Latest news with #Mag7
Globe and Mail
2 days ago
- Business
- Globe and Mail
Will Cloud Results Boost Microsoft Earnings?
The 2025 Q2 earnings season picks up considerable steam this week, with a wide variety of S&P 500 companies reporting results. Headlining the docket are several Mag 7 members, a list that includes Microsoft MSFT. A peer, Alphabet GOOGL, already revealed its quarterly results, whose Cloud performance was largely positive and pleased the market. Given Microsoft's reliance on cloud performance, let's take a closer look at what to expect from the fellow tech titan. Alphabet Impresses Alphabet's results were largely positive, with Google Cloud revenue soaring 32% year-over-year to $13.6 billion. The growth rate reflected a nice acceleration, with operating income in the segment also more than doubling YoY. Below is a chart illustrating the company's sales on a quarterly basis. Notably, GOOGL upped its capital expenditures (CapEx) guidance for its current fiscal year to $85 billion, up $10 billion from the prior mark. The increased spend remains aimed toward the data center and broader AI infrastructure buildout, a theme we'll likely see discussed in MSFT's and AMZN's upcoming releases too. Up 1.5% YTD, Alphabet shares have lagged the S&P 500 but nonetheless saw a nice charge higher following the latest release. Microsoft Earnings Loom EPS and sales expectations for MSFT's upcoming release have largely remained unchanged, with the titan expected to see 14% EPS growth on 14% higher sales. While revisions haven't budged much, the stability here in the revisions trends is still a positive takeaway, with the YoY growth rates also remaining sizable. Below is a chart illustrating the company's sales on a quarterly basis. Microsoft Cloud and AI strength drove its latest set of strong results, with Microsoft Cloud revenue soaring 20% year-over-year to $42.4 billion. Demand has remained strong for the tech titan, with commentary alluding to the trend remaining for years to come. Importantly, its Intelligent Cloud (includes Azure) revenue totaled a strong $26.8 billion, up 21% from the year-ago period. For the period to be reported, the Zacks Consensus estimate for Intelligent Cloud revenue stands at $28.9 billion. Putting Everything Together The 2025 Q2 earnings season picks up notable steam this week, with several Mag 7 members on the docket. Microsoft MSFT is among the bunch, whose cloud results and capex commentary will be watched intently. A peer, Alphabet GOOGL, already delivered its quarterly results, with its cloud performance largely positive and providing decent read-throughs of what to expect from MSFT. Alphabet also upped its capex guidance, suggesting that MSFT might just do the same given the current AI frenzy. Higher. Faster. Sooner. Buy These Stocks Now A small number of stocks are primed for a breakout, and you have a chance to get in before they take off. At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We've combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month. You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days. Download the report free now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Microsoft Corporation (MSFT): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report
Globe and Mail
2 days ago
- Business
- Globe and Mail
The Zacks Analyst Blog Highlights Microsoft, Meta Platforms, Apple, Amazon, MAGS, FNGS and TOPT
For Immediate Release Chicago, IL – July 29, 2025 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Microsoft MSFT, Meta Platforms META, Apple AAPL, Amazon AMZN, Roundhill Magnificent Seven ETF MAGS, MicroSectors FANG+ ETN FNGS and iShares Top 20 U.S. Stocks ETF TOPT. Here are highlights from Monday's Analyst Blog: Big Tech Earnings Coming Up: Spotlight on Mag 7 ETFs The second-quarter earnings season has turned into high gear, and the so-called "Magnificent 7" companies are in focus. Four of the "Magnificent 7" members — Microsoft, Meta Platforms, Apple and Amazon — are slated to report this week, accounting for almost a third of the S&P 500 members. The second-quarter earnings of the "Mag 7" companies are expected to be up 14% from the same period last year on 11.9% higher revenues. These expectations are a blend of actual results from Alphabet and Tesla and estimates for the remaining five, of which four are on deck