The 2024 Q2 earnings season is in full swing, with a forthcoming week packed with well-known companies set to report. The general sentiment around earnings has been fairly positive, with major banks not causing any ripples so far.
Looking ahead to next week’s lineup, several prominent members of the Mag 7, including Meta Platforms META, Amazon AMZN, and Apple AAPL, are on deck. These three stocks have been standout performers in 2024, prompting many to question if their bullish momentum can be sustained.
Let’s delve deeper into how these companies are positioned as they gear up for their earnings releases.
Apple Focuses on China Sales Dynamics
Apple shares faced scrutiny earlier in 2024 due to a slow start but have shown impressive growth recently, with a 14% increase year-to-date. Concerns about performance in China and AI competitiveness had weighed on the stock, though these apprehensions seem to have subsided, at least for now.
With a Zacks Rank #2 (Buy), earnings estimates for the upcoming period have been trending upwards over recent months. The expected $1.34 per share points to a 6% jump from the same period last year, with sales also anticipated to rise by 2.7% year-over-year.
The company faced challenges in China during the previous period, but overall, sales aligned more closely with expectations compared to earlier quarters. Additionally, positive news on iPhone shipments in China has emerged recently, alleviating some concerns. Investors will keep a close eye on Apple’s Services segment, which has been a consistent growth driver and reduced the reliance on iPhone sales.
Amazon’s AWS Performance Takes the Stage
Amazon’s latest period was a showcase of strength, with operating income surging 220% year-over-year to $15.3 billion. Notably, AWS displayed robust performance, with net sales of $25 billion depicting a 17% annual growth rate, breaking a trend of recent underwhelming results in that area.
While expectations for earnings and revenue in the upcoming release have been relatively subdued, substantial growth is anticipated, with an expected 63% increase in EPS on 10% higher sales. Improved cost management and operational efficiencies have significantly boosted profitability, leading to meaningful margin expansion.
Meta Platforms’ Capital Expenditure Under the Magnifying Glass
META’s enhanced operational efficiencies have propelled its profitability, resulting in significant EPS growth over the past few quarters. Investors will be eager for insights on CapEx trends related to AI, following a similar focus in Alphabet’s recent quarterly report.
Earnings estimates for the upcoming release have seen an upward trend, with the expected $4.69 per share indicating a 45% year-over-year growth. Key metrics, specifically Advertising revenue, are projected to reach $37.5 billion, marking a 20% increase from the prior year.
After META’s stock took a hit post its last quarterly results due to a higher CapEx guidance for the current fiscal year, investors will be closely monitoring any further developments, especially given the caution raised by Alphabet’s elevated CapEx.
Summing Up
The 2024 Q2 earnings season is moving forward with a jam-packed week of reports. Expectations are high for another positive period, largely fueled by the Tech sector’s continued strong performance.
Several Mag 7 members, including Meta Platforms META, Amazon AMZN, and Apple AAPL, will unveil their results this week, attracting significant scrutiny due to their standout performance in 2024. This upcoming week might prove to be the highlight of the Q2 earnings cycle.