The 2024 Q2 earnings season is in full swing, with a plethora of high-profile companies set to release their financial reports next week. The current earnings landscape has been relatively positive, with major banks’ performances not causing any major concerns among investors.
Looking ahead to the upcoming week, several members of the esteemed Mag 7 group, such as Meta Platforms META, Amazon AMZN, and Apple AAPL, are scheduled to announce their earnings. These three giants have experienced significant growth in 2024, prompting speculation on whether their stellar performance can be sustained.
Lets delve into a closer examination of their current standing as we approach their earnings announcements.
Apple: Unveiling Insights into China Sales
Apple’s stock faced scrutiny earlier in 2024 due to a slow start, but it has since gained momentum, registering a 14% year-to-date increase. Concerns surrounding its presence in China and falling behind in the AI race had initially impacted the stock’s performance, but these worries seem to have abated for now.
The company holds a Zacks Rank #2 (Buy), with projected earnings for the upcoming period showing an upward trend over the past few months. The expected earnings per share of $1.34 indicate a 6% rise from the same period last year, with sales also anticipated to increase by 2.7% year-over-year.
Image Source: Zacks Investment Research
While Apple faced challenges in China during the previous quarter, overall sales came in closer to expectations compared to earlier periods, missing the consensus estimate by $220 million versus a $2.5 billion shortfall in the previous quarter.
Furthermore, positive news regarding iPhone shipments in China has surfaced in recent weeks, alleviating concerns. Investors will also be keenly observing the performance of Apple’s Services segment, which has been a consistent growth driver in recent times, helping to reduce dependence on iPhone sales.
As illustrated below, the Services segment has often surpassed expectations in recent periods, with one exception.
Image Source: Zacks Investment Research
Amazon: Spotlight on AWS Performance
During its most recent quarter, AMZN demonstrated robust performance, with operating income of $15.3 billion marking a 220% year-over-year increase. Of particular significance, AWS delivered impressive results, with net sales of $25 billion showing a 17% growth compared to the previous year, breaking a streak of negative surprises in this metric.
Fears of a slowdown in cloud services, which had been observed in previous periods, seem to have dissipated based on the recent positive results, setting an optimistic tone for the upcoming earnings release.
Image Source: Zacks Investment Research
Expectations for earnings and revenue in the upcoming release have been relatively subdued, but substantial growth is anticipated, with EPS projected to increase by 63% on a 10% rise in sales. Improved cost management and operational efficiencies have significantly contributed to enhanced profitability, leading to notable margin expansion.
It is important to note that the subsequent chart depicts data on a trailing twelve-month basis.
Image Source: Zacks Investment Research
Meta Platforms: Evaluating CapEx Trends
META’s improved operational efficiencies have significantly enhanced its profitability in recent quarters, resulting in substantial growth in earnings per share.
Investors will be seeking insights into Capital Expenditure (CapEx) trends related to AI, a topic that was also highlighted in Alphabet’s latest quarterly report. Projections for earnings have increased in recent months, with an expected EPS of $4.69 indicating a 45% year-over-year growth.
Image Source: Zacks Investment Research
In terms of key metrics, the Zacks Consensus Estimate for Advertising revenue is set at $37.5 billion, reflecting a 20% increase from the same period last year. Notably, Alphabet’s Advertising business exhibited strong performance, with sales totaling $64.6 billion, up 12% year-over-year.
Following META’s last quarterly results, the stock experienced a decline, attributed to a higher CapEx guidance for the current fiscal year. Consequently, investors will closely monitor any developments in this area, especially following Alphabet’s unsettling disclosure of higher-than-expected CapEx.
The Verdict
The 2024 Q2 earnings season is progressing steadily, with a packed schedule of earnings releases this week. Tech companies are expected to lead the way once again with strong performances, continuing the positive trend observed in previous quarters.
This week, several Mag 7 members, including Meta Platforms META, Amazon AMZN, and Apple AAPL, are set to announce their results. Given their standout performances throughout 2024, these reports are sure to attract significant attention and may well be the highlight of the entire Q2 earnings cycle.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Meta Platforms, Inc. (META) : Free Stock Analysis Report