to report this week. Microsoft and Meta Platforms will report after market close on July 30, while Apple and Amazon will report on July 31. NVIDIA is likely to report later next month. The whole group has led the market's rebound from the April lows to new all-time highs. Only Apple is the laggard, as the company has not yet reaped the benefits of AI. Other members of the "Magnificent 7" are leaders in the AI space and are actively investing in setting up datacenters and related infrastructure that will enable them to run the large-language models (read: Mag 7 ETFs Surge: Will the Rally Keep Rolling?). Microsoft Microsoft has an Earnings ESP of -0.64% and a Zacks Rank #2 (Buy). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter. Microsoft saw no earnings estimate revision over the past 30 days for the second quarter of fiscal 2025. Its earnings track record is impressive, with the four-quarter earnings surprise being 5.21%, on average. The Zacks Consensus Estimate indicates earnings growth of 13.6% and revenue growth of 13.9% from the year-ago quarter. The world's largest software company will continue to grow as artificial intelligence applications drive more cloud infrastructure usage. Microsoft's Azure cloud business is benefiting from the company's partnership with AI leader OpenAI. Wall Street is clearly bullish on the world's largest software company heading into the results, with an average brokerage recommendation (ABR) of 1.23 made by 47 brokerage firms. Out of them, 39 are Strong Buy and five are Buy. Strong Buy and Buy, respectively, account for 82.98% and 10.64% of all recommendations. The average price target for Microsoft comes to $552.35, ranging from a low of $475.00 to a high of $626.00. Some analysts have also raised the target price on Microsoft. Evercore ISI raised its price target to $545.00 from $515.00, citing that the company's momentum in Azure and AI will continue to drive "durable double-digit top and bottom line growth." Wedbush lifted the price target to $6000. According to Wedbush, the company "is just hitting its next phase of monetization on the AI front," thanks to the adoption of Copilot, its chatbot, and the cloud-computing platform Azure (read: ETFs to Surge as Microsoft Tops $3.5T, Reclaims Top Spot). Meta Platforms Meta Platforms has an Earnings ESP of +2.91% and a Zacks Rank #1. The social media giant saw a negative earnings estimate revision of five cents for the second quarter over the past seven days. The Zacks Consensus Estimate for the yet-to-be-reported quarter indicates substantial year-over-year earnings growth of 12.98%. Revenues are expected to increase 14.77% year over year. Meta Platforms delivered an earnings surprise of 17.30%, on average, in the last four quarters. Meta currently has a Wall Street analyst recommendation of 1.35 made by 55 brokerage firms. Of these, 45 are Strong Buy and three are Buy. Strong Buy and Buy, respectively, account for 81.82% and 5.45% of all recommendations. Based on short-term price targets offered by 52 analysts, the average price target for Meta Platforms comes to $756.13, ranging from a low of $566.00 to a high of $935.00. Meta's AI strategy now serves as the backbone of its business transformation. The company has now committed $60–70 billion in capital expenditure for this year, with the lion's share earmarked for AI infrastructure. This includes cutting-edge data centers like Prometheus and Hyperion, as well as the deployment of NVIDIA's Grace Hopper Superchip. These bold investments are already delivering results across Meta's platforms. The 30% adoption of Advantage+ is driving a 5% boost in Reels conversion rates. AI-driven recommendations have lifted time spent on Facebook by 7% and on Threads by a remarkable 35%. Instagram Reels engagement is up 24%, fueled by improved algorithmic personalization. The world's largest social media platform projects revenues in the range of $42.5-$45.5 billion for the second quarter. Apple Apple has an Earnings ESP of +3.52% and a Zacks Rank #3. Apple saw a positive earnings estimate revision of a penny over the past 30 days for the fiscal third quarter of 2025. The iPhone maker has a strong track record of positive earnings surprises. It delivered an average earnings surprise of 4.68% in the trailing four quarters. The Zacks Consensus Estimate indicates a modest