Netflix stunned; Tesla shocked. Now it's Alphabet, Amazon, Apple, Meta, and Microsoft's turn to perform for investors as the US earnings season reaches its climax in the next five days.
Apple, Meta, and Amazon are set to report on February 1, while Microsoft is scheduled for January 30, along with Alphabet.
These mega-caps have the opportunity to reinvigorate the fourth-quarter reporting season.
Currently, it's wavering, as observed by US financial data group FactSet last Friday:
"At this stage of the fourth-quarter earnings season, the overall performance of the S&P 500 continues to be subpar. The percentage of S&P 500 companies reporting positive earnings surprises is below average, while companies are reporting actual earnings that are below estimates in aggregate."
While not part of the Magnificent Seven tech giants, Netflix exceeded all expectations, with its 4th quarter and full-year figures causing shares to surge by 12% on Wednesday and nearly 17% for the week.
In contrast, Tesla shares faced an anticipated weak result for the quarter and year, coupled with a surprise warning about slowing sales growth for 2024. This led to a 12% drop on Thursday and more than 13% for the week, prompting some analysts to question its place among the Magnificent Seven.
Tesla shares have now fallen by over 26% for the year, with much of the blame attributed to founder Elon Musk's erratic behavior.
The price cuts for the company's EVs can be justified, but not his demands for billions of dollars worth of shares and his attempt to raise $US6 billion for his AI ambitions, independent of Tesla.
Just as Tesla faces a challenging year and the launch of the long-rumored 'affordable' Tesla, Musk is juggling multiple ventures, from Twitter (X), his rocket company, and his boring company, to a foray into AI. No wonder some investors have abandoned the stock this year.
But this week, the quintet of giants will face their test. Investors applauded the cost-cutting measures they implemented last year in response to rising inflation, interest rate hikes, recession concerns, and the lingering market downturn from 2022.
Layoffs reached their peak in January of last year when 277 technology companies cut nearly 90,000 jobs, as the tech industry grappled with cautious consumers, business challenges, and the rapid shift to AI.
Tech companies accelerated their cuts in the final two months of last year, with more than 23,600 layoffs reported in 85 tech companies this month, the most since March when almost 38,000 people in the industry were laid off.
Many of this month's layoffs have occurred at Amazon, primarily affecting its Prime business.
Nvidia, the final member of the Magnificent Seven, won't report until February 21, but investors anticipate it will stand out again, with its shares rising over 26% in the first 28 days of the year.
Alphabet shares reached a new high on Thursday, as did Meta (regaining a $US1 trillion market value) and Microsoft, which ended the week at $US3 trillion in market value, just ahead of Apple at $US2.8 trillion.
Other companies due to report this week include chip groups Qualcomm, Samsung, and AMD, following Intel's weak outlook that surprised analysts and caused a more than 10% drop in its value last week.
Three oil majors, Exxon Mobil, Chevron, and Shell, release figures this week. Hess Corp, a smaller US group being bid for by Chevron, will also update the market.
Boeing will be closely watched to see if the troubled airline company is impacted by issues surrounding its 737 MAX 9 aircraft.
Another concerning industrial player is carmaker GM, with some analysts anticipating write-downs in the value of its EV businesses and its Cruise automated drive vehicle, currently under government investigation.
Additional companies reporting this week include Nomura, Marubeni, Mitsui, H&M, Mondelez, Novartis, Merck, GSK, Pfizer, Honeywell, US Steel, Nucor, Starbucks, BNP, Diageo, Ryanair, Caterpillar, and Mastercard.
