Tesla stock plunged nearly 10% last week on earnings. That caught everyone's attention, but it was just the tip of the iceberg.
With roughly one-third of the S&P 500 companies announcing quarterly earnings results this week, there are none bigger than tech titans Alphabet, Amazon.com, Microsoft and Meta Platforms. These four Big Tech stocks alone account for 41% of the S&P 500's 2023 year-to-date gain, according to Nicholas Colas, co-founder of DataTrek Research.
Adding Apple, which reports next week, Nvidia and Tesla stock, Colas says these seven tech giants account for 86% of the S&P 500's 2023 gain, which was 7.7% through Monday's close. These seven Big Tech stocks have rallied far more than the S&P 500 this year.
According to Colas, there have been three drivers of outperformance for these tech leaders. First, all seven were deeply oversold at the end of 2022 and received a "January Effect" bounce.
The January Effect is a seasonal increase in stock prices throughout the month of January. The increase in demand for stocks in January is often preceded by a decrease in prices during the month of December, in part due to tax-loss harvesting.
Second, many of these tech companies have been aggressively cutting costs, so earnings power should now be higher than last year. And, finally, interest rates have declined, supporting the valuation of high-multiple stocks, he added.
Alphabet, Microsoft Earnings Due
Google-owner Alphabet reported earnings after the closing bell Tuesday. Shares are just below a 106.69 buy point in a cup with handle, according to IBD MarketSmith chart analysis.
Alphabet reported first-quarter earnings and revenue that topped estimates. GOOGL stock dropped 1.2% Friday, right at the buy point.
Dow Jones software giant Microsoft surged 7.2% Wednesday after easily beating Wall Street's targets for its fiscal third quarter thanks to a strong showing by its cloud computing businesses. The company also guided higher for the current period.
MSFT stock is trading out of buy range above a 276.86 buy point in a flat base following a March 17 breakout. Shares tacked on 0.1% Friday.
Amazon Slides On Slowing Cloud Growth; Meta Surges On Earnings Beat
E-commerce giant Amazon continues to trace the right side of a cup base, but is seeing resistance around its long-term 200-day moving average.
Amazon stock lost 3.8% Friday after the e-commerce giant reported first-quarter earnings that topped Wall Street targets amid cost-cutting. Management's earnings call commentary raised questions over how long a slowdown in cloud computing growth will persist.
Facebook parent Meta Platforms reported Wednesday after the stock market close. Meta stock surged 13.9% Thursday after easily beating Wall Street's first-quarter projections and issuing bullish sales guidance.
Meta stock is out of buy range past a 197.26 buy point in a flat base and sharply above the entry. Shares dipped 0.9% Friday.
Apple Earnings Next Week
Apple shares rallied 2.8% Thursday, closing at their highest level since late August. They remain above a 157.48 buy point and out of the buy range that runs up to 165.35. AAPL stock rose 0.1% Friday.
The Dow Jones tech giant reports its fiscal second-quarter results on May 4. Wall Street expects the iPhone maker to earn $1.43 a share on sales of $92.9 billion.
Nvidia Holds Up; Tesla Stock Breaks Down
Graphics-chip maker Nvidia remains near its recent highs amid slight gains Friday. Shares rose 0.8% in morning trade.
The IBD Leaderboard stock broke out past a 230.59 handle buy point after the company's strong earnings on Feb. 23.
Electric-vehicle giant Tesla stock continues to trade near its lowest level since Jan. 25. In recent weeks, shares triggered the 7%-8% loss rule from a buy point at 200.76 in a cup with handle. And they are trading sharply below their 50-day line, a key level.
TSLA stock looked to add to Thursday's gains, trading up 2% Friday. Shares continued lower this week after gapping down on April 20 after the company announced quarterly results.
Tesla Stock, Big Tech's 2023 Performance
This is the 2023 performance for Tesla stock and the other Big Tech stocks driving the S&P 500's year-to-date gain.
| Symbol | 2023 YTD Performance | Earnings Due Date | |
|---|---|---|---|
| Alphabet | +19.6% | April 25 | |
| Amazon | +23.9% | April 27 | |
| Apple | +26.6% | May 4 | |
| Meta Platforms | +74.0% | April 26 | |
| Microsoft | +15.7% | April 25 | |
| Nvidia | +85.0% | Late May (est.) | |
| Tesla | + 31.9% | Mid July (est.) |
