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With Q1 results from Apple (AAPL - Free Report) and Amazon (AMZN - Free Report) now out, we only have Nvidia’s (NVDA - Free Report) results still awaited at this stage of the ‘Magnificent 7’ group of companies. The sub-par growth numbers from Tesla (TSLA - Free Report) and Apple notwithstanding, the Mag 7 group as a whole showed impressive top- and bottom-line growth numbers.

In fact, had it not been for the substantial earnings contribution from the Mag 7, Q1 earnings growth for the rest of the S&P 500 index would be in negative territory.

It is interesting to note here that the market reaction to the Tesla and Apple releases has thus far been the best of the group. This may look odd since Tesla’s Q1 earnings were down -53.4% from the year-earlier level on -8.7% lower revenues, and Apple’s earnings and revenue growth rates were -2.2% and -4.3%, respectively. But it isn’t surprising as both companies’ results proved better than what market participants had feared. We also need to keep in mind the impact of Apple’s blockbuster buyback announcement, the largest ever in history.

Using estimates for Nvidia, which will be coming out with its March-quarter results on May 22^nd, and actual results for the other six members of the group, total Q1 earnings for the group are expected to be up +49% from the same period last year on +13.6% higher revenues.

The chart below shows the group’s Q1 earnings and revenue growth performance in the context of what we saw from the group in the preceding quarter and what is currently expected for the next three quarters.

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The chart below shows the group’s growth picture on an annual basis.

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The charts below show the aggregate earnings and revenues for the group on an annual basis.

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Please note that the Mag 7 companies currently account for 29.9% of the S&P 500 index’s total market capitalization and are expected to bring in 21.2% of the index’s total earnings in 2024. For 2024 Q1, the Mag 7 group is on track to bring in 22.1% of all S&P 500 earnings.

The chart below shows the group’s earnings contribution to the index over time and what is currently expected for the next two years.

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Given their enormous earnings power and growth profile, it is hard to argue with the group’s market leadership.

Beyond these mega-cap players, total Q1 earnings for the Technology sector as a whole are expected to be up +28.2% from the same period last year on +8.9% higher revenues.

The chart below shows the sector’s Q1 earnings and revenue growth expectations in the context of where growth has been in recent quarters and what is expected in the coming four periods.

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Earnings Season Scorecard and This Week’s Earnings Reports

We remain in the heart of the Q1 earnings season this week, with more than 1200 companies reporting results, including 54 S&P 500 members. This week’s notable reports include Disney, Uber, Lyft, Shopify, and others.

Through Friday, May 3^rd, we have seen Q1 results from 400 S&P 500 index members, or 80% of the index’s total membership. Total Q1 earnings for these 400 index members are up +4.4% from the same period last year on +4.2% higher revenues, with 78.3% beating EPS estimates and 61% beating revenue estimates.

The comparison charts below put the Q1 earnings and revenue growth rates in a historical context.

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The comparison charts below put the Q1 EPS and revenue beats percentages in a historical context.

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The Earnings Big Picture

Looking at Q1 as a whole, total S&P 500 earnings are expected to be up +5.3% from the same period last year on +4.3% higher revenues, which would follow the +6.8% earnings growth on +3.9% revenue gains in the preceding period.

The chart below shows current earnings and revenue growth expectations for 2024 Q1 in the context of where growth has been over the preceding four quarters and what is currently expected for the following three quarters.

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As you likely know already, the Tech and Energy sectors are having the opposite effects on the aggregate growth picture. Excluding the Tech sector, Q1 earnings for the rest of the index would be down -2.2%, while the growth pace improves to +8.3% on an ex-energy basis.

Looking at the overall earnings picture on an annual basis, total 2024 S&P 500 earnings are expected to be up +8.9% on +1.7% revenue growth.

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