The third-quarter earnings season is underway, shining the spotlight on the renowned “Magnificent 7″ or “Mag 7” companies. These market darlings of the first half of 2024 faced a setback in recent months as the AI frenzy ebbed, and investors sidled up to sectors reaping benefits from rate cuts.
The elite group known as “Mag 7” comprises Tesla (TSLA), Alphabet (GOOGL), Meta Platforms (META), Microsoft (MSFT), Apple (AAPL), Amazon (AMZN), and NVIDIA (NVDA). Among the seven, Tesla will lead the pack in reporting, with its earnings announcement scheduled after the market closes today. Subsequently, Alphabet is set to report on Oct. 29, followed by Microsoft and Meta Platforms on Oct. 30, and Apple and Amazon on Oct. 31. NVIDIA is poised to report in the upcoming month.
The third-quarter earnings of the “Mag 7” companies are anticipated to rise by 16.2% from the corresponding period last year on 13.6% higher revenues. In the second quarter, the Mag 7 witnessed a 35.2% surge in earnings on 14.7% higher revenues.
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Taking a Deeper Dive into Tesla
Tesla presents an Earnings ESP of -1.28% and holds a Zacks Rank #2 (Buy). According to our evaluations, a positive Earnings ESP combined with a Zacks Rank of 1 (Strong Buy), 2, or 3 (Hold) heightens the probability of an earnings outperformance. For insights on the best-performing stocks before their reports, leverage our Earnings ESP Filter.
Tesla has seen no revisions in earnings estimates for the third quarter of 2024 over the last 30 days. The Zacks Consensus Estimate for third-quarter earnings spells a substantial year-over-year dip of 12.1% and revenue growth of 9.5%. Historically, the company has a less-than-ideal earnings track record with a four-quarter average negative surprise of 7.99%. Over the last three months, the electric car manufacturer has experienced a 5.7% decline.
Exploring the Price, Consensus, and EPS Performance of Tesla
After two consecutive quarters of decline, Tesla witnessed a return to growth in deliveries during the third quarter, reporting its third-highest quarterly delivery figures. Investors eagerly await details on Tesla’s strategies for an affordable EV below $30,000 and its long-term vision for Cybercab following a recent Robotaxi event that left investors craving concrete details surrounding its ridesharing platform.
Unveiling Insights on Alphabet
Alphabet boasts an Earnings ESP of +1.57% and a Zacks Rank #2. It has seen no alterations in earnings estimates for the third quarter of 2024 over the past 30 days. With an average past earnings surprise of 9.60% over the last four quarters, Alphabet anticipates an 18.1% earnings uptick and 13.6% growth in revenues compared to the year-ago quarter. The tech giant has witnessed a 9% slump over the last three months.
Reviewing the Price, Consensus, and EPS Trends of Alphabet
Google faces challenges from antitrust litigations and intensified competition in the AI sector. Concerns loom over the impact of generative AI on Google’s core search business.
Delving into Meta Platforms Performance
Meta Platforms presents an Earnings ESP of +2.83% and holds a Zacks Rank #2. The social media juggernaut observed a positive two-cent increase in earnings estimates for the third quarter of 2024 over the recent 30 days, showcasing analysts’ last-minute upwards revisions—a promising indicator for the stock. The Zacks Consensus Estimate for the impending quarter suggests significant year-over-year earnings growth of 17.8% with a 17.6% revenue uptick. Meta Platforms has averaged an impressive earnings surprise of 12.61% over the past four quarters. META has witnessed a rise of approximately 23.5% over the last three months.
Unveiling the Price, Consensus, and EPS Performance of Meta Platforms
Trading at near-all-time highs, Meta Platforms has seen multiple analysts boosting its target price ahead of earnings, signaling robust confidence in its growth prospects. Analysts from UBS, Guggenheim, Jefferies, TD Cowen, and KeyBanc have raised the price targets for Meta Platforms, highlighting enhanced user engagement and better monetization of video content, including the popular Reels feature. The increased ad load and usage rates of Reels are poised to drive continued growth for Instagram.
Analyzing Microsoft’s Standing
Microsoft exhibits an Earnings ESP of -0.74% along with a Zacks Rank #3. The tech giant has noted a penny increment in earnings estimates over the recent 30 days for the third quarter of 2024. With an average four-quarter earnings surprise of 6.34%, Microsoft projects a 3% earnings growth and a 14% revenue uptick from the year-ago quarter. Microsoft has seen a 4% decline over the past three months.
Reviewing the Price, Consensus, and EPS Trends of Microsoft
Exploring Tech Giants: A Financial Overview
Microsoft – Cloud Computing Expansion
The world’s largest software company is investing billions in constructing new data centers to keep up with the demand for cloud computing and AI services that are becoming increasingly power-hungry. While Azure’s growth might see a temporary slowdown in the current quarter, Microsoft’s chief financial officer, Amy Hood, remains optimistic. She believes that the investments in data centers and servers will position the company to capitalize on future demand and drive accelerated growth for Azure in the latter half of fiscal 2025. Microsoft’s revenue expectations for the first quarter of fiscal 2025 range from $63.8 to $64.8 billion, indicating a robust 13.8% growth rate at the midpoint.
Apple – Innovation and Revenue Growth
Despite an Earnings ESP of -17.71% and a Zacks Rank #3, Apple continues to navigate a challenging landscape. The company witnessed a negative earnings estimate revision for the fiscal fourth quarter of 2024, yet Apple’s history of positive earnings surprises remains intact. With the introduction of four AI-based iterations of the iPhone 16, Apple is positioned for a potential growth surge. Investor optimism has been steadily rising, pushing the stock to new highs on the back of strong demand for its latest offerings.
Amazon – Dominance in E-Commerce and Cloud Services
As the reigning monarch of e-commerce, Amazon continues to see its advertising arm flourish while experiencing exponential growth in Amazon Web Services, fueled by its AI capabilities. Similar to its peers, Amazon is ramping up investments in critical infrastructure such as data centers and chips to support the burgeoning AI workloads. With revenue projections ranging from $154 to $158.5 billion for the third quarter of 2024, Amazon remains a force to be reckoned with in the tech industry.
NVIDIA – Pioneering AI Chip Design
NVIDIA, the frontrunner in AI chip design and software, commands a substantial market share in the AI industry due to its cutting-edge graphics processing units. Market analysts are bullish on NVIDIA’s prospects, with expectations of impressive earnings growth of 85% and revenue growth of 80.7% for the upcoming quarter. The company’s focus on AI technologies positions it favorably in a market hungry for innovative solutions.
NVIDIA’s stock has shown resilience, posting a 15% increase in value over the last three months. Wall Street analysts are optimistic about the company’s future, with many raising their price targets recently. Notably, Bank of America and CFRA have raised their price targets, citing the robust demand for AI solutions.