The "Magnificent 7" of Nasdaq, including Tesla (NASDAQ:TSLA), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), and Nvidia (NASDAQ:NVDA), have initiated their Q3 earnings season. Despite Tesla's disappointing results causing a 10% stock drop, the remaining six tech giants show promise despite macroeconomic concerns like rising bond yields, inflation fears, and the Israel-Hamas war's oil price impact.
Today, investors' attention is focused on mega-cap tech companies during this earnings season. Last week's initiation by Tesla has set the stage for the Big 5 - Apple, Microsoft, Alphabet (Google's parent company), Amazon, and Nvidia. These firms constitute about a quarter of the S&P 500's market cap and could significantly influence the broader market with their results.
A strong performance and substantial year-over-year increases are expected to counter any earnings downturn in other sectors. Without these tech giants, average S&P 500 firms' earnings would drop by 5%. Meta Platforms will report this week, followed by Apple and Nvidia in November.
Key areas of focus include Google's Search and YouTube growth, Meta's user base expansion and new offerings, Microsoft's Personal Computing sector performance, and Amazon's cloud computing leadership. AI investment, R&D, and IT spending will be central to earnings calls.
Factors such as Netflix (NASDAQ:NFLX)'s successful earnings report indicating sustained consumer spending on streaming services are favoring Amazon (Prime Video), Alphabet (YouTube), and Apple (popular shows). The upcoming holiday season is expected to boost Amazon's Q3 earnings, which are anticipated to double from last year.
The AI boom could enhance Meta's ad relevance on Instagram and Reels platforms and Nvidia's Q3 growth, contributing to the S&P 500 profit growth. Apple could benefit from iPhone 15 sales while Microsoft may gain from Xbox console sales. Stakeholders in Rivian (NASDAQ:RIVN) (Amazon) and Waymo (Alphabet) could also see gains.
The Wall Street Breakfast Survey is assessing investors' top holdings among the 'Magnificent 7' stocks. For broader Big Tech exposure, investors might consider MicroSectors FANG+ ETN and Invesco S&P 500 Top 50 ETF.
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