Big Tech has been the main driver of this year’s rally, and some of these stocks have shown their mettle by continuing to outperform during the market’s recent rough patch.On Wednesday, DataTrek co-founder Jessica Rabe took a look at the so-called Magnificent Seven big tech firms— Apple , Amazon.com , Google parent Alphabet , Facebook parent Meta Platforms , Microsoft , Nvidia , and Tesla .
Looking at consensus estimates for the group shows that every company except Tesla has seen analysts lift earnings estimates for the current third quarter, the current year, and 2024. Moreover, Amazon, Meta, and Nvidia have seen earnings estimates jump by double-digit percentages. Those increasingly optimistic expectations help to explain why Alphabet, Amazon, Meta, and Nvidia shares have all outperformed the S&P 500’s 0.8% rise over the past three months, Rabe highlights. The fact that Apple and Microsoft lagged could reflect the fact that while analysts are confident about the third quarter, 2023, and 2024, they lowered their fourth-quarter earnings-per-share estimates for those two companies, clouding the profit picture.
Newsletter Sign-up However Rabe notes that her firm believes “the company is more of a call option on the disruptive innovation of autonomous vehicles than a straightforward equity to be valued only by discounting future cash flows. Tesla’s profitability is therefore not as important as it is for the company to keep its strong market share in electric vehicles and make it to the personal transportation/AV ‘finish line.