The heaviest stretch of the fourth-quarter earnings storm hits this week, with 106 companies set to report results. But results from only five — all part of the gang of tech behemoths known as the Magnificent Seven — will play an oversized role in steering collective corporate profit growth into positive territory for the period.
The numbers explosion begins on Tuesday, with results from two of those seven, Microsoft Corp. MSFT, -0.23% and Google parent Alphabet Inc. GOOGL, +0.21% GOOG, +0.10%. It continues on Thursday, with three others: Online retail giant Amazon.com Inc. AMZN, +0.87%, Facebook parent Meta Platforms Inc. META, +0.24% and Apple Inc. AAPL, -0.90%. Among the remaining two, EV maker Tesla Inc. TSLA, +0.34% reported last week — with results and a forecast that disappointed investors — while chip maker Nvidia Corp. NVDA, -0.95% reports next month.
Six of the Magnificent Seven are expected to be the top six drivers of per-share profit growth for S&P 500 companies overall for the fourth quarter, according to a FactSet report released on Friday. Those six are Nvidia, Amazon, Meta, Alphabet, Apple and Microsoft, the firm said.
Taken together, the FactSet report said, those six were expected to report a jump in fourth-quarter earnings of 53.7%. Factor them out, and the equation for everyone else gets a lot worse.
“Excluding these six companies, the blended (combines actual and estimated results) earnings decline for the remaining 494 companies in the S&P 500 would be -10.5% for Q4 2023,” FactSet Senior Earnings Analyst John Butters said in the report.
The results from the five large tech companies this week will catch investors up on demand for AI — the potential for which launched their stocks higher last year. Markets will also get a fresh look at demand for digital ads, cloud services and e-commerce amid lingering concerns of regulations, more stringent tech budgets and prices that are still pretty high. For Apple, there are signs of slipping iPhone demand in China, amid increased competition.
For the seven companies altogether — and their shares — there are other questions.
Some analysts have suggested solid gains might lie elsewhere in the S&P 500, if the Federal Reserve cuts interest rates and thereby eases the pressure on smaller companies contending with more debt. Others have wondered how much higher can the Mag Seven have left to go, after an average 111% gain last year.
“The Mag Seven stocks were really the perfect antidote to what we saw in 2023, where there was a lot of economic uncertainty, but also rising rates,” Chris Marangi, co-CIO of value at Gabelli Funds, said in an interview earlier this month. “And where interest rates were rising, they were safe havens.”
He added: “Although there’s some variation in the Mag Seven, as a whole, they are more fully valued today than they were a year ago.”
This week in earnings
Among the other companies reporting this week are United Parcel Service Inc. UPS, -0.26%, as rival FedEx continues to deal with weak shipping demand. Video-game developer Electronic Arts Inc. EA, +0.35% also reports, following layoffs elsewhere in the industry. Results are also due from drug maker Pfizer Inc. PFE, , coffee chain Starbucks Corp. SBUX, +0.21% and appliance maker Whirlpool Corp. WHR, +1.48% are also due. Mastercard Inc. MA, +0.40% also reports, after concerns about U.S. buying trends this month sank rival Visa Inc. V, -1.71%.
The calls to put on your calendar
Boeing: David Calhoun, the chief executive of jet maker Boeing Co. said this month that the company needs to own its mistakes, after the Alaska Airlines in-flight blowout that grounded dozens of 737 Max 9 jets. Alaska Airlines’ CEO expressed anger. So did the FAA. United Airlines Holdings Inc. UAL, -0.95% backed away from some of its longer-term plans with Boeing. More questions about Boeing’s safety protocols and corporate culture — and, maybe, some answers — could emerge when Boeing reports results and holds its conference call on Wednesday.
JetBlue: Elsewhere in airline drama, JetBlue Airways Corp. JBLU, +3.56% reports results on Tuesday, as it confronts a possible future of flying solo after a federal judge blocked its merger deal with Spirit Airlines Inc. SAVE, -13.43%. While the carriers said they’ve appealed that ruling, JetBlue on Friday said the deal might have to be terminated on or after Jan. 28, an assessment Spirit disputed. Expect more commentary from executives, as JetBlue seeks ways to jumpstart growth and Spirit tries to patch up its finances.
The numbers to watch
General Motors sales, forecasts: Automaker General Motors Co. GM, +0.06% reports quarterly results on Tuesday. According to Barron’s, Wolfe Research recently upgraded the stock, citing potential gains for lower interest rates, which would make it easier to take out car loans. But the company reports amid a slowdown in electric-vehicle sales growth.