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Tesla, Alphabet Kick Off Magnificent Seven Earnings in Mixed Fashion
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There’s no doubt that members of the “Magnificent 7” have enjoyed a stellar move in 2024. Even EV giant Tesla has joined the fray, today’s post-earnings reaction notwithstanding.
It’s also clear that stocks are expanding on last year’s start to this new bull market. Tech stocks have led the majority of the way, with big tech garnering the top spot in terms of returns.
The Nasdaq 100 index, which is comprised of the most innovative, non-financial companies based on market capitalization, officially bottomed out back in December of 2022. The index has surged 85% since then; we can see how the Mag 7 fared over the same time period:
Image Source: Zacks Investment Research
All eyes remain on these dominant players as the group has begun to report their second-quarter earnings figures, with Google-parent Alphabet and AI-leader Tesla kicking things off.
Alphabet, Tesla Shares Slide Amid Q2 Results
Heading into the week, the Mag 7 group was expected to deliver 25.6% earnings growth year-over-year on 13.3% higher revenues. These companies have led a favorable revisions trend over the past few months, with estimates rising leading into the actual results.
The group is off to a bit of a rocky start. After the bell yesterday, Tesla (TSLA - Free Report) missed on the bottom line. Second-quarter earnings fell 43% to 52 cents per share relative to the year-ago period. The figure represented a 16.1% miss versus the $0.62/share consensus estimate from analysts covering the company. Free cash flow and operating income measures also came in light.
On a brighter note, quarterly revenues of $25.5 billion rose 2% versus the year-earlier quarter and came in ahead of estimates.
CEO Elon Musk continued to tout Tesla’s Full Self-Driving (FSD) capabilities and remains optimistic about the company’s upcoming Robotaxi launch. Musk also said that lower-cost vehicle models are likely to begin production in the first half of next year.
Tesla stock was off by more than 12% in early trading on Wednesday, setting the stage for its worst day since January:
Image Source: StockCharts
Meanwhile, Alphabet (GOOGL - Free Report) delivered a beat on both the top and bottom lines. Earnings of $1.89/share surged 31% from a year earlier, whereas gross revenues rose 14% to $84.74 billion. But while cloud computing revenue was strong, YouTube ad revenue, network revenue and services revenue all disappointed.
Stock buybacks for the internet search giant reached $15.68 billion during the second quarter, topping the $14.97 billion that was expended in Q1. The stock has also benefitted this year from ongoing advancements in generative AI, with Alphabet devoting significant resources to its Gemini language model.
Despite an overall solid report, it wasn’t enough to match high expectations. GOOGL shares slid nearly 4% in the early going on Tuesday, slicing below the 50-day moving average:
Image Source: StockCharts
Final Thoughts
Markets rallied sharply heading into the Q2 earnings season, and it’s not all that surprising to encounter some volatility as the numbers roll in. The Nasdaq is down about 6% since July 10th, so it looks like we’re seeing that play out now.
But let’s also remember that the month of August tends to hold up well in election years, and this may just be some overdue selling pressure amid early season jitters.
The remaining Mag 7 members will report their Q2 results next week with the exception of Nvidia, which is slated to deliver its results in late August.
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Tesla, Alphabet Kick Off Magnificent Seven Earnings in Mixed Fashion
There’s no doubt that members of the “Magnificent 7” have enjoyed a stellar move in 2024. Even EV giant Tesla has joined the fray, today’s post-earnings reaction notwithstanding.
It’s also clear that stocks are expanding on last year’s start to this new bull market. Tech stocks have led the majority of the way, with big tech garnering the top spot in terms of returns.
The Nasdaq 100 index, which is comprised of the most innovative, non-financial companies based on market capitalization, officially bottomed out back in December of 2022. The index has surged 85% since then; we can see how the Mag 7 fared over the same time period:
Image Source: Zacks Investment Research
All eyes remain on these dominant players as the group has begun to report their second-quarter earnings figures, with Google-parent Alphabet and AI-leader Tesla kicking things off.
Alphabet, Tesla Shares Slide Amid Q2 Results
Heading into the week, the Mag 7 group was expected to deliver 25.6% earnings growth year-over-year on 13.3% higher revenues. These companies have led a favorable revisions trend over the past few months, with estimates rising leading into the actual results.
The group is off to a bit of a rocky start. After the bell yesterday, Tesla (TSLA - Free Report) missed on the bottom line. Second-quarter earnings fell 43% to 52 cents per share relative to the year-ago period. The figure represented a 16.1% miss versus the $0.62/share consensus estimate from analysts covering the company. Free cash flow and operating income measures also came in light.
On a brighter note, quarterly revenues of $25.5 billion rose 2% versus the year-earlier quarter and came in ahead of estimates.
CEO Elon Musk continued to tout Tesla’s Full Self-Driving (FSD) capabilities and remains optimistic about the company’s upcoming Robotaxi launch. Musk also said that lower-cost vehicle models are likely to begin production in the first half of next year.
Tesla stock was off by more than 12% in early trading on Wednesday, setting the stage for its worst day since January:
Image Source: StockCharts
Meanwhile, Alphabet (GOOGL - Free Report) delivered a beat on both the top and bottom lines. Earnings of $1.89/share surged 31% from a year earlier, whereas gross revenues rose 14% to $84.74 billion. But while cloud computing revenue was strong, YouTube ad revenue, network revenue and services revenue all disappointed.
Stock buybacks for the internet search giant reached $15.68 billion during the second quarter, topping the $14.97 billion that was expended in Q1. The stock has also benefitted this year from ongoing advancements in generative AI, with Alphabet devoting significant resources to its Gemini language model.
Despite an overall solid report, it wasn’t enough to match high expectations. GOOGL shares slid nearly 4% in the early going on Tuesday, slicing below the 50-day moving average:
Image Source: StockCharts
Final Thoughts
Markets rallied sharply heading into the Q2 earnings season, and it’s not all that surprising to encounter some volatility as the numbers roll in. The Nasdaq is down about 6% since July 10th, so it looks like we’re seeing that play out now.
But let’s also remember that the month of August tends to hold up well in election years, and this may just be some overdue selling pressure amid early season jitters.
The remaining Mag 7 members will report their Q2 results next week with the exception of Nvidia, which is slated to deliver its results in late August.