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Goldman Sachs says the sobriquet Magnificent 7 needs to be retired following first-quarter results.
“In aggregate, profits for (AAPL), (AMZN), (GOOGL), (META), (MSFT), (NVDA), and (TSLA) grew by 48% year/year led by sales growth (+14%) and margin expansion of 521 bp (to 22.8%),” strategist David Kostin wrote in a note. “But the combined results masks wide dispersion.”
“Sales growth for META (+27%), GOOGL (+15%), and AMZN (+13%) beat expectations and powered YTD share price gains of 34%, 25%, and 21%, respectively,” Kostin said. “NVDA reports results (this) week; the share price has soared nearly 91% YTD in anticipation the company will post 1Q sales of $25 billion, per consensus (+241% vs. last year).”
“In contrast, AAPL sales fell by 4% and TSLA revenues dropped by 9% and their stock prices have fallen by 1% and 30%, respectively. TSLA now ranks as the 12th largest stock in the S&P 500 index (NYSEARCA:SPY) (IVV) (VOO).”
“Revisions to consensus 2024 EPS estimates have been better than usual due to upward guidance from the largest firms,” Kostin added. “Bottom-up consensus since 1985 has cut annual EPS by a median of 4% each year.”
“Analysts YTD have lowered 2024 EPS estimates for the S&P 493 by 2% but lifted estimates for the Magnificent 7 by 8%, so the aggregate 2024 S&P 500 EPS forecast has been flat.”
