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  • Looking Ahead to Earnings From Big Tech's Magnificent Seven

Looking Ahead to Earnings From Big Tech's Magnificent Seven

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Bloomberg Apr 22, 2024 03:43 · 27.1k Views

The so-called Magnificent Seven group of tech giants, including Microsoft Corp., Tesla Inc. and Facebook parent Meta Platforms Inc., will release their earnings in the coming days. As Garfield Reynolds reports on Bloomberg Television, investors are hoping for a rise in profits that will outpace the overall S&P 500's earnings growth.

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  • 00:00 I I just want to know how high the bar is.
  • 00:03 Do these companies need to really
  • 00:05 jump over something that's that's
  • 00:07 actually
  • 00:08 quite sizeable to convince investors that this rally can be sustained that we had at the beginning of the year around tech.
  • 00:17 Well,
  • 00:18 it's very interesting when you look back the last time that I know NVIDIA isn't amongst those that are reporting this week,
  • 00:25 but
  • 00:26 last time NVIDIA reported there was the stock dropped into the earnings.
  • 00:30 People were saying I can't possibly meet
  • 00:33 what back then were pretty elevated expectations
  • 00:36 and then it
  • 00:37 completely blew them out of the water.
  • 00:38 So on the one hand, you have that recent history of concern going into earnings,
  • 00:44 but there's that second part,
  • 00:46 the earnings really astounded to the upside.
  • 00:49 And so I think that that's part of what's helping to drive
  • 00:53 some of the concerns going into this earnings season is that
  • 00:56 it is very much about the magnificent 7.
  • 01:00 You're they're expected to show growth in earnings.
  • 01:03 The rest of the S&P 500 is expected to show a decline.
  • 01:07 So there's this big burden on them
  • 01:09 and they probably do
  • 01:11 face a pretty high bar in particular to be able to spur sustained gains because was everyone's digested, you know, those NVIDIA earnings, some of the other earnings that have gone along.
  • 01:23 So there is a high bar not just about what they report now, but about the outlook.
  • 01:29 Again,
  • 01:30 recent history, TSMC, the Taiwan
  • 01:33 chip producer, it reported just recently.
  • 01:36 And on the face of it, those earnings looked fairly good, but there were concerns about the outlook.
  • 01:43 Some of the impact got a little bit,
  • 01:47 you know,
  • 01:48 washed away by the geopolitical,
  • 01:52 geopolitically induced fluctuations that we saw at the end of last week.
  • 01:56 But it was still there.
  • 01:57 And it even came down to I saw some people talking about the biggest problem with TSMC was that the,
  • 02:05 the, the CEO on the call seemed, you know, far less upbeat, just his body language wasn't great, Whereas last time around,
  • 02:14 you know, there were also challenges within the earnings,
  • 02:17 but he looked and sounded very optimistic as though, you know, the, the only way forward was up.
  • 02:23 So I, I think
  • 02:25 the
  • 02:25 magnificent 7
  • 02:27 need to truly live up to their name and be magnificent those of them that are reporting this week.
  • 02:32 Otherwise
  • 02:34 we could have
  • 02:35 some further underperformance from underperformance from them.
  • 02:39 Or also,
  • 02:41 you know, there's the concern for the rest
  • 02:43 of the
  • 02:44 equities universe.
  • 02:46 And you know that that highlights one of the concerns in general, which is that the
  • 02:51 a lot of the rally
  • 02:52 in the last little while has been so narrow.