Magnificent 7 Stocks Earnings Beats Fuel Markets

Tom Gentile

Posted in
Big Picture

By: Tom Gentile
February 2nd, 2024

3 mins read

What comes to mind when you hear the term Big Tech or Major Tech Companies? Nowadays it is a group of stocks called the Magnificent 7 or Mag-7.

The Magnificent 7 Stocks
The Magnificent 7 Stocks

The S&P 500 is trading at or near all-time highs, even after recent comments from Fed Chair Powell saying he is uncertain if the Fed will perform their first rate cut in quite some time this coming March.

The market sold off that day from its highs only to reach and, at the time of this writing, reach new all-time highs today, February 02, 2024.

The cause or at least a major cause for this has to be attributed to the positive earnings reports coming from Big Tech or the Mag-7.

Mag-7 Earnings Info 

Meta Platforms, Inc. (META)

Beat on their eps projections, announced a $50 Billion, (with a B) buyback program and announced they’ll pay a dividend for the first time ever. The stock was up 21% after those announcements., Inc. (AMZN)

Exceeded eps expectations by reporting a $1.01 eps vs. $0.81. Revenue was reported at $169.96 billion vs. the estimate of $166.04 billion. They also saw a price target raised by an analyst from $170 to $215.

Apple, Inc. (AAPL)

Reported eps of $2.18 per share on revenue of $119.58 billion vs. expectations of $2.09 per share and revenue of $118.00 billion.

The same analyst who raised the price target for AMZN, Brian White from Monness, maintained the buy rating on Apple (AAPL) with a price target of $200.00. Robert W. Baird along with Brian White maintained his Buy rating and price target of $200.

Microsoft Corporation (MSFT)

They beat on eps and revenue estimates as well. Reported earnings came in at $2.93 per share on revenue of $62.02 billion vs. estimate of $2.76 per share on revenue of $61.03 billion.

They had a price target increase from $430 to $475.

Not all of the Mag-7 had earnings beats, as Alphabet, Inc. (GOOGL) and Tesla, Inc. (TSLA) missed.

NVIDIA Corporation

Due to report February 21, 2024, After market Close (AMC).

That puts the results at 4 of 6 Mag-7 stocks beating estimates with NVDA yet to report.

Magnificent 7 Stocks Impact on the Markets

While I am a strong believer is strength begets more strength when it comes to price momentum in the markets, I have to be concerned that the gains in the S&P 500 are predominantly due to the price performance of these 7 stocks.

Research I find from Goldman Sachs and others is the Magnificent Seven stocks have gained 71%.

Compare that to the other 493 stocks which have a combined performance gain of only 6%. When you look at the benchmark index’s market cap distribution (which allows larger stocks to contribute more to the index’s price movement), the S&P 500 has seen a gain of about 19% this year.

SPY 09-26-23 through 02-01-24
SPY 09-26-23 through 02-01-24

Options Offer Opportunity if Magnificent 7 Prices Too High

If the Mag-7 are priced outside of your comfort range, you have the opportunity to trade options on them.

Remember a Call option contract gives one the right, but not the obligation to buy a stock on or before a specific date at a specific price.

What my team and I love to do is buy an option (to open) at one price with the goal to later sell it (to close) at a higher price and pocketing the profit when we do. 

Tom Gentile
C1P: Chief 1-Percenter

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