year-over-year increase of 1.43% for earnings and 3.67% for revenues. The tech giant currently has a Wall Street analyst recommendation of 2.04 made by 37 brokerage firms. Of these, 18 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 48.65% and 8.11% of all recommendations. Based on short-term price targets offered by 33 analysts, the average price target for Apple comes to $231.52. The forecasts range from a low of $139.00 to a high of $300.00. On the last earnings call, the iPhone maker guided "low to mid-single digit" sales growth for the fiscal third quarter. Chief executive Tim Cook warned that Apple is likely to face a $900 million headwind as a result of tariffs. He added that it is "very difficult" to predict beyond June due to uncertainties surrounding the U.S.-China trade policy. Amazon Amazon has an Earnings ESP of +7.37% and a Zacks Rank #1. The company saw a positive earnings estimate revision of a penny over the past seven days for the second quarter. The Zacks Consensus Estimate indicates a year-over-year earnings increase of 8.13% and substantial revenue growth of 9.67% for the to-be-reported quarter. Additionally, Amazon's earnings surprise history is impressive, with the four-quarter average surprise being 20.68%. Amazon currently has a Wall Street analyst recommendation of 1.15 made by 55 brokerage firms. Of these, 48 are Strong Buy and six are Buy. Strong Buy and Buy respectively account for 87.27% and 10.91% of all recommendations. Based on short-term price targets offered by 53 analysts, the average price target for Amazon comes to $254.38, ranging from a low of $195.00 to a high of $305.00. Amazon continues to dominate the e-commerce business and is expanding its footprint in cloud computing, advertising and various other sectors. The world's largest online retailer projected revenues of $159-$164 billion for the second quarter of 2025. Blockbuster Prime Day Event sales are likely to boost revenues for the company. Like other tech companies, Amazon is ramping up investments in data centers, chips and the power needed for AI workloads. It is also investing in its own computer chips and those developed by NVIDIA. However, CFO Brian Olsavsky, on the last earnings call, issued a cautious outlook due to uncertain consumer demand in the face of President Trump's shifting tariff policies. ETFs to Tap Given this, investors may want to invest in these stocks through ETFs. Below, we have highlighted some ETFs with the largest exposure to Mag 7. Roundhill Magnificent Seven ETF: It is the first-ever ETF offering investors equal-weight exposure to the Magnificent 7 stocks. MicroSectors FANG+ ETN: This ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of the seven stocks. MicroSectors FANG+ ETN has a Zacks ETF Rank #3 (see: all the Technology ETFs here). iShares Top 20 U.S. Stocks ETF: It offers exposure to the potential growth of mega-cap stocks, which may benefit from their scale and resources. The in-focus four firms account for a combined 38% share. TOPT has a Zacks ETF Rank #2. Boost Your Portfolio with Our Top ETF Insights Zacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week. Don't miss out on this valuable resource. It's free! Get it now >> Media Contact Zacks Investment Research 800-767-3771 ext. 9339 support@ Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release. Higher. Faster. Sooner. Buy These Stocks Now A small number of stocks are primed for a breakout, and you have a chance to get in before they take off. At any given time, there are only 220 Zacks Rank #1 Strong Buys. On average, this list more than doubles the S&P 500. We've combed through the latest Strong Buys and selected 7 compelling companies likely to jump sooner and climb higher than any other stock you could buy this month. You'll learn everything you need to know about these exciting trades in our brand-new Special Report, 7 Best Stocks for the Next 30 Days. Download the report free now >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (AMZN): Free Stock Analysis Report Apple Inc. (AAPL): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report MicroSectors FANG+ ETN (FNGS): ETF Research Reports Meta Platforms, Inc. (META): Free Stock Analysis Report iShares Top 20 U.S. Stocks ETF (TOPT): ETF Research Reports
Yahoo
3 days ago
- Business
- Yahoo
Trading Day: Fading trade deal relief?
