The real excitement of earnings season is yet to begin. It kicks off on Wednesday, featuring tech giants that have been the driving force behind the S&P 500 this year. Tesla and Netflix lead the way, followed by Alphabet, Microsoft, Meta Platforms, Amazon.com, and Apple. Nvidia’s results will be unveiled in late November.
Known as the “Magnificent Eight,” these tech giants may be smaller in terms of market capitalization, contributing just 10% of the S&P 500’s third-quarter sales and 16% of earnings. Yet, their premium valuations give them substantial influence.
For instance, Meta is expected to report $8.0 billion in third-quarter earnings, a 120% increase from the same period last year. This alone significantly impacts the S&P 500’s expected earnings growth for the quarter.
Nvidia is another significant player, contributing 1.5 percentage points to the expected growth, with Amazon, Alphabet, and Microsoft each adding 0.5 to 0.6 percentage points. The performance of these tech giants can sway the overall earnings growth of the S&P 500.
Also Read: Tesla Soars as Analyst Forecasts $600 Billion Surge in Value with Dojo Supercomputer
Amid a year dominated by macroeconomic trends, the fervor surrounding artificial intelligence (AI) stands out as a prominent bullish driver of the stock market. Nvidia’s results are already demonstrating the benefits of AI, while other tech giants are likely to emphasize the technology’s transformative potential.
With artificial intelligence being a driving theme this year, the performance of tech giants is eagerly awaited. They need to demonstrate the returns on their AI investments. As the third quarter progresses, these signs of progress will be closely monitored, potentially impacting the strong rallies of the “Magnificent Eight.”
Although the third-quarter earnings season has officially commenced, the real excitement is yet to unfold as Big Tech prepares to take center stage.
