Key Metrics Investors Should Monitor for Nvidia, Alphabet, and Amazon Earnings Reports

Key Points

• Nvidia, Alphabet, and Amazon all reported significant income growth in the last quarter, driven largely by unprecedented increases in “other income.”

• The S&P 500 earnings growth estimate for Q2 stands at 23.6%, with a full-year projection of 25.1% and an average of 24.9% over the next five years.

• Combined “other income” for these three companies reached $69 billion, accounting for nearly 10% of the total S&P 500 earnings.

Analysts anticipate a remarkable growth trajectory for the S&P 500 earnings, projecting a 23.6% increase in Q2 2023 and 25.1% for the full year, largely fueled by strong performances from key players like Nvidia, Alphabet, and Amazon. In the first quarter, these companies reported sizeable “other income” — Nvidia at $16 billion, Alphabet at nearly $38 billion, and Amazon at $16 billion. This income, which mainly stems from unrealized capital gains, significantly inflated the earnings figures, with their combined total representing approximately 10% of the S&P 500’s earnings.

As unrealized gains on investments such as Anthropic and SpaceX have led to these substantial “other income” figures, investors are urged to pay careful attention to this line item in quarterly reports. The overall market dynamics may shift with fluctuations in these gains, impacting perceived earnings and driving stock valuations accordingly.