current market undervalues Apple, and similar situations have occurred before. In 2018, Wall Street predicted Apple's gross margin of 39% in 2023, but in fact, in the end, Apple surpassed this forecast. The gross margin reported last year was as high as 44%.
Which technology company are coworkers looking forward to the most?
Which of the “Big Seven” are you most interested in?
Everyone is welcome to share your wonderful opinions~
Editor/Somer