The strong performance of large tech companies relative to the S&P 500 (^GSPC) is often attributed to the success of the Magnificent 7 stocks. But this time it's actually about three names.
Nvidia (NVDA), Meta (META), and Amazon (AMZN) significantly outperformed the S&P 500 (^GSPC) in early 2024. Nvidia led his trio, surging nearly 60% compared to his 6% rise in the benchmark index.
These three names also outperformed other artists in “The Magnificent 7.” Microsoft (MSFT) is up about 8% this year. Meanwhile, Apple (AAPL), Alphabet (GOOGL, GOOG), and Tesla (TSLA) lost value through about two months of trading in 2024.
Stock price movements are primarily based on earnings. In this fiscal year, Nvidia once again disappoints. Meta announced plans for a $50 billion stock repurchase program and its first dividend. Amazon, on the other hand, has seen a surprising turnaround in its revenue metrics.
Meta, Amazon and Nvidia saw the biggest increases in earnings estimates for this year and next year over the past 30 days when Wall Street analysts analyzed the latest corporate results for all seven major tech companies, according to DataTrek research. has become clear. co-founder Jessica Rabe;
Meanwhile, Tesla and Microsoft are the only two companies in the group whose earnings forecasts for next year are significantly lower than the S&P 500.
The quarterly results of these companies are likely to determine the direction of the entire market. Venu Krishna, head of U.S. equity strategy at Barclays, wrote on Tuesday that the 2024 earnings per share forecast for big tech companies has “significantly improved” and raised the lower bound for this year's S&P 500 total profit forecast.
As a result, the company raised its year-end target for the S&P 500 stock index from 4,800 to 5,300, partly due to high earnings expectations from high-tech companies. Goldman Sachs recently struck a similar tone in calling for the S&P 500 to end this year at 5,200.
“The superior earnings momentum of U.S. Big Tech companies compared to the S&P 500 as a whole goes a long way toward explaining why most companies have been able to continue to outperform. [more than one] “Even though interest rates have risen this year, the fundamentals of most Big Tech companies are much better than the overall U.S. stock market,” DataTrek co-founder Jessica Raab said in a note to clients Monday night. .
“As long as they continue to deliver results similar to last quarter, most of these stocks should continue to outperform and push the S&P higher.”
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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