By Jamie McGeever ORLANDO, Florida (Reuters) -TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist Investors' initial response to the U.S.-EU trade deal framework saw the euro and German stocks slammed lower on Monday, while the S&P 500 and Nasdaq notched fresh closing highs in choppy trade, also supported by optimism around U.S. tech earnings. More on that below. In my column today I look at whether the Q2 earnings season could be an inflection point for U.S. stocks - does the 'Mag 7' megacap concentration persist, or is the market finally beginning to broaden out? If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. 1. Out-gunned Europe accepts least-worst U.S. trade deal 2. U.S. tariffs will be test of luxury brands' pricingpower 3. EU's lopsided Trump trade deal will be short-lived 4. Fed rates are going nowhere fast: Mike Dolan 5. Bank of England poised to slow QT after rise in yields Today's Key Market Moves * FX: Euro falls 1.2%, dollar index up 1%; both biggestmoves since May 12. * STOCKS: Germany's DAX falls 1% after U.S.-EU trade deal,S&P 500 and Nasdaq notch fresh closing highs. * BONDS: U.S. yields rise 3 bps at long end, curve snaps7-day flattening streak. * COMMODITIES: Oil rises 2.4%, biggest rise in over twoweeks. Fading trade deal relief? The relief and feel-good factor for markets that Sunday's U.S.-European Union trade deal initially sparked waxed and waned on Monday, with European assets hit hard and Wall Street trading in negative territory for much of the session. The S&P 500 and Nasdaq did manage to set new closing highs. The trade deals with the UK, Japan and now the EU are seen as significant wins for Washington and President Donald Trump, as they secure higher tariffs on imports into the U.S. without retaliation and include commitments for additional investment. Many Europeans have criticized the EU for caving in. Oppenheimer Asset Management on Monday raised its year-end target for the S&P 500 index to 7,100, the highest among major Wall Street brokerages, betting on easing trade tensions and strong corporate earnings. But as commentator Matthew Klein noted on Monday, it is odd that the country unilaterally making things more expensive for its citizens is somehow deemed to be "winning". The longer-term impact on the U.S. economy and revenues remain to be seen, but most observers agree growth will slow, and inflation and unemployment will rise in the short-term. Joseph Wang, CIO at Monetary Macro, estimates that the "trade war is concluding with an effective tax hike worth about 1% of GDP." With the tariff on most imports from the EU now set at 15%, America's overall average effective tariff rate is now 18.2%, according to the Yale Budget Lab, the highest since 1934. Attention now turns to Stockholm, where U.S. Treasury Secretary Scott Bessent and China's Vice Premier He Lifeng are seeking to extend a tariff truce by three months. These talks, set to conclude on Tuesday, could also pave the way for a meeting between Trump and Chinese President Xi Jinping in late October or early November. On top of trade, there are plenty market-moving developments and events for investors to monitor this week, including top-tier corporate earnings, policy meetings in Japan and the U.S., and the latest U.S. inflation and employment reports. This week is the busiest of the second-quarter earnings season with over 150 companies in the S&P 500 scheduled to report, including four of the 'Magnificent Seven' tech giants later in the week. Tuesday's focus will likely center on Visa, Proctor & Gamble, and Boeing. Elsewhere, the U.S. Treasury on Monday said it expects to borrow $1.007 trillion in the third quarter, almost double the April estimate mainly due to the lower beginning-of-quarter cash balance and projected lower net cash flows. Is U.S. stock rally near 'Mag 7' turning point? As investors brace for the busiest week of the U.S. earnings season, with four of the 'Magnificent Seven' tech giants reporting, debate is picking up again about these megacap firms' influence over U.S. equity indexes and whether we could be seeing the beginnings of true market broadening. By some measures, this small clutch of tech titans' profits, market cap, and valuations as a share of the wider market has never been bigger. Broader indices are at record highs, but strip out these firms and the picture is much less rosy. Indeed, since the beginning of 2023, the S&P 500 composite - the benchmark 'market cap' index increasingly dominated by the 'Mag 7' - has gained 67%, more than double the 'equal-weight' index's 32%. Only two years ago, the S&P 500 composite/equal-weight ratio was 0.66, meaning the composite index was worth around two-thirds of the equal weight index. That ratio is now 0.84, the highest since 2003. There's