4 stocks whose earnings will rock markets this week
It's been a big week for markets. Donald Trump was sworn in as President for a second term, promising economic and market growth, deportations and tariffs.
Once markets reopened after the Martin Luther King holiday, the result was a solid one for stocks. The S&P 500 added 1.7% for the week. The Nasdaq Composite Index rose 1.65%, and the Dow Jones Industrial Average jumped 2.2%.
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January is turning into a strong month. The Dow, up 4.4% going into the last week of trading, is off to its best start since 2019. The S&P 500 and Nasdaq, with gains of 3.7% and 3.3% in January, respectively, are enjoying their best starts since 2023.
Part of the gains are due to the Trump rally. Measured from the Nov. 5 election, the S&P 500 is up 5.5%. The Nasdaq has jumped 8.2%, and the Dow has risen 5.2%. The Nasdaq-100 Index, which includes all of the big technology stocks and a lot of growthy stocks, is up 7.7%.The week ahead brings us one of the most important weeks of any earnings season. A total of 349 companies are due to report quarterly reports.
What sets the week apart is who's reporting.
It includes a bevy of giant tech stocks, including four of the seven Magnificent 7 companies — Apple () , Meta Platforms () , Microsoft () and Tesla () .
They are joined by such giants as AT&T () , Boeing () , Starbucks SBUX, money manager Blackstone () , personal finance giant () , Caterpillar () and Sherwin Williams () .Toward the end of the week, the energy sector of the S&P 500 starts to weigh in, starting with Shell () and Baker Hughes () on Thursday and, on Friday, the giants: Exxon Mobil () and Chevron () .
Around the first four companies are a host of questions, all different, that investors might consider:
Apple's economic power is built on the overwhelming success of the iPhone since its introduction in 2007. So, slowing sales may be a surprise to some. The shares, however, are down 11% since Dec. 31 after jumping 30.1% in 2024. The iPhone 16 is a concern because it has not been the huge success Apple and its investors expected.Other issues are slow sales in China and problems getting enough artificial intelligence features into the iPhone. Much of that may be fixed when the iPhone 17 comes out. It's due in September. One other challenge for all cell-phone companies: Mobile telephony is getting to be a mature market.
The rap on Apple right now is that it isn't innovating enough. There is no gotta-have product coming right now.
But its elements, starting with a $3.35-trillion market cap, the strength of the iPhone franchise and its Apple store, give the company so much power and time to fix problems, that no analyst dares to rate it a sell.
The consensus on Apple earnings is $2.34 a share, up from $2.18 a share. The revenue estimate is $124 billion, up 3.7% from a year ago.
The stock of the Facebook parent is up 10.6% this year after a 65% gain in 2024. CEO Mark Zuckerberg has become friendly with the Trump Administration, but the company never seems to make critics happy.On the other hand, the company has a market cap of $1.64 trillion. The ad business is very strong, and Meta employs artificial intelligence to deliver ads of interest to increasingly specific groups of users.
There are some risks: Reliance on advertising is a big one. Another is big: How much further can it grow its audience.
Meta's fourth-quarter earnings estimates are $7.29 a share on revenue of $47 billion. If this were the case, earnings would be up 26.6%, and revenue would jump 17.1%.
Microsoft shares have been a bit of a laggard, partly because of its huge bet on artificial intelligence. They were up nearly 57% in 2023 as the AI frenzy took off. But they were up 12.1% in 2024. So far, in January, the stock has been up 5.35%.Investors have been a bit nervous seeing the company spend $80 billion a quarter to build out AI. But 52 of 57 analysts who cover the stock rate it a buy or strong buy. Only five say it's a hold. The market cap is $3.3 trillion.
But the company believes all will be visible when it reports earnings on Wednesday. Earnings for the fiscal second quarter are estimated at $3.11 a share, up from $2.93 a year ago. Revenue is expected to jump 11% to $68.8 billion.
Look for continued profits from its Microsoft Office products. A major portion of revenue comes from customers simply renewing their licenses.
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Tesla shares are down 4.7% in January after a 62% gain in 2024. The annual return came after the shares fell more than 56% in the first quarter of 2024 because of worries Tesla's sales were falling.
The consensus estimate for fourth-quarter earnings is 77 cents a share, up 8.4% from a year ago. Revenue of $27.1 billion would be up 7.8%.
A challenge for the company is its inability to come up with a moderately priced vehicle for the U.S. market. While Tesla has intense fans, they are mostly moderate to affluent buyers.At the same time, CEO Elon Musk hates his company being called a car company. He believes Tesla is really an artificial intelligence company. One reason: every Tesla vehicle communicates where and how it is is being driven, Tesla collects all that data to improve vehicles and driving experience and improve the software that drives them.
There is hope the company will introduce a sport utility vehicle this year. And Musk is promising to bring a Robo Taxi to market perhaps this year.
The solar battery business is, apparently, solid.
One question that may get asked in the earnings call is how Musk can do two full-time jobs at once: running Tesla and working with the Trump Administration to cut federal spending.
Note: The three remaining Mag 7 stocks are Google-parent Alphabet () and Amazon.com () , due Feb. 6, and Nvidia () , due Feb. 26.
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