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Zacks Earnings Trends Highlights: Meta, Nvidia, Oracle and Broadcom
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For Immediate Release
Chicago, IL – June 13, 2024 – Zacks Director of Research Sheraz Mian says, "Upward revisions to the Energy sector have been a big contributor to the favorable revisions trend since the start of Q2, but estimates have also moved higher for the Transportation, Tech, Autos, and Utilities sectors."
Where Is Earnings Growth Coming From?
Note: The following is an excerpt from this week’sEarnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
The setup for the Q2 earnings season, whose early reports have started trickling in, is one of continued resilience coupled with a steadily improving outlook. Given the favorable revisions trend ahead of the beginning of this reporting cycle, we will be looking for further improvement in the outlook.
For 2024 Q2, S&P 500 earnings are expected to be up +8.6% from the same period last year on +4.6% higher revenues. While Q2 estimates have ticked down in recent weeks, they are barely down from where they stood in the aggregate at the start of the period.
Upward revisions to the Energy sector have been a big contributor to the favorable revisions trend since the start of Q2, but estimates have also moved higher for the Transportation, Tech, Autos, and Utilities sectors.
Earnings growth for the Energy sector is on track to turn positive in Q2 after remaining in negative territory over the preceding four quarters.
Regular readers of our earnings commentary are familiar with our favorable take on the overall earnings picture. A big part of our positive view reflects developments on the revisions front, both for the current period (2024 Q2) as well as the remainder of the year.
As noted earlier, the current +8.6% earnings growth expected for the S&P 500 index is barely down from where the growth rate stood at the start of the period.
In addition to the Energy sector, Q2 estimates have increased for the Tech, Utilities, Transportation, and Autos sectors, helping partly offset negative cuts for the other sectors.
The revisions trend for the Tech sector has been positive for a while now, which is important since the sector alone is on track to bring in almost 30% of all S&P 500 earnings over the coming four-quarter period.
The 2024 Q2 quarter will be the fourth consecutive quarter of robust Tech sector earnings growth, with total earnings for the sector expected to be up +15.1% from the same period last year.
For full-year 2024, Tech sector earnings are expected to be up +17.1%, followed by another strong showing expected next year.
Some of the major Tech stocks that have led the market’s gains this year are also experiencing positive estimate revisions.
Take, for example, Meta Platforms (META - Free Report) - Research Report) and Nvidia Corp. (NVDA - Free Report) - Research Report) . The current $20.16 per share earnings estimate for META for this year is up from $17.64 at the start of the year and $14.92 on June 30th, 2023. The magnitude of positive revisions to NVDA’s estimates is in a league of its own.
We will be closely watching how the revisions trend for the space unfolds as the Q2 reporting cycle really gets going. The early results from the likes of Oracle (ORCL - Free Report) - Research Report) and Broadcom (AVGO - Free Report) - Research Report) suggest that we can expect continued favorable momentum here.
A big contributing factor to the Tech sector’s positive earnings outlook is the sector’s margins outlook.
We are already in record territory with Tech sector margins, with 2024 margins expected to exceed last year’s record level. The expectation is for some more gains next year and the year after, with the ever-growing share of higher-margin software and services in the overall Tech earnings pie explaining the favorable trend. Part of this likely also reflects optimism about the impact of AI on the sector’s productivity.
The Earnings Big Picture
Please note that this year’s +9.2% earnings growth on only +1.7% top-line gains reflects revenue weakness in the Finance sector. Excluding the Finance sector, the earnings growth pace remains unchanged, but the revenue growth rate improves to +4%. In other words, about half of this year’s earnings growth comes from revenue growth, with margin gains accounting for the rest.
On the margins front, 11 of the 16 Zacks sectors are expected to have higher margins in 2024 relative to last year, with Tech, Basic Materials, Medical, and Consumer Discretionary as the big gainers.
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Zacks Earnings Trends Highlights: Meta, Nvidia, Oracle and Broadcom
For Immediate Release
Chicago, IL – June 13, 2024 – Zacks Director of Research Sheraz Mian says, "Upward revisions to the Energy sector have been a big contributor to the favorable revisions trend since the start of Q2, but estimates have also moved higher for the Transportation, Tech, Autos, and Utilities sectors."
Where Is Earnings Growth Coming From?
Note: The following is an excerpt from this week’sEarnings Trends report. You can access the full report that contains detailed historical actual and estimates for the current and following periods, please click here>>>
Here are the key points:
Regular readers of our earnings commentary are familiar with our favorable take on the overall earnings picture. A big part of our positive view reflects developments on the revisions front, both for the current period (2024 Q2) as well as the remainder of the year.
As noted earlier, the current +8.6% earnings growth expected for the S&P 500 index is barely down from where the growth rate stood at the start of the period.
In addition to the Energy sector, Q2 estimates have increased for the Tech, Utilities, Transportation, and Autos sectors, helping partly offset negative cuts for the other sectors.
The revisions trend for the Tech sector has been positive for a while now, which is important since the sector alone is on track to bring in almost 30% of all S&P 500 earnings over the coming four-quarter period.
The 2024 Q2 quarter will be the fourth consecutive quarter of robust Tech sector earnings growth, with total earnings for the sector expected to be up +15.1% from the same period last year.
For full-year 2024, Tech sector earnings are expected to be up +17.1%, followed by another strong showing expected next year.
Some of the major Tech stocks that have led the market’s gains this year are also experiencing positive estimate revisions.
Take, for example, Meta Platforms (META - Free Report) - Research Report) and Nvidia Corp. (NVDA - Free Report) - Research Report) . The current $20.16 per share earnings estimate for META for this year is up from $17.64 at the start of the year and $14.92 on June 30th, 2023. The magnitude of positive revisions to NVDA’s estimates is in a league of its own.
We will be closely watching how the revisions trend for the space unfolds as the Q2 reporting cycle really gets going. The early results from the likes of Oracle (ORCL - Free Report) - Research Report) and Broadcom (AVGO - Free Report) - Research Report) suggest that we can expect continued favorable momentum here.
A big contributing factor to the Tech sector’s positive earnings outlook is the sector’s margins outlook.
We are already in record territory with Tech sector margins, with 2024 margins expected to exceed last year’s record level. The expectation is for some more gains next year and the year after, with the ever-growing share of higher-margin software and services in the overall Tech earnings pie explaining the favorable trend. Part of this likely also reflects optimism about the impact of AI on the sector’s productivity.
The Earnings Big Picture
Please note that this year’s +9.2% earnings growth on only +1.7% top-line gains reflects revenue weakness in the Finance sector. Excluding the Finance sector, the earnings growth pace remains unchanged, but the revenue growth rate improves to +4%. In other words, about half of this year’s earnings growth comes from revenue growth, with margin gains accounting for the rest.
On the margins front, 11 of the 16 Zacks sectors are expected to have higher margins in 2024 relative to last year, with Tech, Basic Materials, Medical, and Consumer Discretionary as the big gainers.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.