The first quarter earnings season has drawn to a close, with a significant number of S&P 500 companies already revealing their quarterly results. Among these, technology firms have played a pivotal role in propelling growth, with expectations for the upcoming quarter (Q2) indicating a projected increase in earnings by +14.4% and revenue by +9.3% for the sector. Notably, Nvidia, Apple, and Vertiv have emerged as frontrunners in this positive trend.
All three companies – Nvidia (NVDA), Apple (AAPL), and Vertiv (VRT) – have shattered quarterly records during the Q1 cycle. Over the past three months, all three stocks have witnessed bullish price movements, exemplifying their strong performance in the market.
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Let’s delve deeper into each of these success stories.
Vertiv Stock Climbs with AI Enthusiasm
Vertiv has experienced a surge in its stock value due to the widespread enthusiasm around artificial intelligence (AI), exiting the latest quarter with a record-high backlog of $6.3 billion. The company specializes in providing services for data centers through a range of offerings including power, cooling, and other essential services.
With a favorable Zacks Rank #2 (Buy) and a significantly positive revision trend for the current fiscal year, showing an increase of nearly 80% over the past year, Vertiv’s growth trajectory appears robust. The Zacks Consensus EPS estimate predicts a 36% year-over-year surge in earnings for the company.
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Following the recent earnings release, Vertiv raised its full-year guidance, leading to a significant post-earnings spike in its stock price. Additionally, notable highlights include a 60% organic order growth and $600 million allocated for share repurchases during the period.
The company has also enjoyed notable margin expansion recently, significantly boosting its overall profitability.
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Apple Stock Surges on Services Growth
Apple’s shares have seen a 7% increase over the past month, signaling a resurgence after a sluggish start in 2024. The tech giant’s recent quarterly results and reports from the Wall Street Journal regarding chip development for AI software in data centers have significantly contributed to this positive performance.
Apple’s Services portfolio has emerged as a strong growth driver in recent periods, alleviating the company’s reliance on iPhone sales. Services revenue reached $23.9 billion in the latest period, marking a 14% year-over-year increase and setting a new quarterly record.
Consistently surpassing expectations in Services sales, Apple posted a recent beat of $570 million, as illustrated below.
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Favorable reports on iPhone shipments in China have further boosted Apple’s performance, alleviating concerns regarding demand in that region.
Nvidia Stock Continues as Prime AI Investment
Investors are running out of superlatives to describe Nvidia’s exceptional performance over the last year, driven by the relentless demand for chips essential in AI applications. The company has consistently surpassed consensus EPS expectations by nearly 20% over its last four releases, with a positive outlook on earnings across the board.
Thanks to this optimistic earnings outlook, Nvidia retains its highly sought-after Zacks Rank #1 (Strong Buy) position, making it a top choice for those seeking exposure to AI technologies.
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Data Center revenue of $22.6 billion once again exceeded consensus estimates and marked another quarterly record for Nvidia, continuing its streak of robust performance. As shown below, Nvidia has consistently outperformed consensus estimates for Data Center revenue by a significant margin in the last four periods.
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To the surprise of many, Nvidia’s shares have not become overvalued despite its remarkable performance, currently trading at a forward 12-month earnings multiple of 38.1X, significantly lower than its five-year median of 50.7X and highs of 106.3X in 2023.
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Bottom Line
The first quarter earnings season has concluded on a positive note, with only a few S&P 500 companies left to report their Q1 results. The overall performance has surpassed expectations, with technology companies leading the way to success.
Excitingly, Nvidia (NVDA), Apple (AAPL), and Vertiv (VRT) have all achieved remarkable quarterly records, showcasing their strength in the market.