S&P 500 Earnings Growth on Mag 7 Stocks

First-quarter earnings season heats up this week, with reports from the S&P 500 Magnificent Seven stocks the alphabet (Google), Meta platforms (dead), Microsoft (MSFT) And Tesla (TSLA). The success or failure of this quarter depends largely on those few companies.

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Analysts expect five of the seven companies in the Magnificent Seven to be the top five contributors to year-over-year earnings growth for the entire S&P 500 in the first quarter, according to John Butters, senior earnings analyst at FactSet.

In terms of shareholding, those companies are Nvidia (NVDA), Amazon.com (Amzn), Meta, Alphabet, and Microsoft platforms.

Additionally, in total, the Street sees these five companies reporting year-over-year earnings growth of 64.3% in the first quarter. That brings the S&P 500's blended first-quarter earnings growth rate to 0.5%, FactSet says.

However, if you exclude these results, the blended earnings decline (which combines actual and estimated results) for the remaining 495 companies in the S&P 500 would be -6% for the first quarter of 2024.

S&P 500 Tesla earnings decline

Tesla will report its earnings after the market closes today. Expectations call for a 42% decline in earnings per share to 49 cents per share on sales of $22.2 billion per share. IBD MarketSurge data.

Last week, Tesla announced plans to lay off more than 10% of its global workforce, with key executives leaving the company, and CEO Elon Musk said it was part of its next “growth phase.”

The layoffs came after Reuters reported on April 6 that Tesla had shifted focus from the $25,000 next-generation Model 2 in favor of prioritizing efforts on its robotaxi program. Following the report, Musk quickly announced that Tesla would unveil the robotaxi on August 8.

Tesla shares rose 1.8% midday Tuesday, snapping a seven-day losing streak. This week, the stock hit a 52-week low.

Alphabet, Meta, Microsoft Reporting

Alphabet, Meta, and Microsoft are scheduled to report later this week.

Meta will report on Wednesday. Analysts expect Meta to post sales of $36.14 billion, up 26% from the same period in 2023, according to FactSet. This would mark a fifth straight quarter of accelerating revenue growth. Earnings are expected to rise 95% to $4.32 per share.

The S&P 500's Meta stock rose 3.1% midday Tuesday, trying to reclaim its 50-day moving average.

Alphabet and Microsoft's earnings are scheduled for Thursday after the close.

Wall Street expects Google's earnings to rise 31% to $1.53 per share, while Dow Jones software giant Microsoft is expected to report earnings per share at $2.82, an increase of 15% year over year.

Alphabet shares rose 1.2%, still above the buy point at 153.78. Microsoft's S&P 500 stock rose 1.5% midday Tuesday, still trading below its 50-day line.

Be sure to follow Scott Lehtonen on X, formerly known as Twitter, at @IBD_SLehtonen To learn more about growth stocks, the S&P 500, and today's stock market.

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