The 2024 Q1 earnings season has essentially wrapped up, and it’s time to review the performance of the Magnificent 7 stocks.

This article will summarize their earnings reports, track the latest company developments, and help investors understand the direction of the US stock market.

How did the Magnificent 7 perform in Q1?

The Magnificent 7, which includes Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla, collectively account for 29.1% of the S&P 500 index and 40.5% of the Nasdaq 100 index as of the end of April 2024.

Their stock price movements are likely to influence the overall market direction. Here’s a closer look at their Q1 2024 performance:

Microsoft (MSFT) - Steady at the Top

Microsoft remains the most valuable US company with a market cap of $3.2 trillion as of May 28, 2024.

Despite its size, the company continues to grow. Q1 total revenue was $61.86 billion, up 17% year-over-year, with net income at $21.94 billion, up 20%.

Growth was primarily driven by its cloud business, with Intelligent Cloud revenue up 21% to $26.7 billion and Azure and other cloud services revenue up 31%.

Images provided are not current and any securities are shown for illustrative purposes only and is not a recommendation.

Apple (AAPL) - Largest Buyback in History

Apple currently resembles a value stock due to its stagnant growth.

In Q1 2024, total revenue was $90.75 billion, down 4.3% year-over-year, and net income was $23.64 billion, down 2.2%.

Despite this, Apple announced a $110 billion stock buyback, the largest in its history.

However, notable is Warren Buffett's reduction of his Apple holdings by 12.83%, though it remains his largest position. Buffett cited tax reasons for the reduction, leaving questions about his outlook on Apple.

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NVIDIA (NVDA) - Surging Demand, Stock Split

As a leader in AI stocks, NVIDIA’s every move impacts the AI sector.

Q1 FY2025 revenue hit a record $26 billion, up 262% year-over-year, with net income surging over 620% to $14.88 billion.

Highlights included CFO’s comments on sustained high demand for new products H200 and Blackwell, and a 10-for-1 stock split, potentially driving short-term stock price increases.

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Alphabet (GOOG) - First-Ever Quarterly Dividend & $70 Billion Buyback

Alphabet reported Q1 revenue of $80.54 billion, up 15% year-over-year, with net income up 57% to $23.66 billion.

The company announced its first-ever quarterly dividend and a $70 billion buyback, second only to Apple’s $100 billion.

The strong earnings and shareholder returns boosted Alphabet’s stock by 10% on earnings day.

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Amazon (AMZN) - Cloud Computing Drives Growth

Amazon remains a leader in e-commerce and cloud computing.

Q1 revenue was $143.31 billion, up 12.5% year-over-year, with adjusted EPS of $0.98, up 216%. Growth was driven by Amazon Web Services (AWS), with revenue up nearly 17% to $25 billion and a record operating margin of 37.6%.

However, Amazon does not currently pay dividends or repurchase shares, which may shift investor focus to its shareholder return policies.

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Meta Platforms (META) - Indicating Rising Costs?

Meta’s Q1 2024 revenue was $36.46 billion, up 27% year-over-year, with EPS of $4.71, up 114%.

Despite decent performance, the stock dropped 14% post-earnings due to lower-than-expected Q2 revenue guidance and hints at increased AI spending.

Previous investments in the metaverse led to significant losses, raising Wall Street’s concerns about a potential repeat with AI investments.

However, the stock recovered its post-earnings drop, suggesting the market’s initial reaction was excessive.

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Tesla (TSLA) - Underwhelming Performance but Positive Signals from Musk

Tesla had the weakest stock performance among the Magnificent 7 prior to its Q1 earnings report.

The company's Q1 revenue was $21.3 billion, down 9%, marking the largest decline since 2012, with EPS of $0.45, missing expectations of $0.52.

Despite the weak numbers, Musk’s optimistic outlook on future developments helped the stock rise 10% post-earnings.

Tesla’s heavy reliance on Model 3 and Model Y sales amidst increasing competition necessitates the introduction of new models and advancements in areas like autonomous driving and AI to maintain its market position.

Images provided are not current and any securities are shown for illustrative purposes only and is not a recommendation.

How to Invest in the Magnificent 7

Since the start of 2024, five of the Magnificent 7 have outperformed the S&P 500, except for Apple and Tesla. NVIDIA led with a 130% year-to-date increase, while Tesla lagged with a nearly 30% decline.

The Magnificent 7 spans high-tech sectors such as AI, cloud computing, software, and electric vehicles.

For investors with limited funds or those preferring not to select individual stocks, ETFs tracking the Magnificent 7 could be a viable option.

According to VettaFi ETF Trends, two ETFs directly tracking these stocks are MAGS (Roundhill Magnificent Seven ETF) and YMAG (YIELDMAX MAGNIFICENT 7 FUND OF OPTION INCOME ETFS), with MAGS having a larger asset size.

According to Roundhill’s website, MAGS consists solely of the Magnificent 7 stocks, with weights relatively balanced. As of May 28, 2024, NVIDIA has the highest weight at 16.48%, and Meta the lowest at 12.51%.

MAGS has significantly outperformed the S&P 500 index, indicating strong investor interest in the Magnificent 7.

Images provided are not current and any securities are shown for illustrative purposes only and is not a recommendation.

Investment Risks of the Magnificent 7

1. Volatility: Most of the Magnificent 7 are tech stocks, which typically exhibit high price volatility, with frequent large price swings.

2. Fundamentals: Although the Magnificent 7 stocks generally have stable earnings and cash flows, future performance is not guaranteed. Deteriorating fundamentals or declining operational capabilities could lead to significant stock price drops, as seen with Tesla.

Additional Disclosures: This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Furthermore, there is no guarantee that any statements, opinions or forecasts provided herein will prove to be correct.