First quarter earnings season heats up this week, with reports from S&P 500 Magnificent Seven stocks Alphabet, Meta Platforms, Microsoft and Tesla. The quarter's success or failure depends largely on those few companies.
Analysts expect five of the seven companies in the Magnificent Seven will be the top five contributors to year-over-year earnings growth for the entire S&P 500 in the first quarter, according to John Butters, senior earnings analyst at FactSet.
In order of contribution, those companies are Nvidia, Amazon.com, Meta Platforms, Alphabet and Microsoft.
Additionally, in total, the Street sees those five companies reporting year-over-year earnings growth of 64.3% for the first quarter. That takes the blended Q1 earnings growth rate for the S&P 500 to 0.5%, FactSet says.
However, if you exclude those results, the blended (combining actual and estimated results) earnings decline for the remaining 495 companies in the S&P 500 would be -6% for the first quarter of 2024.
S&P 500 Company Tesla's Earnings Decline
Late Tuesday, Tesla announced worse-than-expected earnings and revenue for the first quarter, with the electric-vehicle giant reporting its lowest quarterly per-share earnings since 2021. But Tesla stock soared more than 9% in midday trading Wednesday as it signaled "more affordable" new models are still coming.
Earlier this week, the stock reached a 52-week low, per IBD MarketSurge data.
Tesla said that Q1 earnings fell 47% to 45 cents per share. Meanwhile, quarterly revenue totaled $21.3 billion, down 9% vs. Q1 2023. Analysts projected Q1 earnings falling more than 42% to 49 cents per share with sales declining nearly 5% to $22.22 billion.
Last week, Tesla announced plans to lay off more than 10% of its global workforce, with key executives leaving the company, and Chief Executive Elon Musk said it is part of the next "phase of growth."
The layoffs came after Reuters reported on April 6 that Tesla has switched focus from the $25,000 next-generation Model 2 in favor of prioritizing efforts on its robotaxi program. Following the report, Musk quickly announced that Tesla will unveil the robotaxi on Aug. 8.
Alphabet, Meta, Microsoft To Report
Alphabet, Meta and Microsoft are all set to report later this week.
Meta will report Wednesday. Analysts project Meta will post sales of $36.14 billion, up 26% from the same period in 2023, according to FactSet. That would mark a fifth straight quarter of revenue growth acceleration. Earnings are projected to rise 95% to $4.32 per share.
S&P 500 stock Meta stock fell 1.5% midday Wednesday, right at the 50-day moving average.
Alphabet and Microsoft earnings are set for Thursday after the close.
Wall Street expects Google earnings to rise 31% to $1.53 a share, while Dow Jones software giant Microsoft is expected to report EPS of $2.82, a 15% year-over-year increase.
Alphabet shares fell 0.5%, still above a 153.78 buy point. And S&P 500 stock Microsoft dropped 01% midday Wednesday, still trading below the 50-day line.
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