Amid the delayed prospect of rate cuts and an increase in geopolitical tension, the technology sector has been seeing brutal trading in recent weeks after a strong first quarter. Notably, the Magnificent Seven stocks suffered the worst-ever weekly loss in terms of market capitalization, erasing $950 billion last week.
Nvidia (NVDA – Free Report) , which has been leading the artificial intelligence boom, shed almost $300 billion and became the biggest market-cap loser. Shares of Nvidia fell 13.6% last week and are down sharply, about 22% from its March high, indicating that it is in bear market territory. Meanwhile, Tesla (TSLA – Free Report) witnessed the biggest decline percentage among the Magnificent Seven as its market cap fell by $76 billion. The electric car maker posted the worst quarterly performance since the fourth quarter of 2022 and continued its slump in the second quarter as well.
Apple (AAPL – Free Report) and Microsoft (MSFT – Free Report) lost $178 billion and $169 billion, respectively, in market cap. Amazon (AMZN – Free Report) shed $118 billion in market value while Meta Platforms (META – Free Report) and Alphabet (GOOGL, GOOG) erased a respective $68 billion and $41 billion from their valuation.
However, first-quarter earnings are expected to drive the whole group higher. Overall, first-quarter earnings for “Magnificent Seven” are expected to grow 33% from the same period last year on 12.7% higher revenues. This would follow the 51.2% earnings growth for the group in the fourth quarter on 15% higher revenues.
Profits for the “Magnificent Seven” are expected to rise 38% in the first quarter from a year ago, dwarfing the overall S&P 500’s 2.4% year-over-year earnings growth, according to Bloomberg Intelligence data (see: all the Technology ETFs here).
Among the group of companies, Tesla is set to report first on Apr 23, followed by Meta Platforms on Apr 24. Microsoft and Alphabet are expected to release their results on Apr 25. Amazon, Apple and Nvidia are expected to come up with earnings on Apr 30, May 2 and May 22, respectively.
Tesla
Tesla has an Earnings ESP of 0.00% and a Zacks Rank #5 (Strong Sell). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The electric carmaker saw a negative earnings estimate revision of a penny over the past seven days for the to-be-reported quarter. The Zacks Consensus Estimate for the first quarter indicates a substantial year-over-year earnings decline of 45.9% and revenue decline of 5%. The earnings track record of the company is not impressive. It delivered a four-quarter negative average earnings surprise of 0.40%. Tesla falls under a bottom-ranked Zacks industry (bottom 32%). The electric carmaker is down 29.6% in the last three months (read: Tesla Stock Sinks After a Big Q1 Delivery Miss: ETFs in Focus).
Meta Platforms
Meta Platforms has an Earnings ESP of +0.62% and Zacks Rank #2. The social media giant saw a positive earnings estimate revision of a penny for the to-be-reported quarter over the past 30 days. Analysts increasing estimates right before earnings — with the most up-to-date information possible — is a good indicator for the stock. The current Zacks Consensus Estimate for the yet-to-be-reported quarter indicates substantial year-over-year earnings growth of 63.6%. Revenues are expected to increase 26.6%. Meta Platforms delivered an earnings surprise of 19.71%, on average, in the last four quarters. The stock belongs to a top-ranked Zacks industry (top 22%). Shares of META have surged about 22% over the past three months.
Microsoft
Microsoft has an Earnings ESP of -3.36% and a Zacks Rank #3. Microsoft saw a negative earnings estimate revision of 3 cents over the past 30 days for the to-be-reported quarter. Its earnings track record is impressive, with the four-quarter earnings surprise being 8.82%, on average. The Zacks Consensus Estimate indicates earnings growth of 14.69% and modest revenue growth of 14.7% from the year-ago quarter. Microsoft belongs to a top-ranked Zacks industry (top 34%) and has gained 0.6% over the past three months (read: 5 ETFs Leading the Tech Rebound: Will the Rally Continue?).
Alphabet
Alphabet has an Earnings ESP of +1.43% and Zacks Rank #3. It saw no earnings estimate revision over the past 30 days for the to-be-reported quarter. The company’s earnings surprise track record over the past four quarters is good, with the earnings surprise being 7.22%, on average. Earnings are expected to increase 27.35%, while revenues are expected to…
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