good reason for that. According to Larry Adam, chief investment officer at Raymond James, 12-month forward earnings estimates for the S&P 500 have outpaced estimates for the equal-weight index by 14%. And Tajinder Dhillon, senior research analyst at LSEG, notes that the 'Mag 7' last year accounted for 52% of overall earnings growth. Many investors and analysts consider it unhealthy to have the fate of the entire market dependent on so few companies. It may be fine when they're flying high, but not so much if one or two of them take a dive. Plus, it makes stock picking more difficult. If the market basically goes where the 'Mag 7' or Nvidia go, why should an investor bother buying anything else? That's a recipe for market inefficiencies. YACHTS AND ALL BOATS? There have recently been nascent signs that the market may be broadening out beyond tech and AI-related names, largely thanks to positive news on the trade front. Last week, the equal-weight index eclipsed November's high to set a fresh record. Raymond James's CIO Adam notes that the equal-weight index outperformed the S&P 500 last week for the fourth week in the last 13. More of the same this week would mark its first monthly outperformance since March. Can it hit this mark? Around 160 of the S&P 500-listed firms report this week, including Meta and Microsoft on Wednesday and Amazon and Apple on Wednesday. It's not a stretch to say these four reports will move the market more than the rest combined. LSEG's Dhillon says the Mag 7's share of total earnings growth is expected to fall to 37% this year and 27% next year. The expected earnings growth spread between Mag 7 and the wider index in the second quarter - 16.4% vs. 7.7% - is the smallest since 2023, and will shrink more in Q3, he adds. Larry Adam at Raymond James, however, thinks the recent market broadening is a "short-term normalization" rather than a "material shift". He thinks the earnings strength of the tech-related sectors justifies the valuation premium on these stocks. Regardless, what we know for sure is that fears about the market's concentration and narrowness have been swirling for years and there has yet to be a reckoning. The equal-weight index's rise to new highs last week suggests the rising tide is lifting all boats, not just the billionaire's yachts. Essentially, the Mag 7 and large caps are outperforming, but if you peel back the onion, other sectors like financials and industrials are also doing well. And look around the world. Many indices outside the U.S. that aren't tech-heavy are approaching or printing new highs also, like Britain's FTSE 100 and Germany's DAX. "To see the largest names leading isn't a worrisome sign, especially as they are backing it up with very strong earnings," says Ryan Detrick, chief market strategist at Carson Group. "This isn't a weak breadth market, it is broad based and a very healthy rally." This week's earnings might go some way to determining whether this continues for a while yet. What could move markets tomorrow? * U.S. consumer confidence (July) * U.S. JOLTS job openings (June) * U.S earnings, including Proctor & Gamble, Visa, Boeing * U.S. Treasury auctions $44 billion of 7-year notes Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. (By Jamie McGeever; Editing by Nia Williams)
Reuters
3 days ago
- Business
- Reuters
Trading Day: Fading trade deal relief?
ORLANDO, Florida, July 28 (Reuters) - Investors' initial response to the U.S.-EU trade deal framework saw the euro and German stocks slammed lower on Monday, while the S&P 500 and Nasdaq notched fresh closing highs in choppy trade, also supported by optimism around U.S. tech earnings. More on that below. In my column today I look at whether the Q2 earnings season could be an inflection point for U.S. stocks - does the 'Mag 7' megacap concentration persist, or is the market finally beginning to broaden out? If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Fading trade deal relief? The relief and feel-good factor for markets that Sunday's U.S.-European Union trade deal initially sparked waxed and waned on Monday, with European assets hit hard and Wall Street trading in negative territory for much of the session. The S&P 500 and Nasdaq did manage to set new closing highs. The trade deals with the UK, Japan and now the EU are seen as significant wins for Washington and President Donald Trump, as they secure higher tariffs on imports into the U.S. without retaliation and include commitments for additional investment. Many Europeans have criticized the EU for caving in. Oppenheimer Asset Management on Monday raised its year-end target for the S&P 500 index to 7,100, the highest among major Wall Street brokerages, betting on easing trade tensions and strong corporate earnings. But as