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Big Tech’s strong performance relative to the S&P 500 (^GSPC) can often be attributed to the success of the “Magnificent Seven” stocks. But this time it’s actually about three names.
Nvidia (NVDA), Meta (META), and Amazon (AMZN) significantly outperformed the S&P 500 in early 2024. Nvidia led his trio, surging nearly 60% compared to his 6% rise in the benchmark index.
These three names also outperform other artists in The Magnificent Seven. Microsoft (MSFT) is up about 8% this year. Meanwhile, Apple (AAPL), Alphabet (GOOGL, GOOG), and Tesla (TSLA) lost value through roughly 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.
DataTrek research shows that over the past 30 days, when Wall Street analysts have analyzed the latest corporate results for all seven Big Tech companies, Meta, Amazon and Nvidia have the biggest increases in earnings estimates for this year and next. It is said that Co-founder Jessica Rabe.
Meanwhile, Tesla and Microsoft were the only two companies in the group whose earnings forecasts for next year were 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 Big Tech’s 2024 earnings per share forecast has “significantly improved” and raised the lower bound on earnings expectations for the entire S&P 500 this year.
As a result, the company raised its year-end S&P 500 target from 4,800 to 5,300, citing Big Tech’s earnings expectations. 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 broader U.S. stock market,” Raab wrote 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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