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On Thursday, two major companies, Netflix (Nasdaq: NFLX) and Taiwan Semiconductor (Nasdaq: TSM), will release their Q2 earnings, each dominant in its own sector. American Express (NYSE: AXP) will follow up the next day.

While Netflix is leaning more toward a growth stock, TSM and AXP are reputable blue-chip stocks. What can existing shareholders of these companies expect, and should new prospective investors buy their exposure based on past performance and forecasts?

Netflix (Nasdaq: NFLX)

When the streaming platform announced in April that they would no longer report subscriber figures from 2025 onward, investors took it as a negative sign pointing to a growth plateau. As of Q2 2024, Netflix shares subscription video-on-demand (SVOD) market share with Amazon Prime Video, at 22%, according to Statista.

For comparison, Disney+ holds half its market position, at only 11%, but it is still above Apple TV+’s share of 9%. As streaming services have become virtually ubiquitous in US households, Netflix has 269.6 million subscribers as of Q1, which is 16% more than in the year-ago quarter of Q1 2023.

This strong position delivered 15% revenue growth year-over-year in Q1, delivering a net income of $2.3 billion compared to $0.93 billion in the prior quarter. From an investing expectation standpoint, Netflix managed to beat the forecasted $4.49 at $5.28 in earnings per share (EPS). 

Moreover, the company’s forecast for Q2 at lowered $2 billion net income at $4.68 EPS slightly declined the NFLX stock at the time. To go up, Netflix will have to beat the forecast of $4.74 EPS. Year-to-date NFLX shares are up 41%, while taking a -1.15% dip in the last 30 days, having experienced a 2% rally this Monday.

Although Nasdaq’s forecasting data, based on 42 analysts, points to the average NFLX price target of $672.64 twelve months ahead, investors should still consider the effect of the company’s first mover advantage. While it succeeded in penetrating US households, Netflix’s growth now largely relies on international growth and price tweaks. 

Netflix competitors will likely aim for a more significant market share with cheaper packages, and if the company fails to churn out a sufficient number of hits, Netflix’s growth plateau will come sooner than later. After all, the company suggested it with the announcement to stop reporting subscriber figures.

Taiwan Semiconductor Manufacturing Company (Nasdaq: TSM)

As the world’s largest chip foundry that fabless companies like Apple (Nasdaq: AAPL), Nvidia (Nasdaq: NVDA) and AMD (Nasdaq: AMD) rely upon, TSMC has been the beneficiary of the AI narrative. Year-to-date, TSM stock is up 84% with no signs of letting up. However, due to being located in Taiwan, the US-China tensions have had a suppressive effect on the TSM stock. 

In April’s Q1 earnings, TSMC beat an estimate of $1.29 per Zacks Consensus, at earnings per ADR of $1.38. The company generated $6.9 billion net income, a nearly 9% improvement over the year-ago quarter. Given that the demand for AI and integrated chipboards are expected to rise, the same is true of TSMC’s outlook.

The company’s monthly revenue report for June, showed 28% YoY increase to $6.4 billion. The current TSMC EPS forecast is $1.41. Having beaten eight consecutive EPS forecasts, another one is likely. Not only does TSMC supply the AI and consumer electronics sector but the EV market as well, making it one of the top next-$1 trillion market cap candidates.

Over one year, however, TSMC’s EPS is down 11.66%. This is a reminder that TSMC is a cyclical company riding on consumer downturns and inventory restocking. In turn, the latter depends on the health of the entire economy. Nasdaq’s average price target of $184.3 reflects this outlook from the present price of $186.47 per share. The stock’s 52-week average is $119.37, while the 52-high is $193.47 per share. 

American Express Company (Nasdaq: AXP)

Although taking a much smaller piece of the payment processing pie, compared to Visa (NYSE: V) or Mastercard (NYSE: MA), American Express fine-tuned its closed-loop business model. Being both the card issuer and network owner makes the company exert greater control of transactions and incentives.

In addition to merchant discount fees and interest on unpaid card balances, much of the company’s revenue comes from annual fees for exclusive perks catered to premium cardholders. In Q1 earnings, American Express delivered an impressive 34% YoY net income increase to $2.4 billion.

With a 39% YoY increase in EPS of $3.33 in Q1, the company is now expected to deliver $3.23 EPS in Q2. However, if recessionary forces materialize sooner, as the surge in credit card delinquencies suggests, American Express could miss the target, leaving AXP to underperform.

From the present price of $243.19, Nasdaq’s aggregated forecasting data positions AXP average price target at $239.82 with the ceiling of $285 per share. The stock’s 52-week average price is $193.09, having gone up 29% this year.

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