commentator Matthew Klein noted on Monday, it is odd that the country unilaterally making things more expensive for its citizens is somehow deemed to be "winning". The longer-term impact on the U.S. economy and revenues remain to be seen, but most observers agree growth will slow, and inflation and unemployment will rise in the short-term. Joseph Wang, CIO at Monetary Macro, estimates that the "trade war is concluding with an effective tax hike worth about 1% of GDP." With the tariff on most imports from the EU now set at 15%, America's overall average effective tariff rate is now 18.2%, according to the Yale Budget Lab, the highest since 1934. Attention now turns to Stockholm, where U.S. Treasury Secretary Scott Bessent and China's Vice Premier He Lifeng are seeking to extend a tariff truce by three months. These talks, set to conclude on Tuesday, could also pave the way for a meeting between Trump and Chinese President Xi Jinping in late October or early November. On top of trade, there are plenty market-moving developments and events for investors to monitor this week, including top-tier corporate earnings, policy meetings in Japan and the U.S., and the latest U.S. inflation and employment reports. This week is the busiest of the second-quarter earnings season with over 150 companies in the S&P 500 scheduled to report, including four of the 'Magnificent Seven' tech giants later in the week. Tuesday's focus will likely center on Visa, Proctor & Gamble, and Boeing. Elsewhere, the U.S. Treasury on Monday said it expects to borrow $1.007 trillion in the third quarter, almost double the April estimate mainly due to the lower beginning-of-quarter cash balance and projected lower net cash flows. Is U.S. stock rally near 'Mag 7' turning point? As investors brace for the busiest week of the U.S. earnings season, with four of the 'Magnificent Seven' tech giants reporting, debate is picking up again about these megacap firms' influence over U.S. equity indexes and whether we could be seeing the beginnings of true market broadening. By some measures, this small clutch of tech titans' profits, market cap, and valuations as a share of the wider market has never been bigger. Broader indices are at record highs, but strip out these firms and the picture is much less rosy. Indeed, since the beginning of 2023, the S&P 500 composite - the benchmark 'market cap' index increasingly dominated by the 'Mag 7' - has gained 67%, more than double the 'equal-weight' index's 32%. Only two years ago, the S&P 500 composite/equal-weight ratio was 0.66, meaning the composite index was worth around two-thirds of the equal weight index. That ratio is now 0.84, the highest since 2003. There's good reason for that. According to Larry Adam, chief investment officer at Raymond James, 12-month forward earnings estimates for the S&P 500 have outpaced estimates for the equal-weight index by 14%. And Tajinder Dhillon, senior research analyst at LSEG, notes that the 'Mag 7' last year accounted for 52% of overall earnings growth. Many investors and analysts consider it unhealthy to have the fate of the entire market dependent on so few companies. It may be fine when they're flying high, but not so much if one or two of them take a dive. Plus, it makes stock picking more difficult. If the market basically goes where the 'Mag 7' or Nvidia go, why should an investor bother buying anything else? That's a recipe for market inefficiencies. There have recently been nascent signs that the market may be broadening out beyond tech and AI-related names, largely thanks to positive news on the trade front. Last week, the equal-weight index eclipsed November's high to set a fresh record. Raymond James's CIO Adam notes that the equal-weight index outperformed the S&P 500 last week for the fourth week in the last 13. More of the same this week would mark its first monthly outperformance since March. Can it hit this mark? Around 160 of the S&P 500-listed firms report this week, including Meta and Microsoft on Wednesday and Amazon and Apple on Wednesday. It's not a stretch to say these four reports will move the market more than the rest combined. LSEG's Dhillon says the Mag 7's share of total earnings growth is expected to fall to 37% this year and 27% next year. The expected earnings growth spread between Mag 7 and the wider index in the second quarter - 16.4% vs. 7.7% - is the smallest since 2023, and will shrink more in Q3, he adds. Larry Adam at Raymond James, however, thinks the recent market broadening is a "short-term normalization" rather than a "material shift". He thinks the earnings strength of the tech-related sectors justifies the valuation premium on these stocks. Regardless, what we know for sure is that fears about the market's concentration and narrowness