Next week’s slate of earnings reports won’t be the most numerous, but it is certainly the most significant. Five of the ‘Magnificent Seven’ stocks are set to share some of the most valuable economic data in the world, with the two largest American energy companies also taking the stage.
So far, the earnings season has painted a generally upbeat picture, with the majority of stocks besting both earnings and revenue estimates.
Impending Tech Reports
According to the Zacks Earnings Trend Report by research head Sheraz Mian, the total Q4 earnings for the Technology sector are expected to be up +18.7% from the same period last year on +6.8% higher revenues. The impact of the strong Tech sector contribution on Q4 earnings for the rest of the index is remarkable.
The ‘Big 7 Tech Players’ – Amazon (AMZN), Alphabet (GOOGL), Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA) – are scheduled to start reporting Q4 results in the next few days. Total Q4 earnings for the group are projected to be up +38.3% from the same period last year on +12.5% higher revenues, following a substantial 2023 Q3 growth.
These figures are stunning, considering the significant portion these mega-cap tech stocks occupy within the S&P 500. The remarkable sales and earnings growth they are posting is simply undeniable.
Earnings from Microsoft (MSFT) and Alphabet (GOOGL) are expected after the market closes on Tuesday, while Apple (AAPL), Amazon (AMZN), and Meta Platforms (META) are due to report on Thursday.
It’s worth noting the valuations of the five tech stocks set to report next week. None of them have outlandish valuations, with a couple being quite appealing. Amazon and Microsoft lead in forward earnings multiples, while Meta Platforms and Alphabet are at the opposite end of the spectrum, with Apple falling in the middle.
Image Source: Zacks Investment Research
Based on valuations, Meta Platforms and Alphabet appear quite appealing, while Microsoft and Apple may need to work off their premium multiples before becoming as attractive. Amazon also appears attractive based on its high earnings growth expectations.
It’s also interesting to note that Microsoft, Amazon, and Meta Platforms hold a Zacks Rank #2 (Buy), while Apple and Alphabet have a Zacks Rank #3 (Hold) rating.
Energy Sector Prospects
Conversely, the earnings expectations for energy stocks are diametrically opposed to the tech sector. The sectors anticipated to experience the most significant earnings declines in Q4 include Autos, Basic Materials, Medical, Energy, and Transportation.
Energy stocks have faced challenges over the past year, primarily due to the stabilizing of oil prices. Following the onset of the Ukraine-Russia conflict and the easing of inflation, the price of crude oil has markedly decreased from the highs of $130 to $78, with sporadic spikes up to $95.
Despite the expected year-over-year earnings decline, this sector continues to hold appeal and is worth considering for potential investments.
On Friday, US oil majors Exxon Mobil (XOM) and Chevron (CVX) will report earnings before the market opens.