have been swirling for years and there has yet to be a reckoning. The equal-weight index's rise to new highs last week suggests the rising tide is lifting all boats, not just the billionaire's yachts. Essentially, the Mag 7 and large caps are outperforming, but if you peel back the onion, other sectors like financials and industrials are also doing well. And look around the world. Many indices outside the U.S. that aren't tech-heavy are approaching or printing new highs also, like Britain's FTSE 100 and Germany's DAX. "To see the largest names leading isn't a worrisome sign, especially as they are backing it up with very strong earnings," says Ryan Detrick, chief market strategist at Carson Group. "This isn't a weak breadth market, it is broad based and a very healthy rally." This week's earnings might go some way to determining whether this continues for a while yet. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
Yahoo
3 days ago
- Business
- Yahoo
Big Tech Earnings Coming Up: Spotlight on Mag 7 ETFs
The second-quarter earnings season has turned into high gear, and the so-called 'Magnificent 7" companies are in focus. Four of the 'Magnificent 7' members — Microsoft MSFT, Meta Platforms META, Apple AAPL and Amazon AMZN — are slated to report this week, accounting for almost a third of the S&P 500 second-quarter earnings of the 'Mag 7' companies are expected to be up 14% from the same period last year on 11.9% higher revenues. These expectations are a blend of actual results from Alphabet GOOGL and Tesla TSLA and estimates for the remaining five, of which four are on deck to report this week. Microsoft and Meta Platforms will report after market close on July 30, while Apple and Amazon will report on July 31. NVIDIA is likely to report later next month. The whole group has led the market's rebound from the April lows to new all-time highs. Only Apple is the laggard, as the company has not yet reaped the benefits of AI. Other members of the 'Magnificent 7' are leaders in the AI space and are actively investing in setting up datacenters and related infrastructure that will enable them to run the large-language models (read: Mag 7 ETFs Surge: Will the Rally Keep Rolling?).MicrosoftMicrosoft has an Earnings ESP of -0.64% and a Zacks Rank #2 (Buy). According to our methodology, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP saw no earnings estimate revision over the past 30 days for the second quarter of fiscal 2025. Its earnings track record is impressive, with the four-quarter earnings surprise being 5.21%, on average. The Zacks Consensus Estimate indicates earnings growth of 13.6% and revenue growth of 13.9% from the year-ago quarter. The world's largest software company will continue to grow as artificial intelligence applications drive more cloud infrastructure usage. Microsoft's Azure cloud business is benefiting from the company's partnership with AI leader Street is clearly bullish on the world's largest software company heading into the results, with an average brokerage recommendation (ABR) of 1.23 made by 47 brokerage firms. Out of them, 39 are Strong Buy and five are Buy. Strong Buy and Buy, respectively, account for 82.98% and 10.64% of all recommendations. The average price target for Microsoft comes to $552.35, ranging from a low of $475.00 to a high of $ analysts have also raised the target price on Microsoft. Evercore ISI raised its price target to $545.00 from $515.00, citing that the company's momentum in Azure and AI will continue to drive "durable double-digit top and bottom line growth.' Wedbush lifted the price target to $6000. According to Wedbush, the company "is just hitting its next phase of monetization on the AI front," thanks to the adoption of Copilot, its chatbot, and the cloud-computing platform Azure (read: ETFs to Surge as Microsoft Tops $3.5T, Reclaims Top Spot).Meta PlatformsMeta Platforms has an Earnings ESP of +2.91% and a Zacks Rank #1. The social media giant saw a negative earnings estimate revision of five cents for the second quarter over the past seven days. The Zacks Consensus Estimate for the yet-to-be-reported quarter indicates substantial year-over-year earnings growth of 12.98%. Revenues are expected to increase 14.77% year over year. Meta Platforms delivered an earnings surprise of 17.30%, on average, in the last four quarters. Meta currently has a Wall Street analyst recommendation of 1.35 made by 55 brokerage firms. Of these, 45 are Strong Buy and three are Buy. Strong Buy and Buy, respectively, account for 81.82% and 5.45% of all recommendations. Based on short-term price targets offered by 52 analysts, the average price target for Meta Platforms comes to $756.13, ranging from a low of $566.00 to a high of $ AI strategy now serves as the backbone of its business transformation. The company has now committed $60–70 billion in capital expenditure for this year, with the lion's share earmarked for AI infrastructure. This includes cutting-edge data centers like Prometheus and Hyperion, as well as the deployment of NVIDIA's Grace Hopper Superchip. These bold investments are already delivering results across Meta's platforms. The 30% adoption of Advantage+ is driving a 5% boost in Reels conversion rates. AI-driven recommendations have lifted time spent on Facebook by 7% and on Threads by a remarkable 35%. Instagram Reels engagement is up 24%, fueled by improved algorithmic world's largest social media platform projects revenues in the range of $42.5-$45.5 billion for the second quarter. AppleApple has an Earnings ESP of +3.52% and a Zacks Rank #3. Apple saw a positive earnings estimate revision of a penny over the past 30 days for the fiscal third quarter of 2025. The iPhone maker has a strong track record of positive earnings surprises. It delivered an average earnings surprise of 4.68% in the trailing four quarters. The Zacks Consensus Estimate indicates a modest year-over-year increase of 1.43% for earnings and 3.67% for tech giant currently has a Wall Street analyst recommendation of 2.04 made by 37 brokerage firms. Of these, 18 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 48.65% and 8.11% of all recommendations. Based on short-term price targets offered by 33 analysts, the average price target for Apple comes to $231.52. The forecasts range from a low of $139.00 to a high of $ the last earnings call, the iPhone maker guided 'low to mid-single digit' sales growth for the fiscal third quarter. Chief executive Tim Cook warned that Apple is likely to face a $900 million headwind as a result of tariffs. He added that it is 'very difficult' to predict beyond June due to uncertainties surrounding the U.S.-China trade policy. AmazonAmazon has an Earnings ESP of +7.37% and a Zacks Rank #1. The company saw a positive earnings estimate revision of a penny over the past seven days for the second quarter. The Zacks Consensus Estimate indicates a year-over-year earnings increase of 8.13% and substantial revenue growth of 9.67% for the to-be-reported quarter. Additionally, Amazon's earnings surprise history is impressive, with the four-quarter average surprise being 20.68%. Amazon currently has a Wall Street analyst recommendation of 1.15 made by 55 brokerage firms. Of these, 48 are Strong Buy and six are Buy. Strong Buy and Buy respectively account for 87.27% and 10.91% of all recommendations. Based on short-term price targets offered by 53 analysts, the average price target for Amazon comes to $254.38, ranging from a low of $195.00 to a high of $305.00. Amazon continues to dominate the e-commerce business and is expanding its footprint in cloud computing, advertising and various other sectors. The world's largest online retailer projected revenues of $159-$164 billion for the second quarter of 2025. Blockbuster Prime Day Event sales are likely to boost revenues for the company. Like other tech companies, Amazon is ramping up investments in data centers, chips and the power needed for AI workloads. It is also investing in its own computer chips and those developed by NVIDIA. However, CFO Brian Olsavsky, on the last earnings call, issued a cautious outlook due to uncertain consumer demand in the face of President Trump's shifting tariff policies. ETFs to Tap Given this, investors may want to invest in these stocks through ETFs. Below, we have highlighted some ETFs with the largest exposure to Mag Magnificent Seven ETF (MAGS): It is the first-ever ETF offering investors equal-weight exposure to the Magnificent 7 stocks. MicroSectors FANG+ ETN (FNGS): This ETN is linked to the performance of the NYSE FANG+ Index, which is equal-dollar weighted and designed to provide exposure to a group of highly traded growth stocks of next-generation technology and tech-enabled companies. The note accounts for a 10% share in each of the seven stocks. MicroSectors FANG+ ETN has a Zacks ETF Rank #3 (see: all the Technology ETFs here).iShares Top 20 U.S. Stocks ETF (TOPT): It offers exposure to the potential growth of mega-cap stocks, which may benefit from their scale and resources. The in-focus four firms account for a combined 38% share. TOPT has a Zacks ETF Rank #2. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (AMZN) : Free Stock Analysis Report Apple Inc. (AAPL) : Free Stock Analysis Report Microsoft Corporation (MSFT) : Free Stock Analysis Report Tesla, Inc. (TSLA) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report Meta Platforms, Inc. (META) : Free Stock Analysis Report iShares Top 20 U.S. Stocks ETF (TOPT): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research
